1. Coronel v.

Court of Appeals, 263 SCRA 15, 37 [1996]

THIRD DIVISION
[G.R. No. 103577. October 7, 1996]
ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C.
GONZALES (for herself and on behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A.
CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS MABANAG, petitioners, vs. THE
COURT OF APPEALS, CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ, assisted
by GLORIA F. NOEL as attorney-in-fact, respondents.

DECISION
MELO, J.:
The petition before us has its roots in a complaint for specific performance to compel herein petitioners
(except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel of land with its
improvements located along Roosevelt Avenue in Quezon City entered into by the parties sometime in
January 1985 for the price of P1,240,000.00.
The undisputed facts of the case were summarized by respondent court in this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter referred to as Coronels)
executed a document entitled Receipt of Down Payment (Exh. A) in favor of plaintiff Ramona Patricia
Alcaraz (hereinafter referred to as Ramona) which is reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 - Total amount
50,000.00 - Down payment
------------------------------------------
P1,190,000.00 - Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos
purchase price of our inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of
Quezon City, in the total amount of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the
transfer certificate of title immediately upon receipt of the down payment above-stated.
On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale
of said property and Miss Ramona Patricia Alcaraz shall immediately pay the balance of
the P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:
1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon execution of the
document aforestated;
2. The Coronels will cause the transfer in their names of the title of the property registered in the name of
their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment;
3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute
sale in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred
Ninety Thousand (P1,190,000.00) Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as
Concepcion), mother of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. B,
Exh. 2).
On February 6, 1985, the property originally registered in the name of the Coronels father was transferred
in their names under TCT No. 327043 (Exh. D; Exh 4)
On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant
Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand
(P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3;
Exh. 6-C)
For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona by depositing the
down payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz.
On February 22, 1985, Concepcion, et. al., filed a complaint for a specific performance against the Coronels
and caused the annotation of a notice of lis pendens at the back of TCT No. 327403 (Exh. E; Exh. 5).
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same property
with the Registry of Deeds of Quezon City (Exh. F; Exh. 6).
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of
Catalina (Exh. G; Exh. 7).
On June 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No.
351582 (Exh. H; Exh. 8).
(Rollo, pp. 134-136)

In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties agreed to
submit the case for decision solely on the basis of documentary exhibits. Thus, plaintiffs therein (now
private respondents) proffered their documentary evidence accordingly marked as Exhibits A through J,
inclusive of their corresponding submarkings. Adopting these same exhibits as their own, then defendants
(now petitioners) accordingly offered and marked them as Exhibits 1 through 10, likewise inclusive of their
corresponding submarkings. Upon motion of the parties, the trial court gave them thirty (30) days within
which to simultaneously submit their respective memoranda, and an additional 15 days within which to
submit their corresponding comment or reply thereto, after which, the case would be deemed submitted for
resolution.

On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then
temporarily detailed to preside over Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment
was handed down by Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon
City branch, disposing as follows:

WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in
favor of plaintiffs a deed of absolute sale covering that parcel of land embraced in and covered by Transfer
Certificate of Title No. 327403 (now TCT No. 331582) of the Registry of Deeds for Quezon City, together
with all the improvements existing thereon free from all liens and encumbrances, and once accomplished,
to immediately deliver the said document of sale to plaintiffs and upon receipt thereof, the plaintiffs are
ordered to pay defendants the whole balance of the purchase price amounting to P1,190,000.00 in
cash. Transfer Certificate of Title No. 331582 of the Registry of Deeds for Quezon City in the name of
intervenor is hereby canceled and declared to be without force and effect. Defendants and intervenor and
all other persons claiming under them are hereby ordered to vacate the subject property and deliver
possession thereof to plaintiffs. Plaintiffs claim for damages and attorneys fees, as well as the counterclaims
of defendants and intervenors are hereby dismissed.
No pronouncement as to costs.

So Ordered.

Macabebe, Pampanga for Quezon City, March 1, 1989.

(Rollo, p. 106)
A motion for reconsideration was filed by petitioners before the new presiding judge of the Quezon City
RTC but the same was denied by Judge Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the
undersigned Presiding Judge should be denied for the following reasons: (1) The instant case became
submitted for decision as of April 14, 1988 when the parties terminated the presentation of their respective
documentary evidence and when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that
they were allowed to file memoranda at some future date did not change the fact that the hearing of the case
was terminated before Judge Roura and therefore the same should be submitted to him for decision; (2)
When the defendants and intervenor did not object to the authority of Judge Reynaldo Roura to decide the
case prior to the rendition of the decision, when they met for the first time before the undersigned Presiding
Judge at the hearing of a pending incident in Civil Case No. Q-46145 on November 11, 1988, they were
deemed to have acquiesced thereto and they are now estopped from questioning said authority of Judge
Roura after they received the decision in question which happens to be adverse to them; (3) While it is true
that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the Court, he was in all respects
the Presiding Judge with full authority to act on any pending incident submitted before this Court during
his incumbency. When he returned to his Official Station at Macabebe, Pampanga, he did not lose his
authority to decide or resolve cases submitted to him for decision or resolution because he continued as
Judge of the Regional Trial Court and is of co-equal rank with the undersigned Presiding Judge. The
standing rule and supported by jurisprudence is that a Judge to whom a case is submitted for decision has
the authority to decide the case notwithstanding his transfer to another branch or region of the same court
(Sec. 9, Rule 135, Rule of Court).
Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the
instant case, resolution of which now pertains to the undersigned Presiding Judge, after a meticulous
examination of the documentary evidence presented by the parties, she is convinced that the Decision of
March 1, 1989 is supported by evidence and, therefore, should not be disturbed.

IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul Decision and Render
Anew Decision by the Incumbent Presiding Judge dated March 20, 1989 is hereby DENIED.
SO ORDERED.

Quezon City, Philippines, July 12, 1989.

(Rollo, pp. 108-109)

Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals (Buena,
Gonzaga-Reyes, Abad-Santos (P), JJ.) rendered its decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last pleading, private respondents Reply
Memorandum, was filed on September 15, 1993. The case was, however, re-raffled to
undersigned ponente only on August 28, 1996, due to the voluntary inhibition of the Justice to whom the
case was last assigned.

While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the
affirmance of the trial courts decision, we definitely find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the resolution of the other issues in the case at bar
is the precise determination of the legal significance of the document entitled Receipt of Down Payment
which was offered in evidence by both parties. There is no dispute as to the fact that the said document
embodied the binding contract between Ramona Patricia Alcaraz on the one hand, and the heirs of
Constancio P. Coronel on the other, pertaining to a particular house and lot covered by TCT No. 119627,
as defined in Article 1305 of the Civil Code of the Philippines which reads as follows:

Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect
to the other, to give something or to render some service.
While, it is the position of private respondents that the Receipt of Down Payment embodied a perfected
contract of sale, which perforce, they seek to enforce by means of an action for specific performance,
petitioners on their part insist that what the document signified was a mere executory contract to sell, subject
to certain suspensive conditions, and because of the absence of Ramona P. Alcaraz, who left for the United
States of America, said contract could not possibly ripen into a contract of absolute sale.
Plainly, such variance in the contending parties contention is brought about by the way each interprets the
terms and/or conditions set forth in said private instrument.Withal, based on whatever relevant and
admissible evidence may be available on record, this Court, as were the courts below, is now called upon
to adjudge what the real intent of the parties was at the time the said document was executed.
The Civil Code defines a contract of sale, thus:
Art. 1458. 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.
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential
elements of a contract of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first
essential element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of
title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer
ownership of the property subject of the contract to sell until the happening of an event, which for present
purposes we shall take as the full payment of the purchase price. What the seller agrees or obliges himself
to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is
delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition,
the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by
the prospective seller without further remedies by the prospective buyer. In Roque vs. Lapuz (96 SCRA 741
[1980]), this Court had occasion to rule:
Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the
ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment
being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an
event that prevented the obligation of the vendor to convey title from acquiring binding force.
Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase
price, the prospective sellers obligation to sell the subject property by entering into a contract of sale with
the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the
promissor of the promise is supported by a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds
himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition
agreed upon, that is, full payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale
where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a
suspensive condition, because in a conditional contract of sale, the first element of consent is present,
although it is conditioned upon the happening of a contingent event which may or may not occur. If the
suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite
and Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). However, if the suspensive condition is
fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of
the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by
operation of law without any further act having to be performed by the seller.
In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the
purchase price, ownership will not automatically transfer to the buyer although the property may have been
previously delivered to him. The prospective seller still has to convey title to the prospective buyer by
entering into a contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases
where the subject property is sold by the owner not to the party the seller contracted with, but to a third
person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third
person buying such property despite the fulfillment of the suspensive condition such as the full payment of
the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot
seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property
will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but
the latter, of course, may be sued for damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes
absolute and this will definitely affect the sellers title thereto. In fact, if there had been previous delivery of
the subject property, the sellers ownership or title to the property is automatically transferred to the buyer
such that, the seller will no longer have any title to transfer to any third person. Applying Article 1544 of
the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of
such defect in the sellers title, or at least was charged with the obligation to discover such defect, cannot be
a registrant in good faith. Such second buyer cannot defeat the first buyers title. In case a title is issued to
the second buyer, the first buyer may seek reconveyance of the property subject of the sale.
With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the
contract entered into by petitioners and private respondents.
It is a canon in the interpretation of contracts that the words used therein should be given their natural and
ordinary meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586
[1992]). Thus, when petitioners declared in the said Receipt of Down Payment that they --
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand
Pesos purchase price of our inherited house and lot, covered by TCT No. 1199627 of the Registry of Deeds
of Quezon City, in the total amount of P1,240,000.00.
without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea
conveyed is that they sold their property.
When the Receipt of Down payment is considered in its entirety, it becomes more manifest that there was
a clear intent on the part of petitioners to transfer title to the buyer, but since the transfer certificate of title
was still in the name of petitioners father, they could not fully effect such transfer although the buyer was
then willing and able to immediately pay the purchase price. Therefore, petitioners-sellers undertook upon
receipt of the down payment from private respondent Ramona P. Alcaraz, to cause the issuance of a new
certificate of title in their names from that of their father, after which, they promised to present said title,
now in their names, to the latter and to execute the deed of absolute sale whereupon, the latter shall, in turn,
pay the entire balance of the purchase price.
The agreement could not have been a contract to sell because the sellers herein made no express reservation
of ownership or title to the subject parcel of land.Furthermore, the circumstance which prevented the parties
from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was
not in their names) and not the full payment of the purchase price. Under the established facts and
circumstances of the case, the Court may safely presume that, had the certificate of title been in the names
of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could
not have been executed and consummated right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the
property to private respondent upon the fulfillment of the suspensive condition. On the contrary, having
already agreed to sell the subject property, they undertook to have the certificate of title change to their
names and immediately thereafter, to execute the written deed of absolute sale.
Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer
with certain terms and conditions, promised to sell the property to the latter. What may be perceived from
the respective undertakings of the parties to the contract is that petitioners had already agreed to sell the
house and lot they inherited from their father, completely willing to transfer ownership of the subject house
and lot to the buyer if the documents were then in order. It just so happened, however, that the transfer
certificate of title was then still in the name of their father. It was more expedient to first effect the change
in the certificate of title so as to bear their names. That is why they undertook to cause the issuance of a
new transfer of the certificate of title in their names upon receipt of the down payment in the amount
of P50,000.00. As soon as the new certificate of title is issued in their names, petitioners were committed
to immediately execute the deed of absolute sale. Only then will the obligation of the buyer to pay the
remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly entered into so as to protect the
seller against a buyer who intends to buy the property in installment by withholding ownership over the
property until the buyer effects full payment therefor, in the contract entered into in the case at bar, the
sellers were the ones who were unable to enter into a contract of absolute sale by reason of the fact that the
certificate of title to the property was still in the name of their father. It was the sellers in this case who, as
it were, had the impediment which prevented, so to speak, the execution of an contract of absolute sale.
What is clearly established by the plain language of the subject document is that when the said Receipt of
Down Payment was prepared and signed by petitioners Romulo A. Coronel, et. al., the parties had agreed
to a conditional contract of sale, consummation of which is subject only to the successful transfer of the
certificate of title from the name of petitioners father, Constancio P. Coronel, to their names.
The Court significantly notes that this suspensive condition was, in fact, fulfilled on February 6, 1985 (Exh.
D; Exh. 4). Thus, on said date, the conditional contract of sale between petitioners and private respondent
Ramona P. Alcaraz became obligatory, the only act required for the consummation thereof being the
delivery of the property by means of the execution of the deed of absolute sale in a public instrument, which
petitioners unequivocally committed themselves to do as evidenced by the Receipt of Down Payment.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case at
bench. Thus,
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which
is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions of the law
governing the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those
already acquired, shall depend upon the happening of the event which constitutes the condition.
Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners
names was fulfilled on February 6, 1985, the respective obligations of the parties under the contract of sale
became mutually demandable, that is, petitioners, as sellers, were obliged to present the transfer certificate
of title already in their names to private respondent Ramona P. Alcaraz, the buyer, and to immediately
execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the balance of
the purchase price amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their petition, petitioners conclusively
admitted that:
3. The petitioners-sellers Coronel bound themselves to effect the transfer in our names from our deceased
father Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the downpayment
above-stated". The sale was still subject to this suspensive condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive
condition. Only, they contend, continuing in the same paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first transferring the title to the property
under their names, there could be no perfected contract of sale. (Emphasis supplied.)
(Ibid.)
not aware that they have set their own trap for themselves, for Article 1186 of the Civil Code expressly
provides that:
Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
Besides, it should be stressed and emphasized that what is more controlling than these mere hypothetical
arguments is the fact that the condition herein referred to was actually and indisputably fulfilled on February
6, 1985, when a new title was issued in the names of petitioners as evidenced by TCT No. 327403 (Exh. D;
Exh. 4).
The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as
Receipt of Down Payment (Exh. A; Exh. 1), the parties entered into a contract of sale subject to the
suspensive condition that the sellers shall effect the issuance of new certificate title from that of their fathers
name to their names and that, on February 6, 1985, this condition was fulfilled (Exh. D; Exh. 4).
We, therefore, hold that, in accordance with Article 1187 which pertinently provides -
Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled, shall retroact
to the day of the constitution of the obligation . . .
In obligations to do or not to do, the courts shall determine, in each case, the retroactive effect of the
condition that has been complied with.
the rights and obligations of the parties with respect to the perfected contract of sale became mutually due
and demandable as of the time of fulfillment or occurrence of the suspensive condition on February 6,
1985. As of that point in time, reciprocal obligations of both seller and buyer arose.
Petitioners also argue there could been no perfected contract on January 19, 1985 because they were then
not yet the absolute owners of the inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the
extent and value of the inheritance of a person are transmitted through his death to another or others by his
will or by operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P. Coronel are
compulsory heirs who were called to succession by operation of law. Thus, at the point their father drew
his last breath, petitioners stepped into his shoes insofar as the subject property is concerned, such that any
rights or obligations pertaining thereto became binding and enforceable upon them. It is expressly provided
that rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil
Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners claim that succession may not be declared unless the creditors have been
paid is rendered moot by the fact that they were able to effect the transfer of the title to the property from
the decedents name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter into an
agreement at that time and they cannot be allowed to now take a posture contrary to that which they took
when they entered into the agreement with private respondent Ramona P. Alcaraz. The Civil Code expressly
states that:
Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making
it, and cannot be denied or disproved as against the person relying thereon.
Having represented themselves as the true owners of the subject property at the time of sale, petitioners
cannot claim now that they were not yet the absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected contract of sale between them and
Ramona P. Alcaraz, the latter breach her reciprocal obligation when she rendered impossible the
consummation thereof by going to the United States of America, without leaving her address, telephone
number, and Special Power of Attorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaim to
the Amended Complaint, p. 2; Rollo, p. 43), for which reason, so petitioners conclude, they were correct in
unilaterally rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the contract of sale in the instant
case. We note that these supposed grounds for petitioners rescission, are mere allegations found only in
their responsive pleadings, which by express provision of the rules, are deemed controverted even if no
reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of Court). The records are absolutely bereft
of any supporting evidence to substantiate petitioners allegations. We have stressed time and again that
allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro
vs. Embisan, 2 SCRA 598 [1961]). Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376
[1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on February 6, 1985,
we cannot justify petitioners-sellers act of unilaterally and extrajudicially rescinding the contract of sale,
there being no express stipulation authorizing the sellers to extrajudicially rescind the contract of
sale. (cf. Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. De Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although
the evidence on record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers
had been dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted for and in behalf of her
daughter, if not also in her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz
with her own personal Check (Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence
showing that petitioners ever questioned Concepcions authority to represent Ramona P. Alcaraz when they
accepted her personal check. Neither did they raise any objection as regards payment being effected by a
third person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz
is not a ground to rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the
full purchase price is concerned. Petitioners who are precluded from setting up the defense of the physical
absence of Ramona P. Alcaraz as above-explained offered no proof whatsoever to show that they actually
presented the new transfer certificate of title in their names and signified their willingness and readiness to
execute the deed of absolute sale in accordance with their agreement. Ramonas corresponding obligation
to pay the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due and
demandable and, therefore, she cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be
considered in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee judicially
or extrajudicially demands from them the fulfillment of their obligation.
xxx
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply
in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill his
obligation, delay by the other begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and
respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of
double sale where Article 1544 of the Civil Code will apply, to wit:
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 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.
The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the second
contract of sale was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a
new certificate of title in the name of Catalina B. Mabanag on June 5, 1985. Thus, the second paragraph of
Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to pass to the buyer, the exceptions
being: (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should
there be no inscription by either of the two buyers, when the second buyer, in good faith, acquires possession
of the property ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or
ownership will not transfer to him to the prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished member
of the Court, Justice Jose C. Vitug, explains:
The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the
first buyer of the second sale cannot defeat the first buyers rights except when the second buyer first
registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge
gained by the second buyer of the first sale defeats his rights even if he is first to register, since knowledge
taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December
1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it was held that it is 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 (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R.
No. 95843, 02 September 1992).
(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioners point out that the notice of lis pendens in the case at bar was annotated on the title of the subject
property only on February 22, 1985, whereas, the second sale between petitioners Coronels and petitioner
Mabanag was supposedly perfected prior thereto or on February 18, 1985. The idea conveyed is that at the
time petitioner Mabanag, the second buyer, bought the property under a clean title, she was unaware of any
adverse claim or previous sale, for which reason she is a buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not whether or not the second buyer in good
faith but whether or not said second buyer registers such second sale in good faith, that is, without
knowledge of any defect in the title of the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good faith, registered
the sale entered into on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had
been annotated on the transfer certificate of title in the names of petitioners, whereas petitioner Mabanag
registered the said sale sometime in April, 1985. At the time of registration, therefore, petitioner Mabanag
knew that the same property had already been previously sold to private respondents, or, at least, she was
charged with knowledge that a previous buyer is claiming title to the same property. Petitioner Mabanag
cannot close her eyes to the defect in petitioners title to the property at the time of the registration of the
property.
This Court had occasions to rule that:
If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale
of the same property to a third party or that another person claims said property in a previous sale, the
registration will constitute a registration in bad faith and will not confer upon him any right. (Salvoro vs.
Tanega, 87 SCRA 349 [1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan,
43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on
February 6, 1985, prior to that between petitioners and Catalina B. Mabanag on February 18, 1985, was
correctly upheld by both the courts below.
Although there may be ample indications that there was in fact an agency between Ramona as principal and
Concepcion, her mother, as agent insofar as the subject contract of sale is concerned, the issue of whether
or not Concepcion was also acting in her own behalf as a co-buyer is not squarely raised in the instant
petition, nor in such assumption disputed between mother and daughter. Thus, We will not touch this issue
and no longer disturb the lower courts ruling on this point.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment
AFFIRMED.
SO ORDERED.
 2. Mendoza v. Kalaw, 42 Phil. [1921]

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-16420 October 12, 1921
AGRIPINO MENDOZA, petitioner-appellee,
vs.
PRIMITIVO KALAW, objector-appellant.
Guillermo M. Katigbak for appellant.
Felipe A. Jose for appellee.

JOHNSON, J.:
From the record it appears that on the 26th day of November, 1919, the petitioner presented a petition in
the Court of First instance of the City of Manila for the registration, under the Torrens system, of a piece
or parcel of land, particularly described in paragraph A of the petition. The said lot is alleged to have an
area of 371.6 square meters. The petitioner alleged that he was the owner in fee simple of said parcel of
land for the reason that he had purchased the same of Federico Caet on the 8th day of November, 1919.
Accompanying the petition, there was united a plan (marked Exhibit A) containing a technical description
of the metes and bounds of said parcel of land.
To the registration of said parcel of land the oppositor, Primitivo Kalaw, presented his opposition, alleging
that he was the owner of the same and that he had acquired it from the said Federico Caet.
Upon the issue thus presented by the petitioner and opposition, the Honorable James A. Ostrand, on the
23d day of January, 1920, in a carefully prepared opinion, reached the conclusion that the petitioner was
the owner in fee simple of said parcel of land, and ordered it registered in his name in accordance with the
provisions of the Land registration Act. From that decree the oppositor appealed to this court.
From an examination of the record the following facts seem to be proved by a large preponderance of the
evidence:
(1) That on the 24th day of September, 1919, the said Federico Caet sold, under a conditional sale, the
parcel of land in question to the appellant (Exhibit 1);
(2) That on the 8th day of November, 1919, the said Federico Caet made an absolute sale of said parcel
of land to the petitioner Agripino Mendoza (Exhibit B);
(3) That on the 12th day of November, 1919, Agripino Mendoza entered upon, and took actual possession
of, said parcel of land, enclosed it with a fence, and began to clean the same;
(4) That after the petitioner had fenced and cleaned said lot, as above indicated, a representative of the
oppositor claimed and attempted to obtain possession of said lot, but the petitioner, who was then in
possession, refused to deliver the possession, upon the ground that the was the owner;
(5) That on the 17th day of November (18th day of November), 1919, the oppositor attempted to have his
title registered in the registry of deeds of the City of Manila, but such registration was denied by the register
of deeds for the reason that there existed some defect in the description of the property, and for the reason
that the title of the vendor had not therefore been registered. The register of deeds, however, did make an
"anotacion preventiva."
It will be noted from the foregoing that Federico Caet made two sales of the same property one of the
oppositor and the other to the petitioner. The first was but a conditional sale while the latter was an absolute
sale. It will also be noted that while the absolute sale to the petitioner was subsequent to the conditional
sale to the oppositor, the former obtained the actual possession of the property first. It will further be noted
from a reading of Exhibits 1 and B that the petitioner actually paid to his vendor the purchase price of the
property in question, while the payment by the oppositor depended upon the performance of certain
conditions mentioned in the contract of sale. 1awph!l.net
While was have stated that there were two sales of the parcel of land in question, that is hardly the fact,
because a conditional sale, before the performance of the condition, can hardly be said to be a sale of
property, especially where the condition has not been performed or complied with. That being true, article
1473 of the Civil Code can hardly be said to be applicable.
Neither can the "anotacion preventiva" obtained by the oppositor be said to have created any advance in his
favor, for the reason that a preventative precautionary notice on the records of the registry of deeds only
protects the rights of the person securing it for a period of thirty days. (Par. 2, art. 17, Mortgage Law.) A
preventative precautionary notice only protects the interests and rights of the person who secures it against
those who acquire an interest in the property subsequent thereto, and then, only for a period of thirty days.
It cannot affect the rights or interests of persons who acquired an interest in the property theretofore.
(Veguillas vs. Jaucian, 25 Phil., 315; Samson vs.Garcia and Ycalina, 34 Phil., 805.) In the present case the
petitioner had acquired an absolute deed to the land in question, and had actually entered into the possession
of the same, before the preventative precautionary notice was noted in the office of the registry of deeds.
Therefore, under the provisions of the Mortgage Law above cited, it could in no way affect the rights or
interests of persons, acquired theretofore.
For all of the foregoing reasons, we are fully persuaded that the judgment ordering the registration of the
parcel of land in question in the name of the petitioner should be and is hereby affirmed, with costs. So
ordered.
 4. Adalin v. Court of Appeals, 280 SCRA 536 [1997]

FIRST DIVISION
[G.R. No. 120191. October 10, 1997]
LORETO ADALIN, CARLOS CALINGASAN, DEMETRIO ADAYA and MAGNO
ADALIN, petitioners, vs. THE HON. COURT OF APPEALS, FAUSTINO L. YU, ANTONIO T. LIM,
ELENA K. PALANCA, JOSE PALANCA, EDUARDA K. VARGAS, JOSE VARGAS, MERCEDES K.
CABALLERO, EBERHARDO CABALLERO, ISABEL K. VILLAMOR, FEDERICO VILLAMOR,
JOSE KADO, URSULA KADO, MARIA K. CALONZO, BAYANI L. CALONZO, TEOFILA KADO,
NESTOR KADO and LILIA KADO, respondents.
DECISION
HERMOSISIMA, JR., J.:
Before us is a petition for review seeking the reversal of the Decision [1] of the Court of Appeals[2] and in
lieu thereof, the reinstatement of the Decision[3] of the Regional Trial Court[4] in an action for specific
performance filed by private respondents Faustino L. Yu and Antonio T. Lim against the Kado siblings,
namely, private respondents Elena K. Palanca, Eduarda K. Vargas, Mercedes K. Caballero, Isabel K.
Villamor, Jose Kado, Maria K. Calonzo, Teofila Kado and Nestor Kado, and their respective spouses.
In essence, the petition poses a challenge against the respondent appellate courts legal conclusion that the
transaction entered into by private respondents Yu and Lim with private respondents Kado siblings, is one
of an absolute sale and not merely a conditional sale as denominated in the document signed by said
parties. As such, there is no dispute as to the following facts:
xxx [F]rom the welter of evidence and the record, it has been established that Elena Kado Palanca, and her
brothers and sisters, namely, Eduarda K. Vargas, Mercedes K. Caballero, Isabel K. Villamor, Jose Kado,
Maria K. Calonzo, Teofila Kado and Nestor Kado, hereinafter referred to, for brevitys sake, as the
Appellees-Vendors, were the owners of a parcel of land, with an area of 1,343 square meters, with a five-
door, one storey commercial building constructed thereon, fronting the Imperial Hotel, located along
Magallanes Street, Cotabato City, described in and covered by Transfer Certificate of Title No. T-12963 of
the Registry of Deeds of Cotabato City x x x. One of the five (5) doors was leased to Loreto Adalin,
hereinafter referred to as the Appellee Adalin, two (2) doors were leased to Carlos Calingasan and Demetrio
Adaya respectively, and two (2) doors were leased to Magno Adalin, all of whom are hereinafter referred
to, for brevitys sake, as the Appellees-Vendees. The Appellees-Vendees and Appellee Adalin paid a
monthly rental of P1,500.00 for each door. The Appellees-Vendors commissioned Ester Bautista to look
for and negotiate with prospective buyers for the sale of their property for the price
of P3,000,000.00. Sometime in August, 1987, Ester Bautista offered the property, for sale, to the Appellants
and the latter agreed to buy the property. A conference was held in the office of the Appellant Faustino Yu,
at the Imperial Hotel, where he was the President-Manager, with both Appellants, the Appellee Adalin, the
Appellees-Vendors Elena Palanca and Teofilo Kado, in their behalf and in behalf of the Appellees-Vendors,
in attendance, to discuss the terms and conditions of the sale. The Appellants and Appellee Adalin, the
Appellees-Vendors agreed that the Appellants will each buy two (2) doors while Appellee Adalin will buy
the fifth door which he was leasing from the Appellees-Vendors, all for the price of P2,600,000.00. During
the conference, the Appellants inquired from the Appellee-Vendor Elena Palanca whether the Appellees-
Vendees were interested to buy the property but the Appellee-Vendor Elena Palanca replied that the
property had been offered to the Appellees-Vendees for sale but that the latter were not interested to buy
the same. The conferees then agreed to meet, on September 2, 1987, in the house of the Appellee-Vendor
Palanca, with Atty. Bayani Calonzo, her brother-in-law, in attendance, to finalize the sale. However,
unknown to the Appellants, the Appellee-Vendor Elena Palanca, in her behalf and in behalf of the other
Appellees-Vendors, sent, on September 2, 1987, separate letters to each of the Appellees-Vendees
informing them that someone was interested to buy the property and requested them to vacate the property
within thirty (30) days unless all of you could buy the property at the same price x x x. During the
conference in the house of the Appellee-Vendor Elena Palanca, on September 2, 1987, the Appellants, the
Appellee Adalin and the Appellees-Vendors Elena Palanca and Teofilo Kado in their behalf and in behalf
of the other Appellees-Vendors, Atty. Bayani Calonzo, the husband of the Appellee Maria Kado, Atty.
Eugenio Soyao, the counsel of the appellants and the Appellee-Vendee Magno Adalin who attended in his
behalf and in behalf of the Appellees-Vendees, were present. When asked by the Appellants if the
Appellees-Vendees were interested to buy the property, the Appellee-vendee Magno Adalin forthrightly
replied that the Appellees-Vendees were not interested to buy the property because they cannot afford the
purchase price thereof. However, he claimed that the Appellees Vendees were entitled to P50,000.00 each
as disturbance money, in consideration for their vacating the property, to be borne by the Appellees-
Vendors. The Appellants, the Appellee Adalin and the Appellees-Vendors forthwith agreed that each
Appellant will buy two (2) doors while the fifth door leased by Appellee Adalin will be purchased by him,
all for the purchased price of P2,600,000.00 and that the appellants and Appellee Adalin will
pay, P300,000.00 as downpayment for the property, the balance to be payable upon the eviction of the
Appellees-Vendees from the property and the execution of a 'Deed of Absolute Sale'. Atty. Bayani Calonzo
forthwith assured the Appellants that he could secure the eviction of the Appellees-Vendees from the
property within a month because the latter were his close friends and compadres. Atty. Bayani Calonzo
then gave Atty. Eugenio Soyao, the counsel of the Appellants, the go-signal to prepare the deed for the
signatures of the parties. On September 8, 1987, the Appellants and Appellee Adalin, as buyers of the
property, and the Appellees-Vendors, met in the office of the Appellant Faustino Yu at the Imperial Hotel
and executed the Deed of Conditional Sale prepared by Atty. Eugenio Soyao x x x. The Appellants and
Appellee Adalin each contributed P100,000.00 and gave the total amount of P300,000.00 to the Appellee-
Vendor Elena Palanca as the downpayment for the property. The Appellees-Vendors Elena Palanca and
Eduarda Vargas signed an Acknowledgment Receipt for the downpayment x x x in their behalf and in
behalf of the other Appellees-vendors. In the meantime, the Appellants deferred registration of the deed
until after the eviction of the Appellees-Vendees from the property and the payment of the balance of the
purchase price of the property to the Appellees-Vendors as agreed upon under the Deed of Conditional
Sale.
In the interim, on October 14, 1987, the Appellees-Vendors, through the Appellee-Vendor Elena Palanca,
wrote, conformably with the terms of the Deed of Conditional Sale x x x a letter complaint against the
Appellees-Vendees with the Barangay Captain for unlawful detainer x x x. The case was docketed as
Barangay Case No. 7,052-87 x x x. On October 16, 1987, the Appellee-Vendee Magno Adalin wrote a letter
to the Appellees-Vendors, through the Appellee-Vendor Elena Palanca, informing them that he had decided
to purchase the two doors he was leasing for the purchase price of P600,000.00 per door and was ready to
tender the amount by the end of the month x x x. The Appellee-Vendee Demetrio Adaya and the Appellee-
Vendee Carlos Calingasan likewise wrote separate letters to the Appellees-vendors informing the latter of
their decision to purchase the premises occupied by them respectively for the amount of P600,000.00 each
x x x. Inspite of the prior sale of the property to the Appellants and Appellee Adalin, the Appellees-Vendors
decided to back out from said sale to theAppellants and to sell the property to the Appellees-vendees and
to return the downpayments of the Appellants for the property in the total amount of P200,000.00 with
interest thereon.The Appellees-Vendees procured TCBT Check No. 195031 in the amount of P101,416.66
payable to the Appellant Faustino Yu and TCBT Check No. 195032 in the amount of P101,416.66 payable
to the Appellant Antonio Lim and transmitted the same to the Appellants with a covering letter x x x. The
Appellants were flabbergasted. Both the Appellants refused to receive the said letter and checks and
insisted, instead, that the Appellees-Vendors comply with the Deed of Conditional Sale x x x. On November
16, 1987, the Appellants, through their counsel, wrote a letter to the Appellees-Vendors, copies of which
were furnished the Appellees-vendees, inquiring if the appropriate action has been undertaken towards the
eviction of the Appellees-Vendees x x x. The Appellees-Vendors ignored the said letter. Instead, the
Appellees-Vendors signed, in December, 1987, a Deed of Sale of Registered Land under which they sold
the said property to the Appellees-Vendees, including the Appellee Adalin for the price of
only P1,000,000.00 x x x much lower than the price of the Appellant under the Deed of Conditional Sale x
x x. Although it appears that the deed was notarized by Atty. Bayani Calonzo, however, the deed does not
bear any number in the notarial register of the lawyer. In the same month, the Appellees-Vendors signed
another Deed of Sale of Registered Land under which they sold to the Appellees-Vendees including
Appellee Adalin the aforesaid property for the considerably increased price of P3,000,000.00 x x x. The
deed was notarized by Atty. Bayani Calonzo. Interestingly, both deeds were not filed with the Register of
Deeds of Cotabato City. Not content with the two (2) Deeds of Sale of registered Land x x x the Appellees-
Vendors, signed a third Deed of Sale of Registered land which appears dated February 5, 1988 under which
they purportedly sold to the Appellees-Vendees, including Appellee Adalin, the aforesaid property for the
much reduced price of only P860,000.00 x x x.However, the aforesaid deed was not immediately filed with
the Register of Deeds of Cotabato City. On February 26, 1988, the Appellees-Vendors, through Atty.
Bayani Calonzo, filed a Petition against the Appellants for the consignation of their downpayment
of P200,000.00, with the Regional Trial Court of General Santos City entitled Maria K. Calonzo, et al.
versusFaustino Yu, Special Civil Case No. 259. x x x
Undaunted, the Appellants filed a complaint with the Barangay captain for Breach of Contract against the
Appellees-vendors entitled Faustino Yu, et al. Versus Elena K. Palanca, et al., Barangay Case No. 9,014-
88. The Barangay Captain issued, on April 7, 1988, summons to the Appellees-Vendors for them to appear
for a conference on April 22, 1988 at 9:00 oclock in the morning x x x. Invitations were also sent to the
Appellees-Vendees x x x. During the conference attended by Appellee-Vendees, the Appellants, if only to
accommodate the Appellee-Vendee Magno Adalin and settle the case amicably, agreed to buy only one
door each so that the Appellee-Vendee Magno Adalin could purchase the two doors he was
occupying.However, the Appellee-Vendee Magno Adalin adamantly refused, claiming that he was already
the owner of the two (2) doors. When the Appellant Antonio Lim asked the Appellee-Vendee Magno Adalin
to show the Deed of Sale for the two doors, the latter insouciantly walked out. Atty. Bayani Calonzo
likewise stated that there was no need to show the deed of sale. No settlement was forged and, on May 16,
1988, the Barangay Captain issued the Certification to File Action x x x.
On May 5, 1988, the Appellants filed their complaint for Specific Performance against the Appellees-
Vendors and appellee Adalin in the Court a quo.
On June 14, 1988, the Appellants caused the annotation of a Notice of Lis Pendens at the dorsal portion of
Transfer Certificate of Title No. 12963 under the names of the Appellees-Vendors x x x. On October 25,
1988, the Appellees-Vendees filed a Motion for Intervention as Plaintiffs-Intervenors appending thereto a
copy of the Deed of Sale of Registered land signed by the Appellees-Vendors x x x. On October 27, 1988,
the Appellees-Vendees filed the Deed of Sale of Registered Land x x x with the Register of Deeds on the
basis of which Transfer certificate of Title No. 24791 over the property was issued under their names x x
x. On the same day, the Appellees-Vendees filed in the Court a quo a Motion To Admit Complaint-In-
Intervention x x x. Attached to the Complaint-In-Intervention was the 'Deed of Sale of Registered land
signed by the Appellees-Vendees x x x. The Appellants were shocked to learn that the Appellees-Vendors
had signed the said deed. As a counter-move, the Appellants filed a motion for leave to amend Complaint
and, on November 11, 1988, filed their Amended Complaint impleading the Appellees-Vendees as
additional defendants x x x.
xxx
The Appellees-Vendors suffered a rebuff when, on January 10, 1989, the Regional Trial Court of General
Santos City issued an Order dismissing the Petition of the Appellees-Vendors for consignation x x x. In the
meantime, on November 30, 1989, Appellee Adalin died and was substituted, per order of the Court a quo,
on January 5, 1990, by his heirs, namely, Anita, Anelita, Loreto, Jr., Teresita, Wilfredo, Lilibeth, Nelson,
Helen and Jocel, all surnamed Adalin, as Appellees-Vendees x x x.
After trial, the Court a quo rendered judgment in favor of the Appellees-Vendees x x x.[5]
In the opinion of the court a quo, petitioners became the owners of the parcel of land in question with the
five-door, one storey commercial building standing thereon, when they purchased the same following the
offer and the 30-day option extended to them by private respondent Elena Palanca, in behalf of the other
Kado siblings, in her letter to them dated September 2, 1987. The trial court disregarded the fact that the
Kado siblings had already finished transacting with private respondents Faustino Yu and Antonio Lim and
had in fact entered into a conditional sale with them respecting the same property. The trial court brushed
aside this fact as it reasoned that:
x x x In conditional deed of sale, ownership is only transferred after the purchase price is fully paid or the
fulfillment of the condition and the execution of a definite or absolute deed of sale are made. x x x
In this case, it is clear from the provision of the Deed of Conditional Sale x x x that the balance of the price
of P2,300,000.00 shall be paid only after all the defendants-vendees shall have vacated and surrendered the
premises to the defendants-vendors. However, the tenants did not leave the premises. In fact they opted to
buy the property. Moreover, at that time, the property was legally leased to the defendants-vendees. x x x
xxx
Clearly therefore, the condition set forth in the said Deed of Conditional Sale between the plaintiffs and the
defendants-vendors was not fulfilled. Since the condition was not fulfilled, there was no transfer of
ownership of the property from the defendants-vendors to the plaintiffs. x x x
x x x [In] the letters of Elena Palanca to the defendants-vendees dated September 2, 1987 x x x [t]hey were
given the option or preferential right to purchase the property.
xxx
When the defendants-vendors accepted defendants-vendees option to buy, the former returned the initial
payment of P200,000.00 to the plaintiffs x x x but they refused to accept the same. This refusal however
did not diminish the effect of the acceptance of the option to buy, which in fact led to the execution of the
said Deed of Sale of Registered Land x x x and the subsequent issuance of the Transfer Certificate of Title
No. T-24791 of the Registry of Deeds for the City of Cotabato in the names of the defendants-vendees x x
x. x x x
x x x [T]he defendants-vendors acted in bad faith when, while during the effectivity of the period of the
option to buy [that] they gave to the defendants-vendees, they executed a Deed of Conditional Sale x x x in
favor of the plaintiffs. This was only six (6) days from date of the option. x x x[6]
The trial court also ruled that the conditional sale of the subject property to private respondents Faustino
Yu and Antonio Lim and the sale of the same property to petitioners, did not involve a double sale as to
warrant the application of Article 1544 of the Civil Code. The court a quo ratiocinated in this manner:
x x x [T]he plaintiffs assert that this case is one of double sale and should be governed by Article 1544 of
the Civil Code. The first sale, plaintiffs claim, is that under the Deed of Conditional Sale x x x in their favor
and the second sale is that ultimately covered by the Deed of sale of registered Land for P860,000.00 x x x
in favor of the defendants-vendees. As already pointed out by the court, the execution of the Deed of
Conditional Sale did not transfer ownership of the property to the plaintiffs, hence, there can be no double
sale. As held in the case of Mendoza vs. Kalaw, 42 Phil. 236, Article 1544 does not apply to situations
where one sale was subject to a condition which was not complied with. This is because a conditional sale,
before the performance of the condition, can hardly be said to be a sale of property, specially where the
condition has not been performed or complied with.[7]
Pursuant to the above ruminations of the court a quo, it ordered the following in the dispositive portion of
its decision:
WHEREFORE, the court hereby orders the dismissal of plaintiffs complaint against the defendants-vendees
for lack of merit, and hereby further sustains the validity of Transfer Certificate of Title No. T-24791 issued
in their names (defendants-vendees) by the Registry of Deeds for the City of Cotabato.
The defendants-vendors are hereby jointly and severally ordered to pay moral damages of P500,000.00 to
each of the plaintiffs, P100,000.00 exemplary damages to each of the plaintiffs and P50,000.00 as and for
attorneys fees.
Defendants-vendors are hereby further ordered to return the P200,000.00 initial payment received by them
with legal interest from date of receipt thereof up to November 3, 1987.
Defendants-vendees counterclaim is hereby ordered dismissed.
With cost against the defendants-vendors.
SO ORDERED.[8]
Private respondents Faustino Yu and Antonio Lim wasted no time in appealing from the above decision of
the court a quo. They were vindicated when the respondent Court of Appeals rendered its decision in their
favor. The respondent appellate court reversed the trial court as it ruled, thus:
x x x We find, and so declare, that the Deed of Conditional Sale x x x executed by the Appellees-Vendors
in favor of the Appellants was an absolute deed of sale and not a conditional sale.
xxx
In ascertaining the nature of a contract and the intention of the parties thereto, it behooves the trier of facts
to look into the context of the contract in its entirety and not merely specific words or phrases therein,
standing alone, as well as the contemporaneous and subsequent acts of the parties. It bears stressing that
the title of the contract is not conclusive of its nature. x x x
Although a contract may be denominated a Deed of Conditional Sale, or Agreement to Sell, the same may
be, in reality a deed of absolute sale or a contract of sale x x x.
Under Article 1458 of the New Civil Code, a sale may be absolute or conditional. A contract may be
conditional when the ownership of the thing sold is retained until the fulfillment of apositive suspensive
condition, generally the payment of the purchase price, the breach of which condition will prevent the onset
of the obligation to deliver title x x x. A sale of immovables is absolute where the contract does not contain
any provision that title to the property sold is reversed to the Vendors or that the Vendor is entitled to
unilaterally rescind the same.
xxx
The Court a quo x x x resolutely subscribed to the view that the x x x deed is conditional, its efficacy
dependent upon a suspensive condition--that of the payment by the Appellants of the balance of the
purchase price of the property, after the Appellees-Vendees shall have been evicted from the property or
shall have voluntarily vacated the same and the Deed of Absolute Sale shall have been executed in favor of
the Appellants; and, since the condition was not fulfilled, the sale never became effective x x x. x x x Even
a cursory reading of the deed will readily show absence of any stipulation in said deed that the title to the
property was reserved to the Appellees-Vendors until the balance of the purchase price was paid nor giving
them the right to unilaterally rescind the contract if the Appellants failed to pay the said amount upon the
eviction of the Appellees-Vendees. Inscrutably then, the deed is a perfected deed of absolute sale, not a
conditional one. x x x
xxx
There may not have been delivery of the property to the Appellants either symbolically or physically and
more, the Appellees-Vendors may have deferred their obligation of delivering physical possession of the
property to the Appellees only after the Appellees-Vendees shall have vacated the property, however, the
right of retention of the Appellees-Vendors of title to or ownership over the property cannot thereby be
inferred therefrom. x x x
In fine, the non-payment of the balance of the purchase price of the property and the consequent eviction
of the Appellees-Vendees therefrom were not conditions which suspended the efficacy of the Deed of
Conditional Sale. Rather, the same, if due to the fault of the Appellants, merely accorded the Appellees-
Vendors the option to rescind the already existing and effective sale.
The Appellants and the Appellees-Vendors, having entered into, under the Deed of Conditional Sale x x x
an absolute sale, the Appellants thus had every right to demand that the Appellees-Vendors performed their
prestation under the deed, to wit--the eviction of the Appellees-Vendees from the property--so that the
Appellants may then pay the balance of the purchase price of the property.
xxx
The Court a quo and the Appellees, however, posit that the Deed of Conditional sale x x x had not been
consummated and title to and ownership over the property had not been transferred to the Appellants
because there had been neither constructive nor actual delivery of the property to the Appellants x x x.
We do not agree. The evidence in the record shows that the Appellants and the Appellees-Vendors met in
the house of Appellee Elena Palanca on September 2, 1987. The Appellees-Vendees were represented by
the Appellee-Vendee, Retired Col. Magno Adalin. The latter did not object to the sale of the property to the
Appellants but merely insisted that each of the Appellees-Vendees be given P50,000.00 as disturbance fee
by the Appellees-Vendors to which the latter acquiesced because Atty. Bayani Calonzo forthwith gave Atty.
Eugenio Soyao, the go-signal to prepare the Deed of Conditional Sale for the signatures thereof by the
parties on September 8, 1987. The Appellees-Vendors, on September 2, 1987, wrote letters to the
Appellees-Vendees giving them the option to match the price offered by the Appellants. The Appellees-
Vendees maintained a resounding silence to the letter-offer of the Appellees-Vendors. It was only, on
October 16, 1987, that the Appellees-Vendees, after the execution by the Appellants and the Appellees-
Vendors of the Deed of Conditional Sale, that the Appellees-Vendees finally decided to, themselves,
purchase the property. The Appellees are estopped from claiming that the property had not been delivered
to the appellants. The Appellants cannot use their gross bad faith as a shield to frustrate the enforcement,
by the Appellants, of the Deed of Conditional Sale. x x x
xxx
The Appellees-Vendors cannot invoke the refusal of the Appellees-Vendees to vacate the property and the
latters decision to themselves purchase the property as a valid justification to renege on and turn their backs
against their obligation to deliver or cause the eviction of the Appellees-vendees from and deliver physical
possession of the property to the Appellants.For, if We gave our approbation to the stance of the Appellees,
then We would thereby be sanctioning the performance by the Appellees-Vendors of their obligations under
the deed subject to the will and caprices of the Appellees-Vendees, which we cannot do x x x.
It would be the zenith of inequity for the Appellees-Vendors to invoke the occupation by the Appellees-
Vendees, as of the property, as a justification to ignore their obligation to have the Appellees-Vendees
evicted from the property and for them to give P50,000.00 disturbance fee for each of the Appellees-
Vendees and a justification for the latter to hold on to the possession of the property.
xxx
Assuming, gratia arguendi, for the nonce, that there had been no consummation of the Deed of Conditional
sale x x x by reason of the non-delivery to the appellants of the property, it does not thereby mean that the
Deed of Sale of Registered Land x x x executed by the Appellees should be given preference. Apropos to
this, We give our approbation to the plaint of the Appellants that the Court a quo erred in not applying the
second and third paragraphs of Article 1544 x x x.
For, the evidence in the record shows that, although the Appellees-Vendees managed to cause the
registration of the Deed of Sale of Registered Land x x x on October 27, 1988 and procure Transfer
Certificate of Title No. 24791 under their names, on said date, and that they were, as of said date, in physical
possession of the property, however, the evidence in the record shows that the Appellees-Vendees were in
gross evident bad faith. At the time the Appellees executed the Deed of Sale of Registered Land in
December 1987 x x x they were aware that the Appellees-Vendors and the Appellants had executed their
Deed of Conditional Sale as early as September 8, 1987. x x x In the light of the foregoing, We arrive at
the ineluctable conclusion that preference must be accorded the Deed of Conditional Sale executed by the
appellants and the Appellees-Vendors.[9]
Accordingly, the respondent Court of Appeals rendered another judgment in the case and ordered the
following:
1.The Deed of Conditional Sale, Exhibit A is hereby declared valid;
2.The Deeds of Sale of Registered Land, Exhibits E, F and G and Transfer Certificate of Title No. 24791
are hereby declared null and void;
3.The Appellees-Vendees except the heirs of Loreto Adalin are hereby ordered to vacate the property within
thirty (30) days from the finality of this Decision;
4.The Appellees-Vendors are hereby ordered to execute, in favor of the Appellants, a Deed of Absolute
Sale covering four (4) doors of the property (which includes the area of the property on which said four
doors are constructed) except the door purchased by the Appellee-Vendee Loreto Adalin, free of any liens
or encumbrances;
5.The Appellants are hereby ordered to remit to the Appellees-Vendors the balance of the purchase price
of the four (4) doors in the amount of P1,880,000.00;
6.The Appellees-Vendors are hereby ordered to refund to the Appellees-Vendees the amount
of P840,000.00 which they paid for the property under the Deed of Conditional Sale of Registered
Land, Exhibit G, without interest considering that they also acted in bad faith;
7.The Appellee-Vendee Magno Adalin is hereby ordered to pay the amount of P3,000.00 a month, and each
of the Appellees-Vendees, except the Appellee Adalin, the amount of P1,500.00 to the Appellants, from
November, 1987, up to the time the property is vacated and delivered to the Appellants, as reasonable
compensation for the occupancy of the property, with interest thereon at the rate of 6% per annum;
8.The Appellees-Vendors are hereby ordered to pay, jointly and severally, to each of the Appellants the
amount of P100,000.00 by way of moral damages, P20,000.00 by way of exemplary damages
and P20,000.00 by way of attorneys fees;
9.The counterclaims of the Appellees are dismissed.
With costs against the Appellees.
SO ORDERED.[10]
Unable to agree with the above decision of the respondent appellate court, petitioners seek reversal thereof
on the basis on the following grounds:
1.The Unconsummated conditional Contract of Sale in favor of the herein respondent VENDEES is Inferior
to and Cannot Prevail Over the Consummated Absolute Contracts of Sale in favor of the herein petitioners.
2.The Deeds of sale in favor of the herein Petitioners as well as Transfer Certificate of Title No. 24791 in
their names are Perfectly Valid Documents.
3.The herein Petitioners may not be legally and rightfully Ordered to Vacate the Litigated Property or Pay
Reasonable Compensation for the Occupancy Thereof.
4.The herein Petitioners may not be Held Liable to Pay the Costs.[11]
5.The Court of Appeals erred in holding that the Deed of Conditional Sale is in reality an absolute deed of
sale.
6.The Court of Appeals erred in relying totally and exclusively on the evidence presented by respondents
and in disregarding the evidence for petitioners.
7.The Court of Appeals erred in holding that herein petitioners are guilty of bad faith and that Article 1544
of the Civil Code is applicable.[12]
The petition lacks merit.
The grounds relied upon by petitioners are essentially a splitting of the various aspects of the one pivotal
issue that holds the key to the resolution of this controversy: the true nature of the sale transaction entered
into by the Kado siblings with private respondents Faustino Yu and Antonio Lim. Our task put simply,
amounts to a declaration of what kind of contract had been entered into by said parties and of what their
respective rights and obligations are thereunder.
It is not disputed that in August, 1987, Elena K. Palanca, in behalf of the Kado siblings, commissioned
Ester Bautista to look for buyers for their property fronting the Imperial Hotel in Cotabato City. Bautista
logically offered said property to the owners of the Imperial Hotel which may be expected to grab the offer
and take advantage of the proximity of the property to the hotel site. True enough, private respondent
Faustino Yu, the President-General manager of the Imperial Hotel, agreed to buy said property.
Thus during that same month of August, 1987, a conference was held in the office of private respondent
Yu at the Imperial Hotel. Present there were private respondent Yu, Loreto Adalin who was one of the
tenants of the five-door, one-storey building standing on the subject property, and Elena Palanca and Teofilo
Kado in their own behalf as sellers and in behalf of the other tenants of said building. During the conference,
private respondents Yu and Lim categorically asked Palanca whether the other tenants were interested to
buy the property, but Palanca also categorically answered that the other tenants were not interested to buy
the same. Consequently, they agreed to meet at the house of Palanca on September 2, 1987 to finalize the
sale.
On September 2, 1987, Loreto Adalin; Yu and Lim and their legal counsel; Palanca and Kado and their
legal counsel; and one other tenant, Magno Adalin, met at Palancas house. Magno Adalin was there in his
own behalf as tenant of two of the five doors of the one-storey building standing on the subject property
and in behalf of the tenants of the two other doors, namely Carlos Calingasan and Demetrio Adaya. Again,
private respondents Yu and Lim asked Palanca and Magno Adalin whether the other tenants were interested
to buy the subject property, and Magno Adalin unequivocally answered that he and the other tenants were
not so interested mainly because they could not afford it.However, Magno Adalin asserted that he and the
other tenants were each entitled to a disturbance fee of P50,000.00 as consideration for their vacating the
subject property.
During said meeting, Palanca and Kado, as sellers, and Loreto Adalin and private respondents Yu and Lim,
as buyers, agreed that the latter will pay P300,000.00 as downpayment for the property and that as soon as
the former secures the eviction of the tenants, they will be paid the balance of P2,300,000.00.
Pursuant to the above terms and conditions, a Deed of Conditional Sale was drafted by the counsel of private
respondents Yu and Lim. On September 8, 1987, at the Imperial Hotel office of private respondent Yu,
Palanca and Eduarda Vargas, representing the sellers, and Loreto Adalin and private respondents Yu and
Lim signed the Deed of Conditional Sale. They also agreed to defer the registration of the deed until after
the sellers have secured the eviction of the tenants from the subject property.
The tenants, however, refused to vacate the subject property. Being under obligation to secure the eviction
of the tenants, in accordance with the terms and conditions of the Deed of Conditional Sale, Elena Palanca
filed with the Barangay Captain a letter complaint for unlawful detainer against the said tenants.
Undisputedly, Palanca, in behalf of the Kado siblings who had already committed to sell the property to
private respondents Yu and Lim and Loreto Adalin, understood her obligation to eject the tenants on the
subject property. Having gone to the extent of filing an ejectment case before the Barangay Captain, Palanca
clearly showed an intelligent appreciation of the nature of the transaction that she had entered into: that she,
in behalf of the Kado siblings, had already sold the subject property to private respondents Yu and Lim and
Loreto Adalin, and that only the payment of the balance of the purchase price was subject to the condition
that she would successfully secure the eviction of their tenants. In the sense that the payment of the balance
of the purchase price was subject to a condition, the sale transaction was not yet completed, and both sellers
and buyers have their respective obligations yet to be fulfilled: the former, the ejectment of their tenants;
and the latter, the payment of the balance of the purchase price. In this sense, the Deed of Conditional Sale
may be an accurate denomination of the transaction. But the sale was conditional only inasmuch as there
remained yet to be fulfilled, the obligation of the sellers to eject their tenants and the obligation of the buyers
to pay the balance of the purchase price. The choice of who to sell the property to, however, had already
been made by the sellers and is thus no longer subject to any condition nor open to any change. In that
sense, therefore, the sale made by Palanca to private respondents was definitive and absolute.
Nothing in the acts of the sellers and buyers before, during or after the said transaction justifies the radical
change of posture of Palanca who, in order to provide a legal basis for her later acceptance of the tenants
offer to buy the same property, in effect claimed that the sale, being conditional, was dependent on the
sellers not changing their minds about selling the property to private respondents Yu and Lim. The tenants,
for their part, defended Palancas subsequent dealing with them by asserting their option rights under
Palancas letter of September 2, 1987 and harking on the non-fulfillment of the condition that their ejectment
be secured first.
Two days after Palanca filed an ejectment case before the Barangay Captain against the tenants of the
subject property, Magno Adalin, Demetrio Adaya and Carlos Calingasan wrote letters to Palanca informing
the Kado siblings that they have decided to purchase the doors that they were leasing for the purchase price
of P600,000.00 per door. Almost instantly, Palanca, in behalf of the Kado siblings, accepted the offer of
the said tenants and returned the downpayments of private respondents Yu and Lim. Of course, the latter
refused to accept the reimbursements.
Certainly, we cannot countenance the double dealing perpetrated by Palanca in behalf of the Kado
siblings. No amount of legal rationalizing can sanction the arbitrary breach of contract that Palanca
committed in accepting the offer of Magno Adalin, Adaya and Calingasan to purchase a property already
earlier sold to private respondents Yu and Lim.
Petitioners claim that they were given a 30-day option to purchase the subject property as contained in the
September 2, 1987 letter of Palanca. In the first place, such option is not valid for utter lack of
consideration.[13] Secondly, private respondents twice asked Palanca and the tenants concerned as to
whether or not the latter were interested to buy the subject property, and twice, too, the answer given to
private respondents was that the said tenants were not interested to buy the subject property because they
could not afford it. Clearly, said tenants and Palanca, who represented the former in the initial negotiations
with private respondents, are estopped from denying their earlier statement to the effect that the said tenants
Magno Adalin, Adaya and Calingasan had no intention of buying the four doors that they were leasing from
the Kado siblings. More significantly, the subsequent sale of the subject property by Palanca to the said
tenants, smacks of gross bad faith, considering that Palanca and the said tenants were in full awareness of
the August and September negotiations between Bautista and Palanca, on the one hand, and Loreto Adalin,
Faustino Yu and Antonio Lim, on the other, for the sale of the one-storey building. It cannot be denied,
thus, that Palanca and the said tenants entered into the subsequent or second sale notwithstanding their full
knowledge of the subsistence of the earlier sale over the same property to private respondents Yu and
Lim. It goes without saying, thus, that though the second sale to the said tenants was registered, such prior
registration cannot erase the gross bad faith that characterized such second sale, and consequently, there is
no legal basis to rule that such second sale prevails over the first sale of the said property to private
respondents Yu and Lim.
We agree, thus, with the ruminations of the respondent Court of Appeals that:
The Appellees-Vendors cannot invoke the refusal of the Appellees-Vendees to vacate the property and the
latters decision to themselves purchase the property as a valid justification to renege on and turn their backs
against their obligation to deliver or cause the eviction of the Appellees-Vendees from and deliver physical
possession of the property to the Appellants.For, if We gave our approbation to the stance of the Appellees,
then We would thereby be sanctioning the performance by the Appellees-Vendors of their obligations under
the deed subject to the will and caprices of the Appellees-Vendees, which we cannot do x x x.
It would be the zenith of inequity for the Appellees-Vendors to invoke the occupation by the Appellees-
Vendees, as of the property, as a justification to ignore their obligation to have the Appellees-Vendees
evicted from the property and for them to give P50,000.00 disturbance fee for each of the Appellees-
Vendees and a justification for the latter to hold on to the possession of the property.
xxx
Assuming, gratia arguendi for the nonce, that there had been no consummation of the Deed of Conditional
Sale x x x by reason of the non-delivery to the Appellants of the property, it does not thereby mean that the
Deed of Sale of Registered Land x x x executed by the Appellees should be given preference. Apropos to
this, We give our approbation to the plaint of the Appellants that the Court a quo erred in not applying the
second and third paragraphs of Article 1544 x x x.
For, the evidence in the record shows that, although the Appellees-Vendees managed to cause the
registration of the Deed of Sale of Registered Land x x x on October 27, 1988 and procure Transfer
Certificate of Title No. 24791 under their names, on said date, and that they were, as of said date, in physical
possession of the property, however, the evidence in the record shows that the Appellees-Vendees were in
gross evident bad faith. At the time the Appellees executed the Deed of Sale of Registered Land in
December 1987 x x x they were aware that the Appellees-Vendors and the Appellants had executed their
Deed of Conditional Sale as early as September 8, 1987. x x x In the light of the foregoing, We arrive at
the ineluctable conclusion that preference must be accorded the deed of Conditional Sale executed by the
Appellants and the Appellees-Vendors.[14]
WHEREFORE, the instant petition is HEREBY DISMISSED.
Costs against petitioners.
SO ORDERED.

5. Espiritu v. Valerio, 9 SCRA 761 [1963]

G.R. No. L-18018 December 26, 1963

ESPERANZA ESPIRITU and ANTONIA APOSTOL, petitioners,
vs.
FRANCISCO VALERIO, respondent.
Agustin U. Cruz for petitioners.
C. Navi Busto for respondent.
DIZON, J.:
Appeal taken by Esperanza Espiritu and her daughter, Antonia Apostol, from the decision of the Court of
Appeals affirming the one rendered by the Court of First Instance of Pangasinan in Civil Case No. 13293
declaring appellee Francisco Valerio, to be the owner of the land described in his complaint and enjoining
defendants from molesting him in the peaceful possession thereof.
On September 15, 1955 Valerio filed an action to quiet title in the above mentioned Court against appellants,
alleging in his complaint that he was the owner of a parcel of unregistered land containing an area of
approximately 8,573 square meters situated in Barrio Olo, Municipality of Mangatarem, Pangasinan, and
more particularly described in paragraph two thereof, having acquired the same from the former owner,
Pelagia Vegilia, as evidenced by a deed of sale executed by the latter in his favor on January 31, 1955
(Exhibit A); that appellants had been asserting adversary rights over said land and disturbing his possession
thereof.
Appellants' answer denied the material allegations of the complaint and alleged, as affirmative defense,
they were the owners of the land in question, having acquired it by inheritance from the late Santiago
Apostol, husband and father of appellants Espiritu and Apostol respectively; that said deceased bought the
property from Mariano Vegilia on June 3, 1934, as evidenced by the deed of sale Exhibit 2, who, in turn,
had acquired it from his niece, Pelagia Vegilia, on May 26, 1932, by virtue of the deed of sale Exhibit 1.
The present appeal depends entirely upon the validity of the Deed of Sale Exhibit 1 allegedly executed by
Pelagia Vegilia in favor of Mariano Vegilia, and of the Deed of Sale Exhibit 2 allegedly executed by the
latter in favor of Santiago Apostol. If both are valid, appellant's contention that they have a better right than
that the claimed by appellee would seem to be meritorious in the light of the facts of the case and the
provisions of Article 1544 of the New Civil Code, it not being disputed that the Deed of Sale in favor of
appellee was registered under the provision of Act. 3344 on June 16, 1955, while Exhibits 1 and 2 were
similarly registered eleven days before.
Regarding the genuiness of the questioned documents, however, the Court of Appeals found as
follows:lawphil.net
Upon motion of plaintiff, the Court ordered the defendants to produce, for examination and inspection by
plaintiff, the two documents referred to. The plaintiff, after examining and inspecting said documents, filed,
on June 22, 1956 a supplementary complaint alleging that the document dated May 26, 1932, "is fictitious
and a falsification", and that the private document of June 3, 1934, "is likewise null and void, being without
the necessary formal requisites, aside to its being fictitious and the fact that the alleged vendor acquired no
rights whatsoever in the land."
In view of this conflicting claims of the plaintiff and the defendants, the trial court correctly stated,
"apparently, this case concerns the sales of one parcel of land by the same vendor but in favor of two
different vendees. If these were the only issues in this case, there is no question that under Art. 1544 of the
New Civil Code, Exhibit "1" would be considered to be effective as against Exhibit "A", it having been
registered prior to Exhibit "A". But this is not the only question at issue. Over and the above the application
of Art. 1544 of the New Civil Code is the determination of whether or not Exhibits "1" and "2" have been
falsified". Having arrived at the conclusion that the two exhibits just mentioned had been falsified, the trial
court rendered decision on July 23, 1956, "adjudging ownership of the land described in the complaint in
favor of the plaintiff and hereby permanently and definitely enjoins the defendants to abstain and desist
from disturbing and molesting the plaintiff from the peaceful enjoyment and possession of the parcel of
land described in the complaint or in any way to interfere personally or by agents in the said peaceful
possession by the plaintiff of the land in litigation; the defendants are hereby further ordered to pay the
costs of this suit."
It is principally contended by defendants-appellants that the trial court erred in deciding the case in favor
of the plaintiff-appellee and against the defendants-appellants, based upon the testimony of Pelagia Vegilia
and Mariano Vegilia; the first, emphatically denying that she sold the land in question to Mariano Vegilia,
and that she appeared before Notary Public Lino Abad Pine before whom the "Escritura de Compraventa
Definita" Exhibit 1, was allegedly ratified; and the second, denying that he bought the said land from Pelagia
Vegilia, and that he sold the same to Santiago Apostol as recited in "Recivo", Exhibit 2. In giving credence
to the testimony of the aforementioned two witnesses, the trial court said: "An examination of Exh. "1"
reveals the glaring fact that it cannot be determined whose thumbmark is the one appearing on said Exh.
"1" for the simple reason that it immediately precedes the name Anselmo Vegilia but it is under the name
Pelagia Vegilia. Ordinarily, this thumbmark would be considered as the thumbmark of Anselmo Vegilia
and not of Pelagia Vegilia. While the Judge presiding this Court does not claim any knowledge of finger
print, it is, however, apparent that the thumbmark appearing in Exh "1" different from the thumbmark
appearing in Exh. "X". Furthermore, it is also very clear that the one who wrote the name Anselmo Vegilia
is the very one who wrote the name Pelagia Vegilia; and from said Exh. "1", it is apparent also that Anselmo
Vegilia could not have written the name Anselmo Vegilia in Exh. "1" for the simple reason that it has been
certified by the Notary Public that said Anselmo Vegilia is physically incapable (inutil physicamente), and
the other factor which leads this Court to believe that Exh. "1" has been falsified is the apparent difference
of the ink used in writing the names of Pelagia Vegilia and Anselmo Vegilia from the ink used by the other
persons who signed in Exh. "1", and the apparent fact that the names Pelagia Vegilia and Anselmo Vegilia
must have been written in a much later date than the other names appearing in said Exh. "1". With respect
to Exh. "2", the denial Mariano Vegilia as to his having purchased the land in question from Pelagia Vegilia
is enough for this Court to disregard "2". But this Court further takes into account the fact the names
Mariano Vegilia and Jose B. Aviles appearing in said Exh. "2" must have been written by only one man.
Assuming that the above findings of the Court of Appeals are reviewable, we find nothing in the record
sufficient to justify their reversal.
WHEREFORE, the decision appealed from is hereby affirmed, with costs.
 6. Taedo v. Court of Appeals, 252 SCRA 80 [1996]

THIRD DIVISION
[G.R. No. 104482. January 22, 1996]
BELINDA TAREDO, for herself and in representation of her brothers and sisters, and TEOFILA CORPUZ
TANEDO, representing her minor daughter VERNA TANEDO, petitioners, vs. THE COURT OF
APPEALS, SPOUSES RICARDO M. TAREDO AND TERESITA BARERA TAREDO, respondents.
DECISION
PANGANIBAN, J.:
Is a sale of future inheritance valid? In multiple sales of the same real property, who has preference in
ownership? What is the probative value of the lower courts finding of good faith in registration of such
sales in the registry of property? These are the main questions raised in this Petition for review on certiorari
under Rule 45 of the Rules of Court to set aside and reverse the Decision1 of the Court of Appeals2 in CA-
G.R. CV NO. 24987 promulgated on September 26, 1991 affirming the decision of the Regional Trial
Court, Branch 63, Third Judicial Region, Tarlac, Tarlac in Civil Case No. 6328, and its Resolution denying
reconsideration thereof, promulgated on May 27, 1992.
By the Courts Resolution on October 25, 1995, this case (along with several others) was transferred from
the First to the Third Division and after due deliberation, the Court assigned it to the
undersigned ponenle for the writing of this Decision.
The Facts
On October 20, 1962, Lazardo Taedo executed a notarized deed of absolute sale in favor of his eldest
brother, Ricardo Taedo, and the latters wife, Teresita Barera, private respondents herein, whereby he
conveyed to the latter in consideration of P1,500.00, one hectare of whatever share I shall have over Lot
No. 191 of the cadastral survey of Gerona, Province of Tarlac and covered by Title T-l3829 of the Register
of Deeds of Tarlac, the said property being his future inheritance from his parents (Exh. 1). Upon the death
of his father Matias, Lazaro executed an Affidavit of Conformity dated February 28, 1980 (Exh. 3) to re-
affirm, respect. acknowledge and validate the sale I made in 1962. On January 13, 1981, Lazaro executed
another notarized deed of sale in favor of private respondents covering his undivided ONE TWELVE (1/12)
of a parcel of land known asLot 191 x x (Exh. 4). He acknowledged therein his receipt of P 10,000.00 as
consideration therefor. In February 1981, Ricardo learned that Lazaro sold the same property to his children,
petitioners herein, through a deed of sale dated December 29, 1980 (Exh. E). On June 7, 1982, private
respondents recorded the Deed of Sale (Exh. 4) in their favor in the Registry of Deeds and the corresponding
entry was made in Transfer Certificate of Title No. 166451 (Exh. 5).
Petitioners on July 16, 1982 filed a complaint for rescission (plus damages) of the deeds of sale executed
by Lazaro in favor of private respondents covering the property inherited by Lazaro from his father.
Petitioners claimed that their father, Lazaro, executed an Absolute Deed of Sale dated December 29,
1980 (Exit. E), conveying to his ten children his allotted portion under the extrajudicial partition executed
by the heirs of Matias, which deed included the land in litigation (Lot 191).
Petitioners also presented in evidence: (1) a private writing purportedly prepared and signed by Matias
dated December 28, 1978, stating that it was his desire that whatever inheritance Lazaro would receive
from him should be given to his (Lazaros) children (Exh. A); (2) a typewritten document dated March 10,
1979 signed by Lazaro in the presence of two witnesses, wherein he confirmed that he would voluntarily
abide by the wishes of his father, Matias, to give to his (Lazaros) children all the property he would inherit
from the latter (Exh. B); and (3) a letter dated January 1, 1980 of Lazaro to his daughter, Carmela, stating
that his share in the extrajudicial settlement of the estate of his father was intended for his children,
petitioners herein (Exh. C).
Private respondents, however presented in evidence a Deed of Revocation of a Deed of Sale dated March
12, 1981 (Exh. 6), wherein Lazaro revoked the sale in favor of petitioners for the reason that it was
simulated or fictitious - without any consideration whatsoever.
Shortly after the case a quo was filed, Lazaro executed a sworn statement (Exh. G) which virtually
repudiated the contents of the Deed of Revocation of a Deed of Sale (Exh. 6) and the Deed of Sale (Exh. 4)
in favor of private respondents. However, Lazaro testified that he sold the property to Ricardo, and that it
was a lawyer who induced him to execute a deed of sale in favor of his children after giving him five pesos
(P5.00) to buy a drink (TSN September 18, 1985, pp. 204-205).
The trial court decided in favor of private respondents, holding that petitioners failed to adduce a
preponderance of evidence to support (their) claim. On appeal, the Court of Appeals affirmed the decision
of the trial court, ruling that the Deed of Sale dated January 13, 1981 (Exh. 9) was valid and that its
registration in good faith vested title in said respondents.
The Issues
Petitioners raised the following errors in the respondent Court, which they also now allege in the instant
Petition:
I. The trial court erred in concluding that the Contract of Sale of October 20, 1962 (Exhibit 7, Answer) is
merely voidable or annulable and not void ab initio pursuant to paragraph 2 of Article 1347 of the New
Civil Code involving as it does a future inheritance.
II. The trial court erred in holding that defendants-appellees acted in good faith in registering the deed of
sale of January 13, 1981 (Exhibit 9) with the Register of Deeds of Tarlac and therefore ownership of the
land in question passed on to defendants-appellees.
III. The trial court erred in ignoring and failing to consider the testimonial and documentary evidence of
plaintiffs-appellants which clearly established by preponderance of evidence that they are indeed the
legitimate and lawful owners of the property in question.
IV. The decision is contrary to law and the facts of the case and the conclusions drawn from the established
facts are illogical and off-tangent.
From the foregoing, the issues may be restated as follows:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and registration with the Registry of Property) of a
deed of sale covering the same property to the same buyers valid?
3. May this Court review the findings of the respondent Court (a) holding that the buyers acted in good
faith in registering the said subsequent deed of sale and (b) in failing to consider petitioners evidence? Are
the conclusions of the respondent Court illogical and off-tangent?
The Courts Ruling
At the outset, let it be clear that the errors which are reviewable by this Court in this petition for review on
certiorari are only those allegedly committed by the respondent Court of Appeals and not directly those of
the trial court, which is not a party here. The assignment of errors in the petition quoted above are therefore
totally misplaced, and for that reason, the petition should be dismissed. But in order to give the parties
substantial justice we have decided to delve into the issues as above re-stated. The errors attributed by
petitioners to the latter (trial) court will be discussed only insofar as they are relevant to the appellate courts
assailed Decision and Resolution.
The sale made in 1962 involving future inheritance is not really at issue here. In context, the assailed
Decision conceded it may be legally correct that a contract of sale of anticipated future inheritance is null
and void.3
But to remove all doubts, we hereby categorically rule that, pursuant to Article 1347 of the Civil Code, (n)o
contract may be entered into upon a future inheritance except in cases expressly authorized by law.
Consequently, said contract made in 1962 is not valid and cannot be the source of any right nor the creator
of any obligation between the parties.
Hence, the affidavit of conformity dated February 28, 1980, insofar as it sought to validate or ratify the
1962 sale, is also useless and, in the words of the respondent Court, suffers from the same infirmity. Even
private respondents in their memorandum4 concede this.
However, the documents that are critical to the resolution of this case are: (a) the deed of sale of January
13, 1981 in favor of private respondents covering Lazaros undivided inheritance of one-twelfth (1/12) share
in Lot No. 191, which was subsequently registered on June 7, 1982; and (b) the deed of sale dated December
29, 1980 in favor of petitioners covering the same property. These two documents were executed after the
death of Matias (and his spouse) and after a deed of extrajudicial settlement of his (Matias) estate was
executed, thus vesting in Lazaro actual title over said property. In other words, these dispositions, though
conflicting, were no longer infected with the infirmities of the 1962 sale.
Petitioners contend that what was sold on January 13, 1981 was only one-half hectare out of Lot No. 191,
citing as authority the trial courts decision. As earlier pointed out, what is on review in these proceedings
by this Court is the Court of Appeals decision - which correctly identified the subject matter of the January
13, 1981 sale to be the entire undivided 1/12 share of Lazaro in Lot No. 191 and which is the same property
disposed of on December 29, 1980 in favor of petitioners.
Critical in determining which of these two deeds should be given effect is the registration of the sale in
favor of private respondents with the register of deeds on June 7, 1982.
Article 1544 of the Civil Code governs the preferential rights of vendees in cases of multiple sales, as
follows:
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 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.
The property in question is land, an immovable, and following the above-quoted law, ownership shall
belong to the buyer who in good faith registers it first in the registry of property. Thus, although the deed
of sale in favor of private respondents was later than the one in favor of petitioners, ownership would vest
in the former because of the undisputed fact of registration. On the other hand, petitioners have not
registered the sale to them at all.
Petitioners contend that they were in possession of the property and that private respondents never took
possession thereof. As between two purchasers, the one who registered the sale in his favor has a preferred
right over the other who has not registered his title, even if the latter is in actual possession of the immovable
property.5
As to third issue, while petitioners conceded the fact of registration, they nevertheless contended that it was
done in bad faith. On this issue, the respondent Court ruled:
Under the second assignment of error, plaintiffs-appellants contend that defendants-appellees acted in bad
faith when they registered the Deed of Sale in their favor as appellee Ricardo already knew of the execution
of the deed of sale in favor of the plaintiffs; appellants cite the testimony of plaintiff Belinda Tafledo to the
effect that defendant Ricardo Taedo called her up on January 4 or 5, 1981 to tell her that he was already the
owner of the land in question but the contract of sale between our father and us were (sic) already
consumated (pp. 9-10, tsn, January 6, 1984). This testimony is obviously self-serving, and because it was a
telephone conversation, the deed of sale dated December 29, 1980 was not shown; Belinda merely told her
uncle that there was already a document showing that plaintiffs are the owners (p. 80). Ricardo Taedo
controverted this and testified that he learned for the first time of the deed of sale executed by Lazaro in
favor of his children about a month or sometime in February 1981 (p. 111, tsn, Nov. 28, 1984). x x x6
The respondent Court, reviewing the trial courts findings, refused to overturn the latters assessment of the
testimonial evidence, as follows:
We are not prepared to set aside the finding of the lower court upholding Ricardo Tanedos testimony, as it
involves a matter of credibility of witnesses which the trial judge, who presided at the hearing, was in a
better position to resolve. (Court of Appeals Decision, p. 6.)
In this connection, we note the tenacious allegations made by petitioners, both in their basic petition and in
their memorandum, as follows:
1. The respondent Court allegedly ignored the claimed fact that respondent Ricardo by fraud and deceit and
with foreknowledge that the property in question had already been sold to petitioners, made Lazaro execute
the deed of January 13, 1981;
2. There is allegedly adequate evidence to show that only 1/2 of the purchase price of P10,000.00 was paid
at the time of the execution of the deed of sale, contrary to the written acknowledgment, thus showing bad
faith;
3. There is allegedly sufficient evidence showing that the deed of revocation of the sale in favor of
petitioners was tainted with fraud or deceit.
4. There is allegedly enough evidence to show that private respondents took undue advantage over the
weakness and unschooled and pitiful situation of Lazaro Tafledo . . . and that respondent Ricardo Taedo
exercised moral ascendancy over his younger brother he being the eldest brother and who reached fourth
year college of law and at one time a former Vice-Governor of Tarlac, while his younger brother only
attained first year high school x x x ;
5. The respondent Court erred in not giving credence to petitioners evidence, especially Lazaro
Taedos Sinumpaang Salaysay dated July 27, 1982 stating that Ricardo Taedo deceived the former in
executing the deed of sale in favor of private respondents.
To be sure, there are indeed many conflicting documents and testimonies as well as arguments over their
probative value and significance. Suffice it to say, however, that all the above contentions involve questions
of fact, appreciation of evidence and credibility of witnesses, which are not proper in this review. It is well-
settled that the Supreme Court is not a trier of facts. In petitions for review under Rule 45 of the Revised
Rules of Court, only questions of law may be raised and passed upon. Absent any whimsical or capricious
exercise of judgment, and unless the lack of any basis for the conclusions made by the lower courts be
amply demonstrated, the Supreme Court will not disturb their findings. At most, it appears that petitioners
have shown that their evidence was not believed by both the trial and the appellate courts, and that the said
courts tended to give more credence to the evidence presented by private respondents. But this in itself is
not a reason for setting aside such findings. We are far from convinced that both courts gravely abused their
respective authorities and judicial prerogatives.
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and Goidrock Construction and
Development Corp.:7
The Court has consistently held that the factual findings of the trial court, as well as the Court of Appeals,
are final and conclusive and may not be reviewed on appeal. Among the exceptional circumstances where
a reassessment of facts found by the lower courts is allowed are when the conclusion is a finding grounded
entirely on speculation, surmises or conjectures; when the inference made is manifestly absurd, mistaken
or Impossible; when there is grave abuse of discretion in the appreciation of facts; when the judgment is
premised on a misapprehension of facts; when the findings went beyond the issues of the case and the same
are contrary to the admissions of both appellant and appellee. After a careful study of the case at bench, we
find none of the above grounds present to justify the re-evaluation of the findings of fact made by the courts
below.
In the same vein, the ruling in the recent case of South Sea Surety and Insurance Company, Inc. vs. Hon.
Court of Appeals, et al.[8] is equally applicable to the present case:
We see no valid reason to discard the factual conclusions of the appellate court. x x x (I)t is not the function
of this Court to assess and evaluate all over again the evidence, testimonial and documentary, adduced by
the parties, particularly where, such as here, the findings of both the trial court and the appellate court on
the matter coincide. (italics supplied)
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals is AFFIRMED.
No Costs.
SO ORDERED.
 7. Cruz v. Cabana, 129 SCRA 656 [1984] (DIGESTED)

Cruz vs. Cabaa

129 SCRA 656
June 1984

FACTS:

In June 1965, respondent Leodegaria Cabaa sold the subject property to respondent spouses Teofilo
Legaspi and Iluminada Cabaa (spouses Legaspi) under their contract entitled Bilihang Muling Mabibili
which stipulated that Cabaa can repurchase the land within one year from December 31, 1966. The said
land was not repurchased, however, so the spouses Legaspi took possession of the said property. Later,
Cabaa requested that the land title be lent to her in order to mortgage the property to the Philippine National
Bank (PNB), to which the spouses Legaspi yielded. On October 21, 1968, Cabaa formally sold the land
to spouses Legaspi by way of an absolute sale. The spouses Legaspi then attempted to register the deed of
sale, but failed because they could not present the owner's duplicate of title which was still in the possession
of the PNB as mortgage. Subsequently, they were able to register the document of sale on May 13, 1969
under Primary Entry No. 210113 of the Register of Deeds of Quezon Province.

On November 29, 1968, Cabaa sold the same property to herein petitioner Abelardo Cruz (now deceased),
who, in turn, tried to register the deed of sale on September 3, 1970. However, he was informed that Cabaa
had already sold the property to the spouses Legaspi, so he was only able to register the land in his name
on February 9, 1971. The CFI of Quezon Province declared the spouses Legaspi as the true and rightful
owners of the subject property and the land title that Cruz had acquired as null and void. The Court of
Appeals affirmed said decision, but ordered Cabaa reimburse to Cruz's heirs the amounts of P2,352.50,
which the late petitioner Abelardo Cruz paid to PNB to discharge the mortgage obligation of Cabaa in
favor of said bank, and the amount of P3,397.50, representing the amount paid by said Abelardo Cruz to
her as consideration of the sale with pacto de retro of the subject property.

ISSUE:

Who is the rightful owner of the subject property?

COURT RULING:

The Supreme Court affirmed the decision of the appellate court with modification ordering and sentencing
respondent Leodegaria Cabaa to reimburse and pay to petitioner's heirs the total sum of P5,750.00.

There is no question that spouses Legaspi were the first buyers, first on June 1, 1965 under a sale with right
of repurchase and later on October 21, 1968 under a deed of absolute sale and that they had taken possession
of the land sold to them; that Abelardo Cruz was the second buyer under a deed of sale dated November
29, 1968, which to ail indications, contrary to the text, was a sale with right of repurchase for ninety (90)
days. There is no question, either, that spouses Legaspi were the first and the only ones to be in possession
of the subject property.

The knowledge of the first sale Abelardo Cruz had gained 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
Article 1544 of the Civil Code. 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 buyer's rights) - from
the time of acquisition until the title is transferred to him by registration or failing registration, by delivery
of possession. The second buyer must show continuing good faith and innocence or lack of knowledge of
the first sale until his contract ripens into full ownership through prior registration as provided by law."

8. Navera v. CA, 184 SCRA 584 [1990]

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-56838 April 26, 1990
GENARO NAVERA AND EMMA AMADOR, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ARSENIO NARES AND FELIX NARES, respondents.
Madrid Law Office for petitioners.

MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. No. 63926-R
affirming in toto the decision of the Court of First Instance of Albay (now Regional Trial Court) in Civil
Case No. 4359 entitled "Arsenio Nares and Felix Nares vs. Genaro Navera and Emma Amador," which
declared the private respondents Arsenio Nares and Felix Nares owners of the land in dispute.
The antecedent facts of this case are as follows:
Leocadio Navera has five (5) children, namely: Elena, Mariano, Basilio, Eduarda and Felix, all surnamed
Navera. Mariano Navera is the father of petitioner Genaro Navera. Elena Navera, on the other hand has
three children by Antonio Nares. Two of them are respondent Arsenio Nares and Felix Nares. The other
child, Dionisia is already deceased and has left children. Petitioner and respondents are therefore, first
cousins.
Way back in 1916, Leocadio Navera donated to Fausto Mustar in a private instrument a certain property in
consideration of the marriage of the former's son, Mariano Navera, to the daughter of Fausto Mustar by the
name of Restituta Mustar. The said property donated is described as follows:
The land that I am giving to my compadres (Cablaye) is located in Caguiba Camalig, Albay, Philippines,
and the boundaries and area are the following: North, property of Angel Navera, and measures 98 meters
on this side and the visible boundary is a row of Pasao; East, property of Josefa Moratalla and measures
150 meters on this side with row of Pasao and bani, on the South, property belong to me and measures 63
meters on this side and the visible mark is shoulder of the mountain: on the west, my own property and
measures 108 meters on this side with row of Pasao with a dita tree." (p. 110, Records)
On July 19, 1927, Original Certificate of Title No. RO-154(NA) was issued in the name of "Elena Navera,
et al.", covering the land in dispute, namely Lot 1460, situated in the Municipality of Camalig, Albay,
particularly described as follows:
A parcel of land (Lot No. 1460 of the Cadastral Survey of Camalig), with all the improvements thereon;
bounded on the SE, along lines 12, by Lot 1459; on the SW, along lines 2-3-4-5-6-7-8, by creek; on the
NE, along line 8-9, by Lot 1474; and on the E, along line 9-1, by Lot 1441, containing an area of TWENTY
SIX THOUSAND NINE HUNDRED NINETY FIVE (26,995) square meters more or less; . . . (pp. 30- 31,
Records)
Sometime in 1924, Elena Navera died.
On May 14, 1947, Eduarda Navera, by means of a public instrument, sold to her nephew, respondent
Arsenio Nares, all of her share in Lot 1460, which is titled in the name of "Elena Navera, et al." Eduarda
Navera's share in the aforementioned lot is one-half (1/2) of the total area of Lot 1460. The deed of sale
which the latter executed in favor of respondent Arsenio Nares particularly describes the lot subject of the
sale, as follows:
A portion from the tax No. 28081, of one (11) half belong to EDUARDA NAVERA and the other one (1)
half to own by the deceased Lina Navera, only is sold by this present deed of sale, the one to belong to
Eduarda Navera. But the other half being owned by Lina Navera, is the very deceased mother of the buyer
of this deed of absolute sale. Although the other half to belong to Lina Navera but the present administrator
is also name[d] the present buyer. And by this reason, the whole lot is now under care of Arsenio Nares.
The boundaries of the portion to belong to Eduarda Navera, to sell the said purchaser are: on the North by
Mariano Navera; on the East by Roman Marga, on the South by Enrico Obligado and on the West by Felix
Samson. (pp. 32-33, Records)
On June 26, 1948, Eduarda Navera sold for the second time a portion of Lot 1460 to Mariano Navera. The
property sold is described as follows:
A portion of 50 meters long, 59 meters wide, the length has a terminus consisting of stone set by the Bureau
of Lands from the West and straight to the East, reaching the goal of a tree namely Ditadita and from, that
point down the South reaching the point with the symbol of a Gomian tree and from Gomian for North
Direction reaching Anonang with a dimension of 48 meters and from Anonang tree curving to the point of
a goal set by the Bureau of Lands and from that point at ends North direction to the last is again a stone
placed by the Bureau of Lands, 12 m. This portion is taken from land tax No. R-124. Title No.
___________________________ and Lot No. _________________________. The declaration has the
value of P280.00. The boundaries of the portion to be sold are: North, by Igmedio Navera; on the east
by Mariano Navera; on the south by Arsenio Nares, and on the west, by Januario Nolasco, Arsenio Nares
had also same bought a portion from the whole lot. (p. 111, Records)
On January 30, 1953, respondent Arsenio Nares sold to Perpetua Dacillo a portion of Lot No. 4167
containing an area of five thousand seven hundred twenty six (5,726) square meters (p. 112, Records).
Perpetua Dacillo thereafter donated the said property to Francisco Dacillo. On August 13, 1955, Mariano
Navera, sold to his brother-in-law, Serapio Mustar, the lot which he bought from Eduarda Navera,
particularly described as follows:
A certain parcel of land situated in the barrio of Tiniguiban, Caguiba Camalig, Albay, Philippines,
containing an area of (00-09-16) square meters more or less. Bounded on the North by Igmedio Navera.
This property is declared for taxation purposes under Tax No. R-124. Visible boundaries consist of mojon
and other trees. Assessed at P280.00. (pp. 105-106, Records)
On February 11, 1956, the foregoing deed of sale was supplemented by the following stipulation:
(b) As to the property under paragraph (2) thereof, the same pertains to Cadastral Lot No. 1460, containing
an area of 1-99-69 square meters, more or less, (in the said document there was clerical error of the area, as
previously stated in the total area of 00-09-16, which is hereto corrected as 1-90-71 square meters, as the
total area sold). (p. 107, Records)
On April 7, 1959, Serapio Mustar later sold to petitioner Genaro Navera Lot 1460 which he bought from
the latter's father, Mariano Navera, containing an area of nineteen thousand nine hundred sixty nine (19,969)
square meters more or less (p. 160, Records).
On September 3, 1971, Francisco Dacillo sold to petitioner Genaro Navera the land which the former
received by way of donation from Perpetua Dacillo. The lot sold is specifically described as follows:
A parcel of land (Lot No. 1460, Camalig, Cad. Survey), Albay, with all the improvements thereon. Bounded
on the N. by Genaro Navera; on the E by Roman Morga; on the S. by CIPRIANO Morga and on the W. by
Heirs of Felix Samson . . containing an area of seven thousand and twenty six hundred (7,026) square
meters. (p. 101, Records)
All of the foregoing transfers of Lot 1460 were not annotated and inscribed in the Original Certificate of
Title.
In their complaint dated March 14, 1971 filed with the then Court of First Instance of Albay (now Regional
Trial Court), respondents Arsenio Nares and Felix Nares, alleged inter alia: that they are the absolute
owners of the whole of Lot 1460 covered by Original Certificate of Title No. RO-154(NA), and are entitled
to the possession of the same; that Lot 1460 is registered in the name of "Elena Navera, et al.", the "et. al"
being Eduarda Navera; that the respondents acquired the above described property by inheritance from their
deceased mother Elena Navera; that a portion thereof which had been adjudicated to Eduarda Navera was
later sold to respondent Arsenio Nares; that sometime in August, 1955, Mariano Navera, without any legal
right whatsoever and under the pretense of ownership sold the said property to his brother-in-law Serapio
Mustar, who in turn sold the same to Genaro Navera, son of Mariano. Plaintiffs, respondents herein, also
claimed that all the foregoing sales were sham and manipulated transactions and that Mariano Navera knew
fully well that he had no right to sell the property. Respondents admitted however, that they sold a portion
of the property containing 5,726 square meters to Perpetua Dacillo, so that the remaining portion still
belongs to them. They further contended that petitioner Genaro Navera entered the land after the sale to
him by Mustar and took possession of the same and acquired the produce thereof since 1957 up to the
present time; and that respondents have exerted earnest efforts toward a compromise but petitioners instead
challenged them to go to court.
Petitioners Genaro Navera and Emma Amador filed their answer with counterclaim, denying all the
respondents' claims, and alleging inter alia: that Leocadio Navera is the father of five children, namely,
Elena, Mariano, Eduarda, Basilio and Felix; that after deducting 12,415 square meters which Leocadio
Navera donated to Fausto Mustar in 1916, the remaining area of Lot 1460 was divided in equal shares
among Elena, Mariano and Eduarda, to the extent of 4,860 square meters each; that Basilio and Felix were
given their shares in other parcels of land. Petitioners also submitted that the et. al.1wphi1 appearing in
the title of the property refers to Fausto Mustar-12,415 square meters, Eduarda Navera-4,860 square meters,
Mariano Navera-4,860 square meters and Elena Navera-4,860 square meters; that Eduarda Navera sold
2,695 square meters of her share to Mariano Navera while the remaining 2,166 square meters of her share
was sold to Arsenio Nares; that Arsenio's property totalled 7,026 sq. meters which he later sold to Perpetua
Dacillo. Petitioners further contended that they are presently in possession of Lot 1460 and their possession
tacked to that of their predecessor-in-interest as early as 1916; that the complaint states no cause of action
and that if the respondents had any, the same has long prescribed.
During the pre-trial on December 14, 1973, the parties agreed on the following matters: identity of the land,
the identity of the parties, that 5,726 sq. meters of the said Lot 1460 had already been sold to Perpetua
Dacillo and; that the defendants are in possession of the land in question.
On February 28, 1978, the trial court rendered a decision, the dispositive portion of which states:
PREMISES CONSIDERED, judgment is hereby rendered:
1. Declaring the plaintiff[s] owner[s] of the lot described in the Original Certificate of Title RO-15480,
except 5,726 square meters which rightfully belongs to defendant Genaro Navera.
SO ORDERED. (p. 47, Rollo)
Not satisfied with the decision of the trial court, the petitioner appealed to the Court of Appeals. On
December 16, 1980, the respondent appellate court rendered judgment affirming in toto the decision of the
trial court.
Hence, the instant petition was filed, praying for a reversal of the above-mentioned decision, with the
petitioner assigning the following errors:
1. That the Honorable Court of Appeals failed to appreciate acquisitive prescription in favor of defendants
(now petitioners). (p. 1 0, Rollo)
2. That the Honorable Lower Court failed to apply the rule of law that actual knowledge is equivalent to, if
not serve the purpose of registration. (p. 1 2, Rollo)
3. That the Honorable Court of Appeals erred in finding defendants-appellants (now petitioners) to be in
bad faith instead of the plaintiff-appellees (now private respondents). (p. 13, Rollo)
In their first assigned error, petitioners-spouses Genaro Navera and Emma Amador allege that the evidence
on record, particularly Exhibit 12 and 12-A, clearly show their possession of the disputed property, the
whole of Lot 1460, for more than forty-six (46) years which is tantamount to their ownership of the same
by prescription, be it ordinary or extraordinary prescription; that respondents Arsenio Nares and Felix Nares
should not have been declared owners of Lot 1460 since they have lost whatever rights they have on the
land due to the possession thereof by petitioners; and that the sale by Eduarda Navera of her property to
Arsenio Nares was not recorded or annotated in the title just like the sale by Eduardo Navera of the same
lot to Mariano Navera.
As found by the trial court and respondent appellate court, the property in dispute, namely, the whole of
Lot 1460 is titled in the name of "Elena Navera, et al.", the phrase et. al." referring only to Eduarda, sister
of Elena since the other brothers of Elena and Eduarda namely, Mariano, Basilio and Felix had received
their shares from the other properties of their father Leocadio Navera. These factual findings are conclusive
upon Us. Thus, when Elena Navera died sometime in 1924, her compulsory heirs including respondents
Arsenio Nares and Felix Nares acquired Elena's shares in Lot 1460 by inheritance, which is one-half of Lot
1460. As to the other half of Lot 1460 owned by Eduarda Navera, the latter sold the same to two vendees,
one in favor of respondent Arsenio Nares and the other in favor of Mariano Navera, petitioner's predecessor-
in-interest.
On this matter of double sale, the appellate court upheld the findings of the trial court, as follows, to wit:
"As correctly noted by the trial court, all the transfers or conveyances are not inscribed in the Original
Certificate of Title No. RO-15480(NA) ("Exhibit A"). It would not be amiss to state that the sa[l]e of
Eduarda Navera to Arsenio Nares, and the sale of Eduarda Navera to Mariano Navera, which as above-
mentioned, the property referred to in both sales is the very same property covered by reconstituted title
Exhibit A. The sale of Eduarda Navera to appellee Arsenio Nares covered all her portion to the property,
thus, she could not possibly sell on June 26, 1948, another portion of the same property to Mariano Navera.
Thus, the portion referred to in the sale to Mariano Navera by Eduarda Navera may not be validly
transferred by Mariano Navera to Serapio Mustar. It likewise follow that Serapio Mustar may not
effectively convey the same to Genaro Navera . . . It is irremissible to state that the alleged conveyance
made by Serapio Mustar in favor of appellant Genaro Navera have no legal effect whatsoever, for the simple
reason that Serapio Mustar could not properly convey the portion referred to in the sale of June 26, 1948,
by Eduarda Navera in favor of Mariano Navera. In the first place, Eduarda Navera has no existing right to
convey another portion of the property because she had already sold all her portion to appellee Arsenio
Nares. Thus at the time Eduarda Navera conveyed a portion of the property which she already conveyed to
appellee Arsenio Nares, she has no right on the property and the power to dispose it. It clearly appears,
therefore, that Mariano Navera never acquired that portion subject of the sale on June 26, 1948. Having
acquired that portion of the property subject of the sale on June 26, 1948 from Mariano Navera, Serapio
Mustar has likewise no existing right and power to dispose of that portion of the property to appellant
Genaro Navera.
Contrary to the appellants' claim that they are possessors in good faith, Article 526 of the New Civil Code
provides that 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 and a possessor in bad faith is one who possesses in any case
contrary to the foregoing. And our Supreme Court said "every possessor in good faith becomes a possessor
in bad faith from the moment he becomes aware that what he believed to be true is not so." His possession
is legally interrupted when he is summoned to trial according to Article 1123 of the New Civil Code. Tacas
v. Tabon, 53 Phil. 356)" (pp. 25-26, Rollo).
We agree with the aforequoted findings and conclusions of the lower court which were affirmed on appeal
by the Court of Appeals. The conclusions and findings of facts by the trial court are entitled to great weight
and will not be disturbed on appeal unless for strong and cogent reasons because the trial court is in a better
position to examine real evidence as well as to observe the demeanor of witnesses while testifying on the
ease. (Macua vs. Intermediate Appellate Court, No. L-70810, October 26, 1987, 155 SCRA 29).
Clearly applicable herein is Article 1544 of the Civil Code which provides:
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 Ours)
In the instant case, the first sale of Eduarda Navera's share in the said lot to Arsenio Nares was made in a
public instrument on May 14, 1947. The second sale of the same property was executed also in a public
instrument in favor of Mariano Navera, who is the predecessor in interest of petitioner Genaro Navera, on
June 26, 1948, or more than a year after the first sale. Since the records show that both sales were not
recorded in the Registry of Property, the law clearly vests the ownership upon the person who in good faith
was first in possession of the disputed lot.
The possession mentioned in Article 1544 for determining who has 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. 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 of the thing
lawfully acquired by the first vendee (Quimson vs. Rosete, 87 Phil. 159; Sanchez vs. Ramos, 40 Phil. 614;
Florendo vs. Foz, 20 Phil. 388). In the case at bar, the prior sale of the land to respondent Arsenio Nares by
means of a public instrument is clearly tantamount to a delivery of the land resulting in the material and
symbolic possession thereof by the latter. Verily, factual evidence points to the prior actual possession by
respondent Nares before he was evicted from the land by petitioners and their predecessors in 1957 when
the latter entered the disputed property. No other evidence exists on record to show the contrary.
Based on the foregoing, it is correct to conclude that the priority of possession stands good in favor of
respondents. It is well-settled in our jurisprudence that prior est in tempore, potior est in jure (he who is
first in time is preferred in right). Ownership should therefore be recognized in favor of the first vendee,
respondent Arsenio Nares.
Petitioners further submit that they have been in possession of the whole lot for more than 46 years, that
this can be gleaned from the letter sent by respondent Nares, wherein the latter admitted that it was the
petitioner Navera who continuously gathered the produce of the land for 46 years; that such possession for
a considerable length of time entitled them to ownership by prescription whether ordinary or extraordinary.
This contention is devoid of merit. Prescription as a defense, must be expressly relied upon in the pleadings.
It cannot be availed of, unless it is specially pleaded in the answer; and it must be proved or established
with the same degree of certainty as any essential allegation in the civil action (Hodges vs. Salas, 63 Phil.
567; Corporacion de PP. Autinus Recolectos vs. Crisostomo, 32 Phil. 427). In the instant case, petitioners,
who were the defendants in the lower court, did not claim acquisitive prescription in their answer, and even
if they did, it cannot be given judicial sanction on mere allegations. The law requires one who asserts
ownership by adverse possession to prove the presence of the essential elements of acquisitive prescription
(Morales vs. CFI, et al., No. L- 52278, May 29, 1980, 97 SCRA 872).
After a careful examination of the records, We are of the opinion that there is lack of sufficient proof to
establish clearly and positively petitioner's claim of acquisitive prescription. In fact, We are more inclined
to believe respondents' version that respondent Arsenio Nares was evicted from the property by petitioner
sometime in 1957, thereby showing the latter's bad faith in acquiring the possession of the property until
1971 when the action against petitioner was filed. Thus, the ordinary acquisitive prescription of ten years
cannot be considered in favor of petitioner in the absence of good faith. Neither is the petitioner entitled to
extraordinary acquisitive prescription, in the absence of sufficient proof of compliance with the thirty-year
requirement of possession in case of bad faith.
Moreover, the law clearly states that "possession has to be in the concept of an owner, public, peaceful and
uninterrupted" (Article 1118, Civil Code). The actuations of petitioners, however, show the contrary. A
reading of the demand letter from respondents dated May 27, 1970, submitted in evidence by petitioners,
shows that the dispute over Lot 1460 had been going on for a number of years among petitioners,
respondents and their families. This goes to show that during the time when the petitioners bought the land
in 1959 and the following years thereafter when the latter possessed the property, they have known or
should have known of the rights and interests of their cousins, respondents herein, over the disputed land.
Moreover, the tax declarations for the years 1951 and 1965 showed that the respondents Arsenio Nares and
Felix Nares were the declared owners (p. 34 and 113, Records). In other words, petitioner's predecessors in
interest, namely, Mariano Navera and the subsequent purchasers of the lot, had not bothered to declare the
land in their own names for purposes of taxation during the time that they were allegedly in possession of
the land. It was only in the year 1966 when petitioner Genaro Navera started to declare himself owner of
the land for taxation purposes (p. 126, Records).
In their second assignment of error, petitioners contend that private respondents are bound by their
knowledge of the previous donation propter nuptias by their ancestor, Leocadio Navera in favor of Fausto
Mustar. This contention has no merit. The respondent appellate court affirmed the findings of the lower
court on this matter, as follows, to wit:
After a careful perusal and thorough review of the whole evidence on record, we cannot find any basis
therein for upholding the claim of appellants, articulated in their appellants' brief. It is apropos to state that
the donation propter nuptias made by Leocadio Navera sometime in October, 1916, should have been at
least recorded in the registry of property or inscribed in the Original Certificate of Title or the donee shall
have titled the property in his name. As the trial court correctly noted that the alleged donee Fausto Mustar
is not a party to the case nor had he transferred the said donated property to the spouses Mariano Navera in
a public instrument or conveyance. Nowhere in the evidence on record would show that the said donated
property was ever transferred to Mariano Navera, father of defendant-appellant Genaro Navera." (p.
24, Rollo)
No important reasons exist to compel Us to ignore the findings of the respondent appellate court. Besides,
the knowledge of private respondents concerning the alleged previous donation is immaterial. The facts are
clear that the original certificate of title itself covers the whole of 26,995 square meters of the disputed Lot
1460 in the name of "Elena Navera, et al.", without any mention of any previous donation of a portion of
the said lot to the alleged donee.
Petitioners' third assigned error was already treated and resolved in the foregoing discussions.
ACCORDINGLY, the petition is DENIED but the decision of the Court of Appeals dated December 16,
1980 is hereby MODIFIED to the effect that as against the petitioners Genaro Navera and Emma Amador,
the respondents Arsenio Nares and Felix Nares are declared the rightful owners of the disputed Lot 1460,
except with respect to 5,726 square meters thereof which belongs to petitioner Genaro Navera, without
prejudice however, to whatever rights and interests that the other compulsory heirs of Elena Navera may
have in the one-half portion of Lot 1460. The respective rights of respondents to Lot 1460 as between
themselves is a matter outside of this controversy and is therefore, beyond the jurisdiction of this Court to
pass upon.
SO ORDERED.

9. Agricultural and Home Extension Dev. v. CA, 213 SCRA 536 [1992]

FIRST DIVISION

[G.R. No. 92310. September 3, 1992.]

AGRICULTURAL AND HOME EXTENSION DEVELOPMENT GROUP, represented by Nicasio D.

Sanchez, Sr., substituted by Milagros S. Bucu, Petitioner, v. COURT OF APPEALS, and LIBRADO
CABAUTAN, Respondents.

Gideon C. Bondoc for Petitioner.

Balgos & Perez for Private Respondent.

SYLLABUS
1. CIVIL LAW; SPECIAL CONTRACTS; SALE; RULE IN CASE OF DOUBLE SALE; APPLICATION
IN CASE AT BAR. Under Article 1544 of the Civil Code of the Philippines: 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 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. It is not disputed that the first sale to Gundran was not registered while the
second sale to Cabautan was registered. Following the above-quoted provision, the courts below were
justified in according preferential rights to the private respondent, who had registered the sale in his favor,
as against the petitioners co-venturer whose right to the same property had not been recorded.

2. ID.; ID.; ID.; PURCHASER IN GOOD FAITH; DEFINED. A purchaser in good faith is defined as
"one who buys the 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."cralaw virtua1aw library

3. ID.; ID.; ID.; ID.; SALE OF PROPERTY REGISTERED UNDER THE TORRENS SYSTEM; EFFECT
OF NOTICE OF LIS PENDENS ANNOTATED ON THE CERTIFICATE. The petitioner claims,
however, that Cabautan was a purchaser in bad faith because he was fully aware of the notices of lis pendens
at the back of TCT No. 287416 and of the earlier sale of the land to Gundran. An examination of TCT No.
287416 discloses no annotation of any sale, lien, encumbrance or adverse claim in favor of Gundran or the
petitioner. Well-settled is the rule that when the property sold is registered under the Torrens system,
registration is the operative act to convey or affect the land insofar as third persons are concerned. Thus, a
person dealing with registered land is only charged with notice of the burdens on the property which are
noted on the register or certificate of title. While it is true that notices of lis pendens in favor of other persons
were earlier inscribed on the title, these did not have the effect of establishing a lien or encumbrance on the
property affected. Their only purpose was to give notice to third persons and to the whole world that any
interest they might acquire in the property pending litigation would be subject to the result of the suit.

DECISION

CRUZ, J.:

We are asked again to determine who as between two successive purchasers of the same land should be
recognized as its owner. The answer is simple enough. But we must first, as usual, plow through some
alleged complications.

The pertinent background facts are as follows:chanrob1es virtual 1aw library

On March 29, 1972, the spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a 19-hectare parcel of
land in Las Pias, Rizal, covered by TCT No. 287416. The owners duplicate copy of the title was turned
over to Gundran. However, he did not register the Deed of Absolute Sale because he said he was advised
in the Office of the Register of Deeds of Pasig of the existence of notices of lis pendens on the
title.chanrobles law library
On November 20, 1972, Gundran and the herein petitioner, Agricultural and Home Development Group,
entered into a Joint Venture Agreement for the improvement and subdivision of the land. This agreement
was also not annotated on the title.

On August 30, 1976, the spouses Andres Diaz and Josefa Mia again entered into another contract of sale of
the same property with Librado Cabautan, the herein private Respondent.

On September 3, 1976, by virtue of an order of the Court of First Instance of Rizal, a new owners copy of
the certificate of title was issued to the Diaz spouses, who had alleged the loss of their copy. On that same
date, the notices of lis pendens annotated on TCT No. 287416 were canceled and the Deed of Sale in favor
of private respondent Cabautan was recorded. A new TCT No. S-33850/T-172 was thereupon issued in his
name in lieu of the canceled TCT No. 287416.

On March 14, 1977, Gundran instituted an action for reconveyance before the Court of First Instance of
Pasay City * against Librado Cabautan and Josefa Mia seeking, among others, the cancellation of TCT No.
33850/T-172 and the issuance of a new certificate of title in his name.

On August 31, 1977, the petitioner, represented by Nicasio D. Sanchez, Sr., filed a complaint in intervention
with substantially the same allegations and prayers as that in Gundrans complaint.

In a decision dated January 12, 1987, 1 Gundrans complaint and petitioners complaint in intervention
were dismissed for lack of merit. So was the private respondents counterclaims, for insufficiency of
evidence.

Upon appeal, this decision was affirmed by the respondent Court of Appeals, with the modification that
Josefa Mia was ordered to pay Gundran the sum of P90,000.00, with legal interest from September 3, 1976,
plus the costs of suit. 2

Under Article 1544 of the Civil Code of the Philippines:chanrob1es virtual 1aw library

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.chanrobles virtual lawlibrary

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.

It is not disputed that the first sale to Gundran was not registered while the second sale to Cabautan was
registered.

Following the above-quoted provision, the courts below were justified in according preferential rights to
the private respondent, who had registered the sale in his favor, as against the petitioners co-venturer whose
right to the same property had not been recorded.

The petitioner claims, however, that Cabautan was a purchaser in bad faith because he was fully aware of
the notices of lis pendens at the back of TCT No. 287416 and of the earlier sale of the land to
Gundran.chanrobles virtual lawlibrary
A purchaser in good faith is defined as "one who buys the 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." 3

An examination of TCT No. 287416 discloses no annotation of any sale, lien, encumbrance or adverse
claim in favor of Gundran or the petitioner. Well-settled is the rule that when the property sold is registered
under the Torrens system, registration is the operative act to convey or affect the land insofar as third
persons are concerned. 4 Thus, a person dealing with registered land is only charged with notice of the
burdens on the property which are noted on the register or certificate of title. 5

While it is true that notices of lis pendens in favor of other persons were earlier inscribed on the title, these
did not have the effect of establishing a lien or encumbrance on the property affected. Their only purpose
was to give notice to third persons and to the whole world that any interest they might acquire in the property
pending litigation would be subject to the result of the suit.

Cabautan took this risk. Significantly, three days after the execution of the deed of sale in his favor, the
notices of lis pendens were canceled by virtue of the orders of the Court of First Instance of Rizal, Branch
23, dated April 1, 1974, and April 4, 1974. Cabautan therefore acquired the land free of any liens or
encumbrances and so could claim to be a purchaser in good faith and for value.

The petitioner insists that it was already in possession of the disputed property when Cabautan purchased
it and that he could not have not known of that possession. Such knowledge should belie his claim that he
was an innocent purchaser for value. However, the courts below found no evidence of the alleged
possession, which we must also reject in deference to this factual finding.chanrobles virtual lawlibrary

The petitioners reliance on Casis v. Court of Appeals 6 is misplaced.

The issue at bar is whether private respondent Cabautan is an innocent purchaser for value and so entitled
to the priority granted under Article 1544 of the Civil Code. The Casis case, on the other hand, involved
the issues of whether or not: 1) certiorari was the proper remedy of the petitioner: 2) the previous petition
for certiorari which originated from the quieting of title case was similar to and, hence, a bar to the petition
for certiorari arising from the forcible entry case; and 3) the court a quo committed grave abuse of
discretion amounting to lack or excess of jurisdiction in issuing the order which dissolved the restraining
order issued in connection with the ejectment case. The Court was not called upon in that case to determine
who as between the two purchasers of the subject property should be preferred.

The petitioner invokes the ruling of the lower court in that case to the effect that the registration of the sale
in favor of the second purchaser and the issuance of a new certificate of title in his favor did not in any
manner vest in him any right of possession and ownership over the subject property because the seller, by
reason of their prior sale, had already lost whatever right or interest she might have had in the property at
the time the second sale was made.

This excerpt was included in the ponencia only as part of the narration of the background facts and was not
thereby adopted as a doctrine of the Court. It was considered only for the purpose of ascertaining if the
court below had determined the issue of the possession of the subject property pending resolution of the
question of ownership. Obviously, the Court could not have adopted that questionable ruling as it would
clearly militate against the provision of Article 1544.chanrobles.com:cralaw:red

Worthy of note at this juncture is the observation of Justice Edgardo L. Paras, to wit:chanrob1es virtual
1aw library
True, no one can sell what he does not own, but this is merely the general rule. Is Art. 1544 then an exception
to the general rule? In a sense, yes, by reason of public convenience (See Aitken v. Lao, 36 Phil. 510); in
still another sense, it really reiterates the general rule in that insofar as innocent third persons are concerned,
the registered owner (in the case of real property) is still the owner, with power of disposition. 7

The language of Article 1544 is clear and unequivocal. In light of its mandate and of the facts established
in this case, we hold that ownership must be recognized in the private respondent, who bought the property
in good faith and, as an innocent purchaser for value, duly and promptly registered the sale in his favor.

WHEREFORE, the petition is DENIED and the questioned decision AFFIRMED in toto, with costs against
the petitioner.

SO ORDERED.
 10. Balatbat v. Court of Appeals, 261 SCRA 128 [1996]

SECOND DIVISION
[G.R. No. 109410. August 28, 1996]
CLARA M. BALATBAT, petitioner, vs. COURT OF APPEALS and Spouses JOSE REPUYAN and
AURORA REPUYAN, respondents.
DECISION
TORRES, JR., J.:
Petitioner Clara M. Balatbat instituted this petition for review pursuant to Rule 45 of the Revised Rules of
Court seeking to set aside the decision dated August 12, 1992 of the respondent Court of Appeals in CA-
G.R. CV No. 29994 entitled Alejandro Balatbat and Clara Balatbat, plaintiffs-appellants, versus Jose
Repuyan and Aurora Repuyan, defendants-appellees, the dispositive portion of which reads:[1]
WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of
P10,000.00 for attorneys fees and P5,000.00 as costs of litigation are deleted.
SO ORDERED.
The records show the following factual antecedents:
It appears that on June 15, 1977, Aurelio A. Roque filed a complaint for partition docketed as Civil Case
No. 109032 against Corazon Roque, Alberto de los Santos, Feliciano Roque, Severa Roque and Osmundo
Roque before the then Court of First Instance of Manila, Branch IX.[2] Defendants therein were declared in
default and plaintiff presented evidence ex-parte. On March 29, 1979, the trial court rendered a decision in
favor of plaintiff Aurelio A. Roque, the pertinent portion of which reads:[3]
From the evidence, it has been clearly established that the lot in question covered by Transfer Certificate
of Title No. 51330 was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal union
and the house constructed thereon was likewise built during their marital union. Out of their union, plaintiff
and Maria Mesina had four children, who are the defendants in this case. When Maria Mesina died on
August 28, 1966, the only conjugal properties left are the house and lot above stated of which plaintiff
herein, as the legal spouse, is entitled to one-half share pro-indiviso thereof. With respect to the one-half
share pro-indiviso now forming the estate of Maria Mesina, plaintiff and the four children, the defendants
here, are each entitled to one-fifth (1/5) share pro-indiviso. The deceased wife left no debt.
Wherefore, judgment is hereby rendered ordering the partition of the properties, subject matter of this case
consisting of the house and lot, in the following manner:
1. Of the house and lot forming the conjugal properties, plaintiff is entitled to one-half share pro-
indiviso thereof while the other half forms the estate of the deceased Maria Mesina;
2. Of the Estate of deceased Maria Mesina, the same is to be divided into five (5) shares and plaintiff and
his four children are entitled each to one-fifth share thereof pro-indiviso.
Plaintiff claim for moral, exemplary and actual damages and attorneys fees not having been established to
the satisfaction of the Court, the same is hereby denied.
Without pronouncement as to costs.
SO ORDERED.
On June 2, 1979, the decision became final and executory. The corresponding entry of judgment was made
on March 29, 1979.[4]
On October 5, 1979, the Register of Deeds of Manila issued a Transfer Certificate of Title No. 135671 in
the name of the following persons in the following proportions:[5]
Aurelio A. Roque 6/10 share
Severina M. Roque 1/10 share
Osmundo M. Roque 1/10 share
Feliciano M. Roque 1/10 share
Corazon M. Roque 1/10 share
On April 1, 1980, Aurelio A. Roque sold his 6/10 share in T.C.T. No. 135671 to spouses Aurora Tuazon-
Repuyan and Jose Repuyan as evidenced by a Deed of Absolute Sale.[6]
On July 21, 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse claim[7] on the
Transfer Certificate of Title No. 135671,[8] to wit:
Entry No. 5627/T-135671 - NOTICE OF ADVERSE CLAIM - Filed by Aurora Tuazon Repuyan, married,
claiming among others that she bought 6/10 portion of the property herein described from Aurelio Roque
for the amount of P50,000.00 with a down payment of P5,000.00 and the balance of P45,000.00 to be paid
after the partition and subdivision of the property herein described, other claims set forth in Doc. No. 954,
page 18, Book 94 of _____________________ 64 ________PEDRO DE CASTRO, Notary Public of
Manila.
Date of instrument - July 21, 1980
Date of inscription- July 21, 1980 at 3:35 p.m.
TERESITA H. NOBLEJAS
Acting Register of Deeds
By:
RAMON D. MACARICAN
Acting Second Deputy
On August 20, 1980, Aurelio A. Roque filed a complaint for Rescission of Contract docketed as Civil Case
No. 134131 against spouses Aurora Tuazon-Repuyan and Jose Repuyan before Branch IV of the then Court
of First Instance of Manila. The complaint is grounded on spouses Repuyans failure to pay the balance of
P45,000.00 of the purchase price.[9] On September 5, 1980, spouses Repuyan filed their answer with
counterclaim.[10]
In the meantime, the trial court issued an order in Civil Case No. 109032 (Partition case) dated February 2,
1982, to wit:[11]
In view of all the foregoing and finding that the amount of P100,000.00 as purchase price for the sale of the
parcel of land covered by TCT No. 51330 of the Registry of Deeds of Manila consisting of 84 square meters
situated in Callejon Sulu, District of Santa Cruz, Manila, to be reasonable and fair, and considering the
opportunities given defendants to sign the deed of absolute sale voluntarily, the Court has no alternative but
to order, as it hereby orders, the Deputy Clerk of this Court to sign the deed of absolute sale for and in
behalf of defendants pursuant to Sec. 10, Rule 39 of the Rules of Court, in order to effect the partition of
the property involved in this case.
SO ORDERED.
A deed of absolute sale was executed on February 4, 1982 between Aurelio S. Roque, Corazon Roque,
Feliciano Roque, Severa Roque and Osmundo Roque and Clara Balatbat, married to Alejandro
Balatbat.[12] On April 14, 1982, Clara Balatbat filed a motion for the issuance of a writ of possession which
was granted by the trial court on September 14, 1982 subject, however, to valid rights and interest of third
persons over the same portion thereof, other than vendor or any other person or persons privy to or claiming
any rights or interest under it. The corresponding writ of possession was issued on September 20, 1982.[13]
On May 20, 1982, petitioner Clara Balatbat filed a motion to intervene in Civil Case No. 134131[14] which
was granted as per courts resolution of October 21, 1982.[15]However, Clara Balatbat failed to file her
complaint in intervention.[16] On April 15, 1986, the trial court rendered a decision dismissing the complaint,
the pertinent portion of which reads:[17]
The rescission of contracts are provided for in the laws and nowhere in the provision of the Civil Code
under the title Rescissible Contracts does the circumstances in the case at bar appear to have occurred,
hence, the prayer for rescission is outside the ambit for which rescissible [sic] could be granted.
The Intervenor - Plaintiff, Clara Balatbat, although allowed to intervene, did not file her complaint in
intervention.
Consequently, the plaintiff having failed to prove with sufficient preponderance his action, the relief prayed
for had to be denied. The contract of sale denominated as Deed of Absolute Sale (Exh. 7 and sub-markings)
being valid and enforceable, the same pursuant to the provisions of Art. 1159 of the Civil Code which says:
Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith.
has the effect of being the law between the parties and should be complied with. The obligation of the
plaintiff under the contract being to have the land covered by TCT No. 135671 partitioned and subdivided,
and title issued in the name of the defendant buyer (see page 2 par. C of Exh. 7-A) plaintiff had to comply
thereto to give effect to the contract.
WHEREFORE, judgment is rendered against the plaintiff, Aurelio A. Roque, and the plaintiff in
intervention, Clara Balatbat, and in favor of the defendants, dismissing the complaint for lack of merit, and
declaring the Deed of Absolute Sale dated April 1, 1980 as valid and enforceable and the plaintiff is, as he
is hereby ordered, to partition and subdivide the land covered by T.C.T. No. 135671, and to aggregate
therefrom a portion equivalent to 6/10 thereof, and cause the same to be titled in the name of the defendants,
and after which, the defendants to pay the plaintiff the sum of P45,000.00. Considering further that the
defendants suffered damages since they were forced to litigate unnecessarily, by way of their counterclaim,
plaintiff is hereby ordered to pay defendants the sum of P15,000.00 as moral damages, attorneys fees in the
amount of P5,000.00.
Costs against plaintiff.
SO ORDERED.
On March 3, 1987, petitioner Balatbat filed a notice of lis pendens in Civil Case No. 109032 before the
Register of Deeds of Manila.[18]
On December 9, 1988, petitioner Clara Balatbat and her husband, Alejandro Balatbat filed the instant
complaint for delivery of the owner's duplicate copy of T.C.T. No. 135671 docketed as Civil Case No. 88-
47176 before Branch 24 of the Regional Trial Court of Manila against private respondents Jose Repuyan
and Aurora Repuyan.[19]
On January 27, 1989, private respondents filed their answer with affirmative defenses and compulsory
counterclaim.[20]
On November 13, 1989, private respondents filed their memorandum[21] while petitioners filed their
memorandum on November 23, 1989.[22]
On August 2, 1990, the Regional Trial Court of Manila, Branch 24, rendered a decision dismissing the
complaint, the dispositive portion of which reads:[23]
Considering all the foregoing, this Court finds that the plaintiffs have not been able to establish their cause
of action against the defendants and have no right to the reliefs demanded in the complaint and the complaint
of the plaintiff against the defendants is hereby DISMISSED. On the counterclaim, the plaintiff are ordered
to pay defendants the amount of Ten Thousand Pesos by way of attorneys fees, Five Thousand Pesos as
costs of litigation and further to pay the costs of the suit.
SO ORDERED.
Dissatisfied, petitioner Balatbat filed on appeal before the respondent Court of Appeals which rendered the
assailed decision on August 12, 1992, to wit:[24]
WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of
P10,000.00 for attorneys fees and P5,000.00 as costs of litigation are deleted.
SO ORDERED.
On March 22, 1993, the respondent Court of Appeals denied petitioners motion for reconsideration.[25]
Hence, this petition for review.
Petitioner raised the following issues for this Courts resolution:
I
WHETHER OR NOT THE ALLEGED SALE TO THE PRIVATE RESPONDENTS WAS MERELY
EXECUTORY AND NOT A CONSUMMATED TRANSACTION?
II
WHETHER OR NOT THERE WAS A DOUBLE SALE AS CONTEMPLATED UNDER ART. 1544 OF
THE CIVIL CODE?
III
WHETHER OR NOT PETITIONER WAS A BUYER IN GOOD FAITH AND FOR VALUE?
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED IN GIVING WEIGHT AND
CONSIDERATION TO THE EVIDENCE OF THE PRIVATE RESPONDENTS WHICH WERE NOT
OFFERED?
Petitioner asseverates that the respondent Court of Appeals committed grave abuse of discretion tantamount
to lack or excess of jurisdiction in affirming the appealed judgment considering (1) that the alleged sale in
favor of the private respondents Repuyan was merely executory; (2) that there is no double sale; (3) that
petitioner is a buyer in good faith and for value; and (4) that private respondents did not offer their evidence
during the trial.
Contrary to petitioners contention that the sale dated April 1, 1980 in favor of private respondents Repuyan
was merely executory for the reason that there was no delivery of the subject property and that
consideration/price was not fully paid, we find the sale as consummated, hence, valid and enforceable. In a
decision dated April 15, 1986 of the Regional Trial Court of Manila, Branch IV in Civil Case No. 134131,
the Court dismissed vendors Aurelio Roque complaint for rescission of the deed of sale and declared that
the sale dated April 1, 1980, as valid and enforceable. No appeal having been made, the decision became
final and executory. It must be noted that herein petitioner Balatbat filed a motion for intervention in that
case but did not file her complaint in intervention. In that case wherein Aurelio Roque sought to rescind the
April 1, 1980 deed of sale in favor of the private respondents for non-payment of the P45,000.00 balance,
the trial court dismissed the complaint for rescision. Examining the terms and conditions of the Deed of
Sale dated April 1, 1980, the P45,000.00 balance is payable only after the property covered by T.C.T. No.
135671 has been partitioned and subdivided, and title issued in the name of the BUYER hence, vendor
Roque cannot demand payment of the balance unless and until the property has been subdivided and titled
in the name of the private respondents. Devoid of any stipulation that ownership in the thing shall not pass
to the purchaser until he has fully paid the price,[26] ownership in the thing shall pass from the vendor to the
vendee upon actual or constructive delivery of the thing sold even if the purchase price has not yet been
fully paid. The failure of the buyer to make good the price does not, in law, cause the ownership to revest
to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the
New Civil Code.[27]Non-payment only creates a right to demand the fulfillment of the obligation or to
rescind the contract.
With respect to the non-delivery of the possession of the subject property to the private respondent, suffice
it to say that ownership of the thing sold is acquired only from the time of delivery thereof, either actual or
constructive.[28] Article 1498 of the Civil Code provides that - when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot be inferred.[29] The execution of the public
instrument, without actual delivery of the thing, transfers the ownership from the vendor to the vendee, who
may thereafter exercise the rights of an owner over the same.[30] In the instant case, vendor Roque delivered
the owners certificate of title to herein private respondent. It is not necessary that vendee be physically
present at every square inch of the land bought by him, possession of the public instrument of the land is
sufficient to accord him the rights of ownership. Thus, delivery of a parcel of land may be done by placing
the vendee in control and possession of the land (real) or by embodying the sale in a public instrument
(constructive). The provision of Article 1358 on the necessity of a public document is only for convenience,
not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of
land that this be embodied in a public instrument.[31]
A contract of sale being consensual, it is perfected by the mere consent of the parties. [32] Delivery of the
thing brought or payment of the price is not necessary for the perfection of the contract; and failure of the
vendee to pay the price after the execution of the contract does not make the sale null and void for lack of
consideration but results at most in default on the part of the vendee, for which the vendor may exercise his
legal remedies.[33]
Article 1544 of the New Civil Code provides:
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 movable 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 present the oldest title, provided there is good
faith.
Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership
shall be transferred (1) to the person acquiring it who in good faith first recorded it in 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, provided there is good faith.[34]
In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share in TCT No. 135671 to private
respondents Repuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor Aurelio Roque
(6/10) and his children (4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of the
Rules of Court, on February 4, 1982.Undoubtedly, this is a case of double sale contemplated under Article
1544 of the New Civil Code.
This is an instance of a double sale of an immovable property hence, the ownership shall vests in the person
acquiring it who in good faith first recorded it in the Registry of Property. Evidently, private respondents
Repuyans caused the annotation of an adverse claim on the title of the subject property denominated as
Entry No. 5627/T-135671 on July 21, 1980.[35] The annotation of the adverse claim on TCT No. 135671 in
the Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world.
On the other hand, petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, private
respondents who first caused the annotation of the adverse claim in good faith shall have a better right over
herein petitioner. Moreover, the physical possession of herein petitioners by virtue of a writ of possession
issued by the trial court on September 20, 1982 is subject to the valid rights and interest of third persons
over the same portion thereof, other than vendor or any other person or persons privy to or claiming any
rights to interest under it.[36] As between two purchasers, the one who has registered the sale in his favor,
has a preferred right over the other who has not registered his title even if the latter is in actual possession
of the immovable property.[37] Further, even in default of the first registrant or first in possession, private
respondents have presented the oldest title.[38] Thus, private respondents who acquired the subject property
in good faith and for valuable consideration established a superior right as against the petitioner.
Evidently, petitioner cannot be considered as a buyer in good faith. In the complaint for rescission filed by
vendor Aurelio Roque on August 20, 1980, herein petitioner filed a motion for intervention on May 20,
1982 but did not file her complaint in intervention, hence, the decision was rendered adversely against
her. If petitioner did investigate before buying the land on February 4, 1982, she should have known that
there was a pending case and an annotation of adverse claim was made in the title of the property before
the Register of Deeds and she could have discovered that the subject property was already sold to the private
respondents. It is incumbent upon the vendee of the property to ask for the delivery of the owners duplicate
copy of the title from the vendor. A purchaser of a valued piece of property cannot just close his eyes to
facts which should put a reasonable man upon his guard and then claim that he acted in good faith and
under the belief that there were no defect in the title of the vendor.[39] 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 as against the true owner of the land or of an interest therein; and the same rule must be applied to one
who has knowledge of facts which should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor. Good faith, or the want of it is not a
visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be
judged of by actual or fancied tokens or signs.[40]
In fine, petitioner had nobody to blame but herself in dealing with the disputed property for failure to inquire
or discover a flaw in the title to the property, thus, it is axiomatic that - culpa lata dolo aequiparatur - gross
negligence is equivalent to intentional wrong.
IN VIEW OF THE FOREGOING PREMISES, this petition for review is hereby DISMISSED for lack of
merit. No pronouncement as to costs.
IT IS SO ORDERED.