Sales Cases Set 4

8/22/14 G.R. No.
104482
www.lawphil.net/judjuris/juri1996/jan1996/gr_104482_1996.html 1/5
Today is Friday, August 22, 2014
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 104482 January 22, 1996
BELINDA TAEDO, for herself and in representation of her brothers and sisters, and TEOFILA CORPUZ
TAEDO, representing her minor daughter VERNA TAEDO, petitioners,
vs.
THE COURT OF APPEALS, SPOUSES RICARDO M. TAEDO AND TERESITA BARERA TAEDO, respondents.
D E C I S I O N
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 court's 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 Decision
1
of the Court of Appeals
2
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 Court's 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 ponente 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 latter's 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-13829 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 as Lot 191 . . . "
(Exh. 4). He acknowledged therein his receipt of P10,000.00 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 tinder 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 (Lazaro's) 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 (Lazaro's) 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).
8/22/14 G.R. No. 104482
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 proponderance
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 Court's 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 court's 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 memorandum
4
concede this.
8/22/14 G.R. No. 104482
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 Lazaro's 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 extra-judicial 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 court's 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 Taedo 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). . . .
6
The respondent Court, reviewing the trial court's findings, refused to overturn the latter's assessment of the
testimonial evidence, as follows;
We are not prepared to set aside the finding of the lower court upholding Ricardo Taedo's 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
8/22/14 G.R. No. 104482
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 Taedo . . ." 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 . . . ;
5. The respondent Court erred in not giving credence to petitioners' evidence, especially Lazaro Taedo's
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 Goldrock 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. . . . (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. (emphasis supplied)
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals is AFFIRMED. No Costs.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.
Footnotes
1
Rollo, pp. 58-64.
2
Thirteenth Division, composed of J. Minerva P. Gonzaga-Reyes, ponente, and JJ. Arturo B. Buena,
chairman, and Quirino D. Abad Santos, Jr., member.
3
CA Decision, p. 5; rollo, p. 62.
4
At pp. 11-12; rollo, pp. 145-146.
5
Nuguid vs. Court of Appeals, 171 SCRA 213 (March 13, 1989).
8/22/14 G.R. No. 104482
6
Court of Appeals' Decision, p. 6; rollo, p. 63.
7
G.R. No. 112130, March 31, 1995; J. Flerida Ruth P. Romero, ponente.
8
G.R. No. 102253, June 2, 1995; J. Jose C. Vitug, ponente.
The Lawphi l Proj ect - Arel l ano Law Foundati on
8/22/14 G.R. No. 156973
www.lawphil.net/judjuris/juri2004/jun2004/gr_156973_2004.html 1/5
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 156973 June 4, 2004
SPOUSES TOMAS OCCEA and SILVINA OCCEA, petitioners,
vs.
LYDIA MORALES OBSIANA ESPONILLA, ELSA MORALES OBSIANA SALAZAR and DARFROSA OBSIANA
SALAZAR ESPONILLA, respondents.
D E C I S I O N
PUNO, J.:
The case at bar involves a portion of the 1,198-square meter residential lot (lot no. 265) situated in Sibalom,
Antique, originally owned by spouses Nicolas and Irene Tordesillas under OCT No. 1130. The Tordesillas spouses
had three (3) children, namely: Harod, Angela and Rosario, the latter having been survived by her two (2)
children, Arnold and Lilia de la Flor.
After the death of the Tordesillas spouses, the lot was inherited by their children Harod and Angela, and
grandchildren Arnold and Lilia. In 1951, the heirs executed a Deed of Pacto de Retro Sale
1
in favor of Alberta
Morales covering the southwestern portion of the lot with an area of 748 square meters.
Three (3) years later, in 1954, Arnold and Lilia executed a Deed of Definite Sale of Shares, Rights, Interests
and Participations
2
over the same 748 sq. m. lot in favor of Alberta Morales. The notarized deed also
attested that the lot sold by vendors Arnold and Lilia to Alberta were their share in the estate of their deceased
parents.
Alberta possessed the lot as owner, constructed a house on it and appointed a caretaker to oversee
her property. Thereafter, in July 1956, vendor Arnold de la Flor borrowed the OCT from Alberta covering the lot.
He executed an Affidavit
3
acknowledging receipt of the OCT in trust and undertook to return said title free from
changes, modifications or cancellations.
In 1966, Arnold and Angela, nephew and daughter respectively of the Tordesillas spouses, without the knowledge
of Alberta, executed a Deed of Extrajudicial Settlement
4
declaring the two of them as the only co-owners
of the undivided 1,198 sq. m. lot no. 265, without acknowledging their previous sale of 748 sq. m.
thereof to Alberta. A number of times, thereafter, Alberta and her nieces asked Arnold for the OCT of the land
but Arnold just kept on promising to return it.
In 1983, Arnold executed an Affidavit of Settlement of the Estate
5
of Angela who died in 1978 without issue,
declaring himself as the sole heir of Angela and thus consolidating the title of the entire lot in his name.
In 1985, vendee Alberta Morales died. Her nieces-heirs, Lydia, Elsa and Dafrosa, succeeded in the
ownership of the lot. Months later, as the heirs were about to leave for the United States, they asked Arnold to
deliver to them the title to the land so they can register it in their name. Arnold repeatedly promised to do so but
failed to deliver the title to them.
On December 4, 1986, after Albertas heirs left for the States, Arnold used the OCT he borrowed from the
deceased vendee Alberta Morales, subdivided the entire lot no. 265 into three sublots, and registered
them all under his name, viz: lot no. 265-A (with TCT No. 16895), lot no. 265-B (with TCT No. 16896) and lot no.
265-C (with TCT No. 16897). He then paid the real estate taxes on the property.
On August 13, 1990, Arnold sold lot nos. 265-B & C to spouses Tomas and Sylvina Occea, which included the
748 sq. m. portion previously sold to Alberta Morales. A Deed of Absolute Sale
6
over said lots was executed to the
Occea spouses and titles were transferred to their names.
8/22/14 G.R. No. 156973
In 1993, after the death of Arnold, the three (3) nieces-heirs of Alberta Morales learned about the second sale of
their lot to the Occea spouses when they were notified by caretaker Abas that they were being ejected from the
land. In 1994, the heirs filed a case
7
for annulment of sale and cancellation of titles, with damages, against the
second vendees Occea spouses. In their complaint, they alleged that the Occeas purchased the land in bad
faith as they were aware that the lots sold to them had already been sold to Alberta Morales in 1954. They averred
that before the sale, when Tomas Occea conducted an ocular inspection of the lots, Morito Abas, the caretaker
appointed by Alberta Morales to oversee her property, warned them not to push through with the sale as the land
was no longer owned by vendor Arnold as the latter had previously sold the lot to Alberta Morales who had a
house constructed thereon.
For their part, the Occea spouses claimed that the OCT in the name of the original owners of the lots, the
Tordesillas spouses, was cancelled after it was subdivided between Angela and Arnold in 1969; that new TCTs
had been issued in the latters names; that they were unaware that the subject lots were already previously sold to
Morales as they denied that Tomas had a talk with caretaker Abas on the matter; that as of December 4, 1987, the
TCTs covering the lots were in the name of Arnold and his wife, without any adverse claim annotated thereon; that
vendor Arnold represented to them that the occupants they saw on the land were squatters and that he merely
tolerated their presence; that they did not personally investigate the alleged squatters on the land and
merely relied on the representation of vendor Arnold; that sometime in 1966-1967, Arnold and his co-heir
Angela caused the survey of the original lot and subdivided it into 3 lots, without opposition from Morales or her
heirs. Thus, three (3) TCTs were issued in 1969 to Arnold and Angela and, two of the lots were then sold to the
Occea spouses, again without objection from Alberta Morales.
The Occea spouses alleged that they were buyers in good faith as the titles to the subject lots were free from
liens or encumbrances when they purchased them. They claimed that in 1989, Arnold offered to sell the subject
lots to them. On August 13, 1990, after they verified with the Antique Registry of Deeds that Arnolds TCTs were
clean and unencumbered, Arnold signed the instrument of sale over the subject lots in favor of the Occeas for
P100,000.00 and new titles were issued in their names.
The Occeas likewise set up the defenses of laches and prescription. They argue that Alberta and plaintiffs-heirs
were barred from prosecuting their action as they failed to assert their right for forty (40) years. Firstly, they point
out that vendor Arnold and Angela subdivided the entire lot in 1966 and declared themselves as the only co-
owners thereof in the deed of extrajudicial settlement. Alberta Morales failed to oppose the inclusion of her 748 sq.
m. lot in the deed. Thus, the title to the entire lot no. 256 was transferred to the names of Arnold and Angela.
Secondly, preparatory to the division of the lots, vendor Arnold had the land surveyed but Alberta again failed to
oppose the same. Finally, Alberta and her heirs who are claiming adverse rights over the land based on the 1951
Deed of Pacto de Retro Sale and the 1954 Deed of Definite Sale of Shares failed for 40 years to annotate their
adverse claims on the new titles issued to Arnold and Angela, enabling the latter to possess a clean title and
transfer them to the Occea spouses.
After trial, the lower court rendered a decision declaring the Occea spouses as buyers in good faith and ruled
that the action of the heirs was time-barred.
On appeal by Albertas heirs, the Court of Appeals reversed the decision of the trial court. It found that the
Occeas purchased the land in bad faith and that the action filed by Albertas heirs was not barred by prescription
or laches. The dispositive portion reads:
WHEREFORE, the instant appeal is hereby GRANTED. Accordingly, the assailed decision is hereby
REVERSED and SET ASIDE and a new one is rendered declaring the Deed of Absolute Sale dated August
13, 1990 executed between Arnold de la Flor in favor of defendants-appellees null and void and ordering
the cancellation of Transfer Certificate of Title Nos. 16896, 16897, T-18241 and T-18242.
SO ORDERED.
8
Hence this appeal where petitioner-spouses Occea raise the following issues:
I
WHETHER OR NOT A VERBAL INFORMATION COULD BE MADE TO PREVAIL OVER A CLEAN
CERTIFICATE OF TITLE OF A REGISTERED LAND WHICH IS FREE OF ANY LIEN OR ENCUMBRANCE
ANNOTATED ON ITS CERTIFICATE OF TITLE OR ANY ADVERSE CLAIM RECORDED WITH THE
REGISTER OF DEEDS.
II
WHETHER OR NOT A BUYER OF A REGISTERED LAND IS OBLIGATED TO MAKE INQUIRIES OF ANY
POSSIBLE DEFECT OR ADVERSE CLAIM AFFECTING ITS OWNERSHIP WHICH DOES NOT APPEAR ON
THE CERTIFICATE OF TITLE.
8/22/14 G.R. No. 156973
THE CERTIFICATE OF TITLE.
III
WHETHER OR NOT THE PERIOD OF MORE THAN FORTY (40) YEARS WITHOUT POSITIVE ACTION
TAKEN BY RESPONDENTS, AS WELL AS BY ALBERTA MORALES, TO PROTECT THEIR INTEREST CAN
BE CONSIDERED LACHES AND THUS THEIR PRESENT ACTION HAS PRESCRIBED.
On the first two issues, petitioner-spouses claim that they were purchasers of the land in good faith as the law
does not obligate them to go beyond a clean certificate of title to determine the condition of the property. They
argue that a person dealing with registered land is only charged with notice of the burden on the property
annotated on the title. When there is nothing on the title to indicate any cloud or vice in the ownership of the
property or any encumbrance thereon, the purchaser is not required to explore further than the title in quest of
any hidden defect or inchoate right that may subsequently defeat his right thereto. They claim they had every right
to purchase the land despite the verbal warning made by caretaker Abas as the information was mere hearsay
and cannot prevail over the title of the land which was free from any encumbrance.
Their arguments do not persuade.
The petition at bar presents a case of double sale of an immovable property. Article 1544 of the New Civil Code
provides that in case an immovable property is sold to different vendees, the ownership shall belong: (1) to the
person acquiring it who in good faith first recorded it in the Registry of Property; (2) should there be no
inscription, the ownership shall pertain to the person who in good faith was first in possession; and, (3) in
the absence thereof, to the person who presents the oldest title, provided there is good faith.
In all cases, good faith is essential. It is the basic premise of the preferential rights granted to the one claiming
ownership over an immovable.
9
What is material is whether the second buyer first registers the second sale in
good faith, i.e., without knowledge of any defect in the title of the property sold.
10
The defense of indefeasibility of
a Torrens title does not extend to a transferee who takes the certificate of title in bad faith, with notice of a flaw.
11
The governing principle of prius tempore, potior jure (first in time, stronger in right) enunciated under Art. 1544
has been clarified, thus:
x x x 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 such knowledge taints his registration with bad faith (see also Astorga vs.
Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabaa (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 and Crisostomo vs. CA, G.R. No. 95843, 02 September
1992).
12
In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase and registration of
the land. A purchaser in good faith and for value is one who buys property without notice that some other
person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims
and interest of another person in the same property. So it is that the "honesty of intention" which constitutes good
faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry. At the
trial, Tomas Occea admitted that he found houses built on the land during its ocular inspection prior to his
purchase. He relied on the representation of vendor Arnold that these houses were owned by squatters and that
he was merely tolerating their presence on the land. Tomas should have verified from the occupants of the land
the nature and authority of their possession instead of merely relying on the representation of the vendor that they
were squatters, having seen for himself that the land was occupied by persons other than the vendor who was not
in possession of the land at that time. The settled rule is that a buyer of real property in the possession of
persons other than the seller must be wary and should investigate the rights of those in possession.
Without such inquiry, the buyer can hardly be regarded as a buyer in good faith and cannot have any
right over the property.
13
A purchaser cannot simply close his eyes to facts which should put a reasonable man
on his guard and then claim that he acted in good faith under the belief that there was no defect in the title of his
vendor.
14
His mere refusal to believe that such defect exists or his willful closing of his eyes to the possibility of the
existence of a defect in his vendors title will not make him an innocent purchaser for value if it later develops that
the title was in fact defective, and it appears that he would have notice of the defect had he acted with that
measure of precaution which may reasonably be required of a prudent man in a similar situation.
Indeed, the general rule is that one who deals with property registered under the Torrens system need not go
beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as
are annotated on the title. However, this principle does not apply when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has
8/22/14 G.R. No. 156973
circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has
knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in good faith.
15
The evidence of the private respondents show that when Tomas Occea conducted an ocular inspection of the
land prior to the second sale, Abas, the caretaker of the house which Alberta Morales built on the land, personally
informed Tomas that the lot had been previously sold by the same vendor Arnold to Alberta Morales. With this
information, the Occeas were obliged to look beyond the title of their vendor and make further inquiries from the
occupants of the land as to their authority and right to possess it. However, despite this information about a prior
sale, the Occeas proceeded with the purchase in haste. They did not inquire from Abas how they could get in
touch with the heirs or representatives of Alberta to verify the ownership of the land. Neither do the records reveal
that they exerted effort to examine the documents pertaining to the first sale. Having discovered that the land they
intended to buy was occupied by a person other than the vendor not in actual possession thereof, it was
incumbent upon the petitioners to verify the extent of the occupants possessory rights.
16
The Occeas did
nothing and chose to ignore and disbelieve Abas statement.
On the third issue, we hold that the action to annul title filed by respondents-heirs is not barred by laches and
prescription. Firstly, laches is a creation of equity and its application is controlled by equitable considerations.
Laches cannot be used to defeat justice or perpetuate fraud and injustice. Neither should its application be used
to prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of
another.
17
Secondly, prescription does not apply when the person seeking annulment of title or reconveyance is
in possession of the lot because the action partakes of a suit to quiet title which is imprescriptible.
18
In this case,
Morales had actual possession of the land when she had a house built thereon and had appointed a caretaker to
oversee her property. Her undisturbed possession of the land for a period of fifty (50) long years gave her and her
heirs a continuing right to seek the aid of a court of equity to determine the nature of the claim of ownership of
petitioner-spouses.
19
As held by this Court in Faja vs. Court of Appeals:
20
x x x There is settled jurisprudence that one who is in actual possession of a piece of land claiming to
be owner thereof may wait until his possession is disturbed or his title attacked before taking
steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives
him a continuing right to seek the aid of a court of equity to ascertain and determine the nature
of the adverse claim and its effect on his own title, which right can be claimed only by one who is in
possession. x x x The right to quiet title to the property, seek its reconveyance and annul any certificate
of title covering it accrued only from the time the one in possession was made aware of a claim
adverse to his own, and it is only then that the statutory period of prescription commences to
run against such possessor.
In the case at bar, Morales caretaker became aware of the second sale to petitioner-spouses only in 1991 when
he received from the latter a notice to vacate the land. Respondents-heirs did not sleep on their rights for in 1994,
they filed their action to annul petitioners title over the land. It likewise bears to stress that when vendor Arnold
reacquired title to the subject property by means of fraud and concealment after he has sold it to Alberta Morales,
a constructive trust was created in favor of Morales and her heirs. As the defrauded parties who were in actual
possession of the property, an action of the respondents-heirs to enforce the trust and recover the property
cannot prescribe. They may vindicate their right over the property regardless of the lapse of time.
21
Hence, the
rule that registration of the property has the effect of constructive notice to the whole world cannot be availed of by
petitioners and the defense of prescription cannot be successfully raised against respondents.
In sum, the general rule is that registration under the Torrens system is the operative act which gives validity to the
transfer of title on the land. However, it does not create or vest title especially where a party has actual knowledge
of the claimants actual, open and notorious possession of the property at the time of his registration.
22
A buyer in
bad faith has no right over the land. As petitioner-spouses failed to register the subject land in good faith,
ownership of the land pertains to respondent-heirs who first possessed it in good faith.
IN VIEW WHEREOF, the petition is DISMISSED. No costs.
SO ORDERED.
Quisumbing, Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
Footnotes
1
Original Records, pp. 19-20.
8/22/14 G.R. No. 156973
1
Original Records, pp. 19-20.
2
Id., pp. 21-24.
3
Id., p. 26.
4
Id., pp. 27-28.
5
Id., pp. 29-30.
6
Id., pp. 33-34.
7
Docketed as Civil Case No. 2715.
8
Decision dated January 17, 2003, Court of Appeals Special Second Division, Penned by Associate Justice
Mariano del Castillo and concurred in by Associate Justices Teodoro P. Regino and Rebecca Guia-
Salvador; Rollo at 41-54.
9
Gabriel vs. Spouses Mabanta and Colobong, G.R. No. 142403, March 26, 2003.
10
Coronel vs. Court of Appeals, 263 SCRA 15 (1996).
11
Baricuatro, Jr. vs. Court of Appeals, 325 SCRA 137 (2000).
12
Compendium of Civil Law and Jurisprudence, Justice Jose C. Vitug, pp. 604-605.
13
Spouses Castro vs. Miat, G.R. No. 143297, February 11, 2003.
14
Heirs of Ramon Durano, Sr. vs. Uy, 344 SCRA 238 (2000).
15
Spouses Domingo vs. Roces, G.R. No. 147468, April 9, 2003; Dela Merced vs. Government Service
Insurance System, 365 SCRA 1 (2001).
16
Gonzales vs. Toledo, G.R. No. 149465, December 8, 2003; Mathay vs. Court of Appeals, 295 SCRA 556
(1998).
17
Alcantara-Daus vs. Spouses de Leon, G.R. No. 149750, June 16, 2003.
18
Heirs of Santiago vs. Heirs of Santiago, G.R. No. 151440, June 17, 2003.
19
Millena vs. Court of Appeals, 324 SCRA 126 (2000).
20
75 SCRA 441 (1977).
21
Heirs of Ermac vs. Heirs of Ermac, G.R. No. 149679, May 30, 2003; Juan vs. Zuiga, 4 SCRA 1221
(1962).
22
Lavides vs. Pre, 367 SCRA 382 (2001).
8/22/14 G.R. No.L-29972
www.lawphil.net/judjuris/juri1976/jan1976/gr_29972_1976.HTML 1/19
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-29972 January 26, 1976
ROSARIO CARBONELL, petitioner,
vs.
HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA INFANTE and RAMON INFANTE, respondents.

MAKASIAR, J.
Petitioner seeks a review of the resolution of the Court of Appeals (Special Division of Five) dated October 30,
1968, reversing its decision of November 2, 1967 (Fifth Division), and its resolution of December 6, 1968 denying
petitioner's motion for reconsideration.
The dispositive part of the challenged resolution reads:
Wherefore, the motion for reconsideration filed on behalf of appellee Emma Infante, is hereby granted
and the decision of November 2, 1967, is hereby annulled and set aside. Another judgement shall be
entered affirming in toto that of the court a quo, dated January 20, 1965, which dismisses the
plaintiff's complaint and defendant's counterclaim.
Without costs.
The facts of the case as follows:
Prior to January 27, 1955, respondent Jose Poncio, a native of the Batanes Islands, was the owner of the parcel of
land herein involve with improvements situated at 179 V. Agan St., San Juan, Rizal, having an area of some one
hundred ninety-five (195) square meters, more or less, covered by TCT No. 5040 and subject to mortgage in favor
of the Republic Savings Bank for the sum of P1,500.00. Petitioner Rosario Carbonell, a cousin and adjacent
neighbor of respondent Poncio, and also from the Batanes Islands, lived in the adjoining lot at 177 V. Agan Street.
Both petitioners Rosario Carbonell and respondent Emma Infante offered to buy the said lot from Poncio (Poncio's
Answer, p. 38, rec. on appeal).
Respondent Poncio, unable to keep up with the installments due on the mortgage, approached petitioner one day
and offered to sell to the latter the said lot, excluding the house wherein respondent lived. Petitioner accepted the
offer and proposed the price of P9.50 per square meter. Respondent Poncio, after having secured the consent of
his wife and parents, accepted the price proposed by petitioner, on the condition that from the purchase price
would come the money to be paid to the bank.
Petitioner and respondent Jose Poncio then went to the Republic Savings Bank and secured the consent of the
President thereof for her to pay the arrears on the mortgage and to continue the payment of the installments as
they fall due. The amount in arrears reached a total sum of P247.26. But because respondent Poncio had
previously told her that the money, needed was only P200.00, only the latter amount was brought by petitioner
constraining respondent Jose Poncio to withdraw the sum of P47.00 from his bank deposit with Republic Savings
Bank. But the next day, petitioner refunded to Poncio the sum of P47.00.
On January 27, 1955, petitioner and respondent Poncio, in the presence of a witness, made and executed a
document in the Batanes dialect, which, translated into English, reads:
CONTRACT FOR ONE HALF LOT WHICH I BOUGHT FROM
JOSE PONCIO
Beginning today January 27, 1955, Jose Poncio can start living on the lot sold by him to me, Rosario
8/22/14 G.R. No.L-29972
Beginning today January 27, 1955, Jose Poncio can start living on the lot sold by him to me, Rosario
Carbonell, until after one year during which time he will not pa anything. Then if after said one can he
could not find an place where to move his house, he could still continue occupying the site but he
should pay a rent that man, be agreed.
(Sgd) JOSE PONCIO
(Sgd.) ROSARIO CARBONELL
(Sgd) CONSTANCIO MEONADA
Witness
(Pp. 6-7 rec. on appeal).
Thereafter, petitioner asked Atty. Salvador Reyes, also from the Batanes Islands, to prepare the formal deed of
sale, which she brought to respondent Poncio together with the amount of some P400.00, the balance she still had
to pay in addition to her assuming the mortgaged obligation to Republic Savings Bank.
Upon arriving at respondent Jose Poncio's house, however, the latter told petitioner that he could not proceed any
more with the sale, because he had already given the lot to respondent Emma Infants; and that he could not
withdraw from his deal with respondent Mrs. Infante, even if he were to go to jail. Petitioner then sought to contact
respondent Mrs. Infante but the latter refused to see her.
On February 5, 1955, petitioner saw Emma Infante erecting a all around the lot with a gate.
Petitioner then consulted Atty. Jose Garcia, who advised her to present an adverse claim over the land in question
with the Office of the Register of Deeds of Rizal. Atty. Garcia actually sent a letter of inquiry to the Register of
Deeds and demand letters to private respondents Jose Poncio and Emma Infante.
In his answer to the complaint Poncio admitted "that on January 30, 1955, Mrs. Infante improved her offer and he
agreed to sell the land and its improvements to her for P3,535.00" (pp. 38-40, ROA).
In a private memorandum agreement dated January 31, 1955, respondent Poncio indeed bound himself to sell to
his corespondent Emma Infante, the property for the sum of P2,357.52, with respondent Emma Infante still
assuming the existing mortgage debt in favor of Republic Savings Bank in the amount of P1,177.48. Emma Infante
lives just behind the houses of Poncio and Rosario Carbonell.
On February 2, 1955, respondent Jose Poncio executed the formal deed of sale in favor of respondent Mrs.
Infante in the total sum of P3,554.00 and on the same date, the latter paid Republic Savings Bank the mortgage
indebtedness of P1,500.00. The mortgage on the lot was eventually discharged.
Informed that the sale in favor of respondent Emma Infante had not yet been registered, Atty. Garcia prepared an
adverse claim for petitioner, who signed and swore to an registered the same on February 8, 1955.
The deed of sale in favor of respondent Mrs. Infante was registered only on February 12, 1955. As a
consequence thereof, a Transfer Certificate of Title was issued to her but with the annotation of the adverse claim
of petitioner Rosario Carbonell.
Respondent Emma Infante took immediate possession of the lot involved, covered the same with 500 cubic meters
of garden soil and built therein a wall and gate, spending the sum of P1,500.00. She further contracted the
services of an architect to build a house; but the construction of the same started only in 1959 years after the
litigation actually began and during its pendency. Respondent Mrs. Infante spent for the house the total amount of
P11,929.00.
On June 1, 1955, petitioner Rosario Carbonell, thru counsel, filed a second amended complaint against private
respondents, praying that she be declared the lawful owner of the questioned parcel of land; that the subsequent
sale to respondents Ramon R. Infante and Emma L. Infante be declared null and void, and that respondent Jose
Poncio be ordered to execute the corresponding deed of conveyance of said land in her favor and for damages
and attorney's fees (pp. 1-7, rec. on appeal in the C.A.).
Respondents first moved to dismiss the complaint on the ground, among others, that petitioner's claim is
unenforceable under the Statute of Frauds, the alleged sale in her favor not being evidenced by a written
document (pp. 7-13, rec. on appeal in the C.A.); and when said motion was denied without prejudice to passing on
the question raised therein when the case would be tried on the merits (p. 17, ROA in the C.A.), respondents filed
separate answers, reiterating the grounds of their motion to dismiss (pp. 18-23, ROA in the C.A.).
During the trial, when petitioner started presenting evidence of the sale of the land in question to her by
respondent Poncio, part of which evidence was the agreement written in the Batanes dialect aforementioned,
respondent Infantes objected to the presentation by petitioner of parole evidence to prove the alleged sale
between her and respondent Poncio. In its order of April 26, 1966, the trial court sustained the objection and
dismissed the complaint on the ground that the memorandum presented by petitioner to prove said sale does not
8/22/14 G.R. No.L-29972
dismissed the complaint on the ground that the memorandum presented by petitioner to prove said sale does not
satisfy the requirements of the law (pp. 31-35, ROA in the C.A.).
From the above order of dismissal, petitioner appealed to the Supreme Court (G.R. No. L-11231) which ruled in a
decision dated May 12, 1958, that the Statute of Frauds, being applicable only to executory contracts, does not
apply to the alleged sale between petitioner and respondent Poncio, which petitioner claimed to have been
partially performed, so that petitioner is entitled to establish by parole evidence "the truth of this allegation, as well
as the contract itself." The order appealed from was thus reversed, and the case remanded to the court a quo for
further proceedings (pp. 26-49, ROA in the C.A.).
After trial in the court a quo; a decision was, rendered on December 5, 1962, declaring the second sale by
respondent Jose Poncio to his co-respondents Ramon Infante and Emma Infante of the land in question null and
void and ordering respondent Poncio to execute the proper deed of conveyance of said land in favor of petitioner
after compliance by the latter of her covenants under her agreement with respondent Poncio (pp. 5056, ROA in
the C.A.).
On January 23, 1963, respondent Infantes, through another counsel, filed a motion for re-trial to adduce evidence
for the proper implementation of the court's decision in case it would be affirmed on appeal (pp. 56-60, ROA in the
C.A.), which motion was opposed by petitioner for being premature (pp. 61-64, ROA in the C.A.). Before their
motion for re-trial could be resolved, respondent Infantes, this time through their former counsel, filed another
motion for new trial, claiming that the decision of the trial court is contrary to the evidence and the law (pp. 64-78,
ROA in the C.A.), which motion was also opposed by petitioner (pp. 78-89, ROA in the C.A.).
The trial court granted a new trial (pp. 89-90, ROA in the C.A.), at which re-hearing only the respondents
introduced additional evidence consisting principally of the cost of improvements they introduced on the land in
question (p. 9, ROA in the C.A.).
After the re-hearing, the trial court rendered a decision, reversing its decision of December 5, 1962 on the ground
that the claim of the respondents was superior to the claim of petitioner, and dismissing the complaint (pp. 91-95,
ROA in the C.A.), From this decision, petitioner Rosario Carbonell appealed to the respondent Court of Appeals
(p. 96, ROA in the C.A.).
On November 2, 1967, the Court of Appeals (Fifth Division composed of Justices Magno Gatmaitan, Salvador V.
Esguerra and Angle H. Mojica, speaking through Justice Magno Gatmaitan), rendered judgment reversing the
decision of the trial court, declaring petitioner therein, to have a superior right to the land in question, and
condemning the defendant Infantes to reconvey to petitioner after her reimbursement to them of the sum of
P3,000.00 plus legal interest, the land in question and all its improvements (Appendix "A" of Petition).
Respondent Infantes sought reconsideration of said decision and acting on the motion for reconsideration, the
Appellate Court, three Justices (Villamor, Esguerra and Nolasco) of Special Division of Five, granted said motion,
annulled and set aside its decision of November 2, 1967, and entered another judgment affirming in toto the
decision of the court a quo, with Justices Gatmaitan and Rodriguez dissenting (Appendix "B" of Petition).
Petitioner Rosario Carbonell moved to reconsider the Resolution of the Special Division of Five, which motion was
denied by Minute Resolution of December 6, 1968 (but with Justices Rodriguez and Gatmaitan voting for
reconsideration) [Appendix "C" of Petition].
Hence, this appeal by certiorari.
Article 1544, New Civil Code, which is decisive of this case, recites:
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 movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in
the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith (emphasis supplied).
It is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the protection of
the second paragraph of said Article 1544.
Unlike the first and third paragraphs of said Article 1544, which accord preference to the one who first takes
possession in good faith of personal or real property, the second paragraph directs that ownership of immovable
property should be recognized in favor of one "who in good faith first recorded" his right. Under the first and third
paragraph, good faith must characterize the act of anterior registration (DBP vs. Mangawang, et al., 11 SCRA 405;
8/22/14 G.R. No.L-29972
paragraph, good faith must characterize the act of anterior registration (DBP vs. Mangawang, et al., 11 SCRA 405;
Soriano, et al. vs. Magale, et al., 8 SCRA 489).
If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, as in the case at
bar, prior registration in good faith is a pre-condition to superior title.
When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer thereof and the title of
Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon. Carbonell was not
aware and she could not have been aware of any sale of Infante as there was no such sale to Infante then.
Hence, Carbonell's prior purchase of the land was made in good faith. Her good faith subsisted and continued to
exist when she recorded her adverse claim four (4) days prior to the registration of Infantes's deed of sale.
Carbonell's good faith did not cease after Poncio told her on January 31, 1955 of his second sale of the same lot
to Infante. Because of that information, Carbonell wanted an audience with Infante, which desire underscores
Carbonell's good faith. With an aristocratic disdain unworthy of the good breeding of a good Christian and good
neighbor, Infante snubbed Carbonell like a leper and refused to see her. So Carbonell did the next best thing to
protect her right she registered her adversed claim on February 8, 1955. Under the circumstances, this
recording of her adverse claim should be deemed to have been done in good faith and should emphasize Infante's
bad faith when she registered her deed of sale four (4) days later on February 12, 1955.
Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is shown by the following facts,
the vital significance and evidenciary effect of which the respondent Court of Appeals either overlooked of failed to
appreciate:
(1) Mrs. Infante refused to see Carbonell, who wanted to see Infante after she was informed by Poncio that he sold
the lot to Infante but several days before Infante registered her deed of sale. This indicates that Infante knew
from Poncio and from the bank of the prior sale of the lot by Poncio to Carbonell. Ordinarily, one will not refuse
to see a neighbor. Infante lives just behind the house of Carbonell. Her refusal to talk to Carbonell could only
mean that she did not want to listen to Carbonell's story that she (Carbonell) had previously bought the lot from
Poncio.
(2) Carbonell was already in possession of the mortgage passbook [not Poncio's saving deposit passbook
Exhibit "1" Infantes] and Poncio's copy of the mortgage contract, when Poncio sold the lot Carbonell who, after
paying the arrearages of Poncio, assumed the balance of his mortgaged indebtedness to the bank, which in the
normal course of business must have necessarily informed Infante about the said assumption by Carbonell of the
mortgage indebtedness of Poncio. Before or upon paying in full the mortgage indebtedness of Poncio to the Bank.
Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook as well as
Poncio's mortgage contract so that the fact of full payment of his bank mortgage will be entered therein; and
Poncio, as well as the bank, must have inevitably informed her that said mortgage passbook could not be given to
her because it was already delivered to Carbonell.
If Poncio was still in possession of the mortgage passbook and his copy of the mortgage contract at the time he
executed a deed of sale in favor of the Infantes and when the Infantes redeemed his mortgage indebtedness from
the bank, Poncio would have surrendered his mortgage passbook and his copy of the mortgage contract to the
Infantes, who could have presented the same as exhibits during the trial, in much the same way that the Infantes
were able to present as evidence Exhibit "1" Infantes, Poncio's savings deposit passbook, of which Poncio
necessarily remained in possession as the said deposit passbook was never involved in the contract of sale with
assumption of mortgage. Said savings deposit passbook merely proves that Poncio had to withdraw P47.26, which
amount was tided to the sum of P200.00 paid by Carbonell for Poncio's amortization arrearages in favor of the
bank on January 27, 1955; because Carbonell on that day brought with her only P200.00, as Poncio told her that
was the amount of his arrearages to the bank. But the next day Carbonell refunded to Poncio the sum of P47.26.
(3) The fact that Poncio was no longer in possession of his mortgage passbook and that the said mortgage
passbook was already in possession of Carbonell, should have compelled Infante to inquire from Poncio why he
was no longer in possession of the mortgage passbook and from Carbonell why she was in possession of the
same (Paglago, et. al vs. Jara et al 22 SCRA 1247, 1252-1253). The only plausible and logical reason why Infante
did not bother anymore to make such injury , w because in the ordinary course of business the bank must have
told her that Poncio already sold the lot to Carbonell who thereby assumed the mortgage indebtedness of Poncio
and to whom Poncio delivered his mortgage passbook. Hoping to give a semblance of truth to her pretended good
faith, Infante snubbed Carbonell's request to talk to her about the prior sale to her b Poncio of the lot. As
aforestated, this is not the attitude expected of a good neighbor imbued with Christian charity and good will as well
as a clear conscience.
(4) Carbonell registered on February 8, 1955 her adverse claim, which was accordingly annotated on Poncio's
title, four [4] days before Infante registered on February 12, 1955 her deed of sale executed on February 2, 1955.
Here she was again on notice of the prior sale to Carbonell. Such registration of adverse claim is valid and
effective (Jovellanos vs. Dimalanta, L-11736-37, Jan. 30, 1959, 105 Phil. 1250-51).
8/22/14 G.R. No.L-29972
(5) In his answer to the complaint filed by Poncio, as defendant in the Court of First Instance, he alleged that both
Mrs. Infante and Mrs. Carbonell offered to buy the lot at P15.00 per square meter, which offers he rejected as he
believed that his lot is worth at least P20.00 per square meter. It is therefore logical to presume that Infante was
told by Poncio and consequently knew of the offer of Carbonell which fact likewise should have put her on her
guard and should have compelled her to inquire from Poncio whether or not he had already sold the property to
Carbonell.
As recounted by Chief Justice Roberto Concepcion, then Associate Justice, in the preceding case of Rosario
Carbonell vs. Jose Poncio, Ramon Infante and Emma Infante (1-11231, May 12, 1958), Poncio alleged in his
answer:
... that he had consistently turned down several offers, made by plaintiff, to buy the land in question,
at P15 a square meter, for he believes that it is worth not less than P20 a square meter; that Mrs.
Infante, likewise, tried to buy the land at P15 a square meter; that, on or about January 27, 1955,
Poncio was advised by plaintiff that should she decide to buy the property at P20 a square meter, she
would allow him to remain in the property for one year; that plaintiff then induced Poncio to sign a
document, copy of which if probably the one appended to the second amended complaint; that
Poncio signed it 'relying upon the statement of the plaintiff that the document was a permit for him to
remain in the premises in the event defendant decided to sell the property to the plaintiff at P20.00 a
square meter'; that on January 30, 1955, Mrs. Infante improved her offer and agreed to sell the land
and its improvement to her for P3,535.00; that Poncio has not lost 'his mind,' to sell his property,
worth at least P4,000, for the paltry sum P1,177.48, the amount of his obligation to the Republic
Saving s Bank; and that plaintiff's action is barred by the Statute of Frauds. ... (pp. 38-40, ROA,
emphasis supplied).
II
EXISTENCE OF THE PRIOR SALE TO CARBONELL
DULY ESTABLISHED
(1) In his order dated April 26, 1956 dismissing the complaint on the ground that the private document Exhibit "A"
executed by Poncio and Carbonell and witnessed by Constancio Meonada captioned "Contract for One-half Lot
which I Bought from Jose Poncio," was not such a memorandum in writing within the purview of the Statute of
Frauds, the trial judge himself recognized the fact of the prior sale to Carbonell when he stated that "the
memorandum in question merely states that Poncio is allowed to stay in the property which he had sold to the
plaintiff. There is no mention of the reconsideration, a description of the property and such other essential
elements of the contract of sale. There is nothing in the memorandum which would tend to show even in the
slightest manner that it was intended to be an evidence of contract sale. On the contrary, from the terms of the
memorandum, it tends to show that the sale of the property in favor of the plaintiff is already an accomplished act.
By the very contents of the memorandum itself, it cannot therefore, be considered to be the memorandum which
would show that a sale has been made by Poncio in favor of the plaintiff" (p. 33, ROA, emphasis supplied). As
found by the trial court, to repeat the said memorandum states "that Poncio is allowed to stay in the property which
he had sold to the plaintiff ..., it tends to show that the sale of the property in favor of the plaintiff is already an
accomplished act..."
(2) When the said order was appealed to the Supreme Court by Carbonell in the previous case of Rosario
Carbonell vs. Jose Poncio, Ramon Infante and Emma Infante
(L-11231, supra), Chief Justice Roberto Concepcion, then Associate Justice, speaking for a unanimous Court,
reversed the aforesaid order of the trial court dismissing the complaint, holding that because the complaint alleges
and the plaintiff claims that the contract of sale was partly performed, the same is removed from the application of
the Statute of Frauds and Carbonell should be allowed to establish by parol evidence the truth of her allegation of
partial performance of the contract of sale, and further stated:
Apart from the foregoing, there are in the case at bar several circumstances indicating that plaintiff's
claim might not be entirely devoid of factual basis. Thus, for instance, Poncio admitted in his answer
that plaintiff had offered several times to purchase his land.
Again, there is Exhibit A, a document signed by the defendant. It is in the Batanes dialect, which,
according to plaintiff's uncontradicted evidence, is the one spoken by Poncio, he being a native of
said region. Exhibit A states that Poncio would stay in the land sold by him to plaintiff for one year,
from January 27, 1955, free of charge, and that, if he cannot find a place where to transfer his house
thereon, he may remain upon. Incidentally, the allegation in Poncio's answer to the effect that he
signed Exhibit A under the belief that it "was a permit for him to remain in the premises in the" that "he
decided to sell the property" to the plaintiff at P20 a sq. m." is, on its face, somewhat difficult to
believe. Indeed, if he had not decided as yet to sell the land to plaintiff, who had never increased her
offer of P15 a square meter, there was no reason for Poncio to get said permit from her. Upon the
other hand, if plaintiff intended to mislead Poncio, she would have caused Exhibit A to be drafted,
probably, in English , instead of taking the trouble of seeing to it that it was written precisely in his
8/22/14 G.R. No.L-29972
probably, in English , instead of taking the trouble of seeing to it that it was written precisely in his
native dialect, the Batanes. Moreover, Poncio's signature on Exhibit A suggests that he is neither
illiterate nor so ignorant as to sign document without reading its contents, apart from the fact that
Meonada had read Exhibit A to him and given him a copy thereof, before he signed thereon,
according to Meonada's uncontradicted testimony.
Then, also, defendants say in their brief:
The only allegation in plaintiff's complaint that bears any relation to her claim that there
has been partial performance of the supposed contract of sale, is the notation of the sum
of P247.26 in the bank book of defendant Jose Poncio. The noting or jotting down of the
sum of P247.26 in the bank book of Jose Poncio does not prove the fact that the said
amount was the purchase price of the property in question. For all we knew, the sum of
P247.26 which plaintiff claims to have paid to the Republic Savings Bank for the account
of the defendant, assuming that the money paid to the Republic Savings Bank came from
the plaintiff, was the result of some usurious loan or accomodation, rather than earnest
money or part payment of the land. Neither is it competent or satisfactory evidence to
prove the conveyance of the land in question the fact that the bank book account of Jose
Poncio happens to be in the possession of the plaintiff. (Defendants-Appellees' brief, pp.
25-26).
How shall We know why Poncio's bank deposit book is in plaintiffs possession, or whether there is
any relation between the P247.26 entry therein and the partial payment of P247.26 allegedly made by
plaintiff to Poncio on account of the price of his land, if we do not allow the plaintiff to explain it on the
witness stand? Without expressing any opinion on the merits of plaintiff's claim, it is clear, therefore,
that she is entitled , legally as well as from the viewpoint of equity, to an opportunity to introduce parol
evidence in support of the allegations of her second amended complaint. (pp. 46-49, ROA, emphasis
supplied).
(3) In his first decision of December 5, 1962 declaring null and void the sale in favor of the Infantes and ordering
Poncio to execute a deed of conveyance in favor of Carbonell, the trial judge found:
... A careful consideration of the contents of Exh. 'A' show to the satisfaction of the court that the sale
of the parcel of land in question by the defendant Poncio in favor of the plaintiff was covered therein
and that the said Exh. "a' was also executed to allow the defendant to continue staying in the
premises for the stated period. It will be noted that Exh. 'A' refers to a lot 'sold by him to me' and
having been written originally in a dialect well understood by the defendant Poncio, he signed the said
Exh. 'A' with a full knowledge and consciousness of the terms and consequences thereof. This
therefore, corroborates the testimony of the plaintiff Carbonell that the sale of the land was made by
Poncio. It is further pointed out that there was a partial performance of the verbal sale executed by
Poncio in favor of the plaintiff, when the latter paid P247.26 to the Republic Savings Bank on account
of Poncio's mortgage indebtedness. Finally, the possession by the plaintiff of the defendant Poncio's
passbook of the Republic Savings Bank also adds credibility to her testimony. The defendant
contends on the other hand that the testimony of the plaintiff, as well as her witnesses, regarding the
sale of the land made by Poncio in favor of the plaintiff is inadmissible under the provision of the
Statute of Fraud based on the argument that the note Exh. "A" is not the note or memorandum
referred to in the to in the Statute of Fraud. The defendants argue that Exh. "A" fails to comply with
the requirements of the Statute of Fraud to qualify it as the note or memorandum referred to therein
and open the way for the presentation of parole evidence to prove the fact contained in the note or
memorandum. The defendant argues that there is even no description of the lot referred to in the
note, especially when the note refers to only one half lot. With respect to the latter argument of the
Exhibit 'A', the court has arrived at the conclusion that there is a sufficient description of the lot
referred to in Exh. 'A' as none other than the parcel of land occupied by the defendant Poncio and
where he has his improvements erected. The Identity of the parcel of land involved herein is
sufficiently established by the contents of the note Exh. "A". For a while, this court had that similar
impression but after a more and thorough consideration of the context in Exh. 'A' and for the reasons
stated above, the Court has arrived at the conclusion stated earlier (pp. 52-54, ROA, emphasis
supplied).
(4) After re-trial on motion of the Infantes, the trial Judge rendered on January 20, 1965 another decision
dismissing the complaint, although he found
1. That on January 27, 1955, the plaintiff purchased from the defendant Poncio a parcel of land with
an area of 195 square meters, more or less, covered by TCT No. 5040 of the Province of Rizal,
located at San Juan del Monte, Rizal, for the price of P6.50 per square meter;
2. That the purchase made by the plaintiff was not reduced to writing except for a short note or
8/22/14 G.R. No.L-29972
memorandum Exh. A, which also recited that the defendant Poncio would be allowed to continue his
stay in the premises, among other things, ... (pp. 91-92, ROA, emphasis supplied).
From such factual findings, the trial Judge confirms the due execution of Exhibit "A", only that his legal conclusion
is that it is not sufficient to transfer ownership (pp. 93-94, ROA).
(5) In the first decision of November 2, 1967 of the Fifth Division of the Court of Appeals composed of Justices
Esguerra (now Associate Justice of the Supreme Court), Gatmaitan and Mojica, penned by Justice Gatmaitan, the
Court of Appeals found that:
... the testimony of Rosario Carbonell not having at all been attempted to be disproved by defendants,
particularly Jose Poncio, and corroborated as it is by the private document in Batanes dialect, Exhibit
A, the testimony being to the effect that between herself and Jose there had been celebrated a sale
of the property excluding the house for the price of P9.50 per square meter, so much so that on faith
of that, Rosario had advanced the sum of P247.26 and binding herself to pay unto Jose the balance
of the purchase price after deducting the indebtedness to the Bank and since the wording of Exhibit
A, the private document goes so far as to describe their transaction as one of sale, already
consummated between them, note the part tense used in the phrase, "the lot sold by him to me" and
going so far even as to state that from that day onwards, vendor would continue to live therein, for
one year, 'during which time he will not pay anything' this can only mean that between Rosario and
Jose, there had been a true contract of sale, consummated by delivery constitutum possession, Art.
1500, New Civil Code; vendor's possession having become converted from then on, as a mere tenant
of vendee, with the special privilege of not paying rental for one year, it is true that the sale by Jose
Poncio to Rosario Carbonell corroborated documentarily only by Exhibit A could not have been
registered at all, but it was a valid contract nonetheless, since under our law, a contract sale is
consensual, perfected by mere consent, Couto v. Cortes, 8 Phil 459, so much so that under the New
Civil Code, while a sale of an immovable is ordered to be reduced to a public document, Art. 1358,
that mandate does not render an oral sale of realty invalid, but merely incapable of proof, where still
executory and action is brought and resisted for its performance, 1403, par. 2, 3; but where already
wholly or partly executed or where even if not yet, it is evidenced by a memorandum, in any case
where evidence to further demonstrate is presented and admitted as the case was here, then the oral
sale becomes perfectly good, and becomes a good cause of action not only to reduce it to the form of
a public document, but even to enforce the contract in its entirety, Art. 1357; and thus it is that what
we now have is a case wherein on the one hand Rosario Carbonell has proved that she had an
anterior sale, celebrated in her favor on 27 January, 1955, Exhibit A, annotated as an adverse claim
on 8 February, 1955, and on other, a sale is due form in favor of Emma L. Infante on 2 February,
1955, Exhibit 3-Infante, and registered in due form with title unto her issued on 12 February, 1955;
the vital question must now come on which of these two sales should prevail; ... (pp. 74-76, rec.,
emphasis supplied).
(6) In the resolution dated October 30, 1968 penned by then Court of Appeals Justice Esguerra (now a member of
this Court), concurred in by Justices Villamor and Nolasco, constituting the majority of a Special Division of Five,
the Court of Appeals, upon motion of the Infantes, while reversing the decision of November 2, 1967 and affirming
the decision of the trial court of January 20, 1965 dismissing plaintiff's complaint, admitted the existence and
genuineness of Exhibit "A", the private memorandum dated January 27, 1955, although it did not consider the
same as satisfying "the essential elements of a contract of sale," because it "neither specifically describes the
property and its boundaries, nor mention its certificate of title number, nor states the price certain to be paid, or
contrary to the express mandate of Articles 1458 and 1475 of the Civil Code.
(7) In his dissent concurred in by Justice Rodriguez, Justice Gatmaitan maintains his decision of November 2, 1967
as well as his findings of facts therein, and reiterated that the private memorandum Exhibit "A", is a perfected sale,
as a sale is consensual and consummated by mere consent, and is binding on and effective between the parties.
This statement of the principle is correct [pp. 89-92, rec.].
III
ADEQUATE CONSIDERATION OR PRICE FOR THE SALE
IN FAVOR OF CARBONELL
It should be emphasized that the mortgage on the lot was about to be foreclosed by the bank for failure on the part
of Poncio to pay the amortizations thereon. To forestall the foreclosure and at the same time to realize some
money from his mortgaged lot, Poncio agreed to sell the same to Carbonell at P9.50 per square meter, on
condition that Carbonell [1] should pay (a) the amount of P400.00 to Poncio and 9b) the arrears in the amount of
P247.26 to the bank; and [2] should assume his mortgage indebtedness. The bank president agreed to the said
sale with assumption of mortgage in favor of Carbonell an Carbonell accordingly paid the arrears of P247.26. On
January 27, 1955, she paid the amount of P200.00 to the bank because that was the amount that Poncio told her
as his arrearages and Poncio advanced the sum of P47.26, which amount was refunded to him by Carbonell the
8/22/14 G.R. No.L-29972
as his arrearages and Poncio advanced the sum of P47.26, which amount was refunded to him by Carbonell the
following day. This conveyance was confirmed that same day, January 27, 1955, by the private document, Exhibit
"A", which was prepared in the Batanes dialect by the witness Constancio Meonada, who is also from Batanes like
Poncio and Carbonell.
The sale did not include Poncio's house on the lot. And Poncio was given the right to continue staying on the land
without paying any rental for one year, after which he should pay rent if he could not still find a place to transfer
his house. All these terms are part of the consideration of the sale to Carbonell.
It is evident therefore that there was ample consideration, and not merely the sum of P200.00, for the sale of
Poncio to Carbonell of the lot in question.
But Poncio, induced by the higher price offered to him by Infante, reneged on his commitment to Carbonell and
told Carbonell, who confronted him about it, that he would not withdraw from his deal with Infante even if he is sent
to jail The victim, therefore, "of injustice and outrage is the widow Carbonell and not the Infantes, who without
moral compunction exploited the greed and treacherous nature of Poncio, who, for love of money and without
remorse of conscience, dishonored his own plighted word to Carbonell, his own cousin.
Inevitably evident therefore from the foregoing discussion, is the bad faith of Emma Infante from the time she
enticed Poncio to dishonor his contract with Carbonell, and instead to sell the lot to her (Infante) by offering Poncio
a much higher price than the price for which he sold the same to Carbonell. Being guilty of bad faith, both in taking
physical possession of the lot and in recording their deed of sale, the Infantes cannot recover the value of the
improvements they introduced in the lot. And after the filing by Carbonell of the complaint in June, 1955, the
Infantes had less justification to erect a building thereon since their title to said lot is seriously disputed by
Carbonell on the basis of a prior sale to her.
With respect to the claim of Poncio that he signed the document Exhibit "A" under the belief that it was a permit for
him to remain in the premises in ease he decides to sell the property to Carbonell at P20.00 per square meter, the
observation of the Supreme Court through Mr. Chief Justice Concepcion in G.R. No. L-11231, supra, bears
repeating:
... Incidentally, the allegation in Poncio's answer to the effect that he signed Exhibit A under the belief
that it 'was a permit for him to remain in the premises in the event that 'he decided to sell the property'
to the plaintiff at P20.00 a sq. m is, on its face, somewhat difficult to believe. Indeed, if he had not
decided as yet to sell that land to plaintiff, who had never increased her offer of P15 a square meter,
there as no reason for Poncio to get said permit from her. Upon the they if plaintiff intended to
mislead Poncio, she would have Exhibit A to be drafted, probably, in English, instead of taking the
trouble of seeing to it that it was written precisely in his native dialect, the Batanes. Moreover,
Poncio's signature on Exhibit A suggests that he is neither illiterate nor so ignorant as to sign a
document without reading its contents, apart from the fact that Meonada had read Exhibit A to him-
and given him a copy thereof, before he signed thereon, according to Meonada's uncontradicted
testimony. (pp. 46-47, ROA).
As stressed by Justice Gatmaitan in his first decision of November 2, 1965, which he reiterated in his dissent from
the resolution of the majority of the Special Division. of Five on October 30, 1968, Exhibit A, the private document
in the Batanes dialect, is a valid contract of sale between the parties, since sale is a consensual contract and is
perfected by mere consent (Couto vs. Cortes, 8 Phil. 459). Even an oral contract of realty is all between the
parties and accords to the vendee the right to compel the vendor to execute the proper public document As a
matter of fact, Exhibit A, while merely a private document, can be fully or partially performed, to it from the
operation of the statute of frauds. Being a all consensual contract, Exhibit A effectively transferred the possession
of the lot to the vendee Carbonell by constitutum possessorium (Article 1500, New Civil Code); because
thereunder the vendor Poncio continued to retain physical possession of the lot as tenant of the vendee and no
longer as knew thereof. More than just the signing of Exhibit A by Poncio and Carbonell with Constancio Meonada
as witness to fact the contract of sale, the transition was further confirmed when Poncio agreed to the actual
payment by at Carbonell of his mortgage arrearages to the bank on January 27, 1955 and by his consequent
delivery of his own mortgage passbook to Carbonell. If he remained owner and mortgagor, Poncio would not have
surrendered his mortgage passbook to' Carbonell.
IV
IDENTIFICATION AND DESCRIPTION OF THE DISPUTED LOT IN THE MEMORANDUM EXHIBIT "A"
The claim that the memorandum Exhibit "A" does not sufficiently describe the disputed lot as the subject matter of
the sale, was correctly disposed of in the first decision of the trial court of December 5, 1962, thus: "The defendant
argues that there is even no description of the lot referred to in the note (or memorandum), especially when the
note refers to only one-half lot. With respect to the latter argument of the defendant, plaintiff points out that one-
half lot was mentioned in Exhibit 'A' because the original description carried in the title states that it was formerly
part of a bigger lot and only segregated later. The explanation is tenable, in (sic) considering the time value of the
contents of Exh. 'A', the court has arrived at the conclusion that there is sufficient description of the lot referred to
8/22/14 G.R. No.L-29972
contents of Exh. 'A', the court has arrived at the conclusion that there is sufficient description of the lot referred to
in Exh. As none other than the parcel of lot occupied by the defendant Poncio and where he has his improvements
erected. The Identity of the parcel of land involved herein is sufficiently established by the contents of the note
Exh. 'A'. For a while, this court had that similar impression but after a more and through consideration of the
context in Exh. 'A' and for the reasons stated above, the court has arrived to (sic) the conclusion stated earlier"
(pp. 53-54, ROA).
Moreover, it is not shown that Poncio owns another parcel with the same area, adjacent to the lot of his cousin
Carbonell and likewise mortgaged by him to the Republic Savings Bank. The transaction therefore between Poncio
and Carbonell can only refer and does refer to the lot involved herein. If Poncio had another lot to remove his
house, Exhibit A would not have stipulated to allow him to stay in the sold lot without paying any rent for one year
and thereafter to pay rental in case he cannot find another place to transfer his house.
While petitioner Carbonell has the superior title to the lot, she must however refund to respondents Infantes the
amount of P1,500.00, which the Infantes paid to the Republic Savings Bank to redeem the mortgage.
It appearing that the Infantes are possessors in bad faith, their rights to the improvements they introduced op the
disputed lot are governed by Articles 546 and 547 of the New Civil Code. Their expenses consisting of P1,500.00
for draining the property, filling it with 500 cubic meters of garden soil, building a wall around it and installing a
gate and P11,929.00 for erecting a b ' bungalow thereon, are useful expenditures, for they add to the value of the
property (Aringo vs. Arenas, 14 Phil. 263; Alburo vs. Villanueva, 7 Phil. 277; Valencia vs. Ayala de Roxas, 13 Phil.
45).
Under the second paragraph of Article 546, the possessor in good faith can retain the useful improvements unless
the person who defeated him in his possession refunds him the amount of such useful expenses or pay him the
increased value the land may have acquired by reason thereof. Under Article 547, the possessor in good faith has
also the right to remove the useful improvements if such removal can be done without damage to the land, unless
the person with the superior right elects to pay for the useful improvements or reimburse the expenses therefor
under paragraph 2 of Article 546. These provisions seem to imply that the possessor in bad faith has neither the
right of retention of useful improvements nor the right to a refund for useful expenses.
But, if the lawful possessor can retain the improvements introduced by the possessor in bad faith for pure luxury or
mere pleasure only by paying the value thereof at the time he enters into possession (Article 549 NCC), as a
matter of equity, the Infantes, although possessors in bad faith, should be allowed to remove the aforesaid
improvements, unless petitioner Carbonell chooses to pay for their value at the time the Infantes introduced said
useful improvements in 1955 and 1959. The Infantes cannot claim reimbursement for the current value of the said
useful improvements; because they have been enjoying such improvements for about two decades without paying
any rent on the land and during which period herein petitioner Carbonell was deprived of its possession and use.
WHEREFORE, THE DECISION OF THE SPECIAL DIVISION OF FIVE OF THE COURT OF APPEALS OF
OCTOBER 30, 1968 IS HEREBY REVERSED; PETITIONER ROSARIO CARBONELL IS HEREBY DECLARED TO
HAVE THE SUPERIOR RIGHT TO THE LAND IN QUESTION AND IS HEREBY DIRECTED TO REIMBURSE TO
PRIVATE RESPONDENTS INFANTES THE SUM OF ONE THOUSAND FIVE HUNDRED PESOS (P1,500.00) WITHIN
THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION; AND THE REGISTER OF DEEDS OF RIZAL IS
HEREBY DIRECTED TO CANCEL TRANSFER CERTIFICATE OF TITLE NO. 37842 ISSUED IN FAVOR OF
PRIVATE RESPONDENTS INFANTES COVERING THE DISPUTED LOT, WHICH CANCELLED TRANSFER
CERTIFICATE OF TITLE NO. 5040 IN THE NAME OF JOSE PONCIO, AND TO ISSUE A NEW TRANSFER
CERTIFICATE OF TITLE IN FAVOR OF PETITIONER ROSARIO CARBONELL UPON PRESENTATION OF PROOF
OF PAYMENT BY HER TO THE INFANTES OF THE AFORESAID AMOUNT OF ONE THOUSAND FIVE HUNDRED
PESOS (P1,500.00).
PRIVATE RESPONDENTS INFANTES MAY REMOVE THEIR AFOREMENTIONED USEFUL IMPROVEMENTS
FROM THE LOT WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION, UNLESS THE
PETITIONER ROSARIO CARBONELL ELECTS TO ACQUIRE THE SAME AND PAYS THE INFANTES THE
AMOUNT OF THIRTEEN THOUSAND FOUR HUNDRED TWENTY-NINE PESOS (P13,429.00) WITHIN THREE (3)
MONTHS FROM THE FINALITY OF THIS DECISION. SHOULD PETITIONER CARBONELL FAIL TO PAY THE SAID
AMOUNT WITHIN THE AFORESTATED PERIOD OF THREE (3) MONTHS FROM THE FINALITY OF THIS
DECISION, THE PERIOD OF THREE (3) MONTHS WITHIN WHICH THE RESPONDENTS INFANTES MAY REMOVE
THEIR AFOREMENTIONED USEFUL IMPROVEMENTS SHALL COMMENCE FROM THE EXPIRATION OF THE
THREE (3) MONTHS GIVEN PETITIONER CARBONELL TO PAY FOR THE SAID USEFUL IMPROVEMENTS.
WITH COSTS AGAINST PRIVATE RESPONDENTS.
Castro, C.J, Aquino and Martin, JJ., concur.

8/22/14 G.R. No.L-29972

Separate Opinions

TEEHANKEE, J., concurring:
I concur. My concurrence proceeds from the same premise as the dissenting opinion of Justice Munoz Palma that
both the conflicting buyers of the real property in question, namely, petitioner Rosario Carbonell as the first buyer
may be deemed purchasers in good faith at the respective dates of their purchase.
The answer to the question of who between the two buyers in good faith should prevail is provided in the second
paragraph of Article 1544 of the Civil Code
1
(formerly Article 1473 of the old Civil Code) which ordains that "the
ownership of the immovable property shall belong to the person acquiring it who in good faith first recorded it in the Registry
of Property."
In the case at bar, the seller executed on January 27, 1955 the private memorandum of sale of the property in
favor of the first buyer Carbonell, However, six days later on February 2, 1955, the seller sold the property for a
second time for an improved price, this time executing a formal registrable deed of sale in favor of the second
buyer Infante.
So it was that when the first buyer Carbonell saw the seller a few days afterwards bringing the formal deed of sale
for the seller's signature and the balance of the agreed cash payment, the seller told her that he could not
proceed anymore with formalizing the first sale because he had already formalized the second sale in favor of the
second buyer Infante.
Since Carbonell (the first buyer) did not have a formal registrable deed of sale, she did the next best thing to
protect her legal rights and registered on February 8, 1955 with the Rizal Register of Deeds her adverse claim as
first buyer entitled to the property. The second buyer Infante registered the deed of sale in her favor with the Rizal
Register of Deeds only on February 12, 1955 (notwithstanding its having been executed ten days earlier on
February 2, 1955), and therefore the transfer certificate of title issued in her favor carried the duly annotated
adverse claim of Carbonell as the first buyer.
Both these registrations were in good faith and hence, as provided by the cited code article, the first buyer
Carbonell as also the first registrant is legally entitled to the property.
The fact that Carbonell registered only an adverse claim as she had no registrable deed of sale is of no moment.
The facts of record amply show that she had a written memorandum of sale, which was partially executed with the
advance payment made by her for the seller's mortgage account with the bank, and which was perfected and
binding in law by their accord on the subject matter and price. Carbonell could in law enforce in court her rights as
first buyer under the memorandum agreement and compel the seller to execute in her favor a formal registrable
deed of sale which would relate back to the date of the original memorandum agreement.
And under the cited code provision, Carbonell had to duly register such adverse claim as first buyer, as otherwise
the subsequent registration of the second buyer's deed of sale would have obliterated her legal rights and enable
the seller to achieve his fraudulent act of selling the property a second time for a better price in derogation of her
prior right thereto.
The fact that the seller refused to execute the formal deed of sale in Carbonell's favor and (as was only to be
expected) informed her that he could not proceed anymore with the sale because he had sold it for a second time
for a better price did not convert her prior registration of her adverse claim into one of bad faith.
The fraudulent seller's act of informing the first buyer that he has wrongfully sold his property for a second time
cannot work out to his own advantage and to the detriment of the innocent first buyer (by being considered as an
"automatic registration" of the second sale) and defeat the first buyer's right of priority, in time in right and in
registration.
The governing principle here is prius tempore, portior jure
2
(first in time, stronger in right). Knowledge gained by the
first buyer of the second sale cannot defeat the first buyer's rights except only as provided by the Civil Code and that is
where the second buyer first registers in good faith the second sale ahead of the first. Such knowledge of the first buyer does
not bar her from availing of her rights under the law, among them, to register first her purchase as against the second buyer.
But in other so knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the
second sale, since such knowledge taints his prior registration with bad faith.
This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first
buyer: that before the second buyer can obtain priority over the first, he must show that he acted in good faith
8/22/14 G.R. No.L-29972
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.
The above principles were aptly restated in a 1948 Court of Appeals decision in the case of Gallardo, vs. Gallardo
penned by Justice J.B.L. Reyes, then a member of the appellate court.
3
The facts of that case and the case at bar are
virtually Identical, except that the earlier case was decided under the old Civil Code (Article 1473 thereof now reproduced as
Article 1544 of the present Civil Code), and the ratio decidendi thereof, mutatis mutandis, is fully applicable, as follows:
Analysis of article 1473 of the Civil Code shows that before a second vendee can obtain priority over
the first, it is indispensable that he should have acted in good faith, (that is to say, in ignorance of the
rights of the first vendee's rights) until the title is transferred to him by actual or constructive delivery
of the thing sold. This is the price exacted by law for his being able to displace the first vendee; and
the mere fact that the second contract of sale was perfected in good faith is not sufficient if, before
the title passes, the second vendee acquires knowledge of the first transaction. That the second
buyer innocently agreed to purchase the land may protect him against responsibility of conspiring with
his vendor to defraud the established rights of the first purchaser; but to defeat the latter's priority in
time (based on the old principle "prius tempore, potior jure," first in time, better in right) the good faith
or innocence of the posterior vendee must needs continue until his contract ripens into ownership by
tradition or recording (Palanca vs. Director of lands, 43 Phil. 141, 154).
That the formal deed of conveyance to Gabino Gallardo was executed after that of Caoagas is of no
moment, the contract of sale being perfected and binding by mere accord on the subject matter and
the price, even if neither is delivered (Article 1450, Civil Code), the deed of conveyance will relate
back to the date of the original agreement.
4
Finally, in the present case, the first buyer's registration (February 8, 1955) concededly preceded the second
buyer's registration (February 12, 1955) by four days, and therefore, as provided by the Civil Code, the first buyer
thereby duly preserved her right of priority and is entitled to the property.
MUOZ PALMA, J., dissenting:
Strongly convinced as I am that the decision of the Court of Appeals under review should be affirmed, this
dissenting opinion is being written.
We are here confronted with a double sale made by Jose Poncio of his 195-square meter lot located at V. Again
St., San Juan, Rizal, covered by Transfer Certificate of Title No. 5040, the solution to which is found in Art. 1544 of
the Civil Code, more particularly the second paragraph thereof which provides that should the thing sold be
immovable property, the ownership shall belong to the person acquiring it who in good with first recorded it in the
Registry of property.
1. The two purchasers, namely, petitioner Rosario Carbonell and respondent Emma Infante, are both purchasers
in good faith.
That Rosario Carbonell is a buyer in good faith cannot be disputed for at the time negotiations for the purchase of
the lot were being made between her and the vendor, Jose Poncio, as of January 27, 1955, there was no
indication at all from the latter that another sale was being contemplated.
That Emma Infante is likewise a buyer in good faith is supported by: (a) an express finding of the trial court in its
decision of January 20, 1965, to the effect that when the vendor and purchaser. Infante consummated the sale on
or about January 29, 1955, an examination of the original of T.C.T. 5040 on file with the Register of Deeds of Rizal
as well as the owner's duplicate revealed no annotation of any encumbrance or lien other than the mortgage in
favor of the Republic Savings Bank (p. 92, Record on Appeal); (b) the findings of fact of the Court of Appeals
given in the decision penned by then Justice Salvador V. Esguerra as well as in the first decision written by Justice
Magno Gatmaitan which subsequently became the basis of the dissenting opinion to the majority, and from which I
quote:
2. CONSIDERING: That as basis for discussion of this issue, it must have to be remembered that the
first vendee, Rosario Carbonell, certainly was an innocent purchaser ... but also must it be
remembered that Emma L. Infante, when she bought the property on 2 February, 1955, under Exhibit
3-Infante, neither had she before then been, preliminary informed of the first sate to Rosario ...;
indeed as Emma has testified on this detail, it is easy to accept her declaration:
Q. When Mr. Jose Poncio offered you this land in question, did he tell you
that the land was sold or otherwise promised to Mrs. Carbonell?
8/22/14 G.R. No.L-29972
A. Of course not, otherwise will never buy.
(tsn. II:27)
in other words, at the respective dates of their purchase, both vendees, Rosario and Emma, were innocent and
had acted in the best of good faith ... (pp. 9-10 of Justice Gatmaitan's decision found on pp. 76-77, rollo; see also
p. 7 of his dissenting opinion found on p. 95, rollo).
Departing from a well-entrenched rule set down in a long array of decisions of this Court that factual findings of the
trial court and of the Court -of Appeals are generally binding and conclusive,
1
and that on appeal by certiorari,
questions of fact are not to be determined nor reviewed by Us
2
the Majority Opinion of my colleagues however undertakes a
fact-finding process of its own, and draws the conclusion that Emma Infante was a buyer in bad faith because, among other
things: (a) Emma allegedly refused to talk to Rosario Carbonell when the latter went to see her about the sale of the lot,
which "is not the attitude expected of a good neighbor imbued with Christian charity and goodwill as well as a clean
conscience" (p. 10, Majority Opinion); (b) "(B)efore or upon paying in full the mortgage indebtedness of Poncio to the bank.
Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook as well as Poncio's
mortgage contract. . and Poncio as well as the bank, must have inevitably informed here that said mortgage passbook could
not be given to her because it was already delivered to Carbonell" (p. 9, Ibid); and (c) "... (T)he victim, therefore, 'of injustice
and outrage is the widow Carbonell and not the Infantes, who without moral compunction exploited the greed and treacherous
nature of Poncio, who, for love of money and without remorse of conscience, dishonored his own plighted word to Carbonell,
his own cousin. ... Inevitably evident therefore from the foregoing discussion, is the bad faith of Emma Infante from the time
she enticed Poncio to dishonor his contract with Carbonell, and instead to sell the lot to her (Infante) by offering Poncio a
much higher price than the price for which he sold the same to Carbonell ..." (p. 20, Majority Opinion; all italicized portions
supplied) all of which are unsupported by the evidence and diametrically contrary to the findings of the court a quo and the
appellate court sustaining the good faith of Emma Infante.
2. Inasmuch as the two purchasers are undoubtedly in good faith, the next question to be resolved is who of the
two first registered her purchase or title in good faith.
In applying Art. 1544 of the Civil Code, it is not enough that the buyer bought the property in good faith, but that
the registration of her title must also be accomplished in good faith. This requirement of good faith is not only
applicable to the second or subsequent purchaser but to the first as well.
3
Construing and applying the second paragraph of Art. 1473 of the Spanish Civil Code which has been adopted
verbatim in Art. 1544 of the Civil Code of the Philippines, this Court in Leung Lee vs. FL Strong Machinery Co., et
al 37 Phil. 644, declared:
It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith,"
in express terms, in relation to "possession" and title but contain no express requirement as to 'good
faith' in relation to the "inscription" of the property in the registry, it must he presumed that good faith
is not an essential requisite of registration in order that it may have the effect contemplated in this
article. We cannot agree with this contention. It could not have been the intention of the legislator to
base the preferential right secured under this article of the code upon an inscription of title in bad
faith. Such an interpretation placed upon the language of this section would open wide the door to
fraud and collusion. The public records cannot be converted into instruments of fraud and oppression
by one who secures an inscription therein in bad faith. The force and effect given by law to an
inscription in a public record presupposes the good faith of him who enters such inscription; and
rights created by statute, which are predicated upon an inscription in a public registry, do not and
cannot accrue under an inscription "in bad faith," to the benefit of the person who thus makes the
inscription. (pp. 648-649, supra)
Good faith means "freedom from knowledge and circumstances which ought to put a person on inquiry";
3
* it
consists of an honest intention to abstain from taking any conscientious advantage of another.
4
On this point it is my view that Rosario Carbonell cannot be held to have a title superior to that of Emma Infante for
even if We were to concede that the notation of her adverse claim on February 8, 1955, was in the nature of
registration of title as required in Art. 1544 of the Civil Code,
5
the same was not accomplished in good faith. This is
obvious from occurrences narrated in the Majority Opinion, thus: that on January 27, 1955, Carbonell and Jose Poncio made
and executed the memorandum of sale, Exhibit A; that thereafter Carbonell asked Atty. Salvador Reyes to prepare the formal
deed of sale which she brought to Poncio together with the amount of some P400.00, the balance she had to pay in addition
to her assuming the mortgage obligation to Republic Savings Bank; that upon arriving at Poncio's house the latter told
Carbonell that he could not proceed anymore with the sale because he had already given the lot to Emma Infants; that on
February 5, 1955, Carbonell saw Emma Infante erecting a wall around the lot with a gate; that Carbonell consulted Atty.
Jose Garcia who advised her to present an adverse claim with the office of the Register of Deeds, and that being informed
that the sale in favor of Emma Infante had not yet been registered, Atty. Garcia prepared the notice of adverse claim which
8/22/14 G.R. No.L-29972
was signed and sworn to by Rosario Carbonell and registered on February 8, 1955. (see pp. 34, Decision)
At the time petitioner herein caused the annotation of her adverse claim she was, therefore, cognizant of facts
which impaired her title to the property in question, and taking advantage of the situation that the second
purchaser had not as yet registered her deed of sale, she went ahead of the second buyer and annotated what
was only in the nature of an adverse claim inasmuch as she had no registrable document of sale at the time. That
annotation of Carbonell's adverse claim did not produce any legal effects as to place her in a preferential situation
to that of Infante, the second purchaser, for the simple reason that a registration made in bad faith is equivalent to
no registration at all. It is a settled rule that the inscription in the registry, to be effective, must be made in good
faith. (Pena, supra, p. 164)
3. One last point to be considered is the theory advanced by the dissenting opinion of Justice Gatmaitan that while
Carbonell's registration of her adverse claim may indeed be considered in bad faith, nonetheless that of Infante
was likewise in bad faith because at the time of the registration of the latter's deed of sale there was already
inscribed on the original of the title on file with the Register of Deeds the adverse claim of Rosario Carbonell.
With due respect to the foregoing conclusion of highly respected Colleague, I hold the view that the act of the
registration of Infante's deed of sale on February 12, 1955, was but a formality in the sense that it simply
formalized what had already been accomplished earlier, that is, the registration of Infantes purchase as against
Carbonell when the latter inquired knowledge of the second sale on or about January 27, 1955, when she brought
the memorandum of sale, Exh. A, to Jose Poncio and was informed by the latter that he could not go through with
the sale because he had already sold it to Emma Infante, which information was bolstered by the fact that
Carbonell saw Infante erecting a wall around the lot on February 5.
We have long accepted the rule that knowledge is equivalent to registration. What would be the purpose of
registration other than to give notice to interested parties and to the whole world of the existence of rights or liens
against the property under question?
What has been clearly and succinctly postulated in T. de Winkleman and Winkleman vs. Veluz 1922, 43 Phil. 604,
609, is applicable to the case before Us, and We quote therefrom:
. . . The purpose of registering an instrument relating to land, annuities, mortgages, liens or any other
class of real rights is to give notice to persons interested of the existence of these various liens
against the property. If the parties interested have actual notice of the existence of such liens then
the necessity for registration does not exist. Neither can one who has actual notice of existing liens
acquire any rights in such property free from such liens by the mere fact that such liens have not
been proven recorded. (citing Obras Pias vs. Devera Ignacio, 17 Phil. 45, 47).
We cannot overlook the fact that while it may be true that the vendor Poncio had signed the memorandum, Exh. A,
from which it may be implied that he sold a lot to Carbonell, there were other things to be accomplished for
purposes of binding third parties, the lot in question being registered land, such as the execution of a formal deed
of sale. Such a document of sale was never signed by Poncio for according to petitioner Carbonell, when she
presented to Poncio the corresponding document together with the sum of P400.00 which according to her was
the balance of the purchase price after she had assumed the mortgage with the Republic Bank, she was informed
by the vendor that the property had been sold to another. That sale was confirmed when Carbonell saw Infante
erecting a wall around the lot on February 5, 1955. As of that moment when Carbonell had notice or actual
knowledge of the second sale in favor of Emma Infante a valid registration of the latter's deed of sale was
constituted as against Carbonell. Accordingly, Infante has a preferential right to the property, the registration of
her sale having been effected in the foregoing manner, prior to the annotation of Carbonell's adverse claim on
February 8, 1955.
The circumstances of the present case are strikingly similar to the hypothetical problem posed in Commentator
Edgardo Paras' Book on the Civil Code of the Philippines and I wholeheartedly concur with his solution of the
problem which is based on law. From him I quote:
6
A sold a parcel of land with a torrens title to B on January 5. A week later, A sold the same land to C.
Neither sale was registered. As soon as B learned of the sale in favor of C, he (B) registered an
adverse claim stating that he was making the claim because the second sale was in fraud of his rights
as first buyer. Later, C registered the deed of sale that had been made in his favor. Who is now the
owner B or C?
Ans. C is clearly the owner, although he was the second buyer. This is so, not because of the
registration of the sale itself but because of the AUTOMATIC registration in his favor caused by Bs
knowledge of the first sale (actual knowledge being equivalent to registration). The purpose of
registration is to notify. This notification was done because of Bs knowledge. It is wrong to assert that
B was only trying to protect his right-for there was no more right to be protected. He should have
registered the sale BEFORE knowledge came to him. It is now too late. It is clear from this that with
8/22/14 G.R. No.L-29972
respect to the principle "actual knowledge is equivalent to registration of the sale about which
knowledge has been obtained' the knowledge may be that-of either the FIRST or the SECOND
buyer. (pp. 142-143, Vol. V, 1972 Ed.)
Aside from the fact that the sale to Infante was considered registered prior to the registration of Carbonell's notice
of adverse claim, Infante also took immediate physical possession of the property by erecting a fence with a gate
around the lot on February 5, at least tree days prior to Carbonell Is registration on February 8, 1955.
On top of all these, equity is on the side of Emma Infante. Under the Majority Opinion, Emma Infante stands to lose
the lot she bought in good faith which was fully paid for plus the building she erected thereon for which she spent
the total sun of a little less than P14,000.00, or equivalent to about P40,000.00 at the time the case was decided
by the Appellate Court, considering that Rosario Carbonell is being given the option either to order the removal of
the house or to acquire it at P13,429.00. On this point I agree with the following statement of Justice Esguerra who
penned the decision of the Appellate Court, thus:
It is indeed inequitable and re revolting to one's sense of justice and fairness that Rosario Carbonell
who paid out of her own money the sum of only P200.00 to the Republic Savings Bank for the
account of Jose Poncio, which was the motivation for the execution of the private instrument, Exhibit
A, should have a superior right to the land involved. The property has been improved at a great
expense and a building of strong materials has been constructed thereon Emma Infants ho spent for
her lot and building the total sum of P13,429.00 made, up of P11,929.00 for cost of land and
improvements and the building and P1,500.00 to discharge the mortgage in favor of the Republic
Savings Bank. with the present purchasing power of the peso this aft i more than 13 years, would be
not equivalent to about P40,000.00. Courts should not lend a hand to the perpetration of such kind of
injustice and outrage (see page 88, rollo)
I close paraphrasing the Supreme Court of Oklahoma in Phelps vs. Theime, et al., 217 p. 376; 377, that "equity is
a right wiseneth that considerate all of the particular circumstances of the case and is also tempered with the
sweetness of mercy." (quoting from St. Germain) In this case now before Us there is no need to invoke mercy, for
all that is required is a wise consideration of the particular circumstances narrated above which warrant a
judgment in favor of respondents Infants.
With all the foregoing, I vote for the affirmance of the decision under review.

Separate Opinions
TEEHANKEE, J., concurring:
I concur. My concurrence proceeds from the same premise as the dissenting opinion of Justice Munoz Palma that
both the conflicting buyers of the real property in question, namely, petitioner Rosario Carbonell as the first buyer
may be deemed purchasers in good faith at the respective dates of their purchase.
The answer to the question of who between the two buyers in good faith should prevail is provided in the second
paragraph of Article 1544 of the Civil Code
1
(formerly Article 1473 of the old Civil Code) which ordains that "the
ownership of the immovable property shall belong to the person acquiring it who in good faith first recorded it in the Registry
of Property."
In the case at bar, the seller executed on January 27, 1955 the private memorandum of sale of the property in
favor of the first buyer Carbonell, However, six days later on February 2, 1955, the seller sold the property for a
second time for an improved price, this time executing a formal registrable deed of sale in favor of the second
buyer Infante.
So it was that when the first buyer Carbonell saw the seller a few days afterwards bringing the formal deed of sale
for the seller's signature and the balance of the agreed cash payment, the seller told her that he could not
proceed anymore with formalizing the first sale because he had already formalized the second sale in favor of the
second buyer Infante.
Since Carbonell (the first buyer) did not have a formal registrable deed of sale, she did the next best thing to
protect her legal rights and registered on February 8, 1955 with the Rizal Register of Deeds her adverse claim as
first buyer entitled to the property. The second buyer Infante registered the deed of sale in her favor with the Rizal
Register of Deeds only on February 12, 1955 (notwithstanding its having been executed ten days earlier on
February 2, 1955), and therefore the transfer certificate of title issued in her favor carried the duly annotated
adverse claim of Carbonell as the first buyer.
8/22/14 G.R. No.L-29972
Carbonell as also the first registrant is legally entitled to the property.
The fact that Carbonell registered only an adverse claim as she had no registrable deed of sale is of no moment.
The facts of record amply show that she had a written memorandum of sale, which was partially executed with the
advance payment made by her for the seller's mortgage account with the bank, and which was perfected and
binding in law by their accord on the subject matter and price. Carbonell could in law enforce in court her rights as
first buyer under the memorandum agreement and compel the seller to execute in her favor a formal registrable
deed of sale which would relate back to the date of the original memorandum agreement.
And under the cited code provision, Carbonell had to duly register such adverse claim as first buyer, as otherwise
the subsequent registration of the second buyer's deed of sale would have obliterated her legal rights and enable
the seller to achieve his fraudulent act of selling the property a second time for a better price in derogation of her
prior right thereto.
The fact that the seller refused to execute the formal deed of sale in Carbonell's favor and (as was only to be
expected) informed her that he could not proceed anymore with the sale because he had sold it for a second time
for a better price did not convert her prior registration of her adverse claim into one of bad faith.
The fraudulent seller's act of informing the first buyer that he has wrongfully sold his property for a second time
cannot work out to his own advantage and to the detriment of the innocent first buyer (by being considered as an
"automatic registration" of the second sale) and defeat the first buyer's right of priority, in time in right and in
registration.
The governing principle here is prius tempore, portior jure
2
(first in time, stronger in right). Knowledge gained by the
first buyer of the second sale cannot defeat the first buyer's rights except only as provided by the Civil Code and that is
where the second buyer first registers in good faith the second sale ahead of the first. Such knowledge of the first buyer does
not bar her from availing of her rights under the law, among them, to register first her purchase as against the second buyer.
But in other so knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the
second sale, since such knowledge taints his prior registration with bad faith.
This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first
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.
The above principles were aptly restated in a 1948 Court of Appeals decision in the case of Gallardo, vs. Gallardo
penned by Justice J.B.L. Reyes, then a member of the appellate court.
3
The facts of that case and the case at bar are
virtually Identical, except that the earlier case was decided under the old Civil Code (Article 1473 thereof now reproduced as
Article 1544 of the present Civil Code), and the ratio decidendi thereof, mutatis mutandis, is fully applicable, as follows:
Analysis of article 1473 of the Civil Code shows that before a second vendee can obtain priority over
the first, it is indispensable that he should have acted in good faith, (that is to say, in ignorance of the
rights of the first vendee's rights) until the title is transferred to him by actual or constructive delivery
of the thing sold. This is the price exacted by law for his being able to displace the first vendee; and
the mere fact that the second contract of sale was perfected in good faith is not sufficient if, before
the title passes, the second vendee acquires knowledge of the first transaction. That the second
buyer innocently agreed to purchase the land may protect him against responsibility of conspiring with
his vendor to defraud the established rights of the first purchaser; but to defeat the latter's priority in
time (based on the old principle "prius tempore, potior jure," first in time, better in right) the good faith
or innocence of the posterior vendee must needs continue until his contract ripens into ownership by
tradition or recording (Palanca vs. Director of lands, 43 Phil. 141, 154).
That the formal deed of conveyance to Gabino Gallardo was executed after that of Caoagas is of no
moment, the contract of sale being perfected and binding by mere accord on the subject matter and
the price, even if neither is delivered (Article 1450, Civil Code), the deed of conveyance will relate
back to the date of the original agreement.
4
Finally, in the present case, the first buyer's registration (February 8, 1955) concededly preceded the second
buyer's registration (February 12, 1955) by four days, and therefore, as provided by the Civil Code, the first buyer
thereby duly preserved her right of priority and is entitled to the property.
MUOZ PALMA, J., dissenting:
Strongly convinced as I am that the decision of the Court of Appeals under review should be affirmed, this
8/22/14 G.R. No.L-29972
We are here confronted with a double sale made by Jose Poncio of his 195-square meter lot located at V. Again
St., San Juan, Rizal, covered by Transfer Certificate of Title No. 5040, the solution to which is found in Art. 1544 of
the Civil Code, more particularly the second paragraph thereof which provides that should the thing sold be
immovable property, the ownership shall belong to the person acquiring it who in good with first recorded it in the
Registry of property.
1. The two purchasers, namely, petitioner Rosario Carbonell and respondent Emma Infante, are both purchasers
in good faith.
That Rosario Carbonell is a buyer in good faith cannot be disputed for at the time negotiations for the purchase of
the lot were being made between her and the vendor, Jose Poncio, as of January 27, 1955, there was no
indication at all from the latter that another sale was being contemplated.
That Emma Infante is likewise a buyer in good faith is supported by: (a) an express finding of the trial court in its
decision of January 20, 1965, to the effect that when the vendor and purchaser. Infante consummated the sale on
or about January 29, 1955, an examination of the original of T.C.T. 5040 on file with the Register of Deeds of Rizal
as well as the owner's duplicate revealed no annotation of any encumbrance or lien other than the mortgage in
favor of the Republic Savings Bank (p. 92, Record on Appeal); (b) the findings of fact of the Court of Appeals
given in the decision penned by then Justice Salvador V. Esguerra as well as in the first decision written by Justice
Magno Gatmaitan which subsequently became the basis of the dissenting opinion to the majority, and from which I
quote:
2. CONSIDERING: That as basis for discussion of this issue, it must have to be remembered that the
first vendee, Rosario Carbonell, certainly was an innocent purchaser ... but also must it be
remembered that Emma L. Infante, when she bought the property on 2 February, 1955, under Exhibit
3-Infante, neither had she before then been, preliminary informed of the first sate to Rosario ...;
indeed as Emma has testified on this detail, it is easy to accept her declaration:
Q. When Mr. Jose Poncio offered you this land in question, did he tell you
that the land was sold or otherwise promised to Mrs. Carbonell?
A. Of course not, otherwise will never buy.
(tsn. II:27)
in other words, at the respective dates of their purchase, both vendees, Rosario and Emma, were innocent and
had acted in the best of good faith ... (pp. 9-10 of Justice Gatmaitan's decision found on pp. 76-77, rollo; see also
p. 7 of his dissenting opinion found on p. 95, rollo).
Departing from a well-entrenched rule set down in a long array of decisions of this Court that factual findings of the
trial court and of the Court of Appeals are generally binding and conclusive,
1
and that on appeal by certiorari,
questions of fact are not to be determined nor reviewed by Us
2
the Majority Opinion of my colleagues however undertakes a
fact-finding process of its own, and draws the conclusion that Emma Infante was a buyer in bad faith because, among other
things: (a) Emma allegedly refused to talk to Rosario Carbonell when the latter went to see her about the sale of the lot,
which "is not the attitude expected of a good neighbor imbued with Christian charity and goodwill as well as a clean
conscience" (p. 10, Majority Opinion); (b) "(B)efore or upon paying in full the mortgage indebtedness of Poncio to the bank.
Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook as well as Poncio's
mortgage contract. . and Poncio as well as the bank, must have inevitably informed here that said mortgage passbook could
not be given to her because it was already delivered to Carbonell" (p. 9, Ibid); and (c) "... (T)he victim, therefore, 'of injustice
and outrage is the widow Carbonell and not the Infantes, who without moral compunction exploited the greed and treacherous
nature of Poncio, who, for love of money and without remorse of conscience, dishonored his own plighted word to Carbonell,
his own cousin. ... Inevitably evident therefore from the foregoing discussion, is the bad faith of Emma Infante from the time
she enticed Poncio to dishonor his contract with Carbonell, and instead to sell the lot to her (Infante) by offering Poncio a
much higher price than the price for which he sold the same to Carbonell ..." (p. 20, Majority Opinion; all italicized portions
supplied) all of which are unsupported by the evidence and diametrically contrary to the findings of the court a quo and the
appellate court sustaining the good faith of Emma Infante.
2. Inasmuch as the two purchasers are undoubtedly in good faith, the next question to be resolved is who of the
two first registered her purchase or title in good faith.
In applying Art. 1544 of the Civil Code, it is not enough that the buyer bought the property in good faith, but that
the registration of her title must also be accomplished in good faith. This requirement of good faith is not only
applicable to the second or subsequent purchaser but to the first as well.
3
Construing and applying the second paragraph of Art. 1473 of the Spanish Civil Code which has been adopted
verbatim in Art. 1544 of the Civil Code of the Philippines, this Court in Leung Lee vs. FL Strong Machinery Co., et
8/22/14 G.R. No.L-29972
al 37 Phil. 644, declared:
It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith,"
in express terms, in relation to "possession" and title but contain no express requirement as to 'good
faith' in relation to the "inscription" of the property in the registry, it must he presumed that good faith
is not an essential requisite of registration in order that it may have the effect contemplated in this
article. We cannot agree with this contention. It could not have been the intention of the legislator to
base the preferential right secured under this article of the code upon an inscription of title in bad
faith. Such an interpretation placed upon the language of this section would open wide the door to
fraud and collusion. The public records cannot be converted into instruments of fraud and oppression
by one who secures an inscription therein in bad faith. The force and effect given by law to an
inscription in a public record presupposes the good faith of him who enters such inscription; and
rights created by statute, which are predicated upon an inscription in a public registry, do not and
cannot accrue under an inscription "in bad faith," to the benefit of the person who thus makes the
inscription. (pp. 648-649, supra)
Good faith means "freedom from knowledge and circumstances which ought to put a person on inquiry";
3
* it
consists of an honest intention to abstain from taking any conscientious advantage of another.
4
On this point it is my view that Rosario Carbonell cannot be held to have a title superior to that of Emma Infante for
even if We were to concede that the notation of her adverse claim on February 8, 1955, was in the nature of
registration of title as required in Art. 1544 of the Civil Code,
5
the same was not accomplished in good faith. This is
obvious from occurrences narrated in the Majority Opinion, thus: that on January 27, 1955, Carbonell and Jose Poncio made
and executed the memorandum of sale, Exhibit A; that thereafter Carbonell asked Atty. Salvador Reyes to prepare the formal
deed of sale which she brought to Poncio together with the amount of some P400.00, the balance she had to pay in addition
to her assuming the mortgage obligation to Republic Savings Bank; that upon arriving at Poncio's house the latter told
Carbonell that he could not proceed anymore with the sale because he had already given the lot to Emma Infants; that on
February 5, 1955, Carbonell saw Emma Infante erecting a wall around the lot with a gate; that Carbonell consulted Atty.
Jose Garcia who advised her to present an adverse claim with the office of the Register of Deeds, and that being informed
was signed and sworn to by Rosario Carbonell and registered on February 8, 1955. (see pp. 34, Decision)
At the time petitioner herein caused the annotation of her adverse claim she was, therefore, cognizant of facts
which impaired her title to the property in question, and taking advantage of the situation that the second
purchaser had not as yet registered her deed of sale, she went ahead of the second buyer and annotated what
was only in the nature of an adverse claim inasmuch as she had no registrable document of sale at the time. That
annotation of Carbonell's adverse claim did not produce any legal effects as to place her in a preferential situation
to that of Infante, the second purchaser, for the simple reason that a registration made in bad faith is equivalent to
no registration at all. It is a settled rule that the inscription in the registry, to be effective, must be made in good
faith. (Pena, supra, p. 164)
3. One last point to be considered is the theory advanced by the dissenting opinion of Justice Gatmaitan that while
Carbonell's registration of her adverse claim may indeed be considered in bad faith, nonetheless that of Infante
was likewise in bad faith because at the time of the registration of the latter's deed of sale there was already
inscribed on the original of the title on file with the Register of Deeds the adverse claim of Rosario Carbonell.
With due respect to the foregoing conclusion of highly respected Colleague, I hold the view that the act of the
registration of Infante's deed of sale on February 12, 1955, was but a formality in the sense that it simply
formalized what had already been accomplished earlier, that is, the registration of Infantes purchase as against
Carbonell when the latter inquired knowledge of the second sale on or about January 27, 1955, when she brought
the memorandum of sale, Exh. A, to Jose Poncio and was informed by the latter that he could not go through with
the sale because he had already sold it to Emma Infante, which information was bolstered by the fact that
Carbonell saw Infante erecting a wall around the lot on February 5.
We have long accepted the rule that knowledge is equivalent to registration. What would be the purpose of
registration other than to give notice to interested parties and to the whole world of the existence of rights or liens
against the property under question?
What has been clearly and succinctly postulated in T. de Winkleman and Winkleman vs. Veluz 1922, 43 Phil. 604,
609, is applicable to the case before Us, and We quote therefrom:
... The purpose of registering an instrument relating to land, annuities, mortgages, liens or any other
class of real rights is to give notice to persons interested of the existence of these various liens
against the property. If the parties interested have actual notice of the existence of such liens then
the necessity for registration does not exist. Neither can one who has actual notice of existing liens
acquire any rights in such property free from such liens by the mere fact that such liens have not
8/22/14 G.R. No.L-29972
been proven recorded. (citing Obras Pias vs. Devera Ignacio, 17 Phil. 45, 47).
We cannot overlook the fact that while it may be true that the vendor Poncio had signed the memorandum, Exh. A,
from which it may be implied that he sold a lot to Carbonell, there were other things to be accomplished for
purposes of binding third parties, the lot in question being registered land, such as the execution of a formal deed
of sale. Such a document of sale was never signed by Poncio for according to petitioner Carbonell, when she
presented to Poncio the corresponding document together with the sum of P400.00 which according to her was
the balance of the purchase price after she had assumed the mortgage with the Republic Bank, she was informed
by the vendor that the property had been sold to another. That sale was confirmed when Carbonell saw Infante
erecting a wall around the lot on February 5, 1955. As of that moment when Carbonell had notice or actual
knowledge of the second sale in favor of Emma Infante a valid registration of the latter's deed of sale was
constituted as against Carbonell. Accordingly, Infante has a preferential right to the property, the registration of
her sale having been effected in the foregoing manner, prior to the annotation of Carbonell's adverse claim on
February 8, 1955.
The circumstances of the present case are strikingly similar to the hypothetical problem posed in Commentator
Edgardo Paras' Book on the Civil Code of the Philippines and I wholeheartedly concur with his solution of the
problem which is based on law. From him I quote:
6
A sold a parcel of land with a torrens title to B on January 5. A week later, A sold the same land to C.
Neither sale was registered. As soon as B learned of the sale in favor of C, he (B) registered an
adverse claim stating that he was making the claim because the second sale was in fraud of his rights
as first buyer. Later, C registered the deed of sale that had been made in his favor. Who is now the
owner B or C?
Ans. C is clearly the owner, although he was the second buyer. This is so, not because of the
registration of the sale itself but because of the AUTOMATIC registration in his favor caused by Bs
knowledge of the first sale (actual knowledge being equivalent to registration). The purpose of
registration is to notify. This notification was done because of Bs knowledge. It is wrong to assert that
B was only trying to protect his right-for there was no more right to be protected. He should have
respect to the principle "actual knowledge is equivalent to registration of the sale about which
knowledge has been obtained' the knowledge may be that-of either the FIRST or the SECOND
buyer. (pp. 142-143, Vol. V, 1972 Ed.)
Aside from the fact that the sale to Infante was considered registered prior to the registration of Carbonell's notice
of adverse claim, Infante also took immediate physical possession of the property by erecting a fence with a gate
around the lot on February 5, at least tree days prior to Carbonell Is registration on February 8, 1955.
On top of all these, equity is on the side of Emma Infante. Under the Majority Opinion, Emma Infante stands to lose
the lot she bought in good faith which was fully paid for plus the building she erected thereon for which she spent
the total sun of a little less than P14,000.00, or equivalent to about P40,000.00 at the time the case was decided
by the Appellate Court, considering that Rosario Carbonell is being given the option either to order the removal of
the house or to acquire it at P13,429.00. On this point I agree with the following statement of Justice Esguerra who
penned the decision of the Appellate Court, thus:
It is indeed inequitable and re revolting to one's sense of justice and fairness that Rosario Carbonell
who paid out of her own money the sum of only P200.00 to the Republic Savings Bank for the
account of Jose Poncio, which was the motivation for the execution of the private instrument, Exhibit
A, should have a superior right to the land involved. The property has been improved at a great
expense and a building of strong materials has been constructed thereon Emma Infants ho spent for
her lot and building the total sum of P13,429.00 made, up of P11,929.00 for cost of land and
improvements and the building and P1,500.00 to discharge the mortgage in favor of the Republic
Savings Bank. with the present purchasing power of the peso this aft i more than 13 years, would be
not equivalent to about P40,000.00. Courts should not lend a hand to the perpetration of such kind of
injustice and outrage (see page 88, rollo)
I close paraphrasing the Supreme Court of Oklahoma in Phelps vs. Theime, et al., 217 p. 376; 377, that "equity is
a right wiseneth that considerate all of the particular circumstances of the case and is also tempered with the
sweetness of mercy." (quoting from St. Germain) In this case now before Us there is no need to invoke mercy, for
all that is required is a wise consideration of the particular circumstances narrated above which warrant a
judgment in favor of respondents Infants.
With all the foregoing, I vote for the affirmance of the decision under review.
Footnotes
TEEHANKEE SEPARATE OPINION
8/22/14 G.R. No.L-29972
TEEHANKEE SEPARATE OPINION
1 Fall text is reproduced in the main opinion, at page 7.
2 Also expressed as "Prior tempore, prior jure" (First in time, prior in right).
3 46 O.G. No. 11, p. 5568, Reyes, J.B.L., J. ponente and Gutierrez David and Borromeo, JJ.
concurring.
4 Emphasis Supplied.
MUNOZ PALMA SEPARATE OPINION
1 Perez vs. Evite 1 SCRA 949;
Paredes vs. Borja, 3 SCRA 495;
De la Cruz vs. Dollete, 5 SCRA 257;
De Gala-Sison vs. Manalo, 8 SCRA 595;
Goduco vs. Court of Appeals, 14 SCRA 282;
Ramos vs. Pepsi Cola Bottling Co., 19 SCRA 289;
Mackay Radio & Tel. Co. vs. Rich 28 SCRA 699;
Ramirez Tel. Corp. vs. Bank of America, 29 SCRA 191;
Miguel vs. Court of Appeals, 29 SCRA 760;
People vs. Pareja, 30 SCRA, 693;
Chan vs. Court of Appeals, 33 SCRA 737;
People vs. Demetrio Sales, 44 SCRA 489;
Evangelista & Co., et al vs. Estrella Abad Santos, 51 SCRA 417;
Tiongco vs. De La Merced, 58 SCRA 89
Ramos vs. Court of Appeals, 63 SCRA 331;
Perido vs. Perido, 63 SCRA 97
Alaras et al. vs. Court of Appeals, et al. 64 SCRA 671
2 Tamayo vs. Callejo, 46 SCRA 27;
Tagumpay Minerals & Mining Ass. vs. Masangkay, 46 SCRA 608;
Fortus vs. Novero, 23 SCRA 1336
3 see Paras on the Civil Code of the Philippines, 1972 Vol. 5, pp. 142-143; Palancas director of
Lands, 43 Phil. 149, 154; Pena Registration of Land Titles and Deeds, 1970 Ed., p. 164-1 Soriano et.
al s Heirs of D. Magali, et al. 8 SCRA 489-1 Granados vs. Monton, 86 Phil. 42
3* Leung Lee vs. FL Strong machinery, supra.
4 Fule vs. De Legare, et al., L-17951, Feb. 28, 1963, -1 SCRA 351, 356
5 Jovellanos vs. Dimalanta, L-11736-37 Jan. 30, 1959 105 Phil. 1250.
6 Prof. Edgardo Paras is now a Judge of the Court of First Instance of the province of Bulacan
8/22/14 G.R. No. L-18497
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SUPREME COURT
Manila
EN BANC
G.R. No. L-18497 May 31, 1965
DAGUPAN TRADING COMPANY, petitioner,
vs.
RUSTICO MACAM, respondent.
Angel Sanchez for petitioner.
Manuel L. Fernandez for respondent.
DIZON, J.:
Appeal taken by the Dagupan Trading Company from the decision of the Court of Appeals affirming the one
rendered by the Court of First Instance of Pangasinan in Civil Case No. 13772, dismissing its complaint.
On September 4, 1958, appellant commenced the action mentioned above against appellee Rustico Macam,
praying that it be declared owner of one-eighth portion of the land described in paragraph 2 of the complaint; that
a partition of the whole property be made; that appellee be ordered to pay it the amount of P500.00 a year as
damages from 1958 until said portion is delivered, plus attorney's fees and costs.
Answering the complaint, appellee alleged, in the main, that Sammy Maron's share in the property described in the
complaint, as well as that of all his co-heirs, had been acquired by purchase by appellee since June 19 and
September 21, 1955, before the issuance of the original certificate of title in their name; that at the time the levy in
execution was made on Sammy Maron's share therein, the latter had no longer any right or interest in said
property; that appellant and its predecessor in interest were cognizant of the facts already mentioned; that since
the sales made in his favor, he had enjoyed uninterrupted possession of the property and introduced considerable
improvements thereon. Appellee likewise sought to recover damages by way of counterclaim.
After trial upon the issue thus joined, the court rendered judgment dismissing the complaint, which, on appeal, was
affirmed by the Court of Appeals.
The facts of the case are not disputed.
In the year 1955, Sammy Maron and his seven brothers and sisters were pro-indiviso owners of a parcel of
unregistered land located in barrio Parayao, Municipality of Binmaley, Pangasinan. While their application for
registration of said land under Act No. 496 was pending, they executed, on June 19 and September 21, 1955, two
deeds of sale conveying the property to appellee, who thereafter took possession thereof and proceeded to
introduce substantial improvements therein. One month later, that is, on October 14, 1955, Original Certificate of
Title No. 6942 covering the land was issued in the name of the Maron's, free from all liens and encumbrances.
On August 4, 1956, by virtue of a final judgment rendered in Civil Case No. 42215 of the Municipal Court of Manila
against Sammy Maron in favor of the Manila Trading and Supply Company, levy was made upon whatever interest
he had in the aforementioned property, and thereafter said interest was sold at public auction to the judgment
creditor. The corresponding notice of levy, certificate of sale and the Sheriff's certificate of final sale in favor of the
Manila Trading and Supply Co. because nobody exercised the right of redemptions were duly registered. On
March 1, 1958, the latter sold all its rights and title to the property to appellant.
The question before Us now is: Who has the better right as between appellant Dagupan Trading Company, on the
one hand, and appellee Rustico Macam, on the other, to the one-eighth share of Sammy Maron in the property
mentioned heretofore?
If the property covered by the conflicting sales were unregistered land, Macam would undoubtedly have the better
right in view of the fact that his claim is based on a prior sale coupled with public, exclusive and continuous
possession thereof as owner. On the other hand, were the land involved in the conflicting transactions duly
registered land, We would be inclined to hold that appellant has the better right because, as We have consistently
8/22/14 G.R. No. L-18497
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registered land, We would be inclined to hold that appellant has the better right because, as We have consistently
held, in case of conveyance of registered real estate, the registration of the deed of sale is the operative act that
gives validity to the transfer. This would be fatal to appellee's claim, the deeds of sale executed in his favor by the
Maron's not having been registered, while the levy in execution and the provisional certificate of sale as well as the
final deed of sale in favor of appellant were registered. Consequently, this registered conveyance must prevail
although posterior to the one executed in favor of appellee, and appellant must be deemed to have acquired such
right, title and interest as appeared on the certificate of title issued in favor of Sammy Maron, subject to no lien,
encumbrance or burden not noted thereon. (Anderson & Co. vs. Garcia, 64 Phil. 506; Reynes, et al. vs. Barrera,
et al., 68 Phil. 656; Banco Nacional, etc. vs. Camus, 70 Phil. 289)
The present case, however, does not fall within either, situation. Here the sale in favor of appellee was executed
before the land subject-matter thereof was registered, while the conflicting sale in favor of appellant was executed
after the same property had been registered. We cannot, therefore, decide the case in the light of whatever
adjudicated cases there are covering the two situations mentioned in the preceding paragraph. It is our
considered view that what should determine the issue are the provisions of the last paragraph of Section 35, Rule
39 of the Rules of Court, to the effect that upon the execution and delivery of the final certificate of sale in favor of
the purchaser of land sold in an execution sale, such purchaser "shall be substituted to and acquire all the right,
title, interest and claim of the judgment debtor to the property as of the time of the levy." Now We ask: What was
the interest and claim of Sammy Maron on the one-eighth portion of the property inherited by him and his co-heirs,
at the time of the levy? The answer must necessarily be that he had none, because for a considerable time prior
to the levy, his interest had already been conveyed to appellee, "fully and retrievably as the Court of Appeals
held. Consequently, subsequent levy made on the property for the purpose of satisfying the judgment rendered
against Sammy Maron in favor of the Manila Trading Company was void and of no effect (Buson vs. Licuaco, 13
Phil. 357-358; Landig vs. U.S. Commercial Company, G.R. No. L-3597, July 31, 1951). Needless to say, the
unregistered sale and the consequent conveyance of title and ownership in favor of appellee could not have been
cancelled and rendered of no effect upon the subsequent issuance of the Torrens title over the entire parcel of
land. We cannot, therefore, but agree with the following statement contained in the appealed decision:
... . Separate and apart from this however, we believe that in the inevitable conflict between a right of
ownership already fixed and established under the Civil Law and/or the Spanish Mortgage Law which
cannot be affected by any subsequent levy or attachment or execution and a new law or system which
would make possible the overthrowing of such ownership on admittedly artificial and technical grounds, the
former must be upheld and applied.1 w p h 1 . t
But to the above considerations must be added the important circumstance that, as already stated before, upon
the execution of the deed of sale in his favor by Sammy Maron, appellee took possession of the land conveyed as
owner thereof, and introduced considerable improvements thereon. To deprive him now of the same by sheer
force of technicality would be against both justice and equity.
IN VIEW OF ALL THE FOREGOING, the decision appealed from is affirmed, with costs.
Bengzon, C.J., Bautista Angelo, Barrera, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
8/22/14 G.R. No. L-48322
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SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-48322 April 8, 1987
FELIPE DAVID and ANTONIA G. DAVID, petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA SILVERIO, JOSE, GABRIEL, ANICETA,
VIRGINIA and FELIX, all surnamed Bandin); GREGORIO BANDIN, RAYMUNDA BANDIN, VALENTIN
BRIONES, SOFIO BRIONES and AGAPITA RAMOS. respondents.

No. L-49712 April 8, 1987
MAGNO DE LA CRUZ, petitioner,
vs.
HONORABLE COURT OF APPEALS; EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA,
SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed Bandin); GREGORIO BANDIN,
RAYMUNDA BANDIN, SOFIO BRIONES and AGAPITA RAMOS; respondents.
No. L-49716 April 8, 1987
JUANITA MARTIN VDA. DE LUCENA MAXIMINA MARTIN VDA. DE COSME, VICTORIA MARTIN VDA. DE
OMANBAC, NEMESIO A. MARTIN, LEONORA DE LA CRUZ and AQUILINA DE LA CRUZ, petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA, SILVERIO, JOSE, GABRIEL, ANICETA,
VIRGINIA and FELIX, all surnamed Bandin);, VALENTIN BRIONES, AGAPITA RAMOS and COURT OF
APPEALS, respondents.
No. L-49687 April 8,1987
JOSE RAMIREZ and HEIRS OF AMBROCIA P. VDA. DE SOTERO RAMIREZ, petitioners,
vs.
COURT OF APPEALS and EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA, SILVERIO,
JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all surnamed BANDIN); GREGORIO BANDIN, RAYMUNDA
BANDIN, VALENTIN BRIONES, SOFIO BRIONES and AGAPITA RAMOS, respondents.
Benito P. Fable for petitioners in G.R. No. L-48322.
Pedro R. de la Cruz for petitioner in G.R. No. L-49712.
David R. Advincula for petitioners in G.R. No. L-49716.
Antonio S. Reyes for petitioners in G. R. No. L-49687.
Enrique C Villanueva for respondents.

YAP, J.:
These petitions, which were consolidated by resolution of this Court dated February 20, 1980,
stemmed from a complaint filed by the herein respondents with the Court of First Instance of Rizal
Branch VII, Pasay City, on June 14, 1963, for the recovery and partition of property. The complaint was
amended twice to reflect additional pertinent and material facts, such as transfers, partitions,
8/22/14 G.R. No. L-48322
amended twice to reflect additional pertinent and material facts, such as transfers, partitions,
subdivisions and registration of portions of the properties involved, and to bring in other
indispensable parties to the case.
On April 12, 1975, a decision was rendered by the trial court, in favor of the plaintiffs, declaring,
however, that certain properties could no longer be reconveyed to plaintiffs since they had been
transferred to purchasers who bought them in good faith for value. Not satisfied with the decision,
both plaintiffs and defendants appealed to the Court of Appeals. The plaintiffs' appeal was docketed as
CA-G.R. No. 58647-R, while that of defendants as CA-G.R. No. 60511-R. . Both appeals were
consolidated, and a decision was rendered by the Court of Appeals on May 19, 1978, which modified
the decision of the trial court in that it nullified the transfers made to the defendants who were
declared by the trial court as purchasers in good faith.
From the decision of the Court of Appeals, an appeal was taken by the parties adversely affected
thereby to this Court. Except for petitioners in G.R. No. L-49716 who seek restoration of the status quo
ante, all other petitioners pray that the decision of the trial court be reinstated.
The facts antecedent of this petition, as may be gathered from the decision, are as follows:
During their lifetime, the spouses Juan Ramos, who died on March 5, 1919, and Fortunate Calibo, who
died before 1919, were the owners of two parcels of land situated in Las Pinas, Rizal: 1) A parcel of
land situated in Barrio Talon, with an area of 39,887 square meters, under Tax Declaration No. 9614
(Talon property for short); and 2) A parcel of land situated in Barrio Laong, with an area of 15,993
square meters, under Tax Declaration No. 4005, although the actual area when surveyed was 22,285
square meters (Laong property for short).
Both spouses died intestate, leaving as heirs two legitimate children, Candida and Victorians Ramos,
and grand-daughter, Agapita Ramos, daughter of their deceased sora Anastacio. Upon the death of the
said spouses, their daughter, Candida Ramos, assumed administration of the properties until her
death on February 16, 1955. Victorians Ramos died on December 12,1931.
Both Candida and Victoriana Ramos died intestate. Candida Ramos was survived by the following
heirs: 1) Victoria Martin-Omanbac, 2) Antonio Martin, 3) Juanita Martin Vda. de Lucena, 4) Maximina
Martin Vda. de Cosme, 5) Raymundo Martin, 6) Aquilina de la Cruz, and 7) Leonora de la Cruz.
Victoriana's heirs are her children from her two marriages, namely: 1) Eulogio Bandin, 2) Gregorio
Bandin, 3) Raymunda Bandin, 4) Valentin Briones, and 5) Sofio Briones.
The record shows that sometime in 1943, Candida Ramos prevailed upon her niece, Agapita Ramos,
and her nephew, Eulogio Bandin, to sell a portion of the Talon property to the spouses Rufino 0.
Miranda and Natividad Guinto. This portion was divided into three lots: Parcel 1, containing an area of
24,363 square meters, declared under Tax Declaration No. 2996 (1948). The spouses Rufino Miranda
and Natividad Guinto subsequently sold the said lot to Narciso Velasquez and Albino Miranda. These
two later sold the same property to Velasquez Realty Company, Inc., which registered the property and
obtained OCT No. 1756 (later cancelled and replaced by TCT No. 165335); Parcel 2, containing an area of
752 square meters, declared under Tax Declaration No. 3358 (1949); and Parcel 3, containing an area of
516 square meters under Tax Declaration No. 3359 (1949). Parcels 2 and 3 were subsequently sold by
Rufino Miranda and Natividad Guinto to Jose Ramirez and Sotero Ramirez (survived by Ambrocia Vda.
de Martin), respectively, who registered these properties and obtained OCT Nos. 2027 and 2029 in
their respective names.
The remaining portion of the Talon property was extrajudicially partitioned on September 17, 1955
among the heirs of Candida Ramos, namely: Juanita Martin, Victoria Martin, Maximina M. Vda. de
Cosme, Antonio Martin and Raymundo Martin. In 1959, this property was subdivided (Subdivision Plan
PSU-173299) into seven lots and adjudicated as follows:
1) To the heirs of Raymundo Martin, namely, Juan, Antonio, Rodrigo, Norma, Bernards, Rufina and
Nieves, all surnamed Martin, and Trinidad Bunag Vda. de Martin Lot 1, containing an area of 774
square meters, declared under Tax Declaration No. 5588 (1960). This lot was subsequently sold to
Consolacion de la Cruz who was able to register the property in her name under OCT No. 4731 (later
cancelled and replaced by TCT Nos. 227470 and 227471).
2) To Juanita Martin Lot 2, containing an area of 774 square meters, declared under Tax Declaration
No. 4831, and subsequently titled in her name under OCT No. 10002, issued on December 18, 1973.
3) To Leonora de la Cruz, granddaughter of Candida Ramos by her son Meliton de la Cruz by her first
husband Lot 3, containing an area of 346 square meters, declared under Tax Declaration No. 5526
(1960) and subsequently registered under OCT No. 6102, issued on January 29, 1967.
4) To Antonio Martin Lot 4, containing an area of 774 square meters, declared under Tax Declaration
8/22/14 G.R. No. L-48322
4) To Antonio Martin Lot 4, containing an area of 774 square meters, declared under Tax Declaration
No. 4833. The property was subsequently sold by the heirs of Antonio Martin to Nemesio Martin.
5) To Victoria Martin Lot 5, containing an area of 773 square meters, declared under Tax Declaration
No. 5590. This lot was later registered by Victoria, to whom OCT No. 3706 was issued on August 22,
1963. She subsequently sold a portion of 300 square meters to Magno de la Cruz on September
25,1963, to whom was issued TCT No. 116450.
6) To Maximina Martin Lot 6, containing an area of 773 square meters, under Tax Declaration No.
5591 (1960). Maximina was able to register the land and was issued OCT No. 3707 on August 22, 1963.
She later sold a portion of 300 square meters to Magno de la Cruz, to whom was issued TCT No.
116450.
7) To Aquiline de la Cruz Lot 7, with an area of 428 square meters, declared under Tax Declaration
No. 5592 (1960). Aquilina is the granddaughter of Candida Ramos by her son Meliton de la Cruz by her
first marriage. Aquilina registered the land in her name in 1967 and was issued OCT No. 6103.
The Laong property was sold by Candida Ramos and her children on December 19, 1943 to
Hermogenes Lucena, husband of Juanita Martin, one of the daughters of Candida. On September 23,
1959, Juanita (then widowed) sold the property to the spouses Gregorio and Mary Venturanza for
P43,236.00 of which P10,000 was paid as down payment, the balance to be paid upon the vendor
obtaining Torrens title to the land. On January 21, 1965, the Venturanzas, in a deed of sale also signed
by Juanita Martin, conveyed a portion of the property with an area of 15,000 square meters to the
spouses Felipe and Antonia David, in liquidation of the latter's investment in the joint real estate
venture which they had entered into with the Venturanzas in April 1959. Juanita Martin Vda. de Lucena
was able to register the property in her name and was issued OCT No. 8916 on July 1, 1971. The portion
sold to the spouses Felipe and Antonia David is presently covered by TCT No. 372092.
From the foregoing facts as established by the evidence, the trial court held that the Talon and Laong
properties formed part of the estate of the spouses Juan Ramos and Fortunate Calibo, which after
their death devolved by right of succession upon their heirs, namely, Candida Ramos, Victorians
Ramos and Agapita Ramos, each of whom was entitled to one-third (1/3) pro-indiviso share of the
properties. The estate of the deceased spouses was never judicially or extra-judicialy settled among
their heirs, who, therefore, remained pro-indiviso co-owners of the said properties, and upon the
death of Victorians and Candida, their respective shares in turn passed to their heirs. Accordingly, the
trial court declared the plaintiffs, Agapita Ramos, and the heirs of Victorians Ramos, entitled to two-
thirds (2/3) pro-indiviso share of the Talon and Laong properties, and ordered the defendants heirs of
Candida Ramos to reconvey to plaintiffs their shares in those properties. However, such
reconveyance was no longer possible with respect to the portions which, in the meantime, had been
sold and disposed of to third parties who were purchasers in good faith and for value.
The following parties were held to be purchasers in good faith. 1) defendants Rufino Miranda, Narciso
Velasquez, Albina Miranda and Velasquez Realty Co., with respect to 24,636 square meters (Parcel 1) of
the Talon property sold by Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943; 2) defendants
Jose Ramirez and Ambrocia Vda. de Ramirez (widow of Sotero Ramirez), with respect to 752 square
meters (Parcel 2) and 516 square meters (Parcel 3), respectively, of the Talon property, 3) defendant
Consolacion de la Cruz, with respect to 774 square meters (Lot 1 of Subdivision Plan PSU-173299); 4)
defendant Nemesio Martin, with respect to 774 square meters (Lot 2 of Subdivision Plan); 5) defendant
Magno de la Cruz, with respect to 300 square meters sold by Victoria Martin and 300 square meters
sold by Maximina Martin (portions of Lots 5 and 6 of Subdivision Plan); 6) defendant spouses Felipe
and Antonia David, with respect to 15,000 square meters of the Laong property. Since the foregoing
properties could not be reconveyed to the plaintiffs, the defendants heirs who sold them were
ordered to pay the plaintiffs two-thirds (2/3) of the present value of such properties.
As stated heretofore, the trial court's decision was upheld by the respondent Court of Appeals, except
with respect to the finding that third parties who bought portions of the properties from the
defendants heirs were purchasers in good faith This finding was reversed by the respondent
appellate court. In fine, the appellate court: a) nullified the sale of the Laong property by Candida
Ramos Vda. de Martin and her children in 1943 in favor of Hermogenes Lucena, the husband of Juanita
Martin, one of the daughters of Candida, as wen as an subsequent sales, transfers and conveyances
of said property, insofar as they affected the two-thirds (2/3) pro-indiviso share of Agapita Ramos and
the heirs of Victorians Ramos; b) nullified the sale of portions of the Talon property by Candida Ramos,
Eulogio Bandin and Agapita Ramos in 1943 in favor of the spouses Rufino Miranda and Natividad
Guinto, and all the subsequent transfers of said properties, insofar as the four-fifteenth (4/15) share of
Gregorio Bandin, Raymundo Bandin, Sofio Briones and Valentin Briones were affected; and c) invali
dated the deed of extrajudicial partition among the heirs of Candida Ramos over the remaining portion
of the Talon property in 1955 and the subdivision thereof into individual lots among said heirs, as well
as all subsequent transfers and conveyances of some of said lots, or portions thereof, to third parties,
8/22/14 G.R. No. L-48322
as all subsequent transfers and conveyances of some of said lots, or portions thereof, to third parties,
insofar as they affected the two-third (2/3) pro- indiviso share pertaining to Agapita Ramos and the
heirs of Victorians Ramos.
From the above decision of the Court of Appeals, the petitioners have come to us on separate
petitions for review by certiorari.
G.R. No. L-49716.:
The petitioners are the heirs of Candida Ramos, led by Juanita Martin Vda. de Lucena and joined in by
her brothers and sisters who are the children of Candida by her first and second marriages. Primarily,
petitioners alleged that the Court of Appeals erred in not declaring that private respondents' claim if
any, is barred by prescription; and in annulling and ordering the cancellation of Original Certificate of
Title No. 8916 issued in the name of Juanita Martin pursuant to a decision by the land registration
court, affirmed by the Court of Appeals in CA G.R. No. 35191-R, which had already become final and
executory.
Petitioners claim in their brief, apparently referring to the Laong property only, that Juanita Martin,
widow of Hermogenes Lucena and daughter of Candida Ramos, had been in possession of the
property since 1943 to the exclusion of private respondents. The trial court, however, found that
Candida Ramos, until her death on February 15, 1955, administered the Laong property, and that
plaintiffs- appellants were given their shares of the fruits thereof, though irregular and at times little,
depending on the amount of the harvest. Under Article 494 of the new Civil Code (Article 400 of the old
Civil Code), prescription generally does not run in favor of a co-heir or co-owner as long as, he
expressly or impliedly recognizes the co-ownership. While an implied or constructive trust prescribes
in ten years, the rule does not apply where a fiduciary relation exists and the trustee recognizes the
trust. 1
In the case at bar, there is no showing that the rights of the plaintiffs as co-owners were repudiated by
Candida Ramos in her lifetime; in fact, the evidence as found by the trial court show the contrary.
The court a quo did not sustain the defense of laches and prescription put up by the defendants
(herein petitioners) since it was not shown that the plaintiffs were guilty of negligence or slept on
their rights. They sent a letter of demand to the heirs of Candida Ramos on April 23, 1963, and filed
their complaint against them on June 14, 1963, or within a period of approximately eight (8) years from
Candida's death.
In sustaining the findings of the trial court, the Court of Appeals did not commit any reversible error.
Petitioners further invoke the doctrine of res judicata in that the decree of registration of the property
in the name of Juanita Martin as owner by the land registration court was affirmed by the Court of
Appeals in its decision dated July 16, 1969 in CA G.R. No. 35191-R, which had already become final and
executory. Both the respondent Court of Appeals and the trial court correctly rejected the petitioners'
contention. There can be no res judicata since private respondents were not parties to the above
case. Neither can it be claimed that the decree of registration vested ownership in Juanita Martin. The
appellate court, citing jurisprudence established by this Court, held that the purpose of the Land
Registration Act is not to create or vest title, but to confirm and register title already vested and
existing in the applicant for a title.
2
G.R. No. L-48322.:
The petitioners spouses Felipe David and Antonia G. David purchased portions of the Laong property,
consisting of 15,000 square meters, on February 21, 1965 from the spouses Gregorio and Mary
Venturanza, who, in turn, purchased the property from Juanita Martin Vda. de Lucena, on September
23, 1959. At the time both purchases took place, the property in question was still an unregistered
land. The land was registered in the name of Juanita Martin only on July 1, 1971, to whom was issued
OCT No. 8916.
Petitioners contend that the Court of Appellee erred in holding that they are buyers in bad faith, in
ordering the cancellation of OCT No. 8916 and all subsequent transfer certificates of title derived
therefrom, and in ordering petitioners - to reconvey to respondents their two-third (2/3) pro-indiviso
share of the land and to segregate therefrom 10,000 square meters for reconveyance to respondents.
In assailing the decision of the appellate court, petitioners invoke the doctrine of incontrovertibility of
the decree of registration after one year from issuance, and the doctrine of conclusiveness and
indivisibility of titles issued under the Torrens system. Petitioners might have stood on solid ground in
invoking the above doctrines if they had purchased the property from the registered owner after the
issuance of the decree of registration and the corresponding certificate of title in his name.
3
8/22/14 G.R. No. L-48322
issuance of the decree of registration and the corresponding certificate of title in his name.
3
As the record shows, petitioners bought the property when it was still unregistered land. The defense
of having purchased the property in good faith may be availed of only where registered land is
involved and the buyer had relied in good faith on the clear title of the registered owner. One who
purchases an unregistered land does so at his peril His claim of having bought the land in good faith,
i.e. without notice that some other person has a right to, or interest in, the property, would not protect
him if it turns out that the seller does not actually own the property. This is what happened in the case
at bar.
G.R.No. L-49867:
In this petition, petitioners Jose Ramirez and the heirs of Ambrocia P. Vda. de Ramirez (widow of
Sotero Ramirez), assail the decision of the respondent Court of Appeals declaring them purchasers in
bad faith and ordering them to reconvey to the plaintiffs Gregorio Bandin, Raymunda Bandin&A
Valentin Briones and Soto Briones, four-fifteenth (4/15) share pro-indiviso of the properties they
purchased from the spouses Rufino Miranda and Natividad Guinto. The land in question, containing an
area of 516 square meters, more or less, was purchased by Jose Ramirez on June 4, 1949. Sotero
Ramirez purchased his land, with an area of 752 square meters on July 9, 1948 and May 10, 1949. These
parcels of land purchased by the Ramirezes were part of the portion of the Talon property bought by
the spouses Rufino and Natividad Miranda from Candida Ramos, Eulogio Bandin and Agapita Ramos in
1943.
The appellate court held that Jose Ramirez and his father Sotero Ramirez were not purchasers in good
faith, not having made diligent investigation of the true ownership of the properties they bought, but
relied merely on the tax declaration shown to them by the seller, Rufino Miranda. We have no reason
to disturb the foregoing findings of the respondent appellate court. Besides, as mentioned earlier, the
issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered
land and the purchaser is buying the same from the registered owner, whose title to the land is clean.
In such case, the purchaser who relies on the clean title of the registered owner is protected if he is a
purchaser in good faith for value. However, this is not the situation before us in the instant case, What
petitioners bought were unregistered lands.
Petitioners contend that the respondents are barred by estoppel and laches from recovering the
property in question We have already dealt with this issue above. We find the contention without
merit.
Petitioners suggest that the portion ordered to be taken from the properties of Jose and Sotero
Ramirez should be taken instead from the shares which pertain to and are held by the heirs of Candida
Ramos. We do not find the suggestion meritorious. The respondents are entitled to their pro- indiviso
share of the property unlawfully sold by Candida Ramos, Agapita Ramos and Eulogio Bandin to the
Miranda spouses from whom the petitioners bought the parcels of land in question. Hence, it would
not be proper for the court to respondents' right to recover their pro-indiviso share of the property
only from the remaining portion still in the possession of the heirs of Candida Ramos.
G.R. No. L-49712:
The case of Magno de la Cruz stands on different footing from the other petitions. The property
purchased by him from Victoria Martin and Maximina Martin were registered lands, covered by Torrens
title. Being a purchaser in good faith for value, Magno de la Cruz is protected by the law. In the
absence of a showing that he had actual notice of the defect in the title of the vendors or that he is a
buyer in bad faith the deed of sale in his favor and the corresponding certificate of title issued in his
name can not be nullified and cancelled. Hence, it was error for the respondent court to invalidate the
sale made by Victoria and Maximina Martin in favor of Magno de la Cruz to the extent that it prejudiced
the two-third (2/3) pro-indiviso share of respondents in the property and to order petitioner to
reconvey said share to respondents. The petition of Magno de la Cruz is meritorious, and the decision
appealed from should be modified accordingly.
WHEREFORE, in view of all the foregoing, judgment is hereby rendered:
1. Dismissing the petitions in G.R. Nos. L-48322, L-49716 and L-49687;
2. Granting the petition in G.R. No. L-49712, declaring valid the deeds of sale executed by Victoria
Martin (Exh. 8-Magno de la Cruz) and Maximina Martin (Exh. 4-Magno de la Cruz) in favor of petitioner
Magno de la Cruz, as well as Transfer Certificate of Title No. 116450 issued in the latter's name,
ordering Victoria Martin and Maximina Martin to pay the respondents two-third (2/3) of the present
value of the property sold by them to Magno de la Cruz, and modifying the appealed decision
accordingly; and
8/22/14 G.R. No. L-48322
3. Affirming the appealed decision, except as modified above.
No pronouncement as to costs.
SO ORDERED.
Narvasa, Melencio-Herrera, Cruz, Feliciano and Sarmiento, JJ., concur.
Gancayco, J., took no part.

Footnotes
1 De Buencamino vs. De Matias, 16 SCRA 849; Heirs of Candelaria vs. Romero, 109 Phil. 500.
2 Angeles vs. Samia, 66 Phil. 444.
3 Cui and Joven vs. Henson, 51 Phil 612.
The Lawphil Proj ect - Arellano Law Foundation
8/22/14 G.R. No. L-34500
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SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-34500 March 18, 1988
MOISES OLIVARES and JUANITA T. OLIVARES, petitioners-appellants,
vs.
THE HONORABLE CARLOS V. GONZALES as Judge of the Court of First Instance of Iloilo (Branch VI),
respondent and JACINTO TUVILLA, CEFERINO TUVILLA, and JUAN TUMABINI, respondents-appellees.
Mario Guarina III for petitioners-appellants.
Enrique Arguelles for respondents-appellees.

MELENCIO-HERRERA, J.:
The Disputed Property is a piece of unregistered land located at Tigbauan, Iloilo Identified as Assessor's Lot No.
343. It was previously owned by respondents-appellees Jacinto Tuvilla and Ceferino Tuvilla (the Tuvillas, for short)
both of Tigbauan, Iloilo.
Sometime in 1955, the Tuvillas executed a "Deed of Sale with Right to Repurchase" in favor of respondent-
appellee Juan Tumabini over the Disputed Property in consideration of the sum of P1,350.00. The document was
duly acknowledged before a Notary Public but was not recorded in the Registry of Property.
Sometime in 1959, the Tuvillas executed a "Deed of Sale with Pacto de Retro" over the Disputed Property in favor
of petitioners- appellants, Moises Olivares and Juanita T. Olivares (the Olivareses, for short). This document was
acknowledged before a Notary Public and registered with the Registry of Deeds. In 1966, the Tuvillas also
executed in favor of the Olivareses a "Deed of Absolute Sale" covering the Disputed Property. Petitioners-
appellants have been in possession of the Disputed Property since 1959.
On October 11, 1967, respondent-appellee, Juan Tumabini filed Civil Case No. 7410 before Branch I of the then
Court of First Instance of Iloilo against the Tuvillas for the consolidation of ownership over the Disputed Property
by reason of the alleged failure of the Tuvillas to redeem the property from Tumabini (hereinafter referred to as
the Consolidation Case). The Olivareses, however, were not included as parties to the said case.
During the pre-trial of the Consolidation Case, counsel for the parties agreed to consider the pacto de retro sale
as one of equitable mortgage. Thus, the Trial Court rendered judgment in favor of Tumabini in the amount of P
1,350.00, pursuant to which, the Court subsequently issued a Writ of Execution on October 23, 1968.
On November 23, 1968, the Olivareses instituted Civil Case No. 7777 before Branch VI of the former Court of First
Instance of Iloilo, for Quieting of Title, against the Tuvillas, Juan Tumabini the Provincial Sheriff and Pyramid
Surety (hereinafter, the Quieting of Title Case). The said Court issued a Restraining Order to stop the sale in the
Consolidation Case (No. 7410) pending in Branch 1, but the said order was lifted on February 6, 1969.
Subsequently, the Consolidation Case (No. 7410), the Disputed Property was sold at public auction and a Writ of
Possession was issued in Tumabinis favor. However, the tenant of the Olivareses refused to surrender
possession, prompting a citation for contempt. Action thereon was deferred, however, pending termination of Civil
Case No. 7777.
On July 7, 1970, in the Quieting of Title Case (No. 7777), the Trial Court issued an Order dismissing said case, as
follows:
Acting upon the motion for dismissal of this case filed by Atty. Enrique Arguelles, counsel for the
defendants, it appearing that the instant action has been filed since November 23, 1968 and up to
this time plaintiffs failed to exert effort to have the defendants summoned, for failure to prosecute and
lack of interest on the part of the plaintiffs for such unreasonable length of time, as prayed, let this
8/22/14 G.R. No. L-34500
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lack of interest on the part of the plaintiffs for such unreasonable length of time, as prayed, let this
case be dismissed
No reconsideration was sought nor any appeal taken by the Olivareses.
On July 14, 1971, the same case was refiled, also in Branch VI, docketed as Civil Case No. 8698 (the Refiled
Case) which, however, was dismissed by the Court on September 6, 1971 "it appearing that Civil Case No. 7777
previously filed and dismissed by the Court embraces the same subject matter and the same party litigants as the
case at bar."
On September 20, 1971, the Court denied the Motion for Reconsideration filed by the Olivareses. Hence, this
appeal by certiorari.
The question posed is whether the dismissal of the Quieting of Title Case (No. 7777) "for failure to prosecute"
barred the institution of a subsequent suit, Civil Case No. 8698, by the same plaintiff against the same defendants
on the same cause of action. Section 3, Rule 17 of the Rules of Court specifically provides:
Sec. 3. Failure to prosecute. If plaintiff fails to appear at the time of the trial, or to prosecute his
action for an unreasonable length of time, or to comply with these rules or any order of the court, the
action may be dismissed upon motion of the defendant or upon the court's own motion. This dismissal
shall have the effect of an adjudication upon the merits, unless otherwise provided by the court.
Procedurally speaking, therefore, since the dismissal by the Trial Court was unqualified, it had the effect of an
adjudication upon the merits.
However, the equities of the case are with the Olivareses. The first sale with pacto de retro by the Tuvillas to
Tumabini was unregistered; in contrast, the sale in favor of the Olivareses was duly recorded. The Consolidation
Case (Case No. 7410) instituted by Tumabini against the Tuvillas for consolidation of his ownership did not include
the Olivareses as parties defendants even though they were then in possession of the Disputed Property. Justice
and equity demand, therefore, that their side be heard in the Refiled Case (No. 8698). Then, too, the contempt
incident and the matter of the Writ of Possession in the Consolidation Case (No. 7410) were left unresolved
pending the outcome of the Quieting of Title Case (No. 7777).
In other words, it would be more in keeping with substantial justice if the controversy between the parties to be
resolved on the merits rather than on a procedural technicality in the light of the express mandate of the Rules
that they be "liberally construed in order to promote their object and to assist the parties in obtaining just, speedy
and inexpensive determination of every action and proceeding." The dismissal of actions is based on sound
judicial discretion and such discretion "must be exercised wisely and prudently never capriciously, with a view to
substantial justice." For having failed to meet that standard it will have to be held that respondent Judge acted with
grave abuse of discretion (see Tandoc vs. Tensuan, I, 50835, October 30, 1979, 93 SCRA 880).
WHEREFORE, the questioned Order of dismissal, dated September 6, 1971, in Civil Case No. 8698, is hereby
SET ASIDE and the said case REMANDED for prompt hearing and determination on the merits. This Decision
shag be immediately executory upon promulgation. No costs.
SO ORDERED.
Yap (Chairman), Paras, Padilla and Sarmiento, JJ., concur.
8/22/14 G.R. No. L-28740
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SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-28740 February 24, 1981
FERMIN Z. CARAM, JR., petitioner,
vs.
CLARO L. LAURETA, respondent.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of Appeals promulgated on January 29, 1968 in
CA-G. R. NO. 35721-R entitled "Claro L. Laureta, plaintiff-appellee versus Marcos Mata, Codidi Mata and Fermin
Caram, Jr., defendants- appellants; Tampino (Mansaca), et al. Intervenors-appellants," affirming the decision of
the Court of First Instance of Davao in Civil Case No. 3083.
1
On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of Davao an action for nullity, recovery of
ownership and/or reconveyance with damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin Z.
Caram, Jr. and the Register of Deeds of Davao City.
2
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered by Original Certificate of Title
No. 3019 in favor of Claro Laureta, plaintiff, the respondent herein. The deed of absolute sale in favor of the
plaintiff was not registered because it was not acknowledged before a notary public or any other authorized officer.
At the time the sale was executed, there was no authorized officer before whom the sale could be acknowledged
inasmuch as the civil government in Tagum, Davao was not as yet organized. However, the defendant Marcos
Mata delivered to Laureta the peaceful and lawful possession of the premises of the land together with the
pertinent papers thereof such as the Owner's Duplicate Original Certificate of Title No. 3019, sketch plan, tax
declaration, tax receipts and other papers related thereto.
3
Since June 10, 1945, the plaintiff Laureta had been and is
stin in continuous, adverse and notorious occupation of said land, without being molested, disturbed or stopped by any of the
defendants or their representatives. In fact, Laureta had been paying realty taxes due thereon and had introduced
improvements worth not less than P20,000.00 at the time of the filing of the complaint.
4
On May 5, 1947, the same land covered by Original Certificate of Title No. 3019 was sold by Marcos Mata to
defendant Fermin Z. Caram, Jr., petitioner herein. The deed of sale in favor of Caram was acknowledged before
Atty. Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys. Abelardo Aportadera and Gumercindo
Arcilla, filed with the Court of First Instance of Davao a petition for the issuance of a new Owner's Duplicate of
Original Certificate of Title No. 3019, alleging as ground therefor the loss of said title in the evacuation place of
defendant Marcos Mata in Magugpo, Tagum, Davao. On June 5, 1947, the Court of First Instance of Davao issued
an order directing the Register of Deeds of Davao to issue a new Owner's Duplicate Certificate of Title No. 3019 in
favor of Marcos Mata and declaring the lost title as null and void. On December 9, 1947, the second sale between
Marcos Mata and Fermin Caram, Jr. was registered with the Register of Deeds. On the same date, Transfer
Certificate of Title No. 140 was issued in favor of Fermin Caram Jr.
5
On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed their answer with counterclaim admitting
the existence of a private absolute deed of sale of his only property in favor of Claro L. Laureta but alleging that
he signed the same as he was subjected to duress, threat and intimidation for the plaintiff was the commanding
officer of the 10th division USFIP operating in the unoccupied areas of Northern Davao with its headquarters at
Project No. 7 (Km. 60, Davao Agusan Highways), in the Municipality of Tagum, Province of Davao; that Laureta's
words and requests were laws; that although the defendant Mata did not like to sell his property or sign the
document without even understanding the same, he was ordered to accept P650.00 Mindanao Emergency notes;
and that due to his fear of harm or danger that will happen to him or to his family, if he refused he had no other
alternative but to sign the document.
6
The defendants Marcos Mata and Codidi Mata also admit the existence of a record in the Registry of Deeds
regarding a document allegedly signed by him in favor of his co-defendant Fermin Caram, Jr. but denies that he
8/22/14 G.R. No. L-28740
regarding a document allegedly signed by him in favor of his co-defendant Fermin Caram, Jr. but denies that he
ever signed the document for he knew before hand that he had signed a deed of sale in favor of the plaintiff and
that the plaintiff was in possession of the certificate of title; that if ever his thumb mark appeared in the document
purportedly alienating the property to Fermin Caram, did his consent was obtained through fraud and
misrepresentation for the defendant Mata is illiterate and ignorant and did not know what he was signing; and that
he did not receive a consideration for the said sale.
7
The defendant Fermin Caram Jr. filed his answer on October 23, 1959 alleging that he has no knowledge or
information about the previous encumbrances, transactions, and alienations in favor of plaintiff until the filing of
the complaints.
8
The trial court rendered a decision dated February 29, 1964, the dispositive portion of which reads:
9
1. Declaring that the deed of sale, Exhibit A, executed by Marcos Mata in favor of Claro L. Laureta
stands and prevails over the deed of sale, Exhibit F, in favor of Fermin Caram, Jr.;
2. Declaring as null and void the deed of sale Exhibit F, in favor of Fermin Caram, Jr.;
3. Directing Marcos Mata to acknowledge the deed of sale, Exhibit A, in favor of Claro L. Laureta;
4. Directing Claro L. Laureta to secure the approval of the Secretary of Agriculture and Natural
Resources on the deed, Exhibit A, after Marcos Mata shall have acknowledged the same before a
notary public;
5. Directing Claro L. Laureta to surrender to the Register of Deeds for the City and Province of Davao
the Owner's Duplicate of Original Certificate of Title No. 3019 and the latter to cancel the same;
6. Ordering the Register of Deeds for the City and Province of Davao to cancel Transfer Certificate of
Title No. T-140 in the name of Fermin Caram, Jr.;
7. Directing the Register of Deeds for the City and Province of Davao to issue a title in favor of Claro
L. Laureta, Filipino, resident of Quezon City, upon presentation of the deed executed by Marcos Mata
in his favor, Exhibit A, duly acknowledged by him and approved by the Secretary of Agriculture and
Natural Resources, and
8. Dismissing the counterclaim and cross claim of Marcos Mata and Codidi Mata, the counterclaim of
Caram, Jr., the answer in intervention, counterclaim and cross-claim of the Mansacas.
The Court makes no pronouncement as to costs.
SO ORDERED.
The defendants appealed from the judgment to the Court of Appeals.
10
The appeal was docketed as CA-G.R. NO.
35721- R.
The Court of Appeals promulgated its decision on January 29, 1968 affirming the judgment of the trial court.
In his brief, the petitioner assigns the following errors:
11
I
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT IRESPE AND
APORTADERA WERE ATTORNEYS-IN-FACT OF PETITIONER CARAM FOR THE PURPOSE OF
BUYING THE PROPERTY IN QUESTION.
II
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE EVIDENCE
ADDUCED IN THE TRIAL COURT CONSTITUTE LEGAL EVIDENCE OF FRAUD ON THE PART OF
IRESPE AND APORTADERA AT TRIBUTABLE TO PETITIONER.
III
THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW IN HOLDING THAT
KNOWLEDGE OF IRESPE AND APORTADERA OF A PRIOR UNREGISTERED SALE OF A TITLED
PROPERTY ATTRIBUTABLE TO PETITIONER AND EQUIVALENT IN LAW OF REGISTRATION OF
SAID SALE.
8/22/14 G.R. No. L-28740
IV
THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT AN ACTION FOR
RECONVEYANCE ON THE GROUND OF FRAUD PRESCRIBES WITHIN FOUR (4) YEARS.
The petitioner assails the finding of the trial court that the second sale of the property was made through his
representatives, Pedro Irespe and Atty. Abelardo Aportadera. He argues that Pedro Irespe was acting merely as a
broker or intermediary with the specific task and duty to pay Marcos Mata the sum of P1,000.00 for the latter's
property and to see to it that the requisite deed of sale covering the purchase was properly executed by Marcos
Mata; that the Identity of the property to be bought and the price of the purchase had already been agreed upon
by the parties; and that the other alleged representative, Atty. Aportadera, merely acted as a notary public in the
execution of the deed of sale.
The contention of the petitioner has no merit. The facts of record show that Mata, the vendor, and Caram, the
second vendee had never met. During the trial, Marcos Mata testified that he knows Atty. Aportadera but did not
know Caram.
12
Thus, the sale of the property could have only been through Caram's representatives, Irespe and
Aportadera. The petitioner, in his answer, admitted that Atty. Aportadera acted as his notary public and attorney-in-fact at
the same time in the purchase of the property.
13
The petitioner contends that he cannot be considered to have acted in bad faith because there is no direct proof
showing that Irespe and Aportadera, his alleged agents, had knowledge of the first sale to Laureta. This
contention is also without merit.
The Court of Appeals, in affirming the decision of the trial court, said:
14
The trial court, in holding that appellant Caram. Jr. was not a purchaser in good faith, at the time he
bought the same property from appellant Mata, on May 5, 1947, entirely discredited the testimony of
Aportadera. Thus it stated in its decision:
The testimony of Atty. Aportadera quoted elsewhere in this decision is hollow. There is every reason
to believe that Irespe and he had known of the sale of the property in question to Laureta on the day
Mata and Irespe, accompanied by Leaning Mansaca, went to the office of Atty. Aportadera for the
sale of the same property to Caram, Jr., represented by Irespe as attorney-in-fact. Ining Mansaca was
with the two Irespe and Mata to engage the services 6f Atty. Aportadera in the annulment of the
sale of his land to Laureta. When Leaning Mansaca narrated to Atty. Aportadera the circumstances
under which his property had been sold to Laureta, he must have included in the narration the sale of
the land of Mata, for the two properties had been sold on the same occassion and under the same
circumstances. Even as early as immediately after liberation, Irespe, who was the witness in most of
the cases filed by Atty. Aportadera in his capacity as Provincial Fiscal of Davao against Laureta, must
have known of the purchases of lands made by Laureta when he was regimental commander, one of
which was the sale made by Mata. It was not a mere coincidence that Irespe was made guardian ad
litem of Leaning Mansaca, at the suggestion of Atty. Aportadera and attorney-in-fact of Caram, Jr.
The Court cannot help being convinced that Irespe, attorney-in-fact of Caram, Jr. had knowledge of
the prior existing transaction, Exhibit A, between Mata and Laureta over the land, subject matter of
this litigation, when the deed, Exhibit F, was executed by Mata in favor of Caram, Jr. And this
knowledge has the effect of registration as to Caram, Jr. RA pp. 123-124)
We agree with His Honor's conclusion on this particular point, on two grounds the first, the same
concerns matters affecting the credibility of a witness of which the findings of the trial court command
great weight, and second, the same is borne out by the testimony of Atty. Aportadera himself. (t.s.n.,
pp. 187-190, 213-215, Restauro).
Even if Irespe and Aportadera did not have actual knowledge of the first sale, still their actions have not satisfied
the requirement of good faith. Bad faith is not based solely on the fact that a vendee had knowledge of the defect
or lack of title of his vendor. In the case of Leung Yee vs. F. L. Strong Machinery Co. and Williamson, this Court
held:
15
One who purchases real estate with knowledge of a defect or lack of title in his vendor can not 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.
In the instant case, Irespe and Aportadera had knowledge of circumstances which ought to have put them an
inquiry. Both of them knew that Mata's certificate of title together with other papers pertaining to the land was
8/22/14 G.R. No. L-28740
taken by soldiers under the command of Col. Claro L. Laureta.
16
Added to this is the fact that at the time of the
second sale Laureta was already in possession of the land. Irespe and Aportadera should have investigated the nature of
Laureta's possession. If they failed to exercise the ordinary care expected of a buyer of real estate they must suffer the
consequences. The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who
buys without checking the vendor's title takes all the risks and losses consequent to such failure.
17
The principle that a person dealing with the owner of the registered land is not bound to go behind the certificate
and inquire into transactions the existence of which is not there intimated
18
should not apply in this case. It was of
common knowledge that at the time the soldiers of Laureta took the documents from Mata, the civil government of Tagum
was not yet established and that there were no officials to ratify contracts of sale and make them registerable. Obviously,
Aportadera and Irespe knew that even if Mata previously had sold t he Disputed such sale could not have been registered.
There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased the property of Mata in
bad faith. Applying the principle of agency, Caram as principal, should also be deemed to have acted in bad faith.
Article 1544 of the New Civil Code provides that:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be
movable property.
faith first recordered it in the Registry of Property.
Should there be no inscription, the ownership shag pertain to the person who in good faith was first in
there is good faith. (1473)
Since Caram was a registrant in bad faith, the situation is as if there was no registration at all.
19
The question to be determined now is, who was first in possession in good faith? A possessor in good faith is one
who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.
20
Laureta was first
in possession of the property. He is also a possessor in good faith. It is true that Mata had alleged that the deed of sale in
favor of Laureta was procured by force.
21
Such defect, however, was cured when, after the lapse of four years from the time
the intimidation ceased, Marcos Mata lost both his rights to file an action for annulment or to set up nullity of the contract as
a defense in an action to enforce the same.
Anent the fourth error assigned, the petitioner contends that the second deed of sale, Exhibit "F", is a voidable
contract. Being a voidable contract, the action for annulment of the same on the ground of fraud must be brought
within four (4) years from the discovery of the fraud. In the case at bar, Laureta is deemed to have discovered that
the land in question has been sold to Caram to his prejudice on December 9, 1947, when the Deed of Sale, Exhibit
"F" was recorded and entered in the Original Certificate of Title by the Register of Deeds and a new Certificate of
Title No. 140 was issued in the name of Caram. Therefore, when the present case was filed on June 29, 1959,
plaintiff's cause of action had long prescribed.
The petitioner's conclusion that the second deed of sale, "Exhibit F", is a voidable contract is not correct. I n order
that fraud can be a ground for the annulment of a contract, it must be employed prior to or simultaneous to the,
consent or creation of the contract. The fraud or dolo causante must be that which determines or is the essential
cause of the contract. Dolo causante as a ground for the annulment of contract is specifically described in Article
1338 of the New Civil Code of the Philippines as "insidious words or machinations of one of the contracting parties"
which induced the other to enter into a contract, and "without them, he would not have agreed to".
The second deed of sale in favor of Caram is not a voidable contract. No evidence whatsoever was shown that
through insidious words or machinations, the representatives of Caram, Irespe and Aportadera had induced Mata
to enter into the contract.
Since the second deed of sale is not a voidable contract, Article 1391, Civil Code of the Philippines which provides
that the action for annulment shall be brought within four (4) years from the time of the discovery of fraud does not
apply. Moreover, Laureta has been in continuous possession of the land since he bought it in June 1945.
A more important reason why Laureta's action could not have prescribed is that the second contract of sale,
having been registered in bad faith, is null and void. Article 1410 of the Civil Code of the Philippines provides that
any action or defense for the declaration of the inexistence of a contract does not prescribe.
In a Memorandum of Authorities
22
submitted to this Court on March 13, 1978, the petitioner insists that the action of
Laureta against Caram has prescribed because the second contract of sale is not void under Article 1409
23
of the Civil Code
8/22/14 G.R. No. L-28740
Laureta against Caram has prescribed because the second contract of sale is not void under Article 1409
23
of the Civil Code
of the Philippines which enumerates the kinds of contracts which are considered void. Moreover, Article 1544 of the New Civil
Code of the Philippines does not declare void a second sale of immovable registered in bad faith.
The fact that the second contract is not considered void under Article 1409 and that Article 1544 does not declare
void a deed of sale registered in bad faith does not mean that said contract is not void. Article 1544 specifically
provides who shall be the owner in case of a double sale of an immovable property. To give full effect to this
provision, the status of the two contracts must be declared valid so that one vendee may contract must be
declared void to cut off all rights which may arise from said contract. Otherwise, Article 1544 win be meaningless.
The first sale in favor of Laureta prevails over the sale in favor of Caram.
WHEREFORE, the petition is hereby denied and the decision of the Court of Appeals sought to be reviewed is
affirmed, without pronouncement as to costs.
SO ORDERED.
Makasiar Guerrero, De Castro* and Mel enci o-Herrera concur.

Footnotes
1 Annex "A", Rollo, pp. 35-48. Written by Justice Nicasio Yatco and concurred in by Justice Salvador
Esquerra and Justice Eulogio S. Serrano.
2 Record on Appeal, pp. 2-13, Rollo, p. 61.
3 Ibid., pp. 3-4.
4 Ibid., P.10; TSN, January 22, 1964, pp. 108, 110-111.
5 Ibid., pp. 6-8.
6 Ibid., p. 27.
7 Ibid., p. 29.
8 Ibid., p. 39.
9 Ibid., pp. 126-127.
10 Ibid., pp. 128-129.
11 Brief for Petitioner, pp. 1-2, Rollo, p. 139.
12 TSN, January 22, 1964, p. 98.
13 Record on Appeal, p. 38, Rollo, p. 61.
14 Rollo, pp. 45-47.
15 Leung Yee vs. Strong Machinery Co. and Williamson, 37 Phil. 644.
16 TSN, January 22, 1964, pp. 187-188.
17 Salvoro vs. Taega, 87 SCRA 349. 361.
18 Quimson vs. Suarez, 45 Phil. 906.
19 Salvorro vs. Taega, 87 SCRA 363.
20 Article 526, Civil Code of the Philippines.
21 The trial court found that the contract in favor of Laureta is voidable, but the action to annul the
same has long prescribed. See Record on Appeal, p. 120, Rollo, p. 61.
22 Rollo, pp. 159-177.
23 Article 1409, Civil Code of the Philippines - The following contracts are inexistent and void from the
beginning:
8/22/14 G.R. No. L-28740
beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;
(7) Those expressly prohibited or declared void by law
These contracts cannot be ratified. Neither can the right to set the defense of illegality be waived.
* Mr. Justice de Castro was designation to sit with the First Division.
8/22/14 G.R. No. L-56232
www.lawphil.net/judjuris/juri1984/jun1984/gr_l56232_1984.html 1/4
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-56232 June 22, 1984
ABELARDO CRUZ (deceased) substituted by Heirs Consuelo C. Cruz, Claro C. Cruz and Stephen C.
Cruz, per Resolution, petitioners,
vs.
LEODEGARIA CABANA, TEOFILO LEGASPI , ILUMINADA CABANA and THE HONOR- ABLE COURT OF
APPEALS,* respondents.
Nazareno, Azada, Sabado & Dizon for petitioners.
Felixberto N. Boquiren for respondents.

TEEHANKEE, J.:
The Court affirms the questioned decision of the now defunct Court of Appeals which affirmed that of the Court of
First Instance of Quezon Province, but directs that the seller, respondent Leodegaria Cabana who sold the
property in question twice, first to her co-respondents Teofilo Legaspi and Iluminada Cabana and later to
petitioner Abelardo Cruz (now deceased), should reimburse to petitioner's heirs the amounts of P2,352.50, which
the late petitioner Abelardo Cruz paid to the Philippine National Bank to discharge the mortgage obligation of said
respondent Leodegaria Cabana in favor of said bank, and 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.
This is a simple case of double sale of real property. Respondent appellate court in its decision of August 13,
1980 stated the background facts and resolved the issue in favor of defendants- appellees, first buyers-
respondents herein, and against plaintiff-appellant Abelardo Cruz, petitioner herein (substituted by his heirs), as
follows:
Defendants' evidence shows that on October 21, 1968, defendant Leodegaria Cabana sold the land
in question to defendants-spouses Teofilo Legaspi and Iluminada Cabana (Exh. 1). The said
defendants-spouses attempted to register the deed of sale but said registration was not
accomplished because they could not present the owner's duplicate of title which was at that time in
the possession of the PNB as mortgage.
Likewise, when plaintiff tried to register the deed of sale executed by Leodegaria Cabana on
September 3, 1970, said plaintiff was informed that the owner thereof had sold the land to
defendants-spouses on October 21, 1968. Plaintiff was able to register the land in his name on
February 9, 1971 (Exh. A). With the admission of both parties that the land in question was sold to
two persons, the main issue to be resolved in this appeal is as to who of said vendees has a better
title to said land.
There is no dispute that the land in question was sold with right of repurchase on June 1, 1965 to
defendants- spouses Teofilo Legaspi and Iluminada Cabana (Exh. 1). The said document 'Bilihang
Muling Mabibili' stipulated that the land can be repurchased by the vendor within one year from
December 31, 1966 (see par. 5, Exh. 1).lw p h l@ it Said land was not repurchased and in the meantime,
however, said defendants-spouses took possession of the land.
Upon request of Leodegaria Cabana, the title of the land was lent to her in order to mortgage the
property to the Philippine National Bank. Said title was, forthwith, deposited with the PNB. On October
21, 1968, defendant Leodegaria Cabana sold the land by way of absolute sale to the defendants-
spouses (Exh. 2). However, on November 29, 1968 defendant sold the same property to herein
plaintiff and the latter was able to register it in his name.
8/22/14 G.R. No. L-56232
The transaction in question is governed by Article 1544 of the Civil Code. True it is that the plaintiff
was able to register the sale in his name but was he in good faith in doing so?
While the title was registered in plaintiff- appellant's name on February 9, 1971 (Exh. A), it appears
that he knew of the sale of the land to defendants-spouses Legaspi as he was informed in the Office
of the Register of Deeds of Quezon. It appears that the defendants-spouses registered their
document of sale on May 13, 1965 under Primary Entry No. 210113 of the Register of Deeds (Exh. 2).
Under the foregoing circumstances, the right of ownership and title to the land must be resolved in
favor of the defendants- spouses Legaspi on three counts. First, the plaintiff-appellant was not in
good faith in registering the title in his name. Consistent is the jurisprudence in this jurisdiction that in
order that the provisions of Article 1544 of the new Civil Code may be invoked, it is necessary that the
conveyance must have been made by a party who has an existing right in the thing and the power to
dispose of it (10 Manresa 170, 171). It cannot be set up by a second purchaser who comes into
possession of the property that has already been acquired by the first purchaser in full dominion
(Bautista vs. Sison, 39 Phil. 615), this not withstanding that the second purchaser records his title in
the public registry, if the registration be done in bad faith, the philosophy underlying this rule being
that the public records cannot be covered into instruments of fraud and oppression by one who
secures an inscription therein in bad faith (Chupinghong vs. Borreros, 7 CA Rep. 699).
A purchaser who has knowledge of fact which would put him upon inquiry and investigation as to
possible defects of the title of the vendor and fails to make such inquiry and investigation, cannot
claim that he is a purchaser in good faith. Knowledge of a prior transfer of a registered property by a
subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates
his title acquired by virtue of the latter instrument of conveyance which creates no right as against the
first purchaser (Reylago vs. Jarabe, L-20046, March 27, 1968, 22 SCRA 1247).
In the second place, the defendants-spouses registered the deed of absolute sale ahead of plaintiff-
appellant. Said spouses were not only able to obtain the title because at that time, the owner's
duplicate certificate was still with the Philippine National Bank.
In the third place, defendants-spouses have been in possession all along of the land in question. If
immovable property is sold to different vendees, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the registry of property; and should there be no inscription, the
ownership shall pertain to the person who in good faith was first in the possession (Soriano, et al. vs.
The Heirs of Domingo Magali et al., L-15133 , July 31, 1963, 8 SCRA 489). Priority of possession
stands good in favor of herein defendants-spouses (Evangelista vs. Abad, [CA] 36 O.G. 2913;
Sanchez vs. Ramos, 40 Phil. 614, Quimson vs, Rosete, 87 Phil. 159).
The Court finds that in this case of double sale of real property, respondent appellate court, on the basis of the
undisputed facts, correctly applied the provisions of Article 1544 of the Civil Code that
movable property.
there is good faith.
There is no question that respondents-spouses Teofilo Legaspi and Iluminada Cabana 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 petitioner was the second buyer under a
deed of sale dated November 29, 1968, which to all indications, contrary to the text, was a sale with right of
repurchase for ninety (90) days. 1 There i s no questi on ei ther that respondents l egaspi spouses were the fi rst and the onl y ones to be i n
possessi on of the subj ect property.
Said respondents spouses were likewise the first to register the sale with right of repurchase in their favor on May
13, 1965 under Primary Entry No. 210113 of the Register of Deeds. They could not register the absolute deed of
sale in their favor and obtain the corresponding transfer certificate of title because at that time the seller's
duplicate certificate was still with the bank. But there is no question, and the lower courts so found conclusively as
a matter of fact, that when petitioner Cruz succeeded in registering the later sale in his favor, he knew and he was
informed of the prior sale in favor of respondents-spouses. Respondent appellate court correctly held that such
"knowledge of a prior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad
faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instrument of conveyance
8/22/14 G.R. No. L-56232
faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instrument of conveyance
which creates no right as against the first purchaser."
As the Court held in Carbonell vs. Court of Appeals
2
"it is essential that the buyer of realty must act in good faith in
registering his deed of sale to merit the protection of the second paragraph of [the above quoted] Article 1544." As the writer
stressed in his concurring opinion therein, "(T)he governing principle here is prius tempore, potior jure (first in time, stronger
in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's rights except only as provided
by the Civil Code and that is where the second buyer first registers in good faith the second sale ahead of the first. Such
knowledge of the first buyer does not bar her from availing of her rights under the law, among them, to register first her
purchase as against the second buyer. But in converso knowledge gained by the second buyer of the first sale defeats his
rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is
the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that before the
second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the
first sale and of the first 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."
Petitioner's prayer for alternative relief for reimbursement of the amount of P2,352.50 paid by him to the bank to
discharge the existing mortgage on the property and of the amount of P3,397.50 representing the price of the
second sale are well taken insofar as the seller Leodegaria Cabana is concerned. These amounts have been
received by the said seller Leodegaria Cabana on account of a void second sale and must be duly reimbursed by
her to petitioner's heirs, but the Legaspi spouses cannot be held liable therefor since they had nothing to do with
the said second sale nor did they receive any benefit therefrom. Petitioner's claim for reimbursement of the
amount of P102.58 as real estate taxes paid on the property is not well taken because the respondents Legaspi
spouses had been paying the real estate taxes on the same property since June 1, 1969.
4
ACCORDINGLY, the appealed judgment of respondent appellate court, upholding respondents-spouses Teofilo
Legaspi and Iluminada Cabana as the true and rightful owners of the property in litigation and ordering the
issuance of a new title with the cancellation as null and void of Title No. T- 99140 obtained by petitioner Abelardo
C. Cruz, is hereby affirmed in toto. In accordance with the partial grant of petitioner's prayer for alternative relief as
stated in the preceding paragraph hereof, the Court hereby orders and sentences respondent Leodegaria
Cabana to reimburse and pay to petitioner's heirs the total sum of P5,750.00.
Melencio-Herrera, Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.

Footnotes
* Eighth Division composed of Samuel F. Reyes, Jorge R. Coquia, ponente, and Mariano A. Zosa, JJ.
1 Respondents Legaspi spouses cite in their brief "facts of record" which were not denied or disputed
by petitioner, as follows:
First. The price paid by Cruz was unconscionably small. The complaint alleged that the land with an
area of 27,882 square meters had an annual income of P3,000.00 (Record on Appeal p. 8) but the
vendor, Leodegaria Cabana, was paid the paltry sum of only P5,000.00 (Record on Appeal, p. 25).
Second. Cruz bought the land without even making an inspection. The deed of sale was executed on
November 25, 1968 but he visited the property only after February, 1971 or after a lapse of more
than two years. (tsn Nov. 23, 1971, page 18). Surely, there must be something fishy when real estate
with an income of P3,000.00 yearly can he had for only P5,000.00. By this fantastically low price, the
buyer is already put on notice of a possible defect in seller's title and vet Cruz did not even visit the
locality where he could have made appropriate inquiries.
Third. By petitioner's own admission (brief, p. 4), the agreement between them (Cruz and Leodegaria
Cabana) was SALE WITH RIGHT OF REPURCHASE within 90 days, however, the deed prepared by
Atty. Bonus, counsel of Cruz in the trial court up to the Court of Appeals, was a deed of absolute sale.
a clear premeditated circumvention of the agreement. ...
Fourth. The deed of sale in favor of Cruz was executed on November 29, 1968 (Record on Appeal, p.
11) but he declared the property for taxation only on April 20, 1971, or after the lapse of over two
years.
an indubitable showing that Cruz was uncertain of his title and was not duty bound to pay taxes
thereon. And please note that he was constrained to pay the real estate taxes only because he found
in Legaspi's answer to his complaint in the trial court that legaspi had been paying the taxes on this
property since June 1, 1969 (Record on appeal,p.9).lw p h l@ it Obviously Cruz must have realized that his
8/22/14 G.R. No. L-56232
property since June 1, 1969 (Record on appeal,p.9).lw p h l@ it Obviously Cruz must have realized that his
claim of ownership would be adversely affected by not declaring this property in his name and not
paying real estate taxes.
2 60 SCRA 99 (1976).
3 Idem, pp. 122,123.
4 See footnote, 1, supra.
8/22/14 G.R. No. 85082
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 85082 February 25, 1991
SPOUSES PASTOR VALDEZ and VIRGINIA VALDEZ, petitioners,
vs.
HONORABLE COURT OF APPEALS AND FELICIDAD VIERNES, FRANCISCO ANTE, AND ANTONIO ANTE,
respondents.
Sumulong Law Offices for petitioners.
Antonio A. Ante for respondents Ante.
Jose A. Rico for respondent Viernes.

GANCAYCO, J.:p
This is a case of double sale of real property where both vendees registered the sales with the Register of Deeds
and each produced their respective owner's duplicate copy of the certificate of title to the property.
Spouses Francisco Ante and Manuela Ante were the registered owners of a parcel of land located at 20th Avenue,
Murphy, Quezon City, with an area of approximately 625.70 square meters as evidenced by Transfer Certificate of
Title (TCT) No. 141582 issued by the Register of Deeds of Quezon City. Said spouses executed a special power
of attorney in favor of their son, Antonio Ante, a lawyer, authorizing him to execute any document conveying by
way of mortgage or sale a portion or the whole of said property, to receive payment and dispose of the same as
he may deem fit and proper under the premises.
1
Antonio Ante offered to sell the lot to Eliseo Viernes, who was occupying the same with the permission of Ante.
Viernes, however, turned down the offer as he did not have money. Antonio Ante then told Viernes that he will
instead sell the property to Pastor Valdez and Virginia Valdez.
2
Antonio Ante had the said lot subdivided into Lot A with an area of 280 square meters and Lot B with an area or
345.70 square meters, each lot having its corresponding technical description.
On June 15, 1980, Antonio Ante, as attorney in fact, executed a deed of sale of Lot A in favor of spouses Pastor
Valdez and Virginia Valdez, for and in consideration of the amount of P112,000.00
3
On February 12, 1987, in the same capacity, Antonio Ante sold to said Valdez spouses, Lot B for the amount of
P138,000.00.
4
The Valdez spouses demanded from Antonio Ante the delivery of the owner's duplicate copy of TCT No. 141582
covering said two (2) lots. Ante promised them that he will deliver the title to them in a few days.
In the meanwhile petitioners started fencing the whole lot with cement hollow blocks in the presence of spouses
Eliseo and Felicidad Viernes. Except for the gate, it took them two weeks to finish fencing the whole lot. On said
occasion the Viernes spouses were informed by the Valdez spouses that they were fencing the same as they
purchased the land from Antonio Ante.
As Ante failed to deliver the owner's duplicate certificate of title demanded by the Valdez spouses, the latter filed
their affidavit of adverse claim over the subject lot with the Register of Deeds of Quezon City on September 6,
1982 as the vendees of the property.
5
8/22/14 G.R. No. 85082
Upon inquiries made, the Valdez spouses learned that Antonio Ante had delivered the owner's duplicate certificate
of title as a collateral to one Dr. Camilo Garma of Purdue Street., Cubao Quezon City to secure his rentals in
arrears in the amount of P9,000.00. On September 13, 1983, upon the prodding of the Valdez spouses, Antonio
Ante wrote to Dr. & Mrs. Garma to request them to entrust the owner's duplicate copy of the title of the questioned
lot to the Valdez spouses with the assurance that Ante will pay his indebtedness to them.
6
The Garma spouses
turned over to the Valdez spouses the said owner's duplicate certificate of title after said Valdez spouses paid for the
obligation of Antonio Ante to the Garma spouses.
The Valdez spouses then proceeded to register the two deeds of sale dated June 15, 1980 and February 12,
1981
7
with the Register of Deeds of Quezon City by presenting the owner's duplicate copy of the title. They were, however,
informed that the said owner's duplicate certificate of title had been declared null and void per order of Judge Tutaan dated
November 10, 1982. They also found out that spouses Francisco and Manuela Ante earlier filed a petition for the issuance of
a new owner's duplicate certificate of title and to declare null and void the lost owner's duplicate certificate of title.
The Valdez spouses also discovered that the Register of Deeds cancelled TCT No. 141582 and in lieu thereof
issued TCT No. 293889 in the name of Felicidad Viernes on the basis of a deed of assignment of the same
property dated February 17, 1982 executed by Antonio Ante in her favor.
When Virginia Valdez inquired from Antonio Ante why he executed the said deed of assignment when he had
previously sold the same lot to them, Ante replied that they could sue him in court.
Thus, the Valdezes filed their adverse claim over the lot covered by TCT No. 293889 in the name of Felicidad
Viernes. They filed the complaint in Barangay office of San Roque, Quezon City against Felicidad Viernes but as
no amicable settlement was reached, the Valdezes filed a complaint in the Regional Trial Court of Quezon City
seeking among others, that the order dated November 10, 1982 of the Court of First Instance of Quezon City
authorizing the issuance of a new owner's duplicate certificate of title in the name of Francisca Ante be declared
null any void; that the deed of assignment dated February 17, 1982 executed by Antonio Ante in favor of Felicidad
Viernes be cancelled and revoked; that TCT No. 293889 in the name of Felicidad Viernes in the Register of Deeds
of Quezon City be cancelled and declared null and void; that the Register of Deeds of Quezon City be ordered to
reinstate, revalidate and give full force and effect to the owner's duplicate copy of TCT No. 141582 in the name of
spouses Francisco and Manuela Ante and declare petitioners as the true and lawful owners of the property;
ordering respondents Viernes and all persons claiming right under them to vacate the property, and to pay
damages and costs to petitioners.
After trial on the merits before which the Antes were declared in default, a decision was rendered by the trial court
on April 9, 1986, the dispositive part of which reads as follows:
WHEREFORE, the complaint is dismissed as against defendants Vierneses, and defendants Antes
are hereby ordered to pay to plaintiff, as prayed for in their complaint, as follows:
Defendant Antes are hereby ordered to pay actual damages in the amount of P250,000.00 to
plaintiffs.
Defendants Antes are hereby ordered to pay moral and exemplary damages in the amount of
P15,000.00 and exemplary damages in the amount of P5,000.00.
Defendants Antes, are hereby ordered to pay P5,000.00 for attorney's fees.
SO ORDERED.
8
Not satisfied therewith the Valdezes interposed an appeal therefrom to the Court of Appeals wherein in due course
a decision was rendered on September 12, 1988, affirming in toto the appealed decision, with costs against the
appellants.
Hence this petition for review on certiorari filed by the Valdezes wherein the following issues are raised:
1. Whether the Order dated November 10, 1983 declaring as null and void the Owner's copy of
Transfer Certificate of Title No. 141582 and ordering the issuance of a new Owner's copy of said title
should be set aside having been secured fraudulently and in bad faith by Francisco Ante and Antonio
Ante who had already sold the property to the spouses Pastor and Virginia Valdez and who knew fully
well that the said Owner's copy of said title has never been lost.
2. As between plaintiff-spouses Pastor and Virginia Valdez, petitioners in this case and defendant
Felicidad Viernes, one of the private respondents, who is entitled to the subject lot?
3. Who is entitled to damages?
9
8/22/14 G.R. No. 85082
3. Who is entitled to damages?
9
The petition is impressed with merit.
Article 1544 of the Civil Code provides as follows:
movable property.
From the aforesaid provision of the law, it is clear that if movable property is sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession thereof in good faith. However,
should the subject of the sale be immovable property, the ownership shall vest in the person acquiring it who in
good faith first recorded it in the registry of property. Should none of the vendees inscribe the sale in the Registry
of Property, then the ownership of the subject real property shall pertain to the person who in good faith was first
in possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good
faith.
In this case, Lot A of the subject property was sold to the petitioners by Antonio Ante, as attorney-in-fact, on June
15, 1980, while Lot B was sold by the same attorney-in-fact to petitioners on February 12, 1981.
10
Since the
owner's copy of TCT No. 141582 was not delivered in due time to the petitioners by Antonio Ante despite his promise to
deliver the same in a few days, petitioners registered their notice of adverse claim over the said property on September 6,
1982 with the Register of Deeds of Quezon City wherein it was duly annotated as follows:
PE-3004/T-141582 Affidavit of Adverse Claim
Filed under sworn statement of Pastor Valdez & Virginia C. Valdez claiming that they are the vendees
of the property described herein, but the title was not delivered (Doc. 253, Page 51, Bk. I of the Not.
Pub. of Q. City, Prudencio W. Valido)
Date of Instrument August 19, 1982
Date of Inscription Sept. 6, 1982
11
However, earlier, that is on February 17, 1982, a Deed of Assignment of the same property was executed by
Antonio Ante in favor of respondent Felicidad Viernes.
12
Ante filed a petition for the issuance of another owner's
duplicate copy of TCT No. 141582 with the then Court of First Instance of Quezon City on the ground that the owner's
duplicate copy had been lost. The petition was granted in an order dated November 10, 1983 declaring null and void the lost
owner's duplicate copy of the title and ordering the issuance of a new owner's duplicate copy of the title in favor of the Antes.
Said owner's duplicate copy was delivered by Ante to respondent Viernes who thereafter together with the Deed of
Assignment presented the same to the Register of Deeds of Quezon City for registration on November 11, 1982. Thus, on
the basis thereof, TCT No. 141582 was cancelled and TCT No. 293889 was issued in the name of respondent Felicidad
Viernes.
Petitioners again filed an adverse claim this time on the property covered by TCT No. 293889 in the name of
respondent Viernes.
From the foregoing set of facts there can be no question that the sale of the subject lot to petitioners was made
long before the execution of the Deed of Assignment of said lot to respondent Viernes and that petitioners
annotated their adverse claim as vendees of the property as early as September 6, 1982 with the Register of
Deeds of Quezon City. On the other hand the deed of Assignment in favor of Viernes of the said lot was registered
with the Register of Deeds of Quezon City only on November 11, 1982 whereby a new title was issued in the name
of Viernes as above stated.
The rule is clear that a prior right is accorded to the vendee who first recorded his right in good faith over an
immovable property.
13
In this case, the petitioners acquired subject lot in good faith and for valuable consideration from
the Antes and as such owners petitioners fenced the property taking possession thereof. Thus, when petitioners annotated
their adverse claim in the Register of Deeds of Quezon City they thereby established a superior right to the property in
question as against respondent Viernes.
14
On the other hand, respondent Viernes cannot claim good faith in the purchase of the subject lot and the
8/22/14 G.R. No. 85082
On the other hand, respondent Viernes cannot claim good faith in the purchase of the subject lot and the
subsequent registration of the Deed of Assignment in her favor. Even before the petitioners purchased the lot
from the Antes respondent Viernes' husband was first given the option to purchase the same by Antonio Ante but
he declined because he had no money and so he was informed that it would be sold to petitioners. After
petitioners purchased the lot they immediately fenced the same with the knowledge and without objection of
respondent Viernes and her husband and they were informed by the petitioners about their purchase of the same.
Moreover, when petitioners annotated their adverse claim as vendees of the property with the Register of Deeds
of Quezon City, it was effectively a notice to the whole world including respondent Viernes.
Respondent Ante obviously in collusion with respondent Viernes sold the same property to Viernes which was
earlier sold to petitioners, by virtue of a subsequent Deed of Assignment. It was fraudulently made to appear that
the owner's duplicate copy of TCT No. 141582 was lost through a petition filed with the trial court to nullify the said
owner's duplicate copy and for the issuance of another owner's duplicate copy.
Unfortunately, such fraud was unmasked as early as July 14, 1981 when respondent Francisco Ante, in Civil Case
No. 29617, filed an urgent motion for the issuance of a subpoena and subpoena duces tecum to require Paz
Garma of 8 Purdue Street, Cubao, Quezon City to produce before the court on July 16, 1981 at 2:00 o'clock p.m.
at the scheduled pre-trial of the case, the owner's duplicate copy of TCT No. 141582 issued by the Register of
Deeds in the name of the Antes as the same was entrusted to Paz Garma as a realtor for the proposed sale of the
property which did not materialize.
15
Respondent Viernes admitted in her answer dated January 7, 1984 that she knew of
the filing in court of said urgent motion and that the branch clerk of court issued the corresponding subpoena.
16
Thus,
respondent Ante, as well as respondent Viernes, knew that the owner's duplicate copy of certificate of title No. 141582 was
never lost, consequently the filing of the petition in court for the issuance of a new one was attended with fraud and gross
misrepresentation.
As a matter of fact, as hereinabove discussed, upon the urging of petitioners, respondent Antonio Ante wrote to
the Garma spouses to entrust the TCT to petitioners on September 30, 1983
17
and when petitioners paid the
standing account of Ante to the Garmas said owner's duplicate copy was delivered by the Garmas to the petitioners. The bad
faith of respondents Viernes and Ante is obvious.
Further, even while the notice of adverse claim of September 6, 1982 filed by the petitioners on TCT No. 141582
in the Register of Deeds was still existing and had not been cancelled, on November 11, 1982 the Register of
Deeds nevertheless cancelled said TCT and issued a new title in favor of respondent Viernes. The annotation was
not even carried over nor was it ordered cancelled under the new title issued to respondent Viernes. The Register
of Deeds and/or his subordinates apparently yielded to the fraudulent design of respondents Viernes and Ante.
An examination of the decision of the trial court dated April 9, 1986 shows that there are no findings of facts to
serve as basis for its conclusions.
18
Section 14, Article VIII of the Constitution mandates as follows:
No decision shall be rendered by any court without expressing therein clearly and distinctly the facts
and the law on which it is based.
No petition for review or motion for reconsideration of a decision shall be refused due course or
denied without stating the legal basis therefor. (Emphasis supplied.)
Section 1, Rule 36 of the Rules of Court also provides clearly as follows:
Sec. 1. Rendition of judgments. All judgments determining the merits of cases shall be in writing
personally and directly prepared by the judge, stating clearly and distinctly the facts and the law on
which it is based, signed by him, and filed with the clerk of the court. (Emphasis supplied.)
That is the reason why this Court, through Administrative Circular No. 1 dated January 28, 1988, reminded all
judges "to make complete findings of facts in their decisions, and scrutinize closely the legal aspects of the case in
the light of the evidence presented. They should avoid the tendency to generalize and form conclusions without
detailing the facts from which such conclusions are deduced."
Of course, when a petition for review or motion for reconsideration of a decision of the court is denied due course,
or is otherwise denied, it is not necessary that such findings of facts be made. However, the denial must state the
legal basis thereof.
In the present case, the three-paged decision of the trial court contained in the first two pages a statement of the
allegations of the pleadings of the parties and enumerates the witnesses presented and the exhibits marked
during the trial. Thereafter, the trial court arrived at the following conclusion:
After considering the evidence on record, this Court finds that plaintiff have failed to prove their case
as against defendant Felicidad Viernes, but proved their case against defaulted defendants Antes.
The Court finds that there is no sufficient proof of knowledge or bad faith on the part of defendant
8/22/14 G.R. No. 85082
The Court finds that there is no sufficient proof of knowledge or bad faith on the part of defendant
Vierneses, and on the basis of existing jurisprudence, a third person who in good faith purchases and
registers a property cannot be deprived of his title as against plaintiff who had previously purchased
same property but failed to register the same.
19
This is not what is contemplated under the Constitution and the Rules as a clear and distinct statement of the facts
on the basis of which the decision is rendered. The foregoing one paragraph statement constitute a mere
conclusion of facts and of law arrived at by the trial court without stating the facts which serve as the basis thereof.
Indeed the conclusion of fact therein that petitioners had not registered the sale to them is traversed by the
records which show on the contrary, petitioners earlier registered the sale to them. The court statement in the
decision that a party has proven his case while the other has not, is not the findings of facts contemplated by the
Constitution and the rules to be clearly and distinctly stated.
Unfortunately, the appellate court overlooked this fatal defect in the appealed decision. It merely adopted the
alleged findings of facts of the trial court. Although it made some findings on how the deed of assignment in favor
of respondent Viernes came about, it is far from complete and is hardly a substantial compliance with the mandate
aforestated.
As it is now, this Court has before it a challenged decision that failed to state clearly and distinctly the facts on
which it is predicated. This Court has said again and again that it is not a trier of facts and that it relies, on the
factual findings of the lower court and the appellate court which are conclusive. But as it is, in this case, the Court
has to wade through the records and make its own findings of facts, rather than further delay the disposition of the
case by remanding the records for further proceedings.
Hence, the appealed decision should be struck down.
WHEREFORE, the petition is GRANTED. The appealed decision of the appellate court dated September 12, 1988
is hereby SET ASIDE and another judgment is hereby rendered declaring the order of the trial court dated
November 10, 1982 null and void and reinstating the owner's duplicate copy of TCT No. 141582 in the possession
of the petitioners; declaring the petitioners to have the superior right to the property in question and to be the true
and lawful owners of the same; directing the Register of Deeds of Quezon City to cancel TCT No. 293889 in the
name of respondent Felicidad Viernes and to issue a new title in favor of petitioners spouses Pastor and Virginia
Valdez upon the presentation of the owner's duplicate copy of TCT No. 141582; directing respondent Felicidad
Viernes and other persons claiming rights under her residing in the premises of the land in question to vacate the
same immediately and to remove whatever improvement she has placed in the premises; and ordering private
respondents to jointly and severally pay the petitioners the amounts of P15,000.00 as moral damages, P5,000.00
exemplary damages, and P20,000.00 as attorney's fees. The docket fees for the amount of damages and
attorney's fees awarded to the petitioners, if not yet duly paid, shall constitute a prior lien in favor of the
government, before the satisfaction of the judgment in favor of the petitioners. Costs against private respondents.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

Footnotes
1 Exhibit T.
2 TSN, December 6, 1984, page 15.
3 Exhibit F.
4 Exhibit G.
5 Exhibit B-1.
6 Exhibit M.
7 Exhibits F and G.
8 Page 68, rollo.
9 Pages 15 to 16, rollo.
10 Exhibits F and G.
11 Exhibit B-1.
8/22/14 G.R. No. 85082
11 Exhibit B-1.
12 Exhibit C.
13 Carbonnel vs. Court of Appeals, 69 SCRA 99 (1976); Article 1544, Civil Code.
14 Carbonnel vs. Court of Appeals supra, at 107 to 108.
15 Exhibit K.
16 Exhibit J.
17 Exhibit N.
18 Pages 66 to 68, rollo.
19 Page 68, rollo.
8/22/14 G.R. No. 77423
www.lawphil.net/judjuris/juri1989/mar1989/gr_77423_1989.html 1/4
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 77423 March 13, 1989
SPOUSES DIOSDADO NUGUID AND MARIQUETA VENEGAS, petitioners,
vs.
COURT OF APPEALS, AMORITA GUEVARRA, TERESITA GUEVARRA, NARCISO GUEVARRA, MARCIANA
DELA ROSA, BERNABE BUENAVENTURA, AND JULIETA BUENAVENTURA, respondents.
Jose F. Mahacop for petitioners.
Ramon L. Ortega for private respondents.

SARMIENTO, J.:
This petition seeks the reversal of the decision of the Court of Appeals declaring the private respondents owners
of one-half portion of the property subject of this case.
The petitioners were the defendants in a suit commenced by the private respondents before the Court of First
Instance (now Regional Trial Court) of Bataan. 1 The antecedent facts may be summari zed as fol l ows:
The deceased spouses Victorino and Crisanta dela Rosa were the registered owners of a parcel of land with an
area of 231 square meters, situated in Orani Bataan, and covered by original Certificate of Title No. 3778. On or
about May 4, 1931, Victorino dela Rosa (widowed by then) sold one-half of the said property to Juliana Salazar for
P 95.00. This sale, though evidenced by a document, 2 was not regi stered. Immedi atel y after the sal e, Jul i ana Sal azar constructed a
house on the l ot she purchased.
On March 10, 1964, petitioner spouses (defendants below) caused the registration of a document entitled
"Kasulatan ng Partihan at Bilihan"' (hereinafter referred to as Exhibit "D"), 3 dated June 6, 1961. In thi s document, Marci ana
del a Rosa (who i s among the pri vate respondents), Vi ctori a Buenaventura, Ernesto Buenaventura, Vi rgi l i o Buenaventura, and Fel i ci si mo Buenaventura-
al l hei rs of Vi ctori no and Cri santa del a Rosa- sol d to the peti ti oners the enti re area of the property abovementi oned for the sum of P 300.00.
Subsequentl y, OCT No. 3778 was cancel l ed by the Regi ster of Deeds of Bataan, and Transfer Certi fi cate of Ti tl e No. T-12782 was i ssued i n the names of
the peti ti oners.
The private respondents claim that Exhibit "D" is a forged deed in that: 1) the signature of Marciana dela Rosa
appearing therein is a forgery; 2) it is not true that, as stated in the deed, Luisa dela Rosa (sister of Marciana), at
the time of her death, was a widow; 3) none of the heirs-signatories to the deed received any consideration for the
supposed sale; and 4) Luisa dela Rosa is survived not only by four, but by five children (the fifth child, respondent
Julieta Buenaventura, was not mentioned in the deed).
The private respondents allegedly discovered the forged deed as well as the certificate of title in the name of the
petitioners much later, that is, on February 28, 1978, when respondents Amorita Guevarra and Teresita Guevarra
thought of having the title of their grandmother Juliana Salazar, registered.
On the other hand, the petitioners assert that sometime in the latter part of 1960, the land subject of this case was
offered to them for sale by Nicolas dela Rosa, uncle of respondent Marciana dela Rosa and grandfather of the
other heirs-signatories to Exhibit "D". Apparently, Nicolas dela Rosa claimed that he had already purchased the
shares of the heirs over the subject property as evidenced by a private document entitled "Kasunduan"
(hereinafter referred to as Exhibit "6") dated August 31, 1955; as a matter of fact, he had in his possession the
original certificate of title covering the property in the name of the deceased Victorino and Crisanta dela Rosa. He
promised, however, that he would arrange for a direct sale to be made by the heirs in favor of the petitioners.
Consequently, Exhibit "D" as mentioned earlier, was executed. The petitioners stress that even before they
decided to buy the subject property, they made an ocular inspection thereof and questioned the occupants therein
to verify its real ownership. They underscore the fact that the persons whom they found occupying the property
8/22/14 G.R. No. 77423
to verify its real ownership. They underscore the fact that the persons whom they found occupying the property
did not at all assert adverse ownership over the same.
The trial court rendered judgment dismissing the complaint filed by the private respondents, but on appeal, this
was reversed by the Court of Appeals. 4 To quote the di sposi ti ve porti on of the appel l ate court's deci si on:
WHEREFORE, finding the decision of the lower court to be with reversible error the decision dated
May 1, 1982 is hereby ordered REVERSED and a new one entered declaring plaintiffs to be owners
of 115.5 square meters of Lot 678. Defendants are hereby ordered to execute a deed of
reconveyance in favor of plaintiffs over the said area within thirty (30) days from the finality of this
decision, otherwise, the Register of Deeds will be ordered to execute one in favor of the plaintiffs.
With costs against the defendants plus attorney's fees in the amount of P 500.00.
SO ORDERED. 5
From the foregoing, this petition for review was filed.
We find merit in the petition.
From the start, the respondent court erred in treating the private respondents as though they all belong to one
group of heirs whose right is derived from one ancestor, when actually, the private respondents should be
categorized into two groups.
To one group belong the respondents Amorita, Teresita and Narcism, all surnamed Guevarra. As children of
Pedro Guevarra and Pascuala Tolentino, and grandchildren of Juliana Salazar, they claim to have succeeded to
the ownership over the onehalf portion of land which was sold to Juliana Salazar. The remaining private
respondents, Marciana dela Rosa, Bernabe Buenaventura, and Julieta Buenaventura, make up the second group
of heirs who claim to have derived, by succession, their ownership over the other half of the subject property from
their predecessors-in-interest, the original registrants, Victorino and Crisanta dela Rosa.
Analyzing the case before us in this manner, we can immediately discern another error in the decision of the
respondent court, which is that said court, with absolutely no basis, sweepingly adjudged all of the respondents
co-owners of one-half of the subject property. Clearly, it was a glaring error for the Court of Appeals to have so
ruled because as a matter of fact, the respondent heirs of Victorino dela Rosa were claiming a half of the entire
property which is separate and distinct from the other half claimed by the respondents Guevarras. 6
Surprisingly, none of the private respondents appealed the above decision of the Court of Appeals. Consequently,
they are deemed to have accepted the said erroneous decision declaring them, collectively, owners of one-half of
the subject property. In effect, only this portion of the Property is being presently disputed by the contending
parties. As regards the other onehalf portion, it is now settled (by virtue of the private respondents' acceptance of
the Court of Appeals decision) that the same is the property of the petitioners.
Insofar as the respondent heirs of Victorino dela Rosa are concerned, undoubtedly they are not entitled to any
portion of the disputed property. Respondent Marciana dela Rosa is bound by her signature appearing on Exhibit
"D". This public document evidencing the sale of the subject property to the petitioners was executed with all the
legal formalities of a public document, to wit:
The "Kasulatan ng Partihan at Bilihan" (Exhibit D, Exhibit 1) was duly witnessed by Ricardo L. Santos
and Pablo R. Buenaventura, proven to be relatives both of Marciana dela Rosa and the
Buenaventuras who were then at the municipal building of Orani Bataan, when the '"Kasulatan ng
Partihan at Bilihan" was notarized by Fernando J. Rivera, Justice of the peace of Orani Bataan, in his
capacity as ex officio notary public. It should be noted that all the parties were from Orani Bataan, and
the notary public, who notarized the document, was the justice of the peace of Orani Bataan, acting in
his capacity as ex officio notary public. 7
Indeed, the legal presumption of the regularity of the above notarized contract was not rebutted successfully. The
courts below were one in concluding that the alleged forgery of respondent Marciana dela Rosa's signature was
not proven. Likewise, the private respondents' allegation of absence of consideration of the contract was not
substantiated. Under Art. 1354 of the Civil Code, it is presumed that consideration exists and is lawful, unless the
debtor proves the contrary. 8
Noteworthy i s the fact that of the fi ve hei rs who si gned Exhi bi t "D", onl y one, the respondent Marci ana del a Rosa, i mpugned i ts genui neness and due
executi on, as wel l as the authenti ci ty of her si gnature thereon; and she al one j oi ned the other respondents i n thi s sui t.
In the case of the respondents Bernabe Buenaventura and Julieta Buenaventura, the trial court correctly declared
that:
... With his signature appearing in the "Kasulatan" 9 (Exhi bi t 6) and hi s affi rmati on that hi s wi fe, Lui sa del a Rosa, who
was a si ster of Marci ana del a Rosa and al so a daughter of Vi ctori no del a Rosa and Cri santa del a Cruz, had sol d her share of Lot No. 678
8/22/14 G.R. No. 77423
was a si ster of Marci ana del a Rosa and al so a daughter of Vi ctori no del a Rosa and Cri santa del a Cruz, had sol d her share of Lot No. 678
to Ni col as del a Rosa, pl ai nti ff Bernabe Buenaventura coul d no l onger be heard to compl ai n. And i f, pl ai nti ff Jul i eta Buenaventura were
prej udi ced, her l ogi cal recourse woul d be to go after her own ki n. 10
Since no evidence was introduced on the point, the trial court surmised that respondent Julieta Buenaventura was
probably a minor at the time of signing of Exhibits "D" and "6".
It must be noted that although respondent Bernabe Buenaventura disowned his signature on Exhibit "6", there was
no effort on his part to prove such claim. Forgery cannot be presumed. It must be proved. 11
At any rate, the question of whether or not the abovementioned signatures were forged would become irrelevant if,
on the other hand, the petitioners are able to establish that they acquired the subject property in good faith. For,
indeed, an innocent purchaser for value is protected such that when land has already passed into the hands of an
innocent purchaser for value, reconveyance of the same can no longer be made.12
On the other hand, the claimed ownership of the respondent heirs of Pedro and Pascuala Guevarra over the
property is anchored on the prior sale thereof to their grandmother, Juliana Salazar. The situation, in effect, is that
contemplated by Article 1544 of the Civil Code, 13 a doubl e sal e. Parentheti cal l y, al though the second sal e (to the peti ti oners herei n) was
made by the hei rs of the deceased Vi ctori no del a Rosa, the sai d hei rs are deemed the j udi ci al conti nuati on of the personal i ty of the decedent.14
Essenti al l y, therefore, the fi rst and second sal es were made by the same person, as envi si oned under Arti cl e 1544 of the Ci vi l Code, quoted earl i er
(footnote No. 13). The di sputed property bei ng i mmovabl e property, the ownershi p shoul d bel ong to the vendee who i n good fai th fi rst recorded i t i n the
Regi stry of Property, pursuant to the same arti cl e.
It is an established fact that the first sale to Juliana Salazar was not registered while the sale to the petitioners was
registered. However, it is contended by the respondents Guevarras that they have a better right as against the
petitioners because the element of good faith was lacking as regards the latter.
Whether or not there was good faith in the purchase of the land and in the subsequent registration of title
acquired in the Registry of Property is, therefore, the central issue in this case.
We agree with the trial court's finding that the petitioners are purchasers in good faith.
The Original Certificate of Title No. 3778 covering the entire property was clean and free from any annotation of
an encumbrance, 15 and there was nothi ng whatsoever to i ndi cate on i ts face any vi ce or i nfi rmi ty i n the ti tl e of the regi stered owners-the spouses
Vi ctori no and Cri santa del a Rosa. Thus, the peti ti oners coul d not have known of the pri or sal e to Jul i ana Sal azar as, preci sel y, i t was not regi stered. The
general rul e i s that i f the property sol d i s regi stered l and, the purchaser i n good fai th has a ri ght to rel y on the certi fi cate of ti tl e and i s under no duty to go
behi nd i t to l ook for fl aws.16 Thi s' notwi thstandi ng, the peti ti oners di d not rel y sol el y upon the certi fi cate of ti tl e. They personal l y i nspected the subj ect
property. Undeni abl y, they found the same to be occupi ed by two houses, one bel ongi ng to a certai n Doray del a Rosa and the other to spouses Pedro
Guevarra and Pascual a Tol enti no, parents of the respondents Guevarras. Upon bei ng i nformed of the peti ti oners' desi re to purchase the l and, Doray del a
Rosa apparentl y offered to sel l her house, whi ch offer was accepted by the peti ti oners. As regards the spouses Guevarra, we fi nd no reason to di sturb the
tri al court's fi ndi ng that they themsel ves requested that they be al l owed to refrai n on the property unti l such ti me that the peti ti oners woul d need the
enti re premi ses; and i n l i eu of rental s to the peti ti oners, they offered to conti nue payi ng the real estate taxes for one-hal f of the property as thi s was thei r
arrangement wi th the previ ous owners-to whi ch request the peti ti oners acceded.17 Evi dentl y, nei ther Doray del a Rosa nor the spouses Guevarra professed
ownershi p over the porti ons of l and they were occupyi ng; on the contrary, by thei r actuati ons they expressl y acknowl edged that they were not the real
owners of the sai d property. The spouses Guevarra, i n parti cul ar, made no menti on of the pri or unregi stered sal e to thei r predecessor-i n-i nterest, Jul i ana
Sal azar. Thus, when the peti ti oners regi stered the sal e i n thei r favor wi th the Regi ster of Deeds, they di d so wi thout any knowl edge about the pri or sal e i n
favor of Jul i ana Sal azar. The peti ti oners, therefore, had acted i n good fai th.
The basis for the Court of Appeals' conclusion that petitioners were buyers in bad faith is, to say the least,
ambiguous. Said court appears to have relied on the singular circumstance that the petitioners are, like the
respondents, from Orani Bataan, and as such, according to the court, they should have personally known that the
private respondents were the persons in actual possession and not Doray dela Rosa and Pedro Guevarra. The
respondent court's premise, therefore, is that the private respondents were the actual occupants of the property.
There is, however, nothing in the record to sustain the validity of the above premise. At the time of the purchase,
the petitioners dealt with Pedro Guevarra and Pascuala Tolentino, the latter being the actual occupants. The
respondents Guevarras children of the said Pedro and Pascuala Guevarra, came into the picture only after their
parents died. As for the respondent heirs of Victorino dela Rosa, their being in actual possession of any portion of
the property was, likewise, simply presumed or taken for granted by the Court of Appeals.
The private respondents can not honestly claim that they became aware of the petitioners' title only in 1978. Ever
since the petitioners bought the property in 1961, they have occupied the same openly, publicly, and continuously
in the concept of owners, even building their house thereon. For seventeen years they were in peaceful
possession, with the respondents Guevarras occupying less than one-half of the same property. If the petitioners
are mere usurpers, why did the private respondents complain only now? Moreover, they have not bothered to
explain in what capacity are the petitioners occupying the land, if not as legal owners. Consequently, we are more
inclined to accept the petitioners' explanation that the private respondents have initiated this suit because of their
(the petitioners') refusal to sell to the respondents Guevarras that portion of the land which the latter are
occupying, coupled with the petitioners' demand for the said private respondents to vacate the same.
Anent the other issues raised in the petition, these do not need further discussion, being merely subordinate to
the main issue of good faith.
8/22/14 G.R. No. 77423
the main issue of good faith.

Footnotes
1 Branch I, presided over by Judge Abraham P. Vera.
2 Rollo, 33-34.
3 Rollo, 34-37.
4 Castro-Bartolome, Floreliana, J., ponente; Coquia, Jorge R., Zosa, Mariano A., and Ejercito,
Bienvenido C., JJ., concurring.
5 Rollo, 26-27.
6 Rollo, 32.
7 Rollo, 109.
8 Penaco vs. Ruaya, No. L-28102, Dec. 14, 1981, 110 SCRA 46.
9 Should be "KASUNDUAN" Rollo, 88, as distinguished from "KASULATAN" (Exh. "D" or 'I').
10 Rollo, 108.
11 Siasat vs. Intermediate Appellate Court, No. L-67889, Oct. 10, 1985, 139 SCRA 238.
12 Seno vs. Mangubat, No. L-44339, Dec. 2, 1987, 156 SCRA 113; Rosario vs. Rosano No. L-9701,
July 31, 1957, 101 Phil. 972.
13 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.
faith recorded it in the Registry of Property.
14 Alzona vs. Capunitan, No. L-10228, February 28, 1962, 4 SCRA 450.
15 Rollo, 112.
16 Mallorca vs. Deocampo, No. I,26852, March 25, 1970, 32 SCRA 48.
17 Rollo, 112.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is SET ASIDE, and that
of the Court of First Instance (now Regional Trial Court) of Bataan, Branch I is hereby REINSTATED.
Costs against the private respondents.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.
8/22/14 G.R. No. 83432
www.lawphil.net/judjuris/juri1991/may1991/gr_83432_1991.html 1/3
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 83432 May 20, 1991
RADIOWEALTH FINANCE COMPANY, petitioner,
vs.
MANUELITO S. PALILEO, respondent.
Rolando A. Calang for petitioner.
Sisenando Villaluz, Sr. for respondent.

GANCAYCO, J.:p
If the same piece of land was sold to two different purchasers, to whom shall ownership belong? 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. There is no ambiguity regarding the application of the law with respect to lands
registered under the Torrens System. Section 51 of Presidential Decree No. 1529 (amending Section 50 of Act No.
496 clearly provides that the act of registration is the operative act to convey or affect registered lands insofar as
third persons are concerned. Thus, a person dealing with registered land is not required to go behind the register
to determine the condition of the property. He is only charged with notice of the burdens on the property which are
noted on the face of the register or certificate of title.
1
Following this principle, this Court has time and again held that a
purchaser in good faith of registered land (covered by a Torrens Title) acquires a good title as against all the transferees
thereof whose right is not recorded in the registry of deeds at the time of the sale.
2
The question that has to be resolved in the instant petition is whether or not the rule provided in Article 1544 of
the Civil Code as discussed above, is applicable to a parcel of unregistered land purchased at a judicial sale. To
be more specific, this Court is asked to determine who, as between two buyers of unregistered land, is the rightful
ownerthe first buyer in a prior sale that was unrecorded, or the second buyer who purchased the land in an
execution sale whose transfer was registered in the Register of Deeds.
The facts as found by the Court of Appeals are as follows:
On April 13, 1970, defendant spouses Enrique Castro and Herminia R. Castro sold to plaintiff-
appellee Manuelito Palileo (private respondent herein), a parcel of unregistered coconut land situated
in Candiis, Mansayaw, Mainit, Surigao del Norte. The sale is evidenced by a notarized Deed of
Absolute Sale (Exh. "E"). The deed was not registered in the Registry of Property for unregistered
lands in the province of Surigao del Norte. Since the execution of the deed of sale, appellee
Manuelito Palileo who was then employed at Lianga Surigao del Sur, exercised acts of ownership over
the land through his mother Rafaela Palileo, as administratrix or overseer. Appellee has continuously
paid the real estate taxes on said land from 1971 until the present (Exhs. "C" to "C-7", inclusive).
On November 29, 1976, a judgment was rendered against defendant Enrique T. Castro, in Civil Case
No. 0103145 by the then Court of First Instance of Manila, Branch XIX, to pay herein defendant-
appellant Radiowealth Finance Company (petitioner herein), the sum of P22,350.35 with interest
thereon at the rate of 16% per annum from November 2, 1975 until fully paid, and the further sum of
P2,235.03 as attorney's fees, and to pay the costs. Upon the finality of the judgment, a writ of
execution was issued. Pursuant to said writ, defendant provincial Sheriff Marietta E. Eviota, through
defendant Deputy Provincial Sheriff Leopoldo Risma, levied upon and finally sold at public auction the
8/22/14 G.R. No. 83432
subject land that defendant Enrique Castro had sold to appellee Manuelito Palileo on April 13,1970. A
certificate of sale was executed by the Provincial Sheriff in favor of defendant- appellant Radiowealth
Finance Company, being the only bidder. After the period of redemption has (sic) expired, a deed of
final sale was also executed by the same Provincial Sheriff. Both the certificate of sale and the deed
of final sale were registered with the Registry of Deeds.
3
Learning of what happened to the land, private respondent Manuelito Palileo filed an action for quieting of title
over the same. After a trial on the merits, the court a quo rendered a decision in his favor. On appeal, the decision
of the trial court was affirmed. Hence, this petition for review on certiorari.
In its petition, Radiowealth Finance Company presents the following errors:
1. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE DEED OF ABSOLUTE SALE
(EXHIBIT B) ALLEGEDLY EXECUTED BY ENRIQUE CASTRO IN FAVOR OF APPELLEE MANUELITO
PALILEO, WAS SIMULATED OR FICTITIOUS.
2. THE COURT OF APPEALS ERRED IN NOT FINDING APPELLEE MANUELITO PALILEO AS
ADMINISTRATOR ONLY OF THE DISPUTED PROPERTY; AND
3. THE COURT OF APPEALS ERRED IN NOT FINDING DEFENDANT-APPELLANT RADIOWEALTH
FINANCE COMPANY OWNER OF THE DISPUTED PROPERTY BY REASON OF THE CERTIFICATE
OF SALE AND THE DEED OF FINAL SALE WHICH WERE ALL REGISTERED IN THE REGISTER OF
DEEDS, HENCE, SUPERIOR TO THAT OF THE DEED OF SALE IN POSSESSION OF MANUELITO
PALILEO, FOR BEING NOT REGISTERED.
4
As regards the first and second assigned errors, suffice it to state that findings of fact of the Court of Appeals are
conclusive on this Court and will not be disturbed unless there is grave abuse of discretion. The finding of the
Court of Appeals that the property in question was already sold to private respondent by its previous owner before
the execution sale is evidenced by a deed of sale. Said deed of sale is notarized and is presumed authentic.
There is no substantive proof to support petitioner's allegation that the document is fictitious or simulated. With
this in mind, We see no reason to reject the conclusion of the Court of Appeals that private respondent was not a
mere administrator of the property. That he exercised acts of ownership through his mother also remains
undisputed.
Going now to the third assigned error which deals with the main issue presented in the instant petition, We
observe that the Court of Appeals resolved the same in favor of private respondent due to the following reason;
what the Provincial Sheriff levied upon and sold to petitioner is a parcel of land that does not belong to Enrique
Castro, the judgment debtor, hence the execution is contrary to the directive contained in the writ of execution
which commanded that the lands and buildings belonging to Enrique Castro be sold to satisfy the execution.
5
There is no doubt that had the property in question been a registered land, this case would have been decided in
favor of petitioner since it was petitioner that had its claim first recorded in the Registry of Deeds. For, as already
mentioned earlier, it is the act of registration that operates to convey and affect registered land. Therefore, a bona
fide purchaser of a registered land at an execution sale acquires a good title as against a prior transferee, if such
transfer was unrecorded.
However, it must be stressed that this case deals with a parcel of unregistered land and a different set of rules
applies. We affirm the decision of the Court of Appeals.
Under Act No. 3344, registration of instruments affecting unregistered lands is "without prejudice to a third party
with a better right". The aforequoted phrase has been held by this Court to mean that the mere registration of a
sale in one's favor does not give him any right over the land if the vendor was not anymore the owner of the land
having previously sold the same to somebody else even if the earlier sale was unrecorded.
The case of Carumba vs. Court of Appeals
6
is a case in point. It was held therein that Article 1544 of the Civil Code has
no application to land not registered under Act No. 496. Like in the case at bar, Carumba dealt with a double sale of the
same unregistered land. The first sale was made by the original owners and was unrecorded while the second was an
execution sale that resulted from a complaint for a sum of money filed against the said original owners. Applying Section 35,
Rule 39 of the Revised Rules of Court,
7
this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the
purchaser at the execution sale though the latter was a buyer in good faith and even if this second sale was registered. It
was explained that this is because the purchaser of unregistered land at a sheriffs execution sale only steps into the shoes
of the judgment debtor, and merely acquires the latter's interest in the property sold as of the time the property was levied
upon.
Applying this principle, the Court of Appeals correctly held that the execution sale of the unregistered land in favor
of petitioner is of no effect because the land no longer belonged to the judgment debtor as of the time of the said
execution sale.
8/22/14 G.R. No. 83432
execution sale.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV No. 10788 is hereby
AFFIRMED. No costs.
SO ORDERED.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

Footnotes
1 William H. Anderson & Co. vs. Garcia, 64 Phil. 506 (1937).
2 Vargas vs. Tancioco, 67 Phil. 308 (1939).
3 Pages 10-11, Rollo.
4 Page 5, Rollo.
5 Page 14, Rollo; Emphasis supplied.
6 31 SCRA 558 (1970).
7 The second paragraph of this provision states that: "Upon the execution and delivery of said deed
the purchaser, or redemptioner, or his assignee, shall be substituted to and acquired all the right,
title, interest and claim of the judgment debtor to the property as of the time of the levy, except as
against the judgment debtor in possession, in which case the substitution shall be effective as of the
time of the deed. . . ." (Emphasis supplied.)

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