[No. L-8420.

May 31, 1956]

LUCENA MASICLAT, ET AL., petitioner, vs. NATALIA CENTENO, respondent.

Appeal by certiorari from the decision of the Court of Appeals

reversing the judgment of the Court of First Instance of Pampanga and
awarding the rice in question to the defendant.

The appealed decision is correct, first, because the evidence does not
clearly show the identity of the pferson who tried to buy the rice
from the respondent, and neither does it show that the same person was
the one who sold the commodity to Ramon Masiclat; and, second,
although a cojitraet of sale is perfected upon the parties having
agreed as to the thing which is the subject matter of the contract and
the price (Warner, Barnes & Co. vs. Inza, 43 Phil., 505; Article 1475,
Civil Code), ownership is not considered transmitted until the
property is actually delivered and the purchaser has taken possession
thereof and has paid the price agreed upon (Roman vs. Grimalt, 6
Phil., 96; Article 1524, Civil Code).

Judgment appealed from affirmed, without pronouncement as to costs.

Paras, C. J.y ponente.

QUIROGA vs. PARSONS HARDWARE CO. 38 Phil 501, G.R. No. L-11491, August
23, 1918

FACTS:
On January 24, 1911, herein plaintiff-appellant Andress Quiroga and J. Parsons,
both merchants, entered into a contract, for the exclusive sale of "Quiroga" Beds
in the Visayan Islands. It was agreed, among others, that Andres Quiroga grants
the exclusive right to sell his beds in the Visayan Islands to J.Parsons, subject to
some conditions provided in the contract. Likewise, it was agreed that. In
compensation for the expenses of advertisement which, for the benefit of both
contracting parties, Mr. Parsons may find himself obliged to make, Mr.Quiroga
assumes the obligation to offer and give the preference to Mr. Parsons in case
anyone should apply for the exclusive agency for any island not comprised with
the Visayan group; and that, Mr. Parsons may sell, or establish branches of his
agency for the sale of "Quiroga" beds in all the towns of the Archipelago where
there are no exclusive agents, and shall immediately report such action to Mr.
Quiroga for his approval. Plaintiff filed a complaint, alleging that the defendant
violated the following obligations: not to sell the beds at higher prices than those
of the invoices; to have an open establishment in Iloilo; itself to conduct the
agency; to keep the beds on public exhibition, and to pay for the advertisement
expenses for the same; and to order the beds by the dozen and in no other
manner. He alleged that the defendant was his agent for the sale of his beds in
Iloilo, and that said obligations are implied in a contract of commercial agency.

ISSUE:
Whether or not the defendant, by reason of the contract herein before transcribed,
was an agent of the plaintiff for the sale of his beds.

HELD:
No. In order to classify a contract, due regard must be given to its essential
clauses. In the contract in question, there was the obligation on the part of the
plaintiff to supply the beds, and, on the part of the defendant, to pay their price.
These features exclude the legal conception of an agency or order to sell whereby
the mandatory or agent received the thing to sell it, and does not pay its price, but
delivers to the principal the price he obtains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns it. By virtue of the
contract between the plaintiff and the defendant, the latter, on receiving the beds,
was necessarily obliged to pay their price within the term fixed, without any other
consideration and regardless as to whether he had or had not sold the beds. In
respect to the defendant's obligation to order by the dozen, the only one expressly
imposed by the contract, the effect of its breach would only entitle the plaintiff to
disregard the orders which the defendant might place under other conditions; but
if the plaintiff consents to fill them, he waives his right and cannot complain for
having acted thus at his own free will.

PELAYO VS PEREZ, G.R NO. 141323 JUNE 8, 2005

FACTS:
David Pelayo sold two parcels of agricultural land located in Panabo to Perez on January
1988 and the sale is evidenced by a deed of Absolute Sale and Lorenza Pelayo, wife of
David and another one whose signature is illegible witnessed the execution of the deed.
Mrs. Pelayo signed only the third space in the space provided for the witness, Perez
asked Lorenza to sign on the first and second pages but the latter refused as a result,
Mr. Perez instituted an action for specific performance and Perez countered that the lots
were given to him by defendant Pelayo in consideration of his services as his attorney-in
fact to make the necessary representation and negotiation with the illegal occupants-
defendants in the ejectment case. Defendant Pelayo said that the deed was without the
consent of Mrs. Perez and invoked Art 166 of the Civil code to support his argument.

ISSUE: Did Mrs. Pelayo express his consent in the deed of Sale executed by Mrs. Pelayo?
HELD: The consent need not be expressed. It can be implied. In the present case,
although it appears on the face of the deed of sale that Lorenza signed only as an
instrumental witness, circumstances leading to the execution of said document point to
the fact that Lorenza was fully aware of the sale of their conjugal property and
consented to the sale. The petition of Mr. and Mrs. Pelayo was denied.

G.R. No. L-25494 June 14, 1972

NICOLAS SANCHEZ vs. SEVERINA RIGOS

FACTS:
Nicolas Sanchez and SeverinaRigos executed an instrument entitled "Option to
Purchase," whereby Mrs. Rigos agreed, promised and committed to sell to
Sanchez a parcel of land within two (2) years from said date with the
understanding that said option shall be deemed terminated and elapsed if
Sanchez shall fail to exercise his right to buy the property within the stipulated
period. Inasmuch as several tenders of payment made by Sanchez within said
period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited
said amount with the Court of First Instance of Nueva Ecija and commenced
against the latter the present action, for specific performance and damages.

Rigos contended that the contract between them was only aunilateral promise
to sell, and the same being unsupported by any valuable consideration, by force
of the New Civil Code, is null and void.

Sanchez alleged in his compliant that, by virtue of the option under

consideration, "defendant agreed and committed to sell" and "the plaintiff
agreed and committed to buy" the land described in the option.

The lower court rendered judgment in favor of Sanchez and ordered Rigos to
accept the sum Sanchez judicially consigned, and to execute in his favor the
requisite deed of conveyance.

ISSUE:
Whether there was a contract to buy and sell between the parties or only a
unilateral promise to sell.

COURT RULING:
The Supreme Court affirmed the lower courts decision.
The instrument executed in 1961 is not a "contract to buy and sell," but merely
granted SANCHEZ an option to buy, as indicated by its own title "Option to
Purchase." The option did not impose upon Sanchez the obligation to purchase
Rigos' property. Rigos "agreed, promised and committed" herself to sell the land
to Sanchez, but there is nothing in the contract to indicate that her
aforementioned agreement, promise and undertaking is supported by a
consideration "distinct from the price" stipulated for the sale of the land.

Article 1479 refers to "an accepted unilateral promise to buy or to sell." Since
there may be no valid contract without a cause or consideration, the promisor
is not bound by his promise and may, accordingly, withdraw it. Pending notice
of its withdrawal, his accepted promise partakes, however, of the nature of an
offer to sell which, if accepted, results in a perfected contract of sale.

DAGUPAN TRADING V. MACAM

DOCTRINE: Where one of two conflicting sales of a piece of land

was executed before the land was registered, while the other was
an execution sale in favor of the judgment creditor of the owner
made after the same property had been registered, 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
rights, title, interest and claim of the judgment debtor to the
property as of the time of the levy.

FACTS:
1. Sammy Maron and his seven brothers and sisters were pro
indiviso owners of a parcel of unregistered land in Pangasinan.

2. While their application for registration of said land under

Act No. 496 was pending, they executed two deeds of sale
conveying the property to appellee [Macam] who thereafter took
possession thereof and introduced substantial improvements
therein.

3. One month later, OCT was issued in favor of the Marons

free from, lien and encumbrances.

4. By virtue of a final judgment rendered in Civil Case No.

42215 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.

5. The corresponding notice of levy, certificate of sale and

the Sheriffs certificate of final sale in favor of the Manila
Trading and Supply Co.

6. On March 1, 1958, the latter sold all its rights, and title
to the property to appellant [Dagupan Trading].

ISSUE:
Who has the better right as between to the one eighth share of
Sammy Maron in the property mentioned heretofore?

HELD:
If the property covered by the conflicting sales were
unregistered land, Macam would 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, appellant has the better
right because, 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. -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. -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
irretrievably. -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. 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.

Dispositive: Macam Won.

CARBONELL VS. CA

FACTS:

Respondent Jose Poncio was the owner of the parcel of land located in Rizal. (Area
more or less 195 sq. m.)

The said lot was subject to mortgage in favor of the Republic Savings Bank for the
sum of P1,500.00.

Carbonell and respondent Emma Infante offered to buy the said lot from Poncio.

Poncio offered to sell his lot to Carbonell excluding the house on which he and his
family stayed. Carbonell accepted the offer and proposed the price of P9.50/sq. m..

Poncio accepted the price on the condition that from the purchase price would
come the money to be paid to the bank.

January 27, 1995: The parties executed a document in the Batanes dialect which is
translated as: CONTRACT FOR ONE HALF LOT WHICH I (Poncio) BOUGHT FROM.

Carbonell asked a lawyer to prepare the deed of sale and delivered the document,
together with the balance of P400, to Jose Poncio. (Note: Carbonell already paid P200 for
the mortgage debt of Poncio + obligated herself to pay the remaining installments.)

However, when she went to Poncio, the latter informed her that he could no
longer proceed with the sale as the lot was already sold to Emma Infante and that he
could not withdraw with the sale.

Poncio admitted that on January 30, 1995, Mrs. Infante improved her offer and he
agreed to sell the land and its improvements to her for P3,535.00.

In a private memorandum agreement, Poncio bound to sell to Infante the lot for
the sum of P2,357.52, with Infante still assuming the mortgage debt of P1,177.48. (Note:
The full amount of mortgage debt was already paid by the Infantes)

February 2, 1995: A deed of sale was executed between Poncio and Infante.

February 8, 1995: Knowing that the sale to Infante has not been registered,
Carbonell filed an adverse claim.
 February 12, 1995: The deed of sale was registered but it has an annotation of the
adverse claim of Carbonell.

Thereafter, Emma Infante took possession of the lot, built a house and introduced
some improvements.

In June 1995, Carbonell filed a complaint praying that she be declared the lawful
owner of the land, that the subsequent sale to spouses Infante be declared null and void,
and that Jose Poncio be ordered to execute the corresponding deed of conveyance of said
land in her favor

RTC ruled that the sale to spouses Infante was null and void. After re-trial, it
reversed its ruling. CA ruled in favor of Carbonell but after a MfR, it reversed its ruling
and ruled in favor of the Infantes.

ISSUE: WON Carbonell has a superior right over Emma Infante. YES

HELD:
Article 1544 provides that for double sale of an immovable property, the ownership shall
belong to the person who first acquired it in good faith and recorded it in the Registry of
Property
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.

The buyer must act in good faith in registering the deed of sale

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.
Rule when there is inscription or not

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.

Carbonell was in good faith when she bought the lot

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.

Carbonells good faith did not cease when she was informed by Poncio about the sale to
Emma Infante

After learning about the second sale, Carbonell tried to talk to the Infantes but the latter
refused. (Exact words of the SC: 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.

The Infantes were in bad faith (5 indications of bad faith listed below)

Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is
shown by the following facts:

1. Mrs. Infante refused to see 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 mortgage passbook and copy of the

mortgage contract.
(Not Poncios saving deposit passbook.)
Infante naturally must have demanded from Poncio the delivery to her of his mortgage
passbook and 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.
3. Emma Infante did not inquire why Poncio was no longer in possession of the
mortgage passbook and why it was in Carbonells possession.

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.

4. Emma Infante registered the sale under her name after Carbonell filed an adverse
claim 4 days earlier.

Here she was again on notice of the prior sale to Carbonell. Such registration of adverse
claim is valid and effective.

5. Infante failed to inquire to Poncio WON he had already sold the property to
Carbonell especially that it can be shown that he was aware of the offer made by
Carbonell.

Poncio alleged in his answer that Mrs. Infante and Mrs. Carbonell offered to buy the lot at
P15/sq. m. which offers he rejected as he believed that his lot is worth at least P20.00/sq.
m. 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

The existence of prior sale to Carbonell was duly established

From the terms of the memorandum, it tends to show that the sale of the property in
favor of Carbonell is already an accomplished act. 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..."

There was an adequate consideration or price for the sale in favor of Carbonell
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 the arrears in the amount of
P247.26 to the bank

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.

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.

The subject property was identified and described

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'.

FIRST OPTIMA REALTY CORPORATION, PETITIONER, VS. SECURITRON

SECURITY
SERVICES, INC., RESPONDENT. G.R. NO. 199648 JANUARY 28, 2015

FACTS:
The petitioner looking to expand business and add to its existing offices, respondent through
its General Manager, Antonio Eleazar (Eleazar) sent a letter to the petitioner offering to
purchase the subject property at P6,000.00 per square meter. A series of telephone calls
ensued, but only between Eleazar and Youngs secretary; Eleazar likewise personally
negotiated with a certain Maria Remoso (Remoso), who was an employee of petitioner. At this
point, Eleazar was unable to personally negotiate with Young or the petitioners board of
directors. Sometime thereafter, Eleazar personally went to petitioners office offering to pay
for the subject property in cash, which he already brought with him. However, Young declined
to accept payment, saying that she still needed to secure her sisters advice on the matter. She
likewise informed Eleazar that prior approval of petitioners Board of Directors was required for
the transaction, to which remark Eleazar replied that respondent shall instead await such
approval. On February 4, 2005, respondent sent a Letter of even date to petitioner. It was
accompanied by Philippine National Bank Check No. 24677, issued for P100,000.00 and made
payable to petitioner. The check was eventually deposited with and credited to petitioners
bank account Thereafter, respondent through counsel demanded in writing that petitioner
proceed with the sale of the property

ISSUE: Whether there is a contract of sale when the respondent accepted the supposed
earnest money.
HELD: No.
In the present case, the parties never got past the negotiation stage. Nothing shows that the
parties had agreed on any final arrangement containing the essential elements of a contract of
sale, namely, (1) consent or the meeting of the minds of the parties; (2) object or subject
matter of the contract; and (3) price or consideration of the sale. Respondents subsequent
sending of the February 4, 2005 letter and check to petitioner without awaiting the approval
of petitioners board of directors and Youngs decision, or without making a new offer
constitutes a mere reiteration of its original offer which was already rejected previously; thus,
petitioner was under no obligation to reply to the February 4, 2005 letter. It would be absurd to
require a party to reject the very same offer each and every time it is made; otherwise, a
perfected contract of sale could simply arise from the failure to reject the same offer made for
the hundredth time.1wphi1 Thus, said letter cannot be considered as evidence of a perfected
sale, which does not exist in the first place; no binding obligation on the part of the petitioner
to sell its property arose as a consequence. The letter made no new offer replacing the first
which was rejected.
 G.R. NO. L-5535 MAY 29, 1953 U. S. COMMERCIAL CO.,
PLAINTIFF-APPELLANT,
VS. FORTUNATO F. HALILI, DEFENDANT-APPELLEE. JOSE G.
MACATANGAY FOR APPELLANT. ARNALDO J. GUZMAN FOR
APPELLEE.

REYES, J.:

This an action to recover unpaid rentals on used army vehicles alleged

to have been leased by plaintiff by the defendants.

The case was submitted in the court below on a stipulation of facts

from which it appears that on December 22, 1945, plaintiff, as
representative of the U. S. Government, entered into a contract with the
defendant leasing to the latter for a term of one year two used army
vehicles, and on February 18, 1946, plaintiff again entered into a
contract with the same defendant leasing to the latter for the same term
six use army vehicles; that under the terms of both contracts the value
of the vehicles was fixed and then after deducting therefrom a
substantial initial payment made by the lessee, the balance was
divided into twelve equal parts and each part was made the monthly
rental or payment which the lessee was to make to the lessor together
with 6 per cent interest "on the unpaid balance of the value of the
lease equipment;" that the contracts provided that the title to the
vehicles was to remain in the lessor during the term of the lease until
all the rentals or payment collected from the lessee should equal the
total value fixed for them, on which event the lease would terminate
and payment of any further rental would cease and the lessor would
then transfer to the lessee title to the vehicles, provided the lessee had
complained with the other conditions of the contracts; that the lessor
would have the right to terminate the contracts and repossess the trucks
should the lessee fail to make payment on the dates specified or fulfill
any of the obligations under the contracts, but that failure to exercise
the right of repossession on any default would not be a waiver of such
right upon any subsequent default; that in the event the contracts were
terminated on account of the lessee's default in the performance of his
obligations then all the payment theretofore made should remain the
property of the lessor and not be recoverable by the lessee, the latter
also waiving "the benefit of section 145-A, Philippine Civil Code;"
that after paying several installments or rentals under the two
contracts, the lessee defaulted in the payment of subsequent rents and
that one year after such default the lessor requested the lessee to return
all the eight vehicles and the lessee voluntarily complied with said
request, but there after refused to pay all rentals in areas. Hence the
present action.

Holding that the contracts in question were leases of personal property

with option to purchase and come within the purview of article 145-A
of the old Civil Code, the trial court, ruled that plaintiff's possessions
of the vehicles precluded it from the bringing an action to recover the
unpaid rents, the notwithstanding the fact that the lessee had waived
the benefit of said article, the court declaring said waiver to be null
and void. The Court, therefore, rendered judgment, dismissing the
plaintiff's complaint with costs. From this judgment plaintiff has
appealed to this court, contending that (1) defendant's voluntary
surrender of the vehicles to the plaintiff took the case out of the
operation of article 1454-A of the old Civil code, and (2) defendant's
waiver of the benefit of said article was valid.

The article in question reads:

ART. 1454-A. In a contract for the sale of personal property payable

installments, failure to pay two or more installments shall confer upon
the vendor the right to cancel the sale or foreclose the mortgage if one
has been given in the property, without reinbursement to the
purchaser to the installments already paid, if there an agreement to
this effect.
However, if the vendor has choosen to foreclose the mortgage he shall
have no further action against the purchaser for the recovery of any
unpaid balance owing by the same, and any agreement to the contrary
shall be null and void.

The same rule shall apply to the leases of personal property with
option to purchase, when the lessor has chosen to deprived the lessee of
the enjoyment of such personal property. (Old Civil Code.)

There can be hardly be any question that the so-called contracts of

lease on which the present action is based were varitable lease of
personal property with option to purchase, and as much come within
the purview of the above article. In fact the instruments (exhibit "A"
and "B") embodying the contracts bear the heading or title "Lease-Sale
(Lease-Sale of Transportation and/or Mechanical Equipment)." The
contracts fixed the value of the vehicles conveyed to the lessee and
expressly refer to the remainder of said value after deduction of the
down payment made by the lessee as "the unpaid balance of the
purchase price of the leased equipment." The contracts also provided
that upon the full value (plus stipulated interest) being paid, the lease
would terminate and title to the leased property would be transferred
to the lessee. Indeed, as the defendant-appellee points out, the
inclusion of a clause waiving benefit of article 1454-A of the old Civil
Code is conclusive proof of the parties' understanding that they were
entering into a lease contract with option to purchase which come
within the purview of said article.

Being leases of personal property with option to purchase as

contemplated in the above article, the contracts in question are subject
to the provision that when the lessor in such case "has chosen to
deprive the lessee of the enjoyment of such personal property," "he shall
have no further action" against the lessee "for the recovery of any
unpaid balance" owing by the latter, "any agreement to the contrary
being null and void."

Plaintiff and appellant, however, contents that defend- ant and

appellee's voluntary surrender to the property taken the case out of the
purview of the article. But it appears from the stipulation of facts that
the voluntary delivery of the vehicles was made in obedience to
plaintiff's demands so that there is no escaping the conclusion that
plaintiff has in facts choosen to deprive the lessee of the enjoyment of
the property leased. The article does not require that the privation of
the enjoyment of the property be brought about thru court action. And
in the present case court action for such purpose was not essential
because the contracts specifically authorized the lessor to repossess the
vehicle whenever the lessee de- faulted in the payment of rent and the
lessee could not in that event refuse to demand for the delivery of the
vehicles without violating the terms of her undertaking.

As to the second ground of appeal, not much need be said, for the
article itself seeks to forestall waiver of its benefits by providing that
"any agreement to the contrary shall be null and void." The waiver
inserted in the contracts in this case being contrary to both the letter
and the policy of the law, the same cannot be given effect.

Plaitiff could recovered all the rentals due by suing for them in the
courts. In choosing the alternative remedy of depriving the defendant of
the enjoyment of the vehicles leased with option to purchase, plaintiff
waived its right to bring such action.

Wherefore, the judgment appealed from is affirmed, with costs against

the appellant.

CORONEL V. CA (OCTOBER 07, 1996)

FACTS:
Coronel et al. consummated the sale of his property located in Quezon City to respondent Alcaraz. Since
the title of the property was still in the name of the deceased father of the Coronels, they agreed to transfer
its title to their name upon payment of the down payment of 50K. and thereafter an absolute deed of sale
will be executed.

Alcarazs mother paid the down payment in behalf of her daughter and as such, Coronel made the transfer
of title to their name. Notwithstanding this fact, Coronel sold the property to petitioner Mabanag and
rescinded its prior contract with Alcaraz.

ISSUE:
WON the rescission of the first contract between Coronel and Alcaraz is valid.

HELD:
The case is a contract of sale subject to a suspensive condition in which consummation is subject only to
the successful transfer of the certificate of title from the name of petitioners' father, to their names. Thus,
the contract of sale became obligatory.

With regard to double sale, the rule that the first in time, stronger in right should apply. The contention of
the petitioner that she was a buyer in good faith because the notice of lis pendens in the title was annotated
after she bought the property is of no merit. In case of double sale, what finds relevance and materiality is
not whether or not the second buyer was a buyer in good faith but whether or not said second buyer
registers such second sale in good faith, that is, without knowledge of any defect in the title of the property
sold.

The ruling should be in favor of Alcaraz because Mabanag registered the property two months after the
notice of lis pendens was annotated in the title and hence, she cannot be a buyer in good faith.

SPOUSES NONATO V. IAC & INVESTOR'S FINANCE CORP 140 SCRA 255 (1985)

FACTS: In 1976, Spouses Restituto Nonato and Ester Nonato purchased a

volkswagen from the Peoples Car Inc on installment basis.

1. To secure their complete payment, Nonato executed a promissory note and

a chattel mortgage in favor of Peoples Car Inc.

2. Subsequently, Peoples Car Inc assigned its rights and interest over
the note and mortagge in favor of Investors Finance Corp (IFC).

3. For failure of the spouses to pay two or more installments, despite

demands, the car was repossessed by IFC.

4. Despite repossession, IFC still demanded from Nonato that they pay the
balance of the price of the car. IFC, then, filed a complaint for the payment
of the price of the car with damages

5. Nonato, in their defense, argued that when the company repossessed the
car, IFC had, by that act, effectively cancelled the sale of the vehicle. As
such, it was barred from exacting the recovery of the unpaid balance of the
purchase price as mandated by Art 1484.

6. The trial court rendered in favor of IFC and ordered the spouses Nonato
pay the balance of the purchase price of the car with interest. CA affirmed
the same.

ISSUE: WON a vendor or his assignee, who had cancelled the sale of a motor
vehicle for failure of the buyer to pay two or more of the stipulated
installments, may also demand payment of the balance of the purchase price

HELD: No. The applicable law in the case at bar is Art 1484 which provides
that:
In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
installments. In this case, he shall have no further action against the
purchaser to recover any unpaid balance of the price. Any agreement to the
contrary shall be void.

This provision means that should the vendee or the purchaser of a personal
property default in the payment of two or more of the agreed installments, the
vendor or the seller has the option to avail any of these 3 remedieseither
to exact fulfillment by the purchaser of the obligation, or to cancel the
sale, or to foreclose the mortgage on the purchased personal property, if one
was constituted. These remedies have been recognized as an alternative, not
cumulative, that the exercise of one should bar the exercise of the others.

In the present case, it is not disputed that IFC had taken possession of the
car purchased by the Nonatos after the spouses defaulted in their payments.
The defense of IFC that it the repossession of the vehicle was only for the
purpose of appraising its value and for storage and safekeeping pending full
payment of the spouses is untenable. The receipt issued by IFC to the spouses
when it took possession of the vehicle that the vehicle could be redeemed
within 15 days. This could only mean that should the spouses fail to redeem
the car within the period provided, IFC would retain permanent possession of
the vehicle. IFC even notified the spouses Nonato that the value of the car
was not sufficient to cover the balance of the purchase price and there was no
attempt at all on the part of the company to return the car.

The acts performed by IFC are consistent with the conclusion that it had opted
to cancel the sale of the vehicle. Therefore, it is barred from exacting
payment from the petitioners of the balance of the price of the vehicle which
it had already repossessed (it cannot have its cake and eat it too)

SOUTHERN MOTORS INC VS. MOSCOSO

2 SCRA 168 MAY 1961

FACTS:

In June 1957, plaintiff-appellee, Southern Motors, Inc. (Southern Motors) sold

to defendant-appellant Angel Moscoso one Chevrolet truck, on installment
basis, for P6,445.00. Upon making a down payment, the defendant executed a
promisory note for the sum of P4,915,00, representing

the unpaid balance of the purchase price to secure the payment of which, a
chattel mortgage was constituted on the truck in favor of Southern Motors. Of
the P4,915,00, defendant was only able to pay a total of P550.00, which
P110.00 was applied to the interest up to August 15, and P400.00 to the
principal, thus leaving an unpaid balance of P4,475.00. The defendant failed to
pay 3 more installments on the balance of the purchase price.

In November 1957, the Southern Motors filed a complaint against the Moscoso
to recover the unpaid balance of the promissory note, and the lower court
issued a writ of attachment on Moscosos properties. The Sheriff of San Jose,
Antique, attach the Chevrolet truck, as well as a house and lot belonging to
Moscoso, and said truck was brought to the Southern Motors compound in
Iloilo City for safe keeping. The Provincial Sheriff of Iloilo sold the said truck on
January 2, 1958 at a public auction in which Southern Motors itself was the
only bidder for P1,000.00. In March 1958, the trial court condemned the
defendant Moscoso to pay the plaintiff Southern Motors the unpaid balance of
P4,475.00 with interest at the rate of 12% per annum from August 16, 1957,
until fully paid. While Southern Motors claims that in filing the complaint,
demanding payment of the unpaid balance of the purchase price, it has availed
of the first remedy provided in Article 1484 of the new Civil Code i.e. to exact
fulfillment of the obligation (specific performance), Mosocoso, on the other
hand, contends that Southern Motors had availed itself of the third remedy viz,
the foreclosure of the chattel mortgage on the truck.

ISSUE:
Which remedy under the Civil Code did the vendor Southern Motors avail?
COURT RULING:
The Supreme Court, in affirming the decision of the lower court, found that
there is nothing unlawful or irregular in appellee Southern Motors's act of
attaching the mortgaged truck itself.

Since it has chosen to exact the fulfillment of the appellant Moscoso's

obligation, Southern Motors may enforce execution of the judgment that may
be favorable to it, on all personal and real properties of the latter not exempt
from execution sufficient to satisfy such judgment. No one can successfully
contest that the attachment of a house and lot at San Jose, Antique was
merelly an incident to all ordinary civil action. (Sections 1 & 11, Rule 59; sec.
16 Rule 39.) The mortgage creditor may recover judgment on the mortgage debt
and cause an execution on the mortgaged property and may cause an
attachment to be issued and levied on such property, upon beginning his civil
action.

G.R. NO. 173038 SEPTEMBER 14, 2011

ELENA JANE DUARTE, PETITIONER, VS. MIGUEL SAMUEL A.E. DURAN, RESPONDENT.
DEL CASTILLO, J.:

Doctrine: Preponderance of evidence only requires that evidence be greater or

more convincing than the opposing evidence.

FACTS: Respondent sold to petitioner with the help of a common friend, Dy, a
laptop computer which petitioner paid through installment basis for a total of
P15k. Petitioner gave P5k as initial payment, and then later paid P3k as
promised, wherein Dy signed a handwritten receipt allegedly made by
petitioner as proof of payment. But when Dy returned to get the remaining
balance, petitioner offered to pay only P2k claiming that the laptop was only
worth P10k. Due to the refusal of petitioner to pay the remaining balance,
respondent sent petitioner a demand letter.

Petitioner claimed that there was no contract of sale. Petitioner said that
respondent loaned P5k and left the laptop with petitioner as security. When
petitioner refused to give it back, Dy then asked petitioner to lend an additional
P3k to respondent. Petitioner gave the money under agreement that the
amounts she lent to respondent would be considered as partial payments for
the laptop in case she decides to buy it. Sometime in March 2002, petitioner
decided not to buy the laptop. Respondent, however, refused to pay and
insisted that petitioner purchase the laptop instead.
MTCC: ruled in favor of respondent. The receipt and the testimonies of
respondent were sufficient to prove that there was a contract of sale between
the parties.

RTC: reversed the MTCC Decision. Alleged receipt was a mere product of
machination, trickery and self-serving. Shows no proof of conformity or
acknowledgment on the part of the defendant that indeed she agreed on the
stipulations. Thus, it cannot be given any credence and ultimately, did not bind
her.

CA: reversed the RTC Decision. Petitioner failed to overturn the presumption that
the demand letter was received by her. Neither was she able to deny under
oath the genuineness and due execution of the receipt

ISSUE: WON respondent has by preponderant evidence sufficiently proved there

was a contract of sale. YES

RULING: We hold that there was a contract of sale, and the absence of a
written contract of sale does not mean otherwise. A contract of sale is
perfected the moment the parties agree upon the object of the sale, the price,
and the terms of payment. Once perfected, the parties are bound by it whether
the contract is verbal or in writing because no form is required. Thus, the
absence of a written contract is not fatal to respondents case. Respondent
only needed to show by a preponderance of evidence that there was an oral
contract of sale, which he did by submitting in evidence his own affidavit, the
affidavit of his witness Dy, the receipt and the demand letter.

Petitioners denial of the receipt of the demand letter did not overturn the
presumption of regularity that the letter was delivered and received by the
addressee considering that respondent was able to present the postmasters
certification stating that the letter was indeed sent to the address of petitioner.

The evidence submitted by respondent weigh more than petitioners bare

denials. Other than her denials, no other evidence was submitted by petitioner
to prove that the laptop was not sold but was only given as security for
respondents loan. What adds doubt to her story is the fact that from the time
she allegedly decided not to buy the laptop, up to the time the instant case
was filed against her, she did not exert any effort to recover from respondent
the payment of the alleged loan. Her inaction leads us to conclude that the
alleged loan was a mere afterthought.

G.R. NO. L-14714 APRIL 30, 1960

ARISTON ANDAYA, ET AL., PLAINTIFFS-APPELLEES,

 VS.
DR. MELENCIO MANANSALA, DEFENDANT-APPELLANT.

FACTS:
1. On June 13, 1934, Isidro Fenis sold the land in question to Eustaquia
Llanes, with right of repurchase within a period of five years. After the expiry of
said period, and without repurchasing the said property, Isidro Fenis sold it
again to Maria Viloria. Then, Maria Viloria sold by way of sale with right to
repurchase within a period of one year, the said property together with another
parcel of land to defendant Melencio Manansala. Upon the expiry of the said
period, Manansala registered with the Register of Deeds an affidavit
consolidating his title on the property. A year later, Maria Viloria sold by way of
absolute sale the same property to Ciriaco Casio, Fidela Valdez, and the
plaintiff spouses Ariston Andaya and MicaelaCabrito, for P4,800.00.

2. Then, Llanes instituted a civil case to quiet title and recover possession
from Casino. Subsequently, Manansala sold the land to Valdez and Casino for
P1500. It was stipulated that there was a warranty (i)that said land is free from
all liens and encumbrances and (ii) in case of eviction, the vendor shall answer
to the vendee in the manner provided by law.

3. Subsequently, Llanes included Manansala, Valdez, Cabrito and Andaya as

co-defendants. The case was decided in favor of Llanes. A writ of execution
was issued and the land was sold at a public auction.

4. Andaya and Cabrito instituted a case against Manansala in the CFI of

Ilocos Sur for the recovery of damages because of the breach of warranty of
title and against eviction. Manansala denied liability and stated that his co-
purchasers pleaded him to sell to them at a low price after the case instituted by
Llanes against them.

5. The lower court decided that it is inequitable to hold defendant liable

under ART 1555 since plaintiffs apparently knew that the warranty could not
have been intended. And that the obligation of the defendant is that of a vendor
in cases of a rescission of contract.

ISSUE: Whether Manansala shall be liable as a vendor in cases of a rescission of

a contract

HELD: NO. HE is exempt from liability.

Now, according to Article 1477 of the old Code (the law applicable when the
contract in this case was made), When the vendee has waived the right to
warranty in case of eviction, and eviction shall occur, the vendor shall only pay
the price which the thing sold had at the time of the eviction, unless the vendee
has made the waiver with knowledge of the danger of eviction and assumed its
consequences. (Same as Art. 1554 of the new Code)

- The vendor's liability for warranty against eviction in a contract of sale is

waivable and may be renounced by the vendee (ART 1548). Not having appealed
from the decision of the lower court, appellees are bound by these findings, the
implication of which is that they not only renounced or waived the warranty
against eviction, but that they knew of the danger of eviction and assumed its
consequences. Therefore, the appellant is not even obliged to restore to them
the price of the land at the time of eviction, but is completely exempt from
liability whatsoever.

- Neither may appellant be condemned to return the price received from

appellees on the theory of rescission of their contract of sale, as held by the
court below. In the first place, the remedy of rescission contemplates that the
one demanding it is able to return whatever he has received under the contract;
and when this can not be done, rescission can not be carried out (Art. 1385). It
is for this reason that the law on sales does not make rescission a remedy in
case the vendee is totally evicted from the thing sold, as in this case, for he can
no longer restore the thing to the vendor. It is only when the vendee loses "a
part of the thing sold of such importance, in relation to the whole, that he would
not have purchased it without said part" that he may ask for rescission, but he
has "the obligation return the thing without other encumbrances than those
which it had when he acquired it" (Art. 1556). In the second place, appellees, as
already stated, assumed the risk of eviction, which stops them from asking for
rescission even were it possible for them to restore what they had received
under the contract.

On their part, appellees claim that in view of the eviction from the land in
question, they are entitled to recover from appellant more items of damages
under Article 1555 than the mere return of the price with interests as ordered
by the trial court. The claim is untenable, not only because appellant, as we have
held, is exempt from any liability for appellees eviction, but also because not
having appealed from the decision of the lower court, appellees can not ask for a
modification thereof or an award of damages not included therein.

BARENG VS. COURT OF APPEALS

G.R. NO. L-12973
APRIL 25, 1960
FACTS: Vicente Bareng purchased from respondent Alegria the cinematographic
equipment installed at the Pioneer Theater in Laoag, Ilocos Norte, for the sum of P15,000.
P10,000 of which was paid, and Bareng signed 4 promissory notes for the balance. The first
promissory note amounting to P1,000 was duly paid by Bareng. On February 15, 1952,
shortly before the second note fell due, the other respondent Agustin Ruiz informed
Bareng that he was a co-owner of the equipment in question, and several days later, Ruiz
sent Bareng a telegram instructing him to suspend payments to Alegria for thebalance of
the price as he was not agreeable to the sale. When Alegria sought to collect the second
note on the same day, Bareng only paid P400 and refused to make any more payments on
account of Ruizs claims.
On March 31, 1952, Ruiz filed suit against Alegria and Bareng for his share in the price of
the cinema equipment. Thereafter in May of the same year, Alegria and Ruiz reached a
compromise wherein the former recognized the latter as co-owner of the equipment sold
to Bareng and promised to pay 2/3 of whatever amount he could recover from the latter.
Alegria then sued Bareng for the amount of P13,500, allegedly the unpaid balance of the
price. But Bareng answered that only P3,600 had not been paid, and prayed for the
rescission of the sale for the supposed violation of Alegria of certain express warranties
as to the quality of the equipment, and asked for payment of damages for alleged
violation of Alegrias warranty of title. Bareng added that he is not liable to pay interests
to Alegria because he was justified in suspending payment of the balance of the price of
the equipment from the time he learned of Ruizs adverse claims over said equipment,
pursuant to Art. 1590 of the Civil Code.
ISSUE: Whether or not Bareng is liable to pay interest of the unpaid balance of the price
of the equipment.
HELD: Bareng is liable to pay interest of the unpaid balance of the price of the equipment
in question. Art. 1590 of the Civil Code provides that: Should the vendee be disturbed in
the possession or ownership of the thing acquired, or should he have reasonable grounds
to fear such disturbance, by a vindicatory action or a foreclosure of mortgage, he may
suspend the payment of the price until the vendor has caused the disturbance or danger
to cease, unless the latter gives security for the return of the price in a proper case, or it
has been stipulated that, notwithstanding any such contingency, the vendee shall be
bound to make the payment. A mere act of trespass shall not authorize the suspension of
the payment of the price.
It is undisputed that petitioner had the right to suspend payment of the balance of the
price of the cinema equipment in question to his vendor from the time he was informed
by Ruiz of the latters claims of co-ownership thereof, especially upon his receipt of Ruizs
telegram wherein the latter asserted that he was not agreeable to the sale. However,
said right of Barend ended as soon as the vendor has caused the disturbance or danger
to cease, which, in this case, was when Alegria reached a compromise with Ruiz
whereby Ruiz expressed his conformity to the sale to Bareng, subject to the payment of
his share in the price by Alegria. From the time Alegria and Ruiz reached this settlement,
there was no longer any danger of threat to Barengs ownership and full enjoyment of
the equipment he bought from Alegria, by virtue of which Alegria sued petitioner for the
unpaid balance. Bareng admitted his indebtedness in the amount of P3,600, yet he did not
tender payment of said amount nor did he deposit the same in court, but instead sought
for rescission of the sale. It is clear that Bareng was in default on the unpaid balance of
the price of the equipment from the date of filing of the complaint by Alegria, and under
Art. 2209 of the Civil Code, he must pay legal interests thereon from said date.

LUZON BROKERAGE CO. V. MARITIME BUILDING CO. (1972) PLAINTIFF-

APPELLEE: LUZON BROKERAGE CO. DEFENDANTS: MARITIME BUILDING CO
AND MYERS BUILDING CO PONENTE: REYES, J.B.L., J.
Doctrine: The distinction between contracts of sale and contract to sell with reserved
title has been recognized by this Court in repeated decisions upholding the power of
promisors under contracts to sell in case of failure of the other party to complete
payment, to extrajudicially terminate the operation of the contract, refuse conveyance
and retain the sums or installments already received, where such rights are expressly
provided for, as in this case.

FACTS: Myers corp sold land to Maritime. In the agreement, they agreed on an
installment plan and that if Maritime missed a payment, the contract will be annulled
and the payments already made will be forfeited. Maritime failed to pay so Myers
annulled the contract and did not return payments. SC says Myers can do this because
under contracts to sell, promisors, in case of failure of the other party to complete
payment, can extrajudicially terminate the contract, refuse conveyance, and retain
installments already received, where such rights are provided.

In Manila, Myers owned 3 parcels of land w/ improvements. Myers then entered

into a contract called a Deed of Conditional Sale with Maritime Building.

o Myers sold the land for P1million.

o They agreed on the manner of payment (instalment, initial payment upon execution
of contract, interest rate)

o In the contract it was stipulated that in case of failure of buyer to pay any of the
instalments, the contract will be annulled at the option of the seller and all payments
made by the buyer is forfeited.

Later on, the stipulated instalment of P10k with 5%interest was amended to the
P5k with 5.5% per annum.

o Maritime paid the monthly instalments but failed to pay the monthly instalment of
March.

VP of Maritime wrote to Pres of Myers requesting for a moratorium on the

monthly payment of the instalments because the company was undergoing financial
problems.

o Myers refused.

o For the months of March, April, and May, Maritime failed to pay and did not heed the
demand of Myers.

Myers wrote Maritime cancelling the Deed of Conditional Sale

o Myers demanded return of possession of properties
o Held Maritime liable for use and occupation amounting to P10k per month
 In the meantime, Luzon Brokerage was leasing the property from Maritime. o
Myers demanded from Luzon the payment of monthly rentals of P10k

o Myers also demanded surrender of property.

While actions and crossclaims between Myers and Maritime were happening, the
contract between Maritime and Luzon was extended for 4 more years.

Turns out, Maritimes suspension of its payments to Myers corp arose from a
previous event:

An award of backwages made by the Court of Industrial Relations in favor of Luzon

Labor Union (employees employed by Luzon).

o FH Myers was a major stockholder of Luzon Brokerage. FH Myers promised to

indemnify Schedler (who controlled Maritime) when

Shedler purchased FH Myerss stock in Luzon Brokerage company. (This indemnification

is for the award of backwages by the CIR)

o Schedler claims that after FH Myers estates closed, he was notified that the indemnity
on the Labor Union case will not be honored anymore.

o And so, Schedler advised Myers corp that Maritime is withholding payments to Myers
corp in order to offset the liability when Myers heirs failed to honor the indemnity
agreement.

TC ruled Maritime in breach of contract.

ISSUE:
Has there been a breach of contract?
Can Myers extrajudicially terminate the contract?

HELD:
Yes.
Yes.

RATIO:
Failure to pay monthly installments constitute a breach of contract. Default was
not made in good faith.

The letter to Myers corp means that the non-payment of installments was
deliberately made to coerce Myers crp into answering for an alleged
promise of the dead FH Myers.

Whatever obligation FH Myers had assumed is not an obligation of Myers corp.

No proof that board of Nyers corp agreed to assume

responsibility to debts of FH Myers and heirs.

Schaedler allowed the estate proceedings of FH Myers to close without providing
liability.

By the balance (of payment) in the Deed of Conditional Sale, Maritime

wasattempting to burden the Myers corp with an uncollectible debt,

since enforcement against FH Myers estate was already barred.

Maritime acted in bad faith.
Maritimes contract with Myers is not the ordinary sale contemplated in
NCC 1592
(transferring ownership simultaneously with delivery).

The distinction between contracts of sale and contract to sell with reserved title
has been recognized by this Court in repeated decisions upholding the power of
promisors under contracts to sell in case of failure of the other party to complete
payment, to extrajudicially terminate the operation of the contract, refuse conveyance
and retain the sums or installments already received, where such rights are expressly
provided for, as in this case. Decision affirmed.

ISABELA BANDONG AND JUAN FERRER VS.ALEJANDRA AUSTRIA

G.R. NO. 9785, SEPTEMBER 24, 1915

FACTS: This case is about the land sold by the plaintiff sometime in 1905 for
350 to Antonio Ventenilla, since decease. The contact stipulates that the
plaintiff reserves the right to repurchase the land at the same price and not
subject to interest on the money or the products of the land, but in the month
of March of any year, if we repurchase. However, it is only in 1913 that the
vendors offered to repurchase in the month of March. This offer was declined
on the ground that the right to repurchase had prescribed: a contention which
is renewed by the defendant in this action, who is the widow of original vendee,
deriving title through him.

ISSUE: Whether or not the right to repurchase the land has prescribed.

HELD: No, the plaintiff right has still not prescribed. The court believes that the
right to repurchase expired at the end of four years from the date of the
contract, relying in support of this ruling on the provisions of article 1508 of
the Civil Code, which are as follows:The right mentioned in the preceding
article (right to repurchase), in the absence of an express agreement, shall last
four years counted from the date of the contract.In case of stipulation, the
period of redemption shall not exceed ten years.

Evidently, the parties having expressly agreed that the vendors should have the
right to repurchase in the month of March of any year after the date of the
contract, the only statutory limitation placed upon them in the exercise of that
right is the limitation found in the second paragraph of article 1508 of the Civil
Code cited above, which limits the power of the vendor, even by express
agreement, to reserve a right to repurchase for a longer period than ten years.
We conclude, therefore, that the provisions of the contract of sale, whereby the
parties undertook by express agreement to secure to the vendors a right to
repurchase in the month of March of any year after the date of the contract,
were valid and binding upon the parties for a period of ten years from the date
of the contract but wholly without force and effect thereafter.It is admitted that
the vendors offered to repurchase the land in question in the month of March,
1913, less than eight years from the date of the contract.

JANUARY 31, 1968

G.R. NO. L-22968

BENEDICTO BALUYOT, ET AL., PLAINTIFFS-APPELLEES,

VS.
EULOGIO E. VENEGAS, DEFENDANT-APPELLANT.

VICENTE M. MAGPOC FOR PLAINTIFFS-APPELLEES.

FILEMON S. TRINIDAD FOR DEFENDANT-APPELLANT.

FACTS:
Plaintiffs are the heirs of Crisanto Baluyot, who in life sold a parcel of land to defendant Eulogio
E. Venegas. The sale, executed on July 24, 1951, contains the following provision for repurchase:

3. That the parties hereto stipulated that at any time after the expiration of the period of theft
(10) years to be computed from October 1, 1951, the Vendor, his heirs or successors-in-interest has
the option and priority to purchase the aforedescribed parcel of land for the same consideration of
P4,000.00.

4. That the Vendee hereby accepts and agrees with the conditions and terms of this sale.

On July 18, 1963 plaintiffs commenced this action in the Court of First Instance of Bataan to
compel defendant to reconvey the land to them pursuant to the contractual provision aforequoted,
alleging that previous offers on their part to exercise the right therein granted had proven
unavailing.

ISSUE:
Whether or not the plaintiffs has the right to avail of their right to repurchase

DECISION:

No. The contract was executed was executed in July 1951. The option or right to repurchase was
sought to be exercised twelve (12) years thereafter, or in 1963. Such a stipulation is not legally
feasible because it is prohibited by Article 1606, which limits the period for repurchase, in case there
be an agreement, to the maximum of ten years from the date of the contract. In other words, the
right to repurchase in the present case did not even arise, since by the time it was supposed to begin
it was already interdicted by the law.

The judgment, appealed from is reversed and the complaint is dismissed, without pronouncement
as to costs.

Insights:

The object of the sale cannot be repurchased during the first 10 years. The stipulation is void and
against public policy.

G.R. NO. L-25931 OCTOBER 30, 1978

ROBERTO LABASAN, AVELINO LABASAN, JOSEFINA LABASAN, AND MARCELA
COLOMA, PETITIONERS,
VS.
ADELA LACUESTA, DOMINGA LACUESTA AND NORBERTO LACUESTA,

FACTS:
On April 20, 1927, spouses Lacuesta executed a document transferring ownership of their
unregistered and irrigated land to spouses Labasan for an amount of Php 225. The
document stipulated that the amount is for an urgent need for money and that within ten
years from conveyance, the vendor shall have the right to repurchase the land. On 1943,
upon the lapse of the redemption period, Lacuesta sought to repurchase the land but
Labasan refused and claimed ownership. Hence, the complaint. The trial court ruled in
favor of defendant Labasan due to petitioners failure to repurchase within the stipulated
time. However, the Court of Appeals reversed the lower courts decision. Hence, the
petition.

ISSUE: What is nature of the document marked Exhibit "1-A"

RULING:
Examining Exhibit "1-A" in this case, it is evident that the terms of the document are not
clear and explicit on the real intent of the parties when they executed the aforesaid
document. In view of the ambiguity caused by conflicting terminologies in the document, it
becomes necessary to inquire into the reason behind the transaction and other
circumstances accompanying it so as to determine the true intent of the parties. Once the
intent becomes clear then it shall be made to prevail over what on its face the document
appears to be. Each case is to be resolved on the basis of the circumstances attending the
transaction.

In the present case, the collective weight of the following considerations lead the Court to
agree with the findings and conclusion of the appellate court that Exhibit "1-A" is a mere
loan with security and not a pacto de retro sale. The reason behind the execution of Exhibit
"1-A" was that the Lacuestas were in "urgent necessity for money" and had to secure a
loan of P225.00 from Gelacio Labasan for which the riceland was given as "security". In
Jayme, et al. v. Salvador, et al., 1930, this Court upheld a judgment of the Court of First
Instance of Iloilo which found the transaction between the parties to be a loan instead of a
sale of real property notwithstanding the terminology used in the document, after taking
into account the surrounding circumstances of the transaction. The Court through Justice
Norberto Romualdez stated that while it was true that plaintiffs were aware of the contents
of the contracts, the preponderance of the evidence showed however that they signed
knowing that said contracts did not express their real intention, and if they did so
notwithstanding this, it was due to the urgent necessity of obtaining funds.

"Necessitous men are not, truly speaking, free men; but to answer a present emergency,
will submit to any terms that the crafty may impose upon them."

ANGELA M. BUTTE, PLAINTIFF-APPELLANT, VS. MANUEL UY A SONS, INC.,

DEFENDANT-APPELLEE

FACTS: Jose V. Ramirez, during his lifetime, was a co-owner of a house and lot located
at Sta. Cruz, Manila. Other owners are Marie GarnierVda. de Ramirez, 1/6; Jos V.
Ramirez, 1/6; Jos E. Ramirez, 1/6; Belen T. Ramirez, 1/6; Rita De Ramirez, 1/6; and
Jos Ma. Ramirez, 1/6.

On October 20, 1951. Jos V. Ramirez died. Subsequently, Special Proceeding No.
15026 was instituted to settle his estate, that included the one-sixth (1/6) undivided
share in the aforementioned property. His last will and testament has been admitted to
probate, wherein he bequeathed his estate to his children and grandchildren and one-
third (1/3) of the free portion to Mrs. Angela M. Butte, hereinafter referred to as plaintiff-
appellant. The Bank of the Philippine Islands was appointed judicial administrator.

Meanwhile, on December 9, 1958, Mrs. Marie GarnierVda. de Ramirez, one of the co-
owners of the late Jos V. Ramirez in the Sta. Cruz property, sold her undivided 1/6
share to Manuel Uy& Sons, Inc., defendant-appellee herein, for the sum of
P500,000.00. After the execution an affidavit to the effect that formal notices of the sale
had been sent to all possible redemptioners, the deed of sale was duly registered and
the old TCT was cancelled in lieu of which a new one was issued in the name of the
vendee and the other-co-owners.

On the same day (December 9, 1958), Manuel Uya l Son Inc. sent a letter to the Bank
of the Philippine Islands as judicial administrator of the estate of the late Jos V.
Ramirez informing it of the above-mentioned sale. This letter, together with that of the
bank, was forwarded by the latter to Mrs. Butte.

On January 15, 1959, Mrs. Angela M. Butte, sent a letter and a Philippine National Bank
cashiers check in the amount of P500,000.00 to Manuel Uy a l Sons, Inc. offering to
redeem share sold by Mrs. Marie Garnier Vda. de Ramirez. This tender having been
refused, plaintiff on the same day consigned the amount in court and filed the
corresponding action for legal redemption. Without prejudice to the determination by the
court of the reasonable and fair market value of the property sold which she alleged to
be grossly excessive, plaintiff prayed for conveyance of the property, and for actual,
moral and exemplary damages.
May 13, 1959, the court dismissed the plaintiffs complaint.

ISSUE: WON the plaintiff in the case at bar has a right to redeem the property

HELD: By law, the rights to the succession of a deceased person are transmitted to his
heirs from the moment of his death, and the right of succession includes all property,
rights and obligations that survive the decedent so from the instant of Jose Ramirez
death, his heirs became co-owners of an undivided share and co-owner of the whole
property thus they became entitled to exercise the right of legal redemption as soon as
another co-owner has sold his undivided share to a stranger. The presence of the
judicial administrator is of no moment because the rights of the administrator of
possession and administration of the real and personal estate of the deceased do not
include the right of legal redemption of the undivided share sold to Manuel Uy and Sons
because the right to redeem only came into existence when the sale was perfected 8
years from the death of Jose Ramirez. The administrator cannot exercise the right of
redemption since the land was sold AFTER the death of Ramirez. The administrator
may exercise the right to redeem only if the right pertains to the estate, and this can
only happen if the sale of said portion to Uy was done before the death of Ramirez.

G.R. NO. L-27759 APRIL 17, 1970

CRESENCIANO DE LA CRUZ, PLAINTIFF-APPELLANT,

VS.
JULIO CRUZ, ZENAIDA MONTES AND ALFONSO MIRANDA, DEFENDANTS-
APPELLEES.
SEGUNDO C. MASTRILLE FOR PLAINTIFF-APPELLANT.

E. A. BERNABE FOR DEFENDANTS-APPELLEES.

REYES, J.B.L., J.:

Direct appeal from a summary judgment of the Court of First Instance of Rizal (Pasay City),
in its Civil Case No. 2723-P, dismissing the plaintiff's complaint against the defendants for
the pre-emption and legal redemption of a portion of registered land and granting, in the
main, the latter's counterclaim for damages and attorneys' fees.

The undisputed facts are as follows.

The spouses Julio Cruz and Zenaida Montes were once the owners of a parcel of land covered
by Transfer Certificate of Title No. 10680 of the Office of the Registry of Deeds for Pasay
City, which parcel of land is more particularly described therein as follows:

A PARCEL OF LAND (Lot 10) of the subdivision plan Psd-790, being a portion of the land
described on plan Psu-2031-Amd. 2-A, LRC (G.L.R.O.) Record No. 2484, situated in the
Barrio of Malibay, Municipality of Pasay, Province of Rizal. Bounded on NE., by Lot 9 of the
subdivision plan: containing an area of SIX HUNDRED SIXTY TWO (662) SQUARE
METERS.'" On 16 December 1965, Julio Cruz and Zenaida Montes sold a portion of the
aforesaid parcel of land to the plaintiff-appellant, Cresenciano de la Cruz. The deed of
absolute sale described the portion sold as

... a portion with an area of Three Hundred and Thirty-One Square Meters (331 sq.

m.) on the northern part ...

Inserted in the deed was a stipulation, reading as follows:

It is hereby agreed that a plan will be made on the whole parcel of land above-described
showing the portion with an area of Three Hundred and Thirty-one Square

Meters (331 sq. m), hereby conveyed, and the remaining portion with an area of Three
Hundred Thirty-One Square Meters (331 sq. m.), together with the technical description of
each portion, that is, the portion hereby conveyed, and the portion remaining.

On 28 February 1966, Julio Cruz and Zenaida Montes sold the remaining portion of the land
to Alfonso Miranda. The deed of sale described the portion sold as

... that unsegregated portion with an area of THREE HUNDRED THIRTY ONE (331)
SQUARE METERS bordering C. Jose and F. Francisco Streets, Malibay, Pasay City, which is at
the southern part of the parcel of land covered by T.C.T. No. 10680 above-described.

Under date of 25 April 1966, Cresenciano de la Cruz, filed a complaint against Julio Cruz,
Zenaida Montes and Alfonso Miranda, praying the court to have himself (plaintiff-appellant
Cresenciano de la Cruz) declared as entitled to purchase, by way of pre-emption and legal
redemption, the one-half () portion of the land that was sold to Miranda.

Upon joinder of issues, the parties agreed, during the pre-trial of the case, to submit the case
for decision on the pleadings, and, on the basis thereof, the court below rendered judgment,
as stated at the beginning of this decision.

Not satisfied with the court's decision, plaintiff-appellant Cresenciano de la Cruz interposed
the present direct appeal to the Supreme Court and assigns the following errors as having
been committed by the lower court;

1. The trial court erred in holding that plaintiff-appellant and defendants-appellees Julio
Cruz and Zenaida Montes are not co-owners of the parcel of land embraced in Transfer
Certificate of Title No. 10680 of the Office of the Register of Deeds for Pasay City.

2. The trial court erred in concluding that plaintiff is not entitled to the right of pre-
emption or legal redemption.

3. The trial court erred in awarding damages in the amount of P2,000.00 in favor of
defendants-appellees Julio Cruz and Zenaida Montes, and another P2,000.00 in favor of
their co-defendant-appellee Alfonso Miranda.

4. The trial court finally erred in ordering plaintiff-appellant to pay defendants-appellees

the sum of P3,000.00 as attorney's fees.

Appellant's theory, under his first two assignments of error, is that after he bought from the
spouses Julio Cruz and Zenaida Montes the northern half of the parcel of land embraced by
Transfer Certificate of Title No. 10680, he and the spouses became co-owners of the said
parcel of land, "the plaintiff owning one-half () (northern part) and defendants Julio Cruz
and Zenaida Montes owning the remaining one-half (1/2) portion (southern part)"; or that,
"considering the situation or location of the parts being owned by plaintiff and defendants
Julio Cruz and Zenaida Montes, respectively, ...

the parts are adjacent to each other, and consequently, plaintiff and defendants Julio Cruz
and Zenaida Montes are adjacent owners", such that plaintiff has the right of pre-emption or
legal redemption over the portion that was subsequently sold to Alfonso Miranda (Quoted
portions taken from appellant's brief, pages 3-4).
The foregoing theory is untenable. Tested against the concept of co-ownership, as
authoritatively expressed by the commentators, appellant is not a co-owner of the registered
parcel of land, taken as a unit or subject of co-ownership, since he and the spouses do not
"have a spiritual part of a thing which is not physically divided" (3 Sanchez Roman 162), nor is
each of them an "owner of the whole, and over the whole he exercises the right of dominion,
but he is at the same time the owner of a portion which is truly abstract ..." (3 Manresa 405).
The portions of appellant-plaintiff and of the defendant spouses are concretely determined
and identifiable, for to the former belongs the northern half, and to the latter belongs the
remaining southern half, of the land. That their respective portions are not technically
described, or that said portions are still embraced in one and the same certificate of title, does
not make said portions less determinable or identifiable or distinguishable, one from the
other, nor that dominion over each portion less exclusive, in their respective owners. Hence,
no right of redemption among co-owners exists.

Nor is plaintiff-appellant entitled, as an adjoining owner, to the right of pre-emption or

redemption over the southern portion of the parcel of land because he had not alleged in his
complaint and has not proved (since the case was submitted for decision on the pleadings)
that said portion is so small and so situated that a major portion thereof cannot be used for
any practical purpose within a reasonable time, having been bought merely for speculation
(Article 1622, Civil Code; Soriente vs. CA, L-1734), 31 August 1963, 62 O.G. 7013, 8 SCRA
750).

The third assignment of error is concerned with the defendants' counterclaim. The court a
quo awarded damages of P2,000.00 to the spouses Cruz and another P2,000.00 to their
co-defendant Alfonso Miranda because the court considered the allegations on two (2)
causes of action in the counterclaim as not specifically denied by the plaintiff-appellant and,
therefore, deemed to have admitted said allegations. The first cause of action, in brief, alleges
that plaintiff had failed to cause the preparation and subdivision plan that would serve as a
basis for the issuance of separate titles for the northern and southern parts of the land,
contrary to their agreement, and for the inaction and delay on the part of plaintiff had
caused damages in the amount of P5,000.00 to the counterclaimants. The second cause of
action, in turn, alleges that the plaintiff had refused to surrender the certificate of title,
despite demands, to the Register of Deeds, for annotation of a release of mortgage that said
plaintiff had himself executed, thus preventing the dealing with the land, sans the
encumbrance, with third persons and prejudicing the counterclaimants in the sum of
P5,000.00. Appellant's argument that the court erred in awarding damages without proof
of the amount of actual damage is well-taken, for even though the rule is that failure to deny
specifically the material allegations in the complaint (or counterclaim) is deemed an
admission of the said allegations, an exception is provided therefor, which is "other than
those as to the amount of damage" (Section 1, Rule 9, Revised Rules of Court).

... Under Section 8, Rule 9 [Sec. 1, Rule 9 of the Revised Rules of Court], however, allegations
regarding the amount of damages are not deemed admitted even if not specifically denied,
and so must be duly proved. Appellants did not offer to present evidence to prove their
damages but merely asked for judgment on the pleadings.
Hence, they must be considered to have waived or renounced their claim for damages ...
(Rili, et al. vs. Chunaco, et al., L-6630, 29 February 1956, 98 Phil. 505, 507).

On his last assignment of error, appellant contests the award of attorney's fees on the ground
that
such fees do not accrue merely because of an adverse decision. On the other hand, he does
not claim that the court below had abused its discretion in giving the award, which is a matter
that is discretionary with it under Article 2208, Civil Code of the Philippines, especially since
the action was clearly unfounded (Heirs of Justiva, et al. vs. Gustilo, et al., L-16396, 31
January 1963, 7 SCRA 72;

Lopez, et al. vs. Gonzaga, et al.,

L-18788, 31 January 1964, 10 SCRA 167).
FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, except insofar as
it awarded damages to the appellees, which is hereby reversed. No pronouncement as to
costs.

Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and Villamor, JJ., concur.

Barredo, J., took no part.

CARBONELL VS. COURT OF APPEALS, AND PONCIO

January 1976

FACTS:
On January 27, 1955, respondent Jose Poncio executed a private
memorandum of sale of his parcel of land with improvements situated in
San Juan, Rizal in favor of petitioner Rosario Carbonell who knew that
the said property was at that time subject to a mortgage in favor of
the Republic Savings Bank (RSB) for the sum of P1,500.00. Four days
later, Poncio, in another private memorandum, bound himself to sell
the same property for an improved price to one Emma Infante for the
sum of P2,357.52, with the latter still assuming the existing mortgage
debt in favor of the RSB in the amount of P1,177.48. Thus, in February
2, Poncio executed a formal registerable deed of sale in her
(Infante's) favor. So, when the first buyer Carbonell saw the seller
Poncio a few days afterwards, bringing the formal deed of sale for the
latter's signature and the balance of the agreed cash payment, she was
told that he could no longer proceed with formalizing the contract
with her (Carbonell) because he had already formalized a sales
contract in favor of Infante.
To protect her legal rights as the first buyer, Carbonell registered
on February 8, 1955 with the Register of Deeds her adverse claim as
first buyer entitled to the property. Meanwhile, Infante, the second
buyer, was able to register the sale in her favor only on February 12,
1955, so that the transfer certificate of title issued in her name
carried the duly annotated adverse claim of Carbonell as the first
buyer. The trial court declared the claim of the second buyer Infante
to be superior to that of the first buyer Carbonell, a decision which
the Court of Appeals reversed. Upon motion for reconsideration,
however, Court of Appeals annulled and set aside its first decision
and affirmed the trial courts decision.

ISSUE:
Who has the superior right over the subject property?

HELD:
The Supreme Court reversed the appellate courts decision and declared
the first buyer Carbonell to have the superior right over the subject
property, relying on Article 1544 of the Civil Code. 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 paragraphs, good faith
must characterize the prior possession, while under the second
paragraph, good faith must characterize the act of anterior
registration.
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 to
Infante as there was no such sale to Infante then. Hence, Carbonell's
prior purchase of the land was made in good faith which did not cease
after Poncio told her on January 31, 1955 of his second sale of the
same lot to Infante. Carbonell wanted to meet Infante but the latter
refused so to protect her legal rights, Carbonell registered her
adverse claim on February 8, 1955. Under the circumstances, this
recording of Carbonells adverse claim should be deemed to have been
done in good faith and should emphasize Infante's bad faith when the
latter registered her deed of sale 4 days later.

SEMIRA V. CA
230 SCRA 577
FACTS:
Gutierrez was the owner of a parcel of land. This parcel was sold to Buenaventura An. He
entered the premises based on the boundaries stated in the deed of sale. He then
bought two additional parcels of land. On a relevant date, he sold the first parcel to his
nephew who also entered the premises based on the boundaries stated in the deed. The
deed also stated the same boundaries and area of the lot, which was larger in actuality.
This nephew then sold the land to petitioner. The deed this time reflected a different
area, the actual area of the land. The land was found to be larger than what was stated
in the previous documents. Semira entered then the premises based on the boundaries
and began construction of a rice mill. Buenaventura then filed an action for forcible
entry against Semira, alleging that latter illegally encroached on the other parcel of land
previously bought by the former and that the land that was supposed to be occupied by
the latter was smaller than the land he was actually occupying.

HELD:
In the case at bar, the issue of possession cannot be decided independently of the
question of ownership. Private respondent claimed constructive possession of the parcel
of land he alleged to be encroached by Semira. Likewise, Semira based his occupancy of
the land by virtue of the Ramirezs sale of the land to him. The question of prior
possession mayonly be resolved in answering the question of who is the real owner of
the disputed portion. Where land is sold for a lump sum and not so much per unit of
measure, the boundaries of the land stated in the contract determines the effectsand
scope of the sale, not the area thereof. The vendor is thus obligated to deliver the land
included within the boundaries regardless of whether the land is greater or lesser than
the area stipulated in the sale.

BALATBAT V. CA

FACTS:
A parcel of land was acquired by plaintiff Aurelio Roque and Maria
Mesina during their conjugal union. Maria died on August 28, 1966.
On June 15, 1977, Aurelio filed a case for partition. The trial court
held that Aurelio is entitled to the portion at his share in the
conjugal property, and 1/5 of the other half which formed part of
Marias estate, divided equally among him at his 4 children. The
decision having become final and executory, the Register of Deeds of
Manila issued a transfer certificate of title on October 5, 1979
according to the ruling of the court. On April 1, 1980, Aurelio sold his
6/10 share to spouses Aurora Tuazon-Repuyan and Jose Repuyan, as
evidenced by a deed of absolute sale. On June 21, 1980, Aurora
caused the annotation of her affidavit of adverse claim. On August 20,
1980, Aurelio filed a complaint for rescission of contract grounded on
the buyers failure to pay the balance of the purchase price. On
February 4, 1982, another deed of absolute sale was executed between
Aurelio and his children, and herein petitioner Clara Balatbat,
involving the entire lot. Balatbat filed a motion for the issuance of writ
of possession, which was granted by the court on September 20, 1982,
subject to valid rights and interests of third persons. Balatbat filed a
motion to intervene in the rescission case, but did not file her
complaint in intervention. The court ruled that the sale between
Aurelio and Aurora is valid.

ISSUES:
(1) Whether the alleged sale to private respondents was merely
executory
(2) Whether there was double sale
(3) Whether petitioner is a buyer in good faith and for value

HELD:
(1) Contrary to petitioner's contention that the sale dated April 1,
1980 in favor of private respondents Repuyan was merely executory for
the reason that there was no delivery of the subject property and that
consideration/price was not fully paid, we find the sale as
consummated, hence, valid and enforceable. The Court dismissed
vendor's Aurelio Roque complaint for rescission of the deed of sale and
declared that the Sale dated April 1, 1980, as valid and enforceable.
No appeal having been made, the decision became final and executory.
The execution of the public instrument, without actual delivery of the
thing, transfers the ownership from the vendor to the vendee, who may
thereafter exercise the rights of an owner over the same.In the instant
case, vendor Roque delivered the owner's certificate of title to herein
private respondent. The provision of Article 1358 on the necessity of a
public document is only for convenience, not for validity or
enforceability. It is not a requirement for the validity of a contract of
sale of a parcel of land that this be embodied in a public instrument.
A contract of sale being consensual, it is perfected by the mere consent
of the parties. Delivery of the thing bought or payment of the price is
not necessary for the perfection of the contract; and failure of the
vendee to pay the price after the execution of the contract does not
make the sale null and void for lack of consideration but results at
most in default on the part of the vendee, for which the vendor may
exercise his legal remedies.
(2) 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. In the case at bar,
vendor Aurelio Roque sold 6/10 portion of his share to private
respondents Repuyan on April 1, 1980. Subsequently, the same lot was
sold again by vendor Aurelio Roque (6/10) and his children (4/10),
represented by the Clerk of Court pursuant to Section 10, Rule 39 of
the Rules of Court, on February 4, 1982. Undoubtedly, this is a case of
double sale contemplated under Article 1544 of the New Civil Code.
Evidently, private respondents Repuyan's caused the annotation of an
adverse claim on the title of the subject property on July 21, 1980. The
annotation of the adverse claim in the Registry of Property is sufficient
compliance as mandated by law and serves notice to the whole world.
On the other hand, petitioner filed a notice of lispendens only on
February 2, 1982. Accordingly, private respondents who first caused
the annotation of the adverse claim in good faith shall have a better
right over herein petitioner. As between two purchasers, the one who
has registered the sale in his favor, has a preferred right over the other
who has not registered his title even if the latter is in actual possession
of the immovable property. Further, even in default of the first
registrant or first in possession, private respondents have presented the
oldest title. Thus, private respondents who acquired the subject property
in good faith and for valuable consideration established a superior
right as against the petitioner.
(3) Petitioner cannot be considered as a buyer in good faith. If
petitioner did investigate before buying the land on February 4, 1982,
she should have known that there was a pending case and an
annotation of adverse claim was made in the title of the property
before the Register of Deeds and she could have discovered that the
subject property was already sold to the private respondents. It is
incumbent upon the vendee of the property to ask for the delivery of
the owner's duplicate copy of the title from the vendor. One who
purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or of an interest therein; and the
same rule must be applied to one who has knowledge of facts which
should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor.
Good faith, or the want of it is not a visible, tangible fact that can be
seen or touched, but rather a state or condition of mind which can
only be judged of by actual or fancied tokens or signs.

NAVAL vs. COURT OF APPEALS ET AL

G.R. No. 167412

February 22, 2006

FACTS: In 1969, Ildefonso Naval sold a parcel of land located in Camarines Sur to Galarosa.
The sale was recorded in the RD pursuant to Act No. 3344, the law governing registrations of
all instruments on unregistered lands.

Subsequently, Galarosa sold portions of the land to respondents Balilla, Nacion, spouses
Moya, and Camalla. All buyers occupied the portion they bought, built improvements
thereon, and paid the taxes due thereto.

The controversy arose when petitioner Juanita Naval, the great granddaughter of Ildefonso,
was issued by the RD an OCT covering a portion of the subject land. She claimed that she
bought the subject land from Ildefonso in 1972.

Petitioner Juanita filed a complaint for recovery of possession against Aguirre, Balila, Moya,
and Nacion. However, the case was dismissed without prejudice for failure to prosecute the
action for an unreasonable length of time.

Almost 20 years later petitioner re-filed the complaint for recovery of possession with
damages before the MCTC, against Camalla, Balila, Aguirre, Nacion and Moya. After trial, the
MCTC rendered its decision in favor of the plaintiff and against defendants, declaring: the
plaintiff to be the legal owner of the land, ordering defendants Camalla, Balila, Balila, Aguirre
and Nacion to vacate the property in question and to deliver its possession to the plaintiff,
and ordering Moya to vacate the land occupied by her and to relinquish its possession to the
plaintiff;

Aggrieved, respondents appealed the decision to the RTC of Naga City, which affirmed in
toto the assailed decision. Respondents thereafter elevated the case to the CA. Finding the
prior registration of the deed of sale between Ildefonso and Galaura with the RD as a
constructive notice to subsequent buyers, the appellate court reversed the decision of the
RTC. Hence, this petition for review.

ISSUE: Who has the superior right to a parcel of land sold to different buyers at different
times by its former owner.

HELD: RESPONDENTS

The petition is DENIED. The Decision of the CA and the denial of the motion for
reconsideration are AFFIRMED.

a. It is not disputed that the subject land belonged to Ildefonso and that it was not registered
under the Torrens System when it was sold to Gregorio in 1969 and to the petitioner in 1972.
Further, the deed of sale between Ildefonso and Gregorio was registered with the RD of
Camarines Sur pursuant to Act No. 3344.

In holding that respondents have a better right to possess the subject land in view of the bona
fide registration of the sale with the RD of Camarines Sur by Ildefonso and Gregorio, the CA
applied Article 1544 of the Civil Code.

While we agree with the appellate court that respondents have superior right over the
petitioner on the subject property, we find Article 1544 inapplicable to the case at bar since
the subject land was unregistered at the time of the first sale. The registration contemplated
under this provision has been held to refer to registration under the Torrens System, which
considers the act of registration as the operative act that binds the land. Thus, in Carumba v.
Court of Appeals, we held that Article 1544 of the Civil Code has no application to land not
registered under Torrens System.

The law applicable therefore is Act No. 3344, which provides for the registration of all
instruments on land neither covered by the Spanish Mortgage Law nor the Torrens System.
Under this law, registration by the first buyer is constructive notice to the second buyer that
can defeat his right as such buyer in good faith; it binds third person who may subsequently
deal with the same property.
b. Even if petitioner argues that she purchased and registered the subject land in good faith
and without knowledge of any adverse claim thereto, respondents still have superior right
over the disputed property. We held in Rayos v. Reyes32 that:

[T]he 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 x x x 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. Since the properties
in question are unregistered lands, petitioners as subsequent buyers thereof did so at their
peril. Their 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 them if it turns out,
as it actually did in this case, that their seller did not own the property at the time of the sale.

c. It is an established principle that no one can give what one does not have, nemo dat quod
non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the
buyer can acquire no more than what the seller can transfer legally.In the case at bar, since
Ildefonso no longer owned the subject land at the time of the sale to the petitioner, he had
nothing to sell and the latter did not acquire any right to it.

d. Even if we apply Article 1544, the facts would nonetheless show that respondents and their
predecessors-in-interest registered first the source of their ownership and possession, i.e., the
1969 deed of sale, and possessed the subject land at the earliest time. Applying the doctrine of
priority in time, priority in rights or prius tempore, potior jure, respondents are entitled
to the ownership and possession of the subject land.

e. True, Section 32 of Presidential Decree No. 1529 provides that [u]pon the expiration of
said period of one year, the decree of registration and the certificate of title shall become
incontrovertible. However, it does not deprive an aggrieved party of a remedy in law. What
cannot be collaterally attacked is the certificate of title and not the title or ownership which is
represented by such certificate. Ownership is different from a certificate of title. The fact that
petitioner was able to secure a title in her name did not operate to vest ownership upon her
of the subject land. Registration of a piece of land under the Torrens System does not create
or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an
evidence of ownership or title over the particular property described therein. It cannot be
used to protect a usurper from the true owner; nor can it be used as a shield for the
commission of fraud; neither does it permit one to enrich himself at the expense of others.
Its issuance in favor of a particular person does not foreclose the possibility that the real
property may be co-owned with persons not named in the certificate, or that it may be held
in trust for another person by the registered owner.
As correctly held by the Court of Appeals, notwithstanding the indefeasibility of the Torrens
title, the registered owner may still be compelled to reconvey the registered property to its
true owners. The rationale for the rule is that reconveyance does not set aside or re-subject
to review the findings of fact of the Bureau of Lands. In an action for reconveyance, the
decree of registration is respected as incontrovertible. What is sought instead is the transfer of
the property or its title which has been wrongfully or erroneously registered in another
persons name, to its rightful or legal owner, or to the one with a better right.

Finally, the Court of Appeals correctly held that an action for reconveyance does not
prescribe when the plaintiff is in possession of the land to be reconveyed, as in this case. The
reason for this is that one who is in actual possession of a piece of land claiming to be the
owner thereof may wait until his possession is disturbed or his title is 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 of a third party and its effect on his own title, which right can be
claimed only by one who is in possession.

We hold that in such a situation the right to quiet title to the property, to 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.

HEMEDES vs CA Case Digest

HEMEDES vs CA
316 SCRA 347

FACTS: Jose Hemedes executed a document entitled Donation Inter Vivos With Resolutory
Conditions conveying ownership a parcel of land, together with all its improvements, in favor
of his third wife, Justa Kauapin, subject to the resolutory condition that upon the latters death
or remarriage, the title to the property donated shall revert to any of the children, or heirs, of
the DONOR expressly designated by the DONEE.
Pursuant to said condition, Justa Kausapin executed a Deed of Conveyance of Unregistered
Real Property by Reversion conveying to Maxima Hemedes the subject property.
Maxima Hemedes and her husband Raul Rodriguez constituted a real estate mortgage over
the subject property in favor of R & B Insurance to serve as security for a loan which they
obtained.
R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes failed to pay
the loan even. The land was sold at a public auction with R & B Insurance as the highest
bidder. A new title was subsequently issued in favor the R&B. The annotation of usufruct in
favor of Justa Kausapin was maintained in the new title.
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa
Kausapin executed a Kasunduan whereby she transferred the same land to her stepson
Enrique D. Hemedes, pursuant to the resolutory condition in the deed of donation executed in
her favor by her late husband Jose Hemedes. Enrique D. Hemedes obtained two declarations
of real property, when the assessed value of the property was raised. Also, he has been paying
the realty taxes on the property from the time Justa Kausapin conveyed the property to him.
In the cadastral survey, the property was assigned in the name of Enrique Hemedes. Enrique
Hemedes is also the named owner of the property in the records of the Ministry of Agrarian
Reform office at Calamba, Laguna.
Enriques D. Hemedes sold the property to Dominium Realty and Construction Corporation
(Dominium).
Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia Brewery) who
made constructions therein. Upon learning of Asia Brewerys constructions, R & B Insurance
sent it a letter informing the former of its ownership of the property. A conference was held
between R & B Insurance and Asia Brewery but they failed to arrive at an amicable
settlement.
Maxima Hemedes also wrote a letter addressed to Asia Brewery asserting that she is the
rightful owner of the subject property and denying the execution of any real estate mortgage
in favor of R&B.
Dominium and Enrique D. Hemedes filed a complaint with the CFI for the annulment of TCT
issued in favor of R & B Insurance and/or the reconveyance to Dominium of the subject
property alleging that Dominion was the absolute owner of the land.
The trial court ruled in favor of Dominium and Enrique Hemedes.

ISSUE: W/N the donation in favor of Enrique Hemedes was valid?

HELD: NO. Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights
over the subject property. Justa Kausapin sought to transfer to her stepson exactly what she
had earlier transferred to Maxima Hemedes the ownership of the subject property pursuant
to the first condition stipulated in the deed of donation executed by her husband. Thus, the
donation in favor of Enrique D. Hemedes is null and void for the purported object thereof did
not exist at the time of the transfer, having already been transferred to his sister. Similarly, the
sale of the subject property by Enrique D. Hemedes to Dominium is also a nullity for the latter
cannot acquire more rights than its predecessor-in-interest and is definitely not an innocent
purchaser for value since Enrique D. Hemedes did not present any certificate of title upon
which it relied.
The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his
being designated as owner of the subject property in the cadastral survey of Cabuyao, Laguna
and in the records of the Ministry of Agrarian Reform office in Calamba, Laguna cannot
defeat a certificate of title, which is an absolute and indefeasible evidence of ownership of the
property in favor of the person whose name appears therein. Particularly, with regard to tax
declarations and tax receipts, this Court has held on several occasions that the same do not by
themselves conclusively prove title to land.

SEMIRA V. CA
230 SCRA 577

FACTS:
Gutierrez was the owner of a parcel of land. This parcel was sold to Buenaventura
An. He entered the premises based on the boundaries stated in the deed of sale.
He then bought two additional parcels of land. On a relevant date, he sold the first
parcel to his nephew who also entered the premises based on the boundaries
stated in the deed. The deed also stated the same boundaries and area of the lot,
which was larger in actuality. This nephew then sold the land to petitioner. The
deed this time reflected a different area, the actual area of the land. The land was
found to be larger than what was stated in the previous documents. Semira
entered then the premises based on the boundaries and began construction of a
rice mill. Buenaventura then filed an action for forcible entry against Semira,
alleging that latter illegally encroached on the other parcel of land previously
bought by the former and that the land that was supposed to be occupied by the
latter was smaller than the land he was actually occupying.

HELD:
In the case at bar, the issue of possession cannot be decided independently of
the question of ownership. Private respondent claimed constructive possession of
the parcel of land he alleged to be encroached by Semira. Likewise, Semira based
his occupancy of the land by virtue of the Ramirezs sale of the land to him. The
question of prior possession may
only be resolved in answering the question of who is the real owner of the
disputed portion. Where land is sold for a lump sum and not so much per unit of
measure, the boundaries of the land stated in the contract determines the effects
and scope of the sale, not the area thereof. The vendor is thus obligated to deliver
the land included within the boundaries regardless of whether the land is greater or
lesser than the area stipulated in the sale.

SECOND DIVISION
CARMELITA FUDOT, G.R. No. 171008
Petitioner,
Present:

QUISUMBING, J.,
- versus - Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
CATTLEYA LAND, INC., VELASCO, JR., JJ.
Respondent.
Promulgated:
September 13, 2007
x-----------------------------------------------------------------------------------x

DECISION

TINGA, J.:

For resolution is a petition that seeks to nullify the Decision[1] and Resolution[2] of
the Court of Appeals dated 28 April 2005 and 11 January 2006, respectively, in
C.A.G.R. CV No. 73025 which declared respondent as having a better right over a
parcel of land located in Doljo, Panglao, Bohol.

The facts, as culled from the records, follow.

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent)

asked someone to check, on its behalf, the titles of nine (9) lots, the subject land
included, which it intended to buy from the spouses Troadio and Asuncion
Tecson. Finding no defect on the titles, respondent purchased the nine lots through
a Deed of Conditional Sale on 6 November 1992. Subsequently, on 30 August
1993, respondent and the Tecsons executed a Deed of Absolute Sale over the same
properties. The Deed of Conditional Sale and the Deed of Absolute Sale were
registered with the Register of Deeds on 06 November 1992 and 04 October 1993,
respectively.[3] The Register of Deeds, Atty. Narciso dela Serna, refused to actually
annotate the deed of sale on the titles because of the existing notice of attachment
in connection with Civil Case No. 3399 pending before the Regional Trial Court of
Bohol.[4] The attachment was eventually cancelled by virtue of a compromise
agreement between the Tecsons and their attaching creditor which was brokered by
respondent. Titles to six (6) of the nine (9) lots were issued, but the Register of
Deeds refused to issue titles to the remaining three (3) lots , because the titles
covering the same were still unaccounted for.
On 23 January 1995, petitioner presented for registration before the Register of
Deeds the owners copy of the title of the subject property, together with the deed
of sale purportedly executed by the Tecsons in favor of petitioner on 19 December
1986. On the following day, respondent sent a letter of protest/opposition to
petitioners application.Much to its surprise, respondent learned that the Register of
Deeds had already registered the deed of sale in favor of petitioner and issued a
new title in her name.[5]

On 5 May 1995, respondent filed its Complaint[6] for Quieting Of Title &/Or
Recovery Of Ownership, Cancellation Of Title With Damages before
the Regional Trial Court ofTagbilaran City.[7] On 26 June 1995, Asuncion filed a
complaint-in-intervention, claiming that she never signed any deed of sale covering
any part of their conjugal property in favor of petitioner. She averred that her
signature in petitioners deed of sale was forged thus, said deed should be declared
null and void.[8] She also claimed that she has discovered only recently that there
was an amorous relationship between her husband and petitioner.[9]

Petitioner, for her part, alleged in her answer[10] that the spouses Tecson had
sold to her the subject property for P20,000.00 and delivered to her the owners
copy of the title on 26 December 1986. She claims that she subsequently presented
the said title to the Register of Deeds but the latter refused to register the same
because the property was still under attachment.

On 31 October 2001, the trial court rendered its decision:[11] (i) quieting the title or
ownership of the subject land in favor of respondent; (ii) declaring the deed of sale
between petitioner and spouses Tecson invalid; (iii) ordering the registration of the
subject land in favor of respondent; (iv) dismissing respondents claim for damages
against the Register of Deeds for insufficiency of evidence; (v) dismissing
Asuncions claim for damages against petitioner for lack of factual basis; and (vi)
dismissing petitioners counterclaim for lack of the required preponderance of
evidence.[12]
According to the trial court, respondent had recorded in good faith the deed of sale
in its favor ahead of petitioner. Moreover, based on Asuncions convincing and
unrebutted testimony, the trial court concluded that the purported signature
of Asuncion in the deed of sale in favor of petitioner was forged, thereby rendering
the sale void.[13]

Petitioner sought recourse to the Court of Appeals, arguing in the main that the rule
on double sale was applicable to the case. The appellate court, however, dismissed
her appeal, holding that there was no double sale because the alleged sale to
petitioner was null and void in view of the forgery of Asuncions purported
signature in the deed. The appellate court noted that petitioner failed to
rebut Asuncions testimony despite opportunities to do so.[14] Moreover, even if
there was double sale, according to the appellate court, respondents claim would
still prevail since it was able to register the second sale in its favor in good faith,
had made inquiries before it purchased the lots, and was informed that the titles
were free from encumbrance except the attachment on the property due to Civil
Case No. 3399.[15]

Petitioner sought reconsideration of the decision but the Court of Appeals denied
her motion for reconsideration for lack of merit.[16]

Petitioner thus presents before this Court the following issues for resolution:

I.

BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE

BETTER RIGHT-IS IT THE FIRST BUYER WHO WAS GIVEN THE
OWNERS DUPLICATE TCT TOGETHER WITH A DEED
OF SALE IN 1986, OR THE SECOND BUYER IN 1992 WITH ONLY A
DEED OF SALE.

II.
IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR
REQUIRE THE DELIVERY OF THE OWNERS DUPLICATE TCT A
BUYER IN GOOD FAITH.

III.

II. IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS

BY SALE, WHICH LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL
CODE OR P.D. 1529 OR TORRENSSYSTEM.[17]

Petitioner avers that she was the first buyer in good faith and even had in her
possession the owners copy of the title so much so that she was able to register the
deed of sale in her favor and caused the issuance of a new title in her name. She
argues that the presentation and surrender of the deed of sale and the owners copy
carried with it the conclusive authority of Asuncion Tecson which cannot be
overturned by the latters oral deposition.[18]

Petitioner claims that respondent did not demand nor require delivery of the
owners duplicate title from the spouses Tecson, neither did it investigate the
circumstances surrounding the absence of the title. These indicate respondents
knowledge of a defect in the title of the spouses and, thus, petitioner concludes that
respondent was not a buyer in good faith.[19]

Finally, petitioner insists that the applicable law in this case is P.D. No.
1529, a special law dealing precisely with the registration of registered lands or
any subsequent sale thereof, and not Article 1544 of the Civil Code which deals
with immovable property not covered by the Torrens System.[20]

Respondent points out, on one hand, that petitioners first two issues which
present an inquiry on who has a better right or which one is a buyer in good faith,
are questions of fact not proper in a petition for review. The third issue, on the
other hand, is ostensibly a question of law which had been unsuccessfully raised
below.[21]

Respondent maintains that there is no room to speak of petitioner as a buyer

in good faith since she was never a buyer in the first place, as her claim is based on
a null and void deed of sale, so the court a quo found. Respondent also asserts that
its status as a buyer in good faith was established and confirmed in the proceedings
before the two courts below.[22]

Lastly, respondent argues that P.D. No. 1529 finds no application in the
instant case. The production of the owners duplicate certificate x x x being
conclusive authority from the registered owner is only true as between the
registration applicant and the register of deeds concerned, but never to third
parties. Such conclusive authority, respondent adds, is only for the Register of
Deeds to enter a new certificate or to make a memorandum of registration in
accordance with such instrument. It cannot cure the fatal defect that the instrument
from which such registration was effected is null and void ab initio, respondent
concludes.[23]

The petition is bereft of merit.

Petitioners arguments, which rest on the assumption that there was a double sale,
must fail.
In the first place, there is no double sale to speak of. Art. 1544 of the Civil
Code,[24] which provides the rule on double sale, applies only to a situation where
the same property is validly sold to different vendees. In this case, there is only one
sale to advert to, that between the spouses Tecson and respondent.

In Remalante v. Tibe,[25] this Court ruled that the Civil Law provision on double
sale is not applicable where there is only one valid sale, the previous sale having
been found to be fraudulent. Likewise, in Espiritu and Apostol v. Valerio,[26] where
the same parcel of land was purportedly sold to two different parties, the Court
held that despite the fact that one deed of sale was registered ahead of the other,
Art. 1544 of the Civil Code will not apply where said deed is found to be a forgery,
the result of this being that the right of the other vendee should prevail.

The trial court declared that the sale between the spouses Tecson and petitioner is
invalid, as it bears the forged signature of Asuncion. Said finding is based on the
unrebutted testimony of Asuncion and the trial courts visual analysis and
comparison of the signatures in her Complaint-in-Intervention and the purported
deed of sale. This finding was upheld by the Court of Appeals, as it ruled that the
purported sale in petitioners favor is null and void, taking into account Asuncions
unrefuted deposition. In particular, the Court of Appeals noted petitioners failure to
attend the taking of the oral deposition and to give written interrogatories. In short,
she did not take the necessary steps to rebut Asuncions definitive assertion.

The congruence of the wills of the spouses is essential for the valid disposition of
conjugal property.[27] Thus, under Article 166 of the Civil Code[28] which was still
in effect on 19 December 1986 when the deed of sale was purportedly executed,
the husband cannot generally alienate or encumber any real property of the
conjugal partnership without the wifes consent.

In this case, following Article 173[29] of the Civil Code, on 26 June 1995, or eight
and a half years (8 ) after the purported sale to petitioner, Asuncion filed her
Complaint-in-Intervention seeking the nullification thereof, and while her marriage
with Troadio was still subsisting. Both the Court of Appeals and the trial court
found Asuncions signature in the deed of sale to have been forged, and
consequently, the deed of sale void for lack of marital consent. We find no reason
to disturb the findings of the trial court and the Court of Appeals. Findings of fact
of lower courts are deemed conclusive and binding upon the Supreme Court
subject to certain exceptions,[30] none of which are present in this case. Besides, it
has long been recognized in our jurisprudence that a forged deed is a nullity and
conveys no title.[31]

Petitioner argues she has a better right over the property in question, as the holder
of and the first one to present, the owners copy of the title for the issuance of a new
TCT. The Court is not persuaded.

The act of registration does not validate petitioners otherwise void contract.
Registration is a mere ministerial act by which a deed, contract, or instrument is
sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the deed,
contract, or instrument.While it operates as a notice of the deed, contract, or
instrument to others, it does not add to its validity nor converts an invalid
instrument into a valid one as between the parties,[32] nor amounts to a declaration
by the state that the instrument is a valid and subsisting interest in the land.[33] The
registration of petitioners void deed is not an impediment to a declaration by the
courts of its invalidity.

Even assuming that there was double sale in this case, petitioner would still not
prevail. The pertinent portion of Art. 1544 provides:

Art. 1544. x x x.

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.

x x x x.

In interpreting this provision, the Court declared that the governing principle
is primus tempore, potior jure (first in time, stronger in right). Knowledge gained
by the first buyer of the second sale cannot defeat the first buyers rights, except
where the second buyer registers in good faith the second sale ahead of the first as
provided by the aforequoted provision of the Civil Code. Such knowledge of the
first buyer does not bar him from availing of his rights under the law, among them
to register first his purchase as against the second buyer. However, knowledge
gained by the second buyer of the first sale defeats his rights even if he is first to
register the second sale, since such knowledge taints his prior registration with bad
faith.[34] It is thus essential, to merit the protection of Art. 1544, second paragraph,
that the second realty buyer must act in good faith in registering his deed of sale.[35]
We agree with the trial court and the Court of Appeals that respondent was a buyer
in good faith, having purchased the nine (9) lots, including the subject lot, without
any notice of a previous sale, but only a notice of attachment relative to a pending
civil case. In fact, in its desire to finally have the title to the properties transferred
in its name, it persuaded the parties in the said case to settle the same so that the
notice of attachment could be cancelled.

Relevant to the discussion are the following provisions of P.D. No. 1529:
Sec. 51. Conveyance and other dealings by registered owner. An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the
same in accordance with existing laws. He may use such forms of deeds,
mortgages, lease or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease or other voluntary instrument, except a will purporting to
convey or affect registered land shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and as evidence of
authority to the Register of Deeds to make Registration.
The act of registration shall be the operative act to convey or affect
the land insofar as third persons are concerned, and in all cases under this
Decree, the registration shall be made in the office of the Register of Deeds for
the province or city where the land lies. (Emphasis supplied)

Sec. 52. Constructive notice upon registration.Every conveyance, mortgage,

lease, lien attachment, order, judgment, instrument or entry affecting registered
land shall, if registered, filed or entered in the office of the Register of Deeds for
the province or city where the land to which it relates lies, be constructive notice
to all persons from the time of such registering, filing or entering.

It has been held that between two transactions concerning the same parcel of land,
the registered transaction prevails over the earlier unregistered right. The act of
registration operates to convey and affect the registered land so that a bona fide
purchaser of such land acquires good title as against a prior transferee, if such prior
transfer was unrecorded.[36] As found by the courts a quo, respondent was able to
register its purchase ahead of petitioner. It will be recalled that respondent was able
to register its Deed of Conditional Sale with the Register of Deeds as early as 6
November 1992, and its Deed of Absolute Sale on 14 October 1993. On the other
hand, petitioner was able to present for registration her deed of sale and owners
copy of the title only on 23 January 1995, or almost nine years after the purported
sale. Why it took petitioner nine (9) years to present the deed and the owners copy,
she had no credible explanation; but it is clear that when she finally did, she
already had constructive notice of the deed of sale in respondents favor. Without a
doubt, respondent had acquired a better title to the property.
Finally, anent petitioners claim that P.D. No. 1529 applies to registered lands or
any subsequent sale thereof, while Art. 1544 of the Civil Code applies only to
immovable property not covered by the Torrens System, suffice it to say that this
quandary has already been answered by an eminent former member of this
Court, Justice Jose Vitug, who explained that the registration contemplated under
Art. 1544 has been held to refer to registration under P.D. No. 1529, thus:
The registration contemplated under Art. 1544 has been held to refer
to registration under Act 496 Land Registration Act (now PD 1529) which
considers the act of registration as the operative act that binds the land
(see Mediante v. Rosabal, 1 O.G. [12] 900, Garcia v. Rosabal, 73 Phil 694). On
lands covered by the Torrens System, the purchaser acquires such rights and
interest as they appear in the certificate of title, unaffected by any prior lien or
encumbrance not noted therein. The purchaser is not required to explore farther
than what the Torrens title, upon its face, indicates. The only exception is where
the purchaser has actual knowledge of a flaw or defect in the title of the seller or
of such liens or encumbrances which, as to him, is equivalent to registration (see
Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18 October 1988; Hernandez vs.
Sales, 69 Phil 744; Tajonera s. Court of Appeals, L-26677, 27 March 1981)
(Emphasis supplied)[37]

WHEREFORE, the petition is DENIED. The assailed decision and

resolution of the Court of Appeals are affirmed. Costs against petitioner.

SO ORDERED.

DANTE O. TINGA
 Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Second Division
 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]
Rollo, pp. 22-32. Penned by Associate Justice Sesinando E. Villon, with Associate Justices Arsenio J.
Magpale and Enrico A. Lanzanas, concurring.
[2]
Id. at 35.
[3]
Id. at 48-49. Vide Entry No. 83422 and Entry No. 87549, respectively of the Register of Deeds of Bohol.
[4]
Tantrade Corporation v. Troadio Tecson, et al.
[5]
Rollo, pp. 51-52.
[6]
Id. at 47-55.
[7]
Docketed as Civil Case No. 5781, Cattleya Land, Inc. v. Carmelita Fudot and Atty. Narciso dela
Serna. The case was eventually raffled to Branch 4, 7th Judicial Region, Tagbilaran City.
[8]
Rollo, pp. 60-61. Asuncion Tecsons testimony was made through oral deposition; records, pp. 497-510.
[9]
Records, Vol. 1, pp. 66-68; Complaint-in-Intervention; id. at 66.
[10]
Volume 1, pp. 35-41; Answer with Counter Claim and Motion to Dismiss, Records.
[11]
Rollo, pp. 57-64.
[12]
Id. at 64.
 [13]
Id. at 62-63.
[14]
Id. at 22-32, 28-29; CA Decision dated 28 April 2005.
[15]
Rollo, p. 30.
[16]
Supra note 2; Resolution dated 11 January 2006.
[17]
Rollo, p. 12.
[18]
Id. at 14.
[19]
Id. at 15-16.
[20]
Id. at 12-17.
[21]
Id. at 67.
[22]
Id. at 70-71.
[23]
Id. at 72-73.
[24]
CIVIL CODE, 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.
[25]
No. L-59514, 25 February 1988, 158 SCRA 138.
[26]
119 Phil. 69 (1963).
[27]
Abalos v. Macatangay, G.R. No. 155043, 30 September 2004, 439 SCRA 649, 661.
[28]
Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the
conjugal partnership without the wifes consent. If she refuses unreasonably to give her consent, the court may
compel her to grant the same.

This article shall not apply to property acquired by the conjugal partnership before the effective date of this
Code.
[29]
Art. 173. The wife may, during the marriage and within ten years from the transaction questioned, ask the
courts for the annulment of any contract of the husband entered into without her consent, when such consent is
required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal
partnership property. Should the wife fail to exercise this right, she or her heirs after the dissolution of the marriage,
may demand the value of property fraudulently alienated by the husband.

[30]
The exceptions are: when the findings are grounded on speculation, surmises or conjectures; when the
inference made is manifestly mistaken, absurd or impossible; when there is grave abuse of discretion in the
appreciation of facts; when the factual findings of the trial and appellate courts are conflicting; when the Court of
Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the
admissions of both appellant and appellee; when the judgment of the appellate court is premised on a
misapprehension of facts or when it has failed to notice certain relevant facts which, if properly considered, will
justify a different conclusion; when the findings of fact are conclusions without citation of specific evidence upon
which they are based; and when findings of fact of the Court of Appeals are premised on the absence of evidence but
are contradicted by the evidence on record. Solid Homes, Inc. v. Court of Appeals, 341 Phil. 261, 275 (1997).
[31]
Salomon v. Intermediate Appellate Court, G.R. No. 70263, 14 May 1990, 185 SCRA 352.
[32]
Pascua v. Court of Appeals, 401 Phil. 350, 367 (2000).
[33]
Agricultural Credit Cooperative Assn. of Hinigaran v. Yusay, et al., 107 Phil 791 (1960).
[34]
Ulep v. Court of Appeals, G.R. No. 125254, 11 October 2005, 472 SCRA 241, 253 citing Uraca v. Court
of Appeals, 278 SCRA 702 (1997).
[35]
Coronel, et al. v. Court of Appeals, 331 Phil. 294, 321-322 (1996) citing VITUG, COMPENDIUM OF
CIVIL LAW AND JURISPRUDENCE, 1993 Ed., p. 604.
[36]
Macadangdang v. Martinez, G.R. No. 158682, 31 January 2005, 450 SCRA 363, 368.
[37]
VITUG, COMPENDIUM OF CIVIL LAW AND JURISPRUDENCE (1993), p. 604, cited in Abrigo v.
De Vera, G.R. No. 154409, 21 June 2004, 432 SCRA 544, 557.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-11415 May 25, 1959

MANUEL BUASON and LOLITA M. REYES, plaintiffs-appellants,

vs.
MARIANO PANUYAS, defendant-appellee.

Garcia and Jacinto, for appellants.

Servando Cleto for appellee.

PADILLA, J.:

This is an appeal from a judgment of the Court of First Instance of Nueva Ecija dismissing an action
brought by the spouses Manuel Buason and Lolita M. Reyes for annulment of a deed of sale in favor
of the defendant, cancellation of transfer certificate of title No. 8419 issued in the name of the
defendant and his wife, declaration that the sale in their favor is valid, recovery of possession of the
parcel of land described in the complaint from the defendant, damages, attorney's fees and costs.
(Civil No. 2144.)

In their lifetime the spouses Buenaventura Dayao and Eugenia Vega acquired by homestead patent
a parcel of land situated at barrio Gabaldon, municipality of Muoz, province of Nueva Ecija,
containing an area of 14.8413 hectares covered by original certificate of title No. 1187 (Exhibit C).
On 29 October 1930 they executed a power of attorney authorizing Eustaquio Bayuga to engage the
services of an attorney to prosecute their case against Leonardo Gambito for annulment of a
contract of sale of the parcel of land (civil No. 5787 of the same court) and after the termination of
the case in their favor to sell it, and from the proceeds of the sale to deduct whatever expenses he
had incurred in the litigation (Exhibit B). On 14 March 1934 Buenaventura Dayao died leaving his
wife Eugenia Vega and children Pablo, Teodoro, Fortunata and Juliana, all surnamed Dayao. On 21
march 1939 his four children executed a deed of sale conveying 12.8413 hectares of the parcel of
land to the appellants, the spouses Manuel Buason and Lolita M. Reyes (Exhibit A). Their mother
Eugenia Vega affixed her thumbmark to the deed of sale as witness (Exhibit A). The appellants took
possession of the parcel of land through their tenants in 1939. On 18 July 1944 Eustaquio Bayuga
sold 8 hectares of the same parcel of land to the spouses Mariano Panuyas (appellee herein) and
Sotera B. Cruz (Exhibit D). Eustaquio Bayuga died on 25 March 1946 and Eugenia Vega in 1954.

The appellants and the appellee claim ownership to the same parcel of land. In their complaint the
appellants prayed that the appellee be ordered to deliver possession of the part of the parcel of land
held by him; that the deed of sale of that part of the parcel of land held by the appellee executed by
Eustaquio Bayuga in his favor and of his wife (Exhibit D) be declared null and void and that transfer
certificate of title No. 8419 issued in their name be cancelled; that the deed of sale of the parcel of
land executed by the children and heirs of Buenaventura Dayao in their favor (Exhibit A) be declared
valid; that the appellee be ordered to pay them damages and attorney's fees in the sum of P9,600;
and that he ordered to pay the costs of the suit. The appellees affirmative defenses are that he and
his wife were buyers in good faith and for valuable consideration; that appellant's causes of action
are barred by the statute of limitations; that the complaint states no cause of action; that the claim on
which their action is based is unenforceable under the statute of frauds; and that the appellants are
guilty of laches. By way of counterclaim, he prayed that for bringing a clearly unfounded suit against
him which depreciated the value of the land and injured his good reputation, the appellants be
ordered to pay him the sums of P5,000 as actual damages and P10,000 as moral damages.

After trial on 20 August 1956 the Court rendered judgment holding that the appellants' action is
barred by the statute of limitations and dismissing their complaint. Their motion for reconsideration
filed on 23 August 1956. Hence this appeal upon questions of law.

It appears that the appellants did not register the sale of 12.8413 hectares of the parcel of land in
question executed in their favor by the Dayao children on 21 March 1939 after the death of their
father Buenaventura Dayao. On the other hand, the power of attorney executed by Buenaventura
Dayao on 29 October 1930 authorizing Eustaquio Bayuga to sell the parcel of land (Exhibit B) was
annotated or inscribed on the back of the original certificate of title No. 1187 (Exhibit C) as Entry No.
16836/H-1187, and the sale executed by Eustaquio Bayuga in favor of the appellee Mariano
Panuyas and his wife Sotera B. Cruz under the aforesaid power of attorney was annotated or
inscribed on the back of the same original certificate of title (Exhibit C) as Entry No 778/H-1187. It
does not appear that the appellee and his wife had actual knowledge of the previous sale. In the
absence of such knowledge, they had a right to rely on the face of the certificate of title of the
registered owners and of the authority conferred by them upon the agent also recorded on the back
of the certificate of title. As this is a case of double sale of land registered under the Land
Registration Act, he who recorded the sale in the Registry of Deeds has a better right than he who
did not.1

As to the appellants' contention that, as the death of the principal on 14 March 1934 ended the
authority of the agent,2 the sale of 8 hectares of the parcel of land by the agent to the appellee
Mariano Panuyas and his wife Sotera B. Cruz was null and void, suffice it to state that is has not
been shown that the agent knew of his principal's demise, and for that reason article 1738, old Civil
code or 1931, new Civil Code, which provides:

Anything done by the agent, without knowledge of the death of the principal or of any other cause
which extinguishes the agency, is valid and shall be fully effective with respect to third persons who
may have contracted with him in good faith is the law applicable to the point raised by the appellants.
The judgment appealed from is affirmed, with costs against the appellants.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion and
Endencia, JJ., concur.

Footnotes

1
Article 1473, old civil code; 1544, new civil code.

2
Article 1732, old civil code; 1919, new civil code.

CAGAOAN VS. CAGAOAN- Donation in Good Faith

An ordinary donee of a land who causes the donation to be

recorded in the Mortgage Law Register in bad faith or with
notice of the rights of an adverse claimant requires no
additional rights against such claimant through the inscription
in the registry.

FACTS:
Eugenio and Felix Cagaoan are sons of Gregorio Cagaoan. In 1915,
Gregorio executed a deed of gift of 4 parcels of land in
Pangasinan in favor of Felix (without delivery of actual
possession) and in 1918 in favor of Eugenio (who immediately
took possession) over a parcel of land, which is the same as
parcel no. 4 in the deed of gift in favor of Felix.

Immediately, Eugenio took possession of the land donated, but

failed to have the donation recorded with the RD. However,
Felixs deed was registered in 1919 and took possession of
Parcel Nos. 1, 2 and 3 since 1915. He has never had possession
of Parcel No. 4.

After Eugenio had taken possession, Felix had caused his title
to be recorded in the Mortgage Law Register, having full notice
of the donation made to Eugenio.

Eugenio instituted an action to declare him the owner of the

parcel of land donated to him and to set aside the donation in
favor of Felix on the ground of fraud. RTC ruled in favor of
Felix ordered Eugenio to surrender possession of the land to
him.
ISSUE: Who owns the parcel of land in dispute?

HELD: EUGENIO.
It clearly appears the Felix had full notice of the Eugenios
claim to the land before he had his deed of gift recorded with
the RD. Thus, he may not be considered a third person within the
meaning of Art. 34 of the Mortgage Law, and his position was in
no wise improved by the inscription of his document. Eugenio,
having first taken possession in good faith, must therefore be
considered to have a better right to the land in question.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-16480 January 31, 1962

ARTEMIO KATIGBAK, petitioner,

vs.
COURT OF APPEALS, DANIEL EVANGELISTA and V. K. LUNDBERG, respondents.

Benjamin J. Molina for petitioner.

Jesus B. Santos for respondent V. K. Lundberg.
Ledesma, Puno, Guytingco, Antonio and Associates for respondent Daniel Evangelista.

PAREDES, J.:

This case arose from an agreed purchase and sale of a Double Drum Carco Tractor Winch. Artemio
Katigbak upon reading an advertisement for the sale of the winch placed by V. K. Lundberg, owner
and operator of the International Tractor and Equipment Co., Ltd., went to see Lundberg and
inspected the equipment. The price quoted was P12,000.00. Desiring a reduction of the price,
Katigbak was referred to Daniel Evangelista, the owner. After the meeting, it was agreed that
Katigbak was to purchase the winch for P12,000.00, payable at P5,000.00 upon delivery and the
balance of P7,000.00 within 60 days. The condition of the sale was that the winch would be
delivered in good condition. Katigbak was apprised that the winch needed some repairs, which could
be done in the shop of Lundberg. It was then stipulated that the amount necessary for the repairs will
be advanced by Katigbak but deductible from the initial payment of P5,000.00. The repairs were
undertaken and the total of P2,029.85 for spare parts was advanced by Katigbak for the purpose.
For one reason or another, the sale was not consummated and Katigbak sued Evangelista,
Lundberg and the latter's company, for the refund of such amount.

Lundberg and Evangelista filed separate Answers to the complaint, the former alleging non-liability
for the amount since the same (obligation for refund) was purely a personal account between
defendant Evangelista and plaintiff Katigbak. Lundberg asked P500.00 by way of actual and
compensatory damages and P5,000.00 as moral damages, claiming that the filing of the suit was
malicious; that there is a misjoinder because he is a stranger in the case, not being a party to the
agreement between Evangelista and Katigbak.
Evangelista, on his part, claimed that while there was an agreement between him and Katigbak for
the purchase and sale of the winch and that Katigbak advanced the payment for the spare parts, he
(Katigbak) refused to comply with his contract to purchase the same; that as a result of such refusal
he (Evangelista) was forced to sell the same to a third person for only P10,000.00, thus incurring a
loss of P2,000.00, which amount Katigbak should be ordered to pay, plus moral damages of
P5,000.00 and P700.00 for attorney's fees.

The lower court rendered judgment, the dispositive portion of which reads - .

WHEREFORE, judgment is hereby rendered ordering the defendants Daniel Evangelista and
V. K. Lundberg to pay plaintiff the sum of P2,029.85, with legal interest thereon from the filing
of the complaint until fully paid, plus the sum of P300.00 as attorney's fees, and the costs." .

The Court of Appeals, on September 5, 1959, reversed the judgment in the following manner:

Notwithstanding the breach of contract committed by him, we may concede appellee's right
to a refund of the sum of P2,029.85, but equally undeniable is appellant Evangelista's right to
recover from him his loss of P2,000.00, which is the difference between the contract price for
the sale of the winch between him and appellee and the actual price for which it was sold
after the latter had refused to carry out his agreement. As held in the above-cited case of
Hanlon, if the purchaser fails to take delivery and pay the purchase price of the subject
matter of the contract, the vendor, without the need of first rescinding the contract judicially,
is entitled to resell the same, and if he is obliged to sell it for less than the contract price, the
buyer is liable for the difference. This loss, which is the subject matter of Evangelista's main
counterclaim, should therefore be set off against the sum claimed by appellee, which would
leave in favor of the latter a balance of P29.85.

Considering our finding that it was appellee who committed a breach of contract, it follows
that the present action was unjustified and he must be held liable to appellant Evangelista for
attorney's fees in the sum of P700.00.

Lastly, inasmuch as, according to the evidence appellant Lundberg was merely an agent of
his co-appellant, it is obvious that he cannot be held liable to appellee in connection with the
refund of the sum advanced by the latter. 1w ph1.t

WHEREFORE, the appealed judgment is hereby modified by dismissing the complaint as to

V. K. Lundberg; by reducing the judgment in favor of appellee to the sum of P29.85, and by
sentencing him, in turn, to pay appellant Evangelista the sum of P700.00 as attorney's fees".

Plaintiff-appellee Katigbak brought the matter to this Court on appeal by certiorari. In his petition he
claims that the Court of Appeals erroneously applied the doctrine enunciated in the Hanlon v.
Hausserman case (40 Phil. 796, 815-816), and failed to apply the law relative to rescission of
contracts. Other issues raised are strictly factual and will only be mentioned here for reference.

We quote from the Hanlon case:

.... In the present case the contract between Hanlon and the mining company was executory
as to both parties, and the obligation of the company to deliver the shares could not arise
until Hanlon should pay or tender payment of the money. The situation is similar to that
which arises every day in business transactions in which the purchaser of goods upon an
executory contract fails to take delivery and pay the purchase price. The vendor in such case
is entitled to resell the goods. If he is obliged to sell for less than the contract price, he holds
the buyer for the difference; if he sells for as much as or more than the contract price, the
 breach of contract by the original buyer is damnum absque injuria. But it has never been held
that there is any need of an action of rescission to authorize the vendor, who is still in
possession, to dispose of the property where the buyer fails to pay the price and take
delivery... (40 Phil. 815) .

The facts of the case under consideration are identical to those of the Hanlon case. The herein
petitioner failed to take delivery of the winch, subject matter of the contract and such failure or
breach was, according to the Court of Appeals, attributable to him, a fact which We are bound to
accept under existing jurisprudence. The right to resell the equipment, therefore, cannot be disputed.
It was also found by the Court of Appeals that in the subsequent sale of the winch to a third party,
the vendor thereof lost P2,000.00, the sale having been only for P10,000.00, instead of P12,000.00
as agreed upon, said difference to be borne by the supposed vendee who failed to take delivery
and/or to pay the price.

Of course, petitioner tried to draw a distinction between the Hanlon case and his case. The slight
differences in the facts noted by petitioner are not, however, to our mode of thinking, sufficient to
take away the case at bar from the application of the doctrine enunciated in the Hanlon case.

WHEREFORE, the petition is dismissed, and the decision appealed from is affirmed in all respects,
with cost against petitioner.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and De Leon, JJ.,
concur.
Padilla and Dizon, JJ., took no part.