Heirs of Arturo Reyes vs Socco-Beltran

Facts: The subject property in this case is a parcel of land originally identified as Lot
No. 6-B, situated in Zamora Street, Dinalupihan, Bataan, with a total area of 360
square meters. It was originally part of a larger parcel of land, measuring 1,022
square meters, allocated to the Spouses Marcelo Laquian and Constancia Socco
(Spouses Laquian), who paid for the same with Japanese money. When Marcelo
died, the property was left to his wife Constancia. Upon Constancia's subsequent
death, she left the original parcel of land, along with her other property, with her
heirs her siblings, namely: Filomena Eliza Socco, Isabel Socco de Hipolito, Miguel
R. Socco, and Elena Socco-Beltran. 3 Pursuant to an unnotarized document entitled
"Extrajudicial Settlement of the Estate of the Deceased Constancia R. Socco,"
executed by Constancia's heirs sometime in 1965, the parcel of land was partitioned
into three lots Lot No. 6-A, Lot No. 6-B, and Lot No. 6-C. 4 The subject property,
Lot No. 6-B, was adjudicated to respondent, but no title had been issued in her
name.
On 25 June 1998, respondent Elena Socco-Beltran filed an application for the
purchase of Lot No. 6-B before the Department of Agrarian Reform (DAR), alleging
that it was adjudicated in her favor in the extra-judicial settlement of Constancia
Socco's estate. 5 cECTaD
Petitioners herein, the heirs of the late Arturo Reyes, filed their protest to
respondent's petition before the DAR on the ground that the subject property was
sold by respondent's brother, Miguel R. Socco, in favor of their father, Arturo Reyes,
as evidenced by the Contract to Sell, dated 5 September 1954, stipulating that: 6
Petitioners averred that they took physical possession of the subject property in
1954 and had been uninterrupted in their possession of the said property since
then.
Legal Officer Brigida Pinlac of the DAR Bataan Provincial Agrarian Reform Office
conducted an investigation, the results of which were contained in her
Report/Recommendation dated 15 April 1999.
In an Order dated 15 September 1999, DAR Regional Director Nestor R. Acosta,
however, dismissed respondent's petition for issuance of title over the subject
property on the ground that respondent was not an actual tiller and had abandoned
the said property for 40 years; hence, she had already renounced her right to
recover the same.
Respondent filed a Motion for Reconsideration of the foregoing Order, which was
denied by DAR Regional Director Acosta in another Order dated 15 September
1999.12
Respondent then appealed to the Office of the DAR Secretary. In an Order, dated 9
November 2001, the DAR Secretary reversed the Decision of DAR Regional Director
Acosta after finding that neither petitioners' predecessor-in-interest, Arturo Reyes,
nor respondent was an actual occupant of the subject property. However, since it
was respondent who applied to purchase the subject property, she was better

qualified to own said property as opposed to petitioners, who did not at all apply to
purchase the same.
Petitioners' Motion for Reconsideration was likewise denied by the Office of the
President in a Resolution dated 30 September 2004. 17 In the said Resolution, the
Office of the President noted that petitioners failed to allege in their motion the date
when they received the Decision dated 30 June 2003. Such date was material
considering that the petitioners' Motion for Reconsideration was filed only on 14
April 2004, or almost nine months after the promulgation of the decision sought to
be reconsidered. Thus, it ruled that petitioners' Motion for Reconsideration, filed
beyond fifteen days from receipt of the decision to be reconsidered, rendered the
said decision final and executory.
Consequently, petitioners filed an appeal before the Court of Appeals, docketed as
CA-G.R. SP No. 87066. Pending the resolution of this case, the DAR already issued
on 8 July 2005 a Certificate of Land Ownership Award (CLOA) over the subject
property in favor of the respondent's niece and representative, Myrna SoccoBeltran. 18Respondent passed away on 21 March 2001, 19 but the records do not
ascertain the identity of her legal heirs and her legatees.
The Contract to Sell on which petitioners based their claim over the subject property
was executed by Miguel Socco, who was not the owner of the said property and,
therefore, had no right to transfer the same.

ISSUE: W/N petitioners have a better right to the subject property over the
respondent.
HELD: No. Under Article 1459 of the Civil Code on contracts of sale, "The thing must
be licit and the vendor must have a right to transfer ownership thereof at the time it
is delivered." The law specifically requires that the vendor must have ownership of
the property at the time it is delivered. Petitioners claim that the property was
constructively delivered to them in 1954 by virtue of the Contract to Sell. However,
as already pointed out by this Court, it was explicit in the Contract itself that, at the
time it was executed, Miguel R. Socco was not yet the owner of the property and
was only expecting to inherit it. Hence, there was no valid sale from which
ownership of the subject property could have transferred from Miguel Socco to
Arturo Reyes. Without acquiring ownership of the subject property, Arturo Reyes
also could not have conveyed the same to his heirs, herein petitioners

Rudolph Leits, Inc. vs CA

Facts:

Salinas vs Faustino
It appears that respondent Bienvenido S. Faustino (Faustino), by a Deed of Absolute
Sale (Deed of Sale) 1 dated June 27, 1962, purchased from his several co-heirs,
including his first cousins Benjamin Salinas and herein petitioner Dolores Salinas,
their respective shares to a parcel of land covered by Tax Declaration No. 14687, in
the name of their grandmother Carmen Labitan, located in Subic, Zambales, with a
"superficial area of 300.375 square meters [sq. m.] more or less", and with
boundaries "in the North: Carmen Labitan; in the South: Calle, in the East: Callejon
and in the West: Roque Demetrio".
On March 15, 1982, respondent Faustino, joined by his wife, filed before the then
Court of First Instance of Zambales a complaint for recovery of possession with
damages against petitioner, assisted by her husband, docketed as Civil Case No.
3382-0, alleging that the parcel of land he bought via the June 27, 1962 Deed of
Sale from his co-heirs consisted of 1,381 sq. m. and is more particularly described
as follows: ISCTcH
A residential land located at Barrio Matain, Subic, Zambales now know as Lot 3,
Block 5-K, Psd-8268 bounded on the NORTH by Road Lot 1, Block 5-1, PSD-8268; on
the SOUTH by Road Lot 2, Block 5-1, Psd-8268; on the EAST by Road Lot 2, Block 51, Psd-8286; and, on the WEST by the property of Roque Demetrio Lot 2, Block 5-k,
Psd 8268; containing an area of ONE THOUSAND THREE HUNDRED EIGHTY-ONE
(1,381) SQUARE METERS, more or less. Declared for taxation purposes under Tax
Declaration No. 1896 in the name of Spouses Bienvenido S. Faustino and Iluminada
G. Faustino. 2 (Emphasis and underscoring supplied)
Respondent spouses further alleged that they allowed petitioner and co-heirs to
occupy and build a house on a 627 sq. m. portion of the land, particularly described
as follows:
The northeastern portion of the land of the plaintiffs described in Paragraph 2 of this
complaint; bounded on the NORTH by Road Lot 1, Block 5-1, Psd-8268; on the East
by Road Lot 2, Block 5-1, Psd-8268; and on the SOUTH and WEST by the remaining
portion of Lot 5, Block 5-1, PSD-8268 of herein plaintiffs which is the land described
in Paragraph 2 of this complaint owned by the plaintiffs and that this portion in
question has an area of SIX HUNDRED TWENTY-SEVEN (627) SQUARE METERS,
more or less; 3 (Emphasis and underscoring supplied),

on the condition that they would voluntarily and immediately remove the house and
vacate that portion of the land should they (respondents) need the land; and that
when they asked petitioner and her co-heir-occupants to remove the house and
restore the possession of the immediately-described portion of the land, they
refused, hence, the filing of the complaint. SCHIcT
In her Answer, 4 petitioner claimed that she is the owner of a 628 sq. m. lot
covered by Tax Declaration No. 1017 in her name, particularly described as follows:
Salinas V. Faustino
Respondent Bienvenido S. Faustino by a Deed of Absolute Sale dated June 27, 1962,
purchased from his severalco-heirs, including his first cousins Benjamin Salinas and
herein petitioner Dolores Salinas, their respective shares to aparcel of land in
the name of their grandmother Carmen Labitan, located in Subic, Zambales.On
March 15, 1982, respondent Faustino, joined by his wife, filed before the then Court
of First Instance of Zambales a complaint for recovery of possession with damages
against petitioner. Respondent spouses further allegedthat they allowed petitioner
and co-heirs to occupy and build a house on a portion of the land on the condition
that theywould voluntarily and immediately remove the house and vacate that
portion of the land should the respondents need theland. When they asked
petitioner and her co-heir-occupants to remove the house and restore the
possession of theimmediately-described portion of the land, they refused, hence,
the filing of the complaint. Petitioner claimed that she isthe owner of that portion of
the land and alleges that her signature in the June 27, 1962 Deed of Sale is
forged.The RTC found petitioner's claim of forgery unsupported. It nevertheless
dismissed the complaint.The boundaries of the land indicated in the Deed of Sale
are different from that of which is claimed by the respondents.Even the tax
declaration submitted by the plaintiff indicates different boundaries with that of
the land indicated in the Deedof Sale.I
ISSUE:Whether or not a description of a lot area can be used as evidence for
purchase and ownership of the lot.
RULING:In a contract of sale of land in a mass, the specific boundaries stated in the
contract must control over any statementwith respect to the area contained within
its boundaries. Thus, it is the boundaries indicated in a deed of absolute sale, and
notthe area in sq. m. mentioned therein 300.375 sq.m. in the Deed of Sale in
respondents favor that control in the determination of which portion of the land a
vendee acquires.In concluding that Faustino acquired via the June 27, 1962 Deed of
Sale the total land area of 753 sq. m., the Court of Appeals subtracted from the total
land area of 1,381 sq. m. reflected in Exh. A, which is Plan of Lot 3, Block 5-k, Psd8268, asprepared for Benjamin R. Salinas containing an area of 1,381 sq. m. and
which was prepared on February 10, 1960 by a privateland surveyor, the 628 sq. m.
area of the lot claimed by Salinas as reflected in Tax Declaration No. 1017 in her
name. As will beshown shortly,however, the basis of the appellate courts
conclusion is erroneous.As the immediately preceding paragraph reflects, the Plan
of Lot 3, Bk 5-K, Psd-82 was prepared for Spouses Faustinoand Salinas first cousin
co-heir Benjamin Salinas on February 10, 1960. Why the appellate court, after

excluding the 628 sq. m.lot covered by a Tax Declaration in the name of petitioner
from the 1,381 sq. m. lot surveyed for Benjamin P. Salinas in 1960,concluded that
what was sold via the 1962 Deed of Sale to respondent Faustino was the remaining
753 sq. m., despite theclear provision of said Deed of Sale that what was conveyed
was 300.375 sq. m., escapes comprehension. It defieslogic, given that respondents
base their claim of ownership of the questioned 628 sq. m. occupied by Salinas on
that June 27,1962 Deed of Sale covering a 300.375 sq. m. lot.The Court of Appeals
thus doubly erred in concluding that 1) what was sold to respondents via the June
27, 1962 Deedof Sale was the 1,381 sq. m. parcel of land reflected in the Plan-Exh.
A prepared in 1960 for Benjamin Salinas, and 2) Salinasoccupied 628 sq. m. portion
thereof, hence, Spouses Faustino own the remaining 753 sq. m

Asset Privatization Trust vs. T.J. EnterpriseG.R. No. 167195 May 8, 2009

Facts:
Petitioner was a government entity created for the purpose to conserve, to
provisionallymanage and to dispose assets of government institutions. It had
acquired assets consisting ofmachinery and refrigeration equipment stored at the
Golden City compound which was leased toand in the physical possession of
Creative Lines, Inc., (Creative Lines). These assets were beingsold on an as-iswhere-is basis.Petitioner and respondent entered into an absolute deed of sale over
certain machineryand refrigeration equipment wherein respondent paid the
full amount as evidenced bypetitioners receipt. After two (2) days, respondent
demanded the delivery of the machinery ithad purchased. Petitioner issued a Gate
Pass to respondent to enable them to pull out from thecompound the properties
designated ; however, during the hauling of Lot No. 2 consisting ofsixteen (16)
items, only nine (9) items were pulled out by respondent. Respondent filed
acomplaint for specific performance and damages against petitioner and Creative
Lines. Uponinspection of the remaining items, they found the machinery and
equipment damaged and hadmissing parts. Petitioner claimed that there was
already a constructive delivery of the machineryand equipment upon the execution
of the deed of sale it had complied with its obligation todeliver the object of the sale
since there was no stipulation to the contrary and it was the duty ofrespondent to
take possession of the property.The RTC ruled that petitioner is liable for breach of
contract and should pay for the actualdamages suffered by respondent. It found
that at the time of the sale, petitioner did not havecontrol over the machinery and

equipment and, thus, could not have transferred ownership byconstructive delivery.
The Court of Appeals affirmed the judgment; hence, this petition.
Issue:Whether or not the petitioner had complied with its obligations to make
delivery of the properties and failure to make actual delivery of the properties was
not attributable was beyond the control of petitioner.
Held:No. There was no constructive delivery of the machinery and equipment
upon theexecution of the deed of absolute sale or upon the issuance of the gate
pass since it was not thepetitioner but Creative Lines which had actual possession
of the property. The presumption ofconstructive delivery is not applicable as it has
to yield to the reality that the purchaser was notplaced in possession and control of
the property.Petitioner also claims that its failure to make actual delivery was
beyond its control. Itposits that the refusal of Creative Lines to allow the hauling of
the machinery and equipment wasunforeseen and constituted a fortuitous event.
The matter of fortuitous events is governed by Ar1174 of the Civil Code which
provides that except in cases expressly specified by the law, orwhen it is otherwise
declared by stipulation, or when the nature of the obligation requiresassumption of
risk, no person shall be responsible for those events which could not be foreseen,or
which though foreseen, were inevitable. A fortuitous event may either be an act of
God, ornatural occurrences such as floods or typhoons, or an act of man such as
riots, strikes or wars.However, when the loss is found to be partly the result of a
persons participation whether byactive intervention, neglect or failure to act, the
whole occurrence is humanized and removedfrom the rules applicable to a
fortuitous event. Thus, the risk of loss or deterioration of propertyis borne by
petitioner. Thus, it should be liable for the damages that may arise from the delay
Board of Liquidators vs Exequiel Floro

Facts:
Melencio Malabanan entered into an agreement with the Board of Liquidators for
the salvage of surplus properties sunk in certain waters. They agreed that
Malabanan was assigned the right, title and interest in and to all the surplus
properties salvaged, and shall therefore pay the Government for such which shall be
made monthly. Subsequently, Malabanan filed in the CFI a petition for voluntary
insolvency which listed the Board and Exequiel Floro as creditors; as well as several
pieces of steel mattings obtained from the waters. The Board claimed that they are
the owners of the steel mattings. Floro opposed this and contended that such steel
mattings are owned by Eulalio Legaspi by virtue of a deed of sale executed in his
favor, executed by Floro pursuant to a previous contract between Malabanan and
Floro. The CFI declared Malabanan as the owner of the steel mattings under his
contract with the board, thus, Floro was properly authorized to dispose of the
mattings (sale to Legaspi). The Board contends that Malabanan did not acquire
ownership over the steel mattings for failure to comply with certain terms of the
contract, allegedly constituting conditions precedent for the transfer of title.

Issue:
WON , based on the contract between Malabanan and the Board, delivery of the
surplus properties salvaged (steel mattings)were never intended to be delivered to
Malabanan.

Held: There is nothing in the terms of the public instrument in question from which
an intent to withhold delivery or transfer of title may be inferred.

While there can be reservation of title in the seller until full payment of the price
(Article 1478, N.C.C.), or, until fulfillment of a condition (Article 1505, N.C.C.); and
while execution of a public instrument amounts to delivery only when from the deed
the contrary does not appear or cannot clearly be inferred (Article 1498, supra),
there is nothing in the said contract which may be deemed a reservation of title, or
from which it may clearly be inferred that delivery was not intended.

The contention that there was no delivery is incorrect. While there was no physical
tradition, there was one by agreement (traditio longa manu) in conformity with
Article 1499 of the Civil Code.lawphil.net

Art. 1499 The delivery of movable property may likewise be made by the mere
consent or agreement of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time of the sale .

Abuan vs. Garcia

Facts:
Laureano Abuan acquired a homestead which was passed to his heirs (plaintiffs)
after his death. Plaintiffs then sold the parcel of land to Defendants, evidenced by a
deed of absolute sale, thus a TCT was issued to defendants on Aug 7, 1953.
Plaintiffs then filed an action to recover the land, alleging that the deed of absolute
sale had been executed through fraud, without consideration. But such was settled
amicably (that defendants would pay for the land). Claiming that full payment of the
land was made by the defendants only after the agreed time, plaintiffs filed an
action for legal redemption on Mar 4, 1960. Defendants moved to dismiss on the
ground that plaintiffs right of action was already barred because the 5-year
redemption period had already expired. The court sustained the defendants
motion, thus dismissed the complaint.

Issue:

When should the 5-year period within which plaintiffs can exercise their right of
repurchase begin to run?

Held:

The 5-yr period should begin to run from the date the defendants acquired
ownership of the land which was upon the execution of the deed of sale on Aug 7,
1953. *

But assuming that the deed of absolute sale was null and void, the date of the
Agreement can be considered as the time within which the ownership is vested in
the defendants. Such agreement may be a private instrument the execution of
which could not be construed as constructive delivery under Art. 1498 of the New
Civil Code. But Art. 1496 explicitly provides that ownership of the thing sold is
acquired by the vendee from the moment it is delivered to him in any other
manner signifying an agreement that the possession is transferred from the vendor
to the vendee. The intention to give possession (and ownership) is manifest in the
agreement entered into by the parties, specially considering the following
circumstances: (1) the payment of part of the purchase price, there being no
stipulation in the agreement that ownership will not vest in the vendees until full
payment of the price; and (2) the fact that the agreement was entered into in
consideration of plaintiffs desistance, as in fact they did desist, in prosecuting their
reivindicatory action, thereby leaving the property in the hands of the then and now
defendants as owners thereof, necessarily. This was delivery brevi manu
permissible under Articles 1499 and 1501 of the New Civil Code.

* Ratio: Art. 1477 of the New Civil Code provides that ownership of the thing sold
shall be transferred to the vendee upon the actual or constructive delivery thereof;
and Art. 1496 points out that ownership of the thing sold is acquired by the vendee
from the moment it is delivered to him in any of the ways specified in articles 1497
to 1501. Under Art. 1498, When the sale is made through a public instrument as
in this case the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does not appear or
cannot be clearly inferred. This manner of delivery of the thing through the

execution of a public document is common to personal as well as real property.

Thus, the 5-year period had already elapsed when plaintiffs filed the action for legal
redemption on Mar 4, 1960.
CRB vs. CA and HEIRS OF DELA CRUZ
NOVEMBER 11, 2010 ~ VBDIAZ
CRB vs. CA and HEIRS OF DELA CRUZ

G.R. No. 132161

January 17, 2005

FACTS: The Madrid brothers were the registered owners of Lot A situated in Isabela.

Said lot was subdivided into several lots. Rizal Madrid sold part of his share
identified lot A-7 to Gamiao and Dayag by virtue of a Deed of Sale, to which his
brothers offered no objection as evidenced by their Joint Affidavit .The deed of sale
was not registered with the ORD of Isabela. However, Gamiao and Dayag declared
the property in their names on a Tax Declaration.

Gamiao and Dayag sold the subject southern half of lot to Teodoro dela Cruz, and
the northern half to Hernandez. Thereupon, Teodoro dela Cruz and Hernandez took
possession of and cultivated the portions of the property respectively sold to them
(Later Restituto Hernandez donated the northern half to his daughter. The children
of Teodoro dela Cruz continued possession of the southern half after their fathers
death.)

In a Deed of Sale the Madrid brothers conveyed all their rights and interests over lot
A-7 to Marquez which the former confirmed. The deed of sale was registered with
the ORD of Isabela.

Subsequently, Marquez subdivided lot A-7 into eight (8) lots. On the same date,
Marquez and his spouse, Mercedita Mariana, mortgaged 4 lots to the Consolidated
Rural Bank, Inc. of Cagayan Valley (hereafter, CRB) to secure a loan. These deeds of
real estate mortgage were registered with the ORD.

As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of the
mortgages in its favor and the lots were sold to it as the highest bidder.

The Heirs-now respondents filed a case for reconveyance and damages for the
southern portion of Lot No. 7036-A (hereafter, the subject property) against Marquez
and CRB.

The RTC handed down a decision in favor of Marquez. The Heirs interposed an
appeal with the CA, which upheld the claim of the Heirs. Hence, the instant CRB
petition.

ISSUE: WON Art. 1544 of the Civil Code (double sale) applicable in this case

HELD: NO.

The petition is denied, and the decision as modified is affirmed. Like the lower court,
the appellate court resolved the present controversy by applying the rule on double
sale provided in Article 1544 of the Civil Code. They, however, arrived at different
conclusions. The RTC made CRB and the other defendants win, while the Court of
Appeals decided the case in favor of the Heirs.

Article 1544 of the Civil Code reads, thus:

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 possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.

The provision is not applicable in the present case. It contemplates a case of double
or multiple sales by a single vendor. It cannot be invoked where the two different
contracts of sale are made by two different persons, one of them not being the
owner of the property sold. And even if the sale was made by the same person, if
the second sale was made when such person was no longer the owner of the
property, because it had been acquired by the first purchaser in full dominion, the
second purchaser cannot acquire any right.

In the case at bar, the subject property was not transferred to several purchasers by
a single vendor. In the first deed of sale, the vendors were Gamiao and Dayag
whose right to the subject property originated from their acquisition thereof from
Rizal Madrid with the conformity of all the other Madrid brothers. On the other hand,
the vendors in the other or later deed were the Madrid brothers but at that time
they were no longer the owners since they had long before disposed of the property
in favor of Gamiao and Dayag.

In a situation where not all the requisites are present which would warrant the
application of Art. 1544, the principle of prior tempore, potior jure or simply he who
is first in time is preferred in right, should apply. The only essential requisite of this
rule is priority in time; in other words, the only one who can invoke this is the first
vendee. Undisputedly, he is a purchaser in good faith because at the time he
bought the real property, there was still no sale to a second vendee. In the instant
case, the sale to the Heirs by Gamiao and Dayag, who first bought it from Rizal
Madrid, was anterior to the sale by the Madrid brothers to Marquez. The Heirs also
had possessed the subject property first in time. Thus, applying the principle, the
Heirs, without a scintilla of doubt, have a superior right to the subject property.

Moreover, it is an established principle that no one can give what one does not
havenemo dat quod non habet. Accordingly, one can sell only what one owns or is
authorized to sell, and the buyer can acquire no more than what the seller can
transfer legally.53 In this case, since the Madrid brothers were no longer the owners
of the subject property at the time of the sale to Marquez, the latter did not acquire
any right to it.

MARTINEZ vs CA

Facts:Private respondents Godofredo De la Paz and his sister Manuela De la Paz

entered into an oralcontract with petitioner Rev. Fr. Dante Martinez, then Assistant
parish priest of Cabanatuan City, for the sale of Lot No. 1337-A-3 at the Villa Fe
Subdivision in Cabanatuan City for the sum of P15,000.00. At the time of the sale,
the lot was still registered in the name of Claudia De la Paz,mother of private
respondents, although the latter had already sold it to private respondent
Manuelade la Paz by virtue of a Deed of Absolute Sale dated. He was assured by
them that the lot belongedto Manuela De la Paz. It was agreed that petitioner would
give a downpayment of P3,000.00 toprivate respondents De la Paz and that the
balance would be payable by installment. After giving theP3,000.00

downpayment, petitioner started the construction of a house on the lot and began
payingthe real estate taxes on said property.In the meantime, in a Deed of. Absolute
Sale with Right to Repurchase, private respondents De laPaz sold three lots with
right to repurchase the same within one year to private respondents
spousesReynaldo and Susan Veneracion for the sum of P150,000.00. One of the lots
sold was the lotpreviously sold to petitioner. Petitioner discovered that the lot he
was occupying with his family hadbeen sold to the spouses Veneracion after
receiving a letter from private respondent ReynaldoVeneracion claiming ownership
of the land and demanding that they vacate the property and removetheir
improvements thereon.
16
Petitioner, in turn, demanded through counsel the execution of thedeed of sale from
private respondents De la Paz and informed Reynaldo Veneracion that he was
theowner of the property as he had previously purchased the same from private
respondents De la Paz.
ISSUE:Whether or not private respondents Veneracion are buyers in good faith of
the lot in dispute as tomake them the absolute owners thereof in accordance with
Art. 1544 of the Civil Code on doublesale of immovable property.
HELD:No. The deed of sale executed by private respondents Godofredo and Manuela
De la Paz in favor of private respondents spouses Reynaldo and Susan Veneracion is
null and void.In this case, the Court of Appeals based its ruling that private
respondents Veneracion are theowners of the disputed lot on their reliance on
private respondent Godofredo De la Paz's assurancethat he would take care of the
matter concerning petitioner's occupancy of the disputed lot asconstituting good
faith. This case, however, involves double sale and, on this matter, Art. 1544 of
theCivil Code provides that where immovable property is the subject of a double
sale, ownership shallbe transferred (1) to the person acquiring it who in good faith
first recorded it to the Registry of Property; (2) in default thereof, to the person who
in good faith was first in possession; and (3) indefault thereof, to the person who
presents the oldest title.
26

The requirement of the law, where titleto the property is recorded in the Register of
Deeds, is two-fold: acquisition in good faith and recording in good faith. To be
entitled to priority, the second purchaser must not only prove prior

recording of his title but that he acted in good faith,

i.e.,
without knowledge or notice of a prior sale toanother. The presence of good faith
should be ascertained from the circumstances surrounding thepurchase of the
land.1. With regard to the first sale to private respondents Veneracion, private
respondent ReynaldoVeneracion testified that on October 10, 1981, 18 days before
the execution of the first Deedof Sale with Right to Repurchase, he inspected the
premises and found it vacant.
However,this is belied by the testimony of Engr. Felix D. Minor, then building
inspector of theDepartment of Public Works and Highways, that he conducted on
October 6, 1981 an ocular inspection of the lot in dispute in the performance of his
duties as a building inspector tomonitor the progress of the construction of the
building subject of the building permit issuedin favor of petitioner on April 23, 1981,
and that he found it 100 % completed. In the absenceof contrary evidence, he is to
be presumed to have regularly performed his official duty.Thus,as early as October,
1981, private respondents Veneracion already knew that there wasconstruction
being made on the property they purchased.2. With regard to the second sale,
which is the true contract of sale between the parties, itshould be noted that this
Court in several cases,
35
has ruled that a purchaser who is aware of facts which should put a reasonable man
upon his guard cannot turn a blind eye and later claim that he acted in good faith.
Private respondent Reynaldo himself admitted during thepre-trial conference in the
MTC in Civil Case that petitioner was already in possession of theproperty in dispute
at the time the second Deed of Sale was executed on June 1, 1983 andregistered on
March 4, 1984. He, therefore, knew that there were already occupants on
theproperty as early as 1981. The fact that there are persons, other than the
vendors, in actualpossession of the disputed lot should have put private
respondents on inquiry as to thenature of petitioner's right over the property. But he
never talked to petitioner to verify thenature of his right. He merely relied on the
assurance of private respondent Godofredo De laPaz, who was not even the owner
of the lot in question, that he would take care of thematter. This does not meet the
standard of good faith.3. The first contract of sale between the private respondents
shows that it is in fact anequitable mortgage. The requisites for considering a
contract of sale with a right of repurchase as an equitable mortgage are (1) that the
parties entered into a contractdenominated as a contract of sale and (2) that their
intention was to secure an existing debtby way of mortgage.A contract of sale with

right to repurchase gives rise to the presumptionthat it is an equitable mortgage in

any of the following cases: (1) when the price of a sale witha right to repurchase is
unusually inadequate; (2) when the vendor remains in possession aslessee or
otherwise; (3) when, upon or after the expiration of the right to repurchase, another
instrument extending the period of redemption or granting a new period is
executed; (4)when the purchaser retains for himself a part of the purchase price; (5)
when the vendor binds himself to pay the taxes on the thing sold; (6) in any other
case where it may be fairlyinferred that the real intention of the parties is that the
transaction shall secure the paymentof a debt or the performance of any other
obligation.In case of doubt, a contract purporting tobe a sale with right to
repurchase shall be construed as an equitable mortgage.

In this case,the following circumstances indicate that the private respondents

intended the transaction tobe an equitable mortgage and not a contract of sale: (1)
Private respondents Veneracionnever took actual possession of the three lots; (2)
Private respondents De la Paz remained inpossession of the Melencio lot which was
co-owned by them and where they resided; (3)During the period between the first
sale and the second sale to private respondentsVeneracion, they never made any
effort to take possession of the properties; and (4) whenthe period of redemption
had expired and private respondents Veneracion were informed bythe De la Pazes
that they are offering the lots for sale to another person for P200,000.00,they never
objected. To the contrary, they offered to purchase the two lots for
P180,000.00when they found that a certain Mr. Tecson was prepared to purchase it
for the same amount.Thus, it is clear from these circumstances that both private
respondents never intended the

first sale to be a contract of sale, but merely that of mortgage to secure a debt of
P150,000.00.