1
The Facts
[G.R. No. 151212. September 10, 2003]
TEN FORTY REALTY AND DEVELOPMENT CORP., Represented by its
President, VERONICA G. LORENZANA, petitioner, vs. MARINA
CRUZ, respondent.
DECISION
PANGANIBAN, J.:
In an ejectment suit, the question of ownership may be provisionally ruled
upon for the sole purpose of determining who is entitled to possession de
facto. In the present case, both parties base their alleged right to possess on
their right to own. Hence, the Court of Appeals did not err in passing upon the
question of ownership to be able to decide who was entitled to physical
possession of the disputed land.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court,
seeking to nullify the August 31, 2001 Decision[2] and December 19, 2001
Resolution[3] of the Court of Appeals (CA) in CA- GR SP No. 64861. The
dispositive portion of the assailed Decision is as follows:
WHEREFORE, premises considered, the petition is hereby DISMISSED and
the Decision dated May 4, 2001 is hereby AFFIRMED.[4]
The assailed Resolution denied petitioner's Motion for Reconsideration.
The facts of the case are narrated by the CA as follows:
A complaint for ejectment was filed by [Petitioner Ten Forty Realty and
Development Corporation] against x x x [Respondent Marina Cruz] before the
Municipal Trial Court in Cities (MTCC) of Olongapo City, docketed as Civil
Case 4269, which alleged that: petitioner is the true and absolute owner of a
parcel of lot and residential house situated in #71 18th Street, E.B.B.
Olongapo City, particularly described as:
A parcel of residential house and lot situated in the above-mentioned address
containing an area of 324 square meters more or less bounded on the
Northeast by 041 (Lot 255, Ts-308); on the Southeast by 044 (Lot 255, Ts-
308); on the Southwest by 043 (Lot 226-A & 18th street) and on the Northwest
by 045 (Lot 227, Ts-308) and declared for taxation purposes in the name of
[petitioner] under T.D. No. 002-4595-R and 002-4596.
having acquired the same on December 5, 1996 from Barbara Galino by virtue
of a Deed of Absolute Sale; the sale was acknowledged by said Barbara
Galino through a 'Katunayan'; payment of the capital gains tax for the transfer
of the property was evidenced by a Certification Authorizing Registration
issued by the Bureau of Internal Revenue; petitioner came to know that
Barbara Galino sold the same property on April 24, 1998 to Cruz, who
immediately occupied the property and which occupation was merely tolerated
by petitioner; on October 16, 1998, a complaint for ejectment was filed with the
Barangay East Bajac-Bajac, Olongapo City but for failure to arrive at an
amicable settlement, a Certificate to File Action was issued; on April 12, 1999
a demand letter was sent to [respondent] to vacate and pay reasonable
amount for the use and occupation of the same, but was ignored by the latter;
and due to the refusal of [respondent] to vacate the premises, petitioner was
constrained to secure the services of a counsel for an agreed fee of P5,000.00
as attorneys fee and P500.00 as appearance fee and incurred an expense
of P5,000.00 for litigation.
 2
In respondents Answer with Counterclaim, it was alleged that: petitioner is not
qualified to own the residential lot in dispute, being a public land; according to
Barbara Galino, she did not sell her house and lot to petitioner but merely
obtained a loan from Veronica Lorenzana; the payment of the capital gains tax
does not necessarily show that the Deed of Absolute Sale was at that time
already in existence; the court has no jurisdiction over the subject matter
because the complaint was filed beyond the one (1) year period after the
alleged unlawful deprivation of possession; there is no allegation that
petitioner had been in prior possession of the premises and the same was lost
thru force, stealth or violence; evidence will show that it was Barbara Galino
who was in possession at the time of the sale and vacated the property in
favor of respondent; never was there an occasion when petitioner occupied a
portion of the premises, before respondent occupied the lot in April 1998, she
caused the cancellation of the tax declaration in the name of Barbara Galino
and a new one issued in respondents name; petitioner obtained its tax
declaration over the same property on November 3, 1998, seven (7) months
[after] the respondent [obtained hers]; at the time the house and lot [were]
bought by respondent, the house was not habitable, the power and water
connections were disconnected; being a public land, respondent filed a
miscellaneous sales application with the Community Environment and Natural
Resources Office in Olongapo City; and the action for ejectment cannot
succeed where it appears that respondent had been in possession of the
property prior to the petitioner.[5]
In a Decision[6] dated October 30, 2000, the Municipal Trial Court in Cities
(MTCC) ordered respondent to vacate the property and surrender to petitioner
possession thereof. It also directed her to pay, as damages for its continued
unlawful use, P500 a month from April 24, 1999 until the property was
vacated, P5,000 as attorneys fees, and the costs of the suit.
On appeal, the Regional Trial Court[7] (RTC) of Olongapo City (Branch
72) reversed the MTCC. The RTC ruled as follows: 1) respondents entry into
the property was not by mere tolerance of petitioner, but by virtue of a Waiver
and Transfer of Possessory Rights and Deed of Sale in her favor; 2) the
execution of the Deed of Sale without actual transfer of the physical
possession did not have the effect of making petitioner the owner of the
property, because there was no delivery of the object of the sale as provided
for in Article 1428 of the Civil Code; and 3) being a corporation, petitioner was
disqualified from acquiring the property, which was public land.
Ruling of the Court of Appeals
Sustaining the RTC, the CA held that petitioner had failed to make a case
for unlawful detainer, because no contract -- express or implied -- had been
entered into by the parties with regard to possession of the property. It ruled
that the action should have been for forcible entry, in which prior physical
possession was indispensable -- a circumstance petitioner had not shown
either.
The appellate court also held that petitioner had challenged the RTCs
ruling on the question of ownership for the purpose of compensating for the
latters failure to counter such ruling. The RTC had held that, as a corporation,
petitioner had no right to acquire the property which was alienable public land.
Hence, this Petition.[8]
Issues
Petitioner submits the following issues for our consideration:
1. The Honorable Court of Appeals had clearly erred in not holding
that [r]espondents occupation or possession of the property in
question was merely through the tolerance or permission of
the herein [p]etitioner;
[2.] The Honorable Court of Appeals had likewise erred in holding
that the ejectment case should have been a forcible entry
case where prior physical possession is indispensable; and
[3.] The Honorable Court of Appeals had also erred when it ruled
that the herein [r]espondents possession or occupation of the
 3
said property is in the nature of an exercise of ownership
which should put the herein [p]etitioner on guard.[9]
The Courts Ruling
The Petition has no merit.
First Issue:
Alleged Occupation by Tolerance
Petitioner faults the CA for not holding that the former merely tolerated
respondents occupation of the subject property. By raising this issue,
petitioner is in effect asking this Court to reassess factual findings. As a
general rule, this kind of reassessment cannot be done through a petition for
review on certiorari under Rule 45 of the Rules of Court, because this Court is
not a trier of facts; it reviews only questions of law.[10] Petitioner has not given
us ample reasons to depart from the general rule.
On the basis of the facts found by the CA and the RTC, we find that
petitioner failed to substantiate its case for unlawful detainer. Admittedly, no
express contract existed between the parties. Not shown either was the
corporations alleged tolerance of respondents possession.
While possession by tolerance may initially be lawful, it ceases to be so
upon the owners demand that the possessor by tolerance vacate the
property.[11] To justify an action for unlawful detainer, the permission or
tolerance must have been present at the beginning of the
possession.[12] Otherwise, if the possession was unlawful from the start, an
action for unlawful detainer would be an improper remedy. Sarona v.
Villegas[13] elucidates thus:
A close assessment of the law and the concept of the word tolerance confirms
our view heretofore expressed that such tolerance must be present right from
the start of possession sought to be recovered, to categorize a cause of action
as one of unlawful detainer not of forcible entry. Indeed, to hold otherwise
would espouse a dangerous doctrine. And for two reasons. First. Forcible
entry into the land is an open challenge to the right of the possessor. Violation
of that right authorizes the speedy redress in the inferior court provided for in
the rules. If one year from the forcible entry is allowed to lapse before suit is
filed, then the remedy ceases to be speedy; and the possessor is deemed to
have waived his right to seek relief in the inferior court. Second, if a forcible
entry action in the inferior court is allowed after the lapse of a number of years,
then the result may well be that no action for forcible entry can really
prescribe. No matter how long such defendant is in physical possession,
plaintiff will merely make a demand, bring suit in the inferior court upon a plea
of tolerance to prevent prescription to set in and summarily throw him out of
the land. Such a conclusion is unreasonable. Especially if we bear in mind the
postulates that proceedings of forcible entry and unlawful detainer are
summary in nature, and that the one year time bar to suit is but in pursuance
of the summary nature of the action.[14]
In this case, the Complaint and the other pleadings do not recite
any averment of fact that would substantiate the claim of petitioner that it
permitted or tolerated the occupation of the property by Respondent Cruz. The
Complaint contains only bare allegations that 1) respondent immediately
occupied the subject property after its sale to her, an action merely tolerated
by petitioner;[15] and 2) her allegedly illegal occupation of the premises was by
mere tolerance.[16]
These allegations contradict, rather than support, petitioners theory that
its cause of action is for unlawful detainer. First, these arguments advance the
view that respondents occupation of the property was unlawful at its
inception. Second, they counter the essential requirement in unlawful detainer
cases that petitioners supposed act of sufferance or tolerance must be present
right from the start of a possession that is later sought to be recovered.[17]
As the bare allegation of petitioners tolerance of respondents occupation
of the premises has not been proven, the possession should be deemed
illegal from the beginning. Thus, the CA correctly ruled that the ejectment case
should have been for forcible entry -- an action that had already prescribed,
however, when the Complaint was filed on May 12, 1999. The prescriptive
 4
period of one year for forcible entry cases is reckoned from the date of
respondents actual entry into the land, which in this case was on April 24,
1998.
Second Issue:
Nature of the Case
Much of the difficulty in the present controversy stems from the legal
characterization of the ejectment Complaint filed by petitioner. Specifically,
was it for unlawful detainer or for forcible entry?
The answer is given in Section 1 of Rule 70 of the Rules of Court, which
we reproduce as follows:
SECTION 1. Who may institute proceedings, and when. - Subject to the
provisions of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express
or implied, or the legal representatives or assigns of any such lessor, vendor,
vendee, or other person, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring an action in the proper
Municipal Trial Court against the person or persons unlawfully withholding or
depriving of possession, or any person or persons claiming under them, for
the restitution of such possession, together with damages and costs.
While both causes of action deal only with the sole issue of physical or de
facto possession,[18] the two cases are really separate and distinct, as
explained below:
x x x. In forcible entry, one is deprived of physical possession of land or
building by means of force, intimidation, threat, strategy, or stealth. In unlawful
detainer, one unlawfully withholds possession thereof after the expiration or
termination of his right to hold possession under any contract, express or
implied. In forcible entry, the possession is illegal from the beginning and the
basic inquiry centers on who has the prior possession de facto. In unlawful
detainer, the possession was originally lawful but became unlawful by the
expiration or termination of the right to possess, hence the issue of rightful
possession is decisive for, in such action, the defendant is in actual
possession and the plaintiffs cause of action is the termination of the
defendants right to continue in possession.
What determines the cause of action is the nature of defendants entry into the
land. If the entry is illegal, then the action which may be filed against the
intruder within one year therefrom is forcible entry. If, on the other hand, the
entry is legal but the possession thereafter became illegal, the case is one of
unlawful detainer which must be filed within one year from the date of the last
demand.[19]
It is axiomatic that what determines the nature of an action as well as
which court has jurisdiction over it are the allegations in the complaint [20] and
the character of the relief sought.[21]
In its Complaint, petitioner alleged that, having acquired the subject
property from Barbara Galino on December 5, 1996,[22] it was the true and
absolute owner[23] thereof; that Galino had sold the property to Respondent
Cruz on April 24, 1998;[24] that after the sale, the latter immediately occupied
the property, an action that was merely tolerated by petitioner; [25] and that, in a
letter given to respondent on April 12, 1999,[26] petitioner had demanded that
the former vacate the property, but that she refused to do so. [27] Petitioner
thereupon prayed for judgment ordering her to vacate the property and to pay
reasonable rentals for the use of the premises, attorneys fees and the costs of
the suit.[28]
The above allegations appeared to show the elements of unlawful
detainer. They also conferred initiatory jurisdiction on the MTCC, because the
case was filed a month after the last demand to vacate -- hence, within the
one-year prescriptive period.
However, what was actually proven by petitioner was that possession by
respondent had been illegal from the beginning. While the Complaint was
crafted to be an unlawful detainer suit, petitioners real cause of action was for
 5
forcible entry, which had already prescribed. Consequently, the MTCC had no
more jurisdiction over the action.
The appellate court, therefore, did not err when it ruled that petitioners
Complaint for unlawful detainer was a mere subterfuge or a disguised
substitute action for forcible entry, which had already prescribed. To repeat, to
maintain a viable action for forcible entry, plaintiff must have been in prior
physical possession of the property; this is an essential element of the suit.[29]
Third Issue:
Alleged Acts of Ownership
Petitioner next questions the CAs pronouncement that respondents
occupation of the property was an exercise of a right flowing from a claim of
ownership. It submits that the appellate court should not have passed upon
the issue of ownership, because the only question for resolution in an
ejectment suit is that of possession de facto.
Clearly, each of the parties claimed the right to possess the disputed
property because of alleged ownership of it. Hence, no error could have been
imputed to the appellate court when it passed upon the issue of ownership
only for the purpose of resolving the issue of possession de facto.[30] The CAs
holding is moreover in accord with jurisprudence and the law.
Execution of a Deed of Sale
Not Sufficient as Delivery
In a contract of sale, the buyer acquires the thing sold only upon its
delivery in any of the ways specified in Articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the
vendor to the vendee.[31] With respect to incorporeal property, Article 1498
lays down the general rule: the execution of a public instrument shall be
equivalent to the delivery of the thing that is the object of the contract if, from
the deed, the contrary does not appear or cannot be clearly inferred.
However, ownership is transferred not by contract but by tradition or
delivery.[32] Nowhere in the Civil Code is it provided that the execution of a
Deed of Sale is a conclusivepresumption of delivery of possession of a piece
of real estate.[33]
This Court has held that the execution of a public instrument gives rise
only to a prima facie presumption of delivery. Such presumption is destroyed
when the delivery is not effected because of a legal impediment. [34] Pasagui v.
Villablanca[35] had earlier ruled that such constructive or symbolic delivery,
being merely presumptive, was deemed negated by the failure of the vendee
to take actual possession of the land sold.
It is undisputed that petitioner did not occupy the property from the time it
was allegedly sold to it on December 5, 1996 or at any time thereafter.
Nonetheless, it maintains that Galinos continued stay in the premises from the
time of the sale up to the time respondents occupation of the same on April
24, 1998, was possession held on its behalf and had the effect of delivery
under the law.[36]
Both the RTC and the CA disagreed. According to the RTC, petitioner did
not gain control and possession of the property, because Galino had
continued to exercise ownership rights over the realty. That is, she had
remained in possession, continued to declare it as her property for tax
purposes and sold it to respondent in 1998.
For its part, the CA found it highly unbelievable that petitioner -- which
claims to be the owner of the disputed property -- would tolerate possession of
the property by respondent from April 24, 1998 up to October 16, 1998. How
could it have been so tolerant despite its knowledge that the property had
been sold to her, and that it was by virtue of that sale that she had undertaken
major repairs and improvements on it?
Petitioner should have likewise been put on guard by respondents
declaration of the property for tax purposes on April 23, 1998, [37] as annotated
in the tax certificate filed sevenmonths later.[38] Verily, the tax declaration
represented an adverse claim over the unregistered property and was inimical
to the right of petitioner.
 6
Indeed, the above circumstances derogated its claim of control and
possession of the property.
Order of Preference in Double
Sale of Immovable Property
The ownership of immovable property sold to two different buyers at
different times is governed by Article 1544 of the Civil Code, which reads as
follows:
Article 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.
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.
Galino allegedly sold the property in question to petitioner on December
5, 1996 and, subsequently, to respondent on April 24, 1998. Petitioner thus
argues that being the first buyer, it has a better right to own the
realty. However, it has not been able to establish that its Deed of Sale was
recorded in the Registry of Deeds of Olongapo City.[39] Its claim of an
unattested and unverified notation on its Deed of Absolute Sale [40] is not
equivalent to registration. It admits that, indeed, the sale has not been
recorded in the Registry of Deeds.[41]
In the absence of the required inscription, the law gives preferential right
to the buyer who in good faith is first in possession. In determining the
question of who is first in possession, certain basic parameters have been
established by jurisprudence.
First, the possession mentioned in Article 1544 includes not only material
but also symbolic possession.[42] Second, possessors in good faith are those
who are not aware of any flaw in their title or mode of acquisition.[43] Third,
buyers of real property that is in the possession of persons other than the
seller must be wary -- they must investigate the rights of the
possessors.[44] Fourth, good faith is always presumed; upon those who allege
bad faith on the part of the possessors rests the burden of proof.[45]
Earlier, we ruled that the subject property had not been delivered to
petitioner; hence, it did not acquire possession either materially or
symbolically. As between the two buyers, therefore, respondent was first in
actual possession of the property.
Petitioner has not proven that respondent was aware that her mode of
acquiring the property was defective at the time she acquired it from Galino. At
the time, the property -- which was public land -- had not been registered in
the name of Galino; thus, respondent relied on the tax declarations
thereon. As shown, the formers name appeared on the tax declarations for the
property until its sale to the latter in 1998. Galino was in fact occupying the
realty when respondent took over possession. Thus, there was no
circumstance that could have placed the latter upon inquiry or required her to
further investigate petitioners right of ownership.
Disqualification from Ownership
of Alienable Public Land
Private corporations are disqualified from acquiring lands of the public
domain, as provided under Section 3 of Article XII of the Constitution, which
we quote:
Sec. 3. Lands of the public domain are classified into agricultural, forest or
timber, mineral lands, and national parks. Agricultural lands of the public
domain may be further classified by law according to the uses to which they
may be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, and not to exceed one thousand hectares in
 7
area. Citizens of the Philippines may not lease not more than five hundred
hectares, or acquire not more than twelve hectares thereof by purchase,
homestead, or grant. x x x. (Italics supplied)
While corporations cannot acquire land of the public domain, they can
however acquire private land.[46] Hence, the next issue that needs to be
resolved is the determination of whether the disputed property is private land
or of the public domain.
According to the certification by the City Planning and Development
Office of Olongapo City, the contested property in this case is alienable and
disposable public land.[47] It was for this reason that respondent filed a
miscellaneous sales application to acquire it.[48]
On the other hand, petitioner has not presented proof that, at the time it
purchased the property from Galino, the property had ceased to be of the
public domain and was already private land. The established rule is that
alienable and disposable land of the public domain held and occupied by a
possessor -- personally or through predecessors-in-interest, openly,
continuously, and exclusively for 30 years -- is ipso jure converted to private
property by the mere lapse of time.[49]
In view of the foregoing, we affirm the appellate courts ruling that
respondent is entitled to possession de facto. This determination, however, is
only provisional in nature.[50] Well-settled is the rule that an award of
possession de facto over a piece of property does not constitute res
judicata as to the issue of its ownership.[51]
WHEREFORE, this Petition is DENIED and the assailed
Decision AFFIRMED. Costs against petitioner.
SO ORDERED.
Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
Puno, (Chairman), on official leave.
G.R. No. L-29972 January 26, 1976
ROSARIO CARBONELL, petitioner,
vs.
HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA INFANTE and
RAMON INFANTE, respondents.
MAKASIAR, J.
Petitioner seeks a review of the resolution of the Court of Appeals (Special
Division of Five) dated October 30, 1968, reversing its decision of November
2, 1967 (Fifth Division), and its resolution of December 6, 1968 denying
petitioner's motion for reconsideration.
The dispositive part of the challenged resolution reads:
Wherefore, the motion for reconsideration filed on behalf of
appellee Emma Infante, is hereby granted and the decision of
November 2, 1967, is hereby annulled and set aside. Another
judgement shall be entered affirming in toto that of the court a
quo, dated January 20, 1965, which dismisses the plaintiff's
complaint and defendant's counterclaim.
Without costs.
The facts of the case as follows:
Prior to January 27, 1955, respondent Jose Poncio, a native of the Batanes
Islands, was the owner of the parcel of land herein involve with improvements
situated at 179 V. Agan St., San Juan, Rizal, having an area of some one
hundred ninety-five (195) square meters, more or less, covered by TCT No.
5040 and subject to mortgage in favor of the Republic Savings Bank for the
sum of P1,500.00. Petitioner Rosario Carbonell, a cousin and adjacent
neighbor of respondent Poncio, and also from the Batanes Islands, lived in the
adjoining lot at 177 V. Agan Street.
 8

Both petitioners Rosario Carbonell and respondent Emma Infante offered to

buy the said lot from Poncio (Poncio's Answer, p. 38, rec. on appeal).

Respondent Poncio, unable to keep up with the installments due on the

mortgage, approached petitioner one day and offered to sell to the latter the
said lot, excluding the house wherein respondent lived. Petitioner accepted
the offer and proposed the price of P9.50 per square meter. Respondent
Poncio, after having secured the consent of his wife and parents, accepted the
price proposed by petitioner, on the condition that from the purchase price
would come the money to be paid to the bank.

Petitioner and respondent Jose Poncio then went to the Republic Savings
Bank and secured the consent of the President thereof for her to pay the
arrears on the mortgage and to continue the payment of the installments as
they fall due. The amount in arrears reached a total sum of P247.26. But
because respondent Poncio had previously told her that the money, needed
was only P200.00, only the latter amount was brought by petitioner
constraining respondent Jose Poncio to withdraw the sum of P47.00 from his
bank deposit with Republic Savings Bank. But the next day, petitioner
refunded to Poncio the sum of P47.00.

On January 27, 1955, petitioner and respondent Poncio, in the presence of a

witness, made and executed a document in the Batanes dialect, which,
translated into English, reads:

CONTRACT FOR ONE HALF LOT WHICH I BOUGHT

FROM

JOSE PONCIO

Beginning today January 27, 1955, Jose Poncio can start

living on the lot sold by him to me, Rosario Carbonell, until
after one year during which time he will not pa anything. Then
if after said one can he could not find an place where to move
his house, he could still continue occupying the site but he
should pay a rent that man, be agreed.
9

R
B
O
N
E
L
L
(Pp. 6-7 rec. on appeal).

(
Thereafter, petitioner asked Atty. Salvador Reyes, also from the Batanes
S
Islands, to prepare the formal deed of sale, which she brought to respondent
g with the amount of some P400.00, the balance she still had to
Poncio together
d to her assuming the mortgaged obligation to Republic Savings
pay in addition
Bank. )

Upon arrivingCat respondent Jose Poncio's house, however, the latter told
petitioner thatO he could not proceed any more with the sale, because he had
already givenNthe lot to respondent Emma Infants; and that he could not
withdraw from S his deal with respondent Mrs. Infante, even if he were to go to
jail. PetitionerT then sought to contact respondent Mrs. Infante but the latter
refused to see A her.
N
On FebruaryC5, 1955, petitioner saw Emma Infante erecting a all around the
I
lot with a gate.
O
Petitioner then consulted Atty. Jose Garcia, who advised her to present an
adverse claim M over the land in question with the Office of the Register of
Deeds of Rizal.E Atty. Garcia actually sent a letter of inquiry to the Register of
O
Deeds and demand letters to private respondents Jose Poncio and Emma
Infante. N
A
In his answerDto the complaint Poncio admitted "that on January 30, 1955,
Mrs. Infante Aimproved her offer and he agreed to sell the land and its
improvements to her for P3,535.00" (pp. 38-40, ROA).

W
 10
In a private memorandum agreement dated January 31, 1955, respondent
Poncio indeed bound himself to sell to his corespondent Emma Infante, the
property for the sum of P2,357.52, with respondent Emma Infante still
assuming the existing mortgage debt in favor of Republic Savings Bank in the
amount of P1,177.48. Emma Infante lives just behind the houses of Poncio
and Rosario Carbonell.
On February 2, 1955, respondent Jose Poncio executed the formal deed of
sale in favor of respondent Mrs. Infante in the total sum of P3,554.00 and on
the same date, the latter paid Republic Savings Bank the mortgage
indebtedness of P1,500.00. The mortgage on the lot was eventually
discharged.
Informed that the sale in favor of respondent Emma Infante had not yet been
registered, Atty. Garcia prepared an adverse claim for petitioner, who signed
and swore to an registered the same on February 8, 1955.
The deed of sale in favor of respondent Mrs. Infante was registered only
on February 12, 1955. As a consequence thereof, a Transfer Certificate of
Title was issued to her but with the annotation of the adverse claim of
petitioner Rosario Carbonell.
Respondent Emma Infante took immediate possession of the lot involved,
covered the same with 500 cubic meters of garden soil and built therein a wall
and gate, spending the sum of P1,500.00. She further contracted the services
of an architect to build a house; but the construction of the same started only
in 1959 — years after the litigation actually began and during its pendency.
Respondent Mrs. Infante spent for the house the total amount of P11,929.00.
On June 1, 1955, petitioner Rosario Carbonell, thru counsel, filed a second
amended complaint against private respondents, praying that she be declared
the lawful owner of the questioned parcel of land; that the subsequent sale to
respondents Ramon R. Infante and Emma L. Infante be declared null and
void, and that respondent Jose Poncio be ordered to execute the
corresponding deed of conveyance of said land in her favor and for damages
and attorney's fees (pp. 1-7, rec. on appeal in the C.A.).
Respondents first moved to dismiss the complaint on the ground, among
others, that petitioner's claim is unenforceable under the Statute of Frauds, the
alleged sale in her favor not being evidenced by a written document (pp. 7-13,
rec. on appeal in the C.A.); and when said motion was denied without
prejudice to passing on the question raised therein when the case would be
tried on the merits (p. 17, ROA in the C.A.), respondents filed separate
answers, reiterating the grounds of their motion to dismiss (pp. 18-23, ROA in
the C.A.).
During the trial, when petitioner started presenting evidence of the sale of the
land in question to her by respondent Poncio, part of which evidence was the
agreement written in the Batanes dialect aforementioned, respondent Infantes
objected to the presentation by petitioner of parole evidence to prove the
alleged sale between her and respondent Poncio. In its order of April 26,
1966, the trial court sustained the objection and dismissed the complaint on
the ground that the memorandum presented by petitioner to prove said sale
does not satisfy the requirements of the law (pp. 31-35, ROA in the C.A.).
From the above order of dismissal, petitioner appealed to the Supreme Court
(G.R. No. L-11231) which ruled in a decision dated May 12, 1958, that the
Statute of Frauds, being applicable only to executory contracts, does not apply
to the alleged sale between petitioner and respondent Poncio, which petitioner
claimed to have been partially performed, so that petitioner is entitled to
establish by parole evidence "the truth of this allegation, as well as the
contract itself." The order appealed from was thus reversed, and the case
remanded to the court a quo for further proceedings (pp. 26-49, ROA in the
C.A.).
After trial in the court a quo; a decision was, rendered on December 5, 1962,
declaring the second sale by respondent Jose Poncio to his co-respondents
Ramon Infante and Emma Infante of the land in question null and void and
ordering respondent Poncio to execute the proper deed of conveyance of said
land in favor of petitioner after compliance by the latter of her covenants under
her agreement with respondent Poncio (pp. 5056, ROA in the C.A.).
 11
On January 23, 1963, respondent Infantes, through another counsel, filed a
motion for re-trial to adduce evidence for the proper implementation of the
court's decision in case it would be affirmed on appeal (pp. 56-60, ROA in the
C.A.), which motion was opposed by petitioner for being premature (pp. 61-64,
ROA in the C.A.). Before their motion for re-trial could be resolved, respondent
Infantes, this time through their former counsel, filed another motion for new
trial, claiming that the decision of the trial court is contrary to the evidence and
the law (pp. 64-78, ROA in the C.A.), which motion was also opposed by
petitioner (pp. 78-89, ROA in the C.A.).
The trial court granted a new trial (pp. 89-90, ROA in the C.A.), at which re-
hearing only the respondents introduced additional evidence consisting
principally of the cost of improvements they introduced on the land in question
(p. 9, ROA in the C.A.).
After the re-hearing, the trial court rendered a decision, reversing its decision
of December 5, 1962 on the ground that the claim of the respondents was
superior to the claim of petitioner, and dismissing the complaint (pp. 91-95,
ROA in the C.A.), From this decision, petitioner Rosario Carbonell appealed to
the respondent Court of Appeals (p. 96, ROA in the C.A.).
On November 2, 1967, the Court of Appeals (Fifth Division composed of
Justices Magno Gatmaitan, Salvador V. Esguerra and Angle H. Mojica,
speaking through Justice Magno Gatmaitan), rendered judgment reversing the
decision of the trial court, declaring petitioner therein, to have a superior right
to the land in question, and condemning the defendant Infantes to reconvey to
petitioner after her reimbursement to them of the sum of P3,000.00 plus legal
interest, the land in question and all its improvements (Appendix "A" of
Petition).
Respondent Infantes sought reconsideration of said decision and acting on the
motion for reconsideration, the Appellate Court, three Justices (Villamor,
Esguerra and Nolasco) of Special Division of Five, granted said motion,
annulled and set aside its decision of November 2, 1967, and entered another
judgment affirming in toto the decision of the court a quo, with Justices
Gatmaitan and Rodriguez dissenting (Appendix "B" of Petition).
Petitioner Rosario Carbonell moved to reconsider the Resolution of the
Special Division of Five, which motion was denied by Minute Resolution of
December 6, 1968 (but with Justices Rodriguez and Gatmaitan voting for
reconsideration) [Appendix "C" of Petition].
Hence, this appeal by certiorari.
Article 1544, New Civil Code, which is decisive of this case, recites:
If the same thing should have been sold to different vendees,
the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it
should movable property.
Should it be immovable property, the ownership shall belong
to the person acquiring it who in good faith first recorded it in
the Registry of Property.
Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession; and,
in the absence thereof, to the person who presents the oldest
title, provided there is good faith (emphasis supplied).
It is essential that the buyer of realty must act in good faith in registering his
deed of sale to merit the protection of the second paragraph of said Article
1544.
Unlike the first and third paragraphs of said Article 1544, which accord
preference to the one who first takes possession in good faith of personal or
real property, the second paragraph directs that ownership of immovable
property should be recognized in favor of one "who in good faith first
recorded" his right. Under the first and third paragraph, good faith must
characterize the act of anterior registration (DBP vs. Mangawang, et al., 11
SCRA 405; Soriano, et al. vs. Magale, et al., 8 SCRA 489).
 12
If there is no inscription, what is decisive is prior possession in good faith. If
there is inscription, as in the case at bar, prior registration in good faith is a
pre-condition to superior title.
When Carbonell bought the lot from Poncio on January 27, 1955, she was the
only buyer thereof and the title of Poncio was still in his name solely
encumbered by bank mortgage duly annotated thereon. Carbonell was not
aware — and she could not have been aware — of any sale of Infante as
there was no such sale to Infante then. Hence, Carbonell's prior purchase of
the land was made in good faith. Her good faith subsisted and continued to
exist when she recorded her adverse claim four (4) days prior to the
registration of Infantes's deed of sale. Carbonell's good faith did not cease
after Poncio told her on January 31, 1955 of his second sale of the same lot to
Infante. Because of that information, Carbonell wanted an audience with
Infante, which desire underscores Carbonell's good faith. With an aristocratic
disdain unworthy of the good breeding of a good Christian and good neighbor,
Infante snubbed Carbonell like a leper and refused to see her. So Carbonell
did the next best thing to protect her right — she registered her adversed
claim on February 8, 1955. Under the circumstances, this recording of her
adverse claim should be deemed to have been done in good faith and should
emphasize Infante's bad faith when she registered her deed of sale four (4)
days later on February 12, 1955.
Bad faith arising from previous knowledge by Infante of the prior sale to
Carbonell is shown by the following facts, the vital significance and
evidenciary effect of which the respondent Court of Appeals either overlooked
of failed to appreciate:
(1) Mrs. Infante refused to see Carbonell, who wanted to see Infante after she
was informed by Poncio that he sold the lot to Infante but several days before
Infante registered her deed of sale. This indicates that Infante knew — from
Poncio and from the bank — of the prior sale of the lot by Poncio to Carbonell.
Ordinarily, one will not refuse to see a neighbor. Infante lives just behind the
house of Carbonell. Her refusal to talk to Carbonell could only mean that she
did not want to listen to Carbonell's story that she (Carbonell) had previously
bought the lot from Poncio.
(2) Carbonell was already in possession of the mortgage passbook [not
Poncio's saving deposit passbook — Exhibit "1" — Infantes] and Poncio's
copy of the mortgage contract, when Poncio sold the lot Carbonell who, after
paying the arrearages of Poncio, assumed the balance of his mortgaged
indebtedness to the bank, which in the normal course of business must have
necessarily informed Infante about the said assumption by Carbonell of the
mortgage indebtedness of Poncio. Before or upon paying in full the mortgage
indebtedness of Poncio to the Bank. Infante naturally must have demanded
from Poncio the delivery to her of his mortgage passbook as well as Poncio's
mortgage contract so that the fact of full payment of his bank mortgage will be
entered therein; and Poncio, as well as the bank, must have inevitably
informed her that said mortgage passbook could not be given to her because
it was already delivered to Carbonell.
If Poncio was still in possession of the mortgage passbook and his copy of the
mortgage contract at the time he executed a deed of sale in favor of the
Infantes and when the Infantes redeemed his mortgage indebtedness from the
bank, Poncio would have surrendered his mortgage passbook and his copy of
the mortgage contract to the Infantes, who could have presented the same as
exhibits during the trial, in much the same way that the Infantes were able to
present as evidence Exhibit "1" — Infantes, Poncio's savings deposit
passbook, of which Poncio necessarily remained in possession as the said
deposit passbook was never involved in the contract of sale with assumption
of mortgage. Said savings deposit passbook merely proves that Poncio had to
withdraw P47.26, which amount was tided to the sum of P200.00 paid by
Carbonell for Poncio's amortization arrearages in favor of the bank on January
27, 1955; because Carbonell on that day brought with her only P200.00, as
Poncio told her that was the amount of his arrearages to the bank. But the
next day Carbonell refunded to Poncio the sum of P47.26.
(3) The fact that Poncio was no longer in possession of his mortgage
passbook and that the said mortgage passbook was already in possession of
Carbonell, should have compelled Infante to inquire from Poncio why he was
no longer in possession of the mortgage passbook and from Carbonell why
she was in possession of the same (Paglago, et. al vs. Jara et al 22 SCRA
1247, 1252-1253). The only plausible and logical reason why Infante did not
 13
bother anymore to make such injury , w because in the ordinary course of
business the bank must have told her that Poncio already sold the lot to
Carbonell who thereby assumed the mortgage indebtedness of Poncio and to
whom Poncio delivered his mortgage passbook. Hoping to give a semblance
of truth to her pretended good faith, Infante snubbed Carbonell's request to
talk to her about the prior sale to her b Poncio of the lot. As aforestated, this is
not the attitude expected of a good neighbor imbued with Christian charity and
good will as well as a clear conscience.
(4) Carbonell registered on February 8, 1955 her adverse claim, which was
accordingly annotated on Poncio's title, four [4] days before Infante registered
on February 12, 1955 her deed of sale executed on February 2, 1955. Here
she was again on notice of the prior sale to Carbonell. Such registration of
adverse claim is valid and effective (Jovellanos vs. Dimalanta, L-11736-37,
Jan. 30, 1959, 105 Phil. 1250-51).
(5) In his answer to the complaint filed by Poncio, as defendant in the Court of
First Instance, he alleged that both Mrs. Infante and Mrs. Carbonell offered to
buy the lot at P15.00 per square meter, which offers he rejected as he
believed that his lot is worth at least P20.00 per square meter. It is therefore
logical to presume that Infante was told by Poncio and consequently knew of
the offer of Carbonell which fact likewise should have put her on her guard
and should have compelled her to inquire from Poncio whether or not he had
already sold the property to Carbonell.
As recounted by Chief Justice Roberto Concepcion, then Associate Justice, in
the preceding case of Rosario Carbonell vs. Jose Poncio, Ramon Infante and
Emma Infante (1-11231, May 12, 1958), Poncio alleged in his answer:
... that he had consistently turned down several offers, made
by plaintiff, to buy the land in question, at P15 a square
meter, for he believes that it is worth not less than P20 a
square meter; that Mrs. Infante, likewise, tried to buy the land
at P15 a square meter; that, on or about January 27, 1955,
Poncio was advised by plaintiff that should she decide to buy
the property at P20 a square meter, she would allow him to
remain in the property for one year; that plaintiff then induced
Poncio to sign a document, copy of which if probably the one
appended to the second amended complaint; that Poncio
signed it 'relying upon the statement of the plaintiff that the
document was a permit for him to remain in the premises in
the event defendant decided to sell the property to the plaintiff
at P20.00 a square meter'; that on January 30, 1955, Mrs.
Infante improved her offer and agreed to sell the land and its
improvement to her for P3,535.00; that Poncio has not lost
'his mind,' to sell his property, worth at least P4,000, for the
paltry sum P1,177.48, the amount of his obligation to the
Republic Saving s Bank; and that plaintiff's action is barred by
the Statute of Frauds. ... (pp. 38-40, ROA, emphasis
supplied).
II
EXISTENCE OF THE PRIOR SALE TO CARBONELL
DULY ESTABLISHED
(1) In his order dated April 26, 1956 dismissing the complaint on the ground
that the private document Exhibit "A" executed by Poncio and Carbonell and
witnessed by Constancio Meonada captioned "Contract for One-half Lot which
I Bought from Jose Poncio," was not such a memorandum in writing within the
purview of the Statute of Frauds, the trial judge himself recognized the fact of
the prior sale to Carbonell when he stated that "the memorandum in
question merely states that Poncio is allowed to stay in the property which he
had sold to the plaintiff. There is no mention of the reconsideration, a
description of the property and such other essential elements of the contract of
sale. There is nothing in the memorandum which would tend to show even in
the slightest manner that it was intended to be an evidence of contract sale.
On the contrary, from the terms of the memorandum, it tends to show that the
sale of the property in favor of the plaintiff is already an accomplished act. By
the very contents of the memorandum itself, it cannot therefore, be considered
to be the memorandum which would show that a sale has been made by
Poncio in favor of the plaintiff" (p. 33, ROA, emphasis supplied). As found by
 14
the trial court, to repeat the said memorandum states "that Poncio is allowed
to stay in the property which he had sold to the plaintiff ..., it tends to show that
the sale of the property in favor of the plaintiff is already an accomplished
act..."
(2) When the said order was appealed to the Supreme Court by Carbonell in
the previous case of Rosario Carbonell vs. Jose Poncio, Ramon Infante and
Emma Infante
(L-11231, supra), Chief Justice Roberto Concepcion, then Associate Justice,
speaking for a unanimous Court, reversed the aforesaid order of the trial court
dismissing the complaint, holding that because the complaint alleges and the
plaintiff claims that the contract of sale was partly performed, the same is
removed from the application of the Statute of Frauds and Carbonell should be
allowed to establish by parol evidence the truth of her allegation of partial
performance of the contract of sale, and further stated:
Apart from the foregoing, there are in the case at bar several
circumstances indicating that plaintiff's claim might not be
entirely devoid of factual basis. Thus, for instance, Poncio
admitted in his answer that plaintiff had offered several times
to purchase his land.
Again, there is Exhibit A, a document signed by the
defendant. It is in the Batanes dialect, which, according to
plaintiff's uncontradicted evidence, is the one spoken by
Poncio, he being a native of said region. Exhibit A states that
Poncio would stay in the land sold by him to plaintiff for one
year, from January 27, 1955, free of charge, and that, if he
cannot find a place where to transfer his house thereon, he
may remain upon. Incidentally, the allegation in Poncio's
answer to the effect that he signed Exhibit A under the belief
that it "was a permit for him to remain in the premises in the"
that "he decided to sell the property" to the plaintiff at P20 a
sq. m." is, on its face, somewhat difficult to believe. Indeed, if
he had not decided as yet to sell the land to plaintiff, who had
never increased her offer of P15 a square meter, there was
no reason for Poncio to get said permit from her. Upon the
other hand, if plaintiff intended to mislead Poncio, she would
have caused Exhibit A to be drafted, probably, in English ,
instead of taking the trouble of seeing to it that it was written
precisely in his native dialect, the Batanes.
Moreover, Poncio's signature on Exhibit A suggests that he is
neither illiterate nor so ignorant as to sign document without
reading its contents, apart from the fact that Meonada had
read Exhibit A to him and given him a copy thereof, before he
signed thereon, according to Meonada's uncontradicted
testimony.
Then, also, defendants say in their brief:
The only allegation in plaintiff's complaint that
bears any relation to her claim that there has
been partial performance of the supposed
contract of sale, is the notation of the sum of
P247.26 in the bank book of defendant Jose
Poncio. The noting or jotting down of the sum
of P247.26 in the bank book of Jose Poncio
does not prove the fact that the said amount
was the purchase price of the property in
question. For all we knew, the sum of
P247.26 which plaintiff claims to have paid to
the Republic Savings Bank for the account of
the defendant, assuming that the money paid
to the Republic Savings Bank came from the
plaintiff, was the result of some usurious loan
or accomodation, rather than earnest money
or part payment of the land. Neither is it
competent or satisfactory evidence to prove
the conveyance of the land in question the
fact that the bank book account of Jose
Poncio happens to be in the possession of
 15
the plaintiff. (Defendants-Appellees' brief, pp.
25-26).
How shall We know why Poncio's bank deposit book is in
plaintiffs possession, or whether there is any relation between
the P247.26 entry therein and the partial payment of P247.26
allegedly made by plaintiff to Poncio on account of the price
of his land, if we do not allow the plaintiff to explain it on the
witness stand? Without expressing any opinion on the merits
of plaintiff's claim, it is clear, therefore, that she is entitled ,
legally as well as from the viewpoint of equity, to an
opportunity to introduce parol evidence in support of the
allegations of her second amended complaint. (pp. 46-49,
ROA, emphasis supplied).
(3) In his first decision of December 5, 1962 declaring null and void the sale in
favor of the Infantes and ordering Poncio to execute a deed of conveyance in
favor of Carbonell, the trial judge found:
... A careful consideration of the contents of Exh. 'A' show to
the satisfaction of the court that the sale of the parcel of land
in question by the defendant Poncio in favor of the plaintiff
was covered therein and that the said Exh. "a' was also
executed to allow the defendant to continue staying in the
premises for the stated period. It will be noted that Exh. 'A'
refers to a lot 'sold by him to me' and having been written
originally in a dialect well understood by the defendant
Poncio, he signed the said Exh. 'A' with a full knowledge and
consciousness of the terms and consequences thereof. This
therefore, corroborates the testimony of the plaintiff Carbonell
that the sale of the land was made by Poncio. It is further
pointed out that there was a partial performance of the verbal
sale executed by Poncio in favor of the plaintiff, when the
latter paid P247.26 to the Republic Savings Bank on account
of Poncio's mortgage indebtedness. Finally, the possession
by the plaintiff of the defendant Poncio's passbook of the
Republic Savings Bank also adds credibility to her
testimony. The defendant contends on the other hand that the
testimony of the plaintiff, as well as her witnesses, regarding
the sale of the land made by Poncio in favor of the plaintiff is
inadmissible under the provision of the Statute of Fraud
based on the argument that the note Exh. "A" is not the note
or memorandum referred to in the to in the Statute of Fraud.
The defendants argue that Exh. "A" fails to comply with the
requirements of the Statute of Fraud to qualify it as the note
or memorandum referred to therein and open the way for the
presentation of parole evidence to prove the fact contained in
the note or memorandum. The defendant argues that there is
even no description of the lot referred to in the note,
especially when the note refers to only one half lot. With
respect to the latter argument of the Exhibit 'A', the court has
arrived at the conclusion that there is a sufficient description
of the lot referred to in Exh. 'A' as none other than the parcel
of land occupied by the defendant Poncio and where he has
his improvements erected. The Identity of the parcel of land
involved herein is sufficiently established by the contents of
the note Exh. "A". For a while, this court had that similar
impression but after a more and thorough consideration of the
context in Exh. 'A' and for the reasons stated above, the
Court has arrived at the conclusion stated earlier (pp. 52-54,
ROA, emphasis supplied).
(4) After re-trial on motion of the Infantes, the trial Judge rendered on January
20, 1965 another decision dismissing the complaint, although he found
1. That on January 27, 1955, the plaintiff purchased from the
defendant Poncio a parcel of land with an area of 195 square
meters, more or less, covered by TCT No. 5040 of the
Province of Rizal, located at San Juan del Monte, Rizal, for
the price of P6.50 per square meter;
 16
2. That the purchase made by the plaintiff was not reduced to
writing except for a short note or memorandum Exh. A, which
also recited that the defendant Poncio would be allowed to
continue his stay in the premises, among other things, ... (pp.
91-92, ROA, emphasis supplied).
From such factual findings, the trial Judge confirms the due execution of
Exhibit "A", only that his legal conclusion is that it is not sufficient to transfer
ownership (pp. 93-94, ROA).
(5) In the first decision of November 2, 1967 of the Fifth Division of the Court
of Appeals composed of Justices Esguerra (now Associate Justice of the
Supreme Court), Gatmaitan and Mojica, penned by Justice Gatmaitan, the
Court of Appeals found that:
... the testimony of Rosario Carbonell not having at all been
attempted to be disproved by defendants, particularly Jose
Poncio, and corroborated as it is by the private document in
Batanes dialect, Exhibit A, the testimony being to the effect
that between herself and Jose there had been celebrated a
sale of the property excluding the house for the price of P9.50
per square meter, so much so that on faith of that, Rosario
had advanced the sum of P247.26 and binding herself to pay
unto Jose the balance of the purchase price after deducting
the indebtedness to the Bank and since the wording of Exhibit
A, the private document goes so far as to describe their
transaction as one of sale, already consummated between
them, note the part tense used in the phrase, "the lot sold by
him to me" and going so far even as to state that from that
day onwards, vendor would continue to live therein, for one
year, 'during which time he will not pay anything' this can only
mean that between Rosario and Jose, there had been a true
contract of sale, consummated by delivery constitutum
possession, Art. 1500, New Civil Code;vendor's possession
having become converted from then on, as a mere tenant of
vendee, with the special privilege of not paying rental for one
year, — it is true that the sale by Jose Poncio to Rosario
Carbonell corroborated documentarily only by Exhibit A could
not have been registered at all, but it was a valid contract
nonetheless, since under our law, a contract sale is
consensual, perfected by mere consent, Couto v. Cortes, 8
Phil 459, so much so that under the New Civil Code, while a
sale of an immovable is ordered to be reduced to a public
document, Art. 1358, that mandate does not render an oral
sale of realty invalid, but merely incapable of proof, where still
executory and action is brought and resisted for its
performance, 1403, par. 2, 3; but where already wholly or
partly executed or where even if not yet, it is evidenced by a
memorandum, in any case where evidence to further
demonstrate is presented and admitted as the case was here,
then the oral sale becomes perfectly good, and becomes a
good cause of action not only to reduce it to the form of a
public document, but even to enforce the contract in its
entirety, Art. 1357; and thus it is that what we now have is a
case wherein on the one hand Rosario Carbonell has proved
that she had an anterior sale, celebrated in her favor on 27
January, 1955, Exhibit A, annotated as an adverse claim on 8
February, 1955, and on other, a sale is due form in favor of
Emma L. Infante on 2 February, 1955, Exhibit 3-Infante, and
registered in due form with title unto her issued on 12
February, 1955; the vital question must now come on which
of these two sales should prevail; ... (pp. 74-76, rec.,
emphasis supplied).
(6) In the resolution dated October 30, 1968 penned by then Court of Appeals
Justice Esguerra (now a member of this Court), concurred in by Justices
Villamor and Nolasco, constituting the majority of a Special Division of Five,
the Court of Appeals, upon motion of the Infantes, while reversing the decision
of November 2, 1967 and affirming the decision of the trial court of January
20, 1965 dismissing plaintiff's complaint, admitted the existence and
genuineness of Exhibit "A", the private memorandum dated January 27, 1955,
although it did not consider the same as satisfying "the essential elements of a
 17
contract of sale," because it "neither specifically describes the property and its
boundaries, nor mention its certificate of title number, nor states the price
certain to be paid, or contrary to the express mandate of Articles 1458 and
1475 of the Civil Code.
(7) In his dissent concurred in by Justice Rodriguez, Justice Gatmaitan
maintains his decision of November 2, 1967 as well as his findings of facts
therein, and reiterated that the private memorandum Exhibit "A", is a perfected
sale, as a sale is consensual and consummated by mere consent, and is
binding on and effective between the parties. This statement of the principle is
correct [pp. 89-92, rec.].
III
ADEQUATE CONSIDERATION OR PRICE FOR THE SALE
IN FAVOR OF CARBONELL
It should be emphasized that the mortgage on the lot was about to be
foreclosed by the bank for failure on the part of Poncio to pay the
amortizations thereon. To forestall the foreclosure and at the same time to
realize some money from his mortgaged lot, Poncio agreed to sell the same to
Carbonell at P9.50 per square meter, on condition that Carbonell [1] should
pay (a) the amount of P400.00 to Poncio and 9b) the arrears in the amount of
P247.26 to the bank; and [2] should assume his mortgage indebtedness. The
bank president agreed to the said sale with assumption of mortgage in favor of
Carbonell an Carbonell accordingly paid the arrears of P247.26. On January
27, 1955, she paid the amount of P200.00 to the bank because that was the
amount that Poncio told her as his arrearages and Poncio advanced the sum
of P47.26, which amount was refunded to him by Carbonell the following day.
This conveyance was confirmed that same day, January 27, 1955, by the
private document, Exhibit "A", which was prepared in the Batanes dialect by
the witness Constancio Meonada, who is also from Batanes like Poncio and
Carbonell.
The sale did not include Poncio's house on the lot. And Poncio was given the
right to continue staying on the land without paying any rental for one year,
after which he should pay rent if he could not still find a place to transfer his
house. All these terms are part of the consideration of the sale to Carbonell.
It is evident therefore that there was ample consideration, and not merely the
sum of P200.00, for the sale of Poncio to Carbonell of the lot in question.
But Poncio, induced by the higher price offered to him by Infante, reneged on
his commitment to Carbonell and told Carbonell, who confronted him about it,
that he would not withdraw from his deal with Infante even if he is sent to jail
The victim, therefore, "of injustice and outrage is the widow Carbonell and not
the Infantes, who without moral compunction exploited the greed and
treacherous nature of Poncio, who, for love of money and without remorse of
conscience, dishonored his own plighted word to Carbonell, his own cousin.
Inevitably evident therefore from the foregoing discussion, is the bad faith of
Emma Infante from the time she enticed Poncio to dishonor his contract with
Carbonell, and instead to sell the lot to her (Infante) by offering Poncio a much
higher price than the price for which he sold the same to Carbonell. Being
guilty of bad faith, both in taking physical possession of the lot and in
recording their deed of sale, the Infantes cannot recover the value of the
improvements they introduced in the lot. And after the filing by Carbonell of the
complaint in June, 1955, the Infantes had less justification to erect a building
thereon since their title to said lot is seriously disputed by Carbonell on the
basis of a prior sale to her.
With respect to the claim of Poncio that he signed the document Exhibit "A"
under the belief that it was a permit for him to remain in the premises in ease
he decides to sell the property to Carbonell at P20.00 per square meter, the
observation of the Supreme Court through Mr. Chief Justice Concepcion in
G.R. No. L-11231, supra, bears repeating:
... Incidentally, the allegation in Poncio's answer to the effect
that he signed Exhibit A under the belief that it 'was a permit
for him to remain in the premises in the event that 'he decided
to sell the property' to the plaintiff at P20.00 a sq. m is, on its
face, somewhat difficult to believe. Indeed, if he had not
 18
decided as yet to sell that land to plaintiff, who had never
increased her offer of P15 a square meter, there as no reason
for Poncio to get said permit from her. Upon the they if
plaintiff intended to mislead Poncio, she would have Exhibit A
to be drafted, probably, in English, instead of taking the
trouble of seeing to it that it was written precisely in his native
dialect, the Batanes. Moreover, Poncio's signature on Exhibit
A suggests that he is neither illiterate nor so ignorant as to
sign a document without reading its contents, apart from the
fact that Meonada had read Exhibit A to him-and given him a
copy thereof, before he signed thereon, according to
Meonada's uncontradicted testimony. (pp. 46-47, ROA).
As stressed by Justice Gatmaitan in his first decision of November 2, 1965,
which he reiterated in his dissent from the resolution of the majority of the
Special Division. of Five on October 30, 1968, Exhibit A, the private document
in the Batanes dialect, is a valid contract of sale between the parties, since
sale is a consensual contract and is perfected by mere consent (Couto vs.
Cortes, 8 Phil. 459). Even an oral contract of realty is all between the parties
and accords to the vendee the right to compel the vendor to execute the
proper public document As a matter of fact, Exhibit A, while merely a private
document, can be fully or partially performed, to it from the operation of the
statute of frauds. Being a all consensual contract, Exhibit A effectively
transferred the possession of the lot to the vendee Carbonell by constitutum
possessorium (Article 1500, New Civil Code); because thereunder the vendor
Poncio continued to retain physical possession of the lot as tenant of the
vendee and no longer as knew thereof. More than just the signing of Exhibit A
by Poncio and Carbonell with Constancio Meonada as witness to fact the
contract of sale, the transition was further confirmed when Poncio agreed to
the actual payment by at Carbonell of his mortgage arrearages to the bank on
January 27, 1955 and by his consequent delivery of his own mortgage
passbook to Carbonell. If he remained owner and mortgagor, Poncio would
not have surrendered his mortgage passbook to' Carbonell.
IV
IDENTIFICATION AND DESCRIPTION OF THE DISPUTED LOT IN THE
MEMORANDUM EXHIBIT "A"
The claim that the memorandum Exhibit "A" does not sufficiently describe the
disputed lot as the subject matter of the sale, was correctly disposed of in the
first decision of the trial court of December 5, 1962, thus: "The defendant
argues that there is even no description of the lot referred to in the note (or
memorandum), especially when the note refers to only one-half lot. With
respect to the latter argument of the defendant, plaintiff points out that one-
half lot was mentioned in Exhibit 'A' because the original description carried in
the title states that it was formerly part of a bigger lot and only segregated
later. The explanation is tenable, in (sic) considering the time value of the
contents of Exh. 'A', the court has arrived at the conclusion that there is
sufficient description of the lot referred to in Exh. As none other than the
parcel of lot occupied by the defendant Poncio and where he has his
improvements erected. The Identity of the parcel of land involved herein is
sufficiently established by the contents of the note Exh. 'A'. For a while, this
court had that similar impression but after a more and through consideration of
the context in Exh. 'A' and for the reasons stated above, the court has arrived
to (sic) the conclusion stated earlier" (pp. 53-54, ROA).
Moreover, it is not shown that Poncio owns another parcel with the same area,
adjacent to the lot of his cousin Carbonell and likewise mortgaged by him to
the Republic Savings Bank. The transaction therefore between Poncio and
Carbonell can only refer and does refer to the lot involved herein. If Poncio
had another lot to remove his house, Exhibit A would not have stipulated to
allow him to stay in the sold lot without paying any rent for one year and
thereafter to pay rental in case he cannot find another place to transfer his
house.
While petitioner Carbonell has the superior title to the lot, she must however
refund to respondents Infantes the amount of P1,500.00, which the Infantes
paid to the Republic Savings Bank to redeem the mortgage.
It appearing that the Infantes are possessors in bad faith, their rights to the
improvements they introduced op the disputed lot are governed by Articles
 19
546 and 547 of the New Civil Code. Their expenses consisting of P1,500.00
for draining the property, filling it with 500 cubic meters of garden soil, building
a wall around it and installing a gate and P11,929.00 for erecting a b '
bungalow thereon, are useful expenditures, for they add to the value of the
property (Aringo vs. Arenas, 14 Phil. 263; Alburo vs. Villanueva, 7 Phil. 277;
Valencia vs. Ayala de Roxas, 13 Phil. 45).
Under the second paragraph of Article 546, the possessor in good faith can
retain the useful improvements unless the person who defeated him in his
possession refunds him the amount of such useful expenses or pay him the
increased value the land may have acquired by reason thereof. Under Article
547, the possessor in good faith has also the right to remove the useful
improvements if such removal can be done without damage to the land,
unless the person with the superior right elects to pay for the useful
improvements or reimburse the expenses therefor under paragraph 2 of
Article 546. These provisions seem to imply that the possessor in bad faith
has neither the right of retention of useful improvements nor the right to a
refund for useful expenses.
But, if the lawful possessor can retain the improvements introduced by the
possessor in bad faith for pure luxury or mere pleasure only by paying the
value thereof at the time he enters into possession (Article 549 NCC), as a
matter of equity, the Infantes, although possessors in bad faith, should be
allowed to remove the aforesaid improvements, unless petitioner Carbonell
chooses to pay for their value at the time the Infantes introduced said useful
improvements in 1955 and 1959. The Infantes cannot claim reimbursement for
the current value of the said useful improvements; because they have been
enjoying such improvements for about two decades without paying any rent on
the land and during which period herein petitioner Carbonell was deprived of
its possession and use.
WHEREFORE, THE DECISION OF THE SPECIAL DIVISION OF FIVE OF
THE COURT OF APPEALS OF OCTOBER 30, 1968 IS HEREBY
REVERSED; PETITIONER ROSARIO CARBONELL IS HEREBY DECLARED
TO HAVE THE SUPERIOR RIGHT TO THE LAND IN QUESTION AND IS
HEREBY DIRECTED TO REIMBURSE TO PRIVATE RESPONDENTS
INFANTES THE SUM OF ONE THOUSAND FIVE HUNDRED PESOS
(P1,500.00) WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS
DECISION; AND THE REGISTER OF DEEDS OF RIZAL IS HEREBY
DIRECTED TO CANCEL TRANSFER CERTIFICATE OF TITLE NO. 37842
ISSUED IN FAVOR OF PRIVATE RESPONDENTS INFANTES COVERING
THE DISPUTED LOT, WHICH CANCELLED TRANSFER CERTIFICATE OF
TITLE NO. 5040 IN THE NAME OF JOSE PONCIO, AND TO ISSUE A NEW
TRANSFER CERTIFICATE OF TITLE IN FAVOR OF PETITIONER ROSARIO
CARBONELL UPON PRESENTATION OF PROOF OF PAYMENT BY HER
TO THE INFANTES OF THE AFORESAID AMOUNT OF ONE THOUSAND
FIVE HUNDRED PESOS (P1,500.00).
PRIVATE RESPONDENTS INFANTES MAY REMOVE THEIR
AFOREMENTIONED USEFUL IMPROVEMENTS FROM THE LOT WITHIN
THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION, UNLESS
THE PETITIONER ROSARIO CARBONELL ELECTS TO ACQUIRE THE
SAME AND PAYS THE INFANTES THE AMOUNT OF THIRTEEN
THOUSAND FOUR HUNDRED TWENTY-NINE PESOS (P13,429.00)
WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION.
SHOULD PETITIONER CARBONELL FAIL TO PAY THE SAID AMOUNT
WITHIN THE AFORESTATED PERIOD OF THREE (3) MONTHS FROM THE
FINALITY OF THIS DECISION, THE PERIOD OF THREE (3) MONTHS
WITHIN WHICH THE RESPONDENTS INFANTES MAY REMOVE THEIR
AFOREMENTIONED USEFUL IMPROVEMENTS SHALL COMMENCE
FROM THE EXPIRATION OF THE THREE (3) MONTHS GIVEN
PETITIONER CARBONELL TO PAY FOR THE SAID USEFUL
IMPROVEMENTS.
WITH COSTS AGAINST PRIVATE RESPONDENTS.
Castro, C.J, Aquino and Martin, JJ., concur.
G.R. No. L-18497 May 31, 1965
 20
DAGUPAN TRADING COMPANY, petitioner,
vs.
RUSTICO MACAM, respondent.
Angel Sanchez for petitioner.
Manuel L. Fernandez for respondent.
DIZON, J.:
Appeal taken by the Dagupan Trading Company from the decision of the
Court of Appeals affirming the one rendered by the Court of First Instance of
Pangasinan in Civil Case No. 13772, dismissing its complaint.
On September 4, 1958, appellant commenced the action mentioned above
against appellee Rustico Macam, praying that it be declared owner of one-
eighth portion of the land described in paragraph 2 of the complaint; that a
partition of the whole property be made; that appellee be ordered to pay it the
amount of P500.00 a year as damages from 1958 until said portion is
delivered, plus attorney's fees and costs.
Answering the complaint, appellee alleged, in the main, that Sammy Maron's
share in the property described in the complaint, as well as that of all his co-
heirs, had been acquired by purchase by appellee since June 19 and
September 21, 1955, before the issuance of the original certificate of title in
their name; that at the time the levy in execution was made on Sammy
Maron's share therein, the latter had no longer any right or interest in said
property; that appellant and its predecessor in interest were cognizant of the
facts already mentioned; that since the sales made in his favor, he had
enjoyed uninterrupted possession of the property and introduced considerable
improvements thereon. Appellee likewise sought to recover damages by way
of counterclaim.
After trial upon the issue thus joined, the court rendered judgment dismissing
the complaint, which, on appeal, was affirmed by the Court of Appeals.
The facts of the case are not disputed.
In the year 1955, Sammy Maron and his seven brothers and sisters were pro-
indiviso owners of a parcel of unregistered land located in barrio Parayao,
Municipality of Binmaley, Pangasinan. While their application for registration of
said land under Act No. 496 was pending, they executed, on June 19 and
September 21, 1955, two deeds of sale conveying the property to appellee,
who thereafter took possession thereof and proceeded to introduce substantial
improvements therein. One month later, that is, on October 14, 1955, Original
Certificate of Title No. 6942 covering the land was issued in the name of the
Maron's, free from all liens and encumbrances.
On August 4, 1956, by virtue of a final judgment rendered in Civil Case No.
42215 of the Municipal Court of Manila against Sammy Maron in favor of the
Manila Trading and Supply Company, levy was made upon whatever interest
he had in the aforementioned property, and thereafter said interest was sold at
public auction to the judgment creditor. The corresponding notice of levy,
certificate of sale and the Sheriff's certificate of final sale in favor of the Manila
Trading and Supply Co. — because nobody exercised the right of redemptions
— were duly registered. On March 1, 1958, the latter sold all its rights and title
to the property to appellant.
The question before Us now is: Who has the better right as between appellant
Dagupan Trading Company, on the one hand, and appellee Rustico Macam,
on the other, to the one-eighth share of Sammy Maron in the property
mentioned heretofore?
If the property covered by the conflicting sales were unregistered land, Macam
would undoubtedly have the better right in view of the fact that his claim is
based on a prior sale coupled with public, exclusive and continuous
possession thereof as owner. On the other hand, were the land involved in the
conflicting transactions duly registered land, We would be inclined to hold that
appellant has the better right because, as We have consistently held, in case
of conveyance of registered real estate, the registration of the deed of sale is
the operative act that gives validity to the transfer. This would be fatal to
appellee's claim, the deeds of sale executed in his favor by the Maron's not
having been registered, while the levy in execution and the provisional
certificate of sale as well as the final deed of sale in favor of appellant were
 21
registered. Consequently, this registered conveyance must prevail although
posterior to the one executed in favor of appellee, and appellant must be
deemed to have acquired such right, title and interest as appeared on the
certificate of title issued in favor of Sammy Maron, subject to no lien,
encumbrance or burden not noted thereon. (Anderson & Co. vs. Garcia, 64
Phil. 506; Reynes, et al. vs. Barrera, et al., 68 Phil. 656; Banco Nacional, etc.
vs. Camus, 70 Phil. 289)
The present case, however, does not fall within either, situation. Here the sale
in favor of appellee was executed before the land subject-matter thereof was
registered, while the conflicting sale in favor of appellant was
executed after the same property had been registered. We cannot, therefore,
decide the case in the light of whatever adjudicated cases there are covering
the two situations mentioned in the preceding paragraph. It is our considered
view that what should determine the issue are the provisions of the last
paragraph of Section 35, Rule 39 of the Rules of Court, to the effect that upon
the execution and delivery of the final certificate of sale in favor of the
purchaser of land sold in an execution sale, such purchaser "shall be
substituted to and acquire all the right, title, interest and claim of the judgment
debtor to the property as of the time of the levy." Now We ask: What was the
interest and claim of Sammy Maron on the one-eighth portion of the property
inherited by him and his co-heirs, at the time of the levy? The answer must
necessarily be that he had none, because for a considerable time prior to the
levy, his interest had already been conveyed to appellee, "fully and retrievably
— as the Court of Appeals held. Consequently, subsequent levy made on the
property for the purpose of satisfying the judgment rendered against Sammy
Maron in favor of the Manila Trading Company was void and of no effect
(Buson vs. Licuaco, 13 Phil. 357-358; Landig vs. U.S. Commercial Company,
G.R. No. L-3597, July 31, 1951). Needless to say, the unregistered sale and
the consequent conveyance of title and ownership in favor of appellee could
not have been cancelled and rendered of no effect upon the subsequent
issuance of the Torrens title over the entire parcel of land. We cannot,
therefore, but agree with the following statement contained in the appealed
decision:
... . Separate and apart from this however, we believe that in the
inevitable conflict between a right of ownership already fixed and
established under the Civil Law and/or the Spanish Mortgage Law —
which cannot be affected by any subsequent levy or attachment or
execution — and a new law or system which would make possible the
overthrowing of such ownership on admittedly artificial and technical
grounds, the former must be upheld and applied.1äwphï1.ñët
But to the above considerations must be added the important circumstance
that, as already stated before, upon the execution of the deed of sale in his
favor by Sammy Maron, appellee took possession of the land conveyed as
owner thereof, and introduced considerable improvements thereon. To deprive
him now of the same by sheer force of technicality would be against both
justice and equity.
IN VIEW OF ALL THE FOREGOING, the decision appealed from is affirmed,
with costs.
Bengzon, C.J., Bautista Angelo, Barrera, Regala, Makalintal, Bengzon, J.P.,
and Zaldivar, JJ., concur.
G.R. No. L-48322 April 8, 1987
FELIPE DAVID and ANTONIA G. DAVID, petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA
SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all
surnamed Bandin); GREGORIO BANDIN, RAYMUNDA BANDIN,
VALENTIN BRIONES, SOFIO BRIONES and AGAPITA
RAMOS. respondents.
No. L-49712 April 8, 1987
 22
MAGNO DE LA CRUZ, petitioner,
vs.
HONORABLE COURT OF APPEALS; EULOGIO BANDIN (substituted by
his legal heirs, namely: JUANA, SILVERIO, JOSE, GABRIEL, ANICETA,
VIRGINIA and FELIX, all surnamed Bandin); GREGORIO BANDIN,
RAYMUNDA BANDIN, SOFIO BRIONES and AGAPITA
RAMOS; respondents.
No. L-49716 April 8, 1987
JUANITA MARTIN VDA. DE LUCENA MAXIMINA MARTIN VDA. DE
COSME, VICTORIA MARTIN VDA. DE OMANBAC, NEMESIO A. MARTIN,
LEONORA DE LA CRUZ and AQUILINA DE LA CRUZ, petitioners,
vs.
EULOGIO BANDIN (substituted by his legal heirs, namely: JUANA,
SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA and FELIX, all
surnamed Bandin);, VALENTIN BRIONES, AGAPITA RAMOS and COURT
OF APPEALS, respondents.
No. L-49687 April 8,1987
JOSE RAMIREZ and HEIRS OF AMBROCIA P. VDA. DE SOTERO
RAMIREZ, petitioners,
vs.
COURT OF APPEALS and EULOGIO BANDIN (substituted by his legal
heirs, namely: JUANA, SILVERIO, JOSE, GABRIEL, ANICETA, VIRGINIA
and FELIX, all surnamed BANDIN); GREGORIO BANDIN, RAYMUNDA
BANDIN, VALENTIN BRIONES, SOFIO BRIONES and AGAPITA RAMOS,
respondents.
Benito P. Fable for petitioners in G.R. No. L-48322.
Pedro R. de la Cruz for petitioner in G.R. No. L-49712.
David R. Advincula for petitioners in G.R. No. L-49716.
Antonio S. Reyes for petitioners in G. R. No. L-49687.
Enrique C Villanueva for respondents.
YAP, J.:
These petitions, which were consolidated by resolution of this Court
dated February 20, 1980, stemmed from a complaint filed by the herein
respondents with the Court of First Instance of Rizal Branch VII, Pasay
City, on June 14, 1963, for the recovery and partition of property. The
complaint was amended twice to reflect additional pertinent and material
facts, such as transfers, partitions, subdivisions and registration of
portions of the properties involved, and to bring in other indispensable
parties to the case.
On April 12, 1975, a decision was rendered by the trial court, in favor of
the plaintiffs, declaring, however, that certain properties could no longer
be reconveyed to plaintiffs since they had been transferred to
purchasers who bought them in good faith for value. Not satisfied with
the decision, both plaintiffs and defendants appealed to the Court of
Appeals. The plaintiffs' appeal was docketed as CA-G.R. No. 58647-R,
while that of defendants as CA-G.R. No. 60511-R. . Both appeals were
consolidated, and a decision was rendered by the Court of Appeals on
May 19, 1978, which modified the decision of the trial court in that it
nullified the transfers made to the defendants who were declared by the
trial court as purchasers in good faith.
From the decision of the Court of Appeals, an appeal was taken by the
parties adversely affected thereby to this Court. Except for petitioners in
G.R. No. L-49716 who seek restoration of the status quo ante, all other
petitioners pray that the decision of the trial court be reinstated.
The facts antecedent of this petition, as may be gathered from the
decision, are as follows:
 23
During their lifetime, the spouses Juan Ramos, who died on March 5,
1919, and Fortunate Calibo, who died before 1919, were the owners of
two parcels of land situated in Las Pinas, Rizal: 1) A parcel of land
situated in Barrio Talon, with an area of 39,887 square meters, under Tax
Declaration No. 9614 (Talon property for short); and 2) A parcel of land
situated in Barrio Laong, with an area of 15,993 square meters, under
Tax Declaration No. 4005, although the actual area when surveyed was
22,285 square meters (Laong property for short).
Both spouses died intestate, leaving as heirs two legitimate children,
Candida and Victorians Ramos, and grand-daughter, Agapita Ramos,
daughter of their deceased sora Anastacio. Upon the death of the said
spouses, their daughter, Candida Ramos, assumed administration of the
properties until her death on February 16, 1955. Victorians Ramos died
on December 12,1931.
Both Candida and Victoriana Ramos died intestate. Candida Ramos was
survived by the following heirs: 1) Victoria Martin-Omanbac, 2) Antonio
Martin, 3) Juanita Martin Vda. de Lucena, 4) Maximina Martin Vda. de
Cosme, 5) Raymundo Martin, 6) Aquilina de la Cruz, and 7) Leonora de la
Cruz. Victoriana's heirs are her children from her two marriages, namely:
1) Eulogio Bandin, 2) Gregorio Bandin, 3) Raymunda Bandin, 4) Valentin
Briones, and 5) Sofio Briones.
The record shows that sometime in 1943, Candida Ramos prevailed
upon her niece, Agapita Ramos, and her nephew, Eulogio Bandin, to sell
a portion of the Talon property to the spouses Rufino 0. Miranda and
Natividad Guinto. This portion was divided into three lots: Parcel 1,
containing an area of 24,363 square meters, declared under Tax
Declaration No. 2996 (1948). The spouses Rufino Miranda and Natividad
Guinto subsequently sold the said lot to Narciso Velasquez and Albino
Miranda. These two later sold the same property to Velasquez Realty
Company, Inc., which registered the property and obtained OCT No. 1756
(later cancelled and replaced by TCT No. 165335); Parcel 2, containing an
area of 752 square meters, declared under Tax Declaration No. 3358
(1949); and Parcel 3, containing an area of 516 square meters under Tax
Declaration No. 3359 (1949). Parcels 2 and 3 were subsequently sold by
Rufino Miranda and Natividad Guinto to Jose Ramirez and Sotero
Ramirez (survived by Ambrocia Vda. de Martin), respectively, who
registered these properties and obtained OCT Nos. 2027 and 2029 in
their respective names.
The remaining portion of the Talon property was extrajudicially
partitioned on September 17, 1955 among the heirs of Candida Ramos,
namely: Juanita Martin, Victoria Martin, Maximina M. Vda. de Cosme,
Antonio Martin and Raymundo Martin. In 1959, this property was
subdivided (Subdivision Plan PSU-173299) into seven lots and
adjudicated as follows:
1) To the heirs of Raymundo Martin, namely, Juan, Antonio, Rodrigo,
Norma, Bernards, Rufina and Nieves, all surnamed Martin, and Trinidad
Bunag Vda. de Martin — Lot 1, containing an area of 774 square meters,
declared under Tax Declaration No. 5588 (1960). This lot was
subsequently sold to Consolacion de la Cruz who was able to register
the property in her name under OCT No. 4731 (later cancelled and
replaced by TCT Nos. 227470 and 227471).
2) To Juanita Martin — Lot 2, containing an area of 774 square meters,
declared under Tax Declaration No. 4831, and subsequently titled in her
name under OCT No. 10002, issued on December 18, 1973.
3) To Leonora de la Cruz, granddaughter of Candida Ramos by her son
Meliton de la Cruz by her first husband — Lot 3, containing an area of
346 square meters, declared under Tax Declaration No. 5526 (1960) and
subsequently registered under OCT No. 6102, issued on January 29,
1967.
4) To Antonio Martin — Lot 4, containing an area of 774 square meters,
declared under Tax Declaration No. 4833. The property was
subsequently sold by the heirs of Antonio Martin to Nemesio Martin.
 24
5) To Victoria Martin — Lot 5, containing an area of 773 square meters,
declared under Tax Declaration No. 5590. This lot was later registered by
Victoria, to whom OCT No. 3706 was issued on August 22, 1963. She
subsequently sold a portion of 300 square meters to Magno de la Cruz
on September 25,1963, to whom was issued TCT No. 116450.
6) To Maximina Martin — Lot 6, containing an area of 773 square meters,
under Tax Declaration No. 5591 (1960). Maximina was able to register the
land and was issued OCT No. 3707 on August 22, 1963. She later sold a
portion of 300 square meters to Magno de la Cruz, to whom was issued
TCT No. 116450.
7) To Aquiline de la Cruz — Lot 7, with an area of 428 square meters,
declared under Tax Declaration No. 5592 (1960). Aquilina is the
granddaughter of Candida Ramos by her son Meliton de la Cruz by her
first marriage. Aquilina registered the land in her name in 1967 and was
issued OCT No. 6103.
The Laong property was sold by Candida Ramos and her children on
December 19, 1943 to Hermogenes Lucena, husband of Juanita Martin,
one of the daughters of Candida. On September 23, 1959, Juanita (then
widowed) sold the property to the spouses Gregorio and Mary
Venturanza for P43,236.00 of which P10,000 was paid as down payment,
the balance to be paid upon the vendor obtaining Torrens title to the
land. On January 21, 1965, the Venturanzas, in a deed of sale also signed
by Juanita Martin, conveyed a portion of the property with an area of
15,000 square meters to the spouses Felipe and Antonia David, in
liquidation of the latter's investment in the joint real estate venture which
they had entered into with the Venturanzas in April 1959. Juanita Martin
Vda. de Lucena was able to register the property in her name and was
issued OCT No. 8916 on July 1, 1971. The portion sold to the spouses
Felipe and Antonia David is presently covered by TCT No. 372092.
From the foregoing facts as established by the evidence, the trial court
held that the Talon and Laong properties formed part of the estate of the
spouses Juan Ramos and Fortunate Calibo, which after their death
devolved by right of succession upon their heirs, namely, Candida
Ramos, Victorians Ramos and Agapita Ramos, each of whom was
entitled to one-third (1/3) pro-indiviso share of the properties. The estate
of the deceased spouses was never judicially or extra-judicialy settled
among their heirs, who, therefore, remained pro-indiviso co-owners of
the said properties, and upon the death of Victorians and Candida, their
respective shares in turn passed to their heirs. Accordingly, the trial
court declared the plaintiffs, Agapita Ramos, and the heirs of Victorians
Ramos, entitled to two- thirds (2/3) pro-indiviso share of the Talon and
Laong properties, and ordered the defendants heirs of Candida Ramos
to reconvey to plaintiffs their shares in those properties. However, such
reconveyance was no longer possible with respect to the portions
which, in the meantime, had been sold and disposed of to third parties
who were purchasers in good faith and for value.
The following parties were held to be purchasers in good faith. 1)
defendants Rufino Miranda, Narciso Velasquez, Albina Miranda and
Velasquez Realty Co., with respect to 24,636 square meters (Parcel 1) of
the Talon property sold by Candida Ramos, Eulogio Bandin and Agapita
Ramos in 1943; 2) defendants Jose Ramirez and Ambrocia Vda. de
Ramirez (widow of Sotero Ramirez), with respect to 752 square meters
(Parcel 2) and 516 square meters (Parcel 3), respectively, of the Talon
property, 3) defendant Consolacion de la Cruz, with respect to 774
square meters (Lot 1 of Subdivision Plan PSU-173299); 4) defendant
Nemesio Martin, with respect to 774 square meters (Lot 2 of Subdivision
Plan); 5) defendant Magno de la Cruz, with respect to 300 square meters
sold by Victoria Martin and 300 square meters sold by Maximina Martin
(portions of Lots 5 and 6 of Subdivision Plan); 6) defendant spouses
Felipe and Antonia David, with respect to 15,000 square meters of the
Laong property. Since the foregoing properties could not be reconveyed
to the plaintiffs, the defendants heirs who sold them were ordered to pay
the plaintiffs two-thirds (2/3) of the present value of such properties.
As stated heretofore, the trial court's decision was upheld by the
respondent Court of Appeals, except with respect to the finding that
third parties who bought portions of the properties from the defendants
 25
heirs were purchasers in good faith This finding was reversed by the
respondent appellate court. In fine, the appellate court: a) nullified the
sale of the Laong property by Candida Ramos Vda. de Martin and her
children in 1943 in favor of Hermogenes Lucena, the husband of Juanita
Martin, one of the daughters of Candida, as wen as an subsequent sales,
transfers and conveyances of said property, insofar as they affected the
two-thirds (2/3) pro-indiviso share of Agapita Ramos and the heirs of
Victorians Ramos; b) nullified the sale of portions of the Talon property
by Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943 in favor
of the spouses Rufino Miranda and Natividad Guinto, and all the
subsequent transfers of said properties, insofar as the four-fifteenth
(4/15) share of Gregorio Bandin, Raymundo Bandin, Sofio Briones and
Valentin Briones were affected; and c) invali dated the deed of
extrajudicial partition among the heirs of Candida Ramos over the
remaining portion of the Talon property in 1955 and the subdivision
thereof into individual lots among said heirs, as well as all subsequent
transfers and conveyances of some of said lots, or portions thereof, to
third parties, insofar as they affected the two-third (2/3) pro- indiviso
share pertaining to Agapita Ramos and the heirs of Victorians Ramos.
From the above decision of the Court of Appeals, the petitioners have
come to us on separate petitions for review by certiorari.
G.R. No. L-49716.:
The petitioners are the heirs of Candida Ramos, led by Juanita Martin
Vda. de Lucena and joined in by her brothers and sisters who are the
children of Candida by her first and second marriages. Primarily,
petitioners alleged that the Court of Appeals erred in not declaring that
private respondents' claim if any, is barred by prescription; and in
annulling and ordering the cancellation of Original Certificate of Title No.
8916 issued in the name of Juanita Martin pursuant to a decision by the
land registration court, affirmed by the Court of Appeals in CA G.R. No.
35191-R, which had already become final and executory.
Petitioners claim in their brief, apparently referring to the Laong property
only, that Juanita Martin, widow of Hermogenes Lucena and daughter of
Candida Ramos, had been in possession of the property since 1943 to
the exclusion of private respondents. The trial court, however, found that
Candida Ramos, until her death on February 15, 1955, administered the
Laong property, and that plaintiffs- appellants were given their shares of
the fruits thereof, though irregular and at times little, depending on the
amount of the harvest. Under Article 494 of the new Civil Code (Article
400 of the old Civil Code), prescription generally does not run in favor of
a co-heir or co-owner as long as, he expressly or impliedly recognizes
the co-ownership. While an implied or constructive trust prescribes in
ten years, the rule does not apply where a fiduciary relation exists and
the trustee recognizes the trust. 1
In the case at bar, there is no showing that the rights of the plaintiffs as
co-owners were repudiated by Candida Ramos in her lifetime; in fact, the
evidence as found by the trial court show the contrary.
The court a quo did not sustain the defense of laches and prescription
put up by the defendants (herein petitioners) since it was not shown that
the plaintiffs were guilty of negligence or slept on their rights. They sent
a letter of demand to the heirs of Candida Ramos on April 23, 1963, and
filed their complaint against them on June 14, 1963, or within a period of
approximately eight (8) years from Candida's death.
In sustaining the findings of the trial court, the Court of Appeals did not
commit any reversible error.
Petitioners further invoke the doctrine of res judicata in that the decree
of registration of the property in the name of Juanita Martin as owner by
the land registration court was affirmed by the Court of Appeals in its
decision dated July 16, 1969 in CA G.R. No. 35191-R, which had already
become final and executory. Both the respondent Court of Appeals and
the trial court correctly rejected the petitioners' contention. There can be
no res judicata since private respondents were not parties to the above
case. Neither can it be claimed that the decree of registration vested
 26
ownership in Juanita Martin. The appellate court, citing jurisprudence
established by this Court, held that the purpose of the Land Registration
Act is not to create or vest title, but to confirm and register title already
vested and existing in the applicant for a title. 2
G.R. No. L-48322.:
The petitioners spouses Felipe David and Antonia G. David purchased
portions of the Laong property, consisting of 15,000 square meters, on
February 21, 1965 from the spouses Gregorio and Mary Venturanza, who,
in turn, purchased the property from Juanita Martin Vda. de Lucena, on
September 23, 1959. At the time both purchases took place, the property
in question was still an unregistered land. The land was registered in the
name of Juanita Martin only on July 1, 1971, to whom was issued OCT
No. 8916.
Petitioners contend that the Court of Appellee erred in holding that they
are buyers in bad faith, in ordering the cancellation of OCT No. 8916 and
all subsequent transfer certificates of title derived therefrom, and in
ordering petitioners - to reconvey to respondents their two-third (2/3)
pro-indiviso share of the land and to segregate therefrom 10,000 square
meters for reconveyance to respondents.
In assailing the decision of the appellate court, petitioners invoke the
doctrine of incontrovertibility of the decree of registration after one year
from issuance, and the doctrine of conclusiveness and indivisibility of
titles issued under the Torrens system. Petitioners might have stood on
solid ground in invoking the above doctrines if they had purchased the
property from the registered owner after the issuance of the decree of
registration and the corresponding certificate of title in his name. 3
As the record shows, petitioners bought the property when it was still
unregistered land. The defense of having purchased the property in
good faith may be availed of only where registered land is involved and
the buyer had relied in good faith on the clear title of the registered
owner. One who purchases an unregistered land does so at his peril His
claim of having bought the land in good faith, i.e. without notice that
some other person has a right to, or interest in, the property, would not
protect him if it turns out that the seller does not actually own the
property. This is what happened in the case at bar.
G.R.No. L-49867:
In this petition, petitioners Jose Ramirez and the heirs of Ambrocia P.
Vda. de Ramirez (widow of Sotero Ramirez), assail the decision of the
respondent Court of Appeals declaring them purchasers in bad faith and
ordering them to reconvey to the plaintiffs Gregorio Bandin, Raymunda
Bandin&A Valentin Briones and Soto Briones, four-fifteenth (4/15) share
pro-indiviso of the properties they purchased from the spouses Rufino
Miranda and Natividad Guinto. The land in question, containing an area
of 516 square meters, more or less, was purchased by Jose Ramirez on
June 4, 1949. Sotero Ramirez purchased his land, with an area of 752
square meters on July 9, 1948 and May 10, 1949. These parcels of land
purchased by the Ramirezes were part of the portion of the Talon
property bought by the spouses Rufino and Natividad Miranda from
Candida Ramos, Eulogio Bandin and Agapita Ramos in 1943.
The appellate court held that Jose Ramirez and his father Sotero
Ramirez were not purchasers in good faith, not having made diligent
investigation of the true ownership of the properties they bought, but
relied merely on the tax declaration shown to them by the seller, Rufino
Miranda. We have no reason to disturb the foregoing findings of the
respondent appellate court. Besides, as mentioned earlier, the issue of
good faith or bad faith of the buyer is relevant only where the subject of
the sale is registered land and the purchaser is buying the same from
the registered owner, whose title to the land is clean. In such case, the
purchaser who relies on the clean title of the registered owner is
protected if he is a purchaser in good faith for value. However, this is not
the situation before us in the instant case, What petitioners bought were
unregistered lands.
 27
Petitioners contend that the respondents are barred by estoppel and
laches from recovering the property in question We have already dealt
with this issue above. We find the contention without merit.
Petitioners suggest that the portion ordered to be taken from the
properties of Jose and Sotero Ramirez should be taken instead from the
shares which pertain to and are held by the heirs of Candida Ramos. We
do not find the suggestion meritorious. The respondents are entitled to
their pro- indiviso share of the property unlawfully sold by Candida
Ramos, Agapita Ramos and Eulogio Bandin to the Miranda spouses
from whom the petitioners bought the parcels of land in question.
Hence, it would not be proper for the court to respondents' right to
recover their pro-indiviso share of the property only from the remaining
portion still in the possession of the heirs of Candida Ramos.
G.R. No. L-49712:
The case of Magno de la Cruz stands on different footing from the other
petitions. The property purchased by him from Victoria Martin and
Maximina Martin were registered lands, covered by Torrens title. Being a
purchaser in good faith for value, Magno de la Cruz is protected by the
law. In the absence of a showing that he had actual notice of the defect
in the title of the vendors or that he is a buyer in bad faith the deed of
sale in his favor and the corresponding certificate of title issued in his
name can not be nullified and cancelled. Hence, it was error for the
respondent court to invalidate the sale made by Victoria and Maximina
Martin in favor of Magno de la Cruz to the extent that it prejudiced the
two-third (2/3) pro-indiviso share of respondents in the property and to
order petitioner to reconvey said share to respondents. The petition of
Magno de la Cruz is meritorious, and the decision appealed from should
be modified accordingly.
WHEREFORE, in view of all the foregoing, judgment is hereby rendered:
1. Dismissing the petitions in G.R. Nos. L-48322, L-49716 and L-49687;
2. Granting the petition in G.R. No. L-49712, declaring valid the deeds of
sale executed by Victoria Martin (Exh. 8-Magno de la Cruz) and Maximina
Martin (Exh. 4-Magno de la Cruz) in favor of petitioner Magno de la Cruz,
as well as Transfer Certificate of Title No. 116450 issued in the latter's
name, ordering Victoria Martin and Maximina Martin to pay the
respondents two-third (2/3) of the present value of the property sold by
them to Magno de la Cruz, and modifying the appealed decision
accordingly; and
3. Affirming the appealed decision, except as modified above.
No pronouncement as to costs.
SO ORDERED.
Narvasa, Melencio-Herrera, Cruz, Feliciano and Sarmiento, JJ., concur.
Gancayco, J., took no part.
G.R. No. L-34500 March 18, 1988
MOISES OLIVARES and JUANITA T. OLIVARES, petitioners-appellants,
vs.
THE HONORABLE CARLOS V. GONZALES as Judge of the Court of First
Instance of Iloilo (Branch VI), respondent and JACINTO TUVILLA,
CEFERINO TUVILLA, and JUAN TUMABINI, respondents-appellees.
Mario Guarina III for petitioners-appellants.
Enrique Arguelles for respondents-appellees.
MELENCIO-HERRERA, J.:
 28
The Disputed Property is a piece of unregistered land located at Tigbauan,
Iloilo Identified as Assessor's Lot No. 343. It was previously owned by
respondents-appellees Jacinto Tuvilla and Ceferino Tuvilla (the Tuvillas, for
short) both of Tigbauan, Iloilo.
Sometime in 1955, the Tuvillas executed a "Deed of Sale with Right to
Repurchase" in favor of respondent-appellee Juan Tumabini over the
Disputed Property in consideration of the sum of P1,350.00. The document
was duly acknowledged before a Notary Public but was not recorded in the
Registry of Property.
Sometime in 1959, the Tuvillas executed a "Deed of Sale with Pacto de Retro"
over the Disputed Property in favor of petitioners- appellants, Moises Olivares
and Juanita T. Olivares (the Olivareses, for short). This document was
acknowledged before a Notary Public and registered with the Registry of
Deeds. In 1966, the Tuvillas also executed in favor of the Olivareses a "Deed
of Absolute Sale" covering the Disputed Property. Petitioners-appellants have
been in possession of the Disputed Property since 1959.
On October 11, 1967, respondent-appellee, Juan Tumabini filed Civil Case
No. 7410 before Branch I of the then Court of First Instance of Iloilo against
the Tuvillas for the consolidation of ownership over the Disputed Property by
reason of the alleged failure of the Tuvillas to redeem the property from
Tumabini (hereinafter referred to as the Consolidation Case). The Olivareses,
however, were not included as parties to the said case.
During the pre-trial of the Consolidation Case, counsel for the parties agreed
to consider the pacto de retro sale as one of equitable mortgage. Thus, the
Trial Court rendered judgment in favor of Tumabini in the amount of P
1,350.00, pursuant to which, the Court subsequently issued a Writ of
Execution on October 23, 1968.
On November 23, 1968, the Olivareses instituted Civil Case No. 7777 before
Branch VI of the former Court of First Instance of Iloilo, for Quieting of Title,
against the Tuvillas, Juan Tumabini the Provincial Sheriff and Pyramid Surety
(hereinafter, the Quieting of Title Case). The said Court issued a Restraining
Order to stop the sale in the Consolidation Case (No. 7410) pending in Branch
1, but the said order was lifted on February 6, 1969.
Subsequently, the Consolidation Case (No. 7410), the Disputed Property was
sold at public auction and a Writ of Possession was issued in Tumabinis favor.
However, the tenant of the Olivareses refused to surrender possession,
prompting a citation for contempt. Action thereon was deferred, however,
pending termination of Civil Case No. 7777.
On July 7, 1970, in the Quieting of Title Case (No. 7777), the Trial Court
issued an Order dismissing said case, as follows:
Acting upon the motion for dismissal of this case filed by Atty.
Enrique Arguelles, counsel for the defendants, it appearing
that the instant action has been filed since November 23,
1968 and up to this time plaintiffs failed to exert effort to have
the defendants summoned, for failure to prosecute and lack
of interest on the part of the plaintiffs for such unreasonable
length of time, as prayed, let this case be dismissed
No reconsideration was sought nor any appeal taken by the Olivareses.
On July 14, 1971, the same case was refiled, also in Branch VI, docketed as
Civil Case No. 8698 (the Refiled Case) which, however, was dismissed by the
Court on September 6, 1971 "it appearing that Civil Case No. 7777 previously
filed and dismissed by the Court embraces the same subject matter and the
same party litigants as the case at bar."
On September 20, 1971, the Court denied the Motion for Reconsideration filed
by the Olivareses. Hence, this appeal by certiorari.
The question posed is whether the dismissal of the Quieting of Title Case (No.
7777) "for failure to prosecute" barred the institution of a subsequent suit, Civil
Case No. 8698, by the same plaintiff against the same defendants on the
same cause of action. Section 3, Rule 17 of the Rules of Court specifically
provides:
 29
Sec. 3. Failure to prosecute. — If plaintiff fails to appear at the
time of the trial, or to prosecute his action for an
unreasonable length of time, or to comply with these rules or
any order of the court, the action may be dismissed upon
motion of the defendant or upon the court's own motion. This
dismissal shall have the effect of an adjudication upon the
merits, unless otherwise provided by the court.
Procedurally speaking, therefore, since the dismissal by the Trial Court was
unqualified, it had the effect of an adjudication upon the merits.
However, the equities of the case are with the Olivareses. The first sale
with pacto de retro by the Tuvillas to Tumabini was unregistered; in contrast,
the sale in favor of the Olivareses was duly recorded. The Consolidation Case
(Case No. 7410) instituted by Tumabini against the Tuvillas for consolidation
of his ownership did not include the Olivareses as parties defendants even
though they were then in possession of the Disputed Property. Justice and
equity demand, therefore, that their side be heard in the Refiled Case (No.
8698). Then, too, the contempt incident and the matter of the Writ of
Possession in the Consolidation Case (No. 7410) were left unresolved
pending the outcome of the Quieting of Title Case (No. 7777).
In other words, it would be more in keeping with substantial justice if the
controversy between the parties to be resolved on the merits rather than on a
procedural technicality in the light of the express mandate of the Rules that
they be "liberally construed in order to promote their object and to assist the
parties in obtaining just, speedy and inexpensive determination of every action
and proceeding." The dismissal of actions is based on sound judicial
discretion and such discretion "must be exercised wisely and prudently never
capriciously, with a view to substantial justice." For having failed to meet that
standard it will have to be held that respondent Judge acted with grave abuse
of discretion (see Tandoc vs. Tensuan, I, 50835, October 30, 1979, 93 SCRA
880).
WHEREFORE, the questioned Order of dismissal, dated September 6, 1971,
in Civil Case No. 8698, is hereby SET ASIDE and the said case REMANDED
for prompt hearing and determination on the merits. This Decision shag be
immediately executory upon promulgation. No costs.
G.R. No. L-28740 February 24, 1981
FERMIN Z. CARAM, JR., petitioner,
vs.
CLARO L. LAURETA, respondent.
FERNANDEZ, J.:
This is a petition for certiorari to review the decision of the Court of Appeals
promulgated on January 29, 1968 in CA-G. R. NO. 35721-R entitled "Claro L.
Laureta, plaintiff-appellee versus Marcos Mata, Codidi Mata and Fermin
Caram, Jr., defendants- appellants; Tampino (Mansaca), et al. Intervenors-
appellants," affirming the decision of the Court of First Instance of Davao in
Civil Case No. 3083. 1
On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of
Davao an action for nullity, recovery of ownership and/or reconveyance with
damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin Z.
Caram, Jr. and the Register of Deeds of Davao City. 2
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land
covered by Original Certificate of Title No. 3019 in favor of Claro Laureta,
plaintiff, the respondent herein. The deed of absolute sale in favor of the
plaintiff was not registered because it was not acknowledged before a notary
public or any other authorized officer. At the time the sale was executed, there
was no authorized officer before whom the sale could be acknowledged
inasmuch as the civil government in Tagum, Davao was not as yet organized.
However, the defendant Marcos Mata delivered to Laureta the peaceful and
lawful possession of the premises of the land together with the pertinent
papers thereof such as the Owner's Duplicate Original Certificate of Title No.
3019, sketch plan, tax declaration, tax receipts and other papers related
thereto. 3 Since June 10, 1945, the plaintiff Laureta had been and is stin in
continuous, adverse and notorious occupation of said land, without being
 30
molested, disturbed or stopped by any of the defendants or their
representatives. In fact, Laureta had been paying realty taxes due thereon and
had introduced improvements worth not less than P20,000.00 at the time of
the filing of the complaint. 4
On May 5, 1947, the same land covered by Original Certificate of Title No.
3019 was sold by Marcos Mata to defendant Fermin Z. Caram, Jr., petitioner
herein. The deed of sale in favor of Caram was acknowledged before Atty.
Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys.
Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of First
Instance of Davao a petition for the issuance of a new Owner's Duplicate of
Original Certificate of Title No. 3019, alleging as ground therefor the loss of
said title in the evacuation place of defendant Marcos Mata in Magugpo,
Tagum, Davao. On June 5, 1947, the Court of First Instance of Davao issued
an order directing the Register of Deeds of Davao to issue a new Owner's
Duplicate Certificate of Title No. 3019 in favor of Marcos Mata and declaring
the lost title as null and void. On December 9, 1947, the second sale between
Marcos Mata and Fermin Caram, Jr. was registered with the Register of
Deeds. On the same date, Transfer Certificate of Title No. 140 was issued in
favor of Fermin Caram Jr. 5
On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed their
answer with counterclaim admitting the existence of a private absolute deed of
sale of his only property in favor of Claro L. Laureta but alleging that he signed
the same as he was subjected to duress, threat and intimidation for the
plaintiff was the commanding officer of the 10th division USFIP operating in
the unoccupied areas of Northern Davao with its headquarters at Project No. 7
(Km. 60, Davao Agusan Highways), in the Municipality of Tagum, Province of
Davao; that Laureta's words and requests were laws; that although the
defendant Mata did not like to sell his property or sign the document without
even understanding the same, he was ordered to accept P650.00 Mindanao
Emergency notes; and that due to his fear of harm or danger that will happen
to him or to his family, if he refused he had no other alternative but to sign the
document. 6
The defendants Marcos Mata and Codidi Mata also admit the existence of a
record in the Registry of Deeds regarding a document allegedly signed by him
in favor of his co-defendant Fermin Caram, Jr. but denies that he ever signed
the document for he knew before hand that he had signed a deed of sale in
favor of the plaintiff and that the plaintiff was in possession of the certificate of
title; that if ever his thumb mark appeared in the document purportedly
alienating the property to Fermin Caram, did his consent was obtained through
fraud and misrepresentation for the defendant Mata is illiterate and ignorant
and did not know what he was signing; and that he did not receive a
consideration for the said sale. 7
The defendant Fermin Caram Jr. filed his answer on October 23, 1959
alleging that he has no knowledge or information about the previous
encumbrances, transactions, and alienations in favor of plaintiff until the filing
of the complaints. 8
The trial court rendered a decision dated February 29, 1964, the dispositive
portion of which reads: 9
1. Declaring that the deed of sale, Exhibit A, executed by
Marcos Mata in favor of Claro L. Laureta stands and prevails
over the deed of sale, Exhibit F, in favor of Fermin Caram, Jr.;
2. Declaring as null and void the deed of sale Exhibit F, in
favor of Fermin Caram, Jr.;
3. Directing Marcos Mata to acknowledge the deed of sale,
Exhibit A, in favor of Claro L. Laureta;
4. Directing Claro L. Laureta to secure the approval of the
Secretary of Agriculture and Natural Resources on the deed,
Exhibit A, after Marcos Mata shall have acknowledged the
same before a notary public;
5. Directing Claro L. Laureta to surrender to the Register of
Deeds for the City and Province of Davao the Owner's
 31
Duplicate of Original Certificate of Title No. 3019 and the
latter to cancel the same;
6. Ordering the Register of Deeds for the City and Province of
Davao to cancel Transfer Certificate of Title No. T-140 in the
name of Fermin Caram, Jr.;
7. Directing the Register of Deeds for the City and Province of
Davao to issue a title in favor of Claro L. Laureta, Filipino,
resident of Quezon City, upon presentation of the deed
executed by Marcos Mata in his favor, Exhibit A, duly
acknowledged by him and approved by the Secretary of
Agriculture and Natural Resources, and
8. Dismissing the counterclaim and cross claim of Marcos
Mata and Codidi Mata, the counterclaim of Caram, Jr., the
answer in intervention, counterclaim and cross-claim of the
Mansacas.
The Court makes no pronouncement as to costs.
SO ORDERED.
The defendants appealed from the judgment to the Court of Appeals. 10 The
appeal was docketed as CA-G.R. NO. 35721- R.
The Court of Appeals promulgated its decision on January 29, 1968 affirming
the judgment of the trial court.
In his brief, the petitioner assigns the following errors: 11
I sum of P1,000.00 for the latter's property and to see to it that the requisite
THE RESPONDENT COURT OF APPEALS ERRED IN
CONCLUDING THAT IRESPE AND APORTADERA WERE
ATTORNEYS-IN-FACT OF PETITIONER CARAM FOR THE
PURPOSE OF BUYING THE PROPERTY IN QUESTION.
II
THE RESPONDENT COURT OF APPEALS ERRED IN
CONCLUDING THAT THE EVIDENCE ADDUCED IN THE
TRIAL COURT CONSTITUTE LEGAL EVIDENCE OF
FRAUD ON THE PART OF IRESPE AND APORTADERA AT
TRIBUTABLE TO PETITIONER.
III
THE RESPONDENT COURT OF APPEALS COMMITTED
GRAVE ERROR OF LAW IN HOLDING THAT KNOWLEDGE
OF IRESPE AND APORTADERA OF A PRIOR
UNREGISTERED SALE OF A TITLED PROPERTY
ATTRIBUTABLE TO PETITIONER AND EQUIVALENT IN
LAW OF REGISTRATION OF SAID SALE.
IV
THE RESPONDENT COURT OF APPEALS ERRED IN NOT
HOLDING THAT AN ACTION FOR RECONVEYANCE ON
THE GROUND OF FRAUD PRESCRIBES WITHIN FOUR (4)
YEARS.
The petitioner assails the finding of the trial court that the second sale of the
property was made through his representatives, Pedro Irespe and Atty.
Abelardo Aportadera. He argues that Pedro Irespe was acting merely as a
broker or intermediary with the specific task and duty to pay Marcos Mata the
deed of sale covering the purchase was properly executed by Marcos Mata;
that the Identity of the property to be bought and the price of the purchase had
already been agreed upon by the parties; and that the other alleged
 32
representative, Atty. Aportadera, merely acted as a notary public in the
execution of the deed of sale.
The contention of the petitioner has no merit. The facts of record show that
Mata, the vendor, and Caram, the second vendee had never met. During the
trial, Marcos Mata testified that he knows Atty. Aportadera but did not know
Caram. 12 Thus, the sale of the property could have only been through
Caram's representatives, Irespe and Aportadera. The petitioner, in his answer,
admitted that Atty. Aportadera acted as his notary public and attorney-in-fact
at the same time in the purchase of the property. 13
The petitioner contends that he cannot be considered to have acted in bad
faith because there is no direct proof showing that Irespe and Aportadera, his
alleged agents, had knowledge of the first sale to Laureta. This contention is
also without merit.
The Court of Appeals, in affirming the decision of the trial court, said: 14
The trial court, in holding that appellant Caram. Jr. was not a
purchaser in good faith, at the time he bought the same
property from appellant Mata, on May 5, 1947, entirely
discredited the testimony of Aportadera. Thus it stated in its
decision:
The testimony of Atty. Aportadera quoted elsewhere in this
decision is hollow. There is every reason to believe that
Irespe and he had known of the sale of the property in
question to Laureta on the day Mata and Irespe,
accompanied by Leaning Mansaca, went to the office of Atty.
Aportadera for the sale of the same property to Caram, Jr.,
represented by Irespe as attorney-in-fact. Ining Mansaca was
with the two — Irespe and Mata — to engage the services 6f
Atty. Aportadera in the annulment of the sale of his land to
Laureta. When Leaning Mansaca narrated to Atty. Aportadera
the circumstances under which his property had been sold to
Laureta, he must have included in the narration the sale of
the land of Mata, for the two properties had been sold on the
same occassion and under the same circumstances. Even as
early as immediately after liberation, Irespe, who was the
witness in most of the cases filed by Atty. Aportadera in his
capacity as Provincial Fiscal of Davao against Laureta, must
have known of the purchases of lands made by Laureta when
he was regimental commander, one of which was the sale
made by Mata. It was not a mere coincidence that Irespe was
made guardian ad litem of Leaning Mansaca, at the
suggestion of Atty. Aportadera and attorney-in-fact of Caram,
Jr.
The Court cannot help being convinced that Irespe, attorney-
in-fact of Caram, Jr. had knowledge of the prior existing
transaction, Exhibit A, between Mata and Laureta over the
land, subject matter of this litigation, when the deed, Exhibit
F, was executed by Mata in favor of Caram, Jr. And this
knowledge has the effect of registration as to Caram, Jr. RA
pp. 123-124)
We agree with His Honor's conclusion on this particular point,
on two grounds — the first, the same concerns matters
affecting the credibility of a witness of which the findings of
the trial court command great weight, and second, the same
is borne out by the testimony of Atty. Aportadera himself.
(t.s.n., pp. 187-190, 213-215, Restauro).
Even if Irespe and Aportadera did not have actual knowledge of the first sale,
still their actions have not satisfied the requirement of good faith. Bad faith is
not based solely on the fact that a vendee had knowledge of the defect or lack
of title of his vendor. In the case of Leung Yee vs. F. L. Strong Machinery Co.
and Williamson, this Court held: 15
One who purchases real estate with knowledge of a defect or
lack of title in his vendor can not claim that he has acquired
title thereto in good faith, as against the true owner of the land
 33
or of an interest therein, and the same rule must be applied to
one who has knowledge of facts which should have put him
upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor.
In the instant case, Irespe and Aportadera had knowledge of circumstances
which ought to have put them an inquiry. Both of them knew that Mata's
certificate of title together with other papers pertaining to the land was taken
by soldiers under the command of Col. Claro L. Laureta. 16 Added to this is the
fact that at the time of the second sale Laureta was already in possession of
the land. Irespe and Aportadera should have investigated the nature of
Laureta's possession. If they failed to exercise the ordinary care expected of a
buyer of real estate they must suffer the consequences. The rule of caveat
emptor requires the purchaser to be aware of the supposed title of the vendor
and one who buys without checking the vendor's title takes all the risks and
losses consequent to such failure. 17
The principle that a person dealing with the owner of the registered land is not
bound to go behind the certificate and inquire into transactions the existence
of which is not there intimated 18 should not apply in this case. It was of
common knowledge that at the time the soldiers of Laureta took the
documents from Mata, the civil government of Tagum was not yet established
and that there were no officials to ratify contracts of sale and make them
registerable. Obviously, Aportadera and Irespe knew that even if Mata
previously had sold t he Disputed such sale could not have been registered.
There is no doubt then that Irespe and Aportadera, acting as agents of Caram,
purchased the property of Mata in bad faith. Applying the principle of agency,
Caram as principal, should also be deemed to have acted in bad faith.
Article 1544 of the New Civil Code provides that:
Art. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the ownership shall belong
to the person acquiring it who in good faith first recordered it
in the Registry of Property.
Should there be no inscription, the ownership shag pertain to
the person who in good faith was first in the possession; and,
in the absence thereof, to the person who presents the oldest
title, provided there is good faith. (1473)
Since Caram was a registrant in bad faith, the situation is as if there was no
registration at all. 19
The question to be determined now is, who was first in possession in good
faith? A possessor in good faith is one who is not aware that there exists in his
title or mode of acquisition any flaw which invalidates it. 20 Laureta was first in
possession of the property. He is also a possessor in good faith. It is true that
Mata had alleged that the deed of sale in favor of Laureta was procured by
force. 21 Such defect, however, was cured when, after the lapse of four years
from the time the intimidation ceased, Marcos Mata lost both his rights to file
an action for annulment or to set up nullity of the contract as a defense in an
action to enforce the same.
Anent the fourth error assigned, the petitioner contends that the second deed
of sale, Exhibit "F", is a voidable contract. Being a voidable contract, the action
for annulment of the same on the ground of fraud must be brought within four
(4) years from the discovery of the fraud. In the case at bar, Laureta is
deemed to have discovered that the land in question has been sold to Caram
to his prejudice on December 9, 1947, when the Deed of Sale, Exhibit "F" was
recorded and entered in the Original Certificate of Title by the Register of
Deeds and a new Certificate of Title No. 140 was issued in the name of
Caram. Therefore, when the present case was filed on June 29, 1959,
plaintiff's cause of action had long prescribed.
The petitioner's conclusion that the second deed of sale, "Exhibit F", is a
voidable contract is not correct. I n order that fraud can be a ground for the
annulment of a contract, it must be employed prior to or simultaneous to the,
 34
consent or creation of the contract. The fraud or dolo causante must be that
which determines or is the essential cause of the contract. Dolo causante as a
ground for the annulment of contract is specifically described in Article 1338 of
the New Civil Code of the Philippines as "insidious words or machinations of
one of the contracting parties" which induced the other to enter into a contract,
and "without them, he would not have agreed to".
The second deed of sale in favor of Caram is not a voidable contract. No
evidence whatsoever was shown that through insidious words or
machinations, the representatives of Caram, Irespe and Aportadera had
induced Mata to enter into the contract.
Since the second deed of sale is not a voidable contract, Article 1391, Civil
Code of the Philippines which provides that the action for annulment shall be
brought within four (4) years from the time of the discovery of fraud does not
apply. Moreover, Laureta has been in continuous possession of the land since
he bought it in June 1945.
A more important reason why Laureta's action could not have prescribed is
that the second contract of sale, having been registered in bad faith, is null
and void. Article 1410 of the Civil Code of the Philippines provides that any
action or defense for the declaration of the inexistence of a contract does not
prescribe.
In a Memorandum of Authorities 22 submitted to this Court on March 13, 1978,
the petitioner insists that the action of Laureta against Caram has prescribed
because the second contract of sale is not void under Article 1409 23 of the
Civil Code of the Philippines which enumerates the kinds of contracts which
are considered void. Moreover, Article 1544 of the New Civil Code of the
Philippines does not declare void a second sale of immovable registered in
bad faith.
The fact that the second contract is not considered void under Article 1409
and that Article 1544 does not declare void a deed of sale registered in bad
faith does not mean that said contract is not void. Article 1544 specifically
provides who shall be the owner in case of a double sale of an immovable
property. To give full effect to this provision, the status of the two contracts
must be declared valid so that one vendee may contract must be declared
void to cut off all rights which may arise from said contract. Otherwise, Article
1544 win be meaningless.
The first sale in favor of Laureta prevails over the sale in favor of Caram.
WHEREFORE, the petition is hereby denied and the decision of the Court of
Appeals sought to be reviewed is affirmed, without pronouncement as to
costs.
SO ORDERED.
G.R. No. L-56232 June 22, 1984
ABELARDO CRUZ (deceased) substituted by Heirs Consuelo C. Cruz,
Claro C. Cruz and Stephen C. Cruz, per Resolution, petitioners,
vs.
LEODEGARIA CABANA, TEOFILO LEGASPI , ILUMINADA CABANA and
THE HONOR- ABLE COURT OF APPEALS,* respondents.
Nazareno, Azada, Sabado & Dizon for petitioners.
Felixberto N. Boquiren for respondents.
TEEHANKEE, J.:
The Court affirms the questioned decision of the now defunct Court of Appeals
which affirmed that of the Court of First Instance of Quezon Province, but
directs that the seller, respondent Leodegaria Cabana who sold the property in
question twice, first to her co-respondents Teofilo Legaspi and Iluminada
Cabana and later to petitioner Abelardo Cruz (now deceased), should
reimburse to petitioner's heirs the amounts of P2,352.50, which the late
petitioner Abelardo Cruz paid to the Philippine National Bank to discharge the
 35
mortgage obligation of said respondent Leodegaria Cabana in favor of said
bank, and of P3,397.50, representing the amount paid by said Abelardo Cruz
to her as consideration of the sale with pacto de retro of the subject property.
This is a simple case of double sale of real property. Respondent appellate
court in its decision of August 13, 1980 stated the background facts and
resolved the issue in favor of defendants- appellees, first buyers- respondents
herein, and against plaintiff-appellant Abelardo Cruz, petitioner herein
(substituted by his heirs), as follows:
Defendants' evidence shows that on October 21, 1968,
defendant Leodegaria Cabana sold the land in question to
defendants-spouses Teofilo Legaspi and Iluminada Cabana
(Exh. 1). The said defendants-spouses attempted to register
the deed of sale but said registration was not accomplished
because they could not present the owner's duplicate of title
which was at that time in the possession of the PNB as
mortgage.
Likewise, when plaintiff tried to register the deed of sale
executed by Leodegaria Cabana on September 3, 1970, said
plaintiff was informed that the owner thereof had sold the land
to defendants-spouses on October 21, 1968. Plaintiff was
able to register the land in his name on February 9, 1971
(Exh. A). With the admission of both parties that the land in
question was sold to two persons, the main issue to be
resolved in this appeal is as to who of said vendees has a
better title to said land.
There is no dispute that the land in question was sold with
right of repurchase on June 1, 1965 to defendants- spouses
Teofilo Legaspi and Iluminada Cabana (Exh. 1). The said
document 'Bilihang Muling Mabibili' stipulated that the land
can be repurchased by the vendor within one year from
December 31, 1966 (see par. 5, Exh. 1).lwphl@itç Said land
was not repurchased and in the meantime, however, said
defendants-spouses took possession of the land.
Upon request of Leodegaria Cabana, the title of the land was
lent to her in order to mortgage the property to the Philippine
National Bank. Said title was, forthwith, deposited with the
PNB. On October 21, 1968, defendant Leodegaria Cabana
sold the land by way of absolute sale to the defendants-
spouses (Exh. 2). However, on November 29, 1968
defendant sold the same property to herein plaintiff and the
latter was able to register it in his name.
The transaction in question is governed by Article 1544 of the
Civil Code. True it is that the plaintiff was able to register the
sale in his name but was he in good faith in doing so?
While the title was registered in plaintiff- appellant's name on
February 9, 1971 (Exh. A), it appears that he knew of the sale
of the land to defendants-spouses Legaspi as he was
informed in the Office of the Register of Deeds of Quezon. It
appears that the defendants-spouses registered their
document of sale on May 13, 1965 under Primary Entry No.
210113 of the Register of Deeds (Exh. 2).
Under the foregoing circumstances, the right of ownership
and title to the land must be resolved in favor of the
defendants- spouses Legaspi on three counts. First, the
plaintiff-appellant was not in good faith in registering the title
in his name. Consistent is the jurisprudence in this jurisdiction
that in order that the provisions of Article 1544 of the new
Civil Code may be invoked, it is necessary that the
conveyance must have been made by a party who has an
existing right in the thing and the power to dispose of it (10
Manresa 170, 171). It cannot be set up by a second
purchaser who comes into possession of the property that
has already been acquired by the first purchaser in full
 36
dominion (Bautista vs. Sison, 39 Phil. 615), this not
withstanding that the second purchaser records his title in the
public registry, if the registration be done in bad faith, the
philosophy underlying this rule being that the public records
cannot be covered into instruments of fraud and oppression
by one who secures an inscription therein in bad faith
(Chupinghong vs. Borreros, 7 CA Rep. 699).
A purchaser who has knowledge of fact which would put him
upon inquiry and investigation as to possible defects of the
title of the vendor and fails to make such inquiry and
investigation, cannot claim that he is a purchaser in good
faith. Knowledge of a prior transfer of a registered property by
a subsequent purchaser makes him a purchaser in bad faith
and his knowledge of such transfer vitiates his title acquired
by virtue of the latter instrument of conveyance which creates
no right as against the first purchaser (Reylago vs. Jarabe, L-
20046, March 27, 1968, 22 SCRA 1247).
In the second place, the defendants-spouses registered the
deed of absolute sale ahead of plaintiff- appellant. Said
spouses were not only able to obtain the title because at that
time, the owner's duplicate certificate was still with the
Philippine National Bank.
In the third place, defendants-spouses have been in
possession all along of the land in question. If immovable
property is sold to different vendees, the ownership shall
belong to the person acquiring it who in good faith first
recorded it in the registry of property; and should there be no
inscription, the ownership shall pertain to the person who in
good faith was first in the possession (Soriano, et al. vs. The
Heirs of Domingo Magali et al., L-15133 , July 31, 1963, 8
SCRA 489). Priority of possession stands good in favor of
herein defendants-spouses (Evangelista vs. Abad, [CA] 36
O.G. 2913; Sanchez vs. Ramos, 40 Phil. 614, Quimson vs,
Rosete, 87 Phil. 159).
The Court finds that in this case of double sale of real property, respondent
appellate court, on the basis of the undisputed facts, correctly applied the
provisions of Article 1544 of the Civil Code that
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.
There is no question that respondents-spouses Teofilo Legaspi and Iluminada
Cabana were the first buyers, first on June 1, 1965 under a sale with right of
repurchase and later on October 21, 1968 under a deed of absolute sale and
that they had taken possession of the land sold to them; that petitioner was
the second buyer under a deed of sale dated November 29, 1968, which to all
indications, contrary to the text, was a sale with right of repurchase for ninety
(90) days. 1 There is no question either that respondents legaspi spouses
were the first and the only ones to be in possession of the subject property.
Said respondents spouses were likewise the first to register the sale with right
of repurchase in their favor on May 13, 1965 under Primary Entry No. 210113
of the Register of Deeds. They could not register the absolute deed of sale in
their favor and obtain the corresponding transfer certificate of title because at
that time the seller's duplicate certificate was still with the bank. But there is no
question, and the lower courts so found conclusively as a matter of fact, that
 37
when petitioner Cruz succeeded in registering the later sale in his favor, he
knew and he was informed of the prior sale in favor of respondents-spouses.
Respondent appellate court correctly held that such "knowledge of a prior
transfer of a registered property by a subsequent purchaser makes him a
purchaser in bad faith and his knowledge of such transfer vitiates his title
acquired by virtue of the latter instrument of conveyance which creates no
right as against the first purchaser."
As the Court held in Carbonell vs. Court of Appeals "it is essential that the
2 upholding respondents-spouses Teofilo Legaspi and Iluminada Cabana as the
buyer of realty must act in good faith in registering his deed of sale to merit the
protection of the second paragraph of [the above quoted] Article 1544." As the
writer stressed in his concurring opinion therein, "(T)he governing principle
here is prius tempore, potior jure(first in time, stronger in right). Knowledge
gained by the first buyer of the second sale cannot defeat the first buyer's
rights except only as provided by the Civil Code and that is where the second
buyer first registers in good faith the second sale ahead of the first. Such
knowledge of the first buyer does not bar her from availing of her rights under
the law, among them, to register first her purchase as against the second
buyer. But in converso knowledge gained by the second buyer of the first sale
defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith. This is the price exacted
by Article 1544 of the Civil Code for the second buyer being able to displace
the first buyer; that before the second buyer can obtain priority over the first,
he must show that he acted in good faith throughout (i.e. in ignorance of the
first sale and of the first buyer's rights) — from the time of acquisition until the
title is transferred to him by registration or failing registration, by delivery of
possession. The second buyer must show continuing good faith and
innocence or lack of knowledge of the first sale until his contract ripens into full
ownership through prior registration as provided by law."
Petitioner's prayer for alternative relief for reimbursement of the amount of
P2,352.50 paid by him to the bank to discharge the existing mortgage on the
property and of the amount of P3,397.50 representing the price of the second
sale are well taken insofar as the seller Leodegaria Cabana is concerned.
These amounts have been received by the said seller Leodegaria Cabana on
account of a void second sale and must be duly reimbursed by her to
petitioner's heirs, but the Legaspi spouses cannot be held liable therefor since
they had nothing to do with the said second sale nor did they receive any
benefit therefrom. Petitioner's claim for reimbursement of the amount of
P102.58 as real estate taxes paid on the property is not well taken because
the respondents Legaspi spouses had been paying the real estate taxes on
the same property since June 1, 1969. 4
ACCORDINGLY, the appealed judgment of respondent appellate court,
true and rightful owners of the property in litigation and ordering the issuance
of a new title with the cancellation as null and void of Title No. T- 99140
obtained by petitioner Abelardo C. Cruz, is hereby affirmed in toto. In
accordance with the partial grant of petitioner's prayer for alternative relief as
stated in the preceding paragraph hereof, the Court hereby orders and
sentences respondent Leodegaria Cabana to reimburse and pay to
petitioner's heirs the total sum of P5,750.00.
Melencio-Herrera, Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.
SPOUSES PASTOR VALDEZ and VIRGINIA VALDEZ, petitioners,
vs.
HONORABLE COURT OF APPEALS AND FELICIDAD VIERNES,
FRANCISCO ANTE, AND ANTONIO ANTE,respondents.
Sumulong Law Offices for petitioners.
Antonio A. Ante for respondents Ante.
Jose A. Rico for respondent Viernes.
GANCAYCO, J.:
 38
This is a case of double sale of real property where both vendees registered
the sales with the Register of Deeds and each produced their respective
owner's duplicate copy of the certificate of title to the property.
Spouses Francisco Ante and Manuela Ante were the registered owners of a
parcel of land located at 20th Avenue, Murphy, Quezon City, with an area of
approximately 625.70 square meters as evidenced by Transfer Certificate of
Title (TCT) No. 141582 issued by the Register of Deeds of Quezon City. Said
spouses executed a special power of attorney in favor of their son, Antonio
Ante, a lawyer, authorizing him to execute any document conveying by way of
mortgage or sale a portion or the whole of said property, to receive payment
and dispose of the same as he may deem fit and proper under the premises.1
Antonio Ante offered to sell the lot to Eliseo Viernes, who was occupying the
same with the permission of Ante. Viernes, however, turned down the offer as
he did not have money. Antonio Ante then told Viernes that he will instead sell
the property to Pastor Valdez and Virginia Valdez.2
Antonio Ante had the said lot subdivided into Lot A with an area of 280 square
meters and Lot B with an area or 345.70 square meters, each lot having its
corresponding technical description.
On June 15, 1980, Antonio Ante, as attorney in fact, executed a deed of sale
of Lot A in favor of spouses Pastor Valdez and Virginia Valdez, for and in
consideration of the amount of P112,000.003
On February 12, 1987, in the same capacity, Antonio Ante sold to said Valdez
spouses, Lot B for the amount of P138,000.00.4
The Valdez spouses demanded from Antonio Ante the delivery of the owner's
duplicate copy of TCT No. 141582 covering said two (2) lots. Ante promised
them that he will deliver the title to them in a few days.
In the meanwhile petitioners started fencing the whole lot with cement hollow
blocks in the presence of spouses Eliseo and Felicidad Viernes. Except for the
gate, it took them two weeks to finish fencing the whole lot. On said occasion
the Viernes spouses were informed by the Valdez spouses that they were
fencing the same as they purchased the land from Antonio Ante.
As Ante failed to deliver the owner's duplicate certificate of title demanded by
the Valdez spouses, the latter filed their affidavit of adverse claim over the
subject lot with the Register of Deeds of Quezon City on September 6, 1982
as the vendees of the property.5
Upon inquiries made, the Valdez spouses learned that Antonio Ante had
delivered the owner's duplicate certificate of title as a collateral to one Dr.
Camilo Garma of Purdue Street., Cubao Quezon City to secure his rentals in
arrears in the amount of P9,000.00. On September 13, 1983, upon the
prodding of the Valdez spouses, Antonio Ante wrote to Dr. & Mrs. Garma to
request them to entrust the owner's duplicate copy of the title of the
questioned lot to the Valdez spouses with the assurance that Ante will pay his
indebtedness to them.6 The Garma spouses turned over to the Valdez
spouses the said owner's duplicate certificate of title after said Valdez spouses
paid for the obligation of Antonio Ante to the Garma spouses.
The Valdez spouses then proceeded to register the two deeds of sale dated
June 15, 1980 and February 12, 19817with the Register of Deeds of Quezon
City by presenting the owner's duplicate copy of the title. They were, however,
informed that the said owner's duplicate certificate of title had been declared
null and void per order of Judge Tutaan dated November 10, 1982. They also
found out that spouses Francisco and Manuela Ante earlier filed a petition for
the issuance of a new owner's duplicate certificate of title and to declare null
and void the lost owner's duplicate certificate of title.
The Valdez spouses also discovered that the Register of Deeds cancelled
TCT No. 141582 and in lieu thereof issued TCT No. 293889 in the name of
Felicidad Viernes on the basis of a deed of assignment of the same property
dated February 17, 1982 executed by Antonio Ante in her favor.
When Virginia Valdez inquired from Antonio Ante why he executed the said
deed of assignment when he had previously sold the same lot to them, Ante
replied that they could sue him in court.
 39
Thus, the Valdezes filed their adverse claim over the lot covered by TCT No.
293889 in the name of Felicidad Viernes. They filed the complaint in Barangay
office of San Roque, Quezon City against Felicidad Viernes but as no
amicable settlement was reached, the Valdezes filed a complaint in the
Regional Trial Court of Quezon City seeking among others, that the order
dated November 10, 1982 of the Court of First Instance of Quezon City
authorizing the issuance of a new owner's duplicate certificate of title in the
name of Francisca Ante be declared null any void; that the deed of
assignment dated February 17, 1982 executed by Antonio Ante in favor of
Felicidad Viernes be cancelled and revoked; that TCT No. 293889 in the name
of Felicidad Viernes in the Register of Deeds of Quezon City be cancelled and
declared null and void; that the Register of Deeds of Quezon City be ordered
to reinstate, revalidate and give full force and effect to the owner's duplicate
copy of TCT No. 141582 in the name of spouses Francisco and Manuela Ante
and declare petitioners as the true and lawful owners of the property; ordering
respondents Viernes and all persons claiming right under them to vacate the
property, and to pay damages and costs to petitioners.
After trial on the merits before which the Antes were declared in default, a
decision was rendered by the trial court on April 9, 1986, the dispositive part of
which reads as follows:
WHEREFORE, the complaint is dismissed as against defendants
Vierneses, and defendants Antes are hereby ordered to pay to
plaintiff, as prayed for in their complaint, as follows:
Defendant Antes are hereby ordered to pay actual damages in the
amount of P250,000.00 to plaintiffs.
Defendants Antes are hereby ordered to pay moral and exemplary
damages in the amount of P15,000.00 and exemplary damages in the
amount of P5,000.00.
Defendants Antes, are hereby ordered to pay P5,000.00 for attorney's
fees.
SO ORDERED.8
Not satisfied therewith the Valdezes interposed an appeal therefrom to the
Court of Appeals wherein in due course a decision was rendered on
September 12, 1988, affirming in toto the appealed decision, with costs
against the appellants.
Hence this petition for review on certiorari filed by the Valdezes wherein the
following issues are raised:
1. Whether the Order dated November 10, 1983 declaring as null and
void the Owner's copy of Transfer Certificate of Title No. 141582 and
ordering the issuance of a new Owner's copy of said title should be
set aside having been secured fraudulently and in bad faith by
Francisco Ante and Antonio Ante who had already sold the property to
the spouses Pastor and Virginia Valdez and who knew fully well that
the said Owner's copy of said title has never been lost.
2. As between plaintiff-spouses Pastor and Virginia Valdez, petitioners
in this case and defendant Felicidad Viernes, one of the private
respondents, who is entitled to the subject lot?
3. Who is entitled to damages?9
The petition is impressed with merit.
Article 1544 of the Civil Code provides as follows:
Art. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in the Registry of
Property.
 40
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.
From the aforesaid provision of the law, it is clear that if movable property is
sold to different vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith. However, should the
subject of the sale be immovable property, the ownership shall vest in the
person acquiring it who in good faith first recorded it in the registry of property.
Should none of the vendees inscribe the sale in the Registry of Property, then
the ownership of the subject real property shall pertain to the person who in
good faith was first in possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.
In this case, Lot A of the subject property was sold to the petitioners by
Antonio Ante, as attorney-in-fact, on June 15, 1980, while Lot B was sold by
the same attorney-in-fact to petitioners on February 12, 1981.10 Since the
owner's copy of TCT No. 141582 was not delivered in due time to the
petitioners by Antonio Ante despite his promise to deliver the same in a few
days, petitioners registered their notice of adverse claim over the said property
on September 6, 1982 with the Register of Deeds of Quezon City wherein it
was duly annotated as follows:
PE-3004/T-141582 — Affidavit of Adverse Claim —
Filed under sworn statement of Pastor Valdez & Virginia C. Valdez
claiming that they are the vendees of the property described herein,
but the title was not delivered (Doc. 253, Page 51, Bk. I of the Not.
Pub. of Q. City, Prudencio W. Valido)
Date of Instrument — August 19, 1982
Date of Inscription — Sept. 6, 198211
However, earlier, that is on February 17, 1982, a Deed of Assignment of the
same property was executed by Antonio Ante in favor of respondent Felicidad
Viernes.12 Ante filed a petition for the issuance of another owner's duplicate
copy of TCT No. 141582 with the then Court of First Instance of Quezon City
on the ground that the owner's duplicate copy had been lost. The petition was
granted in an order dated November 10, 1983 declaring null and void the lost
owner's duplicate copy of the title and ordering the issuance of a new owner's
duplicate copy of the title in favor of the Antes. Said owner's duplicate copy
was delivered by Ante to respondent Viernes who thereafter together with the
Deed of Assignment presented the same to the Register of Deeds of Quezon
City for registration on November 11, 1982. Thus, on the basis thereof, TCT
No. 141582 was cancelled and TCT No. 293889 was issued in the name of
respondent Felicidad Viernes.
Petitioners again filed an adverse claim this time on the property covered by
TCT No. 293889 in the name of respondent Viernes.
From the foregoing set of facts there can be no question that the sale of the
subject lot to petitioners was made long before the execution of the Deed of
Assignment of said lot to respondent Viernes and that petitioners annotated
their adverse claim as vendees of the property as early as September 6, 1982
with the Register of Deeds of Quezon City. On the other hand the deed of
Assignment in favor of Viernes of the said lot was registered with the Register
of Deeds of Quezon City only on November 11, 1982 whereby a new title was
issued in the name of Viernes as above stated.
The rule is clear that a prior right is accorded to the vendee who first recorded
his right in good faith over an immovable property.13 In this case, the
petitioners acquired subject lot in good faith and for valuable consideration
from the Antes and as such owners petitioners fenced the property taking
possession thereof. Thus, when petitioners annotated their adverse claim in
the Register of Deeds of Quezon City they thereby established a superior right
to the property in question as against respondent Viernes.14
On the other hand, respondent Viernes cannot claim good faith in the
purchase of the subject lot and the subsequent registration of the Deed of
 41
Assignment in her favor. Even before the petitioners purchased the lot from
the Antes respondent Viernes' husband was first given the option to purchase
the same by Antonio Ante but he declined because he had no money and so
he was informed that it would be sold to petitioners. After petitioners
purchased the lot they immediately fenced the same with the knowledge and
without objection of respondent Viernes and her husband and they were
informed by the petitioners about their purchase of the same. Moreover, when
petitioners annotated their adverse claim as vendees of the property with the
Register of Deeds of Quezon City, it was effectively a notice to the whole
world including respondent Viernes.
Respondent Ante obviously in collusion with respondent Viernes sold the
same property to Viernes which was earlier sold to petitioners, by virtue of a
subsequent Deed of Assignment. It was fraudulently made to appear that the
owner's duplicate copy of TCT No. 141582 was lost through a petition filed
with the trial court to nullify the said owner's duplicate copy and for the
issuance of another owner's duplicate copy.
Unfortunately, such fraud was unmasked as early as July 14, 1981 when
respondent Francisco Ante, in Civil Case No. 29617, filed an urgent motion for
the issuance of a subpoena and subpoena duces tecum to require Paz Garma
of 8 Purdue Street, Cubao, Quezon City to produce before the court on July
16, 1981 at 2:00 o'clock p.m. at the scheduled pre-trial of the case, the
owner's duplicate copy of TCT No. 141582 issued by the Register of Deeds in
the name of the Antes as the same was entrusted to Paz Garma as a realtor
for the proposed sale of the property which did not materialize.15 Respondent
Viernes admitted in her answer dated January 7, 1984 that she knew of the
filing in court of said urgent motion and that the branch clerk of court issued
the corresponding subpoena.16 Thus, respondent Ante, as well as respondent
Viernes, knew that the owner's duplicate copy of certificate of title No. 141582
was never lost, consequently the filing of the petition in court for the issuance
of a new one was attended with fraud and gross misrepresentation.
As a matter of fact, as hereinabove discussed, upon the urging of petitioners,
respondent Antonio Ante wrote to the Garma spouses to entrust the TCT to
petitioners on September 30, 198317 and when petitioners paid the standing
account of Ante to the Garmas said owner's duplicate copy was delivered by
the Garmas to the petitioners. The bad faith of respondents Viernes and Ante
is obvious.
Further, even while the notice of adverse claim of September 6, 1982 filed by
the petitioners on TCT No. 141582 in the Register of Deeds was still existing
and had not been cancelled, on November 11, 1982 the Register of Deeds
nevertheless cancelled said TCT and issued a new title in favor of respondent
Viernes. The annotation was not even carried over nor was it ordered
cancelled under the new title issued to respondent Viernes. The Register of
Deeds and/or his subordinates apparently yielded to the fraudulent design of
respondents Viernes and Ante.
An examination of the decision of the trial court dated April 9, 1986 shows that
there are no findings of facts to serve as basis for its conclusions.18 Section
14, Article VIII of the Constitution mandates as follows:
No decision shall be rendered by any court without expressing
therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision shall
be refused due course or denied without stating the legal basis
therefor. (Emphasis supplied.)
Section 1, Rule 36 of the Rules of Court also provides clearly as follows:
Sec. 1. Rendition of judgments. — All judgments determining the
merits of cases shall be in writing personally and directly prepared by
the judge, stating clearly and distinctly the facts and the law on which
it is based, signed by him, and filed with the clerk of the court.
(Emphasis supplied.)
That is the reason why this Court, through Administrative Circular No. 1 dated
January 28, 1988, reminded all judges "to make complete findings of facts in
their decisions, and scrutinize closely the legal aspects of the case in the light
of the evidence presented. They should avoid the tendency to generalize and
 42
form conclusions without detailing the facts from which such conclusions are
deduced."
Of course, when a petition for review or motion for reconsideration of a
decision of the court is denied due course, or is otherwise denied, it is not
necessary that such findings of facts be made. However, the denial must state
the legal basis thereof.
In the present case, the three-paged decision of the trial court contained in the
first two pages a statement of the allegations of the pleadings of the parties
and enumerates the witnesses presented and the exhibits marked during the
trial. Thereafter, the trial court arrived at the following conclusion:
After considering the evidence on record, this Court finds that plaintiff
have failed to prove their case as against defendant Felicidad
Viernes, but proved their case against defaulted defendants Antes.
The Court finds that there is no sufficient proof of knowledge or bad
faith on the part of defendant Vierneses, and on the basis of existing
jurisprudence, a third person who in good faith purchases and
registers a property cannot be deprived of his title as against plaintiff
who had previously purchased same property but failed to register the
same.19
This is not what is contemplated under the Constitution and the Rules as a
clear and distinct statement of the facts on the basis of which the decision is
rendered. The foregoing one paragraph statement constitute a mere
conclusion of facts and of law arrived at by the trial court without stating the
facts which serve as the basis thereof. Indeed the conclusion of fact therein
that petitioners had not registered the sale to them is traversed by the records
which show on the contrary, petitioners earlier registered the sale to them. The
court statement in the decision that a party has proven his case while the
other has not, is not the findings of facts contemplated by the Constitution and
the rules to be clearly and distinctly stated.
Unfortunately, the appellate court overlooked this fatal defect in the appealed
decision.1âwphi1 It merely adopted the alleged findings of facts of the trial
court. Although it made some findings on how the deed of assignment in favor
of respondent Viernes came about, it is far from complete and is hardly a
substantial compliance with the mandate aforestated.
As it is now, this Court has before it a challenged decision that failed to state
clearly and distinctly the facts on which it is predicated. This Court has said
again and again that it is not a trier of facts and that it relies, on the factual
findings of the lower court and the appellate court which are conclusive. But as
it is, in this case, the Court has to wade through the records and make its own
findings of facts, rather than further delay the disposition of the case by
remanding the records for further proceedings.
Hence, the appealed decision should be struck down.
WHEREFORE, the petition is GRANTED. The appealed decision of the
appellate court dated September 12, 1988 is hereby SET ASIDE and another
judgment is hereby rendered declaring the order of the trial court dated
November 10, 1982 null and void and reinstating the owner's duplicate copy of
TCT No. 141582 in the possession of the petitioners; declaring the petitioners
to have the superior right to the property in question and to be the true and
lawful owners of the same; directing the Register of Deeds of Quezon City to
cancel TCT No. 293889 in the name of respondent Felicidad Viernes and to
issue a new title in favor of petitioners spouses Pastor and Virginia Valdez
upon the presentation of the owner's duplicate copy of TCT No. 141582;
directing respondent Felicidad Viernes and other persons claiming rights
under her residing in the premises of the land in question to vacate the same
immediately and to remove whatever improvement she has placed in the
premises; and ordering private respondents to jointly and severally pay the
petitioners the amounts of P15,000.00 as moral damages, P5,000.00
exemplary damages, and P20,000.00 as attorney's fees. The docket fees for
the amount of damages and attorney's fees awarded to the petitioners, if not
yet duly paid, shall constitute a prior lien in favor of the government, before the
satisfaction of the judgment in favor of the petitioners. Costs against private
respondents.
SO ORDERED.
 43
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.
G.R. No. 77423 March 13, 1989
SPOUSES DIOSDADO NUGUID AND MARIQUETA VENEGAS, petitioners,
vs.
COURT OF APPEALS, AMORITA GUEVARRA, TERESITA GUEVARRA,
NARCISO GUEVARRA, MARCIANA DELA ROSA, BERNABE
BUENAVENTURA, AND JULIETA BUENAVENTURA, respondents.
Jose F. Mahacop for petitioners.
Ramon L. Ortega for private respondents.
SARMIENTO, J.:
This petition seeks the reversal of the decision of the Court of Appeals
declaring the private respondents owners of one-half portion of the property
subject of this case.
The petitioners were the defendants in a suit commenced by the private
respondents before the Court of First Instance (now Regional Trial Court) of
Bataan. 1 The antecedent facts may be summarized as follows:
The deceased spouses Victorino and Crisanta dela Rosa were the registered
owners of a parcel of land with an area of 231 square meters, situated in Orani
Bataan, and covered by original Certificate of Title No. 3778. On or about May
4, 1931, Victorino dela Rosa (widowed by then) sold one-half of the said
property to Juliana Salazar for P 95.00. This sale, though evidenced by a
document, 2 was not registered. Immediately after the sale, Juliana Salazar
constructed a house on the lot she purchased.
On March 10, 1964, petitioner spouses (defendants below) caused the
registration of a document entitled "Kasulatan ng Partihan at Bilihan"'
(hereinafter referred to as Exhibit "D"), 3 dated June 6, 1961. In this
document, Marciana dela Rosa (who is among the private respondents),
Victoria Buenaventura, Ernesto Buenaventura, Virgilio Buenaventura, and
Felicisimo Buenaventura-all heirs of Victorino and Crisanta dela Rosa- sold to
the petitioners the entire area of the property abovementioned for the sum of P
300.00. Subsequently, OCT No. 3778 was cancelled by the Register of Deeds
of Bataan, and Transfer Certificate of Title No. T-12782 was issued in the
names of the petitioners.
The private respondents claim that Exhibit "D" is a forged deed in that: 1) the
signature of Marciana dela Rosa appearing therein is a forgery; 2) it is not true
that, as stated in the deed, Luisa dela Rosa (sister of Marciana), at the time of
her death, was a widow; 3) none of the heirs-signatories to the deed received
any consideration for the supposed sale; and 4) Luisa dela Rosa is survived
not only by four, but by five children (the fifth child, respondent Julieta
Buenaventura, was not mentioned in the deed).
The private respondents allegedly discovered the forged deed as well as the
certificate of title in the name of the petitioners much later, that is, on February
28, 1978, when respondents Amorita Guevarra and Teresita Guevarra thought
of having the title of their grandmother Juliana Salazar, registered.
On the other hand, the petitioners assert that sometime in the latter part of
1960, the land subject of this case was offered to them for sale by Nicolas
dela Rosa, uncle of respondent Marciana dela Rosa and grandfather of the
other heirs-signatories to Exhibit "D". Apparently, Nicolas dela Rosa claimed
that he had already purchased the shares of the heirs over the subject
property as evidenced by a private document entitled "Kasunduan"
(hereinafter referred to as Exhibit "6") dated August 31, 1955; as a matter of
fact, he had in his possession the original certificate of title covering the
property in the name of the deceased Victorino and Crisanta dela Rosa. He
promised, however, that he would arrange for a direct sale to be made by the
heirs in favor of the petitioners. Consequently, Exhibit "D" as mentioned
earlier, was executed. The petitioners stress that even before they decided to
buy the subject property, they made an ocular inspection thereof and
questioned the occupants therein to verify its real ownership. They underscore
 44
the fact that the persons whom they found occupying the property did not at all
assert adverse ownership over the same.
The trial court rendered judgment dismissing the complaint filed by the private
respondents, but on appeal, this was reversed by the Court of Appeals. 4 To
quote the dispositive portion of the appellate court's decision:
WHEREFORE, finding the decision of the lower court to be
with reversible error the decision dated May 1, 1982 is hereby
ordered REVERSED and a new one entered declaring
plaintiffs to be owners of 115.5 square meters of Lot 678.
Defendants are hereby ordered to execute a deed of
reconveyance in favor of plaintiffs over the said area within
thirty (30) days from the finality of this decision, otherwise, the
Register of Deeds will be ordered to execute one in favor of
the plaintiffs. With costs against the defendants plus
attorney's fees in the amount of P 500.00.
SO ORDERED. 5
From the foregoing, this petition for review was filed.
We find merit in the petition.
From the start, the respondent court erred in treating the private respondents
as though they all belong to one group of heirs whose right is derived from one
ancestor, when actually, the private respondents should be categorized into
two groups.
To one group belong the respondents Amorita, Teresita and Narcism, all
surnamed Guevarra. As children of Pedro Guevarra and Pascuala Tolentino,
and grandchildren of Juliana Salazar, they claim to have succeeded to the
ownership over the onehalf portion of land which was sold to Juliana Salazar.
The remaining private respondents, Marciana dela Rosa, Bernabe
Buenaventura, and Julieta Buenaventura, make up the second group of heirs
who claim to have derived, by succession, their ownership over the other half
of the subject property from their predecessors-in-interest, the original
registrants, Victorino and Crisanta dela Rosa.
Analyzing the case before us in this manner, we can immediately discern
another error in the decision of the respondent court, which is that said court,
with absolutely no basis, sweepingly adjudged all of the respondents co-
owners of one-half of the subject property. Clearly, it was a glaring error for
the Court of Appeals to have so ruled because as a matter of fact, the
respondent heirs of Victorino dela Rosa were claiming a half of the entire
property which is separate and distinct from the other half claimed by the
respondents Guevarras. 6
Surprisingly, none of the private respondents appealed the above decision of
the Court of Appeals. Consequently, they are deemed to have accepted the
said erroneous decision declaring them, collectively, owners of one-half of the
subject property. In effect, only this portion of the Property is being presently
disputed by the contending parties. As regards the other onehalf portion, it is
now settled (by virtue of the private respondents' acceptance of the Court of
Appeals decision) that the same is the property of the petitioners.
Insofar as the respondent heirs of Victorino dela Rosa are concerned,
undoubtedly they are not entitled to any portion of the disputed property.
Respondent Marciana dela Rosa is bound by her signature appearing on
Exhibit "D". This public document evidencing the sale of the subject property
to the petitioners was executed with all the legal formalities of a public
document, to wit:
The "Kasulatan ng Partihan at Bilihan" (Exhibit D, Exhibit 1)
was duly witnessed by Ricardo L. Santos and Pablo R.
Buenaventura, proven to be relatives both of Marciana dela
Rosa and the Buenaventuras who were then at the municipal
building of Orani Bataan, when the '"Kasulatan ng Partihan at
Bilihan" was notarized by Fernando J. Rivera, Justice of the
peace of Orani Bataan, in his capacity as ex officionotary
public. It should be noted that all the parties were from Orani
Bataan, and the notary public, who notarized the document,
 45
was the justice of the peace of Orani Bataan, acting in his
capacity as ex officio notary public. 7
Indeed, the legal presumption of the regularity of the above notarized contract
was not rebutted successfully. The courts below were one in concluding that
the alleged forgery of respondent Marciana dela Rosa's signature was not
proven. Likewise, the private respondents' allegation of absence of
consideration of the contract was not substantiated. Under Art. 1354 of the
Civil Code, it is presumed that consideration exists and is lawful, unless the
debtor proves the contrary. 8
Noteworthy is the fact that of the five heirs who signed Exhibit "D", only one,
the respondent Marciana dela Rosa, impugned its genuineness and due
execution, as well as the authenticity of her signature thereon; and she alone
joined the other respondents in this suit.
In the case of the respondents Bernabe Buenaventura and Julieta
Buenaventura, the trial court correctly declared that:
... With his signature appearing in the "Kasulatan" 9 (Exhibit
6) and his affirmation that his wife, Luisa dela Rosa, who was
a sister of Marciana dela Rosa and also a daughter of
Victorino dela Rosa and Crisanta dela Cruz, had sold her
share of Lot No. 678 to Nicolas dela Rosa, plaintiff Bernabe
Buenaventura could no longer be heard to complain. And if,
plaintiff Julieta Buenaventura were prejudiced, her logical
recourse would be to go after her own kin. 10
Since no evidence was introduced on the point, the trial court surmised that
respondent Julieta Buenaventura was probably a minor at the time of signing
of Exhibits "D" and "6".
It must be noted that although respondent Bernabe Buenaventura disowned
his signature on Exhibit "6", there was no effort on his part to prove such
claim. Forgery cannot be presumed. It must be proved. 11
At any rate, the question of whether or not the abovementioned signatures
were forged would become irrelevant if, on the other hand, the petitioners are
able to establish that they acquired the subject property in good faith. For,
indeed, an innocent purchaser for value is protected such that when land has
already passed into the hands of an innocent purchaser for value,
reconveyance of the same can no longer be made.12
On the other hand, the claimed ownership of the respondent heirs of Pedro
and Pascuala Guevarra over the property is anchored on the prior sale thereof
to their grandmother, Juliana Salazar. The situation, in effect, is that
contemplated by Article 1544 of the Civil Code, 13 a double sale.
Parenthetically, although the second sale (to the petitioners herein) was made
by the heirs of the deceased Victorino dela Rosa, the said heirs are deemed
the judicial continuation of the personality of the decedent.14 Essentially,
therefore, the first and second sales were made by the same person, as
envisioned under Article 1544 of the Civil Code, quoted earlier (footnote No.
13). The disputed property being immovable property, the ownership should
belong to the vendee who in good faith first recorded it in the Registry of
Property, pursuant to the same article.
It is an established fact that the first sale to Juliana Salazar was not registered
while the sale to the petitioners was registered. However, it is contended by
the respondents Guevarras that they have a better right as against the
petitioners because the element of good faith was lacking as regards the
latter.
Whether or not there was good faith in the purchase of the land and in the
subsequent registration of title acquired in the Registry of Property is,
therefore, the central issue in this case.
We agree with the trial court's finding that the petitioners are purchasers in
good faith.
The Original Certificate of Title No. 3778 covering the entire property was
clean and free from any annotation of an encumbrance, 15 and there was
nothing whatsoever to indicate on its face any vice or infirmity in the title of the
 46
registered owners-the spouses Victorino and Crisanta dela Rosa. Thus, the
petitioners could not have known of the prior sale to Juliana Salazar as,
precisely, it was not registered. The general rule is that if the property sold is
registered land, the purchaser in good faith has a right to rely on the certificate
of title and is under no duty to go behind it to look for flaws.16 This'
notwithstanding, the petitioners did not rely solely upon the certificate of title.
They personally inspected the subject property. Undeniably, they found the
same to be occupied by two houses, one belonging to a certain Doray dela
Rosa and the other to spouses Pedro Guevarra and Pascuala Tolentino,
parents of the respondents Guevarras. Upon being informed of the petitioners'
desire to purchase the land, Doray dela Rosa apparently offered to sell her
house, which offer was accepted by the petitioners. As regards the spouses
Guevarra, we find no reason to disturb the trial court's finding that they
themselves requested that they be allowed to refrain on the property until such
time that the petitioners would need the entire premises; and in lieu of rentals
to the petitioners, they offered to continue paying the real estate taxes for one-
half of the property as this was their arrangement with the previous owners-to
which request the petitioners acceded.17 Evidently, neither Doray dela Rosa
nor the spouses Guevarra professed ownership over the portions of land they
were occupying; on the contrary, by their actuations they expressly
acknowledged that they were not the real owners of the said property. The
spouses Guevarra, in particular, made no mention of the prior unregistered
sale to their predecessor-in-interest, Juliana Salazar. Thus, when the
petitioners registered the sale in their favor with the Register of Deeds, they
did so without any knowledge about the prior sale in favor of Juliana Salazar.
The petitioners, therefore, had acted in good faith.
The basis for the Court of Appeals' conclusion that petitioners were buyers in
bad faith is, to say the least, ambiguous. Said court appears to have relied on
the singular circumstance that the petitioners are, like the respondents, from
Orani Bataan, and as such, according to the court, they should have
personally known that the private respondents were the persons in actual
possession and not Doray dela Rosa and Pedro Guevarra. The respondent
court's premise, therefore, is that the private respondents were the actual
occupants of the property.
There is, however, nothing in the record to sustain the validity of the above
premise. At the time of the purchase, the petitioners dealt with Pedro
Guevarra and Pascuala Tolentino, the latter being the actual occupants. The
respondents Guevarras children of the said Pedro and Pascuala Guevarra,
came into the picture only after their parents died. As for the respondent heirs
of Victorino dela Rosa, their being in actual possession of any portion of the
property was, likewise, simply presumed or taken for granted by the Court of
Appeals.
The private respondents can not honestly claim that they became aware of the
petitioners' title only in 1978. Ever since the petitioners bought the property in
1961, they have occupied the same openly, publicly, and continuously in the
concept of owners, even building their house thereon. For seventeen years
they were in peaceful possession, with the respondents Guevarras occupying
less than one-half of the same property. If the petitioners are mere usurpers,
why did the private respondents complain only now? Moreover, they have not
bothered to explain in what capacity are the petitioners occupying the land, if
not as legal owners. Consequently, we are more inclined to accept the
petitioners' explanation that the private respondents have initiated this suit
because of their (the petitioners') refusal to sell to the respondents Guevarras
that portion of the land which the latter are occupying, coupled with the
petitioners' demand for the said private respondents to vacate the same.
Anent the other issues raised in the petition, these do not need further
discussion, being merely subordinate to the main issue of good faith.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals is SET ASIDE, and that of the Court of First Instance (now Regional
Trial Court) of Bataan, Branch I is hereby REINSTATED.
Costs against the private respondents.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.
 47
G.R. No. 83432 May 20, 1991
RADIOWEALTH FINANCE COMPANY, petitioner,
vs.
MANUELITO S. PALILEO, respondent.
Rolando A. Calang for petitioner.
Sisenando Villaluz, Sr. for respondent.
GANCAYCO, J.:
If the same piece of land was sold to two different purchasers, to whom shall
ownership belong? Article 1544 of the Civil Code provides that in case of
double sale of an immovable property, ownership shall be transferred: (1) to
the person acquiring it who in good faith first recorded it in the Registry of
Property; (2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the oldest
title, provided there is good faith. There is no ambiguity regarding the
application of the law with respect to lands registered under the Torrens
System. Section 51 of Presidential Decree No. 1529 (amending Section 50 of
Act No. 496 clearly provides that the act of registration is the operative act to
convey or affect registered lands insofar as third persons are concerned.
Thus, a person dealing with registered land is not required to go behind the
register to determine the condition of the property. He is only charged with
notice of the burdens on the property which are noted on the face of the
register or certificate of title.1 Following this principle, this Court has time and
again held that a purchaser in good faith of registered land (covered by a
Torrens Title) acquires a good title as against all the transferees thereof
whose right is not recorded in the registry of deeds at the time of the sale. 2
The question that has to be resolved in the instant petition is whether or not
the rule provided in Article 1544 of the Civil Code as discussed above, is
applicable to a parcel of unregistered land purchased at a judicial sale. To be
more specific, this Court is asked to determine who, as between two buyers of
unregistered land, is the rightful owner—the first buyer in a prior sale that was
unrecorded, or the second buyer who purchased the land in an execution sale
whose transfer was registered in the Register of Deeds.
The facts as found by the Court of Appeals are as follows:
On April 13, 1970, defendant spouses Enrique Castro and Herminia
R. Castro sold to plaintiff-appellee Manuelito Palileo (private
respondent herein), a parcel of unregistered coconut land situated in
Candiis, Mansayaw, Mainit, Surigao del Norte. The sale is evidenced
by a notarized Deed of Absolute Sale (Exh. "E"). The deed was not
registered in the Registry of Property for unregistered lands in the
province of Surigao del Norte. Since the execution of the deed of sale,
appellee Manuelito Palileo who was then employed at Lianga Surigao
del Sur, exercised acts of ownership over the land through his mother
Rafaela Palileo, as administratrix or overseer. Appellee has
continuously paid the real estate taxes on said land from 1971 until
the present (Exhs. "C" to "C-7", inclusive).
On November 29, 1976, a judgment was rendered against defendant
Enrique T. Castro, in Civil Case No. 0103145 by the then Court of
First Instance of Manila, Branch XIX, to pay herein defendant-
appellant Radiowealth Finance Company (petitioner herein), the sum
of P22,350.35 with interest thereon at the rate of 16% per annum from
November 2, 1975 until fully paid, and the further sum of P2,235.03 as
attorney's fees, and to pay the costs. Upon the finality of the
judgment, a writ of execution was issued. Pursuant to said writ,
defendant provincial Sheriff Marietta E. Eviota, through defendant
Deputy Provincial Sheriff Leopoldo Risma, levied upon and finally sold
at public auction the subject land that defendant Enrique Castro had
sold to appellee Manuelito Palileo on April 13,1970. A certificate of
sale was executed by the Provincial Sheriff in favor of defendant-
appellant Radiowealth Finance Company, being the only bidder. After
the period of redemption has (sic) expired, a deed of final sale was
also executed by the same Provincial Sheriff. Both the certificate of
 48
sale and the deed of final sale were registered with the Registry of
Deeds.3
Learning of what happened to the land, private respondent Manuelito Palileo
filed an action for quieting of title over the same. After a trial on the merits, the
court a quo rendered a decision in his favor. On appeal, the decision of the
trial court was affirmed. Hence, this petition for review on certiorari.
In its petition, Radiowealth Finance Company presents the following errors:
1. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
DEED OF ABSOLUTE SALE (EXHIBIT B) ALLEGEDLY EXECUTED
BY ENRIQUE CASTRO IN FAVOR OF APPELLEE MANUELITO
PALILEO, WAS SIMULATED OR FICTITIOUS.
2. THE COURT OF APPEALS ERRED IN NOT FINDING APPELLEE
MANUELITO PALILEO AS ADMINISTRATOR ONLY OF THE
DISPUTED PROPERTY; AND
3. THE COURT OF APPEALS ERRED IN NOT FINDING
DEFENDANT-APPELLANT RADIOWEALTH FINANCE COMPANY
OWNER OF THE DISPUTED PROPERTY BY REASON OF THE
CERTIFICATE OF SALE AND THE DEED OF FINAL SALE WHICH
WERE ALL REGISTERED IN THE REGISTER OF DEEDS, HENCE,
SUPERIOR TO THAT OF THE DEED OF SALE IN POSSESSION OF
MANUELITO PALILEO, FOR BEING NOT REGISTERED.4
As regards the first and second assigned errors, suffice it to state that findings
of fact of the Court of Appeals are conclusive on this Court and will not be
disturbed unless there is grave abuse of discretion. The finding of the Court of
Appeals that the property in question was already sold to private respondent
by its previous owner before the execution sale is evidenced by a deed of
sale. Said deed of sale is notarized and is presumed authentic. There is no
substantive proof to support petitioner's allegation that the document is
fictitious or simulated. With this in mind, We see no reason to reject the
conclusion of the Court of Appeals that private respondent was not a mere
administrator of the property. That he exercised acts of ownership through his
mother also remains undisputed.
Going now to the third assigned error which deals with the main issue
presented in the instant petition, We observe that the Court of Appeals
resolved the same in favor of private respondent due to the following reason;
what the Provincial Sheriff levied upon and sold to petitioner is a parcel of land
that does not belong to Enrique Castro, the judgment debtor, hence the
execution is contrary to the directive contained in the writ of execution which
commanded that the lands and buildings belonging to Enrique Castro be sold
to satisfy the execution.5
There is no doubt that had the property in question been a registered land, this
case would have been decided in favor of petitioner since it was petitioner that
had its claim first recorded in the Registry of Deeds. For, as already
mentioned earlier, it is the act of registration that operates to convey and affect
registered land. Therefore, a bona fide purchaser of a registered land at an
execution sale acquires a good title as against a prior transferee, if such
transfer was unrecorded.
However, it must be stressed that this case deals with a parcel of unregistered
land and a different set of rules applies. We affirm the decision of the Court of
Appeals.
Under Act No. 3344, registration of instruments affecting unregistered lands is
"without prejudice to a third party with a better right". The aforequoted phrase
has been held by this Court to mean that the mere registration of a sale in
one's favor does not give him any right over the land if the vendor was not
anymore the owner of the land having previously sold the same to somebody
else even if the earlier sale was unrecorded.
The case of Carumba vs. Court of Appeals6 is a case in point. It was held
therein that Article 1544 of the Civil Code has no application to land not
registered under Act No. 496. Like in the case at bar, Carumba dealt with a
double sale of the same unregistered land. The first sale was made by the
original owners and was unrecorded while the second was an execution sale
 49
that resulted from a complaint for a sum of money filed against the said
original owners. Applying Section 35, Rule 39 of the Revised Rules of
Court,7 this Court held that Article 1544 of the Civil Code cannot be invoked to
benefit the purchaser at the execution sale though the latter was a buyer in
good faith and even if this second sale was registered. It was explained that
this is because the purchaser of unregistered land at a sheriffs execution sale
only steps into the shoes of the judgment debtor, and merely acquires the
latter's interest in the property sold as of the time the property was levied
upon.
Applying this principle, the Court of Appeals correctly held that the execution
sale of the unregistered land in favor of petitioner is of no effect because the
land no longer belonged to the judgment debtor as of the time of the said
execution sale.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals
in CA-G.R. CV No. 10788 is hereby AFFIRMED. No costs.
SO ORDERED.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concu
[G.R. No. 104482. January 22, 1996]
BELINDA TAREDO, for herself and in representation of her brothers and
sisters, and TEOFILA CORPUZ TANEDO, representing her minor
daughter VERNA TANEDO, petitioners, vs. THE COURT OF
APPEALS, SPOUSES RICARDO M. TAREDO AND TERESITA
BARERA TAREDO, respondents.
DECISION
PANGANIBAN, J.:
Is a sale of future inheritance valid? In multiple sales of the same real
property, who has preference in ownership? What is the probative value of the
lower courts finding of good faith in registration of such sales in the registry of
property? These are the main questions raised in this Petition for review on
certiorari under Rule 45 of the Rules of Court to set aside and reverse the
Decision1 of the Court of Appeals2 in CA-G.R. CV NO. 24987 promulgated on
September 26, 1991 affirming the decision of the Regional Trial Court, Branch
63, Third Judicial Region, Tarlac, Tarlac in Civil Case No. 6328, and its
Resolution denying reconsideration thereof, promulgated on May 27, 1992.
By the Courts Resolution on October 25, 1995, this case (along with
several others) was transferred from the First to the Third Division and after
due deliberation, the Court assigned it to the undersigned ponenle for the
writing of this Decision.
The Facts
On October 20, 1962, Lazardo Taedo executed a notarized deed of
absolute sale in favor of his eldest brother, Ricardo Taedo, and the latters
wife, Teresita Barera, private respondents herein, whereby he conveyed to the
latter in consideration of P1,500.00, one hectare of whatever share I shall
have over Lot No. 191 of the cadastral survey of Gerona, Province of Tarlac
and covered by Title T-l3829 of the Register of Deeds of Tarlac, the said
property being his future inheritance from his parents (Exh. 1). Upon the death
of his father Matias, Lazaro executed an Affidavit of Conformity
dated February 28, 1980 (Exh. 3) to re-affirm, respect. acknowledge and
validate the sale I made in 1962. On January 13, 1981, Lazaro executed
another notarized deed of sale in favor of private respondents covering his
undivided ONE TWELVE (1/12) of a parcel of land known as Lot 191 x x (Exh.
4). He acknowledged therein his receipt of P 10,000.00 as consideration
therefor. In February 1981, Ricardo learned that Lazaro sold the same
property to his children, petitioners herein, through a deed of sale
dated December 29, 1980 (Exh. E). On June 7, 1982, private respondents
recorded the Deed of Sale (Exh. 4) in their favor in the Registry of Deeds and
 50
the corresponding entry was made in Transfer Certificate of Title No. 166451
(Exh. 5).
Petitioners on July 16, 1982 filed a complaint for rescission (plus
damages) of the deeds of sale executed by Lazaro in favor of private
respondents covering the property inherited by Lazaro from his father.
Petitioners claimed that their father, Lazaro, executed an Absolute Deed
of Sale dated December 29, 1980 (Exit. E), conveying to his ten children his
allotted portion under the extrajudicial partition executed by the heirs of
Matias, which deed included the land in litigation (Lot 191).
Petitioners also presented in evidence: (1) a private writing purportedly
prepared and signed by Matias dated December 28, 1978, stating that it was
his desire that whatever inheritance Lazaro would receive from him should be
given to his (Lazaros) children (Exh. A); (2) a typewritten document dated
March 10, 1979 signed by Lazaro in the presence of two witnesses, wherein
he confirmed that he would voluntarily abide by the wishes of his father,
Matias, to give to his (Lazaros) children all the property he would inherit from
the latter (Exh. B); and (3) a letter dated January 1, 1980 of Lazaro to his
daughter, Carmela, stating that his share in the extrajudicial settlement of the
estate of his father was intended for his children, petitioners herein (Exh. C).
Private respondents, however presented in evidence a Deed of
Revocation of a Deed of Sale dated March 12, 1981 (Exh. 6), wherein Lazaro
revoked the sale in favor of petitioners for the reason that it was simulated or
fictitious - without any consideration whatsoever.
Shortly after the case a quo was filed, Lazaro executed a sworn
statement (Exh. G) which virtually repudiated the contents of the Deed of
Revocation of a Deed of Sale (Exh. 6) and the Deed of Sale (Exh. 4) in favor
of private respondents. However, Lazaro testified that he sold the property to
Ricardo, and that it was a lawyer who induced him to execute a deed of sale in
favor of his children after giving him five pesos (P5.00) to buy a drink (TSN
September 18, 1985, pp. 204-205).
The trial court decided in favor of private respondents, holding that
petitioners failed to adduce a preponderance of evidence to support (their)
claim. On appeal, the Court of Appeals affirmed the decision of the trial court,
ruling that the Deed of Sale dated January 13, 1981 (Exh. 9) was valid and
that its registration in good faith vested title in said respondents.
The Issues
Petitioners raised the following errors in the respondent Court, which they
also now allege in the instant Petition:
I. The trial court erred in concluding that the Contract of Sale of October 20,
1962 (Exhibit 7, Answer) is merely voidable or annulable and not void ab
initio pursuant to paragraph 2 of Article 1347 of the New Civil Code involving
as it does a future inheritance.
II. The trial court erred in holding that defendants-appellees acted in good faith
in registering the deed of sale of January 13, 1981 (Exhibit 9) with the Register
of Deeds of Tarlac and therefore ownership of the land in question passed on
to defendants-appellees.
III. The trial court erred in ignoring and failing to consider the testimonial and
documentary evidence of plaintiffs-appellants which clearly established by
preponderance of evidence that they are indeed the legitimate and lawful
owners of the property in question.
IV. The decision is contrary to law and the facts of the case and the
conclusions drawn from the established facts are illogical and off-tangent.
From the foregoing, the issues may be restated as follows:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and
registration with the Registry of Property) of a deed of sale
covering the same property to the same buyers valid?
3. May this Court review the findings of the respondent Court (a)
holding that the buyers acted in good faith in registering the said
 51
subsequent deed of sale and (b) in failing to consider petitioners
evidence? Are the conclusions of the respondent Court illogical
and off-tangent?
The Courts Ruling
At the outset, let it be clear that the errors which are reviewable by this
Court in this petition for review on certiorari are only those allegedly committed
by the respondent Court of Appeals and not directly those of the trial court,
which is not a party here. The assignment of errors in the petition quoted
above are therefore totally misplaced, and for that reason, the petition should
be dismissed. But in order to give the parties substantial justice we have
decided to delve into the issues as above re-stated. The errors attributed by
petitioners to the latter (trial) court will be discussed only insofar as they are
relevant to the appellate courts assailed Decision and Resolution.
The sale made in 1962 involving future inheritance is not really at issue
here. In context, the assailed Decision conceded it may be legally correct that
a contract of sale of anticipated future inheritance is null and void.3
But to remove all doubts, we hereby categorically rule that, pursuant to
Article 1347 of the Civil Code, (n)o contract may be entered into upon a future
inheritance except in cases expressly authorized by law.
Consequently, said contract made in 1962 is not valid and cannot be the
source of any right nor the creator of any obligation between the parties.
Hence, the affidavit of conformity dated February 28, 1980, insofar as it
sought to validate or ratify the 1962 sale, is also useless and, in the words of
the respondent Court, suffers from the same infirmity. Even private
respondents in their memorandum4 concede this.
However, the documents that are critical to the resolution of this case
are: (a) the deed of sale of January 13, 1981 in favor of private respondents
covering Lazaros undividedinheritance of one-twelfth (1/12) share in Lot No.
191, which was subsequently registered on June 7, 1982; and (b) the deed of
sale dated December 29, 1980 in favor of petitioners covering the same
property. These two documents were executed after the death of Matias (and
his spouse) and after a deed of extrajudicial settlement of his (Matias) estate
was executed, thus vesting in Lazaro actual title over said property. In other
words, these dispositions, though conflicting, were no longer infected with the
infirmities of the 1962 sale.
Petitioners contend that what was sold on January 13, 1981 was only
one-half hectare out of Lot No. 191, citing as authority the trial courts decision.
As earlier pointed out, what is on review in these proceedings by this Court is
the Court of Appeals decision - which correctly identified the subject matter of
the January 13, 1981 sale to be the entire undivided 1/12 share of Lazaro in
Lot No. 191 and which is the same property disposed of on December 29,
1980 in favor of petitioners.
Critical in determining which of these two deeds should be given effect is
the registration of the sale in favor of private respondents with the register of
deeds on June 7, 1982.
Article 1544 of the Civil Code governs the preferential rights of vendees
in cases of multiple sales, as follows:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who
in good faith was first in the possession; and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith.
The property in question is land, an immovable, and following the above-
quoted law, ownership shall belong to the buyer who in good faith registers it
first in the registry of property. Thus, although the deed of sale in favor of
private respondents was later than the one in favor of petitioners, ownership
 52
would vest in the former because of the undisputed fact of registration. On the
other hand, petitioners have not registered the sale to them at all.
Petitioners contend that they were in possession of the property and that
private respondents never took possession thereof. As between two
purchasers, the one who registered the sale in his favor has a preferred right
over the other who has not registered his title, even if the latter is in actual
possession of the immovable property.5
As to third issue, while petitioners conceded the fact of registration, they
nevertheless contended that it was done in bad faith. On this issue, the
respondent Court ruled:
Under the second assignment of error, plaintiffs-appellants contend that
defendants-appellees acted in bad faith when they registered the Deed of Sale
in their favor as appellee Ricardo already knew of the execution of the deed of
sale in favor of the plaintiffs; appellants cite the testimony of plaintiff Belinda
Tafledo to the effect that defendant Ricardo Taedo called her up on January 4
or 5, 1981 to tell her that he was already the owner of the land in question but
the contract of sale between our father and us were (sic) already consumated
(pp. 9-10, tsn, January 6, 1984). This testimony is obviously self-serving, and
because it was a telephone conversation, the deed of sale dated December
29, 1980 was not shown; Belinda merely told her uncle that there was already
a document showing that plaintiffs are the owners (p. 80). Ricardo Taedo
controverted this and testified that he learned for the first time of the deed of
sale executed by Lazaro in favor of his children about a month or sometime in
February 1981 (p. 111, tsn, Nov. 28, 1984). x x x6
The respondent Court, reviewing the trial courts findings, refused to overturn
the latters assessment of the testimonial evidence, as follows:
We are not prepared to set aside the finding of the lower court upholding
Ricardo Tanedos testimony, as it involves a matter of credibility of witnesses
which the trial judge, who presided at the hearing, was in a better position to
resolve. (Court of Appeals Decision, p. 6.)
In this connection, we note the tenacious allegations made by petitioners,
both in their basic petition and in their memorandum, as follows:
1. The respondent Court allegedly ignored the claimed fact that
respondent Ricardo by fraud and deceit and with foreknowledge
that the property in question had already been sold to petitioners,
made Lazaro execute the deed of January 13, 1981;
2. There is allegedly adequate evidence to show that only 1/2 of the
purchase price of P10,000.00 was paid at the time of the
execution of the deed of sale, contrary to the written
acknowledgment, thus showing bad faith;
3. There is allegedly sufficient evidence showing that the deed of
revocation of the sale in favor of petitioners was tainted with
fraud or deceit.
4. There is allegedly enough evidence to show that private
respondents took undue advantage over the weakness and
unschooled and pitiful situation of Lazaro Tafledo . . . and that
respondent Ricardo Taedo exercised moral ascendancy over his
younger brother he being the eldest brother and who reached
fourth year college of law and at one time a former Vice-
Governor of Tarlac, while his younger brother only attained first
year high school x x x ;
5. The respondent Court erred in not giving credence to petitioners
evidence, especially Lazaro Taedos Sinumpaang
Salaysay dated July 27, 1982 stating that Ricardo Taedo
deceived the former in executing the deed of sale in favor of
private respondents.
To be sure, there are indeed many conflicting documents and testimonies
as well as arguments over their probative value and significance. Suffice it to
say, however, that all the above contentions involve questions of fact,
appreciation of evidence and credibility of witnesses, which are not proper in
this review. It is well-settled that the Supreme Court is not a trier of facts. In
petitions for review under Rule 45 of the Revised Rules of Court, only
questions of law may be raised and passed upon. Absent any whimsical or
 53

capricious exercise of judgment, and unless the lack of any basis for the SO ORDERED.
conclusions made by the lower courts be amply demonstrated, the Supreme
Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.
Court will not disturb their findings. At most, it appears that petitioners have
shown that their evidence was not believed by both the trial and the appellate
courts, and that the said courts tended to give more credence to the evidence
presented by private respondents. But this in itself is not a reason for setting
aside such findings. We are far from convinced that both courts gravely
abused their respective authorities and judicial prerogatives. [G.R. No. 156973. June 4, 2004]
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and
Goidrock Construction and Development Corp.:7
SPOUSES TOMAS OCCEA and SILVINA OCCEA, petitioners, vs. LYDIA
The Court has consistently held that the factual findings of the trial court, as MORALES OBSIANA ESPONILLA, ELSA MORALES OBSIANA
well as the Court of Appeals, are final and conclusive and may not be SALAZAR and DARFROSA OBSIANA SALAZAR
reviewed on appeal. Among the exceptional circumstances where a ESPONILLA, respondents.
reassessment of facts found by the lower courts is allowed are when the
conclusion is a finding grounded entirely on speculation, surmises or
DECISION
conjectures; when the inference made is manifestly absurd, mistaken or
Impossible; when there is grave abuse of discretion in the appreciation of PUNO, J.:
facts; when the judgment is premised on a misapprehension of facts; when the
findings went beyond the issues of the case and the same are contrary to the The case at bar involves a portion of the 1,198-square meter residential
admissions of both appellant and appellee. After a careful study of the case at lot (lot no. 265) situated in Sibalom, Antique, originally owned by spouses
bench, we find none of the above grounds present to justify the re-evaluation Nicolas and Irene Tordesillas under OCT No. 1130. The Tordesillas spouses
of the findings of fact made by the courts below. had three (3) children, namely: Harod, Angela and Rosario, the latter having
been survived by her two (2) children, Arnold and Lilia de la Flor.
In the same vein, the ruling in the recent case of South Sea Surety and
After the death of the Tordesillas spouses, the lot was inherited by their
Insurance Company, Inc. vs. Hon. Court of Appeals, et al.[8] is equally
children Harod and Angela, and grandchildren Arnold and Lilia. In 1951, the
applicable to the present case:
heirs executed a Deed of Pacto de Retro Sale[1] in favor of Alberta Morales
covering the southwestern portion of the lot with an area of 748 square
We see no valid reason to discard the factual conclusions of the appellate
meters.
court. x x x (I)t is not the function of this Court to assess and evaluate all over
again the evidence, testimonial and documentary, adduced by the parties, Three (3) years later, in 1954, Arnold and Lilia executed a Deed of
particularly where, such as here, the findings of both the trial court and the Definite Sale of Shares, Rights, Interests and Participations[2] over the
appellate court on the matter coincide. (italics supplied) same 748 sq. m. lot in favor of Alberta Morales. The notarized deed also
attested that the lot sold by vendors Arnold and Lilia to Alberta were their
WHEREFORE, the petition is DENIED and the assailed Decision of the share in the estate of their deceased parents.
Court of Appeals is AFFIRMED. No Costs.
 54
Alberta possessed the lot as owner, constructed a house on it and
appointed a caretaker to oversee her property. Thereafter, in July 1956,
vendor Arnold de la Flor borrowed the OCT from Alberta covering the lot. He
executed an Affidavit[3] acknowledging receipt of the OCT in trust and
undertook to return said title free from changes, modifications or cancellations.
In 1966, Arnold and Angela, nephew and daughter respectively of the
Tordesillas spouses, without the knowledge of Alberta, executed a Deed of
Extrajudicial Settlement[4]declaring the two of them as the only co-
owners of the undivided 1,198 sq. m. lot no. 265, without acknowledging
their previous sale of 748 sq. m. thereof to Alberta. A number of times,
thereafter, Alberta and her nieces asked Arnold for the OCT of the land but
Arnold just kept on promising to return it.
In 1983, Arnold executed an Affidavit of Settlement of the Estate[5] of
Angela who died in 1978 without issue, declaring himself as the sole heir of
Angela and thus consolidating the title of the entire lot in his name.
In 1985, vendee Alberta Morales died. Her nieces-heirs, Lydia, Elsa
and Dafrosa, succeeded in the ownership of the lot. Months later, as the
heirs were about to leave for the United States, they asked Arnold to deliver to
them the title to the land so they can register it in their
name. Arnold repeatedly promised to do so but failed to deliver the title to
them.
On December 4, 1986, after Albertas heirs left for the States, Arnold used
the OCT he borrowed from the deceased vendee Alberta
Morales, subdivided the entire lot no. 265 into three sublots, and
registered them all under his name, viz: lot no. 265-A (with TCT No. 16895),
lot no. 265-B (with TCT No. 16896) and lot no. 265-C (with TCT No.
16897).He then paid the real estate taxes on the property.
On August 13, 1990, Arnold sold lot nos. 265-B & C to spouses Tomas
and Sylvina Occea, which included the 748 sq. m. portion previously sold to
Alberta Morales. A Deed of Absolute Sale[6] over said lots was executed to the
Occea spouses and titles were transferred to their names.
In 1993, after the death of Arnold, the three (3) nieces-heirs of Alberta
Morales learned about the second sale of their lot to the Occea spouses when
they were notified by caretaker Abas that they were being ejected from the
land. In 1994, the heirs filed a case[7] for annulment of sale and cancellation of
titles, with damages, against the second vendees Occea spouses. In their
complaint, they alleged that the Occeas purchased the land in bad faith as
they were aware that the lots sold to them had already been sold to Alberta
Morales in 1954. They averred that before the sale, when Tomas Occea
conducted an ocular inspection of the lots, Morito Abas, the caretaker
appointed by Alberta Morales to oversee her property, warned them not to
push through with the sale as the land was no longer owned by vendor Arnold
as the latter had previously sold the lot to Alberta Morales who had a house
constructed thereon.
For their part, the Occea spouses claimed that the OCT in the name of
the original owners of the lots, the Tordesillas spouses, was cancelled after it
was subdivided between Angela and Arnold in 1969; that new TCTs had been
issued in the latters names; that they were unaware that the subject lots were
already previously sold to Morales as they denied that Tomas had a talk with
caretaker Abas on the matter; that as of December 4, 1987, the TCTs
covering the lots were in the name of Arnold and his wife, without any adverse
claim annotated thereon; that vendor Arnold represented to them that the
occupants they saw on the land were squatters and that he merely tolerated
their presence; that they did not personally investigate the alleged
squatters on the land and merely relied on the representation of vendor
Arnold; that sometime in 1966-1967, Arnold and his co-heir Angela caused
the survey of the original lot and subdivided it into 3 lots, without opposition
from Morales or her heirs. Thus, three (3) TCTs were issued in 1969 to Arnold
and Angela and, two of the lots were then sold to the Occea spouses, again
without objection from Alberta Morales.
The Occea spouses alleged that they were buyers in good faith as the
titles to the subject lots were free from liens or encumbrances when they
purchased them. They claimed that in 1989, Arnold offered to sell the subject
lots to them. On August 13, 1990, after they verified with the Antique Registry
of Deeds that Arnolds TCTs were clean and unencumbered, Arnold signed the
instrument of sale over the subject lots in favor of the Occeas for P100,000.00
and new titles were issued in their names.
 55
The Occeas likewise set up the defenses of laches and
prescription. They argue that Alberta and plaintiffs-heirs were barred from
prosecuting their action as they failed to assert their right for forty (40)
years. Firstly, they point out that vendor Arnold and Angela subdivided the
entire lot in 1966 and declared themselves as the only co-owners thereof in
the deed of extrajudicial settlement. Alberta Morales failed to oppose the
inclusion of her 748 sq. m. lot in the deed. Thus, the title to the entire lot no.
256 was transferred to the names of Arnold and Angela. Secondly,
preparatory to the division of the lots, vendor Arnold had the land surveyed
but Alberta again failed to oppose the same. Finally, Alberta and her heirs who
are claiming adverse rights over the land based on the 1951 Deed of Pacto de
Retro Sale and the 1954 Deed of Definite Sale of Shares failed for 40 years to
annotate their adverse claims on the new titles issued to Arnold and Angela,
enabling the latter to possess a clean title and transfer them to the Occea
spouses.
After trial, the lower court rendered a decision declaring the Occea
spouses as buyers in good faith and ruled that the action of the heirs was
time-barred.
On appeal by Albertas heirs, the Court of Appeals reversed the decision
of the trial court. It found that the Occeas purchased the land in bad faith and
that the action filed by Albertas heirs was not barred by prescription or
laches. The dispositive portion reads:
WHEREFORE, the instant appeal is hereby GRANTED. Accordingly, the
assailed decision is hereby REVERSED and SET ASIDE and a new one is
rendered declaring the Deed of Absolute Sale dated August 13, 1990
executed between Arnold de la Flor in favor of defendants-appellees null and
void and ordering the cancellation of Transfer Certificate of Title Nos. 16896,
16897, T-18241 and T-18242.
SO ORDERED. [8]
Hence this appeal where petitioner-spouses Occea raise the following
issues:
I
WHETHER OR NOT A VERBAL INFORMATION COULD BE MADE TO
PREVAIL OVER A CLEAN CERTIFICATE OF TITLE OF A REGISTERED
LAND WHICH IS FREE OF ANY LIEN OR ENCUMBRANCE ANNOTATED
ON ITS CERTIFICATE OF TITLE OR ANY ADVERSE CLAIM RECORDED
WITH THE REGISTER OF DEEDS.
II
WHETHER OR NOT A BUYER OF A REGISTERED LAND IS OBLIGATED
TO MAKE INQUIRIES OF ANY POSSIBLE DEFECT OR ADVERSE CLAIM
AFFECTING ITS OWNERSHIP WHICH DOES NOT APPEAR ON THE
CERTIFICATE OF TITLE.
III
WHETHER OR NOT THE PERIOD OF MORE THAN FORTY (40) YEARS
WITHOUT POSITIVE ACTION TAKEN BY RESPONDENTS, AS WELL AS
BY ALBERTA MORALES, TO PROTECT THEIR INTEREST CAN BE
CONSIDERED LACHES AND THUS THEIR PRESENT ACTION HAS
PRESCRIBED.
On the first two issues, petitioner-spouses claim that they were
purchasers of the land in good faith as the law does not obligate them to go
beyond a clean certificate of title to determine the condition of the
property. They argue that a person dealing with registered land is only
charged with notice of the burden on the property annotated on the title. When
there is nothing on the title to indicate any cloud or vice in the ownership of the
property or any encumbrance thereon, the purchaser is not required to explore
further than the title in quest of any hidden defect or inchoate right that may
subsequently defeat his right thereto. They claim they had every right to
purchase the land despite the verbal warning made by caretaker Abas as the
information was mere hearsay and cannot prevail over the title of the land
which was free from any encumbrance.
 56
Their arguments do not persuade.
The petition at bar presents a case of double sale of an immovable
property. Article 1544 of the New Civil Code provides that in case an
immovable property is sold to different vendees, the ownership shall belong:
(1) to the person acquiring it who in good faith first recorded it in the
Registry of Property; (2) should there be no inscription, the ownership shall
pertain to the person who in good faith was first in possession; and, (3) in
the absence thereof, to the person who presents the oldest title, provided
there is good faith.
In all cases, good faith is essential. It is the basic premise of the
preferential rights granted to the one claiming ownership over an
immovable.[9] What is material is whether the second buyer first registers the
second sale in good faith, i.e., without knowledge of any defect in the title of
the property sold.[10] The defense of indefeasibility of a Torrens title does not
extend to a transferee who takes the certificate of title in bad faith, with notice
of a flaw.[11]
The governing principle of prius tempore, potior jure (first in time,
stronger in right) enunciated under Art. 1544 has been clarified, thus:
x x x Knowledge by the first buyer of the second sale cannot defeat the first
buyers rights except when the second buyer first registers in good faith the
second sale (Olivares vs. Gonzales, 159 SCRA 33).Conversely, knowledge
gained by the second buyer of the first sale defeats his rights even if he
is first to register, since such knowledge taints his registration with bad
faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December
1984). In Cruz vs. Cabaa (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it
was held that it is essential, to merit the protection of Art. 1544, second
paragraph, that the second realty buyer must act in good faith in
registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA
99 and Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).[12]
In the case at bar, we find that petitioner-spouses failed to prove good
faith in their purchase and registration of the land. A purchaser in good faith
and for value is one who buys property without notice that some other person
has a right to or interest in such property and pays its fair price before he has
notice of the adverse claims and interest of another person in the same
property. So it is that the honesty of intention which constitutes good faith
implies a freedom from knowledge of circumstances which ought to put a
person on inquiry. At the trial, Tomas Occea admitted that he found houses
built on the land during its ocular inspection prior to his purchase. He relied on
the representation of vendor Arnold that these houses were owned by
squatters and that he was merely tolerating their presence on the land. Tomas
should have verified from the occupants of the land the nature and authority of
their possession instead of merely relying on the representation of the vendor
that they were squatters, having seen for himself that the land was occupied
by persons other than the vendor who was not in possession of the land at
that time. The settled rule is that a buyer of real property in the possession
of persons other than the seller must be wary and should investigate the
rights of those in possession. Without such inquiry, the buyer can hardly
be regarded as a buyer in good faith and cannot have any right over the
property.[13] A purchaser cannot simply close his eyes to facts which should
put a reasonable man on his guard and then claim that he acted in good faith
under the belief that there was no defect in the title of his vendor. [14] His mere
refusal to believe that such defect exists or his willful closing of his eyes to the
possibility of the existence of a defect in his vendors title will not make him an
innocent purchaser for value if it later develops that the title was in fact
defective, and it appears that he would have notice of the defect had he acted
with that measure of precaution which may reasonably be required of a
prudent man in a similar situation.
Indeed, the general rule is that one who deals with property registered
under the Torrens system need not go beyond the same, but only has to rely
on the title. He is charged with notice only of such burdens and claims as are
annotated on the title. However, this principle does not apply when the party
has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the purchaser has
knowledge of a defect or the lack of title in his vendor or of sufficient facts to
induce a reasonably prudent man to inquire into the status of the title of the
property in litigation. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in good faith. [15]
 57
The evidence of the private respondents show that when Tomas Occea
conducted an ocular inspection of the land prior to the second sale, Abas, the
caretaker of the house which Alberta Morales built on the land, personally
informed Tomas that the lot had been previously sold by the same vendor
Arnold to Alberta Morales. With this information, the Occeas were obliged to
look beyond the title of their vendor and make further inquiries from the
occupants of the land as to their authority and right to possess it. However,
despite this information about a prior sale, the Occeas proceeded with the
purchase in haste. They did not inquire from Abas how they could get in touch
with the heirs or representatives of Albertato verify the ownership of the land.
Neither do the records reveal that they exerted effort to examine the
documents pertaining to the first sale. Having discovered that the land they
intended to buy was occupied by a person other than the vendor not in actual
possession thereof, it was incumbent upon the petitioners to verify the extent
of the occupants possessory rights.[16] The Occeas did nothing and chose to
ignore and disbelieve Abas statement.
On the third issue, we hold that the action to annul title filed by
respondents-heirs is not barred by laches and prescription. Firstly, laches is a
creation of equity and its application is controlled by equitable
considerations. Laches cannot be used to defeat justice or perpetuate fraud
and injustice. Neither should its application be used to prevent the rightful
owners of a property from recovering what has been fraudulently registered in
the name of another.[17] Secondly, prescription does not apply when the
person seeking annulment of title or reconveyance is in possession of the lot
because the action partakes of a suit to quiet title which is imprescriptible.[18] In
this case, Morales had actual possession of the land when she had a house
built thereon and had appointed a caretaker to oversee her property. Her
undisturbed possession of the land for a period of fifty (50) long years gave
her and her heirs a continuing right to seek the aid of a court of equity to
determine the nature of the claim of ownership of petitioner-spouses.[19] As
held by this Court in Faja vs. Court of Appeals:[20]
x x x There is settled jurisprudence that one who is in actual possession of
a piece of land claiming to be owner thereof may wait until his
possession is disturbed or his title attacked before taking steps to
vindicate his right, the reason for the rule being, that his undisturbed
possession gives him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim and its
effect on his own title, which right can be claimed only by one who is in
possession. x x x The right to quiet title to the property, seek its
reconveyance and annul any certificate of title covering it accrued only
from the time the one in possession was made aware of a claim adverse
to his own, and it is only then that the statutory period of prescription
commences to run against such possessor.
In the case at bar, Morales caretaker became aware of the second sale
to petitioner-spouses only in 1991 when he received from the latter a notice to
vacate the land.Respondents-heirs did not sleep on their rights for in 1994,
they filed their action to annul petitioners title over the land. It likewise bears to
stress that when vendor Arnold reacquired title to the subject property by
means of fraud and concealment after he has sold it to Alberta Morales, a
constructive trust was created in favor of Morales and her heirs. As the
defrauded parties who were in actual possession of the property, an action of
the respondents-heirs to enforce the trust and recover the property cannot
prescribe. They may vindicate their right over the property regardless of the
lapse of time.[21] Hence, the rule that registration of the property has the effect
of constructive notice to the whole world cannot be availed of by petitioners
and the defense of prescription cannot be successfully raised against
respondents.
In sum, the general rule is that registration under the Torrens system is
the operative act which gives validity to the transfer of title on the
land. However, it does not create or vest title especially where a party has
actual knowledge of the claimants actual, open and notorious possession of
the property at the time of his registration.[22] A buyer in bad faith has no right
over the land. As petitioner-spouses failed to register the subject land in good
faith, ownership of the land pertains to respondent-heirs who first possessed it
in good faith.
IN VIEW WHEREOF, the petition is DISMISSED. No costs.
SO ORDERED.
Quisumbing, Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
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