May 31, 1965

G.R. No. L-18497

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 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. 357358; 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.
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.
[G.R. No. 154409. June 21, 2004]
Spouses NOEL and JULIE ABRIGO, petitioners, vs. ROMANA DE VERA, respondent.
DECISION
PANGANIBAN, J.:
Between two buyers of the same immovable property registered under the Torrens system, the law gives ownership
priority to (1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer
who in good faith presents the oldest title. This provision, however, does not apply if the property is not registered
under the Torrens system.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the March 21, 2002
Amended Decision[2] and the July 22, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 62391. The
Amended Decision disposed as follows:
WHEREFORE, the dispositive part of the original DECISION of this case, promulgated on November 19, 2001, is SET
ASIDE and another one is entered AFFIRMING in part and REVERSING in part the judgment appealed from, as
follows:
1.
Declaring [Respondent] Romana de Vera the rightful owner and with better right to possess the property in
question, being an innocent purchaser for value therefor;
2.
Declaring Gloria Villafania [liable] to pay the following to [Respondent] Romana de Vera and to
[Petitioner-]Spouses [Noel and Julie] Abrigo, to wit:
As to [Respondent] Romana de Vera:
1.
2.
3.
4.
5.

P300,000.00 plus 6% per annum as actual damages;

P50,000.00 as moral damages;
P50,000.00 as exemplary damages;
P30,000.00 as attorneys fees; and
Cost of suit.

As to [Petitioner-]Spouses [Noel and Julie] Abrigo:

1.
2.
3.
4.

P50,000.00 as moral damages;

P50,000.00 as exemplary damages;
P30,000.00 as attorneys fees;
Cost of suit.[4]

The assailed Resolution denied reconsideration.

The Facts
Quoting the trial court, the CA narrated the facts as follows:
As culled from the records, the following are the pertinent antecedents amply summarized by the trial court:
On May 27, 1993, Gloria Villafania sold a house and lot located at Banaoang, Mangaldan, Pangasinan and covered
by Tax Declaration No. 1406 to Rosenda Tigno-Salazar and Rosita Cave-Go. The said sale became a subject of a suit
for annulment of documents between the vendor and the vendees.
On December 7, 1993, the Regional Trial Court, Branch 40 of Dagupan City rendered judgment approving the
Compromise Agreement submitted by the parties. In the said Decision, Gloria Villafania was given one year from
the date of the Compromise Agreement to buy back the house and lot, and failure to do so would mean that the
previous sale in favor of Rosenda Tigno-Salazar and Rosita Cave-Go shall remain valid and binding and the plaintiff
shall voluntarily vacate the premises without need of any demand. Gloria Villafania failed to buy back the house
and lot, so the [vendees] declared the lot in their name.
Unknown, however to Rosenda Tigno-Salazar and Rosita Cave-Go, Gloria Villafania obtained a free patent over the
parcel of land involved [on March 15, 1988 as evidenced by OCT No. P-30522]. The said free patent was later on
cancelled by TCT No. 212598 on April 11, 1996.
On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold the house and lot to the herein [PetitionerSpouses Noel and Julie Abrigo].
On October 23, 1997, Gloria Villafania sold the same house and lot to Romana de Vera x x x. Romana de Vera
registered the sale and as a consequence, TCT No. 22515 was issued in her name.
On November 12, 1997, Romana de Vera filed an action for Forcible Entry and Damages against [Spouses Noel and
Julie Abrigo] before the Municipal Trial Court of Mangaldan, Pangasinan docketed as Civil Case No. 1452. On
February 25, 1998, the parties therein submitted a Motion for Dismissal in view of their agreement in the instant
case that neither of them can physically take possession of the property in question until the instant case is
terminated. Hence the ejectment case was dismissed.[5]
Thus, on November 21, 1997, [petitioners] filed the instant case [with the Regional Trial Court of Dagupan City] for
the annulment of documents, injunction, preliminary injunction, restraining order and damages [against respondent
and Gloria Villafania].
After the trial on the merits, the lower court rendered the assailed Decision dated January 4, 1999, awarding the
properties to [petitioners] as well as damages. Moreover, x x x Gloria Villafania was ordered to pay [petitioners and
private respondent] damages and attorneys fees.
Not contented with the assailed Decision, both parties [appealed to the CA].[6]
Ruling of the Court of Appeals
In its original Decision promulgated on November 19, 2001, the CA held that a void title could not give rise to a valid
one and hence dismissed the appeal of Private Respondent Romana de Vera.[7] Since Gloria Villafania had already
transferred ownership to Rosenda Tigno-Salazar and Rosita Cave-Go, the subsequent sale to De Vera was deemed
void.
The CA also dismissed the appeal of Petitioner-Spouses Abrigo and found no sufficient basis to award them moral
and exemplary damages and attorneys fees.

On reconsideration, the CA issued its March 21, 2002 Amended Decision, finding Respondent De Vera to be a
purchaser in good faith and for value. The appellate court ruled that she had relied in good faith on the Torrens title
of her vendor and must thus be protected.[8]
Hence, this Petition.[9]
Issues
Petitioners raise for our consideration the issues below:
1.
valid.

Whether or not the deed of sale executed by Gloria Villafania in favor of [R]espondent Romana de Vera is

2.

Whether or not the [R]espondent Romana de Vera is a purchaser for value in good faith.

3.

Who between the petitioners and respondent has a better title over the property in question.[10]

In the main, the issues boil down to who between petitioner-spouses and respondent has a better right to the
property.
The Courts Ruling
The Petition is bereft of merit.
Main Issue:
Better Right over the Property
Petitioners contend that Gloria Villafania could not have transferred the property to Respondent De Vera because it
no longer belonged to her.[11] They further claim that the sale could not be validated, since respondent was not a
purchaser in good faith and for value.[12]
Law on Double Sale
The present case involves what in legal contemplation was a double sale. On May 27, 1993, Gloria Villafania first
sold the disputed property to Rosenda Tigno-Salazar and Rosita Cave-Go, from whom petitioners, in turn, derived
their right. Subsequently, on October 23, 1997, a second sale was executed by Villafania with Respondent Romana
de Vera.
Article 1544 of the Civil Code states the law on double sale thus:
Art. 1544.
If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.
Otherwise stated, the law provides that a double sale of immovables transfers ownership to (1) the first registrant in
good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest
title.[13] There is no ambiguity in the application of this law with respect to lands registered under the Torrens
system.
This principle is in full accord with Section 51 of PD 1529[14] which provides that no deed, mortgage, lease or other
voluntary instrument -- except a will -- purporting to convey or affect registered land shall take effect as a
conveyance or bind the land until its registration.[15] Thus, if the sale is not registered, it is binding only between
the seller and the buyer but it does not affect innocent third persons.[16]
In the instant case, both Petitioners Abrigo and respondent registered the sale of the property. Since neither
petitioners nor their predecessors (Tigno-Salazar and Cave-Go) knew that the property was covered by the Torrens
system, they registered their respective sales under Act 3344.[17] For her part, respondent registered the
transaction under the Torrens system[18] because, during the sale, Villafania had presented the transfer certificate
of title (TCT) covering the property.[19]

Respondent De Vera contends that her registration under the Torrens system should prevail over that of petitioners
who recorded theirs under Act 3344. De Vera relies on the following insight of Justice Edgardo L. Paras:
x x x If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is sold but
the subsequent sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is
not considered REGISTERED, as the term is used under Art. 1544 x x x.[20]
We agree with respondent. It is undisputed that Villafania had been issued a free patent registered as Original
Certificate of Title (OCT) No. P-30522.[21] The OCT was later cancelled by Transfer Certificate of Title (TCT) No.
212598, also in Villafanias name.[22] As a consequence of the sale, TCT No. 212598 was subsequently cancelled
and TCT No. 22515 thereafter issued to respondent.
Soriano v. Heirs of Magali[23] held that registration must be done in the proper registry in order to bind the land.
Since the property in dispute in the present case was already registered under the Torrens system, petitioners
registration of the sale under Act 3344 was not effective for purposes of Article 1544 of the Civil Code.
More recently, in Naawan Community Rural Bank v. Court of Appeals,[24] the Court upheld the right of a party who
had registered the sale of land under the Property Registration Decree, as opposed to another who had registered a
deed of final conveyance under Act 3344. In that case, the priority in time principle was not applied, because the
land was already covered by the Torrens system at the time the conveyance was registered under Act 3344. For the
same reason, inasmuch as the registration of the sale to Respondent De Vera under the Torrens system was done in
good faith, this sale must be upheld over the sale registered under Act 3344 to Petitioner-Spouses Abrigo.
Radiowealth Finance Co. v. Palileo[25] explained the difference in the rules of registration under Act 3344 and those
under the Torrens system in this wise:
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 ones favor does not give him any right over the land if the vendor was not anymore the owner of the land
having previously sold the same to somebody else even if the earlier sale was unrecorded.
The case of Carumba vs. Court of Appeals[26] is a case in point. It was held therein that Article 1544 of the Civil
Code has no application to land not registered under Act No. 496. Like in the case at bar, Carumba dealt with a
double sale of the same unregistered land. The first sale was made by the original owners and was unrecorded
while the second was an execution sale that resulted from a complaint for a sum of money filed against the said
original owners. Applying [Section 33], Rule 39 of the Revised Rules of Court,[27] 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 latters interest in the property sold as of the time the property was levied upon.
Applying this principle, x x x the execution sale of 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.[28]
Petitioners cannot validly argue that they were fraudulently misled into believing that the property was
unregistered. A Torrens title, once registered, serves as a notice to the whole world.[29] All persons must take
notice, and no one can plead ignorance of the registration.[30]
Good-Faith Requirement
We have consistently held that Article 1544 requires the second buyer to acquire the immovable in good faith and to
register it in good faith.[31] Mere registration of title is not enough; good faith must concur with the registration.[32]
We explained the rationale in Uraca v. Court of Appeals,[33] which we quote:
Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself confer
ownership or a better right over the property. Article 1544 requires that such registration must be coupled with
good faith. Jurisprudence teaches us that (t)he governing principle is primus tempore, potior jure (first in time,
stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyers rights
except where the second buyer registers in good faith the second sale ahead of the first, as provided by the Civil
Code. 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 buyers rights) ---- from the time of

acquisition until the title is transferred to him by registration, or failing registration, by delivery of possession.[34]
(Italics supplied)
Equally important, under Section 44 of PD 1529, every registered owner receiving a certificate of title pursuant to a
decree of registration, and every subsequent purchaser of registered land taking such certificate for value and in
good faith shall hold the same free from all encumbrances, except those noted and enumerated in the certificate.
[35] Thus, a person dealing with registered land is not required to go behind the registry to determine the condition
of the property, since such condition is noted on the face of the register or certificate of title.[36] Following this
principle, this Court has consistently held as regards registered land that a purchaser in good faith acquires a good
title as against all the transferees thereof whose rights are not recorded in the Registry of Deeds at the time of the
sale.[37]
Citing Santiago v. Court of Appeals,[38] petitioners contend that their prior registration under Act 3344 is
constructive notice to respondent and negates her good faith at the time she registered the sale. Santiago affirmed
the following commentary of Justice Jose C. Vitug:
The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of
the second sale cannot defeat the first buyer's 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. Cabana (G.R. No. 56232, 22 June
1984; 129 SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second paragraph, that the
second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69
SCRA 99, Crisostomo vs. CA, G.R. 95843, 02 September 1992).
xxx

xxx

xxx

Registration of the second buyer under Act 3344, providing for the registration of all instruments on land neither
covered by the Spanish Mortgage Law nor the Torrens System (Act 496), cannot improve his standing since Act 3344
itself expresses that registration thereunder would not prejudice prior rights in good faith (see Carumba vs. Court of
Appeals, 31 SCRA 558). Registration, however, by the first buyer under Act 3344 can have the effect of constructive
notice to the second buyer that can defeat his right as such buyer in good faith (see Arts. 708-709, Civil Code; see
also Revilla vs. Galindez, 107 Phil. 480; Taguba vs. Peralta, 132 SCRA 700). Art. 1544 has been held to be
inapplicable to execution sales of unregistered land, since the purchaser merely steps into the shoes of the debtor
and acquires the latter's interest as of the time the property is sold (Carumba vs. Court of Appeals, 31 SCRA 558;
see also Fabian vs. Smith, Bell & Co., 8 Phil. 496) or when there is only one sale (Remalante vs. Tibe, 158 SCRA
138).[39] (Emphasis supplied)
Santiago was subsequently applied in Bayoca v. Nogales,[40] which held:
Verily, there is absence of prior registration in good faith by petitioners of the second sale in their favor. As stated
in the Santiago case, registration by the first buyer under Act No. 3344 can have the effect of constructive notice to
the second buyer that can defeat his right as such buyer. On account of the undisputed fact of registration under Act
No. 3344 by [the first buyers], necessarily, there is absent good faith in the registration of the sale by the [second
buyers] for which they had been issued certificates of title in their names. x x x.[41]
Santiago and Bayoca are not in point. In Santiago, the first buyers registered the sale under the Torrens system, as
can be inferred from the issuance of the TCT in their names.[42] There was no registration under Act 3344. In
Bayoca, when the first buyer registered the sale under Act 3344, the property was still unregistered land.[43] Such
registration was therefore considered effectual.
Furthermore, Revilla and Taguba, which are cited in Santiago, are not on all fours with the present case. In Revilla,
the first buyer did not register the sale.[44] In Taguba, registration was not an issue.[45]
As can be gathered from the foregoing, constructive notice to the second buyer through registration under Act 3344
does not apply if the property is registered under the Torrens system, as in this case.
We quote below the additional commentary of Justice Vitug, which was omitted in Santiago. This omission was
evidently the reason why petitioner misunderstood the context of the citation therein:
"The registration contemplated under Art. 1544 has been held to refer to registration under Act 496 Land
Registration Act (now PD 1529) which considers the act of registration as the operative act that binds the land (see
Mediante vs. Rosabal, 1 O.G. [12] 900, Garcia vs. Rosabal, 73 Phil 694). On lands covered by the Torrens System, the
purchaser acquires such rights and interest as they appear in the certificate of title, unaffected by any prior lien or
encumbrance not noted therein. The purchaser is not required to explore farther than what the Torrens title, upon its

face, indicates. The only exception is where the purchaser has actual knowledge of a flaw or defect in the title of the
seller or of such liens or encumbrances which, as to him, is equivalent to registration (see Sec. 39, Act 496; Bernales
vs. IAC, G.R. 75336, 18 October 1988; Hernandez vs. Sales, 69 Phil 744; Tajonera vs. Court of Appeals, L-26677, 27
March 1981),"[46]
Respondent
in Good Faith
The Court of Appeals examined the facts to determine whether respondent was an innocent purchaser for value.[47]
After its factual findings revealed that Respondent De Vera was in good faith, it explained thus:
x x x. Gloria Villafania, [Respondent] De Veras vendor, appears to be the registered owner. The subject land was,
and still is, registered in the name of Gloria Villafania. There is nothing in her certificate of title and in the
circumstances of the transaction or sale which warrant [Respondent] De Vera in supposing that she need[ed] to look
beyond the title. She had no notice of the earlier sale of the land to [petitioners]. She ascertained and verified that
her vendor was the sole owner and in possession of the subject property by examining her vendors title in the
Registry of Deeds and actually going to the premises. There is no evidence in the record showing that when she
bought the land on October 23, 1997, she knew or had the slightest notice that the same was under litigation in Civil
Case No. D-10638 of the Regional Trial Court of Dagupan City, Branch 40, between Gloria Villafania and [Petitioners]
Abrigo. She was not even a party to said case. In sum, she testified clearly and positively, without any contrary
evidence presented by the [petitioners], that she did not know anything about the earlier sale and claim of the
spouses Abrigo, until after she had bought the same, and only then when she bought the same, and only then when
she brought an ejectment case with the x x x Municipal Court of Mangaldan, known as Civil Case No. 1452. To the
[Respondent] De Vera, the only legal truth upon which she had to rely was that the land is registered in the name of
Gloria Villafania, her vendor, and that her title under the law, is absolute and indefeasible. x x x.[48]
We find no reason to disturb these findings, which petitioners have not rebutted. Spouses Abrigo base their position
only on the general averment that respondent should have been more vigilant prior to consummating the sale.
They argue that had she inspected the property, she would have found petitioners to be in possession.[49]
This argument is contradicted, however, by the spouses own admission that the parents and the sister of Villafania
were still the actual occupants in October 1997, when Respondent De Vera purchased the property.[50] The family
members may reasonably be assumed to be Villafanias agents, who had not been shown to have notified
respondent of the first sale when she conducted an ocular inspection. Thus, good faith on respondents part stands.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 167412

February 22, 2006

JUANITA NAVAL, Petitioner,

vs.
COURT OF APPEALS, JUANITO CAMALLA, JAIME NACION, CONRADO BALILA, ESTER MOYA and PORFIRIA AGUIRRE,
Respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review assails the Decision1 of the Court of Appeals dated December 14, 2004, in CA-G.R. SP No.
86736, which reversed the Decision2 of the Regional Trial Court (RTC) of Naga City, Branch 26, in Civil Case No.
2004-0054 affirming the Decision3 of the Municipal Circuit Trial Court (MCTC) of Magarao-Canaman, Camarines Sur,
as well as the Resolution4 dated February 17, 2005 denying petitioners motion for reconsideration.
The facts of the case are as follows:
On December 2, 1969, Ildefonso A. Naval sold a parcel of land located in Sto. Tomas, Magarao, Camarines Sur,
consisting of 858 sq. m. to Gregorio B. Galarosa. The sale was recorded in the Registry of Property of the Registry of
Deeds of Camarines Sur on December 3, 1969 pursuant to Act No. 3344, the law governing registrations of all
instruments on unregistered lands.5
Subsequently, Gregorio sold portions of the land to respondents Conrado Rodrigo Balilla6 on November 4, 1976,
Jaime Nacion7 on January 10, 1977 and spouses Ireneo and Ester Moya8 in July 1977, and Juanito Camalla9 on

September 4, 1987. All buyers occupied the portion they bought, built improvements thereon, and paid the taxes
due thereto.10
The controversy arose when petitioner Juanita Naval, the great granddaughter of Ildefonso, was issued on April 1,
1975 by the Register of Deeds of Camarines Sur an Original Certificate of Title (OCT) No. RP-5386 (29791), covering
733 sq. m. of the subject land.11 She claimed that she bought the subject land from Ildefonso in 1972.12
On November 10, 1977, petitioner filed a complaint for recovery of possession against Bartolome Aguirre, Conrado
Balila,13 Ireneo Moya, Jaime Nacion and Domingo Nacion, which was docketed as Civil Case No. 306.14 However,
the case was dismissed15 without prejudice16 for failure to prosecute the action for an unreasonable length of time.
Almost 20 years later, or on April 21, 1997, petitioner re-filed the complaint for recovery of possession with
damages before the MCTC of Magarao-Canaman, Camarines Sur, against Juanita17 Camalla, Diosdado Balila,
Conrado Balila, Forferia18 Aguirre, Jaime Nacion and Ester Moya. The case was docketed as Civil Case No. 994.
After trial, the MCTC rendered its decision, the dispositive portion reads as follows:
WHEREFORE, for all the foregoing consideration, decision is hereby rendered in favor of the plaintiff and against
defendants:
1) Declaring the plaintiff to be the legal owner of the land as described in paragraph 2 of the complaint;
2) Ordering defendants Juanito Camalla, Diosdado Balila, Conrado Balila, Porferia Aguirre and Jaime Nacion to vacate
the property in question and to deliver its possession to the plaintiff;
3) Ordering Ester Moya to vacate the fifty (50) square meters occupied by her and to relinquish its possession to the
plaintiff;
4) Dismissing the respective claims for damages of the parties.
Pronouncing no costs.
SO ORDERED.19
Aggrieved, respondents appealed the decision to the RTC of Naga City, which affirmed in toto the assailed
decision.20
Respondents thereafter elevated the case to the Court of Appeals via Rule 42 of the Rules of Court. Finding the prior
registration of the deed of sale between Ildefonso and Gregorio with the Register of Deeds as a constructive notice
to subsequent buyers, the appellate court reversed the decision of the RTC. Thus,
WHEREFORE, premises considered, the present petition is hereby GRANTED. The appealed decision of the court a
quo is hereby REVERSED and SET ASIDE and a new judgment is hereby entered dismissing respondent's complaint
for recovery of possession with damages. Petitioners' counterclaim for damages is likewise dismissed for lack of
legal and factual bases.
No pronouncement as to costs.
SO ORDERED.21
Hence, this petition assigning the following errors:
I
THE COURT OF APPEALS ERRED IN DECLARING THAT GREGORIO GALAROSA HAS RIGHTFULLY ACQUIRED OWNERSHIP
OVER THE LOT COVERED BY OCT RP #5386 (29791) AND DECLARING HIM TO HAVE POSSESSED THE LOT BEFORE
THE ALLEGED SALES TO RESPONDENTS.
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE PAYMENT OF TAXES BY RESPONDENTS WERE (sic) EVIDENCE
OF LAWFUL POSSESSION AND OWNERSHIP.
III

THE COURT OF APPEALS ERRED IN DECLARING THAT THE LOTS CLAIMED BY THE RESPONDENTS HAVE BEEN
POSSESSED BY THEM IN GOOD FAITH DESPITE THEIR KNOWLEDGE OF THE EXISTENCE OF OCT RP #5386(29791).22
Petitioner claims that she has superior rights over the subject land because the sale between Ildefonso and Gregorio
and the subsequent registration thereof with the Register of Deeds had no legal effect since the subject land was
declared in the name of Agrifina Avila while the tax declaration cancelled by Gregorios was that of Gregorio Boaga.
Petitioner thus assails the right claimed by Gregorio over the subject land from which the respondents derived their
respective claims.23
On the other hand, respondents contend that the registered sale by Ildefonso to Gregorio in 1969 of the subject
land, from whom they derive their claims, vests them with better right than the petitioner; that registration under
Act No. 3344 served as constructive notice to the whole world, including the petitioner, who claimed to have
purchased the subject land from Ildefonso in 1972, but failed to present evidence to prove such acquisition.24
We deny the petition.
Prefatorily, a perusal of the records reveals that during the trial, petitioner vigorously asserted that the subject land
was the exclusive property of Ildefonso who sold it to her in 1972.25 However, in this appeal, petitioner assails the
ownership not only of Gregorio but also of Ildefonso by alleging that at the time the latter sold the land to Gregorio,
the same was declared in the name of Agrifina Avila. When a party adopts a certain theory in the court below, he is
not allowed to change his theory on appeal, for to allow him to do so would not only be unfair to the other party, but
it would also be offensive to the basic rules of fair play, justice and due process.26
In this appeal, the issue for resolution is who has the superior right to a parcel of land sold to different buyers at
different times by its former owner.
It is not disputed that the subject land belonged to Ildefonso and that it was not registered under the Torrens
System27 when it was sold to Gregorio in 1969 and to the petitioner in 1972. Further, the deed of sale between
Ildefonso and Gregorio was registered with the Register of Deeds of Camarines Sur pursuant to Act No. 3344, as
shown by Inscription No. 54609 dated December 3, 1969, Page 119, Volume 186, File No. 55409 at the back thereof.
In holding that respondents have a better right to possess the subject land in view of the bona fide registration of
the sale with the Register of Deeds of Camarines Sur by Ildefonso and Gregorio, the Court of Appeals applied Article
1544 of the Civil Code, which provides:
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.
While we agree with the appellate court that respondents have superior right over the petitioner on the subject
property, we find Article 1544 inapplicable to the case at bar since the subject land was unregistered at the time of
the first sale. The registration contemplated under this provision has been held to refer to registration under the
Torrens System, which considers the act of registration as the operative act that binds the land.28 Thus, in Carumba
v. Court of Appeals,29 we held that Article 1544 of the Civil Code has no application to land not registered under
Torrens System.
The law applicable therefore is Act No. 3344, which provides for the registration of all instruments on land neither
covered by the Spanish Mortgage Law nor the Torrens System. Under this law, registration by the first buyer is
constructive notice to the second buyer that can defeat his right as such buyer in good faith.
Applying the law, we held in Bautista v. Fule30 that the registration of an instrument involving unregistered land in
the Registry of Deeds creates constructive notice and binds third person who may subsequently deal with the same
property. We also held in Bayoca v. Nogales31 that:
Verily, there is absence of prior registration in good faith by petitioners of the second sale in their favor. As stated in
the Santiago case, registration by the first buyer under Act No. 3344 can have the effect of constructive notice to
the second buyer that can defeat his right as such buyer. On account of the undisputed fact of registration under Act
No. 3344 by [the first buyers], necessarily, there is absent good faith in the registration of the sale by the [second
buyers] for which they had been issued certificates of title in their names. It follows that their title to the land cannot
be upheld. x x x.

Even if petitioner argues that she purchased and registered the subject land in good faith and without knowledge of
any adverse claim thereto, respondents still have superior right over the disputed property. We held in Rayos v.
Reyes32 that:
"[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land
and the purchaser is buying the same from the registered owner whose title to the land is clean x x x in such case
the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for
value." Since the properties in question are unregistered lands, petitioners as subsequent buyers thereof did so at
their peril. Their claim of having bought the land in good faith, i.e., without notice that some other person has a right
to or interest in the property, would not protect them if it turns out, as it actually did in this case, that their seller did
not own the property at the time of the sale.
It is an established principle that no one can give what one does not have, nemo dat quod non habet. Accordingly,
one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can
transfer legally.33 In the case at bar, since Ildefonso no longer owned the subject land at the time of the sale to the
petitioner, he had nothing to sell and the latter did not acquire any right to it.
Even if we apply Article 1544, the facts would nonetheless show that respondents and their predecessors-in-interest
registered first the source of their ownership and possession, i.e., the 1969 deed of sale, and possessed the subject
land at the earliest time. Applying the doctrine of "priority in time, priority in rights" or "prius tempore, potior jure,"
respondents are entitled to the ownership and possession of the subject land.34
True, a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified, enlarged
or diminished except in a direct proceeding permitted by law.35 Moreover, Section 32 of Presidential Decree No.
1529 provides that "[u]pon the expiration of said period of one year, the decree of registration and the certificate of
title shall become incontrovertible."
However, it does not deprive an aggrieved party of a remedy in law. What cannot be collaterally attacked is the
certificate of title and not the title or ownership which is represented by such certificate. Ownership is different from
a certificate of title.36 The fact that petitioner was able to secure a title in her name did not operate to vest
ownership upon her of the subject land. Registration of a piece of land under the Torrens System does not create or
vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership
or title over the particular property described therein.37 It cannot be used to protect a usurper from the true owner;
nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the
expense of others.38 Its issuance in favor of a particular person does not foreclose the possibility that the real
property may be co-owned with persons not named in the certificate, or that it may be held in trust for another
person by the registered owner.39
As correctly held by the Court of Appeals, notwithstanding the indefeasibility of the Torrens title, the registered
owner may still be compelled to reconvey the registered property to its true owners. The rationale for the rule is that
reconveyance does not set aside or re-subject to review the findings of fact of the Bureau of Lands. In an action for
reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of
the property or its title which has been wrongfully or erroneously registered in another persons name, to its rightful
or legal owner, or to the one with a better right.40
Finally, the Court of Appeals correctly held that an action for reconveyance does not prescribe when the plaintiff is in
possession of the land to be reconveyed, as in this case. Thus, in Leyson v. Bontuyan:41
x x x [T]his Court declared that an action for reconveyance based on fraud is imprescriptible where the plaintiff is in
possession of the property subject of the acts. In Vda. de Cabrera v. Court of Appeals, the Court held:
... [A]n action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten years, the
point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over
the property, but this rule applies only when the plaintiff or the person enforcing the trust is not in possession of the
property, since if a person claiming to be the owner thereof is in actual possession of the property, as the
defendants are in the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land claiming to
be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to
vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to
seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its
effect on his own title, which right can be claimed only by one who is in possession.
Similarly, in the case of David v. Malay, the same pronouncement was reiterated by the Court:

... 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 is attacked before taking steps to vindicate his right, the reason
for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of the court of equity
to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right
can be claimed only by one who is in possession. No better situation can be conceived at the moment for Us to
apply this rule on equity than that of herein petitioners whose ... possession of the litigated property for no less than
30 years and was suddenly confronted with a claim that the land she had been occupying and cultivating all these
years, was titled in the name of a third person. We hold that in such a situation the right to quiet title to the
property, to seek its reconveyance and annul any certificate of title covering it, accrued only from the time the one
in possession was made aware of a claim adverse to his own, and it is only then that the statutory period of
prescription commences to run against such possessor.
The paramount reason for this exception is based on the theory that registration proceedings could not be used as a
shield for fraud. Moreover, to hold otherwise would be to put premium on land-grabbing and transgressing the
broader principle in human relations that no person shall unjustly enrich himself at the expense of another.
WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals dated December
14, 2004, in CA-G.R. SP No. 86736, dismissing petitioners complaint for recovery of possession and respondents
counterclaim for damages for lack of legal and factual bases, and the Resolution dated February 17, 2005 denying
the motion for reconsideration, are AFFIRMED.
SO ORDERED.
[G.R. No. 103577. October 7, 1996]
ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A. CORONEL, ANNABELLE C. GONZALES (for herself and on
behalf of Floraida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA A. ALMONTE, and CATALINA BALAIS
MABANAG, petitioners, vs. THE COURT OF APPEALS, CONCEPCION D. ALCARAZ and RAMONA PATRICIA ALCARAZ,
assisted by GLORIA F. NOEL as attorney-in-fact, respondents.
DECISION
MELO, J.:
The petition before us has its roots in a complaint for specific performance to compel herein petitioners (except the
last named, Catalina Balais Mabanag) to consummate the sale of a parcel of land with its improvements located
along Roosevelt Avenue in Quezon City entered into by the parties sometime in January 1985 for the price of
P1,240,000.00.
The undisputed facts of the case were summarized by respondent court in this wise:
On January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter referred to as Coronels) executed a
document entitled Receipt of Down Payment (Exh. A) in favor of plaintiff Ramona Patricia Alcaraz (hereinafter
referred to as Ramona) which is reproduced hereunder:
RECEIPT OF DOWN PAYMENT
P1,240,000.00 - Total amount
50,000.00 - Down payment
-----------------------------------------P1,190,000.00 - Balance
Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase
price of our inherited house and lot, covered by TCT No. 119627 of the Registry of Deeds of Quezon City, in the total
amount of P1,240,000.00.
We bind ourselves to effect the transfer in our names from our deceased father, Constancio P. Coronel, the transfer
certificate of title immediately upon receipt of the down payment above-stated.
On our presentation of the TCT already in or name, We will immediately execute the deed of absolute sale of said
property and Miss Ramona Patricia Alcaraz shall immediately pay the balance of the P1,190,000.00.
Clearly, the conditions appurtenant to the sale are the following:

1.
Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon execution of the document
aforestated;
2.
The Coronels will cause the transfer in their names of the title of the property registered in the name of their
deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment;
3.
Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale
in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety
Thousand (P1,190,000.00) Pesos.
On the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as
Concepcion), mother of Ramona, paid the down payment of Fifty Thousand (P50,000.00) Pesos (Exh. B, Exh. 2).
On February 6, 1985, the property originally registered in the name of the Coronels father was transferred in their
names under TCT No. 327043 (Exh. D; Exh 4)
On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B.
Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos
after the latter has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. F-3; Exh. 6-C)
For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona by depositing the down
payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz.
On February 22, 1985, Concepcion, et. al., filed a complaint for a specific performance against the Coronels and
caused the annotation of a notice of lis pendens at the back of TCT No. 327403 (Exh. E; Exh. 5).
On April 2, 1985, Catalina caused the annotation of a notice of adverse claim covering the same property with the
Registry of Deeds of Quezon City (Exh. F; Exh. 6).
On April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Catalina
(Exh. G; Exh. 7).
On June 5, 1985, a new title over the subject property was issued in the name of Catalina under TCT No. 351582
(Exh. H; Exh. 8).
(Rollo, pp. 134-136)
In the course of the proceedings before the trial court (Branch 83, RTC, Quezon City) the parties agreed to submit
the case for decision solely on the basis of documentary exhibits. Thus, plaintiffs therein (now private respondents)
proffered their documentary evidence accordingly marked as Exhibits A through J, inclusive of their
corresponding submarkings. Adopting these same exhibits as their own, then defendants (now petitioners)
accordingly offered and marked them as Exhibits 1 through 10, likewise inclusive of their corresponding
submarkings. Upon motion of the parties, the trial court gave them thirty (30) days within which to simultaneously
submit their respective memoranda, and an additional 15 days within which to submit their corresponding comment
or reply thereto, after which, the case would be deemed submitted for resolution.
On April 14, 1988, the case was submitted for resolution before Judge Reynaldo Roura, who was then temporarily
detailed to preside over Branch 82 of the RTC of Quezon City. On March 1, 1989, judgment was handed down by
Judge Roura from his regular bench at Macabebe, Pampanga for the Quezon City branch, disposing as follows:
WHEREFORE, judgment for specific performance is hereby rendered ordering defendant to execute in favor of
plaintiffs a deed of absolute sale covering that parcel of land embraced in and covered by Transfer Certificate of Title
No. 327403 (now TCT No. 331582) of the Registry of Deeds for Quezon City, together with all the improvements
existing thereon free from all liens and encumbrances, and once accomplished, to immediately deliver the said
document of sale to plaintiffs and upon receipt thereof, the plaintiffs are ordered to pay defendants the whole
balance of the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate of Title No. 331582 of the
Registry of Deeds for Quezon City in the name of intervenor is hereby canceled and declared to be without force and
effect. Defendants and intervenor and all other persons claiming under them are hereby ordered to vacate the
subject property and deliver possession thereof to plaintiffs. Plaintiffs claim for damages and attorneys fees, as
well as the counterclaims of defendants and intervenors are hereby dismissed.
No pronouncement as to costs.
So Ordered.

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

(Rollo, p. 106)
A motion for reconsideration was filed by petitioners before the new presiding judge of the Quezon City RTC but the
same was denied by Judge Estrella T. Estrada, thusly:
The prayer contained in the instant motion, i.e., to annul the decision and to render anew decision by the
undersigned Presiding Judge should be denied for the following reasons: (1) The instant case became submitted for
decision as of April 14, 1988 when the parties terminated the presentation of their respective documentary evidence
and when the Presiding Judge at that time was Judge Reynaldo Roura. The fact that they were allowed to file
memoranda at some future date did not change the fact that the hearing of the case was terminated before Judge
Roura and therefore the same should be submitted to him for decision; (2) When the defendants and intervenor did
not object to the authority of Judge Reynaldo Roura to decide the case prior to the rendition of the decision, when
they met for the first time before the undersigned Presiding Judge at the hearing of a pending incident in Civil Case
No. Q-46145 on November 11, 1988, they were deemed to have acquiesced thereto and they are now estopped
from questioning said authority of Judge Roura after they received the decision in question which happens to be
adverse to them; (3) While it is true that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch of the
Court, he was in all respects the Presiding Judge with full authority to act on any pending incident submitted before
this Court during his incumbency. When he returned to his Official Station at Macabebe, Pampanga, he did not lose
his authority to decide or resolve cases submitted to him for decision or resolution because he continued as Judge of
the Regional Trial Court and is of co-equal rank with the undersigned Presiding Judge. The standing rule and
supported by jurisprudence is that a Judge to whom a case is submitted for decision has the authority to decide the
case notwithstanding his transfer to another branch or region of the same court (Sec. 9, Rule 135, Rule of Court).
Coming now to the twin prayer for reconsideration of the Decision dated March 1, 1989 rendered in the instant case,
resolution of which now pertains to the undersigned Presiding Judge, after a meticulous examination of the
documentary evidence presented by the parties, she is convinced that the Decision of March 1, 1989 is supported
by evidence and, therefore, should not be disturbed.
IN VIEW OF THE FOREGOING, the Motion for Reconsideration and/or to Annul Decision and Render Anew Decision
by the Incumbent Presiding Judge dated March 20, 1989 is hereby DENIED.
SO ORDERED.
Quezon City, Philippines, July 12, 1989.
(Rollo, pp. 108-109)
Petitioners thereupon interposed an appeal, but on December 16, 1991, the Court of Appeals (Buena, GonzagaReyes, Abad-Santos (P), JJ.) rendered its decision fully agreeing with the trial court.
Hence, the instant petition which was filed on March 5, 1992. The last pleading, private respondents Reply
Memorandum, was filed on September 15, 1993. The case was, however, re-raffled to undersigned ponente only on
August 28, 1996, due to the voluntary inhibition of the Justice to whom the case was last assigned.
While we deem it necessary to introduce certain refinements in the disquisition of respondent court in the
affirmance of the trial courts decision, we definitely find the instant petition bereft of merit.
The heart of the controversy which is the ultimate key in the resolution of the other issues in the case at bar is the
precise determination of the legal significance of the document entitled Receipt of Down Payment which was
offered in evidence by both parties. There is no dispute as to the fact that the said document embodied the binding
contract between Ramona Patricia Alcaraz on the one hand, and the heirs of Constancio P. Coronel on the other,
pertaining to a particular house and lot covered by TCT No. 119627, as defined in Article 1305 of the Civil Code of
the Philippines which reads as follows:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the
other, to give something or to render some service.
While, it is the position of private respondents that the Receipt of Down Payment embodied a perfected contract
of sale, which perforce, they seek to enforce by means of an action for specific performance, petitioners on their
part insist that what the document signified was a mere executory contract to sell, subject to certain suspensive
conditions, and because of the absence of Ramona P. Alcaraz, who left for the United States of America, said
contract could not possibly ripen into a contract of absolute sale.

Plainly, such variance in the contending parties contention is brought about by the way each interprets the terms
and/or conditions set forth in said private instrument. Withal, based on whatever relevant and admissible evidence
may be available on record, this Court, as were the courts below, is now called upon to adjudge what the real intent
of the parties was at the time the said document was executed.
The Civil Code defines a contract of sale, thus:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and
to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of
a contract of sale are the following:
a)

Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;

b)

Determinate subject matter; and

c)

Price certain in money or its equivalent.

Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential
element is lacking. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the
prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the
property subject of the contract to sell until the happening of an event, which for present purposes we shall take as
the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell
the subject property when the entire amount of the purchase price is delivered to him. In other words the full
payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the
obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by
the prospective buyer. In Roque vs. Lapuz (96 SCRA 741 [1980]), this Court had occasion to rule:
Hence, We hold that the contract between the petitioner and the respondent was a contract to sell where the
ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being
a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding force.
Stated positively, upon the fulfillment of the suspensive condition which is the full payment of the purchase price,
the prospective sellers obligation to sell the subject property by entering into a contract of sale with the prospective
buyer becomes demandable as provided in Article 1479 of the Civil Code which states:
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor
of the promise is supported by a consideration distinct from the price.
A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to
sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full
payment of the purchase price.
A contract to sell as defined hereinabove, may not even be considered as a conditional contract of sale where the
seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition,
because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the
perfection of the contract of sale is completely abated (cf. Homesite and Housing Corp. vs. Court of Appeals, 133
SCRA 777 [1984]). However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such
that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto
automatically transfers to the buyer by operation of law without any further act having to be performed by the
seller.
In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price,
ownership will not automatically transfer to the buyer although the property may have been previously delivered to
him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute
sale.
It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the
subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case

at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property
despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance,
cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the
property. There is no double sale in such case. Title to the property will transfer to the buyer after registration
because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by
the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes
absolute and this will definitely affect the sellers title thereto. In fact, if there had been previous delivery of the
subject property, the sellers ownership or title to the property is automatically transferred to the buyer such that,
the seller will no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such
second buyer of the property who may have had actual or constructive knowledge of such defect in the sellers title,
or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such
second buyer cannot defeat the first buyers title. In case a title is issued to the second buyer, the first buyer may
seek reconveyance of the property subject of the sale.
With the above postulates as guidelines, we now proceed to the task of deciphering the real nature of the contract
entered into by petitioners and private respondents.
It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary
meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]). Thus, when
petitioners declared in the said Receipt of Down Payment that they -Received from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the sum of Fifty Thousand Pesos purchase
price of our inherited house and lot, covered by TCT No. 1199627 of the Registry of Deeds of Quezon City, in the
total amount of P1,240,000.00.
without any reservation of title until full payment of the entire purchase price, the natural and ordinary idea
conveyed is that they sold their property.
When the Receipt of Down payment is considered in its entirety, it becomes more manifest that there was a clear
intent on the part of petitioners to transfer title to the buyer, but since the transfer certificate of title was still in the
name of petitioners father, they could not fully effect such transfer although the buyer was then willing and able to
immediately pay the purchase price. Therefore, petitioners-sellers undertook upon receipt of the down payment
from private respondent Ramona P. Alcaraz, to cause the issuance of a new certificate of title in their names from
that of their father, after which, they promised to present said title, now in their names, to the latter and to execute
the deed of absolute sale whereupon, the latter shall, in turn, pay the entire balance of the purchase price.
The agreement could not have been a contract to sell because the sellers herein made no express reservation of
ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from
entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their
names) and not the full payment of the purchase price. Under the established facts and circumstances of the case,
the Court may safely presume that, had the certificate of title been in the names of petitioners-sellers at that time,
there would have been no reason why an absolute contract of sale could not have been executed and consummated
right there and then.
Moreover, unlike in a contract to sell, petitioners in the case at bar did not merely promise to sell the property to
private respondent upon the fulfillment of the suspensive condition. On the contrary, having already agreed to sell
the subject property, they undertook to have the certificate of title change to their names and immediately
thereafter, to execute the written deed of absolute sale.
Thus, the parties did not merely enter into a contract to sell where the sellers, after compliance by the buyer with
certain terms and conditions, promised to sell the property to the latter. What may be perceived from the
respective undertakings of the parties to the contract is that petitioners had already agreed to sell the house and lot
they inherited from their father, completely willing to transfer ownership of the subject house and lot to the buyer if
the documents were then in order. It just so happened, however, that the transfer certificate of title was then still in
the name of their father. It was more expedient to first effect the change in the certificate of title so as to bear their
names. That is why they undertook to cause the issuance of a new transfer of the certificate of title in their names
upon receipt of the down payment in the amount of P50,000.00. As soon as the new certificate of title is issued in
their names, petitioners were committed to immediately execute the deed of absolute sale. Only then will the
obligation of the buyer to pay the remainder of the purchase price arise.
There is no doubt that unlike in a contract to sell which is most commonly entered into so as to protect the seller
against a buyer who intends to buy the property in installment by withholding ownership over the property until the
buyer effects full payment therefor, in the contract entered into in the case at bar, the sellers were the ones who

were unable to enter into a contract of absolute sale by reason of the fact that the certificate of title to the property
was still in the name of their father. It was the sellers in this case who, as it were, had the impediment which
prevented, so to speak, the execution of an contract of absolute sale.
What is clearly established by the plain language of the subject document is that when the said Receipt of Down
Payment was prepared and signed by petitioners Romulo A. Coronel, et. al., the parties had agreed to a conditional
contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the
name of petitioners father, Constancio P. Coronel, to their names.
The Court significantly notes that this suspensive condition was, in fact, fulfilled on February 6, 1985 (Exh. D; Exh.
4). Thus, on said date, the conditional contract of sale between petitioners and private respondent Ramona P.
Alcaraz became obligatory, the only act required for the consummation thereof being the delivery of the property by
means of the execution of the deed of absolute sale in a public instrument, which petitioners unequivocally
committed themselves to do as evidenced by the Receipt of Down Payment.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case at bench. Thus,
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts.
Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already
acquired, shall depend upon the happening of the event which constitutes the condition.
Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners names
was fulfilled on February 6, 1985, the respective obligations of the parties under the contract of sale became
mutually demandable, that is, petitioners, as sellers, were obliged to present the transfer certificate of title already
in their names to private respondent Ramona P. Alcaraz, the buyer, and to immediately execute the deed of
absolute sale, while the buyer on her part, was obliged to forthwith pay the balance of the purchase price
amounting to P1,190,000.00.
It is also significant to note that in the first paragraph in page 9 of their petition, petitioners conclusively admitted
that:
3. The petitioners-sellers Coronel bound themselves to effect the transfer in our names from our deceased father
Constancio P. Coronel, the transfer certificate of title immediately upon receipt of the downpayment above-stated".
The sale was still subject to this suspensive condition. (Emphasis supplied.)
(Rollo, p. 16)
Petitioners themselves recognized that they entered into a contract of sale subject to a suspensive condition. Only,
they contend, continuing in the same paragraph, that:
. . . Had petitioners-sellers not complied with this condition of first transferring the title to the property under their
names, there could be no perfected contract of sale. (Emphasis supplied.)
(Ibid.)
not aware that they have set their own trap for themselves, for Article 1186 of the Civil Code expressly provides
that:
Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
Besides, it should be stressed and emphasized that what is more controlling than these mere hypothetical
arguments is the fact that the condition herein referred to was actually and indisputably fulfilled on February 6,
1985, when a new title was issued in the names of petitioners as evidenced by TCT No. 327403 (Exh. D; Exh. 4).
The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as Receipt of
Down Payment (Exh. A; Exh. 1), the parties entered into a contract of sale subject to the suspensive condition
that the sellers shall effect the issuance of new certificate title from that of their fathers name to their names and
that, on February 6, 1985, this condition was fulfilled (Exh. D; Exh. 4).
We, therefore, hold that, in accordance with Article 1187 which pertinently provides -

Art. 1187. The effects of conditional obligation to give, once the condition has been fulfilled, shall retroact to the
day of the constitution of the obligation . . .
In obligations to do or not to do, the courts shall determine, in each case, the retroactive effect of the condition that
has been complied with.
the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and
demandable as of the time of fulfillment or occurrence of the suspensive condition on February 6, 1985. As of that
point in time, reciprocal obligations of both seller and buyer arose.
Petitioners also argue there could been no perfected contract on January 19, 1985 because they were then not yet
the absolute owners of the inherited property.
We cannot sustain this argument.
Article 774 of the Civil Code defines Succession as a mode of transferring ownership as follows:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent
and value of the inheritance of a person are transmitted through his death to another or others by his will or by
operation of law.
Petitioners-sellers in the case at bar being the sons and daughters of the decedent Constancio P. Coronel are
compulsory heirs who were called to succession by operation of law. Thus, at the point their father drew his last
breath, petitioners stepped into his shoes insofar as the subject property is concerned, such that any rights or
obligations pertaining thereto became binding and enforceable upon them. It is expressly provided that rights to
the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code; Cuison vs.
Villanueva, 90 Phil. 850 [1952]).
Be it also noted that petitioners claim that succession may not be declared unless the creditors have been paid is
rendered moot by the fact that they were able to effect the transfer of the title to the property from the decedents
name to their names on February 6, 1985.
Aside from this, petitioners are precluded from raising their supposed lack of capacity to enter into an agreement at
that time and they cannot be allowed to now take a posture contrary to that which they took when they entered into
the agreement with private respondent Ramona P. Alcaraz. The Civil Code expressly states that:
Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and
cannot be denied or disproved as against the person relying thereon.
Having represented themselves as the true owners of the subject property at the time of sale, petitioners cannot
claim now that they were not yet the absolute owners thereof at that time.
Petitioners also contend that although there was in fact a perfected contract of sale between them and Ramona P.
Alcaraz, the latter breach her reciprocal obligation when she rendered impossible the consummation thereof by
going to the United States of America, without leaving her address, telephone number, and Special Power of
Attorney (Paragraphs 14 and 15, Answer with Compulsory Counterclaim to the Amended Complaint, p. 2; Rollo, p.
43), for which reason, so petitioners conclude, they were correct in unilaterally rescinding the contract of sale.
We do not agree with petitioners that there was a valid rescission of the contract of sale in the instant case. We
note that these supposed grounds for petitioners rescission, are mere allegations found only in their responsive
pleadings, which by express provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs
(Sec. 11, Rule 6, Revised Rules of Court). The records are absolutely bereft of any supporting evidence to
substantiate petitioners allegations. We have stressed time and again that allegations must be proven by sufficient
evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere allegation
is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]).
Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on February 6, 1985, we
cannot justify petitioners-sellers act of unilaterally and extrajudicially rescinding the contract of sale, there being no
express stipulation authorizing the sellers to extrajudicially rescind the contract of sale. (cf. Dignos vs. CA, 158
SCRA 375 [1988]; Taguba vs. Vda. De Leon, 132 SCRA 722 [1984])
Moreover, petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the
evidence on record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been
dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted for and in behalf of her daughter, if not also in

her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz with her own personal Check (Exh.
B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence showing that petitioners ever questioned
Concepcions authority to represent Ramona P. Alcaraz when they accepted her personal check. Neither did they
raise any objection as regards payment being effected by a third person. Accordingly, as far as petitioners are
concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale.
Corollarily, Ramona P. Alcaraz cannot even be deemed to be in default, insofar as her obligation to pay the full
purchase price is concerned. Petitioners who are precluded from setting up the defense of the physical absence of
Ramona P. Alcaraz as above-explained offered no proof whatsoever to show that they actually presented the new
transfer certificate of title in their names and signified their willingness and readiness to execute the deed of
absolute sale in accordance with their agreement. Ramonas corresponding obligation to pay the balance of the
purchase price in the amount of P1,190,000.00 (as buyer) never became due and demandable and, therefore, she
cannot be deemed to have been in default.
Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered
in default, to wit:
Art. 1169. Those obliged to deliver or to do something, incur in delay from the time the obligee judicially or
extrajudicially demands from them the fulfillment of their obligation.
xxx
In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by
the other begins. (Emphasis supplied.)
There is thus neither factual nor legal basis to rescind the contract of sale between petitioners and respondents.
With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double
sale where Article 1544 of the Civil Code will apply, to wit:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof to the person who presents the oldest title, provided there is good faith.
The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the second contract of
sale was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title
in the name of Catalina B. Mabanag on June 5, 1985. Thus, the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to pass to the buyer, the exceptions being:
(a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no
inscription by either of the two buyers, when the second buyer, in good faith, acquires possession of the property
ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or ownership will not transfer
to him to the prejudice of the first buyer.
In his commentaries on the Civil Code, an accepted authority on the subject, now a distinguished member of the
Court, Justice Jose C. Vitug, explains:
The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of
the second sale cannot defeat the first buyers rights except when the second buyer first registers in good faith the
second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first
sale defeats his rights even if he is first to register, since knowledge taints his registration with bad faith (see also
Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabana (G.R. No. 56232, 22 June
1984, 129 SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second paragraph, that the
second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69
SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).
(J. Vitug, Compendium of Civil Law and Jurisprudence, 1993 Edition, p. 604).
Petitioners point out that the notice of lis pendens in the case at bar was annotated on the title of the subject
property only on February 22, 1985, whereas, the second sale between petitioners Coronels and petitioner Mabanag

was supposedly perfected prior thereto or on February 18, 1985. The idea conveyed is that at the time petitioner
Mabanag, the second buyer, bought the property under a clean title, she was unaware of any adverse claim or
previous sale, for which reason she is a buyer in good faith.
We are not persuaded by such argument.
In a case of double sale, what finds relevance and materiality is not whether or not the second buyer in good faith
but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any
defect in the title of the property sold.
As clearly borne out by the evidence in this case, petitioner Mabanag could not have in good faith, registered the
sale entered into on February 18, 1985 because as early as February 22, 1985, a notice of lis pendens had been
annotated on the transfer certificate of title in the names of petitioners, whereas petitioner Mabanag registered the
said sale sometime in April, 1985. At the time of registration, therefore, petitioner Mabanag knew that the same
property had already been previously sold to private respondents, or, at least, she was charged with knowledge that
a previous buyer is claiming title to the same property. Petitioner Mabanag cannot close her eyes to the defect in
petitioners title to the property at the time of the registration of the property.
This Court had occasions to rule that:
If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale of the
same property to a third party or that another person claims said property in a previous sale, the registration will
constitute a registration in bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349
[1978]; citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader,
43 Phil. 581.)
Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on February 6,
1985, prior to that between petitioners and Catalina B. Mabanag on February 18, 1985, was correctly upheld by both
the courts below.
Although there may be ample indications that there was in fact an agency between Ramona as principal and
Concepcion, her mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not
Concepcion was also acting in her own behalf as a co-buyer is not squarely raised in the instant petition, nor in such
assumption disputed between mother and daughter. Thus, We will not touch this issue and no longer disturb the
lower courts ruling on this point.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED and the appealed judgment AFFIRMED.
SO ORDERED.
G.R. No. L-40242

December 15, 1982

DOMINGA CONDE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, MANILA PACIENTE CORDERO, together with his wife, NICETAS ALTERA, RAMON
CONDE, together with his wife, CATALINA T. CONDE, respondents.

MELENCIO-HERRERA, J.:
An appeal by certiorari from the Decision of respondent Court of Appeals 1 (CA-G.R. No. 48133- R) affirming the
judgment of the Court of First Instance of Leyte, Branch IX, Tacloban City (Civil Case No. B-110), which dismissed
petitioner's Complaint for Quieting of Title and ordered her to vacate the property in dispute and deliver its
possession to private respondents Ramon Conde and Catalina Conde.
The established facts, as found by the Court of Appeals, show that on 7 April 1938. Margarita Conde, Bernardo
Conde and the petitioner Dominga Conde, as heirs of Santiago Conde, sold with right of repurchase, within ten (10)
years from said date, a parcel of agricultural land located in Maghubas Burauen Leyte, (Lot 840), with an
approximate area of one (1) hectare, to Casimira Pasagui, married to Pio Altera (hereinafter referred to as the
Alteras), for P165.00. The "Pacto de Retro Sale" further provided:
... (4) if at the end of 10 years the said land is not repurchased, a new agreement shall be made between the
parties and in no case title and ownership shall be vested in the hand of the party of the SECOND PART (the Alteras).

xxx

xxx

xxx (Exhibit "B")

On 17 April 1941, the Cadastral Court of Leyte adjudicated Lot No. 840 to the Alteras "subject to the right of
redemption by Dominga Conde, within ten (10) years counting from April 7, 1983, after returning the amount of
P165.00 and the amounts paid by the spouses in concept of land tax ... " (Exhibit "1"). Original Certificate of Title
No. N-534 in the name of the spouses Pio Altera and Casimira Pasagui, subject to said right of repurchase, was
transcribed in the "Registration Book" of the Registry of Deeds of Leyte on 14 November 1956 (Exhibit "2").
On 28 November 1945, private respondent Paciente Cordero, son-in-law of the Alteras, signed a document in the
Visayan dialect, the English translation of which reads:
MEMORANDUM OF REPURCHASE OVER A PARCEL OF LAND SOLD WITH REPURCHASE WHICH DOCUMENT GOT LOST
WE, PIO ALTERA and PACIENTE CORDERO, both of legal age, and residents of Burauen Leyte, Philippines, after
having been duly sworn to in accordance with law free from threats and intimidation, do hereby depose and say:
1. That I, PIO ALTERA bought with the right of repurchase two parcels of land from DOMINGA CONDE, BERNARDO
CONDE AND MARGARITA CONDE, all brother and sisters.
2. That these two parcels of land were all inherited by the three.
3. That the document of SALE WITH THE RIGHT OF REPURCHASE got lost in spite of the diligent efforts to locate the
same which was lost during the war.
4. That these two parcels of land which was the subject matter of a Deed of Sale with the Right of Repurchase
consists only of one document which was lost.
5. Because it is about time to repurchase the land, I have allowed the representative of Dominga Conde, Bernardo
Conde and Margarita Conde in the name of EUSEBIO AMARILLE to repurchase the same.
6. Now, this very day November 28, 1945, 1 or We have received together with Paciente Cordero who is my son-inlaw the amount of ONE HUNDRED SIXTY-FIVE PESOS (P165. 00) Philippine Currency of legal tender which was the
consideration in that sale with the right of repurchase with respect to the two parcels of land.
That we further covenant together with Paciente Cordero who is my son-in-law that from this day the said Dominga
Conde, Bernardo Conde and Margarita Conde will again take possession of the aforementioned parcel of land
because they repurchased the same from me. If and when their possession over the said parcel of land be disturbed
by other persons, I and Paciente Cordero who is my son-in-law will defend in behalf of the herein brother and sisters
mentioned above, because the same was already repurchased by them.
IN WITNESS WHEREOF, I or We have hereunto affixed our thumbmark or signature to our respective names below
this document or memorandum this 28th day of November 1945 at Burauen Leyte, Philippines, in the presence of
two witnesses.
PIO ALTERA

(Sgd.) PACIENTE CORDERO

WITNESSES:
1. (SGD.) TEODORO C. AGUILLON
To be noted is the fact that neither of the vendees-a-retro, Pio Altera nor Casimira Pasagui, was a signatory to the
deed. Petitioner maintains that because Pio Altera was very ill at the time, Paciente Cordero executed the deed of
resale for and on behalf of his father-in-law. Petitioner further states that she redeemed the property with her own
money as her co-heirs were bereft of funds for the purpose.
The pacto de retro document was eventually found.
On 30 June 1965 Pio Altera sold the disputed lot to the spouses Ramon Conde and Catalina T. Conde, who are also
private respondents herein. Their relationship to petitioner does not appear from the records. Nor has the document
of sale been exhibited.
Contending that she had validly repurchased the lot in question in 1945, petitioner filed, on 16 January 1969, in the
Court of First Instance of Leyte, Branch IX, Tacloban City, a Complaint (Civil Case No. B-110), against Paciente
Cordero and his wife Nicetas Altera, Ramon Conde and his wife Catalina T. Conde, and Casimira Pasagui Pio Altera
having died in 1966), for quieting of title to real property and declaration of ownership.

Petitioner's evidence is that Paciente Cordero signed the Memorandum of Repurchase in representation of his fatherin-law Pio Altera, who was seriously sick on that occasion, and of his mother-in-law who was in Manila at the time,
and that Cordero received the repurchase price of P65.00.
Private respondents, for their part, adduced evidence that Paciente Cordero signed the document of repurchase
merely to show that he had no objection to the repurchase; and that he did not receive the amount of P165.00 from
petitioner inasmuch as he had no authority from his parents-in-law who were the vendees-a-retro.
After trial, the lower Court rendered its Decision dismissing the Complaint and the counterclaim and ordering
petitioner "to vacate the property in dispute and deliver its peaceful possession to the defendants Ramon Conde
and Catalina T. Conde".
On appeal, the Court of Appeals upheld the findings of the Court a quo that petitioner had failed to validly exercise
her right of repurchase in view of the fact that the Memorandum of Repurchase was signed by Paciente Cordero and
not by Pio Altera, the vendee-a-retro, and that there is nothing in said document to show that Cordero was
specifically authorized to act for and on behalf of the vendee a retro, Pio Altera.
Reconsideration having been denied by the Appellate Court, the case is before us on review.
There is no question that neither of the vendees-a-retro signed the "Memorandum of Repurchase", and that there
was no formal authorization from the vendees for Paciente Cordero to act for and on their behalf.
Of significance, however, is the fact that from the execution of the repurchase document in 1945, possession, which
heretofore had been with the Alteras, has been in the hands of petitioner as stipulated therein. Land taxes have also
been paid for by petitioner yearly from 1947 to 1969 inclusive (Exhibits "D" to "D-15"; and "E"). If, as opined by both
the Court a quo and the Appellate Court, petitioner had done nothing to formalize her repurchase, by the same
token, neither have the vendees-a-retro done anything to clear their title of the encumbrance therein regarding
petitioner's right to repurchase. No new agreement was entered into by the parties as stipulated in the deed of
pacto de retro, if the vendors a retro failed to exercise their right of redemption after ten years. If, as alleged,
petitioner exerted no effort to procure the signature of Pio Altera after he had recovered from his illness, neither did
the Alteras repudiate the deed that their son-in-law had signed. Thus, an implied agency must be held to have been
created from their silence or lack of action, or their failure to repudiate the agency. 2
Possession of the lot in dispute having been adversely and uninterruptedly with petitioner from 1945 when the
document of repurchase was executed, to 1969, when she instituted this action, or for 24 years, the Alteras must be
deemed to have incurred in laches. 3 That petitioner merely took advantage of the abandonment of the land by the
Alteras due to the separation of said spouses, and that petitioner's possession was in the concept of a tenant,
remain bare assertions without proof.
Private respondents Ramon Conde and Catalina Conde, to whom Pio Altera sold the disputed property in 1965,
assuming that there was, indeed, such a sale, cannot be said to be purchasers in good faith. OCT No. 534 in the
name of the Alteras specifically contained the condition that it was subject to the right of repurchase within 10 years
from 1938. Although the ten-year period had lapsed in 1965 and there was no annotation of any repurchase by
petitioner, neither had the title been cleared of that encumbrance. The purchasers were put on notice that some
other person could have a right to or interest in the property. It behooved Ramon Conde and Catalina Conde to have
looked into the right of redemption inscribed on the title, and particularly the matter of possession, which, as also
admitted by them at the pre-trial, had been with petitioner since 1945.
Private respondent must be held bound by the clear terms of the Memorandum of Repurchase that he had signed
wherein he acknowledged the receipt of P165.00 and assumed the obligation to maintain the repurchasers in
peaceful possession should they be "disturbed by other persons". It was executed in the Visayan dialect which he
understood. He cannot now be allowed to dispute the same. "... If the contract is plain and unequivocal in its terms
he is ordinarily bound thereby. It is the duty of every contracting party to learn and know its contents before he
signs and delivers it." 4
There is nothing in the document of repurchase to show that Paciente Cordero had signed the same merely to
indicate that he had no objection to petitioner's right of repurchase. Besides, he would have had no personality to
object. To uphold his oral testimony on that point, would be a departure from the parol evidence rule 5 and would
defeat the purpose for which the doctrine is intended.
... The purpose of the rule is to give stability to written agreements, and to remove the temptation and possibility of
perjury, which would be afforded if parol evidence was admissible. 6

In sum, although the contending parties were legally wanting in their respective actuations, the repurchase by
petitioner is supported by the admissions at the pre-trial that petitioner has been in possession since the year 1945,
the date of the deed of repurchase, and has been paying land taxes thereon since then. The imperatives of
substantial justice, and the equitable principle of laches brought about by private respondents' inaction and neglect
for 24 years, loom in petitioner's favor.
WHEREFORE, the judgment of respondent Court of Appeals is hereby REVERSED and SET ASIDE, and petitioner is
hereby declared the owner of the disputed property. If the original of OCT No. N-534 of the Province of Leyte is still
extant at the office of the Register of Deeds, then said official is hereby ordered to cancel the same and, in lieu
thereof, issue a new Transfer Certificate of Title in the name of petitioner, Dominga Conde.
No costs.
SO ORDERED.
G..R. No. 132424

May 2, 2006

SPOUSES BONIFACIO R. VALDEZ, JR. and VENIDA M. VALDEZ, Petitioners,

vs.
HON. COURT OF APPEALS, SPOUSES GABRIEL FABELLA and FRANCISCA FABELLA, Respondents.
DECISION
CHICO-NAZARIO, J.:
This petition for review under Rule 45 of the Rules of Court, filed by petitioners spouses Bonifacio R. Valdez, Jr. and
Venida M. Valdez, seeks to nullify and set aside the 22 April 1997 decision1 and 30 January 1998 resolution of the
Court of Appeals in CA-G.R. SP No. 43492, which reversed the judgment, dated 8 January 1997, of the Regional Trial
Court of Antipolo, Rizal, Branch 74, in Civil Case No. 3607, which, in turn, affirmed in toto the decision rendered by
the Municipal Trial Court of Antipolo, Rizal, Branch II, in Civil Case No. 2547.
This case originated from a complaint for unlawful detainer filed by petitioners Bonifacio and Venida Valdez against
private respondents Gabriel and Francisca Fabella before the Municipal Trial Court of Antipolo, Rizal. The complaint
alleges these material facts:
2. That plaintiffs are the registered owner[s] of a piece of residential lot denominated as Lot [N]o. 3 Blk 19 located at
Carolina Executive Village, Brgy. Sta. Cruz, Antipolo, Rizal which [they] acquired from Carolina Realty, Inc. Sometime
[i]n November 1992 by virtue of Sales Contract, xerox copy of which is hereto attached marked as Annex "A" and
the xerox copy of the Torrens Certificate of Title in her name marked as Annex "B";
3. That defendants, without any color of title whatsoever occupie[d] the said lot by building their house in the said
lot thereby depriving the herein plaintiffs rightful possession thereof;
4. That for several times, plaintiffs orally asked the herein defendants to peacefully surrender the premises to them,
but the latter stubbornly refused to vacate the lot they unlawfully occupied;
5. That despite plaintiffs referral of the matter to the Barangay, defendants still refused to heed the plea of the
former to surrender the lot peacefully;
6. That because of the unfounded refusal of the herein defendants to settle the case amicably, the Barangay
Captain was forced to issue the necessary Certification to File Action in favor of the herein plaintiffs in order that the
necessary cause of action be taken before the proper court, xerox copy of which is hereto attached marked as
Annex "C";
7. That by reason of the deliberate, malicious and unfounded refusal of the defendants to vacate/surrender the
premises in question, the herein plaintiffs were constrained to engage the professional services of counsel thus
incurring expenses amounting to TEN THOUSAND PESOS (P10,000.00) representing acceptance fee and additional
ONE THOUSAND PESOS (P1,000.00) per appearance, who on July 12, 1994 sent a formal demand was likewise
ignored, (sic) copy of which is hereto attached as Annex "D";
8. That likewise by virtue of the adamant refusal of the defendants to vacate/surrender the said premises in
question, plaintiff[s] suffered serious anxiety, sleepless nights, mental torture and moral erosion; x x x2
In their answer, private respondents contended that the complaint failed to state that petitioners had prior physical
possession of the property or that they were the lessors of the former. In the alternative, private respondents

claimed ownership over the land on the ground that they had been in open, continuous, and adverse possession
thereof for more than thirty years, as attested by an ocular inspection report from the Department of Environment
and Natural Resources. They also stressed that the complaint failed to comply with Supreme Court Circular No. 2891 regarding affidavits against non-forum shopping.
The Municipal Trial Court (MTC) rendered a decision in favor of the petitioners, ordering private respondents to
vacate the property and to pay rent for the use and occupation of the same plus attorneys fees.
Private respondents appealed the MTCs decision to the Regional Trial Court (RTC). The RTC, in a decision dated 8
January 1997, affirmed in toto the decision of the MTC.
Undeterred, the private respondents filed a petition for review with the Court of Appeals on 10 March 1997
questioning the decision of the RTC.
In a decision dated 22 April 1997, the Court of Appeals reversed and set aside the decision of the RTC. It held that
petitioners failed to make a case for unlawful detainer because they failed to show that they had given the private
respondents the right to occupy the premises or that they had tolerated private respondents possession of the
same, which is a requirement in unlawful detainer cases. It added that the allegations in petitioners complaint lack
jurisdictional elements for forcible entry which requires an allegation of prior material possession. The Court of
Appeals ratiocinated thus:
An examination of the complaint reveals that key jurisdictional allegations that will support an action for ejectment
are conspicuously lacking. In particular, an allegation of prior material possession is mandatory in forcible entry, xxx
and the complaint is deficient in this respect. On the other hand, neither does there appear to be a case of unlawful
detainer, since the private respondents failed to show that they had given the petitioners the right to occupy the
premises, which right has now [been] extinguished.
xxx
In light of the foregoing, the conclusion is inevitable that the Municipal Trial Court before which the action for
ejectment was filed had no jurisdiction over the case. Consequently, the dismissal thereof is in order.
WHEREFORE, the Petition is hereby GIVEN DUE COURSE, and GRANTED. The decision dated 08 January 1997
rendered by the respondent court is hereby REVERSED and SET ASIDE, and judgment is hereby rendered
DISMISSING the complaint in Civil Case No. 2547 of the Municipal Trial Court of Antipolo, Rizal for lack of
jurisdiction.3
Petitioners filed a motion for reconsideration which was denied in a resolution dated 30 January 1998.4
Hence, the instant petition.
Petitioners submit the following issues for the Courts consideration5:
A. WHETHER OR NOT THE ALLEGATIONS OF THE COMPLAINT CLEARLY MADE OUT A CASE FOR UNLAWFUL DETAINER.
B. WHETHER OR NOT BASED ON THE ALLEGATION(S) OF THE COMPLAINT, THE MUNICIPAL TRIAL COURT OF
ANTIPOLO, RIZAL, CLEARLY HAS ORIGINAL JURISDICTION OVER THE INSTANT COMPLAINT FILED BEFORE IT.
Since the two issues are closely intertwined, they shall be discussed together.
In the main, petitioners claim that the averments of their complaint make out a case for unlawful detainer having
alleged that private respondents unlawfully withheld from them the possession of the property in question, which
allegation is sufficient to establish a case for unlawful detainer. They further contend that the summary action for
ejectment is the proper remedy available to the owner if another occupies the land at the formers tolerance or
permission without any contract between the two as the latter is bound by an implied promise to vacate the land
upon demand by the owner.
The petition is not meritorious.
Under existing law and jurisprudence, there are three kinds of actions available to recover possession of real
property: (a) accion interdictal; (b) accion publiciana; and (c) accion reivindicatoria.6
Accion interdictal comprises two distinct causes of action, namely, forcible entry (detentacion) and unlawful detainer
(desahuico).7 In forcible entry, one is deprived of physical possession of real property by means of force,
intimidation, strategy, threats, or stealth whereas in unlawful detainer, one illegally withholds possession after the

expiration or termination of his right to hold possession under any contract, express or implied.8 The two are
distinguished from each other in that in forcible entry, the possession of the defendant is illegal from the beginning,
and that the issue is which party has prior de facto possession while in unlawful detainer, possession of the
defendant is originally legal but became illegal due to the expiration or termination of the right to possess.9
The jurisdiction of these two actions, which are summary in nature, lies in the proper municipal trial court or
metropolitan trial court.10 Both actions must be brought within one year from the date of actual entry on the land,
in case of forcible entry, and from the date of last demand, in case of unlawful detainer.11 The issue in said cases is
the right to physical possession.
Accion publiciana is the plenary action to recover the right of possession which should be brought in the proper
regional trial court when dispossession has lasted for more than one year.12 It is an ordinary civil proceeding to
determine the better right of possession of realty independently of title.13 In other words, if at the time of the filing
of the complaint more than one year had elapsed since defendant had turned plaintiff out of possession or
defendants possession had become illegal, the action will be, not one of the forcible entry or illegal detainer, but an
accion publiciana. On the other hand, accion reivindicatoria is an action to recover ownership also brought in the
proper regional trial court in an ordinary civil proceeding.14
To justify an action for unlawful detainer, it is essential that the plaintiffs supposed acts of tolerance must have
been present right from the start of the possession which is later sought to be recovered.15 Otherwise, if the
possession was unlawful from the start, an action for unlawful detainer would be an improper remedy.16 As
explained in Sarona v. Villegas17:
But even where possession preceding the suit is by tolerance of the owner, still, distinction should be made.
If right at the incipiency defendants possession was with plaintiffs tolerance, we do not doubt that the latter may
require him to vacate the premises and sue before the inferior court under Section 1 of Rule 70, within one year
from the date of the demand to vacate.
xxxx
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 of 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.18 (Underlining supplied)
It is the nature of defendants entry into the land which determines the cause of action, whether it is forcible entry
or unlawful detainer. If the entry is illegal, then the action which may be filed against the intruder is forcible entry. If,
however, the entry is legal but the possession thereafter becomes illegal, the case is unlawful detainer.
Indeed, to vest the court jurisdiction to effect the ejectment of an occupant, it is necessary that the complaint
should embody such a statement of facts as brings the party clearly within the class of cases for which the statutes
provide a remedy, as these proceedings are summary in nature.19 The complaint must show enough on its face the
court jurisdiction without resort to parol testimony.20
The jurisdictional facts must appear on the face of the complaint. When the complaint fails to aver facts constitutive
of forcible entry or unlawful detainer, as where it does not state how entry was affected or how and when
dispossession started, the remedy should either be an accion publiciana or an accion reivindicatoria in the proper
regional trial court.21 Thus, in Go, Jr. v. Court of Appeals,22 petitioners filed an unlawful detainer case against
respondent alleging that they were the owners of the parcel of land through intestate succession which was
occupied by respondent by mere tolerance of petitioners as well as their deceased mother. Resolving the issue on
whether or not petitioners case for unlawful detainer will prosper, the court ruled23:
Petitioners alleged in their complaint that they inherited the property registered under TCT No. C-32110 from their
parents; that possession thereof by private respondent was by tolerance of their mother, and after her death, by

their own tolerance; and that they had served written demand on December, 1994, but that private respondent
refused to vacate the property. x x x
It is settled that one whose stay is merely tolerated becomes a deforciant illegally occupying the land the moment
he is required to leave. It is essential in unlawful detainer cases of this kind, that plaintiffs supposed acts of
tolerance must have been present right from the start of the possession which is later sought to be recovered. This
is where petitioners cause of action fails. The appellate court, in full agreement with the MTC made the conclusion
that the alleged tolerance by their mother and after her death, by them, was unsubstantiated. x x x
The evidence revealed that the possession of defendant was illegal at the inception and not merely tolerated as
alleged in the complaint, considering that defendant started to occupy the subject lot and then built a house
thereon without the permission and consent of petitioners and before them, their mother. xxx Clearly, defendants
entry into the land was effected clandestinely, without the knowledge of the owners, consequently, it is categorized
as possession by stealth which is forcible entry. As explained in Sarona vs. Villegas, cited in Muoz vs. Court of
Appeals [224 SCRA 216 (1992)] 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 x x x.
And in the case of Ten Forty Realty and Development Corp. v. Cruz,24 petitioners complaint for unlawful detainer
merely contained the bare allegations that (1) respondent immediately occupied the subject property after its sale
to her, an action merely tolerated by petitioner; and (2) her allegedly illegal occupation of the premises was by mere
tolerance. The court, in finding that the alleged tolerance did not justify the action for unlawful detainer, held:
To justify an action for unlawful detainer, the permission or tolerance must have been present at the beginning of
the possession. x x x
xxxx
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; and 2) her allegedly illegal occupation of the premises was by mere tolerance.
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.25
In the instant case, the allegations in the complaint do not contain any averment of fact that would substantiate
petitioners claim that they permitted or tolerated the occupation of the property by respondents. The complaint
contains only bare allegations that "respondents without any color of title whatsoever occupies the land in question
by building their house in the said land thereby depriving petitioners the possession thereof." Nothing has been said
on how respondents entry was effected or how and when dispossession started. Admittedly, no express contract
existed between the parties. This failure of petitioners to allege the key jurisdictional facts constitutive of unlawful
detainer is fatal.26 Since the complaint did not satisfy the jurisdictional requirement of a valid cause for unlawful
detainer, the municipal trial court had no jurisdiction over the case.27 It is in this light that this Court finds that the
Court of Appeals correctly found that the municipal trial court had no jurisdiction over the complaint.
WHEREFORE, the petition is DENIED and the judgment of the Court of Appeals dismissing the complaint in Civil Case
No. 2547 of the MTC Antipolo, Rizal for lack of jurisdiction is hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 123655. January 19, 2000]

ANGEL BAUTISTA, petitioner, vs. COURT OF APPEALS, PEDRO ATIENZA (for himself and as Attorney-inFact of Julita Atienza, Benedicto De Leon and Rizalino Atienza), AMELIA ATIENZA, GREGORIO ATIENZA,
CONRADO ATIENZA and REALTY BARON CORPORATION, respondents. francis
DECISION
PUNO, J.:

This case arose from an action for specific performance and damages filed by Angel Bautista[1] (petitioner) against
the Atienzas (respondents), namely, Pedro Atienza (for himself and as the Attorney-in-Fact of Julita Atienza,
Benedicto De Leon and Rizalino Atienza), Amelia Atienza, Gregorio Atienza and Conrado Atienza, all
compulsory heirs of spouses Artemio Atienza and Esperenza Trinidad.
The records show that on April 13, 1977, respondents sold to petitioner a parcel of land in Tagaytay City, with an
area of approximately 158,386 square meters, for one million five hundred thousand pesos (P 1,500,000.00).[2] At
the time of the sale, the lot was still registered in the names of the deceased parents of the respondents under TCT
No. T-6744 of the Register of Deeds of Cavite. The Contract of Sale[3] provide, inter alia:
"CONTRACT OF SALE
"x x x
"WHEREAS, the above named forced and/or compulsory heirs, herein referred to as the SELLERS,
have agreed as they hereby agree, to enter into a Contract of Sale with the BUYER involving the
property covered by TCT No. T-6744;
"NOW, THEREFORE, for and in consideration of ONE MILLION FIVE HUNDRED THOUSAND PESOS
(Pl,500,000.00) the SELLERS hereby cede, transfer and convey and sell, as by these presents, the
SELLERS ceded, transfer(red), convey(ed) and sold, unto the BUYER, his heirs, successors in
interest, assigns, executor or administrator, any and all their rights, title, interest, share or
participation, in and over the property covered by TCT No. T-6744 under the following terms
and conditions:
"TERMS OF PAYMENT: marie
"a) The sum of TEN THOUSAND PESOS (P10,000.00) shall be paid by the BUYER to the
SELLERS upon the signing of this Contract of Sale;
"b) The sum of NINETY THOUSAND PESOS (P90,000.00) shall be paid by the BUYER to
the SELLERS upon presentation of the SELLERS to the BUYER of a new transfer
certificate of title of the property subject of this sale, already registered under the
names of the SELLERS herein. However, the BUYER may advance the necessary
amount to the SELLERS for the payment of their back taxes, inheritance tax and other
taxes which might be required by the Register of Deeds of Tagaytay City before
transfer certificate of title from the registered owners to the sellers can be effected,
but not exceeding NINETY THOUSAND PESOS (P90,000.00). Any and all cash advances
shall be deducted from the second payment of NINETY THOUSAND PESOS
(P90,000.00);
"c) The sum of TWO HUNDRED SIXTY THOUSAND PESOS (P260,000.00) shall be paid
by the BUYER to the SELLERS thirty (30) days after the Transfer Certificate of Title to
the heirs and/or the SELLERS have been effected; and
"d) The balance of ONE MILLION ONE HUNDRED FORTY THOUSAND PESOS
(P1,140,000.00) shall be paid by the BUYER to the SELLERS within two (2) years from
the date of the last payment of TWO HUNDRED SIXTY THOUSAND PESOS
(P260,000.00).
"x x x" (emphasis supplied)
Petitioner paid the down payment of ten thousand pesos (P10,000.00) on the date of the sale.[4]

In July 1977, respondent Pedro Atienza wrote a letter to petitioner, asking him for an additional sum of fifty thousand
pesos (P50,000.00). The money was intended for the inheritance and realty taxes due on the subject property and
other incidental expenses to facilitate the transfer of the title of the subject property in their names.[5] novero
Petitioner refused to give the additional money. In a letter dated August 25, 1977, he pointed out that under
paragraph (b) of their Contract of Sale, the sum of ninety thousand pesos (P90,000.00) would be due only upon
presentation by the respondents of the new TCT showing that the subject property was already registered in their
names. Petitioner then asked respondent Pedro Atienza to turn over to him the documents required by the Register
of Deeds, namely: the owner's duplicate copy of TCT No. T-6744, the original copies of the annexes of the Contract
of Sale, the Petition for Extra-judicial Partition, the Certifiate of Publication of the Petition for Extra-judicial Partition,
and the Affidavit that the property is not planted with rice or corn. Respondents did not comply.
Thereafter, respondent's counsel, Atty. Antonio Jose Cortes, sent a demand letter to petitioner, requiring him to pay
the amount of ninety thousand pesos (P90,000.00) within three (3) days from receipt of the letter.[6] Petitioner
insisted that paragraph (b) of the contract merely states that he "may" advance the necessary amount to the
respondents for the settlement of their back taxes, hence, such payment would be discretionary on his part.[7]
On November 1, 1977, petitioner retained the services of Mariano Jumarang as overseer of the subject property for
a monthly salary of P200.00 plus a 50% share in the net harvest of the crops to be planted on the subject property.
[8]
While awaiting the registration of the subject property in the names of the respondents, petitioner also prepared
project studies and subdivision plans for the property.
In the same month of November 1977, petitioner met Nicanor Papa, Sr., then Chairman of the Board of Directors of
Realty Baron Corporation (intervenor), through a broker named Ligaya Sangalang. They discussed the possible sale
of the subject property in favor of Realty Baron Corporation. Petitioner showed Papa some of the plans for the
Tagaytay property. He also gave Papa a copy of the Contract of Sale dated April 13, 1977, as proof of his ownership
over the subject property.[9] Upon ocular inspection, however, Papa changed his mind and wanted to buy only the
one-half western portion of the property, with an area of approximately 87,555 square meters. He found the other
portion of the lot too steep and occupied by squatters. The sale did not push through.
In a letter dated January 8, 1978, petitioner again asked the respondents to deliver to him the certificate of title of
the subject property and other documents needed by the Register of Deeds of Tagaytay City to effect the transfer of
the title in his name.[10]
On January 31, 1978, Atty. Cortes executed a document called "Notarial Act for the Cancellation of Contract to Sell
as Provided for in Article 1592 of the New Civil Code and Republic Act 6552."[11] A copy of the said document was
sent by registered mail to petitioner. Respondent Pedro Atienza also returned the down payment and cash advances
to petitioner through Philippine Trust Company Check no. 309276;[12] Petitioner, through his lawyer, returned the
check to the respondents on March 1, 1978.[13] nigel
Meanwhile, real estate agents persuaded the respondents to sell, the property to Realty Baron Corporation.
Respondents agreed provided the corporation would advance the payment for the taxes due on the property, as well
as the documentation and registration expenses related to the projected sale. Thus, Realty Baron Corporation
advanced the amount of P100,000.00 as down payment.
Eventually, respondents managed to have the subject property subdivided into two (2) lots. One lot was registered
in their names under TCT No. 12107. The other lot, with an area of approximately eighty seven thousand five
hundred fifty five (87,555) square meters, was covered by TCT No. 12106.[14]
On October 30, 1978,[15] the lot covered by TCT No. 12106 was sold by respondents to Realty Baron Corporation for
eight hundred seventy five thousand five hundred fifty pesos (P 875,550.00). Accordingly, TCT No. T-12113 was
issued in favor of Realty Baron Corporation.
On January 26, 1979, petitioner verified from the Register of Deeds of Tagaytay if respondents had already secured a
new title for the property. He discovered that the property sold to him has been subdivided into two lots.[16] He also

learned that the respondents sold to Realty Baron Corporation the property covered by TCT No. 12106 (now TCT No.
12113), the same area which Papa was planning to buy from him.[17]
On January 27, 1979, petitioner wrote a letter[18] to Felicito Papa, son of Nicanor Papa, Sr. and President of Realty
Baron Corporation, reminding the latter that he is the owner of the property sold by the respondents.[19]
On Apri1 3, 1979, a Notice of Adverse Claim was registered by petitioner in the Register of Deeds of Tagaytay City,
against TCT No. T-12107.[20] Petitioner also filed an adverse claim over the lot covered by TCT No. 12113. The
adverse claims were cancelled after the lapse of the period provided by law.
On December 29, 1979, petitioner filed the present action for specific performance and damages, docketed as Civil
Case No. 35608 before the Regional Trial Court of Pasig, to compel the respondents to comply with their obligation
to deliver the title over the property.
Petitioner; also caused the annotation of a notice of lis pendens over TCT Nos. 12107 and 12113 before the Register
of Deeds of Tagaytay City.[21] Thus, Realty Baron Corporation decided not to pay the balance of the contract price in
the amount of P520,000.00.[22] It also intervened in the specific performance case.
Petitioner claimed that due to respondents' nonperformance of their obligations under the contract, he would need
to spend more to develop the property. He also suffered sleepless nights and experienced serious anxieties.
[23]
Moreover, he was constrained to engage the services of a lawyer to file the complaint for specific performance
against the respondents for a P20,000.00 legal fee.[24] ella
On September 17, 1986, the lower court rendered its decision,[25] declaring that there was a perfected contract to
sell between petitioner and the respondents. It held that title over the subject lot did not pass to petitioner because
the sale was subject to the condition that petitioner would advance the necessary expenses for the registration of
the property in the names of respondents. Further, it held that petitioner was the one who reneged on his obligation
so he could not successfully demand for specific performance nor ask for damages. It ordered petitioner to pay
P100,000.00 as actual damages and P50,000.00 as attorney's fees. Realty Baron Corporation was also directed to
complete its payment of P500,000.00 to the respondents.
Petitioners motion for reconsideration was denied. He appealed to the Court of Appeals.
On January 31, 1996, the Court of Appeals rendered its Decision in CA-G.R. CV No. 33213, affirming the lower court
ruling. Hence, the present petition. Petitioner contends that the appellate court erred:
"I
"IN AFFIRMING THE TRIAL COURTS DECISION NOTWITHSTANDING ITS FINDING THAT THERE WAS A
PERFECTED CONTRACT OF SALE BETWEEN THE PARTIES;
"II
"IN CONCLUDING THAT PETITIONER AGREED AND ASSUMED THE OBLIGATION TO EXTEND CASH
ADVANCES IN ORDER TO FACILITATE THE TRANSFER OF TITLE OF THE PROPERTY SUBJECT OF THE
CONTRACT IN FAVOR OF (THE ATIENZAS);
"III
"IN DECLARING THAT THE ATIENZAS HAD THE RIGHT TO RESCIND THE CONTRACT OF SALE BECAUSE
OF PETITIONERS REFUSAL TO ADVANCE THE PAYMENT INTENDED TO PAY FOR TAXES AND OTHER
FEES; marinella
"IV

"IN DECLARING THAT, IN THE CASE AT BENCH, PETITIONER WAS THE PARTY WHO DID NOT PERFORM
THE UNDERTAKING WHICH HE IS BOUND BY THE TERMS OF THE AGREEMENT TO PERFORM, THUS, HE
CANNOT INSIST ON THE PERFORMANCE OF THE CONTRACT BY (THE ATIENZAS) OR RECOVER
DAMAGES BY REASON OF HIS OWN BREACH;
"V
"IN AFFIRMING THE TRIAL COURTS CONCLUSION THAT THE GROUND FOR THE AWARD OF DAMAGES
AND ATTORNEYS FEES WAS BASED ON JUDICIOUS FINDINGS; AND
"VI
"IN AFFIRMING THE TRIAL COURTS DECISION DISMISSING PETITIONERS COMPLAINT FOR SPECIFIC
PERFORMANCE AND DAMAGES."
We grant the petition.
We agree with the initial ruling of the respondent court characterizing the contract in the case at bar as a contract of
sale. We quote its pertinent ruling:
"Construing the foregoing, it can be seen that defendants-appellees (Atienzas) agreed to sell and the plaintiffappellant (petitioner) agreed to buy a definite object, that is 158,386 sq. m. lot covered by TCT No. 6744 registered
in the name of deceased spouses Atienza. The parties also agreed on a definite price of One Million Five Hundred
Thousand (P1,500,000.00) Pesos. The contract here is complete since the parties have already agreed not only on
the thing and the price but also on who should bear the expenses with respect o the transfer of title of the property
subject of the sale. Hence, it cannot be denied that there was a perfected contract of sale between the
parties. Article 1475 of the Civil Code of the Philippines reads:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the
thing which is the object of the contract and upon the price.
'From that moment, the parties may reciprocally demand performance, subject to the provisions of
law governing the form of contracts. brando
"From the moment the contract is perfected, the parties are bound not only to the fulfillment of what
has been expressly stipulated but also to all consequences which according to their nature, may be
in keeping with good faith, usage and law.
"A perfected contract of sale, however, may either be absolute or conditional. Depending on whether
the agreement is devoid of, or subject to, any condition imposed on the passing of the title of the
thing to be conveyed or on the obligation of a party thereto. When ownership is retained until
fulfillment of a positive condition the breach of the condition will simply prevent the duty to convey
title from acquiring an obligatory force. If the condition is imposed on an obligation of a party which
is not complied with, the other party may either refuse to proceed or waive said condition.
"In this case, the contract entered into by the parties is subject to the following terms and conditions,
to wit:
a. Pl0,000.00 upon signing of the contract;
b. P90,000.00 upon the defendants' (Atienzas) presentation to the plaintiff of a new
certificate of title of the property subject of the sale, registered in their
name. However, the plaintiff (buyer) may advance the necessary amount to the
defendants (sellers) for payment of their back taxes, inheritance tax and other taxes
which might be required by the Register of Deeds of Tagaytay City before the transfer
certificate of title from the registered owners (parents of the defendants) to the

defendants (sellers) can be effected but not exceeding P90,000.00 Any and all cash
advances made by the plaintiff to the defendants shall be deducted from the
second .payment of P90,000.00;
"Thus, the foregoing provides a (sic) reciprocal obligations to be performed by the parties.
Compliance by one party of the aforementioned undertaking would, in turn, demand performance of
the reciprocal obligation of the other. There is no dispute that defendants-appellees upon execution
of the contract forthwith received and acknowledged the initial payment of Ten Thousand
(P10,000.00) Pesos, thus, the issue now is whether or not defendants-appellants (sic) can reject the
binding effects of the contract." alonzo
We disagree, however, with the respondent court that under paragraph (b) of the above contract, "plaintiffappellant (i.e., petitioner) agreed and (sic) assumed the obligation to extend cash advances in order to facilitate the
transfer of title of the property subject of the contract in favor of the defendants (i.e., respondent Atienzas) and any
amount extended to defendants (i.e., respondent Atienzas) is deductible from the amount of Ninety Thousand
(P90,000.00) Pesos." On these bases, the respondent court held that the respondent Atienzas had a valid ground to
rescind their contract and sell half of the subject lot to the respondent Baron Corporation.
The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined
without reference to extrinsic facts or aids. The intention of the parties must be gathered from that language, and
from that language alone. Stated differently, where the language of a written contract is clear and unambiguous,
the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can be
assigned to show that the words used should be understood in a different sense. Courts cannot make for the parties
better or more equitable agreements than they themselves have been satisfied to make, or rewrite contracts
because they operate harshly or inequitably as to one of the parties, or alter them for the benefit of one party and
to the detriment of the other, or by construction, relieve one of the parties from terms which he voluntarily
consented to, or impose on him those which he did not.[26]
In the case at bar, paragraph (b) of the Contract of Sale is plain and unambiguous. It provides that: (1) the petitioner
as buyer shall pay to the respondent Atienzas as seller the sum ofP90,000.00 upon presentation to the buyer of a
new certificate of title already registered in the name of the sellers. At the time of the sale, the subject land was still
in the name of the deceased parents of the sellers; (2) the petitioner as buyer MAY advance to the respondents as
sellers the necessary amount (not exceeding P90,000.00) for the payment of such taxes as may be required before
the transfer certificate of title in favor of the sellers can be effected, and (3) in the event such advances are made,
they shall be deducted from the second payment of P90,000.00. The use of the word MAY is significant. It meant
that petitioner has the discretion whether or not to advance the P90,000.00. He has no duty to do it. It is purely
optional on his part. It is incomprehensible for the respondent court to construe it as mandatory. Needless to state,
petitioner did not violate the contract when he refused to pay the advance money. Corollarily, the respondent
Atienzas had no right to rescind said contract on that ground. micks
We now come to the validity of the sale by the respondent Atienzas to respondent Baron Corporation. We hold that it
has no force and effect. As above-discussed, the respondent Atienzas had no right to rescind the sale of the subject
lot to petitioner. Moreover, respondent Baron Corporation cannot pretend to be a buyer in good faith. In Uraca vs.
Court of Appeals,[27] we held that " x x x 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 title is transferred to
him by registration or failing registration, by delivery of possession." There is no dispute that respondent Baron
Corporation knew that petitioner was the first buyer of the subject lot. Its initial plan was to buy the whole lot from
the petitioner. It changed its plan only when it found squatters on the hilly portion of the property. Thus, it cannot
claim the right of an innocent purchaser for value. We have held that:[28]
"One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim
good faith as well as one who has knowledge of facts which should have put him upon such inquiry or
investigation as might be necessary to acquaint him with the defects in the title of his vendor. . . His

mere refusal to believe that such defect exist, or his willful closing of his eyes to the possibility of
existence of a defect in the vendor's title, will not make him an innocent purchaser for value if it
afterwards develop that title was in fact defective and it appears that he had such notice of defect as
would have led to its discovery had he acted with that measure of precaution which may reasonably
be required of a prudent man in a like situation."
On the other hand, we reject the petitioner's claim for damages. The court a quo held that "the records do not
disclose that the plaintiff (i.e., petitioner) ever adduced evidence to prove damages."[29] This factual finding binds
this Court.
IN VIEW WHEREOF, the questioned judgment of the Court of Appeals in CA-G.R. C.V. No. 33213 is REVERSED and
SET ASIDE. Instead, we render the following judgment:nigella
1. The notarial rescission executed by Atty. Cortes on January 31, 1978, is declared null and void and without force
and effect on the Contract of Sale, dated April 13, 1977, executed between petitioner and the respondents;
2. The estate of petitioner Angel Bautista and/or his legal heirs are declared as the true and rightful owner of the
subject parcel of land in Tagaytay City, formerly covered by TCT No. T-6744, with an area of approximately 158,386
square meters, pursuant to the Contract of Sale of April 13, 1977;
3. The Deed of Sale with Mortgage, dated October 30, 1978 and TCT No. T-12113 issued in favor of respondent
Realty Baron Corporation is declared null and void;
4. The administrator of petitioner's estate and/or the authorized representative of petitioner's legal heirs are ordered
to pay the balance of the purchase price of the Contract of Sale of April 13, 1977, pursuant to the terms and
conditions specified therein;
5. Respondent Atienzas are ordered to deliver TCT No. 12107 to the authorized representative of the legal heirs of
petitioner and/or the administrator of petitioner's estate and to execute all the necessary documents as may be
required by the Register of Deeds of Tagaytay City to facilitate the issuance of the TCT in the names of petitioner's
legal heirs;
6. The Regional Trial Court of Pasig, Branch CLaX, is ordered to cause the cancellation by the Register of Deeds of
Tagaytay City of TCT No. T-12113 and TCT No. 12107 and the issuance, in lieu thereof, of the corresponding
certificate of title in the names of petitioner's legal heirs.
No costs.
SO ORDERED.