Monday, October 4, 2010

VILLARTA V. CA (May 29, 1987)

FACTS:
Respondent Rosalinda Cruz entrusted to petitioner Victoria Villarta seven pieces of jewelry on November
1968. On December of the same year, Villarta exchanges one jewelry to another and issued a post-dated
check in favor of Cruz. Cruz deposited the check but it was dishonored for lack of funds.
An estafa case was filed against Villarta but she argued that she can only be civilly liable because even
though the check bounced, she only gave it for a pre-existing obligation. She contends a person cannot
be imprisoned for non-payment of debt.
ISSUE:
WON the transaction is a sale or return
HELD:
The transaction is not a sale or return but a sale on approval or sale on acceptance.
When Cruz gave the jewelry to Villarta on November, the clear intention is to make the latter choose
which item she wanted to buy. There was no meeting of the minds yet at this point and hence, it cannot
be considered as delivery.
If ownership over the jewelry was not transmitted on that date, then it could have been transmitted only in
December 1968, the date when the check was issued. In which case, it was a "sale on approval" since
ownership passed to the buyer. Vallarta, only when she signified her approval or acceptance to the seller,
Cruz, and the price was agreed upon.
It is still criminal fraud or deceit in the issuance of a check which is made punishable under the Revised
Penal Code, and not the non-payment of the debt.

ROSARIO CARBONELL, petitioner, vs.HONORABLE COURT

OF APPEALS, JOSE PONCIO, EMMA INFANTE and RAMON
INFANTE, respondents.
G.R. No. L-29972 January 26, 1976
FACTS:
Petitioner Carbonell lives in an adjoining lot owned by Respondent Poncio, latters lot is
mortgaged in favor of Republic Savings Bank for P1,500.
Petitioner and another Respondent (Infante) offered to buy the land owned by Poncio. Which
Poncio, in his failure to pay the mortgaged agreed for the petitioner to buy the land including his
house for P9.50 per square meter on the condition that from the purchase price would come the
money to be paid to the bank.
Both parties settled the arrears of the mortgaged amounting P247.26. However, Petitioner only
have P200.00 as per respondents information that he only owes the same to the bank.
Respondent then withdrew the deficit amount and was reimbursed by Carbonell the following
day.
The parties executed a document stipulating that, Poncio may still occupy the land sold by him
to the petitioner and if after a year, he still cant find a place to move, that he shall pay rent in
favor of the petitioner.
Subsequently, Poncio had told Carbonell that the former can no longer pursue with the sale for
he had given the land to Infante, to which he cannot withdraw even if he goes to jail. The said lot
was fenced by Infante.
Atty. Jose Garcia advised her to present an adverse claim over the land in question with the
Office of the Register of Deeds of Rizal.
Poncio, admittedly sold the land to Infante when she improved her offer.
With the information that the land was not yet registered, Atty. Garcia in favor of the petitioner
prepared an adverse claim over the property. Whereby upon registration of the same by Infante,
the said adverse claim was noted in the Transfer Certificate of Title.
Petitioner filed a second complaint, alleging that the sale between Poncio and Infante be
declared null and void. Respondents allegation was that, Petitioners claim was unenforceable
for lack of written document.
Trial Court ruled that the second sale was null and void. However, after re-trial, Trial Court
reversed its decision ruling that the claim of the respondents were greater than that of the
petitioner.
CA ruled in favor of petitioner, alleging that it has a superior right over the respondent. After a
motion for reconsideration CA reversed its decision.
ISSUE:

Whether or not Petitioner have the superior right over the property.
HELD:
YES.
Article 1544, New Civil Code, which is decisive of this case, recites:
If the same thing should have been sold to different vendees, the ownership shall be transferred
to the person who may have first taken possession thereof in good faith, if it should movable
property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith (emphasis supplied).
When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer
thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly
annotated thereon. Carbonell was not aware and she could not have been aware of any
sale of Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase of
the land was made in good faith. Her good faith subsisted and continued to exist when she
recorded her adverse claim four (4) days prior to the registration of Infantes's deed of sale.
Carbonell's good faith did not cease after Poncio told her on January 31, 1955 of his second
sale of the same lot to Infante. Because of that information, Carbonell wanted an audience with
Infante, which desire underscores Carbonell's good faith. With an aristocratic disdain unworthy
of the good breeding of a good Christian and good neighbor, Infante snubbed Carbonell like a
leper and refused to see her. So Carbonell did the next best thing to protect her right she
registered her adversed claim on February 8, 1955. Under the circumstances, this recording of
her adverse claim should be deemed to have been done in good faith and should emphasize
Infante's bad faith when she registered her deed of sale four (4) days later on February 12,
1955

Consolidated Rural Bank (Cagayan Valley), Inc vs Court of Appeals

448 SCRA 347

January 17, 2005

Ponente: Tinga
Nature: Petition for review on certiorari of a decision and resolution of the Court
of Appeals
Facts:
The Madrid brothers were registered owners of Lot No. 7036-A in Isabela
per TCT No. T-8121. It was subdivided into several lots.
1ST SALE (August 15 1957)
Rizal Madrid sold part of his share to Gamiao and Dayag by virtue of a
deed of sale, to which his brothers offered no objection. The deed of sale was
not registered with the Office of the Register of Deeds, however, Gamiao and
Dayag declared the property in their names for taxation purposes.
Gamiao and Dayag sold the southern portion of the land to Teodoro
dela Cruz, and the northern portion was sold to Restituto Hernandez. These
buyers took possession of and cultivated the portions of the property
respectively sold to them.
2ND SALE (June 15 1976)
The Madrid brothers conveyed all their rights and interests to Pacifico
Marquez. The deed of sake was registered with the Office of the Register of
Deeds. Marquez subdivided the lot into 8. Lots 7036-A-7-A until 7036-A-7-D
were mortgaged to the Consolidated Rural Bank to secure a loan of
P100,000. Additionally, Marquez mortgaged Lot No. 7036-A-7-E to the Rural
Bank of Cauayan to secure a loan of P10,000. These deeds of real estate
mortgage were registered with the Office of the Register of Deeds.
Meanwhile, Marquez sold Lot No. 7036-A-7-G to Romeo Calixto.
Marquez defaulted in the payment of his loan and CRB caused the
foreclosure of the mortgages and the lots were sold to it as the highest
bidder.
The heirs of Teodoro dela Cruz filed a case for reconveyance and damages as
to the southern portion of the land, claiming to be null and void the issuance of
TCTs to Marquez; the foreclosure sale in favour of CRB; to mortgage to RBC; and
the sale to Calixto. Evangeline del Rosario, successor-in-interest of Hernandez,

filed a Complaint in Intervention wherein she claimed the northern portion of Lot
No. 7036-A-7.
Marquez argued that he was a buyer in good faith and for value. He argued
as well that being the first registrant, the sale in favour of him must prevail over
the sale to Gamiao and Dayag which shouldnt be binding upon him, that being
unregistered. CRB, on the other hand, insisted that they were mortgagees in good
faith and that they had the right to rely on the titles of Marquez.
The RTC ruled in favour of Marquez, finding nothing to show that Marquez
was aware of dela Cruz and del Rosarios claim of ownership and holding that it
was, indeed, Marquez, who first registered.
The CA, however, reversed the ruling of the RTC, holding that Marquez
failed to prove that he was a purchaser in good faith and noting that while
Marquez was the first registrant, there was no showing that the registration was
coupled with good faith. Marquez admitted having knowledge that there was
dispute over said property and that the Heirs of dela Cruz were also in possession
of the land.
As to the mortgages, the CA held that the banks merely relied on the
certificates o title and this failure to observe diligence in standard banking
procedure constitutes bad faith and on that basis, the mortgages were declared
null and void. CRB insisted that Marquez had the right over the said property
being the first registered owners. Hence, this petition.
Issue: WON Marquez, having registered first, has better right over the property
Held//Ratio:
No.
But first, important!! Applicability of 1544.
The RTC and the CA, albeit arriving at different conclusions, both relied on
the NCCs provision on double sale (1544) to resolve the case. However, the
Supreme Court held that such provision is not applicable in this case. 1544
contemplates a case of double sale by a single vendor. It is necessary that the
conveyance must have been made by a party who has an existing right in the thing
and the power to dispose of it. It cannot be invoked where the two different
contracts of sale are made by two different persons, one of them not being the
owner of the property sold.
In the case at bar, the subject property was not transferred to several
purchasers by a single vendor. In the first sale, the vendors were Gamiao and
Dayag whose right to the property originated from their acquisition thereof from

Rizal Madrid. In the second sale, the vendors were the Madrid brothers but at that
time they were no longer the owners since they had long disposed of the property.
In a situation where not all the requisites are present which would warrant
the application of 1544, the principle that he who is first in time is preferred in
right should apply. In the instant case, the sale by Gamiao and Dayag who first
bought it from Rizal Madrid was anterior to the sale to Marquez. The Heirs of dela
Cruz and Hernandez also had possession of the property first. Thus, applying the
principle, the Heirs have a superior right to the subject property. Morover, since
the Madrid brothers were no longer the owners of the lot at the time of the sale to
Marquez, Marquez did not acquire any right to it.
Assuming arguendo that 1544 applies, the claim of Marquez still cannot
prevail over the right of the Heirs since he was not a purchaser in good faith.

RICARDO CHENG vs RAMON GENATO and SPS. DA JOSE

G.R. NO. 129760, December 29, 1998
FACTS:

Ramon Genato is the owner of two parcels of land located at Paradise Farms, San Jose del
Monte, Bulacan.
September 6, 1989: Genato entered into an agreement with the Da Jose Spouses over said land.
The agreement culminated in the execution of a contract to sell gor which the purchase price was
P80.00 per sq.m. It was in a public instrument and contained the stipulation that: after 30 days,
after having satisfactorily verified and confirmed the truth and authenticity of documents vendee
shall pay the vendor the full payment of the purchase price.
The Da Jose Spouses asked for an extension of 30 days when it failed to verify the said titles on
the condition that a new set of documents be made seven days after.
Pending effectivity of said extension period, and without due notice to Spouses Da Jose, Genato
executed an affidavit to annul the Contract to Sell. This was not annotated at the back of his titles
right away.
October 24, 1989: Ricardo Cheng went to Genatos residence and expressed interest in buying
the subject properties. Genato showed Cheng the copies of his titles and the annotations at the
back thereof of his contract to sell with the Da Jose Spouses. He likewise showed Cheng the
affidavit to annul contract to sell.
Despite these, Cheng still issued a check for P50,000 upon the assurance that the previous
contract will be annulled.

The Da Jose Spouses met Genato at the Office of the Resgistry of Deeds by coincidence, and
were later shocked of Genatos decision to annul the contract and protested regarding the matter.
They reminded Genato that the 30 day extension period was still in effect and they are willing to
pay the downpayment.
Genato later continued with their contract, informed Cheng of hi decision and returned to the
latter, the downpayment paid. Cheng however contended that their contract to sell said property
had already been perfected.

ISSUES:
1. W/N the contact to sell between Genato and Spouses Da Jose was validly rescinded.
2. W/N Chengs own contract with Genato was not just a contract to sell but of a conditional
contract of sale.
HELD:
1. NO.
In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure of
which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to
convey title from acquiring an obligatory force. Article 1191 of the New Civil Code cannot be made to
apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses
since the 30-day extension period has not yet expired.
The contention of the Da Jose spouses that no further condition was agreed when they were granted the
30-day extension period from October 7, 1989 in connection with clause 3 of their contract to sell should
be upheld. Also, Genato could have sent at least a notice of such fact, and there being no stipulation
authorizing him for automatic rescission, so as to finally clear the encumbrance on his titles and make it
available to other would be buyers, it bolstered that there was no default on the part of the Da Jose
Spouses. Genato is not relieved from the giving of a notice, verbal or written, to the Da Jose spouses for
his decision to rescind their contract. In many cases.
2. IT WAS A CONTRACT TO SELL.
The Court ruled that if it was assumed that the receipt is to be treated as a conditional contract of sale, it
did not acquire any obligatory force since it was subject to suspensive condition that the earlier contract to
sell between Genato and the Da Jose spouses should first be cancelled or rescinded a condition never
met, as Genato, to his credit, upon realizing his error, redeemed himself by respecting and maintaining his
earlier contract with the Da Jose spouses.
Art.1544 should apply because for not only was the contract between herein respondents first in time, it
was also registered long before petitioner's intrusion as a second buyer (PRIMUS TEMPORE, PORTIOR
JURE). (Spouses made annotation on the title of Genato). Since Cheng was fully aware, or could have
been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly
annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate
in detail the fact that he is indeed in bad faith in entering into such agreement.
NB: "Registration", as defined by Soler and Castillo, means any entry made in the books of the registry, including
both registration in its ordinary and strict sense, and cancellation, annotation, and even marginal notes.In its strict
acceptation, it is the entry made in the registry which records solemnly and permanently the right of ownership and
other real rights.

SAN LORENZO DEVELOPMENT CORPORATION, petitioner,

vs.
COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA ZAVALLA LU, respondents

G.R. No. 124242

January 21, 2005

FACTS

On 20 August 1986, the Spouses Lu purportedly sold two parcels of land to respondent Pablo Babasanta,
for the price of fifteen pesos (P15.00) per square meter. Babasanta made a downpayment of (P50,000.00)
as evidenced by a memorandum receipt issued by Pacita Lu of the same date.

Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his favor so that
he could effect full payment of the purchase price. In response, Pacita Lu wrote a letter to Babasanta
wherein she reminded Babasanta that when the balance of the purchase price became due, he requested
for a reduction of the price and when she refused, Babasanta backed out of the sale

herein petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for Intervention. SLDC
alleged that it had legal interest in the subject matter under litigation because on 3 May 1989, the two
parcels of land involved had been sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was
a buyer in good faith and for value and therefore it had a better right over the property in litigation

Respondent Babasanta, however, argued that SLDC could not have acquired ownership of the property
because it failed to comply with the requirement of registration of the sale in good faith. He emphasized
that at the time SLDC registered the sale in its favor on 30 June 1990, there was already a notice of lis
pendens annotated on the titles of the property made as early as 2 June 1989. Hence, petitioners
registration of the sale did not confer upon it any right.

ISSUE:
Did the registration of the sale after the annotation of the notice of lis pendens obliterate the effects of delivery and
possession in good faith which admittedly had occurred prior to SLDCs knowledge of the transaction in favor of
Babasanta?

HELD:NO

It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to Buy in
favor of SLDC upon receiving P316,160.00 as option money from SLDC. After SLDC had paid more than
one half of the agreed purchase price, the Spouses Lu subsequently executed on 3 May 1989 a Deed of
Absolute Sale in favor or SLDC. At the time both deeds were executed, SLDC had no knowledge of
the prior transaction of the Spouses Lu with Babasanta. Simply stated, from the time of
execution of the first deed up to the moment of transfer and delivery of possession of the lands
to SLDC, it had acted in good faith and the subsequent annotation of lis pendens has no effect
at all on the consummated sale between SLDC and the Spouses Lu.

A purchaser in good faith is one who buys property of another without notice that some other person has
a right to, or interest in, such property and pays a full and fair price for the same at the time of such
purchase, or before he has notice of the claim or interest of some other person in the property.

We rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it
had knowledge of the prior transaction in favor of Babasanta. At the time of the sale of the property to
SLDC, the vendors were still the registered owners of the property and were in fact in possession of the
lands.

In assailing knowledge of the transaction between him and the Spouses Lu, Babasanta apparently relies
on the principle of constructive notice incorporated in Section 52 of the Property Registration Decree (P.D.
No. 1529) which reads, thus:

Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order,
judgment, instrument or entry affecting registered land shall, if registered, filed, or entered in the office of the
Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all
persons from the time of such registering, filing, or entering.

However, the constructive notice operates as such by the express wording of Section 52 from the time of
the registration of the notice of lis pendens which in this case was effected only on 2 June 1989, at which
time the sale in favor of SLDC had long been consummated insofar as the obligation of the Spouses Lu to
transfer ownership over the property to SLDC is concerned.

G.R. No. 104482

January 22, 1996
BELINDA TAREDO, for herself and in representation of her brothers and sisters,
and TEOFILA CORPUZ TANEDO, representing her minor daughter VERNA
TANEDO, petitioners
vs.
THE COURT OF APPEALS, SPOUSES RICARDO M. TAREDO AND TERESITA
BARERA TAREDO, respondents
FACTS:
1. October 20, 1962: Lazardo Taedo executed a notarized deed of absolute sale
in favor of his eldest brother, Ricardo Taedo, and the latters wife, Teresita
Barera (private respondents) whereby he conveyed for P1,500 one hectare of
his future inheritance from his parents.
2. February 28, 1980: Upon the death of his father Matias, Lazaro made another
affidavit to reaffirm the 1962 sale.
3. January 13, 1981: Lazaro acknowledged therein his receipt of P 10,000.00 as
consideration for the sale.
4. February 1981: Ricardo learned that Lazaro sold the same property to his
children (petitioners) through a deed of sale dated December 29, 1980
5. On June 7, 1982, Ricardo recorded the Deed of Sale in their favor in the
Registry of Deeds
Petitioners filed a complaint for rescission (plus damages) of the deeds of sale
executed by Lazaro in favor of Ricardo. They contend that Lolo Matias desired that
whatever inheritance Lazaro would receive from him should be given to his
(Lazaros) children.
Ricardo (private respondents) however presented in evidence a Deed of Revocation
of a Deed of Sale wherein Lazaro revoked the sale in favor of his children for the
reason that it was simulated or fictitious - without any consideration whatsoever.
LAZAROS VERSION: He executed a sworn statement in favor of his children. BUT he
also testified that he sold the property to Ricardo, and that it was a lawyer who
induced him to execute a deed of sale in favor of his children after giving him five
pesos (P5.00) to buy a drink. LABO
Trial court ruled in favor of Lazaros children. Ca affirmed TCs decision.

ISSUES:
1. Is the sale of a future inheritance valid? NO
2. Was Ricardos registration of the deed of valid? YES

HELD: SC rules in favor of Ricardo.

Pursuant to Art 1347, the contract made in 1962 (sale of future inheritance) is not
valid and cannot be the source of any right nor the creator of any obligation
between the parties. (No contract may be entered into upon a future inheritance
except in cases expressly authorized by law.)
However, Article 1544 governs the preferential rights of vendees in cases of
multiple sales. The property in question is land, an immovable, and ownership shall
belong to the buyer who in good faith registers it first in the registry of property.
Thus, although the deed of sale in favor of Ricardo was later than the one in favor of
Lazaros children, ownership would vest with Ricardo because of the undisputed fact
of registration. On the other hand, petitioners have not registered the sale to them
at all.
Lazaros children contend that they were in possession of the property and that
Ricardo never took possession thereof. As between two purchasers, the one who
registered the sale in his favor has a preferred right over the other who has not
registered his title, even if the latter is in actual possession of the immovable
property.
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals is AFFIRMED.

II. SUBJECT MATTER

2.Licit
a.) BELINDA TAEDO, for herself and in representation of her brothers and sisters, and TEOFILA CORPUZ
TAEDO, representing her minor daughter VERNA TAEDO vs. COURT OF APPEALS, SPOUSES RICARDO
M. TAEDO AND TERESITA BARERA TAEDO
FACTS:
On October 20, 1962, Lazardo Taedo executed a notarized deed of absolute sale in favor of his eldest brother,
Ricardo Taedo, and the latter's wife, Teresita Barera, private respondents herein, whereby he conveyed to the latter
in consideration of P1,500.00, "one hectare of whatever share I shall have over Lot No. 191", the said property being
his "future inheritance" from his parents. Upon the death of his father, Lazaro executed an "Affidavit of Conformity" to
"re-affirm, respect, acknowledge and validate the sale I made in 1962." On January 13, 1981, Lazaro executed
another notarized deed of sale in favor of Ricardo and Teresita, covering his "undivided ONE TWELVE (1/12) of a
parcel of land known as Lot 191 ". He acknowledged his receipt of P10,000 as consideration. Ricardo learned that
Lazaro sold the same property to his children, petitioners herein, through another deed of sale. On June 7, 1982,
private respondents recorded the Deed of Sale in their favor in the Registry of Deeds and entry was made in the TCT.

Petitioners on July 16, 1982 filed a complaint for rescission (plus damages) of the deeds of sale executed by Lazaro
in favor of private respondents. Petitioners claimed that their father, Lazaro, executed an "Absolute Deed of Sale"
conveying to his ten children his allotted portion from the extrajudicial partition executed by the heirs of Matias.
Petitioners also presented in evidence: (1) a private writing purportedly prepared and signed by Matias, stating that it
was his desire that whatever inheritance Lazaro would receive from him should be given to his (Lazaro's) children; (2)
a typewritten document signed by Lazaro wherein he confirmed that he would voluntarily abide by the wishes of his
father; and (3) a letter of Lazaro to his daughter, Carmela, stating that his share in the extrajudicial settlement of the
estate of his father was intended for his children, petitioners herein.
Private respondents, however presented in evidence a "Deed of Revocation of a Deed of Sale", wherein Lazaro
revoked the sale in favor of petitioners for the reason that it was "simulated or fictitious without any consideration
whatsoever". Shortly after the case a quo was filed, Lazaro executed a sworn statement which virtually repudiated
the contents of the Deed of Revocation of a Deed of Sale and the Deed of Sale in favor of private respondents.
However, Lazaro testified that he sold the property to Ricardo, and that it was a lawyer who induced him to execute a
deed of sale in favor of his children after giving him five pesos (P5.00) to buy a "drink".
TC: decided in favor of private respondents, holding that petitioners failed "to adduce a proponderance of evidence to
support (their) claim. CA: affirmed the decision of the TC, ruling that the Deed of Sale dated January 13, 1981 was
valid and that its registration in good faith vested title in said respondents.

ISSUES:
I.

Is the sale of a future inheritance valid?

II.

Was the subsequent execution on January 13, 1981 (and registration with the Registry of Property)
of a deed of sale covering the same property to the same buyers valid?

HELD:
I
The sale made in 1962 involving future inheritance is not really at issue here. In context, the assailed Decision
conceded "it may be legally correct that a contract of sale of anticipated future inheritance is null and void." But to
remove all doubts, we hereby categorically rule that, pursuant to Article 1347 of the Civil Code, "(n)o contract may be
entered into upon a future inheritance except in cases expressly authorized by law." Consequently, said contract
made in 1962 is not valid and cannot be the source of any right nor the creator of any obligation between the parties.
Hence, the "affidavit of conformity" dated February 28, 1980, insofar as it sought to validate or ratify the 1962 sale, is
also useless and, in the words of the respondent Court, "suffers from the same infirmity." Even private respondents in
their memorandum4 concede this.

II
However, the documents that are critical to the resolution of this case are: (a) the deed of sale of January 13, 1981 in
favor of private respondents covering Lazaro's undivided inheritance of one-twelfth (1/12) share in Lot No. 191, which
was subsequently registered on June 7, 1982; and (b) the deed of sale dated December 29, 1980 in favor of
petitioners covering the same property. These two documents were executed after the death of Matias (and his
spouse) and after a deed of extra-judicial settlement of his estate was executed, thus vesting in Lazaro actual title
over said property. In other words, these dispositions, though conflicting, were no longer infected with the infirmities of
the 1962 sale.

The CA correctly identified the subject matter of the January 13, 1981 sale to be the entire undivided 1/12 share of
Lazaro in Lot No. 191 and which is the same property disposed of on December 29, 1980 in favor of petitioners.
Critical in determining which of these two deeds should be given effect is the registration of the sale in favor of private
respondents with the register of deeds on June 7, 1982.

Article 1544 of the Civil Code governs the preferential rights of vendees in cases of multiple sales. The property in
question is land, an immovable, and following the above-quoted law, ownership shall belong to the buyer who in good
faith registers it first in the registry of property. Thus, although the deed of sale in favor of private respondents was
later than the one in favor of petitioners, ownership would vest in the former because of the undisputed fact of
registration. On the other hand, petitioners have not registered the sale to them at all. Petitioners contend that they
were in possession of the property and that private respondents never took possession thereof. As between two
purchasers, the one who registered the sale in his favor has a preferred right over the other who has not registered
his title, even if the latter is in actual possession of the immovable property.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 170405

February 2, 2010

RAYMUNDO S. DE LEON, Petitioner,

vs.
BENITA T. ONG.1 Respondent.
DECISION
CORONA, J.:
On March 10, 1993, petitioner Raymundo S. de Leon sold three parcels of land 2 with improvements situated in
Antipolo, Rizal to respondent Benita T. Ong. As these properties were mortgaged to Real Savings and Loan

Association, Incorporated (RSLAI), petitioner and respondent executed a notarized deed of absolute sale with
assumption of mortgage3 stating:
x xx

x xx

x xx

That for and in consideration of the sum of ONE MILLION ONE HUNDRED THOUSAND PESOS (P1.1 million),
Philippine currency, the receipt whereof is hereby acknowledged from [RESPONDENT] to the entire
satisfaction of [PETITIONER], said [PETITIONER] does hereby sell, transfer and convey in a manner
absolute and irrevocable, unto said [RESPONDENT], his heirs and assigns that certain real estate together
with the buildings and other improvements existing thereon, situated in [Barrio] Mayamot, Antipolo, Rizal under
the following terms and conditions:
1. That upon full payment of [respondent] of the amount of FOUR HUNDRED FIFTEEN THOUSAND FIVE
HUNDRED (P415,000), [petitioner] shall execute and sign a deed of assumption of mortgage in favor of
[respondent] without any further cost whatsoever;
2. That [respondent] shall assume payment of the outstanding loan of SIX HUNDRED EIGHTY FOUR
THOUSAND FIVE HUNDRED PESOS (P684,500) with REAL SAVINGS AND LOAN,4 Cainta, Rizal
(emphasis supplied)
x xx

x xx

x xx

Pursuant to this deed, respondent gave petitioner P415,500 as partial payment. Petitioner, on the other hand,
handed the keys to the properties and wrote a letter informing RSLAI of the sale and authorizing it to accept
payment from respondent and release the certificates of title.
Thereafter, respondent undertook repairs and made improvements on the properties. 5 Respondent likewise
informed RSLAI of her agreement with petitioner for her to assume petitioners outstanding loan. RSLAI
required her to undergo credit investigation.
Subsequently, respondent learned that petitioner again sold the same properties to one Leona Viloria after
March 10, 1993 and changed the locks, rendering the keys he gave her useless. Respondent thus proceeded
to RSLAI to inquire about the credit investigation. However, she was informed that petitioner had already paid
the amount due and had taken back the certificates of title.
Respondent persistently contacted petitioner but her efforts proved futile.
On June 18, 1993, respondent filed a complaint for specific performance, declaration of nullity of the second
sale and damages6 against petitioner and Viloria in the Regional Trial Court (RTC) of Antipolo, Rizal, Branch
74. She claimed that since petitioner had previously sold the properties to her on March 10, 1993, he no longer
had the right to sell the same to Viloria. Thus, petitioner fraudulently deprived her of the properties.
Petitioner, on the other hand, insisted that respondent did not have a cause of action against him and
consequently prayed for the dismissal of the complaint. He claimed that since the transaction was subject to a
condition (i.e., that RSLAI approve the assumption of mortgage), they only entered into a contract to sell.
Inasmuch as respondent did apply for a loan from RSLAI, the condition did not arise. Consequently, the sale
was not perfected and he could freely dispose of the properties. Furthermore, he made a counter-claim for
damages as respondent filed the complaint allegedly with gross and evident bad faith.

Because respondent was a licensed real estate broker, the RTC concluded that she knew that the validity of
the sale was subject to a condition. The perfection of a contract of sale depended on RSLAIs approval of the
assumption of mortgage. Since RSLAI did not allow respondent to assume petitioners obligation, the RTC held
that the sale was never perfected.
In a decision dated August 27, 1999,7 the RTC dismissed the complaint for lack of cause of action and ordered
respondent to pay petitioner P100,000 moral damages, P20,000 attorneys fees and the cost of suit.
Aggrieved, respondent appealed to the Court of Appeals (CA), 8 asserting that the court a quo erred in
dismissing the complaint.
The CA found that the March 10, 2003 contract executed by the parties did not impose any condition on the
sale and held that the parties entered into a contract of sale. Consequently, because petitioner no longer
owned the properties when he sold them to Viloria, it declared the second sale void. Moreover, it found
petitioner liable for moral and exemplary damages for fraudulently depriving respondent of the properties.
In a decision dated July 22, 2005,9 the CA upheld the sale to respondent and nullified the sale to Viloria. It
likewise ordered respondent to reimburse petitioner P715,250 (or the amount he paid to RSLAI). Petitioner, on
the other hand, was ordered to deliver the certificates of titles to respondent and pay her P50,000 moral
damages andP15,000 exemplary damages.
Petitioner moved for reconsideration but it was denied in a resolution dated November 11, 2005. 10 Hence, this
petition,11 with the sole issue being whether the parties entered into a contract of sale or a contract to sell.
Petitioner insists that he entered into a contract to sell since the validity of the transaction was subject to a
suspensive condition, that is, the approval by RSLAI of respondents assumption of mortgage. Because RSLAI
did not allow respondent to assume his (petitioners) obligation, the condition never materialized. Consequently,
there was no sale.
Respondent, on the other hand, asserts that they entered into a contract of sale as petitioner already conveyed
full ownership of the subject properties upon the execution of the deed.
We modify the decision of the CA.
Contract of Sale or Contract to Sell?
The RTC and the CA had conflicting interpretations of the March 10, 1993 deed. The RTC ruled that it was a
contract to sell while the CA held that it was a contract of sale.
In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the
contract. Should the buyer default in the payment of the purchase price, the seller may either sue for the
collection thereof or have the contract judicially resolved and set aside. The non-payment of the price is
therefore a negative resolutory condition.12
On the other hand, a contract to sell is subject to a positive suspensive condition. The buyer does not acquire
ownership of the property until he fully pays the purchase price. For this reason, if the buyer defaults in the
payment thereof, the seller can only sue for damages.13
The deed executed by the parties (as previously quoted) stated that petitioner sold the properties to respondent
"in a manner absolute and irrevocable" for a sum of P1.1 million.14 With regard to the manner of payment, it

required respondent to pay P415,500 in cash to petitioner upon the execution of the deed, with the
balance15payable directly to RSLAI (on behalf of petitioner) within a reasonable time. 16 Nothing in said
instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase
price.17 On the contrary, the terms and conditions of the deed only affected the manner of payment, not the
immediate transfer of ownership (upon the execution of the notarized contract) from petitioner as seller to
respondent as buyer. Otherwise stated, the said terms and conditions pertained to the performance of the
contract, not the perfection thereof nor the transfer of ownership.
Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the
buyer.18In this regard, Article 1498 of the Civil Code19 provides that, as a rule, the execution of a notarized deed
of sale is equivalent to the delivery of a thing sold.
In this instance, petitioner executed a notarized deed of absolute sale in favor of respondent. Moreover, not
only did petitioner turn over the keys to the properties to respondent, he also authorized RSLAI to receive
payment from respondent and release his certificates of title to her. The totality of petitioners acts clearly
indicates that he had unqualifiedly delivered and transferred ownership of the properties to respondent. Clearly,
it was a contract of sale the parties entered into.
Furthermore, even assuming arguendo that the agreement of the parties was subject to the condition that
RSLAI had to approve the assumption of mortgage, the said condition was considered fulfilled as petitioner
prevented its fulfillment by paying his outstanding obligation and taking back the certificates of title without even
notifying respondent. In this connection, Article 1186 of the Civil Code provides:
Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

Void Sale Or Double Sale?

Petitioner sold the same properties to two buyers, first to respondent and then to Viloria on two separate
occasions.20 However, the second sale was not void for the sole reason that petitioner had previously sold the
same properties to respondent. On this account, the CA erred.
This case involves a double sale as the disputed properties were sold validly on two separate occasions by
the same seller to the two different buyers in good faith.

Article 1544 of the Civil Code provides:

Article 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. (emphasis supplied)

This provision clearly states that the rules on double or multiple sales apply only to purchasers in good faith.
Needless to say, it disqualifies any purchaser in bad faith.

A purchaser in good faith is one who buys the property of another without notice that some other person has a
right to, or an interest in, such property and pays a full and fair price for the same at the time of such purchase,
or before he has notice of some other persons claim or interest in the property.21 The law requires, on the part
of the buyer, lack of notice of a defect in the title of the seller and payment in full of the fair price at the time of
the sale or prior to having notice of any defect in the sellers title.
Was respondent a purchaser in good faith? Yes.
Respondent purchased the properties, knowing they were encumbered only by the mortgage to RSLAI.
According to her agreement with petitioner, respondent had the obligation to assume the balance of petitioners
outstanding obligation to RSLAI. Consequently, respondent informed RSLAI of the sale and of her assumption
of petitioners obligation. However, because petitioner surreptitiously paid his outstanding obligation and took
back her certificates of title, petitioner himself rendered respondents obligation to assume petitioners
indebtedness to RSLAI impossible to perform.

Article 1266 of the Civil Code provides:

Article 1266. The debtor in obligations to do shall be released when the prestation become legally or physically
impossible without the fault of the obligor.

Since respondents obligation to assume petitioners outstanding balance with RSLAI became impossible
without her fault, she was released from the said obligation. Moreover, because petitioner himself willfully
prevented the condition vis--vis the payment of the remainder of the purchase price, the said condition is
considered fulfilled pursuant to Article 1186 of the Civil Code. For purposes, therefore, of determining whether
respondent was a purchaser in good faith, she is deemed to have fully complied with the condition of the
payment of the remainder of the purchase price.

Respondent was not aware of any interest in or a claim on the properties other than the mortgage to RSLAI
which she undertook to assume. Moreover, Viloria bought the properties from petitioner after the latter sold
them to respondent. Respondent was therefore a purchaser in good faith. Hence, the rules on double sale are
applicable.
Article 1544 of the Civil Code provides that when neither buyer registered the sale of the properties with the
registrar of deeds, the one who took prior possession of the properties shall be the lawful owner thereof.
In this instance, petitioner delivered the properties to respondent when he executed the notarized deed 22 and
handed over to respondent the keys to the properties. For this reason, respondent took actual possession and
exercised control thereof by making repairs and improvements thereon. Clearly, the sale was perfected and
consummated on March 10, 1993. Thus, respondent became the lawful owner of the properties.

Nonetheless, while the condition as to the payment of the balance of the purchase price was deemed fulfilled,
respondents obligation to pay it subsisted. Otherwise, she would be unjustly enriched at the expense of
petitioner.
Therefore, respondent must pay petitioner P684,500, the amount stated in the deed. This is because the
provisions, terms and conditions of the contract constitute the law between the parties. Moreover, the deed
itself provided that the assumption of mortgage "was without any further cost whatsoever." Petitioner, on the
other hand, must deliver the certificates of title to respondent. We likewise affirm the award of damages.

WHEREFORE, the July 22, 2005 decision and November 11, 2005 resolution of the Court of Appeals in CAG.R. CV No. 59748 are hereby AFFIRMED with MODIFICATION insofar as respondent Benita T. Ong is
ordered to pay petitioner Raymundo de Leon P684,500 representing the balance of the purchase price as
provided in their March 10, 1993 agreement.
Costs against petitioner.
SO ORDERED.

De Leon vs. Benita T. Ong

GR No. 170405, Feb. 2, 2010
Absolute and Conditional Sales
Facts:
On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to Benita T.
Ong(respondent). The said properties were mortgaged to a financial institution; Real Savings & Loan
Association Inc. (RSLAI). The parties then executed a notarized deed of absolute sale withassumption of
mortgage. As indicated in the deed of mortgage, the parties stipulated that the petitioner (de leon) shall
execute a deed of assumption of mortgage in favor of Ong (respondent)after full payment of the
P415,000. They also agreed that the respondent (Ong) shall assume themortgage. The respondent then
subsequently gave petitioner P415,000 as partial payment. On theother hand, de leon handed the keys to
Ong and de leon wrote a letter to inform RSLAI that themortgage will be assumed by Ong. Thereafter, the
respondent took repairs and madeimprovements in the properties. Subsequently, respondent learned that
the same properties weresold to a certain Viloria after March 10, 1993 and changed the locks, rendering
the keys given toher useless. Respondent proceeded to RSLAI but she was informed that the mortgage
has beenfully paid and that the titles have been given to the said person. Respondent then filed a
complaintfor specific performance and declaration of nullity of the second sale and damages. The
petitioner contended that respondent does not have a cause of action against him because the sale
wassubject to a condition which requires the approval of RSLAI of the mortgage. Petitioner reiteratedthat

they only entered into a contract to sell. The RTC dismissed the case. On appeal, the CAupheld the sale to
respondent and nullified the sale to Viloria. Petitioner moved for reconsideration to the SC
.Issue: Whether the parties entered into a contract of sale or a contract to sell?
Held:
In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfectionof the
contract. The non-payment of the price is a negative resolutory condition. Contract to sellis subject to a
positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays
the purchase price.In the present case, the deed executed by the parties did not show that the owner
intends toreserve ownership of the properties. The terms and conditions affected only the manner of
payment and not the immediate transfer of ownership. It was clear that the owner intended a sale because
he unqualifiedly delivered and transferred ownership of the properties to the respondent

Agricultural and Home Extension Development Group vs. CA [G.R. No. 92310.
September 3, 1992.] First Division, Cruz (J): 3 concurring Facts: On 29 March 1972,
the spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a 19-hectare parcel
of land in Las Pias, Rizal, covered by TCT 287416. The owners duplicate copy of
the title was turned over to Gundran. However, he did not register the Deed of
Absolute Sale because he said he was advised in the Office of the Register of Deeds
of Pasig of the existence of notices of lis pendens on the title. On 20 November
1972, Gundran and Agricultural and Home Development Group (AHDG) entered into
a Joint Venture Agreement for the improvement and subdivision of the land. This
agreement was also not annotated on the title. On 30 August 1976, the spouses
Andres Diaz and Josefa Mia again entered into another contract of sale of the same
property with Librado Cabautan. On 3 September 1976, by virtue of an order of the
CFI Rizal, a new owners copy of the certificate of title was issued to the Diaz
spouses, who had alleged the loss of their copy. On that same date, the notices of
lis pendens annotated on TCT 287416 were canceled and the Deed of Sale in favor
of Cabautan was recorded. A new TCT S-33850/T-172 was thereupon issued in his
name in lieu of the canceled TCT 287416. On 14 March 1977, Gundran instituted an
action for reconveyance before the CFI Pasay City * against Librado Cabautan and
Josefa Mia seeking, among others, the cancellation of TCT 33850/T-172 and the
issuance of a new certificate of title in his name. On 31 August 1977, AHDG,
represented by Nicasio D. Sanchez, Sr. (later substituted by Milagros S. Bucu), filed
a complaint in intervention with substantially the same allegations and prayers as
that in Gundrans complaint. In a decision dated 12 January 1987, Gundrans Sales,
2003 ( 15 ) Haystacks (Berne Guerrero) complaint and petitioners complaint in
intervention were dismissed for lack of merit. So was Cabautans counterclaims, for
insufficiency of evidence. Upon appeal, this decision was affirmed by the Court of
Appeals, with the modification that Josefa Mia was ordered to pay Gundran the sum
of P90,000.00, with legal interest from 3 September 1976, plus the costs of suit. The

Supreme Court denied the petition and affirmed in toto the questioned decision;
with costs against AHDG. 1. Article 1544 Under Article 1544 of the Civil Code of the
Philippines, it is provided that 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. 2. Preferential right of first to register The first sale to
Gundran was not registered while the second sale to Cabautan was registered.
Preferential rights are accorded to Cabautan, who had registered the sale in his
favor, as against AHDGs coventurer whose right to the same property had not been
recorded. 3. Purchaser in good faith A purchaser in good faith is defined as one
who buys the property of another without notice that some other person has a right
to or interest in such property and pays a full and fair price for the same at the time
of such purchase or before he has notice of the claim or interest of some other
person in the property. In the present case, an examination of TCT 287416
discloses no annotation of any sale, lien, encumbrance or adverse claim in favor of
Gundran or AHDC. 4. Registered property under Torrens system; Person charge with
notice of burdens noted on the register of title When the property sold is registered
under the Torrens system, registration is the operative act to convey or affect the
land insofar as third persons are concerned. Thus, a person dealing with registered
land is only charged with notice of the burdens on the property which are noted on
the register or certificate of title. 5. Notices of lis pendes not a lien or encumbrance,
merely notice of litigation of property subject to the result of the suit Notices of lis
pendens in favor of other persons were earlier inscribed on the title did not have the
effect of establishing a lien or encumbrance on the property affected. Their only
purpose was to give notice to third persons and to the whole world that any interest
they might acquire in the property pending litigation would be subject to the result
of the suit. 6. Cabautan a purchaser in good faith and for value Cabautan took the
risk of acquiring the property even in the light of notice of lis pendens inscribed in
the title. Significantly, three days after the execution of the deed of sale in his favor,
the notices of lis pendens were canceled by virtue of the orders of the CFI Rizal,
Branch 23, dated 1 and 4 April 1974. Cabautan therefore acquired the land free of
any liens or encumbrances and so could claim to be a purchaser in good faith and
for value. Sales, 2003 ( 16 ) Haystacks (Berne Guerrero) 7. No evidence of alleged
possession by AHDG AHDG insists that it was already in possession of the disputed
property when Cabautan purchased it and that he could not have not known of that
possession. Such knowledge should belie his claim that he was an innocent
purchaser for value. However, the courts below found no evidence of the alleged
possession, which the Supreme Court must also reject in deference to this factual
finding. 8. Casis vs. CA not applicable; Different issues The issue in the present case
is whether Cabautan is an innocent purchaser for value and so entitled to the

priority granted under Article 1544 of the Civil Code. The Casis case, on the other
hand, involved the issues of whether or not: 1) certiorari was the proper remedy of
the petitioner: 2) the previous petition for certiorari which originated from the
quieting of title case was similar to and, hence, a bar to the petition for certiorari
arising from the forcible entry case; and 3) the court a quo committed grave abuse
of discretion amounting to lack or excess of jurisdiction in issuing the order which
dissolved the restraining order issued in connection with the ejectment case. The
Court was not called upon in that case to determine who as between the two
purchasers of the subject property should be preferred. 9. Excerpt used by AHDG a
narration of background facts and not adopted as a doctrine by the Supreme Court
AHDG invokes the ruling of the lower court in that case to the effect that the
registration of the sale in favor of the second purchaser and the issuance of a new
certificate of title in his favor did not in any manner vest in him any right of
possession and ownership over the subject property because the seller, by reason
of their prior sale, had already lost whatever right or interest she might have had in
the property at the time the second sale was made. The excerpt was included in the
ponencia only as part of the narration of the background facts and was not thereby
adopted as a doctrine of the Court. It was considered only for the purpose of
ascertaining if the court below had determined the issue of the possession of the
subject property pending resolution of the question of ownership. Obviously, the
Court could not have adopted that questionable ruling as it would clearly militate
against the provision of Article 1544. 10. No one can sell what he does not own;
Article 1544 either an exception to the general rule or a reiteration of the general
rule insofar as innocent third parties are concerned Justice Edgardo L. Paras
observed that No one can sell what he does not own, but this is merely the general
rule. Is Art. 1544 then an exception to the general rule? In a sense, yes, by reason
of public convenience (See Aitken v. Lao, 36 Phil. 510); in still another sense, it
really reiterates the general rule in that insofar as innocent third persons are
concerned, the registered owner (in the case of real property) is still the owner, with
power of disposition. 11. Language of Article 1544 clear; Cabautan deemed owner
The language of Article 1544 is clear and unequivocal. In light of its mandate and of
the facts established in the present case, Ownership must be recognized in the
private respondent, who bought the property in good faith and, as an innocent
purchaser for value, duly and promptly registered the sale in his favor. [6]

SPOUSES JOSE USI and AMELITA USI, Respondents.

Facts:
The case involves a lot originally owned by the Mendozas divided into seven parts, one
part of which was sold to the petitioner. On the other hand, there was also a subject
agreement between the Mendozas and Spouses Usi, Respondent wherein the subject lot

was divided into 13 parts, some parts went to the Respondents. The conflict arose as to
whom originally belongs the subject land.

In lieu, Spouses Usi instituted complaints against Viray, among others is a Petition for
accion publiciana/reivindicatoria before the RTC. On the other hand, petitioners moved
for the dismissal of the said petition, on the ground of litis pendencia and res judicata.
The RTC dismissed the petition for failure to establish preponderant evidence to support
their claim of title, possession and ownership over the subject lots. Hence, they
appealed before the CA. The CA reversed RTCs decision basing its ruling on the 2
notarized subject agreements. Viray appealed but was denied, hence this.

Issue:
Whether or not the Court of Appeals erred in ruling that Respondents are the legal and
valid owners of the subject lot?

Ruling:
The court held that the petition is barred by res judicata defined as one that operates
as bar by prior judgement when there is a final judgement on merits rendered by a
court with jurisdiction and the first and second action has identical parties, subject
matter or cause of action.

The better right to possess and right of ownership cannot be relitigated because of res
judicata

NAVERA V. CA (April 26, 1990)

FACTS:
Leocadio Navera owns a parcel of land in Albay which was inherited by his 5 children. His 3 children
already have their share of the inheritance from the other properties of Leocadio. The subject land was
now owned by his 2 daughters. An OCT was issued in the name of Elena Navera et.al (et.al refers to his
sister Eduarda Navera)

When Elena died, his share of the land was inherited by her heirs Arsenio and Felix Narez. The other
portion was owned by Eduarda.
Eduarda sold her portion to her nephew Arsenio and then one year after to Mariano Navera. Both sales
were made in a public instrument but both sales were also not registered in the Registry of Property.
ISSUE:
WON the second sale of the property is valid.
HELD:
Since the records show that both sales were not recorded in the Registry of Property, the law clearly vests
the ownership upon the person who in good faith was first in possession of the disputed lot.
The possession viewed in the law includes not only the material but also the symbolic possession, which
is acquired by the execution of a public instrument. This means that after the sale of a realty by means of
a public instrument, the vendor, who resells it to another, does not transmit anything to the second
vendee, and if the latter, by virtue of this second sale, takes material possession of the thing, he does it as
mere detainer, and it would be unjust to protect this detention against the rights of the thing lawfully
acquired by the first vendee.
In the case at bar, the prior sale of the land to respondent Arsenio Nares by means of a public instrument
is clearly tantamount to a delivery of the land resulting in the material and symbolic possession thereof by
the latter.

Navera vs. CA [G.R. No. L-56838. April 26, 1990.] First Division, Medialdea (J): 4
concur Facts: Leocadio Navera has 5 children, namely: Elena, Mariano, Basilio,
Eduarda and Felix, all surnamed Navera. Mariano Navera is the father of petitioner
Genaro Navera (married to Emma Amador). Elena Navera, on the other hand has
three children by Antonio Nares. Two of them are respondent Arsenio Nares and
Felix Nares. The other child, Dionisia is already deceased and has left children.
Petitioner and respondents are Sales, 2003 ( 171 ) Haystacks (Berne Guerrero)
therefore, first cousins. Way back in 1916, Leocadio Navera donated to Fausto
Mustar in a private instrument a certain property in consideration of the marriage of
the formers son, Mariano Navera, to the daughter of Fausto Mustar by the name of
Restituta Mustar. On 19 July 1927, OCT RO-154(NA) was issued in the name of
Elena Navera, et al., covering the land in dispute, namely Lot 1460, situated in the
Municipality of Camalig, Albay. Sometime in 1924, Elena Navera died. On 14 May
1947, Eduarda Navera, by means of a public instrument, sold to her nephew,
Arsenio Nares, all of her share in Lot 1460, which is titled in the name of Elena
Navera, et al.. Eduarda Naveras share in the lot is 1/2 of the total area of Lot 1460
(The other half allegedly owned by Lina Navera, the deceased mother of the buyer,
who was the administrator of said half. Arsenio Nares thus take care of the whole

property). On 26 June 1948, Eduarda Navera sold for the second time a portion of
Lot 1460 to Mariano Navera (50 meters long and 59 meters wide). On 30 January
1953, Arsenio Nares sold to Perpetua Dacillo a portion of Lot 4167 containing an
area of 5,726 sq. ms. Perpetua Dacillo thereafter donated the said property to
Francisco Dacillo. On 13 August 1955, Mariano Navera, sold to his brother-in-law,
Serapio Mustar, the lot which he bought from Eduarda Navera. On 11 February
1956, a deed of sale was supplemented by the following stipulation (b) as to the
property under paragraph (2) thereof, the same pertains to Cadastral Lot No. 1460,
containing an area of 1-99-69 square meters, more or less, (in the said document
there was clerical error of the area, as previously stated in the total area of 00-0916, which is hereto corrected as 1-90-71 square meters, as the total area sold). On
7 April 1959, Serapio Mustar later sold to Genaro Navera Lot 1460 which he bought
from the latters father, Mariano Navera, containing an area of 19,969 sq. ms. more
or less. On 3 September 1971, Francisco Dacillo sold to Genaro Navera the land
which the former received by way of donation from Perpetua Dacillo. All of the
foregoing transfers of Lot 1460 were not annotated and inscribed in the OCT. [Nares
complaint] In their complaint dated 14 March 1971 filed with the then CFI Albay
(now RTC; Civil Case 4359), Arsenio and Felix Nares, alleged inter alia: that they are
the absolute owners of the whole of Lot 1460 covered by OCT No. RO-154(NA), and
are entitled to the possession of the same; that Lot 1460 is registered in the name
of Elena Navera, et al., the et al. being Eduarda Navera; that they acquired the
property by inheritance from their deceased mother Elena Navera; that a portion
thereof which had been adjudicated to Eduarda Navera was later sold to Arsenio
Nares; that sometime in August, 1955, Mariano Navera, without any legal right
whatsoever and under the pretense of ownership sold the said property to his
brother-in-law Serapio Mustar, who in turn sold the same to Genaro Navera, son of
Mariano. They also claimed that all the foregoing sales were sham and manipulated
transactions and that Mariano Navera knew fully well that he had no right to sell the
property. They admitted however, that they sold a portion of the property containing
6,726 square meters to Perpetua Dacillo, so that the remaining portion still belongs
to them. They further contended that Genaro Navera entered the land after the sale
to him by Mustar and took possession of the same and acquired the produce thereof
since 1957 up to the present time; and that they have exerted earnest efforts
toward a compromise but Navera instead challenged them to go to court. [Naveras
counterclaim] Genaro Navera and Emma Amador filed their answer with
counterclaim, denying Nares claims, and alleging inter alia: that Leocadio Navera is
the father of five children, namely, Elena, Mariano, Eduarda, Basilio and Felix; that
after deducting 12,415 square meters which Leocadio Navera donated to Fausto
Mustar in 1916, the remaining area of Lot 1460 was divided in equal shares among
Elena, Mariano and Eduarda, to the extent of 4,860 square meters each; that Basilio
and Felix were given their shares in other parcels of land. They also submitted that
the et al. appearing in the title of the property refers to Fausto Mustar (12,415 sq.
ms.), Eduarda Navera (4,860 sq. ms.), Mariano Navera (4,860 sq. ms.) and Elena
Navera (4,860 sq. ms.); that Eduarda Navera sold 2,695 sq. ms. of her share to

Mariano Navera while the remaining 2,166 sq sq. ms. of her share was sold to
Arsenio Nares; that Arsenios property totalled 7,026 sq. ms. which he later sold to
Perpetua Dacillo. They further contended that they are presently in possession of
Lot 1460 and their possession tacked to that of their predecessor-in-interest as early
as 1916; that the complaint states no cause of action and that if Nares had any, the
same has long prescribed. [Courts ruling] On 28 February 1978, the trial court
rendered a decision declaring Nares owners of the lot described in the OCT RO15480, except 5,726 sq. ms. which rightfully belongs to Genaro Navera. Sales, 2003
( 172 ) Haystacks (Berne Guerrero) Not satisfied with the decision of the trial court,
Navera appealed to the Court of Appeals (CA-GR 63926-R). On 16 December 1980,
the appellate court rendered judgment affirming in toto the decision of the trial
court. Hence the petition for review on certiorari. The Supreme Court denied the
petition but modified the decision of the Court of Appeals dated 16 December 1980
to the effect that as against Genaro Navera and Emma Amador, Arsenio Nares and
Felix Nares are declared the rightful owners of the disputed Lot 1460, except with
respect to 5,726 square meters thereof which belongs to Genaro Navera, without
prejudice however, to whatever rights and interests that the other compulsory heirs
of Elena Navera may have in the one-half portion of Lot 1460. The respective rights
of respondents to Lot 1460 as between themselves is a matter outside of the
controversy and is therefore, beyond the jurisdiction of the Court to pass upon. 1.
Et. al refer only to Eduarda; Factual finding of courts conclusive upon the Supreme
Court The whole of Lot 1460 is titled in the name of Elena Navera, et al., the
phrase et al. referring only to Eduarda, sister of Elena since the other brothers of
Elena and Eduarda namely, Mariano, Basilio and Felix had received their shares
from the other properties of their father Leocadio Navera. These factual findings are
conclusive upon the Supreme Court. Thus, when Elena Navera died sometime in
1924, her compulsory heirs including Arsenio Nares and Felix Nares acquired Elenas
shares in Lot 1460 by inheritance, which is 1/2of Lot 1460. As to the other half of Lot
1460 owned by Eduarda Navera, the latter sold the same to two vendees, one in
favor of Arsenio Nares and the other in favor of Mariano Navera, Genaro Naveras
predecessor-ininterest. 2. Double Sale; Eduarda Navera had no existing right
anymore to convey portion of property in a subsequent sale to Mariano Navera On
this matter of double sale, all the transfers or conveyances are not inscribed in the
OCT RO- 15480(NA). It would not be amiss to state that the sale of Eduarda Navera
to Arsenio Nares, and the sale of Eduarda Navera to Mariano Navera, the property
referred to in both sales is the very same property covered by reconstituted title.
The sale of Eduarda Navera to Arsenio Nares covered all her portion to the property,
thus, she could not possibly sell on 26 June 1948, another portion of the same
property to Mariano Navera. Thus, the portion referred to in the sale to Mariano
Navera by Eduarda Navera may not be validly transferred by Mariano Navera to
Serapio Mustar. It likewise follow that Serapio Mustar may not effectively convey the
same to Genaro Navera. It is irremissible to state that the alleged conveyance made
by Serapio Mustar in favor of Genaro Navera have no legal effect whatsoever, for
the simple reason that Serapio Mustar could not properly convey the portion

referred to in the sale of 26 June 1948, by Eduarda Navera in favor of Mariano

Navera. In the first place, Eduarda Navera has no existing right to convey another
portion of the property because she had already sold all her portion to Arsenio
Nares. Thus at the time Eduarda Navera conveyed a portion of the property which
she already conveyed to appellee Arsenio Nares, she has no right on the property
and the power to dispose it. Mariano Navera therefore never acquired that portion
subject of the sale on 26 June 948. Having acquired that portion of the property
subject of the sale on 26 June 1948 from Mariano Navera, Serapio Mustar has
likewise no existing right and power to dispose of that portion of the property to
Genaro Navera. 3. Navera not possessors in good faith; Knowledge of flaw of title
Article 526 of the New Civil Code provides that a possessor in good faith is one who
is not aware that there exists in his title or mode of acquisition any flaw which
invalidates it and a possessor in bad faith is one who possesses in any case contrary
to the foregoing. Every possessor in good faith becomes a possessor in bad faith
from the moment he becomes aware that what he believed to be true is not so. His
possession is legally interrupted when he is summoned to trial according to Article
1123 of the New Civil Code (Tacas v. Tabon, 53 Phil. 356). 4. Conclusions and
finding of facts by trial court given great weight Sales, 2003 ( 173 ) Haystacks
(Berne Guerrero) The conclusions and findings of facts by the trial court are entitled
to great weight and will not be disturbed on appeal unless for strong and cogent
reasons because the trial court is in a better position to examine real evidence as
well as to observe the demeanor of witnesses while testifying on the ease. (Macua
vs. Intermediate Appellate Court, No. L-70810, October 26, 1987, 155 SCRA 29). 5.
Article 1544 of the Civil Code Article 1544 of the Civil Code provides that 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. 6.
Sales not registered; Ownership vested upon first possessor in good faith The first
sale of Eduarda Naveras share in the said lot to Arsenio Nares was made in a public
instrument on 14 May 1947. The second sale of the same property was executed
also in a public instrument in favor of Mariano Navera, who is the predecessor in
interest of Genaro Navera, on 26 June 1948, or more than a year after the first sale.
Since the records show that both sales were not recorded in the Registry of
Property, the law clearly vests the ownership upon the person who in good faith was
first in possession of the disputed lot. 7. Possession of vendor includes not only the
material but also symbolic possession; Vendor does not transmit anything to second
vendee The possession mentioned in Article 1544 for determining who has better
right when the same piece of land has been sold several times by the same vendor
includes not only the material but also the symbolic possession, which is acquired
by the execution of a public instrument. This means that after the sale of a realty by

means of a public instrument, the vendor, who resells it to another, does not
transmit anything to the second vendee, and if the latter, by virtue of this second
sale, takes material possession of the thing, he does it as mere detainer, and it
would be unjust to protect this detention against the rights of the thing lawfully
acquired by the first vendee (Quimson vs. Rosete, 87 Phil. 159; Sanchez vs. Ramos,
40 Phil. 614; Florendo vs. Foz, 20 Phil. 388). 8. Constructive delivery in the
execution of public instrument The prior sale of the land to Arsenio Nares by means
of a public instrument is clearly tantamount to a delivery of the land resulting in the
material and symbolic possession thereof by the latter. Further, actual evidence
points to the prior actual possession by Nares before he was evicted from the land
by Navera and their predecessors in 1957 when the latter entered the disputed
property. No other evidence exists on record to show the contrary. 9. Prior est in
tempore, potior est in jure Prior est in tempore, potior est in jure (he who is first in
time is preferred in right). The priority of possession stands good in favor of Nares.
Ownership should therefore be recognized in favor of the first vendee, Arsenio
Nares. 10. Prescription must be expressly relied upon in the pleadings; One
asserting ownership through adverse possession must prove essential elements of
acquisitive prescription Navera alleged that they have been in possession of the lot
for more than 46 years. Prescription, as a defense, must be expressly relied upon in
the pleadings. It cannot be availed of, unless it is specially pleaded in the answer;
and it must be proved or established with the same degree of certainty as any
essential allegation in the civil action (Hodges vs. Salas, 63 Phil. 567; Corporacion
de PP. Augustinus Recolectos vs. Crisostomo, 32 Phil. 427). In the present case,
Navera did not claim acquisitive prescription in their answer in Sales, 2003 ( 174 )
Haystacks (Berne Guerrero) the lower court, and even if they did, it cannot be given
judicial sanction on mere allegations. The law requires one who asserts ownership
by adverse possession to prove the presence of the essential elements of
acquisitive prescription (Morales vs. CFI, et al., No. L-52278, May 29, 1980, 97 SCRA
872). 11. Nares evicted, thus Navera is in bad faith; 30-year requirement in adverse
possession not met (suit filed 1971, 14 years after dispossession) There is lack of
sufficient proof to establish clearly and positively Naveras claim of acquisitive
prescription. The Court is more inclined to believe Nares version that he was
evicted from the property by Navera sometime in 1957, thereby showing the latters
bad faith in acquiring the possession of the property until 1971 when the action
against Navera was filed. Thus, the ordinary acquisitive prescription of 10 years
cannot be considered in favor of Navera in the absence of good faith. Neither is
Navera entitled to extraordinary acquisitive prescription, in the absence of sufficient
proof of compliance with the thirty-year requirement of possession in case of bad
faith. 12. Navera has knowledge of right and interest of cousins in disputed land The
law clearly states that possession has to be in the concept of an owner, public,
peaceful and uninterrupted (Article 1118, Civil Code). A reading of the demand
letter from Nares dated 27 May 1970, submitted in evidence by Navera, shows that
the dispute over Lot 1460 had been going on for a number of years among them
and their families. During the time when Navera bought the land in 1959 and the

following years thereafter when the latter possessed the property, they have known
or should have known of the rights and interests of their cousins over the disputed
land. 13. Naveras predecessor-in-interest did not declare themselves owner of land
for taxation purposes Moreover, the tax declarations for the years 1951 and 1965
showed that Arsenio and Felix Nares were the declared owners. Naveras
predecessors in interest, namely, Mariano Navera and the subsequent purchasers of
the lot, had not bothered to declare the land in their own names for purposes of
taxation during the time that they were allegedly in possession of the land. It was
only in the year 1966 when Genaro Navera started to declare himself owner of the
land for taxation purposes. 14. Nares not bound by alleged donation propter nuptias
in favor of Mustar; No evidence that donated property was transferred to Mariano
Navera Arsenio and Felix Nares are not bound by their alleged knowledge of the
previous donation propter nuptias by their ancestor, Leocadio Navera in favor of
Fausto Mustar. The donation propter nuptias made by Leocadio Navera sometime in
October 1916, should have been at least recorded in the registry of property or
inscribed in the Original Certificate of Title or the donee shall have titled the
property in his name. The alleged donee Fausto Mustar is not a party to the case nor
had he transferred the said donated property to the spouses Mariano Navera in a
public instrument or conveyance. Nowhere in the evidence on record would show
that the said donated property was ever transferred to Mariano Navera, father of
Genaro Navera. 15. Knowledge of alleged donation immaterial; OCT clear without
mention of any previous donation of any portion of the land The knowledge of Nares
concerning the alleged previous donation is immaterial. The facts are clear that the
original certificate of title itself covers the whole of 26,995 square meters of the
disputed Lot 1460 in the name of Elena Navera, et al., without any mention of any
previous donation of a portion of the said lot to the alleged donee.