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Republic of the Philippines Regional Trial Court Ninth Judicial Region Branch 001

STA. BARBARA DEVELOPMENT CORPORATION (SBDC) Plaintiff CIVIL CASE: 13301 -versusMANUEL, PEDRO AND JOSE, ALL SURNAMED DELA CRUZ AND BAGONG PAG-ASA PROPERTIES INCORPORATED (BPPI) Defendants x---------------------------x JOINT OPPOSITION OF MANUEL, PEDRO AND JOSE DE LA CRUZ AND OPPOSITION OF BAGONG PAG-ASA PROPERTIES INCORPORATED (BPPI) The herein Respondents and Respondent-Corporation, through the undersigned counsel, respectfully submits this Memorandum in Opposition to the Consolidated Motion for Reconsideration filed by the plaintiffs, Sta. Barbara Development Corporation (STBC). As set forth below, the Respondents opposes the motion that it seeks the (a) dismissal of the motion and (b) uphold the judgment rendered in favor of the Defendants. ARGUMENTS 1. The Respondents oppose the Motion for Reconsideration on the following grounds: I. THE SALE, AS TO THE WHOLE LOT 1, BETWEEN HILARIO AND SBDC IS VOID II. EVEN THOUGH THE SALE IS VALID, THE SALE WOULD NOT HAVE BEEN CONSUMMATED AS THERE WAS NO DELIVERY. III. SBDC DID NOT ACQUIRE GOOD TITLE TO THE PROPERTY AS SBDC WAS IN BAD FAITH AND DID NOT REGISTER THE SALE. FOR RESCISSION WITH DAMAGES

IV.

BPPI

ACQUIRED

OWNERSHIP

OVER

THE

UNDIVIDED

INTEREST AS IT WAS BUYER IN GOOD FAITH AND IT REGISTERED THE SALE AND OBTAINED TCT IN ITS NAME.

DISCUSSION THE SALE, AS TO THE WHOLE LOT 1, BETWEEN HILARIO AND SBDC IS VOID 2. At the time of the purported sale between Hilario and SBDC, Hilario has not yet exercised his option to purchase the undivided shares from his siblings. Thus, he was still only a co-owner of undivided shares, and not the owner of the entire Lot 1, at the time of the purported sale to SBDC. 3. Also, there was no evidence that the Respondents were aware or at least have consented to the contracts entered into by Hilario with the SBDC. NO ONE GIVES WHAT HE DOES NOT HAVE 4. Article 1505 of the New Civil Code provides: a. Article 1505. Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell. (Italics Supplied) 5. Article 1505 pertains to the principle of nemo dat non quad habet1. Although it does not say that the sale by a non-owner renders the contract void, it describes the consequences when delivery under a sale is effected when the seller is not the owner of the thing delivered. Thus, one can sell only what one owns or is

No one gives what he does not have

authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.2 6. Although Art. 1505 expressly pertains to goods, the rule that the buyer only acquires the seller's title also applies, and even more strictly, to real properties. The difference is that, while Article 1505 allows in certain instances a buyer in good faith and for value to acquire better title to the thing than the seller, such rule does not apply to real property. Consequently, when the seller of a parcel of land has only voidable or void title to the property, then the buyer, even though in good faith and for value, and in spite of actual or constructive delivery, takes only the same title to the land which his seller had.3 THE SALE IS VALID ONLY TO THE SHARE OWNED BY HILARIO 7. Following Article 491 4 of the New Civil Code, it is necessary for consent to present before any alterations in the thing owned in common may be made. a. Although the Article pertains to alteration, disposal of the property, as to sale, is deemed to be in the purview of the said Article. 8. This makes the act of Hilario of selling Lot 1 to SBDC one that is void. However, the rule is, when prior to partition a co-owner sells the entire property owned in common, the sale of the property itself is void but valid as to his spiritual share.5 9. Therefore, applying jurisprudential basis and the rule stated in Article 1505, SBDC acquires the sellers title. In this case, this sellers title pertains to the undivided share of Hilario over Lot 1. Thus, at most, SBDC only became a coowner to undivided interests on Lot 1.

2 3

Gonzales vs. Heirs of Cruz, 314 SCRA 585, 597, 1999 Villanueva, Law on Sales, 2009 edition, pg. 337 4 New Civil Code Article 491. None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits for all would result therefrom. However, if the withholding of the consent by one or more of the co-owners is clearly prejudicial to the common interest, the courts may afford adequate relief. (397a) 5 Fernandez vs. Fernandez, 363 SCRA 811, 2001;

10. However, further inference to the intention of SBDC, the sale of Hilarios shares cannot even be considered as valid. 11. The general rule on the effect of the sale of the entire property owned in common by one of the co-owners to be valid as to the seller's undivided share does not apply to a situation when the subject matter is indivisible in nature or by intent. In such cases, the sale is entirely void, even as to the seller's undivided share.6 12. It is clear that SBDC intends that the property be made into a commercial complex. In fact, a two-storey building has already been constructed in the said area. SBDC has also entered into various contracts to purchase the lots adjoining Lot 1 to house facilities to support the operations of the commercial complex. These circumstances suggest that SBDC would never have entered into the purported sale of Lot 1 with Hilario had it known that it can purchase only of the property. Such decrease of of the area can hardly be said to accommodate the commercial complex. EVEN THOUGH THE SALE IS VALID, THE SALE WOULD NOT HAVE BEEN CONSUMMATED AS THERE WAS NO DELIVERY. 13. Assuming that the sale done by Hilario was valid, SBDC still did not acquire ownership as there was no delivery. 14. To effect delivery, Hilario and SBDC entered into a contract of sale, a public document. The execution of the public document is tantamount to a formal delivery or a constructive delivery. 15. Article 1497 of the New Civil Code provides: a. Article 1497. The thing shall be understood as delivered, when it is placed in the control and possession of the vendee. (Italics Supplied) 16. Ocejo, Perez & Co. vs. International Banking Corporation7 provides that:

6 7

Mindanao Inc. vs. Yap, 13 SCRA 190, 1965 37 Phil 631, 1918

a. Delivery produces its natural effects in law, the principal and most important of which being the conveyance of ownership (Italics Supplied) 17. Equatorial Realty Development Inc., vs. Mayfair Theater, Inc. further provides that: a. Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him in any of the ways specified in Articles 1497 to 1501 of the Civil Code, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. This right of ownership is transferred, not by contract alone, but by tradition or delivery. Non nudis pactis sed traditione dominia rerum transferantur. And there is said to be delivery if and when the thing sold is placed in the control and possession of the vendee. (Italics Supplied) THE EXECUTION OF THE CONTRACT OF SALE CREATES A DISPUTABLE PRESUMPTION OF DELIVERY 18. Constructive delivery only creates a prima facie evidence or disputable presumption of delivery. The presumption becomes conclusive when the vendee obtains control of the property sold, and such control should last for a reasonable period of time. 19. On the issue of control of the property, Addison vs. Felix comprehensive explanation to wit: a. It is not enough to confer upon the vendee the right of possession. The thing must be placed in his control. When there is no impediment whatsoever to prevent the thing sold from passing into the tenancy of
8

provides a

38 Phil 404, 1918

the purchaser by the sole will of the vendor, symbolic delivery through the execution of the public instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself.., because such tenancy and enjoyment are opposed by the interposition of another will, then fiction yields to reality the delivery has not been effected. 20. The requisite of control for a reasonable time is explained through Pasagui vs, Villablanca9 which provides: a. In order that the execution of a public instrument will produce the effect of tradition, not only must the seller have actual control and possession of the object of the sale at the execution of the instrument, but that such control must subsist for a reasonable length of time. 21. Thus, SBDC never failed to obtain control over Lot 1. In fact, less than a month after the purported sale between Hilario and SBDC, the Respondents sold the property to another party, BPPI. Thus, even assuming that control was transferred upon the execution of the deed of sale, such control nevertheless did not last for a reasonable time. 22. Also, it cannot be concluded that the construction of a commercial complex in Lot No. 1 is an evidence of control. The construction was made pursuant to the Lease Contract with Option to Purchase executed between SBDC and Hilario, not the purported contract of sale. SBDC DID NOT ACQUIRE GOOD TITLE TO THE PROPERTY AS SBDC WAS IN BAD FAITH AND DID NOT REGISTER THE SALE. SBDC IS NOT A BUYER IN GOOD FAITH

68 SCRA 18, 1975

23. Under the Torren's system, a buyer of registered land is protected as he can rely on what is shown in the face of the certificate of title and is not required to go beyond the title to determine validity of ownership of the land. This protection, however, is extended only to buyers in good faith. A buyer in good faith is one who takes registered property without notice of any other claims or interests of the property, and who paid a reasonable value thereof 24. While one who buys from the registered owner does not need to look behind the certificate of title, one who buys from one who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the land.10 25. SBDC bought Lot 1 from Hilario, who is not the registered owner thereof. Thus, SBDC should have examined not only the certificate of title but all factual circumstances necessary to check Hilario's title of authority. However, SBDC did not examine all the necessary factual circumstances. Moreover, SBDC did not even inspect the certificate of title at all. 26. Had SBDC inspect the certificate of title, it would have so easily seen that the property was co-owned by Hilario and his 3 siblings. Also, had SBDC at least inquired as to the whereabouts of the certificate of title upon the execution of the purported sale, it would have known that it was not in the possession of Hilario, but with his sibling Manuel. Such possession of the certificate of title by someone other than the seller Hilario would have forewarned SBDC of possible defects in the title of Hilario. 27. Further, Leon Villa, the President of SBDC, is the first cousin of Hilario's wife, Wilma. The parties had close relationships. In fact, the spouses allowed SBDC the free use of the lot subject in Civil Case No. 13302 due to this close relationship.
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R.R. Paredes vs. Caliling, 517 SCRA 369, 2007

This circumstance suggests that SBDC, through its President, is familiar to the members of Hilario's family, among this is the fact that Hilario has 3 other siblings. It cannot be said that SBDC was totally unaware that these other siblings co-own Lot 1, especially as this is a large tract of land. SBDC DID NOT REGISTER THE SALE 28. Section 51 of Presidential Decree 1529 provides: a. Section 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (Italics Supplied) 29. SBDC failed to register the purported contract of sale with Hilario. Thus, it cannot enforce its claim against subsequent purchasers in good faith and for value, such as BPPI. BPPI ACQUIRED OWNERSHIP OVER THE UNDIVIDED INTEREST AS IT WAS BUYER IN GOOD FAITH AND IT REGISTERED THE SALE AND OBTAINED TCT IN ITS NAME.

30. A buyer in good faith is one who takes registered property without notice of any other claims or interests of the property, and who paid a reasonable value therefor. 31. The Lease Contract with Exclusive Option to Purchase executed between Hilario and his Respondents was not registered. Applying the concept of Section 51 of Presidential Decree 1529 there is constructive notice to third parties as soon as there is registration. Thus, the said Lease Contract is binding only upon the siblings. 32. Moreover, the fact that thre Respondents sold their undivided interest to BPPI during before the expiration of Hilario's 5-year option to purchase period does not prevent the title from being conveyed to an innocent purchaser in good faith and for value. The Lease Contract with Exclusive Option to Purchase binds only the siblings. BPPI HAD THE RIGHT TO RELY ONLY ON THE OWNERS DUPLICATE OF THE CERTIFICATE OF TITLE 33. The Respondents presented the owner's duplicate of the certificate of title to BPPI when they entered into the contract of sale. Relying on the certificate which showed that the Respondents owned undivided interest, BPPI agreed to purchase such interest. 34. In this case, the sellers are the registered owners of the subject matter of the sale. There were no annotations of any encumbrance on the certificate. Thus, there exists no circumstance which would have put BPPI on guard and requires it to go beyond the certificate to determine the title of the 3 siblings. BPPI had the right to rely on the face of the certificate of title. BPPI HAD REGISTERED THE SALE AND WAS ISSUED A TRANSFER CERTIFICATE OF TITLE FOR THE LOT

35. BPPI duly registered the sale of undivided interest in its favor and obtained a TCT in its name. 36. The second paragraph of Section 31 of Presidential Decree 1529 provides: a. Section 31. Decree of registration. The decree of registration shall bind the land and quiet title thereto, subject only to such exceptions or liens as may be provided by law. It shall be conclusive upon and against all persons, including the National Government and all branches thereof, whether mentioned by name in the application or notice, the same being included in the general description "To all whom it may concern". (Italics Supplied) 37. Thus, the registration of BPPI of the undivided interest of Lot 1 quiets title thereto.

PRAYER WHEREFORE, premises considered it is most respectfully prayed of this Regional Trial Court that the Consolidated Motion for Reconsideration filed by the
Sta. Barbara Development Corporation be DISMISSED and the petition for recission filed by Sta. Barbara Development Corporation be DENIED for being clearly unmeritorious. Respondents further pray for such other reliefs and remedies as justice and equity may demand under the circumstances. October 26, 2013, Zamboanga City, Philippines. BENSAUD O. DEGUSMAN Counsel for Respondents MS 301, Sauras Building, Ateneo de Zamboanga University La Purisima Street, Zamboanga City