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G.R.No.176841

RepublicofthePhilippines
SUPREMECOURT
Manila

FIRSTDIVISION

ANTHONYORDUA,DENNIS

G.R.No.176841
ORDUA,andANTONITA

ORDUA,
Present:
Petitioners,

CORONA,C.J.,Chairperson,

VELASCO,JR.,
versus
LEONARDODECASTRO,

DELCASTILLO,and

PEREZ,JJ.
EDUARDOJ.FUENTEBELLA,

MARCOSS.CID,BENJAMINF.
Promulgated:
CID,BERNARDG.BANTA,and

ARMANDOGABRIEL,JR.,
June29,2010
Respondents.
xx

DECISION

VELASCO,JR.,J.:

[1]
InthisPetitionforReview underRule45oftheRulesofCourt,AnthonyOrdua,
Dennis Ordua and Antonita Ordua assail and seek to set aside the Decision

[2]

of the

CourtofAppeals(CA)datedDecember4,2006inCAG.R.CVNo.79680,asreiterated
initsResolutionofMarch6,2007,whichaffirmedtheMay26,2003Decision

[3]

ofthe

RegionalTrialCourt(RTC),Branch3inBaguioCity,inCivilCaseNo.4984R,asuitfor
annulment of title and reconveyance commenced by herein petitioners against herein
respondents.

Central to the case is a residential lot with an area of 74 square meters located at
FairviewSubdivision,BaguioCity,originallyregisteredinthenameofArmandoGabriel,
Sr. (Gabriel Sr.) under Transfer Certificate of Title (TCT) No. 67181 of the Registry of
[4]

DeedsofBaguioCity.

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Asgatheredfromthepetition,withitsenclosures,andthecommentsthereonoffour
[5]
ofthefiverespondents, theCourtgathersthefollowingrelevantfacts:

Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to petitioner
AntonitaOrdua(Antonita),butnoformaldeedwasexecutedtodocumentthesale.The
contract price was apparently payable in installments as Antonita remitted from time to
timeandGabrielSr.acceptedpartialpayments.OneoftheOrduaswouldlatertestifythat
GabrielSr.agreedtoexecuteafinaldeedofsaleuponfullpaymentofthepurchaseprice.
[6]

As early as 1979, however, Antonita and her sons, Dennis and Anthony Ordua,
were already occupying the subject lot on the basis of some arrangement undisclosed in
therecordsandevenconstructedtheirhousethereon.Theyalsopaidrealpropertytaxes
forthehouseanddeclareditfortaxpurposes,asevidencedbyTaxDeclarationNo.(TD)
[7]
9604012111087 inwhichtheyplacetheassessedvalueofthestructureatPhP20,090.

AfterthedeathofGabrielSr.,hissonandnamesake,respondentGabrielJr.,secured
[8]
over the subject lot and continued accepting payments from the

TCT No. T71499

petitioners.OnDecember12,1996,GabrielJr.wroteAntonitaauthorizinghertofenceoff
[9]
thesaidlotandtoconstructaroadintheadjacentlot. OnDecember13,1996,Gabriel
Jr. acknowledged receipt of a PhP 40,000 payment from petitioners.

[10]

Through a

[11]
letter
datedMay1,1997,GabrielJr.acknowledgedthatpetitionerhadsofarmadean
aggregate payment of PhP 65,000, leaving an outstanding balance of PhP 60,000. A
receiptGabrielJr.issueddatedNovember24,1997reflectedaPhP10,000payment.

Despiteallthosepaymentsmadeforthesubjectlot,GabrielJr.wouldlatersellitto
Bernard Banta (Bernard) obviously without the knowledge of petitioners, as later
developmentswouldshow.

As narrated by the RTC, the lot conveyance from Gabriel Jr. to Bernard was
effected against the following backdrop: Badly in need of money, Gabriel Jr. borrowed
fromBernardtheamountofPhP50,000,payableintwoweeksatafixedinterestrate,with
the further condition that the subject lot would answer for the loan in case of default.
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[12]
GabrielJr.failedtopaytheloanandthisledtotheexecutionofaDeedofSale
dated
June30,1999andtheissuancelaterofTCTNo.T72782

[13]
forsubjectlotinthename

ofBernarduponcancellationofTCTNo.71499inthenameofGabriel,Jr.AstheRTC
decision indicated, the reluctant Bernard agreed to acquire the lot, since he had by then
readybuyersinrespondentsMarcosCidandBenjaminF.Cid(MarcosandBenjaminor
theCids).

Subsequently,BernardsoldtotheCidsthesubjectlotforPhP80,000.Armedwitha
Deed of Absolute Sale of a Registered Land

[14]

dated January 19, 2000, the Cids were

[15]
coveringthesubjectlot.

abletocancelTCTNo.T72782andsecureTCTNo.72783

Justlikeintheimmediatelyprecedingtransaction,thedeedofsalebetweenBernardand
the Cids had respondent Eduardo J. Fuentebella (Eduardo) as one of the instrumental
witnesses.

MarcosandBenjamin,inturn,cededthesubjectlottoEduardothroughaDeedof
AbsoluteSale

[16]
datedMay11,2000.Thus,theconsequentcancellationofTCTNo.T
[17]
oversubjectlotinthename

72782andissuanceonMay16,2000ofTCTNo.T3276
ofEduardo.

As successive buyers of the subject lot, Bernard, then Marcos and Benjamin, and
finally Eduardo, checked, so each claimed, the title of their respective predecessorsin
interestwiththeBaguioRegistryanddiscoveredsaidtitletobefreeandunencumberedat
thetimeeachpurchasedtheproperty.Furthermore,respondentEduardo,beforebuyingthe
property,wassaidtohaveinspectedthesameandfounditunoccupiedbytheOrduas.

[18]

Sometime in May 2000, or shortly after his purchase of the subject lot, Eduardo,
throughhislawyer,sentaletteraddressedtotheresidenceofGabrielJr.demandingthat
allpersonsresidingonorphysicallyoccupyingthesubjectlotvacatethepremisesorface
[19]
theprospectofbeingejected.

LearningofEduardosthreat,petitionerswenttotheresidenceofGabrielJr.atNo.
34DominicanHill,BaguioCity. There, they met Gabriel Jr.s estranged wife, Teresita,
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whoinformedthemaboutherhavingfiledanaffidavitcomplaintagainstherhusbandand
theCidsforfalsificationofpublicdocumentsonMarch30,2000.AccordingtoTeresita,
hersignatureontheJune30,1999GabrielJr.Bernarddeedofsalewasaforgery.Teresita
further informed the petitioners of her intent to honor the aforementioned 1996 verbal
agreementbetweenGabrielSr.andAntonitaandthepartialpaymentstheygaveherfather
inlawandherhusbandforthesubjectlot.

[20]
On July 3, 2001, petitioners, joined by Teresita, filed a Complaint
for
AnnulmentofTitle,ReconveyancewithDamagesagainsttherespondentsbeforetheRTC,
docketedasCivilCaseNo.4984R,specificallyprayingthatTCTNo.T3276datedMay
16,2000inthenameofEduardobeannulled.Corollarytothisprayer,petitionerspleaded
thatGabrielJr.stitletothelotbereinstatedandthatpetitionersbedeclaredasentitledto
acquire ownership of the same upon payment of the remaining balance of the purchase
pricethereforagreeduponbyGabrielSr.andAntonita.

While impleaded and served with summons, Gabriel Jr. opted not to submit an
answer.

RulingoftheRTC

ByDecisiondatedMay26,2003,theRTCruledfortherespondents,asdefendants
a quo, and against the petitioners, as plaintiffs therein, the dispositive portion of which
reads:

WHEREFORE,theinstantcomplaintisherebyDISMISSEDforlackofmerit.The
four(4)plaintiffsareherebyorderedbythisCourttopayeachdefendant(exceptArmando
Gabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who did not testify on these
damages), Moral Damages of Twenty Thousand (P20,000.00) Pesos, so that each
defendant shall receive Moral Damages of Eighty Thousand (P80,000.00) Pesos each.
Plaintiffsshallalsopayalldefendants(exceptArmandoGabriel,Jr.,BenjaminF.Cid,and
EduardoJ.Fuentebellawhodidnottestifyonthesedamages),ExemplaryDamagesofTen
Thousand (P10,000.00) Pesos each so that each defendant shall receive Forty Thousand
(P40,000.00) Pesos as Exemplary Damages. Also, plaintiffs are ordered to pay each
defendant(exceptArmandoGabriel,Jr.,BenjaminF.Cid,andEduardoJ.Fuentebellawho
didnottestifyonthesedamages),FiftyThousand(P50,000.00)PesosasAttorneysFees,
jointlyandsolidarily.

[21]
Costofsuitagainsttheplaintiffs.

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Onthemain,theRTCpredicateditsdismissalactiononthebasisofthefollowing
groundsand/orpremises:

1. Eduardo was a purchaser in good faith and, hence, may avail himself of the
[22]
provisionofArticle1544
oftheCivilCode,whichprovidesthatincaseofdoublesale,
the party in good faith who is able to register the property has better right over the
property

[23]
[24]
2. Under Arts. 1356
and 1358
of the Code, conveyance of real property
mustbeintheproperform,elseitisunenforceable

3.Theverbalsalehadnoadequateconsiderationand

4. Petitioners right of action to assail Eduardos title prescribes in one year from
dateoftheissuanceofsuchtitleandtheoneyearperiodhasalreadylapsed.

Fromtheabovedecision,onlypetitionersappealedtotheCA,theirappealdocketed
asCAG.R.CVNo.79680.

TheCARuling

OnDecember4,2006,theappellatecourtrenderedtheassailedDecisionaffirming
theRTCdecision.Thefalloreads:
WHEREFORE,premisesconsidered,theinstantappealisherebyDISMISSEDand
the26May2003DecisionoftheRegionalTrialCourt,Branch3ofBaguioCityinCivil
CaseNo.4989RisherebyAFFIRMED.

[25]

SOORDERED.

Hence, the instant petition on the submission that the appellate court committed
reversibleerroroflaw:

1.xxxWHENITHELDTHATTHESALEOFTHESUBJECTLOTBY
ARMANDO GABRIEL, SR. AND RESPONDENT ARMANDO GABRIEL, JR.
TOTHEPETITIONERSISUNENFORCEABLE.

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2.xxxINNOTFINDINGTHATTHESALEOFTHESUBJECTLOT
BYRESPONDENTARMANDOGABRIEL,JR.TORESPONDENTBERNARD
BANTA AND ITS SUBSEQUENT SALE BY THE LATTER TO HIS CO
RESPONDENTSARENULLANDVOID.

3.xxxINNOTFINDINGTHATTHERESPONDENTSAREBUYERS
INBADFAITH

4. xxx IN FINDING THAT THE SALE OF THE SUBJECT LOT

BETWEEN GABRIEL, SR. AND RESPONDENT GABRIEL, JR. AND THE
PETITIONERSHASNOADEQUATECONSIDERATION.

5.xxxINRULINGTHATTHEINSTANTACTIONHADALREADY
PRESCRIBED.

6. xxx IN FINDING THAT THE PLAINTIFFSAPPELLANTS ARE

LIABLE FOR MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS
FEES.

[26]

TheCourtsRuling

The core issues tendered in this appeal may be reduced to four and formulated as
follows,towit:first,whetherornotthesaleofthesubjectlotbyGabrielSr.toAntonitais
unenforceableundertheStatuteofFraudssecond,whetherornotsuchsalehasadequate
considerationthird,whethertheinstantactionhasalreadyprescribedand,fourth,whether
ornotrespondentsarepurchasersingoodfaith.
Thepetitionismeritorious.

StatuteofFraudsInapplicable
toPartiallyExecutedContracts

It is undisputed that Gabriel Sr., during his lifetime, sold the subject property to
Antonita, the purchase price payable on installment basis. Gabriel Sr. appeared to have
beenarecipientofsomepartialpayments.Afterhisdeath,hissondulyrecognizedthesale
by accepting payments and issuing what may be considered as receipts therefor. Gabriel
Jr., in a gesture virtually acknowledging the petitioners dominion of the property,
authorized them to construct a fence around it. And no less than his wife, Teresita,
testifiedastothefactofsaleandofpaymentsreceived.

Pursuanttosuchsale,Antonitaandhertwosonsestablishedtheirresidenceonthe
lot,occupyingthehousetheyearlierconstructedthereon.Theylaterdeclaredtheproperty
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for tax purposes, as evidenced by the issuance of TD 9604012111087 in their or

Antonitas name, and paid the real estates due thereon, obviously as sign that they are
occupyingthelotintheconceptofowners.

Giventheforegoingperspective,EduardosassertioninhisAnswer that persons

appeared in the property

[27]
[28]
only after he initiated ejectment proceedings
is

clearlybaseless.Ifindeedpetitionersenteredandtookpossessionofthepropertyafterhe
(Eduardo) instituted the ejectment suit, how could they explain the fact that he sent a
demandlettertovacatesometimeinMay2000?

Withtheforegoingfactualantecedents,thequestiontoberesolvediswhetherornot
theStatuteofFraudsbarstheenforcementoftheverbalsalecontractbetweenGabrielSr.
andAntonita.
The CA, just as the RTC, ruled that the contract is unenforceable for non
compliancewiththeStatuteofFrauds.

We disagree for several reasons. Foremost of these is that the Statute of Frauds
[29]
of the Civil Code applies only to executory

expressed in Article 1403, par. (2),

contracts,i.e.,thosewherenoperformancehasyetbeenmade.Statedabitdifferently,the
legalconsequenceofnoncompliancewiththeStatutedoesnotcomeintoplaywherethe
[30]

contractinquestioniscompleted,executed,orpartiallyconsummated.

The Statute of Frauds, in context, provides that a contract for the sale of real
property or of an interest therein shall be unenforceable unless the sale or some note or
memorandum thereof is in writing and subscribed by the party or his agent. However,
where the verbal contract of sale has been partially executed through the partial
payments made by one party duly received by the vendor, as in the present case, the
contractistakenoutofthescopeoftheStatute.

The purpose of the Statute is to prevent fraud and perjury in the enforcement of
obligations depending for their evidence on the unassisted memory of witnesses, by
requiring certain enumerated contracts and transactions to be evidenced by a writing
[31]
signed by the party to be charged.
The Statute requires certain contracts to be
evidencedbysomenoteormemoranduminordertobeenforceable.ThetermStatute
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of Frauds is descriptive of statutes that require certain classes of contracts to be in

writing.TheStatutedoesnotdeprivethepartiesoftherighttocontractwithrespecttothe
mattersthereininvolved,butmerelyregulatestheformalitiesofthecontractnecessaryto
[32]
renderitenforceable.

Since contracts are generally obligatory in whatever form they may have been
entered into, provided all the essential requisites for their validity are present,

[33]
the

Statute simply provides the method by which the contracts enumerated in Art. 1403 (2)
maybeprovedbutdoesnotdeclaretheminvalidbecausetheyarenotreducedtowriting.
In fine, the form required under the Statute is for convenience or evidentiary purposes
only.

There can be no serious argument about the partial execution of the sale in
question.Therecordsshowthatpetitionershad,onseparateoccasions,givenGabrielSr.
andGabrielJr.sumsofmoneyaspartialpaymentsofthepurchaseprice.Thesepayments
were duly receipted by Gabriel Jr. To recall, in his letter of May 1, 1997, Gabriel, Jr.
acknowledgedhavingreceivedtheaggregatepaymentofPhP65,000frompetitionerswith
thebalanceofPhP60,000stillremainingunpaid.Butontopofthepartialpaymentsthus
made, possession of the subject of the sale had been transferred to Antonita as buyer.
Owingthustoitspartialexecution,thesubjectsaleisnolongerwithinthepurviewofthe
StatuteofFrauds.

Lestitbeoverlooked,acontractthatinfringestheStatuteofFraudsisratifiedbythe
[34]

acceptanceofbenefitsunderthecontract.

Evidently,Gabriel,Jr.,ashisfatherearlier,

hadbenefitedfromthepartialpaymentsmadebythepetitioners.Thus,neitherGabrielJr.
northeotherrespondentssuccessivepurchasersofsubjectlotscouldplausiblysetup
theStatuteofFraudstothwartpetitionerseffortstowardsestablishingtheirlawfulright
overthesubjectlotandremovinganycloudintheirtitle.Asitwere,petitionersneedonly
topaytheoutstandingbalanceofthepurchasepriceandthatwouldcompletetheexecution
oftheoralsale.

TherewasAdequateConsideration

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Withoutdirectlysayingso,thetrialcourtheldthatthepetitionerscannotsueupon
theoralsalesinceinitsownwords:xxxformorethanadecade,[petitioners]havenot
paid in full Armando Gabriel, Sr. or his estate, so that the sale transaction between
ArmandoGabrielSr.and[petitioners][has]noadequateconsideration.

The trial courts posture, with which the CA effectively concurred, is patently
flawed. For starters, they equated incomplete payment of the purchase price with
inadequacy of price or what passes as lesion, when both are different civil law concepts
with differing legal consequences, the first being a ground to rescind an otherwise valid
and enforceable contract. Perceived inadequacy of price, on the other hand, is not a
sufficient ground for setting aside a sale freely entered into, save perhaps when the
[35]

inadequacyisshockingtotheconscience.

TheCourttobesuretakesstockofthefactthatthecontractingpartiestothe1995or
1996 sale agreed to a purchase price of PhP 125,000 payable on installments. But the
original lot owner, Gabriel Sr., died before full payment can be effected. Nevertheless,
petitioners continued remitting payments to Gabriel, Jr., who sold the subject lot to
BernardonJune30,1999.Gabriel,Jr.,asmaybenoted,partedwiththepropertyonlyfor
PhP50,000.Ontheotherhand,BernardsolditforPhP80,000toMarcosandBenjamin.
Fromtheforegoingpricefigures,whatisabundantlyclearisthatwhatAntonitaagreedto
payGabriel,Sr.,albeitininstallment,wasverymuchmorethanwhathisson,forthesame
lot,receivedfromhisbuyerandthelattersbuyerlater.TheCourt,therefore,cannotsee
itswayclearastohowtheRTCarrivedatitssimplisticconclusionaboutthetransaction
betweenGabrielSr.andAntonitabeingwithoutadequateconsideration.

TheIssuesofPrescriptionandtheBona
FidesoftheRespondentsasPurchasers

Consideringtheinterrelationofthesetwoissues,wewilldiscussthemjointly.

There can be no quibbling about the fraudulent nature of the conveyance of the
subject lot effected by Gabriel Jr. in favor of Bernard. It is understandable that after his
fathersdeath,GabrielJr.inheritedsubjectlotandforwhichhewasissuedTCTNo.No.
T71499. Since the Gabriel Sr. Antonita sales transaction called for payment of the
contract price in installments, it is also understandable why the title to the property
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remained with the Gabriels. And after the demise of his father, Gabriel Jr. received
payments from the Orduas and even authorized them to enclose the subject lot with a
fence.Insum,GabrielJr.knewfullywellaboutthesaleandisboundbythecontractas
predecessorininterestofGabrielSr.overthepropertythussold.

Yet, the other respondents (purchasers of subject lot) still maintain that they are
innocent purchasers for value whose rights are protected by law and besides which
prescriptionhassetinagainstpetitionersactionforannulmentoftitleandreconveyance.

The RTC and necessarily the CA found the purchaserrespondents thesis on

prescriptioncorrectstatinginthisregardthatEduardosTCTNo.T3276wasissuedon
May16,2000whilepetitionersfiledtheircomplaintforannulmentonlyonJuly3,2001.
Tothecourtsbelow,theoneyearprescriptiveperiodtoassailtheissuanceofacertificate
oftitlehadalreadyelapsed.

Wearenotpersuaded.

The basic complaint, as couched, ultimately seeks the reconveyance of a

fraudulently registered piece of residential land. Having possession of the subject lot,
petitionersrighttothereconveyancethereof,andtheannulmentofthecoveringtitle,has
not prescribed or is not timebarred. This is so for an action for annulment of title or
reconveyance based on fraud is imprescriptible where the suitor is in possession of the
[36]
propertysubjectoftheacts,
theactionpartakingasitdoesofasuitforquietingoftitle
[37]
whichisimprescriptible.
Suchisthecaseinthisinstance.Petitionershavepossession
ofsubjectlotsasownershavingpurchasedthesamefromGabriel,Sr.subjectonlytothe
fullpaymentoftheagreedprice.

Theprescriptiveperiodforthereconveyanceoffraudulentlyregisteredrealproperty
is10years,reckonedfromthedateoftheissuanceofthecertificateoftitle,iftheplaintiff
[38]
isnotinpossession,butimprescriptibleifheisinpossessionoftheproperty.
Thus,
onewhoisinactualpossessionofapieceoflandclaimingtobetheownerthereofmay
waituntilhispossessionisdisturbedorhistitleisattackedbeforetakingstepstovindicate
hisright.

[39]
Asitis,petitionersactionforreconveyanceisimprescriptible.

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This brings us to the question of whether or not the respondentpurchasers, i.e.,

Bernard, Marcos and Benjamin, and Eduardo, have the status of innocent purchasers for
value,aswasthethrustofthetrialcourtsdisquisitionanddisposition.

WeareunabletoagreewiththeRTC.

It is the common defense of the respondentpurchasers that they each checked the
titleofthesubjectlotwhenitwashisturntoacquirethesameandfounditclean,meaning
withoutannotationofanyencumbranceoradversethirdpartyinterest.Anditisuponthis
postulate that each claims to be an innocent purchaser for value, or one who buys the
property of another without notice that some other person has a right to or interest in it,
andwhopaysthereforafullandfairpriceatthetimeofthepurchaseorbeforereceiving
[40]
suchnotice.

The general rule is that one dealing with a parcel of land registered under the
TorrensSystemmaysafelyrelyonthecorrectnessofthecertificateoftitleissuedtherefor
andisnotobligedtogobeyondthecertificate.

[41]
Where,inotherwords,thecertificate

oftitleisinthenameoftheseller,theinnocentpurchaserforvaluehastherighttorelyon
whatappearsonthecertificate,asheischargedwithnoticeonlyofburdensorclaimson
theresasnotedinthecertificate.Anotherformulationoftheruleisthat(a)intheabsence
ofanythingtoarousesuspicionor(b)exceptwherethepartyhasactualknowledgeoffacts
andcircumstancesthatwouldimpelareasonablycautiousmantomakesuchinquiryor(c)
whenthepurchaserhasknowledgeofadefectoftitleinhisvendororofsufficientfactsto
[42]
induceareasonablyprudentmantoinquireintothestatusofthetitleoftheproperty,
saidpurchaseriswithoutobligationtolookbeyondthecertificateandinvestigatethetitle
oftheseller.
Eduardoand,forthatmatter,BernardandMarcosandBenjamin,canhardlyclaim
tobeinnocentpurchasersforvalueorpurchasersingoodfaith.Foreachkneworwasat
least expected to know that somebody else other than Gabriel, Jr. has a right or interest
over the lot. This is borne by the fact that the initial seller, Gabriel Jr., was not in
possessionofsubjectproperty.WithrespecttoMarcosandBenjamin,theyknewasbuyers
thatBernard,theseller,wasnotalsoinpossessionofthesameproperty.Thesamegoes
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withEduardo,asbuyer,withrespecttoMarcosandBenjamin.

Basicistherulethatabuyerofapieceoflandwhichisintheactualpossessionof
persons other than the seller must be wary and should investigate the rights of those in
possession.Otherwise,withoutsuchinquiry,thebuyercanhardlyberegardedasabuyer
in good faith. When a man proposes to buy or deal with realty, his duty is to read the
public manuscript, i.e., to look and see who is there upon it and what his rights are. A
wantofcautionanddiligencewhichanhonestmanofordinaryprudenceisaccustomedto
exerciseinmakingpurchasesis,incontemplationoflaw,awantofgoodfaith.Thebuyer
whohasfailedtoknowordiscoverthatthelandsoldtohimisinadversepossessionof
[43]
anotherisabuyerinbadfaith.

Where the land sold is in the possession of a person other than the vendor, the
purchasermustgobeyondthecertificatesoftitleandmakeinquiriesconcerningtherights
[44]
And where, as in the instant case, Gabriel Jr. and the

of the actual possessor.

subsequent vendors were not in possession of the property, the prospective vendees are
obligedtoinvestigatetherightsoftheoneinpossession.Evidently,Bernard,Marcosand
Benjamin,andEduardodidnotinvestigatetherightsoverthesubjectlotofthepetitioners
who,duringtheperiodmaterialtothiscase,wereinactualpossessionthereof.Bernard,et
al.are,thus,notpurchasersingoodfaithand,assuch,cannotbeaccordedtheprotection
[45]
Moreover,notbeingpurchasersingoodfaith,

extendedbythelawtosuchpurchasers.

theirhavingregisteredthesale,willnot,asagainstthepetitioners,carrythedayforanyof
themunderArt.1544oftheCivilCodeprescribingrulesonpreferenceincaseofdouble
[46]
salesofimmovableproperty.Occeav.Esponilla
laiddownthefollowingrulesinthe
applicationofArt.1544:(1)knowledgebythefirstbuyerofthesecondsalecannotdefeat
thefirstbuyersrightsexceptwhenthesecondbuyerfirstregisteringoodfaiththesecond
saleand(2)knowledgegainedbythesecondbuyerofthefirstsaledefeatshisrightseven
ifheisfirsttoregister,sincesuchknowledgetaintshisregistrationwithbadfaith.

Upon the facts obtaining in this case, the act of registration by any of the three
respondentpurchaserswasnotcoupledwithgoodfaith.Attheminimum,eachwasaware
orisatleastpresumedtobeawareoffactswhichshouldputhimuponsuchinquiryand
investigation as might be necessary to acquaint him with the defects in the title of his
vendor.
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Theawardbythelowercourtsofdamagesandattorneysfeestosomeoftheherein
respondents was predicated on the filing by the original plaintiffs of what the RTC
characterizedasanunwarrantedsuit.Thebasisoftheaward,needlesstostress,nolonger
obtainsand,hence,thesameissetaside.

WHEREFORE, the petition is hereby GRANTED. The appealed December 4,

2006DecisionandtheMarch6,2007ResolutionoftheCourtofAppealsinCAG.R.CV
No.79680affirmingtheMay26,2003DecisionoftheRegionalTrialCourt,Branch3in
BaguioCityareherebyREVERSEDandSETASIDE.Accordingly,petitionerAntonita
Ordua is hereby recognized to have the right of ownership over subject lot covered by
TCTNo.T3276oftheBaguioRegistryregisteredinthenameofEduardoJ.Fuentebella.
TheRegisterofDeedsofBaguioCityisherebyORDEREDtocancelsaidTCT No. T
3276 and to issue a new one in the name of Armando Gabriel, Jr. with the proper
annotation of the conditional sale of the lot covered by said title in favor of Antonita
OrduasubjecttothepaymentofthePhP50,000outstandingbalance.Uponfullpayment
ofthepurchasepricebyAntonitaOrdua,ArmandoGabriel,Jr.isORDEREDtoexecute
a Deed of Absolute Sale for the transfer of title of subject lot to the name of Antonita
Ordua,withinthree(3)daysfromreceiptofsaidpayment.

Nopronouncementastocosts.

SOORDERED.

PRESBITEROJ.VELASCO,JR.
AssociateJustice

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WECONCUR:

RENATOC.CORONA
ChiefJustice
Chairperson

TERESITAJ.LEONARDODECASTROMARIANOC.DELCASTILLO
AssociateJusticeAssociateJustice

JOSEPORTUGALPEREZ
AssociateJustice

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,Icertifythattheconclusions

intheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothe
writeroftheopinionoftheCourtsDivision.

RENATOC.CORONA
ChiefJustice

[1]
Rollo,pp.924,datedApril21,2007.
[2]
Id.at2535.PennedbyAssociateJusticeArturoG.TayagandconcurredinbyAssociateJusticesRemediosA.
SalazarFernandoandNoelG.Tijam.
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[3]
Id.at3849.PennedbyPresidingJudgeFernandoVilPamintuan.
[4]
Exh.D.
[5]
RespondentGabriel,Jr.didnotfilehiscomment.
[6]
RTCDecision,p.5,Rollo,p.42.
[7]
Exh.A.
[8]
Records,p.221.
[9]
Exh.H
[10]
Exh.G.
[11]
Exh.E.
[12]
Exh.J.Records,p.223.AlsoExh.1.
[13]
Exh.K.
[14]
Records,p.226.
[15]
Exh.M.
[16]
Records,p.230.Exh.N.
[17]
Id.at232.
[18]
Rollo,p.40
[19]
Id.at39.
[20]
Id.at5661.
[21]
Supranote3at4849.
[22]
Art.1544.Ifthesamethingshouldhavebeensoldtodifferentvendees,theownershipshallbetransferredtothe
personwhomayhavefirsttakenpossessionthereofingoodfaith,ifitshouldbemovableproperty.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recordeditintheRegistryofProperty.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possessionand,intheabsencethereof,tothepersonwhopresentstheoldesttitle,providedthereisgoodfaith.
[23]
Art.1356.Contractsshallbeobligatory,inwhateverformtheymayhavebeenenteredinto,providedallthe
essentialrequisitesfortheirvalidityarepresent.However,whenthelawrequiresthatacontractbeinsomeforminorderthat
itmaybevalidorenforceable,orthatacontracttobeprovedinacertainway,thatrequirementisabsoluteandindispensable.
Insuchcases,therightofthepartiesstatedinthefollowingarticlecannotbeexercised.
[24]
Art.1358.Thefollowingmustappearinapublicdocument:
(1)Actsandcontractswhichhavefortheirobjectthecreation,transmission,modificationorextinguishmentofreal
rights over immovable property sales of real property or of an interest therein are governed by Articles 1403, No. 2, and
1405
xxxx
(4)Thecessionofactionsorrightsproceedingfromanactappearinginapublicdocument.
AllothercontractswheretheamountinvolvedexceedsFivehundredpesosmustappearinwritingevenaprivate
one.Butsalesofgoods,chattelsorthingsinactionaregovernedbyArticles1403,No.2and1405.
[25]
Supranote2at3435.
[26]
Supranote1at1415.
[27]
Rollo,p.40.
[28]
Id.
[29]
Art.1403.Thefollowingcontractsareunenforceable,unlesstheyareratified:
xxx
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an
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agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof, be in
writing, and subscribed by the party charged, or by his agent evidence, therefore, of the agreement cannot be received
withoutthewriting,orasecondaryevidenceofitscontents:
xxxx
(e)Anagreementfortheleasingforalongerperiodthanoneyear,orforthesaleofrealproperty or of an
interesttherein
xxx
[30]
Arrogantev.Deliarte,G.R.No.152132,July24,2007,528SCRA63,74,citingAveriav.Averia,G.R.No.
141877,August13,2004,436SCRA459,466.
[31]
AsiaProductionsCo.,Inc.v.Pao,G.R.No.51058,January27,1992,205SCRA458,465,citingC.J.S.513
Shoemakerv.LaTondea,68Phil.24(1939).
[32]
RosencorDevelopmentCorporationv.CourtofAppeals, G.R. No. 140479, March 8, 2001, 354 SCRA 119,
127.
[33]
Art.1356,CivilCode.
[34]
Article1405,CivilCode,whichstates:
ContractsinfringingtheStatuteofFrauds,referredtoinNo.2ofArticle1403,areratifiedbythefailuretoobjectto
thepresentationoforalevidencetoprovethesame,orbytheacceptanceofbenefitsunderthem.
[35]
4Paras,CIVILCODEOFTHEPHILIPPINESANNOTATED723(13th ed.,1995).
[36]
Llemosv.Llemos,G.R.No.150162,January26,2007,513SCRA128,134citingOcceav.Esponilla,G.R.
No.156973,June4,2004,431SCRA116,126andDelfinv.Billones,G.R.No.146550,March17,2006,485SCRA38,47
48.
[37]
Occeav.Esponilla,G.R.No.156973,June4,2004,431SCRA116.
[38]
HeirsofSalvadorHermosillav.Remoquillo,G.R.No.167320,January30,2007,513SCRA403,408409.
[39]
Id.at409citingArleguiv.CourtofAppeals,G.R.No.126437,March6,2002,378SCRA322,324.
[40]
Potencianov.Reynoso, G.R. No. 140707, April 22, 2003, 401 SCRA 391, 401402 citing Tsai v. Court of
Appeals,G.R.No.120109,October2,2001,366SCRA324.
[41]
Republicv.Mendoza,Sr.,G.R.Nos.153726&154014,March28,2007,519SCRA203,231.
[42]
Sandovalv.CourtofAppeals,G.R.No.106657,August1,1996,260SCRA283,295.
[43]
Embradov.CourtofAppeals,G.R.No.51457,June27,1994,233SCRA335,347citingJ.M.Tuason&Co.,
Inc. v. Court of Appeals, No. L41233, November 21, 1979, 94 SCRA 413, 422423 and Angelo v. Pacheco, 56 Phil. 70
(1931).
[44]
HeirsofTrinidadDeLeonVda.deRoxasv.CourtofAppeals,G.R.No.138660,February5,2004,422SCRA
101,117citingDevelopmentBankofthePhilippinesv.CourtofAppeals,G.R.No.129471,April28,2000,331SCRA
267.
[45]
Sec.32ofPresidentialDecreeNo.1529,whichprovides:
Section32.ReviewofdecreeofregistrationInnocentpurchaserforvalue.Thedecreeofregistrationshallnotbe
reopenedorrevisedbyreasonofabsence,minority,orotherdisabilityofanypersonadverselyaffectedthereby,norbyany
proceedinginanycourtforreversingjudgments,subject,however,totherightofanyperson,xxxdeprivedoflandorofany
estateorinterestthereinbysuchadjudicationorconfirmationoftitleobtainedbyactualfraud,tofileintheproper[RTC]a
petitionforreopeningandreviewofthedecreeofregistrationnotlaterthanoneyearfromandafterthedateoftheentryof
suchdecreeofregistration,butinnocaseshallsuchpetitionbeentertainedbythecourtwhereaninnocentpurchaserfor
valuehasacquiredthelandoraninteresttherein,whoserightsmaybeprejudiced.Wheneverthephraseinnocentpurchaser
forvalueoranequivalentphraseoccursinthisDecree,itshallbedeemedtoincludeaninnocentlessee,mortgagee,orother
encumbranceforvalue.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall
becomeincontrovertible.Anypersonaggrievedbysuchdecreeofregistrationinanycasemaypursuehisremedybyaction
fordamagesagainsttheapplicantoranyotherpersonsresponsibleforthefraud.
[46]
Supranote37.

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