Sun Brothers & Co. vs.

Velasco (1958)
FACTS:
Sun Brothers & company delivered to Lopez an Admiral refrigerator under a
Conditional Sale Agreement. Out of the P1,700 purchase price, only P500 was paid
as downpayment.
Inter alia, they stipulated that Lopez shall not remove the refrigerator from his address
nor part possession therewith without the express written consent of Sun Brothers. In
violation thereof, Sun Brothers may rescind the sale, recover possession and the
amounts paid shall be forfeited. The refrigerator shall remain the absolute property of
Sun Brothers until Lopez has fully paid the purchase price.
Lopez sold the refrigerator to JV Trading (owned by Jose Velasco) without knowledge
of Sun brothers for P850, misrepresented himself as Jose Lim and executed a
document stating that he is the absolute owner. Thereafter, Velasco displayed the
refrigerator in his store and Co Kang Chui bought it for P985.
ISSUE/HOLDING:
1. Whether Co Kang Chiu, an innocent buyer from a store, has a better right as owner
than Sun Brothers, a conditional vendor

ripening into a valid one, as a result of some intervening causes. The policy of the law which
we do not feel justified to deviate, has always been that where the rights and interests of a
vendor comes into clash with that of an innocent buyer for value, the latter must be
protected.
The rule embodied in Article 1505 (3) protecting innocent third parties who have made
purchases at merchants stores in good faith and for value appears to us to be a wise and
necessary rule not only to facilitate commercial sales on movables but to give stability to
business transactions. This rule is necessary in a country such as ours where free enterprise
prevails, for buyers cannot be reasonably expected to look behind the title of every article
when he buys at a store. The doctrine of caveat emptor [the buyer alone is responsible for
checking the quality and suitability of goods before a purchase is made] is now rarely
applied, and if it is ever mentioned, it is more of an exception rather than the general rule.
Upon the whole, we are persuaded to believe that Co Kang Chui who is now is possession of
the refrigerator should be adjudged the owner thereof, because he bought it at a
merchants store in good faith and for value.

Co Kang Chiu has a better right than Sun Brothers.

Article 1505 of the Civil Code provides:
Art. 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 if
the goods is by his conduct precluded from denying the sellers authority to sell.
Nothing in this Title, however, shall affect:
(1) The provisions of any factors acts, recording laws, or any other provision of law enabling
the apparent owner of goods to dispose of them as if he were the true owner thereof;

(3) Purchases made in a merchants store, or in fairs, or markets,

The lower court committed error when it applied the 1st paragraph of Article 1505. It is true
that Francisco Lopez, the conditional vendee, never had any title to the refrigerator in
question, because the stipulation between him and the conditional vendor, Sun Brothers, is
that title shall vest in the vendee upon payment in full of the purchase price, and Lopez has
not fully paid such price. When Lopez, who has no title to the refrigerator, sold it to Jose
Velasco, the latter did not acquire any better right than what Lopez had --- which is
practically nothing. We do not agree with the court a quo that Velasco was a purchaser in
good faith and for value for the reason that Lopez, being a private person who is not
engaged in the business of selling refrigerators, Velasco must be reasonably expected to
have inquired from Lopez whether or not the refrigerator he was selling has been paid in full.
In this, Velasco has been negligent.
Also, since Co Kang Chui purchased the refrigerator from JV Trading, a merchant store and
displayed thereat, the 3rd paragraph of Art. 1505 applies, from which Co Kang Chui should
be declared as having acquired a valid title to the refrigerator, although his predecessors in
interest did not have any right of ownership over it. This is a case of imperfect or void title
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Cavite Development Bank vs. Lim (2000)

FACTS:
Petitioners Cavite Development Bank (CDB) and Far East Bank and Trust Company
(FEBTC) are banking institutions duly organized and existing under Philippine laws. On
or about June 15, 1983, a certain Rodolfo Guansing obtained a loan in the amount of
P90,000.00 from CDB, to secure which he mortgaged a parcel of land situated at No.
63 Calavite Street, La Loma, Quezon City and covered by a TCT registered in his name.
As Guansing defaulted in the payment of his loan, CDB foreclosed the mortgage. At
the foreclosure sale held on March 15, 1984, the mortgaged property was sold to CDB
as the highest bidder. Guansing failed to redeem, and on March 2, 1987, CDB
consolidated title to the property in its name. A new TCT was issued in the name of
CDB.
On June 16, 1988, private respondent Lolita Chan Lim, assisted by a broker named
Remedios Gatpandan, offered to purchase the property from CDB for 300k. The
written Offer to Purchase was signed by Lim and Gatpandan. The ff. are the terms and
conditions
o 10% Option Money;
o Balance payable in cash;
o Provided that the property shall be cleared of illegal occupants or tenants.
Lim paid CDB 30k as option money for which she was issued a receipt. However, she
subsequently found out that the subject property was previously registered to a certain
Perfecto Guansing who was the father of the mortgagor, Rodolfo Guansing.
o Perfecto filed a civil case against Rodolfo for the cancellation og his title. TC
granted petition. The same has become final and executory
Lim later filed an action for specific performance against CDB and its mother
company FEBTC for serious misrepresentation. It was later amended to implead the
Register of Deeds of QC.
TC: for Lim spouses.
o There was a perfected contract between Lim and CDB.
o Performance by CDB and FEBTC became impossible on the account of the
cancellation of title of Rodolfo Guansing.
o CDB and FEBTC, however, were not exempt from liability; they could not
credibly disclaim knowledge of the cancellation of title of Rodolfo Guansing
without admitting their failure to discharge their duties to the public as a
reputable banking institutions.
o CDB and FEBTC were liable to damages against Lim spouses.
CA: affirmed in toto; denied MR, thus this petition.
ISSUE/HOLDING:
1. W/N there was a perfected contract of sale? Yes.
Petitioners contend that the contract was merely an option contract and not a contract of
sale. SC held that it is a contract of sale. The nature of the contract is defined by law and not
be the parties to it.
In this case, the option money given was in the nature of an earnest money or
downpayment when considered with the other terms of the contract. An option contract is
a preparatory contract in which one party grants to the other, for a fixed period and under
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specified conditions, the power to decide, whether or not to enter into a principal contract,
it binds the party who has given the option not to enter into the principal contract with any
other person during the period designated, and within that period, to enter into such
contract with the one to whom the option was granted, if the latter should decide to use the
option. It is a separate agreement distinct from the contract to which the parties may enter
upon the consummation of the option.
It is separate from and preparatory to a contract of sale. If it is perfected, it does not
result in the perfection or consummation of the sale. A sale is only perfected when the
option is exercised.
In this case, however, after the payment of the 10% option money, the Offer to Purchase
provides for the payment only of the balance of the purchase price, implying that the
"option money" forms part of the purchase price. This is precisely the result of paying earnest
money under Art. 1482 of the Civil Code. It is clear then that the parties in this case actually
entered into a contract of sale, partially consummated as to the payment of the price.
CDB also accepted the terms of the offer of Lim based on the acts of the petitioner bank as
testitfied by their own witness.
Although the petitioner bank could not deliver the property to Lim, a sale is perfected upon
the meeting of the minds of the parties. Perfection =/= consummation. Now heres the
problem: CDB was does not have a valid title to the property by virtue of being the highest
bidder in the foreclosure because the mortgagor did not actually have a valid title when it
mortgaged the property.
There is, however, a situation where, despite the fact that the mortgagor is not the owner of
the mortgaged property, his title being fraudulent, the mortgage contract and any
foreclosure sale arising therefrom are given effect by reason of public policy. This is the
doctrine of "the mortgagee in good faith" based on the rule that all persons dealing with
property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required
to go beyond what appears on the face of the title. The public interest in upholding the
indefeasibility of a certificate of title, as evidence of the lawful ownership of the land or of
any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon
what appears on the face of the certificate of title.
However, SC was not convinced that CDB was a mortgagee in good faith because it is
standard practice for banks to send representatives to the premises of the land offered as
collateral and to investigate who are the real owners thereof, noting that banks are
expected to exercise more care and prudence than private individuals in their dealings,
even those involving registered lands, for their business is affected with public interest before
approving collateral to loans.
In this case, there is no evidence that CDB observed its duty of diligence in ascertaining the
validity of Rodolfo Guansings title. It appears that Rodolfo Guansing obtained his fraudulent
title by executing an Extra-Judicial Settlement of the Estate With Waiver where he made it
appear that he and Perfecto Guansing were the only surviving heirs entitled to the property,
and that Perfecto had waived all his rights thereto. This self-executed deed should have
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placed CDB on guard against any possible defect in or question as to the mortgagors title.
Moreover, the alleged ocular inspection report by CDBs representative was never formally
offered in evidence. Indeed, petitioners admit that they are aware that the subject land was
being occupied by persons other than Rodolfo Guansing and that said persons, who are the
heirs of Perfecto Guansing, contest the title of Rodolfo.
2. Who was the guilty party for the nullity of the contract? CDB!
TC and CA both found that CDB already knew of the cancellation of the title of Rodolfo
when it asked Lim to pay the 10% option money. This is a question of fact that SC could not
review for not falling within the exceptions thereto.
3. What are the legal effects of the void contract of sale? Art. 1412 (2)
(2) When only one of the contracting parties is at fault, he cannot recover what he has given
by reason of the contract, or ask for the fulfillment of what has been promised him. The other,
who is not at fault, may demand the return of what he has given without any obligation to
comply with his promise.
RULING: For Lim; refund + moral damages + exemplary damages

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Aznar vs. Yapdiangco (1965)

FACTS:
In May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of his
FORD FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to
be a nephew of Vicente Marella, went to the Santos residence to answer the ad.
However, Teodoro Santos was out during this call and only the latter's son, Irineo
Santos, received and talked with De Dios. The latter told the young Santos that he had
come in behalf of his uncle, Vicente Marella, who was interested to buy the advertised
car.
On being informed of the above, Teodoro Santos instructed his son to see the said
Vicente Marella the following day at his given address. And so, in the morning the
following day, Irineo Santos went to Marella. At this meeting, Marella agreed to buy
the car for P14,700.00 on the understanding that the price would be paid only after
the car had been registered in his name.
Irineo Santos and his father, together with L. de Dios, went to a lawyer who executed a
Deed of Sale in favor of Marella.
They proceeded to Motor Vehicles Office to registed the car in Marellas name. No
purchase price has yet been paid.
Teodoro went home from the MVO. Irineo and L. de Dios went to Marellas house.
Teodoro instructed Irineo not to part with the documents until the full purchase price
had been paid.
When they got to Marellas house, Marella gave him the purchase price short of 2000
pesos. He asked Irineo to get the shortage from his sister who lived in Azcarraga St. in
Manila. In good faith, Irineo left the documents with Marella, as per the request of
Marella on the pretext of showing them to his lawyer.
At a place in Azcarraga, Irineo and L. de Dios went inside a house. Irineo was asked to
wait at the sala while L. de Dios went inside a room. However, after a considerable
period of time, Irineo found out that L. de Dios and the car was gone.
He inquired upon a woman if she had seen L. de Dios but the woman said no person
of that name lived or was even known at the place.
He reported the matter to his father and then later to the police.
So this all happened in the same day. Marella was able to sell the car to Jose Aznar,
who bought it for 15K in good faith for a valuable consideration and without notice of
the defect appertaining to the vendor's title.
Later, the car was confiscated from Aznar by agents of the Philippine Constabulary in
consequence of the report to them by Teodoro Santos that the said car was unlawfully
taken from him.
Aznar filed a complaint for replevin against Captain Rafael Yapdiangco, head of the
PC unit which seized the car. Teodoro Santos was later allowed to intervene.
TC: for Santos. He was unlawfully deprived of his property by Marella. Although Aznar
acquired the property in good faith, Santos was entitled to its recovery under Art. 559,
NCC.
o ART. 559. The possession of movable property acquired in good faith is
equivalent to title. Nevertheless, one who lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the
same.
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If the possessor of a movable lost or of which the owner has been unlawfully
deprived, has acquired it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid therefor.
ISSUE/HOLDING:
1. Who had better right to the possession of the disputed car? Santos!
Although Aznar agreed that Santos was the previous owner of the car, he contends that Art.
559 was not the controlling provision, but Art. 1506: Where the seller of goods has a voidable
title thereto, but his, title has not been voided at the time of the sale, the buyer acquires a
good title to the goods, provided he buys them in good faith, for value, and without notice
of the seller's defect of title.
SC, however, said that 1506 requires that the seller should havea voidable title at least. In this
case, Marella had no title thereto because the car was not delivered to him. He only
acquires ownership upon delivery pursuant to Art. 712, NCC: "ownership and other real rights
over property are acquired and transmitted by law, by donation, by testate and intestate
succession, and in consequence of certain contracts, by tradition." [Note: it was stolen! No
delivery of the key, and even if there is it is not the delivery contemplated under Art. 712]
The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for
under it, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully
deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also
from third persons who may have acquired it in good faith from such finder, thief or robber.
The said article establishes two exceptions to the general rule of irrevindicability, to wit, when
the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these cases,
the possessor cannot retain the thing as against the owner, who may recover it without
paying any indemnity, except when the possessor acquired it in a public sale.
RULING: lower court affirmed.

EDCA Publishing and Distributing Corp. vs. Santos (1990)

FACTS:
October 5, 1981, a person identifying himself as Professor Jose Cruz placed an order by
telephone with the petitioner company for 406 books, payable on delivery.
o EDCA prepared the corresponding invoice and delivered the books as ordered,
for which Cruz issued a personal check covering the purchase price of
P8,995.65.
On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos
who, after verifying the seller's ownership from the invoice he showed her, paid him
P1,700.00.
Cruz placed another order before the clearing of his check. This made EDCA
suspicious.
o EDACA made inquiries with the De la Salle College where he had claimed to be
a dean and was informed that there was no such person in its employ.
o Further verification revealed that Cruz had no more account or deposit with the
Philippine Amanah Bank, against which he had drawn the payment check.
EDCA then went to the police, which set a trap and arrested Cruz on October 7, 1981.
Investigation disclosed his real name as Tomas de la Pea and his sale of 120 of the
books he had ordered from EDCA to the private respondents.
The same night with the arrest of Cruz, EDCA sought assistance of police which forced
their way to the store of Santos whom they threatened with prosecution for sale of
stolen property.
o They seized 120 books without warrant loading them in a van owned by EDCA.
They then turned them over to the latter.
Santos then demanded return of the books, which EDCA rejected.
Santos then filed a suit for the recovery of the books. A writ of attachment was issued
against EDCA. EDCA leter surrendered the books to Santos.
MTC, RTC and CA all ruled for Santos.
ISSUE/HOLDING:
1. W/N Santos had the right of ownership over the disputed books? YES.
Art. 559 provides that "the possession of movable property acquired in good faith is
equivalent to a title," thus dispensing with further proof. The contention that Santos did not
acquire the books in good faith was dismissed by all the courts including the SC on the
ground that Leonor Santos is engaged in the business of buying and selling books at reduced
prices because of their urgent need. To Santos, Cruz may have only been a customer with
whom she was accustomed to dealing with. She also ascertained ownership of the books by
the invoice issued by EDCA. Bad faith could not be shown.
2. W/N EDCA was unlawfully deprived of ownership over the disputed books? NO.
General rule is that ownership is transferred upon the delivery of property. An exception is
when there is a stipulation stating that ownership shall only transfer upon payment of full
price which is absent in this case. Non-payment only creates a right to demand payment or
to rescind the contract, or to criminal prosecution in the case of bouncing checks. But
absent the stipulation above noted, delivery of the thing sold will effectively transfer
ownership to the buyer who can in turn transfer it to another.

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Asiatic Commercial vs. CA: no unlawful deprivation when a party voluntarily parted with the
property pusuant to a contract of sale. The circumstance that the price was not
subsequently paid did not render illegal a transaction which was valid and legal at the
beginning.
Tagatac vs. Jimenez: Fraud and deceit earmarks a contract voidable, however, a voidable
contract remains valid and binding until annulment or ratification.
Actual delivery of the books having been made, Cruz acquired ownership over the books
which he could then validly transfer to the private respondents. The fact that he had not yet
paid for them to EDCA was a matter between him and EDCA and did not impair the title
acquired by the private respondents to the books.
NOTE: private respondent did not have to go beyond that invoice to satisfy herself that the
books being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz
was presumed under Article 559 by his mere possession of the books, these being movable
property, Leonor Santos nevertheless demanded more proof before deciding to buy them. It
was EDCA which was too trusting by delivering the books to Cruz even though it was the first
time they transacted.
It would certainly be unfair now to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence.1wphi1 We cannot see the justice in
transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care,
when they bought the books from Cruz.
RULING: lower courts affirmed.

Rosaroso vs. Doria (2013)

FACTS: Spouses Luis Rosaroso (Luis) and Honorata Duazo (Honorata) acquired several real
properties in Daan Bantayan, Cebu City, including the subject properties. The couple had
nine (9) children namely: Hospicio, Arturo, Florita, Lucila, Eduardo, Manuel, Cleofe, Antonio,
and Angelica. On April 25, 1952, Honorata died. Later on, Luis married Lourdes Pastor
Rosaroso (Lourdes).
On January 16, 1995, a complaint for Declaration of Nullity of Documents with Damages was
filed by Luis, as one of the plaintiffs, against his daughter, Lucila R. Soria (Lucila); Lucilas
daughter, Laila S. Solutan (Laila); and Meridian Realty Corporation (Meridian). Due to Luis
untimely death, however, an amended complaint was filed on January 6, 1996, with the
spouse of Laila, Ham Solutan (Ham); and Luis second wife, Lourdes, included as defendants.
In the Amended Complaint, it was alleged by petitioners Hospicio D. Rosaroso, Antonio D.
Rosaroso (Antonio), Angelica D. Rosaroso (Angelica), and Cleofe R. Labindao (petitioners)
that on November 4, 1991, Luis, with the full knowledge and consent of his second wife,
Lourdes, executed the Deed of Absolute Sale (First Sale) covering the properties all located
at Daanbantayan, Cebu, in their favor.
They also alleged that, despite the fact that the said properties had already been sold to
them, respondent Laila, in conspiracy with her mother, Lucila, obtained the Special Power of
Attorney (SPA), from Luis (First SPA); that Luis was then sick, infirm, blind, and of unsound mind;
that Lucila and Laila accomplished this by affixing Luis thumb mark on the SPA which
purportedly authorized Laila to sell and convey, among others, Lot Nos. 8, 22 and 23, which
had already been sold to them; and that on the strength of another SPA by Luis, (Second
SPA), respondents Laila and Ham mortgaged Lot No. 19 to Vital Lending Investors, Inc. for
and in consideration of the amount of P150,000.00 with the concurrence of Lourdes.
Petitioners further averred that a second sale took place on August 23, 1994, when the
respondents made Luis sign the Deed of Absolute Sale conveying to Meridian three (3)
parcels of residential land for P960,500.00 (Second Sale); that Meridian was in bad faith when
it did not make any inquiry as to who were the occupants and owners of said lots; Petitioners,
thus, prayed that they be awarded moral damages, exemplary damages, attorneys fees,
actual damages, and litigation expenses and that the two SPAs and the deed of sale in
favor of Meridian be declared null and void ab initio.
Lucila and Laila: Contested the First Sale in favor of petitioners. They submitted that even
assuming that it was valid, petitioners were estopped from questioning the Second Sale in
favor of Meridian because they failed not only in effecting the necessary transfer of the title,
but also in annotating their interests on the titles of the questioned properties. With respect to
the assailed SPAs and the deed of absolute sale executed by Luis, they claimed that the
documents were valid because he was conscious and of sound mind and body when he
executed them.
Meridian: Averred that Luis was fully aware of the conveyances he made. In fact, Sophia
Sanchez (Sanchez), Vice-President of the corporation, personally witnessed Luis affix his
thumb mark on the deed of sale in its favor.

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RTC Ruling: RTC ruled in favor of petitioners.

CA: Reversed and set aside the RTC decision.
ISSUE: THE HONORABLE COURT OF APPEALS (19TH DIVISION) GRAVELY ERRED WHEN IT
DECLARED AS VOID THE FIRST SALE EXECUTED BY THE LATE LUIS ROSAROSO IN FAVOR OF HIS
CHILDREN OF HIS FIRST MARRIAGE.
HELD: The Court finds for the petitioners.
The First Deed Of Sale Was Valid. The fact that the first deed of sale was executed,
conveying the subject properties in favor of petitioners, was never contested by the
respondents. What they vehemently insist, though, is that the said sale was simulated
because the purported sale was made without a valid consideration.
(Meridian is not a buyer in Good Faith) Respondents Meridian and Lucila argue that,
granting that the First Sale was valid, the properties belong to them as they acquired these in
good faith and had them first recorded in the Registry of Property, as they were unaware of
the First Sale.
Again, the Court is not persuaded.
The fact that Meridian had them first registered will not help its cause. In case of double sale,
Article 1544 of the Civil Code provides:
ART. 1544. If the same thing should have been sold to different vendees, the ownership shall
be transferred to the person who may have first possession thereof in good faith, if it should
be movable property.
In the case at bench, the fact that the subject properties were already in the possession of
persons other than Luis was never disputed. Sanchez, representative and witness for
Meridian, From the testimony, it is clear that Meridian, through its agent, knew that the
subject properties were in possession of persons other than the seller. Instead of investigating
the rights and interests of the persons occupying the said lots, however, it chose to just
believe that Luis still owned them. Simply, Meridian Realty failed to exercise the due diligence
required by law of purchasers in acquiring a piece of land in the possession of person or
persons other than the seller.
In this regard, great weight is accorded to the findings of fact of the RTC. Basic is the rule
that the trial court is in a better position to examine real evidence as well as to observe the
demeanor of witnesses who testify in the case.
WHEREFORE, the petition is GRANTED. The December 4, 2009 Decision and the November 18,
201 0 Resolution of the Court of Appeals, in CA-G.R. CV No. 00351, are REVERSED and SET
ASIDE. The July 30, 2004 Decision of the Regional Trial Court, Branch 8, 7th Judicial Region,
Cebu City, in Civil Case No. CEB-16957, is hereby REINSTATED.
SO ORDERED
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11

Roman Catholic Church vs. Pante (2012)

FACTS:
The Church, represented by the Archbishop of Caceres, owned a 32-square meter lot
that measured 2x16 meters located in Barangay Dinaga, Canaman, Camarines Sur.
On September 25, 1992, the Church contracted with respondent Regino Pante for the
sale of the lot (thru a Contract of Sale) on the belief that the latter was an actual
occupant of the lot. The contract between them fixed the purchase price
at P11,200.00, with the initial P1,120.00 payable as down payment, and the remaining
balance payable in three years or until September 25, 1995.
Subsequently, the Church sold in favor of the spouses Nestor and Fidela Rubi (spouses
Rubi) a 215-square meter lot that included the lot previously sold to Pante. The spouses
Rubi asserted their ownership by erecting a concrete fence over the lot sold to Pante,
effectively blocking Pante and his familys access from their family home to the
municipal road. As no settlement could be reached between the parties, Pante
instituted with the RTC an action to annul the sale between the Church and the
spouses Rubi, insofar as it included the lot previously sold to him.
o Church: answer + counterclaim, seeking the annulment of its contract with
Pante. The Church alleged that its consent to the contract was obtained by
fraud when Pante, in bad faith, misrepresented that he had been an actual
occupant of the lot sold to him, when in truth, he was merely using the 32-square
meter lot as a passageway from his house to the town proper. It contended that
it was its policy to sell its lots only to actual occupants. Since the spouses Rubi
and their predecessors-in-interest have long been occupying the 215-square
meter lot that included the 32-square meter lot sold to Pante, the Church
claimed that the spouses Rubi were the rightful buyers.
RTC: for the Church. Consent of the Church was obtained through misrepresentation
by Pante that he was the lawful occupant of the said lot. Additionally, there was a 3year delay in the payment of the purchase price to the Church which is fatal to the
claim of Pante.
CA: reversed. The transaction between the Church and Pante was in the nature of a
contract of sale because the Church did not reserve the right to ownership over the
property until full payment of price. Even assuming that it was a contract to sell, the
CA declared that Pante fulfilled the condition precedent when he consigned the
balance within the three-year period allowed under the parties agreement; upon full
payment, Pante fully complied with the terms of his contract with the Church.
o Applied Art. 1544: xxx 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.
Since neither of the two sales was registered, the CA upheld the full effectiveness of
the sale in favor of Pante who first possessed the lot by using it as a passageway
since 1963.
ISSUE/HOLDING:
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1. W/N there was misrepresentation vitiating the consent of the Church that would
warrant invalidation of the contract? NO.
Consent; essential requisite; To create a valid contract, the meeting of the minds must be
free, voluntary, willful and with a reasonable understanding of the various obligations the
parties assumed for themselves. Where consent, however, is given through mistake, violence,
intimidation, undue influence, or fraud, the contract is deemed voidable. However, not
every mistake renders a contract voidable. [check Art. 1331]
For mistake as to the qualification of one of the parties to vitiate consent, two requisites must
concur:
1. the mistake must be either with regard to the identity or with regard to the
qualification of one of the contracting parties; and
2. the identity or qualification must have been the principal consideration for the
celebration of the contract.

Churchs permission, since 1963. After purchasing the lot in 1992, he continued using it as a
passageway until he was prevented by the spouses Rubis concrete fence over the lot in
1994. Pantes use of the lot as a passageway after the 1992 sale in his favor was a clear
assertion of his right of ownership that preceded the spouses Rubis claim of ownership. In
fact, he even placed electric and water pipes in the subject lot indicating ownership, this is
known to sps. Rubi. This is an indication of bad faith.
Delivery of a thing sold may also be made constructively under Art. 1498. Under this
provision, the sale in favor of Pante would have to be upheld since the contract executed
between the Church and Pante was duly notarized, converting the deed into a public
instrument.
RULING: petition denied; CA affirmed.

Church says they only agreed to sell because Pante misrepresented himself to be actually
residing in said lot. There is willful misrepresentation because of their policy to sell the land
only to actual occupants. The consider such as a qualification.
Contrary to Churchs contention that actual occupancy is a qualification for sale, such does
not appear as a necessary qualification considering the size of the subject property, neither
Pante nor Rubi could be qualified. In fact, in the contract executed between the church
and Pante, there was a sketch plan attached to it which labeled the subject property as
right of way. Also, the Church was the parish of the barangay the lot was situated it, they
could have easily verified through ocular inspection as to the occupancy within the same
lot. Thus, there was no misrepresentation.
If there is bad faith, it should be imputed to the Church. Without securing a court ruling on
the validity of its contract with Pante, the Church sold the subject property to the spouses
Rubi. Article 1390 of the Civil Code declares that voidable contracts are binding, unless
annulled by a proper court action. From the time the sale to Pante was made and up until it
sold the subject property to the spouses Rubi, the Church made no move to reject the
contract with Pante; it did not even return the down payment he paid. The Churchs bad
faith in selling the lot to Rubi without annulling its contract with Pante negates its claim for
damages.
2. W/N there was double sale?
[Check Art. 1544 par. 3] As neither Pante nor the spouses Rubi registered the sale in their
favor, the question now is who, between the two, was first in possession of the property in
good faith.
Jurisprudence has interpreted possession in Article 1544 of the Civil Code to mean
both actual physical delivery and constructive delivery. Under either mode of delivery, the
facts show that Pante was the first to acquire possession of the lot.
Actual delivery of a thing sold occurs when it is placed under the control and possession of
the vendee. Pante claimed that he had been using the lot as a passageway, with the
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Abrigo vs. De Vera

FACTS:
Gloria Villafania sold a house and lot to Rosenda Tigno-Salazar and Rosita Cave-Go
located in Pangasinan and covered by a tax declaration. The said sale became a
subject of a suit for annulment of documents between the vendor and the
vendees.
RTC: approving the Compromise Agreement submitted by the parties.
o In the said Decision, Gloria Villafania was given one year from the date of the
Compromise Agreement to buy back the house and lot, and failure to do so
would mean that the previous sale in favor of Rosenda Tigno-Salazar and
Rosita Cave-Go shall remain valid and binding and the plaintiff shall
voluntarily vacate the premises without need of any demand. Gloria
Villafania failed to buy back the house and lot, so the [vendees] declared
the lot in their name.
However, unknown to vendees, Gloria Villafania obtained a free patent over the
parcel of land involved. The said free patent was later on cancelled by a TCT.
Vendees, sold the house and lot to petitioner spouses Abrigo.
Subsequently, Gloria Villafania sold the same house to Romana de Vera, who
registered the sale and thus a TCT was issued in her name
Later on, Romana de Vera filed an action for Forcible Entry and Damages against
petitioners before the MTC of Mangaldan. On February 25, 1998, the parties therein
submitted a Motion for Dismissal in view of their agreement in the instant case that
neither of them can physically take possession of the property in question until the
instant case is terminated. Hence the ejectment case was dismissed.
About a couple of weeks after, petitioners filed the present case for the annulment
of documents, injunction, preliminary injunction, restraining order and damages
[against respondent and Gloria Villafania].
RTC: for petitioners + damages and attorneys fees
CA:
o Original decision: void title could not give rise to a valid one and hence
dismissed the appeal of Romana de Vera.
o On reconsideration: ruled that De Vera was a purchaser in good faith, as she
had relied in good faith on the Torrens title of her vendor and must thus be
protected
ISSUE/HOLDING:
1. Who has the better right over the property? De Vera.
The present case involves what in legal contemplation was a double sale. [check 1544]
The law provides that a double sale of immovables transfers ownership to (1) the first
registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the
buyer who in good faith presents the oldest title. There is no ambiguity in the
application of this law with respect to lands registered under the Torrens system.
In the instant case, both Petitioners Abrigo and respondent registered the sale of the
property. Since neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go) knew
that the property was covered by the Torrens system, they registered their respective sales
under Act 3344. For her part, respondent registered the transaction under the Torrens system
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because, during the sale, Villafania had presented the transfer certificate of title (TCT)
covering the property.
Court sided with de Vera this time citing Soriano v. Heirs of Magali wherein it was held that
registration must be done in the proper registry in order to bind the land. Since the property
in dispute in the present case was already registered under the Torrens system, petitioners
registration of the sale under Act 3344 was not effective for purposes of Article 1544 of the
Civil Code.
Naawan Community Rural Bank v. Court of Appeals: the right of a party who had registered
the sale of land under the Property Registration Decree, as opposed to another who had
registered a deed of final conveyance under Act 3344. In that case, the priority in time
principle was not applied, because the land was already covered by the Torrenssystem at
the time the conveyance was registered under Act 3344. For the same reason, inasmuch as
the registration of the sale to Respondent De Vera under the Torrens system was done in
good faith, this sale must be upheld over the sale registered under Act 3344 to PetitionerSpouses Abrigo.
Carumba vs. Court of Appeals is a case in point. It was held therein that Article 1544 of the
Civil Code has no application to land not registered under Act No. 496.
Petitioners cannot validly argue that they were fraudulently misled into believing that the
property was unregistered. A Torrens title, once registered, serves as a notice to the whole
world. All persons must take notice, and no one can plead ignorance of the registration.
2. W/N de Vera was in good faith? YES.
Article 1544 requires the second buyer to acquire the immovable in good faith and to
register it in good faith. Mere registration of title is not enough; good faith must concur with
the registration.
Uraca v. CA: the prior registration of the disputed property by the second buyer does
not by itself confer ownership or a better right over the property. Article 1544 requires
that such registration must be coupled with good faith. Jurisprudence teaches us that
(t)he governing principle is primus tempore, potior jure (first in time, stronger in
right). Knowledge gained by the first buyer of the second sale cannot defeat the first
buyers rights except where the second buyer registers in good faith the second
sale ahead of the first, as provided by the Civil Code. Such knowledge of the first
buyer does not bar her from availing of her rights under the law, among them, to
register first her purchase as against the second buyer. But in converso, knowledge
gained by the second buyer of the first sale defeats his rights even if he is first to
register the second sale, since such knowledge taints his prior registration with bad
faith. This is the price exacted by Article 1544 of the Civil Code for the second buyer
being able to displace the first buyer; that before the second buyer can obtain priority
over the first, he must show that he acted in good faith throughout (i.e. in ignorance of
the first sale and of the first buyers rights) ---- from the time of acquisition until the title is
transferred to him by registration, or failing registration, by delivery of possession
PD 1529, Sec. 44: every registered owner receiving a certificate of title pursuant to a
decree of registration, and every subsequent purchaser of registered land taking such
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certificate for value and in good faith shall hold the same free from all encumbrances,
except those noted and enumerated in the certificate. Thus, a person dealing with
registered land is not required to go behind the registry to determine the condition of
the property, since such condition is noted on the face of the register or certificate of
title.
Santiago v. Court of Appeals: The governing principle is prius tempore, potior jure (first
in time, stronger in right). Knowledge by the first buyer of the second sale cannot
defeat the first buyer's rights except when the second buyer first registers in good faith
the second sale.

Based on the findings of the CA, De Vera was in good faith. There was no need for SC to
disturb such findings:
RULING: Petition denied, assailed decision affirmed.

Consolidated Rural Bank vs. CA (2005)

Madrids sold to Gamiao and Dayag. Gamiao and Dayag sold to dela Cruz and Hernandez.
Then for some reason, Madrids conveyed to Pacifico kahit hindi na sila yung may-ari. 1544
does not apply because not double sale. Madrids no longer owners when they sold property
for the 2nd time.
Facts:
Madrid brothers are the registered owners of a lot in San Mateo, Isabela. It was
subdivided into several lots.
August 15, 1957: Rizal Madrid sold part of his share to Aleja Gamiao and Felisa Dayag
May 28, 1964: Gamiao and Dayag sold southern half to Teodoro dela Cruz, and the
northern half to Restituto Hernandez. The buyers took possession and cultivated the
land.
December 28: 1986: Restituto donated his share to his daughter Evangeline
Hernandez-del Rosario. Heirs of dela Cruz continued in position after their fathers
death
***June 15, 1976 Madrid brothers conveyed all their rights and interests over lot to
Pacifico Marquez. Marquez subdivided lots into 8, mortgaged a part to Rural Bank to
secure P10k loan. Marquez defaulted, foreclosure, sold to highest bidder.
October 31, 1985: Marquez sold a lot to Romeo Calixto.
Heirs of dela Cruz filed case to declare NAV the foreclosure, mortgage, sale to Calixto.
RTC in favor of Bank, CA in favor of heirs.
Issues: WoN 1544 applicable
Held: No, 1544 contemplates a case of double/multiple sales by a single vendor. It covers a
situation where a single vendor sold one and the same immovable property to two or more
buyers. 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 2
different contracts of sale are made by 2 different persons, one of them not being the owner
of the property sold. Even if the sale was made by the same person, if the 2nd sale was made
when such person was no longer the owner of the property, because it had been acquired
by the 1st purchaser in full dominion, the 2nd purchaser cannot acquire any right.
In the case at bar, the subject property was not transferred to several purchasers by a single
vendor. In the first deed of sale, the vendors were Gamiao and Dayag whose right to the
subject property originated from their acquisition thereof from Rizal Madrid with the
conformity of all the other Madrid brothers in 1957, followed by their declaration of the
property in its entirety for taxation purposes in their names. On the other hand, the vendors in
the other or later deed were the Madrid brothers but at that time they were no longer the
owners since they had long before disposed of the property in favor of Gamiao and Dayag.
In any event, assuming arguendo that 1544 applies to the present case, the claim of
Marquez still cannot prevail over the right of the Heirs since according to the evidence he
was not a purchaser and registrant in good faith.
Following Article 1544, in the double sale of an immovable, the rules of preference are:

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(a) the first registrant in good faith;

(b) should there be no entry, the first in possession in good faith; and
(c) in the absence thereof, the buyer who presents the oldest title in good faith.
Prior registration of the subject property does not by itself confer ownership or a better right
over the property. 1544 requires that before the second buyer can obtain priority over the
first, he must show that he acted in good faith throughout (i.e., in ignorance of the first sale
and of the first buyers rights)from the time of acquisition until the title is transferred to him
by registration or failing registration, by delivery of possession
WHEREFORE, the Petition is DENIED. The dispositive portion of the CAs Decision, as modified
by its Resolution dated 5 January 1998, is AFFIRMED. Costs against petitioner.

Carbonell vs. CA (1976)

Facts:
R Jose Poncio was the owner of a parcel of land in Agan St, San Juan, Rizal which was
subject to mortgage in favor of the Republic Savings Bank for P1.5K. P Rosario Carbonell, an
adjacent neighbor, and R Emma Infante, also a neighbor, both offered to buy the said lot.
One day, R Poncio approached P and offered to sell the lot, excluding his house, as he was
unable to keep up with the payment of the mortgage. P proposed P9.50/sqm, which R
Poncio accepted on the condition that P would pay the mortgage. On January 27, 1955,
the two executed a document in the Batanes dialect.
P asked a lawyer to prepare the formal deed of sale which she brought to R Poncio together
with P400, her subsisting balance. However, upon arriving at R Poncios house, the latter told
P that the sale was off as he had already sold the lot to R Emma Infante. P then sought to
talk to R Infante but the latter refused to talk to her (kahit na magkapitbahay sila).
Thereafter, R Infante erected a gate around the lot and built improvements so P consulted a
lawyer. Demand letters were made to both Rs Poncio and Infante. R Poncios answer was
that R Infante had a better offer so he opted to sell the lot to her instead. A formal deed of
sale was executed between them and R Infante paid the subsisting mortgage debt.
However, the sale to R Infante was not yet registered so P registered an adverse claim over
the lot on February 8. The deed of sale in favor of R Infante was only registered on February
12, 4 days after the adverse claim was registered so the TCT issued to her had the annotation
of said claim.
P filed a complaint against Rs, praying she be declared the lawful owner; that the 2nd sale
between Poncio and Infante be declared null and void; and that a deed of conveyance be
executed in her favor.
Rs moved to dismiss the complaint on the ground that the claim is unenforceable under the
Statute of Frauds, as the alleged sale in Ps favor was not evidenced by a written document
(the agreement in Batanes dialect not being in accordance with the requirements of law).
*Daming nangyari na procedural stuff, flipflopping decisions from the TC to CA, hence this
appeal by certiorari.
Issue: Who has a better right over the lot P Carbonell
Held:
It is essential that the buyer of realty must act in good faith in registering his deed of sale to
merit the protection of the second paragraph of Article 1544. Unlike the first and third
paragraphs of said Article 1544, which accord preference to the one who first takes
possession in good faith of personal or real property, the second paragraph directs that
ownership of immovable property should be recognized in favor of one "who in good faith
first recorded" his right. If there is no inscription, what is decisive is prior possession in good

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faith. If there is inscription, as in the case at bar, prior registration in good faith is a precondition to superior title.

respondents Infantes the amount of P1,500.00, which the Infantes paid to the Republic
Savings Bank to redeem the mortgage.

When P Carbonell bought the lot from R Poncio on January 27, 1955, she was the only buyer
thereof and the title of R Poncio was still in his name solely encumbered by bank mortgage
duly annotated thereon. P Carbonell was not aware and she could not have been aware
of any sale to R Infante as there was no such sale to R Infante then. Hence, P 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 4 days prior to the registration of R Infantes's
deed of sale. P Carbonell's good faith did not cease after R Poncio told her on January 31,
1955 of his second sale of the same lot to R Infante. Because of that information, P Carbonell
wanted an audience with R Infante, which desire underscores P Carbonell's good faith. With
an aristocratic disdain unworthy of the good breeding of a good Christian and good
neighbor, R Infante snubbed P Carbonell like a leper (exagg) and refused to see her. So P
Carbonell did the next best thing to protect her right she registered her adverse 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 R Infante's bad faith when
she registered her deed of sale 4 days later on February 12, 1955.

TCT in favor of Sps Infante must be cancelled and a new one issued in favor of P Carbonell. R
Infantes may remove their useful improvements from the lot within 3 months from the finality
of this decision, unless the P Carbonell elects to acquire the same and pay the Infantes the
amount of P13,429.00 within 3 months from the finality of this decision.

Bad faith arising from previous knowledge by R Infante of the prior sale to P Carbonell is
shown by the following facts:
- She refused to see P, who wanted to see her after latter was informed by R Poncio of
the 2nd sale to R Infante. This refusal indicates R Infante knew of the prior sale.
Ordinarily, one will not refuse to see a neighbor. Infante lives just behind the house of
Carbonell. Her refusal to talk to Carbonell could only mean that she did not want to
listen to Carbonell's story
- P Carbonell was already in possession of the mortgage passbook and R Poncios copy
of the mortgage contract. Before or upon paying in full the mortgage indebtedness of
Poncio to the Bank. Infante naturally must have demanded from Poncio the delivery
to her of his mortgage passbook as well as Poncio's mortgage contract so that the
fact of full payment of his bank mortgage will be entered therein; and Poncio, as well
as the bank, must have inevitably informed her that said mortgage passbook could
not be given to her because it was already delivered to Carbonell.
- Carbonell registered on February 8, 1955 her adverse claim, which was accordingly
annotated on Poncio's title 4 days before Infante registered on February 12, 1955 her
deed of sale executed on February 2, 1955. Here she was again on notice of the prior
sale to Carbonell.

Separate opinions:
Teehankee (concurring): both Carbonell and R Infante are buyers in GF, but the first buyer
Carbonell as also the first registrant is legally entitled to the property. The governing principle
here is prius tempore, portior jure (first in time, stronger in right). Knowledge gained by the first
buyer of the second sale cannot defeat the first buyer's rights except only as provided by the
Civil Code and that is where the second buyer first registers in good faith the second sale
ahead of the first. Such knowledge of the first buyer does not bar her from availing of her
rights under the law, among them, to register first her purchase as against the second buyer.
Munoz-Palma (dissenting): Both were buyers in GF but Carbonell cannot be held to have a
superior title to that of Infantes, as the notation of her adverse claim was not done in GF,
having knowledge of Infantes right to the lot. The act of registration of Infantes deed of
sale, even after the annotation of Carbonells claim, was only a formality of what had
already been established her ownership.

The existence of the prior sale to Carbonell was duly established existence of an
agreement, even in Batanes dialect (for both P and R Poncio are native speakers). As
a sale is consensual and consummated by mere consent, and is binding on and
effective between the parties, so must the 1st sale be recognized.
There was adequate consideration for the sale in favor of Carbonell.
Being guilty of bad faith, both in taking physical possession of the lot and in recording their
deed of sale, the Infantes rights are governed by Arts. 546 and 547 of the NCC. However,
while petitioner Carbonell has the superior title to the lot, she must however refund to
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Cheng vs. Genato (1998)

Facts:
Respondent Ramon B. Genato is the owner of two parcels of land located at Paradise
Farms, San Jose Del Monte, Bulacan. He entered into a Contract to Sell with respondentspouses Ernesto R. Da Jose and Socorro B. Da Jose for which the purchase price was P80.00
per square; P50,000.00 shall be paid as partial down payment at the time of execution of this
Contract to Sell; and that P950,000 as full payment shall be paid 30 days after the execution
of the Contract to Sell after the buyer has satisfactorily verified the authenticity of the
documents.
The contract was in a public instrument and was duly annotated at the back of the two
certificates of title. Sps Da Jose asked for and was granted by respondent Genato an
extension of another 30 days - until November 5, 1989.
But without due notice to the Da Jose spouses, Genato executed an Affidavit to Annul the
Contract to Sell. Ricardo Cheng expressed his desire to buy Genatos property. Genato
showed him the TCT with annotation of the contract with Sps Da Jose and the affidavit of
cancelling such contract. Cheng paid him P50,000 upon the assurance that the previous
contract will be annulled.
When Genato was in Registry of Deeds in Meycauayan, Bulacan to register the annulment of
the contract with the Sps Da Jose, by coincidence, the two parties met and later on in the
day, Genato decided to continue the Contract he had with them. Genato returned the
P50,000 to Cheng. The Da Jose spouses paid Genato the complete down payment of
P950,000.00. Cheng instituted a complaint for specific performance to compel Genato to
execute a deed of sale for the check he gave was a partial payment to the total agreed
purchase price of the subject properties and considered as an earnest money for which
Genato acceded.
Issue: WON Article 1544 applies - YES
Held:
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. It is one where
the happening of the event gives rise to an obligation. Thus, for its non-fulfillment there will be
no contract to speak of, the obligor having failed to perform the suspensive condition which
enforces a juridical relation. In fact with this circumstance, there can be no rescission of an
obligation that is still non-existent, the suspensive condition not having occurred as yet.
Emphasis should be made that the breach contemplated in Article 1191 of the New Civil
Code is the obligors failure to comply with an obligation already extant, not a failure of a
condition to render binding that obligation.
A meticulous reading of Article 1544 shows that said law is not apropos to the instant case.
This provision connotes that the following circumstances must concur:
(a)
The two (or more) sales transactions in the issue must pertain to exactly the same
subject matter, and must be valid sales transactions.
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(b)
The two (or more) buyers at odds over the rightful ownership of the subject matter
must each represent conflicting interests; and
(c)
The two (or more) buyers at odds over the rightful ownership of the subject matter
must each have bought from the very same seller.
These situations obviously are lacking in a contract to sell for neither a transfer of ownership
nor a sales transaction has been consummated. The contract to be binding upon the
obligee or the vendor depends upon the fulfillment or non-fulfillment of an event.
Notwithstanding this contrary finding with the appellate court, we are of the view that the
governing principle of Article 1544, Civil Code, should apply in this situation. Jurisprudence
teaches us that the governing principle is PRIMUS TEMPORE, PORTIOR JURE (first in time,
stronger in right). For not only was the contract between herein respondents first in time; it
was also registered long before petitioners intrusion as a second buyer. This principle only
applies when the special rules provided in the aforecited article of Civil Code do not apply
or fit the specific circumstances mandated under said law or by jurisprudence interpreting
the article.
The rule exacted by Article 1544 of the Civil Code for the second buyer to be able to
displace the first buyer are:
(1) that the second buyer must show that he acted in good faith (i.e. in ignorance of the first
sale and of the first buyers rights) from the time of acquisition until title is transferred to him
by registration or failing registration, by delivery of possession;
(2) the second buyer must show continuing good faith and innocence or lack of knowledge
of the first sale until his contract ripens into full ownership through prior registration as
provided by law
Thus, in the case at bar, the knowledge gained by the Da Jose spouses, as first buyers, of the
new agreement between Cheng and Genato will not defeat their rights as first buyers
except where Cheng, as second buyer, registers or annotates his transaction or agreement
on the title of the subject properties in good faith ahead of the Da Jose spouses. Moreover,
although the Da Jose spouses, as first buyers, knew of the second transaction it will not bar
them from availing of their rights granted by law, among them, to register first their
agreement as against the second buyer.
In contrast, knowledge gained by Cheng of the first transaction between the Da Jose
spouses and Genato defeats his rights even if he is first to register the second transaction,
since such knowledge taints his prior registration with bad faith. 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. We have ruled before that when a
Deed of Sale is inscribed in the registry of property on the original document itself, what was
done with respect to said entries or annotations and marginal notes amounted to a
registration of the sale. In this light, we see no reason why we should not give priority in right
the annotation made by the Da Jose spouses with respect to their Contract to Sell dated
September 6, 1989.
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Sabitsana vs. Muertegi (2013)

FACTS
Subject prop is a 7.5k sqm land in the pristine island of Dalutan in the province of Biliran (igoogle niyo, legit na maganda at malinis na whitesand beach, ie tropical paradise talaga).
Respondent's father Domingo Muertegui owned the lot through an unnotarized Deed of Sale
executed in his favor by one Alberto Garcia. They took actual possession of said land by
planting ipil trees and paying real property taxes.

was not yet registered, he raced to register the sale ahead of the Muerteguis, expecting that
his purchase and prior registration would prevail over that of his clients. Applying Article 1544
of the Civil Code, the trial court declared that even though petitioners were first to register
their sale, the same was not done in good faith. And because petitioners registration was
not in good faith, preference should be given to the sale in favor of Juanito, as he was the
first to take possession of the lot in good faith, and the sale to petitioners must be declared
null and void for it casts a cloud upon the Muertegui title.

Later on however, the same Alberto Garcia would again sell the same property to the
lawyer of the Muerteguis, herein petitioner Atty. Sabitsana (pero buti nalang nakapasa)
through a notarized deed of sale which was registered in the Registry of Deeds. The
Muertegui tax declarations were cancelled and new ones were issued upon payment by
Atty. Sabitsana of real property taxes. He also introduced improvements over said lot.

CA: RTC affirmed. Applying Article 1544 of the Civil Code, the CA said that the determining
factor is petitioners good faith, or the lack of it. It held that even though petitioners were first
to register the sale in their favor, they did not do so in good faith, for they already knew
beforehand of Garcias prior sale to Juanito. By virtue of Atty. Sabitsanas professional and
confidential relationship with the Muertegui family, petitioners came to know about the prior
sale to the Muerteguis and the latters possession of the lot, and yet they pushed through
with the second sale. Far from acting in good faith, petitioner Atty. Sabitsana used his legal
knowledge to take advantage of his clients by registering his purchase ahead of them.

When R Daddy died, the heirs - his brother and his son, herein respondents, tried to register
said land under their name through the Public Land Act. Petitioner lawyer however opposed,
saying that he is the true owner. Civil case for quieting of title was then filed.
For respondents, they claim that they were in actual possession over said land and that the
alleged title of the petitioner constituted a cloud over their title. They prayed that P's title be
declared void.
For petitioners, they claim that their title was acquired in good faith as evidenced by the
Absolute Deed of Sale executed by Garcia. Moreover, the alleged sale of the Garcia to the
Muerteguis should be deemed inoperative as it was done without the marital consent of
Garcia's wife.
On trial, it was discovered that petitoner, as the family lawyer of the respondents, was
consulted by the family before the sale was executed; that after the sale to petitioner,
Domingo entered into actual, public, adverse and continuous possession of the lot, and
planted the same to coconut and ipil-ipil; and that after Domingo Sr.s death, his wife
Caseldita, succeeded him in the possession and exercise of rights over the lot.

One issue now raised by the petitioner, which is relevant in our class, is whether or not the
RTC and CA was correct in applying NCC 1544 with respect to the subject prop, an
unregistered land.
HELD
RTC and CA erred. Public Land Act and not NCC 1544 should apply in case of double sales
with respect to unregistered parcels of land. Notwithstanding such error on the legal basis for
judgment, RTC and CA affirmed.
Our courts seem to have forgotten that NCC 1544 does not apply to sales involving
unregistered land. Suffice it to state that the issue of the buyers good or bad faith is relevant
only where the subject of the sale is registered land, and the purchaser is buying the same
from the registered owner whose title to the land is clean. In such case, the purchaser who
relies on the clean title of the registered owner is protected if he is a purchaser in good faith
for
value.

On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told by a
member of the Muertegui family, Carmen Muertegui Davies (Carmen), that the Muertegui
family had bought the lot, but she could not show the document of sale; that he then
conducted an investigation with the offices of the municipal and provincial assessors; that
he failed to find any document, record, or other proof of the sale by Garcia to Juanito, and
instead discovered that the lot was still in the name of Garcia; that given the foregoing
revelations, he concluded that the Muerteguis were merely bluffing, and that they probably
did not want him to buy the property because they were interested in buying it for
themselves considering that it was adjacent to a lot which they owned; that he then
proceeded to purchase the lot from Garcia; that after purchasing the lot, he wrote
Caseldita in October 1991 to inform her of the sale; that he then took possession of the lot
and gathered ipil-ipil for firewood and harvested coconuts and calamansi from the lot.

What applies in this case is Act No. 3344, as amended, which provides for the system of
recording of transactions over unregistered real estate. Act No. 3344 expressly declares that
any registration made shall be without prejudice to a third party with a better right. In this
case, it is the respondents who have a better right:

RTC: Owned by Muerteguis. Sabitsana a purchaser in BF as when he found out that the prop

The fact that the sale to Juanito was not notarized does not alter anything, since the sale

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(ENTER CASIS BARATHEON)

The sale to respondent Juanito was executed on September 2, 1981 via an
unnotarized deed of sale, while the sale to petitioners was made via a
notarized document only on October 17, 1991, or ten years thereafter. Thus,
Juanito who was the first buyer has a better right to the lot, while the
subsequent sale to petitioners is null and void, because when it was made,
the seller Garcia was no longer the owner of the lot.

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between him and Garcia remains valid nonetheless. Notarization, or the requirement of a
public document under the Civil Code, is only for convenience, and not for validity or
enforceability. And because it remained valid as between Juanito and Garcia, the latter no
longer had the right to sell the lot to petitioners, for his ownership thereof had ceased.
Nor can petitioners registration of their purchase have any effect on Juanitos rights. The
mere registration of a sale in ones favor does not give him any right over the land if the
vendor was no longer the owner of the land, having previously sold the same to another
even if the earlier sale was unrecorded. Neither could it validate the purchase thereof by
petitioners, which is null and void. Registration does not vest title; it is merely the evidence of
such title. Our land registration laws do not give the holder any better title than what he
actually has.
Under Act No. 3344, registration of instruments affecting unregistered lands is without
prejudice to a third party with a better right. The aforequoted phrase has been held by this
Court to mean that the mere registration of a sale in ones favor does not give him any right
over the land if the vendor was not anymore the owner of the land having previously sold
the same to somebody else even if the earlier sale was unrecorded.
Petitioner's actual and prior knowledge of the first sale to Juanito makes him a purchaser in
BF. As explained from the foregoing, the purchaser in GF shall be deemed as the one who
has a better right over the title, hence the respondents Muerteguis should be considered as
the true and lawful owners.

Dagupan Trading vs. Macam (1965)

FACTS:
In 1955, Sammy Maron and his seven brothers and sisters were pro-indiviso owners of a
parcel of unregistered land located in a barrio Pangasinan. While their application for
registration of said land under Act No. 496 was pending, they executed, on June 19
and September 21, 1955, two deeds of sale conveying the property to Macam, who
thereafter took possession thereof and proceeded to introduce substantial
improvements therein. One month later, that is, on October 14, 1955, Original
Certificate of Title No. 6942 covering the land was issued in the name of the Maron's,
free from all liens and encumbrances.
A year later, by virtue of a final judgment rendered in a civil case in Manila filed
against Sammy Maron in favor of the Manila Trading and Supply Company, levy was
made upon whatever interest he had in the subject property.
It was later foreclosed. No redemption was made within the allowable period, and
thus the propert was registered in the name of Manila Trading. They later sold all its
rights and title to the property.
In 1958, Dagupan Trading commenced the action against Rustico Macam, praying
that it be declared owner of one-eighth portion of the land and that a partition of the
whole property be made; that appellee be ordered to pay it the amount of P500.00 a
year as damages from 1958 until said portion is delivered, plus attorney's fees and
costs.
Macam, on the other hand, alleged that Sammy Maron's share in the property
described in the complaint, as well as that of all his co-heirs, had been acquired by
purchase by appellee since June 19 and September 21, 1955, before the issuance of
the original certificate of title in their name; that at the time the levy in execution was
made on Sammy Maron's share therein, the latter had no longer any right or interest in
said property; that appellant and its predecessor in interest were cognizant of the
facts already mentioned; that since the sales made in his favor, he had enjoyed
uninterrupted possession of the property and introduced considerable improvements
thereon. Appellee likewise sought to recover damages by way of counterclaim.
TC: dismissed Dagupan Tradings complaint; CA: affirmed
ISSUE/HOLDING:
1. Who has the better right as between appellant Dagupan Trading Company, on the
one hand, and appellee Rustico Macam, on the other, to the one-eighth share of
Sammy Maron in the subject property? MACAM!!
The case at hand does not fall within the two situations presented above. Here the sale in
favor of Rustico Macam was executed before the land was registered, while the sale in favor
of Dagupan Trading was executed after the same property had been registered. What
should determine the issue, then, is the last paragraph of Section 35, Rule 39 of the Rules of
Court. It provides that upon the execution and delivery of the final certificate of sale in favor
of the purchaser of land sold in an execution sale, such purchaser "shall be substituted to
and acquire all the right, title, interest and claim of the judgment debtor to the property as
of the time of the levy."

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What was the interest and claim of Sammy Maron on the one-eighth portion of the property
at the time of the levy? He had none, because for a considerable time prior to the levy, his
interest had already been conveyed to Rustico Macam. Therefore, the subsequent levy
made on the property was void and of no effect (in short: the transfer of rights to Dagupan
was void because the levy in favor of Manila Trading was also void). Needless to say, the
unregistered sale and the consequent conveyance of title and ownership in favor of Rustico
Macam could not have been cancelled and rendered of no effect upon the subsequent
issuance of the Torrens title over the entire parcel of land.
RULING: IN VIEW OF ALL THE FOREGOING, the decision appealed from is affirmed, with costs.

Carumba vs. CA (1970)

FACTS:
Spouses Amado Canuto and Nemesia Ibasco, by virtue of a "Deed of Sale of Unregistered
Land with Covenants of Warranty" sold a parcel of land, partly residential and partly
coconut land with a periphery (area) of 359.09 square meters, more or less, located in the
barrio of Santo Domingo, Iriga, Camarines Sur, to the spouses Amado Carumba and Benita
Canuto, for the sum of P350.00 on April 12, 1955. The deed was never registered in the Office
of the Register of Deeds and the Notary, Mr. Vicente Malaya, was not then an authorized
notary public in the place. Amado Canuto is the older brother of the wife of the herein
appellee, Amado Carumba.
On January 21, 1957, a complaint for a sum or money was filed by Santiago Balbuena
against Amado Canuto and NemesiaIbasco before the Justice of the Peace Court of Iriga,
Camarines Sur. Asubsequent decision was rendered in favor of the plaintiff. On October 1,
1968, the ex-officio Sheriff issued a "Definite Deed of Sale of the property now in question in
favor of Santiago Balbuena, which instrument of sale was registered. The aforesaid property
was declared for taxation purposes in the name of Santiago Balbuena.
CFI ordered Balbuena to pay P30.00, as damages, plus the costs and declared Carumba the
owner of the litigated property because he had taken possession of the land. On the other
hand, CA held that there having been a double sale of the land subject of the suit
Balbuena's title was superior to that of his adversary under Article 1544 of the Civil Code of
the Philippines, since the execution sale had been properly registered in good faith and the
sale to Carumba was not recorded.
ISSUE: Who is the true owner of the said parcel of land?
HELD: Carumba.
Although Article 1544 provides that the registration in good faith prevails over possession in
the event of a double sale by the vendor of the same piece of land to different vendees,
said article is of no application to the case at bar, even if Balbuena, the later vendee, was
ignorant of the prior sale made by his judgment debtor in favor of petitioner Carumba. The
reason is that the purchaser of unregistered land at a sheriff's execution sale only steps into
the shoes of the judgment debtor, and merely acquires the latter's interest in the property
sold as of the time the property was levied upon as provided by section 35 of Rule 39 of the
Revised Rules of Court.
The deed of sale in favor of Canuto had been executed two years before the time of the
levy, on 12 April 1955, and while only embodied in a private document, the same, coupled
with the fact that petitioner Carumba had taken possession of the unregistered land sold,
sufficed to vest ownership on the said buyer. When the levy was made by the Sheriff,
therefore, the judgment debtor no longer had dominical interest nor any real right over the
land that could pass to the purchaser at the execution sale.

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Escueta vs. Lim (2007)

SUMMARY: Ignacio Rubio and the heirs of Luz Baloloy sold 2 parcels of land to respondent
Lim and then subsequently to petitioner Escueta.
FACTS:
Rufina Lim filed an action to remove cloud on, or quiet title to, real property, with
preliminary injunction and issuance of a hold-departure order from
the Philippines against Ignacio E. Rubio. Respondent amended her complaint to
include specific performance and damages.
o Amended complaint: respondent averred inter alia
she bought the hereditary shares (consisting of 10 lots) of Ignacio Rubio
and the heirs of Luz Baloloy, namely: Alejandrino, Bayani, and other coheirs;
that said vendors executed a contract of sale dated April 10, 1990 in her
favor;
that Ignacio Rubio and the heirs of Luz Baloloy received a down payment
or earnest money in the amount of 102k and 450k respectively;
that it was agreed in the contract of sale that the vendors would secure
certificates of title covering their respective hereditary shares;
that the balance of the purchase price would be paid to each heir upon
presentation of their individual certificate[s] of [title];
that Ignacio Rubio refused to receive the other half of the down payment
which is 100k;
that Ignacio Rubio refused and still refuses to deliver to [respondent] the
certificates of title covering his share on the two lots;
that with respect to the heirs of Luz Baloloy, they also refused and still
refuse to perform the delivery of the two certificates of title covering their
share in the disputed lots;
that respondent was and is ready and willing to pay Ignacio Rubio and
the heirs of Luz Baloloy upon presentation of their individual certificates of
title, free from whatever lien and encumbrance;
Corazon Escueta, in spite of her knowledge that the disputed lots have already been
sold by Ignacio Rubio to respondent, it is alleged that a simulated deed of sale
involving said lots was effected by Ignacio Rubio in her favor; and that the simulated
deed of sale by Rubio to Escueta has raised doubts and clouds over respondents title.
Petitioners:
o Baloloys: R has no cause of action, because the subject contract of sale has no
more force and effect as far as the Baloloys are concerned, since they have
withdrawn their offer to sell for the reason that respondent failed to pay the
balance of the purchase price as orally promised on or before May 1, 1990.
o Rubio and Escueta: R has no cause of action, because Rubio has not entered
into a contract of sale with her; that he has appointed his daughter Patricia
Llamas to be his attorney-in-fact and not Virginia Rubio Laygo Lim (Lim for
brevity) who was the one who represented him in the sale of the disputed lots in
favor of respondent; that the P100,000 respondent claimed he received as
down payment for the lots is a simple transaction by way of a loan with Lim.
TC:
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o Declared the Baloloys in default during pre-trial. Consequently, respondent was

allowed to adduce evidence ex parte. Rendered partial decision in favor of R
and against the Baloloys + damages.
o Trial on merits against Rubio and Escueta: dismissed complaint against Rubio
and Escueta but ordered to return 102k downpayment.
CA: reversed.
o the validity of the subject contract of sale in favor of R is upheld.
o Rubio is directed to execute a Deed of Absolute Sale conditioned upon the
payment of the balance of the purchase price by [respondent] within 30 days
from the receipt of the entry of judgment of this Decision.
o the contracts of sale between Rubio and Escueta involving Rubios share in the
disputed properties is declared NULL and VOID.
o damages

ISSUE/HOLDING:
1. W/N the sale between the petitioners and Lim was valid? YES.
Re: failure of Bayani to appear at the pre-trial:
Bayani Baloloy was represented by his attorney-in-fact, Alejandrino Baloloy. In the
Baloloys answer to the original complaint and amended complaint, the allegations
relating to the personal circumstances of the Baloloys are clearly admitted.
An admission, verbal or written, made by a party in the course of the proceedings in
the same case, does not require proof. The factual admission in the pleadings on
record [dispenses] with the need x x x to present evidence to prove the admitted fact.
It cannot, therefore, be controverted by the party making such
admission, and [is] conclusive as to them. All proofs submitted by them contrary
thereto or inconsistent therewith should be ignored whether objection is interposed by
a party or not. Besides, there is no showing that a palpable mistake has been
committed in their admission or that no admission has been made by them
Pre-trial is mandatory. Notices were served. They did not raise the issue of lack of SPA in
their motion, they are deemed to have waived it. Lack of representation = default.
Did not allege fraud within the 60-day period required by the ROC.
Re: special power of attorney executed by Ignacio Rubio in favor of his daughter Patricia
Llamas
[check 1892] she is not prohibited from appointing a substitute. By authorizing Virginia
Lim to sell the subject properties, Patricia merely acted within the limits of the authority
given by her father, but she will have to be responsible for the acts of the sub-agent,
among which is precisely the sale of the subject properties in favor of respondent.
Even if Virginia had no authority to sell the property, the contract of sale would have
only been unenforceable, not void. [1317] The same was ratified:
o Rubio: acceptance and encashment of the check. His action necessarily implies
that he waived his right of action to avoid the contract, and, consequently, it
also implies the tacit, if not express, confirmation of the said sale effected by
Virginia Lim in favor of respondent.
o Baloloys: when they accepted and enjoyed its benefits. The doctrine of
estoppel applicable to petitioners here is not only that which prohibits a party
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from assuming inconsistent positions, based on the principle of election, but that
which precludes him from repudiating an obligation voluntarily assumed after
having accepted benefits therefrom. To countenance such repudiation would
be contrary to equity, and would put a premium on fraud or misrepresentation.
Re: double sale
[1544] a second buyer of the property who may have had actual or constructive
knowledge of such defect in the sellers title, or at least was charged with the
obligation to discover such defect, cannot be a registrant in good faith. Such second
buyer cannot defeat the first buyers title. In case a title is issued to the second buyer,
the first buyer may seek reconveyance of the property subject of the sale.
Nothing in the contract prevents the obligation of the vendor to convey title from
becoming effective or gives the vendor the right to unilaterally resolve the contract
the moment the buyer fails to pay within a fixed period. Petitioners themselves have
failed to deliver their individual certificates of title, for which reason it is obvious that
respondent cannot be expected to pay the stipulated taxes, fees, and expenses.

Re: Validity of the contract of sale

All elements were present.
Ignacio Rubio, the Baloloys, and their co-heirs sold their hereditary shares for a price
certain to which respondent agreed to buy and pay for the subject properties. The
offer and the acceptance are concurrent, since the minds of the contracting parties
meet in the terms of the agreement. In fact, earnest money has been given by
respondent. [I]t shall be considered as part of the price and as proof of the perfection
of the contract. It constitutes an advance payment to be deducted from the total
price.
Article 1477 of the same Code also states that [t]he ownership of the thing sold shall
be transferred to the vendee upon actual or constructive delivery thereof. In
the present case, there is actual delivery as manifested by acts simultaneous with and
subsequent to the contract of sale when respondent not only took possession of the
subject properties but also allowed their use as parking terminal for jeepneys and
buses. Moreover, the execution itself of the contract of sale is constructive delivery.
Consequently, Ignacio Rubio could no longer sell the subject properties to Corazon Escueta,
after having sold them to respondent. [I]n a contract of sale, the vendor loses ownership
over the property and cannot recover it until and unless the contract is resolved or
rescinded x x x. The records do not show that Ignacio Rubio asked for a rescission of the
contract.
Immovable properties: failure to pay = right to rescission; vendee may pay until rescission is
demanded.
RULING: petition denied.

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