DELIVER THE SUBJECT MATTER

Nemo potest nisi quod de jure potest - no man can do anything except what he can
do lawfully

Traders Royal Bank vs CA 269 SCRA 15

Filriters registered owner of Central Bank Certificate of Indebtedness (CBCI). Filriters

transferred it to Philfinance by one of its officers without authorization from the
company. Subsequently, Philfinance transferred same CBCI to Traders Royal Bank
(TRB) under a repurchase agreement. When Philfinance failed to do so, The TRB tried to
register in its name in the CBCI. The Central Bank did not want to recognize the transfer.
Docketed as Civil Case No. 83-17966 in the Regional Trial Court of Manila, Branch 32,
the action was originally filed as a Petition for Mandamus 5 under Rule 65 of the Rules of
Court, to compel the Central Bank of the Philippines to register the transfer of the subject
CBCI to petitioner Traders Royal Bank (TRB).
DECISION OF LOWER COURTS: * RTC: transfer is null and void. * CA: The appellate
court ruled that the subject CBCI is not a negotiable instrument. Philfinance acquired no
title or rights under CBCI No. D891 which it could assign or transfer to Traders Royal
Bank and which the latter can register with the Central Bank. Thus, the transfer of the
instrument from Philfinance to TRB was merely an assignment, and is not governed by
the negotiable instruments law.

Ruling:

The transfer made by Filriters to Philfinance did not conform to the said Central Bank
Circular, which for all intents, is considered part of the law. As found by the courts a quo,
Alfredo O. Banaria, who had signed the deed of assignment from Filriters to Philfinance,
purportedly for and in favor of Filriters, did not have the necessary written authorization
from the Board of Directors of Filriters to act for the latter. As it is, the sale from Filriters
to Philfinance was fictitious, and therefore void and inexistent, as there was no
consideration for the same. This is fatal to the petitioner’s cause, for then, Philfinance had
no title over the subject certificate to convey to Traders Royal Bank. Nemo potest nisi
quod de jure potest—no man can do anything except what he can do lawfully.

Nemo Dat Quod Non Habet - No man can give that which does not have

Tsai vs CA 366 SCRA 324

Ever Textile Mills, Inc. (EVERTEX) obtained loan from Philippine Bank of
Communications (PBCom), secured by a deed of Real and Chattel Mortgage over the lot
where its factory stands, and the chattels located therein as enumerated in a schedule
attached to the mortgage contract. PBCom again granted a second loan to EVERTEX
which was secured by a Chattel Mortgage over personal properties enumerated in a list
attached thereto. These listed properties were similar to those listed in the first mortgage
deed. After the date of the execution of the second mortgage mentioned above,
EVERTEX purchased various machines and equipments. Upon EVERTEX's failure to
meet its obligation to PBCom, the latter commenced extrajudicial foreclosure
proceedings against EVERTEX under Act 3135 and Act 1506 or "The Chattel Mortgage
Law". PBCom then consolidated its ownership over the lot and all the properties in it. It
leased the entire factory premises to Ruby Tsai and sold to the same the factory, lock,
stock and barrel including the contested machineries.
EVERTEX filed a complaint for annulment of sale, reconveyance, and damages
against PBCom, alleging inter alia that the extrajudicial foreclosure of subject mortgage
was not valid, and that PBCom, without any legal or factual basis, appropriated the
contested properties which were not included in the Real and Chattel Mortgage of the
first mortgage contract nor in the second contract which is a Chattel Mortgage, and
neither were those properties included in the Notice of Sheriff's Sale.

Ruling:

Accordingly, we find no reversible error in the respondent appellate court’s ruling that
inasmuch as the subject mortgages were intended by the parties to involve chattels,
insofar as equipment and machinery were concerned, the Chattel Mortgage Law applies,
which provides in Section 7 thereof that: “a chattel mortgage shall be deemed to cover
only the property described therein and not like or substituted property thereafter
acquired by the mortgagor and placed in the same depository as the property originally
mortgaged, anything in the mortgage to the contrary notwithstanding.” And, since the
disputed machineries were acquired in 1981 and could not have been involved in the
1975 or 1979 chattel mortgages, it was consequently an error on the part of the Sheriff to
include subject machineries with the properties enumerated in said chattel mortgages.
Tsai vs. Court of Appeals, 366 SCRA 324, G.R. No. 120098, G.R. No. 120109 October 2,
2001

As the auction sale of the subject properties to PBCom is void, no valid title passed in its
favor. Consequently, the sale thereof to Tsai is also a nullity under the elementary
principle of nemo dat quod non habet, one cannot give what one does not have.17 Tsai vs.
Court of Appeals, 366 SCRA 324, G.R. No. 120098, G.R. No. 120109 October 2, 2001

GENERAL DOCTRINES ON TRADITION, WHETHER ACTUAL OR

CONSTRUCTIVE

Froilan vs Pan Oriental Shipping Co., 12 SCRA 276

Plaintiff, Fernando Froilan filed a complaint against the defendant-appellant, Pan Oriental
Shipping Co., alleging that he purchased from the Shipping Commission the vessel for
P200,000, paying P50,000 down and agreeing to pay the balance in installments. To
secure the payment of the balance of the purchase price, he executed a chattel mortgage
of said vessel in favor of the Shipping Commission. For various reasons, among them the
non-payment of the installments, the Shipping Commission tool possession of said vessel
and considered the contract of sale cancelled. The Shipping Commission chartered and
delivered said vessel to the defendant-appellant Pan Oriental Shipping Co. subject to the
approval of the President of the Philippines. Plaintiff appealed the action of the Shipping
Commission to the President of the Philippines and, in its meeting the Cabinet restored
him to all his rights under his original contract with the Shipping Commission. Plaintiff
had repeatedly demanded from the Pan Oriental Shipping Co. the possession of the vessel
in question but the latter refused to do so.
Plaintiff, prayed that, upon the approval of the bond accompanying his complaint, a writ
of replevin be issued for the seizure of said vessel with all its equipment and
appurtenances, and that after hearing, he be adjudged to have the rightful possession
thereof . The lower court issued the writ of replevin prayed for by Froilan and by virtue
thereof the Pan Oriental Shipping Co. was divested of its possession of said vessel.

Pan Oriental protested to this restoration of Plaintiff ‘s rights under the contract of sale,
for the reason that when the vessel was delivered to it, the Shipping Administration had
authority to dispose of said authority to the property, Plaintiff having already relinquished
whatever rights he may have thereon. Plaintiff paid the required cash of P10,000.00 and
as Pan Oriental refused to surrender possession of the vessel, he filed an action to recover
possession thereof and have him declared the rightful owner of said property. The
Republic of the Philippines was allowed to intervene in said civil case praying for the
possession of the in order that the chattel mortgage constituted thereon may be
foreclosed.

Ruling:
In the instant case, while it may be true that the contract of sale did not expressly give to
the mortgagee the right to cancel the agreement, it was, nevertheless, provided therein
that said party may rescind the contract as it may see f it in case of breach of the terms
thereof by the mortgagor.

It is to be noted that unlike in the charter contract where it was specifically prescribed
that ownership of the vessel shall be transferred to the vendee only upon full payment of
the purchase price, no similar provision appears in the contract of sale in favor of
plaintiff-appellant. In the absence of stipulation to the contrary, the ownership of the thing
sold passes to the vendee upon actual or constructive delivery thereof. (Art. 1477, new
Civil Code.)

Phil Suburban Dev. Corp. Vs Auditor General

On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on
the reports of the Committee created to survey suitable lots for relocating squatters in
Manila and suburbs, approved in principle the acquisition by the People’s Homesite and
Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta. Maria,
Bulacan and of another area either in Las Piñas or Parañaque, Rizal, or Bacoor, Cavite for
those who desire to settle south of Manila. On June 10, 1960, the Board of Directors of
the PHHC passed Resolution No. 700 (Annex “C”) authorizing the purchase of the
unoccupied portion of the Sapang Palay Estate at P0.45 per square meter “subject to the
following conditions precedent:

3. That the President of the Philippines shall first provide the PHHC with the necessary
funds to effect the purchase and development of this property from the proposed P4.5
million bond issue to be absorbed by the GSIS.
4. That the contract of sale shall first be approved by the Auditor General pursuant to
Executive Order dated February 3, 1959.

On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos.
1000 and 1322 in the amount of P7,500,000.00 to be absorbed by the GSIS, in order to
finance the acquisition by the PHHC of the entire Sapang Palay Estate at a price not to
exceed P0.45 per sq. meter.

On December 29,1960, Petitioner Philippine Suburban Development Corporation, as

owner of the unoccupied portion of the Sapang Palay Estate and the People’s Homesite
and Housing Corporation, entered into a contract embodied in a public instrument entitled
“Deed of Absolute Sale” whereby the former conveyed unto the latter the two parcels of
land abovementioned. This was not registered in the Office of the Register of Deeds until
March 14, 1961, due to the fact, petitioner claims, that the PHHC could not at once
advance the money needed for registration expenses.

In the meantime, the Auditor General, to whom a copy of the contract had been submitted
for approval in conformity with Executive Order No. 290, expressed objections thereto
and requested a re-examination of the contract, in view of the fact that from 1948 to
December 20, 1960, the entire hacienda was assessed at P131,590.00, and reassessed
beginning December 21, 1960 in the greatly increased amount of P4,898,110.00.

It appears that as early as the first week of June, 1960, prior to the signing of the deed by
the parties, the PHHC acquired possession of the property, with the consent of petitioner,
to enable the said PHHC to proceed immediately with the construction of roads in the
new settlement and to resettle the squatters and flood victims in Manila who were
rendered homeless by the floods or ejected from the lots which they were then occupying.
On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold
the amount of P30,099.79 from the purchase price to be paid by it to the Philippine
Suburban Development Corporation. Said amount represented the realty tax due on the
property involved for the calendar year 1961. Petitioner, through the PHHC, paid under
protest the abovementioned amount to the Provincial Treasurer of Bulacan and thereafter,
or on June 13, 1961, by letter, requested then Secretary of Finance Dominador Aytona to
order a refund of the amount so paid. Upon recommendation of the Provincial Treasurer
of Bulacan, said request was denied by the Secretary of Finance in a letter-decision dated
August 22, 1961.
**Petitioner claimed that it ceased to be the owner of the land in question upon the
execution of the Deed of Absolute Sale on December 29, 1960. It is now claimed in this
appeal that the Auditor General erred in disallowing the refund of the real estate tax in the
amount of P30,460.90 because aside from the presumptive delivery of the property by the
execution of the deed of sale on December 29, 1960, the possession of the property was
actually delivered to the vendee prior to the sale, and, therefore, by the transmission of
ownership to the vendee, petitioner has ceased to be the owner of the property involved,
and, consequently, under no obligation to pay the real property tax for the year 1961.
**Respondent, however, argues that the presumptive delivery of the property under
Article 1498 of the Civil Code does not apply because of the requirement in the contract
that the sale shall first be approved by the Auditor General, pursuant to the Executive
Order.

Ruling:

The vendor had actually placed the vendee in possession and control over the thing sold,
even before the date of the sale. The condition that the vendor should first register the
deed of sale and secure a new title in the name of the vendee before the latter shall pay
the balance of the purchase price did not preclude the transmission of ownership. In the
absence of an express stipulation to the contrary , the pay ment of the purchase price of
the goods is not a condition precedent to the transfer of title to the buy er, but title passes
by the delivery of the goods. Philippine Suburban Development Corporation vs. Auditor
General, 63 SCRA 397, No. L-19545 April 18, 1975

Under the civil law, delivery (tradition) as a mode of transmission of ownership may be
actual (real tradition) or constructive (constructive tradition). When the sale of real
property is made in a public instrument, the execution thereof is equivalent to the delivery
of the thing object of the contract, if from the deed the contrary does not appear or cannot
clearly be inferred. Philippine Suburban Development Corporation vs. Auditor General,
63 SCRA 397, No. L-19545 April 18, 1975

Balatbat vs CA

A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina during their
conjugal union. Maria died on August 28, 1966. On June 15, 1977, Aurelio filed a case
for partition. The trial court held that Aurelio is entitled to the ½ portion at his share in
the conjugal property, and 1/5 of the other half which formed part of Maria’s estate,
divided equally among him at his 4 children. The decision having become final and
executory, the Register of Deeds of Manila issued a transfer certificate of title on October
5, 1979 according to the ruling of the court. On April 1, 1980, Aurelio sold his 6/10 share
to spouses Aurora Tuazon-Repuyan and Jose Repuyan, as evidenced by a deed of
absolute sale. On June 21, 1980, Aurora caused the annotation of her affidavit of adverse
claim. On August 20, 1980, Aurelio filed a complaint for rescission of contract grounded
on the buyers’ failure to pay the balance of the purchase price. On February 4, 1982,
another deed of absolute sale was executed between Aurelio and his children, and herein
petitioner Clara Balatbat, involving the entire lot. Balatbat filed a motion for the issuance
of writ of possession, which was granted by the court on September 20, 1982, subject to
valid rights and interests of third persons. Balatbat filed a motion to intervene in the
rescission case, but did not file her complaint in intervention. The court ruled that the sale
between Aurelio and Aurora is valid.

Ruling:

Devoid of any stipulation that “ownership in the thing shall not pass to the purchaser until
he has fully paid the price,” ownership in the thing shall pass from the vendor to the
vendee upon actual or constructive delivery of the thing “sold even if the purchase price
has not yet been fully paid. The failure of the buyer to make good the price does not, in
law, cause the ownership to revest to the seller unless the bilateral contract of sale is first
rescinded or resolved pursuant to Article 1191 of the New Civil Code. Non-payment only
creates a right to demand the fulfillment of the obligation or to rescind the contract.

With respect to the nondelivery of the possession of the subject property to the private
respondent, suffice it to say that ownership of the thing sold is acquired only from the
time of delivery thereof, either actual or constructive. Article 1498 of the Civil Code
provides that—when the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the thing which is the object of the contract, if from
the deed the contrary does not appear or cannot be inferred. The execution of the public
instrument, without actual delivery of the thing, transfers the ownership from the vendor
to the vendee, who may thereafter exercise the rights of an owner over the same. Balatbat
vs. Court of Appeals, 261 SCRA 128, G.R. No. 109410 August 28, 1996

PHYSICAL DELIVERY

Alfredo vs Borras

Spouses Armando Borras (“Armando”) and AdeliaLobaton Borras (“Adelia”), filed a

complaint for specificperformance against Godofredo and Carmen before theRegional
Trial Court of Bataan, Branch 4.Armando and Adelia alleged in their complaint that
Godofredoand Carmen mortgaged the Subject Land for P7,000.00 with the Development
Bank of the Philippines (“DBP”). The SubjectLand is covered by Original Certificate of
Title No. 284 (“OCTNo. 284”) issued to Godofredo Alfredo (“Godofredo”) and Carmen
Limon Alfredo (“Carmen”under Homestead Patent No.V-69196.To pay the debt, Carmen
and Godofredo sold theSubject Land to Armando and Adelia for P15,000.00, thebuyers to
pay the DBP loan and its accumulated interest, andthe balance to be paid in cash to the
sellers.Armando and Adelia subsequently paid the balance of the purchase price of the
land and Godofredo and Carmenthen delivered to Adelia the owner’s duplicate copy of
OCT No.284, with the document of cancellation of mortgage, officialreceipts of realty tax
payments, and tax declaration in the name of Godofredo. Godofredo and Carmen
introduced Armando and Adelia, as the new owners of the Subject Land, to the
Natanawans, the old tenants of the Subject Land. Armando and Adelia then took
possession of the Subject Land.Subsequently, Armando and Adelia discovered that
Godofredo and Carmen had re-sold portions of the Subject Land to several
persons.Armando and Adelia
filed an adverse claim with the Register of Deeds of Bataan.
They discovered that Godofredo and Carmen had secured an owner’s duplicate copy of
OCT No. 284 after filing a petition in court for the issuance of a new copy ,claiming in
their petition that they lost their owner’s duplicate copy.Then Armando and Adelia
amended their complaint to include the following persons as additional defendants: the
spouses Arnulfo Savellano and Editha B.Savellano, Danton D. Matawaran, the spouses
Delfin F.Espiritu, Jr. and Estela S. Espiritu, and Elizabeth Tuazon(“Subsequent Buyers”)
who purchased from Godofredo andCarmen the subdivided portions of the Subject Land
and to whom the Register of Deeds of Bataan issued transfer certificates of title to the lots
they purchased.I n t h e i r a n s w e r, G o d o f r e d o a n d C a r m e n a n d t h e Subsequent
Buyers (collectively “petitioners”) argued that the action is unenforceable under the
Statute of Frauds as there is no written instrument evidencing the alleged contract
of saleover the Subject Land in favor of Armando and Adelia.As counterclaim,
petitioners sought payment of attorney’s fees and incidental expenses.
Trial then followed. The trial court rendered its decision infavor of Armando and Adelia.

Ruling:

The contract of sale of the Subject Land has also been consummated because the sellers
and buyers have performed their respective obligations under the contract. In a contract
of sale, the seller obligates himself to transfer the ownership of the determinate thing
sold, and to deliver the same, to the buyer who obligates himself to pay a price certain to
the seller.

This physical delivery of the Subject Land also constituted a transfer of ownership of the
Subject Land to Armando and Adelia. Ownership of the thing sold is transferred to the
vendee upon its actual or constructive delivery. Alfredo vs. Borras, 404 SCRA 145, G.R.
No. 144225 June 17, 2003

CONSTRUCTIVE DELIVERY

Sabio vs International Corporate Bank

Parallel to our ruling in Dulay Enterprises, Inc. v. Court of Appeals, we find that
petitioners’ contention that respondents “never acquired ownership over the subject
property since the latter was never in possession of the subject property nor was the
property ever delivered” is totally without merit. Under the aforementioned Article 1498,
the mere execution of the deed of conveyance in a public document is equivalent to the
delivery of the property. Since the execution of the deed of conveyance is deemed
equivalent to delivery, prior physical delivery or possession is not legally required. It is
well-established that ownership and possession are two entirely different legal concepts.
Just as possession is not a definite proof of ownership, neither is non-possession
inconsistent with ownership. Thus, it is of no legal consequence that respondents were
never in actual possession or occupation of the subject property. They, nevertheless,
perfected and completed ownership and title to the subject property Sabio vs.
International Corporate Bank, Inc., 364 SCRA 385, G.R. No. 132709 September 4, 2001

Santos vs Santos

Petitioner Zenaida M. Santos is the widow of Salvador Santos, a brother of private

respondents Calixto, Alberto, Antonio, all surnamed Santos and Rosa Santos-Carreon.

The spouses Jesus and Rosalia were the parents of the respondents and the husband of the
petitioner. The spouses owned a parcel of registered land with a four-door apartment
administered by Rosalia who rented them out. On January 19, 1959, the spouses executed
a deed of sale of the properties in favor of their children Salvador and Rosa. Rosa in turn
sold her share to Salvador on November 20, 1973, which resulted in the issuance of new
TCT. Despite the transfer of the property to Salvador, Rosalia continued to lease and
receive rentals from the apartment units.

On January 9, 1985, Salvador died, followed by Rosalia who died the following month.
Shortly after, petitioner Zenaida, claiming to be Salvador’s heir, demanded the rent from
Antonio Hombrebueno, a tenant of Rosalia. When the latter refused to pay, Zenaida filed
an ejectment suit against him with the Metropolitan Trial Court of Manila, which
eventually decided in Zenaida’s favor.

On January 5, 1989, private respondent instituted an action for reconveyance of property

with preliminary injunction against petitioner in the Regional Trial Court of Manila,
where they alleged that the two deeds of sale were simulated for lack of consideration.
The petitioner on the other hand denied the material allegations in the complaint and that
she further alleged that the respondents’ right to reconveyance was already barred by
prescription and laches considering the fact that from the date of sale from Rosa to
Salvador up to his death, more or less twelve (12) years had lapsed, and from his death up
to the filing of the case for reconveyance, four (4) years has elapsed. In other words, it
took respondents about sixteen (16) years to file the case. Moreover, petitioner argues that
an action to annul a contract for lack of consideration prescribes in ten (10) years and
even assuming that the cause of action has not prescribed, respondents are guilty of
laches for their inaction for a long period of time.

The trial court decided in favor of private respondents in as much as the deeds of sale
were fictitious, the action to assail the same does not prescribe.

Upon appeal, the Court of Appeals affirmed the trial court’s decision. It held that the
subject deeds of sale did not confer upon Salvador the ownership over the subject
property, because even after the sale, the original vendors remained in dominion, control,
and possession thereof.

Ruling:

It is true that neither tax receipts nor declarations of ownership for taxation purposes
constitute sufficient proof of ownership. They must be supported by other effective
proofs. These requisite proofs we find present in this case. As admitted by petitioner,
despite the sale, Jesus and Rosalia continued to possess and administer the property and
enjoy its fruits by leasing it to third persons. Both Rosa and Salvador did not exercise any
right of ownership over it. Before the second deed of sale to transfer her 1/2 share over
the property was executed by Rosa, Salvador still sought the permission of his mother.
Further, after Salvador registered the property in his name, he surrendered the title to his
mother. These are clear indications that ownership still remained with the original
owners. In Serrano vs. CA, 139 SCRA 179, 189 (1985), we held that the continued
collection of rentals from the tenants by the seller of realty after execution of alleged deed
of sale is contrary to the notion of ownership. Santos vs. Santos, 366 SCRA 395, G.R.
No. 133895 October 2, 2001

As To Movables

Lagon vs Hooven Comalco Industries

Even more strange is the fact that HOOVEN instituted the present action for collection of
sum of money against Lagon only on 24 February 1987, or more than five (5) years after
the supposed completion of the project. Indeed, it is contrary to common experience that
a creditor would take its own sweet time in collecting its credit, more so in this case when
the amount involved is not miniscule but substantial Lagon vs. Hooven Comalco
Industries, Inc., 349 SCRA 363, G.R. No. 135657 January 17, 2001

As above specifically stated, deliveries must be made to the buyer or his duly authorized
representative named in the contracts. In other words, unless the buyer specifically
designated someone to receive the delivery of materials and his name is written on the
Proposals opposite
the words “Authorized Receiver/Depository,” the seller is under obligation to deliver to
the buyer only and to no other person; otherwise, the delivery would be invalid and the
seller would not be discharged from liability. In the present case, petitioner did not name
any person in the Proposals who would receive the deliveries in his behalf, which meant
that HOOVEN was bound to deliver exclusively to petitioner. Lagon vs. Hooven
Comalco Industries, Inc., 349 SCRA 363, G.R. No. 135657 January 17, 2001

Union Motors Corp. Vs CA

Undisputed is the fact that the respondent Bernal spouses did not come into possession of
the subject Cimarron jeepney that was supposed to be delivered to them by the petitioner.
The registration certificate, receipt and sales invoice that the respondent Bernal spouses
signed were explained during the hearing without any opposition by the petitioner.
According to testimonial evidence adduced by the respondent spouses during the trial of
the case, the said documents were signed as a part of the processing and for the approval
of their application to buy the subject motor vehicle. Without such signed documents, no
sale, much less delivery, of the subject jeepney could be made. The documents were not
therefore an acknowledgment by respondent spouses of the physical acquisition of the
subject motor vehicle but merely a requirement of petitioner so that the said subject
motor vehicle would be delivered to them. We have ruled that the issuance of a sales
invoice does not prove transfer of ownership of the thing sold to the buyer; an invoice is
nothing more than a detailed statement of the nature, quantity and cost of the thing sold
and has been considered not a bill of sale.

The registration certificate signed by the respondent spouses does not conclusively prove
that constructive delivery was made nor that ownership has been transferred to the
respondent spouses. Like the receipt and the invoice, the signing of the said documents
was qualified by the fact that it was a requirement of petitioner for the sale and financing
contract to be approved. In all forms of delivery, it is necessary that the act of delivery,
whether constructive or actual, should be coupled with the intention of delivering the
thing. The act, without the intention, is insufficient. The critical factor in the different
modes of effecting delivery which gives legal effect to the act, is the actual intention of
the vendor to deliver, and its acceptance by the vendee. Without that intention, there is no
tradition.

Inasmuch as there was neither physical nor constructive delivery of a determinate thing
(in this case, the subject motor vehicle), the thing sold remained at the seller’s risk. The
petitioner should therefore bear the loss of the subject motor vehicle after osmeña
allegedly stole the same. Union Motor Corporation vs. Court of Appeals, 361 SCRA 506,
G.R. No. 117187 July 20, 2001

As to Immovables

Manuel R. Dulay Enterprise Inc. Vs CA

· Manuel R. Dulay Enterprises, Inc, a domestic corporation obtained various loans

for the construction of its hotel project, Dulay Continental Hotel (now Frederick
Hotel).
· Manuel Dulay by virtue of Board Resolution No 18 sold the subject property to
spouses Maria Theresa and Castrense Veloso.
· Maria Veloso (buyer), without the knowledge of Manuel Dulay, mortgaged the
subject property to private respondent Manuel A. Torres. #fluffypeaches Upon the
failure of Maria Veloso to pay Torres, the property was sold to Torres in an
extrajudicial foreclosure sale.
· Torres filed an action against the corporation, Virgilio Dulay and against the
tenants of the apartment.
· RTC ordered the corporation and the tenants to vacate the building.
· Petitioners: RTC had acted with GAD when it applied the doctrine of piercing the
veil of corporate entity considering that the sale has no binding effect on corporation
as Board Resolution No. 18 which authorized the sale of the subject property was
resolved without the approval of all the members of the board of directors and
said Board Resolution was prepared by a person not designated by the corporation to
be its secretary.
Under the aforementioned article, the mere execution of the deed of sale in a public
document is equivalent to the delivery of the property. x x x x x x Therefore, prior
physical delivery or possession is not legally required since the execution of the Deed of
Sale is deemed equivalent to delivery. Manuel R. Dulay Enterprises, Inc. vs. Court of
Appeals, 225 SCRA 678, G.R. No. 91889 August 27, 1993

Pasagui vs Court of Appeals

It is true that the execution of the deed of absolute sale in a public instrument is
equivalent to delivery of the land subject of the sale. This presumptive delivery only
holds true when there is no impediment that may prevent the passing of the property from
the hands of the vendor into those of the vendee. It can be negated by the reality that the
vendees actually failed to obtain material possession of the land subject of the sale.

In order that an action may be considered as one for forcible entry, it is not only
necessary that the plaintiff should allege his prior physical possession of the property but
also that he was deprived of his possession by any of the means provided in Section 1,
Rule 70 of the Revised Rules of Court, namely: force, intimidation, threats, strategy and
stealth. For, if the dispossession did not take place by any of these means, the courts of
first instance, not the municipal courts, have jurisdiction.

Power Commercial and Industrial Corp. Vs CA

By his own admission, Anthony Powers, General Manager of petitioner-corporation, did

not ask the corporation’s lawyers to stipulate in the contract that Respondent Reynaldo
was guaranteeing the ejectment of the occupants, because there was already a proviso in
said deed of sale that the sellers were guaranteeing the peaceful possession by the buyer
of the land in question. Any obscurity in a contract, if the above-quoted provision can be
so described, must be construed against the party who caused it. Petitioner itself caused
the obscurity because it omitted this alleged condition when its lawyer drafted said
contract.

If the parties intended to impose on respondent spouses the obligation to eject the tenants
from the lot sold, it should have included in the contract a provision similar to that
referred to in Romero vs. Court of Appeals, where the ejectment of the occupants of the
lot sold by private respondent was the operative act which set into motion the period of
petitioner’s compliance with his own obligation, i.e., to pay the balance of the purchase
price. Failure to remove the squatters within the stipulated period gave the other party the
right to either refuse to proceed with the agreement or to waive that condition of
ejectment in consonance with Article 1545 of the Civil Code. In the case cited, the
contract specifically stipulated that the ejectment was a condition to be fulfilled;
otherwise, the obligation to pay the balance would not arise. This is not so in the case at
bar.

Although most authorities consider transfer of ownership as the primary purpose of sale,
delivery remains an indispensable requisite as our law does not admit the doctrine of
transfer of property by mere consent. The Civil Code provides that delivery can either be
(1) actual (Article 1497) or (2) constructive (Articles 1498-1501). Symbolic delivery
(Article 1498), as a species of constructive delivery, effects the transfer of ownership
through the execution of a public document. Its efficacy can, however, be prevented if the
vendor does not possess control over the thing sold, in which case this legal fiction must
yield to reality.

The key word is control, not possession, of the land as petitioner would like us to
believe. The Court has consistently held that: “xxx (I)n order that this symbolic delivery
may produce the effect of tradition, it is necessary that the vendor shall have had such
control over the thing sold that xxx its material delivery could have been made. It is not
enough to confer upon the purchaser the ownership and the right of possession. The thing
sold must be placed in his control. When there is no impediment whatever to prevent the
thing sold passing into the tenancy of the purchaser by the sole will of the vendor,
symbolic delivery through the execution of a public instrument is sufficient. But if,
notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment
and material tenancy of the thing and make use of it himself or through another in his
name, because such tenancy and enjoyment are opposed by the interposition of another
will, then fiction yields to reality—the delivery has not been effected.”

Considering that the deed of sale between the parties did not stipulate or infer otherwise,
delivery was effected through the execution of said deed. The lot sold had been placed
under the control of petitioner; thus, the filing of the ejectment suit was subsequently
done. It signified that its new owner intended to obtain for itself and to terminate said
occupants’ actual possession thereof. Prior physical delivery or possession is not legally
required and the execution of the deed of sale is deemed equivalent to delivery. This deed
operates as a formal or symbolic delivery of the property sold and authorizes the buyer to
use the document as proof of ownership. Nothing more is required.

Chua vs Court of Appeals

On 28 February 1996, Lydia Hao, treasurer of Siena Realty Corporation, filed a

complaint-affidavit with the City Prosecutor of Manila charging Francis Chua and his
wife, Elsa Chua, of four counts of falsification of public documents pursuant to Article
172[3] in relation to Article 171[4] of the Revised Penal Code. The charge reads: "That
on or about May 13, 1994, in the City of Manila, Philippines, the said accused, being then
a private individual, did then and there willfully, unlawfully and feloniously commit acts
of falsification upon a public document, to wit: the said accused prepared, certified, and
falsified the Minutes of the Annual Stockholders meeting of the Board of Directors of the
Siena Realty Corporation, duly notarized before a Notary Public, Atty. Juanito G. Garcia
and entered in his Notarial Registry as Doc No. 109, Page 22, Book No. IV and Series of
1994, and therefore, a public document, by making or causing it to appear in said Minutes
of the Annual Stockholders Meeting that one LYDIA HAO CHUA was present and has
participated in said proceedings, when in truth and in fact, as the said accused fully well
knew that said Lydia C. Hao was never present during the Annual Stockholders Meeting
held on April 30, 1994 and neither has participated in the proceedings thereof to the
prejudice of public interest and in violation of public faith and destruction of truth as
therein proclaimed. Contrary to Law."

Thereafter, the City Prosecutor filed the Information (Criminal Case 285721) for
falsification of public document, before the Metropolitan Trial Court (MeTC) of Manila,
Branch 22, against Francis Chua but dismissed the accusation against Elsa Chua. Francis
Chua, was arraigned and trial ensued thereafter. During the trial in the MeTC, Atty.
Evelyn Sua-Kho and Atty. Ariel Bruno Rivera appeared as private prosecutors and
presented Hao as their first witness. After Hao’s testimony, Chua moved to exclude Hao’s
counsels as private prosecutors in the case on the ground that Hao failed to allege and
prove any civil liability in the case. In an Order, dated 26 April 1999, the MeTC granted
Chua’s motion and ordered the complainant’s counsels to be excluded from actively
prosecuting Criminal Case 285721. Hao moved for reconsideration but it was denied.
Hao filed a petition for certiorari (SCA 99-94846), before the Regional Trial Court (RTC)
of Manila, Branch 19. The RTC gave due course to the petition and on 5 October 1999,
the RTC in an order reversed the MeTC Order. Chua moved for reconsideration which
was denied. Dissatisfied, Chua filed before the Court of Appeals a petition for certiorari.
On 14 June 2001, the appellate court promulgated its Decision denying the petition. The
Court of Appeals held that the action was indeed a derivative suit, for it alleged that
petitioner falsified documents pertaining to projects of the corporation and made it appear
that Chua was a stockholder and a director of the corporation. According to the appellate
court, the corporation was a necessary party to the petition filed with the RTC and even if
Hao filed the criminal case, her act should not divest the Corporation of its right to be a
party and present its own claim for damages. Chua moved for reconsideration but it was
denied in a Resolution dated 20 November 2001. Hence, the petition by Chua.
It is only upon the existence of the contract of sale that the seller becomes obligated to
transfer the ownership of the thing sold to the buyer. Article 1458 of the Civil Code
defines a contract of sale as follows: Art. 1458. By the contract of sale one of the
contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent.
x x x. (Emphasis supplied) Prior to the existence of the contract of sale, the seller is not
obligated to transfer ownership to the buyer, even if there is a contract to sell between
them. It is also upon the existence of the contract of sale that the buyer is obligated to pay
the purchase price to the seller. Since the transfer of ownership is in exchange for the
purchase price, these obligations must be simultaneously fulfilled at the time of the
execution of the contract of sale, in the absence of a contrary stipulation.

Delivery is not only a necessary condition for the enjoyment of the thing, but is a mode of
acquiring dominion and determines the transmission of ownership, the birth of the real
right. The delivery, therefore, made in any of the forms provided in articles 1497 to 1505
signifies that the transmission of ownership from vendor to vendee has taken place. The
delivery of the thing constitutes an indispensable requisite for the purpose of acquiring
ownership. Our law does not admit the doctrine of transfer of property by mere consent;
the ownership, the property right, is derived only from delivery of the thing. x x x.
(Emphasis supplied)

The buyer has more interest in having the capital gains tax paid immediately since this is
a pre-requisite to the issuance of a new Torrens title in his name. Nevertheless, as far as
the government is concerned, the capital gains tax remains a liability of the seller since it
is a tax on the seller’s gain from the sale of the real estate. Payment of the capital gains
tax, however, is not a pre-requisite to the transfer of ownership to the buyer. The transfer
of ownership takes effect upon the signing and notarization of the deed of absolute sale.

B. SPECIAL RULE ON COMPLETENESS OF DELIVERY

In case of Movables

Gaite vs Fonacier

Gaite was appointed by Fonacier as attorney-in-fact to contract any party for the
exploration and development of mining claims. Gaite executed a deed of assignment in
favor of a single proprietorship owned by him. For some reasons, Fonacier revoked the
agency, which was acceded to by Gaite, subject to certain conditions, one of which being
the transfer of ores extracted from the mineral claims for P75,000, of which P10,000 has
already been paid upon signing of the agreement and the balance to be paid from the first
letter of credit for the first local sale of the iron ores. To secure payment, Fonacier
delivered a surety agreement with Larap Mines and some of its stockholders, and another
one with Far Eastern Insurance. When the second surety agreement expired with no sale
being made on the ores, Gaite demanded the P65,000 balance. Defendants contended that
the payment was subject to the condition that the ores will be sold.

A contract of sale is normally commutative and onerous; not only does each of the parties
assume a correlative obligation, but each party anticipates performance by the other from
the very start. Although the obligation of one party can be lawfully subordinated to an
uncertain event, so that the other understands that he assumes the risk of receiving
nothing for what he gives, it is not in the usual course of business to do so; hence, the
contingent character of the obligation must clearly appear.

Sale is essentially onerous, and if there is doubt whether the parties intended a suspensive
condition or a suspensive period for the payment of the agreed price, the doubt shall be
settled in favor of the greatest reciprocity of interests, which will obtain if the buyer’s
obligation is deemed to be actually existing, with only its maturity postponed or deferred.

Rules on Delivery to Carrier

FAS Sales

A Soriano Y Cia vs CIR

One who acquires title to surplus equipment found in U. S. Army bases or installations
within the Philippines by purchase, and then brings them out of those bases or deposits, is
an importer, and sales made by him of such surplus goods to the general public are
taxable under sections 185 and 186 of the Internal Revenue Code. (Chen Tee vs. Meer, 87
Phil., 18; Saura Import and Export Co. vs. Meer, 88 Phil., 199.)

That the tractors in question merely passed Philippine territory in transit and that they
were not intended for local use but for exportation to a foreign country, is irrelevant, since
the tax in dispute is one on transaction (sales) and not a tax on the property sold. The sale
of the tractors was consummated in the Philippines, for title was transferred to the foreign
buyer at the pier in Manila; hence, the situs of the sale is Philippines and it is taxable in
this country.

he consignment tax formerly imposed on exports by section 187 of the Internal Revenue
Code (now repealed by Republic Act 41) is different from the sales tax imposed by
Article 186, which has not been repealed. "The tax on consignments is a privilege tax
pure and simple; it is a tax on the business of consigning commodities abroad from these
Islands. . . . If the tax were one on sales we would readily agree that the sales, in order to
be taxable in the Philippines, must be consummated there." (Vegetable Oil Co. vs.
Trinidad, 45 Phil., 634-635) The law subjects to the payment of the sales tax, not the
buyer who intends to export what he buys, but the seller because such sale is domestic
and therefore liable for the payment of sales tax in this country. A. Soriano y Cia vs. Coll.
of Internal Revenue, 97 Phil. 505, No. L-5896 August 31, 1955

FOB Sales and CIF Sales

Behn Meyer & Co. Vs Yangco

 A sale of 80 drums of caustic soda was agreed between Behn, Meyer & Co. and
Teodoro Yanco. The merchandise was shipped from New York to Manila.
 However, the ship carrying the cargo was detained at Penang and the 71 of the 80
drums were removed. Respondent Yangco also refused to accept the 9 remaining and
also refused to accept the offer of Behn Meyer to have the products substituted with
other merchandise, which however were different from what was ordered.
 It must be noted that the contract provided for "c.i.f. Manila, pagadero against
delivery of documents."
 Yanco filed an action seeking for damages for alleged breach of contract.

Determination of the place of delivery always resolves itself into a question of fact. Behn,
Meyer & Co. vs. Yangco., 38 Phil. 602, No. 13203 September 18, 1918

Determination of the place of delivery always resolves itself into a question of fact. the
goods are to be sent, delivery by the vendor to a common carrier in the usual and ordinary
course of business, tranfers the property to the vendee.

A specification in a contract relative to the payment of freight can be taken to indicate the
intention of the parties in regard to the place of delivery. If the buyer is to pay the freight,
it is reasonable to suppose that he does so because the goods become his at the point of
shipment. On the other hand, if the seller is to pay the freight, the inference is equally
strong that the duty of the seller is to have the goods transported to their ultimate
destination and that title to property does not pass until the goods have reached their
destination. Behn, Meyer & Co. vs. Yangco., 38 Phil. 602, No. 13203 September 18, 1918

Sale on Approval, Trial or Satisfaction

Villarta vs CA

Respondent Rosalinda Cruz entrusted to petitioner Victoria Villarta seven pieces of

jewelry on November 1968. On December of the same year, Villarta exchanges one
jewelry to another and issued a post-dated check in favor of Cruz. Cruz deposited the
check but it was dishonored for lack of funds.

An estafa case was filed against Villarta but she argued that she can only be civilly liable
because even though the check bounced, she only gave it for a pre-existing obligation.
She contends a person cannot be imprisoned for non-payment of debt.

Properly, then, the transaction entered into by Cruz and Vallarta was not a "sale or
return." Rather, it was a "sale on approval" (also called "sale on acceptance," ' sale on
trial," or "sale on satisfaction" [CIVIL CODE, art. 1502]). In a Sale or return," the
ownership passes to the buyer on delivery (CIVIL CODE, art. 1502). (The subsequent
return of the goods reverts ownership in the seller [CIVIL CODE, art. 1502]). Delivery,
or tradition, as a mode of acquiring ownership must be in consequence of a contract
(CIVIL CODEart. 712], e.g. sale.

lf there was no meeting of the minds on November 20,1968, then, as of that date, there
was yet no contract of sale which could be the basis of delivery or tradition. Thus, the
delivery made on November 20, 1968 was not a delivery for purposes of transferring
ownership—the prestation incumbent on the vendor. If ownership over the jewelry was
not transmitted on that date, then it could have been transmitted only in December 1968,
the date when the check was issued. In which case, it was a "sale on approval" since
ownership passed to the buyer, Vallarta, only when she signified her approval or
acceptance to the seller, Cruz, and the price was agreed upon. Vallarta us. Court of
Appeals, 150 SCRA 336, No. L-40195 May 29, 1987

C. DOUBLE SALES

Priority of Torrens System of Registration

Naawan Community Rural Bank, Inc. Vs CA

It has been held that, where a person claims to have superior proprietary rights over
another on the ground that he derived his title from a sheriff’s sale registered in the
Registry of Property, Article 1473 (now Article 1544) of the Civil Code will apply only if
said execution sale of real estate is registered under Act 496. Naawan Community Rural
Bank, Inc. vs. Court of Appeals, 395 SCRA 43, G.R. No. 128573 January 13, 2003

A close scrutiny of the records reveals that, at the time of the execution and delivery of
the sheriff’s deed of final conveyance on September 5, 1986, the disputed property was
already covered by the Land Registration Act and Original Certificate of Title No. 0-820
pursuant to Decree No. N189413 was likewise already entered in the registration book of
the Register of Deeds of Cagayan De Oro City as of April 17, 1984. Thus, from April 17,
1984, the subject property was already under the operation of the Torrens System. Under
the said system, registration is the operative act that gives validity to the transfer or
creates a lien upon the land. Naawan Community Rural Bank, Inc. vs. Court of Appeals,
395 SCRA 43, G.R. No. 128573 January 13, 2003

The issuance of a certificate of title had the effect of relieving the land of all claims
except those noted thereon. Accordingly, private respondents, in dealing with the subject
registered land, were not required by law to go beyond the register to determine the legal
condition of the property. They were only charged with notice of such burdens on the
property as were noted on the register or the certificate of title. To have required them to
do more would have been to defeat the primary object of the Torrens System which is to
make the Torrens Title indefeasible and valid against the whole world. Naawan
Community Rural Bank, Inc. vs. Court of Appeals, 395 SCRA 43, G.R. No. 128573
January 13, 2003

The rights created by the above-stated statute of course do not and cannot accrue under an
inscription in bad faith. Mere registration of title in case of double sale is not enough;
good faith must concur with the registration. Naawan Community Rural Bank, Inc. vs.
Court of Appeals, 395 SCRA 43, G.R. No. 128573 January 13, 2003

The “priority in time” principle being invoked by petitioner bank is misplaced because its
registration referred to land not within the Torrens System but under Act 3344. On the
other hand, when private respondents bought the subject property, the same was already
registered under the Torrens System. It is a well-known rule in this jurisdiction that
persons dealing with registered land have the legal right to rely on the face of the Torrens
Certificate of Title and to dispense with the need to inquire further, except when the party
concerned has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry. Naawan Community Rural Bank, Inc. vs.
Court of Appeals, 395 SCRA 43, G.R. No. 128573 January 13, 2003

Naval vs CA

While we agree with the appellate court that respondents have superior right over the
petitioner on the subject property, we find Article 1544 inapplicable to the case at bar
since the subject land was unregistered at the time of the first sale. The registration
contemplated under this provision has been held to refer to registration under the Torrens
System, which considers the act of registration as the operative act that binds the land.
Thus, in Carumba v. Court of Appeals, we held that Article 1544 of the Civil Code has no
application to land not registered under Torrens System. Naval vs. Court of Appeals, 483
SCRA 102, G.R. No. 167412 February 22, 2006

The law applicable therefore is Act No. 3344, which provides for the registration of all
instruments on land neither covered by the Spanish Mortgage Law nor the Torrens
System. Under this law, registration by the first buyer is constructive notice to the second
buyer that can defeat his right as such buyer in good faith. Applying the law, we held in
Bautista v. Fule that the registration of an instrument involving unregistered land in the
Registry of Deeds creates constructive notice and binds third person who may
subsequently deal with the same property.

Even if petitioner argues that she purchased and registered the subject land in good faith
and without knowledge of any adverse claim thereto, respondents still have superior right
over the disputed property. We held in Rayos v. Reyes that: “[T]he issue of good faith or
bad faith of the buyer is relevant only where the subject of the sale is registered land and
the purchaser is buying the same from the registered owner whose title to the land is
clean x x x in such case the purchaser who relies on the clean title of the registered owner
is protected if he is a purchaser in good faith for value.” Since the properties in question
are unregistered lands, petitioners as subsequent buyers thereof did so at their peril. Their
claim of having bought the land in good faith, i.e., without notice that some other person
has a right to or interest in the property, would not protect them if it turns out, as it
actually did in this case, that their seller did not own the property at the time of the sale.
Naval vs. Court of Appeals, 483 SCRA 102, G.R. No. 167412 February 22, 2006

A certificate of title, once registered, should not thereafter be impugned, altered, changed,
modified, enlarged or diminished except in a direct proceeding permitted by law.
Moreover, Section 32 of Presidential Decree No. 1529 provides that “[u]pon the
expiration of said period of one year, the decree of registration and the certificate of title
shall become incontrovertible.” However, it does not deprive an aggrieved party of a
remedy in law. What cannot be collaterally attacked is the certificate of title and not the
title or ownership which is represented by such certificate. Ownership is different from a
certificate of title. The fact that petitioner was able to secure a title in her name did not
operate to vest ownership upon her of the subject land. Registration of a piece of land
under the Torrens System does not create or vest title, because it is not a mode of
acquiring ownership. A certificate of title is merely an evidence of ownership or title over
the particular property described therein. It cannot be used to protect a usurper from the
true owner; nor can it be used as a shield for the commission of fraud; neither does it
permit one to enrich himself at the expense of others. Its issuance in favor of a particular
person does not foreclose the possibility that the real property may be co-owned with
persons not named in the certificate, or that it may be held in trust for another person by
the registered owner. Naval vs. Court of Appeals, 483 SCRA 102, G.R. No. 167412
February 22, 2006

Test Applicable under Article 1544

Coronel vs CA

This case is about a sale of land in Roosevelt Avenue, Quezon City by the vendor Romulo
Coronel to the vendees Conception Alcaraz and her daughter Ramona Patricia Alcaraz
with the following conditions:
 The Coronel’s will immediately transfer the certificate of title in their name upon
receipt of the downpayment which is ₱50,000.
 Upon the transfer in their names of the subject property, the Coronel’s will
execute the deed of absolute sale in favor of Ramona and then Ramona shall
immediately pay the Coronel’s the whole balance of ₱1,190,000.

On January 15, 1985, Conception paid the downpayment of ₱50,000 and then on
February 6, 1985, the property was now registered under the name of Coronel’s. By Feb.
18, 1985, the Coronel’s sold the property to Catalina B. Mabanag for ₱1,580,000 after she
made a ₱300,000 downpayment. This is the reason why the Coronel’s cancelled and
rescind the contract with the Alcaraz by depositing back the ₱50,000 to Ramona’s bank
account.

On Feb. 22, Conception filed a complaint for specific performance against the Coronel’s.
On April, the Coronel’s executed a deed of absolute sale over the subject property to
Catalina after which on June Catalina was issued a new title over the subject property.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale
because the first essential element is lacking. In a contract to sell, the prospective seller
explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective
seller does not as yet agree or consent to transfer ownership of the property subject of the
contract to sell until the happening of an event, which for present purposes we shall take
as the full payment of the purchase price. What the seller agrees or obliges himself to do
is to fulfill his promise to sell the subject property when the entire amount of the purchase
price is delivered to him. In other words the full payment of the purchase price partakes
of a suspensive condition, the non-fulfillment of which prevents the obligation to sell
from arising and thus, ownership is retained by the prospective seller without further
remedies by the prospective buyer. Coronel vs. Court of Appeals, 263 SCRA 15, G.R. No.
103577 October 7, 1996

A contract to sell may thus be defined as a bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the said property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of
the purchase price. Coronel vs. Court of Appeals, 263 SCRA 15, G.R. No. 103577
October 7, 1996

A contract to sell as defined hereinabove, may not even be considered as a conditional

contract of sale where the seller may likewise reserve title to the property subject of the
sale until the fulfillment of a suspensive condition, because in a conditional contract of
sale, the first element of consent is present, although it is conditioned upon the happening
of a contingent event which may or may not occur. If the suspensive condition is not
fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite and
Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]). Coronel vs. Court of
Appeals, 263 SCRA 15, G.R. No. 103577 October 7, 1996

Main Rule: Prior Tempore, Prior Jure

Carbonell vs CA

 espondent Jose Poncio was the owner of the parcel of land located in Rizal. (Area
– more or less 195 sq. m.)
 The said lot was subject to mortgage in favor of the Republic Savings Bank for
the sum of P1,500.00.
 Carbonell and respondent Emma Infante offered to buy the said lot from Poncio.
 Poncio offered to sell his lot to Carbonell excluding the house on which he and his
family stayed. Carbonell accepted the offer and proposed the price of P9.50/sq. m..
 Poncio accepted the price on the condition that from the purchase price would
come the money to be paid to the bank.
 January 27, 1995: The parties executed a document in the Batanes dialect which is
translated as: CONTRACT FOR ONE HALF LOT WHICH I (Poncio) BOUGHT
FROM.
 Carbonell asked a lawyer to prepare the deed of sale and delivered the document,
together with the balance of P400, to Jose Poncio. (Note: Carbonell already paid P200
for the mortgage debt of Poncio + obligated herself to pay the remaining
installments.)
 However, when she went to Poncio, the latter informed her that he could no
longer proceed with the sale as the lot was already sold to Emma Infante and that he
could not withdraw with the sale.
 Poncio admitted that on January 30, 1995, Mrs. Infante improved her offer and he
agreed to sell the land and its improvements to her for P3,535.00.
 In a private memorandum agreement, Poncio bound to sell to Infante the lot for
the sum of P2,357.52, with Infante still assuming the mortgage debt of P1,177.48.
(Note: The full amount of mortgage debt was already paid by the Infantes)
 February 2, 1995: A deed of sale was executed between Poncio and Infante.
 February 8, 1995: Knowing that the sale to Infante has not been registered,
Carbonell filed an adverse claim.
 February 12, 1995: The deed of sale was registered but it has an annotation of the
adverse claim of Carbonell.
 Thereafter, Emma Infante took possession of the lot, built a house and introduced
some improvements.
 In June 1995, Carbonell filed a complaint praying that she be declared the lawful
owner of the land, that the subsequent sale to spouses Infante be declared null and
void, and that Jose Poncio be ordered to execute the corresponding deed of
conveyance of said land in her favor
 RTC ruled that the sale to spouses Infante was null and void. After re-trial, it
reversed its ruling. CA ruled in favor of Carbonell but after a MfR, it reversed its
ruling and ruled in favor of the Infantes.
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. Under the first and third paragraphs,
good faith must characterize the prior possession. Under the second paragraph, good faith
must characterize the act of anterior registration. If there is no inscription, what is
decisive is prior possession in good faith. If there is inscription, as in the case at bar, prior
registration in good faith is a pre-condition to superior title. Carbonell vs. Court of
Appeals, 69 SCRA 99, No. L-29972 January 26, 1976

Requisites for Double Sale

There must be two different valid

Respondent Genato entered a contract to sell to spouses Da Jose pertaining to his

property in Bulacan. The contract made in public document states that the spouses shall
pay the down payment and 30 days after verifying the authenticity of the documents, they
shall pay the remaining purchase price.

Da Jose spouses was not able to finish verifying the documents and as such asked for a 30
day extension. Pending the extension and without notice to the spouses, Genato made a
document for the annulment of the contract.

Petitioner Cheng expressed interest over the property and paid 50K check with the
assurance that the contract between Genato and the spouses Da Jose will be annulled. Da
Jose spouses protested with the annulment and persuaded Genato to continue the contract.
Genato returned the check to Cheng and hence, this petition.

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 nonexistent, 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 obligor’s failure to comply with an obligation already
extant, not a failure of a condition to render binding that obligation. Cheng vs. Genato,
300 SCRA 722, G.R. No. 129760 December 29, 1998

Exact Same Subject Matter

Dischoso vs Roxas

The provisions of paragraph 3, Article 1544 of the Civil Code of the Philippines, do not
apply to a case where the sale in favor of one party was of the property itself, while the
transaction in favor of another was either a mere promise to assign or, at most, an actual
assignment of the right to repurchasethe same property. Dichoso vs. Roxas, 5 SCRA 781,
No. L-17441 July 31, 1962

Exact Same Seller for Both Sales

Salera vs Rodaje

 May 7, 1993 Petitioners filed an action for Quieting of title in the RTC against the
Respondents. The Complaint alleged that they are the absolute Owners of a parcel of
land located in Leyte and acquired the property from the heirs of Brigido Tonacao on
June 23, 1986 shown by a deed of absolute sale and registered in the Registry of
deeds. On Jul 1, 1986 in Iloilo, when they asked the Provincial Assessor to declare the
land in their names for taxation purposes the Petitioners found out that tax declaration
for Brigido was already canceled and a new one was already issued in the name of
Respondents. The complaint also alleged that they have been in possession of the
property and house built therein before the execution of the Deed of sale.
 Respondents in their answer, Allegedly claim that they are the Absolute owners
of the property and acquired the property from the Father of Brigido evidenced by a
deed of absolute sale and a tax declaration issued in their names. Prior thereto they
had a verbal Contract of sale with Catalino the Father of Brigido and paid him 1,000
as Downpayment and agreed that the Balance of 4,000 shall be paid at the execution
of deed of sale, since then they have been exercising their rights of Ownership over
the property and buildings therein and allege that they are Buyers in good faith.
 The Court ruled in favor of petitioners. On appeal the CA reversed the decision.
Ruling
Article 1544 of the Civil Code contemplates a case of double sale or multiple sales by a
single vendor. More specifically, it covers a situation where a single vendor sold one and
the same immovable property to two or more buyers. It cannot be invoked where the two
different contracts of sale are made by two different persons, one of them not being the
owner of the property sold. In the instant case, the property was sold by two different
vendors to different purchasers. The first sale was between Catalino and herein
respondents, while the second was between Brigido’s heirs and herein petitioners. Salera
vs. Rodaje, 530 SCRA 432, G.R. No. 135900 August 17, 2007

Good faith is something internal. Actually, it is a question of intention. In ascertaining

one’s intention, this Court must rely on the evidence of one’s conduct and outward acts.
Good faith, or want of it, is capable of being ascertained only from the acts of one
claiming its presence, for it is a condition of the mind which can be judged by actual or
fancied tokens or signs. Good faith consists in the possessor’s belief that the person from
whom he received the thing was the owner of the same and could convey his title. Good
faith, while it is always to be presumed in the absence of proof to the contrary, requires a
well founded belief that the person from whom title was received was himself the owner
of the land, with the right to convey it. There is good faith where there is an honest
intention to abstain from taking any unconscientious advantage of another. Salera vs.
Rodaje, 530 SCRA 432, G.R. No. 135900 August 17, 2007
Registration in Good Faith as First Priority
Meaning of Registration
Cheng vs Genato

“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 to the annotation made by the Da Jose
spouses with respect to their Contract to Sell dated September 6, 1989. Cheng vs. Genato,
300 SCRA 722, G.R. No. 129760 December 29, 1998

Registration must always be in good faith

Martinez vs CA

With regard to the second sale, which is the true contract of sale between the parties, it
should be noted that this Court in several cases, has ruled that a purchaser who is aware
of facts which should put a reasonable man upon his guard cannot turn a blind eye and
later claim that he acted in good faith. Private respondent Reynaldo himself admitted
during the pre-trial conference in the MTC in Civil Case No. 9523 (for ejectment) that
petitioner was already in possession of the property in dispute at the time the second
Deed of Sale was executed on June 1, 1983 and registered on March 4, 1984. He,
therefore, knew that there were already occupants on the property as early as 1981. The
fact that there are persons, other than the vendors, in actual possession of the disputed lot
should have put private respondents on inquiry as to the nature of petitioner’s right over
the property. But he never talked to petitioner to verify the nature of his right. He merely
relied on the assurance of private respondent Godofredo De la Paz, who was not even the
owner of the lot in question, that he would take care of the matter. This does not meet the
standard of good faith. Martinez vs. Court of Appeals, 358 SCRA 38, G.R. No. 123547
May 21, 2001

Knowledge of First Buyer of the Second Sale Does not amount to registration in
favor of the Second Buyer

Uraca vs CA
Under the foregoing, the prior registration of the disputed property by the second buyer
does not by itself confer ownership or a better right over the property. Article 1544
requires that such registration must be coupled with good faith. Jurisprudence teaches us
that “(t)he governing principle is primus tempore, potior jure (first in time, stronger in
right). Knowledge gained by the first buyer of the second sale cannot defeat the first
buyer’s 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 Uraca vs. Court of Appeals, 278 SCRA
702, G.R. No. 115158 September 5, 1997

Consolidated Rural Bank vs CA

The Madrid brothers were the registered owners of Lot A situated in Isabela.
Said lot was subdivided into several lots. Rizal Madrid sold part of his share identified lot
A-7 to Gamiao and Dayag by virtue of a Deed of Sale, to which his brothers offered no
objection as evidenced by their Joint Affidavit .The deed of sale was not registered with
the ORD of Isabela. However, Gamiao and Dayag declared the property in their names on
a Tax Declaration. Gamiao and Dayag sold the subject southern half of lot to Teodoro
dela Cruz, and the northern half to Hernandez. Thereupon, Teodoro dela Cruz and
Hernandez took possession of and cultivated the portions of the property respectively
sold to them (Later Restituto Hernandez donated the northern half to his daughter. The
children of Teodoro dela Cruz continued possession of the southern half after their
father’s death.) In a Deed of Sale the Madrid brothers conveyed all their rights and
interests over lot A-7 to Marquez which the former confirmed. The deed of sale was
registered with the ORD of Isabela. Subsequently, Marquez subdivided lot A-7 into eight
(8) lots. On the same date, Marquez and his spouse, Mercedita Mariana, mortgaged 4 lots
to the Consolidated Rural Bank, Inc. of Cagayan Valley (hereafter, CRB) to secure a loan.
These deeds of real estate mortgage were registered with the ORD. As Marquez defaulted
in the payment of his loan, CRB caused the foreclosure of the mortgages in its favor and
the lots were sold to it as the highest bidder. The Heirs-now respondents filed a case for
reconveyance and damages for the southern portion of Lot No. 7036-A (hereafter, the
subject property) against Marquez and CRB. The RTC handed down a decision in favor
of Marquez. The Heirs interposed an appeal with the CA, which upheld the claim of the
Heirs. Hence, the instant CRB petition.
Ruling

In a situation where not all the requisites are present which would warrant the application
of Art. 1544, the principle of prior tempore, potior jure or simply “he who is first in time
is preferred in right,” should apply. The only essential requisite of this rule is priority in
time; in other words, the only one who can invoke this is the first vendee. Undisputedly,
he is a purchaser in good faith because at the time he bought the real property, there was
still no sale to a second vendee. In the instant case, the sale to the Heirs by Gamiao and
Dayag, who first bought it from Rizal Madrid, was anterior to the sale by the Madrid
brothers to Marquez. The Heirs also had possessed the subject property first in time.
Thus, applying the principle, the Heirs, without a scintilla of doubt, have a superior right
to the subject property. Consolidated Rural Bank (Cagayan Valley), Inc. vs. Court of
Appeals, 448 SCRA 347, G.R. No. 132161 January 17, 2005

Registration in good faith always pre-empts Possession in Good Faith

San Lorenzo Dev. Corp.

Enrique Salvatierra died intestate and without any issue. He was survived by his
legitimate brothers: Tomas, Bartolome, Venancio and Macario, and sister Marcela. His
estate consisted of three parcels of land.
An Extrajudicial Partition with Confirmation of Sale was executed by and among
the surviving legal heirs and descendants of Enrique Salvatierra, which consisted of Lot
No. 25, 26 and 27. By virtue of the sale executed by Marcela in favor of Venancio, the
latter now owns 2/5 shares of the estate. By virtue of thesale by Bartolome’s heirs
Catalina and Ignacia, of his undivided shares to Tomas, now deceased, represented by his
widow, Catalina Azarcon, the latter now owns 2/5 shares in the said estate. Anselmo
Salvatierra represented his father Macario, who had already died.
Thereafter, Venancio sold the whole of Lot No. 27 and a 149-sq. m. portion of Lot
26 to herein respondent spouses Lino Longalong and Paciencia Mariano. The Longalongs
took possession of the said lots. It was discovered in 1982 (through a relocation survey)
that the 149 sq. m. portion of Lot No. 26 was outside their fence. It turned out that
Anselmo Salvatierra was able to obtain a title, Original Certificate of Title No. 0-4221 in
his name, the title covering the whole of Lot. No. 26 which has an area of 749 sq. m.
Private respondents Longalong then filed a case with the RTC for the
reconveyance of the said portion of Lot 26.
Ruling
Assuming ex gratia argumenti that SLDC’s registration of the sale had been tainted by the
prior notice of lis pendens and assuming further for the same nonce that this is a case of
double sale, still Babasanta’s claim could not prevail over that of SLDC’s. In Abarquez v.
Court of Appeals, this Court had the occasion to rule that if a vendee in a double sale
registers the sale after he has acquired knowledge of a previous sale, the registration
constitutes a registration in bad faith and does not confer upon him any right. If the
registration is done in bad faith, it is as if there is no registration at all, and the buyer who
has taken possession first of the property in good faith shall be preferred. San Lorenzo
Development Corporation vs. Court of Appeals, 449 SCRA 99, G.R. No. 124242 January
21, 2005
Possession refers both to material and symbolic delivery
Ten Forty Realty and Dev. Corp vs Cruz

Petitioner filed an ejectment complaint against Marina Cruz(respondent) before the MTC.
Petitioner alleges that the land indispute was purchased from Barbara Galino on
December 1996, andthat said land was again sold to respondent on April 1998;

• On the other hand, respondent answer with counterclaim that never was there an
occasion when petitioner occupied a portion of the premises. In addition, respondent
alleges that said land was a public land (respondent filed a miscellaneous sales
application with the Community Environment and Natural Resources Office) and the
action for ejectment cannot succeed where it appears that respondent had been in
possession of the property prior to the petitioner;

• On October 2000, MTC ordered respondent to vacate the land and surrender to
petitioner possession thereof. On appeal, the RTC reversed the decision. CA sustained the
trial court’s decision.

Ruling
In a contract of sale, the buyer acquires the thing sold only upon its delivery “in any of
the ways specified in Articles 1497 to 1501, or in any other manner signifying an
agreement that the possession is transferred from the vendor to the vendee.” With respect
to incorporeal property, Article 1498 lays down the general rule: the execution of a public
instrument shall be equivalent to the delivery of the thing that is the object of the contract
if, from the deed, the contrary does not appear or cannot be clearly inferred. However,
ownership is transferred not by contract but by tradition or delivery. Nowhere in the Civil
Code is it provided that the execution of a Deed of Sale is a conclusive presumption of
delivery of possession of a piece of real estate. Ten Forty Realty and Development Corp.
vs. Cruz, 410 SCRA 484, G.R. No. 151212 September 10, 2003
This Court has held that the execution of a public instrument gives rise only to a prima
facie presumption of delivery. Such presumption is destroyed when the delivery is not
effected because of a legal impediment. Pasagui v. Villablanca had earlier ruled that such
constructive or symbolic delivery, being merely presumptive, was deemed negated by the
failure of the vendee to take actual possession of the land sold. Ten Forty Realty and
Development Corp. vs. Cruz, 410 SCRA 484, G.R. No. 151212 September 10, 2003
Who is purchaser in good faith
Must have paid price in full
Tanglao vs Parungao
Spouses Parungao, purchased from Spring Homes 7 Subdivision Lots in Laguna.
Respondents made a down payment, leaving a balance exclusive of interest. Respondents
introduced improvements on the lots. Under the terms of the Contracts to Sell signed by
respondents and Spring Homes, the balance of was to be paid by them within one year
from its execution. Respondents failed to pay the installments.

Later, Spring Homes executed two separate Deeds of Absolute Sale in favor of spouses
Tanglao, petitioners, wherein the former sold to the latter two lots. It turned out that the
lots sold to them were among the lots previously sold to the spouses Parungao.

In a letter, respondents demanded that Spring Homes deliver to them the corrected
Contracts to Sell, as well as the TCTs covering the lots they purchased.

Meanwhile, petitioners took possession of the two lots they bought. They forcibly opened
the steel gate as well as the doors of the buildings and entered the premises.
When informed of these events, respondents demanded an explanation from Spring
Homes; it apologized and promised she would settle the matter with petitioners.
However, the controversy was not settled.

Respondent Spouses Parungao filed with the Housing and Land Use Regulatory Board
(HLURB), a complaint for annulment of deed of sale and/or return of investment for the
seven (7) lots and costs of improvements, plus interest and damages. Impleaded as
respondents were Spring Homes and petitioners. Despite notice, Spring Homes did not
appear during the hearings.

The HLURB Arbiter rendered a Decision ordering respondent Spring Homes to pay
complainants by way of refund of payments and damages.

Dissatisfied with the ruling, respondents filed a petition for review with the HLURB
Board of Commissioners. The HLURB Board of Commissioners reversed the Arbiter’s
Decision and granted the petition for review. Petitioners filed a motion for
reconsideration, but this was denied by the HLURB Board of Commissioners. Petitioners
then filed an appeal with the Office of the President, which dismissed their appeal and
affirmed the Decision of the HLURB Board of Commissioners. Petitioners’ MR was also
denied by the said Office.

Eventually, petitioners filed with the CA a petition for review.The CA rendered its
Decision dismissing the petition, hence this petition for Review on Certiorari

Ruling
A purchaser in good faith or innocent purchaser for value is one who buys property and
pays a full and fair price for it at the time of the purchase or before any notice of some
other person’s claim on or interest in it. Tanglao vs. Parungao, 535 SCRA 123, G.R. No.
166913 October 5, 2007
Burden of proof
Tanglao vs Parungao
The burden of proving the status of a purchaser in good faith lies upon him who asserts
that status and it is not sufficient to invoke the ordinary presumption of good faith, that is,
that everyone is presumed to have acted in good faith.
Settled is the rule that a buyer of real property in possession of persons other than the
seller must be wary and should investigate the rights of those in possession, for without
such inquiry the buyer can hardly be regarded as a buyer in good faith and cannot have
any right over the property. Tanglao vs. Parungao, 535 SCRA 123, G.R. No. 166913
October 5, 2007

Instances when no good faith

Being in Business in Realty

Expresscredit Financing Corp vs. Velasco

It is true that a person dealing with the owner of registered land is not bound to go
beyond the certificate of title. He may rely on the notices of the encumbrances on the
property annotated on the certificate of title or absence of any annotation. However, we
note that the Garcia spouses are unlike other mortgagors. They are in the business of
constructing and selling townhouses and are past masters in real estate transactions.
Further, petitioner is in the business of extending credit to the public, including real estate
loans. In both these businesses, it devolves upon both, greater charge than ordinary
buyers or encumbrancers for value, who are not in such venture. It is standard in their
business, as a matter of due diligence required of banks and financing companies, to
ascertain whether the property being offered as security for the debt has already been sold
to another to prevent injury to prior innocent buyers. They also have the resources to
ascertain any encumbrances over the properties they are dealing with. Expresscredit
Financing Corporation vs. Velasco, 473 SCRA 570, G.R. No. 156033 October 20, 2005

Close Relationship

Pilapil vs CA

In the instant petition for review on certiorari, questioning the decision of the CA
affirming the decision of the trial court.

Felix Otadora was the registered owner of a parcel of land (273,796-sqm) in Ormoc city
covered by OCT No. 26026. He died and was survived by his wife Leona and 3 children
(vitaliana, Maxima and Agaton). Subsequently, Leona and the three children sold portions
of said lot, leaving a portion with an area of 51, 019 sqm (Lot 8734-B-5) . Then Leona
died.

On March, 1962, the Otadora siblings, together with their nephew Antonio, executed a
deed of extrajudicial partition and confirmation of sales, giving each of them one-fourth
undivided share in the remaining property. That very same day, Vitallana and Agaton
sold to petitioners Pilapil and Penaranda an undivided portion of the, measuring
18,626 sqm of lot Lot 8734-B-5. The deed of sale, which was executed in the presence of
Antonio and another witness, specified that the possession and ownership of the property
sold shall be transferred to the buyers from the date of the instrument. The deed of
extrajudicial partition was annotated on OCT No. 26026. Because of such partition, OCT
No. 26026 was cancelled and replaced by TCT No. 4026 which, in turn, was superseded
by TCT No. 4029, indicating as owners Agaton, Vitaliana, Maxima, and Antonio. The
sale to petitioners was inscribed at the back of TCT No. 4029 as Entry No. 10903 on
March 29, 1962.

Later, Antonio sold his one-fourth share to his cousin Bensig, who ceded one-half thereof
to the spouses Visitacion Otadora and S. Aldrin, by a deed of quitclaim. Because of such,
TCT No. 4029 was cancelled and supplanted by TCT No. 4484, which showed Agaton,
Vitaliana, Maxima, Bensig, and the spouses Visitacion and S. Aldrin as owners of Lot
8734-B-5. Petitioners’ names did not appear among the owners, although in the
memorandum of encumbrances at the back of TCT No. 4484 regarding the sale to them
by Vitaliana was retained.

Despite the sale of 18, 626 sqm of their undivided share in said lot earlier made in
favor of petitioners, Agaton AGAIN sold his one-fourth share in the lot to his daughter
Carmen covered by TCT No. 9130. Vitaliana on the other hand, RE-SOLD her one-
fourth share to Maxima. 4 days later, Maxima sold her now one-half share to her sons
Dionisio and Macario who were able to register the said properties in their names. On
Sept, 1971, TCT was issued to spouses Visitacion and S. Aldrin, and another TCT
for Carmen and her husband.

Upon discovery of the new titles, petitioners filed a protest with the register of deeds or
Ormoc city, who in a letter informed Carmen, S. ALdrin, Macario and Dionisio of the
existence of the deed of sale in favor of petitioner and required them to present their
original titles for proper annotation. Such request was, however, ignored.

On July 1972, Carmen and her husband Masias sold the one-fourth share sold by
Carmen’s father to her to respondent Serafica and Sons Corp. which was not able to
register the same because of the annotation in TCT No. 9130 earlier made showing the
sale in favor of petitioners. Because of this, the corporation charged the vendors with
estafa before the City Fiscal’s Office, but the complaint did not prosper.

Petitioners therefore filed, on December 1973, a complaint for quieting of title,

annulment of deeds, cancellation of titles, partition, and recovery of ownership with
damages, against herein private respondents. The complaint alleged, among other things,
that petitioners succeeded in possessing only 12,000 square meters of the lot and needed
6,626 square meters more to complete the total area purchased from Vitaliana and Agaton
in 1962.

The trial court rendered a decision in favor of the defendants (Serafica & Sons
Corporation) and against the plaintiffs (Pilapil) hereby dismissing plaintiffs complaint,
and ordering the plaintiffs to pay the defendants for attorney’s fee, to vacate the lot in
question and deliver the same to defendant. In its decision dated June 1994, the court a
quo concluded that the annotation on TCT No. 4484 of the sale by Vitaliana and
Agaton in favor of petitioners was null and void because the latter failed to
surrender the owner’s duplicate copy of the title, in violation of Section 55 of the Land
Registration Act (Act No. 496).

The CA said that OCT No. 26026 thereby became inexistent, it having been already
cancelled by TCT(s) Nos. 4026 and 4029. It would have been against the law to have the
deed of sale registered in TCT No. 4029 without an order from the proper court
authorizing such registration, specifically because OCT No. 26026 had already undergone
two cancellations, first by TCT No. 4026 and then by TCT No. 4029 .It held that
Appellants should have filed the necessary petition with the proper court asking that the
Register of Deeds be authorized to annotate the deed of sale executed by Agaton Otadora
and Vitaliana Otadora in their favor. The said title was, therefore, null and void, and the
same did not acquire the effect of a constructive notice to the whole world of the interest
over the land in question of the plaintiffs-appellants. At most, the deed of sale is merely a
contract between the plaintiffs-appellants and the vendors appearing therein but without
any binding effect upon their persons and upon whom bad faith cannot be imputed. Also,
The deed of sale did not specify what part of the 1/4 share of each of the registered
owners who executed the sale was sold to the appellants. The CA also agreed with the
lower court that H. Serafica & Sons Corporation was an innocent purchaser for
value as it was not required by law to go beyond TCT No. 9130 which, on its face,
appeared to be unencumbered.

Ruling

Moreover, as Vitaliana’s sister, Maxima was actually a co-owner of Lot No. 8734B-5
which, at the time of the sale to petitioners, was not yet partitioned and segregated.
Maxima was, therefore, privy to the contract. As defined in Basa v. Aguilar, a third
person, within the meaning of Article 1620 of the Civil Code (on the right of legal
redemption of a coowner) is anyone who is not a co-owner. Pilapil vs. Court of Appeals,
250 SCRA 566, G.R. No. 55134 December 4, 1995

Obligation to investigate or to follow leads

Santiago vs CA

It is axiomatic that good faith is always presumed. There being absent any direct evidence
of bad faith, there is need to examine what respondent Court of Appeals said are indices
of bad faith on the part of petitioners. Even though on the date of the execution of deed of
sale on July 30, 1979, in favor of petitioners, respondent Arevalo was still a complete
stranger to the transaction, Arevalo having purchased the property only on September 13,
1982, respondent court found it “most irregular” that no copy of document of sale in
favor of petitioners was filed with The Records Management and Archives Division in
Manila, and that while said deed of sale is dated July (mistakenly stated by respondent
court as June) 30, 1979, the notarial commission of the attesting notary public was stated
as expiring on December 31, 1982, or more than 2 years from the date of notarization of
the document. Santiago vs. Court of Appeals, 247 SCRA 336, G.R. No. 117014 August
14, 1995

Martinez vs CA

With regard to the second sale, which is the true contract of sale between the parties, it
should be noted that this Court in several cases, has ruled that a purchaser who is aware
of facts which should put a reasonable man upon his guard cannot turn a blind eye and
later claim that he acted in good faith. Private respondent Reynaldo himself admitted
during the pre-trial conference in the MTC in Civil Case No. 9523 (for ejectment) that
petitioner was already in possession of the property in dispute at the time the second
Deed of Sale was executed on June 1, 1983 and registered on March 4, 1984. He,
therefore, knew that there were already occupants on the property as early as 1981. The
fact that there are persons, other than the vendors, in actual possession of the disputed lot
should have put private respondents on inquiry as to the nature of petitioner’s right over
the property. But he never talked to petitioner to verify the nature of his right. He merely
relied on the assurance of private respondent Godofredo De la Paz, who was not even the
owner of the lot in question, that he would take care of the matter. This does not meet the
standard of good faith. Martinez vs. Court of Appeals, 358 SCRA 38, G.R. No. 123547
May 21, 2001

Samson vs CA

Indeed, petitioner had every opportunity to verify the status of the lease contract of
private respondent with Susana Realty. As held by this Court in the case of Caram, Jr. v.
Laureta, the rule caveat emptor requires the purchaser to be aware of the supposed title of
the vendor and he who buys without checking the vendor’s title takes all the risks and
losses consequent to such failure. In the case at bench, the means of verifying for himself
the status of private respondent’s lease contract with Susana Realty was open to
petitioner. Nonetheless, no effort was exerted by petitioner to confirm the status of the
subject lease right. He cannot now claim that he has been deceived. Samson vs. Court of
Appeals, 238 SCRA 397, G.R. No. 108245 November 25, 1994
Land in Adverse Possession Claim

Heirs of Ramon Durano vs Uy

As far back as August 1970, a 128 hectare of land located in the barrios of Dunga and
Cahumayhumayan, Danao City. On December 27, 1973, the late Congressman Ramon
Durano Sr. together with his son Ramon Durano III, and the latter’s wide Elizabeth
Hotchkins-Durano, instituted an action for damages against spouses Angeles Sepulveda
Uy and Emigdio Beng Sing Uy, Spouses Faustino Alatan and Valeriana Garro, Spouses
Rufino Lavador and Aurelia Mata, Silvestre Ramos, Hermogenes Tito, Teotimo Gonzales,
Primitiva Garro, Julian Garro, Ismael Garro, Bienvido Castro, Glicerio Alcala, Felemon
Lavador, Candelario Lumantao, Garino Quimbo, Justino Tito, Marcelino Gonzales,
Salvador Duyday, Venancia Repaso, Leodegracia Gonzales, Jose dela Calzada, Restituta
Gonzales, and Cosme Ramos before branch XVII of the then Court of First Instance of
Cebu, Danao City.. Herein respondents are the possessors of the subject parcel of land
which they are cultivating, it was used to be owned by CEPCO who later sold the same to
Durano & Co. On September 15, 1990, Durano & Co sold the disputed property to
petitioner Ramon Durano III, who procured the registration of these lands in his name
under TCT no. T-103 and T-104. The different parts of the entire land was bulldozed by
the petitioner’s company resulting to the destruction of plants and other products that
were placed by the respondents. Hence, a claim for damages was lodged against herein
petitioner. The respondents presented tax declaration covering the different areas of the
parcel of land that is titled in each of them as proof that they are entitled for the said
damages.

A purchaser of a parcel of land cannot close his eyes to facts which should put a
reasonable man upon his guard, such as when the property subject of the purchase is in
the possession of persons other than the seller. A buyer who could not have failed to know
or discover that the land sold to him was in the adverse possession of another is a buyer
in bad faith. In the herein case, respondents were in open possession and occupancy of
the properties when Durano & Co. supposedly purchased the same from Cepoc.
Petitioners made no attempt to investigate the nature of respondents’ possession before
they ordered demolition in August 1970. Heirs of Ramon Durano, Sr. vs. Uy, 344 SCRA
238, G.R. No. 136456 October 24, 2000

Existence of Lis Pendens

Po Lam vs CA

Settled is the rule that one who deals with property subject of a notice of lis pendens
cannot invoke the right of a purchaser in good faith. Neither can he acquire better rights
than those of his predecessors in interest. A transferee pendente lite stands in the shoes of
the transferor and is bound by any judgment or decree which may be rendered for or
against the transferor. It is thus beyond cavil that the herein petitioners, who purchased
Lot 1558 subject of a notice of lis pendens, are not purchasers in good faith and are
consequently bound by the Resolution dated March 11, 1981 of the Court of Appeals. Po
Lam vs. Court of Appeals, 316 SCRA 721, G.R. No. 116220 October 13, 1999

When subject of sale is Unregistered Land

Dagupan Trading Co. Vs Macam

Where one of two conflicting sales of a piece of land was executed before the land was
registered, while the other was an execution sale in favor of the judgment creditor of the
owner made after the same property had been registered, what should determine the issue
are the provisions of the last paragraph of Section 35, Rule 39 of the Rules of Court to the
effect that, upon the execution and delivery of the final certificate of sale in favor of the
purchaser of land sold in an execution sale, such purchaser “shall be substituted to and
acquire all the rights, title, interest and claim of the judgment debtor to the property as of
the time of the levy.” Dagupan Trading Co. vs. Macam, 14 SCRA 179, No. L-18497 May
31, 1965

Where for a considerable time prior to the levy on execution interest of the owner of the
land levied upon had already been convened to another who took possession thereof and
introduced improvements thereon, the aforesaid levy is void. The prior sale, albeit
unregistered, cannot be deemed automatically cancelled Dagupan Trading Co. vs.
Macam, 14 SCRA 179, No. L-18497 May 31, 1965

Carumba vs CA
In 1955, the 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 located in
Camarines Sur, to the spouses Amado Carumba and Benita Canuto, The referred deed of
sale was never registered in the Office of the RD of Camarines Sur, and the Notary was
not then an authorized notary public in the place.

In 1957, a complaint for a sum or money was filed by Balbuena against Amado Canuto
and Nemesia Ibasco before the Justice of the Peace Court. A decision was rendered in
favor of Balbuena and against the defendants.

In 1968, the ex-officio Sheriff issued a “Definite Deed of Sale of the property now in
question in favor of Balbuena, which instrument of sale was registered before the Office
of the RD.

The CFI, finding that after execution of the document Carumba had taken possession of
the land, and planted thereon:

1 declared him to be the owner of the property under a consummated sale;

2 held void the execution levy made by the sheriff, pursuant to a judgment against
Carumba’s vendor, Amado Canuto;
3 and nullified the sale in favor of the judgment creditor, Balbuena.
The CA, without altering the findings of fact made by the court of origin, declared 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.

Ruling

The rule in Article 1544 of the Civil Code applies to lands covered by Torrens title, where
the prior sale is neither recorded nor known to the execution purchaser prior to the levy.
But where the land in question is not registered under Act No. 496, the rule is different.
While under Article 1544 of Civil Code 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 not applicable even if the later vendee was ignorant of the prior sale made
by his judgment debtor in favor of another vendee. 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 in Sec. 35 of Rule 39 of the Revised Rules of
Court. Carumba vs. Court of Appeals, 31 SCRA 558, No. L-27687 February 18, 1970

Acabal vs Acabal
Alejandro Acabal and Felicidad Balasbas executed a Deed of Absolute Sale over a parcel
of land in favor of their son, respondent Villaner Acabal (Villaner). Villaner was then
married to Justiniana Lipajan. When he became a widower, he executed a deed
conveying the same parcel of land in favor of petitioner Leonardo Acabal (Leonardo).
However, Villaner later claims that the document he signed was a document captioned
―Lease Contract,‖ wherein he leased for the property for 3 years to Leonardo. Villaner
filed a complaint with the Regional Trial Court (RTC) against Leonardo and Ramon
Nicolas to whom Leonardo in turn conveyed the property for annulment of the deeds of
sale.
The RTC ruled in favor of Acabal and dismissed the complaint. The Court of Appeals
(CA) however reversed the decision of RTC and held that the Deed of Absolute Sale
executed by Villaner in favor of Leonardo was simulated and fictitious.
Ruling
It bears noting, however, that Villaner failed to present evidence on the fair market value
of the property as of April 19, 1990, the date of execution of the disputed deed. Absent
any evidence of the fair market value of a land as of the time of its sale, it cannot be
concluded that the price at which it was sold was inadequate. Inadequacy of price must be
proven because mere speculation or conjecture has no place in our judicial system.
Acabal vs. Acabal, 454 SCRA 555, G.R. No. 148376 March 31, 2005
DOCUMENTS OF TITLE
Purpose of Documents of Title
Philippine Trust Co. National Bank
Where quedans were endorsed and delivered in January, 1919, to secure a preexisting
debt, and the insolvency petition was filed on April 21, 1919, the holder of such quedans
is the owner of the property therein described, as against the assignee or any creditor of
the insolvent. Philippine Trust Co. vs. Philppine National Bank, 42 Phil., 413, No. 16483
December 7, 1921
Negotiable Documents Title
Effects of Negotiation
Where on February 10, 1919, a firm received certain quedans under a promise to return
them on or before February 27th, to which was attached a certificate of the firm dated
February 8, 1919, that certain described property was in its bodegas which it promised
would not be removed without first consulting its creditor, construed together, such
instruments do not constitute a negotiable quedan, and are nothing more than a repre-
sentation and a promise and do not convey title to the property. Philippine Trust Co. vs.
Philppine National Bank, 42 Phil., 413, No. 16483 December 7, 1921
Where it appears that on February 8, 1919, on behalf of one of its creditors, a firm made a
representation, and on February 10th, made a certificate as to certain property, and filed
its insolvency petition on April 21, 1919, and the property was left and remained in
possesion of the insolvent firm, and was not delivered to the creditor until May 3, 1919,
the assignee of the insolvent firm, as against such creditor, is entitled to the possession of
the property or its value. Philippine Trust Co. vs. Philppine National Bank, 42 Phil., 413,
No. 16483 December 7, 1921
Unauthorized Negotiation
Siy Long Bieng vs Hongkong and Shanghai Banking Corp
Plaintiff sold certain quantity of hemp to one by the name of Otto Ranft by quedans and
sent the quedans, together with the covering invoice, to Ranft, without having been paid
for, but plaintiff's understanding was that the payment would be made against the
quedans. Ranft on the same day turned over the quedans to the defendant bank to secure
payment of his preexisting debts. Ranft died on the evening of the day the quedans were
delivered to the bank. Plaintiff brought this action to recover the quedans or their values.
Held: Taking into consideration that the quedans were negotiable in form and duly
endorsed in blank by the plaintiff and by Otto Ranft, it follows that on delivery of the
quedans to the bank, they were no longer the property of the indorser unless he liquidated
his debts with the bank. Siy Cong Bieng & Co. vs. Hongkong & Shanghai Bank, 56 Phil.
598, No. 34655 March 5, 1932
The bank had a perfect right to accept the quedans in security of preexisting debts without
investigation of the authority of the person negotiating them. (Sections 47, 38 and 40 of
the Warehouse Receipts Act No. 2137.) Siy Cong Bieng & Co. vs. Hongkong & Shanghai
Bank, 56 Phil. 598, No. 34655 March 5, 1932
Loss, Deterioration, Fruits and other benefits
Before Perfection
Roman vs Grimalt
Where no valid contract of sale exists it creates no mutual rights or obligations between
the alleged purchaser and seller, nor any legal relation binding upon them.
The disappearance or loss of property which the owner intended or -attempted to sell can
only interest the owner, who should suffer the loss, and not a third party who has acquired
no rights nor incurred any liability with respect thereto. Roman vs. Grimalt, 6 Phil., 96,
No. 2412 April 11, 1906
General Rule: Res perit Domino

Chrysler Phil vs CA

From the evidentiary record, Negros Navigation was the party negligent in failing to
deliver the complete shipment either to Sambok, Bacolod, or to Sambok, Iloilo, but as the
Trial Court found, petitioner failed to comply with the conditions precedent to the filing
of a judicial action. Thus, in the last analysis, it is petitioner that must shoulder the
resulting loss. The general rule that before delivery, the risk of loss is borne by the seller
who is still the owner, under the principle of “res perit domino”, is applicable in
petitioner’s case. Chrysler Philippines Corp. vs. Court of Appeals, 133 SCRA 567, No. L-
55684 December 19, 1984

After Delivery

Lawyers Coop vs Tabora

In a contract of sale where the seller agreed that the ownership of the books sold shall
remain with it until the purchase price shall have been fully paid, it is held that such
stipulation cannot make the seller liable in case of loss, not only because such was agreed
merely to secure the performance by the buyer of his obligation but also because in the
very contract itself, it was agreed that the loss or damage to the books after delivery to the
buyer shall be borne by the buyer. Lawyers Cooperative Publishing Co. vs. Tabora, 13
SCRA 762, No. L-21263 April 30, 1965