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G.R. No.

L-12342 August 3, 1918 RULING:

The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to
A. A. ADDISON, plaintiff-appellant,
be delivered when it is placed "in the hands and possession of the vendee." (Civ. Code, art. 1462.) It
vs.
is true that the same article declares that the execution of a public instruments is equivalent to the
MARCIANA FELIX and BALBINO TIOCO, defendants-appellees.
delivery of the thing which is the object of the contract, but, in 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
FISHER, J.: (5 Concurring) sold that, at the moment of the sale, 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
FACTS: 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
By a public instrument, 4 parcels of land was subject of a contract of sale between the petitioner A.A. have the enjoyment and material tenancy of the thing and make use of it himself or through another in
Addison and the defendant Maciana Felix and Balbino Tioco. Defendant paid Php3000 upon the his name, because such tenancy and enjoyment are opposed by the interposition of another will, then
execution of deeds and promised to pay Php2000 on July 15, 1914 and another Php5000 (30) days fiction yields to reality — the delivery has not been effected.
after the issuance of her certificate of title.
The execution of a public instrument is sufficient for the purposes of the abandonment made by the
The contract also stipulated that within ten years from the date of such title, defendant is to pay P10 vendor; but it is not always sufficient to permit of the apprehension of the thing by the purchaser.
for each cocoanut tree in bearing and P5 for each such tree not in bearing that might be growing on
said parcels of land on the date of the issuance of title to her, with the condition that the total price It is evident, then, in the case at bar, that the mere execution of the instrument was not a fulfillment of
should not exceed P85,000. the vendors' obligation to deliver the thing sold, and that from such non-fulfillment arises the
purchaser's right to demand, as she has demanded, the rescission of the sale and the return of the price.
It was further stipulated that Felix was to deliver to the Addison 25% of the value of the products that (Civ. Code, arts. 1506 and 1124.)
she might obtain from the four parcels "from the moment she takes possession of them until the Torrens
certificate of title be issued in her favor," and that within 1 year from the date of the certificate of title Inasmuch as the rescission is made by virtue of the provisions of law and not by contractual agreement,
in her favor, Marciana Felix may rescind the contract of purchase and sale in which case, Mariana it is not the conventional but the legal interest that is demandable.
Felix shall be obliged to return to, A. A. Addison, the net value of all the products of the four parcels
sold, and that Addison shall return to, Marciana Felix, all the sums that she may have paid the As per the book (Villanueva):
petitioner, together with interest at the rate of 10% per annum." It is the duty of the seller to deliver the thing sold, and that symbolic delivery by the execution of a
public instrument is equivalent to actual delivery only when the thing sold is subject to the control of
In 1915, Addison filed a suit to compel the defendant to pay him the P2000 with interest as in the the seller, so that “at the moment of sale, its “material delivery could have been made,” which talks
accordance of the terms of the contract. However, in a form of special defense, Felix alleges that the the capacity rather than an actual physical delivery.
petitioner failed to do his obligation of the contract by failing to deliver the parcels of land. That out
of the 4 parcels of land only 2 of it where delivered and that 2/3 of the other half were in the possession However, “if the sale had been made under express agreement of imposing upon the purchaser the
of a third person. She then filed for a declaration of the rescission of the contract, whereby she prayed obligation to take the necessary steps to obtain the material possession of the thing sold, and it were
that petitioner return her P3000 plus interest and indemnity proven that she knew that the thing was in the possession of a 3 rd person claiming to have property
rights therein, such agreement would perfectly be valid,” there would be full compliance by the seller
Trial Court: In favor of defendants. of his obligations under the sale, by the mere execution of the public instrument.
Grounds: Plaintiff failed to deliver the lands and in accordance to their stipulation that ". . . within one
year from the date of the certificate of title in favor of Marciana Felix, this latter may rescind the In effect, Addison doctrine does not intend to place constructive delivery at a lower category than that
present contract of purchase and sale . . . ." of actual delivery, and there is no implication in the ruling that for constructive delivery to produce
the effects of tradition, it has to be coupled by subsequent actual delivery or by the actual taking of
Appellate Court: Disagreed, alleging that the right to elect to rescind the contract was subject to a physical possession by the buyer; otherwise, if constructive delivery cannot do the job without actual
condition, namely, the issuance of the title, which in this case has not yet been fulfilled. delivery being made later on, then constructive delivery would not in reality be separate form of
tradition.
ISSUE:

Whether or not delivery of a Public Instrument is equivalent to the delivery of the subject matter of FELIX DANGUILAN, petitioner,
the sale – NO. vs.

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INTERMEDIATE APPELLATE COURT, APOLONIA MELAD, assisted by her husband, of the defendant was contradictory to her claim of ownership. She was also
JOSE TAGACAY, respondents. inconsistent when she testified first that the defendant was her tenant and later in
rebuttal that he was her administrator. The decision concluded that where there
was doubt as to the ownership of the property, the presumption was in favor of the
one actually occupying the same, which in this case was the defendant.
CRUZ, J.:  The defendant appealed the decision.
 Ruling of the respondent court: The respondent court held that Exhibits 2-b and 3-a, by virtue
of which Domingo Melad had conveyed the two parcels of land to the petitioner, were null
FACTS:
and void. The reason was that they were donations of real property and as such should have
 The subject of this dispute is the two lots owned by Domingo Melad which is claimed by been effected through a public instrument. It then set aside the appealed decision and
both the petitioner and the respondent. The trial court believed the petitioner but the declared the respondents the true and lawful owners of the disputed property.
respondent court, on appeal, upheld the respondent. The case is now before us for a  EXHIBIT 2-b is quoted as follows: 12
resolution of the issues once and for all.
 January 29, 1962, the respondent filed a complaint against the petitioner in the then Court I, DOMINGO MELAD, of legal age, married, do hereby declare in this receipt the
of First Instance of Cagayan for recovery of a farm lot and a residential lot which she claimed truth of my giving to Felix Danguilan, my agricultural land located at Barrio Fugu-
she had purchased from Domingo Melad in 1943 and were now being unlawfully withheld Macusi, Penablanca, Province of Cagayan, Philippine Islands; that this land is
by the defendant. registered under my name; that I hereby declare and bind myself that there is no
 The petitioner denied the allegation and averred that he was the owner of the said lots of one to whom I will deliver this land except to him as he will be the one responsible
which he had been in open, continuous and adverse possession, having acquired them from for me in the event that I will die and also for all other things needed and necessary
Domingo Melad in 1941 and 1943. for me, he will be responsible because of this land I am giving to him; that it is
 The case was dismissed for failure to prosecute but was refiled in 1967. true that I have nieces and nephews but they are not living with us and there is no
 The plaintiff presented a deed of sale dated December 4, 1943, purportedly signed by one to whom I will give my land except to Felix Danguilan for he lives with me
Domingo Melad and duly notarized, which conveyed the said properties to her for the sum and this is the length—175 m. and the width is 150 m.
of P80.00.
 She claimed to be the illegitimate daughter of Domingo Melad, with whom she and her IN WITNESS WHEREOF, I hereby sign my name below and also those present
mother were living when he died in 1945. She moved out of the farm only when in 1946 in the execution of this receipt this 14th day of September 1941.
Felix Danguilan approached her and asked permission to cultivate the land and to stay
therein. She had agreed on condition that he would deliver part of the harvest from the farm Penablanca Cagayan, September 14, 1941.
to her, which he did from that year to 1958. When the deliveries stopped, that is when she
filed a complaint against the respondent. (SGD.) DOMINGO MELAD
o The witness for her testimony is only her mother.
 For his part, the defendant testified that he was the husband of Isidra Melad, Domingo's
WITNESSES:
niece, whom he and his wife Juana Malupang had taken into their home as their ward as they
1. (T.M.) ISIDRO MELAD
had no children of their own. He and his wife lived with the couple in their house on the
2. (SGD.) FELIX DANGUILAN
residential lot and helped Domingo with the cultivation of the farm.
3. (T.M.) ILLEGIBLE
o Domingo Melad signed in 1941 a private instrument in which he gave the
defendant the farm
o 1943 another private instrument in which he also gave him the residential lot, on  EXHIBIT 3-a is quoted as follows: 13
the understanding that the latter would take care of the grantor and would bury
him upon his death I, DOMINGO MELAD, a resident of Centro, Penablanca, Province of Cagayan,
o Danguilan presented three witnesses for his story; the two witnesses even said that do hereby swear and declare the truth that I have delivered my residential lot at
neither the plaintiff and the mother lived with Domingo Melad. Centro, Penablanca, Cagayan, to Felix Danguilan, my son-in-law because I have
o Ruling or trial court: Weighing the evidence presented by the parties, the no child; that I have thought of giving him my land because he will be the one to
judge held that the defendant was more believable and that the plaintiff's evidence take care of SHELTERING me or bury me when I die and this is why I have
was "unpersuasive and unconvincing." It was held that the plaintiff's own thought of executing this document; that the boundaries of this lot is—on the east,
declaration that she moved out of the property in 1946 and left it in the possession Cresencio Danguilan; on the north, Arellano Street; on the south by Pastor

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Lagundi and on the west, Pablo Pelagio and the area of this lot is 35 meters going  At any rate, even assuming the validity of the deed of sale, the record shows that the private
south; width and length beginning west to east is 40 meters. respondent did not take possession of the disputed properties and indeed waited until 1962
to file this action for recovery of the lands from the petitioner. If she did have possession,
IN WITNESS HEREOF, I hereby sign this receipt this 18th day of December she transferred the same to the petitioner in 1946, by her own sworn admission, and moved
1943. out to another lot belonging to her step-brother. Her claim that the petitioner was her tenant
(later changed to administrator) was disbelieved by the trial court, and properly so, for its
(SGD.) DOMINGO MELAD inconsistency. In short, she failed to show that she consummated the contract of sale by
actual delivery of the properties to her and her actual possession thereof in concept of
purchaser-owner.
WITNESSES:

As was held in Garchitorena v. Almeda:


(SGD.) ILLEGIBLE

Since in this jurisdiction it is a fundamental and elementary principle


(SGD.) DANIEL ARAO
that ownership does not pass by mere stipulation but only by delivery
(Civil Code, Art. 1095; Fidelity and Surety Co. v. Wilson, 8 Phil. 51),
ISSUE: and the execution of a public document does not constitute sufficient
delivery where the property involved is in the actual and adverse
 Who owns the disputed land? possession of third persons (Addison vs. Felix, 38 Phil. 404; Masallo vs.
Cesar, 39 Phil. 134), it becomes incontestable that even if included in
the contract, the ownership of the property in dispute did not pass
HELD:
thereby to Mariano Garchitorena. Not having become the owner for lack
 FELIX DANGUILAN, petitioner. of delivery, Mariano Garchitorena cannot presume to recover the
 Domingo Melad did intend to donate the properties to the petitioner, as the private property from its present possessors. His action, therefore, is not one of
respondent contends. However, it was not moved by pure liberality. While truly donations, revindicacion, but one against his vendor for specific performance of the
the conveyances were onerous donations as the properties were given to the petitioner in sale to him.
exchange for his obligation to take care of the donee for the rest of his life and provide for
his burial. Hence, it was not covered by the rule in Article 749 of the Civil Code requiring  As for the argument that symbolic delivery was effected through the deed of sale, which was
donations of real properties to be effected through a public instrument. a public instrument, the Court has held:
 The private respondent argues that as there was no equivalence between the value of the
lands donated and the services for which they were being exchanged, the two transactions The Code imposes upon the vendor the obligation to deliver the thing sold.
should be considered pure or gratuitous donations of real rights, hence, they should have The thing is considered to be delivered when it is placed "in the hands and
been effected through a public instrument and not mere private writings. However, no possession of the vendee." (Civil Code, art. 1462). It is true that the same article
evidence has been adduced to support her contention that the values exchanged were declares that the execution of a public instrument is equivalent to the delivery of
disproportionate or unequal. the thing which is the object of the contract, but, in order that this symbolic
 Regarding the deed of sale that was shown by the private respondents: delivery may produce the effect of tradition, it is necessary that the vendor shall
o The deed of sale was allegedly executed when the respondent was only three years have had such control over the thing sold that, at the moment of the sale, its
old and the consideration was supposedly paid by her mother, Maria Yedan from material delivery could have been made. It is not enough to confer upon the
her earnings as a wage worker in a factory. This was itself a suspicious purchaser the ownership and the right of possession. The thing sold must be
circumstance, one may well wonder why the transfer was not made to the mother placed in his control. When there is no impediment whatever to prevent the thing
herself, who was after all the one paying for the lands. The sale was made out in sold passing into the tenancy of the purchaser by the sole will of the vendor,
favor of Apolonia Melad although she had been using the surname Yedan her symbolic delivery through the execution of a public instrument is sufficient. But
mother's surname, before that instrument was signed and in fact even after she got if, notwithstanding the execution of the instrument, the purchaser cannot have the
married. The averment was also made that the contract was simulated and enjoyment and material tenancy of the thing and make use of it himself or through
prepared after Domingo Melad's death in 1945. It was also alleged that even after another in his name, because such tenancy and enjoyment are opposed by the
the supposed execution of the said contract, the respondent considered Domingo interposition of another will, then fiction yields to reality—the delivery has not
Melad the owner of the properties and that she had never occupied the same.
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been effected. whether or not the action is one of forcible entry within the original exclusive jurisdiction of
the municipal court, the averments of the complaint and the character of the relief sought are
the ones to be consulted.
 In the case at bar, it was not alleged that the plaintiffs were in physical possession of the
land and have been deprived of that possession through force, intimation, threat,
strategy or stealth. It simply avers that the plaintiffs-appellants bought the land from
defendants-appellees Bocar the land in question for 2 800php and that a deed of sale was
CALIXTO PASAGUI vs. ESTER VILLABLANCA et. al.
executed, notarized and registered; that defendants Villablanca, illegally and without right,
GR No. L-21998 November 10, 1975 took possession of the land; and that for the purpose of enforcing the vendors’ warranty in
case of eviction, the Bocars were also included as defendants.
Antonio, J.  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. The presumptive delivery only holds true when
FACTS:
there is no impediment that may prevent the passing of the property from the hands of
 Feb. 4, 1963: Appellants Calixto Pasagui and Fausta Mosar filed a complaint with the Court the vendor into those of the vendee. It can be negated by the reality that the vendees
of First Instance at Tacloban City, alleging that on Nov. 15, 1962, in consideration of 2 actually failed to obtain material possession of the land subject of sale.
800php, they bought from appellees Eustaquia Bocar and Catalina Bocar a parcel of  In this case, the plaintiffs-appellants had not acquired physical possession of the land since
agricultural land, in Leyte. its purchase on Nov. 12, 1962. As a matter of fact, their purpose in filing a complaint is
 The corresponding document of sale was executed, notarized on the same date, and recorded precisely to get the possession of the property.
in the Registry of Deeds of Tacloban, Leyte on Nov. 16.  In order that an action may be considered as “forcible entry”, it is not only necessary that
 During the first week of February 1963, defendant spouses Ester Villblanca and Zosimo the plaintiff should allege his prior physical possession of the property, but also that he was
Villablanca, illegally and without any right, took possession of the above property deprived of his possession by any of the means provided in Sec. 2, Rule 70 of the Rules of
harvesting coconuts from the coconut plantation thereon, thus depriving plaintiffs of its Court, namely: force, intimidation, threats, strategy and stealth. If the dispossession did not
possession. take place by any of these means, the CFI, not the Municipal Courts, have jurisdiction. The
 Despite the demands made by the plaintiffs upon defendants to surrender to hem the said bare allegation in the complaint that the plaintiff has been “deprived” of the land of which
property and its possession, the latter failed or refused to return said parcel of land to the he is the legal owner for a long period of time has been held insufficient.
former, causing them damage, and that Eustaquia and Catalina Bocar (vendors of the  It is true that the mere act of a trespasser in unlawfully entering the land, planting himself
property) are included defendants in the complaint by virtue of the warranty clause on the ground and excluding therefrom the prior possessor would imply the use of force.
contained in the document of sale. However in this case, no such interference could be made as plaintiffs-appellants had not
 Plaintiffs prayed for a decision ordering defendants to surrender the possession of the parcel claimed that they were in actual physical possession of the property prior to the entry of the
of land mentioned and to pay damages. Villablancas. Moreover, it is evident that plaintiffs-appellants are not only seeking to get the
 However, appellees moved to dismiss the complaint on the ground that the Court of First possession of the property, but as an alternative cause of action, they seek the return of
Instance had no jurisdiction over the subject matter, the action being one of forcible entry. the price and payment of damages by the vendors “in case of eviction or loss of
Appellants opposed the Motion to Dismiss, asserting that the action is not one for forcible ownership” of the said property. It is therefore, not the summary action of forcible entry
entry being no allegation that the deprivation of possession was effected through force, within the context of the Rules.
intimidation, threat, strategy or stealth.  The order of dismissal is hereby set aside, and the case remanded to the court a quo for
 Trial court issued dismissed the complaint for lack of jurisdiction, it appearing from the further proceedings. Costs against defendants-appellees.
alllegations in the complaint that the case is one for forcible entry which belongs to the
exclusive jurisdiction of the Justice of Peace (now Municipal Court) of Pastrana, Leyte.

ISSUE: Whether or not, from the nature of the action pleaded as appears in the allegations of the G.R. No. 92989 July 8, 1991
complaint, the aforesaid action is one of forcible entry, within the exclusive jurisdiction of the
municipal court. PERFECTO DY, JR. petitioner,
vs.
HELD: No.
COURT OF APPEALS, GELAC TRADING INC., and ANTONIO V. GONZALES,
 What determines the jurisdiction of the municipal court in a forcible entry case is the nature respondents.
of the action pleaded as appears from the allegations in the complaint. In ascertaining
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GUTIERREZ, JR., J.: 2. Whether or not the ownership of the farm tractor had already passed to herein petitioner
when said tractor was levied on by the sheriff pursuant to an alias writ of execution issued
FACTS: in another case in favor of respondent Gelac Trading Inc.

 The petitioner, Perfecto Dy and Wilfredo Dy are brothers. Sometime in 1979, Wilfredo Dy RULING:
purchased a truck and a farm tractor through financing extended by Libra Finance and
Investment Corporation (Libra). Both truck and tractor were mortgaged to Libra as security  NO. The relationship between Libra and the petitioner is not one of sale but still a mortgage.
for the loan. The payment of the check was actually intended to extinguish the mortgage obligation so
 The petitioner wanted to buy the tractor from his brother so on August 20, 1979, he wrote a that the tractor could be released to the petitioner. It was never intended nor could it be
letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the said tractor considered as payment of the purchase price because the relationship between Libra and the
and assume the mortgage debt of the latter. petitioner is not one of sale but still a mortgage.
 In a letter dated August 27, 1979, Libra thru its manager, Cipriano Ares approved the  Supreme Court set aside the decision of the CA and reinstated the decision of the RTC.
petitioner's request.  The clearing or encashment of the check which produced the effect of payment determined
 Thus, on September 4, 1979, Wilfredo Dy executed a deed of absolute sale in favor of the the full payment of the money obligation and the release of the chattel mortgage. It was not
petitioner over the tractor in question. At this time, the subject tractor was in the possession determinative of the consummation of the sale. The transaction between the brothers is
of Libra Finance due to Wilfredo Dy's failure to pay the amortizations. distinct and apart from the transaction between Libra and the petitioner. The contention,
 Despite the offer of full payment by the petitioner to Libra for the tractor, the immediate therefore, that the consummation of the sale depended upon the encashment of the check is
release could not be effected because Wilfredo Dy had obtained financing not only for said untenable.
tractor but also for a truck and Libra insisted on full payment for both.  YES.
 When petitioner finally fulfilled its obligation to pay the tractor, LIBRA would only release  SPECIAL CONTRACTS; CHATTEL MORTGAGE; RIGHT OF MORTGAGOR TO
the same only if he would also pay for the truck. SELL THE PROPERTY MORTGAGED; RULE. — The mortgagor who gave the
 In order to fulfill LIBRA’s condition, petitioner convinced his sister to pay for the remaining property as security under a chattel mortgage did not part with the ownership over the
truck, to which she released a check amounting to P22,000. LIBRA however, insisted that same. He had the right to sell it although he was under the obligation to secure the written
the check must be first cleared before it delivers the truck and tractor. consent of the mortgagee or he lays himself open to criminal prosecution under the
 Meanwhile, Civil Case entitled “Gelac Trading, Inc. v. Wilfredo Dy”, a collection case to provision of Article 319 par. 2 of the Revised Penal Code. And even if no consent was
recover the sum of P12,269.80 was pending in another court in Cebu. obtained from the mortgagee, the validity of the sale would still not be affected.
 On the strength of an alias writ of execution issued, the provincial sheriff was able to seize
and levy on the tractor which was in the premises of Libra in Carmen, Cebu.  APPLICABLE IN CASE AT BAR. — We see no reason why Wifredo Dy, as the chattel
 The tractor was subsequently sold at public auction where Gelac Trading was the alone mortgagor can not sell the subject tractor. There is no dispute that the consent of Libra
bidder. Later, Gelac sold the tractor to one of its stockholders, Antonio Gonzales. Finance was obtained in the instant case. Libra allowed the petitioner to purchase the tractor
 It was only when the check was that the petitioner learned about GELAC having already and assume the mortgage debt of his brother. The sale between the brothers was therefore
taken custody of the subject tractor. valid and binding as between them and to the mortgagee, as well.
 Petitioner then filed an action to recover the subject tractor against GELAC Trading.  REMEDY OF MORTGAGEE IN CASE MORTGAGOR FAILED TO PAY THE DEBT.
 the RTC rendered judgment in favor of the petitioner pronouncing that plaintiff is the owner — It was Libra Finance which was in possession of the subject tractor due to Wilfredo’s
of the tractor, the subject matter in this case, and directed the defendants Gelac Trading and failure to pay the amortization as a preliminary step to foreclosure. As mortgagee, he has the
Antonio Gonzales to return the same to the plaintiff as well as to jointly and severally pay right of foreclosure upon default by the mortgagor in the performance of the conditions
damages. mentioned in the contract of mortgage.
• Howeever, Court of Appeals reversed the decision of the RTC (held that the tractor in  The law implies that the mortgagee is entitled to possess the mortgaged property because
question still belonged to Wilfredo Dy when it was seized and levied by the sheriff). possession is necessary in order to enable him to have the property sold. While it is true that
Wilfredo Dy was not in actual possession and control of the subject tractor, his right of
ownership was not divested from him upon his default. Neither could it be said that Libra
ISSUES:
was the owner of the subject tractor because the mortgagee can not become the owner of or
convert and appropriate to himself the property mortgaged (Article 2088, Civil Code). Said
1. Whether or not there was a consummated sale between Petitioner and LIBRA? property continues to belong to the mortgagor.
 The only remedy given to the mortgagee is to have said property sold at public auction and
the proceeds of the sale applied to the payment of the obligation secured by the mortgagee.
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 SALE; DELIVERY OF PROPERTY VESTS OWNERSHIP TO THE VENDEE. — Article
1496 of the Civil Code states that the ownership of the thing sold is acquired by the vendee
from the moment it is delivered to him 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. We agree with the petitioner that Articles 1498 and 1499 are applicable
in the case at bar.
 Article 1498 states: 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 clearly be inferred.
 Article 1499 provides: The delivery of movable property may likewise be made by the mere
consent or agreement of the contracting parties, if the thing sold cannot be transferred to the
possession of the vendee at the time of the sale, or if the latter already had it in his possession
for any other reason.
 RULE ON CONSTRUCTIVE DELIVERY. — In the instant case, actual delivery of the
subject tractor could not be made. However, there was constructive delivery already upon G.R. No. 119745 June 20, 1997
the execution of the public instrument pursuant to Article 1498 and upon the consent or POWER COMMERCIAL AND INDUSTRIAL CORPORATION, petitioner,
agreement of the parties when the thing sold cannot be immediately transferred to the vs.
possession of the vendee (Article 1499). COURT OF APPEALS, SPOUSES REYNALDO and ANGELITA R. QUIAMBAO and
PHILIPPINE NATIONAL BANK, respondents.
Other terms and Concept included in the case:
PANGANIBAN, J.:
 PURCHASER OF MORTGAGED PROPERTY STEPS INTO THE SHOES OF THE FACTS:
MORTGAGOR. — Where a third person purchases the mortgaged property, he
automatically steps into the shoes of the original mortgagor. His right of ownership  Petitioner Power Commercial & Industrial Development Corporation (PowerCom), an
shall be subject to the mortgage of the thing sold to him. In the case at bar, the petitioner industrial asbestos manufacturer, needed a bigger office space and warehouse for its
was fully aware of the existing mortgage of the subject tractor to Libra. In fact, when products.
he was obtaining Libra’s consent to the sale, he volunteered to assume the remaining  For this purpose, on January 31, 1979, it entered into a contract of sale with the spouses
balance of the mortgage debt of Wilfredo Dy which Libra undeniably agreed to. Reynaldo and Angelita R. Quiambao, herein private respondents.
 CONSUMMATION OF SALE; NOT DEPENDENT ON THE ENCASHMENT OF  The contract involved a 612-sq. m. parcel of land covered by Transfer Certificate of Title
CHECK. — The payment of the check was actually intended to extinguish the mortgage No. S-6686 located at the corner of Bagtican and St. Paul Streets, San Antonio Village,
obligation so that the tractor could be released to the petitioner. It was never intended Makati City.
nor could it be considered as payment of the purchase price because the relationship  The parties agreed that petitioner would pay private respondents P108,000.00 as down
between Libra and the petitioner is not one of sale but still a mortgage. payment, and the balance of P295,000.00 upon the execution of the deed of transfer of the
 The clearing or encashment of the check which produced the effect of payment title over the property. Further, petitioner assumed, as part of the purchase price, the existing
determined the full payment of the money obligation and the release of the chattel mortgage on the land . In full satisfaction thereof, he paid P79,145.77 to Respondent
mortgage. It was not determinative of the consummation of the sale. The transaction Philippine National Bank ("PNB" for brevity).
between the brothers is distinct and apart from the transaction between Libra and the  On June 1, 1979, respondent spouses mortgaged again said land to PNB to guarantee a loan
petitioner. The contention, therefore, that the consummation of the sale depended upon of P145,000.00, P80,000.00 of which was paid to respondent spouses. Petitioner agreed to
the encashment of the check is untenable. assume payment of the loan.
 EVIDENCE; FRAUD; MUST BE ESTABLISHED BY CLEAR CONVINCING  On June 26, 1979, the parties executed a Deed of Absolute Sale With Assumption of
EVIDENCE. — There is no sufficient evidence to show that the sale of the tractor was Mortgage which contained the following terms and conditions:
in fraud of Wilfredo and creditors. While it is true that Wilfredo and Perfecto are
brothers, this fact alone does not give rise to the presumption that the sale was “…We hereby also warrant that we are the lawful and absolute owners of the above described
fraudulent. Relationship is not a badge of fraud. Moreover, fraud cannot be presumed; property, free from any lien and/or encumbrance, and we hereby agree and warrant to defend its title
it must be established by clear convincing evidence. and peaceful possession thereof in favor of the said Power Commercial and Industrial Development

6
Corporation, its successors and assigns, against any claims whatsoever of any and all third persons;  By his own admission, Anthony Powers, General Manager of petitioner-corporation, did not
subject, however, to the provisions hereunder provided to wit:” ask the corporation's lawyers to stipulate in the contract that Respondent Reynaldo was
 On February 15, 1980,PNB informed respondent spouses that, for petitioner’s failure to guaranteeing the ejectment of the occupants, because there was already a proviso in said
submit the papers necessary for approval pursuant to the former’s letter dated January 15, deed of sale that the sellers were guaranteeing the peaceful possession by the buyer of the
1980, the application for assumption of mortgage was considered withdrawn; that the land in question.
outstanding balance of P145,000.00 was deemed fully due and demandable; and that said  If the parties intended to impose on respondent spouses the obligation to eject the tenants
loan was to be paid in full within fifteen (15) days from notice from the lot sold, it should have included in the contract a provision similar to that referred
 Petitioner PowerCom paid PNB P41,880.45 on June 24, 1980 and P20,283.14 on December to in Romero vs. Court of Appeals, where the ejectment of the occupants of the lot sold by
23, 1980, payments which were to be applied to the outstanding loan. private respondent was the operative act which set into motion the period of petitioner’s
 On March 17, 1982, petitioner filed Civil Case No. 45217 against respondent spouses for compliance with his own obligation, i.e., to pay the balance of the purchase price. In the case
rescission and damages. cited, the contract specifically stipulated that the ejectment was a condition to be fulfilled;
 Petitioner demanded the return of the payments it made on the ground that its assumption of otherwise, the obligation to pay the balance would not arise. This is not so in the case at
mortgage was never approved. bar.
 On May 31, 1983, while the case was pending, the mortgage was foreclosed. The property  Absent a stipulation therefor, we cannot say that the parties intended to make its
was subsequently bought by PNB during the public auction. Thus, an amended complaint nonfulfillment a ground for rescission. If they did intend this, their contract should have
was filed impleading PNB as party defendant. expressly stipulated so.
 There is no breach of contact in this case since there is no provision in the contract that
 The Trial Court ruled that the failure of respondent spouses to deliver actual possession to
imposes the obligation to the respondents to eject the people occupying the property.
petitioner entitled the latter to rescind the sale, and in view of such failure and of the denial
of the latter’s assumption of mortgage, PNB was obliged to return the payments made by  There was also a constructive delivery because the deed of sale was made in a public
the latter. document. The contention of the petitioners that there could be no constructive delivery
because the respondents is not in possession of the property is of no merit. What matters in
 On appeal by the respondent-spouses and PNB, respondent COURT OF APPEALS
a constructive delivery is control and not possession. Control was placed in the hands of the
reversed the trial court. it held that the deed of sale between respondent spouses and
petitioners that is why they were able to file an ejectment case. Prior physical delivery or
petitioner did not obligate the former to eject the lessees from the land in question as a
possession is not legally required and the execution of the deed of sale is deemed equivalent
condition of the sale, nor was the occupation thereof by said lessees a violation of the
to delivery.
warranty against eviction. Hence, there was no substantial breach to justify the rescission of
said contract or the return of the payments made.
 Petitioner now contends that there was a substantial breach of the contract between the Effective Symbolic Delivery
parties warranting rescission and that CA gravely erred in failing to consider in its decision
 The Court disagrees with petitioner's allegation that the respondent spouses failed to deliver
that a breach of implied warranty under Article 1547 in relation to Article 1545 of the Civil
the lot sold.
Code applies in the case-at-bar.
 Although most authorities consider transfer of ownership as the primary purpose of sale,
ISSUES: delivery remains an indispensable requisite as our law does not admit the doctrine of
1. Whether or not the alleged “failure” of respondent spouses to eject the lessees from the lot transfer of property by mere consent. 21 The Civil Code provides that delivery can either
in question and to deliver actual and physical possession can be considered a substantial be (1) actual (Article 1497) or (2) constructive (Articles 1498-1501). Symbolic delivery
breach of condition. (Article 1498), as a species of constructive delivery, effects the transfer of ownership
2. Whether or not there was a substantial breach of the contract between the parties warranting through the execution of a public document. Its efficacy can, however, be prevented if the
rescission. vendor does not possess control over the thing sold, in which case this legal fiction must
yield to reality.
RULING:  The key word is control, not possession, of the land as petitioner would like us to believe.
The Court has consistently held that:
1. NO. The alleged “failure” of respondent spouses to eject the lessees from the lot in question
 . . . (I)n order that this symbolic delivery may produce the effect of tradition, it is necessary
and to deliver actual and physical possession thereof cannot be considered a substantial
that the vendor shall have had such control over the thing sold that . . . its material delivery
breach of a condition for two reasons: first, such “failure” was not stipulated as a condition
could have been made. It is not enough to confer upon the purchaser the ownership and the
-- whether resolutory or suspensive -- in the contract; and second, its effects and
right of possession. The thing sold must be placed in his control.
consequences were not specified either. The provision adverted to by petitioner does not
impose a condition or an obligation to eject the lessees from the lot.

7
 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.
 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.

2. NO.

Requisites of Breach of Warranty Against Eviction

A breach of this warranty requires the concurrence of the following circumstances:

(a) The purchaser has been deprived of the whole or part of the thing sold;
(b) This eviction is by a final judgment;
(c) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(d) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of G.R. No. L-40195 May 29, 1987
the vendee.
VICTORIA R. VALLARTA, petitioner,
 In the absence of these requisites, a breach of the warranty against eviction under vs.
Article 1547 cannot be declared. THE HONORABLE COURT OF APPEALS and THE HONORABLE JUDGE FRANCISCO
 As correctly pointed out by CA, the presence of lessees does not constitute an LLAMAS, Pasay City Court,
encumbrance of the land, nor does it deprive petitioner of its control thereof. CORTES, J.:
 We note, however, that petitioner’s deprivation of ownership and control finally occurred
when it failed and/or discontinued paying the amortizations on the mortgage, causing the lot FACTS:
to be foreclosed and sold at public auction. But this deprivation is due to petitioner’s fault,
and not to any act attributable to the vendor-spouses.  Rosalinda Cruz, the private offended party, and accused Victoria Vallarta are long time
friends and business acquaintances.
OTHER TERMS INCLUDED IN THE CASE:  On November 20, 1968, Cruz entrusted to Victoria Vallarta seven pieces of jewelry. In
December of the same year, Vallarta decided to buy some items, exchanged one item with
another, and issued a post-dated check in the amount of P5,000 dated January 30, 1969.
Absence of Mistake In Payment  Rosalinda Cruz deposited said check with the bank. However, upon presentment, the check
was dishonored and Cruz was informed that Vallarta's account had been closed.
 Contrary to the contention of petitioner that a return of the payments it made to PNB is
 Cruz apprised Vallarta of the dishonor and the latter promised to give another check. Later,
warranted under Article 2154 of the Code, solutio indebiti does not apply in this case. This
Vallarta pleaded for more time. Still later, she started avoiding Cruz. Hence, Cruz instituted
doctrine applies where: (1) a payment is made when there exists no binding relation between
a criminal action.
the payor, who has no duty to pay, and the person who received the payment, and (2) the
 Based on the foregoing facts, both the trial court and the Court of Appeals found Vallarta
payment is made through mistake, and not through liberality or some other cause.
guilty beyond reasonable doubt of the crime of estafa.
 In this case, petitioner was under obligation to pay the amortizations on the mortgage under
 Petitioner Vallarta then seeks a reversal of the Court of Appeals decision dated December
the contract of sale and the deed of real estate mortgage.
13, 1974 affirming the Trial Court's judgment convicting her of estafa. Supreme Court
 The quasi-contract of solutio indebiti is one of the concrete manifestations of the ancient
denied the petition initially but granted a motion for reconsideration and gave the petition
principle that no one shall enrich himself unjustly at the expense of another. 31 But as shown
due course.
earlier, the payment of the mortgage was an obligation petitioner assumed under the contract
of sale. There is no unjust enrichment where the transaction, as in this case, is quid pro quo, ISSUE:
value for value.
Whether or not the transaction between her and Cruz
constitutes a “sale or return” under Art. 1502.
8
RULING:  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
 NO. Article 1502 of the Civil Code provides that: was a "sale on approval" since ownership passed to the buyer.
 It is still criminal fraud or deceit in the issuance of a check which is made punishable under
Art. 1502. When goods are delivered to the buyer "on sale or return" to give the buyer an option the Revised Penal Code, and not the non-payment of the debt. Art. 315 (2) (d) RPC, as
to return the goods instead of paying the price, the ownership passes to the buyer of delivery, amended by RA 4885,which penalizes any person who shall defraud another "(b)y
but he may revest the ownership in the seller by returning or tendering the goods within the time postdating a check, or issuing a check in payment of an obligation when the offender had no
fixed in the contract, or, if no time has been fixed, within a reasonable time. (n) funds in the bank, or his funds deposited therein were not sufficient to cover the amount of
the check. The failure of the drawer of the check to deposit the amount necessary to cover
When goods are delivered to the buyer on approval or on trial or on satisfaction, or other similar his check within 3 days from receipt of notice from the bank and/or the payee or holder that
terms, the ownership therein passes to the buyer: said check has been dishonored for lack or insufficiency of funds" is deemed prima facie
evidence of deceit constituting false pretense or fraudulent act. Estafa here is the act of post-
(1) When he signifies his approval or acceptance to the seller or does any other act dating or issuing a check in payment of an obligation must be the efficient cause of
adopting the transaction; defraudation, and as such it should be either prior to, or simultaneous with the act of fraud.
 Dispositive: AFFIRMED. Costs against the petitioner.
(2) If he does not signify his approval or acceptance to the seller, but retains the goods
without giving notice of rejection, then if a time has been fixed for the return of the Carbonell v. CA
goods, on the expiration of such time, and, if no time has been fixed, on the expiration
G.R. No. L-29972 January 26, 1976
of a reasonable time. What is a reasonable time is a question of fact.
Makasiar J.
 In seeking acquittal, petitioner stresses that the transaction between her and Cruz was a "sale
or return," perfected and consummated on November 20, 1968 when the seven pieces of FACTS:
jewelry were delivered. The check issued in December 1968 was therefore in payment of a
 Respondent Jose Poncio, a native of the Batanes Islands, was the owner of the parcel
pre-existing obligation. Thus, even if it was dishonored, petitioner claims that she can only
of land herein involve and subject to mortgage in favor of the Republic Savings Bank
be held civilly liable, but not criminally liable under Art. 315 (2) (d), Revised Penal Code.
for the sum of P1,500.00
She also argues that at any rate, what prompted Cruz to deliver the jewelry was the social
 Petitioner Rosario Carbonell is the cousin and adjacent neighbor of respondent Poncio
standing of petitioner Vallarta and not the postdated check.
and lives in the adjoining lot
 She thus assigns as errors the finding of that Court a quo that the jewelries were entrusted
 Both petitioners Rosario Carbonell and respondent Emma Infante offered to buy the
on November 20, 1968, but the sale was perfected in December 1968, and the finding that
said lot from Poncio
there was deceit in the issuance of the postdated check.
 Respondent Poncio, unable to keep up with the installments due on the mortgage,
 Supreme Court ruled that the transaction entered into by Cruz and Vallarta was not a "sale
approached petitioner Carbonell and offered to sell to the latter the said lot, excluding
or return." Rather, it was a "sale on approval " (also called " sale on acceptance, " "sale on
the house wherein respondent lived.
trial." or "sale on satisfaction". In a "sale or return," the ownership passes to the buyer on
 Carbonell accepted the offer and proposed the price of P9.50 per square meter.
delivery (The subsequent return of the goods reverts ownership in the seller). Delivery, or
 Respondent Poncio, after having secured the consent of his wife and parents, accepted
tradition. as a mode of acquiring ownership must be in consequence of a contract e.g. sale.
the price proposed by petitioner, on the condition that from the purchase price would
 Note that Vallarta changed the ruby ring because it was not acceptable to her, and chose
come the money to be paid to the bank.
another ring. Likewise, the price to be paid for the jewelry was finally agreed upon only in
 Petitioner and respondent Jose Poncio then went to the Republic Savings Bank and
December 1968. Thus, there was a meeting of the minds between the parties as to the object
secured the consent of the President thereof for her to pay the arrears on the mortgage
of the contract and the consideration therefore only in December 1968, the same time that
and to continue the payment of the installments as they fall due.
the check was issued. The delivery made on November 20, 1968 was only for the purpose
of enabling Vallarta to select what jewelry she wanted.  Thereafter, petitioner asked Atty. Salvador Reyes, to prepare the formal deed of sale,
which she brought to respondent Poncio together with the amount of some P400.00,
 If there was no meeting of the minds on November 20, 1968, then, as of that date, there was
the balance she still had to pay in addition to her assuming the mortgaged obligation
yet no contract of sale which could be the basis of delivery or tradition. Thus, the delivery
to Republic Savings Bank.
made on November 20, 1968 was not a delivery for purposes of transferring ownership —
the prestation incumbent on the vendor.

9
 Upon arriving at respondent Jose Poncio's house, however, the latter told petitioner - It is essential that the buyer of realty must act in good faith in registering his deed of sale
that he could not proceed any more with the sale, because he had already given the lot to merit the protection of the second paragraph of said Article 1544.
to respondent Emma Infants - Unlike the first and third paragraphs of said Article 1544, which accord preference to the
 Petitioner then sought to contact respondent Mrs. Infante but the latter refused to see one who first takes possession in good faith of personal or real property, the second
her. paragraph directs that ownership of immovable property should be recognized in favor of
 In a private memorandum agreement dated January 31, 1955, respondent Poncio one "who in good faith first recorded" his right. Under the first and third paragraph, good
indeed bound himself to sell to his corespondent Emma Infante, the property for the faith must characterize the act of anterior registration
sum of P2,357.52, with respondent Emma Infante still assuming the existing - If there is no inscription, what is decisive is prior possession in good faith. If there is
mortgage debt in favor of Republic Savings Bank in the amount of P1,177.48. Emma inscription, as in the case at bar, prior registration in good faith is a pre-condition to
Infante lives just behind the houses of Poncio and Rosario Carbonell. superior title.
 On February 2, 1955, respondent Jose Poncio executed the formal deed of sale in - When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer
favor of respondent Mrs. Infante in the total sum of P3,554.00 and on the same date, thereof and the title of Poncio was still in his name solely encumbered by bank mortgage
the latter paid Republic Savings Bank the mortgage indebtedness of P1,500.00. The duly annotated thereon.
mortgage on the lot was eventually discharged. - Carbonell was not aware — and she could not have been aware — of any sale of Infante
 Informed that the sale in favor of respondent Emma Infante had not yet been as there was no such sale to Infante then.
registered, Atty. Garcia prepared an adverse claim for petitioner - Hence, Carbonell's prior purchase of the land was made in good faith. Her good faith
 The deed of sale in favor of respondent Mrs. Infante was registered only on February subsisted and continued to exist when she recorded her adverse claim four (4) days prior to
12, 1955. As a consequence thereof, a Transfer Certificate of Title was issued to her the registration of Infantes's deed of sale.
but with the annotation of the adverse claim of petitioner Rosario Carbonell. - Carbonell's good faith did not cease after Poncio told her on January 31, 1955 of his
second sale of the same lot to Infante. Because of that information, Carbonell wanted an
audience with Infante, which desire underscores Carbonell's good faith.
ISSUE: WON there was a double sale? - Inevitably evident therefore from the foregoing discussion, is the bad faith of Emma
Infante from the time she enticed Poncio to dishonor his contract with Carbonell, and
instead to sell the lot to her (Infante) by offering Poncio a much higher price than the price
HELD: YES. for which he sold the same to Carbonell.
- Being guilty of bad faith, both in taking physical possession of the lot and in recording
their deed of sale, the Infantes cannot recover the value of the improvements they
introduced in the lot.
“Article 1544, New Civil Code, which is decisive of this case, recites:

If the same thing should have been sold to different vendees, the ownership shall TOMASA QUIMSON and MARCOS SANTOS Petitioners, vs. FRANCISCO
be transferred to the person who may have first taken possession thereof in good faith, if it ROSETE, Respondent.
should movable property.

TUASON, J.:
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.

 This is an appeal by certiorari from a decision of the Court of Appeals reversing the
judgment of the Court of First Instance of Zambales. The case involves s dispute over a
Should there be no inscription, the ownership shall pertain to the person who in parcel of land sold to two different persons.
good faith was first in the possession; and, in the absence thereof, to the person who
 The case involves s dispute over a parcel of land sold to two different persons: Tomasa
presents the oldest title, provided there is good faith”
Quimson and Francisco Rosete.

10
 The property originally belonged to Dionisio Quimson (deceased), who executed a deed of o Florendo vs. Foz (20 Phil., 388), the court, through Mr. Chief Justice Arellano,
conveyance in favor of his daughter Tomasa Quimson. However, he continued possession rules that "When the sale is made by means of a public instrument, the
and enjoyment of the property. execution thereof is tantamount to conveyance of the subject matter, unless
 Dionisio also sold the land to Sps Magno Agustin and Paulina Manzano with an agreement the contrary clearly follows or be deduced from such instrument itself, and in the
to repurchase within 6 years. Two years later, it was also sold to Francisco Rosete, with a absence of this condition such execution by the vendor is per se a formal or
pacto de retro, within 5 years. symbolical conveyance of the property sold, that is, the vendor in the
o Pacto de Retro sale refers to the sale wherein the seller has the right to repurchase the instrument itself authorizes the purchaser to used the title of ownership as
subject matter or the property being sold. The essence of a pacto de retro sale is that proof that latter is thenceforth the owner of the property."
the title and ownership of the property sold transfers immediately to the vendee a retro.  Article 1473:
Dionisio repurchased the property from the Sps with the money that Rosete paid him o Sanchez vs. Ramon (40 Phil., 614): The execution of the public instrument is
for the land. equivalent to the delivery of the realty sold (art. 1462, Civil Code ) and its
 Rosete excercised possession and enjoyment in a peaceful and quiet manner, even after the possession by the vedee (art. 438).Under these conditions the sale is considered
death of Dionisio. consummated and completely transfers to the vendee all of the thing. the vendee
 When Tomasia and Rosete sought the registration of the property and inscription of the by virtue of this sale has acquired everything and nothing, absolutely nothing, is
deed of sale, Tomasa arrived earlier (9:30am) than Rosete (10:30am). left to the vendor.
o This means that after the sale of the realty by means of a public instruments, the
vendor, who resells it to another, does not transmitted anything to this second
Issue(s): sale, takes materials possession of the thing, he does it as mere detainer, and it
would be unjust to protect this detention against the rights to the thing lawfully
 Who owned the land that originally belonged to Dionisio?
acquired by the first vendee.
o We are of the opinion that the possession mentioned in the article 1473 (for
Ruling: determining who has better right when the same piece of land has been sold
several times by the vendor ) includes not the materials but also the symbolic
 Tomasa Quimson possession, which is acquired by the execution of a public instrument.
 Articles 1462 and 1473 of the Civil Code provide:  The findings that a deed of conveyance was made by Dionisio Quimson in favor of his
daughter could have no other meaning, in the absence of any qualifying statement , that the
ART. 1462. The thing sold shall be deemed delivered, when it is placed in the control and land was sold by the father to his daughter. Furthermore, this was the trial court's explicit
possession of the vendee. finding which was not reversed by the Court of Appeals and stand as the fact of the case.
Looking into the documents itself Exhibits A states categorically that the vendor received
When the sale is made by means of a public instrument, the execution thereof shall be form the vendee the consideration of sale, P 250, acknowledge before the notary public the
equivalent to the delivery of the thing which is the object of the contract, if from the said notary public having executed the instruments of his own free will.
instrument the contrary does not appear or may not be clearly inferred.
 In conclusion, Tomasa Quimson is the real owner of the land, since when her father sold her
ART. 1473. If the same thing should have been sold to different vendees, the ownership the land for P250, she decided to execute the deed in the notary public, and when the second
shall be transferred to the person who may have first taken possession thereof in good faith, sale happened it produces no effect.
if it should be movable property. Should it be immovable property, the ownership shall
belong to the person acquiring it who first recorded it in the registry.

Should there be no inscription, the ownership shall belong to the person who in good faith
RICARDO CHENG vs. RAMON GENATO
was first in the possession; and, in the absence of this, to the person who represents the oldest
title, provided there is good faith. GR No. 129760 December 29, 1998

Matinez, J.
 Article 1462:
o Buencamino vs. Viceo (13 Phil., 97), Mr. Justice Willard, speaking for the court FACTS:
and citing article 1462 says: "Upon a sale of real estate the execution of a notarial
document of sale is a sufficient delivery of the property sold.".  This petition for review on certiorari seeks to annul and set aside the decision of the CA.
11
 Respondent Ramon Genato is the owner of the two parcels of lands located at Paradise against the rescission of their contract. They reminded Genato that he had given them an
Farms, San Jose del Monte, Bulacan. additional 30-day period to finish their verification of his titles, that the period was still in
 On September 6, 1989, respondent Genato entered into an agreement with respondent- effect, and that they were willing and able to pay the balance of the agreed down payment,
spouses Ernesto and Socorro Da Jose over the above-mentioned parcels of lands. The Genato then decided to continue the contract he had with them.
agreement culminated in the execution of a contract to sell for which the purchase price  He then advised Cheng of his decision to continue his contract with the Da Jose spouses and
was P80.00 per square meter. Clauses 1 and 3 thereof provide: the return of Cheng’s 50,000 check. Consequently, Cheng’s lawyer sent a letter to Genato
o 1. That the purchase price shall be 80php per square meter, of which the amount demanding compliance with their agreement to sell the property to him stating that the
of 50,000php shall be paid by the vendee to the vendor as partial down payment contract to sell between him and Genato was already perfected and threatening legal action.
at the time of execution of this Contract to sell.  The Da Jose spouses paid Genato the complete down payment of 950k, however, due to the
o 3. That the vendee, 30 days after the execution of this contract, and only after filing of the pendency of this case, the 3 postdated checks given by Da Jose have not been
having satisfactorily verified and confirmed the truth and authenticity of encashed.
documents, and that no restrictions, limitations, and developments imposed on  Cheng, on the other hand, instituted a complaint for specific performance to compel Genato
and/or affecting the property subject of this contract shall be detrimental to his to execute a deed of sale to him of the subject properties plus damages and prayer for
interest, the vendee shall pay to the vendor, 950 000php, representing the full preliminary attachment. He averred that the 50k was a partial payment to the total agreed
payment of the agreed down payment, after which complete possession of the purchase price of the subject properties and considered as an earnest money for which
property shall be given to the vendee to enable him to prepare the premises and Genato acceded, hence the contract was already perfected.
any development therein.  Trial court ruled that the receipt issued by Genato to Cheng unerringly meant a sale and not
 On October 4, 1989, the Da Jose spouses, not having finished verifying the titles mentioned just a priority or an option to buy. It cannot be true that the transaction was subjected to some
in clause 3, asked for and was granted by respondent Genato an extension of another 30 days condition or reservation, like the priority in favor of the Da Jose spouses as first buyer
– or until Nov. 5, 1989. However, according to Genato, the extension was granted on because, if it were otherwise, the receipt would have provided such material condition or
condition that a new set of documents are made 7 days from October 4, 1989. This was reservation, especially as it was Genato himself who had made the receipt in his own hand.
denied by the Da Jose spouses.  CA reversed trial court’s decision, and rule that the subsequent contract to sell between
 Pending the effectivity of the aforesaid extension period, and without due notice to the Da Genato and Cheng, embodied in the handwritten receipt, was without force and effect due
Jose spouses, Genato executed an Affidavit to Annul the Contract to Sell. Moreover, no to the failure to rescind the prior contract, and that Cheng should pay damages to the
annotation of the said affidavit at the back of his titles was made right away. The affidavit respondents herein being found to be in bad faith.
contained the following:
o That it was agreed between the parties that the agreed downpayment of 950,000 ISSUES:
shall be paid 30 days after the execution of the Contract, that is on or before
1. Whether or not the CA erred in reversing the decision. No.
October 6, 1989.
2. Whether or not the nature of the agreement between Cheng and Genato is one of a Contract
o The supposed vendees failed to pay the said full downpayment even up to this
to Sell. Yes.
writing, a breach of contract;
o That this affidavit is being executed to annul the aforesaid Contract to Sell for the HELD: Petition must be denied for failure to show that the CA committed a reversible error which
vendee having committed a breach of contract for not having complied with the would warrant a contrary ruling.
obligation as provided in the Contract to Sell.
 Herein petitioner Cheng went to Genato’s residence and expressed interest in buying the  No reversible error can be ascribed to the ruling of the CA that there was no valid and
subject properties. Genato showed Cheng copies of his transfer certificates of title and the effective rescission or resolution of the Da Jose spouses Contract to Sell, contrary to
annotations at the back thereof of his contract to sell with the Da Jose spouses. Genato also petitioner’s contentions and the trial court’s erroneous ruling.
showed him the aforementioned Affidavit to Annul the Contract to Sell which has not been  In a Contract to Sell, the payment of the purchase price is a positive suspensive condition,
annotated at the back of the titles. the failure of which is not a breach, casual or serious, but a situation that prevents the
 Despite these, Cheng went ahead and issued a check for 50,000php upon the assurance by obligation of the vendor to convey title from acquiring an obligatory force. There can be no
Genato that the previous contract with the Da Jose spouses will be annulled for which Genato rescission of an obligation that is still non-existent, the suspensive condition not having
issued a handwritten receipt. Acting on Cheng’s request, Genato caused the registration of occurred as yet. Emphasis should be made that the breach contemplated in Art. 1191 of the
the affidavit to annul the contract to sell in the registry of deeds. New Civil Code is the obligor’s failure to comply with an obligation already extant, not a
 While the Da Jose spouses were at the Office of the Registry of Deeds Bulacan, they met failure of a condition to render binding that obligation.
Genato by coincidence. It was only then that the Da Jose spouses discovered about the  The Da Jose spouses’ contention that no further condition was agreed when they were
affidavit to annul their contract. The latter were shocked at the disclosure and protested granted the 30-days extension period from Oct. 7, 1989 in connection with clause 3 of their

12
contract to sell should be upheld, since the sad extension has not yet expired. Even assuming title of subject properties in good faith ahead of the Da Jose spouses. In contrast, knowledge
that the Da Jose spouses defaulted in their contract to sell, the execution by Genato of the gained by Cheng of the first transaction between the Da Jose spouses and Genato defeats his
affidavit to annul the contract is not even called for. For with or without the aforesaid rights even if he is first to register the second transaction, since such knowledge taints his
affidavit, their non-payment to complete the full down payment of the purchase price ipso prior registration with bad faith.
facto avoids their contract to sell, it being subjected to a suspensive condition. When a  Registration, as defined by Soler and Castillo, means any entry made in the books of
contract is subject to a suspensive condition, its birth or effectivity can take place only if and registry, including both registration in its ordinary and strict sense, and cancellation,
when the event which constitutes the condition happens or is fulfilled. If the suspensive annotation, and even marginal notes. We have ruled before that when a Deed of Sale is
condition does not take place, the parties would stand as if the conditional obligation had inscribed in the registry of property on the original document itself, what was done with
never existed. respect to said entries or annotations and marginal notes amounted to a registration of the
 Genato is not relieved from the giving of a notice, verbal or written, to the Da Jose spouses sale. In this light, we see no reason why we should not give priority in right the annotation
for his decision to rescind their contract. In many case, the act of a party in treating a contract made by the Da Jose spouses with respect to their Contract to Sell.
as cancelled should be made known to the other. Such is always subject to scrutiny and  Moreover, registration alone in such cases without good faith is not sufficient. Good faith
review by the courts in case the alleged defaulter brings the matter to the proper courts. must concur with registration for such prior right to be enforceable. In the instant case, the
 In the case of UP vs. De Los Angeles, the ruling validates, both in equity and justice, in order annotation made by the Da Jose spouses on the titles of Genato of their “Contract to Sell”
to avoid and prevent the defaulting party from assuming the offer as still in effect due to the more than satisfies this requirement. Since Cheng was fully aware of this existing valid
obligee’s tolerance for such non-fulfillment. Litigations of this sort shall be prevented and contract between the Da Jose and Genato, and the right of the Da Jose spouses under such
the relations among would-be parties may be preserved. Thus, Cheng’s contention that the contract duly annotated on the transfer certificates of titles of Genato, it now becomes
Contract to Sell between Genato and Da Jose spouses was rescinded or resolved due to unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering
Genato’s unilateral rescission finds no support in this case. into such agreement.
 Regarding the issue on the nature of the agreement between Cheng and Genato, the records
of this case are replete with admissions that Cheng believed it to be one of a Contract to Sell
and not one of a Conditional Contract of Sale which he, in a transparent turn-around, now
pleads in this petition. This ambivalent stance of Cheng is noted by the appellate court,
however, settled is the rule that an issue which was not raised during the trial in the court
below cannot be raised for the first time on appeal. In fact, both courts below correctly held
that the receipt which was the result of their agreement, is a contract to sell. This was, in fact
Cheng’s contention in his pleadings before said courts. This patent twist only operates
against Cheng’s posture which is indicative of the weakness of his claim.
 But even if we are to assume that the receipt is to be treated as a conditional contract of sale,
it did not acquire any obligatory force since it was subject to suspensive condition that the
earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or
rescinded – a condition never met, as Genato, to his credit, upon realizing his error, redeemed
himself by respecting and maintaining his earlier contract with the Da Jose spouses. In fact,
a careful reading of the receipt alone would not even show that a conditional contract of sale
has been entered by Genato and Cheng. When the requisites of a valid contract of sale are
lacking in said receipt, the sale is neither valid nor enforceable.
 We are of view that the governing principle of Art. 1544 of the Civil Code should apply in
this situation. Jurisprudence teaches us that the governing principle is primus tempore,
portior jure (first in time, stronger in right). For not only was the contract between herein
respondents first in time, it was also registered long before petitioner’s intrusion as a second
buyer. This principle only applies when the special rules provided in the mentioned article
of the Civil Code do not apply or fit the specific circumstance mandated under said law or
by jurisprudence interpreting the article.
 Thus, in the case at bar, the knowledge gained by the Da Jose spouses, as first buyers, of the
new agreement between Cheng and Genato will not defeat their rights as first buyers except
where Cheng, as second buyer, registers or annotates his transaction or agreement on the

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