G.R. No. 156033 October 20, 2005EXPRESSCREDIT*FINANCING CORPORATION,Petitioner,vs.SPS. MORTON AND JUANITA VELASCO,Respondents.D E C I S I O NQUISUMBING,J.:Before us is a Petition for Review on Certiorari under Rule 45 appealing theDecision1dated August 20, 2002 and theResolution2dated November 12, 2002 of the Court of Appeals in CA-G.R. CV No. 56491, entitled "Juanita Velasco v. Sps. Jesus V. Garcia." The assailed Decision reversed the Decision of the Regional Trial Court of Quezon City, Branch 101, in Civil Case No. Q-90-7037, while the assailed Resolution denied petitioners Motion for Reconsideration.The antecedent facts are as follows:On May 25, 1988,3respondents purchased on installment, from spouses Jesus and Lorelei Garcia ("Garcia spouses"), a house and lot in Quezon City, covered by Transfer Certificate of Title No. 3250 in the name of Jesus Garcia.In July 1988,4a Deed of Absolute Sale5was executed whereby the Garcia spouses bound themselves to deliver the title of the property purchased, free from all liens and encumbrances within 15 days from full payment. Respondents were thereafter informed by the Garcia spouses that since the house on the property was still under construction, the lot was still covered by the mother title and had no separate title as yet. They promised to give the title after the construction was completed.In August 1988, the keys to the property were delivered to the respondents. They moved in, applied for a telephone connection, and insured the house. When respondents followed up on the title, the Garcia spouses told them that since the Quezon City Hall was razed by a fire in June, the title had to be reconstituted, so their separate title could not yet be delivered to them. Because the Garcia spouses would not deliver the title despite repeated demands, respondents went to the Register of Deeds in Quezon City and discovered that the Garcia spouses had mortgaged the property to petitioner, Expresscredit Financing Corporation, forP250,000 on June 15, 1989, or more than a year after the property was sold to them.On October 23, 1990, the respondents filed a case for Quieting of Title and Specific Performance against the Garcia spouses before the courta quo,whereby they caused registration of a notice oflis pendenson the title, attaching thereto a copy of their complaint stating that they have been the owners of the said property since May 25, 1988. The Garcia spouses were subsequently declared in default for failing several times to appear in court despite notice.On October 7, 1992, petitioner foreclosed on the property in defiance of the notice oflis pendensand the Writ of Preliminary Injunction issued by the lower court, enjoining petitioner from selling or in any manner disposing of the property without permission from the court. Petitioner sold the property in a public auction where petitioner was the highest bidder. Due to the failure of the Garcia spouses to redeem the property, petitioner thereafter executed an Affidavit of Consolidation and secured Certificate of Title No. 69049 in its name.On March 1, 1996, the Regional Trial Court rendered its Decision, stating as follows:Under the foregoing circumstances, there is no need for the defendant corporation to go beyond the title itself because the title is in the name of defendant Garcia and it was defendant Garcia who offered the title as collateral to the loan agreement. But nonetheless, defendant corporation went beyond the certificate of title by conducting an [ocular] inspection of the property. Surely, defendant corporation could never have accepted the property as a collateral to the loan of defendant spouses Garcia had there been any knowledge of any encumbrance over the same, much more that the title thereto had been transferred and sold. The defendant corporations failure to make further inquiry apart from the ocular inspection, concerning the rights of herein plaintiffs who were in possession of the property thru their caretakers is not fatal because it relied on the title on the property which is in the name of Garcia and it was Garcia himself who is the registered owner of the land and not someone else claiming the right from Garcia.Clearly then, under the foregoing circumstances, defendant [Expresscredit] Financing Corporation is an innocent purchaser and is, therefore, in good faith.The Court, however, recognized the rights pertaining to herein plaintiffs, only said rights are subservient to that of defendant corporation. Plaintiffs, based on the evidence, both testimonial and documentary, adduced in Court are likewise considered as innocent purchasers of the subject property. Had they registered the Deed of Sale executed between them and Spouses Garcia, they [would] have, undoubtedly, a preferential right over the property.Plaintiffs spouses [deserve] to be reimbursed of whatever amount they have [spent] for the purchase of the property sold to them by the Garcia spouses. Considering the predicament of herein plaintiffs, and the fact that they were the first to buy the properties, were it not for their failure to register the sale before the Registry of Property, defendant corporation is hereby enjoined to REIMBURSE plaintiffs of the amount spent for the purchase of the 37.50 square meters of a parcel of residential land, Lot 6-B-1, Subdivision plan PSD 342248, situated in the district of Diliman, Quezon City and formerly covered by TCT No. 3250 now TCT No. 69049, Registry of Deeds, Quezon City, with right of recovery from co-defendants, spouses Garcia.WHEREFORE, premises above considered, the above-entitled case filed against defendant [Expresscredit] Financing Corporation is hereby ordered DISMISSED for lack of merit.Counterclaims filed by defendant [Expresscredit] Financing Corporation against herein plaintiffs are likewise ordered DISMISSED.No pronouncement as to the costs of the suit.SO ORDERED.6The spouses Velasco, herein respondents, then filed an appeal before the Court of Appeals alleging that the courta quoerred in (1) not declaring Expresscredit Financing Corporation as an incumbrancer in bad faith such that it did not acquire good title as against them and (2) not incorporating in the dispositive portion of the decision, an order to Expresscredit Financing Corporation to reimburse the money they paid.The Court of Appeals reversed the Decision of the trial court as follows:WHEREFORE, the Decision of the lower court is herebyREVERSEDandSET ASIDE. Accordingly:1. Appellants Juanita and Morton Velasco are declared purchaser for value and in good faith with respect to the subject property;2. The Deed of Mortgage, Sheriffs Certificate of Sale, Affidavit of Consolidation in favor of appellee [Expresscredit], and the Transfer Certificate of Title No. 69049 in the name of [Expresscredit], are hereby declared of no force and effect;3. Defendants Jesus and Lorelei Garcia are hereby ordered to pay to appellants Velasco the amount of P40,000 as moral damages, P15,000 as attorneys fees; and P10,000 as litigation expenses.Costs against appellee.SO ORDERED.7Before us, petitioner raises the following issues:I. THE APPELLATE COURT COMMITTED GRAVE ERROR IN REVERSING THE DECISION OF THE LOWER COURT.II. THE APPELLATE COURT COMMITTED GRAVE ABUSE OF DISCRETION AND ERROR IN HOLDING SUPREME, AN UNREGISTERED DEED OF ABSOLUTE SALE OVER A REGISTERED REAL ESTATE MORTGAGE.III. THE APPELLATE COURT ERRED IN VOIDING THE SALE ON PUBLIC AUCTION AS A RESULT OF THE EXTRA JUDICIAL PETITION FOR FORECLOSURE OF MORTGAGE.8The main issue is, Who has preferential right over the property, the respondents who acquired it through prior purchase or the petitioner who acquired the same in a foreclosure sale as the highest bidder?Petitioner alleges that this is a clear case of a double sale. The first sale is the unregistered sale of the property covered by TCT No. 3250 by the Garcia spouses to the respondents; the second is the sale during the foreclosure proceedings by the Ex-Officio Sheriff in favor of the petitioner as the winning bidder.Article 1544 of the Civil Code is the rule on double sale. It provides:. . .Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.An "innocent purchaser for value" or any equivalent phrase shall be deemed to include, under the Torrens System, the innocent lessee, mortgagee, and other encumbrancer for value.9InBautista v. Court of Appeals,10we held that where the thing sold twice is an immovable, the one who acquires it and first registers it in the Registry of Property, in good faith, shall be the owner.Who then can be considered a purchaser in good faith?In the early case ofLeung Yee v. F.L. Strong Machinery Co. and Williamson,11we explained good faith in this wise:One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.12Good faith, or the 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 only be judged by actual or fancied token or signs.13As shown by the evidence, the property had already been sold by the Garcia spouses to the respondents on May 25, 1988. The respondents immediately took possession, applied for a telephone line, and insured the property with Pioneer Insurance in September 1988. When the same land was mortgaged by the Garcia spouses, respondents have been, since May 25, 1988 in actual, physical, continuous and uninterrupted possession.Petitioner justifies its acquisition of the property by saying that when it was mortgaged, the previous sale of the land was not annotated on the title and so its purchase was in good faith. To fulfill the requirement of good faith, it is imperative for a mortgagee of the land, in the possession of persons not the mortgagor, to inquire and investigate into the rights or title of those in possession. 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 diligence14required 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.According to respondents witness, Conchita Cotoner, on the second week of June 1989, two credit investigators of petitioner visited the subject property to investigate concerning the occupants on the property. They were promptly informed by the witness, who was the caretaker of the property, that the same had been sold to respondents by the Garcia spouses in May of 1988. Clearly, petitioner, through its agents, had been informed of the earlier sale of the subject property to the respondents. Since the Garcia spouses no longer had the right to alienate the property, no valid mortgage was ever constituted on it.15Since the mortgage contract was void, the foreclosure of the property was ineffectual as well.16Sadly, petitioner, despite having knowledge of the unregistered sale still accepted the mortgage and to our mind, in bad faith, purchased the same at the foreclosure sale.A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendors title, will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation. Good faith or the lack of it, is a question of intention; but in ascertaining the intention, courts are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined.17Indeed, where the land sold in auction sale was registered under the Torrens System, the purchaser at the execution sale acquired such rights, title and interest of the judgment debtor as appearing on the certificate of title issued on the property, subject to no liens, encumbrances or burdens that were not noted thereon. Petitioners claim that it purchased the property at an auction sale is of no moment. In this case, particular circumstances constrain us to rule that petitioner was neither a mortgagee nor a purchaser in good faith and as such, could not acquire good title to the property as against the former transferee.18WHEREFORE, the assailed Decision dated August 20, 2002 and Resolution dated November 12, 2002 of the Court of Appeals in CA-G.R. CV No. 56491 areAFFIRMED.SO ORDERED.

16. CARBONELL v CAFACTS: Poncio, a Batanes native, owned a parcel ofland, which he offered to sell to Carbonell and Infante.The land was mortgaged to Republic Bank. Poncio andCarbonell agreed to the sale of the land, and the latterassumed to pay the mortgage in favor of the bank.Poncio and Carbonell executed an instrument where thelatter allowed the former to remain in the premises inspite of the sale for a period of 1 year. Later on, whenthe Formal Deed of Sale was to be executed, Poncio toldCarbonell that he could no longer proceed with the saleas he had already sold the same to Infante for a betterprice. Carbonell immediately sought to register adverseclaim; 4 days later, Infante registered the sale with theadverse claim annotated thereto. Infante thereafterintroduced significant improvements on the property.They now dispute ownership over the said land.

ISSUE: Who has a better title, Carbonell or Infante?

HELD: CARBONELL. In order to claim the benefit of Art.1544, the buyer of realty must register the property ingood faith. It is a pre-condition to a superior title. Inthis case, Infante was not in good faith, thus the priorsale to Carbonell must prevail. Infante registered herclaim 4 days after the adverse claim was registered, shehad notice that Carbonell paid off the mortgage debt asthe mortgage passbook was already in his possession.She likewise ignored Carbonell and refused to talk tohere. These are badges of bad faith that taint herregistration.

Article 1544 provides that for double sale of an immovable property, the ownership shall belong to the person who first acquired it in good faith and recorded it in the Registry of PropertyArticle 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 be transferred to the person who may have first taken possession thereof in good faith, if it should movable property.Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.The buyer must act in good faith in registering the deed of saleIt is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of said Article 1544.

Unlike the first and third paragraphs of said Article 1544, which accord preference to the one who first takes possession in good faith of personal or real property, the second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith first recorded" his right. Under the first and third paragraph, good faith must characterize the act of anterior registration.Rule when there is inscription or notIf 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 was in good faith when she bought the lotWhen Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon. Carbonell was not aware and she could not have been aware of any sale of Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase of the land was made in good faith. Her good faith subsisted and continued to exist when she recorded her adverse claim four (4) days prior to the registration of Infantes's deed of sale. Carbonells good faith did not cease when she was informed by Poncio about the sale to Emma InfanteAfter learning about the second sale, Carbonell tried to talk to the Infantes but the latter refused. (Exact words of the SC: With an aristocratic disdain unworthy of the good breeding of a good Christian and good neighbor, Infante snubbed Carbonell like a leper and refused to see her.)So Carbonell did the next best thing to protect her right she registered her adversed claim on February 8, 1955. Under the circumstances, this recording of her adverse claim should be deemed to have been done in good faith and should emphasize Infante's bad faith when she registered her deed of sale four (4) days later on February 12, 1955.The Infantes were in bad faith (5 indications of bad faith listed below)Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is shown by the following facts:1. Mrs. Infante refused to see Carbonell.Her refusal to talk to Carbonell could only mean that she did not want to listen to Carbonell's story that she (Carbonell) had previously bought the lot from Poncio.2. Carbonell was already in possession of mortgage passbook and copy of the mortgage contract. (Not Poncios saving deposit passbook.)Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook and mortgage contract so that the fact of full payment of his bank mortgage will be entered therein; and Poncio, as well as the bank, must have inevitably informed her that said mortgage passbook could not be given to her because it was already delivered to Carbonell.3. Emma Infante did not inquire why Poncio was no longer in possession of the mortgage passbook and why it was in Carbonells possession.The fact that Poncio was no longer in possession of his mortgage passbook and that the said mortgage passbook was already in possession of Carbonell, should have compelled Infante to inquire from Poncio why he was no longer in possession of the mortgage passbook and from Carbonell why she was in possession of the same.4. Emma Infante registered the sale under her name after Carbonell filed an adverse claim 4 days earlier.Here she was again on notice of the prior sale to Carbonell. Such registration of adverse claim is valid and effective.5. Infante failed to inquire to Poncio WON he had already sold the property to Carbonell especially that it can be shown that he was aware of the offer made by Carbonell.Poncio alleged in his answer that Mrs. Infante and Mrs. Carbonell offered to buy the lot at P15/sq. m. which offers he rejected as he believed that his lot is worth at least P20.00/sq. m. It is therefore logical to presume that Infante was told by Poncio and consequently knew of the offer of Carbonell which fact likewise should have put her on her guard and should have compelled her to inquire from Poncio whether or not he had already sold the property to CarbonellThe existence of prior sale to Carbonell was duly establishedFrom the terms of the memorandum, it tends to show that the sale of the property in favor of Carbonell is already an accomplished act. As found by the trial court, to repeat the said memorandum states "that Poncio is allowed to stay in the property which he had sold to the plaintiff ..., it tends to show that the sale of the property in favor of the plaintiff is already an accomplished act..."There was an adequate consideration or price for the sale in favor of CarbonellPoncio agreed to sell the same to Carbonell at P9.50 per square meter, on condition that Carbonell: 1. should pay (a) the amount of P400.00 to Poncio and the arrears in the amount of P247.26 to the bank2. should assume his mortgage indebtedness. The bank president agreed to the said sale with assumption of mortgage in favor of Carbonell an Carbonell accordingly paid the arrears of P247.26.It is evident therefore that there was ample consideration, and not merely the sum of P200.00, for the sale of Poncio to Carbonell of the lot in question.The subject property was identified and describedThe court has arrived at the conclusion that there is sufficient description of the lot referred to in Exh. As none other than the parcel of lot occupied by the defendant Poncio and where he has his improvements erected. The Identity of the parcel of land involved herein is sufficiently established by the contents of the note Exh. 'A'.

SPOUSES TANGLAO vs. SPOUSES PARUNGAO

G.R. No. 166913

October 5, 2007

[KNOWLEDGE BY FIRST BUYER]

FACTS: 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 Arbiters 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

ISSUE: Who between the petitioners and respondents have the right of ownership over the two lots in controversy.

HELD: SPOUSES PARUNGAO, the first buyer.

PETITION DENIED. The Decision of the CA is AFFIRMED in toto.

The ownership of immovable property sold to two different persons at different times is governed by Article 1544 of the Civil Code,2 which provides:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have taken possession thereof in good faith, if it should be movable property.

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

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

In all of these cases, good faith is essential, being the basic premise of the preferential rights granted to the person claiming ownership of the immovable.

In Occea v. Esponilla,5 this Court, speaking through then Associate Justice (now Chief Justice) Reynato S. Puno, laid down the following rules in the application of Article 1544:

(1) Knowledge by the first buyer of the second sale cannot defeat the first buyers rights except when the second buyer first registers in good faith the second sale; and

(2) Knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since such knowledge taints his registration with bad faith. Differently put, the act of registration by the second buyer must be coupled with good faith, meaning, the registrant must have no knowledge of the defect or lack of title of his vendor or must not have been aware of facts which should put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.

At the time of the second sale to petitioners by Spring Homes, there were already occupants and improvements on the two lots in question. These facts should have put petitioners on their guard. 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.

As the petitioners cannot be considered buyers in good faith, they cannot rely upon the indefeasibility of their TCTs in view of the doctrine that the defense of indefeasibility of a torrens title does not extend to transferees who take the certificate of title in bad faith.

Considering that respondents who, in good faith, were first in possession of the subject lots, we rule that the ownership thereof pertains to them

NOTES:

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 persons claim on or interest in it.7 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.8

CHENG V. GENATO (December 29, 1998)FACTS: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.HELD:The contract between Genato and spouses Da Jose was a contract to sell which is subject to a suspensive condition. Thus, there will be no contract to speak of, if the obligor failed to perform the suspensive condition which enforces a juridical relation. Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired.Even assuming that the spouses defaulted, the contract also cannot be validly rescinded because no notice was given to them. Thus, Cheng's contention that the Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission finds no support in this case.The contract between Genato and Cheng is a contract to sell not a contract of sale. But But even assuming that it should be treated as a conditional contract of sale, it did not acquire any obligatory force since it was subject to a suspensive condition that the earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded.Art.1544 should apply because 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 (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made annotation on the title of Genato). Since Cheng was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering into such agreement.

G.R. No. L-20046 March 27, 1968

ROMEO PAYLAGO and ROSARIO DIMAANDAL, petitioners, vs.INES PASTRANA JARABE and THE HONORABLE COURT OF APPEALS, respondents.

M. de la Cruz for petitioners.M.G. Garcia for respondents.

REYES J.B.L.,:

This is an appeal by certiorari from the decision of the Court of Appeals affirming the lower court's decision in the case of Romeo Paylago, et al. vs. Ines Pastrana Jarabe, CA-G.R. No. 25031-R, promulgated on June 6, 1962. (Civil Case No. R-709 of the Court of First Instance of Oriental Mindoro).

The entire lot involved in this suit was originally covered by Homestead Patent issued on June 7, 1920 under Act No. 926 and later under OCT No. 251 of the Registry of Deeds of Mindoro, issued on June 22, 1920 in the name of Anselmo Lacatan. On May 17, 1948, after the death of Anselmo Lacatan, TCT No. T-728 (which cancelled OCT No. 251) was issued in the name his two sons and heirs, Vidal and Florentino Lacatan. Vidal Lacatan died on August 27, 1950.

On March 23, 1953, Vidal Lacatan's heirs, namely, Maximo, Tomas and Lucia Lacatan, executed a deed of sale (Exh. C) in favor of the spouses Romeo Paylago and Rosario Dimaandal, plaintiffs-petitioners herein, over a portion of the entire lot under TCT No. T-728, which portion is described as follows:

North Provincial Road;East Property of Romeo Paylago;South Property of Florentino Lacatan;West Provincial Road (Nabuslot-Batingan);

containing an area of 3.9500 hectares.

On October 6, 1953, Florentino Lacatan also died, leaving as his heirs his widow and three children, Felipe, Rosita and Florencia Lacatan. On December 31, 1953, the said children of Florentino Lacatan likewise executed a deed of sale (Exh. D) in favor of the same vendees over another portion of the same lot described as follows:

North Provincial Road (Calapan-Pinamalayan);East Heirs of Sotero Mongo;South Aniceta Lolong;West Heirs of Vidal Lacatan;

with an area of 2.8408 hectares.

On March 2, 1954, by virtue of the registration of the two deeds of sale (Exhs. C and D), a new TCT No. T-4208 covering the total area of6.7908 hectares was issued in favor of plaintiffs-petitioners, the Paylago spouses. A subsequent subdivision survey for the purpose of segregating the two aforementioned portions of land described in the deeds (Exhs. C and D) as well as in the new TCT No. T-4208, however, disclosed that a portion (one half hectare) of the total area purchased by plaintiffs-petitioners and indicated in the sketch Exh. B at a point marked Exh. B-1 was being occupied by defendant-respondent. Hence, the action to recover possession and ownership of the said portion.

Vis-a-vis the foregoing undisputed facts, the trial court and the Court of Appeals found that a portion of land in question which is described as follows:

North Provincial Road;East Apolonio Lacatan;South Anselmo Lacatan;West Valentin Lastica;

and with an area of one half hectare is indicated in the sketch of subdivision plan marked Exh. B-1 of Exh. B; that on November 27, 1938, the said portion of land was purchased by Hilario Jarabe, late husband of defendant-respondent, from one Apolonio Lacatan, which sale is evidenced by an unregistered deed of sale (Exh. 6); that Apolonio Lacatan, in turn, bought the same in 1936 from Anselmo Lacatan, the original registered owner in whose favor OCT No. 251 and later TCT No. T-4208 were issued; that the first deed of sale, also unregistered, executed by Anselmo Lacatan in favor of Apolonio Lacatan was lost during the Japanese occupation; that the herein defendant-respondent has been in possession of the said portion continuously, publicly, peacefully and adversely as owner thereof from 1938 up to the present; and, that the herein plaintiffs-petitioners knew, nay, admitted in a deed of lease, paragraph 3 (Exh. 4), that defendant-respondent has been in possession of the premises since 1945.

After trial, the lower court held that plaintiffs-petitioners were not purchasers in good faith and, accordingly, rendered judgment in favor of defendant-respondent, declaring the latter as owner of the land in question with the right to retain possession of the same. The decision was affirmed in toto by the Court of Appeals.

From the evidence adduced by the parties evolved the issue: Who has a better right in case of double sale of real property, the registered buyer or the prior but unregistered purchaser?

This Court has formulated in no uncertain terms the general principle governing the matter: as between two purchasers, the one who has registered the sale in his favor, in good faith, has a preferred right over the other who has not registered his title, even if the latter is in the actual possession of the immovable property (Mendiola v. Pacalda, 10 Phil. 705; Veguillas v. Jaucian, 25 Phil. 315; Po Sun Tun v. Price, 54 Phil. 192). Indeed, the foregoing principle finds concrete bases in the pertinent provisions of the New Civil Code, Article 1544, providing that if the same immovable property should have been sold to different vendees, "the ownership shall belong to the person acquiring it who in good faith first recorded it in the registry of property."

There is no question that the sales made in favor of plaintiffs-petitioners were registered while the alleged sale executed in favor of defendant-respondent was not. Applying the foregoing principle of law to the instant case, it is now contended by plaintiffs-petitioners that their certificate of title must prevail over defendant-respondent, and that the courts below correspondingly committed error in deciding the case to the contrary.

But there is more than meets the eye in the case at bar. While plaintiffs-petitioners have a registered title, it cannot be denied that their acquisition and subsequent registration were tainted with the vitiating element of bad faith. It was so found by both the Court of First Instance and the Court of Appeals, and their finding is conclusive upon us. Thus, in Evangelista vs. Montao, 93 Phil. 275, 279, this Court ruled:

Both the Court of First Instance and the Court of Appeals absolved the defendants, having found and declared after weighing the evidence that the plaintiff, was not a purchaser in good faith. That this conclusion is a finding of fact and, being a finding of fact, not subject to review, is too plain to admit of argument.

Both Courts below found that petitioners knew beforehand that the parcel of land in question was owned by defendant-respondent.1wph1.t

In its decision the Court of Appeals declared that "plaintiffs herein were aware of that peaceful, continuous and adverse possession of defendant since 1945, because this fact is admitted by said plaintiffs in a deed of lease, paragraph 3 (Exhibit 4) covering a portion of the entire lot, and situated just across the road from the land in question." (Dec., C. App., p. 4).

Considering that the boundaries of the lands that the petitioners Paylago purchased in 1953 and 1954 were well defined, they must have known that the portion occupied by the defendant-respondent under claim of ownership and leased to them by the latter was included in the description. And coupled with their knowledge that defendant-respondent purchased the same from Apolonio Lacatan, plaintiffs-petitioners should have inquired and made an investigation as to the possible defects of the title of the Lacatan heirs over the entire lot sold to them, granting that the latter's certificate of title was clear. This, they failed to do. They cannot now claim complete ignorance of defendant-respondent's claim over the property. As was well stated in one case, "a purchaser who has knowledge of facts which should put him upon inquiry and investigation as to possible defects of the title of the vendor and fails to make such inquiry and investigation, cannot claim that he is a purchaser in good faith and has acquired a valid title thereto". (Sampilo vs. Court of Appeals, 55 O.G. No. 30, p. 5772). To the same effect is the following doctrine laid down by the Supreme Court in the case of Leung Yee v. F.L. Strong Machinery Co. & Williamson, 37 Phil. 644. Said the Court:

One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith, as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects of the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and then claims that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it afterwards develops that the title was defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.

The fundamental premise of the preferential rights established by Article 1544 of the New Civil Code is good faith (Bernas v. Bolo, 81 Phil. 16). To be entitled to the priority, the second vendee must not only show prior recording of his deed of conveyance or possession of the property sold, but must, above all, have acted in good faith, that is to say, without knowledge of the existence of another alienation by his vendor to a stranger (Obras Pias v. Ignacio, 17 Phil. 45; Leung Yee v. F.L. Strong Machinery Co., et al., op. cit.; Emas v. De Zuzuarregui, et al., 53 Phil. 197). Short of this qualifying circumstance, the mantle of legal protection and the consequential guarantee of indefeasibility of title to the registered property will not in any way shelter the recording purchaser against known and just claims of a prior though unregistered buyer. Verily, it is now settled jurisprudence that knowledge of a prior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the later instrument of conveyance which was registered in the Registry of Deeds (Ignacio v. Chua Hong, 52 Phil. 940; Gustilo, et al. v. Maravilla, 48 Phil. 442; Ramos, et al. v. Dueno, et al., 50 Phil. 786). The registration of the later instrument creates no right as against the first purchaser. For the rights secured under the provisions of Article 1544 of the New Civil Code to the one of the two purchasers of the same real estate, who has secured and inscribed his title thereto in the Registry of Deeds, do not accrue, as already mentioned, unless such inscription is done in good faith (Leung Yee v. F.L. Strong Machinery Co., et al., op. cit.). To hold otherwise would reduce the Torrens system to a shield for the commission of fraud (Gustilo, et al. v. Maravilla, op. cit.).

Plaintiffs-petitioners cited the case of Bacolod-Murcia Milling Co., Inc. v. De la Rama, et al., G.R. No. L-4526 September 1959, to disprove bad faith ascribed to them. But the citation does not fit with the facts of the present case. It is to be noted that the second purchaser in the De la Rama case had no knowledge of the previous sale and possession of the first purchaser at the time he (second purchaser) acquired the property involved therein. "(T)here is nothing in the complaint which may in any way indicate that he knew such possession and encumbrance when he bought the property from its owner." Plaintiffs-petitioners in the instant case, however, had knowledge of defendant-respondent's claim of ownership over the land in question long before they purchased the same from the Lacatan heirs. They were even told, as previously intimated, that defendant-respondent bought the land from Apolonio Lacatan. Thus, it could easily be distinguished that the second purchaser in the De la Rama case acted with good faith, i.e., without knowledge of the anterior sale and claim of ownership of the first vendee, whereas, plaintiffs-petitioners herein acted with manifest bad faith in buying the land in question, all the while knowing that defendant-respondent owns the same. Such knowledge of defendant-respondent's ownership of the land is more than enough to overthrow the presumption of good faith created by law in favor of plaintiffs-petitioners. This being the case, we cannot just close our eyes and blindly stamp our approval on the argument of plaintiffs-petitioners that they have the better right simply because their title is registered and as such is indefeasible.

Plaintiffs-petitioners also contend that the identity of the land in question has not been established. Again, we disagree. Evidence of record, both oral and documentary, unequivocally show that the said portion of land can be identified and segregated, and has been in fact identified and segregated (Exh. B-1), from the entire lot covered by TCT No. T-4208 (Exh- A) issued in the names of plaintiffs-petitioners. The boundaries of the same have been clearly indicated as that planted by madre cacao trees. Even the surveyor hired by plaintiffs-petitioners was able to fix the said boundaries in such a manner as to definitely and accurately segregate the premises from the adjoining property. How could plaintiffs-petitioners now argue that the land has not been identified when the Supreme Court itself says that what really defines a piece of land is not the area mentioned in the description but the boundaries (Sanchez v. Director of Lands, 63 Phil. 378; Buizer v. Cabrera, etc., 81 Phil. 669; Bayot v. Director of Lands, 98 Phil. 935)? Besides, the area has been also established as one-half hectare.

Another collateral question raised by plaintiffs-petitioners is the admission by the courts a quo of secondary evidence to establish the contents of the first unregistered deed of sale executed by Anselmo Lacatan in favor of Apolonio Lacatan when the loss or destruction of the original document, according to them, has not been established. Again, the findings of the Court of Appeals destroy this assertion of petitioners (Dec., p. 5):

Undeniably the alleged unregistered document could no longer be examined by the parties in court, because it was lost but its original, however, upon, the trial court's findings which we have no reason to question has been sufficiently proved as having existed.

As observed by this Supreme Court, "the destruction of the instrument may be proved by any person knowing the fact. The loss may be shown by any person who knew the fact of its loss, or by any one who has made, in the judgment of the court, a sufficient examination of the place or places where the document or papers of similar character are kept by the person in whose custody the document lost was, and has been unable to find it; or has made any other investigation which is sufficient to satisfy the court that the instrument is indeed lost." (Michael & Co. v. Enriquez, 33 Phil. 87). And "it is not even necessary to prove its loss beyond all possibility of mistake. A reasonable probability of its loss is sufficient, and this may be shown by a bona fide and diligent search, fruitlessly made, for it in places where it is likely to be found." (Government of P.I. v. Martinez, 44 Phil. 817). And after proving the due execution and delivery of the document, together with the fact that the same has been lost or destroyed, its contents may be proved, among others, by the recollection of witnesses (Vaguillas v. Jaucian, 25 Phil. 315).

Finding that the facts and the law support the same, it is our opinion, and so hold, that the appealed decision should be, as it is hereby affirmed. Costs against petitioners spouses Paylago and Dimaandal.

Agricultural & Home Extension v. CA,(See bernes pdf)

G.R. No. 11176MARCIANO RIVERA, plaintiff-appellant, vs.ONG CHE, defendant-appellee.

STREET, J.:For some time prior to the events which gave origin to the lawsuit, the house of Lichauco, or Lichauco Brothers, had offered for sale certain old machinery and boilers which were deposited and exposed for sale in a yard at Tanduay, in the city of Manila. The plaintiff, Marciano Rivera, alleges that upon January 8, 1912, he purchased some of this old material for the price of P5,500, and received a receipt from Crisanto Lichauco showing that he had become such purchaser. These things consisted, according to said receipt, of two complete steam-boilers, with chimneys; one steam motor (15 by 30 inches) complete; one pair of twin rice hullers complete, and a feeding pump (donkey) for boilers.

The plaintiff, however, did not take possession of the property, which remained in the same place. It further appears that upon February 9, 1912, the defendant, Ong Che, bought from Lichauco Brothers a lot of old iron, machinery, and junk for the sum of P1,100. This purchaser took immediate possession of the materials purchased by him. Later, when Marciano Rivera appeared to take possession of the things of which he supposed himself to be the purchaser, under the receipt given by Crisanto Lichauco, he found that many of the accessory and auxiliary parts of the boilers, motor, and rice mill were wanting; and upon investigation it developed that these articles were held by the defendant, Ong Che, and were claimed by him as owner by virtue of the purchase effected by him upon February 9, as stated above. The plaintiff thereupon instituted the present action to recover the articles in question alleging that he was the true owner thereof. At the hearing in the Court of First Instance of the city of Manila, judgment was given in favor of the defendant and the plaintiff has appealed.

We concur in the conclusion reached by the judge of the Court of First Instance the defendant, Ong Che, was a purchaser of these articles in good faith. It is furthermore uncontroverted that he acquired possession by virtue of his purchase. He, therefore, undoubtedly has, under article 1473 of the Civil Code, a better title than the first purchaser, who has never had possession at all. The only doubt as to the application of that article to the present case arises from the fact that there is some conflict in the testimony upon the question as to who was the original owner. It is to be inferred from the testimony that the house of Lichauco consists of Faustino Lichauco and Galo Lichauco, and it would seem that Crisanto Lichauco, who effected the sale to Rivera, is not a member of that establishment. Crisanto testified that the property sold by him to the plaintiff Rivera, including the articles which are now in dispute, was the property of Galo Lichauco. There is grave doubt as to the correctness of this statement, however, as the same witness admits that the machinery sold by him to Rivera had been taken out of an old mill owned by Lichauco Brothers in Dagupan; and it is not made clear that Galo Lichauco had ever become its exclusive owner. Furthermore, the evidence submitted by the defendant tends to show that the things acquired by him, including the articles in dispute, were bought from Faustino Lichauco as property of the house. At any rate we find that, under the circumstances disclosed in this case, and even conceding that the property belong to Galo Lichauco, the house of Lichauco had authority to sell it. In this view the case presented is that where two different agents of the same owner successively negotiated sales to two different purchasers, and it is obvious that, under the article of the Civil Code cited above, the second purchaser having acquired possession first must be declared the true owner. In our view of the facts it was merely a case where a mistake was made by the house of Lichauco in selling something that had already been sold.

Other aspects of the case are equally fatal to the contention of the plaintiff. It was incumbent upon the plaintiff to prove title in himself, as against the defendant, by a preponderance of the evidence; and he could not recover merely upon the weakness of the defendant's title. (Belen vs. Belen, 13 Phil. Rep., 202.) The court below held that the plaintiff had failed to prove title in himself and we see no reason for disturbing the judgment on this point. The defendant had, in his favor, the fact that he was a purchaser in good faith and had acquired lawful possession. There is a presumption arising from such possession that he was the owner (sec. 334 [10], Code of Civil Procedure); and the mere fact, if such it be, that the property originally belonged to Galo Lichauco was not sufficient, without more, to defeat a title acquired by the defendant through the house of Lichauco.

It should be stated that at the hearing the plaintiff himself did not appear as a witness. Furthermore, no steps were taken, prior to the trial to secure the attendance of either Galo Lichauco or Faustino Lichauco, both of whom would have been most material witnesses for the plaintiff if his contention is correct.

At the close of the trial in the court below, plaintiff's counsel asked for a continuance in order to call these witnesses. The court refused to grant a continuance for such purpose. In this we think the court did not abuse its discretion, and its action in this respect does not constitute reversible error. The plaintiff was appraised from the nature of the issue raised that the question to be tried was that of ownership and he should have been ready with the witnesses to prove it. He was not entitled to a continuance on the ground of the absence of those important witnesses unless he showed that he had used reasonable diligence to secure their attendance. An application for a continuance of a cause is addressed to the sound legal discretion of the trial court, and its ruling thereon will not be disturbed, unless it clearly appears that such discretion has been abused, and that by the refusal of the continuance a party has been without his fault deprived of an opportunity of making his case or defense.

It results that the judgment of the lower court should be affirmed, with costs of this instance against the appellant. So ordered.

Cagayan vs. CaCRB vs. CA and HEIRS OF DELA CRUZ

G.R. No. 132161

January 17, 2005

FACTS: 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 fathers 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.

ISSUE: WON Art. 1544 of the Civil Code (double sale) applicable in this case

HELD: NO.

The petition is denied, and the decision as modified is affirmed. Like the lower court, the appellate court resolved the present controversy by applying the rule on double sale provided in Article 1544 of the Civil Code. They, however, arrived at different conclusions. The RTC made CRB and the other defendants win, while the Court of Appeals decided the case in favor of the Heirs.

Article 1544 of the Civil Code reads, thus:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

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

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

The provision is not applicable in the present case. It contemplates a case of double or multiple sales by a single vendor. 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. And even if the sale was made by the same person, if the second sale was made when such person was no longer the owner of the property, because it had been acquired by the first purchaser in full dominion, the second purchaser cannot acquire any right.

In the case at bar, the subject property was not transferred to several purchasers by a single vendor. In the first deed of sale, the vendors were Gamiao and Dayag whose right to the subject property originated from their acquisition thereof from Rizal Madrid with the conformity of all the other Madrid brothers. On the other hand, the vendors in the other or later deed were the Madrid brothers but at that time they were no longer the owners since they had long before disposed of the property in favor of Gamiao and Dayag.

In 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.

Moreover, it is an established principle that no one can give what one does not havenemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.53 In this case, since the Madrid brothers were no longer the owners of the subject property at the time of the sale to Marquez, the latter did not acquire any right to it.

NOTES:

In any event, assuming arguendo that Article 1544 applies to the present case, the claim of Marquez still cannot prevail over the right of the Heirs since according to the evidence he was not a purchaser and registrant in good faith.

In the instant case, the actions of Marquez have not satisfied the requirement of good faith from the time of the purchase of the subject property to the time of registration. Found by the Court of Appeals, Marquez knew at the time of the sale that the subject property was being claimed or taken by the Heirs. This was a detail which could indicate a defect in the vendors title which he failed to inquire into. Marquez also admitted that he did not take possession of the property and at the time he testified he did not even know who was in possession.

Carumba v. CA, (See Bernes PDf)

Dagupan v. Macam (See)

ILUMINADO HANOPOL vs. PERFECTO PILAPILG.R. No. L-19248 February 28, 1963FACTS:Appellant Hanopol claims ownership of a parcel of unregistered land in Leyte by virtue of a series of purchases effected in 1938 by means of private instruments, executed by the former owners Teodora, Lucia, Generosa, Sinforosa and Isabelo, all surnamed Siapo. Additionally, he invokes in his favor a decision rendered by the Court of First Instance of Leyte (in Civil Case No. 412) on a complaint he filed on June 16, 1948, against the same vendors, who, according to his own averments, took possession of the said property in December, 1945 through fraud, threat and intimidation, pretending falsely to be the owners thereof and ejecting the tenants of Hanopol thereon, and since then had continued to possess the land. Decision declaring him the exclusive owner of the land in question and ordering therein defendants to deliver possession thereof was rendered on September 21, 1958. On the other hand, appellee Pilapil asserts title to the property on the strength of a duly notarized deed of sale executed in his favor by the same owners on December 3, 1945, which deed of sale was registered in the Registry of Deeds of Leyte on August 20, 1948 under the provisions of Act No. 3344. ISSUE: Whether or not the registration of the second sale in favor of Pilapil affects Hanopol's rights as the first vendee HELD:Appellant argues that the registration of Pilapil's notarized deed of sale in 1948 under Act No. 3344 "shall be understood to be without prejudice to a third party with a better right". He contends that since at the time the Siapos sold the land in question in 1945 to Pilapil, the former were no longer the owners as they had already sold the same to appellant since 1938, the first sale to him is a better right which cannot be prejudiced by the registration of the second sale. We do not think the proviso in Act No. 3344 justifies appellant's contention. If his theory is correct, then the second paragraph of Article 1544 of the New Civil Code (formerly Article 1473 of the old Code) would have no application at all except to lands or real estate registered under the Spanish Mortgage Law or the Land Registration Act. Such a theory would thus limit the scope of that codal provision. But even if we adopt this latter view, that is, that Article 1544 (formerly Article 1473) only applies to registered land, still we cannot agree with the appellant that by the mere fact of his having a previous title or deed of sale, he has acquired thereby what is referred to in Act No. 3344 as the "better right" that would be unaffected by the registration of a second deed of sale under the same law. Under such theory, there would never be a case of double sale of the same unregistered property. It thus appears that the "better right" referred to in Act No. 3344 is much more than the mere prior deed of sale in favor of the first vendee. In the Lichauco case mentioned, it was the prescriptive right that had supervened. Or, as also suggested in that case, other facts and circumstances exist which, in addition to his deed of sale, the first vendee can be said to have better right than the second purchaser. In the case at bar, there appears to be no clear evidence of Hanopol's possession of the land in controversy. In fact, in his complaint against the vendors, Hanopol alleged that the Siapos took possession of the same land under claim of ownership in 1945 and continued and were in such possession at the time of the filing of the complaint against them in 1948. Consequently, since the Siapos were in actual occupancy of the property under claim of ownership, when they sold the said land to appellee Pilapil on December 3, 1945, such possession was transmitted to the latter, at least constructively, with the execution of the notarial deed of sale, if not actually and physically as claimed by Pilapil in his answer filed in the present case. Thus, even on this score, Hanopol cannot have a better right than appellee Pilapil who, according to the trial court, "was not shown to be a purchaser in bad faith".

G.R. No. L-13442December 20, 1919

NARCISA SANCHEZ, plaintiff-appellant, vs.ROQUE RAMOS, defendant-appellee.

Irureta Goyena and Recto for appellant.Sisenando Palarca for appellee.

AVANCEA, J.:

This is an action for the recovery of a piece of land described in the second paragraph of the complaint. This land is in the defendant's possession and formerly belonged to Ciriaco Fernandez. On July 1, 1910, Ciriaco Fernandez sold it to the spouses Marcelino Gomez and Narcisa Sanchez under pacto de retro for the period of one year. This also was executed in a public instrument. Marcelino Gomez and Narcisa Sanchez never took material possession of the land. The period for repurchase elapsed without the vendor making use of it. On July 3, 1912, Ciriaco Fernandez again sold the same land, by means of a private document, to Roque Ramos who immediately took material possession thereof. By applying article 1473 of the Civil Code, the trial court declared preferable the sale executed to the defendant and absolved him from the complaint.

By the same article applied by the lower court, we are of the opinion that the sale executed to the plaintiff must be declared preferable. This article provides:

ART. 1473.If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be personal property.

Should it be real property, it shall belong to the purchaser who first recorded it in the registry of deeds.

Should it not be recorded, the property shall belong to the person who first took possession of it in good faith, or, in default of possession, to the person who presents the oldest title, provided there is good faith.

Not one of the documents of sale in this case having been recorded, preference must be decided in favor of the vendee who first took possession.lawphi1.net

To what kind of possession does this article refer? Possession is acquired by the material occupancy of the thing or right possessed, or by the fact that the latter is subjected to the action of our will, or by the appropriate acts and legal formalities established for acquiring possession (art. 438, Civil Code.). By a simple reasoning, it appears that, because the law does not mention to which of these kinds of possession the article refers, it must be understood that it refers to all of these kinds. The proposition that this article, according to its letter, refers to the material possession and excludes the symbolic does not seem to be founded upon a solid ground. It is said that the law, in the gradation of the causes of preference between several sales, fixes, first, possession and then the date of the title and, as a public instrument is a title, it is claimed that the inference is that the law has deliberately intended to place the symbolic possession, which the execution of the public document implies after the material possession. This argument, however, would only be forceful if the title, mentioned by this article, includes public instruments, and this would only be true if public instruments are not included in the idea of possession spoken of in said article. In other words, the strength of the argument rests in that this possession is precisely the material and does not include the symbolic. Consequently, the argument is deficient for it is begging the same question, because if this possession includes the symbolic, which is acquired by the execution of a public instrument, it should be understood that the title, mentioned by the law as the next cause of preference, does not include public instruments.

Furthermore, our interpretation of this article 1473 is more in consonance with the principles of justice. The execution of a public instrument is equivalent to the delivery of the realty sold (art. 1462, Civil Code) and its possession by the vendee (art. 438). Under these conditions the sale is considered consummated and completely transfers to the vendee all of the vendor's rights of ownership including his real right over the thing. The vendee by virtue of this sale has acquired everything and nothing, absolutely nothing, is left to the vendor. From this moment the vendor is a stranger to the thing sold like any other who has never been its owner. As the thing is considered delivered, the vendor has no longer the obligation of even delivering it. If he continues taking material possession of it, it is simply on account of vendee's tolerance and, in this sense, his possession is vendor's possession. And if the latter should have to ask him for the delivery of this material possession; it would not be by virtue of the sale, because this has been already consummated and has produced all its effects, but by virtue of the vendee's ownership, in the same way as said vendee could require of another person although same were not the vendor. This means that after the sale of a realty by means of a public instrument, the vendor, who resells it to another, does not transmit anything to the second vendee and if the latter, by virtue of this second sale, takes material 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 acquired by the first vendee.

We are of the opinion that the possession mentioned in article 1473 (for determining who has better right when the same piece of land has been sold several times by the same vendor) includes not only the material but also the symbolic possession, which is acquired by the execution of a public instrument.

From the foregoing it follows that the plaintiff was the first to take possession of the land, and consequently the sale executed to him is preferable.

Wherefore, the judgment appealed from is hereby reversed; the plaintiff is declared owner of the land in question; and the defendant is ordered to deliver the possession of the land to the plaintiff. No special findings as to costs. So ordered.

G.R. No. L-2397TOMASA QUIMSON and MARCOS SANTOS, petitioners, vs.FRANCISCO ROSETE, respondent.

Marcelino Lontok for petitioners.Ignacio Mangosing for respondent.

TUASON, J.:

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 parcel of land sold to two different persons.

The Facts as found by the Court of Appeals are these:

Esta finca pertenecia originalmente al hoy difunto Dionisio Quimson, quien, en 7 de junio de 1932, otorgo la escritura Exhibit A de trespaso de la misma a favor de su hija Tomasa Quimson, pero continuo en su posesion y goce. La vendio a los esposos Magno Agustin y Paulina Manzano en 3 de Mayo de 1935, con pacto de recomprar dentro del plazo de seis aos; y dos aos escasos despues, en 5 de abril de 1937, la volvio a vender a Francisco Rosete, tambien con pacto de retro por el termino de cinco aos, despues de haber verificado su recompra de Agustin y Manzano, con dinero que le habla facilitado Rosete, otorgandose a este facto la escritura de venta Exhibit 1. Desde entoces Rosete es el que esta en su posesion y disfrute, de una manera pacifica y quieta, aun despues de la muerte de Dionisio Quimson, ocurrida en 6 de junio de 1939, hasta el enero de 1943, en que Tomasa Quimson acudio al Juez de Paz de San Marcelino , Zambales, para que este interviniera en un arreglo con Rosete sobre dicha finca, cuyo fracaso motivo una carrera hacia Iba, la capital de Zambales, para ganar la prioridad del registro e inscripcion de las escrituras de venta Exhibits A y 1 que Dionisio Quimson otorgara a favor de Tomasa Quimson y Francisco Rosete, respectivamente, carreraque aquella gano por haber llegado a la meta una hora antes, a las 9:30 a.m. del 17 de febrero de 1943, en tanto que este la alcanzo a las 10:30 a.m. de ese mismo dia.

Two questions are raised: (1) What were the effects of the registration of plaintiff's document? and (2) Who was prior in possession? The Court of Appeals' answer to the question is , None, and to the second, the defendant or second purchaser.

We do not deem it necessary to pass upon the first issue in the light of the view we take of the last, to which we will address ourselves presently.

Articles 1462 and 1473 of the Civil Code provide:

ART. 1462. The thing sold shall be deemed delivered, when it is placed in the control and possession of the vendee.

When the sale is made by means of 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 said instrument the contrary does not appear or may not be clearly inferred.

ART. 1473. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, 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 was first in the possession; and, in the absence of this, to the person who represents the oldest title, provided there is good faith.

In the case of Buencamino vs. Viceo (13 Phil., 97), Mr. Justice Willard, speaking for the court 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.".

In the case of Florendo vs. Foz (20 Phil., 388), the court, through Mr. Chief Justice Arellano, rules that "When the sale is made by menas of a public instrument, the execution thereof is tantamount to conveyance of the subject matter, unless the contrary clearly follows or be deduced from such instrument itself, and in the absence of this condition such execution by the vendor is per se a formal or symbolical conveyance of the property sold, that is, the vedor in the instrument itself authorizes the purchaser to used the title of ownership as proof that latter is thenceforth the owner of the property."

More decisive of the case at the bar, being almost on all fours with it, is the case of Sanchez vs. Ramon (40 Phil., 614). There. appeared that one Fernandez sold a piece of land to Marcelino Gomez and Narcisa Sanchez under pacto de retro in a public instrument. The purchasers neither recorded the deed in the registry of property nor ever took materials possession of the land. Later, Fernandez sold the same property by means of a private document to Ramos who immediately entered upon the possession of it. It was held that, according to article 1473 of the Civil Code, Gomez and Sanchez were the first in possession and. consequently, that the sale in their favor was superior. Says the court, through Mr. Justice Avancea, later chief justice:

To what kind of possession is acquired by the materials occupancy of the thing or right possessed, or by the fact that the latter is subjected to the action of our will, or by the appropriate acts and legal formalities established for acquiring possession (art. 438, Civil Code). by a simple reasoning, it appears that, because the law does not mention to which of these kinds of the possession the article refers, it must be understood that it refers to all of these kinds. The proposition that this article, according to its letter, refers to the materials possession and excludes the symbolic does not seem to be founded upon a solid ground. It is said that the law, in the first possession and then the date of the date of the title and as a public instruments is a title, it is claimed that the inference is that the law has deliberately intented to place the symbolic possession, which the execution of the public document implies, after the materials possession. This argument, however, would only be forceful if the title, mentioned by this article, includes public instruments, and this would only be true if public instruments are not included in the idea of the possession spoken of in said article. In other words the strength of the arguments rests in that this possession is precisely the materials and does not include the symbolic. Consequently, the argument is deficient for it is begging the same question, because if this possession includes the symbolic, which is acquired by the execution of a public instruments, it should be understood that the title, mentioned by the law as the next cause of preference, does not include instruments.

Furthermore, our interpretation of this article 1473 is more in consonance with the principles of the justice. The execution of the public instrument is equivalent to the delivery of the realty sold (art. 1462, Civil Code ) and its possession by the vedee (art. 438).Under these conditions the sale is considered consummated and completely transfers to the vendee all of the thing. the vendee by virtue of this sale has acquired everything and nothing, absolutely nothing, is left to the vendor. Form this moment the vendor is a stranger to the thing sold like any other who has never been its owner. As the obligation of even delivering it. If he continues taking materials possession of it, is simply on account of the vendee's tolerance and, in this sense, his possession is vendor's possession. And if the latter should have to ask him for the delivery of this materials possession it would not be by virtue of the sale, because this has been already consummated and has produced all its effects, but by virtue of the vendee's ownership, in the same were not the vendor. 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 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 acquired by the first vendee.

We are of the opinion that the possession mentioned in the article 1473 (for 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 possession, which is acquired by the execution of a public instrument.

The Supreme Court of Spain and Mr. Manresa are of the same opinion. On pp. 157 ,158 Vol. X, of his treatise on the Spanish Civil Code. Manresa comments:

II. Observacion comun a la venta de muebles y a la de inmuebles. Hemos interpretado el precepto de articulo 1.473, en sus parrafos 1. y 3. en el sentido mas racional mas racional, aunque no tal vez en el mas adecuado a las palabras que se emplean. Las palabras tomar posesion, y primero en la posesion las hemos considerado como equivalentes a la de la tradicion real o fingida a que se refieren los articulos 1.462 al 1. 464 porque si la posesion materials del objeto puede otorgar preferencia e cuestiones de possesion y asi lo re-conoe el articulo 445. no debe darla nunca en cuestiones de propiedad y de la propiedad habla expresamente el articulo 1.473. Asi en nuestra opinion, robustecida por la doctrine que rectamente se deriva de la sentencia de 24 de Novembre de 1894, vendida una finca A. en escritura publica despues a B., aunque se incate materialmente este del inmueble, la etrega de la cosa elvendedor carecia ya de la facultad de disponer de ella .

The statement of Sr. Manresa which is said to sustain the theory of the Court of Appeals, expresses, as we under stand that statement, the literal meaning of article 1473, for the decision of November 24, 1894 reflects, according to the learned author, the intention of the lawmaker and is in the conformity with the principles of justice. now under both the a Spanish and Philippine rules of interpretation, the spirit, the intent, the law prevails over its letter.

Counsel for defendant denies that the land was sold to plaintiff's Tomasa Quimson or that the Court of Appeals so founds. All that latter court declared, he says, was that a deed of the land was executed by the original owner on June 7, 1932.

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 land was sold by the father to his daughter. Furthermore, this was the trial court's explicit 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 form the vendee the consideration of sale, P 250, acknowledge before the notary public the notary public having executed the instruments of his own free will.

The expression in the court's decision in the case of Cruzado vs. Escaler (34 Phil., 17), cited by the Court of Appeals, Apparently to the effect that physical possession by the purchaser is essential to the consummation of a sale of real of estate, is at best obiter dictum; for the court distinctly found that the sale to plaintiff's Cruzado's father was a sham, execution with the sole purpose of enabling the senior Cruzado to mortgage the property and become procurador. And with reference to the failure of the second vendee, Escaler, to register his purchase, the court disregarded the omission as well as the entry of the first sale in the registry because that entry was made by the plaintiff, son and heir of the first supposed vendee, more than a score years after the alleged transaction, when the plaintiff was no longer or had any right therein (in the land). Because it already belonged to the defendant Escaler, its lawful owner." When Escaler, the second purchase was sued he had become the owner of the land by prescription. The defendant's possession in the present case fell far short of having ripened into title by prescription when the plaintiff commenced her action.

For the reasons above stated, we are constrained to set aside the decision of the Court of Appeals. Because the Appellate Court found for the defendant, it made no findings on damages for the latter's used of the property in controversy. Not being authorized in this appeal to examine the evidence we have to accept the trials court's appraisal of the damages. Judge Llanes assessed the damages of P 180 for the occupation of the agricultural years 143-44,1944-45 and 1945-46, and P 60 a year thereafter until the possession of the property was restituted to the plaintiffs.

Let judgment be entered in accordance with the tenor of this decision, with costs against the defendant.

Beatingo vs. Gasis DigestG.R. No. 179641 : February 9, 2011

DOLORITA C. BEATINGO, Petitioner, v. LILIA BU GASIS, Respondent.

NACHURA, J.:FACTS:

Petitioner Dolorita Beatingo bought a piece of land, denominated as Lot No. 7219 from Flora G. Gasis on May 19, 1998. Petitioner went to the Register of Deeds to have the sale registered. She, however, failed to obtain registration as she could not produce the owners duplicate certificate of title. She, thus, filed a petition for the issuance of the owners duplicate certificate of title but was opposed by respondent Lilia Bu Gasis, claiming that she was in possession of the Original Certificate of Title (OCT) as she purchased the subject property from Flora on January 27, 1999.

Petitioner filed a Complaint for Annulment and Cancellation of Sale, Reconveyance, Delivery of Title and Damages against respondent before the Regional Trial Court. Respondent claimed that she purchased the subject property from Flora without knowledge of the prior sale of the same subject property to petitioner, which makes her an innocent purchaser for value.

The RTC considered the controversy as one of double sale and since the two sales that of petitioner and that of respondent were not registered with the Registry of Property, the RTC held that whoever was in possession had the better right. Hence, it decided in favor of respondent.

Petitioner elevated the matter to the CA via a Notice of Appeal. However, due to pressures of work in equally important cases with other clients, counsel for petitioner requested for an extension of ninety (90) days within which to file the brief. Instead of filing the Appellants Brief within the extended period, petitioner twice moved for extension of time to file the brief.

The CA denied the motions for extension to file brief. Thus, for failure to file the Appellants Brief, the appellate court dismissed the appeal.

ISSUE: Whether or not the CA erred in not reviewing the merits of the appeal.

HELD:

The petition lacks merit.

REMEDIAL LAW: Extension to file brief

Evidently, petitioners counsel was negligent in failing to file the required brief not only within 45 days from receipt of the notice but also within the extended period of ninety (90) days granted by the appellate court.

The excuse forwarded above is unacceptable. An attorney is bound to protect his clients interest to the best of his ability and with utmost diligence. Failure to file brief certainly constitutes inexcusable negligence, more so if the delay results in the dismissal of the appeal.

The failure to file the Appellants Brief, though not jurisdictional, results in the abandonment of the appeal which may be the cause for its dismissal.

Nevertheless, to put an end to the controversy, the Court carefully perused the records of the case and reached the conclusion that the decision dated December 29, 2005 of the RTC is in perfect harmony with law and jurisprudence. The rules on double sales, as discussed above, apply.

Petition is DENIED. The decision of CA is affirmed.

Roman vs. Grimalt 6 Phil 96 April 1906

FACTS:

In between the 13th to the 23d of June, 1904, petitioner Pedro Roman, the owner, and respondent Andres Grimalt, the purchaser, verbally agreed upon the sale of the schooner Santa Marina. In his letter on June 23, Grimalt agreed to buy the vessel and offered to pay in three installments of P500 each on July 15, September 15, and November 15, provided the title papers to the vessel were in proper form. The title of the vessel, however, was in the name of one Paulina Giron and not in the name of Roman as the alleged owner. Roman promised to perfect his title to the vessel, but failed so the papers he presented did not show that he was the owner of the vessel. On June 25, 1904, the vessel sank in the Manila harbor during a severe storm, even before Roman was able to produce for Grimalt the proper papers showing that the former was in fact the owner of the vessel in question and not Paulina Giron. As a result, Grimalt refused to pay the purchase price when Roman made a demand on June 30, 1904.

On July 2, 1904, Roman filed this complaint in the CFI of Manila, which found that the parties had not arrived at a definite understanding, and later dismissed said complaint.

ISSUE:

Who should bear the risk of loss?

COURT RULING:

The Supreme Court affirmed the decision of the lower court and declared Roman as the one who should bear the risk of lost because there was no actual contract of sale. If no contract of sale was actually executed by the parties, the loss of the vessel must be borne by its owner and not by a party who only intended to purchase it and who was unable to do so on account of failure on the part of the owner to show proper title to the vessel and thus enable them to draw up the contract of sale. Grimalt was under no obligation to pay the price of the vessel, the purchase of which had not been concluded. The conversations between the parties and the letter Grimalt had written to Roman did not establish a contract sufficient in itself to create reciprocal rights between the parties.

Norkis Distributors, Inc. v. CAFacts:Petitioner Norkis Distributors, Inc. is the distributor of Yamaha motorcycles in Negros Occidental. Alberto Nepales bought from the Norkis Bacolod branch a brand new Yamaha Wonderbike motorcycle. The price of P7,500 was payable by means of a Letter of Guaranty from the DBP, which Norkis Branch Manager Labajo agrred to accept. Hence, credit was extended to Nepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan. As security for the loan, Nepales would execute a chattel mortgage on the motorcycle in favor of DBP. Branch Manager Labajo issued Norkis Sales Invoice No. 0120 (Exh.1) showing that the contract of sale of the motorcycle had been perfected. Nepales signed the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the motorcycle remained in Norkis' possession.

The motorcycle was then registered in the Land Transportation Commission in the name of Alberto Nepales. The motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto Nepales but the latter denies it. The motorcycle met an accident and an investigation conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the accident. The unit was a total wreck, was returned, and stored inside Norkis' warehouse.

DBP released the proceeds of private respondent's motorcycle loan to Norkis in th