Sales Assignment Cases Sept 4

8/11/2019 Sales Assignment Cases Sept 4

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2. SEN PO EK MARKETING CORPORATION, petitioner, vs. TEODORA PRICEMARTINEZ, JUANITO TIU UYPING, JR., NELSON TIU UYPING LEONCIO TIUUYPING, respondents.

D E C I S I O N

DE LEON, JR., J.:

Before us is a petition for review on certiorari assailing the Decision[1] and

Resolution[2] dated October 13, 1997 and May 18, 1998, respectively, of theCourt of Appeals[3] which reversed and set aside the Decision[4] of theRegional Trial Court (RTC) of Palo, Leyte, Branch 8, rescinding the Deed ofAbsolute Sale over two (2) parcels of land executed by private respondentTeodora P. Martinez in favor of private respondent brothers Juanito, Nelsonand Leoncio, all surnamed Tiu Uyping and declaring that petitioner Sen PoEk Marketing Corporation (hereafter Sen Po Ek) has the first preference tobuy said land.

The pertinent facts are:

Sofia P. Martinez was the registered owner of two (2) parcels of land, known

as Lot Nos. 50 and 106 of the Tacloban City Cadastre, located at No. 84Justice Romualdez St., formerly Gran Capitan, Tacloban City. The saidparcels of land are covered and described by Transfer Certificate of Title(TCT) No. 2915.[5]

On October 25, 1961, Sofia leased the lots to Yu Siong, father of thepresident and stockholders of petitioner Sen Po Ek for a period of ten (10)years.[6] The lease contract required the lessee to construct a commercialbuilding on the leased property which shall become the property of Sofiaupon the expiration of the lease. The building which was constructedsometime in 1963 was declared, for taxation purposes, in the name ofpetitioner Sen Po Ek under Tax Declaration No. 19487.

On October 25, 1971, the contract of lease expired.

On September 20, 1973, the lease contract[7] was renewed between Sofiaand Yu Siongs wife, Lim Hua, who succeeded him, as lessee, upon his death.Said contract explicitly states that "as of October 1, 1973, the lessor shall bethe absolute owner of a building located at Lot Nos. 50 and 106 of theTacloban Cadastre."[8] The lease underwent several renewals. The lastwritten contract of lease was executed on March 24, 1982 for a term of five(5) years expiring on January 1, 1987.[9]

Meantime, Sofia sold the lots and the building to her daughter, private

respondent Teodora P. Martinez. The deed of sale was executed sometimein 1979 but was notarized only on November 5, 1985.[10]

After the lease contract expired in January 1987, it was no longer renewedby the parties. Petitioner Sen Po Ek, however, continued to possess andoccupy the leased properties, and regularly paid the monthly rentals toSofia until her death in August 1989. After the latters death, the rentalswere paid to the heirs of Sofia through private respondent Teodora P.Martinez.

On November 11, 1989, Teodora sent a letter to petitioner Sen Po Ekinforming it of her intention to sell the leased premises and authorizing Mrs.

Remedios Petilla to negotiate the sale "with any and all interestedparties."[11] The letter reads, viz.:

"Quezon City

November 11, 1989

SIN [sic] PO EK COMMERCIAL

Tacloban City

Gentlemen:

Please take notice that we are selling the two (2) lots, including the buildinhereon, covered by Transfer Certificate of Title No. T-2915, with a total arof Three Hundred Thirteen (313) square meters, situated at Tacloban Cityand presently occupied by your establishment.

Please contact Mrs. REMEDIOS L. PETILLA who is authorized to negotiasale with any and all interested parties.

Cordially yours,

(sgd.) TEODORA P. MARTINEZ"

But petitioner Sen Po Ek received the letter only on December 12, 1989.[1It sought to purchase the properties at six thousand pesos (P6,000.00) persquare meter, and the Yu Siongs were able to contact private respondentTeodora P. Martinez who advised them to formalize the offer of petitionerSen Po Ek in writing. This was done in a letter dated December 27, 1989 bConsorcio Yu Siong.[13]

Meantime, sometime in December 1989, private respondent Juanito TiuUyping, Jr. was informed by a certain Mr. Militante that the subject leased

premises were for sale and that the sale was being brokered by Mrs.Remedios Petilla.[14] Juanito contacted his two (2) other brothers, andtogether, they went to the office of Governor Leopoldo Petilla, the husbandof Remedios Petilla, and inquired about the property.[15]

On January 9, 1990, petitioner Sen Po Ek filed a verified complaint againsTeodora in the RTC of Palo, Leyte, for the annulment of the Deed of Saleexecuted by her mother, Sofia, in her favor and notarized on November 5,1985. Petitioner invoked its alleged right of first refusal or preferential righto buy the leased premises based on Republic Act (R.A.) No. 1162,[16] asamended, in relation to Presidential Decree (P.D.) No. 1517.[17]

On January 12, 1990, Teodora sold the property to the respondent TiuUyping brothers.[18] As a result, TCT No. T-32239[19] was issued in thenames of Juanito Tiu Uyping, Nelson Tiu Uyping and Leoncio Tiu UypingMarch 5, 1990, an amended complaint[20] was filed to include therespondents Tiu Uyping brothers and also praying for the nullity of thesecond sale transaction.

On February 27, 1992, the trial court rendered a decision in favor ofpetitioner Sen Po Ek, the dispositive portion of which reads, viz.:

"WHEREFORE, upon the preponderance of evidence this Court renders judgment in favor of the plaintiffs [sic] SEN PO EK MARKETING


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CORPORATION represented by Consorcio Yusiong, and against thedefendants

1. Declaring, as ordering the rescission of the Deed of Absolute Saleexecuted by defendant Teodora P. Martinez on 12 January 1990 in favor ofthe brother defendants Juanito Tiu Uyping Jr., Nelson Tiu Uyping andLeoncio Tiu Uyping, Exhibit 2;

2. Declaring that the plaintiffs [sic] have a first preference to buy Lot Nos. 50and 106 of the Tacloban Cadastre as well as the building erected thereon as

of December, 1989, hence, commanding defendant Teodora P. Martinezand her brothers and sisters to sell the aforementioned properties to theplaintiff corporation at the price of Six Thousand (P6,000.00) Pesos persquare meter as offered in the letter dated 11 November 1989 and asappearing to have been quoted by Teodora P. Martinez agent, Mrs.Remedios L. Petilla;

3. Ordering the defendant Teodora P. Martinez to return to his [sic] co-defendants Tiu Uyping brothers the sum of EIGHT HUNDRED THOUSAND(P800,000.00) Pesos, appearing to be the total selling price of the propertyin question;

4. Ordering defendant Teodora P. Martinez to pay the plaintiff corporationthe sum of TEN THOUSAND PESOS (P10,000.00) in the concept ofattorneysfees and THREE THOUSAND PESOS (P 3,000.00) in that of litigationexpenses.

Costs of this suit jointly and severally against all defendants.

SO ORDERED."[21]

Private respondents appealed from the said decision to the Court ofAppeals.

On October 13, 1997, the Court of Appeals rendered a decision reversingthe trial court. It held:

"It is noteworthy that although the CORPORATION included the sale by Sofiaof the subject property to her daughter, Teodora, as one of the deeds itprayed to be declared void or annulled the trial court did not nullify thedeed. It, therefore, remains valid and binding. And, indeed, the trial courtcould not have granted what was prayed for, notwithstanding the latenotarization of the deed and its other perceived defects, not only becauseneither Sofia nor her heirs complained, and on the contrary, the said heirsacknowledged its validity, but more importantly, a contract is valid inwhatever form it may have been entered into unless form is essential for its

validity, which is not so in this case. The Corporations protestation that thesale is invalid since it was not informed of it, has no basis in law.

"Being the owner of the property in suit , Teodora had the right to exerciseall the attributes of ownership, to wit: jus possidendi, jus utendi, jus fruendi,jus abutendi, jus disponendi and jus vindicandi. With respect to jusdisponendi, she may dispose of the property to whomsoever and inwhatsoever manner and for whatever consideration she wishes, although ata loss or even for free and no one can complain, except as may otherwise beprovided by law, like the limitations on donation and in the case of sale, theright of pre-emption of an adjoining owner and the right of first refusalunder the Urban Land Reform Law (P.D. No. 1517) when the area is

proclaimed as an urban land reform zone.

"In the case on hand, the appellee Corporation is neither an adjoining ownof the property in suit nor a qualified tenant of a residential land in a dulyproclaimed urban land reform zone, there being no proof of suchproclamation in Tacloban City. Its claim to first priority to buy the disputeproperty is merely derived from the following postulation:

`We believe that in this particular case, plaintiff-appellee should beaccorded the first priority to buy the questioned properties, being its actuapossessor and occupant. Even under equal circumstances, plaintiff-appelle

should have been given the preference to purchase the property over thirdpersons. More so, in this case for the plaintiff-appellee accepted the offer tbuy for an amount more than double the price for which defendants-appellant Uyping brothers paid the same properties for.

"The claim is, however, utterly bereft of any foundation in law. It isnoteworthy that the Corporation does not cite any specific piece oflegislation or even any decisional law that is supportive of its stance. This simply because there is none. Deserving of some examination, if at all, isonly the last part of the Corporations for mulation, to wit: that it acceptedTeodoras offer to sell.

"Teodora, however, made no offer to sell the property, much less to theCorporation in particular. She merely gave notice to the Corporation of heintention to sell. x x x x x x x x x

"Clearly, no offer to sell was made. If ever there was any semblance of anoffer, it was merely for the Corporation to contact Mrs. Remedios Petillawho was authorized to negotiate the sale `with any and all interestedparties. But the Corporation did no t promptly react. On the contrary, theUypings, upon learning somehow that the property was up for sale, werethe ones who immediately made inquiries from Governor Leopoldo Petillathe husband of Remedios, and, thereupon, made an offer to buy. Still, to beconsiderate to the Corporation, which was a long-time lessee of the

property, the Governor called up its representative, Alfredo Yu Siong, to fiout if they were interested in buying the property but after mulling over thmatter for sometime, Alfredo informed the Governor that they were notinterested. So, on December 23, 1989, Teodora accepted the offer of theUypings and executed in their favor the Option to Purchase after the latterhad paid her one-half of the agreed purchase price of P800,000.00. Then oJanuary 12, 1990, upon payment of the balance of P400,000.00, sheexecuted the corresponding deed of absolute sale.

"The Corporation discredits the testimony of Governor Petilla in this regarand, not without malediction asks, `Is it because Gov. Petilla is a lawyer, anconsequently is more eloquent in narrating defendants-appellants distorted

version of the facts? For being a lawyer and, hence, an officer of the court,we readily give full faith and credence to the testimony of Governor Petillas against Alfredo Yu Siongs whom we found to be lying through his teethfor, in his testimony on April 26, 1991, he declared that upon receivingTeodoras notice of intention to sell, he and his brother, Consorico Yu Siong,went to see Mrs. Petilla at Palo, Leyte, because they know that the Petillasreside there.

"x x x x x x x x x

"But on December 6, 1991, in rebutting Governor Petillas testimony, heperjuriously executed a turn about and declared that he did not go to the

Governors residence in Palo as he did not know that they reside there.


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"x x x x x x x x x

"In any event, even if Teodoras letter of November 11, 1989, wereconstrued as an offer or promise to sell the property to the Corporation, thelatter did not thereby acquire any enforceable or actionable right for thesimple reason that the letter did not quote any price and is, therefore, notthe offer contemplated by law. In this regard, Article 1479 of the Civil Codeprovides:

Àrt. 1479. A promise to buy and sell a determinate thing for a price certainis reciprocally demandable.

Àn accepted unilateral promise to buy or to sell a determinate thing for aprice certain is binding upon the promissor if the promise is supported by aconsideration distinct from the price.

"Thus, although the Yu Siong brothers and sisters, who own theCorporation, allegedly decided among themselves to buy the property uponreceipt of Teodoras letter on December 12, 1989, still Consorcio andAlfredo Yu Siong had to seek out Mrs. Remedios Petilla, about three (3) tofour (4) days thereafter, to find out the selling price.

"x x x x x x x x x

"But Consorcio and Alfredo Yu Siong could not make any decision on theprice without first consulting their brothers and sisters. After theconsultation, they sent Alfredo to Manila to see Teodora, who was residingthere, to clarify if she was really selling the property.

"x x x x x x x x x

"Alfredo allegedly met with Teodora on December 26, 1989, who told himto reduce into writing their offer to buy.

"x x x x x x x x x

"On December 27, 1989, Consorcio Yu Siong wrote their letter ofacceptance and on December 28, sent it by registered mail to Teodora inQuezon City with a copy furnished Remedios Petilla in Palo, Leyte. Teodorareceived the letter on January 12, 1990 while Remedios got her copy onJanuary 2, 1990.

"But the letter of acceptance was too late since, as aforestated, onDecember 23, 1989, Teodora already executed an option to purchase infavor of the Uypings upon her receipt of their initial payment of

P400,000.00. It bears stressing in this connection that Teodoras notice ofintention to sell became an offer to sell to the Corporation only onDecember 15 or 16, 1989, (three or four days after it received the notice onDecember 12, 1989) when Mrs. Remedios Petilla quoted the price ofP6,000.00 per square meter to Consorcio and Alfredo Yu Siong. However,the latter did not then signify their acceptance and, instead, according toConsorcio himself, they took their time to make up their minds. In theinterim, Teodora committed to sell to the Uypings on December 23, 1989.At that point in time, there could not have been any perfected contractbetween Teodora and the Corporation since there was no meeting of theminds between them on the consideration. As Article 1475 of the Civil Codeprovides:

Àrt. 1475. The contract of sale is perfected at the moment there is ameeting of minds upon the thing which is the object of the contract andupon the price.

"At most, there was only an offer or promise to sell which was not bindingon Teodora as it was not then accepted, and even if accepted, theacceptance was not supported by a consideration distinct from the promiseTeodora was, therefore, at complete liberty to convey the property to theUypings.

"And when Alfredo Yu Siong went to see her on December 26, 1989,pleading that they be allowed to buy the property, she refused, telling himthat she had already committed it to other people. Thus, she was surprisedto receive in January 1990, a letter from the Corporation offering to buy thproperty for P6,000.00 per square meter.

"Understandably, Alfredo Yu Siong gave the lie to Teodoras testimony.

x x x x x x x x x

"He even went further to flatly contradict and make a liar out of his ownbrother, Consorcio Yu Siong, by asserting that in their meeting with Mrs.

Remedios Petilla on December 15 or 16, 1989, they already agreed on thelatters price quotation of P6,000.00 per square meter.

x x x x x x x x x

"Alfredo Yu Siong, however, is hopelessly wanting in credibility. As wepointed out earlier, he caught himself in irretrievable inconsistency in hisattempt to discredit Governor Petilla. Now, he can not even spare his ownbrother from his penchant for prevarication for the sake of advancing theircause.

"From our viewpoint, the Corporation, upon the instigation of Alfredo Yu

Siong, conceived of the plot of belatedly offering to buy the property in suat P6,000.00 per square meter, or the total price of P1,878,000.00 in orderto make the accepted offer of the Uypings in the amount of P800,000.00appear a pittance, in a calculated move to start a lawsuit and therebyprolong their stay on the premises. So far, they have succeeded. But to us, iis downright unthinkable that Teodora could have agreed to back out fromher commitment to the Uypings. That is too foolhardy an adventure to gointo and too farfetched to merit belief.

"To repeat, under the facts, no contractual or juridical relation whatsoeverhas been established between Teodora and the Corporation as seller andbuyer, respectively, of the property in dispute. Even the trial court

conspicuously failed to point out any. Nonetheless, it inscrutably orderedthe `rescission of the deed of absolute sale between Teodora and theUypings, and `commanded Teodora and her brothers and sisters to sell theproperty to the Corporation on the basis of Article 19 of the Civil Code.

x x x x x x x x x

"We are at a loss as to why the court below decreed the rescission of thedeed of sale between Teodora and the Uypings when the Corporationprayed for the declaration of its nullity and/or annulment. There is a whaleof a difference between rescission and declaration of nullity or annulmentof contracts. The grounds for the first are those enumerated in Article 138

of the Civil Code while those for the second are found in Article 1409 whi


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the grounds for annulment are stated in Article 1390. In any case violationof Article 19 of the same Code is not a ground for rescission, declaration ofnullity or annulment. The appealed judgment has, therefore, no leg both infact and in law to stand on."[22]

The dispositive portion of the foregoing decision reads, thus:

"WHEREFORE, the appealed decision is REVERSED and SET ASIDE, andanother is rendered DISMISSING the complaint of plaintiff-appelleeCORPORATION, with costs against the latter."[23]

Petitioner Sen Po Ek moved for reconsideration of the decision of the Courtof Appeals, but the latter denied the motion.[24]

Hence, this petition.

Petitioner Sen Po Ek raises the following issues:

"I

WHETHER OR NOT THE COURT OF APPEALS HAS DECIDED IN A WAY NOT INACCORD WITH LAW AND JURISPRUDENCE, DISREGARDING CLEAR EVIDENCE

ON RECORD, WHEN IT HELD THAT THE SALE OF THE PROPERTY IN QUESTIONBY THE LATE SOFIA MARTINEZ TO HER DAUGHTER TEODORA WAS VALID,AND NOT VOID AS FOUND BY THE TRIAL COURT.

"II

WHETHER OR NOT THE COURT OF APPEALS HAS DECIDED ARBITRARILY ANDCAPRICIOUSLY, IN A WAY NOT IN ACCORD WITH JUSTICE AND EQUITY,WHEN IT HELD THAT THE PETITIONER HAS NO LEGAL AND EQUITABLE RIGHTTO PURCHASE THE PROPERTY IN QUESTION, AS AGAINST THE TIU UYPINGS.

"III

WHETHER OR NOT THE COURT OF APPEALS HAS DECIDED ARBITRARILY ANDCAPRICIOUSLY IN A WAY NOT IN ACCORD WITH LAW AND JURISPRUDENCE,IN UPHOLDING THE VALIDITY OF THE DEED OF SALE BETWEEN TEODORAAND THE TIU UYPINGS.

"IV

WHETHER OR NOT THE COURT OF APPEALS HAS ACTED ARBITRARILY ANDCAPRICIOUSLY IN GIVING TOO MUCH WEIGHT TO THE TESTIMONY OFRESPONDENTS WITNESS LEOPOLD PETILLA AND DISCREDITING THAT OFPETITIONERS ALFREDO YU SIONG, CONSIDERING THAT THE FORMER DID

NOT EVEN HAD [sic] THE LEGAL AUTHORITY TO SELL OR NEGOTIATE THESALE OF THE PROPERTY IN QUESTION."[25]

We deny the petition.

First. Private respondent Teodora P. Martinez had the right, as lawful ownerof the leased premises, to sell the same to private respondent Tiu Uypingbrothers.

The first sale between mother and daughter, Sofia and Teodora, was voidfor being fictitious. Under Art. 1409 (2) of the New Civil Code, one type ofcontract which can be declared void and inexistent is that which is

absolutely simulated or fictitious, and this was established by several

badges of simulation proving that the sale between Sofia and Teodora wasnot intended to have any legal effect between them.[26]

Immediately suspect is the Contract of Sale itself which was executedsometime in 1979 but was notarized only on November 5, 1985, six (6) yelater. Said sale all the more inspires doubt when upon close reading of thelease contracts executed thereafter, Teodora signed not as owner butmerely as an instrumental witness.

If Teodora was really the owner of the leased premises as transferee-

vendee under the 1979 Deed of Sale, she should have signed in thatcapacity and not in any other. Moreover, this clearly indicates that Sofiaretained enjoyment and control of the leased premises as lessor-ownerthereof so much so that Teodora never asserted her alleged right ofownership over the leased premises. Indeed the most protuberant index ofsimulation is the absence of an attempt in any manner in the past of thealleged vendee-owner to exercise his rights as such over the subjectproperty.[27]

Finally, Sofia continued receiving the rentals until her demise in August1989. This was admitted by Teodora herself during the trial:

Q So, the rentals were actually intended and received by Sofia P.Martinez?

A Yes, sir.

Q And it was at this happening that Sofia Martinez have been receiving trentals in the year 1979 when you were already allegedly the owner up toher death in August, 1989? Is that correct?

A Yes, sir, it was Sofia Martinez.[28]

The combination of all of these events leads one to the inescapable

conclusion that the first sale transaction was absolutely simulated, hencevoid.

Nonetheless, the sale between private respondents Teodora P. Martinezand the Tiu Uyping brothers, is valid.

Teodora, as only one of the co-heirs of Sofia, had no authority to sell theentire lot to the Tiu Uyping brothers. She can only sell her undivided portiof the property. Thus, when she sold the leased premises to privaterespondent brothers Tiu Uyping, the sale is unenforceable having beenentered into by Teodora in behalf of her co-heirs who, however, gave noauthority or legal representation. However, such a contract is susceptible o

ratification.[29] In this case, the ratification came in the form of"Confirmation of Sale of Land and Improvements"[30] executed by theother heirs of Sofia.[31] Since the sale by private respondent TeodoraMartinez of the leased premises to private respondents Tiu Uyping brotherwas ratified by her co-heirs, then the sale is considered valid and binding.

Second. Petitioner Sen Po Ek does not have a right of first refusal to assertagainst private respondents. Neither any law nor any contract grants itpreference in the purchase of the leased premises.

Petitioner cites P.D. No. 1517, R.A. No. 1162 and Article 1622 of the NewCivil Code, but they are not applicable to the case at bar. P.D. No. 1517,

otherwise known as "The Urban Land Reform Act", pertains to areas


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proclaimed as urban land reform zones. Lot Nos. 50 and 106 are bothlocated in Tacloban City, which has not been declared as an urban landreform zone. R.A. No. 1162, on the other hand, only deals withexpropriation of parcels of land located in the City of Manila, which theleased premises are not. Finally, Article 1622 of the New Civil Code, whichprovides that:

"Whenever a piece of urban land which is so small and so situated that amajor portion thereof cannot be used for any practical purpose within areasonable time, having been bought merely for speculation, is about to be

re-sold, the owner of the adjoining land shall have the right of redemption,also at a reasonable price.

When two or more owners of adjoining lands wish to exercise the right ofpre-emption or redemption, the owner whose intended use of the land inquestion appears best justified shall be preferred,"

only deals with small urban lands that are bought for speculation whereonly adjoining lot owners can exercise the right of pre-emption orredemption. Petitioner Sen Po Ek is not an adjoining lot owner, but a lesseetrying to buy the land that it was leasing.

Indeed the right of first refusal may be provided for in a lease contract.[32]However in this case, such right was never st ipulated in any of the severallease contracts between petitioner and Sofia. Petitioner claims that it wasTeodora herself who assured them that they can have the first priority tobuy the subject parcels of land, but there is absolutely no proof of this. Suchgrant of the right of first refusal must be clearly embodied in a writtencontract, but there is none in the present case.

WHEREFORE, the petition is hereby DENIED. No costs.

SO ORDERED.


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3. Loyola v. CA

Facts:

In dispute is a parcel of land in Binan, originally owned in common bysiblings Mariano and Gaudencia Zarraga. Mariano predeceased her sister,who died without offspring on August 5, 1983, at the age of 97. Victorinaand Cecilia, sisters of Mariano and Gaudencia, are the original plaintiffs inthis case, and when they died, they were substituted by the petitioners whoare heirs of Victorina. Cecilia died childless. Private respondents, some are

children of Mariano and some are heirs of Jose Zarraga, are first cousins ofpetitioners. Repondents allege that they are the lawful owners of the land,the one-half share inherited by their father, and the other half purchasedfrom their aunt Gaudencia.

On August 24, 1980, Gaudencia allegedly sold her share to privaterespondents, evidenced by a notarised document entitled Bilihang Tuluyanng Kalahati ng Isang Lagay na Lupa. A TCT was eventually issued. OnJanuary 31, 1985, Victorina and Cecilia filed a complaint for the purpose ofannulling the sale and the TCT. The trial court rendered judgment in theirfavor, but such was reversed by the Court of Appeals.

Issue:

Whether the alleged sale between Gaudencia and respondents is valid

Held:

Petitioners vigorously assail the validity of the execution of the deed ofabsolute sale suggesting that since the notary public who prepared andacknowledged the questioned Bilihan did not personally know Gaudencia,the execution of the deed was suspect. The rule is that a notarizeddocument carries the evidentiary weight conferred upon it with respect toits due execution, and documents acknowledged before a notary public

have in their favor the presumption of regularity. By their failure toovercome this presumption, with clear and convincing evidence, petitionersare estopped from questioning the regularity of the execution of the deed.

Petitioners suggest that all the circumstances lead to the conclusion that thedeed of sale was simulated. Simulation is "the declaration of a fictitious will,deliberately made by agreement of the parties, in order to produce, for thepurposes of deception, the appearances of a juridical act which does notexist or is different what that which was really executed." Characteristic ofsimulation is that the apparent contract is not really desired or intended toproduce legal effect or in any way alter the juridical situation of the parties.Perusal of the questioned deed will show that the sale of the property

would convert the co-owners to vendors and vendees, a clear alteration ofthe juridical relationships. This is contrary to the requisite of simulation thatthe apparent contract was not really meant to produce any legal effect. Alsoin a simulated contract, the parties have no intention to be bound by thecontract. But in this case, the part ies clearly intended to be bound by thecontract of sale, an intention they did not deny.The requisites for simulationare: (a) an outward declaration of will different from the will of the parties;(b) the false appearance must have been intended by mutual agreement;and (c) the purpose is to deceive third persons. None of these are present inthe assailed transaction.

Petitioners fault the Court of Appeals for not considering that at the time of

the sale in 1980, Gaudencia was already 94 years old; that she was already

weak; that she was living with private respondent Romana; and wasdependent upon the latter for her daily needs, such that under thesecircumstances, fraud or undue influence was exercised by Romana to obtaGaudencia's consent to the sale. The rule on fraud is that it is neverpresumed, but must be both alleged and proved. For a contract to beannulled on the ground of fraud, it must be shown that the vendor nevergave consent to its execution. If a competent person has assented to acontract freely and fairly, said person is bound. There also is a disputablepresumption, that private transactions have been fair and regular. Appliedto contracts, the presumption is in favor of validity and regularity. In this

case, the allegation of fraud was unsupported, and the presumption standsthat the contract Gaudencia entered into was fair and regular.

Petitioners also claim that since Gaudencia was old and senile, she wasincapable of independent and clear judgment. However, a person is notincapacitated to contract merely because of advanced years or by reason ophysical infirmities. Only when such age or infirmities impair his mentalfaculties to such extent as to prevent him from properly, intelligently, andfairly protecting his property rights, is he considered incapacitated.Petitioners show no proof that Gaudencia had lost control of her mentalfaculties at the time of the sale. The notary public who interviewed her,testified that when he talked to Gaudencia before preparing the deed of

sale, she answered correctly and he was convinced that Gaudencia wasmentally fit and knew what she was doing.


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4. EQUATORIAL vs. MAYFAIRG.R. No. 106063November 21, 1996

FACTS:- Petitioners are Carmelo & Bauermann, Inc

(owner/seller/lessor) Equatorial Realty Development, Inc(buyer)

- Respondent is Mayfair Theater, Inc (lessee)- Carmelo owned a parcel of land with two 2-storey buildings

(covered by 4 land titles) at Recto- In 1967, 2 portions of the property (covered by 2 titles) wasleased to Mayfair for 20 years

- In 1978, Carmelo sold the entire Recto property toEquatorial for P11,300,000

- Mayfair petitioned for annulment of the sale on the groundthat it was violative of Paragraph 8 of the Contract of leasebetween respondent and Carmelo, which reads:That if the LESSOR should desire to sell the leasedpremises, the LESSEE shall be given 30-days exclusiveoption to purchase the same.

- The Trial court ruled in favor of herein petitioners on theground that Paragraph 8 was interpreted as an optioncontract

- Mayfair appealed and the CA reversed the decision of theTrial court saying that Paragraph 8 should be interpreted asa right of first refusal and not an option contract

ISSUES:1. Whether Paragraph 8 constitutes an option contract clause

or a right of first refusal2. WON sale of property to Equatorial is valid

HELD:SC ruled in favor of Mayfair ordering recission of the deed of saleand granting him right of first refusal to buy the property at

P11,300,000. The issues were held as follows:1. RIGHT OF FIRST REFUSAL. The SC agreed with the CAsruling that Paragraph 8 cannot constitute an option clause(covered in Article 1324 & 1479 of the Civil Code) for thelack of definite purchasing price in the agreement.Furthermore, the SC ruled that the stipulation in questionwas created to manifest a reciprocal obligation to guardthe interest of Mayfair in case of sale of the property: (1)togive him the option to purchase the property or (2)toensure that purchaser of the property shall recognize thelease agreement earlier made. As such, Paragraph 8 isconsidered a right of first refusal.

2. NO . Both Carmelo and Equatorial acted in bad faith forentering into Contract of Sale knowing that Paragraph 8(right of first refusal) was agreed upon in the Contract ofLease and that Mayfair (another party) was interested inthe property in question


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5. POWER COMMERCIAL V. CA (June 20,1997)

FACTS: Petitioner asbestos manufacturer PowerCommercial and industrial corporation bought theproperty of spouses Reynaldo and AngelitaQuiambao located in Makati City.

Since there are lessees occupying the subject land,part of the deed of sale is a warranty of respondentsthat will defend its title and peaceful possession infavor of the petitioners.

The property is mortgage to PNP and as such,petitioners filed a request to assume responsibility ofthe mortgage. Because of petitioners failure toproduce the required papers, their petition wasdenied.

Petitioners allege that the contract should berescinded because of failure of delivery.

ISSUE: WON the contract is recissible due to breach ofcontract.

HELD: There is no breach of contact in this case sincethere is no provision in the contract that imposes theobligation to the respondents to eject the peopleoccupying the property.

There was also a constructive delivery because thedeed of sale was made in a public document. Thecontention of the petitioners that there could be noconstructive delivery because the respondents is notin possession of the property is of no merit. Whatmatters in a constructive delivery is control and notpossession. Control was placed in the hands of thepetitioners that is why they were able to file anejectment case. Prior physical delivery orpossession is not legally required and the executionof the deed of sale is deemed equivalent to delivery.


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6. PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION vs Auditor GeneralFacts:On June 8, 1960, at a meeting with the Cabinet, the President of thePhilippines, acting on the reports of the Committee created to surveysuitable lots for relocating squatters in Manila and suburbs, approved inprinciple the acquisition by the People's Homesite and Housing Corporationof the unoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacanand of another area either in Las Pias or Paraaque, Rizal, or Bacoor, Cavitefor those who desire to settle south of Manila. On June 10, 1960, the Boardof Directors of the PHHC passed Resolution No. 700 (Annex "C") authorizing

the purchase of the unoccupied portion of the Sapang Palay Estate at P0.45per square meter "subject to the following conditions precedent:3. That the President of the Philippines shall first provide the PHHC with thenecessary funds to effect the purchase and development of this propertyfrom the proposed P4.5 million bond issue to be absorbed by the GSIS.4. That the contract of sale shall first be approved by the Auditor Generalpursuant to Executive Order dated February 3, 1959.On July 13, 1960, the President authorized the floating of bonds underRepublic Act Nos. 1000 and 1322 in the amount of P7,500,000.00 to beabsorbed by the GSIS, in order to finance the acquisition by the PHHC of theentire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter.On December 29,1960, Petitioner Philippine Suburban Development

Corporation, as owner of the unoccupied portion of the Sapang Palay Estateand the People's Homesite and Housing Corporation, entered into acontract embodied in a public instrument entitled "Deed of Absolute Sale"whereby the former conveyed unto the latter the two parcels of landabovementioned. This was not registered in the Office of the Register ofDeeds until March 14, 1961, due to the fact, petitioner claims, that thePHHC could not at once advance the money needed for registrationexpenses.In the meantime, the Auditor General, to whom a copy of the contract hadbeen submitted for approval in conformity with Executive Order No. 290,expressed objections thereto and requested a re-examination of thecontract, in view of the fact that from 1948 to December 20, 1960, the

entire hacienda was assessed at P131,590.00, and reassessed beginningDecember 21, 1960 in the greatly increased amount of P4,898,110.00.It appears that as early as the first week of June, 1960, prior to the signingof the deed by the parties, the PHHC acquired possession of the property,with the consent of petitioner, to enable the said PHHC to proceedimmediately with the construction of roads in the new settlement and toresettle the squatters and flood victims in Manila who were renderedhomeless by the floods or ejected from the lots which they were thenoccupying.On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHCto withhold the amount of P30,099.79 from the purchase price to be paid byit to the Philippine Suburban Development Corporation. Said amount

represented the realty tax due on the property involved for the calendaryear 1961. Petitioner, through the PHHC, paid under protest theabovementioned amount to the Provincial Treasurer of Bulacan andthereafter, or on June 13, 1961, by letter, requested then Secretary ofFinance Dominador Aytona to order a refund of the amount so paid. Uponrecommendation of the Provincial Treasurer of Bulacan, said request wasdenied by the Secretary of Finance in a letter-decision dated August 22,1961.**Petitioner claimed that it ceased to be the owner of the land in questionupon the execution of the Deed of Absolute Sale on December 29, 1960. It isnow claimed in this appeal that the Auditor General erred in disallowing therefund of the real estate tax in the amount of P30,460.90 because aside

from the presumptive delivery of the property by the execution of the deed

of sale on December 29, 1960, the possession of the property was actuallydelivered to the vendee prior to the sale, and, therefore, by thetransmission of ownership to the vendee, petitioner has ceased to be theowner of the property involved, and, consequently, under no obligation topay the real property tax for the year 1961.**Respondent, however, argues that the presumptive delivery of theproperty under Article 1498 of the Civil Code does not apply because of threquirement in the contract that the sale shall first be approved by theAuditor General, pursuant to the Executive Order.ISSUE: WON there was already a valid transfer of ownership between the

parties.HELD:Considering the aforementioned approval and authorization by thePresident of the Philippines of the specific transaction in question, the prioapproval by the Auditor General envisioned by Administrative Order woutherefore, not be necessary.Under the civil law, delivery (tradition) as a mode of transmission ofownership maybe actual (real tradition) or constructive (constructivetradition). 2 When the sale of real property is made in a public instrument,the execution thereof is equivalent to the delivery of the thing object of thecontract, if from the deed the contrary does not appear or cannot clearly beinferred. 3

In other words, there is symbolic delivery of the property subject of the salby the execution of the public instrument, unless from the express terms othe instrument, or by clear inference therefrom, this was not the intentionof the parties. Such would be the case, for instance, when a certain date isfixed for the purchaser to take possession of the property subject of theconveyance, or where, in case of sale by installments, it is stipulated thatuntil the last installment is made, the title to the property should remainwith the vendor, or when the vendor reserves the right to use and enjoy theproperties until the gathering of the pending crops, or where the vendor hano control over the thing sold at the moment of the sale, and, therefore, itsmaterial delivery could not have been made.In the case at bar, there is no question that the vendor had actually placed

the vendee in possession and control over the thing sold, even before thedate of the sale. The condition that petitioner should first register the deedof sale and secure a new title in the name of the vendee before the lattershall pay the balance of the purchase price, did not preclude thetransmission of ownership. In the absence of an express stipulation to thecontrary, the payment of the purchase price of the good is not a condition,precedent to the transfer of title to the buyer, but title passes by thedelivery of the goods.WHEREFORE, the appealed decision is hereby reversed, and the realproperty tax paid under protest to the Provincial Treasurer of Bulacan bypetitioner Philippine Suburban Development Corporation, in the amount oP30,460,90, is hereby ordered refunded. Without any pronouncement as to

costs.


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7. JOSE LAGONv. HOOVEN COMALCO INDUSTRIESG.R. No. 135657 January 17, 2001

FACTS:

Petitioner is the owner of a commercial building while respondentis a domestic corporation known to be the biggest manufacturer andinstaller of aluminum materials in the country. Parties entered into 2contracts whereby for a total consideration of P104,870. Hooven agreed to

sell and install various aluminum materials in Lagons building. Uponexecution of contracts, Lagon paid Hooven P48,000 in advance. On February24, 1987, Hooven commenced an action for sum of money. It was allegedthat materials were delvered and installed but P69,329 remained unpaideven after the completion of the project and despite repeated demands.RTC held partly on the basis of the ocular inspection finding that the totalactual deliveries cost P87,140 deducting therefrom P48,000. CA set asidethe decision and held in favor of Hooven.

ISSUE:

Whether all the materials specified in the contracts had beendelivered and installed by respondent in petitioners commercial building

RULING:

Essentially, respondent has the burden of establishing itsaffirmative allegations of complete delivery and installation of the materialsand petitioners failure to pay therefor. The evidence on its discharge isgrossly anemic. The CA decision is modified. Lagon is ordered to payrespondent P6,377.66 representing the value unpaid. On the other hand,respondent is ordered to pay petitioner P50,000 as moral damages, P30,000attorneys fees and P46,554.50 as actual damages.

JOSE V. LAGON vs. HOOVEN COMALCO INDUSTRIES, INCG.R. No. 135657JANUARY 17, 2001

FACTS:

Sometime in April 1981 Lagon, a businessman and HOOVEN entered intotwo (2) contracts, denominated Proposal, whereby for a total considerationof P104,870.00 HOOVEN agreed to sell and install various aluminummaterials in Lagons commercial building in Tacurong, Sultan Kudarat.

HOOVEN filed an action against Lagon claiming that the latter failed to payhis due despite HOOVENs performance of its obligation. Lagon, in hisanswer, denied liability and averred that HOOVEN was the party guilty ofbreach of contract by failing to deliver and install some of the materialsspecified in the proposals; that as a consequence he was compelled toprocure the undelivered materials from other sources; that as regards thematerials duly delivered and installed by HOOVEN, they were fully paid.

ISSUE:Who among the parties is entitled to damages?

RULING:

HOOVEN's bad faith lies not so much on its breach of contract - as there wno showing that its failure to comply with its part of the bargain wmotivated by ill will or done with fraudulent intent - but rather on appalling temerity to sue petitioner for payment of an alleged unpabalance of the purchase price notwithstanding knowledge of its failure make complete delivery and installation of all the materials under thecontracts. Although petitioner was found to be liable to respondent to th

extent of P6,377.66, petitioner's right to withhold full payment of tpurchase price prior to the delivery and installation of all the merchandicannot be denied since under the contracts the balance of the purchaseprice became due and demandable only upon the completion of the projecConsequently, the resulting social humiliation and damage to petitionerreputation as a respected businessman in the community, occasioned bthe filing of this suit provide sufficient grounds for the award of P50,000as moral damages. On the part of Lagon, he is ordered by the court to paHOOVEN the amount corresponding to the value of the materiadmittedly delivered to him.


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8. VILLARTA V. CA (May 29, 1987)FACTS:Respondent Rosalinda Cruz entrusted to petitioner Victoria Villarta sevenpieces of jewelry on November 1968. On December of the same year,Villarta exchanges one jewelry to another and issued a post-dated check infavor of Cruz. Cruz deposited the check but it was dishonored for lack offunds.

An estafa case was filed against Villarta but she argued that she can only becivilly liable because even though the check bounced, she only gave it for a

pre-existing obligation. She contends a person cannot be imprisoned fornon-payment of debt.

ISSUE:WON the transaction is a sale or return

HELD:The transaction is not a sale or return but a sale on approval or sale onacceptance.

When Cruz gave the jewelry to Villarta on November, the clear intention isto make the latter choose which item she wanted to buy. There was no

meeting of the minds yet at this point and hence, it cannot be considered asdelivery.

If ownership over the jewelry was not transmitted on that date, then itcould have been transmitted only in December 1968, the date when thecheck was issued. In which case, it was a "sale on approval" since ownershippassed to the buyer. Vallarta, only when she signified her approval oracceptance to the seller, Cruz, and the price was agreed upon.

It is still criminal fraud or deceit in the issuance of a check which is madepunishable under the Revised Penal Code, and not the non-payment of thedebt.


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9. G.R. No. 108515 October 16, 1995

LUIS BALANTAKBO, AMADEO BALANTAKBO and HEIRS OF SANCHOBALANTAKBO, petitioners,vs.COURT OF APPEALS and LAGUNA AGRO-INDUSTRIAL, COCONUTCOOPERATIVE, INC., respondents.

NARVASA, C.J.:

Private respondent Laguna Agro-Industrial Coconut Cooperative, Inc.(hereafter simply LAGUNA), a family corporation organized by the heirs ofthe deceased spouses Honorio Sumaya and Crispina Orlanda, was theplaintiff in an action to quiet title over a parcel of unregistered coconut landin Bo. Dita. Liliw, Laguna, filed in the Regional Trial Court, Br. XXVII, Lagunaagainst herein private respondents and docketed as Civil Case No. SC-1367

The complaint in said action alleged basically that the land in question hadbeen purchased by the Sumaya spouses (LAGUNA's predecessors) forP800.00 from Consuelo Vda. de Balantakbo (mother of petitioner Luis

Balantakbo and Sancho Balantakbo), the sale being evidenced by a deed 1executed by Consuelo on December 13, 1955; and that some twenty (20)years later, or on March 8, 1975, the seller's heirs, intruded into the landand harvested the coconuts found therein.

In their answer the Balantakbos denied knowledge of the sale and allegedthat the land claimed sued for was different from that owned and held bythem.

In the course of the trial the parties, stipulated upon the following facts andcircumstances, to wit:

1) on October 8, 1975: the genuineness and due execution of (a) theDeed of Extrajudicial Partition executed on December 10, 1945 by the heirsof the deceased Jose Balantakbo, Sr., and of (b) the affidavit of Consuelo J.Vda. de Balantakbo executed November 3, 1952, adjudicating to herselfownership of the property left by the deceased Raul Balantakbo;

2) on July 21, 1981: (a) the description of the land subject of the suit, i.e.,as having an area of 2,000 square meters, and as being bounded by theproperty of named individuals, and (b) the substance of their respectivecontentions, viz:

1) LAGUNA's theory that what had been sold to its predecessors, the

Sumaya Spouses, was the land within the identified boundaries, regardlessof the area; and

2) the Balantakbos' countervailing theory that the land within saidboundaries had an area of 6,870 square meters, more or less, only a portionthereof measuring 2,000 square meters, having been sold by their motherto the Sumayas: and they are therefore the owners of the remaining area of4,870 square meters which they had in fact long possessed.

The Regional Trial Court rendered judgment (per Judge Francisco C.Manabat, Branch 27, Sta. Cruz, Laguna) in favor of the Balantakbos,dismissing LAGUNA's complaint, upholding the former's theory of the case

and ruling that what was contemplated in the descriptive words "more or

less" immediately following the stated area of 2,000 square meters in thdescription of the land was construable as referring only to a "sligdifference" in said area, 2 not to a difference as large as 4,870 squarmeters, or more than double the 2,000 square meters actually stated andintended to be sold.

The judgment was appealed to the Court of Appeals which after dproceedings reversed it by decision promulgated on July 9, 1992. TAppellate Court declared LAGUNA the owner of the entire land, not onla 2,000-square meter portion thereof, ruling that the area embraced within

the stated boundaries prevails over the area set forth in the descriptionswhich must have been based on mere estimates, and that the buyer wasentitled to receive all that was included within the boundaries thus stated ithe deed of sale. 3

The Court finds no reversible error in said judgment now on appeal certiorari by the Balantakbos.

The issue here may be stated simply, thus: In case of conflict between tharea described and the actual boundaries of the land, which should prevail

And it is by no means a novel question. On the contrary, the rule is qui

well-settled that what really defines a piece of land is not the arecalculated with more or less certainty mentioned in the description, but thboundaries therein laid down, as enclosing the land and indicating its limi4

In Dichoso, supra, this Court held:

. . . In a contract of sale of land in mass, it is well established that tspecific boundaries stated in the contract must control over any statemenwith respect to the area contained within its boundaries. It is not of vitconsequence that a deed or contract of sale of land should disclose the areawith mathematical accuracy. It is sufficient that its extent is objective

indicated with sufficient precision to enable one to identify it. An error as the superficial area is immaterial. 5

The case at bar is on all fours with this Court's ruling in the recent case Miguel Semira vs. Court of Appeals and Buenaventura An, G.R. No. 76promulgated on March 2, 1994 6 There, private respondent purchased parcel of land designated as Lot 4221 in Sto. Nio, Taysan, Batangas P850.00 from one Juana Rodriguez. The sale was evidenced by a "Kasulang Bilihan ng Lupa" executed on January 4, 1961 on which appeared estimated area of the property as 822.5 square meters with its boundariesdefined. On October 18, 1972, the private respondent sold the lot to hnephew, Cipriano Ramirez, with the same area and boundaries, the easter

side of which had now reflected private respondent's subsequenacquisition of an adjoining property from Pascual Hornilla. On March 1979, Ramirez in turn sold the lot to the petitioner for P20,000,00 but thtime, the area stated in the document of sale was 2,200 sq. m. as actuallydelimited by its boundaries and confirmed by the cadastral survconducted in 1974. When the petitioner occupied the premises and begaconstruction of a rice-mill thereon, private respondent filed a complaint fforcible entry in the MCTC, claiming that Lot 4221 belonging to petitioshould only be 822.5 sq. m. and that the excess of 1,377 sq. m. allegedforcibly occupied formed part of his Lot 4215 acquired in 1964 fromHornilla over which was subsequently issued OCT No. P-12694 in his ncovering said lot and another lot which he (respondent) had also acquire

both having a combined area of 19,606 sq. m. The MCTC adjud


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petitioner the rightful and lawful owner and possessor of the area inquestion and threw out the ejectment suit. On appeal, the RTC reversed andwas thereafter sustained by the Court of Appeals. This Court in turnreversed the CA judgment and reinstated the MCTC decision, holding:

We have repeatedly ruled that where land is sold for a lump sum and not somuch per unit of measure or number, the boundaries of the land stated inthe contract determine the effects and scope of the sale, not the areathereof. 7 Hence, the vendors are obligated to deliver all the land includedwithin the boundaries, regardless of whether the real area should be

greater or smaller than that recited in the deed. This is particularly truewhere the area is described as "humigit kumulang," that is, more or less. 8These conclusions are drawn from Art. 1542 of the Civil Code which states

In the sale of real estate, made for a lump sum and not at the rate of acertain sum for a unit of measure or number, there shall be no increase ordecrease of the price, although there be a greater or less area or numberthan that stated in the contract.

The same rule shall be applied when two or more immovables are sold for asingle price; but if, besides mentioning the boundaries, which isindispensable in every conveyance of real estate, its area or number should

be designated in the contract, the vendor shall be bound to deliver all that isincluded within said boundaries, even when it exceeds the area or numberspecified in the contract; and, should he not be able to do so, he shall suffera reduction in the price, in proportion to what is lacking in the area ornumber, unless the contract is rescinded because the vendee does notaccede to the failure to deliver what has been stipulated. 9

In the present case, it is clear that the disputed parcel of unregistered landwas sufficiently identified and described. The Second Partial Stipulation ofFacts submitted by the Parties sufficiently demonstrates that the parties layclaim to one and the same parcel of land, that descended to RaulBalantakbo from his father Jose Balantakbo, Sr. 10 later inherited by

Consuelo Joaquin Vda. de Balantakbo from the same Raul, her son 11 andthen sold by Consuelo to the Spouses Honorio Sumaya and CrispinaOrlanda. Uniform descriptions of the subject lot were made in the Deed ofSale executed by Consuelo Joaquin Vda. de Balantakbo in favor of hereinprivate respondent in 1955, in the Affidavit of Self-Adjudication executed byConsuelo on November 3, 1952, and in the Extrajudicial Partition ofDecember 10, 1945, to wit:

A parcel of land with the improvements thereon, with fence of madre-cacaotrees, situated in Barrio Dita, Municipality of Lilio. Bounded on the N., byJose Balantakbo; on the E., by Jose Balantakbo; on the S., by VenancioVillarica; and on the W., by Cornelio Napil and Prudencio Ardeza. Containing

an area of 2,000 square meters, more or less.

It appears, too, that after the 1970 survey of the property when the truearea of the lot was determined to be 6,870 square meters, more or less, LuisBalantakbo was able to secure in 1975 a new Tax Declaration No. 9397 inthe name of the Heirs of Jose Balantakbo, Sr., covering a 4,873 square-meter parcel of land located at Dita, Liliw, Laguna. Tax Declaration No. 9397was supposedly a revival of Tax Declaration No. 42, which, as mentioned inthe first paragraph of the Second Partial Stipulation of Facts, covered theproperty then described as containing an area of 2,000 square meters, moreor less. This shows that the Tax Declaration No. 9397, obtained by LuisBalantakbo, covers the same lot, which contains an area equivalent to the

difference between the actual area of the subject land and the area

mentioned in the deed of sale, sold to the Sumayas and not anotheseparate parcel of land.

Moreover, in his testimony, petitioner Luis Balantakbo admitted that thsupposed separate parcel of land for which he obtained a tax declaration part and parcel of the land inherited by his brother Raul, then by his mothConsuelo, and thereafter sold by the latter to the Sumayas, Thus:

COURT:

So when your mother sold the land even under Exhibit A, Deed of Sale1955, she sold unsurveyed land of 2,000 square meters which whesurveyed in 1970 it turns out to be 6,000 plus square meters?

WITNESS:

Yes, your Honor. 12

Since it was only in 1970 that the true area of the disputed property wadetermined after a survey, Consuelo Joaquin Vda. de Balantakbo could nhave sold in 1955 only a portion of the lot which then was known (believed) to have an area of only 2,000 square meters, more or less, a

mentioned in all the documents covering the land.

And apart from the Tax Declaration secured by Luis Balantakbo after survey of the subject property, petitioners failed to present other proof isupport of their argument that the land claimed by them is different fromthat sold by their mother Consuelo Joaquin Vda. de Balantakbo to tSumayas.

Clearly, therefore, the position taken by petitioners that there are twodifferent parcels of land involved is untenable. Only one parcel of landinvolved and the respondent Appellate Court correctly formulated anresolved affirmatively in favor of private respondent the issue of wheth

the actual boundaries should prevail over the area described.

Petitioners' reliance on the Asiain case 13 is misplaced. Following arguments advanced by the trial court, petitioners contend that thdescriptive words "more or less" after the area which is 2,000 squameters refer only to a slight or inconsiderable difference or a reasonabexcess or deficiency, hence could not have included the 4,870 squameters claimed by petitioners, which is more than double the area of the losold by petitioners' mother to the Sumayas in 1955. In Asiain, the maconsideration of the transaction between the seller Asiain and the buyeJalandoni was the size or the area of the land. To convince Jalandoni to bthe land, Asiain even guaranteed that the land would produce so muc

sugar in piculs, hence the relevance of the phrase "more or less" whicfollowed the statement if area in hectares which Asiain assured his lancontains. It developed, however that the area was much less than what wathus represented by the seller. The Court therein ruled that the mistakewith reference to the subject matter of the contract was such as to render itrescindable, at the buyer's option.

The case at bar is clearly quite different, the stated area being only additional description of the land already sufficiently identified adescribed as being fenced by madre cacao trees and bounded on all sides bproperties with identified owners or holders.


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As correctly held by the respondent Appellate Court, this is a case where theland was sold a cuerpo cierto for a lump sum of P800.00 and not at the rateof a certain sum per unit of measure or number, with boundaries clearlydelimited, hence the area embraced within said boundaries must be held toprevail over the area indicated in the documents.

WHEREFORE, the petition is DENIED for lack of merit. The appealed decisionof the respondent Court of Appeals is AFFIRMED in toto.

SO ORDERED.


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DOUBLE SALE1.Spouses ABRIGO vs. DE VERA Leave a comment

Spouses ABRIGO vs. DE VERA

G.R. No. 154409

June 21, 2004

FACTS: Villafania sold a house and lot located Pangasinan and Tigno-Salazarand Cave-Go covered by a tax declaration. Unknown, however to Tigno -Salazar and a Cave-Go, Villafania obtained a free patent over the parcel ofland involved.The said free patent was later on cancelled by a TCT.

On Oct 16, 1997, Tigno -Salazar and Cave-Go, sold the house and lot to theSpouses Abrigo.

On Oct 23, 1997, Villafania sold the same house and lot to de Vera. De Veraregistered the sale and as a consequence a TCT was issued in her name.

De Vera filed an action for Forcible Entry and Damages against Spouses

Abrigo before the MTC.

Spouses Abrigo filed a case with the RTC for the annulment of documents,injunction, preliminary injunction, restraining order and damages Villafania.

The parties submitted a Motion for Dismissal in view of their agreement inthe instant (RTC) case that neither of them can physically take possession ofthe property in question until the instant case is terminated. Hence theejectment case was dismissed.

The RTC rendered judgment approving the Compromise Agreementsubmitted by the parties. In the said Decision, Villafania was given one year

from the date of the Compromise Agreement to buy back the house and lot,and failure to do so would mean that the previous sale in favor of Tigno-Salazar and Cave-Go shall remain valid and binding and the plaintiff shallvoluntarily vacate the premises without need of any demand. Villafaniafailed to buy back the house and lot, so the [vendees] declared the lot intheir name

The RTC rendered the assailed Decision awarding the properties to SpousesAbrigo as well as damages. Moreover, Villafania was ordered to pay*petitioners and private respondent+ damages and attorneys fees.

Not contented with the assailed Decision, both parties [appealed to the CA].

In its original Decision, the CA held that a void title could not give rise to avalid one and hence dismissed the appeal of Private Respondent de Vera.Since Villafania had already transferred ownership to Rosenda Tigno-Salazar and Rosita Cave-Go, the subsequent sale to De Vera was deemedvoid.The CA also dismissed the appeal of Petitioner-Spouses Abrigo andfound no sufficient basis to award them moral and exemplary damages andattorneys fees.

On reconsideration found Respondent De Vera to be a purchaser in goodfaith and for value. The appellate court ruled that she had relied in goodfaith on the Torrens title of her vendor and must thus be protected.

Hence, this Petition.9

ISSUE: Who between petitioner-spouses and respondent has a better righto the property.

HELD: DE VERA

The petition is denied, and the assailed decision affirmed.The present cainvolves what in legal contemplation was a double sale. Gloria Villafania fsold the disputed property to Tigno-Salazar and Cave-Go, from wh

petitioners, in turn, derived their right. Subsequently a second sale wexecuted by Villafania with Respondent de Vera.

Article 1544 of the Civil Code states the law on double sale 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 takepossession thereof in good faith, if it should be movable property.

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

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

There is no ambiguity in the application of this law with respect to lanregistered under the Torrens system.

In the instant case, both Petitioners Abrigo and respondent registered thsale of the property. Since neither petitioners nor their predecessors (TignoSalazar and Cave-Go) knew that the property was covered by the Torresystem, they registered their respective sales under Act 3344 For her parrespondent registered the transaction under the Torrens system because,

during the sale, Villafania had presented the transfer certificate of title (TCcovering the property.

Soriano v. Heirs of Magali23 held that registration must be done in tproper registry in order to bind the land. Since the property in dispute in thpresent case was already registered under the Torrens system, petitionersregistration of the sale under Act 3344 was not effective for purposes Article 1544 of the Civil Code.

More recently, in Naawan Community Rural Bank v. Court of Appeals,24Court upheld the right of a party who had registered the sale of land undthe Property Registration Decree, as opposed to another who ha

registered a deed of final conveyance under Act 3344. In that case, tpriority in time principle was not applied, because the land was alreadycovered by the Torrens system at the time the conveyance was registereunder Act 3344. For the same reason, inasmuch as the registration of thsale to Respondent De Vera under the Torrens system was done in goofaith, this sale must be upheld over the sale registered under Act 3344 tPetitioner-Spouses Abrigo.

NOTES:

The principle in Article 1544 of the Civil Code is in full accord with Se51 of PD 1529 which provides that:


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no deed, mortgage, lease or other voluntary instrument except a will purporting to convey or affect registered land shall take effect as aconveyance or bind the land until its registration. Thus, if the sale is notregistered, it is binding only between the seller and the buyer but it doesnot affect innocent third persons.

2. Radiowealth Finance Co. v. Palileo25 explained the difference in the rulesof registration under Act 3344 and those under the Torrens system in thiswise:

Under Act No. 3344, registration of instruments affecting unregisteredlands is without prejudice to a third party with a better right. Theaforequoted phrase has been held by this Court to mean that the mereregistration of a sale in ones favor does not give him any right over the landif the vendor was not anymore the owner of the land having previously soldthe same to somebody else even if the earlier sale was unrecorded.

The case of Carumba vs. Court of Appeals is a case in point. It was heldtherein that Article 1544 of the Civil Code has no application to land notregistered under Act No. 496. Like in the case at bar, Carumba dealt with adouble sale of the same unregistered land. The first sale was made by theoriginal owners and was unrecorded while the second was an execution sale

that resulted from a complaint for a sum of money filed against the saidoriginal owners. Applying [Section 33], Rule 39 of the Revised Rules of Court,this Court held that Article 1544 of the Civil Code cannot be invoked tobenefit the purchaser at the execution sale though the latter was a buyer ingood faith and even if this second sale was registered. It was explained thatthis is because the purchaser of unregistered land at a sheriffs executionsale only steps into the shoes of the judgment debtor, and merely acquiresthe latters interest in the property sold as of the time the property waslevied upon.

Applying this principle, x x x the execution sale of unregistered land in favorof petitioner is of no effect because the land no longer belonged to the

judgment debtor as of the time of the said execution sale.

3. Good-Faith Requirement

We have consistently held that Article 1544 requires the second buyer toacquire the immovable in good faith and to register it in good faith. Mereregistration of title is not enough; good faith must concur with theregistration.We explained the rationale in Uraca v. Court of Appeals, whichwe quote:

Under the foregoing, the prior registration of the disputed property by thesecond buyer does not by itself confer ownership or a better right over the

property. Article 1544 requires that such registration must be coupled withgood faith. Jurisprudence teaches us that (t)he governing principle is primustempore, potior jure (first in time, stronger in right). Knowledge gained bythe first buyer of the second sale cannot defeat the first buyers rightsexcept where the second buyer registers in good faith the second saleahead of the first, as provided by the Civil Code. Such knowledge of the firstbuyer does not bar her from availing of her rights under the law, amongthem, to register first her purchase as against the second buyer. But inconverso, knowledge gained by the second buyer of the first sale defeats hisrights even if he is first to register the second sale, since such knowledgetaints his prior registration with bad faith. This is the price exacted by Article1544 of the Civil Code for the second buyer being able to displace the first

buyer; that before the second buyer can obtain priority over the first, he

must show that he acted in good faith throughout (i.e. in ignorance of thfirst sale and of the first buy ers rights) - from the time of acquisition uthe title is transferred to him by registration, or failing registration, delivery of possession.34 (Italics supplied)

Equally important, under Section 44 of PD 1529, every registered owreceiving a certificate of title pursuant to a decree of registration, and eversubsequent purchaser of registered land taking such certificate for valuand in good faith shall hold the same free from all encumbrances, excethose noted and enumerated in the certificate. Thus, a person dealing with

registered land is not required to go behind the registry to determine thcondition of the property, since such condition is noted on the face of thregister or certificate of title.Following this principle, this Court consistently held as regards registered land that a purchaser in good faitacquires a good title as against all the transferees thereof whose rights arnot recorded in the Registry of Deeds at the time of the sale.


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2. LIAO vs CA

Petitioner Jesus P. Liao seeks to annul the decisions of the Court of Appealswhich annulled an order of the Regional Trial Court, Quezon City, Branch 99directing the Register of Deeds to issue transfer titles to Estrella Mapa overcertain lots in Piedad Estate, Quezon City.

On March 5, 1986, Estrella Mapa filed with the Regional TrialCourt a petition for reconstitution of documents and issuance ofcertificates of title over certain parcels of land.

Estrella Mapa claimed that on June 16, 1913, the Director of Landsissued certificates of sales to her predecessor-in-interest, VicenteSalgado, over the same parcels of land in accordance with Act. No.1120, otherwise known as the Friar Lands Act.

After hearing, RTC ordered the issuance of certificate of titles infavor of Estrella Mapa.

Estrella Mapa assigned the parcels of land covered by T.C.T. No.348291 and T.C.T. No. 348292 in favor of Palmera AgriculturalRealty Development Corporation, which is a family corporationheaded by Lourdes Angeles, Estrella Mapas daughter.

Re: G. R. Nos. 102961-62

On March 28, 1990, I.C. Cruz Construction, Inc. (ICC) filed with theCourt of Appeals a petition for the annulment of the Order of theRegional Trial Court. I.C. Cruz alleged that the title issued by theRegister of Deeds of Quezon City pursuant to said orderencompassed property which had been registered and titled in itsname.

On July 3, 1990, Arle Realty Development Corporation (hereafterArle) filed a similar petition with the Court of Appeals praying forthe annulment of the same order of the Regional Trial Court. Arle

claimed ownership of six (6) lots which had overlapped theproperty claimed by Estrella.

After consolidation of the two cases, the Court of Appeals set thecases for preliminary conference on March 21, 1991. At thisconference, Jesus P. Liao appeared with his counsel and claimedthat he purchased the parcels of land from Palmera by virtue of aDeed of Omnibus Assignment dated August 23, 1990.

CA declared the RTC order as null and void. Motion forreconsideration was likewise denied.

Re: G. R. No. 107625

Respondents alleged that Lot 777 ceased to be part of Friar Landas early as May 1922 when the Director of Lands executed Deed ofSale No. 10570 conveying ownership of Lot 777 to one CarlosSarmiento , not to Vicente Salgado . The lot could not have beenvalidly assigned to defendant Estrella Mapa on April 12, 1930 byVicente Salgado, who was not the rightful owner of the property.TCT 348292 was procured only in 1986 while the titles of plaintiffswere issued in 1967 and one was issued in 1958.

It was found out that the land was fraudulently and irregularlyissued, being a duplication of previously issued titles and

recommending the filing of an action for the annulment of TNos. 348156, 348291 and 348292 all in the name of Estrella Ma

On July 24, 1990, the trial court rendered decision ruling, citingVilla vs. Trinidad, 22 SCRA 1167, 1174 [1968], that "wherecertificates of title are issued to different persons covering tsame land in whole or in part, the earlier in date must prevail between the original parties and in case of successive registratiowhere more than one certificate is issued over the land, thperson holding under prior certificate is entitled to the land

against the persons who rely on the second certificate."

CA affirmed.


Re: G. R. No. 108759

On February 9, 1988, Edmund Ruiz, Romeo Gomez, and RosalVillapa filed with the Regional Trial Court, Quezon City, Brancha complaint for annulment of title, reconveyance of real propertdamages, and injunction against Estrella Mapa.

RTC declared the title of Estrella Mapa null and void.

CA affirmed.


whether or not the Court of Appeals erred in upholdithe annulment of the order of the trial court in issuing certificatof title to Estrella Mapa.

Petitioner not owner of land

The subject lots are part of the Piedad Estate, Quezon City, a FrLand acquired by the Philippine Government as indicated in PuAct No. 1120 (Friar Lands Act). By virtue of Act No. 1120Piedad Estate was placed under the administration of the Directof Lands.

Petitioner Liao claims that his predecessor in interest acquired tproperty through sale certificates Nos. 780, 781, 783, issued the Director of Lands in 1913. It is shown, however, that the sacertificates were signed by the Director of Lands and approved the Secretary of the Interior. These sales were void . Thbecause the sales were not approved by the Secretary ofAgriculture and Natural Resources.

In view of the invalidity of the sales, there can be no valid titissued on the basis of such sales.

Double Sale

the law provides that as between two purchasers, the one whregistered the sale in his favor has a preferred right over the othewho has not registered his title, even if the latter is in actupossession of the immovable property.

"when two certificates of title are issued to different persocovering the same land in whole or in part, the earlier in datmust prevail , and, in case of successive registrations where mo


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3.

13. NAAWAN COMMUNITY RURAL BANK INC v CA

FACTS: Comayas offered to sell to the Lumo Spouses a

house and lot. The property was already registered

under the Torrens System that time and they made

appropriate inquiries with the RD; they found out that it

was mortgaged for P8,000, paid Comayas to settle the

mortgage, and the release of the adverse claim was

annotated in the title. Thereafter, they executed an

Absolute Deed of Sale over the subject property and

registered the same. However, it turns out that it was

already previously sold to Naawan Community Rural

Bank; it was then unregistered. The Bank foreclosed on

the property, purchased the same, and registered it

under Act 3344. Thus, the Bank sought to eject the

spouses. However, the latter countered with an action

for quieting of title.

ISSUE: Who has a better title, Naawan or Lumo spouses?

HELD: LUMO SPOUSES. Where a person claims to have

superior pro perty rights by virtue of a sheriffs sale, the

benefit of Art. 1544 applies favorably only if the

property is registered under the Torrens System not

under Act 3344. Registration under the Torrens System

is the operative act that gives validity to the transfer

and creates lien upon the land. The spouses acquired

their titles under the Torrens System and they acted in

good faith by exercising due diligence; thus, they have a

better right to the said property.


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4. AMADO CARUMBA, petitioner,

vs.

THE COURT OF APPEALS, SANTIAGO BALBUENA and ANGELES BOAQUIA asDeputy Provincial Sheriff, respondents.

Luis N. de Leon for petitioner.

Reno R. Gonzales for respondents.

REYES, J.B.L., J.:

Amado Carumba petitions this Supreme Court for a certiorari to review adecision of the Court of Appeals, rendered in its Case No. 36094-R, thatreversed the judgment in his favor rendered by the Court of First Instance ofCamarines Sur (Civil Case 4646).

The factual background and history of these proceedings is thus stated bythe Court of Appeals (pages 1-2):

On April 12, 1955, the spouses Amado Canuto and Nemesia Ibasco, by virtueof a "Deed of Sale of Unregistered Land with Covenants of Warranty" (Exh.A), sold a parcel of land, partly residential and partly coconut land with aperiphery (area) of 359.09 square meters, more or less, located in the barrioof Santo Domingo, Iriga, Camarines Sur, to the spouses Amado Carumba andBenita Canuto, for the sum of P350.00. The referred deed of sale was neverregistered in the Office of the Register of Deeds of Camarines Sur, and theNotary, Mr. Vicente Malaya, was not then an authorized notary public in theplace, as shown by Exh. 5. Besides, it has been expressly admitted byappellee that he is the brother-in-law of Amado Canuto, the alleged vendorof the property sold to him. Amado Canuto is the older brother of the wifeof the herein appellee, Amado Carumba.

On January 21, 1957, a complaint (Exh. B) for a sum or money was filed bySantiago Balbuena against Amado Canuto and Nemesia Ibasco before theJustice of the Peace Court of Iriga, Camarines Sur, known as Civil Case No.139 and on April 15, 1967, a decision (Exh. C) was rendered in favor of theplaintiff and against the defendants. On October 1, 1968, the ex-officioSheriff, Justo V. Imperial, of Camarines Sur, issued a "Definite Deed of Sale(Exh. D) of the property now in question in favor of Santiago Balbuena,which instrument of sale was registered before the Office of the Register ofDeeds of Camarines Sur, on October 3, 1958. The aforesaid property wasdeclared for taxation purposes (Exh. 1) in the name of Santiago Balbuena in

1958.

The Court of First instance, finding that after execution of the documeCarumba had taken possession of the land, planting bananas, coffee another vegetables thereon, declared him to be the owner of the propertyunder a consummated sale; held void the execution levy made by thsheriff, pursuant to a judgment against Carumba's vendor, Amado Canutand nullified the sale in favor of the judgment creditor, Santiago BalbuenThe Court, therefore, declared Carumba the owner of the litigated propertand ordered Balbuena to pay P30.00, as damages, plus the costs.

The Court of Appeals, without altering the findings of fact made by the coof origin, declared that there having been a double sale of the land subjeof the suit Balbuena's title was superior to that of his adversary undArticle 1544 of the Civil Code of the Philippines, since the execution sale been properly registered in good faith and the sale to Carumba was nrecorded.

We disagree. While under the invoked Article 1544 registration in good fa

prevails over possession in the event of a double sale by the vendor of thsame piece of land to different vendees, said article is of no application the case at bar, even if Balbuena, the later vendee, was ignorant of the priosale made by his judgment debtor in favor of petitioner Carumba. Treason is that the purchaser of unregistered land at a sheriff's execution salonly steps into the shoes of the judgment debtor, and merely acquires thlatter's interest in the property sold as of the time the property was leviedupon. This is specifically provided by section 35 of Rule 39 of the RevRules of Court, the second paragraph of said section specifically providthat:

Upon the execution and delivery of said (final) deed the purchasredemptioner, or his assignee shall be substituted to and acquire all thright, title, interest, and claim of the judgment debtor to the property as othe time of the levy, except as against the judgment debtor in possession, iwhich case the substitution shall be effective as of the time of the deed .(Emphasis supplied)

While the time of the levy does not clearly appear, it could not have beemade prior to 15 April 1957, when the decision against the former owneof the land was rendered in favor of Balbuena. But the deed of sale in fav

of Canuto had been executed two years before, on 12 April 1955, and whionly embodied in a private document, the same, coupled with the fact thathe buyer (petitioner Carumba) had taken possession of the unregistereland sold, sufficed to vest ownership on the said buyer. When the levy wmade by the Sheriff, therefore, the judgment debtor no longer hadominical interest nor any real right over the land that could pass to thpurchaser at the execution sale.1 Hence, the latter must yield the land topetitioner Carumba. The rule is different in case of lands covered by Torretitles, where the prior sale is neither recorded nor known to the executiopurchaser prior to the levy;2 but the land here in question is admittedly noregistered under Act No. 496.


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5. RADIOWEALTH; GABRIEL; DE LEONcase digest of Julianne DominiqueAlpuerto

Double Sale

G.R. No. 83432 May 20, 1991

RADIOWEALTH FINANCE COMPANY, petitioner,

vs.

MANUELITO S. PALILEO, respondent.

FACTS:

In April 1970, defendant spouses Enrique Castro and Herminio R. Castro(spouse Castro) sold to herein respondent Manuelito Palileo a parcel ofunregistered coconut land in Surigao del Norte. The sale is evidenced by anotarized Deed of Absolute Sale, but the deed was not registered in theRegistry of Property for unregistered lands in the province of Surigao delNorte. Since the execution of the deed of sale, Palileo who was thenemployed in Lianga, Surigao del Sur, exercised acts of ownership over theland through his mother Rafaela Palileo, as administratrix or overseer.Manuelito Palileo has continuously paid the real estate taxes on said landfrom 1971 until the present.

In November 1976, the CFI of Manila rendered a judgment was renderedagainst defendant Enrique T. Castro to pay herein petitioner RadiowealthFinance Company (Radiowealth), the sum of P22,350.35 with interest rateof 16% per annum from November 2, 1975 until fully paid, and upon thefinality of the judgment, a writ of execution was issued. The ProvincialSheriff Marietta E. Eviota, through defendant Deputy Provincial SheriffLeopoldo Risma, levied upon and finally sold at public auction the subjectland that defendant Enrique Castro had sold to Palileo in 1970. The saidProvincial Sheriff executed a certificate of sale was by the in favor ofRadiowealth as the only bidder, and upon expiration of the redemption

period, she also executed a deed of final sale. Both documents wereregistered with the Registry of Deeds.

Learning of what happened to the land, Palileo filed an action for recoveryof the subject property. The court a quo rendered a decision in favor ofPalileo, which the Court of Appeals affirmed.

ISSUE:

Who is the rightful owner of the subject property?

COURT RULING:

The Supreme Court likewise affirmed the appellat e courts decision on thiscase. There is no doubt that had the subject property been a registeredland, this case would have been decided in favor of Radiowealth since it wasthe company that had its claim first recorded in the Registry of Deeds for itis the act of registration that operates to convey and affect registered land.Therefore, a bonafide purchaser of a registered land at an execution saleacquires a good title as against a prior transferee, if such transfer wasunrecorded.

However, a different set of rules applies in the case at bar which deals witha parcel of unregistered land. Under Act No. 3344, registration ofinstruments affecting unregistered lands is "without prejudice to a third

party with a better right." The afore quoted phrase has been held by the

Supreme Court to mean that the mere registration of a sale in one's favodoes not give him any right over the land if the vendor was not anymore thowner of the land having previously sold the same to somebody else eventhe earlier sale was unrecorded. Applying this principle, the Court Appeals correctly held that the execution sale of the unregistered land favor of petitioner is of no effect because the land no longer belonged tthe judgment debtor as of the time of the said execution sale.


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6. Caram vs. Laureta

G.R. No. L-28740 February 24, 1981

FERNANDEZ, J.:

FACTS:

On June 10, 1945, Marcos Mata conveyed a large tract ofagricultural land covered by OCT No. 3019 in favor of Claro Laureta, plaintiff,the respondent herein. The deed of absolute sale in favor of the plaintiffwas not registered because it was not acknowledged before a notary publicor any other authorized officer. Since June 10, 1945, the plaintiff Lauretahad been and is in continuous, adverse and notorious occupation of saidland, without being molested, disturbed or stopped by any of thedefendants or their representatives. In fact, Laureta had been paying realtytaxes due thereon and had introduced improvements worth not less thanP20,000.00 at the time of the filing of the complaint. On May 5, 1947, thesame land covered by OCT No. 3019 was sold by Marcos Mata to defendantFermin Z. Caram, Jr., petitioner herein. The deed of sale in favor of Caramwas acknowledged before Atty. Abelardo Aportadera. On December 9,1947, the second sale between Marcos Mata and Fermin Caram, Jr. wasregistered with the Register of Deeds. On the same date, Transfer

Certificate of Title No. 140 was issued in favor of Fermin Caram Jr.Thedefendant Fermin Caram Jr. claimed that he has no knowledge orinformation about the previous encumbrances, transactions, and alienationsin favor of plaintiff until the filing of the complaints.

ISSUE: Whether or not the knowledge petitioner of a prior unregistered saleof a titled property attributable to petitioner and equivalent in law ofregistration of sale.

HELD: Yes. There is no doubt then that Irespe and Aportadera, acting asagents of Caram, purchased the property of Mata in bad faith. Applying theprinciple of agency, Caram as principal, should also be deemed to haveacted in bad faith.Since Caram was a registrant in bad faith, the situation isas if there was no registration at all. A possessor in good faith is one who isnot aware that there exists in his title or mode of acquisition any flaw whichinvalidates it. Laureta was first in possession of the property. He is also apossessor in good faith. It is true that Mata had alleged that the deed of salein favor of Laureta was procured by force. Such defect, however, was curedwhen, after the lapse of four years from the time the intimidation ceased,Marcos Mata lost both his rights to file an action for annulment or to set upnullity of the contract as a defense in an action to enforce the same.

Documents

Sales Assignment Cases Sept 4