Documentos de Académico
Documentos de Profesional
Documentos de Cultura
BEHN,
MEYER
&
CO.
vs.
TEODORO R. YANCO, defendant-appellee.
(LTD.), plaintiff-appellant,
Crossfield
&
Charles C. Cohn for appellee.
for
O'Brien
appellant.
MALCOLM, J.:
The first inquiry to be determined is what was the contract between the parties.
The memorandum agreement executed by the duly authorized representatives of the
parties to this action reads:
Contract No. 37.
MANILA,
Facts. The contract provided for "80 drums Caustic Soda 76 per cent "Carabao"
brand al precio de Dollar Gold Nine and 75/100 1-lbs."
Resorting to the circumstances surrounding the agreement are we are permitted to
do, in pursuance of this provision, the merchandise was shipped from New York on
the steamship Chinese Prince. The steamship was detained by the British authorities
at Penang, and part of the cargo, including seventy-one drums of caustic soda, was
removed. Defendant refused to accept delivery of the remaining nine drums of soda
on the ground that the goods were in bad order. Defendant also refused the optional
offer of the plaintiff, of waiting for the remainder of the shipment until its arrival, or of
accepting the substitution of seventy-one drums of caustic soda of similar grade from
plaintiff's stock. The plaintiff thereupon sold, for the account of the defendant, eighty
drums of caustic soda from which there was realized the sum of P6,352.89.
Deducting this sum from the selling price of P10,063.86, we have the amount claimed
as damages for alleged breach of the contract.
Law. It is sufficient to note that the specific merchandise was never tendered. The
soda which the plaintiff offered to defendant was not of the "Carabao" brand, and the
offer of drums of soda of another kind was not made within the time that a March
shipment, according to another provision the contract, would normally have been
available.
7 de marzo, de 1916.
2. PLACE OF DELIVERY.
Confirmanos haber vendido a Bazar Siglo XX, 80 drums Caustic Soda 76
per cent "Carabao" brand al precio de Dollar Gold Nine and 75/100 per 100lbs., c.i.f. Manila, pagadero against delivery of documents. Embarque March,
1916.
Comprador
Bazar
Siglo
XX
de
Teodoro
R.
Yangco
J. Siquia
BEHN,
MEYER
O. LOMBECK.
&
CO.
Vendores
(Ltd.)
Facts. The contract provided for "c.i.f. Manila, pagadero against delivery of
documents."
Law. Determination of the place of delivery always resolves itself into a question of
act. If the contract be silent as to the person or mode by which the goods are to be
sent, delivery by the vendor to a common carrier, in the usual and ordinary course of
business, transfers the property to the vendee. A specification in a contact relative to
the payment of freight can be taken to indicate the intention of the parties in regard to
the place of delivery. If the buyer is to pay the freight, it is reasonable to suppose that
he does so because the goods become his at the point of shipment. On the other
hand, if the seller is to pay the freight, the inference is equally so strong that the duty
of the seller is to have the goods transported to their ultimate destination and that title
to property does not pass until the goods have reached their destination.
(See Williston on Sales, PP. 406-408.)
The letters "c.i.f." found in British contracts stand for cost, insurance, and freight. They
signify that the price fixed covers not only the cost of the goods, but the expense of
freight and insurance to be paid by the seller. (Irelandvs. Livingston, L. R., 5 H. L.,
395.) Our instant contract, in addition to the letters "c.i.f.," has the word following,
This view is corroborated by the facts. The goods were not shipped nor consigned
from New York to plaintiff. The bill of lading was for goods received from Neuss
Hesslein & Co. the documents evidencing said shipment and symbolizing the
property were sent by Neuss Hesslein & Co. to the Bank of the Philippine Islands with
a draft upon Behn, Meyer & Co. and with instructions to deliver the same, and thus
transfer the property to Behn, Meyer & Co. when and if Behn, Meyer & Co. should
pay the draft.
The place of delivery was Manila and plaintiff has not legally excused default in
delivery of the specified merchandise at that place.
3. TIME OF DELIVERY.
Facts. The contract provided for: "Embarque: March 1916," the merchandise was
in fact shipped from New York on the Steamship Chinese Prince on April 12, 1916.
vs.
NATIONAL
and
sixty-four
dollars
($164)
DECISION
1. Provisional Invoice.
2. Full set of negotiable ocean bills of lading, freight charges fully prepaid and
showing the material on board.
Hence, this action is filed by Pacific. Singzon, in defense, filed a motion to dismiss on
the ground that Pacific Vegetable Oil Corp. (Pacific) failed to obtain license to transact
business in the Philippines and consequently, it had no personality to file the action.
RTC denied the motion. It also denied MR. However, the Court of Appeals reversed
and dismissed the case holding that Pacific had no personality to institute the present
case even if it afterwards obtained a license to transact business upon the theory that
this belated act did not have the effect of curing the defect.
Facts:
This is an action instituted by the plaintiff, a foreign corporation, against the defendant
to recover the sum of P157,760 as damages suffered by plaintiff as a consequence of
the failure of the defendant to deliver 300 tons of copra which he sold and bound
himself to deliver to the plaintiff.
Singzon in August 1947, acting through a broker in San Francisco, sold to Pacific 500
tons of copra for shipment in September and October 1947. The agreed price to be
covered by an irrevocable letter of credit for the contract price. Thus, pursuant to this,
the Bank of California, on behalf of Pacific, opened an irrevocable letter of credit with
China Bank in the Philippines. Singzon failed to ship the 500 tons of copra, but upon
negotiation through the broker, a conditional amicable settlement was arrived at under
which Singzon promised to ship on February 1948, the amount of 300 tons of copra
with the understanding that if he effectually ship said 300 tons of copra not later than
February, the original contract would be considered cancelled. But that should he fail
to ship said 300 tons, Singzon shall pay Pacific $10,000 as damages and shall
furthermore be obliged to fulfill all his obligations under original contract.
Singzon failed to ship and deliver the 300 tons of copra to Pacific according to their
agreement. Thereafter, Pacific demanded from Singzon the payment of $10,000 but
It appearing that Pacific has not transacted business in the Philippines and as such it
is not required to obtain a license before acquiring personality to bring court action, it
may be stated that the appellant, even if a foreign corporation, can maintain the
present action because, as aptly said by this Court, it was never the purpose of the
Legislature to exclude a foreign corporation which happens to obtain an isolated order
SO ORDERED.4
As culled from the records, the following antecedents appear:
After trial on the merits, the trial court rendered judgment on May 27, 1992,
dismissing both petitioners complaint and respondents counterclaim for damages.
Appeals, petitioner anchors its argument on the second paragraph of Article 1539 of
the Civil Code, which provides:
Art. 1539. The obligation to deliver the thing sold includes that of placing in the control
of the vendee all that is mentioned in the contract, in conformity with the following
rules:
If the sale of real estate should be made with a statement of its area, at the rate of a
certain price for a unit of measure or number, the vendor shall be obliged to deliver to
the vendee, if the latter should demand it, all that may have been stated in the
contract; but, should this be not possible, the vendee may choose between a
proportional reduction of the price and the rescission of the contract, provided that, in
the latter case, the lack in the area be not less than one-tenth of that stated.
SO ORDERED.8
....
Petitioner brought to this Court the instant petition after the denial of its motion for
reconsideration of the Court of Appeal Decision. The instant petition imputes the
following errors to the Court of Appeals.
I. IN DEFENDING AGAPITO BURIOLS GOOD FAITH AND IN STATING THAT
ASSUMING THAT HE (BURIOL) WAS IN BAD FAITH PETITIONER WAS SOLELY
RESPONSIBLE FOR ITS INEXCUSABLE CREDULOUSNESS.
II. IN ASSERTING THAT ARTICLES 1542 AND 1539 OF THE NEW CIVIL CODE
ARE, RESPECTIVELY, APPLICABLE AND INAPPLICABLE IN THE CASE AT BAR.
III. IN NOT GRANTING PETITIONERS CLAIM FOR ACTUAL AND EXEMPLARY
DAMAGES.
IV. IN GRANTING RESPONDENTS TIZIANA TURATELLO AND PAOLA SANI
EXHORBITANT [sic] AMOUNTS AS DAMAGES WHICH ARE EVEN BEREFT OF
EVIDENTIARY BASIS.9
Essentially, only two main issues confront this Court, namely: (i) whether or not
petitioner is entitled to the delivery of the entire five hectares or its equivalent, and (ii)
whether or not damages may be awarded to either party.
Petitioner contends that it is entitled to the corresponding reduction of the purchase
price because the agreement was for the sale of five (5) hectares although
respondent Buriol owned only four (4) hectares. As in its appeal to the Court of
As correctly noted by the trial court and the Court of Appeals, the sale between
petitioner and respondent Buriol involving the latters property is one made for a lump
sum. The Deed of Absolute Sale shows that the parties agreed on the purchase price
on a predetermined area of five hectares within the specified boundaries and not
based on a particular rate per area. In accordance with Article 1542, there shall be no
reduction in the purchase price even if the area delivered to petitioner is less than that
stated in the contract. In the instant case, the area within the boundaries as stated in
the contract shall control over the area agreed upon in the contract.
The Court rejects petitioners contention that the propertys boundaries as stated in
the Deed of Absolute Sale are superficial and unintelligible and, therefore, cannot
prevail over the area stated in the contract. First, as pointed out by the Court of
Appeals, at an ocular inspection prior to the perfection of the contract of sale,
respondent Buriol pointed to petitioner the boundaries of the property. Hence,
petitioner gained a fair estimate of the area of the property sold to him. Second,
petitioner cannot now assail the contents of the Deed of Absolute Sale, particularly
the description of the boundaries of the property, because petitioners subscription to
the Deed of Absolute Sale indicates his assent to the correct description of the
boundaries of the property.
Petitioner also asserts that respondent Buriol is guilty of misleading petitioner into
believing that the latter was buying five hectares when he knew prior to the sale that
he owned only four hectares. The review of the circumstances of the alleged
misrepresentation is factual and, therefore, beyond the province of the Court.
Besides, this issue had already been raised before and passed upon by the trial court
and the Court of Appeals. The factual finding of the courts below that no sufficient
evidence supports petitioners allegation of misrepresentation is binding on the Court.
The Court of Appeals reversed the trial courts dismissal of respondents Turatello and
Sanis counterclaim for moral and exemplary damages, attorneys fees and litigation
expenses. In awarding moral damages in the amount of P100,000 in favor of Turatello
and Sani, the Court of Appeals justified the award to alleviate the suffering caused by
petitioners unfounded civil action. The filing alone of a civil action should not be a
ground for an award of moral damages in the same way that a clearly unfounded civil
action is not among the grounds for moral damages.15
Exemplary or corrective damages are imposed, by way of example or correction for
the public good, in addition to the moral, temperate, liquidated or compensatory
damages.16 With the deletion of the award for moral damages, there is no basis for
the award of exemplary damages.
NAAWAN
COMMUNITY
RURAL
BANK
INC., petitioner,
vs.
THE COURT OF APPEALS and SPOUSES ALFREDO AND ANNABELLE
LUMO, respondents.
CORONA, J.:
Under the established principles of land registration, a person dealing with registered
land may generally rely on the correctness of a certificate of title and the law will in no
way oblige him to go beyond it to determine the legal status of the property.
Before us is a Petition for Review on Certiorari challenging the February 7, 1997
Decision1 of the Court of Appeals in CA-G.R. CV No. 55149, which in turn affirmed
the decision2 of the Regional Trial Court of Misamis Oriental, Branch 18 as follows:
"WHEREFORE, the plaintiffs-spouses are adjudged the absolute owners
and possessors of the properties in question (Lot 18583, under TCT No. T50134, and all improvements thereon) and quieting title thereto as against
any and all adverse claims of the defendant. Further, the sheriff's certificate
of sale, Exhibit 4; 4-A; Sheriff's deed of final conveyance, Exhibit 5, 5-A; Tax
Declarations No. 71211, Exhibit 7, and any and all instrument, record, claim,
encumbrance or proceeding in favor of the defendant, as against the
plaintiffs, and their predecessor-in-interest, which may be extant in the office
of the Register of Deeds of Province of Misamis Oriental, and of Cagayan de
Oro City, and in the City Assessor's Office of Cagayan de Oro City, are
declared as invalid and ineffective as against the plaintiffs' title.
"The counterclaim is dismissed for lack of merit.
"SO ORDERED."3
The facts of the case, as culled from the records, are as follows:
1544) of the Civil Code will apply only if said execution sale of real estate is registered
under Act 496.5
Unfortunately, the subject property was still untitled when it was already acquired by
petitioner bank by virtue of a final deed of conveyance. On the other hand, when
private respondents purchased the same property, it was covered by the Torrens
System.
Petitioner also relies on the case of Bautista vs. Fule6 where the Court ruled that the
registration of an instrument involving unregistered land in the Registry of Deeds
creates constructive notice and binds third person who may subsequently deal with
the same property.
However, a close scrutiny of the records reveals that, at the time of the execution and
delivery of the sheriff's deed of final conveyance on September 5, 1986, the disputed
property was already covered by the Land Registration Act and Original Certificate of
Title No. 0-820 pursuant to Decree No. N189413 was likewise already entered in the
registration book of the Register of Deeds of Cagayan De Oro City as of April 17,
1984.
Thus, from April 17, 1984, the subject property was already under the operation of the
Torrens System. Under the said system, registration is the operative act that gives
validity to the transfer or creates a lien upon the land.
Moreover, the issuance of a certificate of title had the effect of relieving the land of all
claims except those noted thereon. Accordingly, private respondents, in dealing with
the subject registered land, were not required by law to go beyond the register to
determine the legal condition of the property. They were only charged with notice of
such burdens on the property as were noted on the register or the certificate of title.
To have required them to do more would have been to defeat the primary object of
the Torrens System which is to make the Torrens Title indefeasible and valid against
the whole world.
Private respondents posit that, even assuming that the sheriff's deed of final
conveyance in favor of petitioner bank was duly recorded in the day book of the
Register of Deeds under Act 3344, ownership of the subject real property would still
be theirs as purchasers in good faith because they registered the sale first under the
Property Registration Decree.
The rights created by the above-stated statute of course do not and cannot accrue
under an inscription in bad faith. Mere registration of title in case of double sale is not
enough; good faith must concur with the registration.7
Thus, the only issue left to be resolved is whether or not private respondents could be
considered as buyers in good faith.
SO ORDERED.
The "priority in time" principle being invoked by petitioner bank is misplaced because
its registration referred to land not within the Torrens System but under Act 3344. On
the other hand, when private respondents bought the subject property, the same was
already registered under the Torrens System. It is a well-known rule in this jurisdiction
that persons dealing with registered land have the legal right to rely on the face of the
Torrens Certificate of Title and to dispense with the need to inquire further, except
when the party concerned has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make such inquiry.8
Did private respondents exercise the required diligence in ascertaining the legal
condition of the title to the subject property so as to be considered as innocent
purchasers for value and in good faith?
We answer in the affirmative.
Before private respondents bought the subject property from Guillermo Comayas,
inquiries were made with the Registry of Deeds and the Bureau of Lands regarding
the status of the vendor's title. No liens or encumbrances were found to have been
annotated on the certificate of title. Neither were private respondents aware of any
adverse claim or lien on the property other than the adverse claim of a certain
Geneva Galupo to whom Guillermo Comayas had mortgaged the subject property.
But, as already mentioned, the claim of Galupo was eventually settled and the
adverse claim previously annotated on the title cancelled. Thus, having made the
necessary inquiries, private respondents did not have to go beyond the certificate of
title. Otherwise, the efficacy and conclusiveness of the Torrens Certificate of Title
would be rendered futile and nugatory.
Considering therefore that private respondents exercised the diligence required by
law in ascertaining the legal status of the Torrens title of Guillermo Comayas over the
subject property and found no flaws therein, they should be considered as innocent
purchasers for value and in good faith.
JUANITA
NAVAL, Petitioner,
vs.
COURT OF APPEALS, JUANITO CAMALLA, JAIME NACION, CONRADO
BALILA, ESTER MOYA and PORFIRIA AGUIRRE, Respondents.
DECISION
YNARES-SANTIAGO, J.:
On December 2, 1969, Ildefonso A. Naval sold a parcel of land located in Sto. Tomas,
Magarao, Camarines Sur, consisting of 858 sq. m. to Gregorio B. Galarosa. The sale
was recorded in the Registry of Property of the Registry of Deeds of Camarines Sur
on December 3, 1969 pursuant to Act No. 3344, the law governing registrations of all
instruments on unregistered lands.5
3) Ordering Ester Moya to vacate the fifty (50) square meters occupied by
her and to relinquish its possession to the plaintiff;
to allow him to do so would not only be unfair to the other party, but it would also be
offensive to the basic rules of fair play, justice and due process.26
II
It is not disputed that the subject land belonged to Ildefonso and that it was not
registered under the Torrens System27 when it was sold to Gregorio in 1969 and to the
petitioner in 1972. Further, the deed of sale between Ildefonso and Gregorio was
registered with the Register of Deeds of Camarines Sur pursuant to Act No. 3344, as
shown by Inscription No. 54609 dated December 3, 1969, Page 119, Volume 186,
File No. 55409 at the back thereof.
In this appeal, the issue for resolution is who has the superior right to a parcel of land
sold to different buyers at different times by its former owner.
III
THE COURT OF APPEALS ERRED IN DECLARING THAT THE LOTS
CLAIMED BY THE RESPONDENTS HAVE BEEN POSSESSED BY THEM
IN GOOD FAITH DESPITE THEIR KNOWLEDGE OF THE EXISTENCE OF
OCT RP #5386(29791).22
Petitioner claims that she has superior rights over the subject land because the sale
between Ildefonso and Gregorio and the subsequent registration thereof with the
Register of Deeds had no legal effect since the subject land was declared in the
name of Agrifina Avila while the tax declaration cancelled by Gregorios was that of
Gregorio Boaga. Petitioner thus assails the right claimed by Gregorio over the
subject land from which the respondents derived their respective claims.23
On the other hand, respondents contend that the registered sale by Ildefonso to
Gregorio in 1969 of the subject land, from whom they derive their claims, vests them
with better right than the petitioner; that registration under Act No. 3344 served as
constructive notice to the whole world, including the petitioner, who claimed to have
purchased the subject land from Ildefonso in 1972, but failed to present evidence to
prove such acquisition.24
We deny the petition.
Prefatorily, a perusal of the records reveals that during the trial, petitioner vigorously
asserted that the subject land was the exclusive property of Ildefonso who sold it to
her in 1972.25 However, in this appeal, petitioner assails the ownership not only of
Gregorio but also of Ildefonso by alleging that at the time the latter sold the land to
Gregorio, the same was declared in the name of Agrifina Avila. When a party adopts a
certain theory in the court below, he is not allowed to change his theory on appeal, for
In holding that respondents have a better right to possess the subject land in view of
the bona fide registration of the sale with the Register of Deeds of Camarines Sur by
Ildefonso and Gregorio, the Court of Appeals applied Article 1544 of the Civil Code,
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 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 the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
While we agree with the appellate court that respondents have superior right over the
petitioner on the subject property, we find Article 1544 inapplicable to the case at bar
since the subject land was unregistered at the time of the first sale. The registration
contemplated under this provision has been held to refer to registration under the
Torrens System, which considers the act of registration as the operative act that binds
the land.28 Thus, inCarumba v. Court of Appeals,29 we held that Article 1544 of the
Civil Code has no application to land not registered under Torrens System.
The law applicable therefore is Act No. 3344, which provides for the registration of all
instruments on land neither covered by the Spanish Mortgage Law nor the Torrens
System. Under this law, registration by the first buyer is constructive notice to the
second buyer that can defeat his right as such buyer in good faith.
True, a certificate of title, once registered, should not thereafter be impugned, altered,
changed, modified, enlarged or diminished except in a direct proceeding permitted by
law.35 Moreover, Section 32 of Presidential Decree No. 1529 provides that "[u]pon the
expiration of said period of one year, the decree of registration and the certificate of
title shall become incontrovertible."
However, it does not deprive an aggrieved party of a remedy in law. What cannot be
collaterally attacked is the certificate of title and not the title or ownership which is
represented by such certificate. Ownership is different from a certificate of title. 36 The
fact that petitioner was able to secure a title in her name did not operate to vest
ownership upon her of the subject land. Registration of a piece of land under the
Torrens System does not create or vest title, because it is not a mode of acquiring
ownership. A certificate of title is merely an evidence of ownership or title over the
particular property described therein.37 It cannot be used to protect a usurper from the
true owner; nor can it be used as a shield for the commission of fraud; neither does it
permit one to enrich himself at the expense of others. 38 Its issuance in favor of a
particular person does not foreclose the possibility that the real property may be coowned with persons not named in the certificate, or that it may be held in trust for
another person by the registered owner.39
As correctly held by the Court of Appeals, notwithstanding the indefeasibility of the
Torrens title, the registered owner may still be compelled to reconvey the registered
property to its true owners. The rationale for the rule is that reconveyance does not
set aside or re-subject to review the findings of fact of the Bureau of Lands. In an
action for reconveyance, the decree of registration is respected as incontrovertible.
What is sought instead is the transfer of the property or its title which has been
wrongfully or erroneously registered in another persons name, to its rightful or legal
owner, or to the one with a better right.40
Finally, the Court of Appeals correctly held that an action for reconveyance does not
prescribe when the plaintiff is in possession of the land to be reconveyed, as in this
case. Thus, in Leyson v. Bontuyan:41
x x x [T]his Court declared that an action for reconveyance based on fraud is
imprescriptible where the plaintiff is in possession of the property subject of the acts.
In Vda. de Cabrera v. Court of Appeals, the Court held:
... [A]n action for reconveyance of a parcel of land based on implied or constructive
trust prescribes in ten years, the point of reference being the date of registration of
the deed or the date of the issuance of the certificate of title over the property, but this
rule applies only when the plaintiff or the person enforcing the trust is not in
possession of the property, since if a person claiming to be the owner thereof is in
HON. DOMINADOR F. CARILO, Presiding Judge, R.T.C. XI-19 Digos, Davao del
Sur, BONIFACIO J. GUYOT, Clerk of Court and Provincial Sheriff of Davao del
Sur, ALFREDO C. SENOY, Deputy Prov. Sheriff assigned to R.T.C. XI-19 Digos,
Davao del Sur, MARCOS D. RISONAR, JR., ., Registrar of Deeds of Davao del
Sur,
and
MARIA
GONZALES, petitioners,
vs.
HON. COURT OF APPEALS, MARIA PAZ DABON and ROSALINDA
DABON, respondents.
RESOLUTION
QUISUMBING, J.:
For review on certiorari is the Decision1 dated February 22, 1995 of the Court of
Appeals in CA-G.R. SP No. 23687, which annulled and set aside the judgment and
court was void ab initiobecause of lack of jurisdiction over their persons, as the real
parties in interest, and that they were fraudulently deprived of their right to due
process. They also prayed for a Temporary Restraining Order and for Preliminary
Prohibitory Injunction against Gonzales. They gave the trial court a notice of their
action for the annulment of the judgment and subsequent orders in Civil Case No.
2647.6
Meanwhile, Gonzales filed before the trial court a motion for the issuance of a writ of
possession. The Dabons filed an opposition on the following grounds: (1) The writ of
possession cannot be enforced because the defendants named in the writ, the
Manios, were no longer in possession of the property; (2) They had bought the lot
with the improvements therein and had taken possession, although they had not yet
registered their ownership with the Register of Deeds; and (3) The court did not
acquire jurisdiction over them as the real parties in interest.
On December 17, 1990, the Court of Appeals, without giving due course to the
petition, issued a resolution restraining the trial court from implementing its Decision
dated June 19, 19907 and its subsequent orders thereto in Civil Case No. 2647 until
further notice from the Court of Appeals. It also required Gonzales to file her
Comment.8
The Court of Appeals in a resolution denied the application for preliminary injunction
and appointed a commissioner to receive evidence of the parties.9
Following the Commissioner's report, the Court of Appeals found that (1) the contract
of sale between Gonzales and Priscilla was unenforceable because the sale was
evidenced by a handwritten note which was vague as to the amount and which was
not notarized; (2) the trial court did not acquire jurisdiction over the indispensable
parties; and (3) the proceedings were attended with fraud. The Court of Appeals
nullified the judgment of the RTC in Civil Case No. 2647 and cancelled TCT No. T23690. The dispositive portion of said judgment reads as follows:
WHEREFORE, premises considered, the questioned decision, dated June
19, 1990 (and all orders arising therefrom), of the Regional Trial Court
(Branch 19) in Digos, Davao del Sur is hereby ANNULLED and SET ASIDE
and the Transfer Certificate of Title No. T-23690 which was issued
thereafter declared null and void and ordered canceled. Costs against the
private respondent.
SO ORDERED.10
BELOW] CLAIM
FOR
DAMAGES
AGAINST
RESPONDENTS [PETITIONERS BELOW].11
THE
PRIVATE
Simply, the threshold issues in this petition are: (1) whether the Court of Appeals
erred in declaring the sale of the land to Gonzales by Priscilla invalid; (2) whether
there was basis to annul the judgment of the RTC; and (3) whether the Dabons could
file the action for annulment of judgment.
We shall discuss the issues jointly.
Prefatorily, we note that named as petitioners are Presiding Judge Dominador Carillo;
Bonifacio Guyot, Alfredo Senoy, Clerk of Court and Deputy Sheriff of the same court,
respectively; Marcos D. Risonar, Registrar of Deeds of Davao del Sur; and Maria
Gonzales. In our view, petitioner Gonzales apparently had impleaded Judge Carillo,
Guyot, Senoy and Risonar in this petition by merely reversing the designation of said
public officers among the respondents below in the Court of Appeals, as now among
the petitioners herein. Since they are not interested parties and would not benefit from
any of the affirmative reliefs sought, only Maria Gonzales remains as the genuine
party-petitioner in the instant case.
We now come to the main issues: (1) Was there sufficient basis to annul the judgment
in Civil Case No. 2647? (2) Are the Dabons proper parties to file the petition for
annulment of judgment?
Petitioner Gonzales contends that the respondents do not have standing before the
Court of Appeals to file a petition for annulment of the judgment in Civil Case No.
2647 because respondents were not parties therein. Petitioner maintains that
respondents have no right that could be adversely affected by the judgment because
they are not the owners of the property. Petitioner claims that the Court of Appeals
should have applied the doctrine of double sale to settle the issue of ownership and
declare her the true owner of the property. Petitioner concludes that respondents
not being the owners and are not real parties in interest in the complaint for specific
performance have no right to bring the action for annulment of the judgment.
According to petitioner Gonzales, she did not implead Aristotle as defendant in Civil
Case No. 2647 since a decision against Priscilla, Aristotle's attorney-in-fact, would
bind Aristotle also.
Respondents (Maria Paz and Rosalina Dabon) now insist that they are parties in
interest as buyers, owners and possessors of the contested land and that they had
been fraudulently deprived of their day in court during the proceedings in the trial
court in Civil Case No. 2647. They have no remedy in law other than to file a case for
the annulment of judgment of the trial court in said case.
There is extrinsic fraud when a party has been prevented by fraud or deception from
presenting his case. Fraud is extrinsic where it prevents a party from having a trial or
from presenting his entire case to the court, or where it operates upon matters
pertaining not to the judgment itself but to the manner in which it is procured. The
overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme
of the prevailing litigant prevented a party from having his day in court. 19 It must be
distinguished from intrinsic fraud which refers to acts of a party at a trial which
prevented a fair and just determination of the case, and which could have been
litigated and determined at the trial or adjudication of the case.20
In its Decision dated February 22, 1995, the Court of Appeals found that indices of
fraud attended the case before the trial court: First, the plaintiff deliberately excluded
the Dabons as party to the case despite knowledge that the Dabons had alleged that
they had bought the land from Aristotle. Second, the Sheriff's Return was suspiciously
served on a Saturday, at midnight, on August 4, 1990. Third, the trial court ordered
the plaintiff to deposit the full payment of property, but subsequently ordered its
withdrawal. Lastly, there was no notice given to the person named in the certificate of
title which Gonzales wanted to be annulled.
Of the indices of fraud cited by the Court of Appeals, the failure to comply with the
notification requirement in the petition for the cancellation of title amounts to extrinsic
fraud. Under the Property Registration Decree, all parties in interest shall be given
notice.21 There is nothing in the records that show Gonzales notified the actual
occupants or lessees of the property. Further, the records show that Gonzales had
known of the sale of the land by Aristotle to the Dabons and despite her knowledge,
the former did not include the Dabons in her petition for the annulment of title.
Deliberately failing to notify a party entitled to notice also constitutes extrinsic
fraud.22 This fact is sufficient ground to annul the order allowing the cancellation of
title in the name of Gonzales.
Likewise, under Rule 47, a judgment is void for lack of jurisdiction over the persons of
the real parties in interest,i.e., Aristotle Manio and the Dabons.
Lastly, petitioner insists that the contract of sale between her and Priscilla was valid
and enforceable because under the provision on double sale, 23 she owned the land
because she bought the lot on April 26, 1988, while the same was allegedly sold to
the Dabons on October 19, 1989. In our view, the doctrine on double sale holds no
relevance in this case. The pertinent article of the Civil Code provides:
ART. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first possession
thereof in good faith, if it should be movable property.
SO ORDERED.
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.
Otherwise stated, where it is immovable property that is the subject of a double sale,
ownership shall be transferred (1) to the person acquiring it who in good faith first
recorded it in the Registry of Property; (2) in default thereof, to the person who in
good faith was first in possession; and (3) in default thereof, to the person who
presents the oldest title, provided there is good faith. The requirement of the law is
two-fold: acquisition in good faith and registration in good faith.24
At this juncture, we must emphasize that the action for annulment of judgment under
Rule 47 of the Rules of Court does not involve the merits of the final order of the trial
court.25 The issue of whether before us is a case of double sale is outside the scope
of the present petition for review. The appellate court only allowed the reception of
extraneous evidence to determine extrinsic fraud. To determine which sale was valid,
review of evidence is necessary. This we cannot do in this petition. An action for
annulment of judgment is independent of the case where the judgment sought to be
annulled is rendered26 and is not an appeal of the judgment therein.27
The extraneous evidence presented to the appellate court cannot be used to supplant
the evidence in the records of the specific performance case because the extraneous
evidence was not part of the records on the merits of the case. Again, the extraneous
evidence was only allowed merely to prove the allegations of extrinsic fraud.
Accordingly, we hold that the issue of ownership of the subject real property cannot
be addressed in this petition for review.
Annulment of judgment is not a relief to be granted indiscriminately by the courts. It is
a recourse equitable in character and allowed only in exceptional cases as where
there is no available or other adequate remedy.28 This case falls under said exception.
In this case, where it was found that the trial court did not have jurisdiction over the
real parties in interest, and that notices were deliberately not given, amount to
extrinsic fraud. The Court of Appeals did not err in granting the annulment of the
judgment in Civil Case No. 2647 and the orders subsequent thereto, for lack of
jurisdiction and extrinsic fraud.
WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated
February 22, 1995 of the Court of Appeals in CA-G.R. SP No. 23687, is AFFIRMED.
Costs against petitioner Maria Gonzales.
MAKASIAR, J.
Petitioner seeks a review of the resolution of the Court of Appeals (Special Division of
Five) dated October 30, 1968, reversing its decision of November 2, 1967 (Fifth
Division), and its resolution of December 6, 1968 denying petitioner's motion for
reconsideration.
The dispositive part of the challenged resolution reads:
Wherefore, the motion for reconsideration filed on behalf of
appellee Emma Infante, is hereby granted and the decision of
November 2, 1967, is hereby annulled and set aside. Another
judgement shall be entered affirming in toto that of the court a
Beginning today January 27, 1955, Jose Poncio can start living on
the lot sold by him to me, Rosario Carbonell, until after one year
during which time he will not pa anything. Then if after said one can
he could not find an place where to move his house, he could still
continue occupying the site but he should pay a rent that man, be
agreed.
(Pp. 6-7 rec. on appeal).
Thereafter, petitioner asked Atty. Salvador Reyes, also from the Batanes Islands, to
prepare the formal deed of sale, which she brought to respondent Poncio together
with the amount of some P400.00, the balance she still had to pay in addition to her
assuming the mortgaged obligation to Republic Savings Bank.
Upon arriving at respondent Jose Poncio's house, however, the latter told petitioner
that he could not proceed any more with the sale, because he had already given the
lot to respondent Emma Infants; and that he could not withdraw from his deal with
respondent Mrs. Infante, even if he were to go to jail. Petitioner then sought to contact
respondent Mrs. Infante but the latter refused to see her.
On February 5, 1955, petitioner saw Emma Infante erecting a all around the lot with a
gate.
Petitioner then consulted Atty. Jose Garcia, who advised her to present an adverse
claim over the land in question with the Office of the Register of Deeds of Rizal. Atty.
Garcia actually sent a letter of inquiry to the Register of Deeds and demand letters to
private respondents Jose Poncio and Emma Infante.
In his answer to the complaint Poncio admitted "that on January 30, 1955, Mrs.
Infante improved her offer and he agreed to sell the land and its improvements to her
for P3,535.00" (pp. 38-40, ROA).
In a private memorandum agreement dated January 31, 1955, respondent Poncio
indeed bound himself to sell to his corespondent Emma Infante, the property for the
sum of P2,357.52, with respondent Emma Infante still assuming the existing
mortgage debt in favor of Republic Savings Bank in the amount of P1,177.48. Emma
Infante lives just behind the houses of Poncio and Rosario Carbonell.
On February 2, 1955, respondent Jose Poncio executed the formal deed of sale in
favor of respondent Mrs. Infante in the total sum of P3,554.00 and on the same date,
From the above order of dismissal, petitioner appealed to the Supreme Court (G.R.
No. L-11231) which ruled in a decision dated May 12, 1958, that the Statute of
Frauds, being applicable only to executory contracts, does not apply to the alleged
sale between petitioner and respondent Poncio, which petitioner claimed to have
been partially performed, so that petitioner is entitled to establish by parole evidence
"the truth of this allegation, as well as the contract itself." The order appealed from
was thus reversed, and the case remanded to the court a quo for further proceedings
(pp. 26-49, ROA in the C.A.).
After trial in the court a quo; a decision was, rendered on December 5, 1962,
declaring the second sale by respondent Jose Poncio to his co-respondents Ramon
Infante and Emma Infante of the land in question null and void and ordering
respondent Poncio to execute the proper deed of conveyance of said land in favor of
petitioner after compliance by the latter of her covenants under her agreement with
respondent Poncio (pp. 5056, ROA in the C.A.).
On January 23, 1963, respondent Infantes, through another counsel, filed a motion
for re-trial to adduce evidence for the proper implementation of the court's decision in
case it would be affirmed on appeal (pp. 56-60, ROA in the C.A.), which motion was
opposed by petitioner for being premature (pp. 61-64, ROA in the C.A.). Before their
motion for re-trial could be resolved, respondent Infantes, this time through their
former counsel, filed another motion for new trial, claiming that the decision of the trial
court is contrary to the evidence and the law (pp. 64-78, ROA in the C.A.), which
motion was also opposed by petitioner (pp. 78-89, ROA in the C.A.).
The trial court granted a new trial (pp. 89-90, ROA in the C.A.), at which re-hearing
only the respondents introduced additional evidence consisting principally of the cost
of improvements they introduced on the land in question (p. 9, ROA in the C.A.).
After the re-hearing, the trial court rendered a decision, reversing its decision of
December 5, 1962 on the ground that the claim of the respondents was superior to
the claim of petitioner, and dismissing the complaint (pp. 91-95, ROA in the C.A.),
From this decision, petitioner Rosario Carbonell appealed to the respondent Court of
Appeals (p. 96, ROA in the C.A.).
On November 2, 1967, the Court of Appeals (Fifth Division composed of Justices
Magno Gatmaitan, Salvador V. Esguerra and Angle H. Mojica, speaking through
Justice Magno Gatmaitan), rendered judgment reversing the decision of the trial
court, declaring petitioner therein, to have a superior right to the land in question, and
condemning the defendant Infantes to reconvey to petitioner after her reimbursement
to them of the sum of P3,000.00 plus legal interest, the land in question and all its
improvements (Appendix "A" of Petition).
P15.00 per square meter, which offers he rejected as he believed that his lot is worth
at least P20.00 per square meter. 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 Carbonell.
As recounted by Chief Justice Roberto Concepcion, then Associate Justice, in the
preceding case of Rosario Carbonell vs. Jose Poncio, Ramon Infante and Emma
Infante (1-11231, May 12, 1958), Poncio alleged in his answer:
... that he had consistently turned down several offers, made by
plaintiff, to buy the land in question, at P15 a square meter, for he
believes that it is worth not less than P20 a square meter; that Mrs.
Infante, likewise, tried to buy the land at P15 a square meter; that,
on or about January 27, 1955, Poncio was advised by plaintiff that
should she decide to buy the property at P20 a square meter, she
would allow him to remain in the property for one year; that plaintiff
then induced Poncio to sign a document, copy of which if probably
the one appended to the second amended complaint; that Poncio
signed it 'relying upon the statement of the plaintiff that the
document was a permit for him to remain in the premises in the
event defendant decided to sell the property to the plaintiff at
P20.00 a square meter'; that on January 30, 1955, Mrs. Infante
improved her offer and agreed to sell the land and its improvement
to her for P3,535.00; that Poncio has not lost 'his mind,' to sell his
property, worth at least P4,000, for the paltry sum P1,177.48, the
amount of his obligation to the Republic Saving s Bank; and that
plaintiff's action is barred by the Statute of Frauds. ... (pp. 38-40,
ROA, emphasis supplied).
II
EXISTENCE
OF
DULY ESTABLISHED
THE
PRIOR
SALE
TO
CARBONELL
(1) In his order dated April 26, 1956 dismissing the complaint on the ground that the
private document Exhibit "A" executed by Poncio and Carbonell and witnessed by
Constancio Meonada captioned "Contract for One-half Lot which I Bought from Jose
Poncio," was not such a memorandum in writing within the purview of the Statute of
Frauds, the trial judge himself recognized the fact of the prior sale to Carbonell when
he stated that "the memorandum in question merely states that Poncio is allowed to
stay in the property which he had sold to the plaintiff. There is no mention of the
'A' and for the reasons stated above, the Court has arrived at the
conclusion stated earlier (pp. 52-54, ROA, emphasis supplied).
(3) In his first decision of December 5, 1962 declaring null and void the sale in favor
of the Infantes and ordering Poncio to execute a deed of conveyance in favor of
Carbonell, the trial judge found:
(4) After re-trial on motion of the Infantes, the trial Judge rendered on January 20,
1965 another decision dismissing the complaint, although he found
(7) In his dissent concurred in by Justice Rodriguez, Justice Gatmaitan maintains his
decision of November 2, 1967 as well as his findings of facts therein, and reiterated
that the private memorandum Exhibit "A", is a perfected sale, as a sale is consensual
and consummated by mere consent, and is binding on and effective between the
parties. This statement of the principle is correct [pp. 89-92, rec.].
III
ADEQUATE
CONSIDERATION
IN FAVOR OF CARBONELL
OR
PRICE
FOR
THE
SALE
It should be emphasized that the mortgage on the lot was about to be foreclosed by
the bank for failure on the part of Poncio to pay the amortizations thereon. To forestall
the foreclosure and at the same time to realize some money from his mortgaged lot,
Poncio 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 9b) the arrears
in the amount of P247.26 to the bank; and [2] 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.
On January 27, 1955, she paid the amount of P200.00 to the bank because that was
the amount that Poncio told her as his arrearages and Poncio advanced the sum of
P47.26, which amount was refunded to him by Carbonell the following day. This
conveyance was confirmed that same day, January 27, 1955, by the private
document, Exhibit "A", which was prepared in the Batanes dialect by the witness
Constancio Meonada, who is also from Batanes like Poncio and Carbonell.
The sale did not include Poncio's house on the lot. And Poncio was given the right to
continue staying on the land without paying any rental for one year, after which he
should pay rent if he could not still find a place to transfer his house. All these terms
are part of the consideration of the sale to Carbonell.
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.
But Poncio, induced by the higher price offered to him by Infante, reneged on his
commitment to Carbonell and told Carbonell, who confronted him about it, that he
would not withdraw from his deal with Infante even if he is sent to jail The victim,
therefore, "of injustice and outrage is the widow Carbonell and not the Infantes, who
without moral compunction exploited the greed and treacherous nature of Poncio,
who, for love of money and without remorse of conscience, dishonored his own
plighted word to Carbonell, his own cousin.
The claim that the memorandum Exhibit "A" does not sufficiently describe the
disputed lot as the subject matter of the sale, was correctly disposed of in the first
decision of the trial court of December 5, 1962, thus: "The defendant argues that
there is even no description of the lot referred to in the note (or memorandum),
especially when the note refers to only one-half lot. With respect to the latter
argument of the defendant, plaintiff points out that one- half lot was mentioned in
Exhibit 'A' because the original description carried in the title states that it was
formerly part of a bigger lot and only segregated later. The explanation is tenable, in
(sic) considering the time value of the contents of Exh. 'A', the 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'. For a while, this court had that similar
impression but after a more and through consideration of the context in Exh. 'A' and
for the reasons stated above, the court has arrived to (sic) the conclusion stated
earlier" (pp. 53-54, ROA).
Moreover, it is not shown that Poncio owns another parcel with the same area,
adjacent to the lot of his cousin Carbonell and likewise mortgaged by him to the
Republic Savings Bank. The transaction therefore between Poncio and Carbonell can
only refer and does refer to the lot involved herein. If Poncio had another lot to
remove his house, Exhibit A would not have stipulated to allow him to stay in the sold
lot without paying any rent for one year and thereafter to pay rental in case he cannot
find another place to transfer his house.
But, if the lawful possessor can retain the improvements introduced by the possessor
in bad faith for pure luxury or mere pleasure only by paying the value thereof at the
time he enters into possession (Article 549 NCC), as a matter of equity, the Infantes,
although possessors in bad faith, should be allowed to remove the aforesaid
improvements, unless petitioner Carbonell chooses to pay for their value at the time
the Infantes introduced said useful improvements in 1955 and 1959. The Infantes
cannot claim reimbursement for the current value of the said useful improvements;
because they have been enjoying such improvements for about two decades without
paying any rent on the land and during which period herein petitioner Carbonell was
deprived of its possession and use.
WHEREFORE, THE DECISION OF THE SPECIAL DIVISION OF FIVE OF THE
COURT OF APPEALS OF OCTOBER 30, 1968 IS HEREBY REVERSED;
PETITIONER ROSARIO CARBONELL IS HEREBY DECLARED TO HAVE THE
SUPERIOR RIGHT TO THE LAND IN QUESTION AND IS HEREBY DIRECTED TO
REIMBURSE TO PRIVATE RESPONDENTS INFANTES THE SUM OF ONE
THOUSAND FIVE HUNDRED PESOS (P1,500.00) WITHIN THREE (3) MONTHS
FROM THE FINALITY OF THIS DECISION; AND THE REGISTER OF DEEDS OF
RIZAL IS HEREBY DIRECTED TO CANCEL TRANSFER CERTIFICATE OF TITLE
NO. 37842 ISSUED IN FAVOR OF PRIVATE RESPONDENTS INFANTES
SAN
LORENZO
DEVELOPMENT
CORPORATION, petitioner,
vs.
COURT OF APPEALS, PABLO S. BABASANTA, SPS. MIGUEL LU and PACITA
ZAVALLA LU, respondents.
DECISION
TINGA, J.:
From a coaptation of the records of this case, it appears that respondents Miguel Lu
and Pacita Zavalla, (hereinafter, the Spouses Lu) owned two (2) parcels of land
situated in Sta. Rosa, Laguna covered by TCT No. T-39022 and TCT No. T-39023
both measuring 15,808 square meters or a total of 3.1616 hectares.
On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to
respondent Pablo Babasanta, (hereinafter, Babasanta) for the price of fifteen pesos
July 1989, they purchased Interbank Managers Check No. 05020269 in the amount
of two hundred thousand pesos (P200,000.00) in the name of Babasanta to show that
she was able and willing to pay the balance of her loan obligation.
Babasanta later filed an Amended Complaint dated 17 January 19903 wherein he
prayed for the issuance of a writ of preliminary injunction with temporary restraining
order and the inclusion of the Register of Deeds of Calamba, Laguna as party
defendant. He contended that the issuance of a preliminary injunction was necessary
to restrain the transfer or conveyance by the Spouses Lu of the subject property to
other persons.
The Spouses Lu filed their Opposition4 to the amended complaint contending that it
raised new matters which seriously affect their substantive rights under the original
complaint. However, the trial court in its Order dated 17 January 1990 5 admitted the
amended complaint.
On 19 January 1990, herein petitioner San Lorenzo Development Corporation
(SLDC) filed a Motion for Intervention6 before the trial court. SLDC alleged that it had
legal interest in the subject matter under litigation because on 3 May 1989, the two
parcels of land involved, namely Lot 1764-A and 1764-B, had been sold to it in a
Deed of Absolute Sale with Mortgage. 7 It alleged that it was a buyer in good faith and
for value and therefore it had a better right over the property in litigation.
In his Opposition to SLDCs motion for intervention,8 respondent Babasanta demurred
and argued that the latter had no legal interest in the case because the two parcels of
land involved herein had already been conveyed to him by the Spouses Lu and
hence, the vendors were without legal capacity to transfer or dispose of the two
parcels of land to the intervenor.
Meanwhile, the trial court in its Order dated 21 March 1990 allowed SLDC to
intervene. SLDC filed its Complaint-in-Intervention on 19 April 1990.9 Respondent
Babasantas motion for the issuance of a preliminary injunction was likewise granted
by the trial court in its Order dated 11 January 199110 conditioned upon his filing of a
bond in the amount of fifty thousand pesos (P50,000.00).
SLDC in its Complaint-in-Intervention alleged that on 11 February 1989, the Spouses
Lu executed in its favor anOption to Buy the lots subject of the complaint. Accordingly,
it paid an option money in the amount of three hundred sixteen thousand one
hundred sixty pesos (P316,160.00) out of the total consideration for the purchase of
the two lots of one million two hundred sixty-four thousand six hundred forty pesos
(P1,264,640.00). After the Spouses Lu received a total amount of six hundred thirtytwo thousand three hundred twenty pesos (P632,320.00) they executed on 3 May
On 4 October 1995, the Court of Appeals rendered its Decision11 which set aside the
judgment of the trial court. It declared that the sale between Babasanta and the
Spouses Lu was valid and subsisting and ordered the spouses to execute the
necessary deed of conveyance in favor of Babasanta, and the latter to pay the
balance of the purchase price in the amount of two hundred sixty thousand pesos
(P260,000.00). The appellate court ruled that the Absolute Deed of Sale with
Mortgage in favor of SLDC was null and void on the ground that SLDC was a
purchaser in bad faith. The Spouses Lu were further ordered to return all payments
made by SLDC with legal interest and to pay attorneys fees to Babasanta.
SLDC and the Spouses Lu filed separate motions for reconsideration with the
appellate court.12 However, in aManifestation dated 20 December 1995,13 the
Spouses Lu informed the appellate court that they are no longer contesting the
decision dated 4 October 1995.
In its Resolution dated 11 March 1996,14 the appellate court considered as withdrawn
the motion for reconsideration filed by the Spouses Lu in view of their manifestation of
20 December 1995. The appellate court denied SLDCs motion for reconsideration on
the ground that no new or substantial arguments were raised therein which would
warrant modification or reversal of the courts decision dated 4 October 1995.
Hence, this petition.
SLDC assigns the following errors allegedly committed by the appellate court:
THE COURT OF APPEALS ERRED IN HOLDING THAT SAN LORENZO WAS NOT
A BUYER IN GOOD FAITH BECAUSE WHEN THE SELLER PACITA ZAVALLA LU
OBTAINED FROM IT THE CASH ADVANCE OF P200,000.00, SAN LORENZO WAS
PUT ON INQUIRY OF A PRIOR TRANSACTION ON THE PROPERTY.
THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE
ESTABLISHED FACT THAT THE ALLEGED FIRST BUYER, RESPONDENT
BABASANTA, WAS NOT IN POSSESSION OF THE DISPUTED PROPERTY WHEN
SAN LORENZO BOUGHT AND TOOK POSSESSION OF THE PROPERTY AND NO
ADVERSE CLAIM, LIEN, ENCUMBRANCE OR LIS PENDENS WAS ANNOTATED
ON THE TITLES.
THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE FACT THAT
RESPONDENT BABASANTA HAS SUBMITTED NO EVIDENCE SHOWING THAT
SAN LORENZO WAS AWARE OF HIS RIGHTS OR INTERESTS IN THE DISPUTED
PROPERTY.
from the fact that it failed to make necessary inquiry regarding the purpose of the
issuance of the two hundred thousand pesos (P200,000.00) managers check in his
favor.
The core issue presented for resolution in the instant petition is who between SLDC
and Babasanta has a better right over the two parcels of land subject of the instant
case in view of the successive transactions executed by the Spouses Lu.
To prove the perfection of the contract of sale in his favor, Babasanta presented a
document signed by Pacita Lu acknowledging receipt of the sum of fifty thousand
pesos (P50,000.00) as partial payment for 3.6 hectares of farm lot situated at
Barangay Pulong, Sta. Cruz, Sta. Rosa, Laguna.17 While the receipt signed by Pacita
did not mention the price for which the property was being sold, this deficiency was
supplied by Pacita Lus letter dated 29 May 1989 18 wherein she admitted that she
agreed to sell the 3.6 hectares of land to Babasanta for fifteen pesos (P15.00) per
square meter.
An analysis of the facts obtaining in this case, as well as the evidence presented by
the parties, irresistibly leads to the conclusion that the agreement between Babasanta
and the Spouses Lu is a contract to sell and not a contract of sale.
Contracts, in general, are perfected by mere consent,19 which is manifested by the
meeting of the offer and the acceptance upon the thing which are to constitute the
contract. The offer must be certain and the acceptance absolute. 20 Moreover,
contracts shall be obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present.21
The receipt signed by Pacita Lu merely states that she accepted the sum of fifty
thousand pesos (P50,000.00) from Babasanta as partial payment of 3.6 hectares of
farm lot situated in Sta. Rosa, Laguna. While there is no stipulation that the seller
reserves the ownership of the property until full payment of the price which is a
distinguishing feature of a contract to sell, the subsequent acts of the parties convince
us that the Spouses Lu never intended to transfer ownership to Babasanta except
upon full payment of the purchase price.
On the other hand, respondent Babasanta argued that SLDC could not have acquired
ownership of the property because it failed to comply with the requirement of
registration of the sale in good faith. He emphasized that at the time SLDC registered
the sale in its favor on 30 June 1990, there was already a notice of lis
pendens annotated on the titles of the property made as early as 2 June 1989.
Hence, petitioners registration of the sale did not confer upon it any right. Babasanta
further asserted that petitioners bad faith in the acquisition of the property is evident
Babasantas letter dated 22 May 1989 was quite telling. He stated therein that despite
his repeated requests for the execution of the final deed of sale in his favor so that he
could effect full payment of the price, Pacita Lu allegedly refused to do so. In effect,
Babasanta himself recognized that ownership of the property would not be transferred
to him until such time as he shall have effected full payment of the price. Moreover,
had the sellers intended to transfer title, they could have easily executed the
document of sale in its required form simultaneously with their acceptance of the
same.29 Therefore, sale by itself does not transfer or affect ownership; the most that
sale does is to create the obligation to transfer ownership. It is tradition or delivery, as
a consequence of sale, that actually transfers ownership.
Explicitly, the law provides that the ownership of the thing sold is acquired by the
vendee from the moment it is delivered to him in any of the ways specified in Article
1497 to 1501.30 The word "delivered" should not be taken restrictively to mean
transfer of actual physical possession of the property. The law recognizes two
principal modes of delivery, to wit: (1) actual delivery; and (2) legal or constructive
delivery.
Actual delivery consists in placing the thing sold in the control and possession of the
vendee.31 Legal or constructive delivery, on the other hand, may be had through any
of the following ways: the execution of a public instrument evidencing the
sale;32 symbolical tradition such as the delivery of the keys of the place where the
movable sold is being kept;33 traditio longa manu or by mere consent or agreement if
the movable sold cannot yet be transferred to the possession of the buyer at the time
of the sale;34 traditio brevi manu if the buyer already had possession of the object
even before the sale;35 and traditio constitutum possessorium, where the seller
remains in possession of the property in a different capacity.36
Following the above disquisition, respondent Babasanta did not acquire ownership by
the mere execution of the receipt by Pacita Lu acknowledging receipt of partial
payment for the property. For one, the agreement between Babasanta and the
Spouses Lu, though valid, was not embodied in a public instrument. Hence, no
constructive delivery of the lands could have been effected. For another, Babasanta
had not taken possession of the property at any time after the perfection of the sale in
his favor or exercised acts of dominion over it despite his assertions that he was the
rightful owner of the lands. Simply stated, there was no delivery to Babasanta,
whether actual or constructive, which is essential to transfer ownership of the
property. Thus, even on the assumption that the perfected contract between the
parties was a sale, ownership could not have passed to Babasanta in the absence of
delivery, since in a contract of sale ownership is transferred to the vendee only upon
the delivery of the thing sold.37
However, it must be stressed that the juridical relationship between the parties in a
double sale is primarily governed by Article 1544 which lays down the rules of
preference between the two purchasers of the same property. It provides:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
A purchaser in good faith is one who buys property of another without notice that
some other person has a right to, or interest in, such property and pays a full and fair
price for the same at the time of such purchase, or beforehe has notice of the claim or
interest of some other person in the property.40 Following the foregoing definition, we
rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in
the records that it had knowledge of the prior transaction in favor of Babasanta. At the
time of the sale of the property to SLDC, the vendors were still the registered owners
of the property and were in fact in possession of the lands.l^vvphi1.net Time and
again, this Court has ruled that a person dealing with the owner of registered land is
not bound to go beyond the certificate of title as he is charged with notice of burdens
on the property which are noted on the face of the register or on the certificate of
title.41 In assailing knowledge of the transaction between him and the Spouses Lu,
Babasanta apparently relies on the principle of constructive notice incorporated in
Section 52 of the Property Registration Decree (P.D. No. 1529) which reads, thus:
Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease,
lien, attachment, order, judgment, instrument or entry affecting registered land shall, if
registered, filed, or entered in the office of the Register of Deeds for the province or
city where the land to which it relates lies, be constructive notice to all persons from
the time of such registering, filing, or entering.
However, the constructive notice operates as suchby the express wording of
Section 52from the time of the registration of the notice of lis pendens which in this
case was effected only on 2 June 1989, at which time the sale in favor of SLDC had
long been consummated insofar as the obligation of the Spouses Lu to transfer
ownership over the property to SLDC is concerned.
More fundamentally, given the superiority of the right of SLDC to the claim of
Babasanta the annotation of the notice of lis pendens cannot help Babasantas
position a bit and it is irrelevant to the good or bad faith characterization of SLDC as a
purchaser. A notice of lis pendens, as the Court held in Natao v. Esteban,42serves as
a warning to a prospective purchaser or incumbrancer that the particular property is in
litigation; and that he should keep his hands off the same, unless he intends to
gamble on the results of the litigation." Precisely, in this case SLDC has intervened in
the pending litigation to protect its rights. Obviously, SLDCs faith in the merit of its
cause has been vindicated with the Courts present decision which is the ultimate
denouement on the controversy.
The Court of Appeals has made capital43 of SLDCs averment in its Complaint-inIntervention44 that at the instance of Pacita Lu it issued a check for P200,000.00
payable to Babasanta and the confirmatory testimony of Pacita Lu herself on crossexamination.45 However, there is nothing in the said pleading and the testimony which
promise to sell the land or at most an actual assignment of the right to repurchase the
same land. Accordingly, there was no double sale of the same land in that case.
Assuming ex gratia argumenti that SLDCs registration of the sale had been tainted
by the prior notice of lis pendens and assuming further for the same nonce that this is
a case of double sale, still Babasantas claim could not prevail over that of SLDCs.
In Abarquez v. Court of Appeals,46 this Court had the occasion to rule that if a vendee
in a double sale registers the sale after he has acquired knowledge of a previous
sale, the registration constitutes a registration in bad faith and does not confer upon
him any right. If the registration is done in bad faith, it is as if there is no registration at
all, and the buyer who has taken possession first of the property in good faith shall be
preferred.
SO ORDERED.
In Abarquez, the first sale to the spouses Israel was notarized and registered only
after the second vendee, Abarquez, registered their deed of sale with the Registry of
Deeds, but the Israels were first in possession. This Court awarded the property to
the Israels because registration of the property by Abarquez lacked the element of
good faith. While the facts in the instant case substantially differ from that
in Abarquez, we would not hesitate to rule in favor of SLDC on the basis of its prior
possession of the property in good faith. Be it noted that delivery of the property to
SLDC was immediately effected after the execution of the deed in its favor, at which
time SLDC had no knowledge at all of the prior transaction by the Spouses Lu in favor
of Babasanta.1a\^/phi1.net
The law speaks not only of one criterion. The first criterion is priority of entry in the
registry of property; there being no priority of such entry, the second is priority of
possession; and, in the absence of the two priorities, the third priority is of the date of
title, with good faith as the common critical element. Since SLDC acquired
possession of the property in good faith in contrast to Babasanta, who neither
registered nor possessed the property at any time, SLDCs right is definitely superior
to that of Babasantas.
At any rate, the above discussion on the rules on double sale would be purely
academic for as earlier stated in this decision, the contract between Babasanta and
the Spouses Lu is not a contract of sale but merely a contract to sell. In Dichoso v.
Roxas,47 we had the occasion to rule that Article 1544 does not apply to a case where
there was a sale to one party of the land itself while the other contract was a mere
WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of
Appeals appealed from is REVERSED and SET ASIDE and the decision of the
Regional Trial Court, Branch 31, of San Pedro, Laguna is REINSTATED. No costs.
JOHNSON, J.:
From the record it appears that on the 26th day of November, 1919, the petitioner
presented a petition in the Court of First instance of the City of Manila for the
registration, under the Torrens system, of a piece or parcel of land, particularly
described in paragraph A of the petition. The said lot is alleged to have an area of
371.6 square meters. The petitioner alleged that he was the owner in fee simple of
said parcel of land for the reason that he had purchased the same of Federico Caet
on the 8th day of November, 1919. Accompanying the petition, there was united a
plan (marked Exhibit A) containing a technical description of the metes and bounds of
said parcel of land.
To the registration of said parcel of land the oppositor, Primitivo Kalaw, presented his
opposition, alleging that he was the owner of the same and that he had acquired it
from the said Federico Caet.
Upon the issue thus presented by the petitioner and opposition, the Honorable James
A. Ostrand, on the 23d day of January, 1920, in a carefully prepared opinion, reached
the conclusion that the petitioner was the owner in fee simple of said parcel of land,
and ordered it registered in his name in accordance with the provisions of the Land
registration Act. From that decree the oppositor appealed to this court.
From an examination of the record the following facts seem to be proved by a large
preponderance of the evidence:
(1) That on the 24th day of September, 1919, the said Federico Caet sold,
under a conditional sale, the parcel of land in question to the appellant
(Exhibit 1);
(2) That on the 8th day of November, 1919, the said Federico Caet made
an absolute sale of said parcel of land to the petitioner Agripino Mendoza
(Exhibit B);
AGRIPINO
vs.
PRIMITIVO KALAW, objector-appellant.
Guillermo
M.
Felipe A. Jose for appellee.
Katigbak
MENDOZA, petitioner-appellee,
for
appellant.
(3) That on the 12th day of November, 1919, Agripino Mendoza entered
upon, and took actual possession of, said parcel of land, enclosed it with a
fence, and began to clean the same;
(4) That after the petitioner had fenced and cleaned said lot, as above
indicated, a representative of the oppositor claimed and attempted to obtain
been performed or complied with. That being true, article 1473 of the Civil Code can
hardly be said to be applicable.
(5) That on the 17th day of November (18th day of November), 1919, the
oppositor attempted to have his title registered in the registry of deeds of the
City of Manila, but such registration was denied by the register of deeds for
the reason that there existed some defect in the description of the property,
and for the reason that the title of the vendor had not therefore been
registered. The register of deeds, however, did make an "anotacion
preventiva."
Neither can the "anotacion preventiva" obtained by the oppositor be said to have
created any advance in his favor, for the reason that a preventative precautionary
notice on the records of the registry of deeds only protects the rights of the person
securing it for a period of thirty days. (Par. 2, art. 17, Mortgage Law.) A preventative
precautionary notice only protects the interests and rights of the person who secures
it against those who acquire an interest in the property subsequent thereto, and then,
only for a period of thirty days. It cannot affect the rights or interests of persons who
acquired an interest in the property theretofore. (Veguillas vs. Jaucian, 25 Phil., 315;
Samson vs. Garcia and Ycalina, 34 Phil., 805.) In the present case the petitioner had
acquired an absolute deed to the land in question, and had actually entered into the
possession of the same, before the preventative precautionary notice was noted in
the office of the registry of deeds. Therefore, under the provisions of the Mortgage
Law above cited, it could in no way affect the rights or interests of persons, acquired
theretofore.
It will be noted from the foregoing that Federico Caet made two sales of the same
property one of the oppositor and the other to the petitioner. The first was but a
conditional sale while the latter was an absolute sale. It will also be noted that while
the absolute sale to the petitioner was subsequent to the conditional sale to the
oppositor, the former obtained the actual possession of the property first. It will further
be noted from a reading of Exhibits 1 and B that the petitioner actually paid to his
vendor the purchase price of the property in question, while the payment by the
oppositor depended upon the performance of certain conditions mentioned in the
contract of sale. 1awph!l.net
While was have stated that there were two sales of the parcel of land in question, that
is hardly the fact, because a conditional sale, before the performance of the condition,
can hardly be said to be a sale of property, especially where the condition has not
For all of the foregoing reasons, we are fully persuaded that the judgment ordering
the registration of the parcel of land in question in the name of the petitioner should
be and is hereby affirmed, with costs. So ordered.
Araullo, Street, Avancea and Villamor, JJ., concur.