Sales Par 6 3
Sales Par 6 3
Sales Par 6 3
SUPREME COURT
Manila
EN BANC
G.R. No. L-11658
Should there be no entry, the property shall belong to the person who
first took possession of it in good faith, and, in the absence thereof, to
the person who presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property, and it
must be apparent that the annotation or inscription of a deed of sale of real
property in a chattel mortgage registry cannot be given the legal effect of
an inscription in the registry of real property. By its express terms, the
Chattel Mortgage Law contemplates and makes provision for mortgages of
personal property; and the sole purpose and object of the chattel mortgage
registry is to provide for the registry of "Chattel mortgages," that is to say,
mortgages of personal property executed in the manner and form
prescribed in the statute. The building of strong materials in which the ricecleaning machinery was installed by the "Compaia Agricola Filipina" was
real property, and the mere fact that the parties seem to have dealt with it
separate and apart from the land on which it stood in no wise changed its
character as real property. It follows that neither the original registry in the
chattel mortgage of the building and the machinery installed therein, not the
annotation in that registry of the sale of the mortgaged property, had any
effect whatever so far as the building was concerned.
We conclude that the ruling in favor of the machinery company cannot be
sustained on the ground assigned by the trial judge. We are of opinion,
however, that the judgment must be sustained on the ground that the
agreed statement of facts in the court below discloses that neither the
purchase of the building by the plaintiff nor his inscription of the sheriff's
certificate of sale in his favor was made in good faith, and that the
machinery company must be held to be the owner of the property under the
third paragraph of the above cited article of the code, it appearing that the
company first took possession of the property; and further, that the building
and the land were sold to the machinery company long prior to the date of
the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the Civil
Code require "good faith," in express terms, in relation to "possession" and
"title," but contain no express requirement as to "good faith" in relation to
the "inscription" of the property on the registry, it must be presumed that
good faith is not an essential requisite of registration in order that it may
have the effect contemplated in this article. We cannot agree with this
contention. It could not have been the intention of the legislator to base the
preferential right secured under this article of the code upon an inscription
of title in bad faith. Such an interpretation placed upon the language of this
section would open wide the door to fraud and collusion. The public records
cannot be converted into instruments of fraud and oppression by one who
secures an inscription therein in bad faith. The force and effect given by law
to an inscription in a public record presupposes the good faith of him who
enters such inscription; and rights created by statute, which are predicated
upon an inscription in a public registry, do not and cannot accrue under an
inscription "in bad faith," to the benefit of the person who thus makes the
inscription.
Construing the second paragraph of this article of the code, the supreme
court of Spain held in its sentencia of the 13th of May, 1908, that:
This rule is always to be understood on the basis of the good faith
mentioned in the first paragraph; therefore, it having been found that
the second purchasers who record their purchase had knowledge of
the previous sale, the question is to be decided in accordance with
the following paragraph. (Note 2, art. 1473, Civ. Code, Medina and
Maranon [1911] edition.)
Although article 1473, in its second paragraph, provides that the title
of conveyance of ownership of the real property that is first recorded
in the registry shall have preference, this provision must always be
understood on the basis of the good faith mentioned in the first
paragraph; the legislator could not have wished to strike it out and to
sanction bad faith, just to comply with a mere formality which, in given
cases, does not obtain even in real disputes between third persons.
(Note 2, art. 1473, Civ. Code, issued by the publishers of the La
Revista de los Tribunales, 13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when he
bought the building at the sheriff's sale and inscribed his title in the land
registry, was duly notified that the machinery company had bought the
building from plaintiff's judgment debtor; that it had gone into possession
long prior to the sheriff's sale; and that it was in possession at the time
when the sheriff executed his levy. The execution of an indemnity bond by
the plaintiff in favor of the sheriff, after the machinery company had filed its
sworn claim of ownership, leaves no room for doubt in this regard. Having
bought in the building at the sheriff's sale with full knowledge that at the
time of the levy and sale the building had already been sold to the
machinery company by the judgment debtor, the plaintiff cannot be said to
have been a purchaser in good faith; and of course, the subsequent
inscription of the sheriff's certificate of title must be held to have been
tainted with the same defect.
Perhaps we should make it clear that in holding that the inscription of the
sheriff's certificate of sale to the plaintiff was not made in good faith, we
should not be understood as questioning, in any way, the good faith and
genuineness of the plaintiff's claim against the "Compaia Agricola
Filipina." The truth is that both the plaintiff and the defendant company
appear to have had just and righteous claims against their common debtor.
No criticism can properly be made of the exercise of the utmost diligence
by the plaintiff in asserting and exercising his right to recover the amount of
his claim from the estate of the common debtor. We are strongly inclined to
believe that in procuring the levy of execution upon the factory building and
in buying it at the sheriff's sale, he considered that he was doing no more
than he had a right to do under all the circumstances, and it is highly
possible and even probable that he thought at that time that he would be
able to maintain his position in a contest with the machinery company.
There was no collusion on his part with the common debtor, and no thought
of the perpetration of a fraud upon the rights of another, in the ordinary
sense of the word. He may have hoped, and doubtless he did hope, that
the title of the machinery company would not stand the test of an action in a
court of law; and if later developments had confirmed his unfounded hopes,
no one could question the legality of the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery company's
claim of ownership when he executed the indemnity bond and bought in the
property at the sheriff's sale, and it appearing further that the machinery
company's claim of ownership was well founded, he cannot be said to have
been an innocent purchaser for value. He took the risk and must stand by
the consequences; and it is in this sense that we find that he was not a
purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in
his vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or of an interest therein; and the same
rule must be applied to one who has knowledge of facts which should have
put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor. A purchaser cannot
close his eyes to facts which should put a reasonable man upon his guard,
and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor. His mere refusal to believe that such defect
exists, or his willful closing of his eyes to the possibility of the existence of a
defect in his vendor's title, will not make him an innocent purchaser for
value, if afterwards develops that the title was in fact defective, and it
appears that he had such notice of the defects as would have led to its
discovery had he acted with that measure of precaution which may
reasonably be acquired of a prudent man in a like situation. Good faith, or
lack of it, is in its analysis a question of intention; but in ascertaining the
intention by which one is actuated on a given occasion, we are necessarily
controlled by the evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be determined. So it is that "the
honesty of intention," "the honest lawful intent," which constitutes good faith
implies a "freedom from knowledge and circumstances which ought to put a
person on inquiry," and so it is that proof of such knowledge overcomes the
presumption of good faith in which the courts always indulge in the
absence of proof to the contrary. "Good faith, or the want of it, is not a
visible, tangible fact that can be seen or touched, but rather a state or
condition of mind which can only be judged of by actual or fancied tokens
or signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber
Co. vs. Shadel, 52 La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley,
119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing part of
the decision and judgment entered in the court below should be affirmed
with costs of this instance against the appellant. So ordered.
EN BANC
G.R. No. L-11176
For some time prior to the events which gave origin to the lawsuit, the
house of Lichauco, or Lichauco Brothers, had offered for sale certain old
machinery and boilers which were deposited and exposed for sale in a yard
at Tanduay, in the city of Manila. The plaintiff, Marciano Rivera, alleges that
upon January 8, 1912, he purchased some of this old material for the price
of P5,500, and received a receipt from Crisanto Lichauco showing that he
had become such purchaser. These things consisted, according to said
receipt, of two complete steam-boilers, with chimneys; one steam motor
(15 by 30 inches) complete; one pair of twin rice hullers complete, and a
feeding pump (donkey) for boilers.chanroblesvirtualawlibrary chanrobles
virtual law library
The plaintiff, however, did not take possession of the property, which
remained in the same place. It further appears that upon February 9, 1912,
the defendant, Ong Che, bought from Lichauco Brothers a lot of old iron,
machinery, and junk for the sum of P1,100. This purchaser took immediate
possession of the materials purchased by him. Later, when Marciano
Rivera appeared to take possession of the things of which he supposed
himself to be the purchaser, under the receipt given by Crisanto Lichauco,
he found that many of the accessory and auxiliary parts of the boilers,
motor, and rice mill were wanting; and upon investigation it developed that
these articles were held by the defendant, Ong Che, and were claimed by
him as owner by virtue of the purchase effected by him upon February 9,
as stated above. The plaintiff thereupon instituted the present action to
recover the articles in question alleging that he was the true owner thereof.
At the hearing in the Court of First Instance of the city of Manila, judgment
was given in favor of the defendant and the plaintiff has
appealed.chanroblesvirtualawlibrary chanrobles virtual law library
We concur in the conclusion reached by the judge of the Court of First
Instance the defendant, Ong Che, was a purchaser of these articles in
good faith. It is furthermore uncontroverted that he acquired possession by
virtue of his purchase. He, therefore, undoubtedly has, under article 1473
of the Civil Code, a better title than the first purchaser, who has never had
possession at all. The only doubt as to the application of that article to the
present case arises from the fact that there is some conflict in the testimony
upon the question as to who was the original owner. It is to be inferred from
the testimony that the house of Lichauco consists of Faustino Lichauco and
Galo Lichauco, and it would seem that Crisanto Lichauco, who effected the
sale to Rivera, is not a member of that establishment. Crisanto testified that
the property sold by him to the plaintiff Rivera, including the articles which
are now in dispute, was the property of Galo Lichauco. There is grave
doubt as to the correctness of this statement, however, as the same
witness admits that the machinery sold by him to Rivera had been taken
out of an old mill owned by Lichauco Brothers in Dagupan; and it is not
made clear that Galo Lichauco had ever become its exclusive owner.
Furthermore, the evidence submitted by the defendant tends to show that
the things acquired by him, including the articles in dispute, were bought
from Faustino Lichauco as property of the house. At any rate we find that,
under the circumstances disclosed in this case, and even conceding that
the property belong to Galo Lichauco, the house of Lichauco had authority
to sell it. In this view the case presented is that where two different agents
of the same owner successively negotiated sales to two different
purchasers, and it is obvious that, under the article of the Civil Code cited
above, the second purchaser having acquired possession first must be
declared the true owner. In our view of the facts it was merely a case where
a mistake was made by the house of Lichauco in selling something that
had already been sold.chanroblesvirtualawlibrary chanrobles virtual law
library
Other aspects of the case are equally fatal to the contention of the plaintiff.
It was incumbent upon the plaintiff to prove title in himself, as against the
defendant, by a preponderance of the evidence; and he could not recover
merely upon the weakness of the defendant's title. (Belen vs. Belen, 13
Phil. Rep., 202.) The court below held that the plaintiff had failed to prove
title in himself and we see no reason for disturbing the judgment on this
point. The defendant had, in his favor, the fact that he was a purchaser in
good faith and had acquired lawful possession. There is a presumption
arising from such possession that he was the owner (sec. 334 [10], Code of
Civil Procedure); and the mere fact, if such it be, that the property originally
belonged to Galo Lichauco was not sufficient, without more, to defeat a title
acquired by the defendant through the house of
Lichauco.chanroblesvirtualawlibrary chanrobles virtual law library
It should be stated that at the hearing the plaintiff himself did not appear as
a witness. Furthermore, no steps were taken, prior to the trial to secure the
attendance of either Galo Lichauco or Faustino Lichauco, both of whom
would have been most material witnesses for the plaintiff if his contention is
correct.chanroblesvirtualawlibrary chanrobles virtual law library
At the close of the trial in the court below, plaintiff's counsel asked for a
continuance in order to call these witnesses. The court refused to grant a
continuance for such purpose. In this we think the court did not abuse its
discretion, and its action in this respect does not constitute reversible error.
The plaintiff was appraised from the nature of the issue raised that the
question to be tried was that of ownership and he should have been ready
with the witnesses to prove it. He was not entitled to a continuance on the
ground of the absence of those important witnesses unless he showed that
he had used reasonable diligence to secure their attendance. An
application for a continuance of a cause is addressed to the sound legal
discretion of the trial court, and its ruling thereon will not be disturbed,
unless it clearly appears that such discretion has been abused, and that by
the refusal of the continuance a party has been without his fault deprived of
an opportunity of making his case or
defense.chanroblesvirtualawlibrary chanrobles virtual law library
It results that the judgment of the lower court should be affirmed, with costs
of this instance against the appellant. So
ordered.chanroblesvirtualawlibrary
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-29972 January 26, 1976
ROSARIO CARBONELL, petitioner,
vs.
HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA INFANTE
and RAMON INFANTE, respondents.
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.
his bank deposit with Republic Savings Bank. But the next day, petitioner
refunded to Poncio the sum of P47.00.
On January 27, 1955, petitioner and respondent Poncio, in the presence of
a witness, made and executed a document in the Batanes dialect, which,
translated into English, reads:
CONTRACT FOR ONE HALF LOT WHICH I BOUGHT FROM
JOSE PONCIO
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.
(Sgd)
JOS
E
PON
CIO
(Sgd.
)
ROS
ARIO
CAR
BON
ELL
(Sgd)
CON
STA
NCIO
MEO
NAD
A
Witne
ss
(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, the latter paid Republic Savings Bank the mortgage
indebtedness of P1,500.00. The mortgage on the lot was eventually
discharged.
Informed that the sale in favor of respondent Emma Infante had not yet
been registered, Atty. Garcia prepared an adverse claim for petitioner, who
signed and swore to an registered the same on February 8, 1955.
The deed of sale in favor of respondent Mrs. Infante was registered only
on February 12, 1955. As a consequence thereof, a Transfer Certificate of
Title was issued to her but with the annotation of the adverse claim of
petitioner Rosario Carbonell.
Respondent Emma Infante took immediate possession of the lot involved,
covered the same with 500 cubic meters of garden soil and built therein a
wall and gate, spending the sum of P1,500.00. She further contracted the
services of an architect to build a house; but the construction of the same
started only in 1959 years after the litigation actually began and during
its pendency. Respondent Mrs. Infante spent for the house the total amount
of P11,929.00.
On June 1, 1955, petitioner Rosario Carbonell, thru counsel, filed a second
amended complaint against private respondents, praying that she be
declared the lawful owner of the questioned parcel of land; that the
subsequent sale to respondents Ramon R. Infante and Emma L. Infante be
declared null and void, and that respondent Jose Poncio be ordered to
execute the corresponding deed of conveyance of said land in her favor
and for damages and attorney's fees (pp. 1-7, rec. on appeal in the C.A.).
Respondents first moved to dismiss the complaint on the ground, among
others, that petitioner's claim is unenforceable under the Statute of Frauds,
the alleged sale in her favor not being evidenced by a written document
(pp. 7-13, rec. on appeal in the C.A.); and when said motion was denied
without prejudice to passing on the question raised therein when the case
would be tried on the merits (p. 17, ROA in the C.A.), respondents filed
separate answers, reiterating the grounds of their motion to dismiss (pp.
18-23, ROA in the C.A.).
During the trial, when petitioner started presenting evidence of the sale of
the land in question to her by respondent Poncio, part of which evidence
was the agreement written in the Batanes dialect aforementioned,
respondent Infantes objected to the presentation by petitioner of parole
evidence to prove the alleged sale between her and respondent Poncio. In
its order of April 26, 1966, the trial court sustained the objection and
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).
Respondent Infantes sought reconsideration of said decision and acting on
the motion for reconsideration, the Appellate Court, three Justices
(Villamor, Esguerra and Nolasco) of Special Division of Five, granted said
motion, annulled and set aside its decision of November 2, 1967, and
entered another judgment affirming in toto the decision of the court a quo,
with Justices Gatmaitan and Rodriguez dissenting (Appendix "B" of
Petition).
Petitioner Rosario Carbonell moved to reconsider the Resolution of the
Special Division of Five, which motion was denied by Minute Resolution of
December 6, 1968 (but with Justices Rodriguez and Gatmaitan voting for
reconsideration) [Appendix "C" of Petition].
Hence, this appeal by certiorari.
Article 1544, New Civil Code, which is decisive of this case, recites:
If the same thing should have been sold to different vendees,
the ownership shall be transferred to the person who may have
first taken possession thereof in good faith, if it should movable
property.
Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property.
Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession; and, in
the absence thereof, to the person who presents the oldest title,
provided there is good faith (emphasis supplied).
It is essential that the buyer of realty must act in good faith in registering his
deed of sale to merit the protection of the second paragraph of said Article
1544.
Unlike the first and third paragraphs of said Article 1544, which accord
preference to the one who first takes possession in good faith of personal
or real property, the second paragraph directs that ownership of immovable
property should be recognized in favor of one "who in good faith first
recorded" his right. Under the first and third paragraph, good faith must
characterize the act of anterior registration (DBP vs. Mangawang, et al., 11
SCRA 405; Soriano, et al. vs. Magale, et al., 8 SCRA 489).
If there is no inscription, what is decisive is prior possession in good faith. If
there is inscription, as in the case at bar, prior registration in good faith is a
pre-condition to superior title.
When Carbonell bought the lot from Poncio on January 27, 1955, she was
the only buyer thereof and the title of Poncio was still in his name solely
encumbered by bank mortgage duly annotated thereon. Carbonell was not
aware and she could not have been aware of any sale of Infante as
there was no such sale to Infante then. Hence, Carbonell's prior purchase
of the land was made in good faith. Her good faith subsisted and continued
to exist when she recorded her adverse claim four (4) days prior to the
registration of Infantes's deed of sale. Carbonell's good faith did not cease
after Poncio told her on January 31, 1955 of his second sale of the same
lot to Infante. Because of that information, Carbonell wanted an audience
with Infante, which desire underscores Carbonell's good faith. With an
aristocratic disdain unworthy of the good breeding of a good Christian and
good neighbor, Infante snubbed Carbonell like a leper and refused to see
her. So Carbonell did the next best thing to protect her right she
registered her adversed claim on February 8, 1955. Under the
circumstances, this recording of her adverse claim should be deemed to
have been done in good faith and should emphasize Infante's bad faith
when she registered her deed of sale four (4) days later on February 12,
1955.
Bad faith arising from previous knowledge by Infante of the prior sale to
Carbonell is shown by the following facts, the vital significance and
evidenciary effect of which the respondent Court of Appeals either
overlooked of failed to appreciate:
(1) Mrs. Infante refused to see Carbonell, who wanted to see Infante after
she was informed by Poncio that he sold the lot to Infante but several days
before Infante registered her deed of sale. This indicates that Infante knew
from Poncio and from the bank of the prior sale of the lot by Poncio to
Carbonell. Ordinarily, one will not refuse to see a neighbor. Infante lives just
behind the house of Carbonell. Her refusal to talk to Carbonell could only
mean that she did not want to listen to Carbonell's story that she
(Carbonell) had previously bought the lot from Poncio.
(2) Carbonell was already in possession of the mortgage passbook [not
Poncio's saving deposit passbook Exhibit "1" Infantes] and Poncio's
copy of the mortgage contract, when Poncio sold the lot Carbonell who,
after paying the arrearages of Poncio, assumed the balance of his
mortgaged indebtedness to the bank, which in the normal course of
business must have necessarily informed Infante about the said
assumption by Carbonell of the mortgage indebtedness of Poncio. Before
or upon paying in full the mortgage indebtedness of Poncio to the Bank.
Infante naturally must have demanded from Poncio the delivery to her of
his mortgage passbook as well as Poncio's mortgage contract so that the
fact of full payment of his bank mortgage will be entered therein; and
Poncio, as well as the bank, must have inevitably informed her that said
mortgage passbook could not be given to her because it was already
delivered to Carbonell.
If Poncio was still in possession of the mortgage passbook and his copy of
the mortgage contract at the time he executed a deed of sale in favor of the
Infantes and when the Infantes redeemed his mortgage indebtedness from
the bank, Poncio would have surrendered his mortgage passbook and his
copy of the mortgage contract to the Infantes, who could have presented
the same as exhibits during the trial, in much the same way that the
Infantes were able to present as evidence Exhibit "1" Infantes, Poncio's
savings deposit passbook, of which Poncio necessarily remained in
possession as the said deposit passbook was never involved in the
contract of sale with assumption of mortgage. Said savings deposit
passbook merely proves that Poncio had to withdraw P47.26, which
amount was tided to the sum of P200.00 paid by Carbonell for Poncio's
amortization arrearages in favor of the bank on January 27, 1955; because
Carbonell on that day brought with her only P200.00, as Poncio told her
that was the amount of his arrearages to the bank. But the next day
Carbonell refunded to Poncio the sum of P47.26.
(3) The fact that Poncio was no longer in possession of his mortgage
passbook and that the said mortgage passbook was already in possession
of Carbonell, should have compelled Infante to inquire from Poncio why he
was no longer in possession of the mortgage passbook and from Carbonell
why she was in possession of the same (Paglago, et. al vs. Jara et al 22
SCRA 1247, 1252-1253). The only plausible and logical reason why Infante
did not bother anymore to make such injury , w because in the ordinary
course of business the bank must have told her that Poncio already sold
the lot to Carbonell who thereby assumed the mortgage indebtedness of
Poncio and to whom Poncio delivered his mortgage passbook. Hoping to
give a semblance of truth to her pretended good faith, Infante snubbed
Carbonell's request to talk to her about the prior sale to her b Poncio of the
lot. As aforestated, this is not the attitude expected of a good neighbor
imbued with Christian charity and good will as well as a clear conscience.
(4) Carbonell registered on February 8, 1955 her adverse claim, which was
accordingly annotated on Poncio's title, four [4] days before Infante
registered on February 12, 1955 her deed of sale executed on February 2,
1955. Here she was again on notice of the prior sale to Carbonell. Such
registration of adverse claim is valid and effective (Jovellanos vs.
Dimalanta, L-11736-37, Jan. 30, 1959, 105 Phil. 1250-51).
(5) In his answer to the complaint filed by Poncio, as defendant in the Court
of First Instance, he alleged that both Mrs. Infante and Mrs. Carbonell
offered to buy the lot at 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:
for Poncio to get said permit from her. Upon the other hand, if
plaintiff intended to mislead Poncio, she would have caused
Exhibit A to be drafted, probably, in English , instead of taking
the trouble of seeing to it that it was written precisely in his
native dialect, the Batanes. Moreover, Poncio's signature on
Exhibit A suggests that he is neither illiterate nor so ignorant as
to sign document without reading its contents, apart from the
fact that Meonada had read Exhibit A to him and given him a
copy thereof, before he signed thereon, according to
Meonada's uncontradicted testimony.
Then, also, defendants say in their brief:
The only allegation in plaintiff's complaint that bears
any relation to her claim that there has been partial
performance of the supposed contract of sale, is the
notation of the sum of P247.26 in the bank book of
defendant Jose Poncio. The noting or jotting down
of the sum of P247.26 in the bank book of Jose
Poncio does not prove the fact that the said amount
was the purchase price of the property in question.
For all we knew, the sum of P247.26 which plaintiff
claims to have paid to the Republic Savings Bank
for the account of the defendant, assuming that the
money paid to the Republic Savings Bank came
from the plaintiff, was the result of some usurious
loan or accomodation, rather than earnest money or
part payment of the land. Neither is it competent or
satisfactory evidence to prove the conveyance of
the land in question the fact that the bank book
account of Jose Poncio happens to be in the
possession of the plaintiff. (Defendants-Appellees'
brief, pp. 25-26).
How shall We know why Poncio's bank deposit book is in
plaintiffs possession, or whether there is any relation between
the P247.26 entry therein and the partial payment of P247.26
allegedly made by plaintiff to Poncio on account of the price of
his land, if we do not allow the plaintiff to explain it on the
witness stand? Without expressing any opinion on the merits of
latter argument of the Exhibit 'A', the court has arrived at the
conclusion that there is a sufficient description of the lot
referred to in Exh. 'A' as none other than the parcel of land
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 thorough consideration of the context in
Exh. 'A' and for the reasons stated above, the Court has arrived
at the conclusion stated earlier (pp. 52-54, ROA, emphasis
supplied).
(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
1. That on January 27, 1955, the plaintiff purchased from the
defendant Poncio a parcel of land with an area of 195 square
meters, more or less, covered by TCT No. 5040 of the Province
of Rizal, located at San Juan del Monte, Rizal, for the price of
P6.50 per square meter;
2. That the purchase made by the plaintiff was not reduced to
writing except for a short note or memorandum Exh. A, which
also recited that the defendant Poncio would be allowed to
continue his stay in the premises, among other things, ... (pp.
91-92, ROA, emphasis supplied).
From such factual findings, the trial Judge confirms the due execution of
Exhibit "A", only that his legal conclusion is that it is not sufficient to transfer
ownership (pp. 93-94, ROA).
(5) In the first decision of November 2, 1967 of the Fifth Division of the
Court of Appeals composed of Justices Esguerra (now Associate Justice of
the Supreme Court), Gatmaitan and Mojica, penned by Justice Gatmaitan,
the Court of Appeals found that:
... the testimony of Rosario Carbonell not having at all been
attempted to be disproved by defendants, particularly Jose
Poncio, and corroborated as it is by the private document in
Batanes dialect, Exhibit A, the testimony being to the effect that
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.
Inevitably evident therefore from the foregoing discussion, is the bad faith
of Emma Infante from the time she enticed Poncio to dishonor his contract
with Carbonell, and instead to sell the lot to her (Infante) by offering Poncio
a much higher price than the price for which he sold the same to Carbonell.
Being guilty of bad faith, both in taking physical possession of the lot and in
recording their deed of sale, the Infantes cannot recover the value of the
improvements they introduced in the lot. And after the filing by Carbonell of
the complaint in June, 1955, the Infantes had less justification to erect a
building thereon since their title to said lot is seriously disputed by
Carbonell on the basis of a prior sale to her.
With respect to the claim of Poncio that he signed the document Exhibit "A"
under the belief that it was a permit for him to remain in the premises in
ease he decides to sell the property to Carbonell at P20.00 per square
meter, the observation of the Supreme Court through Mr. Chief Justice
Concepcion in G.R. No. L-11231, supra, bears repeating:
IV
IDENTIFICATION AND DESCRIPTION OF THE DISPUTED LOT IN THE
MEMORANDUM EXHIBIT "A"
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. 5354, 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.
While petitioner Carbonell has the superior title to the lot, she must
however refund to respondents Infantes the amount of P1,500.00, which
the Infantes paid to the Republic Savings Bank to redeem the mortgage.
It appearing that the Infantes are possessors in bad faith, their rights to the
improvements they introduced op the disputed lot are governed by Articles
546 and 547 of the New Civil Code. Their expenses consisting of
P1,500.00 for draining the property, filling it with 500 cubic meters of
garden soil, building a wall around it and installing a gate and P11,929.00
for erecting a b ' bungalow thereon, are useful expenditures, for they add to
the value of the property (Aringo vs. Arenas, 14 Phil. 263; Alburo vs.
Villanueva, 7 Phil. 277; Valencia vs. Ayala de Roxas, 13 Phil. 45).
Under the second paragraph of Article 546, the possessor in good faith can
retain the useful improvements unless the person who defeated him in his
possession refunds him the amount of such useful expenses or pay him the
increased value the land may have acquired by reason thereof. Under
Article 547, the possessor in good faith has also the right to remove the
useful improvements if such removal can be done without damage to the
land, unless the person with the superior right elects to pay for the useful
improvements or reimburse the expenses therefor under paragraph 2 of
Article 546. These provisions seem to imply that the possessor in bad faith
has neither the right of retention of useful improvements nor the right to a
refund for useful expenses.
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
Separate Opinions
first buyer may be deemed purchasers in good faith at the respective dates
of their purchase.
The answer to the question of who between the two buyers in good faith
should prevail is provided in the second paragraph of Article 1544 of the
Civil Code 1 (formerly Article 1473 of the old Civil Code) which ordains that
"the ownership of the immovable property shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property."
In the case at bar, the seller executed on January 27, 1955 the private
memorandum of sale of the property in favor of the first buyer Carbonell,
However, six days later on February 2, 1955, the seller sold the property for
a second time for an improved price, this time executing a formal
registrable deed of sale in favor of the second buyer Infante.
So it was that when the first buyer Carbonell saw the seller a few days
afterwards bringing the formal deed of sale for the seller's signature and the
balance of the agreed cash payment, the seller told her that he could not
proceed anymore with formalizing the first sale because he had already
formalized the second sale in favor of the second buyer Infante.
Since Carbonell (the first buyer) did not have a formal registrable deed of
sale, she did the next best thing to protect her legal rights and registered on
February 8, 1955 with the Rizal Register of Deeds her adverse claim as
first buyer entitled to the property. The second buyer Infante registered the
deed of sale in her favor with the Rizal Register of Deeds only on February
12, 1955 (notwithstanding its having been executed ten days earlier on
February 2, 1955), and therefore the transfer certificate of title issued in her
favor carried the duly annotated adverse claim of Carbonell as the first
buyer.
Both these registrations were in good faith and hence, as provided by the
cited code article, the first buyer Carbonell as also the first registrant is
legally entitled to the property.
The fact that Carbonell registered only an adverse claim as she had no
registrable deed of sale is of no moment. The facts of record amply show
that she had a written memorandum of sale, which was partially executed
with the advance payment made by her for the seller's mortgage account
with the bank, and which was perfected and binding in law by their accord
on the subject matter and price. Carbonell could in law enforce in court her
rights as first buyer under the memorandum agreement and compel the
seller to execute in her favor a formal registrable deed of sale which would
relate back to the date of the original memorandum agreement.
And under the cited code provision, Carbonell had to duly register such
adverse claim as first buyer, as otherwise the subsequent registration of the
second buyer's deed of sale would have obliterated her legal rights and
enable the seller to achieve his fraudulent act of selling the property a
second time for a better price in derogation of her prior right thereto.
The fact that the seller refused to execute the formal deed of sale in
Carbonell's favor and (as was only to be expected) informed her that he
could not proceed anymore with the sale because he had sold it for a
second time for a better price did not convert her prior registration of her
adverse claim into one of bad faith.
The fraudulent seller's act of informing the first buyer that he has wrongfully
sold his property for a second time cannot work out to his own advantage
and to the detriment of the innocent first buyer (by being considered as an
"automatic registration" of the second sale) and defeat the first buyer's right
of priority, in time in right and in registration.
The governing principle here is prius tempore, portior jure 2 (first in time,
stronger in right). Knowledge gained by the first buyer of the second sale
cannot defeat the first buyer's rights except only as provided by the Civil
Code and that is where the second buyer first registers in good faith the
second sale ahead of the first. Such knowledge of the first buyer does not
bar her from availing of her rights under the law, among them, to register
first her purchase as against the second buyer. But in other so knowledge
gained by the second buyer of the first sale defeats his rights even if he is
first to register the second sale, since such knowledge taints his prior
registration with bad faith.
This is the price exacted by Article 1544 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 the first sale and of the first buyer's rights)
from the time of acquisition until the title is transferred to him by registration
or failing registration, by delivery of possession. The second buyer must
showcontinuing good faith and innocence or lack of knowledge of the first
sale until his contract ripens into full ownership through prior registration as
provided by law.
The above principles were aptly restated in a 1948 Court of Appeals
decision in the case of Gallardo, vs. Gallardopenned by Justice J.B.L.
Reyes, then a member of the appellate court. 3 The facts of that case and
the case at bar are virtually Identical, except that the earlier case was
decided under the old Civil Code (Article 1473 thereof now reproduced as
Article 1544 of the present Civil Code), and the ratio
decidendi thereof, mutatis mutandis, is fully applicable, as follows:
Analysis of article 1473 of the Civil Code shows
that before a second vendee can obtain priority over the first, it
is indispensable that he should have acted in good faith, (that is
to say, in ignorance of the rights of the first vendee's rights) until
the title is transferred to him by actual or constructive delivery of
the thing sold. This is the price exacted by law for his being able
to displace the first vendee; and the mere fact that the second
contract of sale was perfected in good faith is not sufficient if,
before the title passes, the second vendee acquires knowledge
of the first transaction. That the second buyer innocently agreed
to purchase the land may protect him against responsibility of
conspiring with his vendor to defraud the established rights of
the first purchaser; but to defeat the latter's priority in time
(based on the old principle "prius tempore, potior jure," first in
time, better in right) the good faith or innocence of the posterior
vendee must needs continue until his contract ripens into
ownership by tradition or recording (Palanca vs. Director of
lands, 43 Phil. 141, 154).
That the formal deed of conveyance to Gabino Gallardo was
executed after that of Caoagas is of no moment, the contract of
sale being perfected and binding by mere accord on the subject
matter and the price, even if neither is delivered (Article 1450,
Civil Code), the deed of conveyance will relate back to the date
of the original agreement. 4
Finally, in the present case, the first buyer's registration (February 8, 1955)
concededly preceded the second buyer's registration (February 12, 1955)
by four days, and therefore, as provided by the Civil Code, the first buyer
thereby duly preserved her right of priority and is entitled to the property.
MUOZ PALMA, J., dissenting:
Strongly convinced as I am that the decision of the Court of Appeals under
review should be affirmed, this dissenting opinion is being written.
We are here confronted with a double sale made by Jose Poncio of his
195-square meter lot located at V. Again St., San Juan, Rizal, covered by
Transfer Certificate of Title No. 5040, the solution to which is found in Art.
1544 of the Civil Code, more particularly the second paragraph thereof
which provides that should the thing sold be immovable property, the
ownership shall belong to the person acquiring it who in good with first
recorded it in the Registry of property.
1. The two purchasers, namely, petitioner Rosario Carbonell and
respondent Emma Infante, are both purchasers in good faith.
That Rosario Carbonell is a buyer in good faith cannot be disputed for at
the time negotiations for the purchase of the lot were being made between
her and the vendor, Jose Poncio, as of January 27, 1955, there was no
indication at all from the latter that another sale was being contemplated.
That Emma Infante is likewise a buyer in good faith is supported by: (a) an
express finding of the trial court in its decision of January 20, 1965, to the
effect that when the vendor and purchaser. Infante consummated the sale
on or about January 29, 1955, an examination of the original of T.C.T. 5040
on file with the Register of Deeds of Rizal as well as the owner's duplicate
revealed no annotation of any encumbrance or lien other than the
mortgage in favor of the Republic Savings Bank (p. 92, Record on Appeal);
(b) the findings of fact of the Court of Appeals given in the decision penned
by then Justice Salvador V. Esguerra as well as in the first decision written
by Justice Magno Gatmaitan which subsequently became the basis of the
dissenting opinion to the majority, and from which I quote:
2. CONSIDERING: That as basis for discussion of this issue, it
must have to be remembered that the first vendee, Rosario
Carbonell, certainly was an innocent purchaser ... but also must
it be remembered that Emma L. Infante, when she bought the
property on 2 February, 1955, under Exhibit 3-Infante, neither
had she before then been, preliminary informed of the first sate
to Rosario ...; indeed as Emma has testified on this detail, it is
easy to accept her declaration:
Q. When Mr. Jose Poncio offered you
this land in question, did he tell you that
the land was sold or otherwise promised
to Mrs. Carbonell?
A. Of course not, otherwise will never
buy.
(tsn. II:27)
in other words, at the respective dates of their purchase, both vendees,
Rosario and Emma, were innocent and had acted in the best of good
faith ... (pp. 9-10 of Justice Gatmaitan's decision found on pp. 76-77, rollo;
see also p. 7 of his dissenting opinion found on p. 95, rollo).
Departing from a well-entrenched rule set down in a long array of decisions
of this Court that factual findings of the trial court and of the Court -of
Appeals are generally binding and conclusive, 1 and that on appeal by
certiorari, questions of fact are not to be determined nor reviewed by
Us 2 the Majority Opinion of my colleagues however undertakes a factfinding process of its own, and draws the conclusion that Emma Infante
was a buyer in bad faith because, among other things: (a) Emma allegedly
refused to talk to Rosario Carbonell when the latter went to see her about
the sale of the lot, which "is not the attitude expected of a good neighbor
imbued with Christian charity and goodwill as well as a clean conscience"
(p. 10, Majority Opinion); (b) "(B)efore or upon paying in full the mortgage
indebtedness of Poncio to the bank. Infante naturally must have demanded
from Poncio the delivery to her of his mortgage passbook as well as
Poncio's mortgage contract. . and Poncio as well as the bank, must have
inevitably informed here that said mortgage passbook could not be given to
her because it was already delivered to Carbonell" (p. 9, Ibid); and (c) "...
(T)he 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. ... Inevitably evident therefore from the foregoing discussion,
is the bad faith of Emma Infantefrom the time she enticed Poncio to
dishonor his contract with Carbonell, and instead to sell the lot to
her (Infante) by offering Poncio a much higher price than the price for which
he sold the same to Carbonell ..." (p. 20, Majority Opinion; all italicized
portions supplied) all of which are unsupported by the evidence and
diametrically contrary to the findings of the court a quo and the appellate
court sustaining the good faith of Emma Infante.
2. Inasmuch as the two purchasers are undoubtedly in good faith, the next
question to be resolved is who of the twofirst registered her purchase or
title in good faith.
In applying Art. 1544 of the Civil Code, it is not enough that the buyer
bought the property in good faith, but that the registration of her title must
also be accomplished in good faith. This requirement of good faith is not
only applicable to the second or subsequent purchaser but to the first as
well. 3
Construing and applying the second paragraph of Art. 1473 of the Spanish
Civil Code which has been adoptedverbatim in Art. 1544 of the Civil Code
of the Philippines, this Court in Leung Lee vs. FL Strong Machinery Co., et
al 37 Phil. 644, declared:
It has been suggested that since the provisions of article 1473
of the Civil Code require "good faith," in express terms, in
relation to "possession" and title but contain no express
requirement as to 'good faith' in relation to the "inscription" of
the property in the registry, it must he presumed that good faith
is not an essential requisite of registration in order that it may
have the effect contemplated in this article. We cannot agree
with this contention. It could not have been the intention of the
legislator to base the preferential right secured under this article
of the code upon an inscription of title in bad faith. Such an
interpretation placed upon the language of this section would
open wide the door to fraud and collusion. The public records
cannot be converted into instruments of fraud and oppression
by one who secures an inscription therein in bad faith. The
force and effect given by law to an inscription in a public record
presupposes the good faith of him who enters such inscription;
and rights created by statute, which are predicated upon an
Separate Opinions
TEEHANKEE, J., concurring:
I concur. My concurrence proceeds from the same premise as the
dissenting opinion of Justice Munoz Palma that both the conflicting buyers
of the real property in question, namely, petitioner Rosario Carbonell as the
first buyer may be deemed purchasers in good faith at the respective dates
of their purchase.
The answer to the question of who between the two buyers in good faith
should prevail is provided in the second paragraph of Article 1544 of the
Civil Code 1 (formerly Article 1473 of the old Civil Code) which ordains that
"the ownership of the immovable property shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property."
In the case at bar, the seller executed on January 27, 1955 the private
memorandum of sale of the property in favor of the first buyer Carbonell,
However, six days later on February 2, 1955, the seller sold the property for
a second time for an improved price, this time executing a formal
registrable deed of sale in favor of the second buyer Infante.
So it was that when the first buyer Carbonell saw the seller a few days
afterwards bringing the formal deed of sale for the seller's signature and the
balance of the agreed cash payment, the seller told her that he could not
proceed anymore with formalizing the first sale because he had already
formalized the second sale in favor of the second buyer Infante.
Since Carbonell (the first buyer) did not have a formal registrable deed of
sale, she did the next best thing to protect her legal rights and registered on
February 8, 1955 with the Rizal Register of Deeds her adverse claim as
first buyer entitled to the property. The second buyer Infante registered the
deed of sale in her favor with the Rizal Register of Deeds only on February
12, 1955 (notwithstanding its having been executed ten days earlier on
February 2, 1955), and therefore the transfer certificate of title issued in her
favor carried the duly annotated adverse claim of Carbonell as the first
buyer.
Both these registrations were in good faith and hence, as provided by the
cited code article, the first buyer Carbonell as also the first registrant is
legally entitled to the property.
The fact that Carbonell registered only an adverse claim as she had no
registrable deed of sale is of no moment. The facts of record amply show
that she had a written memorandum of sale, which was partially executed
with the advance payment made by her for the seller's mortgage account
with the bank, and which was perfected and binding in law by their accord
on the subject matter and price. Carbonell could in law enforce in court her
rights as first buyer under the memorandum agreement and compel the
seller to execute in her favor a formal registrable deed of sale which would
relate back to the date of the original memorandum agreement.
And under the cited code provision, Carbonell had to duly register such
adverse claim as first buyer, as otherwise the subsequent registration of the
second buyer's deed of sale would have obliterated her legal rights and
enable the seller to achieve his fraudulent act of selling the property a
second time for a better price in derogation of her prior right thereto.
The fact that the seller refused to execute the formal deed of sale in
Carbonell's favor and (as was only to be expected) informed her that he
could not proceed anymore with the sale because he had sold it for a
second time for a better price did not convert her prior registration of her
adverse claim into one of bad faith.
The fraudulent seller's act of informing the first buyer that he has wrongfully
sold his property for a second time cannot work out to his own advantage
and to the detriment of the innocent first buyer (by being considered as an
"automatic registration" of the second sale) and defeat the first buyer's right
of priority, in time in right and in registration.
The governing principle here is prius tempore, portior jure 2 (first in time,
stronger in right). Knowledge gained by the first buyer of the second sale
cannot defeat the first buyer's rights except only as provided by the Civil
Code and that is where the second buyer first registers in good faith the
second sale ahead of the first. Such knowledge of the first buyer does not
bar her from availing of her rights under the law, among them, to register
first her purchase as against the second buyer. But in other so knowledge
gained by the second buyer of the first sale defeats his rights even if he is
first to register the second sale, since such knowledge taints his prior
registration with bad faith.
This is the price exacted by Article 1544 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 the first sale and of the first buyer's rights)
from the time of acquisition until the title is transferred to him by registration
or failing registration, by delivery of possession. The second buyer must
showcontinuing good faith and innocence or lack of knowledge of the first
sale until his contract ripens into full ownership through prior registration as
provided by law.
The above principles were aptly restated in a 1948 Court of Appeals
decision in the case of Gallardo, vs. Gallardopenned by Justice J.B.L.
Reyes, then a member of the appellate court. 3 The facts of that case and
the case at bar are virtually Identical, except that the earlier case was
decided under the old Civil Code (Article 1473 thereof now reproduced as
Article 1544 of the present Civil Code), and the ratio
decidendi thereof, mutatis mutandis, is fully applicable, as follows:
Analysis of article 1473 of the Civil Code shows
that before a second vendee can obtain priority over the first, it
is indispensable that he should have acted in good faith, (that is
to say, in ignorance of the rights of the first vendee's rights) until
the title is transferred to him by actual or constructive delivery of
the thing sold. This is the price exacted by law for his being able
to displace the first vendee; and the mere fact that the second
Construing and applying the second paragraph of Art. 1473 of the Spanish
Civil Code which has been adoptedverbatim in Art. 1544 of the Civil Code
of the Philippines, this Court in Leung Lee vs. FL Strong Machinery Co., et
al37 Phil. 644, declared:
It has been suggested that since the provisions of article 1473
of the Civil Code require "good faith," in express terms, in
relation to "possession" and title but contain no express
requirement as to 'good faith' in relation to the "inscription" of
the property in the registry, it must he presumed that good faith
is not an essential requisite of registration in order that it may
have the effect contemplated in this article. We cannot agree
with this contention. It could not have been the intention of the
legislator to base the preferential right secured under this article
of the code upon an inscription of title in bad faith. Such an
interpretation placed upon the language of this section would
open wide the door to fraud and collusion. The public records
cannot be converted into instruments of fraud and oppression
by one who secures an inscription therein in bad faith. The
force and effect given by law to an inscription in a public record
presupposes the good faith of him who enters such inscription;
and rights created by statute, which are predicated upon an
inscription in a public registry, do not and cannot accrue under
an inscription "in bad faith," to the benefit of the person who
thus makes the inscription. (pp. 648-649,supra)
Good faith means "freedom from knowledge and circumstances which
ought to put a person on inquiry"; 3* it consists of an honest intention to
abstain from taking any conscientious advantage of another. 4
On this point it is my view that Rosario Carbonell cannot be held to have a
title superior to that of Emma Infante for even if We were to concede that
the notation of her adverse claim on February 8, 1955, was in the nature of
registration of title as required in Art. 1544 of the Civil Code, 5 the same
was not accomplished in good faith. This is obvious from occurrences
narrated in the Majority Opinion, thus: that on January 27, 1955, Carbonell
and Jose Poncio made and executed the memorandum of sale, Exhibit A;
that thereafter Carbonell asked Atty. Salvador Reyes to prepare the formal
deed of sale which she brought to Poncio together with the amount of some
P400.00, the balance she had to pay in addition to her assuming the
registration of her sale having been effected in the foregoing manner, prior
to the annotation of Carbonell's adverse claim on February 8, 1955.
The circumstances of the present case are strikingly similar to the
hypothetical problem posed in Commentator Edgardo Paras' Book on the
Civil Code of the Philippines and I wholeheartedly concur with his solution
of the problem which is based on law. From him I quote: 6
A sold a parcel of land with a torrens title to B on January 5. A
week later, A sold the same land to C. Neither sale was
registered. As soon as B learned of the sale in favor of C, he
(B) registered an adverse claim stating that he was making the
claim because the second sale was in fraud of his rights as first
buyer. Later, C registered the deed of sale that had been made
in his favor. Who is now the owner B or C?
Ans. C is clearly the owner, although he was the second buyer.
This is so, not because of the registration of the sale itself but
because of the AUTOMATIC registration in his favor caused by
Bs knowledge of the first sale (actual knowledge being
equivalent to registration). The purpose of registration is to
notify. This notification was done because of Bs knowledge. It is
wrong to assert that B was only trying to protect his right-for
there was no more right to be protected. He should have
registered the sale BEFORE knowledge came to him. It is now
too late. It is clear from this that with respect to the principle
"actual knowledge is equivalent to registration of the sale about
which knowledge has been obtained' the knowledge may be
that-of either the FIRST or the SECOND buyer. (pp. 142-143,
Vol. V, 1972 Ed.)
Aside from the fact that the sale to Infante was considered registered prior
to the registration of Carbonell's notice of adverse claim, Infante also took
immediate physical possession of the property by erecting a fence with a
gate around the lot on February 5, at least tree days prior to Carbonell Is
registration on February 8, 1955.
On top of all these, equity is on the side of Emma Infante. Under the
Majority Opinion, Emma Infante stands to lose the lot she bought in good
faith which was fully paid for plus the building she erected thereon for which
she spent the total sun of a little less than P14,000.00, or equivalent to
about P40,000.00 at the time the case was decided by the Appellate Court,
considering that Rosario Carbonell is being given the option either to order
the removal of the house or to acquire it at P13,429.00. On this point I
agree with the following statement of Justice Esguerra who penned the
decision of the Appellate Court, thus:
It is indeed inequitable and re revolting to one's sense of justice
and fairness that Rosario Carbonell who paid out of her own
money the sum of only P200.00 to the Republic Savings Bank
for the account of Jose Poncio, which was the motivation for the
execution of the private instrument, Exhibit A, should have a
superior right to the land involved. The property has been
improved at a great expense and a building of strong materials
has been constructed thereon Emma Infants ho spent for her
lot and building the total sum of P13,429.00 made, up of
P11,929.00 for cost of land and improvements and the building
and P1,500.00 to discharge the mortgage in favor of the
Republic Savings Bank. with the present purchasing power of
the peso this aft i more than 13 years, would be not equivalent
to about P40,000.00. Courts should not lend a hand to the
perpetration of such kind of injustice and outrage (see page 88,
rollo)
I close paraphrasing the Supreme Court of Oklahoma in Phelps vs.
Theime, et al., 217 p. 376; 377, that "equity is a right wiseneth that
considerate all of the particular circumstances of the case and is also
tempered with the sweetness of mercy." (quoting from St. Germain) In this
case now before Us there is no need to invoke mercy, for all that is required
is a wise consideration of the particular circumstances narrated above
which warrant a judgment in favor of respondents Infants.
With all the foregoing, I vote for the affirmance of the decision under review.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
MARTINEZ, J.:
This petition for review on certiorari seeks to annul and set aside the
Decision of the Court of Appeals (CA) 1 dated July 7, 1997 in CA-G.R. No.
CV No. 44706 entitled "Ricardo Cheng, plaintiff-appellee vs. Ramon B.
Genato, defendant-appellant, Ernesto R. Da Jose & Socorro B. Da Jose,
Intervenors-Appellants" which reversed the ruling of the Regional Trial
Court, Branch 96 of Quezon City dated January 18, 1994. The dispositive
portion of the CA Decision reads:
WHEREFORE, based on the foregoing, appealed decision is
hereby REVERSED and SET ASIDE and judgment is rendered
ordering;
1. The dismissal of the complaint;
2. The cancellation of the annotations of the defendantappellant's Affidavit to Annul Contract to Sell and plaintiffappellee's Notice of Adverse Claim in the subject TCT's,
namely, TCT No. T-76.196 (M) and TCT No. T-76.197 (M);
3. Payment by the intervenors-appellants of the remaining
balance of the purchase price pursuant to their agreement with
the defendant-appellant to suspend encashment of the three
post-dated checks issued since 1989.
4. Ordering the execution by the defendant-appellant Genato of
the Deed of Absolute Sale over the subject two lots covered by
TCT No. T-76.196 (M) and TCT No. T-76.197 (M) in favor of
intervenors-appellants Spouses Da Jose;
sell with the Da Jose spouses. Genato also showed him the
aforementioned Affidavit to Annul the Contract to Sell which has not been
annotated at the back of the titles.
Despite these, Cheng went ahead and issued a check for P50,000.00 upon
the assurance by Genato that the previous contract with the Da Jose
spouses will be annulled for which Genato issued a handwritten receipt
(Exh. "D"), written in this wise:
10/24/89
Received from Ricardo Cheng
the Sum of Fifty Thousand Only (P50.000-)
as partial for T-76196 (M)
T-76197 (M) area 35.821 Sq.m.
Paradise Farm, Gaya-Gaya, San Jose Del Monte
P70/m2 Bulacan
plus C. G. T. etc.
Check # 470393 (SGD.) Ramon B. Genato
10/24/89 9
On October 25, 1989, Genato deposited Cheng's check. On the same day,
Cheng called up Genato reminding him to register the affidavit to annul the
contract to sell. 10
The following day, or on October 26, 1989, acting on Cheng's request,
Genato caused the registration of the Affidavit to Annul the Contract to Sell
in the Registry of Deeds, Meycauayan, Bulacan as primary entry No.
262702.11
While the Da Jose spouses were at the Office of the Registry of Deeds of
Meycauayan, Bulacan on October 27, 1989, they met Genato by
coincidence. It was only then that the Da Jose spouses discovered about
the affidavit to annul their contract. The latter were shocked at the
disclosure and protested against the rescission of their contract. After being
reminded that he (Genato) had given them (Da Jose spouses) an additional
30-day period to finish their verification of his titles, that the period was still
in effect, and that they were willing and able to pay the balance of the
agreed down payment, later on in the day, Genato decided to continue the
Contract he had with them. The agreement to continue with their contract
was formalized in a conforme letter dated October 27, 1989.
Thereafter, Ramon Genato advised Ricardo Cheng of his decision to
continue his contract with the Da Jose spouses and the return of Cheng's
P50,000.00 check. Consequently, on October 30, 1989, Cheng's lawyer
sent a letter 12 to Genato demanding compliance with their agreement to
sell the property to him stating that the contract to sell between him and
Genato was already perfected and threatening legal action.
On November 2, 1989, Genato sent a letter 13 to Cheng (Exh. "6") enclosing
a BPI Cashier's Check for P50,000.00 and expressed regret for his inability
to "consummate his transaction" with him. After having received the letter of
Genato on November 4, 1989, Cheng, however, returned the said check to
the former via RCPI telegram 14 dated November 6, 1989, reiterating that
"our contract to sell your property had already been perfected."
Meanwhile, also on November 2, 1989, Cheng executed an affidavit of
adverse claim 15 and had it annotated on the subject TCT's.
On the same day, consistent with the decision of Genato and the Da Jose
spouses to continue with their Contract to Sell of September 6, 1989, the
Da Jose spouses paid Genato the complete down payment of P950,000.00
and delivered to him three (3) postdated checks (all dated May 6, 1990, the
stipulated due date) in the total amount of P1,865,680.00 to cover full
payment of the balance of the agreed purchase price. However, due to the
filing of the pendency of this case, the three (3) postdated checks have not
been encashed.
On December 8, 1989, Cheng instituted a complaint 16 for specific
performance to compel Genato to execute a deed of sale to him of the
subject properties plus damages and prayer for preliminary attachment. In
his complaint, Cheng averred that the P50,000.00 check he gave was a
partial payment to the total agreed purchase price of the subject properties
in case the alleged defaulter brings the matter to the proper courts.
In University of the Philippines vs. De Los Angeles, 29 this Court stressed
and we quote:
In other words, the party who deems the contract violated may
consider it resolved or rescinded, and act accordingly, without
previous court action, but it proceeds at its own risk. For it is
only the final judgment of the corresponding court that will
conclusively and finally settle whether the action taken was or
was not correct in law. But the law definitely does not require
that the contracting party who believes itself injured must first
file suit and wait for a judgment before taking extrajudicial steps
to protect its interest. Otherwise, the party injured by the other's
breach will have to passively sit and watch its damages
accumulate during the pendency of the suit until the final
judgment of rescission is rendered when the law itself requires
that he should exercise due diligence to minimize its own
damages (Civil Code, Article 2203).
This rule validates, both in equity and justice, contracts such as the one at
bat, in order to avoid and prevent the defaulting party from assuming the
offer as still in effect due to the obligee's tolerance for such non-fulfillment.
Resultantly, litigations of this sort shall be prevented and the relations
among would-be parties may be preserved. Thus, Ricardo Cheng's
contention that the Contract to Sell between Genato and the Da Jose
spouses was rescinded or resolved due to Genato's unilateral rescission
finds no support in this case.
Anent the issue on the nature of the agreement between Cheng and
Genato, the records of this case are replete with admissions 30 that Cheng
believed it to be one of a Contract to Sell and not one of Conditional
Contract of Sale which he, in a transparent turn-around, now pleads in this
Petition. This ambivalent stance of Cheng is even noted by the appellate
court, thus:
At the outset, this Court notes that plaintiff-appellee was
inconsistent in characterizing the contract he allegedly entered
into. In his complaint. 31 Cheng alleged that the P50,000.00
down payment was earnest money. And next, his
testimony 32 was offered to prove that the transaction between
Whereas, in the instant case, even by a careful perusal of the receipt, Exh.
"D," alone such kind of circumstances cannot be ascertained without
however resorting to the exceptions of the Rule on Parol Evidence.
To our mind, the trial court and the appellate court correctly held that the
agreement between Genato and Cheng is a contract to sell, which was, in
fact, petitioner connection in his pleadings before the said courts.
Consequently, both to mind, which read:
Art. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property.
Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in possession; and in the
absence thereof, to the person who presents he oldest title,
provided there is good faith.
However, a meticulous reading of the aforequoted provision shows that
said law is not apropos to the instant case. This provision connotes that the
following circumstances must concur:
(a) The two (or more) sales transactions in issue must pertain to
exactly the same subject matter, and must be valid sales
transactions.
(b) The two (or more) buyers at odds over the rightful ownership
of the subject matter must each represent conflicting interests;
and
(c) The two (or more) buyers at odds over the rightful ownership
of the subject matter must each have bought from the very
same seller.
These situations obviously are lacking in a contract to sell for neither a
transfer of ownership nor a sales transaction has been consummated. The
contract to be binding upon the obligee or the vendor depends upon the
fulfillment or non-fulfillment of an event.
Notwithstanding this contrary finding with the appellate court, we are of the
view that the governing principle of Article 1544, Civil Code, should apply in
this situation. Jurisprudence 38 teaches us that the governing principle is
PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). For
not only was the contract between herein respondents first in time; it was
also registered long before petitioner's intrusion as a second buyer. This
principle only applies when the special rules provided in the aforcited article
of the Civil Code do not apply or fit the specific circumstances mandated
under said law or by jurisprudence interpreting the article.
The rule exacted by Article 1544 of the Civil Code for the second buyer to
be able to displace the first buyer are:
(1) that the second buyer must show that he acted in good faith (i.e. in
ignorance of the first sale and of the first buyer's rights) from the time of
acquisition until title is transferred to him by registration or failing
registration, by delivery of possession; 39
(2) the second buyer must show continuing good faith and innocence or
lack of knowledge of the first sale until his contract ripens into full
ownership through prior registration as provided by law. 40
Thus, in the case at bar, the knowledge gained by the Da Jose spouses, as
first buyers, of the new agreement between Cheng and Genato will not
defeat their rights as first buyers except where Cheng, as second buyer,
registers or annotates his transaction or agreement on the title of the
subject properties in good faith ahead of the Da Jose spouses. Moreover,
although the Da Jose spouses, as first buyers, knew of the second
transaction it will not bar them from availing of their rights granted by law,
among them, to register first their agreement as against the second buyer.
In contrast, knowledge gained by Cheng of the first transaction between the
Da Jose spouses and Genato defeats his rights even if he is first to register
the second transaction, since such knowledge taints his prior registration
with bad faith.
"Registration", as defined by Soler and Castillo, means any entry made in
the books of the registry, including both registration in its ordinary and strict
sense, and cancellation, annotation, and even marginal notes. 41 In its strict
acceptation, it is the entry made in the registry which records solemnly and
permanently the right of ownership and other real rights. 42 We have
ruled 43 before that when a Deed of Sale is inscribed in the registry of
property on the original document itself, what was done with respect to said
entries or annotations and marginal notes amounted to a registration of the
sale. In this light, we see no reason why we should not give priority in right
the annotation made by the Da Jose spouses with respect to their Contract
to Sell dated September 6, 1989.
Moreover, registration alone in such cases without good faith is not
sufficient. Good faith must concur with registration for such prior right to be
enforceable. In the instant case, the annotation made by the Da Jose
spouses on the titles of Genato of their "Contract To Sell" more than
satisfies this requirement. Whereas in the case of Genato's agreement with
Cheng such is unavailing. For even before the receipt, Exh. "D," was
issued to Cheng information of such pre-existing agreement has been
brought to his knowledge which did not deter him from pursuing his
agreement with Genato. We give credence to the factual finding of the
appellate court that "Cheng himself admitted that it was he who sought
Genato in order to inquire about the property and offered to buy the
same. 44 And since Cheng was fully aware, or could have been if he had
chosen to inquire, of the rights of the Da Jose spouses under the Contract
to Sell duly annotated on the transfer certificates of titles of Genato, it now
becomes unnecessary to further elaborate in detail the fact that he is
indeed in bad faith in entering into such agreement. As we have held
in Leung Yee vs. F.L. Strong Machinery Co.: 45
One who purchases real estate with knowledge of a defect . . .
of title in his vendor cannot claim that he has acquired title
thereto in good faith as against . . . . an interest therein; and the
same rule must be applied to one who has knowledge of facts
which should have put him upon such inquiry and investigation
as might be necessary to acquaint him with the defects in the
title of his vendor. A purchaser cannot close his eyes to facts
which should put a reasonable man upon his guard, and then
claim that he acted in good faith under the belief that there was
no defect in the title of the vendor. His mere refusal to believe
that such defect exists, or his willful closing of his eyes to the
possibility of the existence of a defect in his vendor's title, will
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
EN BANC
G.R. No. L-19248
to the parties adducing other evidence to prove their case not covered by
this stipulation of facts. 1wph1.t
The case was submitted for decision without any testimonial evidence, both
parties relying exclusively on their documentary evidence consisting, on the
part of Hanopol, of the private instruments alluded to and a copy of the
decision in the reivindicatory case, and on the part of Pilapil, the notarized
deed of sale in his favor bearing annotation of its registration under Act No.
3344. As thus submitted, the trial court rendered the decision adverted to at
the beginning of this opinion, mainly upon the authority of the second
paragraph of Article 15441 of the New Civil Code, which is a reproduction of
Article 1473 of the old Civil Code, the law in force at the time the
transaction in this case took place.
Appellant Hanopol in his appeal from the decision of the trial court presents
two questions of law; firstly, whether or not the judgment in the former case
No. 412 against the vendors Siapos is binding upon the defendant-appellee
as their successor-in-interest; and secondly, whether or not the registration
of the second deed of sale in favor of appellee Pilapil affects his right as the
first vendee.
Under the first assignment of error, the appellant contends that inasmuch
as appellee claims to be the successor-in-interest of the vendors, he is
bound by the judgment rendered against the latter. This contention is
without merit, because it appears from the documentary evidence that
appellee Pilapil derived his right to the land from the sale to him of the said
property on December 3, 1945, long before the filing of the complaint
against the vendors in 1948. He was not made a party in the case against
the Siapos, and there was not even a claim that he had knowledge of said
litigation. He cannot, therefore, be bound by such judgment in view of the
provision of paragraph (b), Section 44 of Rule 39 of the Rules of Court
which speaks of the effect of judgment as follows:
... the judgment so ordered is, in respect to the matter directly
adjudged, conclusive between the parties and their successors in
interest by title subsequent to commencement of the action or special
proceeding, litigating for the same thing and under the same title and
in the same capacity. (Emphasis supplied)
Since Pilapil was not a party to the action and is not a successor-in-interest
by title subsequent to the commencement of the action, having acquired his
title in 1945 and the action filed in 1948, the decision in said case cannot
be binding on him.
Appellant argues under the second issue raised by him that the registration
of Pilapil's notarized deed of sale in 1948 under Act No. 3344 "shall be
understood to be without prejudice to a third party with a better right". He
contends that since at the time the Siapos sold the land in question in 1945
to Pilapil, the former were no longer the owners as they had already sold
the same to appellant since 1938, the first sale to him is a better right which
cannot be prejudiced by the registration of the second sale.
We do not think the quoted proviso in Act No. 3344 justifies appellant's
contention. If his theory is correct, then the second paragraph of Article
1544 of the New Civil Code (formerly Article 1473 of the old Code) would
have no application at all except to lands or real estate registered under the
Spanish Mortgage Law or the Land Registration Act. Such a theory would
thus limit the scope of that codal provision. But even if we adopt this latter
view, that is, that Article 1544 (formerly Article 1473) only applies to
registered land, still we cannot agree with the appellant that by the mere
fact of his having a previous title or deed of sale, he has acquired thereby
what is referred to in Act No. 3344 as the "better right" that would be
unaffected by the registration of a second deed of sale under the same law.
Under such theory, there would never be a case of double sale of the same
unregistered property.
An example of what could be a better right that is protected against the
inscription of a subsequent sale is given in the case of Lichauco v.
Berenguer (39 Phil. 643). The facts in that case are succinctly stated in the
syllabus thereof as follows:
.... In 1882 B sold to S a piece of land. After the sale B continued in
the possession of the land in the capacity of lessee of S through
payment of rent, and continued as such until his death when he was
substituted by the administrator of his property. In 1889 B sold again
the same piece of land to L who leased it to B himself under certain
conditions. Both sales were executed in a public instrument, the one
executed in favor of L being registered only in 1907. Thus, S and L
acquired possession of the land through the same vendor upon the
under claim of ownership, when they sold the said land to appellee Pilapil
on December 3, 1945, such possession was transmitted to the latter, at
least constructively, with the execution of the notarial deed of sale, if not
actually and physically as claimed by Pilapil in his answer filed in the
present case. Thus, even on this score, Hanopol cannot have a better right
than appellee Pilapil who, according to the trial court, "was not shown to be
a purchaser in bad faith".
WHEREFORE, finding no error in the decision appealed from, the same is
hereby affirmed, with costs against the appellant. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18497
The question before Us now is: Who has the better right as between
appellant Dagupan Trading Company, on the one hand, and appellee
Rustico Macam, on the other, to the one-eighth share of Sammy Maron in
the property mentioned heretofore?
If the property covered by the conflicting sales were unregistered land,
Macam would undoubtedly have the better right in view of the fact that his
claim is based on a prior sale coupled with public, exclusive and continuous
possession thereof as owner. On the other hand, were the land involved in
the conflicting transactions duly registered land, We would be inclined to
hold that appellant has the better right because, as We have consistently
held, in case of conveyance of registered real estate, the registration of the
deed of sale is the operative act that gives validity to the transfer. This
would be fatal to appellee's claim, the deeds of sale executed in his favor
by the Maron's not having been registered, while the levy in execution and
the provisional certificate of sale as well as the final deed of sale in favor of
appellant were registered. Consequently, this registered conveyance must
prevail although posterior to the one executed in favor of appellee, and
appellant must be deemed to have acquired such right, title and interest as
appeared on the certificate of title issued in favor of Sammy Maron, subject
to no lien, encumbrance or burden not noted thereon. (Anderson & Co. vs.
Garcia, 64 Phil. 506; Reynes, et al. vs. Barrera, et al., 68 Phil. 656; Banco
Nacional, etc. vs. Camus, 70 Phil. 289)
The present case, however, does not fall within either, situation. Here the
sale in favor of appellee was executedbefore the land subject-matter
thereof was registered, while the conflicting sale in favor of appellant was
executedafter the same property had been registered. We cannot,
therefore, decide the case in the light of whatever adjudicated cases there
are covering the two situations mentioned in the preceding paragraph. It is
our considered view that what should determine the issue are the
provisions of the last paragraph of Section 35, Rule 39 of the Rules of
Court, to the effect that upon the execution and delivery of the final
certificate of sale in favor of the purchaser of land sold in an execution sale,
such purchaser "shall be substituted to and acquire all the right, title,
interest and claim of the judgment debtor to the property as of the time of
the levy." Now We ask: What was the interest and claim of Sammy Maron
on the one-eighth portion of the property inherited by him and his co-heirs,
at the time of the levy? The answer must necessarily be that he had none,
because for a considerable time prior to the levy, his interest had already
that the latter is subjected to the action of our will, or by the appropriate
acts and legal formalities established for acquiring possession (art. 438,
Civil Code.). By a simple reasoning, it appears that, because the law does
not mention to which of these kinds of possession the article refers, it must
be understood that it refers to all of these kinds. The proposition that this
article, according to its letter, refers to the material possession and
excludes the symbolic does not seem to be founded upon a solid ground. It
is said that the law, in the gradation of the causes of preference between
several sales, fixes, first, possession and then the date of the title and, as a
public instrument is a title, it is claimed that the inference is that the law has
deliberately intended to place the symbolic possession, which the
execution of the public document implies after the material possession.
This argument, however, would only be forceful if the title, mentioned by
this article, includes public instruments, and this would only be true if public
instruments are not included in the idea of possession spoken of in said
article. In other words, the strength of the argument rests in that this
possession is precisely the material and does not include the symbolic.
Consequently, the argument is deficient for it is begging the same question,
because if this possession includes the symbolic, which is acquired by the
execution of a public instrument, it should be understood that the title,
mentioned by the law as the next cause of preference, does not include
public instruments.
Furthermore, our interpretation of this article 1473 is more in consonance
with the principles of justice. The execution of a public instrument is
equivalent to the delivery of the realty sold (art. 1462, Civil Code) and its
possession by the vendee (art. 438). Under these conditions the sale is
considered consummated and completely transfers to the vendee all of the
vendor's rights of ownership including his real right over the thing. The
vendee by virtue of this sale has acquired everything and nothing,
absolutely nothing, is left to the vendor. From this moment the vendor is a
stranger to the thing sold like any other who has never been its owner. As
the thing is considered delivered, the vendor has no longer the obligation of
even delivering it. If he continues taking material possession of it, it is
simply on account of vendee's tolerance and, in this sense, his possession
is vendor's possession. And if the latter should have to ask him for the
delivery of this material possession; it would not be by virtue of the sale,
because this has been already consummated and has produced all its
effects, but by virtue of the vendee's ownership, in the same way as said
vendee could require of another person although same were not the
vendor. This means that after the sale of a realty by means of a public
instrument, the vendor, who resells it to another, does not transmit anything
to the second vendee and if the latter, by virtue of this second sale, takes
material possession of the thing, he does it as mere detainer, and it would
be unjust to protect this detention against the rights to the thing lawfully
acquired by the first vendee.
We are of the opinion that the possession mentioned in article 1473 (for
determining who has better right when the same piece of land has been
sold several times by the same vendor) includes not only the material but
also the symbolic possession, which is acquired by the execution of a
public instrument.
From the foregoing it follows that the plaintiff was the first to take
possession of the land, and consequently the sale executed to him is
preferable.
Wherefore, the judgment appealed from is hereby reversed; the plaintiff is
declared owner of the land in question; and the defendant is ordered to
deliver the possession of the land to the plaintiff. No special findings as to
costs. So ordered.
Arellano, C.J., Torres, Johnson, Araullo and Malcolm, JJ., concur.
Separate Opinions
STREET, J., dissenting:
In my judgment the possession referred to in article 1473 of the Civil Code
is the actual, material and physical possession of the thing sold; and in
applying that provision no account should ever be taken of the symbolic
possession which is supposed to be acquired by the purchaser, under
article 1463 of the Civil Code, when the sale is proved by a public
document.
The authors of the Civil Code have stated three distinct criteria for
determining who has the better right when the same piece of real property
is sold by the same vendor, to two different persons, which are: First,
owner and takes the material possession from him, should be protected as
against any prior purchaser except the one who may have registered his
title. This was without doubt the intention of the codifiers. Otherwise the
third paragraph of article 1473 would have been so drawn as to read as
follows:
Should it not be recorded, the property shall belong to the
person whose purchase is proved by a public instrument, and if
neither sale be thus proved , to the person who first took possession
of it in good faith, or, in default of possession, to the person who
presents the oldest title, provided there is good faith.
In other words, if the codifiers had intended to create a preferential right
based upon the fact that a contract of sale is executed in the form of a
public instrument, this would have been enumerated among the criteria
expressed in article 1473, as giving the better right.
The omission of the authors of the Code of take this course in framing that
article is significant; and it was doubtless due to a perception of the fact
that the form in which a contract happens to be executed affords no proper
test when the question is between one who claims under that contract and
one who claims under another contract of later date executed by the same
vendor. The court, by the decision made in this case has, we submit,
amended article 1473 by inserting therein a provision antagonistic to the
spirit of that article and destructive of its purpose.
If there were any real publicity incident to the execution of a public
instrument, the result would not be so baleful. But under our existing
notarial system, the acknowledgment of a document before a notary
involves no general publicity; and the inspection so long as it remains in the
hands of the notary. Besides, where there are dozens of notaries
accessible to the public, as in the city of Manila, it would be impracticable
for a person, desirous of purchasing a particular piece of unregistered
property, to ascertain whether or not such property has been the subject of
a prior sale acknowledged before a notary. The impossibility of protecting a
purchaser in good faith from such occult prior transactions is obvious.
THIRD DIVISION
SPOUSES
SAMUEL
ULEP
(Deceased)
and
SUSANA
REPOGIA-ULEP; SAMUEL ULEP
is substituted by his surviving
spouses SUSANA REPOGIAULEP and his children: SALLY,
RENATO,
RODELIO
and
RICHARD, all surnamed ULEP,
and VALENTINA ULEP,
Petitioners,
Present:
PANGANIBAN, J., Chairman
SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES and
GARCIA, JJ.
- versus HONORABLE
COURT
OF
Promulgated:
APPEALS, former Eight Division,
IGLESIA NI CRISTO, MAXIMA
RODICO and spouses WARLITO
October 11, 2005
PARINGIT and ENCARNACION
PARINGIT- GANTE,
Respondents.
x----------------------------------------------------------------------------------x
DECISION
GARCIA, J.:
Under consideration is this petition for review under Rule 45 of the Rules of
Court seeking the reversal and setting aside of the Decision [1] dated August
15, 1995 of the Court of Appeals (CA) in CA-G.R. CV. No. 39333, and its
Resolution[2] dated April 25, 1996, denying petitioners motion for
reconsideration.
The assailed decision modified the June 17, 1991 decision [3] of the
Regional Trial Court at Urdaneta, Pangasinan, Branch 48, in its Civil Case
No. U-3929, an action for Quieting of Title, Reconveyance and Declaration
of Nullity of Titles and Subdivision Plan, with Damages, thereat
commenced by the petitioners against the herein private respondents.
The factual antecedents:
This prompted Samuel Ulep and sister Rosita Ulep to make inquiries with
the Office of the Register of Deeds of Pangasinan. To their consternation,
they discovered from the records of said office that a deed of sale bearing
date December 21, 1954, was
purportedly executed by their brother Atinedoro Ulep his, wife Beatriz and
their sister Valentina Ulep in favor of INC over a portion of 620 square
meters, more or less, of Lot 840, and that on the basis of said deed, INC
was issued TCT No. 12689 on September 23, 1975 [4] over the portion
allegedly sold to it by the three. Samuel was further shocked to find out that
on July 9, 1975, an affidavit of subdivision was executed by
respondentsINC, Maxima Rodico and the spouses Warlito Paringit and
Encarnation Gante, on the basis of which affidavit Lot 840 was subdivided
into four (4) lots, namely: (1) Lot 840-A, covered by TCT No. 16205 in his
(Samuels) name that of his wife, Susana Repogia-Ulep; (2) Lot 840-B,
covered by TCT No. 12688 in the names of Warlito Paringit and the latters
wife Encarnacion Gante; (3) Lot-C 840-C, covered by TCT No. 12689 in the
name of INC; and (4) Lot 840-D, covered by TCT No. 12690 [5] in the name
of Maxima Rodico.
Such was the state of things when, on March 29, 1983, in the Regional
Trial Court at Pangasinan, the spouses Samuel Ulep and Susana
Repogia-Ulep, the spouses Atinedoro Ulep and Beatriz Ulep and
their sister Valentina Ulep, filed their complaint for Quieting of Title,
Reconveyance and Declaration of Nullity of Title and Subdivision Plan with
Damages against respondents INC, Maxima Rodico and the spouses
Warlito Paringit and Encarnacion Gante. In their complaint, docketed as
Civil Case No. U-3929, the Uleps basically alleged that they and
respondents are co-owners of Lot 840 in the following proportions:
1,635 square meters to Maxima Rodico;
817.5 square meters to spouses Samuel Ulep and Susana
Repogia-Ulep;
507.5 square meters to spouses Warlito Paringit and
Encarnacion Gante;
210 square meters to spouses Atinedoro Ulep and Beatriz Ulep,
and Valentina Ulep;
(b)
(c)
(d)
(e)
(g)
(h)
(j)
3. TCT No. 16205 registered in the names of [petitionerspouses] Samuel and Susan Ulep (Exh. K-4) is annulled.
The Register of Deeds of Pangasinan is ordered to issue
a new TCT in favor of [petitioner-spouses] Samuel Ulep and
Susana Repogia covering only 297.5 sq. m.; and another new
TCT covering 105 sq. m. in favor of Valentina Ulep and the
other of 210 sq. m. or 105 sq. m. in favor of [petitioner-spouses]
Samuel Ulep and Susana Repogia pursuant to Exh.
C. No Costs.
SO ORDERED.[9] (Words in brackets ours).
In so ruling, the Court of Appeals explained:
There is no adequate evidentiary demonstration in the
record that the deed of sale (dated December 21, 1954
executed by Atinedoro Ulep, his wife Beatriz and sister
Valentina Ulep in favor of INC over the 620 square-meter area
of the western portion of Lot 840) is void and inefficacious on
account of forgery.
first sale defeats his rights even if he is first to register the second sale,
since such knowledge taints his prior registration with bad faith. This is the
price exacted by the same provision of the Civil Code for the second buyer
to be able to displace the first buyer; before the second buyer can obtain
priority over the first, he must show that he acted in good faith throughout
(i.e. ignorance of the first sale and of the first buyers rights) from the time of
acquisition until the title is transferred to him by registration, or, failing
registration, by delivery of possession.[13]
Per records, the sale of the disputed 620 square-meter portion of Lot 840 to
respondent INC was made on December 21, 1954 and registered with the
Registry of Deeds of Pangasinan on January 5, 1955. In fact, INC was
issued a title over the same portion on September 23, 1975. On the other
hand, the conveyance to the spouses Samuel Ulep and Susana RepogiaUlep happened on January 18, 1971 and the spouses registered their
document of conveyance only on February 22, 1973.[14]
Clearly, not only was respondent INC the first buyer of the disputed
area. It was also the first to register the sale in its favor long before
petitioners Samuels and Susanas intrusion as second buyers. Although
Samuel and Susana thereafter registered the sale made to them, they did
so only after 18 years from the time INC caused the registration of its own
document of sale.
Registration means any entry made in the books of the Registry
which records solemnly and permanently the right of ownership and other
real rights.[15] However, mere registration is not sufficient. Good faith must
concur with registration, else registration becomes an exercise in futility.
[16]
In the instant case, the registration made by respondent INC of its deed
of sale more than satisfies this requirement. The same thing cannot be said
of petitioners Samuel Ulep and Susana Ulep. Said petitioners, by their own
admission, were aware that there existed an agreement between INC and
vendors Atinedoro Ulep, his wife Beatriz and sister Valentina Ulep involving
a portion of 100 square meters of Lot 840. Knowledge of such transaction
should have put the spouses Samuel Ulep and Susana Ulep upon such
inquiry or investigation as might be necessary to acquaint them with the
possible defects in the title of their vendors. They should have acted with
that, if it be not completely paid on the expiration of the term, the ownership
of the land should revert to Anselmo Singian (Exhibit X).
The parties to this action are: Faustino Lichauco and others, in their
capacity as heirs of Cornelia Lauchangco, as plaintiff; Jose Berenguer,
administrator of the estate of Macario Berenguer, and Anselmo Singian in
his own behalf, as defendants.
The plaintiffs pray that the sale of the land executed by Macario Berenguer
in favor of Cornelia Lauchangco be declared absolute or that the defendant
Jose Berenguer be obliged to pay to the plaintiffs the sum of P3,000, the
price of the repurchase, with legal interest thereon from October 7, 1891,
and the amount of P9,236.86, as rents due, as well as the amounts which
would be due until the execution of the sentence with the corresponding
interests. The defendants Jose Berenguer prays that he be absolved from
the complaint and that the plaintiffs be obliged to execute in this favor the
document of repurchase of the land. The defendant Anselmo Singian prays
that the sale of the land executed by Macario Berenguer in favor of
Cornelia Lauchangco be declared null and void and that he be declared
absolute owner of the said land.
The trial court absolved owner of the said land, finding as to costs and from
this judgment the plaintiffs appealed.
From what has been said, it appears that the land in question had been
twice sold by Macario Berenguer: the first sale was made in 1882 in favor
of Cristino Singian and the second, in 1889, in favor of Cornelia
Lauchangco, predecessor in interest of the plaintiffs. The question to be
decided is, which of these two sales is to be preferred. Both were executed
by means of public instruments. Considering the facts in connection with
the time prior to 1907, it follows that, since neither of these instruments was
inscribed, the preference should be in favor of the purchaser who first took
possession of the land, inasmuch as this possession, according to the law
in force prior to the promulgation of the Civil Code, constituted the
consummation of the contract, and also inasmuch as the civil Code (article
1473) expressly provides that possession in such cases transfers the
ownership of the thing sold. The trial court accepted the fact that the
defendant Anselmo Singian, by himself and through a representative, took
possession of the land since its sale in 1882 and has been continuing in
Singian but not the legal effects of his possession. The effect which the law
gives to the registry of a sale, in case of a double sale, against the efficacy
of the sale that was not registered does not extend to the other titles which
the other vendee may have gained independently, as the little of
prescription in this case. And thus, even supposing that the sale to Singian,
for lack of registry, had lost all its efficacy, in itself, as a title transferring
ownership as against the sale to Lauchangco which was registered, still
there remains for Singian the title of prescription which has not been
destroyed by another to the contrary.
The fact that in 1904 Anselmo Singian in turn sold the land in question to
Macario Berenguer does not affect the merits of the case. In the said sale it
was agreed that Berenguer would pay the stipulated price within the period
of eight years and if, at the expiration of the eight years, the amount should
not have been completely paid, the ownership of the land would revert to
the vendor. It does not appear that no payment on account of this price has
been made and inasmuch as this payment should be proved by him who is
obliged to do so, we accept as a fact that it was not so made. Under such
circumstances, whatever effect may be attributed to the sale during the
said period of eight years, which was fixed for the payment of the price,
cannot be given such effect after the expiration of the said period, without
the price having been paid. At all events, the ownership of the land sold
reverted to the vendor.
We have reached the conclusion that the sale to Anselmo Singian
represented by his tutor Cristino Singian was valid and produced the effect
of transferring in his favor the ownership of the land in question. And, even
disregarding the proper effect of this sale, the defendant Anselmo Singian
has also acquired the ownership of the land by prescription.
Having reached the conclusion and as the action of the plaintiff against the
defendant Berenguer is entirely based upon the efficacy of the sale of the
same land made in favor of Cornelia Lauchangco, we have to hold also that
the complaint against the latter is improper.
Therefore, we hereby affirm the judgment appealed form in so far as it
absolves the defendants from the complaint with the costs against the
appellants. So ordered.
Finding that the facts and the law support the same, it is our opinion,
and so hold, that the appealed decision should be, as it is hereby affirmed.
Costs against petitioners spouses Paylago and Dimaandal.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
Jomoc, so that the subsequent sale to petitioner spouses Lim is null and
void.
The subject lot in Cagayan de Oro City forms part of the estate of the late
Pantaleon Jomoc. Because it was fictitiously sold and transferred to third
persons, petitioner Maria P. Vda. Jomoc, as administratrix of the estate and
in behalf of all the heirs, filed suit to recover the property before the trial
court of Misamis Oriental in Civil Case No. 4750. Mariano So, the last of
the transferees and the husband of Maria So, intervened. The case was
decided in favor of Jomoc and was accordingly appealed by Mariano So
and one Gaw Sur Cheng to the Court of Appeals. In February 1979,
pending the appeal, Jomoc executed a Deed of Extrajudicial Settlement
and Sale of Land (Exhibit "A") with private respondent for P300,000.00. The
document was not yet signed by all the parties nor notarized but in the
meantime, Maura So had made partial payments amounting to P49,000.00.
In 1983, Mariano So, the appellant in the recovery proceeding, agreed to
settle the case by executing a Deed of Reconveyance of the land in favor
of the heirs of Pantaleon Jomoc. The reconveyance was in compliance with
the decision in the recovery case and resulted in the dismissal of his
appeal. On February 28, 1983, the heirs of Jomoc executed another extrajudicial settlement with absolute sale in favor of intervenors Lim Leong
Kang and Lim Pue filing. Later, Maura So demanded from the Jomoc family
the execution of a final deed of conveyance. They ignored the demand.
Thus, private respondent Maria So sued petitioners-heirs for specific
performance to compel them to execute and deliver the proper registrable
deed of sale over the lot. The case was docketed as Civil Case No. 8983.
So then filed a notice of lis pendens with the Register of Deeds on
February 28, 1983. It was on the same date, February 28, 1983, allegedly
upon the Jomocs' belief that Maura So had backed out from the transaction
that the Jomocs executed the other extrajudicial settlement with sale of
registered land in favor of the spouses Lim for a consideration of
P200,000.00 part of which amount was allegedly intended to be returned to
Maura So as reimbursement. The spouses Lim, however, registered their
settlement and sale only on April 27, 1983.
The Jomocs as defendants, and the spouses Lim as intervenors alleged
that complainant Maura so backed out as evidenced by an oral testimony
that she did so in a conference with the Jomocs' lawyers where she
The Court finds no cogent reason to reverse the factual finding of the
Regional Trial Court and the Court of Appeals that private respondent did
not subsequently abandon her intention of purchasing the subject lot.
The facts reveal an agreement between the contracting parties to Exhibit
"A" to the effect that "the consideration of P300,000.00 or whatever balance
remains after deducting the advanced payments thereon, shall be paid
upon the termination of (Mariano So's) appeal in the case involving the
property in question." (G.R. No. 92871, Rollo, p. 123). The finding is
supported by substantial evidence. As reasoned by both courts, even if the
sums paid by Maura So were allegedly intended to expedite the dismissal
of the appeal of Mariano So, such payment only indicates interest in
acquiring the subject lot. In addition, the claim by the defendants-petitioners
that the payments were for the gathering of the several heirs from far
places to sign Exhibit "A" confirms respondent Maura So's continuing
interest. The terms of Exhibit "A" and the actual intention of the parties are
clear and no reform requiring parole evidence is being sought to elucidate
the intention further. The oral evidence offered by defendants-petitioners to
show a subsequent refusal to proceed with the sale cannot be considered
to reverse the express intention in the contract. Moreover, the two courts
below had definite findings on this factual issue and we see no reason to
reject and reverse their conclusion.
The petitioners contend that the trial court and the appellate court erred in
declaring as void the subsequent deed of extra-judicial settlement with
spouses Lim since specific performance and not annulment of contract due
to existence of double sale, was the thrust of the complaint. This argument
is untenable. The issue of double sale had to be resolved to determine
whether or not complainant Maura So was entitled to the reliefs prayed for
There was no hard evidence to show that the vinculum or contractual
relation between petitioners-heirs and Maura So had been cut-off. Yet,
petitioners-heirs sold the same lot to spouses Lim. The case therefore
requires us to discern who has the better right to the property.
Article 1544 of the Civil Code provides:
xxx xxx xxx