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Sometime in Feb. 1981, Gerardo Dela Paz and his sister Manuela Dela Paz, entered into an
oral contract with Rev. Fr. Dante Martinez for sale of lot P15k. At time of sale, lot was still
registered in name of Claudia de la Paz, mother, although already sold it to Manuela through
DOAS however, Martinez was assured that the lot belonged to Manuela. After giving P3k
downpayment, Martinez started construction of house after getting abuilding permit from the
City Engineers Office with the consent of Claudia. Petioner started paying real estate taxes &
maintained residence there. When he completed payment 2 documents were executed
promising that DOS would be executed in favor of Martinez but the Dela Pazes never
delivered it.
In the meantime, by virtue of a Deed of Absolite Sale with right to repurchase, De la Paz sold
3 lots to Sps. Veneracion for P150k, including lot sold to Martinez and the lot occupied by the
Dela Pazes, but Sps. Veneracion never took actual possession of any of the lots. Before
expiration of 1-yr period to repurchase, Godofredo informed Veneracion that he was selling
the lots to Tecson for P180k but Veneracion offered to buy 2 lots for same amount. Godofredo
then accepted & executed DOAS to Veneracion covering the two lots.
Sometime in January, 1984, private respondent Reynaldo Veneracion asked petitioners
neighbor who the owner of the building erected on the subject lot was. Reyes told him that it
was Feliza Martinez, petitioners mother, who was in possession of the property. Reynaldo
Veneracion told private respondent Godofredo about the matter and was assured that
Godofredo would talk to Feliza. Based on that assurance, private respondents Veneracion
registered the lots with the Register of Deeds of Cabanatuan on March 5, 1984. The lot in
dispute was registered under TCT No. T-44612
Martinez discovered that lot he was occupying had been sold to Sps. Veneracion only on
1984 when Veneracion informed him through a letter claiming that Veneracion is the owner
of the lots and demanding Martinez to vacate the property.
Veneracion filed for ejectment and Martinez subsequenlty filed for the annulment of sale
between Dela Paz and Veneracion insofar as his lot is concerned.
CA affrimed TCs decision that Veneracion was the rightful owner of the lots subject to
Marinez right as a builder in good faith. The decision was anchored upon Article 1544 of the
CC under the ff points:
1. The Veneracions were buyers in good faith and this was manifested when they
immediately informed Godofredo about the house built of the subject lot and the
former relied on the latters assurance.
2. the sale between petitioner Martinez and private respondents De la Paz was not
notarized, as required by Arts. 1357 and 1358 of the Civil Code, thus it cannot be said
that the private respondents Veneracion had knowledge of the first sale.
ISSUES: 1. WON Veneracion was a buyer in good faith
2. WON the sale between Martinez and Dela Paz needed to be in a public document to
be enforceable.
HELD: 1. The Veneracions were not buyers in good faith.
The provision that will apply in this case is Art 1544 CC on double sale which provides that
ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it
to the Registry of Property; (2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the oldest title. The
requirement of the law, where title to the property is recorded in the Register of Deeds, is twofold: acquisition in good faith and recording in good faith. To be entitled to priority, the second

purchaser must not only prove prior recording of his title but that he acted in good faith, i.e.,
without knowledge or notice of a prior sale to another. The presence of good faith should be
ascertained from the circumstances surrounding the purchase of the land.
Veneracion claimed that on Oct 10, 1981, 18 days prior to the execution of the DOS with right
to repurchase, he went to the subject lot but found no house therein. However, this was bellied
by the testimony of the building inspector that when he conducted and ocular inspection on
Oct 6, 1981, the house of Martinez was already completed (presumption of regularity).
Veneracion therefore has knowledge of the facts which should put him into inquiry of the real
nature of Martinez possession, but he merely relied on Godofredos assurance when the latter
wasnt even the owner of the subj. land.
2. Reduction into a public document is not necessary.
The appellate courts reliance on Arts. 1357 and 1358 of the Civil Code to determine private
respondents Veneracions lack of knowledge of petitioners ownership of the disputed lot is
Art. 1357 and Art. 1358, in relation to Art. 1403(2) of the Civil Code, requires that the sale of
real property must be in writing for it to be enforceable. It need not be notarized. If the sale
has not been put in writing, either of the contracting parties can compel the other to observe
such requirement. This is what petitioner did when he repeatedly demanded that a Deed of
Absolute Sale be executed in his favor by private respondents De la Paz. There is nothing in the
above provisions which require that a contract of sale of realty must be executed in a public
document. In any event, it has been shown that private respondents Veneracion had
knowledge of facts which would put them on inquiry as to the nature of petitioners occupancy
of the disputed lot.
Therefore, since Veneracion did not register the property in good faith and Martinez had first
possession of the property in good faith, pursuant to Art 1544 CC, the Court held that Martinez
was the owner of the land and ordered the annulment of the DOAS executed in favor of
Veneracion, and ordered Dela Paz to reimburse whatever Veneracion paid for the lot.