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SECOND DIVISION DELFIN TAN, Petitioner, G.R. No. 153820 Present: QUISUMBING, J., CARPIO-MORALES, ** NACHURA, BRION, and ABAD, JJ.

*

- versus

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ERLINDA C. BENOLIRAO, ANDREW C. BENOLIRAO, ROMANO C. BENOLIRAO, DION C. BENOLIRAO, SPS. REYNALDO TANINGCO and NORMA D. BENOLIRAO, EVELYN T. MONREAL, and ANN KARINA TANINGCO, Respondents.

Promulgated: October 16, 2009

x-------------------------------------------------------------------------------------- x DECISION BRION, J.:

Is an annotation made pursuant to Section 4, Rule 74 of the Rules of Court (Rules) on a certificate of title covering real property considered an encumbrance on the property? We resolve this question in the petition for review on certiorari[1] filed by Delfin Tan (Tan) to assail the decision of the Court of Appeals (CA) in CA-G.R. CV No. 52033[2] and the decision of the Regional Trial

Court (RTC)[3] that commonly declared the forfeiture of his P200,000.00 down payment as proper, pursuant to the terms of his contract with the respondents. THE ANTECEDENTS The facts are not disputed. Spouses Lamberto and Erlinda Benolirao and the Spouses Reynaldo and Norma Taningco were the co-owners of a 689-square meter parcel of land (property) located in Tagaytay City and covered by Transfer Certificate of Title (TCT) No. 26423. On October 6, 1992, the co-owners executed a Deed of Conditional Sale over the property in favor of Tan for the price of P1,378,000.00. The deed stated:
a) An initial down-payment of TWO HUNDRED (P200,000.00) THOUSAND PESOS, Philippine Currency, upon signing of this contract; then the remaining balance of ONE MILLION ONE HUNDRED SEVENTY EIGHT THOUSAND (P1,178,000.00) PESOS, shall be payable within a period of one hundred fifty (150) days from date hereof without interest; b) That for any reason, BUYER fails to pay the remaining balance within above mentioned period, the BUYER shall have a grace period of sixty (60) days within which to make the payment, provided that there shall be an interest of 15% per annum on the balance amount due from the SELLERS; c) That should in case (sic) the BUYER fails to comply with the terms and conditions within the above stated grace period, then the SELLERS shall have the right to forfeit the down payment, and to rescind this conditional sale without need of judicial action; d) That in case, BUYER have complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale;

Pursuant to the Deed of Conditional Sale, Tan issued and delivered to the co-owners/vendors Metrobank Check No. 904407 for P200,000.00 as down payment for the property, for which the vendors issued a corresponding receipt.

On November 6, 1992, Lamberto Benolirao died intestate. Erlinda Benolirao (his widow and one of the vendors of the property) and her children, as heirs of the deceased, executed an extrajudicial settlement of Lamberto’s estate on January 20, 1993. On the basis of the extrajudicial settlement, a new certificate of title over the property, TCT No. 27335, was issued on March 26, 1993 in the names of the Spouses Reynaldo and Norma Taningco and Erlinda Benolirao and her children. Pursuant to Section 4, Rule 74 of the Rules, the following annotation was made on TCT No. 27335:
x x x any liability to credirots ( sic), excluded heirs and other persons having right to the property, for a period of two (2) years, with respect only to the share of Erlinda, Andrew, Romano and Dion, all surnamed Benolirao

As stated in the Deed of Conditional Sale, Tan had until March 15, 1993 to pay the balance of the purchase price. By agreement of the parties, this period was extended by two months, so Tan had until May 15, 1993 to pay the balance. Tan failed to pay and asked for another extension, which the vendors again granted. Notwithstanding this second extension, Tan still failed to pay the remaining balance due on May 21, 1993. The vendors thus wrote him a letter demanding payment of the balance of the purchase price within five (5) days from notice; otherwise, they would declare the rescission of the conditional sale and the forfeiture of his down payment based on the terms of the contract. Tan refused to comply with the vendors’ demand and instead wrote them a letter (dated May 28, 1993) claiming that the annotation on the title, made pursuant to Section 4, Rule 74 of the Rules, constituted an encumbrance on the property that would prevent the vendors from delivering a clean title to him. Thus, he alleged that he could no longer be required to pay the balance of the purchase price and demanded the return of his down payment.

When the vendors refused to refund the down payment, Tan, through counsel, sent another demand letter to the vendors on June 18, 1993. The vendors still refused to heed Tan’s demand, prompting Tan to file on June 19, 1993 a complaint with the RTC of Pasay City for specific performance against the vendors, including Andrew Benolirao, Romano Benolirao, Dion Benolirao as heirs of Lamberto Benolirao, together with Evelyn Monreal and Ann Karina Taningco (collectively, the respondents). In his complaint, Tan alleged that there was a novation of the Deed of Conditional Sale done without his consent since the annotation on the title created an encumbrance over the property. Tan prayed for the refund of the down payment and the rescission of the contract. On August 9, 1993, Tan amended his Complaint, contending that if the respondents insist on forfeiting the down payment, he would be willing to pay the balance of the purchase price provided there is reformation of the Deed of Conditional Sale. In the meantime, Tan caused the annotation on the title of a notice of lis pendens. On August 21, 1993, the respondents executed a Deed of Absolute Sale over the property in favor of Hector de Guzman (de Guzman) for the price ofP689,000.00. Thereafter, the respondents moved for the cancellation of the notice of lis pendens on the ground that it was inappropriate since the case that Tan filed was a personal action which did not involve either title to, or possession of, real property. The RTC issued an order dated October 22, 1993 granting the respondents’ motion to cancel the lis pendens annotation on the title. Meanwhile, based on the Deed of Absolute Sale in his favor, de Guzman registered the property and TCT No. 28104 was issued in his name. Tan then filed a motion to carry over the lis pendens annotation to TCT No. 28104 registered in de Guzman’s name, but the RTC denied the motion.

On appeal. or the reformation of the contract to adjust the payment period. Hence.000.00 per court appearance. the RTC rendered judgment ruling that the respondents’ forfeiture of Tan’s down payment was proper in accordance with the terms and conditions of the contract between the parties. In the present case. after due proceedings. believing that he is in the right. Tan posits that the CA erroneously disregarded the alternative remedy of reformation of contract when it affirmed the removal of thelis pendens annotation on the title. the present petition. so that Tan will pay the remaining balance of the purchase price only after the lapse of the required two-year encumbrance on the title. as attorney’s fees.00. 1995. since he filed the foregoing action in good faith. Tan further contends that the CA erred when it recognized the validity of the forfeiture of the down payment in favor of the vendors. Due to the unauthorized novation of the agreement.00. Tan presented before the trial court two alternative remedies in his complaint – either the rescission of the contract and the return of the down payment. plus P1. Tan maintains that the CA erred in ordering him to pay the respondents P30.000. THE ISSUES Tan argues that the CA erred in affirming the RTC’s ruling to cancel the lis pendens annotation on TCT No.On September 8. While admitting that the Deed of Conditional Sale contained a forfeiture clause. Tan claims that he was justified in refusing to pay the balance price since the vendors would not have been able to comply with their obligation to deliver a “clean” title covering the property. plusP1.000.000. he insists that this clause applies only if the failure to pay the balance of the purchase price was through his own fault or negligence.00 per court appearance as attorney’s fees. . Lastly. the CA dismissed the petition and affirmed the ruling of the trial court in toto. [4] The RTC ordered Tan to pay the respondents the amount of P30. 27335. and to pay the cost of suit.

we note that Tan raised the following additional assignment of errors in his Memorandum: (a) the CA erred in holding that the petitioner could seek reformation of the Deed of Conditional Sale only if he paid the balance of the purchase price and if the vendors refused to execute the deed of absolute sale. theories. on the other hand. we said that: The raising of additional issues in a memorandum before the Supreme Court is irregular. No new points of law. 2004 Resolution expressly stated that “No new issues may be raised by a party in his/its Memorandum. because said memorandum is supposed to be in support merely of the position taken by the party concerned in his petition.The respondents. in contravention of the provisions of Rule 45 of the Rules which provides that only questions of law can be raised in petitions for review on certiorari.” Explaining the reason for this rule. The purpose of this rule is to provide all parties to a case a fair opportunity to be heard. justice and due process. The Court’s September 27. No new issues can be raised in the Memorandum At the onset. issues or arguments may be raised by a party in the Memorandum for the reason that to permit these would be offensive to the basic rules of fair play. and the raising of new issues amounts to the filing of a petition beyond the reglementary period. [5] . assert that the petition should be dismissed for raising pure questions of fact. and (b) the CA erred in holding that the petitioner was estopped from asking for the reformation of the contract or for specific performance. THE COURT’S RULING The petition is granted.

after proper showing that the notice is for the purpose of molesting the adverse party. the plaintiff and the defendant. and only of its pendency against the parties designated by their real names. be deemed to have constructive notice of the pendency of the action. or that it is not necessary to protect the rights of the party who caused it to be recorded. the issue raised in the present petition – defined in the opening paragraph of this Decision – is a pure question of law. In an action affecting the title or the right of possession of real property. the petition and the issue it presents are properly cognizable by this Court. Notice of lis pendens. and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser. Lis pendens annotation not proper in personal actions Section 14. Hence.Tan contravened the Court’s explicit instructions by raising these additional errors. Rule 13 of the Rules enumerates the instances when a notice of lis pendens can be validly annotated on the title to real property: Sec. 14. when affirmative relief is claimed in his answer. Petition raises a question of law Contrary to the respondents’ claim. Hence. or encumbrancer of the property affected thereby. may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. we disregard them and focus instead on the issues previously raised in the petition and properly included in the Memorandum. . The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court. Said notice shall contain the names of the parties and the object of the action or defense.

specific property. While the Deed does have real property for its object. some responsibility or liability directly upon the person of the defendant. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person. Since Tan had no claim of ownership or title to the property yet. or in personam. Furthermore. and by these only. Tan wants to enforce his personal rights against the respondents. the contract between the parties was merely a contract to sell where the vendors retained title and ownership to the property until Tan had fully paid the purchase price. he obviously had no right to ask for the annotation of a lis pendens notice on the title of the property. although it may involve his right to. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. as Tan asked the court to compel the respondents to do something – either to rescind the contract and return the down payment. we find that Tan’s complaint is an in personam action. through the judgment of a court. is determined by its nature and purpose. As we explained in Domagas v. or seek to compel him to control or dispose of it in accordance with the mandate of the court.[6] Tan’s complaint prayed for either the rescission or the reformation of the Deed of Conditional Sale. Either way. Whether a proceeding is in rem. Contract is a mere contract to sell . or the exercise of ownership of. as will be explained in detail below. The purpose of a proceeding in personam is to impose. not against the property subject of the Deed.The litigation subject of the notice of lis pendens must directly involve a specific property which is necessarily affected by the judgment. or to reform the contract by extending the period given to pay the remaining balance of the purchase price. or quasi in rem for that matter. Jensen:[7] The settled rule is that the aim and object of an action determine its character.

[8] Article 1485 of the Civil Code defines a contract of sale as follows: Art. BUYER has complied with the terms and conditions of this contract.[9] In contrast. and not what the contracting parties call it. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a determinate thing. the true nature of the contract is revealed by paragraph D thereof.e. while expressly reserving the ownership of the propertydespite delivery thereof to the prospective buyer. although it is conditioned upon the happening of a contingent event which may or may not occur. binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed. A contract of sale may be absolute or conditional. a contract to sell is defined as a bilateral contract whereby the prospective seller. which states: x x x d) That in case. The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised. x x x Jurisprudence has established that where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price.[10] A contract to sell may not even be considered as a conditional contract of sale where the seller may likewisereserve title to the property subject of the sale until the fulfillment of a suspensive condition.A contract is what the law defines it to be. because in a conditional contract of sale. full payment of the purchase price.. . taking into consideration its essential elements. i. then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale. and the other to pay therefor a price certain in money or its equivalent. the first element of consent is present .[11] In the present case.

which Tan considered an encumbrance on the property. . or that an heir or other person has been unduly deprived of his lawful participation payable in money. all surnamed Benolirao [Emphasis supplied.If it shall appear at any time within two (2) years after the settlement and distribution of an estate in accordance with the provisions of either of the first two sections of this rule. states: x x x any liability to credirots ( sic). with respect only to the share of Erlinda. Andrew.the contract is only a contract to sell. the court having jurisdiction of the estate may. And if withinthe same time of two (2) years. after hearing. The annotation placed on TCT No. excluded heirs and other persons having right to the property. it shall appear that there are debts outstanding against the estate which have not been paid. [12] Thus. for a period of two (2) years. he claims that he had valid reason to do so – the sudden appearance of an annotation on the title pursuant to Section 4.] This annotation was placed on the title pursuant to Section 4. the new title issued to reflect the extrajudicial partition of Lamberto Benolirao’s estate among his heirs. and may . Liability of distributees and estate. such heir or such other person may compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such lawful participation. that an heir or other person has been unduly deprived of his lawful participation in the estate. settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall contribute in the payment thereof. the presence of the above-quoted provision identifies the contract as being a mere contract to sell. Rule 74 of the Rules. A Section 4. 4. We find Tan’s argument meritorious. by order for that purpose. which reads: Sec. while the contract is denominated as a Deed of Conditional Sale. Rule 74 of the Rules. Romano and Dion. 27335. Rule 74 annotation is an encumbrance on the property While Tan admits that he refused to pay the balance of the purchase price.

or some outstanding debts which have not been paid are discovered.] Senator Vicente Francisco discusses this provision in his book The Revised Rules of Court in the Philippines.] An annotation is placed on new certificates of title issued pursuant to the distribution and partition of a decedent’s real properties to warn third persons on the possible interests of excluded heirs or unpaid creditors in these properties. heirs. of course. it may issue execution against the real estate belonging to the decedent. as was allowed under the old Code. the procedure is not to cancel the partition. or in case unpaid debts are discovered within the said period of two years. if circumstances require. The present procedure is more expedient and less expensive in that it dispenses with the appointment of an administrator and does not disturb the possession enjoyed by the distributees. he is entitled to a part of the real property that has been partitioned. Rule 74 prescribes the procedure to be followed if within two years after an extrajudicial partition or summary distribution is made. Where a buyer purchases the real . The annotation.issue execution. creates a legal encumbrance or lien on the real property in favor of the excluded heirs or creditors. or other persons for the full period of two (2) years after such distribution. there can be no other procedure than to cancel the partition so made and make a new division. notwithstanding any transfers of real estate that may have been made.[13] where he states: The provision of Section 4. after hearing. the heir agrees to be paid the value of his participation with interest . [Emphasis supplied. because. an heir or other person appears to have been deprived of his lawful participation in the estate. nor to appoint an administrator to re-assemble the assets. or both. if circumstances require. shall fix the amount of such debts or lawful participation in proportion to or to the extent of the assets they have respectively received and. When the lawful participation of the heir is not payable in money. But in case the lawful participation of the heir consists in his share in personal property of money left by the decedent. Such bond and such real estate shall remain charged with a liability to creditors. against the bond provided in the preceding section or against the real estate belonging to the deceased. for instance. but the court. unless. or both.[14] [Emphasis supplied. therefore.

the court in re-dividing it among the heirs has the authority to direct cancellation of such alienation in the same estate proceedings. All this implies that. in Sps.[17] although the title of the property had already been registered in the name of the third party buyers. . whenever it becomes necessary to do so. As we held in Vda. but shall affect any transferee of the properties.] Indeed. Carreon:[15] And Section 4. Roces.property despite the annotation. we cancelled the sale and ordered the reconveyance of the property to the estate of the deceased for proper disposal among his rightful heirs. Rule 74 xxx expressly authorizes the court to give to every heir his lawful participation in the real estate “notwithstanding any transfers of such real estate” and to “issue execution” thereon. the effects of this provision are not limited to the heirs or original distributees of the estate properties. The cancellation of the sale would be the logical consequence where: (a) the annotation clearly appears on the title. Malay. warning all would-be buyers. Domingo v. he must be ready for the possibility that the title could be subject to the rights of excluded parties. as long as the deprived heir or creditor vindicates his rights within two years from the date of the settlement and distribution of estate. To require the institution of a separate action for such annulment would run counter to the letter of the above rule and the spirit of these summary settlements. de Francisco v. [Emphasis supplied.] Similarly. in David v. (b) the sale unlawfully interferes with the rights of heirs. Contrary to petitioners’ contention. and (c) the rightful heirs bring an action to question the transfer within the two-year period provided by law. when within the amendatory period the realty has been alienated. [Emphasis supplied.[16] we said: The foregoing rule clearly covers transfers of real property to any person.

at this time. the encumbrance would remain so attached until the expiration of the two-year period. In a contract to sell. a new certificate of title covering the property had already been issued on March 26. title remains with the vendor and does not pass on to the vendee until the purchase price is paid in full. 1993. Thus.] . In a contract of sale. The effects in law are not identical. We explained the reason for this in Santos v. Contract to sell is not rescinded but terminated What then happens to the contract? We have held in numerous cases[18] that the remedy of rescission under Article 1191 cannot apply to mere contracts to sell. it is subordinated to the provisions of Article 1592 when applied to sales of immovable property. Neither provision is applicable [to a contract to sell]. It does not apply to a contract to sell. Failure to pay the price agreed upon is not a mere breach. As to Article 1191. Clearly. 1993 (on account of the extensions granted by the respondents). x x xArticle 1592 speaks of non-payment of the purchase price as a resolutory condition. where non-payment of the price is a negative resolutory condition. however. the vendors could no longer compel Tan to pay the balance of the purchase since considering they themselves could not fulfill their obligation to transfer a clean title over the property to Tan. the vendor remains the owner for as long as the vendee has not complied fully with the condition of paying the purchase price. unless the contract of sale is rescinded and set aside. he is enforcing the contract and not rescinding it. the vendor has lost ownership of the thing sold and cannot recover it. Court of Appeals.By the time Tan’s obligation to pay the balance of the purchase price arose on May 21. but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.[19] where we said: [I]n a contract to sell. [Emphasis supplied. casual or serious. If the vendor should eject the vendee for failure to meet the condition precedent. the payment of the purchase price is a positive suspensive condition. This is entirely different from the situation in a contract of sale. in a contract to sell. which contained the encumbrance on the property.

we find and so hold that the forfeiture of Tan’s down payment was clearly unwarranted. therefore. Monetary award is subject to legal interest Undoubtedly. to convey a clean title.00 as attorney’s fees proper. Tan made a clear and unequivocal demand on the vendors to return his down payment as early as May 28. we find the award of P50.e. Tan had a valid reason for refusing to pay the balance of the purchase price for the property.We. 1993. Pursuant to . Given the facts of this case. there is no basis for the award of attorney’s fees in favor of the respondents. i. since he was compelled to litigate due to the respondents’ refusal to return his down payment despite the fact that they could no longer comply with their obligation under the contract to sell.000. we award attorney’s fees in favor of Tan. Award of Attorney’s fees As evident from our previous discussion. Consequently. hold that the contract to sell was terminated when the vendors could no longer legally compel Tan to pay the balance of the purchase price as a result of the legal encumbrance which attached to the title of the property. Since Tan’s refusal to pay was due to the supervening event of a legal encumbrance on the property and not through his own fault or negligence. On the other hand..

this interim period being deemed to be by then an equivalent to a forbearance of credit. Another judgment is rendered declaring the Deed of Conditional Sale terminated and ordering the respondents to return the P200. computed from May 28. the date of the first demand letter.[20] we hold that the vendors should return the P200. until full payment of these amounts. shall be 12% per annum from such finality until its satisfaction. 52033. Furthermore. respondents are ordered to pay interest at 12% per annum on the principal obligation as well as the attorney’s fees.000. premises considered. jointly and severally. we hereby GRANT the petition and. subject to legal interest of 6% per annum.000.00 down payment to Tan. an annual interest of 12% shall be imposed on these obligations until their final satisfaction. 2002 decision of the Court of Appeals in CA-G. after a judgment has become final and executory. subject to the legal interest of 6% per annum computed from May 28. petitioner Delfin Tan the amount of P50. 1993. ANNUL and SET ASIDE the May 30. 1993.000.00 shall bear 6% interest from the date of first demand or from May 28. Accordingly. accordingly. Costs against the respondents.00 down payment to petitioner Delfin Tan. v. .00 as and by way of attorney’s fees. Inc. whether the obligation was in the form of a loan or forbearance of money or otherwise. From the date the liability for the principal obligation and attorney’s fees has become final and executory.our definitive ruling in Eastern Shipping Lines. CV No. the principal obligation of P200.R. Court of Appeals. WHEREFORE. Once this decision becomes final and executory. 1993. the rate of legal interest.000. The respondents are also ordered to pay.

R. 2009 ROGELIA DACLAG and ADELINO DACLAG (deceased). 2003 of the Court of Appeals (CA) in CA-G. The deed of sale executed by Maxima in favor of petitioners was null and void. title to the property is in the name of petitioner Rogelia. the defense of having purchased the property in good faith is unavailing. notwithstanding petitioners' unmeritorious argument. Petitioners. DACLAG. ADELA MACAHILIG.Search Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G. No. respondents’ complaint for reconveyance was filed in 1991. 48498. CONRADO MACAHILIG. the trial court correctly ordered the reconveyance of the subject land to respondents. ELINO MACAHILIG. 159578 February 18. the Court deems it necessary to make certain clarifications.: Before us is petitioners' Motion for Reconsideration of our Decision dated July 28. and ADRIAN M.R. CV No. substituted by RODEL M. However. in accordance with Article 1410 of the Civil Code that an action to declare the inexistence of a void contract does not prescribe. petitioners contend that the 10-year period for reconveyance is applicable if the action is based on an implied or a constructive trust. since Maxima was not the owner of the land she sold to petitioners. Court of Appeals. Likewise. Records show that while the land was registered in the name of petitioner Rogelia in 1984. thus. We ruled that since petitioners bought the property when it was still an unregistered land. we have consistently ruled that when there is a showing of such illegality. and the former then has the right to sue for the reconveyance of the property. We affirmed the Regional Trial Court (RTC) in finding that petitioners should pay respondents their corresponding share in the produce of the subject land from the time they were deprived thereof until the possession is restored to them. which was within the 10-year prescriptive period. the action must be filed within four years from the discovery of the fraud. vs. 2001 and the Resolution dated August 7. a review of the factual antecedents of the case shows that respondents' action for reconveyance was not even subject to prescription.Respondents. DACLAG. 2008 where we affirmed the Decision dated October 17. an action in personam will lie to compel him to reconvey the property to the real owner. We have earlier ruled that respondents' action for reconveyance had not prescribed. 5 An action for reconveyance based on a void contract is imprescriptible. the property registered is deemed to be simply held in trust for the real owner by the person in whose name it is registered. citing Gerona v. that since respondents' action for reconveyance was based on fraud. De Guzman."4 However. Being an absolute nullity. LORENZA HABER and BENITA DEL ROSARIO.6 As long as the land wrongfully registered under the Torrens system is still in the name of the person who caused such registration. the deed is subject to attack anytime.2 We do not agree.1 which was reiterated in Balbin v. In their Motion for Reconsideration. 7 In this case. J.3 we have explicitly held that "the prescriptive period for the reconveyance of fraudulently registered real property is 10 years reckoned from the date of the issuance of the certificate of title x x x. . RESOLUTION AUSTRIA-MARTINEZ. and the one-half northern portion of such land was owned by respondents. since it was filed within the 10-year prescriptive period. Medalla. In Caro v.

VICENTE TENG GUI. according to petitioners. which. Juana Ting Ho and Lydia Ting Ho Belenzo against their brother. No. Branch 74 of Olongapo City. respondent Vicente Teng Gui. July 16. MERLA TING HO BRADEN. before the RTC. DECISION PUNO. 2008] FELIX TING HO. CJ. 558-0-88.R. 130115. PETITIONERS. Jr. Merla Ting Ho Braden. . and should be partitioned equally among each of the siblings.FIRST DIVISION [G. VS. CV No. RESPONDENT. and the improvements established thereon. Felix Ting Ho.: This is a Petition for Review on Certiorari[1] assailing the Decision[2] of the Court of Appeals (CA) in CA-G. JUANA TING HO LYDIA TING HO BELENZO. The instant case traces its origin to an action for partition filed by petitioners Felix Ting Ho. in Civil Case No. JR.. should form part of the estate of their deceased father. 42993 which reversed and set aside the Decision of the Regional Trial Court (RTC) of Olongapo City. Branch 74. The controversy revolves around a parcel of land..R.

and left upon his death an estate consisting of the following: a) A commercial land consisting of 774 square meters. 5982. Victoria Cabasal.S. [4] In his answer.. Felix Ting Ho had managed the bakery while the mother managed the sari-sari store. in favor of Gregorio Fontela. b) A two-storey residential house on the aforesaid lot. [3] According to petitioners. The father. the father of the plaintiffs and defendant. P-1064 and Tax Declaration No. he executed on October 11. No. petitioners alleged that their father Felix Ting Ho died intestate on June 26. The father of the plaintiffs and the defendant was a Chinese citizen although their mother was Filipino. C). 1978. specifically described in Tax Dec. who was already then married to their mother Leonila Cabasal.In their complaint before the RTC. of Felix Ting Ho over the said building (Exh. C-2). They are the only legitimate children of the deceased Spouses Felix Ting Ho and Leonila Cabasal. The couple. being a Chinese citizen. East Bajac-Bajac. the defendant being the oldest. in favor of Victoria Cabasal his sister-in-law (Exh. P-1064 covering the subject lot was issued to him pursuant to a miscellaneous sales patent granted to him on January 3. 1961 and has since then been in possession of subject properties in the concept of an owner. are as follows: [T]he plaintiffs and the defendant are all brothers and sisters. described in Tax Dec. the first floor rented to different persons and the second floor. Olongapo. and that on January 24. 1978. and d) A sari-sari store (formerly a bakery) also located on the above described lot. 1970 while the wife Leonila Cabasal died on December 7. On the same date. Long before the death of Felix Ting Ho. who died on June 26. No. That sometime in 1947. 1943. the said lot and properties were titled and tax declared under trust in the name of respondent Vicente Teng Gui for the benefit of the deceased Felix Ting Ho who. . Naval Reservation Office. 1970. Felix Ting Ho sold the commercial and residential buildings to his sister-in-law. 1978. the respondent took possession of the same for his own exclusive use and benefit to their exclusion and prejudice. and that upon the death of Felix Ting Ho. 1970. of legal age. Gregorio Fontela. 5432. an American citizen. and the bakery to his brother-in-law. 7579 (Exh. East Bajac-Bajac. lived and resided in the said properties until their death. 16 situated at Afable Street. 1958. This Deed of Sale cancelled the Tax Dec. Bonanza Hotel. as per Tax Dec. more or less. covered by Original Certificate of Title No. No. c) A two-storey commercial building. by virtue of the permission granted him by the then U. and affirmed by the appellate court (CA). 18 Brill which was thereafter identified as Lot No. Felix Ting Ho died on June 26. was then disqualified to own public lands in the Philippines. 1958a Deed of Absolute Sale of a house of strong material located at 16 Afable Street. October 11. Felix Ting Ho. 1958 the said Felix Ting Ho also sold a building of strong material located at 18 Afable Street. the respondent countered that on October 11. They built a house of strong material at 16 Afable Street which is a commercial and residential house and another building of strong material at 18 Afable Street which was a residential house and a bakery. Olongapo City. Zambales. Original Certificate of Title No. The couple thereafter introduced improvements on the land. 002-2451. as well as their children.[6] The undisputed facts as found by the trial court (RTC). operated by the defendant also located on the above described lot. 16 and 18 Afable St. Olongapo. C-1) and the building was registered in the name of the buyer Victoria Cabasal. occupied a parcel of land identified to (sic) as Lot No. The defendant Vicente Teng Gui is the oldest among the children as he was born on April 5. [5] He alleged that he acquired said properties from the respective buyers on October 28. Olongapo City. located at Nos. Zambales.

On the basis of the said document the defendant who then chose Filipino citizenship filed a miscellaneous sales application with the Bureau of Lands. This Deed of Sale. 418. pursuant to Article 1471 of the New Civil Code[9] it can be assumed that the intention of Felix Ting Ho in such transaction was to give and donate such properties to the respondent. the herein respondent.married (Exh.[8] Notwithstanding such findings. the Court believes. 7457 of the land which was then identified to be Lot No. as per Tax Dec. The Court finds that these transaction (sic) were simulated and that no consideration was ever paid by the vendees.. Miscellaneous Sales Patent No. C-3 and D-3).[7] (Emphasis supplied) In light of these factual findings. the RTC considered the Affidavit of Transfer. in effect. As a result. No. xxx xxx xxx With regards (sic) to the transfer and relinquishment of Felix Ting Ho's right to the land in question in favor of the defendant. D). 1961 the buildings which were bought by them from Felix Ting Ho and their tax declarations for the building they bought (Exhs. the Court is inclined to believe that Felix Ting Ho. With respect to the properties in the lot. During all the time that the alleged buildings were sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to the defendant Vicente Teng Gui in October of 1961 the plaintiffs and the defendant continued to live and were under the custody of their parents until their father Felix Ting Ho died in 1970 and their mother Leonila Cabasal died in 1978. In turn Victoria Cabasal and her husband Gregorio Fontela sold to Vicente Teng Gui on October 28. P-1064 covering the lot in question was issued to the defendant Vicente Teng Gui. still the Court believes that the transaction was one of implied trust executed by Felix Ting Ho for the benefit of his family. it awarded the entire conjugal share of Felix Ting Ho in . 7580 (Exh. C-2 and D-2) were accordingly cancelled and the said buildings were registered in the name of the defendant Vicente Teng Gui (Exhs. resorted to a series of simulated transactions in order to preserve the right to the lot and the properties thereon in the hands of the family. Ts-308 consisting of 774 square meters was issued to the applicant Vicente Teng Gui and accordingly on the 24th of January. the trial court held that although the sales were simulated. 1966 the father of the parties Felix Ting Ho executed an Affidavit of Transfer. being a Chinese citizen and the father of the petitioners and respondent. the RTC found that Felix Ting Ho.. On October 25. No. As stated by the trial court: After a serious consideration of the testimonies given by both one of the plaintiffs and the defendant as well as the documentary exhibits presented in the case. cancelled Tax Dec. he first executed simulated Deeds of Sales in favor of the sister and brother-in-law of his wife in 1958 and after three (3) years it was made to appear that these vendees had sold the improvements to the defendant Vicente Teng Gui who was then 18 years old. 1978 Original Certificate of Title No. Relinquishment and Renouncement of Rights and Interest including Improvements on Land in favor of his eldest son the defendant Vicente Teng Gui. and the husband of Leonila Cabasal thought of preserving the properties in question by transferring the said properties to his eldest son as he thought that he cannot acquire the properties as he was a Chinese citizen. 5982 and the same was registered in the name of the buyer Gregorio Fontela. Relinquishment and Renouncement of Rights and Interests over the land as a donation which was accepted by the donee. the defendant Vicente Teng Gui. D-2). that although from the face of the document it is stated in absolute terms that without any consideration Felix Ting Ho was transferring and renouncing his right in favor of his son. Although the buildings and improvements on the land in question were sold by Felix Ting Ho to Victoria Cabasal and Gregorio Fontela in 1958 and who in turn sold the buildings to the defendant in 1961 the said Felix Ting Ho and his wife remained in possession of the properties as Felix Ting Ho continued to manage the bakery while the wife Leonila Cabasal continued to manage the sari-sari store. To transfer the improvements on the land to his eldest son the defendant Vicente Teng Gui. the father of the plaintiffs and the defendant.

which clearly establishes that these properties should form part of the estate of the late spouses Felix Ting Ho and Leonila Cabasal. Relinquishment and Renouncement of Rights and Interest" etc. plaintiffs' and defendant's late father. specifically described in original Certificate of Title No.the subject lot and properties to the respondent and divided only the conjugal share of his wife among the siblings. the late Felix Ting Ho. asserted that the RTC erred in not ruling that the lot and properties do not form part of the estate of Felix Ting Ho and are owned entirely by him. Lot 418. Merla Ting-Ho Braden. having died on June 6. to wit: To the defendant Vicente Teng Gui is adjudicated an undivided six-tenth (6/10) of the aforementioned properties and to each of the plaintiffs Felix Ting Ho. the CA reversed and set aside the decision of the RTC. Jr. xxx xxx xxx Defendant Vicente Teng Gui acquired the subject land by sales patent or purchase from the government and not from his father. .S.[10] From this decision. 9179 and 9180 in the name of Vicente Teng Gui in the following manner. executed on October 25. January 10. who is of legal age. 7457 issued in his favor. It cannot be said that he acquired or bought the land in trust for his father because on December 5. 4). (Emphasis supplied) The affidavit. 1970 (TSN. The dispositive portion of the RTC decision decreed: WHEREFORE. the CA held that the finding that the sales of the two-storey commercial and residential buildings and sari-sari store to Victoria Cabasal and Gregorio Fontela and subsequently to respondent were without consideration and simulated is supported by evidence. p. On appeal. Zambales". Record.. both parties interposed their respective appeals. 1966 he. 107). by the then U. 1978 when Miscellaneous Sales Patent No. was merely a possessor or occupant of the subject lot "by virtue of a permission granted. 1990. A. now identified as Lot No. 418. The petitioners claimed that the RTC erred in awarding respondent the entire conjugal share of their deceased father in the lot and properties in question contrary to its own finding that an implied trust existed between the parties. and that respondent Vicente Teng Gui was the rightful owner over said lot by virtue of Miscellaneous Sales Patent No.. including all the improvements thereon to his son. the late Felix Ting Ho. judgment is hereby rendered in favor of the plaintiffs and against the defendant as the Court orders the partition and the adjudication of the subject properties. 7457 was issued. single.. was subscribed and sworn to before a Land Investigator of the Bureau of Lands and in the said affidavit. B: Record. P-1064 and the residential and commercial houses standing on the lot specifically described in Tax Decs. Olongapo. Nos. was never the owner of the subject lot. Ts-308. the late Felix Ting Ho was already dead. As stated by Felix Ting Ho no less in the "Affidavit of Transfer. viz: The deceased Felix Ting Ho. Ts-308 covered by OCT No. The appellate court held that the deceased Felix Ting Ho was never the owner and never claimed ownership of the subject lot since he is disqualified under Philippine laws from owning public lands. The respondent. relinquishes and renounces all his rights and interests in the subject land. the defendant Vicente Teng Gui. 104). p. P-1064 (Exh. Juana Ting and Lydia Ting Ho-Belenzo each an undivided one-tenth (1/10) of the properties. Filipino citizen and qualified under the public land law to acquire lands.. p. Naval Reservation Office. the late Felix Ting Ho expressly acknowledged that because he is a Chinese citizen he is not qualified to purchase public lands under Philippine laws for which reason he thereby transfers. [11] Regarding the properties erected over the said lot.. Exhibit B. The late Felix Ting Ho was never the owner and never claimed ownership of the land. 1977 when the subject land was sold to him by the government and on January 3. on the other hand. (Exh.

Ts-308 but also of the properties erected thereon and that the CA erred in not dismissing the complaint for partition with respect to the said properties. Ts-308. this petition. it awarded the petitioners a four-fifths (4/5) share of the subject properties erected on the said lot. 418. the CA erred in declaring that Lot No. or utilization shall be limited to citizens of the Philippines or to corporations or associations at least sixty per centum of the capital of which is owned . minerals. and that plaintiff-appellants are entitled to four-fifths (4/5) thereof. 3. the remaining one-fifth (1/5) being the share of the defendant-appellant. SO ORDERED.[12] Both petitioners and respondent filed their respective motions for reconsideration from this ruling. With regard to Lot No. form part of the estate of the deceased spouses Felix Ting Ho and Leonila Cabasal. and There is no pronouncement as to costs. the decision appealed from is REVERSED and SET ASIDE and NEW JUDGMENT rendered: 1. identified as Lot No. All agricultural timber. DECLARING that the two-storey commercial building. DISMISSING plaintiff-appellants' complaint with respect to the subject parcel of land. in the name of plaintiff-appellants [should be defendantappellant]. 418. exploitation. According to the petitioners. on the other hand. and other mineral oils. the two-storey residential building and sari-sari store (formerly a bakery). two-storey residential building and sari-sari store (formerly a bakery) in accordance with Rule 69 of the Revised Rules of Court and pertinent provisions of the Civil Code. P-1064. 2. Let a copy of this decision be furnished the Office of the Solicitor General. petroleum. Hence. 4. We affirm the CA ruling. DIRECTING the court a quo to partition the said two-storey commercial building. 418. Let the records of this case be remanded to the court of origin for further proceedings. Ts-308. premises considered. Ts-308. all forces of potential energy and other natural resources of the Philippines belong to the State. development. Article XIII. coal. contends that he should be declared the sole owner not only of Lot No. 418. covered by OCT No. while the appellate court dismissed the complaint for partition with respect to the lot in question. 5. The dispositive portion of the CA ruling reads as follows: WHEREFORE. The primary issue for consideration is whether both Lot No. all erected on the subject lot No. Ts-308 and the properties erected thereon should be included in the estate of the deceased Felix Ting Ho. 6. Ts-308 does not form part of the estate of the deceased Felix Ting Ho and is owned alone by respondent. Section 1 of the 1935 Constitution states: Section 1. and their disposition. 418. and mineral lands of the public domain . which were summarily denied by the CA in its Resolution [13] dated August 5.Thus. 1997. waters. 418. Respondent.

[14]the Court enunciated that: .--Whenever public land is by the Government alienated. grant.. viz: Sec. P-1064 was correspondingly issued in his name. 1978.. On the other hand. 7457 on January 3. Thus.by such citizens. Zambales.. grant. and in all cases under this Decree registration shall be made in the office of the Register of Deeds of the province or city where the land lies.S. (Emphasis supplied ) Our fundamental law cannot be any clearer. Register of Deeds. Naval Reservation Office of Olongapo. 418. therefore. [16] (Emphasis supplied) Under the law. These issuances bear the presumption of regularity in their performance in the absence of evidence to the contrary. 103. they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. admitted freely into the Philippines from owning sites where they may build their homes.. 1529. Filipino citizenship is not impossible to acquire. The fees for registration shall be paid by the grantee. and to be there registered like other deeds and conveyance. the same shall be brought forthwith under the operation of this Decree. a certificate of title issued pursuant to any grant or patent involving public land is as conclusive and indefeasible as any other certificate of title issued to private lands in the ordinary or cadastral registration proceeding. The right to acquire lands of the public domain is reserved for Filipino citizens or corporations at least sixty percent of the capital of which is owned by Filipinos. It shall be the duty of the official issuing the instrument of alienation. by the Secretary of Natural Resources "By Authority of the President of the Philippines. 496. and the corresponding issuance of the original certificate of title in his name. Since their residence in the Philippines is temporary.Perhaps the effect of our construction is to preclude aliens. in Krivenko v. Certificate of title pursuant to patents. It is the act of registration that shall be the operative act to affect and convey the land. in the same manner as if ownership had been determined by final . We are satisfied. Should they desire to remain here forever and share our fortunes and misfortunes. we will not attempt to compromise it even in the name of amity or equity. which was subsequently amended by Section 103 of Presidential Decree No. The deeds. subject to any existing right. granted or conveyed to any person. and an owner's duplicate issued to the grantee. the father of petitioners and respondent was a Chinese citizen. patent or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land. [15] In the present case. show that the respondent possesses all the qualifications and none of the disqualifications to acquire alienable and disposable lands of the public domain. patent or conveyance in behalf of the Government to cause such instrument to be filed with the Register of Deeds of the province or city where the land lies. the respondent became the owner of Lot No. In fact. but shall operate only as a contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. Registration of grants and patents involving public lands is governed by Section 122 of Act No. But if this is the solemn mandate of the Constitution. grant. however. or concession at the time of the inauguration of the Government established under this Constitution. he was disqualified from acquiring and owning real property in the Philippines. Ts-308 when he was granted Miscellaneous Sales Patent No. After due registration and issuance of the certificate of title. the deceased Felix Ting Ho was never the owner of the subject lot in light of the constitutional proscription and the respondent did not at any instance act as the dummy of his father." and when Original Certificate of Title No. whereupon a certificate of title shall be entered as in other cases of registered land. that aliens are not completely excluded by the Constitution from the use of lands for residential purposes. he was only occupying the subject lot by virtue of the permission granted him by the then U. The grant of the miscellaneous sales patent by the Secretary of Natural Resources. As correctly found by the CA. such land shall be deemed to be registered land to all intents and purposes under this Decree. lease. The effect of the registration of a patent and the issuance of a certificate of title to the patentee is to vest in him an incontestable title to the land.

[17] Nonetheless. . Save for the exception provided in cases of hereditary succession. or some other act or contract. for the purchase of a property in Antipolo. This contention must fail because the prohibition against an alien from owning lands of the public domain is absolute and not even an implied trust can be permitted to arise on equity considerations. a Philippine citizen. Besides. as affirmed by the appellate court. the Court. was seeking reimbursement of funds claimed by him to be given in trust to his petitioner wife. the trial court concluded that: In fairness to the defendant. a German national. The Court of Appeals erred in holding that an implied trust was created and resulted by operation of law in view of petitioner's marriage to respondent. that the series of transactions resorted to by the deceased were simulated in order to preserve the properties in the hands of the family. the sale is void. remained in possession and continued to live in said properties. and is not subject to collateral attack.[18] wherein the respondent.[21] The Court holds that the reliance of the trial court on the provisions of Article 1471 of the Civil Code to conclude that the simulated sales were a valid donation to the respondent is misplaced because its finding was based on a mere assumption when the law requires positive proof. However. cannot be done directly. along with their parents. To hold otherwise would allow circumvention of the constitutional prohibition. Muller. the Court agrees with the finding of the trial court. and the title so issued is absolutely conclusive and indisputable. Not even an ownership in trust is allowed. In the case of Muller v. [19] Coming now to the issue of ownership of the properties erected on the subject lot. in rejecting the claim. the petitioners and respondent. If the price is simulated. It has been held that equity as a rule will follow the law and will not permit that to be done indirectly which. The records show that during all the time that the properties were allegedly sold to the spouses Victoria Cabasal and Gregorio Fontela in 1958 and the subsequent sale of the same to respondent in 1961. where the purchase is made in violation of an existing statute and in evasion of its express provision. Invoking the principle that a court is not only a court of law but also a court of equity. ruled that: Respondent was aware of the constitutional prohibition and expressly admitted his knowledge thereof to this Court. is likewise misplaced. pursuant to Article 1471 of the New Civil Code it can be assumed that the intention of Felix Ting Ho in such transaction was to give and donate the improvements to his eldest son the defendant Vicente Teng Gui . He declared that he had the Antipolo property titled in the name of the petitioner because of the said prohibition. 1471. petitioners invoke equity considerations and claim that the ruling of the RTC that an implied trust was created between respondent and their father with respect to the subject lot should be upheld. His attempt at subsequently asserting or claiming a right on the said property cannot be sustained. yet.. which provides that: Art. respondent's disqualification from owning lands in the Philippines is absolute.decree of the court.. no trust can result in favor of the party who is guilty of the fraud. but the act may be shown to have been in reality a donation. because of public policy. [20] Its finding was based on Article 1471 of the Civil Code. although the Deeds of Sale executed by Felix Ting Ho regarding the improvements in favor of Victoria Cabasal and Gregorio Fontela and the subsequent transfer of the same by Gregorio Fontela and Victoria Cabasal to the defendant are all simulated...

Thus. entitling the petitioners to a four-fifths (4/5) share thereof.R. RESPONDENTS.. ROSALINA PADLAN.The respondent was unable to show. TRINIDAD LOZADA. ROSALINA PADLAN. CASTILLO. DOMINADOR SALVADOR. TRINIDAD L. EMILIO FUERTE. RESPONDENTS. the petition is DENIED. DOMINADOR SALVADOR. CV No. ROSARIO BONDOC. SR. TRINIDAD LOZADA. September 11. VER REYES AND RAMON REYES. the Court holds that the two-storey residential house. SR. CRISTOBAL AND DULOS REALTY & DEVELOPMENT CORPORATION. VS. MARIA Q.: . IN VIEW WHEREOF. PETITIONERS. CRISTOBAL AND DULOS REALTY & DEVELOPMENT CORPORATION. VER REYES AND RAMON REYES. 1996 of the Court of Appeals in CA-G. DECISION CHICO-NAZARIO. VS. two-storey residential building and sari-sari store form part of the estate of the late spouses Felix Ting Ho and Leonila Cabasal. CASTILLO. THIRD DIVISION [G. [G. JOHN DOE AND RICHARD DOE. 42993 is herebyAFFIRMED. and the records are bereft of any evidence.R.R. 139365] MARIA Q. ROSARIO BONDOC.. that the simulated sales of the properties were intended by the deceased to be a donation to him. EMILIO FUERTE. 139047. J. AURORA TOLENTINO. PETITIONERS. The assailed Decision dated December 27. FELIZA LOZADA. SO ORDERED. NO. AURORA TOLENTINO. 2008] SPOUSES EMMA H. FELIZA LOZADA. TRINIDAD L. SPOUSES EMMA H.

e. It previously formed part of a bigger parcel of agricultural land[4] first declared in the name of Domingo Lozada (Domingo) in the year 1916 under Tax Declaration No. x x x.[6] he fathered two children.545) SQUARE METERS. and with a total assessed value of P1. After the death of Hisberta. in the consolidated cases of LRC Case No. in accordance with the approved subdivision plan Psu-205035. Lot 1 and Lot 2. The Contracts At the core of the controversy in the Petitions at bar is a parcel of unregistered land located in Tungtong.00.The two Petitions for Review on Certiorari[1] now before this Court seek to challenge. Branch 119. Rizal.. designated as Lot 1 of Plan Psu-205035. Nicomedes and the heirs of his brother Pablo entered into an Extrajudicial Settlement of the Estate[8] of their parents Domingo and Graciana. formerly of the Province of Rizal. [5] During the lifetime of Domingo. namely Nicomedes and Pablo. 35688. According to the settlement. more or less. The subject property.545 square meters (subject property). was adjudicated to Nicomedes. Domingo and Graciana died on 27 February 1930 and 12 August 1941. the entire parcel of agricultural land declared in the name of Domingo [9] was divided into two.860. formerly numbered Pq-8557-P).R. 2932. LP-553-P (an application for registration of title to real property) and Civil Case No. 2304 of Las Pinas. On 18 March 1965. he was married twice. Rizal. in the name of Domingo Lozada. more particularly described as follows: "A parcel of land (Lot 1 of plan Psu-205035). 6914-P (an action to declare ownership over real property. thus. respectively. and still a portion of the land covered by Tax Declaration No. The Court of Appeals upheld the title of Rosario Bondoc to the disputed property. [10] On 23 June 1965. Las Piñas. CV No. 2050. Lot 1. with an area of 19. Nicomedes executed a Deed of Conditional Sale[11] over the subject property in favor of Emma Ver Reyes (Emma). which provided: That the Vendor [Nicomedes] is the true and lawful owner of a parcel of land situated at Tungtong. under Rule 45 of the Rules of Court. namely Bernardo and Anatalia. Nicomedes then declared the subject property in his name in 1965 under Tax Declaration No." . i. now a part of Metro Manila. overturning the finding of the RTC of Pasay City that Maria Q. while Lot 2 was given to the heirs of Pablo. Las Pinas. the Decision[2] dated 17 June 1999 of the Court of Appeals in CA-G. Cristobal and Dulos Realty & Development Corporation have a registrable title to the same property. containing an area of NINETEEN THOUSAND FIVE HUNDRED FOURTY FIVE (19. which reversed and set aside the Decision[3] dated 25 November 1991 of the Regional Trial Court (RTC) of Pasay City. From his first marriage to Hisberta Guevarra in the year 1873. Domingo married Graciana San Jose in the year 1887 [7] and their marriage produced two children.

CEDES. transfer and convey absolutely the above-described property to any person. That the total price shall be subject to adjustment in accordance with the total area of the abovedescribed property that will be finally decreed by the court in favor of the herein Vendor [Nicomedes].[12] It would appear from the records of the case that Emma was only able to pay the first installment of the total purchase price agreed upon by the parties. assigns and successors.That the [subject property] is a paraphernal property of the Vendor[Nicomedes]. notice or filing the necessary action in court. and the Vendor [Nicomedes] shall have the full and exclusive right to sell. Nicomedes did not succeed in his attempt to have any title to the subject property issued in his name. Domingo Lozada. . and 4. TRANSFERS and CONVEYS by way of CONDITIONAL SALE the above-described parcel of land together with all the improvements thereon to the said Vendee [Emma]. (b). per square meter to be paid by the Vendee to the Vendor. TWENTY FIVE PERCENT (25%) of the total price on the date of the signing of this contract. the said Vendor by these presents hereby SELLS. The next TWENTY FIVE PERCENT (25%) of the total price upon the issuance of the title for the land described above. That the Vendee [Emma] will pay the Vendor [Nicomedes] as follows: (a). The balance of FIFTY PERCENT (50%) of the total price within one (1) year from the issuance of the said title. her heirs. Philippine Currency. (Emphases ours. the same having been inherited by him from his deceased mother. That the Vendor [Nicomedes] will execute a final deed of absolute sale covering the said property in favor of the Vendee [Emma] upon the full payment of the total consideration in accordance with the stipulations above. free from all liens and encumbrances. this contract shall automatically be null and void and of no effect without the necessity of any demand. Graciana San Jose. as will be discussed later on. but was declared for taxation in the name of his deceased father. under the following terms and conditions. 3.50). to wit: 1. That for and in consideration of the sum of FOUR PESOS AND FIFTY CENTAVOS (P4.) The Deed of Conditional Sale was registered in the Registry of Property for Unregistered Lands in August 1965. Furthermore. That if the Vendee [Emma] fails to pay the Vendor [Nicomedes] the sums stated in paragraphs 1(b) and 1(c) above within the period stipulated and after the grace period of one (1) month for each payment. 2. but the said Vendor [Nicomedes] shall return to the Vendee [Emma] all the amount paid to him by reason of this contract without any interest upon the sale of the said property to another person . and (c).

and the execution of the final Deed of Sale. shall. Nicomedes entered into another contract involving the subject property with Rosario D.905. who hereby agrees and binds herself to purchase from the former. Designated as an Agreement of Purchase and Sale.00) Philippine Currency. the sum of THIRTY SEVEN THOUSAND SEVEN HUNDRED FIVE PESOS (P37. the sum of FIFTEEN THOUSAND PESOS (P15. They likewise agreed to have the said Agreement registered with the Registry of Deeds in accordance with the provisions of Section 194 of the Revised Administrative Code. Paragraph II. free from any and all liens and encumbrances. the BUYER [Rosario] shall pay the SELLER [Nicomedes].705.00) Philippine Currency. That in the event the BUYER [Rosario] fails to pay any amount as specified in Section 2. 3344.00). THEREFORE. the BUYER [Rosario] shall pay to the SELLER [Nicomedes].000. 2. by the mere fact of non-payment expire itself and shall be considered automatically cancelled. [That] upon the delivery by the SELLER [Nicomedes] to the BUYER [Rosario] of a valid title of the aforesaid parcel of land. the aforesaid parcel of land. interests.) On 7 March 1969. The SELLER [Nicomedes] hereby warrants the useful and peaceful possession and occupation of the lot subject matter of this agreement by the BUYER [Rosario] . Philippine Currency. Upon the execution of this Agreement. Nicomedes and Rosario executed a Joint Affidavit.On 14 June 1968.200. Bondoc (Rosario). and immediately thereafter the SELLER [Nicomedes] shall return to the BUYER [Rosario] the sums of money he had received from the BUYER [Rosario] without any interests and whatever improvement or improvements made or introduced by the BUYER [Rosario] on the lot being sold shall accrue to the ownership and possession of the SELLER [Nicomedes]. The Agreement of Purchase and Sale was thus registered on 10 March . all without interest.00) Philippine Currency.[14]whereby they confirmed the sale of the subject property by Nicomedes to Rosario through the Agreement of Purchase and Sale dated 14 June 1968. (Emphasis ours. subject to the following terms and conditions: 1. title and ownership over the parcel of land x x x unto the BUYER [Rosario]. one year from the date of execution of the final deed of sale.the SELLER [Nicomedes] by these presents hereby agreed and contracted to sell all his rights.[13] the significant portions thereof states: NOW. then this contract. 3. of no value and effect . as amended by Act No. for and in consideration of the foregoing premises and of the sum of ONE HUNDRED SEVENTY FIVE THOUSAND NINE HUNDRED FIVE PESOS (P175. which the BUYER [Rosario] shall pay to the SELLER [Nicomedes] in the manner and form hereinafter specified. and the final balance of ONE HUNDRED TWENTY THREE THOUSAND AND TWO HUNDRED PESOS (P123. xxxx 6.

Filipino citizen. Psu 205035). and more particularly described as follows: "A parcel of land described under Tax Declaration No. the four children from his first marriage. of legal age.) Nicomedes passed away on 29 June 1972. Province of Rizal. Philippines. Lozada with Ratification of a Certain Deed of Absolute Sale of Unregistered Land . of the entire consideration stipulated upon in the Agreement. Philippines. exclusively belonging to and possessed by me. Cristobal (Maria). do hereby sell.[17] The relevant terms of the Deed recite: THAT I. more or less. CRISTOBAL.00.9545 hectares. LOZADA. Municipality of Las Piñas. as represented by its President Juan B. TWO THOUSAND SQUARE METERS (2.000. her heirs." (Emphasis ours.[16] involving a portion of the subject property measuring 2. married to Juan [Dulos].000 square meters. Philippines. Rizal. On 10 August 1979. for the sum of P414. Nicomedes's heirs. 1. namely. xxx [C]ontaining an area of 1. Rizal. executors. married and a resident of Las Piñas. They also ratified therein the prior sale of a portion of the subject property made by Nicomedes in favor of Maria. Dulos.00) PESOS. the heirs claimed equal pro indiviso shares in the remaining 17. Philippines. Nicomedes's application for the registration of the subject property was still pending. Province of Rizal. not 2.[15] The records of this case show that. . Five months thereafter. but they clarified that the actual area of the portion sold as presented in the plan was 2. and a resident of 114 Real Street. Nicomedes executed on 10 August 1969 a third contract. Nicomedes's heirs[22] collectively sold. administrators and assigns.[20] and his surviving second spouse Genoveva Pallera Vda. Filipino citizen.000) for an easement of way of a parcel of unregistered landsituated in the Barrio of Tungtong.192.000 square meters. On 30 July 1980. No title to the subject property was ever delivered to her since.258 square meters of the subject property. in favor of Maria Q. for and in consideration of the sum of TWENTY FIVE THOUSAND (P25. receipt of which is hereby acknowledged to my full and entire satisfaction. their shares in the subject property in favor of Dulos Realty and Development Corporation (Dulos Realty). NICOMEDES J. De Lozada. After excluding the portion sold to Maria. via a Deed of Absolute Sale of an Unregistered Land.287 square meters. likewise of legal age. executed a Deed of Extrajudicial Settlement of the Estate of the Late Nicomedes J. only the first installment was paid by Rosario. at the time of the execution of the above contract. [19] the six children from his second marriage.1969. Las Piñas. 9575 (Lot No. transfer and convey to MARIA Q. Philippine currency.[21] The heirs declared in said Deed of Extrajudicial Settlement that the only property left by Nicomedes upon his death was the subject property. Municipality of Las Piñas. The Deed of Absolute Sale of Unregistered Land between Nicomedes and Maria was registered only on 8 February 1973. a Deed of Absolute Sale of Unregistered Land. situated in the Barrio of Tuntong. [18] or more than seven months after the former's death.

Rosario. In view of the conflicting claims over the subject property. they had no knowledge of any encumbrance or claim of title affecting the same.. invoking the Agreement of Purchase and Sale executed in her favor by Nicomedes on 14 June 1968.[23] The said Deed of Absolute Sale dated 30 July 1980. Sometime in 1973. The Cases On 11 April 1966. other than Emma.[26] Five years later. LP-553-P. Pq-8557-P. The grandchildren of Domingo by his former marriage[24] opposed the application for registration and Emma and her husband Ramon filed their intervention. et al. the parties agreed to have LRC Case No. N-6577 on 21 November 1975 and ordered the parties therein. filed a Complaint [29] before the CFI of Rizal for the declaration in her favor of ownership over the subject property. following the execution in her favor of the Agreement of Purchase and Sale dated 14 June 1968 and Joint Affidavit dated 7 March 1969. docketed as LRC Case No.) consolidated with Civil Case No. On 6 November 1980. that they were the owners of the subject property by virtue of inheritance. after executing the Deed of Conditional Sale in favor of Emma on 23 June 1965. Rosario's complaint was docketed as Civil Case No. however. Pq-8557-P (the action for declaration of ownership of Rosario). Rosario filed a motion to intervene in LRC Case No.. [27] filed an Application for Registration[28] of title to the subject property with the CFI of Rizal. the applicant Nicomedes and the oppositors/intervenors.[25] Rosario no longer appealed from the order denying her motion to intervene in said case. inter alia. On 4 August 1981. Domingo's grandchildren from his first marriage. et al. however. in an Order dated 2 June 1973. alleged. her motion was denied by the CFI of Pasig. docketed as LRC Case No. N-6577 then pending before the CFI of Pasig. Dominador. LP-553-P) and two other persons. on 27 June 1980. to litigate first the issues of ownership and possession. LP-553-P (the application for land registration of Dominador. who allegedly trespassed into the subject property. assisted by her husband Mariano Bondoc. they were the actual occupants of the said property. with an application for a temporary restraining order or preliminary injunction. et al. namely. was not registered. Nicomedes filed an application for the registration of the subject property with the then Court of First Instance (CFI) of Pasig. N-6577. and. against Trinidad Lozada (one of Domingo's heirs from his first marriage who applied for registration of the subject property in LRC Case No.[30] . In their Application. the CFI of Pasig dismissed without prejudice LRC Case No. Dominador.

Dominador.287 square meters of which appertains to Maria Cristobal Dulos married to Juan Dulos and the remaining portion. [32](Emphasis ours. et al. properly pertained to Nicomedes as one of his sons in said marriage. the RTC rationalized that the subject property constituted Domingo's share in the conjugal properties of his second marriage to Graciana San Jose and. 35688. moved to withdraw their appeal in light of the amicable settlement they entered into with Maria and Dulos Realty. Pq-8557-P now 6914 for lack of merit.. 6914-P.[31] and in consideration of the location of the subject property in Las Piñas.[36] In their respective Briefs before the appellate court. et al.[34] In a Resolution dated 24 September 1992. Emma and her spouse Ramon Reyes (Ramon).. In its Decision dated 25 November 1991. in favor of Dulos Realty and Development Corporation. Dominador. 2. while the sales of portions of the same property in favor of Maria and of the rest to Dulos Realty were fully consummated as evidenced by the absolute deeds of sale dated 10 August 1969 and 30 July 1980. having no more right over the land applied for. LP-553-P and Civil Case No. [33] Their consolidated appeals were docketed as CA-G. however. Dominador. later filed a motion to withdraw their earlier Motion to Withdraw Appeal. [37] Emma and Rosario both faulted the RTC of Pasay City for awarding the subject property to Maria and Dulos Realty. No final deed of sale over the subject property was executed in favor of Emma or Rosario. [35] the Court of Appeals granted their Motion to Withdraw Appeal. the Court of Appeals rendered its assailed Decision. The lower court also found that neither Emma nor Rosario acquired a better title to the subject property as against Maria and Dulos Realty. They each claimed entitlement to the subject property and asserted the superiority of their respective contracts as against those of the others. and hereby declares Maria Cristobal Dulos and Dulos Realty and Development Corporation to have a registrable title. Dominador. respectively. therefore. LRC Case No. Pq-8557-P. without pronouncement as to costs.545 square meters.. were not entitled to the subject property. CV No. the court denies the application of Dominador Salvador. disposed of the cases thus: WHEREFORE. considering all the foregoing. et al. but this was denied by the Court of Appeals in a Resolution dated 15 January 1993.By subsequent events. confirming title and decreeing the registration of Lot 1 PSU205035 containing a total area of 19. et al..) In so ruling. Branch 119. et al.R. and Rosario separately appealed to the Court of Appeals the foregoing Decision dated 25 November 1991 of the RTC of Pasay City. On 17 June 1999. the RTC of Pasay City. ruling as follows: . dismisses Civil Case No. reinstated as Civil Case No. Being Domingo's heirs from his first marriage. Sr. were finally transferred to and decided by the RTC of Pasay City.

any improvements introduced by the vendee would become the vendor's implies that possession was transferred to the vendee and.. their contemporaneous and subsequent acts shall be principally considered. et al. the vendor. Article 1371 of the Civil Code provides: "Art. And apart from opposing the land registration case. under the provision of Section 194 of the Revised Administrative Code. the parties hereto have agreed to register the Agreement of Purchase and Sale . 496 or under the Spanish Mortgage Law]) provides that any registration made under Sec. Such being the case. both contracts [entered into with Emma and Rosario] gave Nicomedes. had been executed. it appears to be a contract of sale. Act No. thereby implying that possession remained with him (vendor).1985. 3344. after which he. for declaration ownership.. Lozada) sold to the latter (Rosario D. In order to judge the intention of the contracting parties. under the Agreement of Purchase and Sale [with Rosario]. Whereas under the Agreement of Purchase and Sale [with Rosario]. it appears to be a contract to sell." Rosario registered the Agreement of Purchase and Sale alright on March 10.) a parcel of land". 496 nor under the Spanish Mortgage Law. upon the sale of the property to another). would become the owner and entitled to the possession of whatever improvements introduced by the buyer. Bondoc) a parcel of land" had been executed but that the lot "not having been registered under Act No.. in case of rescission. there was no provision that possession would be. Under the Deed of Conditional Sale [to Emma].. as vendor. returned to the vendor. therefore. Additionally. she filed a complaint against Trinidad. there is no mistaking that the lot was sold to Rosario xxx. Anent the effect of Rosario's registration of the Agreement of Purchase and Sale on Emma's contract involving the same lot.As gathered above. as vendor. 226 SCRA 118)." From the provisions of the Agreement of Purchase and Sale [to Rosario] and the subsequent acts of the parties then including the execution of the Joint Affidavit by Rosario and Nicomedes stating that "an Agreement of Purchase and Sale wherein the former (Nicomedes.) sold to the latter (Rosario. 1969. 3344 (Amending Sec. 1371. She fenced the lot with concrete and hollow blocks.. She paid taxes on the lot from 1980 . That the Agreement of Purchase and Sale [with Rosario] was a contract of sale gains light from the Joint Affidavit subsequently executed by Rosario and Nicomedes stating that "an Agreement of Purchase and Sale wherein the former (Nicomedes J. in case of rescission. the provision that in case of rescission. the right to unilaterally rescind the contract the moment the buyer failed to pay within a fixed period (Pingol v.. was obliged to return without interest the sums of money he had received from the buyer (under the Deed of Conditional Sale [to Emma].. 194 of the Administrative Code [Recording of instruments or deeds relating to real estate not registered under Act No. as amended by Act No. 194 of the Administrative Code "shall . CA.

WHEREFORE. 425016. The lot having been previously sold to Rosario.R. Appellees Maria Cristobal and Dulos Realty and Development Corporation and all other claimants to subject land including all persons claiming under them are hereby ordered to vacate and restore possession to appellant Rosario D. [41] the two Petitions were ordered consolidated by this Court in a Resolution[42] dated 13 December 1999. filed directly before this Court separate Petitions for Review on Certiorari under Rule 45 of the Rules of Court. 139365. as demonstrated above is one of sale and. assailing the 17 June 1999 Decision of the appellate court. for instance.) Aggrieved. No.[39] as well as Maria and Dulos Realty. Lot 1. Bondoc.R. he citing Nisce v. 139047 and G. PSU-205035 containing an area of 19. she has no claim of a better right unlike Rosario who has. January 17. Emma and her husband Ramon. there was no lot or portion thereof to be later sold to Maria and to Dulos Realty in 1979 and 1980. This judgment is without prejudice to the rights which Emma Ver Reyes and Maria Cristobal and Dulos Realty and Development Corporation might have against the estate or surviving heirs of Nicomedes Lozada to the extent that the latter was/were benefited. No. and that it has no reference to rights acquired under that unregistered deed itself". In their Petition. respectively. Upon issuance of title to subject lot. 1936 Unrep. G. Emma and her husband Ramon raise the following issues: I. 62 Phil. Upon the manifestation and motion of Maria and Dulos Realty. and dismissing the claims of ownership of all other claimants. such as. title by prescription. independently of Emma's contract to sell.. was not defined by law. Milo. "Better right". Bondoc is ordered to pay the balance of the purchase price to the heirs of Nicomedes Lozada in accordance with the Agreement of Purchase and Sale executed by the latter in her favor. ordering its registration in her name. not to mention the fact that she (Rosario) registered her contract earlier than Emma's.m. as against Rosario's contract which. [38] (Emphasis ours. But author Narciso Peña is inclined to concur that "better right" should refer to a "right which must have been acquired by a third party independently of the unregistered deed. appellant Rosario D. Bondoc over subject lot.545 sq.[40] without seeking reconsideration of the appellate court's decision.be understood to be without prejudice to a third party who has a better right". . No. the appealed Joint Decision is hereby REVERSED and SET ASIDE and another is rendered confirming the title of Rosario D.R. in any event. Rosario must prevail. respectively. however. 976 x x x. Given the fact that the contract in Emma's favor is a mere contract to sell. docketed as G.

the "conditionality" of the sale did not suspend the transfer of ownership over the subject . which party acquired valid and registrable title to the same. Emma and Ramon contend that although the subject property was conditionally sold to them by Nicomedes. III. IV. submitted in their Petition the following issues for consideration of this Court: I. [43] Maria and Dulos Realty. II. II. WHETHER OR NOT RESPONDENTS BONDOC AND THE REYESES ARE BARRED BY LACHES AND/OR PRESCRIPTION. on the other hand. ORDERING ITS REGISTRATION IN HER NAME AND DISMISSING THE CLAIM OF EMMA VER REYES AND RAMON REYES. WHETHER OR NOT THE COURT OF APPEALS PATENTLY AND GRAVELY ERRED IN CONFIRMING THE TITLE OF ROSARIO BONDOC OVER THE DISPUTED LOT. WHETHER OR NOT MARIA CRISTOBAL DULOS AND DULOS REALTY AND DEVELOPMENT CORPORATION ARE PURCHASERS IN BAD FAITH. III. WHETHER OR NOT RESPONDENT BONDOC IS BARRED BY RES JUDICATA. in consideration of all the contracts executed by Nicomedes and/or his heirs involving the subject property.WHETHER OR NOT OWNERSHIP OF THE DISPUTED LOT WAS VALIDLY AND LEGALLY TRANSFERRED TO EMMA VER REYES. WHETHER OR NOT EMMA VER REYES AND RAMON REYES ARE BARRED BY PRESCRIPTION OR LACHES.[44] The fundamental issue that the Court is called upon to resolve is. WHETHER OR NOT BONDOC'S AGREEMENT OF PURCHASE AND SALE AND SPOUSES REYES DEED OF CONDITIONAL SALE ARE REGISTRABLE ABSOLUTE CONVEYANCES IN FEE SIMPLE TO SERVE AS BASIS FOR AN AWARD AND REGISTRATION OF THE SUBJECT LOT IN THEIR FAVOR.

Maria and Dulos Realty aver that Rosario is already barred byres judicata since her motion to intervene in LRC Case No. docketed as LRC Case No. Lastly. to wit: The Civil Code defines a contract of sale. Maria and Dulos Realty point out that Emma and Rosario are not holders of absolute deeds of conveyances over the subject property. Finally.property from Nicomedes to Emma. which constituted symbolic and constructive delivery of the subject property to them. notwithstanding their knowledge of Nicomedes's death on 29 June 1972. on 10 August 1969 and 30 July 1980. respectively.[46] this Court effectively provided the guidelines for differentiating between a contract to sell and a contract of sale. which would have entitled them to register the same in their respective names. Emma and Reyes likewise claim that there was constructive delivery of the subject property to Emma. For their part. occurred only after the filing of the cases involving the property [45]and the registration of the sale to Emma. it did not bar the transfer of title to the subject property to Emma in the meantime. The dismissal of Rosario's motion to intervene in the case for registration of the subject property already became final and executory. LP-553-P. They further buttress their alleged superior right to the subject property based on the execution of two notarized documents of sale in their favor. was denied by the CFI of Pasig. Furthermore. This Court's Ruling After a conscientious review of the arguments and evidence presented by the parties. thus: . Maria and Dulos Realty likewise assert that the claims of Emma and Rosario are already barred by laches and prescription because they only decided to enforce their respective rights over the subject property after Domingo's heirs filed with the CFI of Rizal on 27 June 1980 an application for registration of the subject property. the case instituted by Nicomedes to register the subject property. the Court finds that the Deed of Conditional Sale between Nicomedes and Emma and the Agreement of Purchase and Sale between Nicomedes and Rosario were both mere contracts to sell and did not transfer ownership or title to either of the buyers in light of their failure to fully pay for the purchase price of the subject property. albeit in the name of Nicomedes (in whose name it was declared). thus. barring Rosario from pursuing her claim over the same. In Coronel v. inasmuch as the Deed of Conditional Sale in her favor was a public instrument. from the time of the sale in 1965 until 1972. Even though Nicomedes may automatically rescind the contract in case of non-payment by Emma of the balance of the purchase price. Emma was in possession of the subject property in the concept of owner since she had been paying realty taxes for the same. Emma and Ramon maintain that the Court of Appeals erred in ruling that the contract in favor of Rosario was a contract of sale for the sole reason that actual possession of the property was already transferred to the latter. Court of Appeals. Emma and Ramon also assert that Maria and Dulos Realty were in bad faith as the sales of the subject property in their favor. 6577.

1458. A contract to sell as defined hereinabove. meaning. ownership is retained by the prospective seller without further remedies by the prospective buyer. such payment being a positive suspensive condition and failure of which is not a breach. A contract to sell may thus be defined as a bilateral contract whereby the prospective seller. may not even be considered as a conditional contract of . upon the fulfillment of the suspensive condition which is the full payment of the purchase price. that is. is a consensual contract because it is perfected by mere consent . Stated positively. We hold that the contract between the petitioner and the respondent was a contract to sell where the ownership or title is retained by the seller and is not to pass until the full payment of the price. the prospective seller explicitly reserves the transfer of title to the prospective buyer. The essential elements of a contract of sale are the following: a) b) c) Consent or meeting of the minds. binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon. Sale. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price.Art. In acontract to sell. Lapuz(96 SCRA 741 [1980]). Under this definition. but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. the non-fulfillment of which prevents the obligation to sell from arising and thus. casual or serious. and the other to pay therefor a price certain in money or its equivalent. while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. Determinate subject matter. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. In Roque vs. that is. In other words the full payment of the purchase price partakes of a suspensive condition. full payment of the purchase price. and Price certain in money or its equivalent. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event. 1479. which for present purposes we shall take as the full payment of the purchase price. this Court had occasion to rule: Hence. consent to transfer ownership in exchange for the price. by its very nature. the prospective seller's obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code which states: Art.

(Emphases ours. a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price. In a contract to sell. but to a third person. the seller's ownership or title to the property is automatically transferred to the buyer such that. although it is conditioned upon the happening of a contingent event which may or may not occur.) Also in Coronel v. vs. In case a title is issued to the second buyer. the first buyer may seek reconveyance of the property subject of the sale. In fact. the perfection of the contract of sale is completely abated (cf. Such second buyer cannot defeat the first buyer's title. While Article 1478 [48] of the Civil Code recognizes the right of the parties to agree that the ownership of the thing shall not pass to the purchaser until he has fully paid the price therefore. cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. the first element of consent is present. upon the fulfillment of the suspensive condition which is the full payment of the purchase price. but the latter. upon the fulfillment of the suspensive condition. of course. If the suspensive condition is not fulfilled. ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. In a conditional contract of sale. the sale becomes absolute and this will definitely affect the seller's title thereto. or at least was charged with the obligation to discover such defect. 133 SCRA 777 [1984]). such second buyer of the property who may have had actual or constructive knowledge of such defect in the seller's title. if there had been previous delivery of the subject property. the Court highlighted the importance of making the distinction between a contract to sell and a contract of sale: It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with. Homesite and Housing Corp. if the suspensive condition is fulfilled. In a contract to sell. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. Court of Appeals. the contract of sale is thereby perfected . Applying Article 1544 of the Civil Code. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller's title per se. the seller will no longer have any title to transfer to any third person.sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition. the same statutory provision does not require that such be expressly stipulated in the contract. there being no previous sale of the property. may be sued for damages by the intending buyer. There is no double sale in such case. Court of Appeals. for instance. because in a conditional contract of sale. however. cannot be a registrant in good faith. However. as in the case at bench. . the intention of the parties to execute a contract to sell may be implied from the provisions of the contract. such that if there had already been previous delivery of the property subject of the sale to the buyer. [47] Even in the absence of an express stipulation to such effect.

the latter shall prevail over the former. it grants Nicomedes the exclusive right to thereafter sell the subject property to a third person. the Deed of Conditional Sale executed by Nicomedes in favor of Emma on 23 June 1965 is unmistakably a mere contract to sell. [55] Moreover. If the words appear to be contrary to the evident intention of the parties. and.In Adelfa Properties. v. It provides for the automatic cancellation of the contract should Emma fail to pay the purchase price as required therein.[49] the Court ruled that since the contract between the parties therein did not contain a stipulation on reversion or reconveyance of the property to the seller in the event that the buyer did not comply with its obligation. the contract between Nicomedes and Emma does not provide for reversion or reconveyance of the subject property to Nicomedes in the event of nonpayment by Emma of the purchase price. it did not constitute constructive delivery of the subject property to Emma in view of the contrary inference in the Deed itself that the ownership over the subject property was reserved by Nicomedes. since the denomination or title given by the parties in their contract is not conclusive of the nature of its contents. As inAdelfa Properties. Court of Appeals. in such an event. where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price. While the Deed of Conditional Sale dated 23 June 1965 was indeed contained in a public instrument. the intention of the parties is primordial and is to be pursued. Taken together. Emma did not present any evidence that she took actual and physical possession of the subject property at any given time. [53] If the terms of the contract are clear and leave no doubt upon the intention of the contracting parties. An agreement is also considered a contract to sell if there is a stipulation therein giving the vendor the rights to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period and to consequently open the subject property anew to purchase offers. the contract involved in the aforementioned case was a mere contract to sell. [51] Viewed in light of the foregoing pronouncements. the Deed in question clearly states that Nicomedes will issue a final deed of absolute sale only upon the full payment of the purchase price for the subject property. Inc. the contract is only a contract to sell. More importantly. it may legally be inferred that the parties never intended to transfer ownership to the buyer prior to the completion of the payment of the purchase price. [52] In the construction or interpretation of an instrument. [50] In the same vein. Consequently. . the literal meaning of its stipulations shall control.[54] A simple reading of the terms of the 23 June 1965 Deed of Conditional Sale readily discloses that it contains stipulations characteristic of a contract to sell. The Court looks beyond the title of said document. other than her claim that she paid the realty taxes on the subject property. the terms of the Deeds reveal the evident intention of the parties to reserve ownership over the subject property to Nicomedes pending payment by Emma of the full purchase price for the same.

and the execution of the final Deed of Sale. the sum of FIFTEEN THOUSAND PESOS (P15.00). That Nicomedes shall appropriate the improvements as his own should Rosario default in her payment of the purchase price only further supports the conclusion that title to the subject property itself still remained with Nicomedes. which the BUYER shall pay to the SELLER in the manner and form hereinafter specified. of no value and effect . the SELLER by these presents hereby agreed and contracted to sell all his rights.) The Agreement additionally grants Nicomedes the right to automatically cancel the same in the event of nonpayment by Rosario of any of the specified sums therein and any improvement introduced in the subject property shall thereby accrue to Nicomedes. contrary to the ruling of the Court of Appeals. subject to the following terms and conditions: 1.00) Philippine Currency. all without interest. Thus: NOW. That upon the delivery by the SELLER to the BUYER of a valid title of the aforesaid parcel of land. The provisions of the Agreement do not in any way indicate that the ownership of the subject property has likewise been transferred to Rosario. [56] (Emphases ours. viz: 3. for and in consideration of the foregoing premises and of the sum of ONE HUNDRED SEVENTY FIVE THOUSAND NINE HUNDRED FIVE PESOS (P175.00) Philippine Currency. title and ownership over the parcel of land xxx unto the BUYER. and the final balance of ONE HUNDRED TWENTY THREE THOUSAND AND TWO HUNDRED PESOS (P123. shall.[57] As can be clearly read above.200.905. That in the event the BUYER fails to pay any amount as specified in Section 2. the BUYER shall pay to the SELLER. the Agreement of Purchase and Sale executed by Nicomedes in favor of Rosario on 14 June 1968 is likewise a mere contract to sell. only the rights to possess the property and construct improvements thereon have been evidently given to Rosario. .This Court also finds that. by the mere fact of non-payment expire itself and shall be considered automatically cancelled.000.705. THEREFORE. the aforesaid parcel of land .00) Philippine Currency. 2. Philippine Currency. Upon the execution of this Agreement. Paragraph II. who hereby agrees and binds herself to purchase from the former. the sum of THIRTY SEVEN THOUSAND SEVEN HUNDRED FIVE PESOS (P37. and immediately thereafter the SELLER shall return to the buyer the sums of money he had received from the BUYER without any interests and whatever improvement or improvements made or introduced by the BUYER on the lot being sold shall accrue to the ownership and possession of the SELLER . The Agreement itself categorically states that Nicomedes only undertakes to sell the subject property to Rosario upon the payment of the stipulated purchase price and that an absolute deed of sale is yet to be executed between the parties. interests. free from any and all liens and encumbrances. the BUYER shall pay the SELLER. one year from the date of the execution of the final deed of sale. then this contract.

No.R. CV No. the rights to the subject property of Maria and Dulos Realty. 35688 dated 17 June 1999 is SET ASIDE and the Decision dated 25 November 1991 of the Regional Trial Court of Pasay City. This fact. however. As both contracts remained unperfected by reason of the non-compliance with conditions thereof by all of the parties thereto. The total considerations for the respective portions of the subject property were fully paid by the buyers and no conditions whatsoever were stipulated upon by the parties as regards the transmission of the ownership of the said property to the said buyers. the Deeds of Absolute Sale in favor of Maria and Dulos Realty were the only conveyances of the subject property in this case that can be the source of a valid and registrable title. enunciates that any registration made under Section 194 of the Administrative Code "shall be understood to be without prejudice to a third party who has a better right. In sum. this Court recognizes the valid and registrable rights of Maria and Dulos Realty to the subject property. is REINSTATED.R. the ownership of the subject property was vested unto the said buyers instantly. is without prejudice to the rights of Emma and Rosario to seek relief by way of damages against the estate and heirs of Nicomedes to the extent that the latter were benefited by the sale to succeeding buyers. Branch 119. 3344.[59] which amended Section 194 of the Administrative Code. No costs. premises considered. . and can thus be confirmed by registration. SO ORDERED.The Court concludes that the Deed of Conditional Sale in favor of Emma and the Agreement of Purchase and Sale in favor of Rosario were mere contracts to sell. Upon the execution of these deeds.[58] Thus. but without prejudice to the rights of Emma and Rosario to seek damages against the estate and heirs of Nicomedes.R. 139365 is GRANTED. acquired through the contracts of sale in their favor. are undeniably better or superior to those of Emma or Rosario. Maria and Dulos Realty acquired their title to the property in separate deeds of absolute sale executed in their favor by Nicomedes and his heirs. 139047 is DENIED. The assailed Decision of the Court of Appeals in CA-G. the Petition in G. Act No." In this case. The fact that Rosario was the first among the parties to register her contract in the Registry of Property for Unregistered Lands on 10 March 1969 is of no moment. WHEREFORE. while the Petition in G. Both contracts were designated as absolute sales and the provisions thereof leave no doubt that the same were true contracts of sale. Nicomedes can still validly convey the subject property to another buyer. Consequently. unlike the contracts to sell executed in favor of Emma and Rosario. No.