You are on page 1of 97

A. A. ADDISON, plaintiff-appellant, vs. MARCIANA FELIX and BALBINO TIOCO, defendants-appellees. Thos. D. Aitken for appellant.

Modesto Reyes and Eliseo Ymzon for appellees. Fisher, J.: By a public instrument dated June 11, 1914, the plaintiff sold to the defendant Marciana Felix, with the consent of her husband, the defendant Balbino Tioco, four parcels of land, described in the instrument. The defendant Felix paid, at the time of the execution of the deed, the sum of P3,000 on account of the purchase price, and bound herself to pay the remainder in installments, the first of P2,000 on July 15, 1914, and the second of P5,000 thirty days after the issuance to her of a certificate of title under the Land Registration Act, and further, within ten years from the date of such title P10, for each coconut tree in bearing and P5 for each such tree not in bearing, that might be growing on said four parcels of land on the date of the issuance of title to her, with the condition that the total price should not exceed P85,000. It was further stipulated that the purchaser was to deliver to the vendor 25 per centum of the value of the products that she might obtain from the four parcels “from the moment she takes possession of them until the Torrens certificate of title be issued in her favor.” It was also covenanted that “within one year from the date of the certificate of title in favor of Marciana Felix, this latter may rescind the present contract of purchase and sale, in which case Marciana Felix shall be obliged to return to me, A. A. Addison, the net value of all the products of the four parcels sold, and I shall obliged to return to her, Marciana Felix, all the sums that she may have paid me, together with interest at the rate of 10 per cent per annum.” In January, 1915, the vendor, A. A. Addison, filed suit in Court of First Instance of Manila to compel Marciana Felix to make payment of the first installment of P2,000, demandable in accordance with the terms of the contract of sale aforementioned, on July 15, 1914, and of the interest in arrears, at the stipulated rate of 8 per cent per annum. The defendant, jointly with her husband, answered the complaint and alleged by way of special defense that the plaintiff had absolutely failed to deliver to the defendant the lands that were the subject matter of the sale,

notwithstanding the demands made upon him for this purpose. She therefore asked that she be absolved from the complaint, and that, after a declaration of the rescission of the contract of the purchase and sale of said lands, the plaintiff be ordered to refund the P3,000 that had been paid to him on account, together with the interest agreed upon, and to pay an indemnity for the losses and damages which the defendant alleged she had suffered through the plaintiff’s non-fulfillment of the contract. The evidence adduced shows that after the execution of the deed of the sale the plaintiff, at the request of the purchaser, went to Lucena, accompanied by a representative of the latter, for the purpose of designating and delivering the lands sold. He was able to designate only two of the four parcels, and more than two-thirds of these two were found to be in the possession of one Juan Villafuerte, who claimed to be the owner of the parts so occupied by him. The plaintiff admitted that the purchaser would have to bring suit to obtain possession of the land (sten. notes, record, p. 5). In August, 1914, the surveyor Santamaria went to Lucena, at the request of the plaintiff and accompanied by him, in order to survey the land sold to the defendant; but he surveyed only two parcels, which are those occupied mainly by the brothers Leon and Julio Villafuerte. He did not survey the other parcels, as they were not designated to him by the plaintiff. In order to make this survey it was necessary to obtain from the Land Court a writ of injunction against the occupants, and for the purpose of the issuance of this writ the defendant, in June, 1914, filed an application with the Land Court for the registration in her name of four parcels of land described in the deed of sale executed in her favor by the plaintiff. The proceedings in the matter of this application were subsequently dismissed, for failure to present the required plans within the period of the time allowed for the purpose. The trial court rendered judgment in behalf of the defendant, holding the contract of sale to be rescinded and ordering the return to the plaintiff the P3,000 paid on account of the price, together with interest thereon at the rate of 10 per cent per annum. From this judgment the plaintiff appealed. In decreeing the rescission of the contract, the trial judge rested his conclusion solely on the indisputable fact that up to that time the lands sold had not been registered in accordance with the Torrens system, and on the terms of the second paragraph of clause (h) of the contract, whereby it is stipulated that “. . . within one year from the date of the certificate of title in

favor of Marciana Felix, this latter may rescind the present contract of purchase and sale . . . .” The appellant objects, and rightly, that the cross-complaint is not founded on the hypothesis of the conventional rescission relied upon by the court, but on the failure to deliver the land sold. He argues that the right to rescind the contract by virtue of the special agreement not only did not exist from the moment of the execution of the contract up to one year after the registration of the land, but does not accrue until the land is registered. The wording of the clause, in fact, substantiates the contention. The one year’s deliberation granted to the purchaser was to be counted “from the date of the certificate of title … .” Therefore the right to elect to rescind the contract was subject to a condition, namely, the issuance of the title. The record show that up to the present time that condition has not been fulfilled; consequently the defendant cannot be heard to invoke a right which depends on the existence of that condition. If in the cross-complaint it had been alleged that the fulfillment of the condition was impossible for reasons imputable to the plaintiff, and if this allegation had been proven, perhaps the condition would have been considered as fulfilled (arts. 1117, 1118, and 1119, Civ. Code); but this issue was not presented in the defendant’s answer. However, although we are not in agreement with the reasoning found in the decision appealed from, we consider it to be correct in its result. The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels of land, he was not even able to show them to the purchaser; and as regards the other two, more than two-thirds of their area was in the hostile and adverse possession of a third person. The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to be delivered when it is placed “in the hands and possession of the vendee.” (Civ. Code, art. 1462.) It is true that the same article declares that the execution of a public instruments is equivalent to the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that, at the moment of the sale, its material delivery could have been made. It is not enough to confer

. notwithstanding the execution of the instrument. vol. interpreting article 1462 of the Civil Code. wherefore. The supreme court of Spain. 43. for it is incontrovertible that. held in its decision of November 10. 1903. then fiction yields to reality – the delivery has not been effected.” It is evident. though. because such tenancy and enjoyment are opposed by the interposition of another will. the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name. vol. (Civ. in the case at bar. and that from such non-fulfillment arises the purchaser’s right to demand. But if. the abandonment of the thing by the person who makes the delivery and the taking control of it by the person to whom the delivery is made. . 1506 and 1124. Code. 96. he who purchases by means of a public instrument should be deemed .) . 560) that this article “merely declares that when the sale is made through the means of a public instrument. then.. (Civ.upon the purchaser the ownership and the right of possession. . symbolic delivery through the execution of a public instrument is sufficient. as a general rule. the execution of this latter is equivalent to the delivery of the thing sold: which does not and cannot mean that this fictitious tradition necessarily implies the real tradition of the thing sold. . 174) in his commentaries on article 1604 of the French Civil code. to be the possessor in fact. The thing sold must be placed in his control. . the rescission of the sale and the return of the price. p. a third person may be in possession of the same thing. As Dalloz rightly says (Gen. Rep. yet this presumption gives way before proof to the contrary. “the word “delivery” expresses a complex idea . that the mere execution of the instrument was not a fulfillment of the vendors’ obligation to deliver the thing sold.” The execution of a public instrument is sufficient for the purposes of the abandonment made by the vendor. but it is not always sufficient to permit of the apprehension of the thing by the purchaser. arts. as she has demanded. p. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor. while its ownership still pertains to the vendor (and with greater reason if it does not). Rep.

” This obviously shows that it was not forseen that the purchaser might be deprived of her possession during the course of the registration proceedings. It is true.000 received by him on account of the price of the sale. But there is nothing in the instrument which would indicate. So ordered. Torres. in order to be able to enjoy the property sold. vs. but from this it cannot be concluded that she had to await the final decision of the Court of Land Registration. such agreement would be perfectly valid. On the contrary. even implicitly. with the costs of both instances against the appellant. . and it were proven that she knew that the thing was in the possession of a third person claiming to have property rights therein. it is not the conventional but the legal interest that is demandable. but that the transaction rested on the assumption that she was to have.. together with interest thereon at the legal rate of 6 per annum from the date of the filing of the complaint until payment. that such was the agreement. as the appellant argues.Of course if the sale had been made under the express agreement of imposing upon the purchaser the obligation to take the necessary steps to obtain the material possession of the thing sold. FELIX DANGUILAN. Inasmuch as the rescission is made by virtue of the provisions of law and not by contractual agreement. and the plaintiff is ordered to make restitution of the sum of P3. during said period. that the obligation was incumbent upon the defendant Marciana Felix to apply for and obtain the registration of the land in the new registry of property. petitioner. the material possession and enjoyment of the four parcels of land. Street. concur. It is therefore held that the contract of purchase and sale entered into by and between the plaintiff and the defendant on June 11. Johnson. 1914. is rescinded. it was expressly stipulated in the contract that the purchaser should deliver to the vendor one-fourth “of the products … of the aforesaid four parcels from the moment when she takes possession of them until the Torrens certificate of title be issued in her favor. JJ. Malcolm and Avanceña.

CRUZ. for petitioner. She had agreed on condition that he would deliver part of the harvest from the farm to her. On January 29. 1943. Mallonga for private respondent. continuous and adverse possession. respondents. The case is now before us for a resolution of the issues once and for all. Perez. Jr. She claimed to be the illegitimate daughter of Domingo Melad. 1 In his answer. Pedro R.00. She moved out of the farm only when in 1946 Felix Danguilan approached her and asked permission to cultivate the land and to stay therein. with whom she and her mother were living when he died in 1945. 1962. Teodoro B. which . J. 4 She said the amount was earned by her mother as a worker at the Tabacalera factory. the respondent filed a complaint against the petitioner in the then Court of First Instance of Cagayan for recovery of a farm lot and a residential lot which she claimed she had purchased from Domingo Melad in 1943 and were now being unlawfully withheld by the defendant. upheld the respondent.INTERMEDIATE APPELLATE COURT. JOSE TAGACAY. assisted by her husband. purportedly signed by Domingo Melad and duly notarized. 3 At the trial. the petitioner denied the allegation and averred that he was the owner of the said lots of which he had been in open. 2 The case was dismissed for failure to prosecute but was refiled in 1967. APOLONIA MELAD.: The subject of this dispute is the two lots owned by Domingo Melad which is claimed by both the petitioner and the respondent. on appeal. having acquired them from Domingo Melad in 1941 and 1943. The trial court believed the petitioner but the respondent court. which conveyed the said properties to her for the sum of P80. the plaintiff presented a deed of sale dated December 4.

The plaintiff 's mother. 10 The review by the respondent court 11 of this decision was manifestly less than thorough. For the most part it merely affirmed the factual findings of the trial court except for an irrelevant modification. She was also inconsistent when she testified first that the defendant was her tenant and later in rebuttal that he was her administrator. which in this case was the defendant. The deliveries having stopped. the presumption was in favor of the one actually occupying the same. her only other witness. whom he and his wife Juana Malupang had taken into their home as their ward as they had no children of their own. the defendant testified that he was the husband of Isidra Melad. Domingo's niece. The decision concluded that where there was doubt as to the ownership of the property. Weighing the evidence presented by the parties. He and his wife lived with the couple in their house on the residential lot and helped Domingo with the cultivation of the farm." It was held that the plaintiff's own declaration that she moved out of the property in 1946 and left it in the possession of the defendant was contradictory to her claim of ownership. corroborated this testimony. the judge 9 held that the defendant was more believable and that the plaintiff's evidence was "unpersuasive and unconvincing. Two of said witnesses declared that neither the plaintiff nor her mother lived in the land with Domingo Melad. and it was only toward . 5 For his part. 8 The decision of the trial court was based mainly on the issue of possession. on the understanding that the latter would take care of the grantor and would bury him upon his death. Domingo Melad signed in 1941 a private instrument in which he gave the defendant the farm and in 1943 another private instrument in which he also gave him the residential lot. 6 Danguilan presented three other witnesses 7 to corroborate his statements and to prove that he had been living in the land since his marriage to Isidra and had remained in possession thereof after Domingo Melad's death in 1945.he did from that year to 1958. she then consulted the municipal judge who advised her to file the complaint against Danguilan.

(SGD. Penablanca. It then set aside the appealed decision and declared the respondents the true and lawful owners of the disputed property.M. and the width is 150 m. that this land is registered under my name.) ILLEGIBLE ISIDRO FELIX MELAD DANGUILAN . he will be responsible because of this land I am giving to him. The said exhibits read as follows: EXHIBIT 2-b is quoted as follows: 12 I. of legal age. (T. Penablanca Cagayan. IN WITNESS WHEREOF. that it is true that I have nieces and nephews but they are not living with us and there is no one to whom I will give my land except to Felix Danguilan for he lives with me and this is the length—175 m.the end that it went to and resolved what it considered the lone decisive issue. (SGD. my agricultural land located at Barrio Fugu-Macusi. by virtue of which Domingo Melad had conveyed the two parcels of land to the petitioner.) 3. DOMINGO MELAD. married. September 14. (T. The respondent court held that Exhibits 2-b and 3-a. The reason was that they were donations of real property and as such should have been effected through a public instrument. that I hereby declare and bind myself that there is no one to whom I will deliver this land except to him as he will be the one responsible for me in the event that I will die and also for all other things needed and necessary for me. 1941.) DOMINGO MELAD WITNESSES: 1. I hereby sign my name below and also those present in the execution of this receipt this 14th day of September 1941. Province of Cagayan.) 2.M. were null and void. Philippine Islands. do hereby declare in this receipt the truth of my giving to Felix Danguilan.

I hereby sign this receipt this 18th day of December 1943. Penablanca.) DANIEL ARAO ILLEGIBLE It is our view. We do not think. Cresencio Danguilan.) (SGD. considering the language of the two instruments. since the donors made it conditional upon the . (SGD. however. to Felix Danguilan. do hereby swear and declare the truth that I have delivered my residential lot at Centro. my sonin-law because I have no child. on the south by Pastor Lagundi and on the west. on the north. that the donee was moved by pure liberality. that Domingo Melad did intend to donate the properties to the petitioner. Penablanca.EXHIBIT 3-a is quoted as follows: 13 I. Hence. IN WITNESS HEREOF. Province of Cagayan. Pablo Pelagio and the area of this lot is 35 meters going south. Cagayan. that the boundaries of this lot is—on the east. DOMINGO MELAD. While truly donations. that I have thought of giving him my land because he will be the one to take care of SHELTERING me or bury me when I die and this is why I have thought of executing this document.) DOMINGO MELAD WITNESSES: (SGD. Arellano Street. it was not covered by the rule in Article 749 of the Civil Code requiring donations of real properties to be effected through a public instrument. width and length beginning west to east is 40 meters. The case at bar comes squarely under the doctrine laid down in Manalo v. 14 where the Court held: There can be no doubt that the donation in question was made for a valuable consideration. a resident of Centro. as the private respondent contends. De Mesa. the conveyances were onerous donations as the properties were given to the petitioner in exchange for his obligation to take care of the donee for the rest of his life and provide for his burial.

" This was. 15 which would mean that the petitioner farmed the land practically by himself and so provided for the donee (and his wife) during the latter part of Domingo Melad's life. a rather superficial way of resolving such a basic and important issue. they should have been effected through a public instrument and not mere private writings. The private respondent argues that as there was no equivalence between the value of the lands donated and the services for which they were being exchanged. However.donees' bearing the expenses that might be occasioned by the death and burial of the donor Placida Manalo. no evidence has been adduced to support her contention that the values exchanged were disproportionate or unequal. On the other hand. We may assume that there was a fair exchange between the donor and the donee that made the transaction an onerous donation. Regarding the private respondent's claim that she had purchased the properties by virtue of a deed of sale. 16 This was . although not recorded in a public instrument. in order to determine whether or not said donation is valid and effective it should be sufficient to demonstrate that. it embraces the conditions the law requires and is valid and effective. therefore. both the trial court and the respondent court have affirmed the factual allegation that the petitioner did take care of Domingo Melad and later arranged for his burial in accordance with the condition imposed by the donor. the respondent court had only the following to say: "Exhibit 'E' taken together with the documentary and oral evidence shows that the preponderance of evidence is in favor of the appellants. It is alleged and not denied that he died when he was almost one hundred years old. a condition and obligation which the donee Gregorio de Mesa carried out in his own behalf and for his wife Leoncia Manalo. hence. Maria Yedan from her earnings as a wage worker in a factory. we think. the two transactions should be considered pure or gratuitous donations of real rights. The deed of sale was allegedly executed when the respondent was only three years old and the consideration was supposedly paid by her mother. as a contract.

Art. even assuming the validity of the deed of sale. 8 Phil. If she did have possession. the respondent considered Domingo Melad the owner of the properties and that she had never occupied the same. 19 Considering these serious challenges. by her own sworn admission. which in this case was not refuted. 17 The averment was also made that the contract was simulated and prepared after Domingo Melad's death in 1945. The sale was made out in favor of Apolonia Melad although she had been using the surname Yedan her mother's surname. she transferred the same to the petitioner in 1946. v. In short. Almeda: 21 Since in this jurisdiction it is a fundamental and elementary principle t hat ownership does not pass by mere stipulation but only by delivery (Civil Code. she failed to show that she consummated the contract of sale by actual delivery of the properties to her and her actual possession thereof in concept of purchaser-owner. Fidelity and Surety Co. At any rate. While it is true that the due execution of a public instrument is presumed. the record shows that the private respondent did not take possession of the disputed properties and indeed waited until 1962 to file this action for recovery of the lands from the petitioner. 1095. who was after all the one paying for the lands. 18 It was also alleged that even after the supposed execution of the said contract. Wilson. before that instrument was signed and in fact even after she got married. and moved out to another lot belonging to her stepbrother. the presumption is disputable and will yield to contradictory evidence. 20 Her claim that the petitioner was her tenant (later changed to administrator) was disbelieved by the trial court. 51). the appellate court could have devoted a little more time to examining Exhibit "E" and the circumstances surrounding its execution before pronouncing its validity in the manner described above. one may well wonder why the transfer was not made to the mother herself. and the execution of a public document does not constitute sufficient . and properly so. As was held in Garchitorena v. for its inconsistency.itself a suspicious circumstance.

he shall not acquire a real right" (and the ownership is surely such) "until the property has been delivered to him. Cesar. The ownership. Wilson. .known doctrine of law that "non mudis pactis sed traditione dominia rerum transferuntur". In the aforecited case of Fidelity and Deposit Co. 39 Phil. However. In conformity with said doctrine as established in paragraph 2 of article 609 of said code. " As for the argument that symbolic delivery was effected through the deed of sale. it becomes incontestable that even if included in the contract. in consequence of certain contracts. 134). by testate or intestate succession. the Court has held: . but one against his vendor for specific performance of the sale to him. the property right.. volume 10. the ownership of the property in dispute did not pass thereby to Mariano Garchitorena. 38 Phil.. is not one of revindicacion. and. is only derived from the delivery of a thing .. by tradition". v. Felix. His action. in our Civil Code it is a fundamental principle in all matters of contracts and a well. by gift. As Manresa states in his Commentaries on the Civil Code. Not having become the owner for lack of delivery. pages 339 and 340: "Our law does not admit the doctrine of the transfer of property by mere consent but limits the effect of the agreement to the due execution of the contract. And as the logical application of this disposition article 1095 prescribes the following: "A creditor has the rights to the fruits of a thing from the time the obligation to deliver it arises. 404. which was a public instrument. 22 Justice Mapa declared for the Court: Therefore." In accordance with such disposition and provisions the delivery of a thing constitutes a necessary and indispensable requisite for the purpose of acquiring the ownership of the same by virtue of a contract. Mariano Garchitorena cannot presume to recover the property from its present possessors. Masallo where the property involved is in the actual and adverse possession of third persons (Addison vs. that "the ownership and other property rights are acquired and transmitted by law. therefore..

petitioner. in order that this symbolic delivery may produce the effect of tradition. WHEREFORE. Even if the respective claims of the parties were both to be discarded as being inherently weak. the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name. judgment must be for the defendant. It is not enough to confer upon the purchaser the ownership and the right of possession. but. its material delivery could have been made. 23 There is no dispute that it is the petitioner and not the private respondent who is in actual possession of the litigated properties. art. for the latter being in possession is presumed to be the owner. JR. But if. It is true that the same article declares that the execution of a public instrument is equivalent to the delivery of the thing which is the object of the contract." (Civil Code. Estejada 24 where the Court announced: If the claim of both the plaintiff and the defendant are weak. notwithstanding the execution of the instrument. . 1462). symbolic delivery through the execution of a public instrument is sufficient. the decision of the respondent court is SET ASIDE and that of the trial court REINSTATED. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor. and cannot be obliged to show or prove a better right. with costs against the private respondent. because such tenancy and enjoyment are opposed by the interposition of another will. it is necessary that the vendor shall have had such control over the thing sold that. the decision should still incline in favor of the petitioner pursuant to the doctrine announced in Santos & Espinosa v. at the moment of the sale. The thing is considered to be delivered when it is placed "in the hands and possession of the vendee. It is so ordered PERFECTO DY.The Code imposes upon the vendor the obligation to deliver the thing sold. vs. then fiction yields to reality—the delivery has not been effected. The thing sold must be placed in his control.

respondents.COURT OF APPEALS. Both truck and tractor were mortgaged to Libra as security for the loan. In a letter dated August 27.. Perfecto Dy and Wilfredo Dy are brothers. The petitioner wanted to buy the tractor from his brother so on August 20. 1979. J. the subject tractor was in the possession of Libra Finance due to Wilfredo Dy's failure to pay the amortizations. 1990 decision of the Court of Appeals which ruled that the petitioner's purchase of a farm tractor was not validly consummated and ordered a complaint for its recovery dismissed. Zosa & Quijano Law Offices for petitioner. Bugarin for respondent GELAC Trading..:p This is a petition for review on certiorari seeking the reversal of the March 23. on September 4. Inc. he wrote a letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the said tractor and assume the mortgage debt of the latter. Wilfredo Dy purchased a truck and a farm tractor through financing extended by Libra Finance and Investment Corporation (Libra). . The facts as established by the records are as follows: The petitioner. 1979. JR. Libra thru its manager. Wilfredo Dy executed a deed of absolute sale in favor of the petitioner over the tractor in question. Thus. Sometime in 1979. At this time. Expedito P. Cipriano Ares approved the petitioner's request. GELAC TRADING INC. 1979. and ANTONIO V. GONZALES. GUTIERREZ.

Wilfredo Dy". the provincial sheriff was able to seize and levy on the tractor which was in the premises of Libra in Carmen. On November 22. Carol Dy-Seno. pronouncing that the plaintiff is the owner of the tractor.00 in favor of Libra. The petitioner was able to convince his sister. 1988.Despite the offer of full payment by the petitioner to Libra for the tractor. Cebu. the petitioner filed an action to recover the subject tractor against GELAC Trading with the Regional Trial Court of Cebu City. Gelac sold the tractor to one of its stockholders. On the strength of an alias writ of execution issued on December 27. R-16646 entitled "Gelac Trading. It was only when the check was cleared on January 17. Meanwhile. Later.269. On April 8.80 was pending in another court in Cebu. thus settling in full the indebtedness of Wilfredo Dy with the financing firm. a collection case to recover the sum of P12. Consequently. Payment having been effected through an out-of-town check. Libra insisted that it be cleared first before Libra could release the chattels in question. judgment is hereby rendered in favor of the plaintiff and against the defendant. to purchase the truck so that full payment could be made for both. a PNB check was issued in the amount of P22. Inc. subject matter of this case. Antonio Gonzales. the immediate release could not be effected because Wilfredo Dy had obtained financing not only for said tractor but also for a truck and Libra insisted on full payment for both. 1979. 1979. The dispositive portion of the decision reads as follows: WHEREFORE. and directing the defendants Gelac .000. v. Civil Case No. 1980 that the petitioner learned about GELAC having already taken custody of the subject tractor. The tractor was subsequently sold at public auction where Gelac Trading was the lone bidder. the RTC rendered judgment in favor of the petitioner.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS MISAPPREHENDED THE FACTS AND ERRED IN NOT AFFIRMING THE TRIAL COURT'S FINDING THAT OWNERSHIP OF THE FARM TRACTOR HAD ALREADY PASSED TO HEREIN PETITIONER WHEN SAID TRACTOR WAS LEVIED ON BY THE SHERIFF PURSUANT TO AN ALIAS WRIT OF EXECUTION ISSUED IN ANOTHER CASE IN FAVOR OF RESPONDENT GELAC TRADING INC. B. 35-36) On appeal. P50. pp. directing the defendants jointly and severally to pay to the plaintiff the amount of P1. THERE BEING NO EVIDENCE OF SUCH FRAUD AS FOUND BY THE TRIAL COURT.000 for moral damages. the Court of Appeals reversed the decision of the RTC and dismissed the complaint with costs against the petitioner. P50. C. The Court of Appeals held that the tractor in question still belonged to Wilfredo Dy when it was seized and levied by the sheriff by virtue of the alias writ of execution issued in Civil Case No. WHETHER OR NOT THE HONORABLE COURT OF APPEALS MISAPPREHENDED THE FACTS AND ERRED IN NOT SUSTAINING THE FINDING OF THE TRIAL COURT THAT THE SALE OF THE .000 for exemplary damages. R-16646. and to pay the cost. WHETHER OR NOT THE HONORABLE COURT OF APPEALS EMBARKED ON MERE CONJECTURE AND SURMISE IN HOLDING THAT THE SALE OF THE AFORESAID TRACTOR TO PETITIONER WAS DONE IN FRAUD OF WILFREDO DY'S CREDITORS.Trading Corporation and Antonio Gonzales to return the same to the plaintiff herein.00 as expenses for hiring a tractor. (Rollo.541. The petitioner now comes to the Court raising the following questions: A.

we stated that: xxx xxx xxx The rule is settled that the chattel mortgagor continues to be the owner of the property. not only upon the parties executing them but also upon those who later. while they subsist. 525). p.TRACTOR BY RESPONDENT GELAC TRADING TO ITS CORESPONDENT ANTONIO V. (Rollo. GONZALES ON AUGUST 2. to secure the written consent of the mortgagee. therefore.. (Francisco. Revised Rules of Court in the Philippines. affects not the validity of the sale but only the penal liability of the mortgagor under the Revised Penal Code and the binding effect of such sale on the mortgagee under the Deed of Chattel Mortgage. however. and therefore. The absence of the written consent of the mortgagee to the sale of the mortgaged property in favor of a third person. Jr. v. has the power to alienate the same. 13) The respondents claim that at the time of the execution of the deed of sale. p. xxx xxx xxx . In the case of Servicewide Specialists Inc. Intermediate Appellate Court. Volume IV-B Part 1. the instruments of mortgage are binding. acquire the properties referred to therein. Vicente. 1980 AT WHICH TIME BOTH RESPONDENTS ALREADY KNEW OF THE FILING OF THE INSTANT CASE WAS VIOLATIVE OF THE HUMAN RELATIONS PROVISIONS OF THE CIVIL CODE AND RENDERED THEM LIABLE FOR THE MORAL AND EXEMPLARY DAMAGES SLAPPED AGAINST THEM BY THE TRIAL COURT. Thus. no constructive delivery was effected since the consummation of the sale depended upon the clearance and encashment of the check which was issued in payment of the subject tractor. by purchase or otherwise. he is obliged under pain of penal liability. (1972). (174 SCRA 80 [1989]).

1979. if the thing sold cannot be transferred to the possession of the vendee at the time . 2 of the Revised Penal Code. 1498. The delivery of movable property may likewise be made by the mere consent or agreement of the contracting parties. And even if no consent was obtained from the mortgagee. we see no reason why Wilfredo Dy. as the chattel mortgagor can not sell the subject tractor. as well. There is no dispute that the consent of Libra Finance was obtained in the instant case. the validity of the sale would still not be affected. the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. In a letter dated August 27. When the sale is made through a public instrument. The sale between the brothers was therefore valid and binding as between them and to the mortgagee. xxx xxx xxx Article 1499 provides: Article 1499. Thus. Article 1498 states: Art. if from the deed the contrary does not appear or cannot clearly be inferred. Libra allowed the petitioner to purchase the tractor and assume the mortgage debt of his brother. Article 1496 of the Civil Code states that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501 or in any other manner signing an agreement that the possession is transferred from the vendor to the vendee.The mortgagor who gave the property as security under a chattel mortgage did not part with the ownership over the same. We agree with the petitioner that Articles 1498 and 1499 are applicable in the case at bar. He had the right to sell it although he was under the obligation to secure the written consent of the mortgagee or he lays himself open to criminal prosecution under the provision of Article 319 par.

. Here. actual delivery of the subject tractor could not be made. 767 [1953]) There is no showing that Libra Finance has already foreclosed the mortgage and that it was the new owner of the subject tractor. his right of ownership was not divested from him upon his default. (See Martinez v. PNB. Undeniably. or if the latter already had it in his possession for any other reason. The law implies that the mortgagee is entitled to possess the mortgaged property because possession is necessary in order to enable him to have the property sold. As mortgagee.of the sale. However. 765. 1499) The respondent court avers that the vendor must first have control and possession of the thing before he could transfer ownership by constructive delivery. he has the right of foreclosure upon default by the mortgagor in the performance of the conditions mentioned in the contract of mortgage. (Article 2088. Libra gave its consent to the sale of the subject tractor to the petitioner. there was constructive delivery already upon the execution of the public instrument pursuant to Article 1498 and upon the consent or agreement of the parties when the thing sold cannot be immediately transferred to the possession of the vendee. (1463a) In the instant case. it was Libra Finance which was in possession of the subject tractor due to Wilfredo's failure to pay the amortization as a preliminary step to foreclosure. 93 Phil. Civil Code) Said property continues to belong to the mortgagor. Neither could it be said that Libra was the owner of the subject tractor because the mortgagee can not become the owner of or convert and appropriate to himself the property mortgaged. It was aware of the transfer of rights to the petitioner. (Art. While it is true that Wilfredo Dy was not in actual possession and control of the subject tractor. The only remedy given to the mortgagee is to have said property sold at public auction and the proceeds of the sale applied to the payment of the obligation secured by the mortgagee.

1979. that the consummation of the sale depended upon the encashment of the check is untenable. It was not determinative of the consummation of the sale. Well settled is the rule that only properties unquestionably owned by the judgment debtor and which are not exempt by law from execution should be levied upon or sought to be levied upon. the petitioner was fully aware of the existing mortgage of the subject tractor to Libra. (See Industrial Finance Corp. The sale of the subject tractor was consummated upon the execution of the public instrument on September 4. 177 SCRA 521 [1989]). G. he volunteered to assume the remaining balance of the mortgage debt of Wilfredo Dy which Libra undeniably agreed to. v. For the power of the court in the execution of its judgment extends only over properties belonging to the judgment debtor. Hence. (Consolidated Bank and Trust Corp.Where a third person purchases the mortgaged property. . The transaction between the brothers is distinct and apart from the transaction between Libra and the petitioner. The payment of the check was actually intended to extinguish the mortgage obligation so that the tractor could be released to the petitioner. v. the subject tractor was no longer owned by Wilfredo Dy when it was levied upon by the sheriff in December. No. It was never intended nor could it be considered as payment of the purchase price because the relationship between Libra and the petitioner is not one of sale but still a mortgage. 78771. 1979. His right of ownership shall be subject to the mortgage of the thing sold to him. At this time constructive delivery was already effected. he automatically steps into the shoes of the original mortgagor. Court of Appeals. Apostol. 1991). January 23.R. when he was obtaining Libra's consent to the sale. In the case at bar. In fact. The respondents further claim that at that time the sheriff levied on the tractor and took legal custody thereof no one ever protested or filed a third party claim. therefore. The clearing or encashment of the check which produced the effect of payment determined the full payment of the money obligation and the release of the chattel mortgage. The contention.

Moreover. WHEREFORE. 1990 is SET ASIDE and the decision of the Regional Trial Court dated April 8. the petition is hereby GRANTED. COURT OF . the Court accords great respect and weight to the findings of fact of the trial court. 1980. Notwithstanding said summons. v. Court of Appeals. it continued to sell the subject tractor to one of its stockholders on August 2. fraud can not be presumed. 1980 when it received summons based on the complaint for replevin filed with the RTC by the petitioner. POWER COMMERCIAL AND INDUSTRIAL CORPORATION. 9 SCRA 663 [1963]). (Consolidated Bank and Trust Corp. A person other than the judgment debtor who claims ownership or right over levied properties is not precluded. vs. As found by the trial court. Anent the second and third issues raised. this fact alone does not give rise to the presumption that the sale was fraudulent. petitioner. While it is true that Wilfredo and Perfecto are brothers. Sycip. Relationship is not a badge of fraud (Goquiolay v. The decision of the Court of Appeals promulgated on March 23.It is inconsequential whether a third party claim has been filed or not by the petitioner during the time the sheriff levied on the subject tractor. We agree with the trial court's findings that the actuations of GELAC Trading were indeed violative of the provisions on human relations. from taking other legal remedies to prosecute his claim. GELAC knew very well of the transfer of the property to the petitioners on July 14. 1988 is REINSTATED. however. supra) This is precisely what the petitioner did when he filed the action for replevin with the RTC. it must be established by clear convincing evidence. SO ORDERED. There is no sufficient evidence to show that the sale of the tractor was in fraud of Wilfredo and creditors.

Quiambao. m. QUIAMBAO and PHILIPPINE NATIONAL BANK. CV Case No. For this purpose. respondents. SPOUSES REYNALDO and ANGELITA R. The contract involved a 612-sq. 1979. DECISION PANGANIBAN. S-6686 located at the corner of Bagtican and St. herein private respondents. 32298 upholding the validity of the contract of sale with assumption of mortgage and absolving the mortgagee from the liability of returning the mortgage payments already made. needed a bigger office space and warehouse for its products. it entered into a contract of sale with the spouses Reynaldo and Angelita R. an industrial asbestos manufacturer. on January 31. J.R. parcel of land covered by Transfer Certificate of Title No. 1995 Decision[1] of the Court of Appeals. Paul Streets.[2] The Facts Petitioner Power Commercial & Industrial Development Corporation.: Is the seller’s failure to eject the lessees from a lot that is the subject of a contract of sale with assumption of mortgage a ground (1) for rescission of such contract and (2) for a return by the mortgagee of the amortization payments made by the buyer who assumed such mortgage? Petitioner posits an affirmative answer to such question in this petition for review on certiorari of the March 27. San Antonio . Eighth Division.APPEALS. in CA-G.

On June 1. and the balance of P295.Village.00) Philippine Currency. he paid P79. respondent spouses mortgaged again said land to PNB to guarantee a loan of P145. Further.00 of which was paid to respondent spouses. we hereby by these presents SELL. In full satisfaction thereof. as part of the purchase price. Petitioner agreed to assume payment of the loan. On June 26. TRANSFER and CONVEY by way of absolute sale the above described property with all the improvements existing thereon unto the said Power Commercial and Industrial Development Corporation. Makati City.000. organized and existing under and by virtue of Philippine Laws with offices located at 252-C Vito Cruz Extension. petitioner assumed.77 to Respondent Philippine National Bank (“PNB” for brevity).000. .00 as down payment. a 100% Filipino Corporation. P80. and which we hereby acknowledge to be payment in full and received to our entire satisfaction.00. free from all liens and encumbrances. The parties agreed that petitioner would pay private respondents P108. 1979.000. the existing mortgage on the land.000. its successors and assigns. 1979.000. to us in hand paid in cash.00 upon the execution of the deed of transfer of the title over the property. by POWER COMMERCIAL AND INDUSTRIAL DEVELOPMENT CORPORATION.145. the parties executed a Deed of Absolute Sale With Assumption of Mortgage which contained the following terms and conditions:[3] “That for and in consideration of the sum of Two Hundred Ninety-Five Thousand Pesos (P295.

agreeing that failure to do so shall give to the bank first lieu (sic) over the herein described property. 163. Cubao. 34 of Book No. found on page No. however. hereby agreeing to abide by any and all requirements of the said bank. subject. Branch. against any claims whatsoever of any and all third persons. its successors and assigns.the same having no agricultural lessee and/or tenant. to the provisions hereunder provided to wit: That the above described property is mortgaged to the Philippine National Bank. Altamirano registered with the Register of Deeds of Pasig (Makati).” . Series of 1979 of Notary Public Herita L. evidenced by document No. Quezon City for the amount of one hundred forty-five thousand pesos. Rizal xxx. “We hereby also warrant that we are the lawful and absolute owners of the above described property. to the said mortgagee bank. and we hereby agree and warrant to defend its title and peaceful possession thereof in favor of the said Power Commercial and Industrial Development Corporation.“We hereby certify that the aforesaid property is not subject to nor covered by the provisions of the Land Reform Code -. That the said Power Commercial and Industrial Development Corporation assumes to pay in full the entire amount of the said mortgage above described plus interest and bank charges. free from any lien and/or encumbrance. thus holding the herein vendor free from all claims by the said bank. Philippine. XV. That both parties herein agree to seek and secure the agreement and approval of the said Philippine National Bank to the herein sale of this property.

Inasmuch as the previous owner . Mrs. and that said loan was to be paid in full within fifteen (15) days from notice. C.880.000. “For this purpose we respectfully request that xxx our assumption of mortgage be given favorable consideration. and that the previous owner would be responsible for the removal of the people who were there. 1980. 1980 and P20. then General Manager of petitioner-corporation. On December 23.45 on June 24. payments which were to be applied to the outstanding loan.[5] Petitioner paid PNB P41. 1980.D.00 was deemed fully due and demandable. submitted to PNB said deed with a formal application for assumption of mortgage. that the outstanding balance of P145. which is why it is our desire and intention that all the people who are currently physically present and in occupation of said lot should be removed immediately. 1980.14 on December 23. for petitioner’s failure to submit the papers necessary for approval pursuant to the former’s letter dated January 15.[4] On February 15. 1980. the application for assumption of mortgage was considered withdrawn. “It was our understanding that this lot was free and clear of problems of this nature. and that the mortgage and title be transferred to our name so that we may undertake the necessary procedures to make use of this lot ourselves. PNB received a letter from petitioner which reads:[6] “With regard to the presence of the people who are currently in physical occupancy of the (l)ot xxx it is our desire as buyers and new owners of this lot to make use of this lot for our own purpose. PNB informed respondent spouses that. Constantino.On the same date.283.

has not been able to keep his commitment. In order to place your account in current form. an amended complaint was filed impleading PNB as party defendant.283. the trial court[9] ruled that the failure of respondent spouses to deliver actual possession to petitioner entitled the latter to rescind the sale. in its reply to PNB’s letter of February 19. 1982. “A review of our records show that it has been past due from last maturity with interest arrearages amounting to P25. Then. Branch 159. The last payment received by us was on December 24. Thus. 1982. 1982.826. petitioner filed Civil Case No. Reynaldo Quiambao which was assumed by you on June 4.[8] while this case was pending. 1982. On May 31. It was last renewed on December 24. we request you to remit payments to cover interest. 1981. 1983.08 as of February 19. and at least part of the principal. 1980 to mature on June 4.00. petitioner demanded the return of the payments it made on the ground that its assumption of mortgage was never approved.14. The property was subsequently bought by PNB during the public auction.” On February 19. the mortgage was foreclosed. 45217 against respondent spouses for rescission and damages before the Regional Trial Court of Pasig. PNB sent petitioner a letter as follows:[7] “(T)his refers to the loan granted to Mr.” On March 17. 1980 for P20.500. charges. it will be necessary for us to take legal possession of this lot inorder (sic) to take physical possession. and in view of such failure and of the denial of the latter’s assumption of . 1990. 1979 for P101. On July 12.

(3) Ordering defendant PNB to return to plaintiff the amount of P62.14) with 12% interest thereon from date of herein judgment until the same is fully paid.” On appeal by respondent-spouses and PNB. that is.144. Respondent Court of Appeals reversed the trial court. The dispositive portion of said decision states:[10] “IN VIEW OF ALL THE FOREGOING.163.59 (P41.145. it held that the deed of sale between respondent spouses and petitioner did not obligate the former to eject the lessees .880. PNB was obliged to return the payments made by the latter.77) with legal interest of 12% per annum from date of filing of herein complaint. the Court hereby renders judgment in favor of plaintiff and against defendants: (1) Declaring the rescission of the Deed of Sale with Assumption of Mortgage executed between plaintiff and defendants Spouses Quiambao.77 (P108. dated June 26.283. “No award of other damages and attorney‟s fees. In the assailed Decision. March 17. “No pronouncement as to costs.00 plus P79.45 and P20.000. 1979. “The counterclaim of both defendants spouses Quiambao and PNB are dismissed for lack of the same not being warranted under the facts and circumstances of the case. “SO ORDERED. (2) Ordering defendants Spouses Quiambao to return to plaintiff the amount of P187. 1982 until the same is fully paid.

the recourse to this Court . In its Memorandum. obligating PNB to return such payments. it specifically assigns the following errors of law on the part of Respondent Court:[12] “A. nor was the occupation thereof by said lessees a violation of the warranty against eviction. Respondent Court of Appeals gravely erred in failing to consider in its decision that a breach of implied warranty under Article 1547 in relation to Article 1545 of the Civil Code applies in the case-at-bar. “B. there was no substantial breach to justify the rescission of said contract or the return of the payments made.” Hence.from the land in question as a condition of the sale. The dispositive portion of said Decision reads:[11] “WHEREFORE. Respondent Court of Appeals gravely erred in failing to consider in its decision that a mistake in payment giving rise to a situation where the principle of solutio indebiti applies is obtaining in the case-at-bar. No costs.” . Hence. the Decision appealed from is hereby REVERSED and the complaint filed by Power Commercial and Industrial Development Corporation against the spouses Reynaldo and Angelita Quiambao and the Philippine National Bank is DISMISSED. and (2) there was a “mistake in payment” made by petitioner. Issues Petitioner contends that: (1) there was a substantial breach of the contract between the parties warranting rescission.

The Court’s Ruling The petition is devoid of merit. did not ask the corporation’s lawyers to stipulate in the contract that Respondent Reynaldo was guaranteeing the ejectment of the occupants. because there was . Conspicuous Absence of an Imposed Condition The alleged “failure” of respondent spouses to eject the lessees from the lot in question and to deliver actual and physical possession thereof cannot be considered a substantial breach of a condition for two reasons: first. and second. its effects and consequences were not specified either. such “failure” was not stipulated as a condition -. free from any lien and/or encumbrance.[13] The provision adverted to by petitioner does not impose a condition or an obligation to eject the lessees from the lot. to the provisions hereunder provided to wit:” By his own admission. subject. Anthony Powers. It fails to appreciate the difference between a condition and a warranty and the consequences of such distinction. its successors and assigns.whether resolutory or suspensive the contract. The deed of sale provides in part:[14] “We hereby also warrant that we are the lawful and absolute owners of the above described property. and we hereby agree and warrant to defend its title and peaceful possession thereof in favor of the said Power Commercial and Industrial Development Corporation. against any claims whatsoever of any and all third persons. General Manager of petitioner-corporation. however.

Absent a stipulation therefor. we cannot say that the parties intended to make its nonfulfillment a ground for rescission..A. the contract specifically stipulated that the ejectment was a condition to be fulfilled. must be construed against the party who caused it. i. if the above-quoted provision can be so described. Rescission was not allowed. Court of Appeals.e. the performance of which would have given rise to the payment of the consideration by private respondent. If the parties intended to impose on respondent spouses the obligation to eject the tenants from the lot sold.[16] Petitioner itself caused the obscurity because it omitted this alleged condition when its lawyer drafted said contract..[18] rescission was sought on the ground that the petitioners had failed to fulfill their obligation “to remove and clear” the lot sold. In Ang vs.[17] where the ejectment of the occupants of the lot sold by private respondent was the operative act which set into motion the period of petitioner’s compliance with his own obligation. In the case cited.already a proviso in said deed of sale that the sellers were guaranteeing the peaceful possession by the buyer of the land in question. because the . If they did intend this. This is not so in the case at bar. C.[15] Any obscurity in a contract. it should have included in the contract a provision similar to that referred to in Romero vs. however. Failure to remove the squatters within the stipulated period gave the other party the right to either refuse to proceed with the agreement or to waive that condition of ejectment in consonance with Article 1545 of the Civil Code. otherwise. their contract should have expressly stipulated so. the obligation to pay the balance would not arise. to pay the balance of the purchase price.

and not to a condition that was not met.” Effective Symbolic Delivery The Court disagrees with petitioner’s allegation that the respondent spouses failed to deliver the lot sold.[20] petitioner’s counsel during the sales negotiation even undertook the job of ejecting the squatters. 1980 admitted that it was the “buyer(s) and new owner(s) of this lot. As testified to by Reynaldo. transfer of possession of said lot was impossible due to the presence of occupants on the lot sold. We find this misleading. Symbolic delivery (Article 1498).breach was not substantial and fundamental to the fulfillment by the petitioners of the obligation to sell. In fact.[19] Futhermore. The terms of the contract are so clear as to leave no room for any other interpretation. Petitioner asserts that the legal fiction of symbolic delivery yielded to the truth that. the provision adverted to in the contract pertains to the usual warranty against eviction. petitioner was well aware of the presence of the tenants at the time it entered into the sales transaction. As stated. Although most authorities consider transfer of ownership as the primary purpose of sale. as a species of constructive delivery. Finally. petitioner actually filed suit to eject the occupants. petitioner in its letter to PNB of December 23. at the execution of the deed of sale. effects the transfer of ownership .[21] The Civil Code provides that delivery can either be (1) actual (Article 1497) or (2) constructive (Articles 1498-1501). delivery remains an indispensable requisite as our law does not admit the doctrine of transfer of property by mere consent.

Prior physical delivery or possession is not legally required and the execution of the deed of sale is deemed equivalent to delivery. But if. The Court has consistently held that:[23] “x x x (I)n order that this symbolic delivery may produce the effect of tradition.[24] This deed operates as a formal or symbolic delivery of the property sold and authorizes the buyer to . It is not enough to confer upon the purchaser the ownership and the right of possession.through the execution of a public document. The lot sold had been placed under the control of petitioner. It signified that its new owner intended to obtain for itself and to terminate said occupants’ actual possession thereof. Its efficacy can. be prevented if the vendor does not possess control over the thing sold. the filing of the ejectment suit was subsequently done. The thing sold must be placed in his control.[22] in which case this legal fiction must yield to reality. notwithstanding the execution of the instrument. it is necessary that the vendor shall have had such control over the thing sold that xxx its material delivery could have been made. because such tenancy and enjoyment are opposed by the interposition of another will. delivery was effected through the execution of said deed.the delivery has not been effected. then fiction yields to reality -. of the land as petitioner would like us to believe. thus. the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name. symbolic delivery through the execution of a public instrument is sufficient. The key word is control. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor. however. not possession.” Considering that the deed of sale between the parties did not stipulate or infer otherwise.

use the document as proof of ownership. (3) The basis thereof is by virtue of a right prior to the sale made by the vendor. (2) This eviction is by a final judgment. As correctly pointed out by Respondent Court. a breach of the warranty against eviction under Article 1547 cannot be declared. the presence of lessees does not constitute an encumbrance of the land. and not that it has been evicted therefrom. Petitioner argues in its memorandum that it has not yet ejected the occupants of said lot. Nothing more is required. Requisites of Breach of Warranty Against Eviction Obvious to us in the ambivalent stance of petitioner is its failure to establish any breach of the warranty against eviction. . and (4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee. Despite its protestation that its acquisition of the lot was to enable it to set up a warehouse for its asbestos products and that failure to deliver actual possession thereof defeated this purpose.[26] nor does it deprive petitioner of its control thereof.[25] In the absence of these requisites. still no breach of warranty against eviction can be appreciated because the facts of the case do not show that the requisites for such breach have been satisfied. A breach of this warranty requires the concurrence of the following circumstances: (1) The purchaser has been deprived of the whole or part of the thing sold.

without the written . petitioner was under obligation to pay the amortizations on the mortgage under the contract of sale and the deed of real estate mortgage. Because petitioner failed to impugn its integrity.[28] both parties agreed to abide by any and all the requirements of PNB in connection with the real estate mortgage. and (2) the payment is made through mistake. “2”). and the person who received the payment. Petitioner was aware that the deed of mortgage (Exh. But this deprivation is due to petitioner’s fault. solutio indebiti does not apply in this case. who has no duty to pay. This doctrine applies where: (1) a payment is made when there exists no binding relation between the payor. to be valid and subsisting. however. under the law. the contract is presumed. and not to any act attributable to the vendorspouses. therefore. causing the lot to be foreclosed and sold at public auction.We note. Under the deed of sale (Exh. primarily[29] liable for the mortgage obligation:[30] “(e) The Mortgagor shall neither lease the mortgaged property xxx nor sell or dispose of the same in any manner. Absence of Mistake In Payment Contrary to the contention of petitioner that a return of the payments it made to PNB is warranted under Article 2154 of the Code.[27] In this case. “C”) made it solidarily and. that petitioner’s deprivation of ownership and control finally occurred when it failed and/or discontinued paying the amortizations on the mortgage. and not through liberality or some other cause.

it cannot be said that it did not have a duty to pay to PNB the amortization on the mortgage.” Therefore. alienation or encumbrance. or the party in whose favor the alienation or encumbrance is made shall be jointly and severally liable for said mortgage obligations. Also. But even if petitioner was a third party in regard to the mortgage of the land purchased. or the party in whose favor the alienation or encumbrance is to be made. should take the property subject to the obligation of this mortgage in the same terms and condition under which it is constituted. the property herein mortgaged. or any portion thereof.” The quasi-contract of solutio indebiti is one of the concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the expense of another. on the contrary both the vendor and the vendee. is xxx sold. However. such payments were necessary to protect its interest as a “the buyer(s) and new owner(s) of the lot. On the contrary. petitioner insists that its payment of the amortization was a mistake because PNB disapproved its assumption of mortgage after it failed to submit the necessary papers for the approval of such assumption. xxx. the payment of the loan by petitioner was a condition clearly imposed by the contract of sale. it being understood that the Mortgagor is not in any manner relieved of his obligation to the Mortgagee under this mortgage by such sale. it shall be the obligation of the Mortgagor to impose as a condition of the sale.consent of the Mortgagee. alienation or encumbrance that the vendee. if not withstanding this stipulation and during the existence of this mortgage. This fact alone disproves petitioner’s insistence that there was a “mistake” in payment.[31] But as shown .

and the assailed Decision is AFFIRMED. value for value. All told. accused-appellant" which affirmed the decision ** of the Court of First Instance of Nueva Ecija a dated 11 February 1969 finding the accused guilty of the crime of malversation and sentencing him to suffer imprisonment of six (6) years and one (1) day to twelve (12) years. . RESOLUTION PADILLA. Ruiz.: Before the Court is a petition for review on certiorari of the decision * of the Court of Appeals dated 27 February 1973 in CA-G. petitioner. the payment of the mortgage was an obligation petitioner assumed under the contract of sale. as in this case.earlier. the petition is hereby DENIED. WHEREFORE. There is no unjust enrichment where the transaction. is quid pro quo. II for petitioner. 11427 entitled "The People of the Philippines. vs. and PEOPLE OF THE PHILIPPINES. No. Alfonso Vallarta.R. respondents. and to pay a fine of P11. respondent Court did not commit any reversible error which would warrant the reversal of the assailed Decision. J. plaintiff-appellee vs. ALFONSO VALLARTA. Nicolas R. SO ORDERED.109. THE HONORABLE COURT OF APPEALS.70 without subsidiary imprisonment in case of insolvency and to pay the costs.

GP6. that at the time of the audit. Alfonso Vallarta was charged with the crime of malversation under Art.62. alleging that errors of law or irregularities were committed during the trial prejudicial to his substantial rights. the present recourse. 217 of the Revised Penal Code in the Court of First Instance of Nueva Ecija. it appears that the accusedappellant was appointed on 17 January 1955 as a warehouseman-cashier in the National Rice and Corn Corporation (NARIC for short) at Jaen Nueva Ecija agency. Accused-appellant (now petitioner) filed a Motion for Reconsideration which was also denied by the respondent appellate court on 20 March 1973. 353 cavans and 50 kilos of rice valued at P 7. .044. as agent-in-charge and cashier of the NARIC at Jaen Nueva Ecija. the trial court denied the motion. 5 cavans and 36 kilos of palay valued at P 51. the Court of Appeals affirmed the trial court's decision. he was credited with a shrinkage allowance of 4% of the stock received. and that Auditor Estrella demanded of the accused to produce the shortage but the latter failed to do so.90.760. that on or abou t 8 April 1957.70. the accused was found short of P 253. The accused elevated the case to the Court of Appeals. the trial court found the accused guilty as charged.109. as such.10 (P0.61 each).161 empty sacks valued at P 3. the property and money accountability of the accused. and 6. 1 Being the agent-in-charge and disbursing officer of the NARIC and. docketed as Criminal Case No. that in computing the net stock of rice and palay under the charge and custody of the accused. Despite its exclusion of the Solicitor General's brief for late filing. On 22 October 1969.18 in cash. Hence. 2 The information was filed by the Assistant Provincial Fiscal on 18 October 1961. that he continued in said position until 21 December 1956. was audited by NARIC Auditor Lucas Estrella. accountable for property and funds of the corporation. A motion for new trial was filed by the accused. In a decision dated 11 February 1969. or for a total of P 11.Adopting the findings of the Court of Appeals.

The only question to be resolved is whether or not the trial court and the Court of Appeals committed reversible error in their appreciation of the evidence leading to the conviction of the accused. Pedro Esquivel and Pedro Perez. without petitioner's reply brief. In the petitioner's motion for new trial before the trial court. as additional evidence. which may be summarized as follows: 1. the testimonies of Messrs. the Court finds no irregularity in the findings of the trial court and the appellate court. 4 The trial court. insufficient evidence to prove guilt beyond reasonable doubt. On 17 July 1973. the Court reconsidered the dismissal and gave due course to the amended petition. consequently. Thereafter. A motion for reconsideration was filed on 5 June 1973.000 empty sacks.The Court's resolution of 26 April 1973 required petitioner to implead the People of the Philippines as a party respondent. the same could not be considered by it. 3. finding that the lower court did not commit a reversible error in denying petitioner's motion for new trial. Petitioner cites several errors allegedly committed by the Court of Appeals in affirming his conviction. 2. because upon the face of . on this matter. to rebut the claim of Missing 6. dismissed the amended petition for lack of merit. without objection by the prosecution. 3 Upon submission of the respective briefs of the parties. which was earlier expunged from the record for late filing. the Court resolved to consider the case submitted for decision. stated: The statement of Pedro Esquivel submitted to this court is not signed. Save for the appellate court's reference to (and continued reliance on) the Solicitor General's brief. unwarranted repudiation and gross misappreciation of documentary evidence duly admitted. the court. in the resolution of 17 May 1973. he sought to present.

the instrument, the due execution thereof has not been established. More than this, the two affidavits could not be relied upon by this court for the same are hearsay. Unless and until the two supposed affiants of said instruments are presented in this court, their testimony as to the contents of their sworn statements are inadmissible in evidence. The accused having failed to present the said two persons, although they were available, the court could not entertain said affidavits. 5

To the trial court's findings, the Court of Appeals decision of 27 February 1973 added that, "Even the affidavits of Perez and Esquivel attached to the motion for new trial of the accused does (sic) not show that they borrowed a total of 6,161 empty sacks. The trial court gave the accused full opportunity to substantiate his allegations in the motion for new trial. It appears from the record that the motion for new trial was set for healing and oral argument." 6 The record shows 7 a signed affidavit of Pedro Esquivel dated 20 February 1959. There appears to be no reason why this same affidavit was not presented before the trial court, Obviously, the execution of the document appended to the petition filed before this Court is an afterthought not really worth considering. Affidavits are not considered the best evidence, if the affiants are available as witnesses. The use of affidavits should be regulated by the hearsay rule 8 to safeguard every opportunity to cross examine the affiants with regard to their contents and due execution. 9 In a motion for reconsideration based on fraud, accident, mistake or excusable negligence, the circumstances must be such that ordinary prudence could not have guarded against them, and by reason of which, the party applying to set aside a judgment has probably been impaired in his rights. 10 Where the defendants filed a motion for new trial under Section 1(a), Rule 37 of the Rules of Court, and the evidence they allegedly failed to present is so unsubstantial and futile that it cannot have the effect of altering the nature of the decision, the motion for new trial should be denied. 11

Petitioner assails the denial of his motion for new trial by the trial court but he fails to take note that the information against him was failed as early as 18 October 1961 and the trial court's decision rendered on 11 February 1969. If the affidavits were indeed voluntarily executed by their affiants on 20 February 1959, what then was the reason for the delay in presenting these documents? We are constrained to agree with the trial court's statement in its decision that these affidavits are mere cloaks designed to cover misappropriation. 12 Likewise assailed by the petitioner as erroneous is the respondent court's appreciation of exhibit 2, the charge order of one Flavio Vasquez for 353 cavans and 50 kilos of rice worth P 8,171.68, exhibit 3, complaint filed in Civil Case No. 45882 in the Court of First Instance of Manila for collection of P 8,171.68, and exhibit 4, the order dismissing the complaint in said case. Both the trial court and the Court of Appeals found that Exhibit 2 was not signed and duly authenticated; it is a mere carbon copy and no explanation was given why Flavio Vasquez was not presented as a witness. 13 A signed carbon copy or duplicate of a document executed at the same time as the original is known as a duplicate original and maybe introduced in evidence without accounting for the non- production of the original. 14 But, an unsigned and uncertified document purporting to be a carbon copy is not competent evidence. It is because there is no public officer acknowledging the accuracy of the copy. 15 The charge order submitted is at best secondary evidence and is not admissible, unless it is made manifest that the primary evidence is unavailable, as where it is shown that it has been lost or destroyed, is beyond the jurisdiction of the court or is in the hands of the opposite party who, on due notice, fails to produce it. 16 Petitioner-movant here had access to a certified or a true copy of the charge order, as it was allegedly presented as an exhibit during the reinvestigation of the case before the office of the Provincial Fiscal of Nueva Ecija and there marked as "exhibit 4, reinvestigation," and submitted to that office on 5 February 1962 17 yet,

the accused did not request for a copy and exhibit the same before the trial court. The non-production by the accused of the original document, unless justified under the exceptions iN Section 2, Rule 130 of the Rules of Court, gives rise to the presumption of suppression of evidence" 18 adverse to him (the accused). Besides the charge order in question has a total price of P 8,171.68, while the misappropriated amount of 353 cavans and 50 kilos of rice is P 7,044.90, and the amount of 5 cavans and 36 kilos of palay is 109.80 or a total of P 7,154.70. Counsel for the accused appears to be confused, as he claims that the value of the rice in the charge order is P 7,044.90," 19 instead of P 8,171.68 which actually appears thereon. 20 The trial and appellate courts correctly disregarded exhibits 3 & 4, the complaint for collection in Civil Case No. 45882, Court of First Instance of Manila and the order for its dismissal 21 because the latter was not based on the merits but for failure to prosecute; and it is erroneous for herein petitioner to claim that the allegations in said complaint (exhibit 3) proved the sale of rice on credit to Flavio Vazquez. It would be improper for the trial court, in this case, to pass upon the truth or falsify of the allegation in a complaint filed in another court. Another factual issue raised by petitioner pertains to two (2) uncollected vouchers for P 845.51 which he claims must be offset with the cash shortage of P 253.18 Here, the Court of Appeals erroneously considered arguments contained in the Solicitor General's brief 22 which it had earlier expunged for late filing; nonetheless, exhibit 1, 23 the receipt signed by Mr. Jose Sarte, NARIC Branch Manager, acknowledging, presentation of the vouchers, is dated 3 February 1960, or almost 3 years after the expenditures were incurred. Compensation or offset takes place by operation of law when two (2) persons, in their own right, are creditor and debtor of each other. 24 For compensation to take place, a distinction must be made between a debt and a mere claim. A debt is a claim which has been formally passed upon by the highest authority to which it can in law be submitted and has been declared to be a debt. A claim, on the other hand, is a debt in embryo. It is

mere evidence of a debt and must pass thru the process prescribed by law before it develops into what is properly called a debt. upon the admitted facts. Finally. consequently. incurred on 8 April 1957 is undisputed and three (3) years lapsed before any voucher was presented to offset liability. the appreciation of such documents is still subject to the rules on weight and sufficiency of evidence.18. to offset one debt against another. . 26 this Court held that Section 624 of the Revised Administrative Code. Pedro Reyes 30 and The United States vs. Jose Feliciano. Whether or not accused should be allowed more or less that 4% can not be a subject of inquiry in this petition. While the documents presented by the accused have been admitted without objection from the prosecution. settle money claims which are contested and unliquidated if. under said Section 624. 29 The United States vs." 31 the failure of an accountable public officer to produce public funds upon demand of the auditor is prima facie evidence that the missing funds or property had been utilized for personal use and were therefore misappropriated. beyond doubt. this does not necessarily imply that respondents may not. when it appears that a creditor of the government is also indebted to the government. the allowance to the accused of a 4% shrinkage in stocks is an administrative procedure adapted by NARIC which the Court is bound to respect. but the cash shortage of P 253. is readily determinable by the ordinary process of accounting. though not fixed. 25 In Compania General de Tabacos vs. the subsequent act of reimbursement cannot in any way affect the existence of the crime of malversation already committed. the indebtedness of the government appears to be certain and can be sustained without extraneous proof or its exact amount which. authorizes the Insular Auditor. 28 Why the two (2) vouchers remained uncollected is not for this Court to look into. Francisco Licas. French and Unson. In the cases of the United States vs. 27 But.

respondent. SO ORDERED. is AFFIRMED. where the trial court. they sold two (2) separate portions of the . Without pronouncement as to costs. No. The decision of the Court of Appeals.This is a case. spouses Jose Santa Ana.850-square meter parcel of land situated in barrio Balasing. Bulacan. 32 Where the issues raised are basically factual and essentially involve an appreciation of evidence of the parties. owned a 115. J. therefore. On 28 May 1954. DOMINGO. and LOURDES STO. T-3598.: Appeal from the decision of the Court of Appeals in its Case CA-G.R. and Lourdes Sto.. respondent appellate court's findings thereon are in turn binding on this Court in the absence of a misapprehension of facts or grave abuse of discretion. in effect reversing the decision of the Court of First Instance of Bulacan in its Civil Case No. and weighing what was said by them. 1036. JOSE SANTA ANA. Maria. de los Santos for respondent. JR. The petitioners herein. Sta. and covered by Transfer Certificate of Title No. J.. Jr. vs. the petition for review on certiorari is DENIED. 20582-R. appealed from. J. finding no reversible error in the respondent court's findings of fact and conclusions of law.L. Manuel J. chose to believe the prosecution rather that the defense. there must be a showing that the trial court overlooked a material fact circumstance or misinterpreted its significance. For such a finding to be overturned. Domingo. petitioners. Serapio for petitioners. 33 WHEREFORE. T. REYES. ROSA HERNANDEZ. after hearing and observing the witnesses testify.B.

the petitioners-spouses caused the preparation of a subdivision plan. was part of the areas that she bought.). kay Domingo Hernandez at Antonio Hernandez. Mayroong (12. humigit kumulang. was approved on 13 January 1955 by the Director of Lands. Rosa Hernandez. claimed that the alleged excess. and she. Maria-Tigbi Road. sa Silanganan. Psd-42844. tallied with the areas that the defendant. Defendant Rosa Hernandez. sa Timugan. The trial court observed: . These portions were described in the deed of sale as follows: Bahaguing nasa gawing Hilagaan. Ana. After the sale (there were two other previous sales to different vendees of other portions of the land). Rosa Hernandez. sa Kanluran. did not conform to the plan and refused to execute an agreement of subdivision and partition for registration with the Register of Deeds of Bulacan. sa lupang kasanib (Jose for P11. This plan. however. kina Maria Perez. she caused the preparation of a different subdivision plan. On 28 February 1955. kay Cornelio Ignacio. at Aurelio Perez. claiming that said defendant was occupying an excess of 17. likewise. at sa Kanluran.000. Humahanga sa Hilaga. sa kay Rosa Hernandez. Jr. Instead. mayroong (26. had actually occupied. herein petitioners-spouses filed suit against respondent Rosa Hernandez in the Court of First Instance of Bulacan.500). kay Mariano Flores at Emilio Ignacio. sa lupang kasanib. sa Timugan. refused to vacate the areas that she had occupied. sa Silanganan. Psd-43187. unlike the previous vendees. humigit kumulang. which was approved by the Director of Lands on 24 February 1955. sa Sta.000 square meters in area of what she had bought from them.500) metros cuadrados.00 to the herein respondent Rosa Hernandez. m. Bahaguing nasa gawing Silanganan Humahanga sa Hilagaan. on the other hand.c.

as defendant Rosa Hernandez claimed. . Not satisfied with the judgment.00. Gonzalo V. the said court ordered the defendant. The Court of Appeals dismissed the complaint and declared Rosa Hernandez the owner of lots 4-a and 4-b in her plan. Psd-42844. and 26.500 sq. among other things." referring to Psd-43187. Finding for the plaintiffs. failed to corroborate Sta. said the transaction was by a unit of measure or per square meter. two portions. Appellee Jose Santa Ana. Ignacio testified that appellant complained to him and the appellees to the effect that the areas stated in the contract were less than the actual areas of the parcels of land being sold and here we quote the notarial officer's own words: "That the area stated in the document will not be the one to prevail but the one to prevail is the boundary of the land which you already know. The appellant denied this claim of appellees. of the plaintiffs ." (p. Ana upon this point.300. m.) at the rate of P. Upon the contrary.29 per square meter the parties agreed to the sale at the reduced price of P11. to vacate "the excess portions actually occupied by her and to confine her occupation only to Lots 4-a and 4-b as shown in the plan. the areas of which were not definite but which were well defined on the land and with definite boundaries and sold for the lump sum of P11. Exhibit E.29 per square meter or.00 at P0. 74. Jr. .000.00. upon the following findings: The contract between appellees and appellant (Exhibit D) provided for the sale of two separate portions of the same land for the single consideration of P11.000. . the notarial officer before the contract of sale was executed. to be determined by the Court is whether or not the plaintiffs had sold two portions without clear boundaries but with exact areas (12. Innocencio). therefore.00.000 sq. and that although the actual total purchase price of the two parcels of land was P11..The only question.000. defendant Hernandez appealed to the Court of Appeals. m. Ignacio.

and that he was able to persuade the parties to meet halfway on the price. . Jesus Policarpio divulged that the same parcels of land involved in this case were previously offered to him by the appellees for the single purchase price of P12. Furthermore the previous conveyances made by the appellees for other portions of the same property (Exhibits B and C) are also for lump sums. The appellees admit the lands in question were separated from the rest of their property by a long and continuous "pilapil" or dike. and there is convincing proof to show that the bigger lot (Lot 4-a) was wholly tenanted for appellees by Ciriaco Nicolas and Santiago Castillo and the smaller lot (Lot 4-b) was wholly tenanted for said appellees by Gregorio Gatchalian.000. but not for this alone may we infer gross mistake on the part of appellees. although there be greater or less area or number than that stated in the contract.000. The Court of Appeals concluded by applying to the case Article 1542 of the new Civil Code: In the sale of real estate. had offered P10. there shall be no increase or decrease of the price. Again. The difference in area of 17. Julio Hernandez stated that his sister.00. Ana is the nephew of the appellant.00. appellees should not be heard to complain about the deficiency in the area because as registered owners and possessors of the entire land since 1949 they can rightly be presumed to have acquired a good estimate of the value and areas of the portions they subsequently sold.00 as against the appellees' price of P12. These facts support the theory that the two parcels of land sold to the appellant were identified by the conspicuous boundaries and the extent or area each tenant used to till for the vendors.000 square meters is about one-half of the total area of the two parcels of land stated in the document. made for a lump sum and not at the rate of a certain sum for a unit of measure or number. the herein appellant. and the former's assurance probably appeased the latter against insisting in the correction of the areas stated in the contract of sale.000.Sta. Two witnesses testified for the appellant.

their position can be summarized as follows: that the Court of Appeals erred in substituting its own findings of fact for that of the trial court's. The Court of Appeals committed a grave error of law when it held that the deed of sale. its area or number should be designated in the contract. and. was for a lump sum. besides mentioning the boundaries. which is indispensable in every conveyance of real estate. and declared Rosa Hernandez the owner of the whole of lots 4-a and 4-b of her own subdivision Plan Psd-42844. Ana spouses appealed to this Court. contrary to the rule that appellate courts shall not disturb the findings of fact of trial courts in the absence of such strong and cogent reasons. despite the fact that the boundaries given therein were not sufficiently certain and the boundaries indicated did not clearly identify the land. notwithstanding their increased area as compared to that specified in the deed of sale. even when it exceeds the area or number specified in the contract.The same rule shall be applied when two or more immovables are sold for a single price. in proportion to what is lacking in the area or number. now in the petitioners. without strong and cogent reasons for the substitution. In turn. On the face of the foregoing assignments of error and the petitioners' discussions thereabout. and that . unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. should he not be able to do so. assigning the following errors: The Court of Appeals committed a grave error of law when it departed from the accepted and usual course of judicial proceedings. he shall suffer a reduction in the price. the Sta. Rosa Hernandez. but if. now the respondent. by disturbing the findings of fact of the trial court. made upon conflicting testimonies of the witnesses for the plaintiffs. and the defendant. the vendor shall be bound to deliver all that is included within said boundaries. thereby erroneously deciding a question of substance in a way not in accord with law and the applicable decisions of this Honorable Court. Exhibit D.

the petitioner spouses complain against the failure of the Court of Appeals to accept the findings of fact made by the Court of First Instance. Ozaeta. L-17248. p. on App. As pointed out by former Chief Justice Moran in his Comments on the Rules of Court (1963 Ed. Both the Judiciary Act (R. or that they are so glaringly erroneous as to constitute serious abuse of discretion. 96 Phil. the law creating the Court of Appeals was intended mainly to take away from the Supreme Court the work of examining the evidence. We now turn to the second. 296. The first assignment of error must.00) for both lots (Annex "C". Fonacier vs.A. therefore. a showing that the findings complained of are totally devoid of support in the record. for this Court is not expected or required to examine and contrast the oral and documentary evidence submitted by the parties. as shown in the deed of sale.. on the ground that the boundaries given in the deed are . 21). 2. Barring. 71 Phil. be overruled. 70 Phil. Court of Appeals. and cases therein cited. and it is not necessarily bound by the conclusions of the trial court. Vol. allegedly because the boundaries..000. 29 January 1962. and numerous decisions of this Court have invariably and repeatedly held that findings of fact by the Court of Appeals are conclusive and not reviewable by the Supreme Court (Galang vs. 101). Nazareno vs. The credibility of witnesses and the weighing of conflicting evidence are matters within the exclusive authority of the Court of Appeals. 421. such findings must stand. appellants insist that the recited area should be taken as controlling. 412). therefore. section 2) only allow a review of decisions of the Court of Appeals on questions of law. Onglengco vs. p. They combat the application of Article 1542 of the Civil Code. Complaint. Court of Appeals. Despite the incontestable fact that the deed of sale in favor of Rosa Hernandez recites a price in a lump sum (P11. 43. and confine its task for the determination of questions which do not call for the reading and study of transcripts containing the testimony of witnesses. Rec. are not definite. Magwagi. 418. In the first assignment of error. section 29) and the Rules of Court (Rule 45.Article 1542 of the Civil Code of the Philippines does not apply.

and the specification of the total area sold. . that obligated the vendors to deliver to the buyer all the land within the boundaries. Santos. On the basis of such findings. appellee herein. for reasons already shown.indefinite.e. in construing Article 1471 of the Spanish Civil Code (copied verbatim in our Article 1542) is highly persuasive that as between the absence of a recital of a given price per unit of measurement. that can not be questioned at this stage. 490. however. (Emphasis supplied) consisting in a long and continuous pilapil or dike that separated the lands in question from the rest of the property.. 1 Phil. it must be made clear therein that the sale was made by unit of measure at a definite price for each unit. Tambunting. Ana. p. irrespective of whether its real area should be greater or smaller than what is recited in the deed (Goyena vs. If the defendant intended to buy by the meter be should have so stated in the contract (Goyena vs. Rosa Hernandez) were identified by the conspicuous boundaries. And this is particularly true where. it is unquestionable that the sale made was of a definite and identified tract. 22). 87 Phil. 677. supra). on App. Gay. Tambunting. 599. Mondragon vs. 471). which is recited as "lupang kasanib (Jose Sta. more or less Rec. the former must prevail and determines the applicability of the norms concerning sales for a lump sum. The Court of Appeals. i. a corpus certum. found as a fact that — the two parcels of land sold to appellant (i.)". 52 Phil. The ruling of the Supreme Court of Spain. the area given is qualified to be approximate only ("humigit kumulang".e. Jr. as in the case now before this Court. Villanueva. Azarraga vs. They point out that the southern boundary of the small parcel is merely given as "lupang kasanib" and that the same occurs with the western boundary of the bigger lot. Teran vs. To hold the buyer to no more than the area recited on the deed. 56 Phil...

that remain controlled by the Civil Code of the Philippines. sin embargo es especificada la dimension total del inmueble. . y otro por la concrecion de las dimensiones globales del unmueble. contra la cual ni el comprador ni el vendedor pueden articular prueba contraria. constituido uno por la falta de un precio singular por unidad de medida. la Ley da prevalencia al mero y presume que aquella individualizacion no habia tenido para las partes valor esencial. prohibiting the issuance of a certificate of title to a grantee of part of a registered tract until a subdivision plan and technical description are duly approved by the Director of Lands. Aranzadi. Sent. and authorizing only the entry of a memorandum on the grantor's certificate of title in default of such plan. cuando las dimensiones globales del unmueble resulten despues mayores o menores de las indicadas en el contrato. Rep.729) (Emphasis supplied) The Civil Code's rule as to sales "a cuerpo cierto" was not modified by Act 496. pero tambien se verifica cuando aun ng habiendo sido indicado un precio singular por unidad de medida. section 58. respectivamente un suplemento de precio. que solo constituia una superabundancia.La venta a cuerpo cierto indudablemente se verifica cuando en el contrato no solo no es precisado el precio singular por unidad de medida. Jurisp. de 26 Junio 1956. sino que tampoco son indicadas los dimensiones globales bales del inmueble. y no significa que las partes hayan convenido aquel precio global solo en cuanto el inmueble tuviese efectivamente aquellas dimensiones totales. siendo de estimar que esta es una presuncion absoluta. It does not even bar the registration of the contract itself to bind the land. en cuyo ultimo caso entre los dos indices en contraste. Por tanto. ni el comprador ni el vendedor pueden pretender una disminucicion o. The latter provision is purely a procedural directive to Registers of Deeds that does not attempt to govern the rights of vendor and vendee inter se. 2. (Tribunal Supreme de España. aunque aduzcan que solo en tanto han convenido el aquel precio en cuanto creian que las dimensiones de la cosa fueran las precisadas en el contrato.

a native of the Batanes Islands. ROSARIO CARBONELL. JOSE PONCIO. EMMA INFANTE and RAMON INFANTE. 1968. more or less. The dispositive part of the challenged resolution reads: Wherefore. having an area of some one hundred ninety-five (195) square meters. HONORABLE COURT OF APPEALS. which dismisses the plaintiff's complaint and defendant's counterclaim. in its case No. covered by TCT No. the decision of the Court of Appeals. reversing its decision of November 2. vs. 1965. Costs against the appellants.WHEREFORE. Petitioner seeks a review of the resolution of the Court of Appeals (Special Division of Five) dated October 30.. 20582R. Agan St. Jose Santa Ana. MAKASIAR. 5040 and subject to mortgage in favor of the Republic . Rizal. is hereby annulled and set aside. Another judgement shall be entered affirming in toto that of the court a quo. San Juan. Jr. J. petitioner. and its resolution of December 6. Domingo. respondent Jose Poncio. 1967. 1967 (Fifth Division). respondents. 1955. Without costs. 1968 denying petitioner's motion for reconsideration. is hereby affirmed. is hereby granted and the decision of November 2. and Lourdes Sto. was the owner of the parcel of land herein involve with improvements situated at 179 V. the motion for reconsideration filed on behalf of appellee Emma Infante. dated January 20. The facts of the case as follows: Prior to January 27.

and also from the Batanes Islands. approached petitioner one day and offered to sell to the latter the said lot. But because respondent Poncio had previously told her that the money. reads: CONTRACT FOR ONE HALF LOT WHICH I BOUGHT FROM JOSE PONCIO Beginning today January 27. 1955. Both petitioners Rosario Carbonell and respondent Emma Infante offered to buy the said lot from Poncio (Poncio's Answer. Respondent Poncio. Petitioner Rosario Carbonell.00 from his bank deposit with Republic Savings Bank. Petitioner accepted the offer and proposed the price of P9. made and executed a document in the Batanes dialect. Rosario Carbonell. Agan Street.26. a cousin and adjacent neighbor of respondent Poncio. petitioner and respondent Poncio. petitioner refunded to Poncio the sum of P47. accepted the price proposed by petitioner.Savings Bank for the sum of P1.00. translated into English. Petitioner and respondent Jose Poncio then went to the Republic Savings Bank and secured the consent of the President thereof for her to pay the arrears on the mortgage and to continue the payment of the installments as they fall due.00. only the latter amount was brought by petitioner constraining respondent Jose Poncio to withdraw the sum of P47. rec. in the presence of a witness. 1955. unable to keep up with the installments due on the mortgage. after having secured the consent of his wife and parents. which. needed was only P200. on the condition that from the purchase price would come the money to be paid to the bank. excluding the house wherein respondent lived. Jose Poncio can start living on the lot sold by him to me.00.50 per square meter.500. On January 27. on appeal). 38. lived in the adjoining lot at 177 V. Then if after said one can he could not find an place . Respondent Poncio. The amount in arrears reached a total sum of P247. until after one year during which time he will not pa anything. p. But the next day.

he could still continue occupying the site but he should pay a rent that man. who advised her to present an adverse claim over the land in question with the Office of the Register of Deeds of Rizal.00. petitioner saw Emma Infante erecting a all around the lot with a gate. 1955. Petitioner then sought to contact respondent Mrs. which she brought to respondent Poncio together with the amount of some P400. however. Jose Garcia. also from the Batanes Islands. on appeal). Mrs. Garcia actually sent a letter of inquiry to the Register of Deeds and demand letters to private respondents Jose Poncio and Emma Infante. because he had already given the lot to respondent Emma Infants. On February 5. Infante but the latter refused to see her.) ROSARIO CARBONELL (Sgd) CONSTANCIO MEONADA Witness (Pp. even if he were to go to jail. Infante improved her offer and he agreed to sell the land and its improvements to her for P3. In his answer to the complaint Poncio admitted "that on January 30. Upon arriving at respondent Jose Poncio's house. (Sgd) JOSE PONCIO (Sgd. to prepare the formal deed of sale. the latter told petitioner that he could not proceed any more with the sale. Salvador Reyes. Infante.00" (pp. and that he could not withdraw from his deal with respondent Mrs. Petitioner then consulted Atty. petitioner asked Atty. Thereafter. ROA). the balance she still had to pay in addition to her assuming the mortgaged obligation to Republic Savings Bank. Atty. 6-7 rec. be agreed. 38-40.535. 1955. .where to move his house.

the property for the sum of P2. Garcia prepared an adverse claim for petitioner.00. Infante in the total sum of P3. The mortgage on the lot was eventually discharged. As a consequence thereof.177. who signed and swore to an registered the same on February 8. Atty. covered the same with 500 cubic meters of garden soil and built therein a wall and gate. She further contracted the services of an architect to build a house. Respondent Emma Infante took immediate possession of the lot involved.00. Infante was registered only on February 12. filed a second amended complaint against private respondents. 1955.554. thru counsel. 1955.00.929. Infante be declared null and void.357. with respondent Emma Infante still assuming the existing mortgage debt in favor of Republic Savings Bank in the amount of P1.500. that the subsequent sale to respondents Ramon R. but the construction of the same started only in 1959 — years after the litigation actually began and during its pendency.48. spending the sum of P1. 1955. respondent Jose Poncio executed the formal deed of sale in favor of respondent Mrs. The deed of sale in favor of respondent Mrs. Infante spent for the house the total amount of P11. respondent Poncio indeed bound himself to sell to his corespondent Emma Infante.In a private memorandum agreement dated January 31. On February 2. 1955. Emma Infante lives just behind the houses of Poncio and Rosario Carbonell. a Transfer Certificate of Title was issued to her but with the annotation of the adverse claim of petitioner Rosario Carbonell. On June 1.52. praying that she be declared the lawful owner of the questioned parcel of land. Informed that the sale in favor of respondent Emma Infante had not yet been registered. Respondent Mrs. the latter paid Republic Savings Bank the mortgage indebtedness of P1. petitioner Rosario Carbonell.500.00 and on the same date. and that respondent Jose Poncio be ordered to . 1955. Infante and Emma L.

that the Statute of Frauds. During the trial. rendered on December 5. From the above order of dismissal.R.execute the corresponding deed of conveyance of said land in her favor and for damages and attorney's fees (pp. rec. the trial court sustained the objection and dismissed the complaint on the ground that the memorandum presented by petitioner to prove said sale does not satisfy the requirements of the law (pp.A.). so that petitioner is entitled to establish by parole evidence "the truth of this allegation. when petitioner started presenting evidence of the sale of the land in question to her by respondent Poncio. ROA in the C. and when said motion was denied without prejudice to passing on the question raised therein when the case would be tried on the merits (p. No. being applicable only to executory contracts. rec. 31-35.).A. 1966.). does not apply to the alleged sale between petitioner and respondent Poncio. ROA in the C. ROA in the C. on appeal in the C. After trial in the court a quo. In its order of April 26." The order appealed from was thus reversed. declaring the second sale by respondent Jose Poncio to his corespondents Ramon Infante and Emma Infante of the land in question null and void and ordering respondent Poncio to execute the proper deed of . the alleged sale in her favor not being evidenced by a written document (pp. that petitioner's claim is unenforceable under the Statute of Frauds. as well as the contract itself. 18-23. 1-7. 7-13. petitioner appealed to the Supreme Court (G.). 26-49. which petitioner claimed to have been partially performed. L-11231) which ruled in a decision dated May 12. 1962. 1958.A. ROA in the C.A. 17.).). among others. respondent Infantes objected to the presentation by petitioner of parole evidence to prove the alleged sale between her and respondent Poncio. on appeal in the C. a decision was. reiterating the grounds of their motion to dismiss (pp. and the case remanded to the court a quo for further proceedings (pp. part of which evidence was the agreement written in the Batanes dialect aforementioned.A.A. Respondents first moved to dismiss the complaint on the ground. respondents filed separate answers.

1963.00 plus legal interest.).).A. and dismissing the complaint (pp. respondent Infantes. declaring petitioner therein. ROA in the C. filed another motion for new trial.000. From this decision. Mojica. to have a superior right to the land in question. which motion was opposed by petitioner for being premature (pp.). 56-60. claiming that the decision of the trial court is contrary to the evidence and the law (pp. 61-64. Salvador V. On November 2.). ROA in the C. On January 23. Before their motion for re-trial could be resolved. the trial court rendered a decision. . and condemning the defendant Infantes to reconvey to petitioner after her reimbursement to them of the sum of P3.). at which rehearing only the respondents introduced additional evidence consisting principally of the cost of improvements they introduced on the land in question (p.conveyance of said land in favor of petitioner after compliance by the latter of her covenants under her agreement with respondent Poncio (pp. 9. Esguerra and Angle H.).). rendered judgment reversing the decision of the trial court. 64-78. speaking through Justice Magno Gatmaitan). ROA in the C. through another counsel. ROA in the C. 78-89.). reversing its decision of December 5. the land in question and all its improvements (Appendix "A" of Petition).A.A. ROA in the C.A. 96. 91-95. 89-90. ROA in the C. petitioner Rosario Carbonell appealed to the respondent Court of Appeals (p.A. ROA in the C.A.). The trial court granted a new trial (pp. 1962 on the ground that the claim of the respondents was superior to the claim of petitioner. 1967. 5056.A. the Court of Appeals (Fifth Division composed of Justices Magno Gatmaitan. this time through their former counsel.A. ROA in the C. After the re-hearing.A. respondent Infantes. which motion was also opposed by petitioner (pp. filed a motion for re-trial to adduce evidence for the proper implementation of the court's decision in case it would be affirmed on appeal (pp. ROA in the C.

1967. provided there is good faith (emphasis supplied).Respondent Infantes sought reconsideration of said decision and acting on the motion for reconsideration. which accord preference to the one who first takes possession in good faith of personal or real property. if it should movable property. and. which motion was denied by Minute Resolution of December 6. the ownership shall pertain to the person who in good faith was first in the possession. in the absence thereof. the Appellate Court. which is decisive of this case. 1968 (but with Justices Rodriguez and Gatmaitan voting for reconsideration) [Appendix "C" of Petition]. New Civil Code. Esguerra and Nolasco) of Special Division of Five. Article 1544. Petitioner Rosario Carbonell moved to reconsider the Resolution of the Special Division of Five. annulled and set aside its decision of November 2. with Justices Gatmaitan and Rodriguez dissenting (Appendix "B" of Petition). Hence. Should it be immovable property. and entered another judgment affirming in toto the decision of the court a quo. granted said motion. recites: If the same thing should have been sold to different vendees. Unlike the first and third paragraphs of said Article 1544. the ownership shall be transferred to the person who may have first taken possession thereof in good faith. It is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of said Article 1544. to the person who presents the oldest title. this appeal by certiorari. the second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith first . three Justices (Villamor. Should there be no inscription. the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

the vital significance and evidenciary effect of which the respondent Court of Appeals either overlooked of failed to appreciate: (1) Mrs. When Carbonell bought the lot from Poncio on January 27. 1955. et al. 8 SCRA 489). which desire underscores Carbonell's good faith. Under the first and third paragraph. 1955. Infante snubbed Carbonell like a leper and refused to see her. If there is inscription. as in the case at bar. vs. Under the circumstances.recorded" his right. Infante refused to see Carbonell. 1955 of his second sale of the same lot to Infante. Soriano. she was the only buyer thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon. who wanted to see Infante after she was informed by Poncio that he sold the lot to Infante but several days before Infante registered her deed of sale. good faith must characterize the act of anterior registration (DBP vs. If there is no inscription. et al. Carbonell wanted an audience with Infante. Carbonell was not aware — and she could not have been aware — of any sale of Infante as there was no such sale to Infante then.. Her good faith subsisted and continued to exist when she recorded her adverse claim four (4) days prior to the registration of Infantes's deed of sale. Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is shown by the following facts. Carbonell's good faith did not cease after Poncio told her on January 31. 11 SCRA 405.. et al. Mangawang. this recording of her adverse claim should be deemed to have been done in good faith and should emphasize Infante's bad faith when she registered her deed of sale four (4) days later on February 12. This indicates that Infante knew . Hence. Magale. With an aristocratic disdain unworthy of the good breeding of a good Christian and good neighbor. Because of that information. prior registration in good faith is a pre-condition to superior title. what is decisive is prior possession in good faith. Carbonell's prior purchase of the land was made in good faith. So Carbonell did the next best thing to protect her right — she registered her adversed claim on February 8. 1955.

as Poncio told her .00 paid by Carbonell for Poncio's amortization arrearages in favor of the bank on January 27. (2) Carbonell was already in possession of the mortgage passbook [not Poncio's saving deposit passbook — Exhibit "1" — Infantes] and Poncio's copy of the mortgage contract. after paying the arrearages of Poncio. in much the same way that the Infantes were able to present as evidence Exhibit "1" — Infantes. when Poncio sold the lot Carbonell who. Poncio would have surrendered his mortgage passbook and his copy of the mortgage contract to the Infantes. Infante lives just behind the house of Carbonell. assumed the balance of his mortgaged indebtedness to the bank. of which Poncio necessarily remained in possession as the said deposit passbook was never involved in the contract of sale with assumption of mortgage. as well as the bank. Ordinarily. one will not refuse to see a neighbor. because Carbonell on that day brought with her only P200. Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook as well as Poncio's mortgage contract so that the fact of full payment of his bank mortgage will be entered therein. who could have presented the same as exhibits during the trial. which in the normal course of business must have necessarily informed Infante about the said assumption by Carbonell of the mortgage indebtedness of Poncio.26. must have inevitably informed her that said mortgage passbook could not be given to her because it was already delivered to Carbonell. Said savings deposit passbook merely proves that Poncio had to withdraw P47. Her refusal to talk to Carbonell could only mean that she did not want to listen to Carbonell's story that she (Carbonell) had previously bought the lot from Poncio. and Poncio. which amount was tided to the sum of P200.00. 1955. Poncio's savings deposit passbook. If Poncio was still in possession of the mortgage passbook and his copy of the mortgage contract at the time he executed a deed of sale in favor of the Infantes and when the Infantes redeemed his mortgage indebtedness from the bank.— from Poncio and from the bank — of the prior sale of the lot by Poncio to Carbonell. Before or upon paying in full the mortgage indebtedness of Poncio to the Bank.

(5) In his answer to the complaint filed by Poncio. w because in the ordinary course of business the bank must have told her that Poncio already sold the lot to Carbonell who thereby assumed the mortgage indebtedness of Poncio and to whom Poncio delivered his mortgage passbook. al vs.26. Jara et al 22 SCRA 1247. The only plausible and logical reason why Infante did not bother anymore to make such injury . he alleged that both Mrs. 105 Phil. As aforestated. Here she was again on notice of the prior sale to Carbonell.00 per square meter. as defendant in the Court of First Instance. this is not the attitude expected of a good neighbor imbued with Christian charity and good will as well as a clear conscience. But the next day Carbonell refunded to Poncio the sum of P47. four [4] days before Infante registered on February 12. Infante and Mrs. It is therefore logical to presume that Infante was told by Poncio and consequently knew of the offer of Carbonell which fact likewise should have put her on her guard and should have compelled her to inquire from Poncio whether or not he had already sold the property to Carbonell. Infante snubbed Carbonell's request to talk to her about the prior sale to her b Poncio of the lot. L-11736-37. 1252-1253). . Carbonell offered to buy the lot at P15. Hoping to give a semblance of truth to her pretended good faith. 1250-51). et. which offers he rejected as he believed that his lot is worth at least P20. should have compelled Infante to inquire from Poncio why he was no longer in possession of the mortgage passbook and from Carbonell why she was in possession of the same (Paglago. (3) The fact that Poncio was no longer in possession of his mortgage passbook and that the said mortgage passbook was already in possession of Carbonell. 30.that was the amount of his arrearages to the bank.00 per square meter. (4) Carbonell registered on February 8. 1955 her adverse claim. which was accordingly annotated on Poncio's title. Such registration of adverse claim is valid and effective (Jovellanos vs. 1955. Jan. 1959. 1955 her deed of sale executed on February 2. Dimalanta.

177. to buy the land in question. Ramon Infante and Emma Infante (1-11231. on or about January 27." was not such a memorandum in writing within the purview of the Statute of Frauds. Infante improved her offer and agreed to sell the land and its improvement to her for P3. 38-40. made by plaintiff. that he had consistently turned down several offers. copy of which if probably the one appended to the second amended complaint. 1956 dismissing the complaint on the ground that the private document Exhibit "A" executed by Poncio and Carbonell and witnessed by Constancio Meonada captioned "Contract for One-half Lot which I Bought from Jose Poncio. 1955. tried to buy the land at P15 a square meter. the amount of his obligation to the Republic Saving s Bank. Infante.535.00 a square meter'. then Associate Justice..As recounted by Chief Justice Roberto Concepcion. ROA. 1958). that Poncio has not lost 'his mind. a description of the property and such other essential . II EXISTENCE OF THE PRIOR SALE TO CARBONELL DULY ESTABLISHED (1) In his order dated April 26. There is no mention of the reconsideration. .' to sell his property. in the preceding case of Rosario Carbonell vs.000. Jose Poncio. (pp. and that plaintiff's action is barred by the Statute of Frauds. worth at least P4.. May 12.. Mrs.48. that plaintiff then induced Poncio to sign a document. at P15 a square meter. that on January 30. likewise. Poncio was advised by plaintiff that should she decide to buy the property at P20 a square meter. for the paltry sum P1. she would allow him to remain in the property for one year.. 1955. that. that Mrs. the trial judge himself recognized the fact of the prior sale to Carbonell when he stated that "the memorandum in question merely states that Poncio is allowed to stay in the property which he had sold to the plaintiff. for he believes that it is worth not less than P20 a square meter. emphasis supplied). that Poncio signed it 'relying upon the statement of the plaintiff that the document was a permit for him to remain in the premises in the event defendant decided to sell the property to the plaintiff at P20. Poncio alleged in his answer: .00.

On the contrary. which. Exhibit A states that Poncio would stay in the land sold by him to plaintiff for one year. a document signed by the defendant. 33. he being a native of said region. it tends to show that the sale of the property in favor of the plaintiff is already an accomplished act.. and that. Again. Jose Poncio. Ramon Infante and Emma Infante (L-11231.. and further stated: Apart from the foregoing. It is in the Batanes dialect. for instance. to repeat the said memorandum states "that Poncio is allowed to stay in the property which he had sold to the plaintiff . it tends to show that the sale of the property in favor of the plaintiff is already an accomplished act. it cannot therefore. holding that because the complaint alleges and the plaintiff claims that the contract of sale was partly performed. the same is removed from the application of the Statute of Frauds and Carbonell should be allowed to establish by parol evidence the truth of her allegation of partial performance of the contract of sale. As found by the trial court. speaking for a unanimous Court. from January 27. according to plaintiff's uncontradicted evidence. Chief Justice Roberto Concepcion. supra). Poncio admitted in his answer that plaintiff had offered several times to purchase his land. is the one spoken by Poncio." (2) When the said order was appealed to the Supreme Court by Carbonell in the previous case of Rosario Carbonell vs. There is nothing in the memorandum which would tend to show even in the slightest manner that it was intended to be an evidence of contract sale. 1955. emphasis supplied). Thus. free of charge. be considered to be the memorandum which would show that a sale has been made by Poncio in favor of the plaintiff" (p. reversed the aforesaid order of the trial court dismissing the complaint.. ROA.elements of the contract of sale. By the very contents of the memorandum itself. if he cannot find a place where .. there is Exhibit A. there are in the case at bar several circumstances indicating that plaintiff's claim might not be entirely devoid of factual basis.. from the terms of the memorandum. then Associate Justice.

instead of taking the trouble of seeing to it that it was written precisely in his native dialect.26 in the bank book of defendant Jose Poncio. there was no reason for Poncio to get said permit from her. the allegation in Poncio's answer to the effect that he signed Exhibit A under the belief that it "was a permit for him to remain in the premises in the" that "he decided to sell the property" to the plaintiff at P20 a sq. For all we knew. he may remain upon. or whether there is any relation between the P247. pp. Indeed. Upon the other hand.26 in the bank book of Jose Poncio does not prove the fact that the said amount was the purchase price of the property in question. Then. rather than earnest money or part payment of the land. Incidentally. before he signed thereon. How shall We know why Poncio's bank deposit book is in plaintiffs possession. the sum of P247. if he had not decided as yet to sell the land to plaintiff.26 which plaintiff claims to have paid to the Republic Savings Bank for the account of the defendant." is. (DefendantsAppellees' brief. probably. Neither is it competent or satisfactory evidence to prove the conveyance of the land in question the fact that the bank book account of Jose Poncio happens to be in the possession of the plaintiff. assuming that the money paid to the Republic Savings Bank came from the plaintiff. Poncio's signature on Exhibit A suggests that he is neither illiterate nor so ignorant as to sign document without reading its contents. on its face.26 entry . was the result of some usurious loan or accomodation. she would have caused Exhibit A to be drafted. according to Meonada's uncontradicted testimony. 25-26). defendants say in their brief: The only allegation in plaintiff's complaint that bears any relation to her claim that there has been partial performance of the supposed contract of sale. the Batanes. if plaintiff intended to mislead Poncio. who had never increased her offer of P15 a square meter. is the notation of the sum of P247. The noting or jotting down of the sum of P247. somewhat difficult to believe. apart from the fact that Meonada had read Exhibit A to him and given him a copy thereof. also. m. transfer his house thereon. in English .

(3) In his first decision of December 5.. 1962 declaring null and void the sale in favor of the Infantes and ordering Poncio to execute a deed of conveyance in favor of Carbonell. 'A' show to the satisfaction of the court that the sale of the parcel of land in question by the defendant Poncio in favor of the plaintiff was covered therein and that the said Exh. It is further pointed out that there was a partial performance of the verbal sale executed by Poncio in favor of the plaintiff. (pp. when the latter paid P247. 46-49. the possession by the plaintiff of the defendant Poncio's passbook of the Republic Savings Bank also adds credibility to her testimony. . the trial judge found: . It will be noted that Exh. to an opportunity to introduce parol evidence in support of the allegations of her second amended complaint.. regarding the sale of the land made by Poncio in favor of the plaintiff is inadmissible under the provision of the Statute of Fraud based on the argument that the note Exh. "a' was also executed to allow the defendant to continue staying in the premises for the stated period. 'A' with a full knowledge and consciousness of the terms and consequences thereof.26 allegedly made by plaintiff to Poncio on account of the price of his land. it is clear.therein and the partial payment of P247. "A" fails to comply with the requirements of the Statute of Fraud to qualify it as the note or memorandum referred to therein and open the way for the presentation of parole evidence to prove the fact contained in the note or memorandum. legally as well as from the viewpoint of equity. The defendants argue that Exh. emphasis supplied). corroborates the testimony of the plaintiff Carbonell that the sale of the land was made by Poncio. that she is entitled . if we do not allow the plaintiff to explain it on the witness stand? Without expressing any opinion on the merits of plaintiff's claim. 'A' refers to a lot 'sold by him to me' and having been written originally in a dialect well understood by the defendant Poncio. A careful consideration of the contents of Exh. therefore. This therefore. he signed the said Exh.26 to the Republic Savings Bank on account of Poncio's mortgage indebtedness. ROA. as well as her witnesses. Finally. "A" is not the note or memorandum referred to in the to in the Statute of Fraud. The defendant contends on the other hand that the testimony of the plaintiff.

Rizal. That on January 27. this court had that similar impression but after a more and thorough consideration of the context in Exh. covered by TCT No. penned by Justice Gatmaitan. From such factual findings. 5040 of the Province of Rizal. A. which also recited that the defendant Poncio would be allowed to continue his stay in the premises..50 per square meter. the court has arrived at the conclusion that there is a sufficient description of the lot referred to in Exh. emphasis supplied).. especially when the note refers to only one half lot. . ROA. the trial Judge confirms the due execution of Exhibit "A". the trial Judge rendered on January 20. The Identity of the parcel of land involved herein is sufficiently established by the contents of the note Exh. (5) In the first decision of November 2. among other things. although he found 1. 1955. 93-94. the plaintiff purchased from the defendant Poncio a parcel of land with an area of 195 square meters. ROA). more or less. located at San Juan del Monte. "A". the Court has arrived at the conclusion stated earlier (pp.The defendant argues that there is even no description of the lot referred to in the note. 2. 1965 another decision dismissing the complaint. For a while. With respect to the latter argument of the Exhibit 'A'. Gatmaitan and Mojica. 'A' and for the reasons stated above. only that his legal conclusion is that it is not sufficient to transfer ownership (pp. emphasis supplied). for the price of P6. the Court of Appeals found that: . That the purchase made by the plaintiff was not reduced to writing except for a short note or memorandum Exh. (4) After re-trial on motion of the Infantes. 1967 of the Fifth Division of the Court of Appeals composed of Justices Esguerra (now Associate Justice of the Supreme Court). 91-92. 'A' as none other than the parcel of land occupied by the defendant Poncio and where he has his improvements erected. (pp. 5254. ROA.

the private document goes so far as to describe their transaction as one of sale. since under our law. 1358. while a sale of an immovable is ordered to be reduced to a public document. in any case where evidence to further demonstrate is presented and admitted as the case was here. and on other.. 1357. par. as a mere tenant of vendee. but it was a valid contract nonetheless. vendor would continue to live therein. where still executory and action is brought and resisted for its performance. and corroborated as it is by the private document in Batanes dialect. 1500. there had been a true contract of sale. with the special privilege of not paying rental for one year. a sale is due form in favor of Emma L. 3. 1955. Couto v. so much so that on faith of that. then the oral sale becomes perfectly good.. Art. and becomes a good cause of action not only to reduce it to the form of a public document. Cortes.50 per square meter.26 and binding herself to pay unto Jose the balance of the purchase price after deducting the indebtedness to the Bank and since the wording of Exhibit A. Exhibit A. particularly Jose Poncio. a contract sale is consensual. 'during which time he will not pay anything' this can only mean that between Rosario and Jose. Art. 1955. Art. perfected by mere consent. consummated by delivery constitutum possession. 1403. already consummated between them. — it is true that the sale by Jose Poncio to Rosario Carbonell corroborated documentarily only by Exhibit A could not have been registered at all. note the part tense used in the phrase. vendor's possession having become converted from then on. but merely incapable of proof. so much so that under the New Civil Code. Exhibit A. 2. for one year. and thus it is that what we now have is a case wherein on the one hand Rosario Carbonell has proved that she had an anterior sale. the testimony being to the effect that between herself and Jose there had been celebrated a sale of the property excluding the house for the price of P9. 8 Phil 459.. "the lot sold by him to me" and going so far even as to state that from that day onwards. the testimony of Rosario Carbonell not having at all been attempted to be disproved by defendants. but even to enforce the contract in its entirety. annotated as an adverse claim on 8 February. it is evidenced by a memorandum. . that mandate does not render an oral sale of realty invalid. but where already wholly or partly executed or where even if not yet. Rosario had advanced the sum of P247. New Civil Code. celebrated in her favor on 27 January.

or contrary to the express mandate of Articles 1458 and 1475 of the Civil Code.. This statement of the principle is correct [pp.00 to Poncio and 9b) the arrears in . upon motion of the Infantes. rec. constituting the majority of a Special Division of Five. nor mention its certificate of title number. although it did not consider the same as satisfying "the essential elements of a contract of sale. the private memorandum dated January 27. 1965 dismissing plaintiff's complaint. and registered in due form with title unto her issued on 12 February. 1955. the Court of Appeals.Infante on 2 February. 1967 as well as his findings of facts therein. and is binding on and effective between the parties.]. and reiterated that the private memorandum Exhibit "A". as a sale is consensual and consummated by mere consent. 1967 and affirming the decision of the trial court of January 20. III ADEQUATE CONSIDERATION OR PRICE FOR THE SALE IN FAVOR OF CARBONELL It should be emphasized that the mortgage on the lot was about to be foreclosed by the bank for failure on the part of Poncio to pay the amortizations thereon." because it "neither specifically describes the property and its boundaries. (pp. emphasis supplied). (6) In the resolution dated October 30. 1955. while reversing the decision of November 2.. (7) In his dissent concurred in by Justice Rodriguez. Justice Gatmaitan maintains his decision of November 2. Exhibit 3-Infante. on condition that Carbonell [1] should pay (a) the amount of P400. rec. Poncio agreed to sell the same to Carbonell at P9. 1968 penned by then Court of Appeals Justice Esguerra (now a member of this Court). concurred in by Justices Villamor and Nolasco.. . 74-76. 1955. nor states the price certain to be paid. the vital question must now come on which of these two sales should prevail. is a perfected sale.50 per square meter. 89-92. admitted the existence and genuineness of Exhibit "A". To forestall the foreclosure and at the same time to realize some money from his mortgaged lot.

is the bad faith of Emma Infante from the time she enticed Poncio to dishonor his contract with Carbonell. All these terms are part of the consideration of the sale to Carbonell. 1955. who confronted him about it. On January 27.00. who. Being guilty of bad faith.26. by the private document. who is also from Batanes like Poncio and Carbonell. induced by the higher price offered to him by Infante. But Poncio. Inevitably evident therefore from the foregoing discussion. which was prepared in the Batanes dialect by the witness Constancio Meonada. 1955. dishonored his own plighted word to Carbonell. and [2] should assume his mortgage indebtedness. and not merely the sum of P200. that he would not withdraw from his deal with Infante even if he is sent to jail The victim. And Poncio was given the right to continue staying on the land without paying any rental for one year. the Infantes cannot recover the value of the .the amount of P247. for the sale of Poncio to Carbonell of the lot in question. therefore. January 27. This conveyance was confirmed that same day.26. who without moral compunction exploited the greed and treacherous nature of Poncio.00 to the bank because that was the amount that Poncio told her as his arrearages and Poncio advanced the sum of P47. and instead to sell the lot to her (Infante) by offering Poncio a much higher price than the price for which he sold the same to Carbonell. The bank president agreed to the said sale with assumption of mortgage in favor of Carbonell an Carbonell accordingly paid the arrears of P247. It is evident therefore that there was ample consideration. for love of money and without remorse of conscience. which amount was refunded to him by Carbonell the following day. after which he should pay rent if he could not still find a place to transfer his house. both in taking physical possession of the lot and in recording their deed of sale. "of injustice and outrage is the widow Carbonell and not the Infantes. reneged on his commitment to Carbonell and told Carbonell. Exhibit "A". The sale did not include Poncio's house on the lot. his own cousin.26 to the bank. she paid the amount of P200.

who had never increased her offer of P15 a square meter. Even an oral contract of realty is all between the parties and accords to the vendee the right to compel the vendor to execute the proper public document As a matter of fact. As stressed by Justice Gatmaitan in his first decision of November 2. supra. if he had not decided as yet to sell that land to plaintiff. the observation of the Supreme Court through Mr. the Infantes had less justification to erect a building thereon since their title to said lot is seriously disputed by Carbonell on the basis of a prior sale to her. Moreover. is a valid contract of sale between the parties. Exhibit A.. 1965. 1955. according to Meonada's uncontradicted testimony. she would have Exhibit A to be drafted.. apart from the fact that Meonada had read Exhibit A to him-and given him a copy thereof. on its face. the allegation in Poncio's answer to the effect that he signed Exhibit A under the belief that it 'was a permit for him to remain in the premises in the event that 'he decided to sell the property' to the plaintiff at P20. With respect to the claim of Poncio that he signed the document Exhibit "A" under the belief that it was a permit for him to remain in the premises in ease he decides to sell the property to Carbonell at P20. since sale is a consensual contract and is perfected by mere consent (Couto vs. Chief Justice Concepcion in G. 46-47. before he signed thereon. can be fully or partially performed. Exhibit A. the Batanes. ROA).00 per square meter. Incidentally. 8 Phil. No. m is. 459). the private document in the Batanes dialect.00 a sq. Cortes. bears repeating: . Poncio's signature on Exhibit A suggests that he is neither illiterate nor so ignorant as to sign a document without reading its contents.R. 1968. probably. And after the filing by Carbonell of the complaint in June. to it . Indeed. (pp. L-11231. Upon the they if plaintiff intended to mislead Poncio. of Five on October 30. there as no reason for Poncio to get said permit from her. in English.improvements they introduced in the lot. which he reiterated in his dissent from the resolution of the majority of the Special Division. somewhat difficult to believe. while merely a private document. instead of taking the trouble of seeing to it that it was written precisely in his native dialect.

was correctly disposed of in the first decision of the trial court of December 5.half lot was mentioned in Exhibit 'A' because the original description carried in the title states that it was formerly part of a bigger lot and only segregated later. New Civil Code). the court has arrived at the conclusion that there is sufficient description of the lot referred to in Exh.from the operation of the statute of frauds. 1955 and by his consequent delivery of his own mortgage passbook to Carbonell. the transition was further confirmed when Poncio agreed to the actual payment by at Carbonell of his mortgage arrearages to the bank on January 27. The explanation is tenable. Being a all consensual contract. plaintiff points out that one. thus: "The defendant argues that there is even no description of the lot referred to in the note (or memorandum). If he remained owner and mortgagor. More than just the signing of Exhibit A by Poncio and Carbonell with Constancio Meonada as witness to fact the contract of sale. With respect to the latter argument of the defendant. this court had that similar impression but after a more and through consideration of the context in Exh. For a while. 'A'. 'A'. Poncio would not have surrendered his mortgage passbook to' Carbonell. Exhibit A effectively transferred the possession of the lot to the vendee Carbonell by constitutum possessorium (Article 1500. especially when the note refers to only one-half lot. IV IDENTIFICATION AND DESCRIPTION OF THE DISPUTED LOT IN THE MEMORANDUM EXHIBIT "A" The claim that the memorandum Exhibit "A" does not sufficiently describe the disputed lot as the subject matter of the sale. in (sic) considering the time value of the contents of Exh. 1962. because thereunder the vendor Poncio continued to retain physical possession of the lot as tenant of the vendee and no longer as knew thereof. 'A' and for the reasons stated . As none other than the parcel of lot occupied by the defendant Poncio and where he has his improvements erected. The Identity of the parcel of land involved herein is sufficiently established by the contents of the note Exh.

Valencia vs. These provisions seem to imply that the possessor in bad faith has neither the right of retention of useful improvements nor the right to a refund for useful expenses. Exhibit A would not have stipulated to allow him to stay in the sold lot without paying any rent for one year and thereafter to pay rental in case he cannot find another place to transfer his house. Villanueva.00 for erecting a b ' bungalow thereon. . 277. It appearing that the Infantes are possessors in bad faith. Their expenses consisting of P1.above. While petitioner Carbonell has the superior title to the lot. Under the second paragraph of Article 546. filling it with 500 cubic meters of garden soil. unless the person with the superior right elects to pay for the useful improvements or reimburse the expenses therefor under paragraph 2 of Article 546. Moreover.00.500.500. for they add to the value of the property (Aringo vs. it is not shown that Poncio owns another parcel with the same area. 14 Phil. she must however refund to respondents Infantes the amount of P1. the possessor in good faith can retain the useful improvements unless the person who defeated him in his possession refunds him the amount of such useful expenses or pay him the increased value the land may have acquired by reason thereof.929. 13 Phil. The transaction therefore between Poncio and Carbonell can only refer and does refer to the lot involved herein. ROA). adjacent to the lot of his cousin Carbonell and likewise mortgaged by him to the Republic Savings Bank. the court has arrived to (sic) the conclusion stated earlier" (pp. 7 Phil. 45). Arenas. 263. their rights to the improvements they introduced op the disputed lot are governed by Articles 546 and 547 of the New Civil Code. Ayala de Roxas. Alburo vs.00 for draining the property. Under Article 547. the possessor in good faith has also the right to remove the useful improvements if such removal can be done without damage to the land. building a wall around it and installing a gate and P11. If Poncio had another lot to remove his house. 5354. are useful expenditures. which the Infantes paid to the Republic Savings Bank to redeem the mortgage.

unless petitioner Carbonell chooses to pay for their value at the time the Infantes introduced said useful improvements in 1955 and 1959. PETITIONER ROSARIO CARBONELL IS HEREBY DECLARED TO HAVE THE SUPERIOR RIGHT TO THE LAND IN QUESTION AND IS HEREBY DIRECTED TO REIMBURSE TO PRIVATE RESPONDENTS INFANTES THE SUM OF ONE THOUSAND FIVE HUNDRED PESOS (P1. WHEREFORE. because they have been enjoying such improvements for about two decades without paying any rent on the land and during which period herein petitioner Carbonell was deprived of its possession and use. The Infantes cannot claim reimbursement for the current value of the said useful improvements. 5040 IN THE NAME OF JOSE PONCIO. AND TO ISSUE A NEW TRANSFER CERTIFICATE OF TITLE IN FAVOR OF PETITIONER ROSARIO CARBONELL UPON PRESENTATION OF PROOF OF PAYMENT BY HER TO THE INFANTES OF THE AFORESAID AMOUNT OF ONE THOUSAND FIVE HUNDRED PESOS (P1. AND THE REGISTER OF DEEDS OF RIZAL IS HEREBY DIRECTED TO CANCEL TRANSFER CERTIFICATE OF TITLE NO. PRIVATE RESPONDENTS INFANTES MAY REMOVE THEIR AFOREMENTIONED USEFUL IMPROVEMENTS FROM THE LOT WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION. although possessors in bad faith. WHICH CANCELLED TRANSFER CERTIFICATE OF TITLE NO.00) WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION. UNLESS THE PETITIONER ROSARIO CARBONELL ELECTS TO ACQUIRE THE SAME AND PAYS THE INFANTES THE AMOUNT OF . 1968 IS HEREBY REVERSED. THE DECISION OF THE SPECIAL DIVISION OF FIVE OF THE COURT OF APPEALS OF OCTOBER 30.500. as a matter of equity.00). if the lawful possessor can retain the improvements introduced by the possessor in bad faith for pure luxury or mere pleasure only by paying the value thereof at the time he enters into possession (Article 549 NCC). should be allowed to remove the aforesaid improvements.But. the Infantes. 37842 ISSUED IN FAVOR OF PRIVATE RESPONDENTS INFANTES COVERING THE DISPUTED LOT.500.

concur. Castro. pero continuo en su posesion y goce. vs. otorgo la escritura Exhibit A de trespaso de la misma a favor de su hija Tomasa Quimson. Aquino and Martin. J. en 7 de junio de 1932. FRANCISCO ROSETE.: This is an appeal by certiorari from a decision of the Court of Appeals reversing the judgment of the Court of First Instance of Zambales. TUASON.THIRTEEN THOUSAND FOUR HUNDRED TWENTY-NINE PESOS (P13. petitioners. La vendio a los esposos Magno Agustin y Paulina Manzano en 3 de Mayo de 1935. The Facts as found by the Court of Appeals are these: Esta finca pertenecia originalmente al hoy difunto Dionisio Quimson. quien. SHOULD PETITIONER CARBONELL FAIL TO PAY THE SAID AMOUNT WITHIN THE AFORESTATED PERIOD OF THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION. Marcelino Lontok for petitioners.00) WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION. TOMASA QUIMSON and MARCOS SANTOS.J. con pacto de recomprar dentro del plazo de seis años. The case involves s dispute over a parcel of land sold to two different persons.. y . WITH COSTS AGAINST PRIVATE RESPONDENTS. respondent. Ignacio Mangosing for respondent.429. THE PERIOD OF THREE (3) MONTHS WITHIN WHICH THE RESPONDENTS INFANTES MAY REMOVE THEIR AFOREMENTIONED USEFUL IMPROVEMENTS SHALL COMMENCE FROM THE EXPIRATION OF THE THREE (3) MONTHS GIVEN PETITIONER CARBONELL TO PAY FOR THE SAID USEFUL IMPROVEMENTS. JJ. C.

de ese mismo dia. la volvio a vender a Francisco Rosete. del 17 de febrero de 1943. . None. respectivamente. the defendant or second purchaser. de una manera pacifica y quieta. la capital de Zambales. Articles 1462 and 1473 of the Civil Code provide: ART. when it is placed in the control and possession of the vendee. the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract. ocurrida en 6 de junio de 1939. cuyo fracaso motivo una carrera hacia Iba.m. tambien con pacto de retro por el termino de cinco años. para ganar la prioridad del registro e inscripcion de las escrituras de venta Exhibits A y 1 que Dionisio Quimson otorgara a favor de Tomasa Quimson y Francisco Rosete.m. con dinero que le habla facilitado Rosete. to which we will address ourselves presently. aun despues de la muerte de Dionisio Quimson. en que Tomasa Quimson acudio al Juez de Paz de San Marcelino . Zambales. We do not deem it necessary to pass upon the first issue in the light of the view we take of the last. Desde entoces Rosete es el que esta en su posesion y disfrute. and to the second. hasta el enero de 1943. The thing sold shall be deemed delivered. When the sale is made by means of a public instrument. if from the said instrument the contrary does not appear or may not be clearly inferred. para que este interviniera en un arreglo con Rosete sobre dicha finca. otorgandose a este facto la escritura de venta Exhibit 1. carreraque aquella gano por haber llegado a la meta una hora antes. en tanto que este la alcanzo a las 10:30 a. 1462.dos años escasos despues. en 5 de abril de 1937. a las 9:30 a. despues de haber verificado su recompra de Agustin y Manzano. Two questions are raised: (1) What were the effects of the registration of plaintiff's document? and (2) Who was prior in possession? The Court of Appeals' answer to the question is .

the ownership shall be transferred to the person who may have first taken possession thereof in good faith. provided there is good faith. and. Mr. the ownership shall belong to the person who in good faith was first in the possession. according to article 1473 of the Civil Code. the execution thereof is tantamount to conveyance of the subject matter. Foz (20 Phil. through Mr. Chief Justice Arellano. appeared that one Fernandez sold a piece of land to Marcelino Gomez and Narcisa Sanchez under pacto de retro in a public instrument. to the person who represents the oldest title. the vedor in the instrument itself authorizes the purchaser to used the title of ownership as proof that latter is thenceforth the owner of the property. is the case of Sanchez vs. and in the absence of this condition such execution by the vendor is per se a formal or symbolical conveyance of the property sold. . If the same thing should have been sold to different vendees.." More decisive of the case at the bar. Should there be no inscription.ART. Ramon (40 Phil. There. Later. unless the contrary clearly follows or be deduced from such instrument itself. if it should be movable property.". It was held that. In the case of Florendo vs. consequently. being almost on all fours with it. 1473. rules that "When the sale is made by menas of a public instrument. speaking for the court and citing article 1462 says: "Upon a sale of real estate the execution of a notarial document of sale is a sufficient delivery of the property sold. 388). Justice Willard. Should it be immovable property. Gomez and Sanchez were the first in possession and. that is. In the case of Buencamino vs. the ownership shall belong to the person acquiring it who first recorded it in the registry. in the absence of this. Viceo (13 Phil. 97). 614). The purchasers neither recorded the deed in the registry of property nor ever took materials possession of the land... the court. Fernandez sold the same property by means of a private document to Ramos who immediately entered upon the possession of it.

by a simple reasoning. is left to the vendor. Civil Code ) and its possession by the vedee (art. 1462.Under these conditions the sale is considered consummated and completely transfers to the vendee all of the thing. according to its letter. Form this moment the vendor is a stranger to the thing sold like any other who has never been its . refers to the materials possession and excludes the symbolic does not seem to be founded upon a solid ground. through Mr. the argument is deficient for it is begging the same question. it should be understood that the title. later chief justice: To what kind of possession is acquired by the materials occupancy of the thing or right possessed.that the sale in their favor was superior. in the first possession and then the date of the date of the title and as a public instruments is a title. our interpretation of this article 1473 is more in consonance with the principles of the justice. The execution of the public instrument is equivalent to the delivery of the realty sold (art. includes public instruments. which is acquired by the execution of a public instruments. 438). Says the court. This argument. after the materials possession. which the execution of the public document implies. would only be forceful if the title. Civil Code). Justice Avanceña. or by the fact that the latter is subjected to the action of our will. does not include instruments. and this would only be true if public instruments are not included in the idea of the possession spoken of in said article. or by the appropriate acts and legal formalities established for acquiring possession (art. because the law does not mention to which of these kinds of the possession the article refers. In other words the strength of the arguments rests in that this possession is precisely the materials and does not include the symbolic. mentioned by this article. it appears that. Consequently. It is said that the law. Furthermore. however. because if this possession includes the symbolic. mentioned by the law as the next cause of preference. The proposition that this article. absolutely nothing. it is claimed that the inference is that the law has deliberately intented to place the symbolic possession. it must be understood that it refers to all of these kinds. the vendee by virtue of this sale has acquired everything and nothing. 438.

en el sentido mas racional mas racional. Observacion comun a la venta de muebles y a la de inmuebles.462 al 1. he does it as mere detainer. 157 .473. We are of the opinion that the possession mentioned in the article 1473 (for determining who has better right when the same piece of land has been sold several times by the vendor ) includes not the materials but also the symbolic possession. Asi en nuestra opinion. If he continues taking materials possession of it.158 Vol. X. The Supreme Court of Spain and Mr. vendida una finca A. does not transmitted anything to this second sale. his possession is vendor's possession. Manresa are of the same opinion. 464 porque si la posesion materials del objeto puede otorgar preferencia e cuestiones de possesion y asi lo re-conoe el articulo 445.. y 3. aunque no tal vez en el mas adecuado a las palabras que se emplean. and it would be unjust to protect this detention against the rights to the thing lawfully acquired by the first vendee. who resells it to another. — Hemos interpretado el precepto de articulo 1. Manresa comments: II.owner. no debe darla nunca en cuestiones de propiedad y de la propiedad habla expresamente el articulo 1. This means that after the sale of the realty by means of a public instruments. the vendor. en escritura publica despues a B. en sus parrafos 1. in this sense. y primero en la posesion las hemos considerado como equivalentes a la de la tradicion real o fingida a que se refieren los articulos 1. but by virtue of the vendee's ownership. of his treatise on the Spanish Civil Code. because this has been already consummated and has produced all its effects. in the same were not the vendor. And if the latter should have to ask him for the delivery of this materials possession it would not be by virtue of the sale. which is acquired by the execution of a public instrument. Las palabras tomar posesion. aunque se incate . is simply on account of the vendee's tolerance and.473. robustecida por la doctrine que rectamente se deriva de la sentencia de 24 de Novembre de 1894. takes materials possession of the thing. On pp. As the obligation of even delivering it.

Counsel for defendant denies that the land was sold to plaintiff's Tomasa Quimson or that the Court of Appeals so founds. P 250. the law prevails over its letter. And with reference to the failure of the second vendee. to register his purchase. now under both the a Spanish and Philippine rules of interpretation. the literal meaning of article 1473. Apparently to the effect that physical possession by the purchaser is essential to the consummation of a sale of real of estate. All that latter court declared. expresses. 1894 reflects. 17). the intention of the lawmaker and is in the conformity with the principles of justice. the court disregarded the omission as well as the entry of the first sale in the registry because that entry was made by the plaintiff. 1932. son and heir of the first supposed vendee.materialmente este del inmueble. The expression in the court's decision in the case of Cruzado vs. Manresa which is said to sustain the theory of the Court of Appeals. according to the learned author. Looking into the documents itself Exhibits A states categorically that the vendor received form the vendee the consideration of sale. this was the trial court's explicit finding which was not reversed by the Court of Appeals and stand as the fact of the case. Furthermore. in the absence of any qualifying statement . Escaler (34 Phil. Escaler. for the court distinctly found that the sale to plaintiff's Cruzado's father was a sham. The statement of Sr. . as we under stand that statement. that the land was sold by the father to his daughter. cited by the Court of Appeals. acknowledge before the notary public the notary public having executed the instruments of his own free will. is at best obiter dictum. he says. la etrega de la cosa elvendedor carecia ya de la facultad de disponer de ella . the intent. the spirit. The findings that a deed of conveyance was made by Dionisio Quimson in favor of his daughter could have no other meaning. was that a deed of the land was executed by the original owner on June 7. execution with the sole purpose of enabling the senior Cruzado to mortgage the property and become procurador.. for the decision of November 24.

1997 in CA-G. when the plaintiff was no longer or had any right therein (in the land). DECISION MARTINEZ. Let judgment be entered in accordance with the tenor of this decision. Not being authorized in this appeal to examine the evidence we have to accept the trials court's appraisal of the damages. Da Jose & Socorro B. RAMON B. the second purchase was sued he had become the owner of the land by prescription." When Escaler. it made no findings on damages for the latter's used of the property in controversy. Ernesto R. The defendant's possession in the present case fell far short of having ripened into title by prescription when the plaintiff commenced her action. Genato. defendant-appellant. its lawful owner. J. vs. RICARDO CHENG.1944-45 and 1945-46. Da Jose. with costs against the defendant. respondents. GENATO and ERNESTO R.: This petition for review on certiorari seeks to annul and set aside the Decision of the Court of Appeals (CA)[1] dated July 7. Because the Appellate Court found for the defendant. Intervenors-Appellants” which reversed the ruling of the . DA JOSE & SOCORRO B. No. and P 60 a year thereafter until the possession of the property was restituted to the plaintiffs. Judge Llanes assessed the damages of P 180 for the occupation of the agricultural years 143-44. CV No. DA JOSE.more than a score years after the alleged transaction. petitioner. Ramon B. plaintiff-appellee vs. 44706 entitled “Ricardo Cheng. For the reasons above stated. we are constrained to set aside the decision of the Court of Appeals.R. Because it already belonged to the defendant Escaler.

00.00 in attorney‟s fees.197 (M). The cancellation of the annotations of the defendant-appellant‟s Affidavit to Annul Contract to Sell and plaintiff-appellee‟s Notice of Adverse Claim in the subject TCT‟s.000. 3.000. 5. P50. Ordering the execution by the defendant-appellant Genato of the Deed of Absolute Sale over the subject two lots covered by TCT No. 4. T76. exemplary damages of P50. of P100. T-76. 1994.Regional Trial Court.00 paid to him by the plaintiff-appellee Cheng. The return by defendant-appellant Genato of P50. The dismissal of the complaint. attorney‟s fees of P50. namely.000. and to defendant-appellant. Branch 96 of Quezon City dated January 18. The dispositive portion of the CA Decision reads: “WHEREFORE.00 in exemplary damages.000. TCT No. Payment by plaintiff-appellee Cheng of moral damages to herein intervenors-appellants Da Jose of P100. 1. appealed decision is hereby REVERSED and SET ASIDE and judgment is rendered ordering.196 (M) and TCT No. Payment by the intervenors-appellants of the remaining balance of the purchase price pursuant to their agreement with the defendantappellant to suspend encashment of the three post-dated checks issued since 1989. T-76.00.00. The amounts payable to the defendant-appellant may be compensated by plaintiff-appellee with the amount ordered under the . 2. and costs of suit.197 (M) in favor of intervenorsappellants Spouses Da Jose. based on the foregoing. and 6.196 (M) and TCT No. T-76.000.000.

That the VENDEE. respondent Genato entered into an agreement with respondent-spouses Ernesto R.000. of which the amount of FIFTY THOUSAND (P50. On September 6. SO ORDERED. Genato(Genato) is the owner of two parcels of land located at Paradise Farms.196 (M)[3] and TCT No. Bulacan covered by TCT No.”[2] The antecedents of the case are as follows: Respondent Ramon B. The contract was in a public instrument and was duly annotated at the back of the two certificates of title on the same day.00) PESOS.00) Pesos shall be paid by the VENDEE to the VENDOR as partial down payment at the time of execution of this Contract to Sell. 1989. Da Jose (Da Jose spouses) over the above-mentioned two parcels of land. and that no restrictions. T-76. limitations. That the purchase price shall be EIGHTY (P80. Clauses 1 and 3 thereof provide: “'1. more or less. San Jose Del Monte. thirty (30) DAYS after the execution of this contract. The agreement culminated in the execution of a contract to sell for which the purchase price was P80. and developments imposed on and/or affecting the property subject of this contract shall be detrimental to his interest. T-76. and only after having satisfactorily verified and confirmed the truth and authenticity of documents.821 square meters. Da Jose and Socorro B.197 (M)[4] with an aggregate area of 35. the VENDEE shall pay .immediately foregoing paragraph which defendant-appellant has to pay the plaintiff-appellee. Philippine Currency per square meter. xxx xxx xxx “'3.00 per square meter.

[6] This was denied by the Da Jose spouses. “That this affidavit is being executed to Annul the aforesaid Contract to Sell for the vendee having committed a breach of contract for not having complied with the obligation as provided in the Contract to Sell. that is on or before October 6. according to Genato.[7] on October 13. However. Genato executed an Affidavit to Annul the Contract to Sell. “The supposed VENDEES failed to pay the said full downpayment even up to this writing. inter alia.00 shall be paid thirty (30) days after the execution of the Contract. a breach of contract. Moreover. Pending the effectivity of the aforesaid extension period. no annotation of the said affidavit at the back of his titles was made right away.00) PESOS. representing the full payment of the agreed Down Payment. the Da Jose the VENDOR. 1989. NINE HUNDRED FIFTY THOUSAND (P950. 1989.”[5] On October 4. 1989. after which complete possession of the property shall be given to the VENDEE to enable him to prepare the premises and any development therein. not having finished verifying the titles mentioned in clause 3 as aforequoted. The affidavit contained. the extension was granted on condition that a new set of documents is made seven (7) days from October 4. 1989.000.000. “ xxx xxx xxx “That it was agreed between the parties that the agreed downpayment of P950. the following paragraphs. 1989. and without due notice to the Da Jose spouses. Philippine Currency.”[8] . asked for and was granted by respondent Genato an extension of another 30 days – or until November 5.

On October 24.000. Despite these.T.G. Cheng went ahead and issued a check for P50. “10/24/89 Received from Ricardo Cheng the Sum of Fifty Thousand Only (P50. written in this wise. 1989. San Jose Del Monte P70/m2 Plus C. Genato also showed him the aforementioned Affidavit to Annul the Contract to Sell which has not been annotated at the back of the titles. herein petitioner Ricardo Cheng (Cheng) went to Genato’s residence and expressed interest in buying the subject properties.000 -) as partial for T-76196 (M) T-76197 (M) area 35. Genato showed to Ricardo Cheng copies of his transfer certificates of title and the annotations at the back thereof of his contract to sell with the Da Jose spouses. “D”). Genato Check # 470393 10/24/89”[9] Bulacan . Paradise Farm.821 Sq.m.00 upon the assurance by Genato that the previous contract with the Da Jose spouses will be annulled for which Genato issued a handwritten receipt (Exh. Gaya-Gaya. etc (SGD ) Ramon B. On that occasion.

Consequently. . they met Genato by coincidence. Genato sent a letter[13] to Cheng (Exh.000.On October 25. Cheng called up Genato reminding him to register the affidavit to annul the contract to sell.[11] While the Da Jose spouses were at the Office of the Registry of Deeds of Meycauaya. It was only then that the Da Jose spouses discovered about the affidavit to annul their contract. 262702. acting on Cheng’s request. and that they were willing and able to pay the balance of the agreed down payment. later on in the day.000. Bulacan on October 27. that the period was still in effect. Cheng’s lawyer sent a letter[12] to Genato demanding compliance with their agreement to sell the property to him stating that the contract to sell between him and Genato was already perfected and threatening legal action. 1989. The agreement to continue with their contract was formalized in a conforme letter dated October 27. Genato caused the registration of the Affidavit to Annul the Contract to Sell in the Registry of Deeds. 1989. Cheng. Thereafter. 1989. Bulacan as primary entry No. After being reminded that he (Genato) had given them (Da Jose spouses) an additional 30-day period to finish their verification of his titles. or on October 26. however. 1989. On November 2. Genato decided to continue the Contract he had with them. 1989. on October 30. After having received the letter of Genato on November 4. Genato deposited Cheng’s check.00 check. 1989. 1989.[10] The following day. “6”) enclosing a BPI Cashier’s Check for P50. On the same day.00 and expressed regret for his inability to “consummate his transaction” with him. The latter were shocked at the disclosure and protested against the rescission of their contract. Meycauayan. Ramon Genato advised Ricardo Cheng of his decision to continue his contract with the Da Jose spouses and the return of Cheng’s P50.

Thus.00 check he gave was a partial payment to the total agreed purchase price of the subject properties and considered as an earnest money for which Genato acceded.000.returned the said check to the former via RCPI telegram[14] dated November 6. 1990. consistent with the decision of Genato and the Da Jose spouses to continue with their Contract to Sell of September 6.00 and delivered to him three (3) postdated checks (all dated May 6. 1989. Genato alleged that the agreement was only a simple receipt of an option-bid deposit. 1989. Cheng executed an affidavit of adverse claim[15] and had it annotated on the subject TCT’s. The Da Jose spouses. On the same day. 1989. In Answer[17] thereto.865. However. nor is it an earnest money and that it was subject to the condition that the prior contract with the Da Jose spouses be first cancelled. the stipulated due date) in the total amount of P1. On December 8.000. In his complaint.[18] asserted that they have a superior right to the property as first buyers.” Meanwhile. Cheng averred that the P50. the three (3) postdated checks have not been encashed. due to the filing of the pendency of this case.680. their contract was already perfected. in their Answer in Intervention.00 to cover full payment of the balance of the agreed purchase price. Cheng instituted a complaint [16] for specific performance to compel Genato to execute a deed of sale to him of the subject properties plus damages and prayer for preliminary attachment. They alleged that the unilateral cancellation of the Contract to Sell was without effect . reiterating that “our contract to sel l your property had already been perfected. and never stated that it was a partial payment. the Da Jose spouses paid Genato the complete down payment of P950. also on November 2. 1989.

and void. Declaring the contract to sell dated September 6. The right of Genato to unilaterally rescind the contract is said to be under Article 1191[20] of the Civil Code. They also cited Cheng’s bad faith as a buyer being duly informed by Genato of the existing annotated Contract to Sell on the titles. especially as it was Genato himself who had made the receipt in his own hand. the receipt would have provided such material condition or reservation. 1989 and as the consequence of intervenors‟ failure to execute within seven (7) days from October 4. the lower court ruled that the receipt issued by Genato to Cheng unerringly meant a sale and not just a priority or an option to buy. by virtue of defendant‟s affidavit to annul contract to sell dated October 13. It falls under the exception to the rule provided in Article 1169 [19] of the Civil Code. It cannot be true that the transaction was subjected to some condition or reservation. extrajudicial or judicial. under this circumstance demand. Civil Code. 1191. 1989 executed between defendant Ramon Genato. . as vendor. on January 18. and intervenors Spouses Ernesto and Socorro Da Jose. is not necessary. after reference was made to the substance of the agreement between Genato and the Da Jose spouses. It also opined that there was a valid rescission of the Contract to Sell by virtue of the Affidavit to Annul the Contract to Sell. Time was of the essence in the execution of the agreement between Genato and Cheng. the lower court also concluded that Cheng should be preferred over the intervenors-Da Jose spouses in the purchase of the subject properties. as vendees. Thus. Additionally. After trial on the merits. resolved and rescinded in accordance with Art. 1994 the trial court rendered its decision the decretal portion of which reads: WHEREFORE. judgment is hereby rendered: 1. like the priority in favor of the Da Jose spouses as first buyer because. if it were otherwise.

plus interest at the legal rate from November 2.000. a deed of conveyance and sale of the real properties described and covered in Transfer Certificates of Title No. as nominal damages. Directing defendant to return to the intervenors the three (3) postdated checks immediately upon finality of this judgment.00.00. d/ P20. and 5. c/ P20. as and for attorney‟s fees. as and for attorney‟s fees. to intervenors. xxx xxx xxx” .000.00 already paid to defendant. another contract to sell pursuant to their mutual agreement with the defendant.000. less the amount of P50. Ordering defendant to pay the plaintiff and the intervenors as follows: a/ P50. as nominal damages. 1989 until full payment. Ordering defendant to return to the intervenors the sum of P1. with the plaintiff being liable for payment of the capital gains taxes and other expenses of the transfer pursuant to the agreement to sell dated October 24. T76-196 (M) and T-76. and e/ Cost of the suit. 1989. to plaintiff. to plaintiff.000. 3. Commanding defendant to execute with and in favor of the plaintiff Ricardo Cheng. at the rate of P70.197 (M) of the Registry of Deeds of Bulacan.000. Meycauyan Branch.000. b/ P50. 4.00.00/sqaure meter. 2. which is considered as part of the purchase price. to intervenors. as vendee.

and (3) that. the failure of which is not a breach. herein respondents Ramon Genato and Da Jose spouses appealed to the court a quo which reversed such judgment and ruled that the prior contract to sell in favor of the Da Jose spouses was not validly rescinded. that the subsequent contract to sell between Genato and Cheng. In a Contract to Sell.[22] It is one where the happening of the event gives rise to an obligation. contrary to petitioner’s contentions and the trial court’s erroneous ruling. No reversible error can be ascribed to the ruling of the Court of Appeals that there was no valid and effective rescission of resolution of the Da Jose spouses’ Contract to Sell. for its non- . Thus. the payment of the purchase price is a positive suspensive condition. The petition must be denied for failure to show that the Court of Appeals committed a reversible error which would warrant a contrary ruling. (2) that Ricardo Cheng’s own contract with Genato was not just a contract to sell but one of conditional contract of sale which gave him better rights. but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force.[21] This petition for review. was without force and effect due to the failure to rescind the prior contract. casual or serious. thus precluding the application of the rule on double sales under Article 1544. and that Cheng should pay damages to the respondents herein being found to be in bad faith. it was error to hold him liable for damages. embodied in the handwritten receipt.Not satisfied with the aforesaid decision. in any case. Hence this petition. assails the Court of Appeals’ Decision on the following grounds: (1) that the Da Jose spouses’ Contract to Sell has been validly rescinded or resolved. Civil Code.

the foregoing jurisprudence cannot be made to apply to the situation in the instant case because no default can be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired. not a failure of a condition to render binding that obligation. The Da Jose spouses’ contention that no further condition was agreed when they were granted the 30-days extension period from October 7. Genato could have sent at least a notice of such fact. the execution by Genato . firstly. Genato could not have been persuaded to continue his contract with them and later on agree to accept the full settlement of the purchase price knowing fully well that he himself imposed such sine qua non condition in order for the extension to be valid. 1989 in connection with clause 3 of their contract to sell dated September 6. the suspensive condition not having occurred as yet. there can be no rescission of an obligation that is still non-existent. 1989 should be upheld for the following reason. 1989 after Cheng reminded him of the annotation. secondly.[24] Obviously. so as to finally clear the encumbrance of his titles and make it available to other would be buyers. in their Contract to Sell. Genato could have immediately annotated his affidavit to annul the contract to sell on his title when it was executed on October 13. to wit. there being no stipulation authorizing him for automatic rescission. thirdly. the obligor having failed to perform the suspensive condition which enforces a juridical relation.[23] Emphasis should be made that the breach contemplated in Article 1191 of the New Civil Code is the obligor’s failure to comply with an obligation already extant. If this were not true.fulfillment there will be no contract to speak of. as claimed by Genato. It likewise settles the holding of the trial court that Genato “needed money urgently. In fact with this circumstance.” Even assuming in gratia argumenti that the Da Jose spouses defaulted. 1989 and not only on October 26.

the parties would stand as if the conditional obligation had never existed. For with or without the aforesaid affidavit their non-payment to complete the full downpayment of the purchase price ipso facto avoids their contract to sell. Otherwise. In University of the Philippines vs. When a contract is subject to a suspensive condition. [28] For such act is always provisional. to the Da Jose spouses for decision to rescind their contract.of the affidavit to annul the contract is not even called for.[29] this Court stressed and we quote: In other words. the party injured by the other‟s breach will have to passively sit and watch its damages accumulate during the pendency of the suit until the final judgment of rescission is . It is always subject to scrutiny and review by the courts in case the alleged defaulter brings the matter to the proper courts.[27] even though we upheld the validity of a stipulation in a contract to sell authorizing automatic rescission for a violation of its terms and conditions. the party who deems the contract violated may consider it resolved or rescinded. De Los Angeles . For it is only the final judgment of the corresponding court that will conclusively and finally settle whether the action taken was or was not correct in law. In many cases.[25] If the suspensive condition does not take place. but it proceeds at its own risk.[26] Nevertheless. it being subjected to a suspensive condition. and act accordingly. verbal or written. its birth or effectivity can take place only if and when the event which constitutes the condition happens or is fulfilled. this being so Genato is not relieved from the giving of a notice. The act of a party in treating a contract as cancelled should be made known to the other. at least a written notice must be sent to the defaulter informing him of the same. without previous court action. But the law definitely does not require that the contracting party who believes itself injured must first file suit and wait for a judgment before taking extajudicial steps to protect its interest.

And next. This ambivalent stance of Cheng is even noted by the appellate court. Thus.rendered when the law itself requires that he should exercise due diligence to minimize its own damages (Civil Code. both courts below correctly held that the receipt which was the result of . both in equity and justice. Resultantly. Ricardo Cheng’s contention that the Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved due to Genato’s unilateral rescission finds no support in this case. thus: “At the outset. now pleads in this Petition. in a transparent turn-around. Article 2203). 1989 was actually a perfected contract to sell. his testimony[32] was offered to prove that the transaction between him and Genato on October 24. In his complaint. contracts such as the one at bat.000. the records of this case are replete with admissions [30] that Cheng believed it to be one of a Contract to Sell and not one of Conditionl Contract of Sale which he.[35] In fact. litigations of this sort shall be prevented and the relations among would-be parties may be preserved. in order to avoid and prevent the defaulting party from assuming the offer as still in effect due to the obligee’s tolerance for such nonfulfillment. this Court notes that plaintiff-appellee was inconsistent in characterizing the contract he allegedly entered into. Anent the issue on the nature of the agreement between Cheng and Genato.[31] Cheng alleged that the P50.00 down payment was earnest money.[34] Issues of fact and arguments not adequately brought to the attention of the trial court need not be and ordinarily will not be considered by a reviewing court as they cannot be raised for the first time on appeal.”[33] Settled is the rule that an issue which was not raised during the trial in the court below cannot be raised for the first time on appeal. This rule validates.

In Coronel. therefore the “sale” is neither valid or enforceable. “D. this Court found that the petitioners therein clearly intended to transfer title to the buyer which petitioner themselves admitted in their pleading. .[36] To support his now new theory that the transaction was a conditional contract of sale. But even if we are to assume that the receipt. to his credit. This was. This patent twist only operates against Cheng’s posture which is indicative of the weakness of his claim. “D. Apparently. Exh.” alone would not even show that a conditional contract of sale has been entered by Genato and Cheng. in fact Cheng’s contention in his pleadings before said courts.” is to be treated as a conditional contract of sale. In fact a careful reading of the receipt. Court of Appeals[37] as the law that should govern their Petition. redeemed himself by respecting and maintaining his earlier contract with the Da Jose spouses. it did not acquire any obligatory force since it was subject to suspensive condition that the earlier contract to sell between Genato and the Da Jose spouses should first be cancelled or rescinded – a condition never met. the delivery of the seller of the property and the manner of the transfer of title subject to the specific condition that upon the transfer in their names of the subject property the Coronels will execute the deed of absolute sale. petitioner invokes the case of Coronel vs. Exh. The agreement of the parties therein was definitively outline in the “Receipt of Down Payment” both as to property. is a contract to sell. We do not agree. the factual milieu in Coronel is not on all fours with those in the case at bar. the purchase price. as Genato. When the requisites of a valid contract of sale are lacking in said receipt.their agreement. upon realizing his error.

in the instant case.Whereas. even by a careful perusal of the receipt. Should it be immovable property. the trial court and the appellate court correctly held that the agreement between Genato and Cheng is a contract to sell. the ownership shall be transferred to the person who may have first taken possession thereof in good faith. (b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests. and in the absence thereof. provided there is good faith” However. which read: “Article 1544. in fact. Consequently. and . a meticulous reading of the aforequoted provision shows that said law is not apropos to the instant case. Exh. and must be valid sales transactions. if it should be movable property. This provision connotes that the following circumstances must concur: “(a) The two (or more) sales transactions in the issue must pertain to exactly the same subject matter. the ownership shall pertain to the person who in good faith was first in possession. to the person who presents the oldest title. which was. petitioner” connection in his pleadings before the said courts. Should there be no inscription. To our mind. If the same thing should have been sold to different vendees. “D.” alone such kind of circumstances cannot be ascertained without however resorting to the exceptions of the Rule on Parol Evidence. both to mind. the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the very same seller.” These situations obviously are lacking in a contract to sell for neither a transfer of ownership nor a sales transaction has been consummated. The contract to be binding upon the obligee or the vendor depends upon the fulfillment or non-fulfillment of an event. Notwithstanding this contrary finding with the appellate court, we are of the view that the governing principle of Article 1544, Civil Code, should apply in this situation. Jurisprudence[38] teaches us that the governing principle is PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). For not only was the contract between herein respondents first in time; it was also registered long before petiti oner’s intrusion as a second buyer. This principle only applies when the special rules provided in the aforcited article of Civil Code do not apply or fit the specific circumstances mandated under said law or by jurisprudence interpreting the article. The rule exacted by Article 1544 of the Civil Code for the second buyer to be able to displace the first buyer are: (1) that the second buyer must show that he acted in good faith (i.e. in ignorance of the first sale and of the first buyer’s rights) from the time of acquisition until title is transferred to him by registration or failing registration, by delivery of possession;[39] (2) the second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law.[40] Thus, in the case at bar, the knowledge gained by the Da Jose spouses, as first buyers, of the new agreement between Cheng and Genato will

not defeat their rights as first buyers except where Cheng, as second buyer, registers or annotates his transaction or agreement on the title of the subject properties in good faith ahead of the Da Jose spouses. Moreover, although the Da Jose spouses, as first buyers, knew of the second transaction it will not bar them from availing of their rights granted by law, among them, to register first their agreement as against the second buyer. In contrast, knowledge gained by Cheng of the first transaction between the Da Jose spouses and Genato defeats his rights even if he is first to register the second transaction, since such knowledge taints his prior registration with bad faith. “Registration”, as defined by Soler and Castillo, means any entry made in the books of the registry, including both registration in its ordinary and strict sense and cancellation, annotation, and even marginal notes.[41] In its strict acceptation, it is the entry made in the registry which records solemnly and permanently the right of ownership and other real rights.[42] We have ruled[43] before that when a Deed of Sale is inscribed in the registry of property on the original document itself, what was done with respect to said entries or annotations and marginal notes amounted to a registration of the sale. In this light, we see no reason why we should not give priority in right the annotation made by the Da Jose spouses with respect to their Contract to Sell dated September 6, 1989. Moreover, registration alone in such cases without good faith is not sufficient. Good faith must concur with registration for such prior right to be enforceable. In the instant case, the annotation made by the Da Jose spouses on the titles of Genato of their “Contract to Sell” more than satisfies this requirement. Whereas in the case of Genato’s agreement with Cheng such is unavailing. For even before the receipt,

Exh. “D,” was issued to Cheng information of such pre -existing agreement has been brought to his knowledge which did not deter him from pursuing his agreement with Genato. We give credence to the factual finding of the appellate court that “Cheng himself admitted that it was he who sought Genato in order to inquire about the property and offered to buy the same.”[44] And since Cheng was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in entering into such agreement. As we have held in Leung Yee vs. F.L. Strong Machinery Co.:[45] “One who purchases real estate with knowledge of a defect x x x of title in his vendor cannot claim that he has acquired title thereto in good faith as against x x x x an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor‟s title, will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation. Good faith, or lack of it, is in its last analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the

. vs. tangible fact that can be seen or touched. be determined. 10. vs. Co. Bromely. 8.”[46] Such bad faith. we find that the award of damages made by the appellate court is in order. Pinkerton Bros. 108 Cal. Gilman. 17. 2094-2098. Breaux-Renoudet. So it is that „the honesty of intention. with safety. 504. 119 Mich. Miller. or the want of it. Cardenas vs. Cypress Lumber Co.” (Wilder vs. „Good faith.’ which constitutes good faith implies a ‘freedom from knowledge and circumstances which ought to put a person on inquiry.conduct and outward acts by which alone the inward motive may. WHEREFORE. 55 Vt.. premises considered. Based on these overwhelming evidence of bad faith on the part of herein petitioner Ricardo Cheng.’ ‘the honest lawful intent. but rather a state or condition of mind which can only be judge of by actual or fancied tokens or signs. Ann. 505. 52 La.) Emphasis ours Damages were awarded by the appellate court on the basis of its finding that petitioner “was in bad faith when he filed the suit for specific performance knowing fully well that his agreement with Genato did not push through. . which culminated in his filing of the present suit and thereby creating what the counsel for the respondents describ es as “a prolonged and economically unhealthy gridlock”[47] on both the land itself and the respondents’ rights provides ample basis for the damages awarded. 250.’ and so it is that proof of such knowledge overcomes the presumption of good faith in which the courts always indulge in the absence of the proof to the contrary. SO ORDERED. Cf. Shadel. is not a visible. coupled with his wrongful interference with the contractual relations between Genato and the Da Jose spouses.. the instant petition for review is DENIED and the assailed decision is hereby AFFIRMED EN TOTO.