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[G.R. No. 144225.

June 17, 2003]

SPOUSES GODOFREDO ALFREDO and AR!EN L"!ON ALFREDO, SPOUSES ARNULFO SA#ELLANO and ED"$%A &. SA#ELLANO, DAN$ON D. !A$A'ARAN, SPOUSES DELF"N F. ESP"R"$U, JR. and ES$ELA S. ESP"R"$U and EL"(A&E$% $UA(ON, petitioners, vs. SPOUSES AR!ANDO &ORRAS and ADEL"A LO&A$ON &ORRAS, respondents. DE ARP"O, J.) $*e a+e "S"ON

Before us is a petition for review assailing the Decision [1] of the Court of Appeals dated 26 November 1 affirming the decision[2] of the !egional "rial Court of Bataan# Branch $# in Civil Case No% D&'2(6' $% )etitioners also *uestion the !esolution of the Court of Appeals dated 26 +ul, 2--den,ing petitioners. motion for reconsideration% $*e An,e-eden, Fa-,+ A parcel of land measuring /1#(2$ s*uare meters 012ub3ect 4and56 in Barrio Culis# 7abiga# &ermosa# Bataan is the sub3ect of controvers, in this case% "he registered owners of the 2ub3ect 4and were petitioner spouses# 8odofredo Alfredo 018odofredo56 and Carmen 4imon Alfredo 01Carmen56% "he 2ub3ect 4and is covered b, 9riginal Certificate of "itle No% 2/$ 019C" No% 2/$56 issued to 8odofredo and Carmen under &omestead )atent No% :'6 1 6% 9n ; 7arch 1 $# the private respondents# spouses Armando Borras 01Armando56 and Adelia 4obaton Borras 01Adelia56# filed a complaint for specific performance against 8odofredo and Carmen before the !egional "rial Court of Bataan# Branch $% "he case was doc<eted as Civil Case No% D&' 2(6' $% Armando and Adelia alleged in their complaint that 8odofredo and Carmen mortgaged the 2ub3ect 4and for );#---%-- with the Development Ban< of the )hilippines 01DB)56% "o pa, the debt# Carmen and 8odofredo sold the 2ub3ect 4and to Armando and Adelia for)1(#---%--# the bu,ers to pa, the DB) loan and its accumulated interest# and the balance to be paid in cash to the sellers% Armando and Adelia gave 8odofredo and Carmen the mone, to pa, the loan to DB) which signed the release of mortgage and returned the owner.s duplicate cop, of 9C" No% 2/$ to 8odofredo and Carmen% Armando and Adelia subse*uentl, paid the balance of the purchase price of the 2ub3ect 4and for which Carmen issued a receipt dated 11 7arch 1 ;-% 8odofredo and Carmen then delivered to Adelia the owner.s duplicate cop, of 9C" No% 2/$# with the document of cancellation of mortgage# official receipts of realt, ta= pa,ments# and ta= declaration in the name of 8odofredo% 8odofredo and Carmen introduced Armando and Adelia# as the new owners of the 2ub3ect 4and# to the Natanawans# the old tenants of the 2ub3ect 4and% Armando and Adelia then too< possession of the 2ub3ect 4and%

>n +anuar, 1 $# Armando and Adelia learned that hired persons had entered the 2ub3ect 4and and were cutting trees under instructions of allegedl, new owners of the 2ub3ect 4and% 2ubse*uentl,# Armando and Adelia discovered that 8odofredo and Carmen had re'sold portions of the 2ub3ect 4and to several persons% 9n / ?ebruar, 1 $# Armando and Adelia filed an adverse claim with the !egister of Deeds of Bataan% Armando and Adelia discovered that 8odofredo and Carmen had secured an owner.s duplicate cop, of 9C" No% 2/$ after filing a petition in court for the issuance of a new cop,% 8odofredo and Carmen claimed in their petition that the, lost their owner.s duplicate cop,% Armando and Adelia wrote 8odofredo and Carmen complaining about their acts# but the latter did not repl,% "hus# Armando and Adelia filed a complaint for specific performance% 9n 2/ 7arch 1 $# Armando and Adelia amended their complaint to include the following persons as additional defendants@ the spouses Arnulfo 2avellano and Aditha B% 2avellano# Danton D% 7atawaran# the spouses Delfin ?% Aspiritu# +r% and Astela 2% Aspiritu# and AliBabeth "uaBon 012ubse*uent Bu,ers56% "he 2ubse*uent Bu,ers# who are also petitioners in this case# purchased from 8odofredo and Carmen the subdivided portions of the 2ub3ect 4and% "he !egister of Deeds of Bataan issued to the 2ubse*uent Bu,ers transfer certificates of title to the lots the, purchased% >n their answer# 8odofredo and Carmen and the 2ubse*uent Bu,ers 0collectivel, 1petitioners56 argued that the action is unenforceable under the 2tatute of ?rauds% )etitioners pointed out that there is no written instrument evidencing the alleged contract of sale over the 2ub3ect 4and in favor of Armando and Adelia% )etitioners ob3ected to whatever parole evidence Armando and Adelia introduced or offered on the alleged sale unless the same was in writing and subscribed b, 8odofredo% )etitioners asserted that the 2ubse*uent Bu,ers were bu,ers in good faith and for value% As counterclaim# petitioners sought pa,ment of attorne,.s fees and incidental e=penses% "rial then followed% Armando and Adelia presented the following witnesses@ Adelia# +esus 4obaton# !oberto 4opeB# Apolinario Natanawan# !olando Natanawan# "omas Natanawan# and 7ildred 4obaton% )etitioners presented two witnesses# 8odofredo and Constancia Calonso% 9n ; +une 1 6# the trial court rendered its decision in favor of Armando and Adelia% "he dispositive portion of the decision reads@ C&A!A?9!A# premises considered# 3udgment is hereb, rendered in favor of plaintiffs# the spouses Adelia 4obaton Borras and Armando ?% Borras# and against the defendant'spouses 8odofredo Alfredo and Carmen 4imon Alfredo# spouses Arnulfo 2abellano and Aditha B% 2abellano# spouses Delfin ?% Aspiritu# +r% and Astela 2% Aspiritu# Danton D% 7atawaran and AliBabeth "uaBon# as follows@ 1% Declaring the Deeds of Absolute 2ale of the disputed parcel of land 0covered b, 9C" No% 2/$6 e=ecuted b, the spouses 8odofredo Alfredo and Camen 4imon Alfredo in favor of spouses Arnulfo 2abellano and Aditha B% 2abellano# spouses Delfin ?% Aspiritu# Danton D% 7atawaran and AliBabeth "uaBon# as null and voidD Declaring the "ransfer Certificates of "itle Nos% "'16E266 and "'16E26; in the names of spouses Arnulfo 2abellano and Aditha B% 2abellanoD "ransfer Certificates of "itle Nos% "'16E26/ and 16E2;2 in the names of spouses Delfin ?% Aspiritu# +r% and Astela 2% AspirituD "ransfer Certificates of "itle Nos% "'16E26 and "'16E2;1 in the name of Danton D% 7atawaranD and "ransfer Certificate of "itle No% "'16E2;- in the name of AliBabeth "uaBon# as null and void and that the !egister of Deeds of Bataan is hereb, ordered to cancel said titlesD 9rdering the defendant'spouses 8odofredo Alfredo and Carmen 4imon Alfredo to e=ecute and deliver a good and valid Deed of Absolute 2ale of the disputed

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parcel of land 0covered b, 9C" No% 2/$6 in favor of the spouses Adelia 4obaton Borras and Armando ?% Borras within a period of ten 01-6 da,s from the finalit, of this decisionD $% 9rdering defendant'spouses 8odofredo Alfredo and Carmen 4imon Alfredo to surrender their owner.s duplicate cop, of 9C" No% 2/$ issued to them b, virtue of the 9rder dated 7a, 2-# 1 2 of the !egional "rial Court of Bataan# Dinalupihan Branch# to the !egistr, of Deeds of Bataan within ten 01-6 da,s from the finalit, of this decision# who# in turn# is directed to cancel the same as there e=ists in the possession of herein plaintiffs of the owner.s duplicate cop, of said 9C" No% 2/$ and# to restore andFor reinstate 9C" No% 2/$ of the !egister of Deeds of Bataan to its full force and effectD 9rdering the defendant'spouses 8odofredo Alfredo and Carmen 4imon Alfredo to restitute andFor return the amount of the respective purchase prices andFor consideration of sale of the disputed parcels of land the, sold to their co' defendants within ten 01-6 da,s from the finalit, of this decision with legal interest thereon from date of the saleD 9rdering the defendants# 3ointl, and severall,# to pa, plaintiff'spouses the sum of )2-#---%-- as and for attorne,.s fees and litigation e=pensesD and 9rdering defendants to pa, the costs of suit%

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Defendants. counterclaims are hereb, dismissed for lac< of merit% 29 9!DA!AD%[E] )etitioners appealed to the Court of Appeals% 9n 26 November 1 court# thus@ # the Court of Appeals issued its Decision affirming the decision of the trial

C&A!A?9!A# premises considered# the appealed decision in Civil Case No% D&'2(6' $ is hereb, A??>!7AD in its entiret,% "reble costs against the defendants'appellants% 29 9!DA!AD%[$] 9n 26 +ul, 2---# the Court of Appeals denied petitioners. motion for reconsideration% $*e Ru./n0 o1 ,*e $2/a. ou2,

"he trial court ruled that there was a perfected contract of sale between the spouses 8odofredo and Carmen and the spouses Armando and Adelia% "he trial court found that all the elements of a contract of sale were present in this case% "he ob3ect of the sale was specificall, identified as the /1#(2$'s*uare meter lot in Barrio Culis# 7abigas# &ermosa# Bataan# covered b, 9C" No% 2/$ issued b, the !egistr, of Deeds of Bataan% "he purchase price was fi=ed at )1(#---%--# with the bu,ers assuming to pa, the sellers. );#---%-- DB) mortgage loan including its accumulated interest% "he balance of the purchase price was to be paid in cash to the sellers% "he last pa,ment of )2#(2$%--

constituted the full settlement of the purchase price and this was paid on 11 7arch 1 ;- as evidenced b, the receipt issued b, Carmen% "he trial court found the following facts as proof of a perfected contract of sale@ 016 8odofredo and Carmen delivered to Armando and Adelia the 2ub3ect 4andD 026 Armando and Adelia treated as their own tenants the tenants of 8odofredo and CarmenD 0E6 8odofredo and Carmen turned over to Armando and Adelia documents such as the owner.s duplicate cop, of the title of the 2ub3ect 4and# ta= declaration# and the receipts of realt, ta= pa,ments in the name of 8odofredoD and 0$6 the DB) cancelled the mortgage on the 2ub3ect )ropert, upon pa,ment of the loan of 8odofredo and Carmen% 7oreover# the receipt of pa,ment issued b, Carmen served as an ac<nowledgment# if not a ratification# of the verbal sale between the sellers and the bu,ers% "he trial court ruled that the 2tatute of ?rauds is not applicable because in this case the sale was perfected% "he trial court concluded that the 2ubse*uent Bu,ers were not innocent purchasers% Not one of the 2ubse*uent Bu,ers testified in court on how the, purchased their respective lots% "he 2ubse*uent Bu,ers totall, depended on the testimon, of Constancia Calonso 01Calonso56 to e=plain the subse*uent sale% Calonso# a bro<er# negotiated with 8odofredo and Carmen the sale of the 2ub3ect 4and which 8odofredo and Carmen subdivided so the, could sell anew portions to the 2ubse*uent Bu,ers% Calonso admitted that the 2ub3ect 4and was ad3acent to her own lot% "he trial court pointed out that Calonso did not in*uire on the nature of the tenanc, of the Natanawans and on who owned the 2ub3ect 4and% >nstead# she bought out the tenants for )1(-#---%--% "he bu, out was embodied in a Kasunduan% Apolinario Natanawan 01Apolinario56 testified that he and his wife accepted the mone, and signed the Kasunduanbecause Calonso and the 2ubse*uent Bu,ers threatened them with forcible e3ectment% Calonso brought Apolinario to the Agrarian !eform 9ffice where he was as<ed to produce the documents showing that Adelia is the owner of the 2ub3ect 4and% 2ince Apolinario could not produce the documents# the agrarian officer told him that he would lose the case% "hus# Apolinario was constrained to sign the Kasunduan and accept the )1(-#---%--% Another indication of Calonso.s bad faith was her own admission that she saw an adverse claim on the title of the 2ub3ect 4and when she registered the deeds of sale in the names of the 2ubse*uent Bu,ers% Calonso ignored the adverse claim and proceeded with the registration of the deeds of sale% "he trial court awarded )2-#---%-- as attorne,.s fees to Armando and Adelia% >n 3ustif,ing the award of attorne,.s fees# the trial court invo<ed Article 22-/ 026 of the Civil Code which allows a court to award attorne,.s fees# including litigation e=penses# when it is 3ust and e*uitable to award the same% "he trial court ruled that Armando and Adelia are entitled to attorne,.s fees since the, were compelled to file this case due to petitioners. refusal to heed their 3ust and valid demand% $*e Ru./n0 o1 ,*e ou2, o1 A33ea.+

"he Court of Appeals found the factual findings of the trial court well supported b, the evidence% Based on these findings# the Court of Appeals also concluded that there was a perfected contract of sale and the 2ubse*uent Bu,ers were not innocent purchasers% "he Court of Appeals ruled that the handwritten receipt dated 11 7arch 1 ;- is sufficient proof that 8odofredo and Carmen sold the 2ub3ect 4and to Armando and Adelia upon pa,ment of the balance of the purchase price% "he Court of Appeals found the recitals in the receipt as 1sufficient to serve as the memorandum or note as a writing under the 2tatute of ?rauds%5 [(] "he Court of Appeals then reiterated the ruling of the trial court that the 2tatute of ?rauds does not appl, in this case%

"he Court of Appeals gave credence to the testimon, of a witness of Armando and Adelia# 7ildred 4obaton# who e=plained wh, the title to the 2ub3ect 4and was not in the name of Armando and Adelia% 4obaton testified that 8odofredo was then bus, preparing to leave for Davao% 8odofredo promised that he would sign all the papers once the, were read,% 2ince Armando and Adelia were close to the famil, of Carmen# the, trusted 8odofredo and Carmen to honor their commitment% Armando and Adelia had no reason to believe that their contract of sale was not perfected or validl, e=ecuted considering that the, had received the duplicate cop, of 9C" No% 2/$ and other relevant documents% 7oreover# the, had ta<en ph,sical possession of the 2ub3ect 4and% "he Court of Appeals held that the contract of sale is not void even if onl, Carmen signed the receipt dated 11 7arch 1 ;-% Citing Felipe v. Heirs of Maximo Aldon, [6] the appellate court ruled that a contract of sale made b, the wife without the husband.s consent is not void but merel, voidable% "he Court of Appeals further declared that the sale in this case binds the con3ugal partnership even if onl, the wife signed the receipt because the proceeds of the sale were used for the benefit of the con3ugal partnership% "he appellate court based this conclusion on Article 161 [;] of the Civil Code% "he 2ubse*uent Bu,ers of the 2ub3ect 4and cannot claim that the, are bu,ers in good faith because the, had constructive notice of the adverse claim of Armando and Adelia% Calonso# who bro<ered the subse*uent sale# testified that when she registered the subse*uent deeds of sale# the adverse claim of Armando and Adelia was alread, annotated on the title of the 2ub3ect 4and% "he Court of Appeals believed that the act of Calonso and the 2ubse*uent Bu,ers in forcibl, e3ecting the Natanawans from the 2ub3ect 4and buttresses the conclusion that the second sale was tainted with bad faith from the ver, beginning% ?inall,# the Court of Appeals noted that the issue of prescription was not raised in the Answer% Nonetheless# the appellate court e=plained that since this action is actuall, based on fraud# the prescriptive period is four ,ears# with the period starting to run onl, from the date of the discover, of the fraud% Armando and Adelia discovered the fraudulent sale of the 2ub3ect 4and onl, in +anuar, 1 $% Armando and Adelia lost no time in writing a letter to 8odofredo and Carmen on 2 ?ebruar, 1 $ and filed this case on ; 7arch 1 $% )lainl,# Armando and Adelia did not sleep on their rights or lose their rights b, prescription% "he Court of Appeals sustained the award of attorne,.s fees and imposed treble costs on petitioners% $*e "++ue+ )etitioners raise the following issues@ " Chether the alleged sale of the 2ub3ect 4and in favor of Armando and Adelia is valid and enforceable# where 016 it was orall, entered into and not in writingD 026 Carmen did not obtain the consent and authorit, of her husband# 8odofredo# who was the sole owner of the 2ub3ect 4and in whose name the title thereto 09C" No% 2/$6 was issuedD and 0E6 it was entered into during the 2(',ear prohibitive period for alienating the 2ub3ect 4and without the approval of the 2ecretar, of Agriculture and Natural !esources% ""

Chether the action to enforce the alleged oral contract of sale brought after 2$ ,ears from its alleged perfection had been barred b, prescription and b, laches% """ Chether the deeds of absolute sale and the transfer certificates of title over the portions of the 2ub3ect 4and issued to the 2ubse*uent Bu,ers# innocent purchasers in good faith and for value whose individual titles to their respective lots are absolute and indefeasible# are valid% "# Chether petitioners are liable to pa, Armando and Adelia )2-#----%-- as attorne,.s fees and litigation e=penses and the treble costs# where the claim of Armando and Adelia is clearl, unfounded and baseless% # Chether petitioners are entitled to the counterclaim for attorne,.s fees and litigation e=penses# where the, have sustained such e=penses b, reason of institution of a clearl, malicious and unfounded action b, Armando and Adelia% [/] $*e "he petition is without merit% >n a petition for review on certiorari under !ule $(# this Court reviews onl, errors of law and not errors of facts%[ ] "he factual findings of the appellate court are generall, binding on this Court% [1-] "his applies with greater force when both the trial court and the Court of Appeals are in complete agreement on their factual findings% [11] >n this case# there is no reason to deviate from the findings of the lower courts% "he facts relied upon b, the trial and appellate courts are borne out b, the record% Ce agree with the conclusions drawn b, the lower courts from these facts% Validity and Enforceability of the Sale "he contract of sale between the spouses 8odofredo and Carmen and the spouses Armando and Adelia was a perfected contract% A contract is perfected once there is consent of the contracting parties on the ob3ect certain and on the cause of the obligation% [12] >n the instant case# the ob3ect of the sale is the 2ub3ect 4and# and the price certain is )1(#---%--% "he trial and appellate courts found that there was a meeting of the minds on the sale of the 2ub3ect 4and and on the purchase price of )1(#---%--% "his is a finding of fact that is binding on this Court% Ce find no reason to disturb this finding since it is supported b, substantial evidence% "he contract of sale of the 2ub3ect 4and has also been consummated because the sellers and bu,ers have performed their respective obligations under the contract% >n a contract of sale# the seller obligates himself to transfer the ownership of the determinate thing sold# and to deliver the same# to the bu,er who obligates himself to pa, a price certain to the seller% [1E] >n the instant case# 8odofredo and Carmen delivered the 2ub3ect 4and to Armando and Adelia# placing the latter in actual ph,sical possession of the 2ub3ect 4and% "his ph,sical deliver, of the 2ub3ect 4and also constituted a transfer of ownership of the 2ub3ect 4and to Armando and Adelia% [1$] 9wnership of the thing sold is transferred ou2,4+ Ru./n0

to the vendee upon its actual or constructive deliver,% [1(] 8odofredo and Carmen also turned over to Armando and Adelia the documents of ownership to the 2ub3ect 4and# namel, the owner.s duplicate cop, of 9C" No% 2/$# the ta= declaration and the receipts of realt, ta= pa,ments% 9n the other hand# Armando and Adelia paid the full purchase price as evidenced b, the receipt dated 11 7arch 1 ;- issued b, Carmen% Armando and Adelia fulfilled their obligation to provide the );#---%-- to pa, the DB) loan of 8odofredo and Carmen# and to pa, the latter the balance of )/#---%-- in cash% "he )2#(2$%-- paid under the receipt dated 11 7arch 1 ;- was the last installment to settle full, the purchase price% >ndeed# upon pa,ment to DB) of the );#---%-- and the accumulated interests# the DB) cancelled the mortgage on the 2ub3ect 4and and returned the owner.s duplicate cop, of 9C" No% 2/$ to 8odofredo and Carmen% "he trial and appellate courts correctl, refused to appl, the 2tatute of ?rauds to this case% "he 2tatute of ?rauds[16] provides that a contract for the sale of real propert, shall be unenforceable unless the contract or some note or memorandum of the sale is in writing and subscribed b, the part, charged or his agent% "he e=istence of the receipt dated 11 7arch 1 ;-# which is a memorandum of the sale# removes the transaction from the provisions of the 2tatute of ?rauds% "he 2tatute of ?rauds applies onl, to e=ecutor, contracts and not to contracts either partiall, or totall, performed%[1;] "hus# where one part, has performed one.s obligation# oral evidence will be admitted to prove the agreement% [1/] >n the instant case# the parties have consummated the sale of the 2ub3ect 4and# with both sellers and bu,ers performing their respective obligations under the contract of sale% >n addition# a contract that violates the 2tatute of ?rauds is ratified b, the acceptance of benefits under the contract%[1 ] 8odofredo and Carmen benefited from the contract because the, paid their DB) loan and secured the cancellation of their mortgage using the mone, given b, Armando and Adelia% 8odofredo and Carmen also accepted pa,ment of the balance of the purchase price% 8odofredo and Carmen cannot invo<e the 2tatute of ?rauds to den, the e=istence of the verbal contract of sale because the, have performed their obligations# and have accepted benefits# under the verbal contract% [2-] Armando and Adelia have also performed their obligations under the verbal contract% Clearl,# both the sellers and the bu,ers have consummated the verbal contract of sale of the 2ub3ect 4and% "he 2tatute of ?rauds was enacted to prevent fraud% [21] "his law cannot be used to advance the ver, evil the law see<s to prevent% 8odofredo and Carmen also claim that the sale of the 2ub3ect 4and to Armando and Adelia is void on two grounds% ?irst# Carmen sold the 2ub3ect 4and without the marital consent of 8odofredo% 2econd# the sale was made during the 2(',ear period that the law prohibits the alienation of land grants without the approval of the 2ecretar, of Agriculture and Natural !esources% "hese arguments are without basis% "he ?amil, Code# which too< effect on E August 1 //# provides that an, alienation or encumbrance made b, the husband of the con3ugal partnership propert, without the consent of the wife is void% &owever# when the sale is made before the effectivit, of the ?amil, Code# the applicable law is the Civil Code%[22] Article 1;E of the Civil Code provides that the disposition of con3ugal propert, without the wife.s consent is not void but merel, voidable% Article 1;E reads@ "he wife ma,# during the marriage# and within ten ,ears from the transaction *uestioned# as< the courts for the annulment of an, contract of the husband entered into without her consent# when such consent is re*uired# or an, act or contract of the husband which tends to defraud her or impair her interest in the con3ugal partnership propert,% 2hould the wife fail to e=ercise this right# she or her heirs# after the dissolution of the marriage# ma, demand the value of propert, fraudulentl, alienated b, the husband%

>n Felipe v. Aldon#[2E] we applied Article 1;E in a case where the wife sold some parcels of land belonging to the con3ugal partnership without the consent of the husband% Ce ruled that the contract of sale was voidable sub3ect to annulment b, the husband% ?ollowing petitioners. argument that Carmen sold the land to Armando and Adelia without the consent of Carmen.s husband# the sale would onl, be voidable and not void% &owever# 8odofredo can no longer *uestion the sale% :oidable contracts are susceptible of ratification%[2$] 8odofredo ratified the sale when he introduced Armando and Adelia to his tenants as the new owners of the 2ub3ect 4and% "he trial court noted that 8odofredo failed to den, categoricall, on the witness stand the claim of the complainants. witnesses that 8odofredo introduced Armando and Adelia as the new landlords of the tenants% [2(] "hat 8odofredo and Carmen allowed Armando and Adelia to en3o, possession of the 2ub3ect 4and for 2$ ,ears is formidable proof of 8odofredo.s ac*uiescence to the sale% >f the sale was trul, unauthoriBed# then 8odofredo should have filed an action to annul the sale% &e did not% "he prescriptive period to annul the sale has long lapsed% 8odofredo.s conduct belies his claim that his wife sold the 2ub3ect 4and without his consent% 7oreover# 8odofredo and Carmen used most of the proceeds of the sale to pa, their debt with the DB)% Ce agree with the Court of Appeals that the sale redounded to the benefit of the con3ugal partnership% Article 161 of the Civil Code provides that the con3ugal partnership shall be liable for debts and obligations contracted b, the wife for the benefit of the con3ugal partnership% &ence# even if Carmen sold the land without the consent of her husband# the sale still binds the con3ugal partnership% )etitioners contend that 8odofredo and Carmen did not deliver the title of the 2ub3ect 4and to Armando and Adelia as shown b, this portion of Adelia.s testimon, on cross'e=amination@ G '' No title was delivered to ,ou b, 8odofredo AlfredoH A '' > got the title from +ulie 4imon because m, sister told me% [26] )etitioners raise this factual issue for the first time% "he Court of Appeals could have passed upon this issue had petitioners raised this earlier% At an, rate# the cited testimon, of Adelia does not convincingl, prove that 8odofredo and Carmen did not deliver the 2ub3ect 4and to Armando and Adelia% Adelia.s cited testimon, must be e=amined in conte=t not onl, with her entire testimon, but also with the other circumstances% Adelia stated during cross'e=amination that she obtained the title of the 2ub3ect 4and from +ulie 4imon 01+ulie56# her classmate in college and the sister of Carmen% Aarlier# Adelia.s own sister had secured the title from the father of Carmen% &owever# Adelia.s sister# who was about to leave for the Inited 2tates# gave the title to +ulie because of the absence of the other documents% Adelia.s sister told Adelia to secure the title from +ulie# and this was how Adelia obtained the title from +ulie% >t is not necessar, that the seller himself deliver the title of the propert, to the bu,er because the thing sold is understood as delivered when it is placed in the control and possession of the vendee% [2;] "o repeat# 8odofredo and Carmen themselves introduced the Natanawans# their tenants# to Armando and Adelia as the new owners of the 2ub3ect 4and% ?rom then on# Armando and Adelia acted as the landlords of the Natanawans% 9bviousl,# 8odofredo and Carmen themselves placed control and possession of the 2ub3ect 4and in the hands of Armando and Adelia% )etitioners invo<e the absence of approval of the sale b, the 2ecretar, of Agriculture and Natural !esources to nullif, the sale% )etitioners never raised this issue before the trial court or the Court of Appeals% 4itigants cannot raise an issue for the first time on appeal# as this would contravene the basic rules of fair pla,# 3ustice and due process% [2/] &owever# we will address this new issue to finall, put an end to this case%

"he sale of the 2ub3ect 4and cannot be annulled on the ground that the 2ecretar, did not approve the sale# which was made within 2( ,ears from the issuance of the homestead title% 2ection 11/ of the )ublic 4and Act 0Commonwealth Act No% 1$16 reads as follows@ 2AC% 11/% A=cept in favor of the 8overnment or an, of its branches# units# or institutions or legall, constituted ban<ing corporation# lands ac*uired under free patent or homestead provisions shall not be sub3ect to encumbrance or alienation from the date of the approval of the application and for a term of five ,ears from and after the date of the issuance of the patent or grant% === No alienation# transfer# or conve,ance of an, homestead after ( ,ears and before twent,'five ,ears after the issuance of title shall be valid without the approval of the 2ecretar, of Agriculture and Commerce# which approval shall not be denied e=cept on constitutional and legal grounds% A grantee or homesteader is prohibited from alienating to a private individual a land grant within five ,ears from the time that the patent or grant is issued% [2 ] A violation of this prohibition renders a sale void%[E-] "his prohibition# however# e=pires on the fifth ,ear% ?rom then on until the ne=t 2,ears[E1] the land grant ma, be alienated provided the 2ecretar, of Agriculture and Natural !esources approves the alienation% "he 2ecretar, is re*uired to approve the alienation unless there are 1constitutional and legal grounds5 to den, the approval% >n this case# there are no apparent constitutional or legal grounds for the 2ecretar, to disapprove the sale of the 2ub3ect 4and% "he failure to secure the approval of the 2ecretar, does not ipso facto ma<e a sale void%[E2] "he absence of approval b, the 2ecretar, does not nullif, a sale made after the e=piration of the (',ear period# for in such event the re*uirement of 2ection 11/ of the )ublic 4and Act becomes merel, director,[EE] or a formalit,%[E$] "he approval ma, be secured later# producing the effect of ratif,ing and adopting the transaction as if the sale had been previousl, authoriBed% [E(] As held in Evangelista v. Montano@[E6] 2ection 11/ of Commonwealth Act No% 1$1# as amended# specificall, en3oins that the approval b, the Department 2ecretar, Jshall not be denied e=cept on constitutional and legal grounds%J "here being no allegation that there were constitutional or legal impediments to the sales# and no pretense that if the sales had been submitted to the 2ecretar, concerned the, would have been disapproved# approval was a ministerial d ty# to be had as a matter of course and demandable if refused% ?or this reason# and if necessar,# approval ma, now be applied for and its effect will be to ratif, and adopt the transactions as if the, had been previousl, authoriBed% 0Amphasis supplied6 Action !ot "arred by #rescription and $aches )etitioners insist that prescription and laches have set in% Ce disagree% "he Amended Complaint filed b, Armando and Adelia with the trial court is captioned as one for 2pecific )erformance% >n realit,# the ultimate relief sought b, Armando and Adelia is the reconve,ance to them of the 2ub3ect 4and% An action for reconve,ance is one that see<s to transfer propert,# wrongfull, registered b, another# to its rightful and legal owner% [E;] "he bod, of the pleading or complaint determines the nature of an action# not its title or heading% [E/] "hus# the present action should be treated as one for reconve,ance% [E ] Article 1$(6 of the Civil Code provides that a person ac*uiring propert, through fraud becomes b, operation of law a trustee of an implied trust for the benefit of the real owner of the propert,% "he

presence of fraud in this case created an implied trust in favor of Armando and Adelia% "his gives Armando and Adelia the right to see< reconve,ance of the propert, from the 2ubse*uent Bu,ers% [$-] "o determine when the prescriptive period commenced in an action for reconve,ance# plaintiff.s possession of the disputed propert, is material% An action for reconve,ance based on an implied trust prescribes in ten ,ears% [$1] "he ten',ear prescriptive period applies onl, if there is an actual need to reconve, the propert, as when the plaintiff is not in possession of the propert,% [$2] &owever# if the plaintiff# as the real owner of the propert, also remains in possession of the propert,# the prescriptive period to recover title and possession of the propert, does not run against him% [$E] >n such a case# an action for reconve,ance# if nonetheless filed# would be in the nature of a suit for *uieting of title# an action that is imprescriptible%[$$] >n this case# the appellate court resolved the issue of prescription b, ruling that the action should prescribe four ,ears from discover, of the fraud% Ce must correct this erroneous application of the four',ear prescriptive period% >n %aro v. %o rt of Appeals#[$(] we e=plained wh, an action for reconve,ance based on an implied trust should prescribe in ten ,ears% >n that case# the appellate court also erroneousl, applied the four',ear prescriptive period% Ce declared in %aro@ Ce disagree% "he case of 4iwalug Amerol# et al% v% 7olo< Bagumbaran# 8%!% No% 4'EE261# 2eptember E-# 1 /;#1($ 2C!A E 6 illuminated what used to be a gra, area on the prescriptive period for an action to reconve, the title to real propert, and# corollaril,# its point of reference@ === >t must be remembered that before August E-# 1 (-# the date of the effectivit, of the new Civil Code# the old Code of Civil )rocedure 0Act No% 1 -6 governed prescription% >t provided@ 2AC% $E% 9ther civil actionsD how limited%' Civil actions other than for the recover, of real propert, can onl, be brought within the following periods after the right of action accrues@ === === ===

E% Cithin four ,ears@ === An action for relief on the ground of fraud# but the right of action in such case shall not be deemed to have accrued until the discover, of the fraudD === === ===

>n contrast# under the present Civil Code# we find that 3ust as an implied or constructive trust is an offspring of the law 0Art% 1$(6# Civil Code6# so is the corresponding obligation to reconve, the propert, and the title thereto in favor of the true owner% >n this conte=t# and vis'a'vis prescription# Article 11$$ of the Civil Code is applicable% Article 11$$% "he following actions must be brought within ten ,ears from the time the right of action accrues@ 016 026 0E6 === Ipon a written contractD Ipon an obligation created b, lawD Ipon a 3udgment% === ===

0Amphasis supplied6%

An action for reconveyance based on an implied or constr ctive tr st m st perforce prescribe in ten years and not other&ise% A long line of decisions of this Court# and of ver, recent vintage at that# illustrates this rule% 'ndo btedly, it is no& &ell(settled that an action for reconveyance based on an implied or constr ctive tr st prescribes in ten years from the iss ance of the )orrens title over the property% "he onl, discordant note# it seems# is Balbin vs% 7edalla which states that the prescriptive period for a reconve,ance action is four ,ears% &owever# this variance can be e=plained b, the erroneous reliance on 8erona vs% de 8uBman% But in 8erona# the fraud was discovered on +une 2(#1 $/# hence 2ection $E0E6 of Act No% 1 -# was applied# the new Civil Code not coming into effect until August E-# 1 (- as mentioned earlier% >t must be stressed# at this 3uncture# that article 11$$ and article 1$(6# are new provisions% "he, have no counterparts in the old Civil Code or in the old Code of Civil )rocedure# the latter being then resorted to as legal basis of the four' ,ear prescriptive period for an action for reconve,ance of title of real propert, ac*uired under false pretenses% An action for reconve,ance has its basis in 2ection (E# paragraph E of )residential Decree No% 1(2 # which provides@ >n all cases of registration procured b, fraud# the owner ma, pursue all his legal and e*uitable remedies against the parties to such fraud without pre3udice# however# to the rights of an, innocent holder of the decree of registration on the original petition or application# === "his provision should be read in con3unction with Article 1$(6 of the Civil Code# which provides@ Article 1$(6% >f propert, is ac*uired through mista<e or fraud# the person obtaining it is# b, force of law# considered a trustee of an implied trust for the benefit of the person from whom the propert, comes% "he law thereb, creates the obligation of the trustee to reconve, the propert, and the title thereto in favor of the true owner% Correlating 2ection (E# paragraph E of )residential Decree No% 1(2 and Article 1$(6 of the Civil Code with Article 11$$026 of the Civil Code# supra# the prescriptive period for the reconve,ance of fraudulentl, registered real propert, is ten 01-6 ,ears rec<oned from the date of the issuance of the certificate of title === 0Amphasis supplied6 [$6] ?ollowing %aro# we have consistentl, held that an action for reconve,ance based on an implied trust prescribes in ten ,ears% [$;] Ce went further b, specif,ing the reference point of the ten',ear prescriptive period as the date of the registration of the deed or the issuance of the title% [$/] &ad Armando and Adelia remained in possession of the 2ub3ect 4and# their action for reconve,ance# in effect an action to *uiet title to propert,# would not be sub3ect to prescription% )rescription does not run against the plaintiff in actual possession of the disputed land because such plaintiff has a right to wait until his possession is disturbed or his title is *uestioned before initiating an action to vindicate his right% [$ ] &is undisturbed possession gives him the continuing right to see< the aid of a court of e*uit, to determine the nature of the adverse claim of a third part, and its effect on his title%[(-] Armando and Adelia lost possession of the 2ub3ect 4and when the 2ubse*uent Bu,ers forcibl, drove awa, from the 2ub3ect 4and the Natanawans# the tenants of Armando and Adelia% [(1] "his created an actual need for Armando and Adelia to see< reconve,ance of the 2ub3ect 4and% "he statute of limitation becomes relevant in this case% "he ten',ear prescriptive period started to run from the date the 2ubse*uent Bu,ers registered their deeds of sale with the !egister of Deeds% 1 "he 2ubse*uent Bu,ers bought the subdivided portions of the 2ub3ect 4and on 22 ?ebruar, $# the date of e=ecution of their deeds of sale% "he !egister of Deeds issued the transfer

certificates of title to the 2ubse*uent Bu,ers on 2$ ?ebruar, 1 $% Armando and Adelia filed the Complaint on ; 7arch 1 $% Clearl,# prescription could not have set in since the case was filed at the earl, stage of the ten',ear prescriptive period% Neither is the action barred b, laches% Ce have defined laches as the failure or neglect# for an unreasonable time# to do that which# b, the e=ercise of due diligence# could or should have been done earlier%[(2] >t is negligence or omission to assert a right within a reasonable time# warranting a presumption that the part, entitled to assert it either has abandoned it or declined to assert it% [(E] Armando and Adelia discovered in +anuar, 1 $ the subse*uent sale of the 2ub3ect 4and and the, filed this case on ; 7arch 1 $% )lainl,# Armando and Adelia did not sleep on their rights% Validity of S bse* ent Sale of #ortions of the S b+ect $and )etitioners maintain that the subse*uent sale must be upheld because the 2ubse*uent Bu,ers# the co'petitioners of 8odofredo and Carmen# purchased and registered the 2ub3ect 4and in good faith% )etitioners argue that the testimon, of Calonso# the person who bro<ered the second sale# should not pre3udice the 2ubse*uent Bu,ers% "here is no evidence that Calonso was the agent of the 2ubse*uent Bu,ers and that she communicated to them what she <new about the adverse claim and the prior sale% )etitioners assert that the adverse claim registered b, Armando and Adelia has no legal basis to render defective the transfer of title to the 2ubse*uent Bu,ers% Ce are not persuaded% 8odofredo and Carmen had alread, sold the 2ub3ect 4and to Armando and Adelia% "he settled rule is when ownership or title passes to the bu,er# the seller ceases to have an, title to transfer to an, third person% [($] >f the seller sells the same land to another# the second bu,er who has actual or constructive <nowledge of the prior sale cannot be a registrant in good faith% [((] 2uch second bu,er cannot defeat the first bu,er.s title% [(6] >n case a title is issued to the second bu,er# the first bu,er ma, see< reconve,ance of the propert, sub3ect of the sale% [(;] "hus# to merit protection under the second paragraph of Article 1($$ [(/] of the Civil Code# the second bu,er must act in good faith in registering the deed% [( ] >n this case# the 2ubse*uent Bu,ers. good faith hinges on whether the, had <nowledge of the previous sale% )etitioners do not dispute that Armando and Adelia registered their adverse claim with the !egistr, of Deeds of Bataan on / ?ebruar, 1 $% "he 2ubse*uent Bu,ers purchased their respective lots onl, on 22 ?ebruar, 1 $ as shown b, the date of their deeds of sale% Conse*uentl,# the adverse claim registered prior to the second sale charged the 2ubse*uent Bu,ers with constructive notice of the defect in the title of the sellers#[6-] 8odofredo and Carmen% >t is immaterial whether Calonso# the bro<er of the second sale# communicated to the 2ubse*uent Bu,ers the e=istence of the adverse claim% "he registration of the adverse claim on / ?ebruar, 1 $ constituted# b, operation of law# notice to the whole world% [61] ?rom that date onwards# the 2ubse*uent Bu,ers were deemed to have constructive notice of the adverse claim of Armando and Adelia% Chen the 2ubse*uent Bu,ers purchased portions of the 2ub3ect 4and on 22 ?ebruar, 1 $# the, alread, had constructive notice of the adverse claim registered earlier% [62]"hus# the 2ubse*uent Bu,ers were not bu,ers in good faith when the, purchased their lots on 22 ?ebruar, 1 $% "he, were also not registrants in good faith when the, registered their deeds of sale with the !egistr, of Deeds on 2$ ?ebruar, 1 $% "he 2ubse*uent Bu,ers. individual titles to their respective lots are not absolutel, indefeasible% "he defense of indefeasibilit, of the "orrens "itle does not e=tend to a transferee who ta<es the certificate of title with notice of a flaw in his title% [6E] "he principle of indefeasibilit, of title does not appl, where fraud attended the issuance of the titles as in this case% [6$]

Attorney,s Fees and %osts Ce sustain the award of attorne,.s fees% "he decision of the court must state the grounds for the award of attorne,.s fees% "he trial court complied with this re*uirement%[6(] Ce agree with the trial court that if it were not for petitioners. un3ustified refusal to heed the 3ust and valid demands of Armando and Adelia# the latter would not have been compelled to file this action% "he Court of Appeals echoed the trial court.s condemnation of petitioners. fraudulent maneuverings in securing the second sale of the 2ub3ect 4and to the 2ubse*uent Bu,ers% Ce will also not turn a blind e,e on petitioners. braBen tactics% "hus# we uphold the treble costs imposed b, the Court of Appeals on petitioners% '%EREFORE# the petition is DAN>AD and the appealed decision is A??>!7AD% "reble costs against petitioners% SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago, and A cuna, JJ., concur.