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Monday, October 4, 2010

VILLARTA V. CA (May 29, 1987)

Respondent Rosalinda Cruz entrusted to petitioner Victoria Villarta seven pieces of jewelry on November
1968. On December of the same year, Villarta exchanges one jewelry to another and issued a post-dated
check in favor of Cruz. Cruz deposited the check but it was dishonored for lack of funds.
An estafa case was filed against Villarta but she argued that she can only be civilly liable because even
though the check bounced, she only gave it for a pre-existing obligation. She contends a person cannot
be imprisoned for non-payment of debt.
WON the transaction is a sale or return
The transaction is not a sale or return but a sale on approval or sale on acceptance.
When Cruz gave the jewelry to Villarta on November, the clear intention is to make the latter choose
which item she wanted to buy. There was no meeting of the minds yet at this point and hence, it cannot
be considered as delivery.
If ownership over the jewelry was not transmitted on that date, then it could have been transmitted only in
December 1968, the date when the check was issued. In which case, it was a "sale on approval" since
ownership passed to the buyer. Vallarta, only when she signified her approval or acceptance to the seller,
Cruz, and the price was agreed upon.
It is still criminal fraud or deceit in the issuance of a check which is made punishable under the Revised
Penal Code, and not the non-payment of the debt.


INFANTE, respondents.
G.R. No. L-29972 January 26, 1976
Petitioner Carbonell lives in an adjoining lot owned by Respondent Poncio, latters lot is
mortgaged in favor of Republic Savings Bank for P1,500.
Petitioner and another Respondent (Infante) offered to buy the land owned by Poncio. Which
Poncio, in his failure to pay the mortgaged agreed for the petitioner to buy the land including his
house for P9.50 per square meter on the condition that from the purchase price would come the
money to be paid to the bank.
Both parties settled the arrears of the mortgaged amounting P247.26. However, Petitioner only
have P200.00 as per respondents information that he only owes the same to the bank.
Respondent then withdrew the deficit amount and was reimbursed by Carbonell the following
The parties executed a document stipulating that, Poncio may still occupy the land sold by him
to the petitioner and if after a year, he still cant find a place to move, that he shall pay rent in
favor of the petitioner.
Subsequently, Poncio had told Carbonell that the former can no longer pursue with the sale for
he had given the land to Infante, to which he cannot withdraw even if he goes to jail. The said lot
was fenced by Infante.
Atty. Jose Garcia advised her to present an adverse claim over the land in question with the
Office of the Register of Deeds of Rizal.
Poncio, admittedly sold the land to Infante when she improved her offer.
With the information that the land was not yet registered, Atty. Garcia in favor of the petitioner
prepared an adverse claim over the property. Whereby upon registration of the same by Infante,
the said adverse claim was noted in the Transfer Certificate of Title.
Petitioner filed a second complaint, alleging that the sale between Poncio and Infante be
declared null and void. Respondents allegation was that, Petitioners claim was unenforceable
for lack of written document.
Trial Court ruled that the second sale was null and void. However, after re-trial, Trial Court
reversed its decision ruling that the claim of the respondents were greater than that of the
CA ruled in favor of petitioner, alleging that it has a superior right over the respondent. After a
motion for reconsideration CA reversed its decision.

Whether or not Petitioner have the superior right over the property.
Article 1544, New Civil Code, which is decisive of this case, recites:
If the same thing should have been sold to different vendees, the ownership shall be transferred
to the person who may have first taken possession thereof in good faith, if it should movable
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith (emphasis supplied).
When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer
thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly
annotated thereon. Carbonell was not aware and she could not have been aware of any
sale of Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase of
the land was made in good faith. Her good faith subsisted and continued to exist when she
recorded her adverse claim four (4) days prior to the registration of Infantes's deed of sale.
Carbonell's good faith did not cease after Poncio told her on January 31, 1955 of his second
sale of the same lot to Infante. Because of that information, Carbonell wanted an audience with
Infante, which desire underscores Carbonell's good faith. With an aristocratic disdain unworthy
of the good breeding of a good Christian and good neighbor, Infante snubbed Carbonell like a
leper and refused to see her. So Carbonell did the next best thing to protect her right she
registered her adversed claim on February 8, 1955. Under the circumstances, this recording of
her adverse claim should be deemed to have been done in good faith and should emphasize
Infante's bad faith when she registered her deed of sale four (4) days later on February 12,

Consolidated Rural Bank (Cagayan Valley), Inc vs Court of Appeals

448 SCRA 347

January 17, 2005

Ponente: Tinga
Nature: Petition for review on certiorari of a decision and resolution of the Court
of Appeals
The Madrid brothers were registered owners of Lot No. 7036-A in Isabela
per TCT No. T-8121. It was subdivided into several lots.
1ST SALE (August 15 1957)
Rizal Madrid sold part of his share to Gamiao and Dayag by virtue of a
deed of sale, to which his brothers offered no objection. The deed of sale was
not registered with the Office of the Register of Deeds, however, Gamiao and
Dayag declared the property in their names for taxation purposes.
Gamiao and Dayag sold the southern portion of the land to Teodoro
dela Cruz, and the northern portion was sold to Restituto Hernandez. These
buyers took possession of and cultivated the portions of the property
respectively sold to them.
2ND SALE (June 15 1976)
The Madrid brothers conveyed all their rights and interests to Pacifico
Marquez. The deed of sake was registered with the Office of the Register of
Deeds. Marquez subdivided the lot into 8. Lots 7036-A-7-A until 7036-A-7-D
were mortgaged to the Consolidated Rural Bank to secure a loan of
P100,000. Additionally, Marquez mortgaged Lot No. 7036-A-7-E to the Rural
Bank of Cauayan to secure a loan of P10,000. These deeds of real estate
mortgage were registered with the Office of the Register of Deeds.
Meanwhile, Marquez sold Lot No. 7036-A-7-G to Romeo Calixto.
Marquez defaulted in the payment of his loan and CRB caused the
foreclosure of the mortgages and the lots were sold to it as the highest
The heirs of Teodoro dela Cruz filed a case for reconveyance and damages as
to the southern portion of the land, claiming to be null and void the issuance of
TCTs to Marquez; the foreclosure sale in favour of CRB; to mortgage to RBC; and
the sale to Calixto. Evangeline del Rosario, successor-in-interest of Hernandez,

filed a Complaint in Intervention wherein she claimed the northern portion of Lot
No. 7036-A-7.
Marquez argued that he was a buyer in good faith and for value. He argued
as well that being the first registrant, the sale in favour of him must prevail over
the sale to Gamiao and Dayag which shouldnt be binding upon him, that being
unregistered. CRB, on the other hand, insisted that they were mortgagees in good
faith and that they had the right to rely on the titles of Marquez.
The RTC ruled in favour of Marquez, finding nothing to show that Marquez
was aware of dela Cruz and del Rosarios claim of ownership and holding that it
was, indeed, Marquez, who first registered.
The CA, however, reversed the ruling of the RTC, holding that Marquez
failed to prove that he was a purchaser in good faith and noting that while
Marquez was the first registrant, there was no showing that the registration was
coupled with good faith. Marquez admitted having knowledge that there was
dispute over said property and that the Heirs of dela Cruz were also in possession
of the land.
As to the mortgages, the CA held that the banks merely relied on the
certificates o title and this failure to observe diligence in standard banking
procedure constitutes bad faith and on that basis, the mortgages were declared
null and void. CRB insisted that Marquez had the right over the said property
being the first registered owners. Hence, this petition.
Issue: WON Marquez, having registered first, has better right over the property
But first, important!! Applicability of 1544.
The RTC and the CA, albeit arriving at different conclusions, both relied on
the NCCs provision on double sale (1544) to resolve the case. However, the
Supreme Court held that such provision is not applicable in this case. 1544
contemplates a case of double sale by a single vendor. It is necessary that the
conveyance must have been made by a party who has an existing right in the thing
and the power to dispose of it. It cannot be invoked where the two different
contracts of sale are made by two different persons, one of them not being the
owner of the property sold.
In the case at bar, the subject property was not transferred to several
purchasers by a single vendor. In the first sale, the vendors were Gamiao and
Dayag whose right to the property originated from their acquisition thereof from

Rizal Madrid. In the second sale, the vendors were the Madrid brothers but at that
time they were no longer the owners since they had long disposed of the property.
In a situation where not all the requisites are present which would warrant
the application of 1544, the principle that he who is first in time is preferred in
right should apply. In the instant case, the sale by Gamiao and Dayag who first
bought it from Rizal Madrid was anterior to the sale to Marquez. The Heirs of dela
Cruz and Hernandez also had possession of the property first. Thus, applying the
principle, the Heirs have a superior right to the subject property. Morover, since
the Madrid brothers were no longer the owners of the lot at the time of the sale to
Marquez, Marquez did not acquire any right to it.
Assuming arguendo that 1544 applies, the claim of Marquez still cannot
prevail over the right of the Heirs since he was not a purchaser in good faith.


G.R. NO. 129760, December 29, 1998

Ramon Genato is the owner of two parcels of land located at Paradise Farms, San Jose del
Monte, Bulacan.
September 6, 1989: Genato entered into an agreement with the Da Jose Spouses over said land.
The agreement culminated in the execution of a contract to sell gor which the purchase price was
P80.00 per sq.m. It was in a public instrument and contained the stipulation that: after 30 days,
after having satisfactorily verified and confirmed the truth and authenticity of documents vendee
shall pay the vendor the full payment of the purchase price.
The Da Jose Spouses asked for an extension of 30 days when it failed to verify the said titles on
the condition that a new set of documents be made seven days after.
Pending effectivity of said extension period, and without due notice to Spouses Da Jose, Genato
executed an affidavit to annul the Contract to Sell. This was not annotated at the back of his titles
right away.
October 24, 1989: Ricardo Cheng went to Genatos residence and expressed interest in buying
the subject properties. Genato showed Cheng the copies of his titles and the annotations at the
back thereof of his contract to sell with the Da Jose Spouses. He likewise showed Cheng the
affidavit to annul contract to sell.
Despite these, Cheng still issued a check for P50,000 upon the assurance that the previous
contract will be annulled.

The Da Jose Spouses met Genato at the Office of the Resgistry of Deeds by coincidence, and
were later shocked of Genatos decision to annul the contract and protested regarding the matter.
They reminded Genato that the 30 day extension period was still in effect and they are willing to
pay the downpayment.
Genato later continued with their contract, informed Cheng of hi decision and returned to the
latter, the downpayment paid. Cheng however contended that their contract to sell said property
had already been perfected.

1. W/N the contact to sell between Genato and Spouses Da Jose was validly rescinded.
2. W/N Chengs own contract with Genato was not just a contract to sell but of a conditional
contract of sale.
1. NO.
In a Contract to Sell, the payment of the purchase price is a positive suspensive condition, the failure of
which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to
convey title from acquiring an obligatory force. Article 1191 of the New Civil Code 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.
The contention of the Da Jose spouses that no further condition was agreed when they were granted the
30-day extension period from October 7, 1989 in connection with clause 3 of their contract to sell should
be upheld. Also, Genato could have sent at least a notice of such fact, and there being no stipulation
authorizing him for automatic rescission, so as to finally clear the encumbrance on his titles and make it
available to other would be buyers, it bolstered that there was no default on the part of the Da Jose
Spouses. Genato is not relieved from the giving of a notice, verbal or written, to the Da Jose spouses for
his decision to rescind their contract. In many cases.
The Court ruled that if it was assumed that the receipt is to be treated as a conditional contract of sale, 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, as Genato, to his credit, upon realizing his error, redeemed himself by respecting and maintaining his
earlier contract with the Da Jose spouses.
Art.1544 should apply because for not only was the contract between herein respondents first in time, it
was also registered long before petitioner's intrusion as a second buyer (PRIMUS TEMPORE, PORTIOR
JURE). (Spouses made annotation on the title of Genato). 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.
NB: "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.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.



G.R. No. 124242

January 21, 2005


On 20 August 1986, the Spouses Lu purportedly sold two parcels of land to respondent Pablo Babasanta,
for the price of fifteen pesos (P15.00) per square meter. Babasanta made a downpayment of (P50,000.00)
as evidenced by a memorandum receipt issued by Pacita Lu of the same date.

Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his favor so that
he could effect full payment of the purchase price. In response, Pacita Lu wrote a letter to Babasanta
wherein she reminded Babasanta that when the balance of the purchase price became due, he requested
for a reduction of the price and when she refused, Babasanta backed out of the sale

herein petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for Intervention. SLDC
alleged that it had legal interest in the subject matter under litigation because on 3 May 1989, the two
parcels of land involved had been sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was
a buyer in good faith and for value and therefore it had a better right over the property in litigation

Respondent Babasanta, however, argued that SLDC could not have acquired ownership of the property
because it failed to comply with the requirement of registration of the sale in good faith. He emphasized
that at the time SLDC registered the sale in its favor on 30 June 1990, there was already a notice of lis
pendens annotated on the titles of the property made as early as 2 June 1989. Hence, petitioners
registration of the sale did not confer upon it any right.

Did the registration of the sale after the annotation of the notice of lis pendens obliterate the effects of delivery and
possession in good faith which admittedly had occurred prior to SLDCs knowledge of the transaction in favor of


It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to Buy in
favor of SLDC upon receiving P316,160.00 as option money from SLDC. After SLDC had paid more than
one half of the agreed purchase price, the Spouses Lu subsequently executed on 3 May 1989 a Deed of
Absolute Sale in favor or SLDC. At the time both deeds were executed, SLDC had no knowledge of
the prior transaction of the Spouses Lu with Babasanta. Simply stated, from the time of
execution of the first deed up to the moment of transfer and delivery of possession of the lands
to SLDC, it had acted in good faith and the subsequent annotation of lis pendens has no effect
at all on the consummated sale between SLDC and the Spouses Lu.

A purchaser in good faith is one who buys property of another without notice that some other person has
a right to, or interest in, such property and pays a full and fair price for the same at the time of such
purchase, or before he has notice of the claim or interest of some other person in the property.

We rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it
had knowledge of the prior transaction in favor of Babasanta. At the time of the sale of the property to
SLDC, the vendors were still the registered owners of the property and were in fact in possession of the

In assailing knowledge of the transaction between him and the Spouses Lu, Babasanta apparently relies
on the principle of constructive notice incorporated in Section 52 of the Property Registration Decree (P.D.
No. 1529) which reads, thus:

Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order,
judgment, instrument or entry affecting registered land shall, if registered, filed, or entered in the office of the
Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all
persons from the time of such registering, filing, or entering.

However, the constructive notice operates as such by the express wording of Section 52 from the time of
the registration of the notice of lis pendens which in this case was effected only on 2 June 1989, at which
time the sale in favor of SLDC had long been consummated insofar as the obligation of the Spouses Lu to
transfer ownership over the property to SLDC is concerned.

G.R. No. 104482

January 22, 1996
BELINDA TAREDO, for herself and in representation of her brothers and sisters,
and TEOFILA CORPUZ TANEDO, representing her minor daughter VERNA
TANEDO, petitioners
BARERA TAREDO, respondents
1. October 20, 1962: Lazardo Taedo executed a notarized deed of absolute sale
in favor of his eldest brother, Ricardo Taedo, and the latters wife, Teresita
Barera (private respondents) whereby he conveyed for P1,500 one hectare of
his future inheritance from his parents.
2. February 28, 1980: Upon the death of his father Matias, Lazaro made another
affidavit to reaffirm the 1962 sale.
3. January 13, 1981: Lazaro acknowledged therein his receipt of P 10,000.00 as
consideration for the sale.
4. February 1981: Ricardo learned that Lazaro sold the same property to his
children (petitioners) through a deed of sale dated December 29, 1980
5. On June 7, 1982, Ricardo recorded the Deed of Sale in their favor in the
Registry of Deeds
Petitioners filed a complaint for rescission (plus damages) of the deeds of sale
executed by Lazaro in favor of Ricardo. They contend that Lolo Matias desired that
whatever inheritance Lazaro would receive from him should be given to his
(Lazaros) children.
Ricardo (private respondents) however presented in evidence a Deed of Revocation
of a Deed of Sale wherein Lazaro revoked the sale in favor of his children for the
reason that it was simulated or fictitious - without any consideration whatsoever.
LAZAROS VERSION: He executed a sworn statement in favor of his children. BUT he
also testified that he sold the property to Ricardo, and that it was a lawyer who
induced him to execute a deed of sale in favor of his children after giving him five
pesos (P5.00) to buy a drink. LABO
Trial court ruled in favor of Lazaros children. Ca affirmed TCs decision.
1. Is the sale of a future inheritance valid? NO
2. Was Ricardos registration of the deed of valid? YES
HELD: SC rules in favor of Ricardo.

Pursuant to Art 1347, the contract made in 1962 (sale of future inheritance) is not
valid and cannot be the source of any right nor the creator of any obligation
between the parties. (No contract may be entered into upon a future inheritance
except in cases expressly authorized by law.)
However, Article 1544 governs the preferential rights of vendees in cases of
multiple sales. The property in question is land, an immovable, and ownership shall
belong to the buyer who in good faith registers it first in the registry of property.
Thus, although the deed of sale in favor of Ricardo was later than the one in favor of
Lazaros children, ownership would vest with Ricardo because of the undisputed fact
of registration. On the other hand, petitioners have not registered the sale to them
at all.
Lazaros children contend that they were in possession of the property and that
Ricardo never took possession thereof. As between two purchasers, the one who
registered the sale in his favor has a preferred right over the other who has not
registered his title, even if the latter is in actual possession of the immovable
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of
Appeals is AFFIRMED.