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August 30, 1991: the RTC ordered the Cu Unjiengs to execute the

necessary Deed of Sale of the property in litigation in favor of

plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the
consideration of P15 Million pesos in recognition of petitioners
right of first refusal and that a new Transfer Certificate of Title be
issued in favor of the buyer. The court also set aside the title issued
to Buen Realty Corporation for having been executed in bad faith.
On September 22, 1991, the Judge issued a writ of execution.
The CA reversed the RTC ruling.

Issue: WON Buen Realty can be bound by the writ of execution by virtue of
the notice of lis pendens, carried over on TCT No. 195816 issued in the
name of Buen Realty, at the time of the latters purchase of the property
on 15 November 1991 from the Cu Unjiengs. NO

1. Ang Yu vs. Ca

July 29, 1987: An amended Complaint for Specific Performance was

filed by petitioners Ang Yu Asuncion and others against Bobby Cu
Unjieng, Rose Cu Unjieng and Jose Tan before RTC.

Petitioners (Ang Yu) alleged that:

- they are the tenants or lessees of residential and commercial spaces

owned by Bobby Unijeng and others located in Binondo, Manila (since


that on several occasions before October 9, 1986, the lessors informed the
lessees (petitioners) that they are offering to sell the premises and are
giving them priority to acquire the same;

Right of first refusal is not a perfected contract of sale under Article 1458
of the Civil Code

- that during the negotiations, Bobby Cu Unjieng offered a price of P6million while they made a counter offer of P5-million;

In the law on sales, the so-called right of first refusal is an innovative

juridical relation. Needless to point out, it cannot be deemed a perfected
contract of sale under Article 1458 of the Civil Code.

- that they wrote them on October 24, 1986 asking that they specify the
terms and conditions of the offer to sell; that when plaintiffs did not receive
any reply, they sent another letter dated January 28, 1987 with the same

In a right of first refusal, while the object might be made determinate, the
exercise of the right, however, would be dependent not only on the
grantors eventual intention to enter into a binding juridical relation with
another but also on terms, including the price, that obviously are yet to be
later firmed up. Prior thereto, it can at best be so described as merely
belonging to a class of preparatory juridical relations governed not by
contracts (since the essential elements to establish the vinculum juris
would still be indefinite and inconclusive) but by, among other laws of
general application, the pertinent scattered provisions of the Civil Code on
human conduct.
The proper action for violation of the right of first refysal is to file an action
for damages and NOT writ of execution
The final judgment in Civil Case No. 87-41058, it must be stressed, has
merely accorded a right of first refusal in favor of petitioners (Ang Yu et.
al). The consequence of such a declaration entails no more than what has
heretofore been said. In fine, if, as it is here so conveyed to us, petitioners
are aggrieved by the failure of private respondents to honor the right of
first refusal, the remedy is not a writ of execution on the judgment, since

The RTC found that Cu Unjiengs offer to sell was never accepted
by the petitioners (Ang Yu) for the reason that they did not agree
upon the terms and conditions of the proposed sale, hence, there
was no contract of sale at all. The Court of Appeals affirmed the
decision of the lower court. This decision was brought to the
Supreme Court by petition for review on certiorari which
subsequently denied the appeal on May 6, 1991 for insufficiency
in form and substance. (Referring to the first case filed by Ang Yu)

November 15, 1990: While the case was pending consideration by

this Court, the Cu Unjieng spouses executed a Deed of Sale
transferring the subject petitioner to petitioner Buen Realty and
Development Corporation.

Petitioner Buen Realty and Development Corporation, as the new

owner of the subject property, wrote a letter to the lessees
demanding that the latter vacate the premises.


Whether or not a Right of First Refusal may be enforced in an

action for Specific Performance.



there is none to execute, but an action for damages in a proper forum for
the purpose.
Unconditional mutual promise to buy vs. Accepted unilateral promise

No. A Right of First Refusal is not a Perfected Contract of Sale under

Art. 1458 or an option under Par. 2 Art 1479 or an offer under Art.
1319. In a Right of First Refusal, only the object of the contract is
determinate. This means that no vinculum juris is created between
the seller-offeror and the buyer-offeree.
No. Since a contractual relationship does not exist between the
parties, a Right of First Refusal may not be enforced through an
action for specific performance. Its conduct is governed by the law
on human relations under Art. 19-21 of the Civil Code and not by
contract law.

An unconditional mutual promise to buy and sell, as long as the object is

made determinate and the price is fixed, can be obligatory on the parties,
and compliance therewith may accordingly be exacted.
An accepted unilateral promise which specifies the thing to be sold and the
price to be paid, when coupled with a valuable consideration distinct and
separate from the price, is what may properly be termed a perfected
contract of option. This contract is legally binding, and in sales, it conforms
with the second paragraph of Article 1479 of the Civil Code, viz:
Art. 1479. . . .
An accepted unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price. (1451a)
Observe, however, that the option is not the contract of sale itself. The
optionee has the right, but not the obligation, to buy. Once the option is
exercised timely, i.e., the offer is accepted before a breach of the option, a
bilateral promise to sell and to buy ensues and both parties are then
reciprocally bound to comply with their respective u

While execution of a public instrument of sale is recognized by law as
equivalent to the delivery of the thing sold, such constructive or symbolic
delivery is merely presumptive. It is nullified by the failure of the vendee to
take actual possession of the land sold.
Carmelo & Bauermann, Inc. owned a land, together with two 2-storey
buildings at Claro M. Recto Avenue, Manila, and covered by TCT No. 18529.
On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair
Theater Inc. fpr 20 years. The lease covered a portion of the second floor
and mezzanine of a two-storey building with about 1,610 square meters of
floor area, which respondent used as Maxim Theater.

Buen Realty cannot be ousted from the ownership and possession of the
Furthermore, whether private respondent Buen Realty Development
Corporation, the alleged purchaser of the property, has acted in good faith
or bad faith and whether or not it should, in any case, be considered bound
to respect the registration of the lis pendens in Civil Case No. 87-41058 are
matters that must be independently addressed in appropriate proceedings.
Buen Realty, not having been impleaded in Civil Case No. 87-41058,
cannot be held subject to the writ of execution issued by respondent Judge,
let alone ousted from the ownership and possession of the property,
without first being duly afforded its day in court.

Whether or not the Contract of Sale is perfected by the grant of a

Right of First Refusal.

The court went on to assert that rent is a civil fruit that belonged to the
owner of the property producing it by right of accession. Hence, the rentals
that fell due from the time of the perfection of the sale to petitioner until
its rescission by final judgment should belong to the owner of the property
during that period.
We remember from SALES that in a contract of sale, one of the
contracting parties obligates himself to transfer ownership of and to deliver
a determinate thing and the other to pay therefor a price certain in money
or its equivalent.
Ownership of the thing sold is a real right, which the buyer acquires only
upon delivery of the thing to him in any of the ways specified in articles
1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee. This right is
transferred, not by contract alone, but by tradition or delivery. There is
delivery if and when the thing sold is placed in the control and possession
of the vendee.

Two years later, on March 31, 1969, Mayfair entered into a second Lease
with Carmelo for another portion of the latters property this time, a part of
the second floor of the two-storey building, and two store spaces on the
ground floor. In that space, Mayfair put up another movie house known as
Miramar Theater. The Contract of Lease was likewise for a period of 20
Both leases contained a clause giving Mayfair a right of first refusal to
purchase the subject properties. Sadly, on July 30, 1978 - within the 20year-lease term -- the subject properties were sold by Carmelo to
Equatorial Realty Development, Inc. for eleven million smackers, without
their first being offered to Mayfair.
As a result of the sale of the subject properties to Equatorial, Mayfair filed a
Complaint before the Regional Trial Court of Manila for the recission of the
Deed of Absolute Sale between Carmelo and Equatorial, specific
performance, and damages. RTC decided for Carmelo and Equatorial. Tsk

While execution of a public instrument of sale is recognized by law as

equivalent to the delivery of the thing sold, such constructive or symbolic
delivery is merely presumptive. It is nullified by the failure of the vendee to
take actual possession of the land sold.

CA reversed and ruled for Mayfair. The SC denied a petition questioning the
CA decision. What happened is that the contract did get rescinded,
Equatorial got its money back and asserted that Mayfair have the right to
purchase the lots for 11 million bucks.

For property to be delivered, we need two things. Delivery of property or

title, and transfer of control or custody to the buyer.

Decision became final and executory, so Mayfair deposited with the clerk
the 11M (less 847grand withholding) payment for the properties (Carmelo
somehow disappeared).

Possession was never acquired by the petitioner. It therefore had no rights

to rent.
Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2storey building to respondent Mayfair Theater Inc.
They entered a contract which provides that if the LESSOR should desire to
sell the leased premises, the LESSEE shall be given 30-days exclusive
option to purchase the same.
informed Mayfair that
Equatorial. Mayfair made known its interest to buy the property but only to
the extent of the leased premises.

Meanwhile, on Sept 18, 1997, barely five months after Mayfair submitted
its Motion for Execution, Equatorial demanded from Mayfair backrentals
and reasonable compensation for the Mayfairs continued use of the
subject premises after its lease contracts expired. Remember that Mayfair
was still occupying the premises during all this hullabaloo.
Whether or not Equatorial was the owner of the subject property and could
thus enjoy the fruits and rentals.
Nor right of ownership was transferred from Carmelo to Equatorial since
there was failure to deliver the property to the buyer. Compound this with
the fact that the sale was even rescinded.

Villonco issued a check to Bormaheco amounting to P100,000 as earnest

money. 26 days after signing the contract of sale, Bormaheco returned the
P100,000 to Villonco with 10% interest for the reason that they are not
sure yet if they will acquire the Sta.Ana property.

Notwithstanding Mayfairs

Villonco rejected the return of the check and demanded for specific









WON the sale of the property to Equatorial is valid.


WON Bormaheco is bound to perform the contract with Villonco.

The contract is already consummated when Bormaheco accepted the offer
by Villonco. The acceptance can be proven when Bormaheco accepted the
check from Villonco and then returned it with 10% interest as stipulated in
the terms made by Villonco.
On the other hand, the fact that Villonco did not object when Bormaheco
encashed the check is a proof that it accepted the offer of Bormaheco.
Whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and as proof of the perfection of the
contract" (Art. 1482, Civil Code).

4. DOROMAL V. CA (September 5, 1975)

The sale of the property should be rescinded because Mayfair has the right
of first refusal. Both Equatorial and Carmelo are in bad faith because they
knew of the stipulation in the contract regarding the right of first refusal.
The stipulation is a not an option contract but a right of first refusal and as
such the requirement of a separate consideration for the option, has no
applicability in the instant case. The consideration is built in the reciprocal
obligation of the parties.
In reciprocal contract, the obligation or promise of each party is the
consideration for that of the other. (Promise to lease in return of the right
to first refusal)
With regard to the impossibility of performance, only Carmelo can be
blamed for not including the entire property in the right of first refusal.
Court held that Mayfair may not have the option to buy the property. Not
only the leased area but the entire property.

A parcel of land in Iloilo were co-owned by 7 siblings all surnamed
Horilleno. 5 of the siblings gave a SPA to their niece Mary Jimenez, who
succeeded her father as a co-owner, for the sale of the land to father and
son Doromal. One of the co-owner, herein petitioner, Filomena Javellana
however did not gave her consent to the sale even though her siblings
executed a SPA for her signature. The co-owners went on with the sale of
6/7 part of the land and a new title for the Doromals were issued.
Respondent offered to repurchase the land for 30K as stated in the deed of
sale but petitioners declined invoking lapse in time for the right of
repurchase. Petitioner also contend that the 30K price was only placed in
the deed of sale to minimize payment of fees and taxes and as such,
respondent should pay the real price paid which was P115, 250.


Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a
parcel of land and its improvements located in Buendia, Makati.
Bormaheco made the terms and condition for the sale and Villonco
returned it with some modifications.
The sale is for P400 per square meter but it is only to be consummated
after respondent shall have also consummated purchase of a property in
Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land and
subsequently bought the property.

Earnest money is a part of payment of a sale. Art. 1385 of the Civil Code
provides that rescission creates the obligation to return the things which
were the object of the contract together with their fruits and interest. Since
the respondent did not oppose the extra-judicial recission, they should
return the earnest money of the petitioner. It would be most inequitable if
resondent BARRETTO REALTY would be allowed to retain petitioner's
payment of P1,000,000.00 and at the same time appropriate the proceeds
of the second sale made to another.

6. DALLION V. CA (February 28, 2009)

Petitioner Segundo Dalion allegedly sold his property in Southern Leyte to
respondent Ruperto Sabesaje through a private deed of sale.
Dalion denies the sale and claims that his signature in the document was

WON the period to repurchase of petitioner has already lapsed.
Period of repurchase has not yet lapsed because the respondent was not
notified of the sale. The 30-day period for the right of repurchase starts
only after actual notice not only of a perfected sale but of actual execution
and delivery of the deed of sale.
The letter sent to the respondent by the other co-owners cannot be
considered as actual notice because the letter was only to inform her of
the intention to sell the property but not its actual sale. As such, the 30day period has not yet commenced and the respondent can still exercise
his right to repurchase.
The respondent should also pay only the 30K stipulated in the deed of sale
because a redemptioners right is to be subrogated by the same terms and
conditions stipulated in the contract.


5. GOLDENROD INC. V. CA (November 04, 1998)

WON there has been a contract of sale between the parties.



The authenticity of the signature of Dallion was proven by the testimony of

several witness including the person who made the deed of sale. Dalion
never presented any evidence or witness to prove his claim of forgery.

Respondents Barreto realty owns 43 parcels of land in Quiapo Manila which

they mortgaged in UCPB. Respondent sold the property to petitioner
Goldenrod who In turn pays 1M earnest money and promise to pay
respondents debt to UCPB. Respondent caused 2 land titles to the

Dallions claim that the sale is invalid because it was not made in a public
document is of no merit. This argument is misplaced. The provision of Art.
1358 on the necessity of a public document is only for convenience, not for
validity or enforceability. It is not a requirement for the validity of a
contract of sale of a parcel of land that this be embodied in a public
instrument. Sale is perfected upon meeting of the minds of both parties.

7. YUVIENCO V. DACUYCUY (May 27, 1981)


Petitioner was not able to pay UCPB and the latter did not agree for and
extension. Hence, petitioner rescinded the contact and demands the return
of the earnest money.
Respondent did not oppose the recession but did not gave the earnest
money. They even sold the first lot to Asiaworld Trade Center and the other
lot to UCPB for payment of their mortgage.
WON respondent should return the earnest money of the petitioner.

Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank,
filed a motion for intervention with the trial court. The trial court denied the
motion since the trial has been concluded already and the case is now
pending appeal. Subsequently, Co, assisted by ACCRA law office, filed a
separate civil case against Demetria and Janolo seeking to have the
purported contract of sale be declared unenforceable against the Bank.
Demetria et al argued that the second case constitutes forum shopping.

Petitioners own a property in Tacloban City which they intend to sell for
6.5M. They gave the respondents the right to purchase the property nut
only until July 31, 1978. Respondents replied that they agree to buy the
property and they will negotiate for details. Petitioner sent another
telegram informing respondents that their proposal is accepted and a
contract will be prepared.

1. Whether or not there is forum shopping.

Lawyer of defendant, Mr.Gamboa, arrived bringing a contact with an

altered mode of payment which says that the balance payment should be
paid withing 30 days instead of the former 90 days. (Otiginal terms: 2M
payment upon execution. 4.5M after 90 days)

2. Whether or not there is a perfected contract of sale.



WON there was already a perfected contract of sale between the parties.




Yes. There is forum shopping because there is identity of interest

and parties between the first case and the second case. There is
identity of interest because both cases sought to have the
agreement, which involves the same property, be declared
unenforceable as against the Bank. There is identity of parties
even though the first case is in the name of the bank as defendant,
and the second case is in the name of Henry Co as plaintiff. There
is still forum shopping here because Henry Co essentially
represents the bank. Both cases aim to have the bank escape
liability from the agreement it entered into with Demetria et al. The
Supreme Court did not lay down any disciplinary action against the
ACCRA lawyers but they were warned that a repetition will be dealt
with more severely.
Yes. There is a perfected contract of sale because the bank
manager, Rivera, entered into the agreement with apparent
authority. This apparent authority has been duly proved by the
evidence presented which showed that in all the dealings and
transactions, Rivera participated actively without the opposition of
the conservator. In fact, in the advertisements and announcements
of the bank, Rivera was designated as the go-to guy in relation to
the disposition of the Banks assets.

9. VDA. DE JOMOC V. CA (August 02, 1991)


There was no perfected contract of sale yet because both parties are still
under negotiation and hence, no meeting of the minds. Mr.Gamboa even
went to the respondents to negotiate for the sale. Even though there was
an agreement on the terms of payment, there was no absolute acceptance
because respondents still insisted on further details.
With regard to the alleged violation of terms of payment, there was no
written document to prove that the respondents agreed to pay not in cash
but in installment. In sale of real property, payment of installment must be
in requisite of a note under the statute of frauds.


Producers Bank (now called First Philippine International Bank), which has
been under conservatorship since 1984, is the owner of 6 parcels of land.
The Bank had an agreement with Demetrio Demetria and Jose Janolo for
the two to purchase the parcels of land for a purchase price of P5.5 million
pesos. The said agreement was made by Demetria and Janolo with the
Banks manager, Mercurio Rivera. Later however, the Bank, through its
conservator, Leonida Encarnacion, sought the repudiation of the
agreement as it alleged that Rivera was not authorized to enter into such
an agreement, hence there was no valid contract of sale. Subsequently,
Demetria and Janolo sued Producers Bank. The regional trial court ruled in
favor of Demetria et al. The Bank filed an appeal with the Court of Appeals.

The plaintiff is the sole heir of his mother, Guillerma Cuyugan y Canda,
that in the year 1895 she borrowed the sum of P3,500 from the
defendant and executed, at the same time, the document, Exhibit C,
attached to the complaint, which purports on its face to be a deed of sale
of the land described therein, with a reservation in favor of the vendor of
that although the instrument purports on its face to be a deed of sale, it
was intended by the parties merely to evidence the loan of the nominal
purchase price and to serve as a security for the repayment of the amount
of the loan;
ISSUE: WON the parol evidence should be admitted in support of
allegations versus that of an instrument in writing
Parol evidence is competent and admissible in support of allegations that
an instrument in writing, purporting on its face to transfer the absolute title
to property, or to transfer the title with a mere right to repurchase under
specified conditions reserved to the vendor, was in truth and in fact given
merely as a security for the repayment of a loan; and upon proof of the
truth of such allegations, the courts in this jurisdiction have power to
enforce the agreement or understanding in this regard, in accord with the
true intent of the parties at the time when it was executed.
UNITED STATES DOCTRINE. The doctrine which must be applied in such
cases in this jurisdiction does not differ materially from the equitable
doctrine frequently announced and applied by the Supreme Court of the
United States in the numerous cases in which similar questions have come
to it from the various States and Territories within its jurisdiction
MORTGAGE CLAIMED TO BE A SALE. That court has held that: To insist
on what was really a mortgage, as a sale, is in equity a fraud, which cannot
be successfully practiced, under the shelter of any written papers, however
precise and complete they may appear to be.
MONEY. Also that: When it is alleged and proved that a loan on security
was really intended, and the defendant sets up the loan as a payment of
purchase money, and the conveyance as a sale, both fraud and a vice in
the consideration are sufficiently averred to require a court of equity to
hold the transaction to be a mortgage.

A parcel of land in CDO owned by late Pantaleon Jomoc was fictitiously sold
to third persons in which the last transferee are the spouses Mariano and
Maria So. Maria Vda de Jomoc filed suit to recover the property and won.
While pending appeal, Vda de Jomoc executed executed a Deed of
Extrajudicial Settlement and Sale of Land with private respondent for
P300,000.00. The document was not yet signed by all the parties nor
notarized but in the meantime, Maura So had made partial payments
amounting to P49,000.00.
So demanded from the heirs of Jomoc for the execution of final deed of
conveyance but the latter did no comply. As such, So filed a civil case and
a notice of lis pendens were placed in the title of the land.
On the same date, the heirs of Jomoc executed another extra-judicial
settlement with absolute sale in favor of intervenors Lim Leong Kang and
Lim Pue claiming that they believe that So already backed-out from the
WON the sale is enforceable.
Since petitioners admit the existence of the extra-judicial settlement, the
court finds that there was meeting of the minds between the parties and
hence, there is a valid contract that has been partly executed.
The contract of sale of real property even if not complete in form, so long
as the essential requisites of consent of the contracting parties, object, and
cause of the obligation concur and they were clearly established to be
present, is valid and effective as between the parties. Public document is
only needed to bind third persons.
The payment made by So is a clear proof of her intention to acquire the
property and the petitioners cannot claim about the respondent backing
out. The sale to the intervenors Lim cannot be recognized because when
they bought the property, there was already a notice of lis pendens and
the sale cannot be said to be in good faith.


specifically with the terms of such an agreement, whether it be oral or

written; and further, that he will not be permitted, in violation of its terms,
to set up title in himself or to assert a claim of absolute ownership


If the parties actually enter into such an agreement, the lender of the
money is legally and morally bound to fulfill it. Of course, such an oral
contract does not give the borrower a real right in the lands unless it is
executed in compliance with the formalities prescribed by law. If entered
into orally, it creates a mere personal obligation which in no wise affects
the lands, and if the lender conveys the lands to innocent third persons,
the borrower must content himself with a mere right of action for damages
against the lender, for failure to comply with his agreement. But so long as
the land remains in the hands of the lender, the borrower may demand the
fulfillment of the agreement, and a mere lack of any of the formalities
prescribed under the Spanish Code for the execution of contracts affecting
real estate will not defeat his right to have the contract fulfilled, as the
lender may be compelled in appropriate proceedings to execute the
contract with the necessary prescribed formalities.
CODES. Under the Spanish Codes an oral contract affecting lands, even
an oral contract for the sale of lands, was valid and enforceable, provided
none of the essential requisites of all valid contracts are lacking, that is to
say, (1) consent, (2) definite object, and (3) cause or consideration. The
lack of the formal requisites prescribed by the Code in order that such
contracts may become effective to bind or convey the property, such as
their execution in public instruments and the like, does not invalidate them
as personal obligations, as either party may compel the other to comply
with such formalities from the moment the valid personal obligation has
been entered into.
Where a sale of lands has been made reserving to the vendor a right to
repurchase under stipulated conditions, and one or more partial payments
have been made by the vendor and accepted by the purchaser, the
acceptance of such partial payments is absolutely incompatible with the
idea of irrevocability of the title of ownership of the purchaser at the
expiration of the term stipulated in the original contract for the exercise of
In the light of these elementary and basic principles of the Code there can
be no question, in the absence of express statutory prohibition, as to the
validity of an agreement or understanding whereby the lender of money,
who as security for the repayment of the loan has taken a deed to land,
absolute on its face or in the form of a deed reserving a mere right of
repurchase to the vendor, obligates himself to hold such deed, not as
evidence of a contract of sale but by way of security for the repayment of
the debt; and that unless the rights of innocent third persons have
intervened the lender of the money may be compelled to comply

the P3,000 paid on account of the price, together with interest thereon at
the rate of 10% per annum.

ISSUE: Was there a delivery made and, therefore, a transfer of ownership

of the thing sold?

1. Addison vs. Felix 38 Phil 404 August 1918



The Supreme Court affirmed the decision of the lower court, with
modification that the interest thereon will be at the rate of 6% (instead of
10%) per annum from the date of the filing of the complaint until payment.

The defendants-appellees spouses Maciana Felix and Balbino Tioco

purchased from plaintiff-appellant A.A. Addison four parcels of land to
which Felix paid, at the time of the execution of the deed, the sum of
P3,000 on account of the purchase price. She likewise bound herself to the
remainder in installments, the first of P,2000 on July 15, 1914, 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 cocoanut tree in bearing and P5 for each such tree
not in bearing that might be growing on said 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 Felix was to deliver to
the Addison 25% 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," and that within 1 year
from the date of the certificate of title in her favor, Marciana Felix may
rescind the contract of purchase and sale.

The thing is considered to be delivered when it is placed "in the hands and
possession of the vendee." 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, 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. Symbolic delivery through the
execution of a public instrument is sufficient 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. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it himself or through
another in his name, because such are opposed by a third persons will,
then the delivery has not been effected. In the case at bar, therefore, it is
evident, that the mere execution of the instrument was not a fulfillment of
the vendor's obligation to deliver the thing sold, and that from such nonfulfillment arises the purchaser's right to demand, as she has demanded,
the rescission of the sale and the return of the price.

2. Danguilan Vs. IAC

In January 1915, Addison , filed suit in the CFI of Manila to compel Felix to
pay the first installment of P2,000, demandable, in accordance with the
terms of the contract of sale. The defendants Felix and her husband Tioco
contended that Addison had absolutely failed to deliver the lands that were
the subject matter of the sale, notwithstanding the demands they made
upon him for this purpose. The evidence adduced shows Addison 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 he so occupied. The trial court held
the contract of sale to be rescinded and ordered Addison to return to Felix

Hence, 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, and the 2 private documents remain valid.
Assuming there was a valid deed of sale, PR Melad failed to show
that it was consummated (no actual delivery + no possession)
At any rate, even assuming the validity of the deed of sale, the
record shows that Apolonia Melad did not take possession of the disputed
properties and indeed waited until 1962 to file this action for recovery of
the lands from petitioner Danguilan. If she did have possession, she
transferred the same to Danguilan in 1946, by her own sworn admission,
and moved out to another lot belonging to her step-brother.
Her claim that the petitioner was her tenant (later changed to
administrator) was disbelieved by the trial court, and properly so, for its
inconsistency. In short, 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.
No constructive delivery allowed if property is in actual and
adverse possession of a third person
In our jurisdiction, it is a fundamental and elementary principle that
ownership does not pass be mere stipulation but only by delivery and the
execution of a public document does not constitute sufficient delivery
where the property involved is in the actual and adverse possession of
third persons.
Therefore, in our Civil Code it is a fundamental principle in all
matters of contracts and a well- known doctrine of law that "non mudis
pactis sed traditione dominia rerum transferuntur".
In conformity with said doctrine as established in paragraph 2 of
article 609 of said code, that "the ownership and other property rights are
acquired and transmitted by law, by gift, by testate or intestate
succession, and, in consequence of certain contracts, by tradition".
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.
One who is in possession is presumed to be the owner
In this case, there no dispute that it is Danguilan and not Melad
who is in actual possession of the litigated properties. And even if the claim
of petitioner and respondent are weak, judgment must be in favor of the

(168 SCRA 22, G.R. No. 69970, November 28, 1988)

A parcel of lot owned by Domingo Melad was being claimed by
petitioner Felix Danguilan and respondent Apolonia Melad.
Apolonia Melad contends that she acquired the property when
Dominggo Melad sold it to her when she was just 3 years old in which her
mother paid the consideration. (Evidence: Deed of sale dated December 4,
1943 with a sum consideration of P80.00.)
Apolonia contended that she just moved out of the farm only in
1946 when Felix Danguilan approached her and asked permission to
cultivate the land and to stay therein.
Dangguilan, on the other hand, presented for his part 2 documents
executed in September 14, 1941 and December 18, 1943, to prove his
claim that the properties were given to him by Dominggo Melad through an
onerous donation. The onerous part of the donation includes the taking
care of the farm and the arrangement of the burial of Dominggo.
RTC ruled in favor of Danguilan. CA reversed RTCs ruling. It ruled
that there was a donation, which was void for failing to comply with the
1. Who has the better right between parties? Petitioner Danguilan.
2. WON there was delivery in favor of respondent for the alleged sale? NO.
Domingo Melad intended to donate the property to petitioner
It is our view, considering the language of the two instruments, that
Melad did intend to donate the properties to the petitioner
Danguilan. We do not think, however, that the donee was moved by pure
liberality. While truly donations, the conveyances were onerous donations
as the properties were given to petitioner Danguilan in exchange for his
obligation to take care of the donee for the rest of his life and provide for
his burial.


The petitioner, Perfecto Dy and Wilfredo Dy are brothers.

Sometime in 1979, Wilfredo Dy purchased a truck and a farm

tractor through financing extended by Libra Finance and Investment
Corporation (Libra). Both truck and tractor were mortgaged to Libra as
security for the loan.

The petitioner wanted to buy the tractor from his brother so, 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.

Libra thru its manager, Cipriano Ares approved the petitioners


Wilfredo Dy executed a deed of absolute sale in favor of the

petitioner over the tractor in question. At this time, the subject tractor was
in the possession of Libra Finance due to Wilfredo Dys failure to pay the

Despite the offer of full payment by the petitioner to Libra for the
tractor, 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.

Petitioner was able to convince his sister to purchase the truck so

that full payment can be made for both

A PNB check was issued in the amount of P22,000.00 in favor of

Libra, thus settling in full the indebtedness of Wilfredo Dy with the
financing firm. Libra insisted that it be cleared first before releasing the

Meanwhile, Civil Case entitled Gelac Trading, Inc. v. Wilfredo Dy,

a collection case to recover the sum of P12,269.80 was pending in another

On the strength of an alias writ of execution issued, the provincial

sheriff was able to seize and levy on the tractor which was in the premises
of Libra in Carmen, Cebu. The tractor was subsequently sold at public
auction where Gelac Trading was the alone bidder. Later, Gelac sold the
tractor to one of its stockholders, Antonio Gonzales.

It was only when the check was that the petitioner learned about
GELAC having already taken custody of the subject tractor

petitioner filed an action to recover the subject tractor against

GELAC Trading

the RTC rendered judgment in favor of the petitioner

Court of Appeals reversed the decision of the RTC (held that the
tractor in question still belonged to Wilfredo Dy when it was seized and
levied by the sheriff)

Danguilan for one who is in possession is presumed to be the owner, and

cannot be obliged to show or prove a better right.
Read the full text here:
APOLONIA MELAD, assisted by her husband, JOSE TAGACAY

3. PASAGUI V. VILLABLANCA (November 10, 1975)

Plaintiffs Calixto Pasagui and Fausta Mosar bought a property in
Leyte from Estaquia and Catalina Bocar for P2,800. Before they could take
possession of the property, defendant spouses Ester T. Villablanca and
Zosimo Villablanca took possession of it and harvested from the coconut
plantation thereon. Plaintiffs demanded the return of the property but the
defendants refused.
Plaintiffs filed a case in the CFI but respondents contend that the
case is a forcible entry and as such, CFI has no jurisdiction.
WON the case is of forcible entry.
In order that an action may be considered as one for forcible entry, it is not
only necessary that the plaintiff should allege his prior physical possession
of the property but also that he was deprived of his possession by any of
the means provided in section 1, Rule 70 of the Revised Rules of Court.
It is true that the execution of the deed of absolute sale in a public
instrument is equivalent to delivery of the land subject of the sale. This
presumptive delivery only holds true when there is no impediment that
may prevent the passing of the property from the hands of the vendor into
those of the vendee. It can be negated by the reality that the vendees
actually failed to obtain material possession of the land subject of the sale.


G.R. No. 92989. July 8, 1991.

ownership shall be subject to the mortgage of the thing sold to him. In the
case at bar, the petitioner was fully aware of the existing mortgage of the
subject tractor to Libra. In fact, when he was obtaining Libras consent to
the sale, he volunteered to assume the remaining balance of the mortgage
debt of Wilfredo Dy which Libra undeniably agreed to.
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
signifying an agreement that the possession is transferred from the vendor
to the vendee. We agree with the petitioner that Articles 1498 and 1499
are applicable in the case at bar.
RULE ON CONSTRUCTIVE DELIVERY. In the instant case, actual delivery
of the subject tractor could not be made. However, 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 (Article 1499).
CHECK. The payment of the check was actually intended to extinguish
the mortgage obligation so that the tractor could be released to the
petitioner. 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. 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. It was not determinative of the consummation of the
sale. The transaction between the brothers is distinct and apart from the
transaction between Libra and the petitioner. The contention, therefore,
that the consummation of the sale depended upon the encashment of the
check is untenable.
EVIDENCE. There is no sufficient evidence to show that the sale of the
tractor was in fraud of Wilfredo and creditors. While it is true that Wilfredo
and Perfecto are brothers, this fact alone does not give rise to the
presumption that the sale was fraudulent. Relationship is not a badge of
fraud (Goquiolay vs. Sycip, 9 SCRA 663 [1963]). Moreover, fraud can not be
presumed; it must be established by clear convincing evidence.


(June 20, 1997)


SELL THE PROPERTY MORTGAGED; RULE. The mortgagor who gave the
property as security under a chattel mortgage did not part with the
ownership over the same. 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.
2 of the Revised Penal Code. And even if no consent was obtained from the
mortgagee, the validity of the sale would still not be affected.
APPLICABLE IN CASE AT BAR. We see no reason why Wifredo Dy, as the
chattel mortgagor can not sell the subject tractor. There is no dispute that
the consent of Libra Finance was obtained in the instant case. Libra
allowed the petitioner to purchase the tractor and assume the mortgage
debt of his brother. The sale between the brothers was therefore valid and
binding as between them and to the mortgagee, as well.
It was Libra Finance which was in possession of the subject tractor due
to Wilfredos failure to pay the amortization as a preliminary step to
foreclosure. As mortgagee, he has the right of foreclosure upon default by
the mortgagor in the performance of the conditions mentioned in the
contract of mortgage. 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. While it is true that Wilfredo Dy
was not in actual possession and control of the subject tractor, his right of
ownership was not divested from him upon his default. 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 (Article 2088, Civil Code). Said property continues to
belong to the mortgagor. 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 (See
Martinez vs. PNB, 93 Phil. 765, 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. Undeniably, Libra gave its consent to the sale
of the subject tractor to the petitioner. It was aware of the transfer of rights
to the petitioner.
MORTGAGOR. Where a third person purchases the mortgaged property,
he automatically steps into the shoes of the original mortgagor. His right of

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
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

7. STA.ANA V. HERNANDEZ (January 17, 1966)

Spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo sold a land in
Bulacan to respondent Rosa Hernandez for P11,000 lump sum. (there were
two other previous sales to different vendees of other portions of the land)
The boundaries of the land were stated in the deed of sale and its
approximate land area.
Petitioners-spouses caused the preparation of the subdivision plan but
Hernandez didnt agree to the partition. As such, petitioners-spouses filed a
case alleging that Hernandez is occupying in excess of 17000 square meter
of the land sold. Hernandez claims that the excess area is part of the land
she bought.
WON the excess area occupied by Hernandez is part of the land sold.

Petitioner asbestos manufacturer Power Commercial and industrial

corporation bought the property of spouses Reynaldo and Angelita
Quiambao located in Makati City.
Since there are lessees occupying the subject land, part of the deed of sale
is a warranty of respondents that will defend its title and peaceful
possession in favor of the petitioners.
The property is mortgage to PNP and as such, petitioners filed a request to
assume responsibility of the mortgage. Because of petitioners failure to
produce the required papers, their petition was denied.
Petitioners allege that the contract should be rescinded because of failure
of delivery.
WON the contract is recissible due to breach of contract.
There is no breach of contact in this case since there is no provision in the
contract that imposes the obligation to the respondents to eject the people
occupying the property.
There was also a constructive delivery because the deed of sale was made
in a public document. The contention of the petitioners that there could be
no constructive delivery because the respondents is not in possession of
the property is of no merit. What matters in a constructive delivery is
control and not possession. Control was placed in the hands of the
petitioners that is why they were able to file an ejectment case. Prior
physical delivery or possession is not legally required and the execution of
the deed of sale is deemed equivalent to delivery.

6. 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
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

mortgage debt of P1,177.48. (Note: The full amount of mortgage debt was
already paid by the Infantes)
February 2, 1995: A deed of sale was executed between Poncio and
February 8, 1995: Knowing that the sale to Infante has not been
registered, Carbonell filed an adverse claim.
February 12, 1995: The deed of sale was registered but it has an
annotation of the adverse claim of Carbonell.
Thereafter, Emma Infante took possession of the lot, built a house
and introduced some improvements.
In June 1995, Carbonell filed a complaint praying that she be
declared the lawful owner of the land, that the subsequent sale to spouses
Infante be declared null and void, and that Jose Poncio be ordered to
execute the corresponding deed of conveyance of said land in her favour
RTC ruled that the sale to spouses Infante was null and void. After
re-trial, it reversed its ruling. CA ruled in favor of Carbonell but after a MfR,
it reversed its ruling and ruled in favor of the Infantes.

The sale involves a definite and identified tract, a corpus certum, that
obligated the vendors to deliver to the buyer all the land within the
boundaries, irrespective of whether its real area should be greater or
smaller than what is recited in the deed.
To hold the buyer to no more than the area recited on the deed, it must be
made clear therein that the sale was made by unit of measure at a definite
price for each unit. The sale in this case only involves the definite
boundaries but only approximate land areas. As such, Art 1542 concerning
the sale for lump sum must be considered.

8.Carbonell Vs. CA

G.R. No. L-29972 January 26, 1976


Issue: WON Carbonell has a superior right over Emma Infante. YES
Article 1544 provides that for double sale of an immovable
property, the ownership shall belong to the person who first acquired it in
good faith and recorded it in the Registry of 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 property.
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
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.
The buyer must act in good faith in registering the deed of sale
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.
Unlike the first and third paragraphs of said Article 1544, which accord
preference to the one who first takes possession in good faith of personal

Respondent Jose Poncio was the owner of the parcel of land located
in Rizal. (Area more or less 195 sq. m.)
The said lot was subject to mortgage in favor of the Republic Savings Bank
for the sum of P1,500.00.
Carbonell and respondent Emma Infante offered to buy the said lot
from Poncio.
Poncio offered to sell his lot to Carbonell excluding the house on
which he and his family stayed. Carbonell accepted the offer and proposed
the price of P9.50/sq. m..
Poncio accepted the price on the condition that from the purchase
price would come the money to be paid to the bank.
January 27, 1995: The parties executed a document in the Batanes
dialect which is translated as: CONTRACT FOR ONE HALF LOT WHICH I
Carbonell asked a lawyer to prepare the deed of sale and delivered
the document, together with the balance of P400, to Jose Poncio. (Note:
Carbonell already paid P200 for the mortgage debt of Poncio + obligated
herself to pay the remaining installments.)
However, when she went to Poncio, the latter informed her that he
could no longer proceed with the sale as the lot was already sold to Emma
Infante and that he could not withdraw with the sale.
Poncio admitted that on January 30, 1995, Mrs. Infante improved
her offer and he agreed to sell the land and its improvements to her for
In a private memorandum agreement, Poncio bound to sell to
Infante the lot for the sum of P2,357.52, with Infante still assuming the

2. Carbonell was already in possession of mortgage passbook and copy of

the mortgage contract. (Not Poncios saving deposit passbook.)
Infante naturally must have demanded from Poncio the delivery to her of
his mortgage passbook and mortgage contract so that the fact of full
payment of his bank mortgage will be entered therein; and Poncio, as well
as the bank, must have inevitably informed her that said mortgage
passbook could not be given to her because it was already delivered to
3. Emma Infante did not inquire why Poncio was no longer in possession of
the mortgage passbook and why it was in Carbonells possession.
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, 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.
4. Emma Infante registered the sale under her name after Carbonell filed
an adverse claim 4 days earlier.
Here she was again on notice of the prior sale to Carbonell. Such
registration of adverse claim is valid and effective.
5. Infante failed to inquire to Poncio WON he had already sold the property
to Carbonell especially that it can be shown that he was aware of the offer
made by Carbonell.
Poncio alleged in his answer that Mrs. Infante and Mrs. Carbonell offered to
buy the lot at P15/sq. m. which offers he rejected as he believed that his
lot is worth at least P20.00/sq. m. 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
The existence of prior sale to Carbonell was duly established
From the terms of the memorandum, it tends to show that the sale of the
property in favor of Carbonell is already an accomplished act. As found by
the trial court, 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..."
There was an adequate consideration or price for the sale in favor of
Poncio agreed to sell the same to Carbonell at P9.50 per square meter, on
condition that Carbonell:
1. should pay (a) the amount of P400.00 to Poncio and the arrears in the
amount of P247.26 to the bank
2. should assume his mortgage indebtedness.

or real property, the second paragraph directs that ownership of

immovable property should be recognized in favor of one "who in good
faith first recorded" his right. Under the first and third paragraph, good
faith must characterize the act of anterior registration.
Rule when there is inscription or not
If there is no inscription, what is decisive is prior possession in good faith. If
there is inscription, as in the case at bar, prior registration in good faith is a
pre-condition to superior title.
Carbonell was in good faith when she bought the lot
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.
Carbonells good faith did not cease when she was informed by Poncio
about the sale to Emma Infante
After learning about the second sale, Carbonell tried to talk to the Infantes
but the latter refused.
(Exact words of the SC: 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, 1955.
The Infantes were in bad faith (5 indications of bad faith listed below)
Bad faith arising from previous knowledge by Infante of the prior
sale to Carbonell is shown by the following facts:
1. Mrs. Infante refused to see Carbonell.
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.

The Court of First instance of Zambales ruled in favor of Tomasa Quimson

and Marcos Santos.
The Court of Appeals the reversed the decision and ruled in favor of
ISSUE: Who owns the land now, Quimson or Rosete?
HELD: Quimson is the owner.
The findings of the RTC that there was indeed a sale by the father in favor
of his daughter was not reversed by the CA and stands as the fact of the
case. Further, it was shown that consideration was given in that sale,
acknowledged before the notary public.

The bank president agreed to the said sale with assumption of mortgage in
favor of Carbonell an Carbonell accordingly paid the arrears of P247.26.
It is evident therefore that there was ample consideration, and not merely
the sum of P200.00, for the sale of Poncio to Carbonell of the lot in
The subject property was identified and described
The court has arrived at the conclusion that there is sufficient description
of the lot referred to in Exh. 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. A'.

9. Quimson v. Rosete [G.R. No. L-2397. August 9, 1950.]

ART. 1462. The thing sold shall be deemed delivered, when it is
placed in the control and possession of the vendee.

TOPIC: Double Sales

When the sale is made by means of a public instrument, the

execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the said instrument the
contrary does not appear or may not be clearly inferred.

DOCTRINE: Upon sale of real estate the execution of a notarial sale is a

sufficient delivery of the property sold. When the sale is made by means
of public instrument, the execution thereof is tantamount to conveyance of
the subject matter.

ART. 1473. 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 be
movable property.
Should it be immovable property, the ownership shall belong to the
person acquiring it who first recorded it in the registry.
Should there be no inscription, the ownership shall belong to the
person who in good faith was first in the possession; and, in the
absence of this, to the person who represents the oldest title,
provided there is good faith.

10. CHENG V. GENATO (December 29, 1998)

Respondent Genato entered a contract to sell to spouses Da Jose
pertaining to his property in Bulacan. The contract made in public
document states that the spouses shall pay the down payment and 30
days after verifying the authenticity of the documents, they shall pay the
remaining purchase price.

FACTS: (written in spnaish)

The subject property land, originally belonged to the late Dionisio Quimson.
He executed a deed transferring the same in favor of his daughter Tomasa
Quimson. However, he still remained to be in possession and enjoyment of
the property.
Later, the property was sold to the spouses Magno Agustin and Paulina
Manzano on 3
May 1935, with right to repurchase within the term of six years.
Then, two years after, the same property was again sold to Francisco
Rosete, also with pacto de retro within five years.
Thereafter, he repurchased the property from Agustin and Manzano with
money furnished to him by Rosete. Since then, Rosete possessed the
property in a peaceful manner even after the death of Dionisio Quimson.
Tomasa Quimson filed with the Justice of Peace of San Marcelino,
Zambales. In the registration of the property and inscription of the deeds
of sale, Tomasa Quimson arrived one hour earlier (9:30am) than Francisco
Rosete (10:30am) of the same day.

Da Jose spouses was not able to finish verifying the documents and as such
asked for a 30 day extension. Pending the extension and without notice to
the spouses, Genato made a document for the annulment of the contract.
Petitioner Cheng expressed interest over the property and paid 50K check
with the assurance that the contract between Genato and the spouses Da
Jose will be annulled. Da Jose spouses protested with the annulment and
persuaded Genato to continue the contract. Genato returned the check to
Cheng and hence, this petition.
The contract between Genato and spouses Da Jose was a contract to sell
which is subject to a suspensive condition. Thus, there will be no contract
to speak of, if the obligor failed to perform the suspensive condition which
enforces a juridical relation. Obviously, 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.
Even assuming that the spouses defaulted, the contract also cannot be
validly rescinded because no notice was given to them. Thus, 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.
The contract between Genato and Cheng is a contract to sell not a contract
of sale. But But even assuming that it should be treated as a conditional
contract of sale, it did not acquire any obligatory force since it was subject
to a suspensive condition that the earlier contract to sell between Genato
and the Da Jose spouses should first be cancelled or rescinded.

FACTS: In 1985, Coronel executed a document entitled "Receipt of Down
Payment" in favor of Alcaraz for P50,000 dp of P1.24M as purchase price
for an inherited house and lot promising to execute a deed of absolute

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.

Facts: On 24 September 1919, Federico Caet sold, under a conditional

sale, the parcel of land in question to the Primitivo Kalaw. On 8 November
1919, Caet made an absolute sale of said parcel of land to Agripino
Mendoza. On 12 November 1919, Mendoza entered upon, and took actual
possession of, said parcel of land, enclosed it with a fence, and began to
clean the same. After doing so, a representative of Kalaw claimed and
attempted to obtain possession of said lot, but Mendoza, who was then in
possession, refused to deliver the possession, upon the ground that he was
the owner. On 17 November (18 November) 1919, Kalaw attempted to
have his title registered in the registry of deeds of the City of Manila, but
such registration was denied by the register of deeds for the reason that
there existed some defect in the description of the property, and for the
reason that the title of the vendor had not theretofore been registered. The
register of deeds, however, did make an anotacion preventiva.
On 26 November 1919, Agripino Mendoza filed a petition in the CFI Manila
for the registration, under the Torrens system, of a piece or parcel of land,
particularly described in paragraph A of the petition. The said lot is alleged
to have an area of 371.6 square meters. Mendoza alleged that he was the
owner in fee simple of said parcel of land for the reason that he had
purchased the same of Federico Caet on 8 November 1919.
Accompanying the petition, there was united a plan containing a technical
description of the metes and bounds of said parcel of land. To the
registration of said parcel of land the oppositor, Primitivo Kalaw, presented
his opposition, alleging that he was the owner of the same and that he had
acquired it from the said Federico Caet. Upon the issue thus presented by
the petition and opposition, and on 23 January 1920, the Court reached the
conclusion that Mendoza was the owner in fee simple of said parcel of land,
and ordered it registered in his name in accordance with the provisions of
the Land Registration Act. From that decree the oppositor appealed to the
Supreme Court.
ISSUE: Who has a better title, Canet or Kalaw?
HELD: CANET. While a conditional sale came before the absolute sale, still
the latter must prevail. A conditional sale, before the happening of the
condition, is hardly a sale especially if the condition has yet to be complied
with. The anotacion preventiva obtained by Kalaw cannot create an
advantage in his favor as the same was good for only 30 days. The court
ruled in favor of Mendoza.

3. Coronel v ca

sale as soon as it has been transferred in their name. The balance of

P1.19M is due upon the execution of the deed. When title to the property
was finally transferred to their names, the Coronels sold the property to
Mabanag for P1.58M after she paid P300K dp. Because of this, they
cancelled and rescinded the contract with Alcaraz by returning the P50,00
Alcaraz filed a complaint for specific performance against the
Coronels and cause the annotation of a notice of lis pendens on the TCT.
Mabanag, on the other hand, caused the annotation of a notice of adverse
claim with the RD. However, the Coronels executed a Deed of Absolute
Sale in favor Mabanag. RTC ruled in favor of Alcaraz. CA affirmed.
ISSUE: Whether the receipt of downpayment serves a contract to sell or
a conditional contract of sale
HELD: NO. The agreement could not have been a contract to sell because
the sellers made no express reservation of ownership or title to the subject
parcel of land. Furthermore, the circumstance, which prevented the parties
from entering into an absolute contract of sale, pertained to the sellers
themselves (the certificate of title was not in their names) and not the full
payment of the purchase price. Under the established facts and
circumstances of the case, had the certificate of title been in the names of
petitioners-sellers at that time, there would have been no reason why an
absolute contract of sale could not have been executed and consummated
right there and then. Moreover, unlike in a contract to sell, petitioners did
not merely promise to sell the property to private respondent upon the
fulfillment of the suspensive condition. On the contrary, having already
agreed to sell the subject property, they undertook to have the certificate
of title changed to their names and immediately thereafter, to execute the
written deed of absolute sale. What is clearly established by the plain
language of the subject document is that when the said Receipt of Down
Payment was prepared and signed by petitioners, the parties had agreed
to a conditional contract of sale, consummation of which is subject only to
the successful transfer of the certificate of title from the name of
petitioners father to their names. The suspensive condition was fulfilled on
6 February 1985 and thus, the conditional contract of sale between the
parties became obligatory, the only act required for the consummation
thereof being the delivery of the property by means of the execution of the
deed of absolute sale in a public instrument, which petitioners
unequivocally committed themselves to do as evidenced by the Receipt of
Down Payment.

2. Mendoza vs. Kalaw [G.R. No. 16420. October 12,

1921.] Second Division, Johnson (J): 4 concur

on 26 May 1932, by virtue of the deed of sale. The CFI rendered decision
declaring Valerio to be the owner of the land and enjoined Espiritu and
Apostol from molesting him in the peaceful possession thereof. Hence, the
appeal by Espiritu and her daughter Apostol.
WON mother and daughter Espiritu have a better right over the property.
Apparently, this case concerns the sales of one parcel of land by the same
vendor but in favor of two different vendees.
If both allegations of the parties are valid, Espiritu's contention that they
have a better right than that the claimed by Valerio would seem to be
meritorious in the light of the facts of the case and the provisions of Article
1544 of the New Civil Code, it not being disputed that the Deed of Sale in
favor of them was registered first.
But since the deeds of sale presented by Esiritu are found to be falsified,
they have no legal right to claim the disputed property.
(1. Espiritu and Apostol have better right only if both their deeds
were valid. The present appeal depends entirely upon the validity of the
Deed of Sale allegedly executed by Pelagia Vegilia in favor of Mariano
Vegilia, and of the Deed of Sale allegedly executed by the latter in favor of
Santiago Apostol. If both are valid, Espiritus and Apostols contention that
they have a better right than that claimed by Valerio would seem to be
meritorious in the light of the facts of the case and the provisions of Article
1544 of the New Civil Code, it not being disputed that the Deed of Sale in
favor of Valerio was registered under the provisions of Act 3344 on 16 June
1955, while the two deeds of Espiritu and Apostol were similarly registered
11 days before.
2. Deeds / Documents falsified; Witnesses and proof. The document
dated 26 May 1932, is fictitious and a falsification, and that the private
document of
3 June 1934 is likewise null and void, being without the necessary formal
requisites, aside to its being fictitious and the fact that the alleged vendor
acquired no right whatsoever in the land. The determination that the
documents are falsified is based upon the testimony of Pelagia Vegilia and
Mariano Vegilia. Pelagia emphatically denied that she sold the land in
question to Mariano Vegilia, and that she appeared before Notary Public
Lino Abad Pine before whom the Escritura de Compraventa Definita, was
allegedly ratified. On the other hand, Mariano denied that he bought the
said land from Pelagia Vegilia, and that he sold the same to Santiago
Apostol as recited in Pecivo. In giving credence to the testimony of the

FACTS: Elena Kado and her siblings owned a lot with a 5door commercial
building fronting Imperial Hotel. The units were leased. Elena contracted
the services of Bautista, who brought Yu and Lim to her for the purpose of
buying the premises. During the meeting, it was agreed that the Yu and
Lim would buy the said units except for the 5th which is to be bought by
Adalin. They entered into a Conditional Sale where Elena was obligated to
evict the tenants before the full payment of the purchase price. Elena
offered the same for sale to the lessees but they refused claiming that they
could not afford; thus, she filed a case for ejectment against them.
Thereafter, the lessees decided to exercise their right to buy the units
Kalaw ruled that since the sale to Yu and Lim was conditional, the
subsequent sale to the lessees must be preferred.
ISSUE: Who has a better title, Yu and Lim or the lessees?
HELD: YU AND LIM. While it is true that the Deed was for Conditional Sale,
examination of the contents thereof would show that it was one for the
actual sale. During the meeting, the property was already sold; the only
conditions were that Elena would evict the lessees before the full payment
of the price. The choice of to whom to sell the property had already been
decided. That being the case, since the sale in favor of Yu and Lim was the
prior sale, it must be preferred.
Besides, Elena was guilty of doubledealing, which cannot be sanctioned in law. It was, after all, her obligation
to evict the lessees. The lessees were in bad faith as well for having
knowledge of the supposed sale in favor of Yu and Lim. Their subsequent
registration of the sale cannot shield them in their fraud.

Espiritu vs. Valerio [G.R. No. L-18018. December 26, 1963.]

En Banc, Dizon (J): 9 concur, 1 took no part

Facts: On 15 September 1955 Valerio filed an action to quiet title in the

CFI Pangasinan (Civil Case 13293) against Esperanza Espiritu and Antonia
Apostol, alleging in his complaint that he was the owner of a parcel of
unregistered land containing an area of approximately 8,573 square
meters situated in Barrio Olo, Municipality of Mangatarem, Pangasinan,
having acquired the same from the former owner, Pelagia Vegilia, as
evidenced by a deed of sale executed by the latter in his favor on 31
January 1955; that Espiritu and Apostol had been asserting adversary
rights over said land and disturbing his possession thereof. Espiritu and
Apostol denied the material allegations of the complaint and alleged that
they were the owners of the land in question, having acquired it by
inheritance from the late Santiago Apostol, husband and father of
appellants Espiritu and Apostol, respectively; that said deceased bought
the property from Mariano Vegilia on 3 June 1934, as evidenced by the
deed of sale, who, in turn, had acquired it from his niece, Pelagia Vegilia,

Civil Case 6328). They claimed that their father, Lazaro, executed an
Absolute Deed of Sale dated 29 December 1980, conveying to his 10
children his allotted portion under the extrajudicial partition executed by
the heirs of Matias, which deed included the land in litigation (Lot 191).
Ricardo Tanedo, on the other hand, presented in evidence a Deed of
Revocation of a Deed of Sale dated 12 March 1981, wherein Lazaro
revoked the sale in favor of petitioners for the reason that it was
simulated or fictitious without any consideration whatsoever. Lazaro
however executed a sworn statement which virtually repudiated the
contents of the Deed of Revocation of a Deed of Sale and the Deed of Sale
in favor of Ricardo Tenedo, but 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 P5 to buy a drink. The trial
court decided in favor of Ricardo Tanedo and his wife, holding that his
children failed to adduce a preponderance of evidence to support (their)
On appeal and on 26 September 1991, the Court of Appeals (CA-GR CV
24987) affirmed the decision of the trial court, ruling that the Deed of Sale
dated 13 January 1981 was valid and that its registration in good faith
vested title in Ricardo Tanedo and his wife. The motion for reconsideration
was denied on 27 May 1992. Hence, the petition for review on certiorari
under Rule 45 of the Rules of Court by the children.
WON the Ricardo Taedo has a better right over the property against the
children of Lazaro Taedo? Yes
Since a future inheritance generally cannot be a subject of a contract, the
deed of sale and the affidavit of conformity made by Lazaro has no effect.
The subject of dispute therefore is the deed of sale made by him in favor of
spouses Taedo and another to his children after he already legally
acquired the property.
Thus, although the deed of sale in favor of private respondents was later
than the one in favor of petitioners, ownership would vest in the former
because of the undisputed fact of registration. On the other hand,
petitioners have not registered the sale to them at all.
Petitioners contend that they were in possession of the property and that
private respondents 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 property.

two witnesses, the trial court said that (1) an examination of first deed
reveals the glaring fact that it cannot be determined whose thumbmark is
the one appearing on said document for the simple reason that it
immediately precedes the name Anselmo Vegilia but it is under the name
Pelagia Vegilia. Ordinarily, this thumbmark would be considered as the
thumbmark of Anselmo Vegilia and not of Pelagia Vegilia; (2) that the one
who wrote the name Anselmo Vegilia is the very one who wrote the name
Pelagia Vegilia; (3) that Anselmo Vegilia could not have written the name
Anselmo Vegilia in the document for the simple reason that it has been
certified by the Notary Public that said Anselmo Vegilia is physically
incapable (inutil physicamente); (4) that there is an apparent difference of
the ink used in writing the names of Pelagia Vegilia and Anselmo Vegilia
from the ink used by the other persons who signed the document
indicating that the names Pelagia Vegilia and Anselmo Vegilia must have
been written in a much later date than the other names appearing in the
said document. On the other document, the names Mariano Vegilia and
Jose B. Aviles must have been written by only one man.)


Tanedo vs. CA

[G.R. No. 104482. January 22, 1996.] Third

Division, Panganiban (J): 4 concur

Facts: On 20 October 1962, Lazardo Taedo executed a notarized deed of

absolute sale in favor of his eldest brother, Ricardo Taedo, and the latters
wife, Teresita Barera, whereby he conveyed to the latter in consideration of
P1,500, 1 hectare of whatever share he shall have over Lot 191 of the
cadastral survey of Gerona, Tarlac (TCT T-1389 of the Register of Deeds of
Tarlac), the said property being his future inheritance from his parents.
Upon the death of his father Matias, Lazaro executed an Affidavit of
Conformity dated 28 February 1980 to re-affirm respect, acknowledge and
validate the sale he made in 1962. On 13 January 1981, Lazaro executed
another notarized deed of sale in favor of Ricardo Tanedo and his wife
covering his undivided 1/12 of a parcel of land known as Lot 191. He
acknowledged therein his receipt of P10,000 as consideration therefor. In
February 1981, Ricardo learned that Lazaro sold the same property to his
children, through a deed of sale dated 29 December 1980. On 7 June 1982,
Ricardo Tanedo and his wife recorded the Deed of Sale in their favor in the
Registry of Deeds and the corresponding entry was made in TCT16645.
Belinda Tanedo, for herself and in representation of her brothers and
sisters, and Teofila Corpuz Tanedo, representing her minor daughter, Verna
Tanedo, on 16 July 1982 filed a complaint for rescission (plus damages) of
the deeds of sale executed by Lazaro in favor of Ricardo Tanedo and his
wife covering the property inherited by Lazaro from his father with the
Regional Trial Court Tarlac (Branch 63, Third Judicial Region, Tarlac, Tarlac;

Legaspi yielded. On October 21, 1968, Cabaa formally sold the land to
spouses Legaspi by way of an absolute sale. The spouses Legaspi then
attempted to register the deed of sale, but failed because they could not
present the owner's duplicate of title which was still in the possession of
the PNB as mortgage. Subsequently, they were able to register the
document of sale on May 13, 1969 under Primary Entry No. 210113 of the
On November 29, 1968, Cabaa sold the same property to herein
petitioner Abelardo Cruz (now deceased), who, in turn, tried to register the
deed of sale on September 3, 1970. However, he was informed that
Cabaa had already sold the property to the spouses Legaspi, so he was
only able to register the land in his name on February 9, 1971. The CFI of
Quezon Province declared the spouses Legaspi as the true and rightful
owners of the subject property and the land title that Cruz had acquired as
null and void. The Court of Appeals affirmed said decision, but ordered
Cabaa reimburse to Cruz's heirs the amounts of P2,352.50, which the late
petitioner Abelardo Cruz paid to PNB to discharge the mortgage obligation
of Cabaa in favor of said bank, and the amount of P3,397.50, representing
the amount paid by said Abelardo Cruz to her as consideration of the sale
with pacto de retro of the subject property.
Whether or not the plaintiff, being the first to register the land
creates right of ownership and title to land in question against defendantspouses notwithstanding his knowledge of the first sale.
SC RULING: The Supreme Court affirmed in toto the appealed judgment
of appellate court, upholding spouses Teofilo Legaspi and Iluminada
Cabana as the true and rightful owners of the property in litigation and
ordering the issuance of a new title with the cancellation as null and void
of Title T-99140 obtained by Abelardo C. Cruz; and ordered Leodegracia
Cabana, in accordance with the partial grant of Cruz prayer for alternative
relief, to reimburse and pay to Cruz heirs the total sum of P5,750
(P2,352.50 as payment to PNB to discharge mortgage obligation, and
P3,397.50 as consideration of the sale with pacto de retro of the property).
No. The court ruled that the right of ownership and title to the land
must be resolved in favor of the defendant-spouse on three (3) counts.
First, the plaintiff was in bad faith in registering the title in his
name. It is necessary that the conveyance must have been made by the

(Facts: On October 20, 1962, Lazardo Taedo executed a deed of sale

regarding his future inheritance in favor of his eldest brother, Ricardo
Taedo. On February 28, 1980, Lazardo'sfather died and he made a
Affidavit of Conformity to the 1962 sale. On January 13, 1981, Lazardo
executed another deed of sale in favor of Ricardo regarding the same
lot in 1962. In February 1981, Ricardo learned that Lazaro sold the same
property to his children (petitioners) through a deed of sale dated
December 29, 1980. On June 7, 1982, Ricardo registered the deed of sale.
Petitioners then filed for recission and damages presenting documents
from the matias (Father) and Lazardo showing that the inheritance was to
be giving to them. Ricardo presented a "Deed of Revocation of a Deed of
Sale" dated March 12, 1981, wherein Lazaro revoked the sale in favor of
petitioners. Later Lazaro issued a sworn statement denying the deed of
revocation, but later testified that he sold the property to Ricardo and that
a lawyer later induced him to sell his property to his children.
1)Is the sale of a future inheritance valid?
2)Is the January 12, 1981 sale valid?
1) Art.1347 "no contract may be entered into upon a future inheritance
except in cases expressly authorized by law." the 1962 contract is void.
But the 1981 sale is valid as not using future inheritance.
2)Art.1544 if immovable property is sold to different buyers, ownership
shall belong to the person acquiring it who in good faith first recorded it in
the Registry of Property.
Petitioners failed to show bad faith on Ricardo's part. Trial Court's
findings on evidence affirmed in favor of Ricardo.)

7. Cruz vs. Cabana [G.R. No. 56232.

June 22, 1984.] First

Division, Teehankee (J): 5 concurring

Facts: In June 1965, respondent Leodegaria Cabaa sold the subject

property to respondent spouses Teofilo Legaspi and Iluminada Cabaa
(spouses Legaspi) under their contract entitled Bilihang Muling Mabibili
which stipulated that Cabaa can repurchase the land within one year from
December 31, 1966. The said land was not repurchased, however, so the
spouses Legaspi took possession of the said property. Later, Cabaa
requested that the land title be lent to her in order to mortgage the
property to the Philippine National Bank (PNB), to which the spouses

concerned. These amounts on account of a void second sale and must be

duly reimbursed by her to petitioner's heirs, but the Legaspi spouses
cannot be held liable therefor since they had nothing to do with the said
second sale nor did they receive any benefit therefrom. Petitioner's claim
for reimbursement of the amount of P102.58 as real estate taxes paid on
the property is not well taken because the respondents Legaspi spouses
had been paying the real estate taxes on the same property since June 1,

8. NAVERA V. CA (April 26, 1990)

Leocadio Navera owns a parcel of land in Albay which was inherited by his
5 children. His 3 children already have their share of the inheritance from
the other properties of Leocadio. The subject land was now owned by his 2
daughters. An OCT was issued in the name of Elena Navera (
refers to his sister Eduarda Navera)
When Elena died, his share of the land was inherited by her heirs Arsenio
and Felix Narez. The other portion was owned by Eduarda.
Eduarda sold her portion to her nephew Arsenio and then one year after to
Mariano Navera. Both sales were made in a public instrument but both
sales were also not registered in the Registry of Property.
WON the second sale of the property is valid.
Since the records show that both sales were not recorded in the Registry of
Property, the law clearly vests the ownership upon the person who in good
faith was first in possession of the disputed lot.
The possession viewed in the law includes not only the material but also
the symbolic possession, which is acquired by the execution of a public
instrument. This means that after the sale of a realty by means of a public
instrument, the vendor, who resells it to another, does not transmit
anything to the second vendee, and if the latter, by virtue of this second
sale, takes material possession of the thing, he does it as mere detainer,
and it would be unjust to protect this detention against the rights of the
thing lawfully acquired by the first vendee.

party who has an existing right in the thing and the power to dispose of it
(10 Manresa 170, 171). It cannot be setup by a second purchaser who
comes into possession of the property that has already been acquired by
the first purchaser in full dominion (Bautista v. Sison, 39 Phil. 615), this
notwithstanding that the second purchaser records his title in the public
registry, if the registration be done in bad faith, the philosophy underlying
this rule being that the public record cannot be covered into instruments of
fraud and oppression by one who secures an inscription therein in badfaith.
(Chupinghong vs. Borreros, 7 CA Rep. 669). A purchaser who has
knowledge of fact which would put him upon inquiry and investigation as
to possible defects of the title of the vendor and fails to make such inquiry
and investigation, cannot claim that he is a purchaser in good faith.
Knowledge of a prior transfer of a registered property by a subsequent
purchaser makes him a purchaser in bad faith and his knowledge of such
transfer vitiates his title acquired by virtue of the latter instrument of
conveyance which creates no right against the first purchaser (Reylago vs.
Jarabe , L-20046, March 27, 1968, 22 SCRA 1247).
Second, the defendant spouse registed the Deed of Absolute Sale
ahead of plaintiff-appellant but was not able to obtain the title as it was
still mortgage with PNB.
Third, defendant-spouses have been in possession of the property.
Under Article 1544 of the New Civil Code, If immovable property is sold to
different vendees, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the registry of property; and should
there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession (Soriano, et al. vs. The Heirs of
Domingo Magali et al., L-15133 , July 31, 1963, 8 SCRA 489). Respondentspouses Teofilo Legaspi and Iluminada Cabana were the first buyers, first
on June 1, 1965 under a sale with right of repurchase and later on October
21, 1968 under a deed of absolute sale and that they had taken possession
of the land sold to them; that petitioner was the second buyer under a
deed of sale dated November 29, 1968, which to all indications, contrary to
the text, was a sale with right of repurchase for ninety (90) days.
Petitioner's prayer for alternative relief for reimbursement of the amount of
P2,352.50 paid by him to the bank to discharge the existing mortgage on
the property and of the amount of P3,397.50 representing the price of the
second sale are well taken insofar as the seller Leodegaria Cabana is

P90,000.00, with legal interest from 3 September 1976, plus the costs of
The Supreme Court denied the petition and affirmed in toto the questioned
decision; with costs against AHDG.
1. Article 1544 Under Article 1544 of the Civil Code of the Philippines, it is
provided that 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 be movable
property. 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
2. Preferential right of first to register The first sale to Gundran was not
registered while the second sale to Cabautan was registered. Preferential
rights are accorded to Cabautan, who had registered the sale in his favor,
as against AHDGs coventurer whose right to the same property had not
been recorded.
3. Purchaser in good faith A purchaser in good faith is defined as one who
buys the 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. In the present case, an
examination of TCT 287416 discloses no annotation of any sale, lien,
encumbrance or adverse claim in favor of Gundran or AHDC.
4. Registered property under Torrens system; Person charge with notice of
burdens noted on the register of title When the property sold is registered
under the Torrens system, registration is the operative act to convey or
affect the land insofar as third persons are concerned. Thus, a person
dealing with registered land is only charged with notice of the burdens on
the property which are noted on the register or certificate of title.
5. Notices of lis pendes not a lien or encumbrance, merely notice of
litigation of property subject to the result of the suit Notices of lis pendens

In the case at bar, the prior sale of the land to respondent Arsenio Nares by
means of a public instrument is clearly tantamount to a delivery of the land
resulting in the material and symbolic possession thereof by the latter.

9. Agricultural and Home Extension Development

Group vs. CA [G.R. No. 92310. September 3, 1992.] First
Division, Cruz (J): 3 concurring
Facts: On 29 March 1972, the spouses Andres Diaz and Josefa Mia sold to
Bruno Gundran a 19-hectare parcel of land in Las Pias, Rizal, covered by
TCT 287416. The owners duplicate copy of the title was turned over to
Gundran. However, he did not register the Deed of Absolute Sale because
he said he was advised in the Office of the Register of Deeds of Pasig of the
existence of notices of lis pendens on the title. On 20 November 1972,
Gundran and Agricultural and Home Development Group (AHDG) entered
into a Joint Venture Agreement for the improvement and subdivision of the
land. This agreement was also not annotated on the title. On 30 August
1976, the spouses Andres Diaz and Josefa Mia again entered into another
contract of sale of the same property with Librado Cabautan. On 3
September 1976, by virtue of an order of the CFI Rizal, a new owners copy
of the certificate of title was issued to the Diaz spouses, who had alleged
the loss of their copy. On that same date, the notices of lis pendens
annotated on TCT 287416 were canceled and the Deed of Sale in favor of
Cabautan was recorded. A new TCT S-33850/T-172 was thereupon issued in
his name in lieu of the canceled TCT 287416.
On 14 March 1977, Gundran instituted an action for reconveyance before
the CFI Pasay City * against Librado Cabautan and Josefa Mia seeking,
among others, the cancellation of TCT 33850/T-172 and the issuance of a
new certificate of title in his name. On 31 August 1977, AHDG, represented
by Nicasio D. Sanchez, Sr. (later substituted by Milagros S. Bucu), filed a
complaint in intervention with substantially the same allegations and
prayers as that in Gundrans complaint. In a decision dated 12 January
1987, Gundrans complaint and petitioners complaint in intervention were
dismissed for lack of merit. So was Cabautans counterclaims, for
insufficiency of evidence.
Upon appeal, this decision was affirmed by the Court of Appeals, with the
modification that Josefa Mia was ordered to pay Gundran the sum of

ownership over the subject property because the seller, by reason of their
prior sale, had already lost whatever right or interest she might have had
in the property at the time the second sale was made. The excerpt was
included in the ponencia only as part of the narration of the background
facts and was not thereby adopted as a doctrine of the Court. It was
considered only for the purpose of ascertaining if the court below had
determined the issue of the possession of the subject property pending
resolution of the question of ownership. Obviously, the Court could not
have adopted that questionable ruling as it would clearly militate against
the provision of Article 1544.
10. No one can sell what he does not own; Article 1544 either an exception
to the general rule or a reiteration of the general rule insofar as innocent
third parties are concerned Justice Edgardo L. Paras observed that No one
can sell what he does not own, but this is merely the general rule. Is Art.
1544 then an exception to the general rule? In a sense, yes, by reason of
public convenience (See Aitken v. Lao, 36 Phil. 510); in still another sense,
it really reiterates the general rule in that insofar as innocent third persons
are concerned, the registered owner (in the case of real property) is still
the owner, with power of disposition.
11. Language of Article 1544 clear; Cabautan deemed owner The language
of Article 1544 is clear and unequivocal. In light of its mandate and of the
facts established in the present case, Ownership must be recognized in the
private respondent, who bought the property in good faith and, as an
innocent purchaser for value, duly and promptly registered the sale in his

10. Balatbat v. CA [G.R. No. 109410. August 28, 1996.] Second

division, Torres Jr (J): 4 concurring
Facts: On 15 June 1977, Aurelio A. Roque filed a complaint for partition
against his children Corazon, Feliciano, Severa and Osmundo Roque, and
Alberto de los Santos before the CFI Manila (Branch IX, Civil Case 109032).
The Roque children were declared in default and Aurelio presented
evidence ex-parte. On 29 March 1979, the trial court rendered a decision in
favor of Aurelio; holding that Aurelio and his wife Maria Mesina acquired
the lot (TCT 51330) during their conjugal union, as well as the house that

in favor of other persons were earlier inscribed on the title did not have the
effect of establishing a lien or encumbrance on the property affected. Their
only purpose was to give notice to third persons and to the whole world
that any interest they might acquire in the property pending litigation
would be subject to the result of the suit.
6. Cabautan a purchaser in good faith and for value Cabautan took the risk
of acquiring the property even in the light of notice of lis pendens inscribed
in the title. Significantly, three days after the execution of the deed of sale
in his favor, the notices of lis pendens were canceled by virtue of the
orders of the CFI Rizal, Branch 23, dated 1 and 4 April 1974. Cabautan
therefore acquired the land free of any liens or encumbrances and so could
claim to be a purchaser in good faith and for value.
7. No evidence of alleged possession by AHDG AHDG insists that it was
already in possession of the disputed property when Cabautan purchased it
and that he could not have not known of that possession. Such knowledge
should belie his claim that he was an innocent purchaser for value.
However, the courts below found no evidence of the alleged possession,
which the Supreme Court must also reject in deference to this factual
8. Casis vs. CA not applicable; Different issues The issue in the present
case is whether Cabautan is an innocent purchaser for value and so
entitled to the priority granted under Article 1544 of the Civil Code. The
Casis case, on the other hand, involved the issues of whether or not: 1)
certiorari was the proper remedy of the petitioner: 2) the previous petition
for certiorari which originated from the quieting of title case was similar to
and, hence, a bar to the petition for certiorari arising from the forcible
entry case; and 3) the court a quo committed grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the order which
dissolved the restraining order issued in connection with the ejectment
case. The Court was not called upon in that case to determine who as
between the two purchasers of the subject property should be preferred.
9. Excerpt used by AHDG a narration of background facts and not adopted
as a doctrine by the Supreme Court AHDG invokes the ruling of the lower
court in that case to the effect that the registration of the sale in favor of
the second purchaser and the issuance of a new certificate of title in his
favor did not in any manner vest in him any right of possession and

interest under it. The corresponding writ of possession was issued on 20

September 1982.
On 20 May 1982, Clara Balatbat filed a motion to intervene in Civil Case
134131 which was granted as per courts resolution of 21 October 1982.
However, Clara Balatbat failed to file her complaint in intervention. On 15
April 1986, the trial court rendered a decision dismissing the complaint,
and declaring the Deed of Absolute Sale dated 1 April 1980 as valid and
enforceable and Aurelio is, as he is hereby ordered, to partition and
subdivide the land covered by TCT 135671, and to aggregate therefrom a
portion equivalent to 6/10 thereof, and cause the same to be titled in the
name of spouses Repuyan, and after which, the latter to pay Aurelio the
sum of P45,000.00. Considering further that the spouses suffered damages
since they were forced to litigate unnecessarily, by way of their
counterclaim, Aurelio is hereby ordered to pay the spouses the sum of
P15,000.00 as moral damages, attorneys fees in the amount of P5,000.00;
with costs against Aurelio.
On 3 March 1987, Balatbat filed a notice of lis pendens in Civil Case
109032 before the Register of Deeds of Manila.
On 9 December 1988, Balatbat and her husband filed a complaint for
delivery of the owners duplicate copy of TCT 135671 before the RTC Manila
(Branch 24, Civil Case 88-47176) against Jose and Aurora Repuyan. On 27
January 1989, spouses Repuyan filed their answer with affirmative
defenses and compulsory counterclaim. The Repuyans and the Balatbats
submitted their memoranda on 13 November 1989 and 23 November
1989, respectively. On 2 August 1990, the RTC Manila rendered a decision
dismissing the complaint, finding that the Balatbats were not able to
establish their cause of action against the Repuyans and have no right to
the reliefs demanded in the complaint, and ordering Balatbat to pay the
Repuyans the amount of P10,000 as attorneys fees, P5,000 as costs of
litigation, and to pay the costs of the suit.
Dissatisfied, Balatbat filed an appeal before the Court of Appeals (CA-GR
CV 29994) which rendered decision on 12 August 1992, affirming the
judgment appealed from with modification deleting the awards of P10,000
for attomeys fees and P5,000 as costs of litigation. On 22 March 1993, the
Court of Appeals denied Balatbats motion for reconsideration. Hence, the
petition for review pursuant to Rule 45 of the Revised Rules of Court.

was constructed thereon; that when Maria Mesina died on 28 August 1966,
leaving no debt, Aurelio (as surviving spouse) was entitled to share proindiviso of the conjugal property (i.e. house and lot) and that Aurelio and
his 4 children were entitled to 1/5 share pro-indiviso each of the share
pro-indiviso forming the estate of Maria Mesina; ordering the partition of
the properties; and dismissing Aurelios claim for moral, exemplary and
actual damages and attorneys fees; without pronouncement as to costs.
On 2 June 1979, the decision became final and executory; with the
corresponding entry of judgment made 29 March 1979. On 5 October 1979,
the Register of Deeds of Manila issued TCT 135671 (with Aurelio Roque
having 6/10 share; and the Roque children with 1/10 share each).
On 1 April 1980, Aurelio sold his 6/10 share in TCT 135671 to spouses
Aurora Tuazon-Repuyan and Jose Repuyan as evidenced by a Deed of
Absolute Sale. On 21 July 1980, Aurora Tuazon Repuyan caused the
annotation of her affidavit of adverse claim on the TCT 135671, claiming
that she bought 6/10 portion of the property from Aurelio Roque for the
amount of P50,000.00 with a downpayment of P5,000.00 and the balance
of P45,000.00 to be paid after the partition and subdivision of the
property. On 20 August 1980, Aurelio Roque filed a complaint for
Rescission of Contract against spouses Repuyan before the then CFI
Manila (Branch IV, Civil Case 134131). The complaint is grounded on
spouses Repuyans failure to pay the balance of P45,000.00 of the
purchase price. On 5 September 1980, spouses Repuyan filed their answer
with counterclaim.
In the meantime, the trial court issued an order in Civil Case 109032
(Partition case) dated 2 February 1982, ordering the Deputy Clerk of the
court to sign the deed of absolute sale for and in behalf of Roque children
pursuant to Section 10, Rule 39 of the Rules of Court, in order to effect the
partition of the property involved in the case (P100,000 purchase price for
the 84 sq. ms. In Callejon Sulu, Sta. Cruz, Manila is reasonable and fair; and
that opportunities have been given to the children to sign the deed
voluntarily). A deed of absolute sale was executed on 4 February 1982
between Aurelio, Corazon, Feliciano, Severa and Osmundo Roque and Clara
Balatbat, married to Alejandro Balatbat. On 14 April 1982, Clara Balatbat
filed a motion for the issuance of a writ of possession which was granted
by the trial court on 14 September 1982 subject, however, to valid rights
and interest of third persons over the same portion thereof, other than
vendor or any other person or persons privy to or claiming any rights or

April 1, 1980. Subsequently, the same lot was sold again by vendor Aurelio
Roque (6/10) and his children (4/10), represented by the Clerk of Court
pursuant to Section 10, Rule 39 of the Rules of Court, on February 4, 1982.
Undoubtedly, this is a case of double sale contemplated under Article 1544
of the New Civil Code.


Evidently, private respondents Repuyan's caused the annotation of an

adverse claim on the title of the subject property on July 21, 1980. The
annotation of the adverse claim in the Registry of Property is sufficient
compliance as mandated by law and serves notice to the whole world. On
the other hand, petitioner filed a notice of lis pendens only on February 2,
1982. Accordingly, private respondents who first caused the annotation of
the adverse claim in good faith shall have a better right over herein
petitioner. As between two purchasers, the one who has 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
property. Further, even in default of the first registrant or first in
possession, private respondents have presented the oldest title. Thus,
private respondents who acquired the subject property in good faith and
for valuable consideration established a superior right as against the

(3) Whether petitioner is a buyer in good faith and for value

(3) Petitioner cannot be considered as a buyer in good faith. If petitioner

did investigate before buying the land on February 4, 1982, she should
have known that there was a pending case and an annotation of adverse
claim was made in the title of the property before the Register of Deeds
and she could have discovered that the subject property was already sold
to the private respondents. It is incumbent upon the vendee of the
property to ask for the delivery of the owner's duplicate copy of the title
from the vendor. One who purchases real estate with knowledge of a
defect or lack of title in his vendor cannot claim that he has acquired title
thereto in good faith as against the true owner of the land or of 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. Good faith, or the want of it is not a visible, tangible fact that can
be seen or touched, but rather a state or condition of mind which can only
be judged of by actual or fancied tokens or signs.

(1) Whether the alleged sale to private respondents was merely executory
(2) Whether there was double sale

(1) Contrary to petitioner's contention that the sale dated April 1, 1980 in
favor of private respondents Repuyan was merely executory for the reason
that there was no delivery of the subject property and that
consideration/price was not fully paid, we find the sale as consummated,
hence, valid and enforceable. The Court dismissed vendor's Aurelio Roque
complaint for rescission of the deed of sale and declared that the Sale
dated April 1, 1980, as valid and enforceable. No appeal having been
made, the decision became final and executory.
The execution of the public instrument, without actual delivery of the thing,
transfers the ownership from the vendor to the vendee, who may
thereafter exercise the rights of an owner over the same.In the instant
case, vendor Roque delivered the owner's certificate of title to herein
private respondent. The provision of Article 1358 on the necessity of a
public document is only for convenience, not for validity or enforceability. It
is not a requirement for the validity of a contract of sale of a parcel of land
that this be embodied in a public instrument. A contract of sale being
consensual, it is perfected by the mere consent of the parties. Delivery of
the thing bought or payment of the price is not necessary for the
perfection of the contract; and failure of the vendee to pay the price after
the execution of the contract does not make the sale null and void for lack
of consideration but results at most in default on the part of the vendee,
for which the vendor may exercise his legal remedies.
(2) Article 1544 of the Civil Code provides that in case of double sale of an
immovable property, ownership shall be transferred (1) to the person
acquiring it who in good faith first recorded it in the Registry of Property;
(2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the
oldest title, provided there is good faith. In the case at bar, vendor Aurelio
Roque sold 6/10 portion of his share to private respondents Repuyan on

filed a complaint for rescission of contract grounded on the buyers failure

to pay the balance of the purchase price. On February 4, 1982, another
deed of absolute sale was executed between Aurelio and his children, and
herein petitioner Clara Balatbat, involving the entire lot. Balatbat filed a
motion for the issuance of writ of possession, which was granted by the
court on September 20, 1982, subject to valid rights and interests of third
persons. Balatbat filed a motion to intervene in the rescission case, but did
not file her complaint in intervention. The court ruled that the sale between
Aurelio and Aurora is valid.)

(FACTS: A parcel of land was acquired by plaintiff Aurelio Roque and Maria
Mesina during their conjugal union. Maria died on August 28, 1966. On June
15, 1977, Aurelio filed a case for partition. The trial court held that Aurelio
is entitled to the portion at his share in the conjugal property, and 1/5 of
the other half which formed part of Marias estate, divided equally among
him at his 4 children. The decision having become final and executory, the
Register of Deeds of Manila issued a transfer certificate of title on October
5, 1979 according to the ruling of the court. On April 1, 1980, Aurelio sold
his 6/10 share to spouses Aurora Tuazon-Repuyan and Jose Repuyan, as
evidenced by a deed of absolute sale. On June 21, 1980, Aurora caused the
annotation of her affidavit of adverse claim. On August 20, 1980, Aurelio