CASE NO. 1
Del Prado vs. Caballero
G.R. No. 148225, March 3, 2010
FACTS:
On June 11, 1990, respondents sold to petitioner a lot on the basis of tax
declaration located at Guba Cebu City. Petitioner registered the same under
PD 1529. Petitioner claimed that the sale was for a lump sum containing an
area of 4,000 square meters, more or less.
However, when the land was registered on December 1990, the technical
description states that the lot measures 14,457 square meters, more or less.
Subsequently, petitioner filed an action in order to compel vendor to deliver all
that was included within said boundaries even if it exceeded the area specified
in the contract. Petitioners, likewise, alleged that the sale was of a lump sum.
In their defense, respondents contended that only 4,000 square meters was
sold to petitioner and the sale was not for a lump sum.
ISSUE:
Whether or not the sale of the land was for a lump sum
HELD:
The Court held in negative.
In the instant case, the sale was not a unit price contract. The parties agreed
on the purchase price of Php40, 000.00 for a predetermined area of 4,000
square meters, more or less.
In a contract of sale of a land mass, the specific boundaries stated therein must
control over any other statement, with respect to area contained within its
boundaries.
“More or less” is defined as approximately, or which intend to cover slight or
unimportant inaccuracies in quantity. This implies both parties assume risk of
ordinary discrepancy.
The Court, however, held that a discrepancy of 10,475 square meters cannot
be considered a slight difference in quantity. The difference in the area is
sizeable and too substantial to be overlooked. It is not a reasonable excess or
deficient that should be deemed included in the deed of sale.
CASE NO.
Cebu Winland Corporation vs. Ong Siao Hua
G.R. No. 173215, May 21, 2009
FACTS:
Respondent bought two (2) condominium units and four (4) parking slots from
petitioner while petitioner’s condominium was still under construction. The area
per unit was 155 square meters which costs Php 22,378.95 per square meter.
Possession of the property was turned over to Hua on October 10, 1996.
After the purchase price was fully paid on January 31, 1997, petitioner sent
Hua the Deeds of Sale. The latter was distressed to find that the floor area is
only 127 square meters, contrary to what was indicated in the price list. Hua
caused a verification survey and discovered the area to be only 110 square
meters. Hua demanded a refund but petitioner refused. Petitioner further
contended that the action has prescribed when it filed on August 7, 1998 after
possession was delivered to respondent on October 10, 1996.
ISSUE:
Whether or not the sale was one made with a statement of its area or at the
rate of a certain price for a unit of measure and not on a lump sum?
HELD:
The Court held that the sale was for a unit price. Accordingly, respondent is
entitled to relief under Article 1539 and not under Article 1542 of the New Civil
Code. Ong is entitled either a proportional reduction of the price or rescission
of a contract, at his option. Respondent however, chose the former remedy
when he prayed in his complaint a reduction of the price of Php 2 million paid
by him.
Likewise, the action has not yet prescribed since there was no delivery yet on
October 10, 1996. It appears that petitioner was already placed in possession
of the subject properties. However, it is only upon payment of the last
instalment when the absolute deed of sale was to be executed. This shows
that the ownership was still withheld by petitioner.
Consequently, there is no delivery yet to speak of. What was merely
transferred was possession and not ownership of the properties.
CASE NO. 3
SPOUSES ROQUE, Petitioner, vs. AGUADO, et.al, Respondent.
G.R. No. 193787 April 7, 2014
TOPIC: Contract of conditional sale, contract to sell, double sale
FACTS:
On July 21, 1977, petitioners-spouses Roque and the original owners of the
then unregistered Lot 18089 – namely, Rivero, et al. executed the 1977 Deed
of Conditional Sale over a 1,231-sq. m. portion of Lot 18089 for a consideration
of P30, 775.00. The parties agreed that Sps. Roque shall make an initial
payment of P15, 387.50 upon signing, while the remaining balance of the
purchase price shall be payable upon the registration of Lot 18089, as well as
the segregation and the concomitant issuance of a separate title over the
subject portion in their names. After the deed’s execution, Sps. Roque took
possession and introduced improvements on the subject portion which they
utilized as a balut factory.
Pertinent provision of the 1977 Deed of Conditional Sale:
DEED OF CONDITIONAL SALE OF REAL PROPERTY
KNOW ALL MEN BY THESE PRESENTS:
xxx
That for and in consideration of the sum of THIRTY THOUSAND SEVEN
HUNDRED SEVENTY FIVE PESOS (P30,775.00), Philippine Currency,
payable in the manner hereinbelow specified, the VENDORS do hereby sell,
transfer and convey unto the VENDEE, or their heirs, executors,
administrators, or assignors, that unsegregated portion of the above lot, x x
x.
That the aforesaid amount shall be paid in two installments, the first
installment which is in the amount of __________ (P15,387.50) and the
balance in the amount of __________ (P15,387.50), shall be paid as soon as
the described portion of the property shall have been registered under the
Land Registration Act and a Certificate of Title issued accordingly;
That as soon as the total amount of the property has been paid and the
Certificate of Title has been issued, an absolute deed of sale shall be
executed accordingly;
xxx
On August 12, 1991, Sabug, Jr, applied for a free patent over the
entire Lot 18089 and was eventually issued OCT No. M-59558 in his name on
October 21, 1991. On June 24, 1993, Sabug, Jr. and Rivero, in her personal
capacity and in representation of Rivero, et al., executed the 1993 Joint
Affidavit, acknowledging that the subject portion belongs to Sps. Roque and
expressed their willingness to segregate the same from the entire area of Lot
18089.
On December 8, 1999, however, Sabug, Jr., through the 1999 Deed of
Absolute Sale, sold Lot 18089 to Aguado for P2,500,000.00, who, in turn,
caused the cancellation of OCT No. M-5955 and the issuance of TCT No. M-
96692 dated December 17, 199911 in her name.
Thereafter, Aguado obtained an P8,000,000.00 loan from the Land Bank
secured by a mortgage over Lot 18089. When she failed to pay her loan
obligation, Land Bank commenced extra-judicial foreclosure proceedings and
eventually tendered the highest bid in the auction sale. Upon Aguado’s failure
to redeem the subject property, Land Bank consolidated its ownership, and
TCT No. M-11589513 was issued in its name on July 21, 2003.
On June 16, 2003, Sps. Roque filed a complaint for reconveyance, annulment
of sale, deed of real estate mortgage, foreclosure, and certificate of sale, and
damages before the RTC.
ISSUE:
Whether or not the 1977 Deed of Conditional Sale is a conditional
contract of sale or a contract to sell.
HELD:
It is a CONTRACT TO SELL. The Court held that where the seller
promises to execute a deed of absolute sale upon the completion by the buyer
of the payment of the purchase price, the contract is only a contract to sell
even if their agreement is denominated as a Deed of Conditional Sale, as in
this case. This treatment stems from the legal characterization of a contract to
sell, that is, a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to the
prospective buyer, binds himself to sell the subject property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, such as, the
full payment of the purchase price. Elsewise stated, in a contract to sell,
ownership is retained by the vendor and is not to pass to the vendee until full
payment of the purchase price.
In contracts to sell the obligation of the seller to sell becomes demandable
only upon the happening of the suspensive condition, that is, the full payment
of the purchase price by the buyer. It is only upon the existence of the contract
of sale that the seller becomes obligated to transfer the ownership of the thing
sold to the buyer. Prior to the existence of the contract of sale, the seller is not
obligated to transfer the ownership to the buyer, even if there is a contract to
sell between them.

Final installment not paid thus no perfected contract of sale

Here, it is undisputed that Sps. Roque have not paid the final installment of the
purchase price. As such, the condition which would have triggered the parties’
obligation to enter into and thereby perfect a contract of sale in order to
effectively transfer the ownership of the subject portion from the sellers (i.e.,
Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been
fulfilled. Consequently, the latter cannot validly claim ownership over the
subject portion even if they had made an initial payment and even took
possession of the same.

Conditional contract of sale and contract to sell in relation to double sale

It is essential to distinguish between a contract to sell and a conditional

contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person, as in the
case at bench.

In a contract to sell, there being no previous sale of the property, a third

person buying such property despite the fulfillment of the suspensive
condition such as the full payment of the purchase price, for instance, cannot
be deemed a buyer in bad faith and the prospective buyer cannot seek the
relief of reconveyance of the property.

There is no double sale in such case. Title to the property will transfer to the
buyer after registration because there is no defect in the owner-seller’s title per
se, but the latter, of course, may be sued for damages by the intending buyer.

The action for reconveyance shall fail.

CASE NO. 4 In this case, preponderance of evidence shows that respondents had been in
actual possession of their respective portions even prior to 1960.
SIGAYA vs. MAYUGA
GR. No. 143254, 18 Aug. 2005 There being occupants of the property, the Court cannot ascribe good faith to
Teodulfo who has not shown any diligence in protecting his rights.
FACTS:

Dionisia Alorsabes owned a three hectare land in Dao, Capiz, denominated as In this case, respondents derive their right over their respective portions either
Lot 3603. In 1934, she sold a portion of the lot to Juanito Fuentes while the through inheritance or sale from Dionisia while petitioners’ invoke their right
remainder was inherited by her children Paz Dela Cruz, Rosela Dela Cruz, and from the sale of the land from Francisco. Clearly, the law on double sales does
Consorcia Arroja (an adopted child), and a grandson, Francisco Abas, in not apply here.
representation of his deceased mother Margarita Dela Cruz. These four heirs
executed an Extra-Judicial Settlement with Sale dated February 4, 1964
wherein Consorcia sold her share with an area of 6,694 square meters to
spouses Balleriano Mayuga. On April 1, 1977, Paz also sold her share to
Honorato de los Santos. Later, another document entitled Extra-Judicial
Partition with Deed of Sale dated November 2, 1972 was uncovered wherein
the heirs of Dionisia purportedly adjudicated Lot 3603 among themselves and
sold their shares to Francisco. On January 9, 1978, Francisco executed a
Deed of Sale over Lot 3603 in favor of Teodulfo Sigaya. Thus, the title over Lot
3603 was cancelled and a new one was issued in the name of Teodulfo,
predecessor-in-interest of the petitioners herein.

The petitioners, who are the widow and children of Teodulfo, filed an action for
recovery of possession and damages against the herein respondents.

The trial court believes and that the evidence of actual occupation and
possession of the defendants of the portions of Lot 3603, to each of them
appertaining had been satisfactorily proven. From the evidence taken together
by its totality of evidence tilts more in favor of the defendants and against the
plaintiffs. The CA affirms the lower court’s decision.

ISSUE:

Whether Teodulfo Sigaya is a purchaser in good faith.

Whether there is double sale.

HELD:

In this case, petitioners failed to show that they fall under any of the exceptional
circumstances.

This Court has held that the burden of proving the status of a purchaser in
good faith lies upon one who asserts that status and this onus probandi cannot
be discharged my mere invocation of the legal presumption of good faith.
CASE NO. 5 heirs were planning to sell the Antipolo property, respondent caused the
annotation of an adverse claim. On 16 January 1996, when respondent
KINGS PROPERTIES CORPORATION, INC. v. GALIDO learned that OCT No. 535 was cancelled and new TCTs were issued,
G.R. No. 170023 November 27, 2009 respondent filed a civil complaint with the trial court against the Eniceo heirs
and petitioner. Respondent’s actions negate petitioner’s argument that
FACTS: respondent is guilty of laches.

Respondent Canuto A. Galido executed a Deed of Sale with the late Rufina
Eniceo and Maria Eniceo over the subject property. The certificate of title
covering the subject property was delivered to Galido.
Eniceo’s heirs filed a petition for the issuance of a new certificate of title over
the subject property. A new certificate of title was issued to the Eniceo heirs.
The Eniceo then sold the subject property to petitioner Kings Properties Corp.
and a new certificate of title was issued to the latter.
True, unrecorded sales of land brought under Presidential Decree No. 1529
or the Property Registration Decree (PD 1529) are effective between and
binding only upon the immediate parties. The registration required in Section
51 of PD 1529 is intended to protect innocent third persons, that is, persons
who, without knowledge of the sale and in good faith, acquire rights to the
property. Petitioner, however, is not an innocent purchaser for value.

When Galido found out that a new certificate of title was issued to the Eniceo
heirs, he filed a criminal case against them for false testimony. Respondent
also filed a civil complaint with the trial court against the Eniceo heirs and
petitioner. The trial court ruled against Galido, declaring that the latter slept on
his rights. On appeal to the CA, the appellate court held that respondent is not
guilty of laches.

Petitioner contends that respondent is guilty of laches because he slept on his

rights by failing to register the sale of the Antipolo property at the earliest
possible time. Petitioner claims that despite respondent’s knowledge of the
subsequent sale in 1991, respondent still failed to have the deed of sale
registered with the registry of deeds.

ISSUE:

Whether or not respondent Galido is guilty of laches.

HELD:

The Court held that Galido is not guilty of Laches.

The essence of laches is the failure or neglect, for an unreasonable and

unexplained length of time, to do that which, through due diligence, could have
been done earlier, thus giving rise to a presumption that the party entitled to
assert it had either abandoned or declined to assert it.

Respondent discovered in 1991 that a new owner’s copy of OCT No. 535 was
issued to the Eniceo’s heirs. Respondent filed a criminal case against the
Eniceo’s heirs for false testimony. When respondent learned that the Eniceo
CASE NO. 7 RULING:

Spouses Suntay vs. Keyser Mercantile, Inc.
GR 208462, Dec. 10, 2014
DOCTRINE:
A levy on execution duly registered takes preference over a prior unregistered
sale. Levy on execution is superior to the subsequent registration of the deed
of absolute sale. Primus tempore, potior jure (first in time, stronger in right).
FACTS:
Bayfront and Keyser entered into a Contract to Sell. The property involved is
a condominium Unit G with 2 parking slots in Bayfront Tower Condominium
covered by CCT No. 15802. It has been fully paid by Keyser but the sale was
not duly registered with the Registry of Deeds, hence the title over the property
remained with Bayfront. It is a clean title.
YES. The doctrine is well settled that a levy on execution duly registered takes
preference over a prior unregistered sale.
In this case, the contract to sell between Keyser and Bayfront was executed
on October 20, 1989, but the deed of absolute sale was only made on
November 9, 1995 and registered on March 12, 1996. The Notice of Levy in
favor of Spouses Suntay was registered on January 18, 1995, while the
Certificate of Sale on April 7, 1995, both dates clearly ahead of Keyser’s
registration of its Deed of Absolute Sale. Evidently, applying the doctrine of
primus tempore, potior jure (first in time, stronger in right), Spouses Suntay
have a better right than Keyser.

Spouses Suntay also purchased several condominium units from Bayfront.

Despite payment of the full purchase price, Bayfront failed to deliver the
condominium units. When Bayfront failed to reimburse the full purchase price,
Spouses Suntay filed an action against it for rescission of contract, sum of
money, and damages before the HLURB. HLURB rescinded the Contract to
Sell and ordered Bayfront to pay Spouses Suntay the full purchase price with
interest. Upon the application of Spouses Suntay, the Sheriffs of Manila RTC
levied Bayfront’s titled properties, including the subject condominium Unit G
and the two parking slots.

Considering that CCT No. 15802 was still registered under Bayfront with a
clean title, the sheriffs deemed it proper to be levied. The levy on execution
was duly recorded in the Register of Deeds of Manila. An auction sale
proceeded and the highest/winning bidders were the Sps. Suntay. The
Certificate of Sale in favor of Spouses Suntay was issued. This was duly
annotated at the back of CCT No. 15802.

Keyser filed a complaint for annulment of auction sale, writ of execution,

declaration of nullity of title, and reconveyance of property with damages
against Spouses Suntay.

ISSUE:

Whether or not the latter duly recorded levy on execution takes preference
over the prior unregistered contract to sell
CASE NO. 8

AMADA COTONER-ZACARIAS v . SPOUSES ALFREDO REVILLA AND

THE HEIRS OF PAZ REVILLA
G.R. No. 190901, November 12, 2014

Those who rely in good faith on a clean title issued under the Torrens system
for registered lands must be protected. On the other hand, those who
purchase unregistered lands do so at their own peril.

FACTS:

Spouses Revilla are owners of land located in Cavite. They faced financial
difficulties, so Paz Castillo- Revilla borrowed money from Amada Cotoner-
Zacarias. By way of security, the parties verbally agreed that Amada would
take physical possession of the property, cultivate it, then use the earnings
from the cultivation to pay the loan and realty taxes and that upon full payment
of the loan, Amada would return the property to the Revilla spouses. Unknown
to the Revilla spouses, Amada presented a fictitious document entitled
“Kasulatan ng Bilihan ng Lupa” before the Provincial Assessor of Cavite with
the Revilla Spouses as sellers and Amada as buyers. Consequently, Tax
Declaration in the name of the Revilla spouses was cancelled, and a new one
was issued to Amada. Then Amada sold the property to the Casorla spouses
who then sold it to the Sun Spouses. When Alfredo Revilla returned from Saudi
Arabia, he discovered that the property’s tax declaration was already in the
name of the Sun spouses.

Spouses Revilla filed a complaint before the RTC for the annulment of sales
and transfers of title and reconveyance of the property with damages against
Amada, who contends that the Sun spouses were buyers in good faith for
value.

ISSUE:

Whether the property should be reinstated in favor of Revilla spouses

RULING:

No. Amada argues that the subsequent buyer of the disputed parcel of land is
in good faith. The issue of whether the buyer of realty is in good or bad faith is
relevant only where the subject of the sale is registered land and the purchase
was made from the registered owner whose title to the land is clean. The good
faith argument cannot be considered as this case involves unregistered land.
In any case, this is a defense personal to the Sun spouses and cannot be
borrowed by petitioner. The Sun spouses no longer raised this argument on
appeal, but only made a partial appeal regarding legal interest on the award
CASE NO. 9 of her title and the issuance of a new one. The forged instrument eventually
became the root of a valid title in the hands of an innocent purchaser for value.
Spouses Peralta vs. Heirs of Abalon The new title under the name of the forger was registered and relied upon by
G.R. No. 183448, June 30, 2014, the innocent purchaser for value. Hence, it was clear that there was a
complete chain of registered titles.

FACTS:

The instant case before the RTC Legazpi City involved a parcel of land
described as Lot 1679 consisting of 8,571 square meters covered by OCT No.
(O) 16 and registered under the name of Bernardina Abalon. It was
fraudulently transferred to Restituto Rellama by executing a Deed of Sale and
who, in turn, subdivided the subject property and sold it separately to the other
parties - Spouses Dominador and Ofelia Peralta (TCT No. 42252); and
Marissa, Leonil and Arnel, all surnamed Andal (TCT No. 42482 and TCT No.
42821). Thereafter, Spouses Peralta and the Andals individually registered
the respective portions of the land they had bought under their names. The
heirs of Bernardina were claiming back the land, alleging that since it was sold
under fraudulent circumstances, no valid title passed to the buyers. On the
other hand, the buyers, who were now title holders of the subject parcel of
land, averred that they were buyers in good faith and sought the protection
accorded to them under the law.

ISSUE:

Whether a forged instrument may become the root of a valid title in the hands
of an innocent purchaser for value, even if the true owner thereof has been in
possession of the genuine title, which is valid and has not been cancelled.

RULING:

Yes. The established rule is that a forged deed is generally null and cannot
convey title, the exception thereto, pursuant to Section 55 of the Land
Registration Act, denotes the registration of titles from the forger to the
innocent purchaser for value. Thus, the qualifying point here is that there must
be a complete chain of registered titles. This means that all the transfers
starting from the original rightful owner to the innocent holder for value – and
that includes the transfer to the forger – must be duly registered, and the title
must be properly issued to the transferee. Contrary to what the Abalons would
like to impress on us, Fule and Torres do not present clashing views. In Fule,
the original owner relinquished physical possession of her title and thus
enabled the perpetrator to commit the fraud, which resulted in the cancellation
CASE NO. 10
Alfaro et.al vs. Sps. Dumalagan, et. al.
G.R. No. 186622 January 22, 2014
DOCTRINE:
Article 1544 clearly states that the rule on double or multiple sales applies
only when all the purchasers are in good faith. In detail Art. 1544 requires
that before the second buyer can obtain priority over the first, he must show
that he acted in good faith throughout, i.e., in ignorance of the first sale and
of the firstbuye’1s rights, from the time of acquisition until the title is
transferred to him by registration or failing registration, by delivery of
possession.
and pays a full and fair price for the same at the time of such purchase, or
before he has notice of some other person’s claim or interest in the property.
The petitioners are not such purchaser. Petitioners, based on evidence
presented, had admitted that they have prior knowledge of the previous sales
by installment of portions of the property to several purchasers based on the
annotation in the title. Moreover, petitioners had prior knowledge of
respondents’ possession over the subject property. Hence, the rule on double
sale is inapplicable in the case at bar. As correctly held by the appellate court.
Petitioner’s prior registration with prior knowledge of respondents’ claim of
ownership and possession, cannot confer ownership or better right over the
subject property.

FACTS:

Sps. Prosperous and Peblia Alfaro bought a lot from Sps. Bagano through a
Deed of absolute Sale on June 1995. The subject property was presently
occupied by Sps. Dumalagan. Due to such circumstance and to allegedly
protect their right, the Sps. Alfaro filed a petition. Spouses Dumalagan
presented the notarized Deed of Absolute Sale dated December 6, 1993 and
certificate, they are the real owner of a portion of the subject property, based
on a notarized Deed of Absolute Sale dated December 6, 1993 and a
certificate of completion and a certificate of occupancy, both dated August
10,1993.

Spouses Bagano filed a complaint for Declaration of nullity of Sale with

Damages and Preliminary injunction against petitioners. In said case, this court
sustained the validity of the Deed of Absolute Sale between petitioners and
Spouses Bagano, which the appellate court reversed and set aside. According
to the Appellate court, petitioners cannot claim good faith by referring to the
annotations written at the back of Bagano’s title.

It stated that regardless if the petitioners name was not stated in the annotated
adverse claims it still have the effect of constructive notice of the defect in the
seller’s title that made them as subsequent buyers. Such fact can be
considered as an evidence that Sps. Alfaro had prior notice that the property
they bought had prior owners.

ISSUE:

Whether or not the petitioners are considered as buyer in good faith?

RULING:

No, a purchaser in good faith is one who buys the property of another without
notice that some other person has a right to, or an interest in such property,
CASE NO. 11
Hector Uy vs. Virginia Fule
G.R. No. 164961 (2014)
BUYER IN GOOD FAITH
DOCTRINES:
Generally, a buyer is not required to inquire beyond the title if the requisites
of good faith concur. However, absent one or two of the requisites, then the
law itself puts the buyer on notice and obliges the latter to exercise a higher
degree of diligence by scrutinizing the certificate of title and examining all
factual circumstances in order to determine the seller’s title and capacity to
transfer any interest in the property.
FACTS:
Conrado Garcia (CG) owned a vast tract of land. Upon his death, his heirs
entered an extrajudicial settlement of his estate including the land and
thereafter caused its registration under their names. Meanwhile, DAR officials
issued a joint certification that said land was an “untitled” property owned by
CG. As such, it was then included in the Operation Land Transfer program
pursuant to PD No. 27. The offices issued Emancipation Patents and Original
Certificate of Titles to farmer-beneficiaries like Mariano Ronda (MR). MR sold
his portion to Chisan Uy then Chisan Uy’s heirs, sold the said land to Hector
Uy. In 1997, the TCT of CG was cancelled and subsequently issued in the
names of the heirs of Garcia under a new TCT. In 1998, DAR Secretary issued
the EPs to farmer-beneficiaries like MR. However, CG’s TCT was already in
the name of Hector Uy. Because of this, the heirs of CG filed a complaint
assailing the certificates of titles issued to purchasers Chisan and Hector Uy.
RTC favored respondents. CA affirmed. SC affirmed CA.
ISSUE:
WON Hector Uy, who got the land from the heirs of the farmer beneficiary
Mariano Ronda, was an innocent purchaser for value who had better rights
than the heirs of Conrado Garcia over the disputed land.
RULING:
NO. He did not exercise reasonable precaution by inquiring beyond the title.
Third requisite was absent. Hence, he cannot be awarded the disputed land.
RATIO:
There is good faith when the following conditions concur:
1. the seller is the registered owner of the land;
2. the latter is in possession thereof; and
3. at the time of the sale, the buyer was not aware of any claim or
interest of some other person in the property, or of any defect or
restriction in the title of the seller or in his capacity to convey title to
the property.
Absent one or two of the foregoing conditions, then the law itself puts the buyer
on notice and obliges the latter to exercise a higher degree of diligence by
scrutinizing the certificate of title and examining all factual circumstances in
order to determine the seller’s title and capacity to transfer any interest in the
property. Under such circumstance, it was no longer sufficient for said buyer
to merely show that he had relied on the face of the title; he must now also
show that he had exercised reasonable precaution by inquiring beyond the
title. Failure to exercise such degree of precaution makes him a buyer in bad
faith.
In this case, the deed of sale executed between the heirs of Ronda and the
petitioner were issued only on August 17, 1998 but the deed of sale was
executed on July 31, 1998. Evidently, the petitioner entered into the deed of
sale without having been able to inspect the TCTs since they were still
inexistent. His only basis were the OCTs and such categorically stated that
they were entered pursuant to an emancipation patent pursuant to Operation
Land Transfer. It provided that it shall not be transferred except by hereditary
succession or to the government. Hence, the third element was negated. At
the time of the sale, the buyer was already aware of any restriction in the title
of the seller or in his capacity to convey title to the property. The absence of
the third condition put the petitioner on notice and obliged him to exercise a
higher degree of diligence by scrutinizing the certificates of title and examining
all factual circumstances in order to determine the seller’s title and capacity to
transfer any interest in the lot.