Ang Yu Asuncion et al. vs. Court of Appeals and Buen Realty Corp.

(G.R. No. 109125, December 2, 1994)

Ponente: Vitug

Topic: Sales; Contract of sale v. Contract to sell; remedies for violation of right of first refusal

Facts:

Petitioners Ang Yu Asuncion et. al. are lessees of residential and commercial spaces owned by the
Unjiengs. They have been leasing the property and possessing it since 1935 and have been paying
rentals.

In 1986, the Unjiengs informed Petitioners Ang Yu Asuncion that the property was being sold and that
Petitioners were being given priority to acquire them (Right of First Refusal). They agreed on a price of
P5M but they had not yet agreed on the terms and conditions. Petitioners wrote to the Unjiengs twice,
asking them to specify the terms and conditions for the sale but received no reply. Later, the petitioners
found out that the property was already about to be sold, thus they instituted this case for Specific
Performance [of the right of first refusal].

The Trial Court dismissed the case. The trial court also held that the Unjieng’s offer to sell was never
accepted by the Petitioners 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. Nonetheless, the lower court ruled that should
the defendants subsequently offer their property for sale at a price of P11-million or below, plaintiffs will
have the right of first refusal.

The Court of Appeals affirmed the decision of the Trial Court.

In the meantime, in 1990, the property was sold to De Buen Realty, Private Respondent in this case. The
title to the property was transferred into the name of De Buen and demanded that the Petitioners vacate
the premises.

Because of this, Petitioners filed a motion for execution of the CA judgement. At first, CA directed the
Sheriff to execute an order directing the Unjiengs to issue a Deed of Sale in the Petitioner’s favour and
nullified the sale to De Buen Realty. But then, the CA reversed itself when the Private Respondents
Appealed.

Issues:

Whether or not the Contract of Sale is perfected by the grant of a Right of First Refusal.

Whether or not a Right of First Refusal may be enforced in an action for Specific Performance.

Held:

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.
Equatorial Realty Dev’t, Inc. vs. Mayfair Theater, Inc.

FACTS:

Carmelo and Bauermann, Inc. leased its parcel of land with two-storey building to Mayfair Theater,
Inc. Carmelo informed Mayfair that they intend to sell the entire property. Mayfair replied that they were
interested to buy the entire property if the price is reasonable. However, Carmelo sold the entire property
to Equatorial. Mayfair filed an action for specific performance and annulment of the sale because it
violated their exclusive option to purchase the property for 30 days as stipulated in the lease contract.
Carmelo contended that it informed Mayfair their desire to sell the property and the option to purchase by
Mayfair is null and void for lack of consideration.

ISSUE:

WON the option to purchase in the leased contract is an option contract or a right of first refusal?

WON the sale of the property to Equatorial is valid?

HELD:

RIGHT OF FIRST REFUSAL. Under the law, an option is a contract granting a privilege to buy and sell
within an agreed period of time for a determined price and must be supported by consideration distinct
from the price. Whereas, right of first refusal is part of the entire contract of lease. In this case, the right of
first refusal is an integral part of the lease contract between Carmelo and Mayfair and no separate
consideration shall be needed to be binding.

The sale is rescissible. Both Carmelo and Equatorial acted in bad faith knowing that a right of first refusal
was agreed upon in the lease contract and Mayfair was an interested buyer of the property.
VILLONCO REALTY v. BORMAHECO July 25, 1975

FACTS:

Bormaheco Inc. agreed 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.

Villonco issued a check to Bormaheco amounting to P100,000 as earnest money. Twenty-six (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.

Villonco rejected the return of the check and demanded for specific performance.

ISSUE:

WON Bormaheco is bound to perform the contract with Villonco.

HELD:

Yes. 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).

The contract was already completed when Bormaheco accepted the offer by Villonco. The acceptance
can be proved when Bormaheco accepted the check from Villonco and then returned it with 10% interest
as stipulated in the terms made by Villonco. Further, the fact that Villonco did not object when
Bormahecoencashed the check is a proof that it accepted the offer of Bormaheco.
DOROMAL V. CA (September 5, 1975)

FACTS:

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.

ISSUE:

WON the period to repurchase of petitioner has already lapsed.

HELD:

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 30-
day 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 redemptioner’s
right is to be subrogated by the same terms and conditions stipulated in the contract.
GOLDENROD INC. V. CA (November 04, 1998)

FACTS:

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 respondent’s debt to UCPB. Respondent caused 2 land titles to the property.

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.

ISSUE:

WON respondent should return the earnest money of the petitioner.

HELD:

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 rescission, 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.
Dalion vs. CA

FACTS:

Dalion and Sabasaje executed a contract of sale of parcel of land in a private document. Dalion
challenged the validity of the sale contending that it was conveyed in a private document but the law
requires that it must be in a public document.

ISSUE:

WON the contract of sale is valid?

HELD:

YES. The provision of Article 1358 of the Civil Code on the necessity of a public document is only for
convenience, not for validity or enforceability. In this case, the contract of sale was embodied in a private
document and it does not affect the validity of the contract. Therefore, the contract of sale is valid.
Yuvienco vs. Dacuycuy

FACTS:

Atty. Gamboa sent a letter to Yao King Ong stating the willingness to sell the land to latter. Yao King Ong
replied by telegram with the following words “we agree to buy proceed to Tacloban to negotiate details”.
Yao King Ong filed a suit for specific performance against the petitioners. Petitioners contended that the
contract of sale is unenforceable under the Statute of Frauds and there was no absolute acceptance
made by the respondents. Hence, there was no perfected contract of sale.

ISSUE:

WON there was a perfected contract of sale?

HELD:

The court ruled that the acceptance was not absolute under Article 1319 of the Civil Code. In this case,
the respondents only said that they are open to negotiate which is opposite to the idea that an agreement
had been reached. Therefore, there was no perfected contract of sale.
FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the Philippines) and
MERCURIO RIVERA vs. CA, CARLOS EJERCITO in substitution of DEMETRIO DEMETRIA, and JOSE
JANOLO

G.R. No. 115849

January 24, 1996

J. PANGANIBAN

FACTS: Producer Bank of the Philippines acquired 6 parcels of land at Laguna. The property used to be
owned by BYME Investment and Development Corporation which had them mortgaged with the bank as
collateral for a loan. Demetrio Demetria and Jose O. Janolo wanted to purchase the property and thus
initiated negotiations for that purpose.

In August 1987, Demetria and Janolo met with Mercurio Rivera, Manager of the Property Management
Department of the Bank to discuss their plan to buy the property. Thereafter, they had a series of letters
where parties accepted the offer of Demetria and Janolo. Later in October, the conservator of the bank
(which has been placed under conservatorship by the Central Bank since 1984) was replaced; and
subsequently the proposal of Demetria and Janolo to buy the properties was under study pursuant to the
new conservator’s mandate. After which, a series of demands ensued.

http://noobcasedigest.blogspot.com/2019/02/first-philippine-international-bank-vs.html
VDA. DE JOMOC V. CA (August 02, 1991)

FACTS:

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 agreement.

ISSUE:

WON the sale is enforceable.

HELD:

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.
Cuyugan vs. Santos

G.R. No. 10265. March 3, 1916

FACTS:

A deed of sale was executed as a security for loan that Guillerma have with Santos. In the deed of
sale, Guillerma shall continue to have possession of the land and pay the loaned amount. Cuyagan
offered to pay the balance of the amount that his mother owed to Santos but the latter refused. Santos
filed an action alleging that the period of the right to repurchase has expired. Cuyugan contended that the
sale was only a security of the loan or mortgage.

ISSUE:

WON the transaction is a sale or mortgage?

HELD:

MORTGAGE. Under the law, the intention of the parties shall be given force not the provisions of the
instrument on its face. In the case at bar, what was intended by the parties was for the deed of sale to be
a consideration for a loan or mortgage. Therefore, the transaction was mortgage.
ADDISON V. FELIX (August 03, 1918)

FACTS:

Petitioner Addison sold four parcels of land to Defendant spouses Felix and Tioco located in Lucena City.
Respondents paid 3K for the purchase price and promised to pay the remaining by installment. The
contract provides that the purchasers may rescind the contract within one year after the issuance of title
on their name.

The petitioner went to Lucena for the survey designaton and delivery of the land but only 2 parcels were
designated and 2/3 of it was in possession of a Juan Villafuerte.

The other parcels were not surveyed and designated by Addison.

Addison demanded from petitioner the payment of the first installment but the latter contends that there
was no delivery and as such, they are entitled to get back the 3K purchase price they gave upon the
execution of the contract.

ISSUE:

WON there was a valid delivery.

HELD:

The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels of land,
he was not even able to show them to the purchaser; and as regards the other two, more than two-thirds
of their area was in the hostile and adverse possession of a third person.

It is true that the same article declares that the execution of a public instruments is equivalent to the
delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may
produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing
sold that, at the moment of the sale, its material delivery could have been made. It is not enough to confer
upon the purchaser the ownership and the right of possession. The thing sold must be placed in his
control. When there is no impediment whatever to prevent the thing sold passing into the tenancy of the
purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is
sufficient. But if there is an impediment, delivery cannot be deemed effected.
DANGUILAN V. AIC (November 28, 1988)

FACTS:

A residential and farm lot in Cagayan owned by Dominggo Melad were being claimed by petitioner Felix
Danguilan and respondent Apolonia Melad. Apolonia contends that she acquired the property when
Dominggo Melad sold it to her when she was just three years old in which her mother paid the
consideration. She contends that she just moved out of the farm only when in 1946 Felix Danguilan
approached her and asked permission to cultivate the land and to stay therein. Dangguilan presented for
his part 2 documents 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.

HELD:

The ruling should be in favor of Danguilan. The contention of Apolonia that the deed of donation is void
because it was not made through a public document is of no merit. The deed was an onerous one and
hence, it was not covered by the rule in Article 749 requiring donations of real properties to be effected
through a public instrument. An onerous donation is effective and valid if it embraces the conditions that
the law requires. Since it has been proven that Danguilan did the conditions in the onerous donation
particularly the arrangement of Dominggo’s burial, the deed is deemed valid.

On the other hand, the deed of sale made in favor of Apolonia is suspicious. One may well wonder why
the transfer was not made to the mother herself, who was after all the one paying for the lands. The
averment was also made that the contract was simulated and prepared after Domingo Melad's death in
1945.

Even assuming the validity of the deed of sale, the record shows that the private respondent did not take
possession of the disputed properties and indeed waited until 1962 to file this action for recovery of the
lands from the petitioner. If she did have possession, she transferred the same to the petitioner in 1946,
by her own sworn admission, and moved out to another lot belonging to her step-brother. 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. Ownership does not pass by mere
stipulation but only by delivery.
PASAGUI V. VILLABLANCA (November 10, 1975)

FACTS:

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.

ISSUE:

WON the case is of forcible entry.

HELD:

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.
DY V. CA (July 08, 1991)

FACTS:

Wilfredo Dy bought a truck and tractor from Libra Finance Corporation. Both truck and tractor was also
mortgage to Libra as security for a loan and as such, they took possession of it. Brother of Wilfredo,
Perfecto Dy and sister Carol Dy-Seno requested Libra that they be allowed to buy the property and
assume the mortgage debt. Libra agreed to the request.

Meanwhile, a collection suit was filed against Wilfredo Dy by Gelac Trading Inc. On the strength of a writ
of execution, the sheriff was able to obtain the tractor on the premises of Libra. It was sold in a public
auction in which Gelac Trading was the lone bidder. Gelac subsequently sold it to one of their
stockholders.

The respondents claim that at the time of the execution of the deed of sale, no constructive delivery was
effected since the consummation of the sale depended upon the clearance and encashment of the check
which was issued in payment of the subject tractor

ISSUE:

WON the William Dy is still the owner of the tractor when it was obtained through the writ of execution.

HELD:

The tractor was not anymore in possession of William Dy when it was obtained by the sheriff because he
already sold it to his brother.

William Dy has the right to sell his property even though it was mortgage because in a mortgage, the
mortgagor doesn’t part with the ownership over the property. He is allowed to sell the property as long as
there is consent from the mortgagee such as in this case. But even if there is no consent given, the sale
would still be valid without prejudice to the criminal action against the mortgagor.

When William Dy sold the tractor, he already transferred the ownership of it because NCC states that the
ownership of the thing sold is acquired by the vendee from the moment it is delivered to him or in any
other manner signing an agreement that the possession is transferred from the vendor to the vendee. In
the instant case, actual delivery of the subject tractor could not be made but there was constructive
delivery already upon the execution of a public instrument which in this case is a deed of sale.

The payment of the check was actually intended to extinguish the mortgage obligation.
Dy, Jr. v. Court of Appeals 198 SCRA 826 July 8, 1991

FACTS :

Wilfredo Dy purchased a truck and a farm tractor through LIBRA which was also mortgaged with the
latter, as a security to the loan. Petitioner, expresses his desire to purchased his brother’s tractor in a
letter to LIBRA which also includes his intention to shoulder its mortgaged. LIBRA approved the request.
At the time that Wilfredo Dy executed a deed of absolute sale in favor of petitioner, the tractor and truck
were in the possession of LIBRA for his failure to pay the amortization. When petitioner finally fulfilled its
obligation to pay the tractor, LIBRA would only release the same only if he would also pay for the truck. In
order to fulfill LIBRA’s condition, petitioner convinced his sister to pay for the remaining truck, to which
she released a check amounting to P22,000. LIBRA however, insisted that the check must be first cleared
before it delivers the truck and tractor.

Meanwhile, another case penned “Gelac Trading Inc vs. Wilfredo Dy” was pending in Cebu as a case to
recover for a sum of money (P12,269.80). By a writ of execution the court in Cebu ordered to seize and
levy the tractor which was in the premise of LIBRA, it was sold in a public auction to which it was
purchased by GELAC. The latter then sold the tractor to Antonio Gonzales.

RTC rendered in favor of petitioner. CA dismissed the case, alleging that it still belongs to Wilfredo Dy.

ISSUE:

Whether or not there was a consummated sale between Petitioner and LIBRA?
POWER COMMERCIAL V. CA (June 20, 1997)

FACTS:

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.

ISSUE:

WON the contract is rescissible due to breach of contract.

HELD:

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.
VILLARTA V. CA (May 29, 1987)

FACTS:

Respondent Rosalinda Cruz entrusted to petitioner Victoria Villarta seven pieces of jewelry on November
1968. On December of the same year, Villarta exchanges one jewelry to another and issued a post-dated
check in favor of Cruz. Cruz deposited the check but it was dishonored for lack of funds.

An estafa case was filed against Villarta but she argued that she can only be civilly liable because even
though the check bounced, she only gave it for a pre-existing obligation. She contends a person cannot
be imprisoned for non-payment of debt.

ISSUE:

WON the transaction is a “sale or return”

HELD:

The transaction is not a sale or return but a sale on approval or sale on acceptance.

When Cruz gave the jewelry to Villarta on November, the clear intention is to make the latter choose
which item she wanted to buy. There was no meeting of the minds yet at this point and hence, it cannot
be considered as delivery.

If ownership over the jewelry was not transmitted on that date, then it could have been transmitted only in
December 1968, the date when the check was issued. In which case, it was a "sale on approval" since
ownership passed to the buyer. Vallarta, only when she signified her approval or acceptance to the seller,
Cruz, and the price was agreed upon.

It is still criminal fraud or deceit in the issuance of a check which is made punishable under the Revised
Penal Code, and not the non-payment of the debt.
STA.ANA V. HERNANDEZ (December 17, 1966)

FACTS:

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 didn’t 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.

ISSUE:

WON the excess area occupied by Hernandez is part of the land sold.

HELD:

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.
Carbonell vs. Court of Appeals, and Poncio

69 SCRA 99

January 1976

FACTS:

On January 27, 1955, respondent Jose Poncio executed a private memorandum of sale of his parcel of
land with improvements situated in San Juan, Rizal in favor of petitioner Rosario Carbonell who knew that
the said property was at that time subject to a mortgage in favor of the Republic Savings Bank (RSB) for
the sum of P1,500.00. Four days later, Poncio, in another private memorandum, bound himself to sell the
same property for an improved price to one Emma Infante for the sum of P2,357.52, with the latter still
assuming the existing mortgage debt in favor of the RSB in the amount of P1,177.48. Thus, in February 2,
Poncio executed a formal register able deed of sale in her (Infante's) favor. So, when the first buyer
Carbonell saw the seller Poncio a few days afterwards, bringing the formal deed of sale for the latter's
signature and the balance of the agreed cash payment, she was told that he could no longer proceed with
formalizing the contract with her (Carbonell) because he had already formalized a sales contract in favor
of Infante.

To protect her legal rights as the first buyer, Carbonell registered on February 8, 1955 with the Register of
Deeds her adverse claim as first buyer entitled to the property. Meanwhile, Infante, the second buyer, was
able to register the sale in her favor only on February 12, 1955, so that the transfer certificate of title
issued in her name carried the duly annotated adverse claim of Carbonell as the first buyer. The trial court
declared the claim of the second buyer Infante to be superior to that of the first buyer Carbonell, a
decision which the Court of Appeals reversed. Upon motion for reconsideration, however, Court of
Appeals annulled and set aside its first decision and affirmed the trial court’s decision.

ISSUE:

Who has the superior right over the subject property?

COURT RULING:

The Supreme Court reversed the appellate court’s decision and declared the first buyer Carbonell to have
the superior right over the subject property, relying on Article 1544 of the Civil Code. 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 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 paragraphs, good faith must characterize the prior possession, while under the second
paragraph, good faith must characterize the act of anterior registration.

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 to Infante as there was no
such sale to Infante then. Hence, Carbonell's prior purchase of the land was made in good faith which did
not cease after Poncio told her on January 31, 1955 of his second sale of the same lot to Infante.
Carbonell wanted to meet Infante but the latter refused so to protect her legal rights, Carbonell registered
her adverse claim on February 8, 1955. Under the circumstances, this recording of Carbonell’s adverse
claim should be deemed to have been done in good faith and should emphasize Infante's bad faith when
the latter registered her deed of sale 4 days later.
QUIMSON vs. ROSETE G.R. No. L-2397, August 9, 1950

FACTS

The estate belonging to the deceased Dionysus Quimson was first transferred in favor of his daughter
TomasaQuimson through a deed of conveyance, but continued in his possession and enjoyment. He sold
it to Francisco Rosete, with a repurchase agreement for the term of five years granting to this effect the
writing of sale. Since then Rosete is the one in his possession and enjoyment, in a peaceful and quiet
manner, even after the death of DionisioQuimson, which occurred on June 6, 1939 until January of 1943.
TomasaQuimsonpetitioned that the property should be given to her as she is the true owner and
possessor of the property.

ISSUE

What were the effects of the registration of plaintiff’s document?

Who was prior in possession?

HELD

The Court held that the execution of a public instrument is equivalent to the delivery of the realty sold and
its possession by the vendee. Under these conditions the sale is considered consummate and completely
transfers to the vendee all of the vendor’s rights of ownership including his real rights over the thing. 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 sales, take
material possession of the thing, he does it as a mere detainer, and it would be unjust to protect this
detention against the rights to the thing lawfully acquired by the first vendee. Hence, the Court ruled that
TomasaQuimson is the rightful owner of the property.
CHENG V. GENATO (December 29, 1998)

FACTS:

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.

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.

HELD:

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.

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.