Gabriel vs.

Mabanta
G.R. No. 142403 March 26, 2003
Sandoval-Gutierrez, J.

Facts:
Spouses Pablo and Escolastica Mabanta were the registered owners of two lots located at
Isabela. They mortgaged both lots with the Development Bank of the Philippines (DBP) as
collateral for a loan of P14,000.00. Five years later, Mabanta sold the lots to Susana Soriano,
including the mortgage, with right to repurchase the lots within a period of two (2) years which
the spouses failed to do. Instead, the spouses convinced Alejandro Gabriel to purchase the lots
from Susana. As consideration, Alejandro delivered to Susana a 500-square meter residential lot
with an actual value of P40,000.00 and paid spouses Mabanta the sum of P5,000.00. On May
15, 1984, spouses Mabanta executed a "Deed of Sale with Assumption of Mortgage" and
Susana executed a document entitled "Cancellation of Contract" both of which are in favor of
Alejandro. Alejandro and his son Alfredo cultivated the lots. They also caused the restructuring
of spouses Mabanta's loan with the DBP. However, when they were ready to pay the entire
loan, they found that spouses Benito and Pura Tan had paid it and that the mortgage was
already cancelled. On August 18, 1985, Benito Tan and Alejandro Tridanio, a barangay official,
approached Alejandro to refund to him the P5,000.00 he paid to spouses Mabanta. Alejandro
refused because Tan was unwilling to return the former's 500-square meter lot delivered to
Susana as purchase price for the lots. Thereafter, spouses Tan tried to eject Alejandro from the
lot. Alejandro and Alfredo filed with the Regional Trial Court for specific performance,
reconveyance and damages with an application for a preliminary injunction against spouses
Mabanta, spouses Tan, the DBP and barangay officials Dominador Maylem and Alejandro
Tridanio. It was later found out that it was spouses Tan's daughter, Zenaida Tan-Reyes who
bought one of the lots from spouses Mabanta on August 21, 1985. Reyes filed an answer-in-
intervention alleging that she is the registered owner of the lot and that she purchased it from
spouses Mabanta "in good faith and for value". The RTC ruled in favor of Alejandro and said
that Reyes is not a purchaser in good faith, thus, cannot avail of the benefit of Article 1544 of
the Civil Code since she already was appraised of the status of the land by her father Benito
Tan, but, she decided to buy the land just the same. However, the CA favored Reyes on the
ground that a person dealing with registered land may simply rely on the correctness of the
certificate of title and, in the absence of anything to engender suspicion, he is under no
obligation to look beyond it.

Issue:
Whether or not respondent Zenaida Tan-Reyes acted in good faith when she purchased the
subject lot and had the sale registered

Held:
The Supreme Court upheld the decision of the RTC. Certain pieces of evidence, put together,
would prove that respondent Reyes is not a buyer in good faith. Moreover, it bears noting that
on September 16, 1985, both petitioners filed with the trial court their complaint involving the
lot in question against respondents. After a month, or on October 17, 1985, respondent Reyes
had the "Deed of Absolute Sale" registered with the Registry of Property. Evidently, she wanted
to be the first one to effect its registration to the prejudice of petitioners who, although in
possession, have not registered the same. The Court consistently held that "in cases of double
sale of immovables, what finds relevance and materiality is not whether or not the second
buyer was a buyer in good faith but whether or not said second buyer registers such second
sale in good faith, that is, without knowledge of any defect in the title of the property sold."
According to Article 1544, where it is an immovable property that is the subject of a double
sale, 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. The requirement of the law then is two-fold: acquisition in good
faith and registration in good faith.

Sanchez vs. Ramos

G.R. No. 13442 December 20, 1919
Avanceña, J.

Facts:
On July 1, 1910, Ciriaco Fernandez sold a piece of land to the spouses Marcelino Gomez and
Narcisa Sanchez under pacto de retro for the period of one year. This sale was executed in a
public instrument but was not recorded in the registry of deeds. Marcelino Gomez and Narcisa
Sanchez never took material possession of the land. The period for repurchase elapsed without
the vendor making use of it. On July 3, 1912, Ciriaco Fernandez again sold the same land, by
means of a private document, to Roque Ramos who immediately took material possession
thereof but was also not recorded in the registry of deeds. An action for the recovery of a piece
of land was filed by Sanchez. According to Article 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 personal property. Should it be real
property, it shall belong to the purchaser who first recorded it in the registry of deeds. Should it
not be recorded, the property shall belong to the person who first took possession of it in good
faith, or, in default of possession, to the person who presents the oldest title, provided there is
good faith." By applying article 1473 of the Civil Code, the trial court declared preferable the
sale executed to the defendant and absolved him from the complaint. Not one of the
documents of sale in this case having been recorded, preference must be decided in favor of
the vendee who first took possession. Sanchez appealed.

Issue:
Whether or not the possession that the article refers only to material possession

Held:
The Court reversed the trial court’s decision and the plaintiff is declared owner of the land in
question. Possession is acquired by the material occupancy of the thing or right possessed, or
by the fact that the latter is subjected to the action of our will, or by the appropriate acts and
legal formalities established for acquiring possession (art. 438, Civil Code.) Because the law
does not mention to which of these kinds of possession the article refers, it must be understood
that it refers to all of these kinds. The proposition that this article, according to its letter, refers
to the material possession and excludes the symbolic does not seem to be founded upon a solid
ground. It is said that the law, in the gradation of the causes of preference between several
sales, fixes, first, possession and then the date of the title and, as a public instrument is a title, it
is claimed that the inference is that the law has deliberately intended to place the symbolic
possession, which the execution of the public document implies, after the material possession.
Furthermore, our interpretation of this article 1473 is more in consonance with the principles of
justice. The execution of a public instrument is equivalent to the delivery of the realty sold (art.
1462, Civil Code) and its possession by the vendee (art. 438). Therefore, the Court is of the
opinion that the possession mentioned in article 1473 (for determining who has better right
when the same piece of land has been sold several times by the same vendor) includes not only
the material but also the symbolic possession, which is acquired by the execution of a public
instrument.

The Forty Realty and Development Corp. vs. Cruz

G.R. No. 151212 September 10, 2003
Panganiban, J.

Facts:
On December 5, 1996, Petitioner Ten Forty Realty and Development Corporation acquired a
land located at Olongapo City from Barbara Galino by virtue of a Deed of Absolute Sale and the
sale was acknowledged by said Barbara Galino through a 'Katunayan'; payment of the capital
gains tax for the transfer of the property was evidenced by a Certification Authorizing
Registration issued by the Bureau of Internal Revenue. Petitioner came to know that Barbara
Galino sold the same property on April 24, 1998 to Cruz, who immediately occupied the
property and which occupation was merely tolerated by petitioner. On October 16, 1998, a
complaint for ejectment was filed with the Barangay East Bajac-Bajac, Olongapo City but for
failure to arrive at an amicable settlement, a Certificate to File Action was issued; on April 12,
1999 a demand letter was sent to [respondent] to vacate and pay reasonable amount for the
use and occupation of the same, but was ignored by the latter; and due to the refusal of
[respondent] to vacate the premises, petitioner was constrained to secure the services of a
counsel for an agreed fee of P5,000.00 as attorney's fee and P500.00 as appearance fee and
incurred an expense of P5,000.00 for litigation. A complaint for ejectment was filed by
[Petitioner Ten Forty Realty and Development Corporation] against [Respondent Marina Cruz]
before the Municipal Trial Court in Cities (MTCC) of Olongapo City.

In respondent's Answer with Counterclaim, it was alleged, among others, that:

1. the court has no jurisdiction over the subject matter because the complaint was filed
beyond the one (1) year period after the alleged unlawful deprivation of possession;
2. there is no allegation that petitioner had been in prior possession of the premises and
the same was lost thru force, stealth or violence; evidence will show that it was Barbara
 Galino who was in possession at the time of the sale and vacated the property in favor
of respondent; never was there an occasion when petitioner occupied a portion of the
premises, before respondent occupied the lot in April 1998, she caused the cancellation
of the tax declaration in the name of Barbara Galino and a new one issued in
respondent's name;
3. petitioner obtained its tax declaration over the same property on November 3, 1998,
seven (7) months [after] the respondent [obtained hers]; at the time the house and lot
[were] bought by respondent, the house was not habitable, the power and water
connections were disconnected; being a public land, respondent filed a miscellaneous
sales application with the Community Environment and Natural Resources Office in
Olongapo City; and the action for ejectment cannot succeed where it appears that
respondent had been in possession of the property prior to the petitioner."

The Municipal Trial Court in Cities (MTCC) ordered respondent to vacate the property and
surrender to petitioner possession thereof. It also directed her to pay, as damages for its
continued unlawful use, P500 a month from April 24, 1999 until the property was vacated,
P5,000 as attorney's fees, and the costs of the suit.

On appeal, the Regional Trial Court 7 (RTC) of Olongapo City (Branch 72) reversed the MTCC.
The RTC ruled as follows: 1) respondents entry into the property was not by mere tolerance of
petitioner, but by virtue of a Waiver and Transfer of Possessory Rights and Deed of Sale in her
favor; 2) the execution of the Deed of Sale without actual transfer of the physical possession did
not have the effect of making petitioner the owner of the property, because there was no
delivery of the object of the sale as provided for in Article 1428 of the Civil Code; and 3) being a
corporation, petitioner was disqualified from acquiring the property, which was public land.

The Court of Appeals sustained the ruling of the RTC.

Hence, this petition.

Issue:
Whether or not CA erred in its pronouncement that respondent's occupation of the property
was an exercise of a right flowing from a claim of ownership

Held:
Ownership is transferred not by contract but by tradition or delivery. This Court has held that
the execution of a public instrument gives rises only to a prima facie presumption of delivery.
Such presumption is destroyed when the delivery is not effected because of a legal
impediment. Pasagui v. Villablanca had earlier ruled that such constructive or symbolic delivery,
being merely presumptive, was deemed negated by the failure of the vendee to take actual
possession of the land sold.

It is undisputed that petitioner did not occupy the property from the time it was allegedly sold
to it on December 5, 1996 or at any time thereafter. According to the RTC, petitioner did not
gain control and possession of the property, because Galino had continued to exercise
ownership rights over the realty.

The ownership of immovable property sold to two different buyers at different times is
governed by Article 1544 of the Civil Code, which reads as follows:

"Article 1544. . . .

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 possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith."

Galino allegedly sold the property in question to petitioner on December 5, 1996 and,
subsequently, to respondent on April 24, 1998. Petitioner thus argues that being the first buyer,
it has a better right to own the realty. However, it has not been able to establish that its Deed
of Sale was recorded in the Registry of Deeds of Olongapo City. Its claim of an unattested and
unverified notation on its Deed of Absolute Sale is not equivalent to registration. It admits that,
indeed, the sale has not been recorded in the Registry of Deeds.

In the absence of the required inscription, the law gives preferential right to the buyer who in
good faith is first in possession. In determining the question of who is first in possession, certain
basic parameters have been established by jurisprudence. First, the possession mentioned in
Article 1544 includes not only material but also symbolic possession. Second, possessors in
good faith are those who are not aware of any flaw in their title or mode of acquisition. Third,
buyers of real property that is in the possession of persons other than the seller must be wary
— they must investigate the rights of the possessors. Fourth, good faith is always presumed;
upon those who allege bad faith on the part of the possessors rests the burden of proof.

Earlier, we ruled that the subject property had not been delivered to petitioner; hence, it did
not acquire possession either materially or symbolically. As between the two buyers, therefore,
respondent was first in actual possession of the property.

The petition is denied.