Other Rules on Delivery

Alfaro vs. Dumalagan, G.R. No. 186622, January 22, 2014

Facts:
The lot in controversy is Lot No. 1710 consisting of an estimated area of 2,287 sq m, more or less,
located in Talisay-Minglanilla Estate, Brgy. San Roque, Talisay City, registered in the name of
Olegario Bagano.
Bagano sold the subject property to petitioner Spouses Prosperous and Peblia Alfaro (Spouses Alfaro)
through a Deed of Absolute Sale.
Spouses Alfaro caused the immediate
 transfer of the title in their names,
 paid the real property tax and
 constructed a perimeter fence around the property.
Respondents Dumalagan filed the instant case for Annulment of Title, Preliminary Injunction with
TRO and damages to preserve their right as occupants of the subject property. claiming that they
were the owner of a portion of the land
Meanwhile, Spouses Bagano filed a complaint for Declaration of Nullity of Sale with Damages against
Petitioners Alfaro.
In this case, SC sustained the validity of the Deed of absolute Sale between Bagano and Alfaro.
Bagano case= bagano sps vs Alfaro sps….stated the validity of the deed of absolute sale

Trial court: dismissed the complaint for lack of cause of action. They ruled that the petitioners failed
to establish that respondents were in bad faith when they bought Lot No. 1710 in 1995.
CA: Reversed. Spouses Alfaro cannot claim good faith.
 It referred to annotations written at the back of Bagano’s title. It noted that the annotated adverse
claims, even if not in the names of respondents, have the effect of charging petitioners as
subsequent buyers with constructive notice of the defect of the seller’s title. Moreover, as shown by
the records, petitioners had prior knowledge that portions of the subject property have been sold to
third persons.

Spouses Dumalagan - res Spouses Alfaro - pet

 They are the real owners of Lot No. 1710-H,
a portion of the subject property, based on a
Notarized Deed of Sale. 1993
 They offered in evidence a Certificate of
Completion and Ceriticate of Occupancy.
 Right after their purchase from Bagano,
 respondent Spouses immediately took
possession of the subject property and
 They bought the property in question in
good faith.
 On the basis of the SC’s ruling upholding the
Deed of Absolute Sale in the Bagano case,
they aver that the Bagano case constitutes
res judicata apropos the case at bar. 
o Respondents Dumalagan, even if they
were not made parties, are bound by
 constructed a nipa hut which they later the Court’s ruling on the ownership in
leased to Ramil Quinineza. favor of petitioner.
 Since then, several tenants have occupied o The appellate court violated the
the subject property, paying monthly rentals doctrine of res judicata when it
to Spouses Dumalagan. sustained the validity of the Deed
of Absolute Sale as it unduly
awarded ownership of the subject
property to respondents, obliquely
reversing the Supreme Court’s
decision in the Bagano case.
SC: Affirmed CA ruling.
To wit, this Court sustained the validity of the Deed of Absolute Sale between Spouses Bagano and
petitioners in the Bagano case. Now petitioners are arguing that the decision is invalid as it is barred
by Res Judicata. 

(1) The Supreme Court discussed each element of res judicata in relation to the case at bar.
Res judicata refers to the rule that a final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and
matters determined in the former suit. The elements of res judicata are as follows:
(1) the former judgment or order must be final;
(2) the judgment or order must be on the merits;
(3) it must have been rendered by a court having jurisdiction over the subject matter and the
parties; and
(4) there must be, between the first and the second action, identity of parties, of subject
matter and cause of action.
The identity of the parties and cause of action in the Bagano case are different than the
case at bar.
In the Bagano case, the parties are petitioner Spouses Alfaro and the Spouses Bagano—the cause of
action is the alleged forgery of the Deed of Absolute Sale by the Spouses Alfaro the crux being the
validity of such sale.
In the case at bar, the parties are petitioner Spouses Alfaro and respondent Spouses Dumalagan
basing their rights on the Deed of Absolute Sale dated 3 December 1993 and the action is the
violation of the right of ownership of respondents Dumalagan. There is, thus, no identity of parties.
Hence, res judicata does not apply.

(2) Petitioners contend that the annotated adverse claims have already expired pursuant to
Section 70 of PD 1529 which provides that an adverse claim shall be effective only for a period
of 30 days from the date of registration.
This cannot prosper because the whole of the law means that the cancellation of the adverse
claim is still necessary to render it ineffective, otherwise, the inscription will remain
annotated and shall continue as a lien upon the property; for if the adverse claim already
ceased to be effective upon the lapse of the said period, its cancellation is no longer necessary and
the process of cancellation would be a useless ceremony.
Therefore, petitioners cannot claim good faith on the basis of the supposed ineffectivity of the
annotated adverse claims as the same have not been cancelled at the time of purchase. Assuming
arguendo that the annotated adverse claims expired, petitioners still cannot claim good faith as they
were fully aware that there were occupants in the subject property other than the seller.
Worse, they were also fully aware that an occupant in the subject property bought the same.
By the very fact that the title of Bagano was not clean on its face, the Petitioners were more than
obliged to look beyond the former’s title and make further inquiries about the extent of
the latter’s right and authority over the subject lot. Had they done so as a reasonably prudent
man buying real property should, they would have discovered that some portions of Lot 1710 had
already been sold by Bagano to third persons who are already in possession of the same.

(3) Double Sale or Art. 1544 does not apply.

Petitioners had prior knowledge of the previous sales by installment of portions of the
property to several purchasers as well as the knowledge of respondents’ possession over
the subject property.
As correctly held by the appellate court, petitioners’ prior registration of the subject property, with
prior knowledge of respondents’ claim of ownership and possession, cannot confer ownership or
better right over the subject property.
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 first buyer’s rights, from the time of acquisition until the title is transferred to him
by registration or failing registration, by delivery of possession.
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, 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.