EVA LINDA ACODILI

Assignment 5 Law on Sales

36. Paulmitan v. C.A. 215 SCRA 866

FACTS:
Agatona Sagario Paulmitan, who died sometime in 1953, left the two parcels of land located in the Province of
Negros Occidental. From her marriage with Ciriaco Paulmitan, who is also now deceased, Agatona begot two
legitimate children, namely: Pascual Paulmitan, who also died in 1953, apparently shortly after his mother passed
away, and Donato Paulmitan, who is one of the petitioners. Petitioner Juliana P. Fanesa is Donato's daughter while
the third petitioner, Rodolfo Fanes, is Juliana's husband. Pascual Paulmitan, the other son of Agatona Sagario, is
survived by the respondents, who are his children, name: Alicio, Elena, Abelino, Adelina, Anita, Baking and Anito,
all surnamed Paulmitan.

Donato Paulmitan executed an Affidavit of Declaration of Heirship, extrajudicially adjudicating unto himself Lot
No. 757 based on the claim that he is the only surviving heir of Agatona Sagario. As regards Lot No. 1091, Donato
executed on May 28, 1974 a Deed of Sale over the same in favor of petitioner Juliana P. Fanesa, his daughter.

For non-payment of taxes, Lot No. 1091 was forfeited and sold at a public auction, with the Provincial Government
of Negros Occidental being the buyer. Juliana P. Fanesa redeemed the property. On learning of these transactions,
respondents children of the late Pascual Paulmitan filed on with the Court of First Instance of Negros Occidental a
Complaint against petitioners to partition the properties plus damages.

Petitioners set up the defense of prescription with respect to Lot No. 757 contending that the Complaint was filed
more than eleven years after the issuance of a transfer certificate of title to Donato Paulmitan over the land as
consequence of the registration with the Register of Deeds, of Donato's affidavit extrajudicially adjudicating unto
himself Lot No. 757. As regards Lot No. 1091, petitioner Juliana P. Fanesa claimed in her Answer to the Complaint
that she acquired exclusive ownership thereof not only by means of a deed of sale executed in her favor by her
father, petitioner Donato Paulmitan, but also by way of redemption from the Provincial Government of Negros
Occidental.

ISSUE:
Whether Juliana has acquired ownership of the property due to the same being forfeited and subsequently redeemed.

RULING:
No, she is only entitle to the spiritual share of Donato.

The redemption of the land made by Fanesa did not terminate the co-ownership nor give her title to the entire land
subject of the co-ownership.

The right of repurchase may be exercised by co-owner with respect to his share alone. While the records show that
petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner
of all of it. In other words, it did not put to end the existing state of co-ownership. There is no doubt that redemption
of property entails a necessary expense. Under the Civil Code:

Art. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of
preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself
from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of
the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.

Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made,
nevertheless, she did acquire the right to reimbursed for half of the redemption price she paid to the Provincial
Government of Negros Occidental on behalf of her co-owners. Until reimbursed, Fanesa hold a lien upon the subject
property for the amount due her.
Even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other
co-owners who did not consent to the sale. This is because under the aforementioned codal provision, the sale or
other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor
in the partition of the thing owned in common.

37. Nool vs. CA, 240 SCRA 78 (1997)

FACTS:
One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously owned by Francisco Nool
has an area of 3.0880 hectares. Spouses (plaintiffs) Conchita Nool and Gaudencio Almojera alleged that they are the
owners of the subject lands. They are in dire need of money, they obtained a loan DBP , secured by a real estate
mortgage on said parcels of land, which were still registered in the names of Victorino and Francisco Nool, at the
time,

Since the plaintiffs failed to pay the said loan, the mortgage was foreclosed; that within the period of redemption, the
plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did;
and as a result, the titles of the 2 parcels of land in question were transferred to Anacleto; that as part of their
arrangement or understanding, Anacleto agreed to buy from Conchita the 2 parcels of land , for a total price of
P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, the
plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses Anacleto Nool and Emilia
Nebre failed to pay.  

Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to redeem
the same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had the right to
redeem the said properties.

ISSUE: 
Is the purchase of the subject lands to Anacleto valid?

RULING:
Nono dat quod non habet, No one can give what he does not have; Contract of repurchase inoperative thus void.

Article 1505 of the Civil Code provides that “where goods are sold by a person who is not the owner thereof, and
who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods
than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to
sell.” 

Jurisprudence, on the other hand, teaches us that “a person can sell only what he owns or is authorized to sell; the
buyer can as a consequence acquire no more than what the seller can legally transfer.” No one can give what he does
not have — nono dat quod non habet.

In the present case, there is no allegation at all that petitioners were authorized by DBP to sell the property to the
private respondents. Further, the contract of repurchase that the parties entered into presupposes that petitioners
could repurchase the property that they “sold” to private respondents. As petitioners “sold” nothing, it follows that
they can also “repurchase” nothing. In this light, the contract of repurchase is also inoperative and by the same
analogy, void.

The agreement to repurchase the land is anchored on the validity of the “sale” between petitioners and respondents.
As the sale never actually took place, since the petitioners no longer had the title at the time, the contract is void.
The petitioners claim that Art.1370 of the Civil Code is applicable in this case but Art. 1370 presupposes that the
contract is valid and enforceable. One can repurchase only what one has previously sold. In this instance, it is clear
that petitioners never really sold the land so they cannot claim the right to repurchase the land.
38. Bucton vs. Gabar

FACTS: Nicanora Bucton & Josefina Gabar are sisters-in-law. Josefina bought a land from Villarin on installment
basis. Josefina then entered into a verbal agreement with Nicanora that the latter would pay one-half of the price and
would then own one-half of the land. Nicanora agreed. She paid the initial amount evidenced by a receipt. Bucton
then took possession of the land and made thereon improvements.
When a deed of sale was executed in favor of Gabar for the land, Bucton sought to obtain a separate title but was
refused. Bucton filed a case for specific performance which was granted by the trial court. CA reversed, ruling that
the action for specific performance was based on the receipt of the initial payment which was executed 22 years ago,
thus had already prescribed (10 years prescription for an action based on a written agreement – Art. 1444)

ISSUE: WON the petitioner may compel the vendors to execute a formal deed of conveyance so that the fact of
their ownership may be inscribed in the corresponding certificate of title.

RULING: Yes. There is no question that petitioner Nicanora Gabar Bucton paid P1,500.00 to respondent Josefina
Gabar as purchase price of one-half of the lot now covered by TCT No. II, for respondent Court of Appeals found as
a fact "that plaintiffs really paid for a portion of the lot in question pursuant to their agreement with the defendants
that they would own one-half (1/2) of the land." That sale, although not consigned in a public instrument or formal
writing, is nevertheless valid and binding between petitioners and private respondents, for the time-honored rule is
that even a verbal contract of sale or real estate produces legal effects between the parties.1 Although at the time
said petitioner paid P1,000.00 as part payment of the purchase price on January 19, 1946, private respondents were
not yet the owners of the lot, they became such owners on January 24, 1947, when a deed of sale was executed in
their favor by the Villarin spouses. In the premises, Article 1434 of the Civil Code, which provides that "[w]hen
a person who is not the owner of a thing sells or alienates and delivers it, and later the seller or grantor
acquires title thereto, such title passes by operation of law to the buyer or grantee," is applicable. Thus, the
payment by petitioner by Nicanora Gabar Bucton of P1,000.00 on January 19, 1946, her second payment of P400.00
on May 2, 1948, and the compensation, up to the amount of P100.00 (out of the P1,000.00-loan obtained by private
respondents from petitioners on July 30, 1951), resulted in the full payment of the purchase price and the
consequential acquisition by petitioners of ownership over one-half of the lot. Petitioners therefore became owners
of the one-half portion of the lot in question by virtue of a sale which, though not evidenced by a formal deed, was
nevertheless proved by both documentary and parole evidence.

39. Heirs of Spouses Benito Gavino, 291 SCRA 495

FACTS: A parcel of land originally registered in the name of the Rehabilitation Finance Corporation (RFC) was
sold by the corporation on installment basis to Luis P. Arejola under a Deed of Conditional Sale. The vendee
however died on 25 September 1958 without completing his payments. Subsequently, a petition for settlement of his
intestate estate was commenced by his surviving spouse Juana Vda. De Arejola who was appointed special
administratrix. Atty. Jacobo Briones was engaged as lawyer of the estate. However, the lot purchased from the RFC
was not included in the inventory of properties submitted by Juana to the intestate court. Later, Juana was able to
revive the conditional sale entered into by RFC with her husband Luis with the imprimatur of the intestate court.
Armed with the authority to sell earlier granted to her by the court, without revealing that her appointment as
administratrix had already been revoked, Juana sold to the Gavino spouses the subject property by way of pacto de
retro. Meanwhile, upon full payment to DBP (successor-in-interest of RFC) of the purchase price, a final Deed of
Sale was executed and a new TCT was issued in the name of Juana. Despite her earlier sale of the land to the Gavino
spouses, Juana fictitiously sold the same property to the estate's lawyer so that the latter could secure a mortgage
thereon in her behalf. Another TCT was issued in the name of Atty. Briones. Atty. Briones, on the other hand, sold
the land to the Gavino, spouses and consequently a new TCT was issued in the name of the Gavino spouses. Juana,
together with the other judicial administrators of the estate, filed a case for annulment of fraudulent sales of
registered property with reconveyance and for damages against Atty. Briones, his wife and the Gavino spouses,
alleging that all sales executed by Juana were done without judicial authority to sell. A decision was rendered by the
trial court declaring the sales of the land to defendant spouses as valid and lawful. The plaintiffs (now private
respondents) appealed to the Court of Appeals. Respondent appellate court upheld the validity of the sale to the
Gavinos but only insofar as the individual share of Juana was concerned. Consequently, the new registered owners
(the two daughters of the Gavinos) were ordered to convey the remaining undivided portion of the property to the
estate of Luis P. Arejola, retaining only the undivided portion equivalent to the share of his widow Juana.

Issue: WON Spouses Gavino acquired the rights over the property.

RULING: The court held that the rights of innocent purchasers for value should prevail. Even assuming that
the sale by Atty. Briones to the Gavinos was void — being based on a fictitious transfer from Juana to Atty. Briones
— as the former did not own the property in its entirety when sold, the general rule that the direct result of a
previous void contract cannot be valid, is inapplicable in this case as it will directly contravene the Torrens
system of registration. Where innocent third persons, relying on the correctness of the certificate of title thus
issued, acquire rights over the property, the court cannot disregard such rights and order the cancellation of
the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title.

The sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered
under the system will have to inquire in every instance as to whether the title had been regularly or irregularly
issued, contrary to the evident purpose of the law. Every person dealing with the registered land may safely rely on
the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.

The Court can do no less. The philosophy of the Torrens system must be upheld. The present registered owners of
the land cannot be disturbed in their ownership and possession thereof and be ordered to return the property for
inclusion in the final settlement of the intestate estate of Luis P. Arejola. It is for this reason that we cannot entirely
affirm the decision of the Court of Appeals. This is not to say however that Juana Vda. de Arejola is not liable to the
estate for willfully causing the transfer to her of the sole ownership of the entire land including that pertaining to the
share of her husband in their conjugal partnership of gains.

40. Manila Remnant Co., Inc. vs. CA, 231 SCRA 281

FACTS: On January 25, 1991, the spouses Ventanilla filed with the trial court a motion for the issuance of a writ of
execution in Civil Case No. 26411. The writ was issued on May 3, 1991, and served upon MRCI on May 9, 1991.

In a manifestation and motion filed by MRCI with the trial court on May 24, 1991, the petitioner alleged that the
subject properties could not be delivered to the Ventanillas because they had already been sold to Samuel Marquez
on February 7, 1990, while their petition was pending in this Court. Nevertheless, MRCI offered to reimburse the
amount paid by the respondents, including legal interest plus the aforestated damages. MRCI also prayed that its
tender of payment be accepted and all garnishments on their accounts lifted.

The Ventanillas accepted the amount of P210,000.00 as damages and attorney's fees but opposed the reimbursement
offered by MRCI in lieu of the execution of the absolute deed of sale. They contended that the alleged sale to
Samuel Marquez was void, fraudulent, and in contempt of court and that no claim of ownership over the properties
in question had ever been made by Marquez.

On July 19, 1991, Judge Elsie Ligot-Telan issued the following order:
"To ensure that there is enough amount to cover the value of the lots involved if transfer thereof to plaintiff may no
longer be effected, pending litigation of said issue, the garnishment made by the Sheriff upon the bank account of
Manila Remnant may be lifted only upon the deposit to the Court of the amount of P500,000.00 in cash."

MRCI then filed a manifestation and motion for reconsideration praying that it be ordered to reimburse the
Ventanillas in the amount of P263,074.10 and that the garnishment of its bank deposit be lifted. This motion was
denied by the trial court in. A second manifestation and motion filed by MRCI was also denied.

ISSUE: WON the court may compel a party to executed the absolute deed of sale in accordance with the judgment.
RULING: Yes. When a defeated party refuses to execute the absolute deed of sale in accordance with the judgment,
the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the
court and the act when so done shall have the like effect as is done by the party.

Regarding the refusal of the petitioner to execute the absolute deed of sale, Section 10 of Rule 39 of the Rules of
Court reads as follows:
Sec. 10. Judgment for specific acts; vesting title — If a judgment directs a party to execute a conveyance of
land, or to deliver deeds or other documents, or to perform any other specific act, and the party fails to
comply within the time specified, the court may direct the act to be done at the cost of the disobedient party
by some other person appointed by the court and the act when so done shall have like effect as if done by the
party.

If real or personal property is within the Philippines, the court in lieu of directing a conveyance thereof may enter
judgment divesting the title of any party and vesting it in others and such judgment shall have the force and effect of
a conveyance executed in due form of law.

Against the unjustified refusal of the petitioner to accept payment of the balance of the contract price, the remedy of
the respondents is consignation, conformably to the following provisions of the Civil Code:
Art. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the
debtor shall be released from responsibility by the consignation of the thing or sum due. . . .
Art. 1258. Consignation shall be made by depositing the things due at the disposal of the judicial authority, before
whom the tender of payment shall be proved, in a proper case, and the announcement of the consignation in other
cases.
The consignation having been made, the interested parties shall also be notified thereof.

Art. 1260. Once the consignation has been duly made, the debtor may ask the judge to order the cancellation of the
obligation.

Accordingly, upon consignation by the Ventanillas of the sum due, the trial court may enter judgment canceling the
title of the petitioner over the property and transferring the same to the respondents. This judgment shall have the
same force and effect as a conveyance duly executed in accordance with the requirements of the law.

41. City of Manila vs. Bugsuk, 101 Phil 859 (1957)

FACTS: On October 10, 1952, the Office of the Treasurer of the City of Manila sent a demand to the Company for
the payment of the amount of P544.50 for license fees corresponding to the years 1951 and 1952, and P40.00 for the
necessary mayor's permit, on the ground that said business firm was found to be engaged in the sales of timber
products without first securing the required licenses and permits pursuant to City Ordinances Nos. 3420, 3364 and
3000. (Exhibit C).

The Company must have refused or failed to pay said imposts because on June 11, 1953, the City Fiscal of Manila
filed a complaint against the Bugsuk Lumber Co., Inc., with the Municipal Court of Manila alleging, among others,
that defendant Company sold at wholesale to different lumber dealers in Manila during the 1st, 2nd, 3rd and 4th
quarters of 1951 and the 1st, 2nd and 3rd quarters of 1952 different kinds of lumber for which it should have paid a
quarterly license tax of P40.000 or a total of P2800.00 as provided by Ordinance No. 3000, as amended; that during
the 2nd, 3rd and 4th quarters of 1951 and the 1st, 2nd, 3rd and 4th quarters of 1952, defendant Company sold at
retail to different firms lumber for which it should have paid a total amount of P215.00 for license fees and the
mayor's permit of P20.00; that despite repeated demands, defendant Company refused and failed to pay the same
and, therefore, prayed that judgment be rendered ordering the defendant Company to pay the City of Manila the
amount of P584.50 representing license fees and mayor's permit fees, with legal interests thereon and surcharges and
for such other relief as may be deemed just and equitable in the premises.
Defendant Bugsuk Lumber Co., Inc., filed an answer on October 12, 1953, contesting plaintiff's allegation that it
sold lumber at wholesale transactions because what it actually sold were unprocessed logs; neither did it sell at retail
because the timbers were delivered directly from the vessel to the lumber dealers, and set up the affirmative defenses
that the Bugsuk Lumber Company was essentially a producer, having no lumber yard of any kind in Manila or
elsewhere, nor kept a store where lumber or logs could be sold, and that its products (logs) were sold directly from
the lumber concession to the dealers in Manila; that as such producer, it had paid the taxes required by law such as
the ordinary Timber License fee, Privilege tax (producer), sales tax, forestry charges, reforestation fees, residence
taxes, and the municipal licenses in Bugsuk, Palawan; that the taxes in the form of license and permit fees sought to
be collected by the City would constitute double taxation, and prayed for the dismissal of the complaint.

ISSUE: Whether or not defendant-appellant is a dealer of lumber which exempt from paying the municipal tax.

RULING: The Court ruled in the negative.

It has been said that a dealer stands immediately between the producer and the consumer, and depends for his profit,
not upon the labor he bestows on his commodities, but upon the skill and foresight with which he watches the
markets (State vs. J. Watts Kearny & Sons, 160 So. 77).

In the light of the above definitions, appellant certainly does not fall within the common and ordinary acceptation of
the word "dealer" for there is no controversy as to the fact that what appellant sold was the produce of its concession
in Palawan. Even conceding, therefore, that the lumber which appellant disposed of comes within the connotation of
'construction materials' (Group 2, Ordinance No. 3364) and of the term "general merchandise" (used in Ordinances
Nos. 3364 and 3420), which was defined as:

All articles subject to the payment of percentage taxes or graduated fixed taxes, but not articles subject to the
payment of specific taxes under the provisions of the Internal Revenue Code. It shall also include poultry, livestock,
fish and other allied products (Ordinance No. 3420).

We see no reason why a producer or manufacturer selling its own produce or manufactured goods would be
considered a dealer just to make it liable for the corresponding dealer's tax, as is the case in the instant appeal.

We may further add that this matter was already passed upon by this Court when, through Mr. Justice Alejo
Labrador, it held that:

It may be admitted that the manufacturer becomes a dealer if he carries on the business of selling goods or the
products manufactured by him at a store or warehouse apart from his own shop or manufactory. But plaintiff-
appellee did not carry on the business of selling sugar at stores or at its warehouses. It entered into the contracts of
sale at its central office in Manila and made deliveries of the sugar sold from its warehouses. It does not appear that
the plaintiff keeps stores at its warehouses and engages in selling sugar in said stores. Neither does it appear that any
one who desires to purchase sugar from it may go to the warehouses and there purchase sugar. All that it does was to
sell the sugar it manufactured; it does not open stores for the sale of such sugar. Plaintiff-appellee did not, therefore,
engage in the business of selling sugar. (Central Azucarera de Don Pedro vs. City of Manila et al., 97 Phil., 627).

Wherefore, the decision appealed from is hereby reversed and appellant declared exempt from the liabilities sought
to be charged against it under the provisions of the aforementioned ordinances, without pronouncement as to costs.
It is so ordered.

42. EDCA Publishing vs. Santos, 184 SCRA 614 (1990)

FACTS: This case arose when on October 5, 1981, a person identifying himself as Professor Jose Cruz placed an
order by telephone with the petitioner company for 406 books, payable on delivery.  EDCA prepared the
corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the
purchase price of P8,995.65.  On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos
who, after verifying the seller's ownership from the invoice he showed her, paid him P1,700.00. 

Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his first
check, made inquiries with the De la Salle College where he had claimed to be a dean and was informed that there
was no such person in its employ. Further verification revealed that Cruz had no more account or deposit with the
Philippine Amanah Bank, against which he had drawn the payment check.  EDCA then went to the police, which set
a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Peña and his sale
of 120 of the books he had ordered from EDCA to the private respondents. 

On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the UN Avenue, which
forced their way into the store of the private respondents and threatened Leonor Santos with prosecution for buying
stolen property. They seized the 120 books without warrant, loading them in a van belonging to EDCA, and
thereafter turned them over to the petitioner. 

Protesting this high-handed action, the private respondents sued for recovery of the books after demand for their
return was rejected by EDCA. A writ of preliminary attachment was issued and the petitioner, after initial refusal,
finally surrendered the books to the private respondents.  As previously stated, the petitioner was successively
rebuffed in the three courts below and now hopes to secure relief from us.

ISSUE: Whether or not private respondents established ownership of the disputed book?

RULING: The Court ruled in the affirmative.

Precisely, the first sentence of Article 559 provides that "the possession of movable property acquired in good faith
is equivalent to a title," thus dispensing with further proof.

The argument that the private respondents did not acquire the books in good faith has been dismissed by the lower
courts, and we agree. Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing
that they had been sold to Cruz, who said he was selling them for a discount because he was in financial need.
Private respondents are in the business of buying and selling books and often deal with hard-up sellers who urgently
have to part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such
sellers she was accustomed to dealing with. It is hardly bad faith for any one in the business of buying and selling
books to buy them at a discount and resell them for a profit.

Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then
validly transfer to the private respondents. The fact that he had not yet paid for them to EDCA was a matter between
him and EDCA and did not impair the title acquired by the private respondents to the books.

It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the books belonged to
Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had been
paid for on delivery. By contrast, EDCA was less than cautious — in fact, too trusting in dealing with the impostor.
Although it had never transacted with him before, it readily delivered the books he had ordered (by telephone) and
as readily accepted his personal check in payment. It did not verify his identity although it was easy enough to do
this. It did not wait to clear the check of this unknown drawer. Worse, it indicated in the sales invoice issued to him,
by the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in the buyer.

It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as a result
of its own negligence.1âwphi1 We cannot see the justice in transferring EDCA's loss to the Santoses who had acted
in good faith, and with proper care, when they bought the books from Cruz.
While we sympathize with the petitioner for its plight, it is clear that its remedy is not against the private
respondents but against Tomas de la Peña, who has apparently caused all this trouble. The private respondents have
themselves been unduly inconvenienced, and for merely transacting a customary deal not really unusual in their kind
of business. It is they and not EDCA who have a right to complain.

WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs against the
petitioner.

43. Aznar vs. Yapdiangco, 13 SCRA 486 (1965)

FACTS: Sometime in May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of his FORD
FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to be a nephew of Vicente
Marella, went to the Santos residence to answer the ad. However, Teodoro Santos was out during this call and only
the latter's son, Irineo Santos, received and talked with De Dios. The latter told the young Santos that he had come in
behalf of his uncle, Vicente Marella, who was interested to buy the advertised car.
Marella expressed his intention to purchase the car. A deed of sale was prepared and Irineo was instructed by his
father not to part with the deed and the car without receiving the purchase price from Marella. When irineo and de
Dios arrived at the residence of Marella, the latter averred that his money was short and had to borrow from his
sister. He then instructed de Dios and Irineo to go the supposed house of the sister to obtain the money with an
unidentified person. He also asked Irineo to leave the deed to have his lawyer see it. Relying on the good faith of
Marella, Irineo did as requested. Upon arriving at the house of Marella’s supposed to be sister, de Dios and the
unidentified person then disappeared together with the car. This prompted Santos to report the incident to the
authorities. Thereafter, Marella was able to sell the land to Aznar. And while in possession of the car, police
authorities confiscated the same. This prompted Aznar to file an action for replevin.

ISSUE: Who has a better right to the possession of the disputed automobile?

RULING: Teodoro Santos has a better right to the possession of the disputed automobile. ART. 1506. Where the
seller of goods has a voidable title thereto, but his, title has not been voided at the time of the sale, the buyer
acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's
defect of title. The plaintiff-appellant accepts that the car in question originally belonged to and was owned by the
intervenor-appellee, Teodoro Santos, and that the latter was unlawfully deprived of the same by Vicente Marella.

The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that the seller should have a
voidable title at least. It is very clearly inapplicable where, as in this case, the seller had no title at all. Vicente
Marella did not have any title to the property under litigation because the same was never delivered to him. He
sought ownership or acquisition of it by virtue of the contract. Vicente Marella could have acquired ownership or
title to the subject matter thereof only by the delivery or tradition of the car to him.

Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired and transmitted by
law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition." As
interpreted by this Court in a host of cases, by this provision, ownership is not transferred by contract merely but by
tradition or delivery. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while
delivery or tradition is the mode of accomplishing the same (Gonzales v. Rojas, 16 Phil. 51; Ocejo, Perez and Co. v.
International Bank, 37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke &
Chandler, 14 Phil. 610; Easton v. Diaz Co., 32 Phil. 180).

For the legal acquisition and transfer of ownership and other property rights, the thing transferred must be
delivered, inasmuch as, according to settled jurisprudence, the tradition of the thing is a necessary and
indispensable requisite in the acquisition of said ownership by virtue of contract. (Walter Laston v. E. Diaz
& Co. & the Provincial Sheriff of Albay, supra.)
 So long as property is not delivered, the ownership over it is not transferred by contract merely but by
delivery. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery
or tradition is the method of accomplishing the same, the title and the method of acquiring it being different
in our law. (Gonzales v. Roxas, 16 Phil. 51)

In the case on hand, the car in question was never delivered to the vendee by the vendor as to complete or
consummate the transfer of ownership by virtue of the contract. It should be recalled that while there was indeed a
contract of sale between Vicente Marella and Teodoro Santos, the former, as vendee, took possession of the subject
matter thereof by stealing the same while it was in the custody of the latter's son.

There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key to the car to the
unidentified person who went with him and L. De Dios to the place on Azcarraga where a sister of Marella allegedly
lived. But even if Irineo Santos did, it was not the delivery contemplated by Article 712 of the Civil Code. For then,
it would be indisputable that he turned it over to the unidentified companion only so that he may drive Irineo Santos
and De Dios to the said place on Azcarraga and not to vest the title to the said vehicle to him as agent of Vicente
Marella. Article 712 above contemplates that the act be coupled with the intent of delivering the thing. (10 Manresa
132)

The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for under it, the rule is to
the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it,
not only from the finder, thief or robber, but also from third persons who may have acquired it in good faith from
such finder, thief or robber. The said article establishes two exceptions to the general rule of irrevindicability, to wit,
when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the possessor
cannot retain the thing as against the owner, who may recover it without paying any indemnity, except when the
possessor acquired it in a public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482; Varela v.
Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p. 261.)

In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this Court has already ruled
that —

Under Article 559 of the new Civil Code, a person illegally deprived of any movable may recover it from
the person in possession of the same and the only defense the latter may have is if he has acquired it in
good faith at a public sale, in which case, the owner cannot obtain its return without reimbursing the price
paid therefor. In the present case, plaintiff has been illegally deprived of his car through the ingenious
scheme of defendant B to enable the latter to dispose of it as if he were the owner thereof. Plaintiff,
therefore, can still recover possession of the car even if it is in the possession of a third party who had
acquired it in good faith from defendant B. The maxim that "no man can transfer to another a better title
than he had himself" obtains in the civil as well as in the common law. (U.S. v. Sotelo, 28 Phil. 147)

Finally, the plaintiff-appellant here contends that inasmuch as it was the intervenor-appellee who had caused the
fraud to be perpetrated by his misplaced confidence on Vicente Marella, he, the intervenor-appellee, should be made
to suffer the consequences arising therefrom, following the equitable principle to that effect. Suffice it to say in this
regard that the right of the owner to recover personal property acquired in good faith by another, is based on his
being dispossessed without his consent. The common law principle that where one of two innocent persons must
suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his misplaced confidence,
has enabled the fraud to be committed, cannot be applied in a case which is covered by an express provision of the
new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must
prevail in this jurisdiction. (Cruz v. Pahati, supra)

44. Dizon vs. Suntay, 47 SCRA 160 (1972)

FACTS: Respondent Lourdes G. Suntay and one Clarita R. Sison entered into a transaction wherein the Suntay’s
three-carat diamond ring, valued at P5,500.00, was delivered to Sison for sale on commission. Upon receiving the
ring, Sison executed and delivered to the receipt to Suntay. After the lapse of a considerable time without Clarita R.
Sison having returned to the ring to her, Suntay made demands on Clarita R. Sison for the return of said jewelry.
Clarita R. Sison, however, could not comply with Suntay’s demands because on June 15, 1962, Melia Sison, niece
of the husband of Clarita R. Sison, evidently in connivance with the latter, pledged the ring with the petitioner
Dominador Dizon's pawnshop for P2,600.00 without Suntay’s knowledge. When Suntay found out that Clarita R.
Sison pledged the ring, she filed a case of estafa against the latter with the fiscal's office. Subsequently, Suntay
wrote a letter to Dizon on September 22, 1962 asking for the return of her ring which was pledged with the latter’s
pawnshop under its Pawnshop Receipt serial B No. 65606, dated June 15, 1962.

Dizon refused to return the ring, so Suntay filed an action for its recovery with the CFI of Manila, which declared
that she had the right to its possession. The Court of Appeals likewise affirmed said decision.

ISSUE: Who has the right title over the subject property?

RULING: The owner has the right to recover. He is not estopped when his property has been unlawfully pledged by
another.

1. There is a fairly recent restatement of the force and effect of the governing codal norm in De Gracia v. Court of
Appeals. Thus: "The controlling provision is Article 559 of the Civil Code. It reads thus: 'The possession of movable
property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been
unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable
lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been
unlawfully deprived of the diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia
who was found in possession of the same. The only exception the law allows is when there is acquisition in good
faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price.
As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there
was good faith in the acquisition by the possessor. There is a reiteration of this principle in  Aznar v. Yapdiangco.
Thus: 'Suffice it to say in this regard that the right of the owner to recover personal property acquired in good faith
by another, is based on his being dispossessed without his consent. The common law principle that were one of two
innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the party who, by his
misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an
express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory
provision, the latter must prevail in this jurisdiction." "

2. It must have been a recognition of the compulsion exerted by the above authoritative precedents that must have
caused petitioner to invoke the principle of estoppel. There is clearly a misapprehension. Such a contention is devoid
of any persuasive force.

Estoppel as known to the Rules of Court and prior to that to the Court of Civil Procedure, 7 has its roots in equity.
Good faith is its basis. It is a response to the demands of moral right and natural justice. For estoppel to exist though,
it is indispensable that there be a declaration, act or omission by the party who is sought to be bound. Nor is this all.
It is equally a requisite that he, who would claim the benefits of such a principle, must have altered his position,
having been so intentionally and deliberately led to comport himself thus, by what was declared or what was done or
failed to be done. If thereafter a litigation arises, the former would not be allowed to disown such act, declaration or
omission. The principle comes into full play. It may successfully be relied upon. A court is to see to it then that there
is no turning back on one's word or a repudiation of one's act. So it has been from our earliest decisions. As Justice
Mapa pointed out in the first case, a 1905 decision, Rodriguez v. Martinez,  a party should not be permitted "to go
against his own acts to the prejudice of [another]. Such a holding would be contrary to the most rudimentary
principles of justice and law." 11 He is not, in the language of Justice Torres, in Irlanda v. Pitargue,  promulgated in
1912, "allowed to gainsay [his] own acts or deny rights which [he had] previously recognized."   Some of the later
cases are to the effect that an unqualified and unconditional acceptance of an agreement forecloses a claim for
interest not therein provided.  Equally so the circumstance that about a month after the date of the conveyance, one
of the parties informed the other of his being a minor, according to Chief Justice Paras, "is of no moment, because
[the former's] previous misrepresentation had already estopped him from disavowing the contract.  It is easily
understandable why, under the circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the
absence of an act or omission, as a result of which a position had been assumed by petitioner, who if such elements
were not lacking, could not thereafter in law be prejudiced by his belief in what had been misrepresented to him.   As
was put by Justice Labrador, "a person claimed to be estopped must have knowledge of the fact that his voluntary
acts would deprive him of some rights because said voluntary acts are inconsistent with said rights."  To
recapitulate, there is this pronouncement not so long ago, from the pen of Justice Makalintal, who reaffirmed that
estoppel "has its origin in equity and, being based on moral right and natural justice, finds applicability wherever
and whenever the special circumstances of a case so demand." 

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel? Neither the
promptings of equity nor the mandates of moral right and natural justice come to his rescue. He is engaged in a
business where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is
offering a jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty
of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such
jewelry should be recognized. The law for this sound reason accords the latter protection. So it has always been
since Varela v.Finnick,  a 1907 decision. According to Justice Torres: "In the present case not only has the
ownership and the origin of the jewels misappropriated been unquestionably proven but also that the accused, acting
fraudulently and in bad faith, disposed of them and pledged them contrary to agreement, with no right of ownership,
and to the prejudice of the injured party, who was thereby illegally deprived of said jewels; therefore, in accordance
with the provisions of article 464, the owner has an absolute right to recover the jewels from the possession of
whosoever holds them, ... ."  There have been many other decisions to the same effect since then. At least nine may
be cited.  Nor could any other outcome be expected, considering the civil code provisions both in the former Spanish
legislation and in the present Code.  Petitioner ought to have been on his guard before accepting the pledge in
question. Evidently there was no such precaution availed of. He therefore, has only himself to blame for the fix he is
now in. It would be to stretch the concept of estoppel to the breaking point if his contention were to prevail.
Moreover, there should have been a realization on his part that courts are not likely to be impressed with a cry of
distress emanating from one who is in a business authorized to impose a higher rate of interest precisely due to the
greater risk assumed by him. A predicament of this nature then does not suffice to call for less than undeviating
adherence to the literal terms of a codal provision. Moreover, while the activity he is engaged in is no doubt legal, it
is not to be lost sight of that it thrives on taking advantage of the necessities precisely of that element of our
population whose lives are blighted by extreme poverty. From whatever angle the question is viewed then, estoppel
certainly cannot be justly invoked.

ART. 1539 ( Sale of Real Estate by the Unit)

45. Rudolf Lietz, Inc. v. CA, 478 SCRA 451 (2005)

Facts of the Case:

Respondent Agapito Buriol previously owned a parcel of unregistered land situated at Capsalay Island, Port Barton,
San Vicente, Palawan. On August 15, 1986, he entered into a lease agreement with Flavia Turatello and respondents
Turatello and Sani, all Italian citizens, involving one (1) hectare of his property. The lease agreement was for a
period of 25 years, renewable for another 25 years. The lessees took possession of the land after paying respondent
Buriol a down payment of P10,000.00.
On November 17, 1986, respondent Buriol sold to petitioner Rudolf Lietz, Inc. the same parcel of land for the
amount of P30,000.00. The Deed of Absolute Sale embodying the agreement described the land as follows:
A parcel of land, consisting of FIVE (5) hectares, more or less, a portion of that parcel of land declared in the name
of Agapito Buriol, under Tax Declaration No. 0021, revised in the year 1985, together with all improvements
thereon, situated at the Island of Capsalay, Barangay Port Barton, municipality of San Vicente, province of Palawan
which segregated from the whole parcel described in said tax declaration, has the following superficial boundaries:
NORTH, Sec. 01-017; and remaining property of the vendor; EAST, by Seashore; SOUTH, 01-020; and WEST, by
01-018 (now Elizabeth Lietz).
Petitioner later discovered that respondent Buriol owned only four (4) hectares, and with one more hectare covered
by lease, only three (3) hectares were actually delivered to petitioner. Thus, petitioner instituted on April 3, 1989 a
complaint for Annulment of Lease with Recovery of Possession with Injunction and Damages against respondents
and Flavia Turatello before the RTC. The complaint alleged that with evident bad faith and malice, respondent
Buriol sold to petitioner five (5) hectares of land when respondent Buriol knew for a fact that he owned only four (4)
hectares and managed to lease one more hectare to Flavia Turatello and respondents Tiziana Turatello and Paola
Sani. The complaint sought the issuance of a restraining order and a writ of preliminary injunction to prevent Flavia
Turatello and respondents Turatello and Sani from introducing improvements on the property, the annulment of the
lease agreement between respondents, and the restoration of the amount paid by petitioner in excess of the value of
the property sold to him. Except for Flavia Turatello, respondents filed separate answers raising similar defenses of
lack of cause of action and lack of jurisdiction over the action for recovery of possession. Respondents Turatello and
Sani also prayed for the award of damages and attorney's fees.
After trial on the merits, the trial court rendered judgment on May 27, 1992, dismissing both petitioner's complaint
and respondents' counterclaim for damages. Petitioner and respondents Turatello and Sani separately appealed the
RTC Decision to the Court of Appeals, which affirmed the dismissal of petitioner's complaint and awarded
respondents Turatello and Sani damages and attorney's fees.

ISSUE: Whether or not petitioner is entitled to the delivery of the entire five hectares or its equivalent.

RULING: Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price
contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending
on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the
vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase
price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the
option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at
the contract rate. However, since both the lower court and the appellate court correctly noted that the sale between
petitioner and respondent Buriol involving the latter's property is one made for a lump sum, Article 1539 cannot be
made to apply.
The Deed of Absolute Sale shows that the parties agreed on the purchase price on a predetermined area of five
hectares within the specified boundaries and not based on a particular rate per area. Thus, falling within the province
of Article 1542, which states that in the sale of real estate, made for a lump sum and not at the rate of a certain sum
for a unit of measure or number, there shall be no increase or decrease of the price although there be a greater or
lesser area or number than that stated in the contract. However, the discrepancy must not be substantial. In the
instant case, the area within the boundaries as stated in the contract shall control over the area agreed upon in the
contract.
In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, a
vendee of land, when sold in gross or with the description "more or less" with reference to its area, does not thereby
ipso facto take all risk of quantity in the land. The use of "more or less" or similar words in designating quantity
covers only a reasonable excess or deficiency.

Thus, where both the area and the boundaries of the immovable are declared, the area covered within the boundaries
of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter
which should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty,
mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In
a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must
control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that
a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is
objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the determinate object.
In an ocular inspection prior to the perfection of the contract of sale, respondent Buriol pointed to petitioner the
boundaries of the property. Hence, petitioner gained a fair estimate of the area of the property sold to him. Thus, the
petitioner cannot now assail the contents of the Deed of Absolute Sale, particularly the description of the boundaries
of the property, because petitioner's subscription to the Deed of Absolute Sale indicates his assent to the correct
description of the boundaries of the property.

On January 2, 1976, spouses Dominador Arbasa and Adelaida Roble (hereinafter referred to as respondents)
purchased from Fidela Roble an unregistered parcel of land located at Poblacion, Isabel, Leyte. 3 As reflected on the
deed of sale, the property had a total land area of two hundred forty (240) square meters. Due to their diligent efforts
in reclaiming a portion of the sea, using stones, sand and gravel, the original size of two hundred forty (240) square
meters increased to eight hundred eighty four (884) square meters,

46.) Roble v. Arbasa, 362 SCRA 69 (2001)

Facts of the Case:
A parcel of residential land with all the improvements thereon; bounded on the North, by Lot Nos. 036 and 037;
East, by Roxas Street; South, Seashore and CAD Lot No. 952; and West, by Lot Nos. 024 and 025. It has an area of
884 sq. meters, more or less, and declared in the name of plaintiff Adelaida Arbasa under Tax Declaration no. 7068-
A and later superseded by Tax Declaration No. 67. It has an assessed value of P31,870.00.

Since 1976 and until the present, respondents have been in actual, open, peaceful and continuous possession of the
entire parcel of land in the concept of owners and had it declared for taxation purposes in the name of respondent
Adelaida Arbasa. Included in the sale were the improvements found on the land, consisting mainly of the house of
Fidela.

Adelaida tolerated her sister Fidelas’ continued stay at the house. Living with Fidela in the same house were their
nieces, petitioners Veronica Roble and Lilibeth Roble as well as the latters spouse Bobby Portugaliza. Veronica and
Lilibeth Roble are the daughters of Gualberto Roble, deceased brother of Fidela and Adelaida.

Shortly after Fidelas death on June 15, 1989, petitioners Veronica and Lilibeth Roble claimed ownership of the
house and the southern portion of the land with an area of 644 square meters. Fidela died intestate and without issue.
Meanwhile, Gualberto Roble, petitioners’ father, died sometime in December 1986. In January 1990, petitioners had
this parcel of land declared for taxation purposes in the names of Fidela Roble under Tax Declaration No. 8141 and
of Gualberto Roble under Tax Declaration No. 8142.

As efforts to have them vacate the house and desist from claiming the parcel of land failed, respondent spouses
Dominador and Adelaida Roble-Arbasa, referred the dispute to the barangay authorities for conciliation. Nothing
happened at the barangay level. Hence, on February 27, 1990, spouses Arbasa filed with the Regional Trial Court,
Branch 12, Ormoc City an action for quieting of title with damages.

On April 4, 1990, petitioner Veronica Roble, Lilibeth Roble and Bobby Portugaliza filed an answer to the complaint
denying its material allegations. They said that the total area of the lot which respondents bought from Fidela
consisted only of two hundred forty (240) square meters, located at the northern portion of the property. This
property was originally classified as foreshore land, but in 1957, due to the effort of Ireneo Roble, father of Fidela,
Adelaida and Gualberto, a portion of the sea was reclaimed and filled up. This was the piece of property where
respondents exercised open, public and continuous possession in the concept of owner, and which had been declared
for taxation purposes in the name of Adelaida Roble in Tax Declaration No. 7068. With the issuance of a new tax
declaration in the name of Adelaida, Tax Declaration No. 5108-R-5 originally registered in the name of Fidela
Roble, was cancelled.

Petitioners attached as an integral part of their answer a copy of the deed of sale dated January 2, 1976, executed by
Fidela Roble in favor of Adelaida Arbasa. The property subject of the sale was aptly described as follows:
This is a whole parcel of residential land, located at Poblacion, Isabel, Leyte, per Tax Declaration No. 5108-R-5,
under the name of Fidela Roble, being bounded on the North, by Matilde Evangelista; East, by Harrison now Roxas
Street; South, by Seashore; and West, by Crestito Manipes, having an area of 240 square meters more or less, with
improvements thereon.
In the late 1960s, Ireneo, with the help of his son Gualberto reclaimed additional portion of the seashore at the
southern portion adjacent to the 240 square meters land earlier reclaimed and declared in the name of Fidela Roble.
Because of this, the original area of two hundred forty (240) square meters increased by six hundred forty four (644)
square meters and became eight hundred eighty four (884), including the portion sold to Adelaida. The 644 square
meters was then divided into two (2) lots of equal proportion, evidenced by Tax Declaration Nos. 8141 13 and 8142
14 in the names of Fidela and Gualberto, respectively. Payment of taxes on both tax declarations commenced in the
year 1980.
Constructed over the eight hundred eighty four (884) square meters lot were three (3) concrete houses. One of the
houses was located over the two hundred forty (240) square-meter parcel of land that spouses Arbasa bought from
Fidela. The other houses belonged to Fidela, located at the central portion, and Gualberto, which was constructed
over the southernmost portion of the eight hundred eighty (884) square meters land.

The house at the central portion was first declared in the name of Fidela under Tax Declaration No. 3548,
commencing with the year 1974. This was later cancelled by Tax Declaration No. 5057, covering the year 1979,
and later was cancelled by Tax Declaration No. 3638, beginning with the year 1985. Meanwhile, the house at the
southernmost portion of the land was declared in Gualbertos name under Tax Declaration No. 3549, commencing
with the year 1974, later cancelled by Tax Declaration No. 5060, then by Tax Declaration No. 5662. The latest tax
declaration on the residential house, Tax Declaration No. 226 cancelled the previous ones and commenced in the
year 1989.

The two lots located at the southern portion, according to petitioners, were owned by their predecessors-in-interest
Fidela (322 square meters) and Gualberto Roble (322 square meters) who had open, public and continuous
possession in the concept of owner. Like Fidelas house, the two (2) parcels of land had been possessed in the
concept of owners by their predecessors-in-interest, and were not included in the deed of sale.

ISSUE: Whether the deed of sale executed on January 2, 1975 by Fidela Roble in favor of respondents conveyed the
entire eight hundred eighty four (884) square meters parcel of land, including the house of Fidela, or it covered only
two hundred forty (240) square meters located at the northern portion of the property.

RULING: The Supreme Court held that where land is sold for lump sum and not so much per unit of measure or
number, the boundaries of the land stated in the contract determine the effects and scope of the sale, not the area
thereof. Hence, the vendors are obligated to deliver all the land included within the boundaries regardless of whether
the real area should be greater or smaller than that recited in the deed. This is particularly true when the area is
described as humigit kumulang, that is, more or less.

The sale that transpired on January 2, 1976 between vendor Fidela and vendee Adelaida was one of cuerpo cierto or
a sale for lump sum. Pursuant to Article 1542, Civil Code of the Philippines, in the sale of real estate, made for a
lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease
of the price although there be a greater or lesser area or number than that stated in the contract. Thus, the obligation
of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes
the determinate object.

However, this rule admits of an exception. A vendee of land, when sold in gross or with the description more or less
with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of more or less or
similar words in designating quantity covers only a reasonable excess or deficiency. In the case at bar, the parties to
the agreement described the land subject of the sale in this wise:
This is a whole parcel of residential land, located at Poblacion, Isabel, Leyte, per Tax Declaration No. 5108-R-5,
under the name of Fidela Roble, being bounded in the North, by Matilde Evangelista; East, by Harrison now Roxas
Street; South, by Seashore; and West, by Cristito Manipes, having an approximate area of 240 square meters more
or less, with all improvements thereon.

An area of 644 square meters more is not reasonable excess or deficiency, to be deemed included in the deed of sale
of January 2, 1976.
Moreover, at the time of the sale, the only piece of land existing was 240 square meters, the subject of the deed of
sale. This 240 square meters parcel of land was originally foreshore land, hence, not alienable and disposable. It was
only in 1952, that Fidela applied for and was granted a foreshore lease. 35 In 1965, the provincial assessor issued a
tax declaration in her name.

Adela confirmed that when the sale took place in 1976, the houses of Fidela and Gualberto, constructed earlier in
1971, were situated on foreshore lands adjacent to the property that Fidela sold to her. The houses, made of concrete
materials and are two-stories high, could be reached by seawater. This lent credence to the claim of petitioners that
what was sold to respondents was indeed only 240 square meters parcel of land. This also explained why in the
technical description of the property as embodied in the deed of sale, the property was described as bounded on the
south by the seashore.

With regard to the ownership over the 644 square meters of land located at the southern portion of the original 240
square meters conveyed to Adela, there is a question regarding the true nature of the land, which has the features of
a foreshore land.
Even though respondents claim that they were responsible for reclaiming the portion of the foreshore land adjacent
to the property they bought from petitioners predecessor in interest, there is no evidence that respondents
subsequently filed an application for lease with regard to the 644 square meters of reclaimed land.

Foreshore land is a part of the alienable land of the public domain and may be disposed of only by lease and not
otherwise. It is the strip of land that lies between the high and low water marks and is alternatively wet and dry
according to the flow of tide. It is that part of the land adjacent to the sea, which is alternately covered and left dry
by the ordinary flow of tides.

There is a need, therefore, to determine whether the lands subject of the action for quieting of title are foreshore
lands. The classification of public lands is a function of the executive branch of government, specifically the director
of lands (now the director of the Lands Management Bureau). Due to the dearth of evidence on this particular issue,
the Supreme Court cannot arrive at a conclusive classification of the land involved. The instant case has to be
remanded to the trial court for that determination.

WHEREFORE , the petition is hereby GRANTED. The decision of the Court of Appeals in CA-G. R. CV No.
38738 is hereby SET ASIDE. The case is remanded to the Regional Trial Court, Branch 12, Leyte for further
proceedings.

47. Garcia v. Velasco, 72 Phil. 248 (1941) [Art. 1542]

FACTS: On July 1, 1929, Florentino Garcia, as duly appointed guardian of the minors, Elisa, Maria, Anita, Pastor,
Gabino, Jose and Pacita, all surnamed Garcia, leased to defendant Paz E. Velasco, for period of ten years at an
annual rental of P750, a fish pond belonging to said minors, situated in Paombong, Bulacan. On May 22, 1931,
pursuant to authority granted him by the court, he sold the fish pond to said defendant for a lump sum of P14,000.
On October 29, 1935, Emiliano E. Garcia, who was appointed guardian in substitution of Florentino Garcia, was
ordered by the court to institute an appropriate action for the recovery from the defendant of the purchase price of
the fish pond. The action was instituted in the Court of First Instance of Manila where said guardian resides.
Defendant, in a special appearance, objected to the court's jurisdiction over her person, and on the overruling of the
objection, a demurrer was interposed reasserting the original ground of objection and adding, as another ground,
want of the court's jurisdiction over the subject matter of the action. The demurrer having been overruled, defendant
filed her answer in which she renewed her objection to the court's jurisdiction over her person and the subject
matter, pleads the special defense of payment, and sets up a counterclaim for P249.57. On the issue thus joined, the
trial court rendered judgment dismissing the action on the ground of lack of jurisdiction and that the amount claimed
has already been paid. Hence, this appeal.
ISSUE: Whether Velasco is entitled to an equitable reduction in the price in proportion to what is lacking in the area
as designated in the contract.

RULING: No, Velasco is not entitled to an equitable reduction.

The trial court credited the defendant the sum of P3,824 upon the evidence that the fish pond purchased by him was
only eight (8) hectares when it was described in the contract to contain "una extension superficial de once (11)
hectareas, treinta y ocho (38) areas, y setenta y siete (77) centiareas, poco mas o menos."

The question is controlled by article 1471 of the Civil Code which provides that "in case of the sale of real estate for
a lump sum and not at the rate of a specified price for each unit of measure or number there shall be no increase or
decrease of the price even if the area or number be found to be more or less than that stated in the contract." T

he transaction here involved is, according to paragraph 5 of the deed of sale, one for a lump sum and not at a
specified price for each unit of measure and, therefore no reduction can be authorized although the area was less
than what was stated in the contract. There are instances in which equitable relief may be granted to the purchaser,
as where the deficiency is very great for, under such circumstance, gross mistake may be inferred.
(Asiain vs.Jalandoni, 45, Phil., 296.)

But, in the instant case, we are satisfied that, although the shortage amounts to practically one-fourth of the total
area, the purchaser clearly intended to take the risk of the quantity, and that the area has been mentioned in the
contract merely for the purpose of description. From the circumstance that the defendant, before her purchase of the
fish pond, had been in possession and control thereof for two years as a lessee, she can rightly be presumed to have
acquired a good estimate of its value and are, and her subsequent purchase thereof must have been premised on the
knowledge of such value and area. Accordingly , she cannot now be heard to claim an equitable reduction in the
purchase price on the pretext that the property is much less than she thought it was.

Judgment is reversed, and defendant is hereby ordered to pay plaintiff the sum of P3,824, with costs against her.

Art. 1542 ( Sale of Real Estate by Lump Sum)

48. Salinas v. Faustino, 566 SCRA 18 (2008)

FACTS: Bienvenido S. Faustino purchased from his several co-heirs, including Benjamin Salinas and Dolores
Salinas, their respective shares to a parcel of land consisting of 1,381 sq. m.

Faustino and his wife filed before the Regional Trial Court (RTC) a complaint for recovery of possession with
damages against Salinas alleging that she is occupying part of former‘s land. Salinas contended that her signature on
the Deed of Sale was forged and she paid the taxes due on the land she is occupying. The RTC dismissed the
complaint. On appeal, the Court of Appeals (CA) modified the RTC decision and concluded that Faustino owned
only 753 sq. m. of the land.

ISSUE: Whether or not a description of a lot area can be used as evidence for purchase and ownership of the lot

RULING: Indeed, in a contract of sale of land in a mass, the specific boundaries stated in the contract must control
over any statement with respect to the area contained within its boundaries. Thus, it is the boundaries indicated in a
deed of absolute sale, and not the area in sq. m. mentioned therein 300.375 sq. m. in the Deed of Sale in respondents
favor that control in the determination of which portion of the land a vendee acquires.
In concluding that Faustino acquired via the June 27, 1962 Deed of Sale the total land area of 753 sq. m., the Court
of Appeals subtracted from the total land area of 1,381 sq. m. reflected in Exh. A, which is Plan of Lot 3, Block 5-k,
Psd-8268, as prepared for Benjamin R. Salinas containing an area of 1,381 sq. m. and which was prepared on
February 10, 1960 by a private land surveyor, the 628 sq. m. area of the lot claimed by Salinas as reflected in Tax
Declaration No. 1017 in her name. As will be shown shortly, however, the basis of the appellate court‘s conclusion
is erroneous.

As the immediately preceding paragraph reflects, the Plan of Lot 3, Bk 5-K, Psd-82 was prepared for Spouses
Faustino and Salinas‘ first cousin co-heir Benjamin Salinas on February 10, 1960. Why the appellate court, after
excluding the 628 sq. m. lot covered by a Tax Declaration in the name of petitioner from the 1,381 sq. m. lot
surveyed for Benjamin P. Salinas in 1960, concluded that what was sold via the 1962 Deed of Sale to respondent
Faustino was the remaining 753 sq. m., despite the clear provision of said Deed of Sale that what was conveyed was
300.375 sq. m., escapes comprehension. It defies logic, given that respondents base their claim of ownership of the
questioned 628 sq. m. occupied by Salinas on that June 27, 1962 Deed of Sale covering a 300.375 sq. m. lot.

The Court of Appeals thus doubly erred in concluding that 1) what was sold to respondents via the June 27, 1962
Deed of Sale was the 1,381 sq. m. parcel of land reflected in the Plan-Exh. A prepared in 1960 for Benjamin Salinas,
and 2) Salinas occupied 628 sq. m. portion thereof, hence, Spouses Fausto own the remaining 753 sq. m.

49. Carbonell v. Court of Appeals, 69 SCRA 99 (1976)

FACTS: Private Respondent Jose Poncio, was the owner of a parcel of land subject to this case, having an area of
some 195 square meters, more or less, covered by TCT No. 5040 and subject to mortgage in favor of the Republic
Savings Bank for the sum of P1,500.00. The said lot was sold twice to two buyers. First, to Carbonell on January 27,
1995 and second to Wilma Infante on January 31, 1955 despite the fact that Carbonell already assumed the mortgage
and paid the arrears in the bank and after executing a document entitled “Contract For One Half Lot Which I Bought
From Poncio”.

Informed that the sale in favor of respondent Emma Infante had not yet been registered, the counsel of Petitioner
prepared an adverse claim and registered the same on February 8, 1955.

While the deed of sale in favor of respondent Mrs. Infante was registered only on February 12, 1955. As a
consequence thereof, a Transfer Certificate of Title was issued to her but with the annotation of the adverse claim of
petitioner Rosario Carbonell. However, Infante took immediate possession of the lot involved, covered the same
with 500 cubic meters of garden soil and built therein a wall and gate, spending the sum of P1,500.00. She further
contracted the services of an architect to build a house; but the construction of the same started only in 1959 —
years after the litigation actually began and during its pendency. Respondent Mrs. Infante spent for the house the
total amount of P11,929.00.

ISSUE: Who among Carbonell and Infante has a superior right to the subject lot.

HELD: The Supreme Court Ruled in favor of Carbonell.

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 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 faith.
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 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. If there is no inscription, what is decisive is
prior possession in good faith. If there is inscription, as in this case, prior registration in good faith is a pre-condition
to superior title.

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 4 days prior to the registration of Infantes's deed of sale. Carbonell's good faith did
not cease after Poncio told her of his second sale of the same lot to Infante. 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 4 days later on February 12, 1955.

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, who wanted to see Infante after she was informed by Poncio that he sold
the lot to Infante but several days before Infante registered her deed of sale. This indicates that Infante knew — from
Poncio and from the bank — of the prior sale of the lot by Poncio to Carbonell. Ordinarily, one will not refuse to see
a neighbor. Infante lives just behind the house of Carbonell. Her refusal to talk to Carbonell could only mean that
she did not want to listen to Carbonell.

(2) Carbonell was already in possession of the mortgage passbook and Poncio's copy of the mortgage contract, when
Poncio sold the lot Carbonell who, after paying the arrearages of Poncio, assumed the balance of his mortgaged
indebtedness to the bank, which in the normal course of business must have necessarily informed Infante about the
said assumption by Carbonell of the mortgage indebtedness of Poncio. Before or upon paying in full the mortgage
indebtedness of Poncio to the Bank. Infante naturally must have demanded from Poncio the delivery to her of his
mortgage passbook as well as Poncio's 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 Carbonell.

If Poncio was still in possession of the mortgage passbook and his copy of the mortgage contract at the time he
executed a deed of sale in favor of the Infantes and when the Infantes redeemed his mortgage indebtedness from the
bank, Poncio would have surrendered his mortgage passbook and his copy of the mortgage contract to the Infantes,
who could have presented the same as exhibits during the trial, in much the same way that the Infantes were able to
present as evidence Exhibit "1" — Infantes, Poncio's savings deposit passbook, of which Poncio necessarily
remained in possession as the said deposit passbook was never involved in the contract of sale with assumption of
mortgage. Said savings deposit passbook merely proves that Poncio had to withdraw P47.26, which amount was
tided to the sum of P200.00 paid by Carbonell for Poncio's amortization arrearages in favor of the bank on January
27, 1955; because Carbonell on that day brought with her only P200.00, as Poncio told her that was the amount of
his arrearages to the bank. But the next day Carbonell refunded to Poncio the sum of P47.26.

(3) 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 (Paglago, et. al
vs. Jara et al 22 SCRA 1247, 1252-1253). The only plausible and logical reason why Infante did not bother anymore
to make such injury , w because in the ordinary course of business the bank must have told her that Poncio already
sold the lot to Carbonell who thereby assumed the mortgage indebtedness of Poncio and to whom Poncio delivered
his mortgage passbook. Hoping to give a semblance of truth to her pretended good faith, Infante snubbed
Carbonell's request to talk to her about the prior sale to her b Poncio of the lot. As aforestated, this is not the attitude
expected of a good neighbor imbued with Christian charity and good will as well as a clear conscience.

(4) Carbonell registered on February 8, 1955 her adverse claim, which was accordingly annotated on Poncio's title,
four [4] days before Infante registered on February 12, 1955 her deed of sale executed on February 2, 1955. Here
she was again on notice of the prior sale to Carbonell. Such registration of adverse claim is valid and effective
(Jovellanos vs. Dimalanta, L-11736-37, Jan. 30, 1959, 105 Phil. 1250-51).

(5) In his answer to the complaint filed by Poncio, as defendant in the Court of First Instance, he alleged that both
Mrs. Infante and Mrs. Carbonell offered to buy the lot at P15.00 per square meter, which offers he rejected as he
believed that his lot is worth at least P20.00 per square meter. 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.

Wherefore, The Decision Of The Special Division Of Five Of The Court Of Appeals Of October 30, 1968 Is Hereby
Reversed; Petitioner Rosario Carbonell Is Hereby Declared To Have The Superior Right To The Land In Question
And Is Hereby Directed To Reimburse To Private Respondents Infantes The Sum Of One Thousand Five Hundred
Pesos (P1,500.00) Within Three (3) Months From The Finality Of This Decision; And The Register Of Deeds Of
Rizal Is Hereby Directed To Cancel Transfer Certificate Of Title No. 37842 Issued In Favor Of Private Respondents
Infantes Covering The Disputed Lot, Which Cancelled Transfer Certificate Of Title No. 5040 In The Name Of Jose
Poncio, And To Issue A New Transfer Certificate Of Title In Favor Of Petitioner Rosario Carbonell Upon
Presentation Of Proof Of Payment By Her To The Infantes Of The Aforesaid Amount Of One Thousand Five
Hundred Pesos (P1,500.00).

50. Rosaroso v. Soria, 699 SCRA 232 (2013)

FACTS: Spouses Luis Rosaroso (Luis) and Honorata Duazo (Honorata) acquired several real properties in Cebu
City, including the subject properties which was sold twice. First to their children on November 4, 1991 and second
to Meridian.

The second sale took place on August 23, 1994, when the respondents made Luis sign the Deed of Absolute Sale9
conveying to Meridian three (3) parcels of residential land for ₱960,500.00; that Meridian was in bad faith when it
did not make any inquiry as to who were the occupants and owners of said lots; and that if Meridian had only
investigated, it would have been informed as to the true status of the subject properties and would have desisted in
pursuing their acquisition.

Petitioners failed not only in effecting the necessary transfer of the title, but also in annotating their interests on the
titles of the questioned properties.

RTC ruled in favor of petitioners. The CA reversed and set aside the RTC decision. Hence, the appeal.

ISSUE: WON Meridian has a superior right to the subject property when they first have them registered in the
Registry of Property.

HELD: No. The fact that Meridian had them first registered will not help its cause. In case of double sale, Article
1544 of the Civil Code provides:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the
person who may have first 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 possession;
and, in the absence thereof; to the person who presents the oldest title, provided there is good faith.
Otherwise stated, ownership of an immovable property which is the subject of a double sale 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. Good faith must concur with the registration. If it would be shown that a buyer was in bad
faith, the alleged registration they have made amounted to no registration at all.

The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of a
double sale of immovable property. When the thing sold twice is immovable, the one who acquires it and first
records it in the Registry of Property, both made in good faith, shall be deemed the owner. Verily, the act of
registration must be coupled with good faith— that is, the registrant must have no knowledge of the defect or lack of
title of his vendor or must not have been aware 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.

Meridian is Not A Buyer in Good Faith.

When a piece of land is in the actual possession of persons other than the seller, the buyer must be wary and should
investigate the rights of those in possession. Without making such inquiry, one cannot claim that he is a buyer in
good faith. When a man proposes to buy or deal with realty, his duty is to read the public manuscript, that is, to look
and see who is there upon it and what his rights are. A want of caution and diligence, which an honest man of
ordinary prudence is accustomed to exercise in making purchases, is in contemplation of law, a want of good faith.
The buyer who has failed to know or discover that the land sold to him is in adverse possession of another is a buyer
in bad faith.

In this connection, it has been held that where, as in this case, the land sold is in the possession of a person other
than the vendor, the purchaser is required to go beyond the certificate of title to make inquiries concerning the rights
of the actual possessor. Failure to do so would make him a purchaser in bad faith.

One who purchases real property which is in the actual possession of another should, at least make some inquiry
concerning the right of those in possession. The actual possession by other than the vendor should, at least put the
purchaser upon inquiry. He can scarely, in the absence of such inquiry, be regarded as a bona fide purchaser as
against such possessors.

If a vendee in a double sale registers the sale after he has acquired knowledge of a previous sale, the registration
constitutes a registration in bad faith and does not confer upon him any right. If the registration is done in bad faith,
it is as if there is no registration at all, and the buyer who has first taken possession of the property in good faith
shall be preferred.

It is clear that Meridian, through its agent, knew that the subject properties were in possession of persons other than
the seller. Instead of investigating the rights and interests of the persons occupying the said lots, however, it chose to
just believe that Luis still owned them. Simply, Meridian Realty failed to exercise the due diligence required by law
of purchasers in acquiring a piece of land in the possession of person or persons other than the seller.

The petition is GRANTED.

Private Respondents Infantes May Remove Their Aforementioned Useful Improvements From The Lot Within
Three (3) Months From The Finality Of This Decision, Unless The Petitioner Rosario Carbonell Elects To Acquire
The Same And Pays The Infantes The Amount Of Thirteen Thousand Four Hundred Twenty-Nine Pesos
(P13,429.00) Within Three (3) Months From The Finality Of This Decision. Should Petitioner Carbonell Fail To
Pay The Said Amount Within The Aforestated Period Of Three (3) Months From The Finality Of This Decision,
The Period Of Three (3) Months Within Which The Respondents Infantes May Remove Their Aforementioned
Useful Improvements Shall Commence From The Expiration Of The Three (3) Months Given Petitioner Carbonell
To Pay For The Said Useful Improvements. With Costs Against Private Respondents.
51. Cheng v. Genato, 300 SCRA 722 (1998)

FACTS: Respondent Ramon B. Genato is the owner of two parcels of land located with an aggregate area of 35,821 square meters,
more or less. On September 6, 1989, he entered into an agreement with respondent-spouses Da Josa over the subject lands and the
agreement culminated in the execution of a CTS for which the purchase price was P80.00/sqm. The contract was in a public
instrument and was duly annotated at the back of the two certificates of title on the same day.

Pending the effectivity of the extension period for verification, Genato executed an Affidavit to Annul the Contract to Sell, 7 on
October 13, 1989 without due notice to the Da Jose spouses, . No annotation of the said affidavit at the back of his titles was made.

On October 24, 1989, herein petitioner Ricardo Cheng went to Genato's residence and expressed interest in buying the subject
properties and issued a check for P50,000.00 despite Genato presenting his TCT were annotated at the back thereof of his contract
to sell with the Da Jose spouses.

To this, Genato caused the registration of the Affidavit to Annul the Contract to Sell in the ROD Bulacan and by coincidence met
with the Spouses Da Jose who only discovered on that day regarding the affidavit to annul their contract. The Spouses protested
against the rescission of their contract after reminding Genato that the period (to verify the title) is still in effect, and that they were
willing and able to pay the balance of the agreed down payment, later on in the day. Genato decided to continue the Contract he had
with them which was formalized in a conforme letter. Genato then advised Cheng of this decision and returned the P50,000.00
check.

Consequently, on October 30, 1989, Cheng's lawyer sent a letter to Genato demanding compliance with their agreement to sell the
property to him stating that the contract to sell between him and Genato was already perfected and threatening legal action and
Cheng, returned the said check to the former via RCPI telegram reiterating that "our contract to sell your property had already been
perfected." Cheng also executed an affidavit of adverse claim and had it annotated on the subject TCT's.

The Spouse De Jose made a full payment to Genato and on December 8, 1989, Cheng instituted a complaint against respondents
contending that (1) that the Da Jose spouses' Contract to Sell has been validly rescinded or resolved; (2) that his own contract with
Genato was not just a CTS but one of conditional contract of sale which gave him better rights, thus precluding the application of
the rule on double sales under Article 1544, Civil Code
The Da Jose spouses asserted that they have a superior right to the property as first buyers. They alleged that the unilateral
cancellation of the Contract to Sell was without effect and void. They also cited Cheng's bad faith as a buyer being duly informed
by Genato of the existing annotated Contract to Sell on the titles.

ISSUE: Whether or not Petitioner is correct in saying that Article 1544 is not applicable in this case.

RULING: SC is of the view that the governing principle of Article 1544, Civil Code, should apply in this situation.

Art. 1544 states. 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 possession; and in the
absence thereof, to the person who presents he oldest title, provided there is good faith.

However, a meticulous reading of the aforequoted provision shows that said law is not apropos to the instant case. This provision
connotes that the following circumstances must concur:

(a) The two (or more) sales transactions in issue must pertain to exactly the same subject matter, and must be valid sales
transactions.

(b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and
(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the very same
seller.

These situations obviously are lacking in a contract to sell for neither a transfer of ownership nor a sales transaction has been
consummated. The contract to be binding upon the obligee or the vendor depends upon the fulfillment or non-fulfillment of an
event.

Jurisprudence teaches us that the governing principle is PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right). 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. This principle only applies when the special rules provided in the aforcited article of the Civil Code do not apply or
fit the specific circumstances mandated under said law or by jurisprudence interpreting the article.

The rule exacted by Article 1544 of the Civil Code for the second buyer to be able to displace the first buyer are:

(1) that the second buyer must show that he acted in good faith (i.e. in ignorance of the first sale and of the first buyer's rights) from
the time of acquisition until title is transferred to him by registration or failing registration, by delivery of possession;

(2) the second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens
into full ownership through prior registration as provided by law.

Here, the knowledge gained by the Da Jose spouses, as first buyers, of the new agreement between Cheng and Genato will not
defeat their rights as first buyers except where Cheng, as second buyer, registers or annotates his transaction or agreement on the
title of the subject properties in good faith ahead of the Da Jose spouses. Moreover, although the Da Jose spouses, as first buyers,
knew of the second transaction it will not bar them from availing of their rights granted by law, among them, to register first their
agreement as against the second buyer.

In contrast, knowledge gained by Cheng of the first transaction between the Da Jose spouses and Genato defeats his rights even if
he is first to register the second transaction, since such knowledge taints his prior registration with bad faith.

"Registration", means any entry made in the books of the registry, including both registration in its ordinary and strict sense, and
cancellation, annotation, and even marginal notes. In its strict acceptation, it is the entry made in the registry which records
solemnly and permanently the right of ownership and other real rights. When a Deed of Sale is inscribed in the registry of property
on the original document itself, what was done with respect to said entries or annotations and marginal notes amounted to a
registration of the sale. In this light, we see no reason why we should not give priority in right the annotation made by the Da Jose
spouses with respect to their Contract to Sell dated September 6, 1989.

Moreover, registration alone in such cases without good faith is not sufficient. Good faith must concur with registration for such
prior right to be enforceable. In the instant case, the annotation made by the Da Jose spouses on the titles of Genato of their
"Contract To Sell" more than satisfies this requirement. Whereas in the case of Genato's agreement with Cheng such is unavailing.
For even before the receipt was issued to Cheng information of such pre-existing agreement has been brought to his knowledge
which did not deter him from pursuing his agreement with Genato. We give credence to the factual finding of the appellate court
that "Cheng himself admitted that it was he who sought Genato in order to inquire about the property and offered to buy the same.
And 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.

The instant petition for review is DENIED and the assailed decision is AFFIRMED IN TOTO.