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SPOUSES RAYOS vs.REYES et al Leave a comment
SPOUSES RAYOS vs.REYES et al
G.R. No. 150913
February 20, 2003
FACTS: 3 parcels of unregistered land in Pangasinan were formerly owned by the spouses Tazal
who on 1 September 1957 sold them to respondents predecessor-in-interest, Reyes, with right to
repurchase within two 2 years from date thereof by paying to the vendee the purchase price and
all expenses incident to their reconveyance. After the sale the vendee a retro took physical
possession of the properties and paid the taxes thereon.
The otherwise inconsequential sale became controversial when 2 of the 3 parcels were again sold
by Tazal in favor of petitioners predecessor-in-interest Rayos without first availing of his right to
repurchase the properties. In the meantime, the conventional right of redemption in favor of
spouses Tazal expired without the right being exercised by either the Tazal spouses or the vendee
Rayos.
After the expiration of the redemption period, Tazal attempted to repurchase the properties from
Reyes by asserting that the 1 September 1957 deed of sale with right of repurchase was actually
an equitable mortgage and offering the amount of P724.00 to pay for the alleged debt.
(consignation) But Reyes refused the tender of payment and vigorously claimed that their
agreement was not an equitable mortgage.3
On 9 May 1960 Francisco Tazal filed a complaint with the CFI Reyes for the declaration of the 1
September 1957 transaction as a contract of equitable mortgage. He also prayed for an order
requiring defendant Mamerto Reyes to accept the amount of P724.00 which he had deposited
with the trial court as full payment for his debt, and canceling the supposed mortgage on the
three (3) parcels of land with the execution of the corresponding documents of reconveyance in
his favor.
The trial court in the Civil Case rejected the contention of Tazal that the deed of sale executed on
1 September 1957 was an equitable mortgage but held that Tazal could nonetheless redeem the
three (3) parcels of land within thirty (30) days from finality of judgment by paying to Reyes the
purchase price and all expenses to execute the reconveyance. Reyes appealed the Decision to the
CA which in turn elevated the appeal to this Court since only questions of law were involved.
When Reyes died, petitioner-spouses Rayos wrested physical possession of the disputed
properties from Reyess heirs.

This Court considered the case closed and terminated for failure of the parties therein to manifest
their interest to further prosecute the case. The judgment in the Civil Case became final and
executory.
Subsequent to the finality of judgment in the Civil Case petitioner-spouses did nothing to
repurchase the three (3) parcels of land within the thirty (30) day grace period from finality of
judgment.
Respondents as heirs of Reyes executed an affidavit adjudicating to themselves the ownership of
the parcels of land and declared the properties in their names for assessment and collection of
real estate taxes. The respondents registered the 1 September 1957 deed of sale with right of
repurchase with the RD.
Respondents filed a complaint for damages and recovery of ownership and possession of the 3
parcels of land in dispute against herein petitioner-spouses Rayos and the administrator thereof
before the RTC. It was respondents theory that neither petitioners nor their predecessors-ininterest Tazal and Rayos repurchased the properties before buying them or when the judgment in
the Civil Case became final and executory, hence the sale of the three (3) parcels of land to
petitioner-spouses did not transfer ownership thereof to them.
Petitioners argued on the other hand that the consignation of P724.00 in Civil Case No. A-245
had the full effect of redeeming the properties from respondents and their predecessor-in-interest,
and that respondents were guilty of estoppel and laches since Reyes as their predecessor-ininterest did not oppose the sale to Rayos and to petitioner-spouses Rayos. The parties then filed
their respective memoranda after which the case was submitted for decision.
The trial court promulgated its Decision in the Civil Case void the separate deeds of absolute sale
thereof executed by Tazal in favor of Rayos and to spouses Rayos and by Rayos to the same
spouses, and ordered herein petitioners and Francisco Tazal to vacate and reconvey the lands to
respondents as heirs of Reyes and to pay damages. Petitioners appealed the Decision to the CA.
The appellate court promulgated its Decision affirming in toto the judgment appealed from.
Hence, the instant petition for review.
ISSUE:
1. WON the consignation is valid
2. WON the respondents are barred by estoppel and laches
3. Won the petitioners are in good faith
HELD:
1. In order that consignation may be effective the debtor must show that:

(a) there was a debt due;

(b) the consignation of the obligation had been made because the creditor to whom a valid tender
of payment was made refused to accept it;
(c) previous notice of the consignation had been given to the person interested in the
performance of the obligation;
(d) the amount due was placed at the disposal of the court; and, (e) after the consignation had
been made the person interested was notified thereof.
In the instant case, petitioners failed,
first, to offer a valid and unconditional tender of payment;
second, to notify respondents of the intention to deposit the amount with the court; and
third, to show the acceptance by the creditor of the amount deposited as full settlement of the
obligation, or in the alternative, a declaration by the court of the validity of the consignation. The
failure of petitioners to comply with any of these requirements rendered the consignation
ineffective.
Consignation and tender of payment must not be encumbered by conditions if they are to
produce the intended result of fulfilling the obligation. In the instant case, the tender of payment
of P724.00 was conditional and void as it was predicated upon the argument of Tazal that he was
paying a debt which he could do at any time allegedly because the 1 September 1957 transaction
was a contract of equitable mortgage and not a deed of sale with right to repurchase. The
ostensible purposes of offering the amount in connection with a purported outstanding debt were
to evade the stipulated redemption period in the deed of sale which had already expired when
the tender of payment was made and the Civil Case was instituted, and as a corollary, to avail of
the thirty (30)-day grace period under Art. 1606 of the Civil Code within which to exercise the
right to repurchase. Reyes was therefore within his right to refuse the tender of payment offered
by petitioners because it was conditional upon his waiver of the two (2)-year redemption period
stipulated in the deed of sale with right to repurchase.
Moreover, petitioners failed to prove in the Civil Cases that any form of notice regarding their
intention to deposit the amount of P724.00 with the CFI had been served upon respondents. This
requirement is not fulfilled by the notice which could have ensued from the filing of the
complaint in the civil case or the stipulation made between Tazal and Reyes regarding the
consignation of P724.00. The latter constitutes the second notice required by law as it already
concerns the actual deposit or consignation of the amount and is different from the first notice
that makes known the debtors intention to deposit the amount, a requirement missing in the
instant case. Without any announcement of the intention to resort to consignation first being

made to the persons interested in the fulfillment of the obligation, the consignation as a means of
payment is void.
It is also futile to argue that the deposit of P724.00 with the Court of First Instance could have
perfected the redemption of the three (3) parcels of land because it was not approved by the trial
court, much less accepted by Mamerto Reyes or his heirs, herein respondents. The dispositive
portion of the Decision in Civil Case No. A-245, which reads x x x x the Court, hereby renders
judgment declaring the contract x x x entered into by the plaintiffs and the defendant and
captioned Deed of Sale with Right to Repurchase as a true sale with right to repurchase x x x
and not an equitable mortgage x x x and declaring the plaintiffs entitled to repurchase the
property in question within thirty (30) days from finality of this decision x x x x plainly rejected
the complaint for lack of merit and necessarily also the consignation done pursuant thereto. This
conclusion is buttressed by the directive of the trial court in the body of the Decision that
Francisco Tazal may still exercise the right to repurchase the property in question by returning
to the [Mamerto Reyes] the purchase price of P724.00 plus all expenses incident to the
reconveyance within the period of thirty (30)-days from the time this decision becomes final x x x
x21 The obvious reference of this statement was the stipulation made by the parties therein that
the defendant [Mamerto Reyes] has been paying the taxes on said properties from 1958 to 1969
x x x x22 where the taxes paid constituted necessary expenses that petitioners had to reimburse to
respondents predecessor-in-interest aside from the P724.00 earlier deposited by Tazal.
To be sure, while it has been held that approval of the court or the obligees acceptance of the
deposit is not necessary where the obligor has performed all acts necessary to a valid
consignation such that court approval thereof cannot be doubted, Sia v. Court of Appeals23 clearly
advises that this ruling is applicable only where there is unmistakable evidence on record that the
prerequisites of a valid consignation are present, especially the conformity of the proffered
payment to the terms of the obligation which is to be paid.24 In the instant case, since there is no
clear and preponderant evidence that the consignation of P724.00 satisfied all the requirements
for validity and enforceability, and since Mamerto Reyes vehemently contested the propriety of
the consignation, petitioners cannot rely upon sheer speculation and unfounded inference to
construe the Decision of the Court of First Instance as one impliedly approving the consignation
of P724.00 and perfecting the redemption of the three (3) parcels of land.
It should be recalled that one of the requisites of consignation is the filing of the complaint by the
debtor against the creditor. Hence it is the judgment on the complaint where the court declares
that the consignation has been properly made that will release the debtor from liability. Should
the consignation be disapproved by the court and the case dismissed, there is no payment and the
debtor is in mora and he shall be liable for the expenses and bear the risk of loss of the thing.25
To sanction the argument of petitioners and in the process excuse them from their responsibility
of securing from the trial court in Civil Case No. A-245 a categorical declaration that the
consignation of P724.00 had complied with all the essential elements for its validity would only
dilute the rule requiring absolute compliance with the requisites of consignation.26 It also disturbs
a steady and stable status of proprietary rights, i.e., x x x el acreedor tan solo, y no el juez,
puede autorizar la variacion que para los derechos de aquel suponga la que se intente en el
objeto, cuantia o forma de las obligaciones,27 since parties are left guessing on whether the

repurchase of the properties had been effected. In a broader sense, this uncertain state will only
depress the market value of the land and virtually paralyze efforts of the landowner to meet his
needs and obligations and realize the full value of his land.
Moreover, we do not think that respondents causes of action in Civil Case No. A-2032 are now
barred by estoppel and laches. The essence of estoppel and laches is the failure or neglect for an
unreasonable and unexplained length of time to do that which by exercising due diligence could
or should have been done earlier; it is the negligence or omission to assert a right within a
reasonable time warranting a presumption that the party entitled to assert it either has abandoned
or declined to assert it although there is no absolute rule as to what constitutes staleness of
demand as each case is to be determined according to its particular circumstances.28
In the instant case, it was prudent and discerning for respondents and their predecessor-ininterest Mamerto Reyes that they deferred any action against petitioners, i.e., Civil Case No. A2032, to recover ownership and possession of the three (3) pieces of real estate, until the finality
of judgment in Civil Case No. A-245. For patiently electing not to inundate our courts of justice
with cases the outcome of which may well depend upon the then pending civil suit, respondents
cannot now be penalized by barring their complaint in Civil Case No. A-2032 on the equitable
grounds of estoppel and laches.
We also find no reason to disturb our findings upon petitioners assertion that they were
purchasers of the three (3) parcels of land in good faith and for value. As we held in David v.
Bandin, the issue of good faith or bad faith of the buyer is relevant only where the subject of the
sale is registered land and the purchaser is buying the same from the registered owner whose
title to the land is clean x x x in such case the purchaser who relies on the clean title of the
registered owner is protected if he is a purchaser in good faith for value.29 Since the properties
in question are unregistered lands, petitioners as subsequent buyers thereof did so at their peril.
Their claim of having bought the land in good faith, i.e., without notice that some other person
has a right to or interest in the property, would not protect them if it turns out, as it actually did in
this case, that their seller did not own the property at the time of the sale.
At any rate, petitioners failed to discharge their burden of proof that they were purchasers of the
three (3) parcels of land in good faith. For, as we ruled in Embrado v. Court of Appeals,30 the
burden of proving the status of a purchaser in good faith and for value lies upon him who asserts
that status, which is not discharged by simply invoking the ordinary presumption of good faith,
i.e., that everyone is presumed to act in good faith, since the good faith that is here essential is
integral with the very status which must be established.
In the proceedings a quo, what is evident is the admitted fact of payment made by Mamerto
Reyes as respondents predecessor-in-interest of the taxes on the properties prior to and at the
time when the contracts of sale in favor of petitioner-spouses were perfected, which undoubtedly
confirms the precedence of respondents possession of the parcels of land in question. This
situation should have compelled petitioners to investigate the right of respondents over the
properties before buying them, and in the absence of such inquiry, the rule is settled that a buyer
in the same circumstances herein involved cannot claim to be a purchaser in good faith.

The absence of good faith on the part of petitioner-spouses Teofilo and Simeona Rayos in
purchasing the three (3) parcels of unregistered land precludes the application of the rule on
double sales enunciated in Art. 1544 of the Civil Code.31 In any event, even if we apply Art.
1544, the facts would nonetheless show that respondents and their predecessor-in-interest
registered first the source of their ownership and possession, i.e., the 1 September 1957 deed of
sale with right to repurchase, held the oldest title, and possessed the real properties at the earliest
time. Applying the doctrine of priority in time, priority in rights or prius tempore, potior
jure, respondents are entitled to the ownership and possession of the parcels of land in dispute.
The instant Petition for Review is DENIED. The assailed Decision of the CA is AFFIRMED with
MODIFICATION concerning the damages.
There is no evidence to prove that petitioners paid at any time the repurchase price for the three
(3) parcels of land in dispute except for the deposit of P724.00 in the Court of First Instance
which however fell short of all the acts necessary for a valid consignation and discharge of their
obligation to respondents.
In order that consignation may be effective the debtor must show that (a) there was a debt due;
(b) the consignation of the obligation had been made because the creditor to whom a valid tender
of payment was made refused to accept it; (c) previous notice of the consignation had been given
to the person interested in the performance of the obligation; (d) the amount due was placed at
the disposal of the court; and, (e) after the consignation had been made the person interested was
notified thereof.
NOTES:
1. No evidence to prove actual damages was offered in Civil Case No. A-2032 since the
parties therein submitted the case for decision on the basis of their respective memoranda,
hence no actual damages can be awarded.32 In the same manner, there is no clear and
convincing showing that petitioners acted in a wanton, fraudulent, reckless, oppressive,
or malevolent manner to warrant the imposition of exemplary damages in respondents
favor.33 In any event, exemplary damages cannot be adjudicated in the instant case since
there is no award of moral, temperate or compensatory damages.
2. It is appropriate to stress that the mere filing of a complaint does not ipso facto entitle a
party to attorneys fees since this act is a means sanctioned by law to protect rights and
interests even if found subsequently to be unmeritorious.
Posted November 11, 2010 by vbdiaz in REAL ESTATE TRANSACTIONS

RADIOWEALTH FINANCE COMPANY vs. PALILEO

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RADIOWEALTH FINANCE COMPANY vs. PALILEO

G.R. No. 83432

May 20, 1991
FACTS: Defendant spouses Castro sold to plaintiff-appellee Palileo (private respondent herein),
a parcel of unregistered coconut land situated in Surigao del Norte. The sale is evidenced by a
notarized Deed of Absolute Sale (Exh. E). The deed was not registered in the Registry of
Property for unregistered lands. Since the execution of the deed of sale, appellee Palileo
exercised acts of ownership over the land through his mother as administratrix or overseer.
Appellee has continuously paid the real estate taxes on said land from 1971 until the present.
A judgment was rendered against defendant Castro by the then CFI to pay herein defendantappellant Radiowealth Finance Company (petitioner herein). Upon the finality of the judgment, a
writ of execution was issued. Pursuant to said writ, defendant provincial Sheriff levied upon and
finally sold at public auction the subject land that defendant Enrique Castro had earlier sold to
appellee Palileo. A certificate of sale was executed by the Provincial Sheriff in favor of
defendant- appellant Radiowealth Finance Company, being the only bidder. After the period of
redemption has (sic) expired, a deed of final sale was also executed by the same Provincial
Sheriff. Both the certificate of sale and the deed of final sale were registered with the RD.
Learning of what happened to the land, private respondent Palileo filed an action for quieting of
title over the same. After a trial on the merits, the court a quo rendered a decision in his favor. On
appeal, the decision of the trial court was affirmed. Hence, this petition for review on certiorari.
ISSUE: Who, as between two buyers of unregistered land, is the rightful ownerthe first buyer
in a prior sale that was unrecorded, or the second buyer who purchased the land in an execution
sale whose transfer was registered in the RD
HELD: PALILEO HAS THE SUPERIOR RIGHT OVER THE LAND
There is no doubt that had the property in question been a registered land, this case would have
been decided in favor of petitioner since it was petitioner that had its claim first recorded in the
RD.
It must be stressed however that this case deals with a parcel of unregistered land and a different
set of rules applies. We affirm the decision of the CA.
Under Act No. 3344, registration of instruments affecting unregistered lands is without
prejudice to a third party with a better right. The aforequoted phrase has been held by this Court
to mean that the mere registration of a sale in ones favor does not give him any right over
the land if the vendor was not anymore the owner of the land having previously sold the same
to somebody else even if the earlier sale was unrecorded.
Applying this principle, the CA correctly held that the execution sale of the unregistered land in
favor of petitioner is of no effect because the land no longer belonged to the judgment debtor as
of the time of the said execution sale.

NOTES: Findings of fact of the CA are conclusive on this Court and will not be disturbed unless
there is grave abuse of discretion. The finding of the CA that the property in question was
already sold to private respondent by its previous owner before the execution sale is evidenced
by a deed of sale. Said deed of sale is notarized and is presumed authentic. There is no
substantive proof to support petitioners allegation that the document is fictitious or simulated.
With this in mind, We see no reason to reject the conclusion of the CA that private respondent
was not a mere administrator of the property. That he exercised acts of ownership through his
mother also remains undisputed.
Posted November 11, 2010 by vbdiaz in REAL ESTATE TRANSACTIONS

CARUMBA vs. CA Leave a comment

CARUMBA vs. CA
G.R. No. L-27587
February 18, 1970
FACTS: In 1955, the spouses Amado Canuto and Nemesia Ibasco, by virtue of a Deed of Sale
of Unregistered Land with Covenants of Warranty sold a parcel of land located in Camarines
Sur, to the spouses Amado Carumba and Benita Canuto, The referred deed of sale was never
registered in the Office of the RD of Camarines Sur, and the Notary was not then an authorized
notary public in the place.
In 1957, a complaint for a sum or money was filed by Balbuena against Amado Canuto and
Nemesia Ibasco before the Justice of the Peace Court. A decision was rendered in favor of
Balbuena and against the defendants.
In 1968, the ex-officio Sheriff issued a Definite Deed of Sale of the property now in question in
favor of Balbuena, which instrument of sale was registered before the Office of the RD.
The CFI, finding that after execution of the document Carumba had taken possession of the land,
and planted thereon:
1. declared him to be the owner of the property under a consummated sale;
2. held void the execution levy made by the sheriff, pursuant to a judgment against
Carumbas vendor, Amado Canuto;
3. and nullified the sale in favor of the judgment creditor, Balbuena.
The CA, without altering the findings of fact made by the court of origin, declared that there
having been a double sale of the land subject of the suit Balbuenas title was superior to that of
his adversary under Article 1544 of the Civil Code of the Philippines, since the execution sale
had been properly registered in good faith and the sale to Carumba was not recorded.

ISSUE: Who has the superior title to the land

HELD: CARUMBA
CA reversed. CFI affirmed.
The SC disagrees with the CA. While under the invoked Article 1544 registration in good faith
prevails over possession in the event of a double sale by the vendor of the same piece of land to
different vendees, said article is of no application to the case at bar, even if Balbuena, the later
vendee, was ignorant of the prior sale made by his judgment debtor in favor of petitioner
Carumba. The reason is that the purchaser of unregistered land at a sheriffs execution sale
only steps into the shoes of the judgment debtor, and merely acquires the latters interest in
the property sold as of the time the property was levied upon. This is specifically provided by
section 35 of Rule 39 of the Revised Rules of Court, the second paragraph of said section
specifically providing that:
Upon the execution and delivery of said (final) deed the purchaser, redemptioner, or his assignee
shall be substituted to and acquire all the right, title, interest, and claim of the judgment debtor to
the property as of the time of the levy, except as against the judgment debtor in possession, in
which case the substitution shall be effective as of the time of the deed (Emphasis supplied)
While the time of the levy does not clearly appear, it could not have been made prior to 1957,
when the decision against the former owners of the land was rendered in favor of Balbuena. But
the deed of sale in favor of Canuto had been executed two years before, in 1955, and while only
embodied in a private document, the same, coupled with the fact that the buyer (petitioner
Carumba) had taken possession of the unregistered land sold, sufficed to vest ownership on the
said buyer. When the levy was made by the Sheriff, therefore, the judgment debtor no longer had
dominical interest nor any real right over the land that could pass to the purchaser at the
execution sale. Hence, the latter must yield the land to petitioner Carumba.
Said rule is different in case of lands covered by Torrens titles, where the prior sale is neither
recorded nor known to the execution purchaser prior to the levy; but the land here in question is
admittedly not registered under Act No. 496.
Posted November 11, 2010 by vbdiaz in REAL ESTATE TRANSACTIONS

NAVAL vs. COURT OF APPEALS ET AL Leave a

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NAVAL vs. COURT OF APPEALS ET AL
G.R. No. 167412
February 22, 2006

FACTS: In 1969, Ildefonso Naval sold a parcel of land located in Camarines Sur to Galarosa.
The sale was recorded in the RD pursuant to Act No. 3344, the law governing registrations of all
instruments on unregistered lands.
Subsequently, Galarosa sold portions of the land to respondents Balilla, Nacion, spouses Moya,
and Camalla. All buyers occupied the portion they bought, built improvements thereon, and paid
the taxes due thereto.
The controversy arose when petitioner Juanita Naval, the great granddaughter of Ildefonso, was
issued by the RD an OCT covering a portion of the subject land. She claimed that she bought the
subject land from Ildefonso in 1972.
Petitioner Juanita filed a complaint for recovery of possession against Aguirre, Balila, Moya, and
Nacion. However, the case was dismissed without prejudice for failure to prosecute the action for
an unreasonable length of time.
Almost 20 years later petitioner re-filed the complaint for recovery of possession with damages
before the MCTC, against Camalla, Balila, Aguirre, Nacion and Moya. After trial, the MCTC
rendered its decision in favor of the plaintiff and against defendants, declaring: the plaintiff to be
the legal owner of the land, ordering defendants Camalla, Balila, Balila, Aguirre and Nacion to
vacate the property in question and to deliver its possession to the plaintiff, and ordering Moya to
vacate the land occupied by her and to relinquish its possession to the plaintiff;
Aggrieved, respondents appealed the decision to the RTC of Naga City, which affirmed in toto
the assailed decision. Respondents thereafter elevated the case to the CA. Finding the prior
registration of the deed of sale between Ildefonso and Galaura with the RD as a constructive
notice to subsequent buyers, the appellate court reversed the decision of the RTC. Hence, this
petition for review.
ISSUE: Who has the superior right to a parcel of land sold to different buyers at different times
by its former owner.
HELD: RESPONDENTS
The petition is DENIED. The Decision of the CA and the denial of the motion for
reconsideration are AFFIRMED.
a. It is not disputed that the subject land belonged to Ildefonso and that it was not registered
under the Torrens System when it was sold to Gregorio in 1969 and to the petitioner in 1972.
Further, the deed of sale between Ildefonso and Gregorio was registered with the RD of
Camarines Sur pursuant to Act No. 3344.
In holding that respondents have a better right to possess the subject land in view of the bona
fide registration of the sale with the RD of Camarines Sur by Ildefonso and Gregorio, the CA
applied Article 1544 of the Civil Code.

While we agree with the appellate court that respondents have superior right over the petitioner
on the subject property, we find Article 1544 inapplicable to the case at bar since the subject
land was unregistered at the time of the first sale. The registration contemplated under this
provision has been held to refer to registration under the Torrens System, which considers
the act of registration as the operative act that binds the land. Thus, in Carumba v. Court of
Appeals, we held that Article 1544 of the Civil Code has no application to land not registered
under Torrens System.
The law applicable therefore is Act No. 3344, which provides for the registration of all
instruments on land neither covered by the Spanish Mortgage Law nor the Torrens System.
Under this law, registration by the first buyer is constructive notice to the second buyer that
can defeat his right as such buyer in good faith; it binds third person who may subsequently deal
with the same property.
b. Even if petitioner argues that she purchased and registered the subject land in good faith and
without knowledge of any adverse claim thereto, respondents still have superior right over the
disputed property. We held in Rayos v. Reyes32 that:
[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the
sale is registered land and the purchaser is buying the same from the registered owner whose
title to the land is clean x x x in such case the purchaser who relies on the clean title of the
registered owner is protected if he is a purchaser in good faith for value. Since the properties in
question are unregistered lands, petitioners as subsequent buyers thereof did so at their peril.
Their claim of having bought the land in good faith, i.e., without notice that some other person
has a right to or interest in the property, would not protect them if it turns out, as it actually did in
this case, that their seller did not own the property at the time of the sale.
c. It is an established principle that no one can give what one does not have, nemo dat quod non
habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can
acquire no more than what the seller can transfer legally.In the case at bar, since Ildefonso no
longer owned the subject land at the time of the sale to the petitioner, he had nothing to sell and
the latter did not acquire any right to it.
d. Even if we apply Article 1544, the facts would nonetheless show that respondents and their
predecessors-in-interest registered first the source of their ownership and possession, i.e., the
1969 deed of sale, and possessed the subject land at the earliest time. Applying the doctrine of
priority in time, priority in rights or prius tempore, potior jure, respondents are entitled to
the ownership and possession of the subject land.
e. True, Section 32 of Presidential Decree No. 1529 provides that [u]pon the expiration of said
period of one year, the decree of registration and the certificate of title shall become
incontrovertible. However, it does not deprive an aggrieved party of a remedy in law. What
cannot be collaterally attacked is the certificate of title and not the title or ownership which is
represented by such certificate. Ownership is different from a certificate of title. The fact that
petitioner was able to secure a title in her name did not operate to vest ownership upon her of the
subject land. Registration of a piece of land under the Torrens System does not create or vest

title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence
of ownership or title over the particular property described therein. It cannot be used to protect a
usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither
does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular
person does not foreclose the possibility that the real property may be co-owned with persons not
named in the certificate, or that it may be held in trust for another person by the registered owner.
As correctly held by the Court of Appeals, notwithstanding the indefeasibility of the Torrens title,
the registered owner may still be compelled to reconvey the registered property to its true
owners. The rationale for the rule is that reconveyance does not set aside or re-subject to review
the findings of fact of the Bureau of Lands. In an action for reconveyance, the decree of
registration is respected as incontrovertible. What is sought instead is the transfer of the
property or its title which has been wrongfully or erroneously registered in another
persons name, to its rightful or legal owner, or to the one with a better right.
Finally, the Court of Appeals correctly held that an action for reconveyance does not prescribe
when the plaintiff is in possession of the land to be reconveyed, as in this case. The reason for
this is that one who is in actual possession of a piece of land claiming to be the owner thereof
may wait until his possession is disturbed or his title is attacked before taking steps to vindicate
his right, the reason for the rule being, that his undisturbed possession gives him a continuing
right to seek the aid of a court of equity to ascertain and determine the nature of the adverse
claim of a third party and its effect on his own title, which right can be claimed only by one who
is in possession.
We hold that in such a situation the right to quiet title to the property, to seek its reconveyance
and annul any certificate of title covering it, accrued only from the time the one in possession
was made aware of a claim adverse to his own, and it is only then that the statutory period of
prescription commences to run against such possessor.
Posted November 11, 2010 by vbdiaz in REAL ESTATE TRANSACTIONS

SPOUSES SALERA, VS. SPOUSES RODAJE Leave a

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SPOUSES SALERA, VS. SPOUSES RODAJE
G.R. No. 135900
August 17, 2007
FACTS: The Petitioner spouses Salera filed with the RTC of Leyte, a complaint for quieting of
title against spouses Rodaje, The Saleras alleged that they are the absolute owners of a parcel of
land situated in Leyte. They acquired the property from the heirs of Brigido Tonacao as shown
by a Deed of Absolute Sale; they had the document registered in the RD.

When they asked the Provincial Assessor to declare the property under their names for taxation
purposes, they found that the Tax Declaration in the name of Brigido was already cancelled and
another one was issued in the names of the Rodajes. Petitioners further alleged that they have
been in possession of the property and the house they built thereon because they had paid the
purchase price even before the execution of the deed of sale.

In their answer to the complaint, respondents Rodajes claimed that they are the absolute owners
of the same property. They acquired it from Catalino Tonacao, the father of Brigido, in a Deed
of Absolute Sale and the sale was registered in the RD and a Tax Declaration was issued in their
names. Since then, they have been exercising their right of ownership over the property and the
building constructed thereon peacefully, publicly, adversely and continuously. Apart from being
the first registrants, they are buyers in good faith.

The RTC rendered a Decision declaring petitioners the rightful and legal owners of the property.

On appeal, the CA reversed and set aside the trial courts Decision. Hence, this petition for
Review on Certiorari

ISSUE: Which of the two contracts of sale is valid.

HELD: THE ONE IN FAVOR OF PETITIONERS SPOUSES SALERA

The petition is GRANTED. The assailed Decision of the CA is REVERSED and the Decision
of the trial court is REINSTATED.
The Court of Appeals, in upholding the validity of the sale in favor of respondents, relied on
Article 1544 of the Civil Code on double sale, thus:
As between two purchasers, the one who registered the sale in his favor has a preferred right over
the other who has not registered his title, even if the latter is in actual possession of the
immovable property A fortiori the defendants-appellants have a superior right over the contested
property inasmuch as they have both actual possession and prior registration of the conveyance.
Dominium a possessione cepisse dicitur. Right is said to have its beginning from possession.

xxx
Since the controversy involves two deeds of sale over the same property, Article 1544 properly
applies thereto.Following the above-quoted provision, the court a quo was not justified in
according preferential rights to the plaintiffs-appellees, who had registered the sale in their favor
later, as against the defendants-appellants.
The Court of Appeals is wrong. Article 1544 of the Civil Code contemplates a case of double
sale or multiple sales by a single vendor. More specifically, it covers a situation where a single
vendor sold one and the same immovable property to two or more buyers. It cannot be invoked
where the two different contracts of sale are made by two different persons, one of them not
being the owner of the property sold. In the instant case, the property was sold by two different
vendors to different purchasers. The first sale was between Catalino and herein respondents,
while the second was between Brigidos heirs and herein petitioners.
Respondents claim that they have been in possession of the lot even before the execution of the
Deed of Absolute Sale on June 6, 1986. However, a perusal of the records of the case shows
that petitioners are the ones in prior possession of the property.
Evidence submitted to the court, oral and documentary, established that respondents knew
beforehand that the property was declared in the name of Brigido Tonacao for taxation
purposes.Thus, respondents should have been wary in buying the property. Any lot buyer is
expected to be vigilant, exercising utmost care in determining whether the seller is the true owner
of the property and whether there are other claimants. There is no indication from the record
that respondents first determined the status of the lot.
While tax declarations are not conclusive proofs of ownership, however, they are good indicia
of possession in the concept of owner, for no one in his right mind would be paying taxes for a
property that is not in his actual or at least constructive possession. Hence, as between Brigido
and Catalino, the former had better right to the property. In other words, Catalino, not being the
owner or possessor, could not validly sell the lot to respondents.
The Court is convinced that respondents had knowledge that the disputed property was
previously sold to petitioners by Brigidos heirs. Obviously, aware that the sale to petitioners
was not registered, they purchased the property and have the sale registered ahead of petitioners,
who although in possession, failed to have their contract of sale registered immediately in the
Registry of Deeds.
NOTES:
1. Settled is the principle that this Court is not a trier of facts. In Gabriel v. Mabanta we said
that (t)his rule, however, is not an iron-clad rule. One of the recognized exceptions is when
the findings of fact of the Court of Appeals are contrary to those of the trial court, as in this case.
2. Good faith is something internal. Actually, it is a question of intention. In ascertaining ones
intention, this Court must rely on the evidence of ones conduct and outward acts. Good faith, or

want of it, is capable of being ascertained only from the acts of one claiming its presence, for it is
a condition of the mind which can be judged by actual or fancied tokens or signs.
Good faith consists in the possessors belief that the person from whom he received the thing
was the owner of the same and could convey his title. Good faith, while it is always to be
presumed in the absence of proof to the contrary, requires a well founded belief that the person
from whom title was received was himself the owner of the land, with the right to convey it.
There is good faith where there is an honest intention to abstain from taking any unconscientious
advantage of another.
Contrastingly, in Magat, Jr. v. Court of Appeals, the Court explained that [b]ad faith does not
simply connote bad judgment or negligence. It imports a dishonest purpose or some moral
obliquity and conscious doing of wrong. It means a breach of a known duty through some
motive or interest or ill will that partakes of the nature of fraud. In Arenas v. Court of Appeals,
the Court held that the determination of whether one acted in bad faith is evidentiary in nature.
Thus, [s]uch acts (of bad faith) must be substantiated by evidence. Indeed, the unbroken
jurisprudence is that [b]ad faith under the law cannot be presumed; it must be established by
clear and convincing evidence.
Posted November 11, 2010 by vbdiaz in REAL ESTATE TRANSACTIONS

SPOUSES TANGLAO vs. SPOUSES PARUNGAO Leave a

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SPOUSES TANGLAO vs. SPOUSES PARUNGAO
G.R. No. 166913
October 5, 2007
[KNOWLEDGE BY FIRST BUYER]
FACTS: Spouses Parungao, purchased from Spring Homes 7 Subdivision Lots in Laguna.
Respondents made a down payment, leaving a balance exclusive of interest. Respondents
introduced improvements on the lots. Under the terms of the Contracts to Sell signed by
respondents and Spring Homes, the balance of was to be paid by them within one year from its
execution. Respondents failed to pay the installments.
Later, Spring Homes executed two separate Deeds of Absolute Sale in favor of spouses Tanglao,
petitioners, wherein the former sold to the latter two lots. It turned out that the lots sold to them
were among the lots previously sold to the spouses Parungao.
In a letter, respondents demanded that Spring Homes deliver to them the corrected Contracts to
Sell, as well as the TCTs covering the lots they purchased.

Meanwhile, petitioners took possession of the two lots they bought. They forcibly opened the
steel gate as well as the doors of the buildings and entered the premises.
When informed of these events, respondents demanded an explanation from Spring Homes; it
apologized and promised she would settle the matter with petitioners. However, the controversy
was not settled.
Respondent Spouses Parungao filed with the Housing and Land Use Regulatory Board
(HLURB), a complaint for annulment of deed of sale and/or return of investment for the seven
(7) lots and costs of improvements, plus interest and damages. Impleaded as respondents were
Spring Homes and petitioners. Despite notice, Spring Homes did not appear during the hearings.
The HLURB Arbiter rendered a Decision ordering respondent Spring Homes to pay
complainants by way of refund of payments and damages.
Dissatisfied with the ruling, respondents filed a petition for review with the HLURB Board of
Commissioners. The HLURB Board of Commissioners reversed the Arbiters Decision and
granted the petition for review. Petitioners filed a motion for reconsideration, but this was denied
by the HLURB Board of Commissioners. Petitioners then filed an appeal with the Office of the
President, which dismissed their appeal and affirmed the Decision of the HLURB Board of
Commissioners. Petitioners MR was also denied by the said Office.
Eventually, petitioners filed with the CA a petition for review.The CA rendered its Decision
dismissing the petition, hence this petition for Review on Certiorari
ISSUE: Who between the petitioners and respondents have the right of ownership over the two
lots in controversy.
HELD: SPOUSES PARUNGAO, the first buyer.
PETITION DENIED. The Decision of the CA is AFFIRMED in toto.
The ownership of immovable property sold to two different persons at different times is
governed by Article 1544 of the Civil Code,2 which 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 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 the oldest title,
provided there is good faith.

In all of these cases, good faith is essential, being the basic premise of the preferential rights
granted to the person claiming ownership of the immovable.
In Occea v. Esponilla,5 this Court, speaking through then Associate Justice (now Chief Justice)
Reynato S. Puno, laid down the following rules in the application of Article 1544:
(1) Knowledge by the first buyer of the second sale cannot defeat the first buyers rights except
when the second buyer first registers in good faith the second sale; and
(2) Knowledge gained by the second buyer of the first sale defeats his rights even if he is first to
register, since such knowledge taints his registration with bad faith. Differently put, the act of
registration by the second buyer must be coupled with good faith, meaning, 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 put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor.
At the time of the second sale to petitioners by Spring Homes, there were already occupants and
improvements on the two lots in question. These facts should have put petitioners on their
guard. Settled is the rule that a buyer of real property in possession of persons other than
the seller must be wary and should investigate the rights of those in possession, for without
such inquiry the buyer can hardly be regarded as a buyer in good faith and cannot have
any right over the property.
As the petitioners cannot be considered buyers in good faith, they cannot rely upon the
indefeasibility of their TCTs in view of the doctrine that the defense of indefeasibility of a
torrens title does not extend to transferees who take the certificate of title in bad faith.
Considering that respondents who, in good faith, were first in possession of the subject lots, we
rule that the ownership thereof pertains to them
NOTES:
A purchaser in good faith or innocent purchaser for value is one who buys property and pays a
full and fair price for it at the time of the purchase or before any notice of some other persons
claim on or interest in it.7 The burden of proving the status of a purchaser in good faith lies upon
him who asserts that status and it is not sufficient to invoke the ordinary presumption of good
faith, that is, that everyone is presumed to have acted in good faith.8
Posted November 11, 2010 by vbdiaz in REAL ESTATE TRANSACTIONS

SPS. LUMBRES vs. SPS. TABLADA Leave a comment

SPS. LUMBRES vs. SPS. TABLADA
G.R. No. 165831

February 23, 2007

FACTS: on January 9, 1995 Spring Homes, former owner of the parcel of land in dispute,
entered into a pro forma Contract to Sell with the respondent spouses Tablada. The prepared
typewritten contract, with the blank spaces therein merely filled up, contains the designation of
the parcel sold, the price per square meter and the stipulation as to payment. After having been
paid the sum total of P179,500.00, which the respondents claim to be the full purchase price of
the subject lot, Spring Homes executed a Deed of Absolute Sale in favor of the respondents. In
the deed the subject lot was already made to appear as covered by a TCT. Because the anticipated
Pag-Ibig loan failed to materialize, the P230,000.00, which, under the Contract to Sell, was
supposed to be paid upon release of the loan, was left unpaid.
Respondents later declared the subject lot for taxation purposes and paid the corresponding real
property taxes thereon. Using their own funds, they caused the construction thereon of a
residential house, which they presently occupy. A Certificate of Occupancy was issued to them
and the house was declared in their names.
With the execution of the aforesaid Deed of Absolute Sale, the respondent spouses sent a demand
letter to Spring Homes for the transfer and release to them of the original or owners copy of the
TCT, who promised to deliver the said title and even apologized for the delay. However, to their
great dismay, the spouses subsequently learned that the TCT was canceled and a new one issued
to the petitioners. On account thereof, the respondent spouses filed with the RTC a civil suit
against the petitioners, Spring Homes and the RD of Calamba City for nullification of title,
reconveyance and damages.
It appears, however, that after the filing of the Civil Case the spouses Lumbres filed a civil case
before the RTC of Calamba City, against Spring Homes. The petitioners filed with the Register
of Deeds of Calamba City a Notice of Lis Pendens over all the properties registered in the name
of the said corporation, including the subject lot. The RTC issued an order attaching all of Spring
Homes properties, subject lot. Premiere Development Bank subsequently intervened because all
said properties had been mortgaged to it.
The petitioner spouses entered into a Compromise Agreement in the Civil Case with Spring
Homes and Premiere Development Bank, which was approved by the RTC. In that Compromise
Agreement, both Spring Homes and Premiere Development Bank recognized the rights and
interests of the petitioner spouses over the parcels of land The subject property (Lot 8, Block 3)
was among the properties covered by the aforementioned compromise agreement that were
judicially assigned, transferred and conveyed to the petitioners.
Meanwhile, due to the respondents alleged failure to pay the P230,000.00 unpaid balance as per
the Contract to Sell earlier adverted to despite demands, the subject lot was sold by Spring
Homes to the petitioners, again by way of a Deed of Absolute Sale executed on December 22,
2000 for and in consideration of the sum of P157,500.00. The mortgage on the lot was released
by Premiere Development Bank. Subsequently a TCT covering the subject lot was issued in
petitioners favor.

The instant case cropped up when, asserting their ownership of the subject lot on the basis of the
TCT the petitioners demanded of the respondents to vacate said lot and to pay them the rentals
due thereon. Their demands having come to naught, the petitioner spouses then filed in the
MTCC for ejectment against respondent Tabladas and all persons claiming rights under them.
The MTCC dismissed the petitioners ejectment complaint and ruled for the respondents.
Aggrieved, the petitioners appealed to the RTC. In The RTC reversed and set aside the MTCC
decision and ordered the respondent spouses to vacate subject lot to surrender the possession
thereof to the petitioners. In holding that the petitioners have superior right on the subject lot
over the respondents, the RTC, applying the provisions of Articles 1350, 1352 and 1409 of the
Civil Code, deemed the Deed of Absolute Sale in favor of the respondents void ab initio for want
of valid consideration. With their MR having been denied by the RTC in the respondent spouses
then went to the CA on a petition for review.
The CA granted the respondents petition, thereby reversing the assailed Orders of the RTC and
reinstating the earlier decision of the MTCC. Their MR having been denied by the
CA,petitioners are now before us via the instant recourse raising the following issues:

ISSUE: Who, as between the petitioners and the respondents, is entitled to the physical or
material possession of the property involved, independent of their respective claims of ownership
thereof

HELD:
petition denied.

Before proceeding with a discussion of the issues laid out above, it must be stressed that the
present case is one for ejectment. As such, our judgment hereon is effective only with respect to
possession. It does not bind the title or affect the ownership of the lot in question.
Upon scrutiny, however, the CA astutely observed that despite there being no question that the
total land area of the subject lot is 105 square meters, the Contract to Sell executed and entered
into by Spring Homes and the respondent spouses states, however, that while there is only one
parcel of land being sold, the Contract to Sell speaks of two (2) land areas, namely, 105 sqm
and 42 sqm, and two (2) prices per square meter differ.
The CA could only think of one possible explanation: the Contract to Sell refers only to a single
lot with a total land area of 105 square meters. The 42 square meters mentioned in the same
contract and therein computed at the rate of P6,000 per square meter refer to the cost of the
house which would be constructed by the respondents on the subject lot through a Pag-Ibig loan.

Looking at that portion of the Contract to Sell, the CA found merit in the respondents contention
that the total selling price of P409,500 includes not only the price of the lot but also the cost of
the house that would be constructed thereon. We are inclined to agree. The CA went on to say:
It could be argued that the contract to sell never mentions the construction of any house or
building on the subject property. Had it been the intention of the parties that the total selling price
would include the amount of the house that would be taken from a loan to be obtained from PagIbig, they could have specified so. However, one should not lose sight of the fact that the
contract to sell is an accomplished form. [Respondents,] trusting Spring Homes, could not be
expected to demand that another contract duly reflective of their agreements be utilized instead
of the accomplished form. The terms and conditions of the contract may not contemplate the
inclusion of the cost of the house in the total selling price, but the entries typewritten thereon
sufficiently reveal the intentions of the parties.
The position of the [respondents] finds support in the documents and subsequent actuations of
Bertha Pasic, the representative of Spring Homes. [Respondents] undeniably proved that they
spent their own hard-earned money to construct a house thereon after their Pag-Ibig loan did not
materialize. It is highly unjust for the [respondents] to pay for the amount of the house when the
loan did not materialize due to the failure of Spring Homes to deliver the owners duplicate copy
of the TCT.
If the total selling price was indeed P409,500.00, as [petitioners] would like to poster, said
amount should have appeared as the consideration in the deed of absolute sale dated January 15,
1996. However, only P157,500.00 was stated. The amount stated in the Deed of Absolute Sale
dated January 15, 1996 was not only a portion of the selling price, because the Deed of Sale
dated December 22, 2000 also reflected P157,500.00 as consideration. It is not shown that
[petitioners] likewise applied for a loan with Pag-Ibig. The reasonable inference is that the
consistent amount stated in the two Deeds of Absolute Sale was the true selling price as it
perfectly jibed with the computation in the Contract to Sell.
We find the CAs reasoning to be sound. At any rate, the execution of the January 16, 1996 Deed
of Absolute Sale in favor of the respondents effectively rendered the previous Contract to Sell
ineffective and canceled. Furthermore, we find no merit in petitioners contention that the first
sale to the respondents was void for want of consideration. As the CA pointed out in its assailed
decision:
Other than the [petitioners'] self-serving assertion that the Deeds of Absolute Sale was executed
solely for the purpose of obtaining a Pag-Ibig loan, no other concrete evidence was tendered to
justify the execution of the deed of absolute sale. They failed to overcome the clear and
convincing evidence of the [respondents] that as early as July 5, 1995 the latter had already paid
the total amount of P179,500.00, much bigger than the actual purchase price for the subject land.
Having stated that the Deed of Absolute Sale executed in favor of the respondent spouses is valid
and with sufficient consideration, the MTCC correctly applied the provisions of Article 1544 of
the Civil Code. Article 1544 reads:

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 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.
Notwithstanding the fact that the petitioners, as the second buyer, registered their Deed of
Absolute Sale, in contrast to the Deed of Sale of the respondents which was not registered at all
precisely because of Spring Homes failure to deliver the owners copy of the TCT, the
respondents right could not be deemed defeated as the petitioners are in bad faith. Petitioners
cannot claim good faith since at the time of the execution of the Compromise Agreement in Civil
Case, they were indisputably and reasonably informed that the subject lot was previously sold
to the respondents. In fact, they were already aware that the respondents had constructed a
house thereon and are presently in possession of the same.
Knowledge gained by the second buyer of the first sale defeats his rights even if he is the first to
register the second sale because such knowledge taints his prior registration with bad faith. For
the second buyer to displace the first, he must show that he acted in good faith throughout (i.e. in
ignorance of the first sale and of the first buyers rights) from the time of acquisition until the
title is transferred to him by registration.
Hence, there was nothing to cede or transfer to the petitioners when the Compromise Agreement
was entered into insofar as the subject lot is concerned as it was already sold to and fully paid for
by the respondents as early as January 16, 1996 when the Absolute Deed of Sale was executed in
their favor by Spring Homes. More so that Spring Homes has no more to sell to the petitioners
when it executed in the latters favor the second deed of absolute sale on December 22, 2000.
The respondents are the current occupants of the subject lot. They had constructed their
residential house thereon and are living there at present. The action for ejectment was fashioned
to provide a speedy, albeit temporary, remedy to the dispossessed party while the issue of lawful
possession or de jure possession is pending or about to be filed. The remedy of ejectment ought
to maintain the status quo and prevent the party-litigants from further aggravating the situation
and causing further damage.
NOTES:
1. When acting as an ejectment court, the Metropolitan, Municipal and Circuit Trial Courts
jurisdiction is limited to the determination of the issue on possession de facto and not possession
de jure.11 By way of exception, however, if the issue of possession depends on the resolution of
the issue of ownership, which is sufficiently alleged in the complaint, as here, the MTCC may

resolve the issue of ownership although the resulting judgment would be conclusive only with
respect to possession but not to the ownership of the property.
2. Regardless of the actual condition of the title to the property, the party in peaceful, quiet
possession thereof shall not be ejected therefrom. Thus, a party who can prove prior possession
can recover such possession even against the owner himself. Whatever may be the character of
the defendants prior possession, whether it be legal or illegal, since he had in his favor priority
in time, he has the security that entitles him to remain on the property until he is lawfully ejected
therefrom by a person having a better right by accion publciana or accion reivindicatoria.15
Posted November 11, 2010 by vbdiaz in REAL ESTATE TRANSACTIONS