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G.R. No.

204160

September 22, 2014

SPOUSES MICHELLE M. NOYNAY and NOEL S. NOYNAY, Petitioners,


vs.
CITIHOMES BUILDER AND DEVELOPMENT, INC., Respondent.
DECISION
MENDOZA, J.:
In this petition for review on certiorari1 under Rule 45 of the Rules of Court, Spouses
Noel and Michelle Noynay (Spouses Noynay) assail the July 16, 2012 Decision 2 of the
Court of Appeals (CA) and October 15, 2012 Resolution, 3 which affirmed with
modification the September 17, 20 I 0 Decision 4 of the Regional Trial CoUii, Branch 21,
Malolos, Bulacan ( RTCJ. Earlier, the RTC reversed the March 26, 2010 Decision 5 of the
Municipal Trial Court for Cities, San Jose Del Monte, Bulacan (MTCC). which dismissed
the complaint6 for unlawful detainer filed by Citihomes Builder and Development, Inc.
(Citihomes) against Spouses Noynay for lack of cause of action.
The Facts:
On December 29, 2004, Citihomes and Spouses Noynay executed a contract to
sell7 covering the sale of a house and lot located in San Jose Del Monte, Bulacan, and
covered by Transfer Certificate of Title (TCT) No. T-43469. Under the terms of the
contract, the price of the property was fixed at P915,895.00, with a downpayment
of P183,179.00, and the remaining balance to be paid in 120 equal monthly installments
with an annual interest rate of 21% commencing on February 8, 2005 and every 8th day
of the month thereafter.
Subsequently, on May 12, 2005, Citihomes executed the Deed of Assignment of Claims
and Accounts8 (Assignment)in favor of United Coconut Planters Bank (UCPB) on May
12, 2005. Under the said agreement, UCPB purchased from Citihomes various
accounts, including the account of Spouses Noynay, for a consideration
of P100,000,000.00. In turn, Citihomes assigned its rights, titles, interests, and
participation in various contracts to sell with its buyers to UCPB.
In February of 2007, Spouses Noynay allegedly started to default in their payments.
Months later, Citihomes decided to declare Spouses Noynay delinquent and to cancel
the contract considering that nine months of agreed amortizations were left unpaid. On
December 8, 2007, the notarized Notice of Delinquency and Cancellation of the
Contract To Sell,9 dated November 21, 2007, was received by Spouses Noynay. They

were given 30 days within which to pay the arrears and failure to do so would authorize
Citihomes to consider the contract as cancelled.
On June 15, 2009, Citihomes sent its final demand letter asking Spouses Noynay to
vacate the premises due to their continued failure to pay the arrears. Spouses Noynay
did not heed the demand, forcing Citihomes to file the complaint for unlawful
detainerbefore the MTCC on July 29, 2009.
In the said complaint, Citihomes alleged that as per Statement of Account as of March
18, 2009, SpousesNoynay had a total arrears in the amount of P272,477.00, inclusive
of penalties. Thus, Citihomes prayed that Spouses Noynay be ordered to vacate the
subject property and pay the amount of P8,715.97 a month as a reasonable
compensation for the use and occupancy to commence from January 8, 2007 until
Spouses Noynay vacate the same.
In its March 26, 2010 Decision,10 the MTCC dismissed the complaint. It considered the
annotation in the certificate of title, which was dated prior to the filing of the complaint,
which showed that Citihomes had executed the Assignment favor of UCPB, as having
the legal effect of divesting Citihomes of its interest and right over the subject property.
As far as the MTCC was concerned, Citihomes did not have a cause of action against
Spouses Noynay.
The RTC, however, reversedthe ruling of the MTCC. In its September 17, 2010
Decision,11 the RTC stated that the MTCC erred in interpreting the deed of assignment
as having the effect of relinquishing all of Citihomes rights over the subject property.
The RTC explained that the assignment was limited only to the installment accounts
receivables due from Spouses Noynay and did not include the transfer of title or
ownership over the property. It pointed out that Citihomes remained as the registered
owner of the subject property, and so it had the right to ask for the eviction of Spouses
Noynay. As to the issue of who had the better right of possession, the RTC ordered that
the records be remanded to the MTCC for the proper determination.
Spouses Noynay then went to the CA. On July 16, 2012, the CA affirmed the conclusion
of the RTC that Citihomes still had the right and interest over the property in its capacity
as the registered owner. Moreover, the issue on who, between the parties had a better
possessory right over the property, was resolved infavor of Citihomes.
In disposing the issue of possession, the CA primarily recognized the relevance of
Republic Act (R.A.)No. 6552, otherwise known as the Realty Installment Buyer Act
(Maceda Law), in determining the limits of the right to possess of Spouses Noynay in
their capacity as defaulting buyers in a realty installment scheme. Under the said law,

the cancellation of a contract would only follow if the requirements set forth therein had
been complied with, particularly the giving of a "notice of delinquency and cancellation
of the contract" to the defaulting party and,in some cases, the payment to the buyer of
the cash surrender value if at least two years of installments had been paid. The CA
noted that Spouses Noynay failed to complete the minimum two (2) years of installment,
despite the allegation that three (3) years of amortizations had already been paid. As an
effect, the CA pronounced that the termination of the contract was validly effected by the
expiration of the 30-day period from the time the notice of cancellation was received by
Spouses Noynay. From thatmoment, the CA treated Spouses Noynay to have lost the
right to possess the property. In addition, the CA made Spouses Noynay liable for the
payment of monthly rentals from the time their possession became illegal.
Spouses Noynay moved for reconsideration, but the CA denied their motion.
Hence, this petition.
ISSUE
The lone issue presented for resolution is whether Citihomes has a cause of action for
ejectment against Spouses Noynay. In effect, Spouses Noynay would have this Court
determine whether Citihomes may rightfully evict them.

Position of Spouses Noynay


Spouses Noynay insist that by virtue of the assignment of rights which Citihomes
executed in favor of UCPB, Citihomes did not have a cause of action against them
because it no longerhad an interest over the subject property. Contrary to the findings of
the CA, the monthly installments amounting to three years were already paid, by reason
of which, Section 3(b) of the Maceda Law should apply. This means that for the
cancellation to be effective, the cash surrender value should have been paid first to
them by Citihomes; and that because no payment was made, it follows that no valid
cancellation could also be effected. Thisallegedly strengthened their right to the
possession of the property even to this day.
Position of Citihomes
Citihomes counters that it has the right to ask for the eviction of the petitioners in its
capacity as the registered owner despite the assignment of rights it made to UCPB. It
believes that because Spouses Noynay failed to pay at least two (2) years of
installments, the cancellation became effective upon the expiration of the 30-day

periodfollowing the receipt of the notice of delinquency and cancellation notice and
without the need for the payment of the cash surrender value under Section 3(b) of the
Maceda Law.
Ruling of the Court
Cause of action has been defined as an act or omission by which a party violates a right
of another.12 It requires the existence of a legal right on the part of the plaintiff, a
correlative obligation of the defendant to respect such right, and an act or omission of
such defendant in violation of the plaintiffs rights. 13 A complaint should not be dismissed
for insufficiency of cause of action if it appears clearly from the complaint and its
attachments that the plaintiff is entitled to relief. 14 The complaint, however, may be
dismissed for lack of cause of action laterafter questions of fact have been resolved on
the basis of stipulations, admissions or evidence presented. 15
Relative thereto, a plaintiff in an unlawful detainer case which seeks recovery of the
property must prove ones legal right to evict the defendant, a correlative obligation on
the part of such defendant to respect the plaintiffs right to evict, and the defendants act
or omission in the form of refusal to vacate upon demand when his possession
ultimately becomes illegal.
At first glance, the main thrust of the discussion in the lower courts is the issue on
whether Citihomes had suchright to evict Spouses Noynay. At its core is the ruling of the
MTCC thatthe right to demand the eviction of Spouses Noynay was already transferred
to UCPB from the moment the Assignment was executed by Citihomes, which was done
prior to the institution of the unlawful detainer case. Thus, based on the evidence
presented during the trial, the MTCC held that Citihomes did not have a cause of action
against Spouses Noynay.The RTC held otherwise justifying that Citihomes may still be
the right party to evict Spouses Noynay in its capacity as the registered owner of the
property. The CA affirmed the RTC on this point.
The Court, however, agrees with the MTCC.
The determination of whether Citihomes has a right to ask for the eviction of Spouses
Noynay entirely depends on the review of the Assignment of Claims and Accounts it
executed in favor of UCPB. If it turns out that what was assigned merely covered the
collectible amounts or receivables due from Spouses Noynay, Citihomes would
necessarily have the right to demand the latters eviction asonly an aspect of the
contract to sell passed on to UCPB. Simply put, because an assignment covered only
credit dues, the relation between Citihomes as the seller and Spouses Noynay as the
buyer under their Contract to Sell remained. If on the other hand, it appears that the

assignment covered all of Citihomes rights, obligations and benefits in favor ofUCPB,
the conclusion would certainly be different.
Under the provisions of the Assignment, it was stipulated that:
NOW, THEREFORE, for and in consideration of the foregoing premises, the
ASSIGNOR hereby agrees as follows:
1. The ASSIGNOR hereby assigns, transfers and sets over unto the ASSIGNEE all its
rights, titles and interest in and to, excluding its obligations under the Contract/s to
Sellenumerated and described in the List of Assigned Receivables which is hereto
attached and marked as Annex "A" hereof, including any and all sum of money due and
payable to the ASSIGNOR, the properties pertaining thereto,all replacements,
substitution, increases and accretion thereof and thereto which the ASSIGNOR has
executed with the Buyers, as defined in the Agreement, and all moneysdue, or which
may grow upon the sales therein set forth.
2. For purposes of this ASSIGNMENT, the ASSIGNOR hereby delivers to the
ASSIGNEE, which hereby acknowledges receipt of the following documents evidencing
the ASSIGNORs title, right, interest, participation and benefit in the assigned
Installment Account Receivables listed in Annex "A" and made as integral part hereof.
a) Original Contracts to Sell
b) Transfer Certificates of Title
3. The ASSIGNOR, hereby irrevocably appoints the ASSIGNEE to be its true and lawful
agent or representativefor it and in its name and stead, but for such ASSIGNEEs own
benefit: (1) to sell, assign, transfer, set over, pledge, compromise or discharge the
whole, or any part, of said assignment; (2) to do all acts and things necessary, or
proper, for any such purpose; (3) to ask, collect, receive and sue for the moneys due, or
which may grow due, upon the said Assignment;and (4) to substitute one person, or
more, with like powers; hereby ratifying and confirming all that said agent or
representative, or his substitute, or substitutes, shall lawfully do, by virtue hereof. 16
[Emphases supplied]
Clearly, the conclusion of the MTCC had factual and legal bases. Evident from the tenor
of the agreement was the intent on the part of Citihomes, as assignor, to assign all of its
rights and benefits in favor of UCPB. Specifically, what Citihomes did was an
assignment or transfer of all contractual rights arising from various contracts to sell,
including the subject contract to sell, with all the rights, obligations and benefits

appurtenant thereto in favor of UCPB for a consideration of P100,000,000.00. Indeed,


the intent was more than just an assignment of credit. This intent to assign all rights
under the contract to sell was even fortified by the delivery of documents such as the
pertinent contracts to sell and the TCTs. Had it been the intent of Citihomes to assign
merely its interest in the receivables due from Spouses Noynay, the tenor of the deed of
assignment would have been couched in very specific terms.
Included in those matters which were handed over to UCPB were the provisions
outlined in Section 6 of the Contract to Sell. In the said provision, Citihomes, as the
seller has been given the right to cancel the contract to sell in cases of continuing
default by Spouses Noynay, to wit: SECTION 6. If for any reason, whatsoever, the
BUYER fails to pay three (3) consecutive monthly installments, the provision of RA No.
6552 shall apply.
Where the BUYER has paid less than two (2) years of installments and defaults in the
payment of three (3) consecutive monthly installment, he shall be given a grace period
of not less than sixty (60) days from the date the installment payments became due and
payable within which to pay the installments and/or make payments in arrears together
with the installments corresponding to the months of the grace period. In the event the
BUYER continues to default in the payment of the installments within or at the expiration
of the grace period herein provided, the SELLER shall have the right to cancel this
agreement thirty (30) days from the BUYERs receipt of the notice of cancellation or
demand for rescission by a notarial act. Thereafter, the SELLER may dispose of the
residential house and lot subject of this agreement in favor of other persons as if this
agreement had never been entered into.
WHERE the BUYER has paid atleast two (2) years of installments and he defaults in the
payment of three (3) consecutive monthly installments, the SELLER shall be entitled:
a. To pay, without additional interest, the unpaid installment due within the total grace
period earned by the BUYER which is fixed at the rate of one (1) month grace period for
every one (1) year of installment payment made; Provided, that this right shall be
exercised by the BUYER only once for every five (5) years of the life of this agreement.
b. If this agreement is cancelled, the SELLER shall refund to the BUYER the cash
surrender value of the payments equivalent to fifty percent thereof and, after five years
of installments, an additional five percent (5%) for every year but not to exceed ninety
(90%) of the total payments made; Provided, that the actual cancellation of this
agreement shall take place after thirty (30) days from receipt by the BUYER of the
notice of cancellation or demand for rescission by a notarial act and upon full payment
of the cash surrender value to the BUYER.

xxx

xxx

xxx

The BUYER, at the termination of the contract, shall promptly surrender the said
property to the SELLER, and should the former fail to comply with the provision, on top
of the remedy provided for above, the BUYER hereby expressly appoints the SELLER
as their duly authorized attorney-in-fact with power and authority to open, enter and take
full possession of the property in the presence of any peace officer and to take an
inventory of the equipment, furniture, merchandise and effect. In case the BUYER fails
to claim the said equipment, furniture, merchandise and effects and/or liquidate their
liabilities with the SELLER within thirty (30) days from the date of transfer of possession
of the property to the latter, the SELLER is hereby given the right to dispose of said
property in a private or public sale and to apply the proceeds to whatever expenses it
may have incurred in line with the warehousing of the equipment, furniture,
merchandise and effects.17
The exercise of such right to cancel necessarily determines the existence of the right to
evict Spouses Noynay. The existence of the right to evict is the first constitutive element
ofthe cause of action in this unlawful detainer case. Considering,however, that the right
to cancel was already assigned prior to the commencement of this controversy with the
execution of the Assignment, its legal consequences cannotbe avoided.
Well-established is the rule that the assignee is deemed subrogated to the rights as well
as to the obligations of the seller/assignor. By virtue of the deed of assignment, the
assignee is deemed subrogated to the rights and obligations of the assignor and is
bound by exactly the same conditions as those which bound the assignor.18 What can
be inferred from here is the effect on the status of the assignor relative to the relations
established by a contract which has been subsequently assigned; that is, the assignor
becomes a complete stranger to all the mattersthat have been conferred to the
assignee.
In this case, the execution of the Assignment in favor of UCPB relegated Citihomes to
the status of a mere stranger to the jural relations established under the contractto sell.
With UCPB as the assignee, it is clear that Citihomes has ceased tohave any right to
cancel the contract to sell with Spouses Noynay. Without this right,which has been
vested in UCPB, Citihomes undoubtedly had no cause ofaction against Spouses
Noynay.
This is not to say that Citihomes lost all interest over the property. To be clear, what
were assigned covered only the rights inthe Contract to Sell and not the property rights
over the house and lot, which remained registered under Citihomes name. Considering,
however, that the unlawful detainer case involves mere physical or materialpossession

of the property and is independent of any claim of ownership by any of the parties, 19 the
invocation of ownership by Citihomes is immaterial in the just determination of the case.
Granting that the MTCC erred in ruling that Citihomes had no cause of action by reason
of the Assignment it made in favor of UCPB, the Court still upholds the right of the
Spouses Noynay to remain undisturbed in the possession of the subject property. The
reason is simple Citihomes failed to comply with the procedures for the proper
cancellation of the contract to sell as prescribed by Maceda Law.
In Pagtalunan v. Manzano,20 the Court stressed the importance of complying with the
provisions of the Maceda Law as to the cancellation of contracts to sell involving realty
installment schemes. There it was held that the cancellation of the contract by the seller
must be in accordance with Section 3 (b) of the Maceda Law, which requires the notarial
act of rescission and the refund to the buyer of the full payment of the cash surrender
value of the payments made on the property. The actual cancellation of the contract
takes place after thirty (30) days from receipt by the buyer of the notice of cancellation
or the demand for rescission of the contract by a notarial act and upon fullpayment of
the cash surrender value to the buyer, to wit: (b) If the contract is cancelled, the seller
shall refund to the buyer the cash surrender value of the payments on the
propertyequivalent to fifty percent of the total payments made and, after five years of
installments, an additional five percent every year but not to exceed ninety percent of
the total payments made: Provided, That the actual cancellation of the contract shall
take place after thirty days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract bya notarial act and upon full payment of the cash
surrender value to the buyer.
[Emphases supplied]
According to the lower courts, Spouses Noynay failed to complete the two-year
minimum period of paid amortizations, thus, the cancellation of the contract to sell no
longer required the payment of the cash surrender value. This conclusion rests on the
allegation that the amortization payments commenced only on May 31, 2005. If indeedit
were true that the payments started only on that date, Spouses Noynay would not have
completed the required two-year period to be entitled to the payment of cash surrender
value. Records, however, show otherwise. The Contract to Sell, dated December 29,
2004, was very particularon the matter. It stipulated as follows:
SECTION 1. NOW, THEREFORE, for and in consideration of the sume of NINE
HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED NINETY FIVE PESOS ONLY,
(915,895.00) Philippine Currency, inclusive of miscellaneous charges hereunder set
forth, and of the foregoing premises, the SELLER hereby agrees to sell, cede and

convey to the BUYER, their heirs, administrators, and successors-in-interest, the


aforedescribed residential house and lot or lot only under the following terms and
conditions:
a. The amount of ONE HUNDRED EIGHTY THREE THOUSAND ONE HUNDRED
SEVENTY NINE PESOS ONLY (P183,179.00), Philippine Currency, representing full
downpayment shall be paid upon signing of this contract.
b. The balanceof the total purchase price in the amount of SEVEN HUNDRED THIRTY
TWO THOUSAND SEVEN HUNDRED SIXTEEN PESOS ONLY, (P732,716..00),
Philippine Currency shall be paid by the BUYER in 120 equal monthly installments in
the amount of P14,649.31 per month with an interest of 21% per annum to
commenceon 02.08.05 and every 8th day of the month thereafter.21
Citihomes claimed that the period ofthe payment of the amortizations started from May
31, 2005.22 As can be gleaned from the contract to sell, however, it appears that the
payment of the downpayment started from the signing thereof on December 29, 2004.
To this end, the factual admissions made by the parties during the preliminary
conference would shed light on the matter. It must be remembered that these judicial
admissions are legally binding on the party making the admissions. Similar to pre-trial
admissions in a pre-trial order in ordinary civil cases, the contents of the record of a
preliminary conference control the subsequent course of the action, thereby, defining
and limiting the issues to be tried. A contrary ruling would render useless the
proceedings during the preliminary conference and would, in fact, be antithetical to the
very purpose of a preliminary conference, which is, among others, to allow the parties to
admit and stipulate on a given set of facts and to simplify the issues involved. 23
The fairly recent case of Oscar Constantino v. Heirs of Oscar Constantino, 24 is most
instructive:
In Bayas, et al. v. Sandiganbayan, et al., this Court emphasized that:
Once the stipulations are reduced into writing and signed by the parties and their
counsels, they become binding on the parties who made them. They become judicial
admissionsof the fact or facts stipulated. Even if placed at a disadvantageous position, a
party may not be allowed to rescind them unilaterally, it must assume the consequences
of the disadvantage.(citations omitted)
Moreover, in Alfelor v. Halasan,this Court declared that:

A party who judicially admits a fact cannot later challenge the fact as judicial admissions
are a waiver of proof; production of evidence is dispensed with. A judicial admissionalso
removes an admitted fact from the field of controversy. Consequently, an admission
made in the pleadings cannot be controverted by the party making such admission and
are conclusive as to such party, and all proofs to the contrary or inconsistent therewith
should be ignored, whether objection is interposed by the party or not. The allegations,
statements or admissions contained in a pleading are conclusive as against the pleader.
A party cannot subsequently take a position contrary of or inconsistent with what was
pleaded. (Citations omitted)
[Emphases supplied]
Here, Spouses Noynay proposed for stipulation the factual allegation that they had been
paying Citihomesthe monthly amortization of the property for more than three (3) years
and only stopped payment by January 8, 2008. In the Preliminary Conference
Order,25 dated January 28, 2010, the MTCC noted the said factas admitted, to wit:
The defendants proposed the following matters for stipulations:
1. That the defendants had already paid the plaintiff the total amount of Php 633,000.00
Not Admitted
2. That the defendants have beenpaying the plaintiff the monthly amortization of the
property for more than three years and only stopped payment by January 8, 2008
Admitted.26
xxx

xxx

x x x[Emphasis supplied]

Moreover, based on the Statement of Account, 27 dated March 18, 2009, Spouses
Noynay started defaulting from January 8, 2008. This shows that prior to that date,
amortizations covering the 3-year period, which started with the downpayment, had
been paid. This is consistent with the admission of Citihomes during the preliminary
conference. By its admission that Spouses Noynay had been paying the amortizations
for three (3) years, there is no reason to doubt Spouses Noynay's compliance with the
minimum requirement of two years payment of amortization, entitling them to the
payment of the cash surrender value provided for by law and by the contract to sell. To
reiterate, Section 3(b) of the Maceda Law requires that for an actual cancellation to take
place, the notice of cancellation by notarial act and the full payment of the cash
surrender value must be first received by the buyer. Clearly, no payment of the cash
surrender value was made to Spouses Noynay. Necessarily, no cancellation of the
contract to selI could be considered as validly effected.

Without the valid cancellation of the contract, there is no basis to treat the possession of
the property by Spouses Noynay as illegal.1wphi1 In AMOSUP-PTGWO-ITF v.
Decena,28 the Court essentially held that such similar failure' to validly cancel the
contract, meant that the possessor therein, similar to Spouses Noynay in this case,
remained entitled to the possession of the property. In the said case, the Court stated:
In the parallel case of Pagtalunan v. Dela Cruz Vda. De Manzano, which likewise
originated as an action for unlawful detainer, we affirmed the finding of the appellate
court that, since the contract to sell was not validly cancelled or rescinded under Section
3(b) of R.A. No. 6552, the respondent therein had the right to continue occupying
unmolested the property subject thereof. WHEREFORE, the petition is GRANTED. The
July 16, 2012 Decision and October 15, 2012 Resolution of the Court of Appeals are
hereby REVERSED and SET ASIDE. The March 26, 2010 Decision of the Municipal
Trial Court for Cities is REINSTATED.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice

G.R. No. 205879

April 23, 2014

SKUNAC CORPORATION and ALFONSO F. ENRIQUEZ, Petitioners,


vs.
ROBERTO S. SYLIANTENG and CAESAR S. SYLIANTENG, Respondents.
DECISION
PERALTA, J.:
This treats of the petition for review on certiorari assailing the Decision 1 and
Resolution2 of the Court of Appeals (CA), dated August 10, 2012 and February 18,
2013, respectively, in CA-G.R. CV No. 92022.
The factual and procedural antecedents of the case, as narrated by the CA, are as
follows:
The civil cases before the [Regional Trial Court of Pasig City) involved two (2) parcels of
land identified as Lot 1, with an area of 1,250 square meters (Civil Case No. 63987) and
Lot 2, with an area of 990 square meters (Civil Case No. 63988), both found in Block 2
of the Pujalte Subdivision situated along Wilson Street, Greenhills, San Juan City which
are portions of a parcel of land previously registered in the name of Luis A. Pujalte on
October 29, 1945 and covered by Transfer Certificate of Title ("TCT") No. (-78865) (2668) -93165 ("Mother Title") of the Register of Deeds for the City of Manila.
Plaintiffs-appellants Roberto S. Sylianteng and Caesar S. Sylianteng ("appellants") base
their claim of ownership over the subject lots a Deed of Absolute Sale executed in their
favor by their mother, Emerenciana Sylianteng ("Emerenciana"), on June 27, 1983.
Appellants further allege that Emerenciana acquired the lots from the late Luis Pujalte
[Luis] through a Deed of Sale dated June 20, 1958 as reflected in Entry No. P.E. 4023,
annotated on the covering TCT, by virtue of which she was issued TCT No. 42369.
Then, when she sold the lots to appellants, TCT No. 39488, covering the same, was
issued in their names.
[Herein petitioners] Skunac Corporation ("Skunac") and Alfonso F. Enriquez
("Enriquez"), on the other hand, claim that a certain Romeo Pujalte who was declared
by the RTC of Pasig City, Branch 151 in Special Proceedings No. 3366 as the sole heir
of Luis Pujalte, caused the reconstitution of the Mother Title resulting to its cancellation
and the issuance of TCT No. 5760-R in his favor. Romeo Pujalte then allegedly sold the
lots to Skunac and Enriquez in 1992. Thus, from TCT No. 5760-R, TCT No. 5888-R, for
Lot 1 was issued in the name of Skunac, while TCT No. 5889-R for Lot 2 was issued in
the name of Enriquez.

[Respondents] contend that they have a better right to the lots in question because the
transactions conveying the same to them preceded those claimed by [petitioners] as
source of the latter's titles. [Respondents] further assert that [petitioners] could not be
considered as innocent purchasers in good faith and for value because they had prior
notice of the previous transactions as stated in the memorandum of encumbrances
annotated on the titles covering the subject lots. [Petitioners], for their part, maintain that
[respondents] acquired the lots under questionable circumstances it appearing that
there was no copy of the Deed of Sale, between Emerenciana and Luis Pujalte, on file
with the Office of the Register of Deeds.3
On November 16, 2007, the Regional Trial Court of Pasig (RTC) rendered judgment in
favor of herein petitioners. The dispositive portion of the RTC Decision reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
defendants and against the plaintiffs:
1. Declaring as null and void TCT No. 42369 in the name of Emerciana (sic) Sylianteng
and TCT No. 39488 in the name of plaintiffs herein and ordering the cancellation
thereof;
2. Declaring the herein defendants as buyers in good faith and for value; and
3. Declaring TCT No. 5888-R in the name of SKUNAC Corporation and TCT No. 5889R in the name of Alfonso Enriquez as valid.
The complaint-in-intervention is ordered dismissed.
With costs against the plaintiffs.
SO ORDERED.4
Herein respondents then filed an appeal with the CA.
On August 10, 2012, the CA promulgated its assailed Decision, disposing as follows:
WHEREFORE, in light of all the foregoing, the appeal is GRANTED. The decision dated
November 16, 2007 of Branch 160, Regional Trial Court of Pasig City in Civil Case No.
63987 is hereby REVERSED and SET ASIDE.
Judgment is hereby rendered in favor of plaintiffs-appellants Roberto S. Sylianteng and
Caesar S. Sylianteng and against defendants-appellees Skunac Corporation and
Alfonso F. Enriquez, and intervenor-appellee Romeo N. Pujalte:

1. Declaring as null and void Transfer Certificate of Title No. 5760-R in the name of
Romeo N. Pujalte, Transfer Certificate of Title No. 5888-R in the name of Skunac
Corporation, and Transfer Certificate of Title No. 5889-R in the name of Alfonso F.
Enriquez;
2. Upholding the validity of Transfer Certificate of Title No. 42369 in the name of
Emerenciana Sylianteng, and Transfer Certificate of Title No. 39488 in the names of
Roberto S. Sylianteng and Caesar S. Sylianteng; and
3. Ordering defendants-appellees Skunac Corporation and Alfonso F. Enriquez, and
intervenor-appellee Romeo N. Pujalte, jointly and severally, to pay plaintiffs-appellants
Roberto S. Sylianteng and Caesar S. Sylianteng:
a. Moral damages in the amount of P500,000.00,
b. Exemplary damages in the amount of P500,000.00,
c. Attorney's fees in the amount of P250,000.00, and
d. The costs of suit.
SO ORDERED.5
Petitioners filed a Motion for Reconsideration, but the CA denied it in its Resolution
dated February 18, 2013.
Hence, the instant petition with the following assignment of errors:
I. THE HONORABLE COURT OF APPEALS ERRED IN APPLYING IN THE CASE THE
PROVISION OF THE CIVIL CODE ON DOUBLE SALE OF A REGISTERED LAND.
II. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT
RESPONDENTS FAILED TO PROVE THE EXISTENCE OF SALE BETWEEN LUIS
PUJALTE AND THEIR PREDECESSOR-IN-INTEREST, EMERENCIANA
SYLIANTENG.
III. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING NULL AND
VOID TCT NO. 42369 PURPORTED TO HAVE BEEN ISSUED TO EMERENCIANA
SYLIANTENG BY THE REGISTER OF DEEDS OF QUEZON CITY.
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT
PETITIONERS ARE THE LAWFUL OWNERS OF THE SUBJECT LOTS SINCE THEY

HAVE VALIDLY ACQUIRED THE SAME FROM ROMEO PUJALTE, THE SOLE HEIR
OF LUIS PUJALTE.
V. THE HONORABLE COURT OF APPEALS ERRED IN AWARDING MORAL AND
EXEMPLARY DAMAGES AS WELL AS ATTORNEY'S FEES AND COST OF SUIT TO
RESPONDENTS CONSIDERING THAT PETITIONERS WERE NOT IN BAD FAITH IN
PURCHASING THE SUBJECT LOTS.6
The petition lacks merit.
At the outset, the Court observes that the main issues raised in the instant petition are
essentially questions of fact. It is settled that, as a rule, in petitions for review on
certiorari under Rule 45 of the Rules of Court, only questions of law may be put in
issue.7 Questions of fact cannot be entertained. There are, however, recognized
exceptions to this rule, to wit:
(a) When the findings are grounded entirely on speculation, surmises, or conjectures;
(b) When the inference made is manifestly mistaken, absurd, or impossible;
(c) When there is grave abuse of discretion;
(d) When the judgment is based on a misapprehension of facts;
(e) When the findings of facts are conflicting;
(f) When in making its findings the CA went beyond the issues of the case, or its
findings are contrary to the admissions of both the appellant and the appellee;
(g) When the CAs findings are contrary to those by the trial court;
(h) When the findings are conclusions without citation of specific evidence on which
they are based;
(i) When the facts set forth in the petition as well as in the petitioners main and reply
briefs are not disputed by the respondent;
(j) When the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; or
(k) When the CA manifestly overlooked certain relevant facts not disputed by the
parties, which, if properly considered, would justify a different conclusion. 8

In the instant case, the findings of the CA and the RTC are conflicting. It, thus,
behooves this Court to entertain the questions of fact raised by petitioners and review
the records of this case to resolve these conflicting findings. Thus, this Court held in the
case of Manongsong v. Estimo9 that:
We review the factual and legal issues of this case in light of the general rules of
evidence and the burden of proof in civil cases, as explained by this Court in Jison v.
Court of Appeals:
x x x Simply put, he who alleges the affirmative of the issue has the burden of proof,
and upon the plaintiff in a civil case, the burden of proof never parts. However, in the
course of trial in a civil case, once plaintiff makes out a prima facie case in his favor, the
duty or the burden of evidence shifts to defendant to controvert plaintiff's prima facie
case, otherwise, a verdict must be returned in favor of plaintiff. Moreover, in civil cases,
the party having the burden of proof must produce a preponderance of evidence
thereon, with plaintiff having to rely on the strength of his own evidence and not upon
the weakness of the defendants. The concept of "preponderance of evidence" refers to
evidence which is of greater weight, or more convincing, that which is offered in
opposition to it; at bottom, it means probability of truth. 10
Coming to the merits of the case, the abovementioned assignment of errors boils down
to two basic questions: (1) whether or not respondents' predecessor-in-interest,
Emerenciana, validly acquired the subject lots from Luis, and (2) whether or not
respondents, in turn, validly acquired the same lots from Emerenciana.
The Court rules in the affirmative, but takes exception to the CA's and RTC's application
of Article 1544 of the Civil Code.
Reliance by the trial and appellate courts on Article 1544 of the Civil Code is misplaced.
The requisites that must concur for Article 1544 to apply are:
(a) The two (or more sales) transactions must constitute valid sales;
(b) The two (or more) sales transactions must pertain to exactly the same subject
matter;
(c) The two (or more) buyers at odds over the rightful ownership of the subject matter
must each represent conflicting interests; and
(d) The two (or more) buyers at odds over the rightful ownership of the subject matter
must each have bought from the very same seller.11

Obviously, said provision has no application in cases where the sales involved were
initiated not by just one but two vendors. 12In the present case, the subject lots were sold
to petitioners and respondents by two different vendors Emerenciana and Romeo
Pujalte (Romeo). Hence, Article 1544 of the Civil Code is not applicable.
Nonetheless, the Court agrees with the findings and conclusion of the CA that
Emerenciana's acquisition of the subject lots from Luis and her subsequent sale of the
same to respondents are valid and lawful. Petitioners dispute such finding. To prove
their contention, they assail the authenticity and due execution of the deed of sale
between Luis and Emerenciana.
Petitioners contend that respondents' presentation of the "duplicate/carbon" original of
the Deed of Sale13 dated June 20, 1958 is in violation of the best evidence rule under
Section 3, Rule 130 of the Rules of Court.14 The Court does not agree.
The best evidence rule is inapplicable to the present case. The said rule applies only
when the content of such document is the subject of the inquiry.15 Where the issue is
only as to whether such document was actually executed, or exists, or on the
circumstances relevant to or surrounding its execution, the best evidence rule does not
apply and testimonial evidence is admissible.16 Any other substitutionary evidence is
likewise admissible without need to account for the original. 17 In the instant case, what is
being questioned is the authenticity and due execution of the subject deed of sale.
There is no real issue as to its contents.
In any case, going to the matter of authenticity and due execution of the assailed
document, petitioners do not dispute that the copy of the deed of sale that respondents
submitted as part of their evidence is a duplicate of the original deed of sale dated June
20, 1958. It is settled that a signed carbon copy or duplicate of a document executed at
the same time as the original is known as a duplicate original and maybe introduced in
evidence without accounting for the non-production of the original. 18
Moreover, Section 4 (b), Rule 130 of the Rules of Court provides that "[w]hen a
document is in two or more copies executed at or about the same time, with identical
contents, all such copies are equally regarded as originals."
In addition, evidence of the authenticity and due execution of the subject deed is the
fact that it was notarized. The notarization of a private document converts it into a public
document.19 Moreover, a notarized instrument is admissible in evidence without further
proof of its due execution, is conclusive as to the truthfulness of its contents, and has in
its favor the presumption of regularity.20 This presumption is affirmed if it is beyond
dispute that the notarization was regular.21 To assail the authenticity and due execution

of a notarized document, the evidence must be clear, convincing and more than merely
preponderant.22
In the present case, petitioners failed to present convincing evidence to prove that the
notarization of the subject deed was irregular as to strip it of its public character. On the
contrary, a certified copy of page 26 of the notarial register of the notary public who
notarized the subject deed of sale, which was issued by the Records Management and
Archives Office of Manila, shows that the sale of the subject lots by Luis to Emerenciana
was indeed regularly notarized.23
Petitioners further argue that the deed of sale between Emerenciana and Luis was not
registered with the Register of Deeds of Quezon City. The Court, however, agrees with
the CA that the said deed was, in fact, registered as evidenced by official
receipts24 issued to this effect. Petitioners, again, did not present any evidence to assail
the authenticity of these documents.
Petitioners also question the authenticity of the subject deed of sale (Exhibit "B-1-C") by
arguing that only one copy of such deed was prepared as only one document number
was assigned by the notary to the said deed. Petitioners claim that this is contrary to the
claim of respondents that the said deed of sale was prepared, executed and notarized
in several copies. The Court is not persuaded.
It is true that Section 246, Article V, Title IV, Chapter II of the Revised Administrative
Code provides that "[t]he notary shall give to each instrument executed, sworn to, or
acknowledged before him a number corresponding to the one in his register, and shall
also state on the instrument the page or pages of his register on which the same is
recorded." In this regard, the Court agrees with respondents' contention that the
"instrument" being referred to in the abovequoted provision is the deed or contract
which is notarized. It does not pertain to the number of copies of such deed or contract.
Hence, one number is assigned to a deed or contract regardless of the number of
copies prepared and notarized. Each and every copy of such contract is given the same
document number. It is, thus, wrong for petitioners to argue that only one copy of the
June 20, 1958 deed of sale was prepared and notarized, because only one document
number appears on the notarial book of the notary public who notarized the said deed.
On the contrary, evidence shows that at least two copies of the subject deed of sale was
prepared and notarized one was submitted for registration with the Register of Deeds
of Quezon City and the other was retained by Emerenciana, which is the copy
presented in evidence by respondents.
As to petitioners' contention that the copy of the deed of sale presented by respondents
in evidence is of dubious origin because it does not bear the stamp "RECEIVED" by the

Register of Deeds of Quezon City, suffice it to state that the Court finds no cogent
reason to disagree with respondents' contention that the duplicate original of the subject
deed of sale which they presented as evidence in court could not have been received
by the Register of Deeds of Quezon City because only the original copy, and not the
duplicate original, was submitted to the Register of Deeds for registration.
Petitioners also question the authenticity of and the entries appearing on the copy of the
title covering the subject properties in the name of Luis. However, the Court finds no
cogent reason to doubt the authenticity of the document as well as the entries
appearing therein, considering that the parties (herein petitioners and respondents)
stipulated25 that the machine copy of TCT No. 78865 in the name of Luis, marked as
Exhibit "DDD" for respondents, is a faithful reproduction of the original copy of the said
title, including the memorandum of encumbrances annotated therein. Included in the
memorandum of encumbrances is Entry No. P.E. 4023, which states, thus:
This certificate of title is hereby cancelled (sic) partially with respect to Lots 1 and 2, Blk.
2 by virtue of a Deed of Sale ratified on June 20, 1958 before Armenio P. Engracia of
Notary for the City of Manila and Transfer Certificate of Title No. 42369 is issued in the
name of Vendee, Emerenciana A.S. de Sylianteng, filing the aforesaid Deed under TNo. 42369.26
The same entry appears in Exhibit "11" for petitioners. 27
P.E. No. 4023 has been entered on TCT No. 78865 by the then Acting Register of
Deeds of San Juan.1wphi1 Petitioners assail the regularity of such entry. However,
one of the disputable presumptions provided under Section 3 (m), Rule 131 of the Rules
of Court is that official duty has been regularly performed. Under the said Rule, this
presumption shall be considered satisfactory unless contradicted and overcome by
other evidence. In the present case, petitioners failed to present sufficient evidence to
contradict the presumption of regularity in the performance of the duties of then Acting
Register of Deeds of San Juan.
Petitioners, nonetheless, insist that they have valid title over the subject properties.
They trace their respective titles from that of Romeo. Romeo, in turn, derives his
supposed ownership of and title over the subject lots from his claim that he is the sole
heir of the estate of his alleged predecessor-in-interest, Luis. Evidence, however, shows
that Romeo never became the owner of the subject properties for two reasons.
First, as shown above, the disputed lots were already sold by Luis during his lifetime.
Thus, these parcels of land no longer formed part of his estate when he died. As a
consequence, Romeo's sale of the disputed lots to petitioners was not affirmed by the

estate court, because the subject parcels of land were not among those included in the
said estate at the time that Romeo was appointed as the administrator thereof. As
shown in its October 11, 1993 Order,28 the RTC of Pasig, acting as an estate court,
denied Romeo's motion for approval of the sale of the subject lots, because these
properties were already sold to respondents per report submitted by the Register of
Deeds of San Juan.
In fact, as early as July 14, 1960, prior to Romeo's appointment as administrator of the
estate of Luis, Paz L. Vda. de Pujalte (Paz), the mother of Luis, who was then appointed
administratrix of the estate of the latter, in her Inventory and Appraisal 29which was
submitted to the estate court, already excluded the subject properties among those
which comprise the estate of Luis. Subsequently, in the Project of Partition30 of the
residual estate of Luis, dated March 22, 1963, Paz again did not include the disputed
lots as part of such residual estate. Hence, Romeo's sale of the subject lots to
petitioners is invalid as it is settled that any unauthorized disposition of property under
administration is null and void and title does not pass to the purchasers. 31
Second, even granting that the subject lots formed part of the estate of Luis, it was
subsequently proven in a separate case that Romeo is not his heir. In a criminal case
for use of falsified documents filed against Romeo, it was proven that his claim of
heirship is spurious. In the said criminal case, his birth certificate and the marriage
certificate of his supposed parents, which he presented before the estate court, to prove
his claim that he is the sole heir of Luis, were found by the criminal court to be
falsified.32 In this regard, it bears to note the disquisition of the CA as to the legitimacy of
Romeo's claim, and its subsequent effect on petitioners' rights to the disputed
properties, to wit:
Appellees' [herein petitioners'] predicament is further compounded by Romeo Pujalte's
conviction on November 18, 2005 of the offense of Use of Falsified Documents, for
falsifying the documents that enabled him to deceive the estate court and have himself
named as Luis Pujalte's sole heir. He did not appeal his conviction and, instead, applied
for probation. It goes without saying that the documents purportedly conveying the lots
in question to appellees and which are founded on Romeo Pujalte's alleged rights over
the estate of the late Luis Pujalte do not deserve any consideration at all. x x x 33
Indeed, not being an heir of Luis, Romeo never acquired any right whatsoever over the
subject lots, even if he was able to subsequently obtain a title in his name. It is a wellsettled principle that no one can give what one does not have, nemo dat quod non
habet.34 One can sell only what one owns or is authorized to sell, and the buyer can
acquire no more right than what the seller can transfer legally.35 Since Romeo has no

right to the subject lots, petitioners, who simply stepped into the shoes of Romeo, in
turn, acquired no rights to the same.
In addition, and as correctly pointed out by the CA, petitioners' position is neither helped
by the fact that, in the present case, Romeo filed a Verified Complaint-inIntervention36 with the RTC, denying that he sold the subject lots to petitioners and
claiming that the same properties still form part of the estate of Luis.
Stretching petitioners' contention a bit further, granting that both petitioners and
respondents bought the disputed lots in good faith by simply relying on the certificates
of the sellers, and subsequently, acquiring titles in their own names, respondents' title
shall still prevail. It is a settled rule that when two certificates of title are issued to
different persons covering the same land in whole or in part, the earlier in date must
prevail, and, in case of successive registrations where more than one certificate is
issued over the land, the person holding a prior certificate is entitled to the land as
against a person who relies on a subsequent certificate. 37 The titles of respondents,
having emanated from an older title, should thus be upheld.
Anent petitioners' bad faith, this Court finds no persuasive reason to depart from the
findings of the CA that petitioners had prior knowledge of the estate proceedings
involving the subject lots and that they have notice of the defect in the title of Romeo.
It is true that a person dealing with registered land need not go beyond the title.
However, it is equally true that such person is charged with notice of the burdens and
claims which are annotated on the title.38 In the instant case, The Torrens Certificate of
Title (TCT No. 5760-R) in the name of Romeo, which was the title relied upon by
petitioners, also contained Entry No. P.E. 4023, quoted above, which essentially informs
petitioners that the lots which they were about to buy and which they in fact bought,
were already sold to Emerenciana.39 This entry should have alerted petitioners and
should have prodded them to conduct further investigation. Simple prudence would
have impelled them as honest persons to make deeper inquiries to clear the
suspiciousness haunting Romeo's title. On the contrary, rather than taking caution in
dealing with Romeo, petitioners, instead, subsequently executed deeds of sale 40 over
the same properties but all of which were, nonetheless, disallowed by the estate court in
its Order41 dated October 11, 1993 on the ground that the said lots were already sold,
this time, by Emerenciana to respondents. In this regard, petitioners acted in bad faith.
Thus, as correctly held by the CA, respondents are entitled to moral damages. Moral
damages are treated as compensation to alleviate physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury resulting from a wrong. 42 In the instant case, respondents

satisfactorily established their claim for moral damages. They endured suffering brought
about by Romeo's bad faith in using falsified documents to enable himself to acquire
title to and sell the subject lots to petitioners to the prejudice of respondents.
Respondents also suffered by reason of petitioners' stubborn insistence in buying the
said properties despite their knowledge of the defect in the title of Romeo. 43 Though
moral damages are not capable of pecuniary estimation, the amount should be
proportional to and in approximation of the suffering inflicted. 44 Respondents sought the
award of P1,000,000.00 as moral damages from each of the petitioners, but the Court
agrees with the CA that the total amount of P500,000.00 is sufficient for both
respondents.
As to exemplary damages, these are imposed by way of example or correction for the
public good, in addition to moral, temperate, liquidated or compensatory
damages.45 They are imposed not to enrich one party or impoverish another, but to
serve as a deterrent against or as a negative incentive to curb socially deleterious
actions.46 While respondents were again seeking the amount of P1,000,000.00 as
exemplary damages from each of the petitioners, the CA correctly reduced it to a total
of P500,000.00.
Respondents are also entitled to attorney's fees, as awarded by the CA, on the strength
of the provisions of Article 2208 of the Civil Code which provides, among others, that
such fees may be recovered when exemplary damages are awarded, when the
defendant's act or omission has compelled the plaintiff to litigate with third persons, or in
any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of
Appeals, dated August 10, 2012 and February 18, 2013, respectively, in CA-G.R. CV
No. 92022, are AFFIRMED.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice

G.R. No. 181359

August 5, 2013

SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M.


SABITSANA, Petitioners,
vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A.
MUERTEGUI, JR., Respondent.
DECISION
DEL CASTILLO, J.:
A lawyer may not, for his own personal interest and benefit, gamble on his client's word,
believing it at one time and disbelieving it the next. He owes his client his undivided
loyalty.
Assailed in this Petition for Review on Certiorari 1 are the January 25, 2007 Decision2 of
the Court of Appeals (CA) which denied the appeal in CA-G.R. CV No. 79250, and its
January 11, 2008 Resolution3 denying petitioners Motion for Reconsideration. 4
Factual Antecedents
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of
Sale5 in favor of respondent Juanito Muertegui 6 (Juanito) over a 7,500-square meter
parcel of unregistered land (the lot) located in Dalutan Island, Talahid, Almeira, Biliran,
Leyte del Norte covered by Tax Declaration (TD) No. 1996 issued in 1985 in Garcias
name.7
Juanitos father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took
actual possession of the lot and planted thereon coconut and ipil-ipil trees. They also
paid the real property taxes on the lot for the years 1980 up to 1998.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner Atty.
Clemencio C. Sabitsana, Jr. (Atty. Sabitsana), through a notarized deed of absolute
sale.8 The sale was registered with the Register of Deeds on February 6, 1992.9 TD No.
1996 was cancelled and a new one, TD No. 5327, 10 was issued in Atty. Sabitsanas
name. Although Domingo Jr. and Sr. paid the real estate taxes, Atty. Sabitsana also paid

real property taxes in 1992, 1993, and 1999. In 1996, he introduced concrete
improvements on the property, which shortly thereafter were destroyed by a typhoon.
When Domingo Sr. passed away, his heirs applied for registration and coverage of the
lot under the Public Land Act or Commonwealth Act No. 141. Atty. Sabitsana, in a
letter11 dated August 24, 1998 addressed to the Department of Environment and Natural
Resources CENRO/PENRO office in Naval, Biliran, opposed the application, claiming
that he was the true owner of the lot. He asked that the application for registration be
held in abeyance until the issue of conflicting ownership has been resolved.
On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil Case No.
B-109712 for quieting of title and preliminary injunction, against herein petitioners Atty.
Sabitsana and his wife, Rosario, claiming that they bought the lot in bad faith and are
exercising acts of possession and ownership over the same, which acts thus constitute
a cloud over his title. The Complaint13 prayed, among others, that the Sabitsana Deed of
Sale, the August 24, 1998 letter, and TD No. 5327 be declared null and void and of no
effect; that petitioners be ordered to respect and recognize Juanitos title over the lot;
and that moral and exemplary damages, attorneys fees, and litigation expenses be
awarded to him.
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to Juanito
is null and void absent the marital consent of Garcias wife, Soledad Corto (Soledad);
that they acquired the property in good faith and for value; and that the Complaint is
barred by prescription and laches. They likewise insisted that the Regional Trial Court
(RTC) of Naval, Biliran did not have jurisdiction over the case, which involved title to or
interest in a parcel of land the assessed value of which is merely P1,230.00.
The evidence and testimonies of the respondents witnesses during trial reveal that
petitioner Atty. Sabitsana was the Muertegui familys lawyer at the time Garcia sold the
lot to Juanito, and that as such, he was consulted by the family before the sale was
executed; that after the sale to Juanito, Domingo Sr. entered into actual, public, adverse
and continuous possession of the lot, and planted the same to coconut and ipil-ipil; and
that after Domingo Sr.s death, his wife Caseldita, succeeded him in the possession and
exercise of rights over the lot.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told
by a member of the Muertegui family, Carmen Muertegui Davies (Carmen), that the
Muertegui family had bought the lot, but she could not show the document of sale; that
he then conducted an investigation with the offices of the municipal and provincial
assessors; that he failed to find any document, record, or other proof of the sale by
Garcia to Juanito, and instead discovered that the lot was still in the name of Garcia;

that given the foregoing revelations, he concluded that the Muerteguis were merely
bluffing, and that they probably did not want him to buy the property because they were
interested in buying it for themselves considering that it was adjacent to a lot which they
owned; that he then proceeded to purchase the lot from Garcia; that after purchasing
the lot, he wrote Caseldita in October 1991 to inform her of the sale; that he then took
possession of the lot and gathered ipil-ipil for firewood and harvested coconuts and
calamansi from the lot; and that he constructed a rip-rap on the property sometime in
1996 and 1997.
Ruling of the Regional Trial Court
On October 28, 2002, the trial court issued its Decision 15 which decrees as follows:
WHEREFORE, in view of the foregoing considerations, this Court finds in favor of the
plaintiff and against the defendants, hereby declaring the Deed of Sale dated 2
September 1981 as valid and preferred while the Deed of Absolute Sale dated 17
October 1991 and Tax Declaration No. 5327 in the name of Atty. Clemencio C.
Sabitsana, Jr. are VOID and of no legal effect.
The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel Tax
Declaration No. 5327 as void and done in bad faith.
Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito Muertigui,
represented by his attorney-in-fact Domingo Muertigui, Jr. the amounts of:
a) P30,000.00 as attorneys fees;
b) P10,000.00 as litigation expenses; and
c) Costs.
SO ORDERED.16
The trial court held that petitioners are not buyers in good faith. Petitioner Atty.
Sabitsana was the Muertegui familys lawyer, and was informed beforehand by Carmen
that her family had purchased the lot; thus, he knew of the sale to Juanito. After
conducting an investigation, he found out that the sale was not registered. With this
information in mind, Atty. Sabitsana went on to purchase the same lot and raced to
register the sale ahead of the Muerteguis, expecting that his purchase and prior
registration would prevail over that of his clients, the Muerteguis. Applying Article 1544
of the Civil Code,17 the trial court declared that even though petitioners were first to
register their sale, the same was not done in good faith. And because petitioners

registration was not in good faith, preference should be given to the sale in favor of
Juanito, as he was the first to take possession of the lot in good faith, and the sale to
petitioners must be declared null and void for it casts a cloud upon the Muertegui title.
Petitioners filed a Motion for Reconsideration 18 but the trial court denied19 the same.
Ruling of the Court of Appeals
Petitioners appealed to the CA20 asserting that the sale to Juanito was null and void for
lack of marital consent; that the sale to them is valid; that the lower court erred in
applying Article 1544 of the Civil Code; that the Complaint should have been barred by
prescription, laches and estoppel; that respondent had no cause of action; that
respondent was not entitled to an award of attorneys fees and litigation expenses; and
that they should be the ones awarded attorneys fees and litigation expenses.
The CA, through its questioned January 25, 2007 Decision, 21 denied the appeal and
affirmed the trial courts Decision in toto. It held that even though the lot admittedly was
conjugal property, the absence of Soledads signature and consent to the deed did not
render the sale to Juanito absolutely null and void, but merely voidable. Since Garcia
and his wife were married prior to the effectivity of the Family Code, Article 173 of the
Civil Code22should apply; and under the said provision, the disposition of conjugal
property without the wifes consent is not void, but merely voidable. In the absence of a
decree annulling the deed of sale in favor of Juanito, the same remains valid.
The CA added that the fact that the Deed of Sale in favor of Juanito was not notarized
could not affect its validity. As against the notarized deed of sale in favor of petitioners,
the CA held that the sale in favor of Juanito still prevails. Applying Article 1544 of the
Civil Code, the CA said that the determining factor is petitioners good faith, or the lack
of it. It held that even though petitioners were first to register the sale in their favor, they
did not do so in good faith, for they already knew beforehand of Garcias prior sale to
Juanito. By virtue of Atty. Sabitsanas professional and confidential relationship with the
Muertegui family, petitioners came to know about the prior sale to the Muerteguis and
the latters possession of the lot, and yet they pushed through with the second sale. Far
from acting in good faith, petitioner Atty. Sabitsana used his legal knowledge to take
advantage of his clients by registering his purchase ahead of them.
Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed the
requisite cause of action to institute the suit for quieting of title and obtain judgment in
his favor, and is entitled as well to an award for attorneys fees and litigation expenses,
which the trial court correctly held to be just and equitable under the circumstances.

The dispositive portion of the CA Decision reads:


WHEREFORE, premises considered, the instant appeal is DENIED and the Decision
dated October 28, 2002 of the Regional Trial Court, 8th Judicial Region, Branch 16,
Naval, Biliran, is hereby AFFIRMED. Costs against defendants-appellants.
SO ORDERED.23
Issues
Petitioners now raise the following issues for resolution:
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL
TRIAL COURT DID NOT HAVE JURISDICTION OVER THE CASE IN VIEW OF
THE FACT THAT THE ASSESSED VALUE OF THE SUBJECT LAND WAS
ONLY P1,230.00 (AND STATED MARKET VALUE OF ONLY P3,450.00).
II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL
CODE INSTEAD OF THE PROPERTY REGISTRATION DECREE (P.D. NO.
1529) CONSIDERING THAT THE SUBJECT LAND WAS UNREGISTERED.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE
COMPLAINT WAS ALREADY BARRED [BY] LACHES AND THE STATUTE OF
LIMITATIONS.
IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE
REGIONAL TRIAL COURT ORDERING THE PETITIONERS TO PAY
ATTORNEYS FEES AND LITIGATION EXPENSES TO THE RESPONDENT.24
Petitioners Arguments
Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over the case.
They argue that since the assessed value of the lot was a mere P1,230.00, jurisdiction
over the case lies with the first level courts, pursuant to Republic Act No. 7691, 25 which
expanded their exclusive original jurisdiction to include "all civil actions which involve
title to, or possession of, real property, or any interest therein where the assessed value
of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00)
or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty
thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorneys fees, litigation expenses and costs." 26 Petitioners thus conclude that the
Decision in Civil Case No. B-1097 is null and void for lack of jurisdiction.

Petitioners next insist that the lot, being unregistered land, is beyond the coverage of
Article 1544 of the Civil Code, and instead, the provisions of Presidential Decree (PD)
No. 1529 should apply. This being the case, the Deed of Sale in favor of Juanito is valid
only as between him and the seller Garcia, pursuant to Section 113 of PD 1529; 27 it
cannot affect petitioners who are not parties thereto.
On the issue of estoppel, laches and prescription, petitioners insist that from the time
they informed the Muerteguis in writing about their purchase of the lot, or in October
1991, the latter did not notify them of their prior purchase of the lot, nor did respondent
interpose any objection to the sale in their favor. It was only in 1998 that Domingo Jr.
showed to petitioners the unnotarized deed of sale. According to petitioners, this sevenyear period of silence and inaction on the Muerteguis part should be taken against them
and construed as neglect on their part to assert their rights for an unreasonable length
of time. As such, their action to quiet title should be deemed barred by laches and
estoppel.
Lastly, petitioners take exception to the award of attorneys fees and litigation expenses,
claiming that since there was no bad faith on their part, such award may not be
considered just and equitable under the circumstances. Still, an award of attorneys fees
should remain the exception rather than the rule; and in awarding the same, there must
have been an express finding of facts and law justifying such award, a requirement that
is absent in this case.
Petitioners thus pray for the reversal of the questioned CA Decision and Resolution; the
dismissal of the Complaint in Civil Case No. B-1097; the deletion of the award of
attorneys fees and litigation expenses in respondents favor; and a declaration that they
are the true and rightful owners of the lot.
Respondents Arguments
Respondent, on the other hand, counters that a suit for quieting of title is one whose
subject matter is incapable of pecuniary estimation, and thus falls within the jurisdiction
of the RTC. He likewise insists that Article 1544 applies to the case because there is a
clear case of double sale of the same property to different buyers, and the bottom line
thereof lies in petitioners lack of good faith in entering into the subsequent sale. On the
issue of laches/estoppel, respondent echoes the CAs view that he was persistent in the
exercise of his rights over the lot, having previously filed a complaint for recovery of the
lot, which unfortunately was dismissed based on technicality.
On the issue of attorneys fees and litigation expenses, respondent finds refuge in
Article 2208 of the Civil Code,28 citing three instances which fortify the award in his favor

petitioners acts compelled him to litigate and incur expenses to protect his interests;
their gross and evident bad faith in refusing to recognize his ownership and possession
over the lot; and the justness and equitableness of his case.
Our Ruling
The Petition must be denied.
The Regional Trial Court has jurisdiction over the suit for quieting of title.
On the question of jurisdiction, it is clear under the Rules that an action for quieting of
title may be instituted in the RTCs, regardless of the assessed value of the real property
in dispute. Under Rule 63 of the Rules of Court, 29 an action to quiet title to real property
or remove clouds therefrom may be brought in the appropriate RTC.
It must be remembered that the suit for quieting of title was prompted by petitioners
August 24, 1998 letter-opposition to respondents application for registration. Thus, in
order to prevent30 a cloud from being cast upon his application for a title, respondent
filed Civil Case No. B-1097 to obtain a declaration of his rights. In this sense, the action
is one for declaratory relief, which properly falls within the jurisdiction of the RTC
pursuant to Rule 63 of the Rules.
Article 1544 of the Civil Code does not apply to sales involving unregistered land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of the Civil
Code. Both courts seem to have forgotten that the provision does not apply to sales
involving unregistered land. Suffice it to state that the issue of the buyers good or bad
faith 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. 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.31
Act No. 3344 applies to sale of unregistered lands.
What applies in this case is Act No. 3344,32 as amended, which provides for the system
of recording of transactions over unregistered real estate. Act No. 3344 expressly
declares that any registration made shall be without prejudice to a third party with a
better right. The question to be resolved therefore is: who between petitioners and
respondent has a better right to the disputed lot?
Respondent has a better right to the lot.

The sale to respondent Juanito was executed on September 2, 1981 via an unnotarized
deed of sale, while the sale to petitioners was made via a notarized document only on
October 17, 1991, or ten years thereafter. Thus, Juanito who was the first buyer has a
better right to the lot, while the subsequent sale to petitioners is null and void, because
when it was made, the seller Garcia was no longer the owner of the lot. Nemo dat quod
non habet.
The fact that the sale to Juanito was not notarized does not alter anything, since the
sale between him and Garcia remains valid nonetheless. Notarization, or the
requirement of a public document under the Civil Code, 33 is only for convenience, and
not for validity or enforceability.34 And because it remained valid as between Juanito and
Garcia, the latter no longer had the right to sell the lot to petitioners, for his ownership
thereof had ceased.
Nor can petitioners registration of their purchase have any effect on Juanitos rights.
The mere registration of a sale in ones favor does not give him any right over the land if
the vendor was no longer the owner of the land, having previously sold the same to
another even if the earlier sale was unrecorded. 35 Neither could it validate the purchase
thereof by petitioners, which is null and void. Registration does not vest title; it is merely
the evidence of such title. Our land registration laws do not give the holder any better
title than what he actually has.36
Specifically, we held in Radiowealth Finance Co. v. Palileo 37 that:
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.
Petitioners defense of prescription, laches and estoppel are unavailing since their claim
is based on a null and void deed of sale. The fact that the Muerteguis failed to interpose
any objection to the sale in petitioners favor does not change anything, nor could it give
rise to a right in their favor; their purchase remains void and ineffective as far as the
Muerteguis are concerned.
The award of attorneys fees and litigation expenses is proper because of petitioners
bad faith.
Petitioners actual and prior knowledge of the first sale to Juanito makes them
purchasers in bad faith. It also appears that petitioner Atty. Sabitsana was remiss in his

duties as counsel to the Muertegui family. Instead of advising the Muerteguis to register
their purchase as soon as possible to forestall any legal complications that accompany
unregistered sales of real property, he did exactly the opposite: taking advantage of the
situation and the information he gathered from his inquiries and investigation, he bought
the very same lot and immediately caused the registration thereof ahead of his clients,
thinking that his purchase and prior registration would prevail. The Court cannot tolerate
this mercenary attitude. Instead of protecting his clients interest, Atty. Sabitsana
practically preyed on him.
Petitioner Atty. Sabitsana took advantage of confidential information disclosed to him by
his client, using the same to defeat him and beat him to the draw, so to speak. He
rushed the sale and registration thereof ahead of his client. He may not be afforded the
excuse that he nonetheless proceeded to buy the lot because he believed or assumed
that the Muerteguis were simply bluffing when Carmen told him that they had already
bought the same; this is too convenient an excuse to be believed. As the Muertegui
family lawyer, he had no right to take a position, using information disclosed to him in
confidence by his client, that would place him in possible conflict with his duty. He may
not, for his own personal interest and benefit, gamble on his clients word, believing it at
one time and disbelieving it the next. He owed the Muerteguis his undivided loyalty. He
had the duty to protect the client, at all hazards and costs even to himself. 38
Petitioner Atty. Sabitsana is enjoined to "look at any representation situation from the
point of view that there are possible conflicts, and further to think in terms of impaired
loyalty, that is, to evaluate if his representation in any way will impair his loyalty to a
client."39
Moreover, as the Muertegui familys lawyer, Atty. Sabitsana was under obligation to
safeguard his client's property, and not jeopardize it. Such is his duty as an attorney,
and pursuant to his general agency.40
Even granting that Atty. Sabitsana has ceased to act as the Muertegui family's lawyer,
he still owed them his loyalty.1wphi1 The termination of attorney-client relation
provides no justification for a lawyer to represent an interest adverse to or in conflict
with that of the former client on a matter involving confidential information which the
lawyer acquired when he was counsel. The client's confidence once reposed should not
be divested by mere expiration of professional employment. 41 This is underscored by
the fact that Atty. Sabitsana obtained information from Carmen which he used to his
advantage and to the detriment of his client.
from the foregoing disquisition, it can be seen that petitioners are guilty of bad faith in
pursuing the sale of the lot despite being apprised of the prior sale in respondent's favor.

Moreover, petitioner Atty. Sabitsana has exhibited a lack of loyalty toward his clients, the
Muerteguis, and by his acts, jeopardized their interests instead of protecting them. Over
and above the trial court's and the CA's findings, this provides further justification for the
award of attorney's fees, litigation expenses and costs in favor of the respondent.
Thus said, judgment must be rendered in favor of respondent to prevent the petitioners'
void sale from casting a cloud upon his valid title.
WHEREFORE, premises considered, the Petition is DENIED. The January 25, 2007
Decision and the January 11, 2008 Resolution of the Court of Appeals in CA-G.R. CV
No. 79250 are AFFIRMED. Costs against petitioners.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice