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CASE DIGESTS

FOR
SALES

1. Goyena v. Tambunting, An agreement to purchase a certain specified lot of land at a certain specified price is obligatory and enforceable
1 Phil 490 regardless of the fact that its area is less than that mentioned in the contract.
FACTS:
The plaintiff own a tract of land containing 152.46 sqm
A broker stated to the defendant that the plaintiffs lot, measuring 23 meters in front and 8 meters in depth, was for sale
Plaintiff and defendant had negotiations
Defendant and plaintiff signed a document:
"On this date I have bought from Don Francisco Yrureta Goyena a lot at No. 20 Calle San Jose, Ermita, for the sum of thirty-two
hundred pesos, this money to be paid as soon as the bill of sale is signed. Manila, March 12, 1901. (Signed) Tambunting."
The defendant took the title papers which showed the are of the lot to be 152.46 from the notary, to make the formal transfer
On the day assigned for the execution of the instrument, teh defendant refused to sign the document because the lot did not
contain the area which the plaintiff, through the broker, had represented that it contained. He expressed his willingness to sign
it if a proportional reduction was made in the price. Upon refusal of the plaintiff, action under Art. 1451 was brought.
defendant says: "I can not pay the 3,200 pesos indicated in the private document, inasmuch as the lot does not contain a
sufficient number of meters to be worth this sum total of 3,200 pesos, at so much a meter. I made the purchase at so much a
meter." He then cites article 1469, 2
plaintiff cites article 1471, which says in part: "In the sale of real estate made for a fixed price and not at the rate of a specified
sum for a unit of measure or number, the increase or decrease of the same shall not be considered, even when greater or less
area or amount than that stated in the contract may be found.
The plaintiff also says: "The fact is that in a private document no statement is made of any superficial area, nor of a price on the
basis of a unit of measure or number. Hence, I am under no obligation to deliver any determinate area or number or measure,
but simply lot No. 20 Calle San Jose, as to whose specific individuality there is no controversy or doubt."
ISSUE:
W/n the defendant bought a specific article and agreed to pay 3,200
HELD:
Yes. The defendant bought a specific article and agreed to pay $3,200 for it. The fact that the article is not as large as he
thought it was does not relieve him from the necessity of paying that price. It was just such cases as this that article 1471, 1,
was intended to cover. If the defendant intended to buy by the meter he should have so stated in the contract. Not only does
the contract not so state, but there is no evidence in the case that the parties ever discussed at all the price which should be
paid for each meter.

2. Union Motors Corp. v. We have ruled that the issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer;
Spouses Bernal, an invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has been
July 20, 2001 considered not a bill of sale. The registration certificate signed by the respondent spouses does not conclusively
prove that constructive delivery was made nor that ownership has been transferred to the respondent spouses. Like
the receipt and the invoice, the signing of the said documents was qualified by the fact that it was a requirement of
petitioner for the sale and financing contract to be approved. In all forms of delivery, it is necessary that the act of
delivery, whether constructive or actual, should be coupled with the intention of delivering the thing. The act, without
the intention, is insufficient. The critical factor in the different modes of effecting delivery which gives legal effect to

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the act, is the actual intention of the vendor to deliver, and its acceptance by the vendee. Without that intention, there
is no tradition. Enlightening in Addison v. Felix and Tiocowherein we ruled that: The Code imposes upon the vendor
the obligation to deliver the thing sold. The thing is considered to be delivered when it is placed "in the hands and
possession of the vendee." (Civil Code, Art. 1462). It is true that the same article declares that the execution of a
public instrument is equivalent to the delivery of the thing which is the object of the contract, but, in order that this
symbolic delivery may produce the effect of tradition, it is not necessary that the vendor shall have had control over
the thing sold that, at the moment of the sale, its material delivery could have been made. It is not enough to confer
upon the purchaser the ownership and the right of possession. The thing sold must be placed in his control. When
there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of
the vendor, symbolic delivery through the execution of a public instrument is sufficient. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use
of it himself or through another in his name, because such tenancy and enjoyment are opposed by the interposition of
another will, then fiction yields to reality, the delivery has not been effected.

FACTS:
On September 14, 1979, the respondent Bernal spouses purchased from petitioner Union Motor Corporation one Cimarron
Jeepney for P37,758.60 to be paid in installments. For this purpose, the respondent spouses executed a promissory note and a
deed of chattel mortgage in favor of the petitioner.
Meanwhile, the petitioner entered into a contract of assignment of the promissory note and chattel mortgage with Jardine-
Manila Finance, Inc. Through Manuel Sosmea, an agent of the petitioner, the parties agreed that the respondent spouses
would pay the amount of the promissory note to Jardine-Manila Finance, Inc., the latter being the assignee of the petitioner.
Upon the respondent spouses' tender of the downpayment worth ten thousand thirty-seven pesos (P10,037.00), and the
petitioner's acceptance of the same, the latter approved the sale.
Although the respondent spouses had not yet physically possessed the vehicle, Sosmea required them to sign the receipt as
a condition for the delivery of the vehicle.
The respondent spouses had paid a total of P7,507.00 worth of installments before they discontinued paying on account of
non-delivery of the subject motor vehicle. According to the respondent spouses, the vehicle was not delivered due to the fact
that Sosmea allegedly took the subject motor vehicle in his personal capacity.
Jardine-Manila Finance, Inc. filed a complaint for a sum of money against the respondent Bernal spouses and was later
amended to include petitioner Union Motor Corporation as alternative defendant.
The petitioner did not present any evidence inasmuch as the testimony of the witness it presented was ordered stricken off the
record for his repeated failure to appear for cross-examination on the scheduled hearings.
The trial court rendered a decision which ordered Jardine-Manila Finance, Inc. to pay spouses Bernal the sum of P7,507.15
plus legal interest until fully paid. The trial court also ordered Union Motor Corporation to pay: spouses Bernal the
downpayment in the amount of P10,037.00, plus legal interest until fully paid; and Jardine-Manila Finance, Inc., P23,268.29,
plus legal interest until fully paid, and attorney's fees equivalent to 20% of the amount due Jardine-Manila Finance, Inc. Union
Motor Corporation shall further pay spouses Bernal the sum of P20,000.00 as moral damages, P10,000.00 as attorney's fees
and costs of suit.
The petitioner interposed an appeal before the Court of Appeals, while the respondent spouses appealed to hold the petitioner
solidarily liable with Jardine-Manila Finance, Inc.
The appellate court denied both appeals and affirmed the trial court's decision. Hence, the instant petition for review
on certiorari.
petitioner Union Motor Corporation maintains that the respondent spouses are not entitled to a return of the downpayment for
the reason that there was a delivery of the subject motor vehicle. That there was a constructive delivery of the vehicle when
respondent Albiato Bernal signed the registration certificate of the subject vehicle. Inasmuch as there was already delivery of

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the subject motor vehicle, ownership has been transferred to the respondent spouses. The Chattel Mortgage Contract signed
by the respondent Bernal spouses in favor of the petitioner likewise proves that ownership has already been transferred to
them for the reason that, under Article 2085 of the New Civil Code, the mortgagor must be the owner of the property. 5As
owners of the jeepney, the respondent Bernal spouses should bear the loss thereof in accordance with Article 1504 of the New
Civil Code which provides that when the ownership of goods is transferred to the buyer, the goods are at the buyer's risk
whether actual delivery has been made or not. These, then, are the contentions of the petitioner
The main allegation of the respondent Bernal spouses, on the other hand, is that they never came into possession of the
subject motor vehicle. Thus, it is but appropriate that they be reimbursed by the petitioner of the initial payment which they
made. They also claim that Jardine-Manila Finance, Inc., and the petitioner conspired to defraud and deprive them of the
subject motor vehicle for which they suffered damages
ISSUE:
whether there was delivery, physical or constructive, of the subject motor vehicle,
HELD:
the Supreme Court ruled in favor of the Bernal spouses as the issuance of a sales invoice does not prove transfer of ownership
of the thing sold to the buyer. Inasmuch as there was neither physical nor constructive delivery of the subject motor vehicle, it
remained at the seller's risk.
The petitioner should therefore bear the loss of the subject motor vehicle after Sosmea allegedly stole the same.
The petitioner at one point claimed that the trial court committed a violation of due process when it ordered the striking off of the
testimony of the petitioner's witness as well as the declaration that petitioner has abandoned its right to present evidence. The
Court ruled that the respondents should not be prejudiced by the repeated failure of the petitioner to present its said witness for
cross-examination. Hence, the trial court ordered that the unfinished testimony of said witness be stricken off the record. The
appealed decision of the Court of Appeals was affirmed with the modification that the award of moral damages be deleted.
3. Phil. Virginia Tobacco Adm. An irrevocable letter of credit cannot during its lifetime be cancelled or modified without the express permission of the
v. De los Angeles, beneficiary
87 SCRA 9 FACTS:
Timoteo Sevilla, proprietor and General Manager of the Philippine Associated Resources (PAR) was awarded in a public
bidding the right to import Virginia leaf tobacco. Subsequently, the Philippine Virginia Tobacco Administration (PVTA) and
Sevilla entered into a contract for the importation of 85 million kilos of Virginia leaf tobacco and a counterpart exportation of
2.53 million kilos of tobacco and 5.1 million kilos of farmers and tobacco at P3.00 a kilo. In accordance with their contract
Sevilla purchased from PVZTA and exported 2,101.470 kilos of tobacco, paying the PVTA the sum of P2,482,938.50 and
leaving a balance of P3,713,908.91. Before respondent Sevilla could import the counterpart blending Virginia tobacco,
amounting to 525,560 kilos, Republic Act No. 4155 was passed and took effect on June 20, 1 964, authorizing the PVTA to
grant import privileges at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its tobacco stock at the best price available.
Because of the prevailing export or world market price under which Sevilla will be exporting at a loss, the agreement was
further amended to require Sevilla would open an irrevocable letter of credit with the Prudential Bank and Trust Co.
(Prudential) in favor of the PVTA to secure the payment of said balance, drawable upon the release from the Bureau of
Customs of the imported Virginia blending tobacco. While Sevilla was trying to negotiate the reduction of the procurement cost
of the 2,101.479 kilos of PVTA tobacco already exported which attempt was denied by PVTA and also by the Office of the
President. PVTA attempted to collect from the letter of Credit with Prudential. Sevilla filed an injunction for the release of funds
with Prudential in the sala of Judge Delos Santos. Judge Delos Santos issued the injunction order and in a subsequent
petition, ordered the funds of the letter of credit released to Sevilla.
ISSUE:
Whether or not Judge Sevilla acted with grave abuse of discretion in releasing the funds to the applicant of the letter of credit.
HELD:
Judge Delos Santos violated the irrevocability of the letter of credit issued by respondent Bank in favor of petitioner. An

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irrevocable letter of credit cannot, during its lifetime, be cancelled or modified Without the express permission of the beneficiary.
Consequently, if the finding the trial on the merits is that respondent Sevilla has ailieged unpaid balance due the petitioner,
such unpaid obligation would be unsecured
4. Sun Brothers Appliance Inc. A stipulation making the buyer liable for loss of destruction of thing sold due to fortuitous event, valid
v. Perez, FACTS:
April 30, 1963 Plaintiff and defendant executed a conditional sale of an air-conditioner, which contained the stipulation that title thereto would
vest in the buyer only upon full payment of the entire account and only upon complete performance of all the other conditions
specified in the contract, and that if the property be lost, damaged or destroyed for any cause, the buyer would suffer the loss,
or repair the damage.
After the air-conditioner had been installed at plaintiff's residence, it was destroyed by fire.
The plaintiff filed an action to recover the balance for the price of the air-conditioner.
Defendant claimed that the machine was destroyed by force majeure, not by the defendants fault and/or negligence and
therefore, he is not liable under the conditional sale
ISSUE:
W/n the stipulation making the buyer liable for loss of destruction of thing sold due to fortuitous event is valid?
HELD:
The agreement making the buyer responsible for any loss whatsoever, fortuitous or otherwise, even if title to the property
remains in the vendor, is neither contrary to law, nor to morals or public policy. On the contrary it is based on a sound public
policy, according to the weight of authority.
Defendant must pay plaintiff the balance of the price of the air-conditioner, including interest and attorney's fees.

5. Aznar v. Yapdianco, A person unlawfully deprived of the possession thereof has a better right as against a buyer in good faith for value
March 31, 1965 from a seller who had no title thereto
Under Article 1506 of the Civil Code, it is essential that the seller should have a voidable title at least. It is clearly
inapplicable where the seller had no title at all.
Ownership is not transferred by contract merely but by tradition or delivery. Contracts only constitute titles or rights
to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same.
A contract of sale of personal property does not serve to transfer ownership where the vendee took possession of the
subject matter thereof by stealing the same while it was in the custody of the vendor's agent.
Under Article 559, Civil Code, the rule is to the effect that if the owner has lost the thing, or if he has been unlawfully
deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also from third persons who
may have acquired it in good faith from such finder, thief or robber. The said article establishes two exceptions to the
general rule of irrevindicability, to wit: when the owner (1) has lost the thing, or (2) has been unlawfully deprived
thereof. In these cases, the possessor cannot retain the thing as against the owner, who may recover it without paying
any indemnity, except when the possessor acquired it in a public sale.
FACTS:
Teodoro Santos advertised the sale of his FORD FAIRLANE 500 in a newspaper. On L. De Dios went to the house of Teodoro
and said that his uncle Vicente Marella is interested in buying the said car.
The next day, Ireneo went to the house of Marella and they agreed to the price of P14,700 on the understanding that it will be
paid after the car has been registered in the latters name.
A deed of sale was executed and the registration was changed to the name of Marella. Ireneo went to Marella to get the
payment and deliver the car who informed him that he is P2,000 short of the money and that they need to go to his sister to get
it. Ireneo, together with De Dios and an unidentified man went to a house.
Once inside, De Dios asked Ireneo to wait in the sale. After waiting in vain, he went down and discovered that the car was

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gone.
Marella was able to sell the car to plaintiff-appellant Jose Aznar and while attending to registration, the car was seized by Phil.
Constabulary
Aznar filed a complaint for replevin, claiming ownership of the vehicle
lower court rendered a decision awarding the disputed motor vehicle to, Teodoro Santos. In brief, it ruled that Teodoro Santos
had been unlawfully deprived of his personal property by Vicente Marella, from whom the plaintiff-appellant traces his right.
Consequently, although the plaintiff-appellant acquired the car in good faith and for a valuable consideration from Vicente
Marella, the said decision concluded, still the intervenor-appellee was entitled to its recovery on the mandate of Article 559 of
the New Civil Code which provides:
o "Art. 559. The possession of movable property acquired in good faith is equivalent to title. Nevertheless, one who has
lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.
"If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at
a public sale, the owner cannot obtain its return without reimbursing the price paid therefor."
the appellant contends, the applicable provision of the Civil Code is Article 1506 and not Article 559.
o "Art. 1506. Where the seller of goods has a voidable title thereto, but his title has not been voided at the time of the
sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of
the seller's defect of title."
ISSUE:
Between the two parties, who has the better right?
HELD:
Teodoro Santos has the better right. Aznars contention that Art. 1506 should apply is untenable. Under the aforequoted
provision, it is essential that the seller should have a voidable title at least. It is very clearly inapplicable where, as in this case,
the seller had no title at all.
Vicente Marella did not have any title to the property under litigation because the same was never delivered to him. He sought
ownership or acquisition of it by virtue of the contract, Marella could have acquired ownership or title to the subject matter only
by the delivery or tradition of the car to him.
the car in question was never delivered to the vendee by the vendor as to complete or consummate the transfer of ownership
by virtue of the contract. It should be recalled that while there was indeed a contract of sale between Vicente Marella and
Teodoro Santos, the former, as vendee, took possession of the subject matter thereof by stealing the same while it was in the
custody of the latter's son.

6. Chua Hai v. Judge The acquirer and possessor in good faith of a chattel or movable property is entitled to be respected and protected in
Kapunan, his possession, as if he were the true owner thereof, until a competent court rules otherwise. Being considered, in the
June 30, 1958 meantime, as the true owner, the possessor in good faith can not be compelled to surrender possession or be
required to institute an action for the recovery of the chattel, whether or not an indemnity bond is issued in his favor.
The delivery of the goods sold under a perfected contract of sale transfers title or ownership to the purchaser. The
failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller until and
unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code.
Where the consent of the seller is obtained through fraud or deceit, the sale is not thereby rendered void ab initio but
only voidable by reason of the fraud.
FACTS:
Soto purchased from Youngstown Hardware 700 galvanized iron sheets and round iron bars. He issued as payment a check
drawn against Security Bank.
Soto then sold the sheets, some of them to Chua Hai.
Meanwhile, the check issued for payment was dishonored due to insufficiency of funds.

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This prompted the hardware store to file a case of estafa against Soto and prayed for the return of the sheets.
This was opposed by Chua on the part of the sheets he purchased.
Notwithstanding this opposition, the court ordered for its return.
ISSUE:
W/n there was delivery
HELD:
There was delivery, by virtue of which, Soto was able to acquire title over the sheets and bars. There was a perfected contract
of sale between it and Soto. The failure of the buyer to pay the purchase price doesn't automatically revest ownership to the
seller until the contract of sale has been first rescinded or resolved. Hence, until the contract between Soto and Ong has been
set aside by the competent court, the validity of Chuas possession cannot be disputed and his right to possession thereof
should be respected.
To deprive Chua, who was in good faith, of the possession of the sheets, may it be temporarily or permanently, is in violation of
the rule laid down in Article 559. Possession of chattels in good faith is equivalent to title, until ordered by the proper court to
restore the thing to the owner who was illegally derpived thereof. Until such decree is issued, the possessor as presumptive
owner is entitled to the enjoyment and holding of the thing.

7. Addison v. Felix, It is the duty of the vendor to deliver the thing sold. Symbolic delivery by the execution of a public Instrument is
August 3, 1918 equivalent to actual delivery only when the thing sold is subject to the control of the vendor.
If the vendor fails to deliver the thing sold the vendee may elect to rescind the contract.

FACTS:
By a public instrument dated June 11, 1914, Addison sold to Marciana Felix four parcels of land.
Felix paid, at the time of the execution of the deed, paid P3,000 and bound herself to pay the remainder in installments.
In January 1915, plaintiff filed a suit to compel the defendant to make payment of the final installment.
The defendant contends that the plaintiff had absolutely failed to deliver to the former the lands that were the subject matter of
the sale, notwithstanding the demands made upon him. Also, the plaintiff was only able to designate only 2 of the 4 parcels and
more than 2/3 of these two were found to be in possession of one Juan Villafuerte.
The trial court rendered judgment holding the contract of sale to be rescinded. Hence, this appeal.
ISSUE:
Whether or not the lands were delivered.
HELD:
No. The records show that the plaintiff did not deliver the thing sold. It is true that the execution of a public instrument is
equivalent to the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may produce
the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold, that at the moment of the
sale, its material delivery could have been made. It is not enough to confer upon the purchaser the ownership and the right of
possession. The thing sold must be placed in his control.
The supreme court of Spain, interpreting article 1462 of the Civil Code, held in its decision of November 10, 1903, (Civ. Rep.,
vol. 96, p. 560) that this article "merely declares that when the sale is made through the means of a public instrument, the
execution of this latter is equivalent to the delivery of the thing sold: which does not and cannot mean that this fictitious tradition
necessarily implies the real tradition of the thing sold, for it is incontrovertible that, while its ownership still pertains to the vendor
(and with greater reason if it does not), a third person may be in possession of the same thing; wherefore, though, as a general
rule, he who purchases by means of a public instrument should be deemed . . . to be the possessor in fact, yet this presumption
gives way before proof to the contrary."
It is evident, then, in the case at bar, that the mere execution of the instrument was not a fulfillment of the vendors' obligation to
deliver the thing sold, and that from such non-fulfillment arises the purchaser's right to demand, as she has demanded, the

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rescission of the sale and the return of the price. (Civ. Code, arts. 1506 and 1124.)
It is therefore held that the contract of purchase and sale is rescinded,

8. Campillo v. CA, A sale of real estate, whether made as a result of private transaction or of a foreclosure or execution sale, becomes
May 29, 1984 legally effective against third persons only from the date of its registration (Campillo vs. Philippine National Bank, 28
SCRA 220). Consequently, and considering that the properties subject matter hereof were actually attached and levied
upon at the time when said properties stood in the official records of the Registry of Deeds as still owned by and
registered in the name of the judgment debtor, Tomas de Vera, the attachment, levy and subsequent sale of said
properties are proper and legal. The net result is that the execution sale made in favor of the herein petitioner
transferred to him all the rights, interest and participation of the judgment debtor in the aforestated properties as
actually appearing in the certificate of title, unaffected by any transfer or encumbrance not so recorded therein.
A person dealing with registered land is not required to go behind the register to determine the condition of the
property and he is merely charged with notice of the burdens on the property which are noted on the face of the
register or the certificate of title. Hence, the petitioner herein, as the purchaser in the execution sale of the registered
land in suit, acquires such right and interest as appears in the certificate of title unaffected by prior lien or
encumbrances not noted therein. This must be so in order to preserve the efficacy and conclusiveness of the
certificate of title which is sanctified under our Torrens system of land registration.
FACTS:
On February 27, 1961, Tomas de Vera and his wife, Felisa Serafico sold two (2) parcels of land to Simplicio Santos, now
deceased and is represented by his administratrix, Zenaida Diaz Vda. de Santos, the herein private respondent. Said sale was
not registered
On January 27, 1962, petitioner Sostenes Campino obtained a judgment for a sum of money against Tomas de Vera in Civil
Case. Thus the three (3) parcels of land in the name of Tomas de Vera, including the two (2) parcels of land which the latter
previously sold to Simplicio Santos, was levied and sold in favor of the petitioner. A final deed of sale was executed and a TCT
was issued in favor of petitioner.
Claiming to be the owner of the two parcels of land by reason of the previous sale to him by Tomas de Vera, Simplicio Santos
filed an action to annul the levy, notice of sale, sale at public auction and final deed of sale of Lots 1 and 2 in favor of petitioner
Campillo, with damages.
Campillo, alleged that he is an innocent purchaser for value and that the supposed previous sale could not be preferred over
the levy and sale at public action because it was not registered.
the lower court rendered judgment sustaining the validity of the levy and sale at public auction primarily because at the
time of the levy and sale, the disputed properties were still registered in the name of the judgment debtor, Tomas de Vera.
Besides, the trial court ruled, the sale to Simplicio Santos which was not registered nor noted in the title of the subject lots,
cannot bind third persons.

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CA modified the ruling of the lower court, It held that the the subject lots could not be legally levied upon to satisfy the judgment
debt of the de Veras in favor of petitioner because at the time of the execution sale, the judgment debtor, having previously sold
said properties, was no longer the owner thereof; that since the judgment debtor had no more right to or interest on the said
properties, then the purchaser at the auction sale acquires nothing considering that a judgment creditor only acquires the
identical interest possessed by the judgment debtor in the property which is the subject of the auction sale, and he takes the
property subject to all existing equities to which the property would have been subject in the hands of the debtor; and, while it
may be true that Simplicio Santos did not record or register the sale of the disputed lots, the levy on execution does not take
precedence over the unrecorded deed of sale to the same property made by the judgment debtor anterior to the said levy since
the judgment creditor is not a third party within the meaning of the law and could not therefore be considered as purchaser for
value in good faith
ISSUE:
Who has the better right or title to the herein disputed two (2) parcels of land Simplicio Santos who earlier purchased them in
a private sale but failed to register his sale, or petitioner Sostenes Campillo who subsequently purchased them at an execution
sale and obtained a certificate of title.
HELD:
Campillo has the better right
It is settled in this jurisdiction that a sale of real estate, whether made as a result of a private transaction or of a foreclosure or
execution sale, becomes legally effective against third persons only from the date of its registration. Consequently, and
considering that the properties subject matter hereof were actually attached and levied upon at a time when said properties
stood in the official records of the Registry of Deeds as still owned by and registered in the name of the judgment debtor,
Tomas de Vera, the attachment, levy and subsequent sale of said properties are proper and legal. The net result is that the
execution sale made in favor of the herein petitioner transferred to him all the rights, interest and participation of the judgment
debtor in the aforestated properties as actually appearing in the certificate of title, unaffected by any transfer or encumbrance
not so recorded therein

9. Leonardo v. Maravilla & Petitioner's action is actually an action for specific performance, i.e., to enforce the deed of absolute sale allegedly
Nadal, executed in his favor. It is a fundamental principle that ownership does not pass by mere stipulation but by delivery.
November 27, 2002 The delivery of a thing constitutes a necessary and indispensable requisite for the purpose of acquiring the ownership
of the same by virtue of a contract. Under Article 1498 of the Civil Code, when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if
from the deed the contrary does not appear or cannot clearly be inferred. Thus, the execution of the contract is only a
presumptive, not conclusive delivery which can be rebutted by evidence to the contrary, as when there is failure on
the part of the vendee to take material possession of the land subject of the sale in the concept of a purchaser-owner
FACTS:
Mariano Torres, predecessor-in-interest of respondents, owns a parcel of land covered by TCT No. 2355 (34515). The said
land was sold by Mariano to Eusebio Roxas but the latter was not able to register the same due to a legal dispute between
Mariano and a certain Francisco Fernandez. Mariano eventually won that case in 1972.
Petitioner now buys the lot from Eusebio Roxas and asked that it be registered under his name. He was not able to do so
because the Owners Duplicate Certificate of Title (ODCT) was still in the hands of respondents and that the Register of Deeds
made an affidavit that the original copy of TCT No. 2355 (34515) could not be retrieved or located in their office. Petitioner files
an adverse claim. On May 1993, the Register of Deeds found the original TCT of the land and annotated thereon the adverse
claim filed by petitioner on May 20, 1993.
Petitioner claims that he is the lawful owner of said land having purchased it from Eusebio Roxas and having protected his
rights through the annotation of adverse claim when the register of Deeds found the Original TCT. Respondents counter that
the action has been barred by prescription and laches, it being filed only 21 years from the time the right of action has

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commenced. Petitioner claims that his action is an accion reivindicatoria which prescribes in 30 years.
ISSUE:
Whether or not petitioners action is barred by prescription and laches.
HELD:
Yes. Petitioners action is actually an action for specific performance. It is a fundamental principle that ownership does not pass
by mere stipulation but by delivery. The delivery of a thing constitutes a necessary and indispensable requisite for the purpose
of acquiring the ownership of the same by virtue of a contract. The execution of the contract is only a presumptive, not
conclusive delivery which can be rebutted by evidence to the contrary, as when there is failure on the part of the vendee to take
material possession of the land subject of the sale in the concept of a purchaser-owner.

10. Paylago v. Jarabe, As between two purchasers, the one who registers the sale in his favor, in good faith, has a preferred right over the
March 27, 1968 other who has not recorded his title, even if the latter is in actual possession of the immovable property.
Although the petitioners' title is registered and the respondent's was not, where the former's acquisition and
subsequent registration were tainted with bad faith, the same cannot prevail over the latter's rights.
A purchaser who has knowledge of facts which should put him upon inquiry and investigation as to possible defects
of the title of the vendor, and who fails to make such inquiry and investigation, cannot claim that he is a purchaser in
good faith. Knowledge of a subsequent purchaser in bad faith, and has knowledge vitiates the title acquired by virtue
of the later instrument of conveyance.
FACTS:
The subject lot was originally registered in the name of Anselmo Lacatan. After his death, the transfer certificate was issued in
the name his two sons and heirs, Vidal and Florentino Lacatan.
o After Vidal Lacatan died, his heirs executed a deed of sale of a portion of their lot in favor of petitioners-spouses.
o Years after, Florentino Lacatan also died. His heirs likewise executed a deed of sale in favor of the same vendees
over a portion of the same lot.
Upon the registration of the two deeds of sale, a new TCT was issued in favor of petitioners-spouses.
However, subsequent subdivision survey for the purpose of segregating the two portions of land described in the deeds
revealed that a portion of the total area purchased by petitioners was being occupied by defendant-respondent.
Hence, an action to recover possession and ownership of the said portion was filed.
The lower court rendered judgment in favor of respondent, and was affirmed in toto by the Court of Appeals
ISSUE:
Who has a better right in case of double sale of real property, the registered buyer or the prior but unregistered purchaser?
HELD:
As held by the Court, the general rule in this matter is that, between two purchasers, the one who has registered the sale in his
favor, in good faith, has a preferred right over the other who has not registered his title, even if the latter is in the actual
possession of the immovable property. This is in accordance with Art 1544, providing that if the same immovable property
should have been sold to different vendees, "the ownership shall belong to the person acquiring it who in good faith first
recorded it in the registry of property. However, it was found that their acquisition and subsequent registration were tainted with
the vitiating element of bad faith; petitioners knew beforehand that the parcel of land in question was owned by respondent.
The fundamental premise of the preferential rights established by Article 1544 of the New Civil Code is good faith. To be
entitled to the priority, the second vendee must not only show prior recording of his deed of conveyance or possession of the
property sold, but must, above all, have acted in good faith, that is to say, without knowledge of the existence of another
alienation by his vendor to a stranger.

DANA| 9
11. Development Bank of the Where two certificates of title over the same parcel of land were regularly issued to the same person, one under the
Philippines v. Mangawang, Homestead Law and another under the Cadastral Act, and the owner of said titles, taking advantage of the situation,
June 30, 1964 sold the land to two different persons surrendering to each purchaser the pertinent certificate of title, both said
purchasers having acted in good faith and having registered their titles on the respective dates of the two sales, it is
held that the sale first made and registered is the valid one, considering that when the subsequent sale was made
by the former owner, he had nothing more to sell even if the title he surrendered to the subsequent vendees is one
issued covering the same property.
Where a person sells the same land to two different persons who are unaware of the flaw that lies in its title, the law
adjudicates the property to the purchaser who first registers the transaction in his name in the registry of property.
FACTS:
Gavino Amposta acquired two certificate of title over the same parcel of land, one under the Homestead Law and another
under the Cadastral Act. Said titles were regularly issued and on their face both appear to be valid.
Amposta first sold the land to Santos Camacho on November 24, 1941, who registered it in his name on the same date.
o Santos Camacho sold the land to Bonifacio Camacho
o Bonifacio Camacho mortgaged the land to the Rehabilitation Finance Corporation
(Development Bank of the Philippines), and having failed to pay the loan as agreed upon the land was sold at public
auction to said bank as the highest bidder. The period of redemption having elapsed without Camacho being able to
redeem the property, a final deed of sale was executed in favor of the bank
And seven years thereafter, or on March 17, 1948, Amposta again sold the land to the Mangawang brothers, who also
registered it in their name on the same date.
the Mangawang brothers took possession thereof, and upon learning of this transfer, the Development Bank of the Philippines,
which as already stated became the owner of the property, commenced the present action against them in the CFI to recover
its possession and damages.
CFI rendered decision awarding the land to the Mangawang brothers.
Appellees contend that their right over the property in litigation should be respected because the certificate of title they are
holding is derived from that issued pursuant to a decision rendered by a cadastral court, while the title being held by appellant
was merely based on the title issued in an administrative proceeding, upon the theory that a judicial title is deemed preferred to
one issued administratively. They further contend that since the decision which gave rise to their title was rendered on March 8,
1920, which become final thirty days thereafter, their right over the land must be deemed vested on said date
whereas the title of appellant is merely a derivation of the one issued to Amposta on November 29, 1920, or seven months
after the decision rendered in the cadastral case.
ISSUE:
Who has a better right
HELD:
Development Bank of the Philippines has the better right.
Amposta first sold the land to Santos Camacho on November 24, 1941, who registered it in his name on the same date. And
seven years thereafter, or on March 17, 1948, Amposta again sold the land to the Mangawang brothers, who also registered it
in their name on the same date. Since both purchasers apparently have acted in good faith, as there is nothing in the evidence
to show that they did otherwise, We cannot but conclude that the sale made by Amposta to Santos Camacho is the valid one
considering that when Amposta sold the same land to the Mangawang brothers he had nothing more to sell even if the title he
surrendered to them is one issued covering the same property. In legal contemplation, therefore, Amposta sold a property he
no longer owned, and hence the transaction is legally ineffective.

DANA| 10
12. Carreon v. Agcaoili, Where the buyer of the land was an enlisted man in Philippine constabulary and seldom went home to visit his
February 23, 1961 relatives, the mere fact that he was a townmate of the vendor is not sufficient basis to conclude that he knew that the
latter had children by a first marriage. Fraud cannot be presumed. It must be established by clear and sufficient
evidence.
A buyer of land is not required to do more than rely on the title. He is only charge with notice of the burdens which are
noted on the face of the title.
FACTS:
During the marriage of Bonifacio Carreon and Celerina Dauag the registered land subject of this case was acquired.
After the death of Carreon, his widow Celerina transferred the certificate of the land in her name, claiming that she was the only
heiress of her husband. There was however annotated on her certificate a lien to the effect that her title was subject to Section
4 of Rule 74 of the Rules of Court.
She borrowed P1,200.00 from the Philippine National Bank guaranteed by a mortgage on one-half of the land.
After the maturity of the loan, Celerina sold the land to Agcaoili on October 13, 1947.
The loan from the bank was paid, the mortgage was released, and the deed of absolute sale executed in his favor was
registered. A new transfer certificate of title was issued in the name of Agcaoili.
On February 19, 1955, the children of Celerina with the deceased husband filed a complaint against the spouses Agcaoili
seeking to have the deed of sale executed by their mother declared as one of mortgage and to recover one-half pro-indiviso of
the land described in the complaint. Simultaneous with the finding of said complaint, Celerina filed an action for intervention
which was dismissed by the trial court.
The trial court found for defendants holding that plaintiffs' claim has no legal basis.
Appellants argues that appellees were buyers in bad faith; that there existed a trust relationship between them and appellants;
and that such being the case, the action against appellees is imprescriptible.
ISSUE:
Who has the better right
HELD:
Agcaoili has the better right, presumed that his acquisition have donein good faith. Fraud cannot be presumed. It must be
established by clear and sufficient evidence.
If fraud had been committed such was perpetrated by Celerina, appellants' mother. By her action she induced Agcaoili to
believe that she was the absolute owner of the land which bore a torrens title. In dealing with it he merely relied on such title.
He was not required to do more. He is only charged with notice of the burdens which are noted on the face of said title. So after
he bought the land and a new title was issued in his name, he became a purchaser thereof for value and a holder of a good
and valid title.
On the transfer certificate of title issued to Agcaoili there was annotated a statement that it was subject to Section 4, Rule 74 of
the Rules of Court. This was an annotation carried over from Celerina's transfer certificate. Section 4, Rule 74, provides the
following:
o "SEC. 4. Liability of distributees and estate. If it shall appear at any time within two years after the settlement and
distribution of an estate in accordance with the provisions of either of the first two sections of this rule, that an heir or
other person has been unduly deprived of his lawful participation in the estate, such heir or such other person may
compel the settlement of the estate in the courts in the manner hereinafter provided for the purpose of satisfying such
lawful participation. And if within the same time of two years, it shall appear that there are debts outstanding against
the estate which have not been paid, or that an heir or other person has been unduly deprived of his lawful
participation payable in money, the court having jurisdiction of the estate may, by order for that purpose, after hearing,
settle the amount of such debts or lawful participation and order how much and in what manner each distributee shall
contribute in the payment thereof, and may issue execution, if circumstances require, against the bond provided in the
preceding section or against the real estate belonging to the deceased, or both. Such bond and such real estate shall

DANA| 11
remain charged with a liability to creditors, heirs or other persons for the full period of two years after such distribution,
notwithstanding any transfer of the real estate that may have been made."
The above lien is effective only for a period of two years. From September 28, 1946, when a transfer certificate of title was
issued to Celerina, to September 8, 1949 when the deed of sale in favor of Agcaoili was issued and registered, more than two
years had elapsed. We sustain the lower court's opinion that thenceforth the right to have such lien cancelled became vested
on appellee Agcaoili and that the same had became functus oficio. And there being no fraud in the transaction on the part of
appellee, nor proof that he knew of any legal infirmity in the title of his vendor, we find no reason to apply the proposition that he
is deemed to be holding the land in trust for the children of Celerina Dauag.

13. Carumba v. CA, While under Article 1544, registration in good faith prevails over possession in the event of a doubt sale by the
February 18, 1970 vendor of the same piece of land to different vendees, said article is of no application to the case at bar. The reason is
that the purchaser of unregistered land at a sheriff's execution sale only steps into the shoes of the judgment debtor.
He merely acquires the latter's interest in the property sold as of the time the property was levied upon.
The deed of sale in favor of Canuto was executed two years before the levy was made by the Sheriff. While it is true
that the said deed of sale was 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. So that when levy was made by the Sheriff, 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.
FACTS:
Canuto sold a parcel of land to Carumba by virtue of a Deed of Sale of Unregistered Land. The sale was never registered.
Thereafter, Canuto was sued forcollection of money, and the said land was levied upon and sold to Balbuena. Sale was
registered before the Office of the Register of Deeds.
ISSUE:
Who has a better right, Carumba or Balbuena?
HELD:
Carumba has a better right.
Art. 1544 does not apply in this case.Instead, the Rules of Court are applicable. Balbuena,the later vendee, merely steps into
the shoes of the judgment debtor and acquires all the rights and interests of the latter. By the time the lot was sold through the
foreclosure proceedings, it was no longerowned by Canuto by virtue of a prior sale to Carumbawho has a better right.
14. Sps. Santiago v. CA, It is axiomatic that good faith is always presumed
August 14, 1995 In any event, even if first buyers had known of the second sale, they still have the superior right, absent as there is
prior registration in good faith by second buyer of the second sale in his favor.
FACTS:
Petitioners, the Santiago spouses, bought 2 parcels of land from Evelyn Mercado, with the latter acting as attorney-in-
fact of her brothers and sisters. The first parcel, purchased on November 18, 1977, is not involved in the case at bench.
Adjoining said lot is the disputed 100 square-meter lot which was offered to petitioners for P100,000 shortly after the sale of the
first lot. An earnest money has been paid.
an Absolute Deed ofSale was executed. Vendor Evelyn Mercado asked for several more payments. After receiving them, she
turned over the owner's copy of the Torrens title to petitioners.
A new title could not at that time be issued to petitioners because Evelyn Mercado had the power of attorney only from one
sister Melita. She assured petitioners that she had full authority from her brothers and sisters to sell the lot and promised to
contact them.
Because of various problems in securing the powers of attorney from the other brothers and sisters, it was not until April 16,

DANA| 12
1982 that the deed of sale was finally registered, but during all this time, the Mercado owner's duplicate of the title was held by
and in the possession of petitioners. Thus, TCT No. S-12785 was cancelled and in lieu thereof TCT No. 113462 was issued in
the names of petitioners.
Two months before the registration of the deed of sale or on February 11, 1982, Evelyn Mercado, for and in behalf of all the
owners, sold the same parcel of land for the same amount of P100,000 to respondent Aquilino Arevalo. No attempt to register
the deed was made by respondent Arevalo.
Arevalo filed the action for specific performance, cancellation of title, and damages. Petitioners in turn filed the two other cases
which were consolidated with the case filed by respondent Arevalo.
the trial court ruled in favor of respondent Arevalo. It directed Evelyn Mercado and her brothers and sisters to surrender the
disputed lot to respondent Arevalo. Petitioners, on the other hand, were ordered to surrender TCT No. 113462 to the
Register of Deeds of Makati for cancellation and the issuance of a new one to Arevalo
Court of Appeals affirmed
o held that there was bad faith on the part of the petitioners since the deed of sale of July 30, 1979 was executed before
the respective special powers of attorney of the other co-owners were executed
Hence present petition, petitioners rely on the circumstance that they were the first to buy and also the first, and indeed the
only, party to register the sale, resulting in the issuance of a new title in their names
ISSUE:
W/n the petitioners were in good faith both at the time of the acquisition or sale of the property and also at the time of the
recording or registration of the same; thus having the better right
HELD:
Petitioners, Sps Santiago, has the better right being the only registrants, following the rules on double sales.
It is axiomatic that good faith is always presumed. There being absent any direct evidence of bad faith, there is need to
examine what respondent Court of Appeals said are indices of bad faith on the part of petitioners.
We believe that petitioners cannot be said to be in bad faith simply because they had the deed of sale executed even if not all
the co-owners had executed their respective special powers of attorney. Consider thus the following:
o (a) petitioners were holding on to and had in their possession the certificate of title of the sellers;
o (b) petitioners had the sellers' general powers of attorney which ofcourse were unavailing to transfer ownership
over realty;
o (c) petitioners waited until all the necessary special powers of attorney were obtained before they registered the sale.
In fine, whatever defects there may have been in the deed of sale are improper bases for respondent court to draw the
conclusion that petitioners are in bad faith. If any co-owner had questioned the deed before the registration, the
assumption of bad faith may be correct, but such inference cannot be claimed by respondent Arevalo, a person who was not
yet a buyer at that time and who was a complete stranger to the first transaction. How could petitioners even attempt to defraud
a future buyer whom they did not know as a possible buyer at the time the deed of sale was executed.
The records do not show the extent to which respondent Arevalo conducted ocular inspections of the lot subject of the double
sale. If he limited himself to an examination of the Torrens title kept by the Register of Deeds, he is guilty\of negligence in not
asking for the owner's duplicate copy of the said title, which of course could not be given to him as the same had been turned
over to petitioners a long time before Arevalo purchased the lot. Evelyn Mercado had no owner's copy of the title to give to
Arevalo.
o If the second buyer in a double sale of real property does not insist in obtaining possession of the owner's copy of the
Torrens title, does not inspect the property in the absence of said copy to ascertain who is in possession, and does not
try to have the deed of sale registered until after he learns that there was a buyer of the same lot ahead of him, his
rights cannot prevail over the first buyer who did all these things.
In any event, even if petitioners had known of the second sale, they still have the superior right, absent as there is prior
registration in good faith by respondent Arevalo of the second sale in his favor.

DANA| 13
15. Tan v. CA, a lessee is estopped or prevented from disputing the title of his landlord.
September 9, 1998 in the double sale of real property, the buyer who is in possession of a Torrens title and had the deed ofsale registered
must prevail.
FACTS:
Private respondent, Kiat, in his complaint filed, claimed that he bought the subject properties from Mr. Tan Keh in 1954 for
P98,065.35, built his house thereon, but was unable to effect immediate transfer of title in his favor in view of his foreign
nationality at the time of the sale. Nonetheless, as an assurance in good faith of the sales agreement, Mr. Tan Keh turned over
to private respondent the owner's duplicate copy of TCT No. 35656 and, in addition, executed a lease contract in
favor of private respondent for a duration of forty (40) years.
However, in 1958, Mr. Tan Keh sold the subject properties to Remigio Tan, his brother and father of petitioners, with the
understanding that the subject properties are to be held in trust by Remigio for the benefit of private respondent and that
Remigio would execute the proper documents of transfer in favor of private respondent should the latter at anytime demand
recovery of the subject properties. TCT No. 35656 was thus cancelled and in lieu thereof TCT No. 53284 was issued in the
name of Remigio.
Another contract of lease was executed by Mr. Tan Keh and Remigio in favor of private respondent to further safeguard the
latter's interest on the subject properties, but private respondent never paid any rental and no demand whatsoever for the
payment thereof had been made on him.
Remigio was killed in 1968. At his wake, petitioners were reminded of private respondent's ownership of the subject properties
and they promised to transfer the subject properties to private respondent who by then had already acquired Filipino citizenship
by naturalization.
Petitioners, however, never made good their promise to convey the subject properties despite repeated demands by private
respondent.
In fact, petitioners had the subject properties fraudulently transferred to their names under TCT No. 117898. Thus, the
filingof the complaint for recovery of property.
petitioners filed a Motion To Dismiss the complaint, claiming that:
o the complaint stated no cause of action;
o the cause of action has long prescribed;
o the cause of action has long been barred by a prior judgment; and,
o the claim has been waived, abandoned and/or extinguished by laches and estoppel.
Thereafter, the trial court issued an order dismissing private respondent's complaint, acceding to all the grounds set forth by
petitioners in their motion to dismiss.
CA which set aside the dismissal and ordered the remand of the case for further proceedings.
ISSUE:
Who has a better right
HELD:
Tan has the better right.
Guided by these crucial limitations on hypothetical admissions, the "trust theory" being espoused by private respondent in his
complaint, and upon which his claim over the subject properties is principally anchored, cannot hold water for the following
reasons:
o First: The execution of a lease contract between Remigio Tan as lessor and private respondent as lessee over the
subject properties already belies private respondent's claim of ownership. This is so because Article 1436 of the Civil
Code, Section 2, Rule 131 of the Rules of Court and settled jurisprudence consistently instruct that a lessee is
estopped or prevented from disputing the title of his landlord.

DANA| 14
o Second: In the Memorandum of Encumbrances found at the back of TCT No. 53284 issued in the
name of Remigio Tan in 1958 attached as Annex "B" to the complaint, there appears a mortgage constituted by
Remigio Tan over the subject properties in favor of Philippine Commercial and Industrial Bank in 1963 to guarantee a
principal obligation in the sum of P245,000.00. Remigio could not have mortgaged the subject properties had he not
been the true owner thereof, inasmuch as under Article 2085 of the New Civil Code, one of the essential requisites for
the validity of a mortgage contract is that the mortgagor be the absolute owner of the thing mortgaged. There is thus
no denying that Remigio Tan's successful acquisition of a transfer certificate oftitle (TCT No. 53284) over the subject
properties in his name after having his brother's (Alejandro Tan Keh) title thereto cancelled, and execution of a
mortgage over the same properties in favor of Philippine Commercial and Industrial Bank, undoubtedly, are
acts of strict dominion which are anathema to the concept of a continuing and subsisting trust private respondent
relies upon.
o Third: There being no trust, express or implied, established in favor of private respondent, the only transaction that can
be gleaned from the allegations in the complaint is a double sale, the controlling provision for which is Article
1544 of the Civil Code
Private respondent alleged that he bought the subject properties from Alejandro Tan Keh in 1954 but
nonetheless failed to present any document evidencing the same, while Remigio Tan, as the other buyer,
had in his name TCT No. 53284 duly registered in the Registry of Deeds of Manila on October 13, 1958.
Remigio Tan, beyond doubt, was the buyer entitled to the subject properties since the prevailing rule is that in
the double sale of real property, the buyer who is in possession of a Torrens title and had the deed of sale
registered must prevail.
o Fourth: Petitioners are in possession of TCT No. 117898 which evidences their ownership of the subject properties.
On the other hand, private respondent relies simply on the allegation that he is entitled to the properties by virtue of a
sale between him and Alejandro Tan Keh who is now dead. Obviously, private respondent will rely on parol evidence
which, under the circumstances obtaining, cannot be allowed without violating the "Dead Man's Statute"
We agree with the petitioners' submission that private respondent's cause ofaction has prescribed. TCT No. 53284 in the
name of Remigio Tan was registered on October 13, 1958, while TCT No. 117898 in the name of his heirs, herein petitioners,
was issued on April 21, 1975. Private respondent filed his complaint on October 18, 1993. Respondent court held that the ten
(10)-year prescriptive period for the reconveyance of property based on an implied trust cannot apply in this case since private
respondent was in actual possession ofthe subject properties

16. Cardente v. Rubin, mere registration of the sale is not enough. Good faith must concur with the registration. Bad faith renders the
November 27, 1987 registration nothing but an exercise in futility
That possession would have been enough to arouse the suspicion of the private respondents as to the ownership of
the entire area which they were about to purchase. Their failure to inquire and to investigate the basis of the
petitioners' actual occupation of the land forming a substantial part of what they were buying militates against their
posited lack of knowledge of the first sale. "A purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard and then claim that he acted in good faith under the belief that there was no defect in the title of
the vendor." We have warned time and again that a buyer of real property which is in the possession of persons other
than the seller must be wary and should investigate the rights of those in possession. Otherwise, without such
inquiry, the buyer can hardly be regarded as a buyer, in good faith.
FACTS:
Sometime in 1956, Francisca Cardente, for and on behalf of her grandson, petitioner Ignacio Cardente, purchased from Isidro
Palanay one hectare of land. The property purchased is a part of a land covered by Original Certificate of Title (O.C.T., for
short) No. P-1380 in Palanay's name. Immediately after the purchase, the Cardentes took possession of the land and planted
various crops and trees thereon. They have been in continuous possession ever since, adverse to the whole world.

DANA| 15
Unfortunately, however, the private document evidencing the sale of the one-hectare lot to petitioner Ignacio Cardente was lost
and never found despite diligent efforts exerted to locate the same.
Some four years later, on August 18, 1960, Isidro Palanay sold the entire property covered by O.C.T. No. P-1380, including the
one-hectare portion already sold to Cardente, this time to the private respondents Ruperto Rubinand his wife. The deed of sale
was registered and a new title, Transfer Certificate of Title (T.C.T., for short) No. 1173, was issued in favor of
the Rubin spouses
Isidro Palanay, executed a public document in favor of petitioner Ignacio Cardente confirming the sale to him (Cardente) in
1956 of the one hectare portion. The deed of confirmation likewise states that the subsequent vendee, respondent
Ruperto Rubin, was informed by Palanay of the first sale of the one-hectare portion to Cardente.
On February 18, 1977, the house of the petitioners was burned. As a consequence thereof, they lodged a complaint for arson
against Ruperto Rubin, whom they suspected of having committed the crime
, the private respondents filed a complaint with the then Court of First Instance of Bukidnon for quieting of title with damages,
against the petitioners, claiming ownership over the whole property previously covered by O.C.T. No. P-1380, now registered in
their names under T.C.T. No. 1173. cdrep
the trial court dismissed the complaint of the Rubins and ordered them to "reconvey the one hectare in question to defendant
(Cardente) at the expense of the latter."
CA set aside the judgment and declared the plaintiffs to be the absolute owners of subject property covered by Transfer
Certificate of Title No. 1173
ISSUE:
Who has the better right over the property?
W/n the private respondents acted in good faith when they registered the deed of sale
HELD:
Cardente has the better right over the property
While the private respondents allegedly bought from Isidro Palanay on August 18, 1960 the entire property comprising 9.2656
hectares and covered by O.C.T. No. P-1380, the petitioners, on the other hand, lay claim to one hectare thereof which they
undeniably purchased from the same vendor earlier, in 1956. The conflict, therefore, falls under, and can be resolved by, Article
1544 of the Civil Code which sets the rules on double sales.
It is undisputed that the private respondents, the second vendees, registered the sale in their favor whereas the petitioners, the
first buyers, did not. But mere registration of the sale is not enough. Good faith must concur with the registration. Bad faith
renders the registration nothing but an exercise in futility.
It is true that good faith is always presumed while bad faith must be proven by the party alleging it. 7 In this case, however,
viewed in the light of the circumstances obtaining, we have no doubt that the private respondents' presumed good faith has
been sufficiently overcome and their bad faith amply established.
The "Confirmation Of A Deed Of Absolute Sale of A Portion Of A Registered Agricultural Land" executed by the late Ignacio
Palanay admitted the sale of the one hectare portion to the petitioners sometime in 1966. The same deed likewise explicitly
stated that the "fact of the previous sale, was well known and acknowledged by Mr. Ruperto Rubin (the private respondent).
Further, the notorious and continuous possession and full enjoyment by petitioners of the disputed one-hectare property long
(four years) before the private respondents purchased the same from Palanay bolsters the petitioners' position. That
possession would have been enough to arouse the suspicion of the private respondents as to the ownership of the entire area
which they were about to purchase. Their failure to inquire and to investigate the basis of the petitioners' actual occupation of
the land forming a substantial part of what they were buying militates against their posited lack of knowledge of the first sale. "A
purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in
good faith under the belief that there was no defect in the title of the vendor."

DANA| 16
17. Carbonell v. CA, The buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second
69 SCRA [1976] paragraph of Article 1544 of the New Civil Code. Unlike the first and third paragraphs of said Article which accords
preference to the one who first takes possession in good faith of personal or real property, the second paragraph
directs that ownership of immovable property should be recognized in favor of one "who in good faith recorded" his
right. Under the first and third paragraphs, good faith must characterize prior possession. Under the second
paragraph, good faith must characterize the act of anterior registration. If there is no inscription, what is decisive is
prior possession in good faith. If there is inscription, prior registration in good faith is a pre-condition to support
here the first buyer was not aware - and could not have been aware - of any sale to another person as there was no
such sale, the buyer's prior purchase of the land was made in good faith. Her good faith subsisted and continued to
exist when she recorded her adverse claim four days prior to the registration of the second buyer's deed of sale. The
first buyer's good faith did not cease after the seller told her of his second sale of the same lot to the second buyer.
By reason thereof, she has superior right to the land in question.
FACTS:
On January 27, 1955, respondent Jose Poncio executed a private memorandum of sale of his parcel of land with improvements
in favor of petitioner Rosario Carbonell who knew that the said property was at that time subject to a mortgage in favor of the
Republic Savings Bank (RSB) for the sum of P1,500.00.
Four days later, Poncio, in another private memorandum, bound himself to sell the same property for an improved price to one
Emma Infante for the sum of P2,357.52, with the latter still assuming the existing mortgage debt in favor of the RSB in the
amount of P1,177.48.
Thus, in February 2, Poncio executed a formal registerable deed of sale in her (Infante's) favor.
So, when the first buyer Carbonell saw the seller Poncio a few days afterwards, bringing the formal deed of sale for the latter's
signature and the balance of the agreed cash payment, she was told that he could no longer proceed with formalizing the
contract with her (Carbonell) because he had already formalized a sales contract in favor of Infante.
To protect her legal rights as the first buyer, Carbonell registered on February 8, 1955 with the Register of Deeds her adverse
claim as first buyer entitled to the property. Meanwhile, Infante, the second buyer, was able to register the sale in her favor only
on February 12, 1955, so that the transfer certificate of title issued in her name carried the duly annotated adverse claim of
Carbonell as the first buyer. The trial court declared the claim of the second buyer Infante to be superior to that of the first buyer
Carbonell, a decision which the Court of Appeals reversed. Upon motion for reconsideration, however, Court of Appeals
annulled and set aside its first decision and affirmed the trial courts decision.
ISSUE:
Who has the superior right over the subject property?
HELD:
The Supreme Court reversed the appellate courts decision and declared the first buyer Carbonell to have the superior right
over the subject property, relying on Article 1544 of the Civil Code. Unlike the first and third paragraphs of said Article 1544,
which accord preference to the one who first takes possession in good faith of personal or real property, the second paragraph
directs that ownership of immovable property should be recognized in favor of one "who in good faith first recorded" his right.
Under the first and third paragraphs, good faith must characterize the prior possession, while under the second paragraph,
good faith must characterize the act of anterior registration.
When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer thereof and the title of Poncio was still
in his name solely encumbered by bank mortgage duly annotated thereon. Carbonell was not aware - and she could not have
been aware - of any sale to Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase of the land
was made in good faith which did not cease after Poncio told her on January 31, 1955 of his second sale of the same lot to
Infante. Carbonell wanted to meet Infante but the latter refused so to protect her legal rights, Carbonell registered her adverse
claim on February 8, 1955. Under the circumstances, this recording of Carbonells adverse claim should be deemed to have
been done in good faith and should emphasize Infante's bad faith when the latter registered her deed of sale 4 days later.

DANA| 17
18. Radiowealth Finance mere registration of a sale in ones favor does not give him any right over the land if the vendor was not anymore the
Company v. Palileo, owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded.
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. 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 defendant-appellant 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.
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 Palileos favor.
On appeal, the decision of the trial court was affirmed. The finding of the Court of Appeals 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
Hence, this petition for review on certiorari.
ISSUE:
whether or not the rule provided in Article 1544 of the Civil Code, is applicable to a parcel of unregistered land purchased at a
judicial sale
Who, as between two buyers of unregistered land, is the rightful owner
o the first buyer in a prior sale that was unrecorded, or
o the second buyer who purchased the land in an execution sale whose transfer was registered in the Register of Deeds

HELD:
Palileo has the superior right over the land
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.
The first sale was made by the original owners and was unrecorded while the second was an execution sale that resulted from
a complaint for a sum of money filed against the said original owners. Applying Section 35, Rule 39 of the Revised Rules of
Court, this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the purchaser at the execution sale
though the latter was a buyer in good faith and even if this second sale was registered. It was explained that this is because the
purchaser of unregistered land at a sheriff's execution sale only steps into the shoes of the judgment debtor, and merely
acquires the latter's interest in the property sold as of the time the property was levied upon. Cdpr
Applying this principle, the Court of Appeals 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.

DANA| 18
19. Villa-rey Transit v. Ferrer v. The 10-year restrictive clause in the contract between Villarama and Pantranco, while in the nature of an agreement
Villarama, suppressing competition, it is, however, merely ancillary or incidental to the main agreement which is that of sale. The
October 29, 1968 suppression or restraint is only partial or limited: first, in scope, it refers only to application for TPU by the seller in
competition with the lines sold to the buyer; second, in duration, it is only for ten (10) years; and third, with respect to
situs or territory, the restraint is only along the lines covered by the certificates sold. In view of these limitations,
coupled with the consideration of P350,000.00 for just two certificates of public convenience, and considering,
furthermore, that the disputed stipulation is only incidental to a main agreement, the same is reasonable and it is not
harmful nor obnoxious to public service. It does not appear that the ultimate result of the clause or stipulation would
be to leave solely to Pantranco the right to operate along the lines in question, thereby establishing a monopoly or
predominance approximating thereto. The main purpose of the restraint was to protect for a limited time the business
of the buyer.
The 10 year prohibition upon Villarama is not against his application for, or purchase of, certificates of public
convenience, but merely the operation of TPU along the lines covered by the certificates sold by him to Pantranco.
Consequently, the sale between Fernando and the Corporation is valid, such that the rightful ownership of the
disputed certificates still belongs to the plaintiff being the prior purchaser in good faith and for value thereof. In view
of the ancient rule of caveat emptor prevailing in this jurisdiction, what was acquired by Ferrer in the sheriff's sale was
only the right which Fernando, judgment debtor, had in the certificates of public convenience on the day of the sale.
FACTS:
Jose Villarama was an operator of a bus transportation pursuant to two certificates of public convenience granted him by the
Public Service Commission (PSC). Later, he sold the certificates to the Pangasinan Transportation Company, Inc. (Pantranco)
with the condition that the seller (Villarama) "shall not for a period of 10 years, apply for any TPU service identical or competing
with the buyer."
Barely three months thereafter, a corporation called Villa Rey Transit, Inc. (the Corporation) was organized with a capital stock
of P500,000.00 divided into 5,000 shares of the par value of P100.00 each; P200,000.00 was the subscribed stock; Natividad
Villarama (wife of Jose Villarama) was one of the incorporators, and she subscribed for P1,000.00; the balance of P199,000.00
was subscribed by the brother and sister-in-law of Jose Villarama; of the subscribed capital stock, P105,000.00 was paid to the
treasurer of the corporation, Natividad.
In less than a month after its registration with the SEC, the Corporation bought five certificates of public convenience and 49
buses from one Valentin Fernando. Later, the Sheriff of Manila levied on 2 of the 5 certificates, in favor of Eusebio Ferrer,
judgment creditor, against Fernando, judgment debtor. A public sale was conducted. Ferrer was the highest bidder. Ferrer sold
the two certificates to Pantranco.
The Corporation filed a complaint against Ferrer, Pantranco and the PSC for the annulment of the sheriff's sale. Pantranco, on
its part, filed a third-party complaint against Villarama, alleging that Villarama and/or the Corporation was disqualified from
operating the two certificates in question by virtue of the previous agreement. The trial court declared null and void the sheriff's
sale of two certificates of public convenience in favor of Ferrer and the subsequent sale thereof by the latter to Pantranco and
declaring Villa Rey Transit, Inc., to be the lawful owner of the said certificates of public convenience.
Pantranco disputes the correctness of the decision insofar as it holds that Villa Rey Transit, Inc. (Corporation) is a distinct and
separate entity from Villarama. Ferrer, for his part, challenges the decision insofar as it holds that the sheriff's sale is null and
void.
ISSUE:
Whether the stipulation between Villarama and Pantranco binds Villa Rey Transit, Inc.
HELD:
YES. The restrictive clause in the contract entered into by the Villarama and Pantranco is also enforceable and binding against

DANA| 19
the said Corporation. The rule is that a seller or promisor may not make use of a corporate entity as a means of evading the
obligation of his covenant. The evidence has disclosed that Villarama, albeit was not an incorporator or stockholder of the
Corporation, his wife, however, was an incorporator and was elected treasurer of the Corporation. The evidence further shows
that the initial cash capitalization of the corporation was mostly financed by Villarama; he supplied the organization expenses
and the assets of the Corporation, such as trucks and equipment; there was no actual payment by the original subscribers of
the amounts of P95,000.00 and P100,000.00 as appearing in the books; Villarama made use of the money of the Corporation
and deposited them to his private accounts; and the Corporation paid his personal accounts. The foregoing circumstances are
strong persuasive evidence showing that Villarama has been too much involved in the affairs of the Corporation to altogether
negate the claim that he was only a part-time general manager. They show beyond doubt that the Corporation is his alter ego.
The doctrine that a corporation is a legal entity distinct and separate from the members and stockholders who compose it is
recognized and respected in all cases which are within reason and the law. When the fiction is urged as a means of
perpetrating a fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the
achievement or perfection of a monopoly or generally the perpetration of knavery or crime, the veil with which the law covers
and isolates the corporation from the members or stockholders who compose it will be lifted to allow for its consideration merely
as an aggregation of individuals.

20. Filinvest Credit Corp. v. The mere return of the mortgaged motor vehicle by the mortgagor to the mortgagee does not constitute dation in
Phil. Acetylene, Co., Inc., payment or dacion en pago in the absence, express or implied, of the true intention of the parties. The fact that the
January 30, 1982 mortgaged motor vehicle was delivered to the mortgagee does not necessarily mean that ownership thereof, as
juridically contemplated by dacion en pago, was transferred from the mortgagor to the mortgagee. In the absence of
clear consent of the mortgagee to the proffered special mode of payment, there can be no transfer of ownership of the
mortgaged motor vehicle from mortgagor to mortgagee.
An examination of the language of the document executed by appellant captioned "Voluntary Surrender with Special
Power of Attorney To Sell" reveals that the possession of the mortgaged motor vehicle was voluntarily surrendered by
the appellant to the appellee authorizing the latter to look for a buyer and sell the vehicle in behalf of the appellant who
retains ownership thereof, and to apply the proceeds of the sale to the mortgage indebtedness, with the undertaking
of the appellant to pay the difference, if any, between the selling price and the mortgage obligation. With the stipulated
conditions as stated, the appellee, in essence was constituted as a mere agent to sell the motor vehicle which was
delivered to the appellee, not as its property, for if it were, he would have full power of disposition of the property, not
only to sell it as is the limited authority given him in the special power of attorney.
FACTS:
Appellant bought, on installment basis, a motor vehicle from one Alexander Lim.
Accordingly, appellant executed a promissory note in favor of Lim which he secured by a chattel mortgage on the subject motor
vehicle.
Lim thereafter assigned all his rights, title and interests over the said promissory note and chattel mortgage to the appellee.
Upon default of appellant in payment of the stipulated installments, appellee demanded full payment of the obligation or the
return of the mortgaged motor vehicle. Appellant opted to deliver the motor vehicle to appellee together with a document of
"Voluntary Surrender with Special Power of Attorney to Sell."
Later, however. appellee, unable to sell the property due to unpaid taxes thereon, requested appellant to pay its installments in
arrears plus interest, and offered to deliver back the motor vehicle, but the appellant refused to accept it.
Appellee thus instituted an action for collection with damages in the Court of First Instance.
Judgment was rendered ordering appellant to pay its outstanding obligations and directing appellee to deliver the subject motor
vehicle to appellant.
Appellant appealed, contending that its obligation to pay the balance of the purchase price has been extinguished when, in
compliance with appellee's demand letter, it had opted to return the subject property, construing the return to and acceptance

DANA| 20
by the appellee of the mortgaged motor vehicle as dation in payment.
ISSUE:
W/n mere return of the mortgaged motor vehicle by the mortgagor to the mortgagee constitute dation in payment
HELD:
No. The Supreme Court held that the mortgagor's mere delivery to and acceptance by the mortgagee of the mortgaged
property may not be construed as actual payment of the mortgagor's obligation under the mortgage contract, more specifically
as dacion en pago. since the record fails to show clear consent of the mortgagee to the proffered special mode of payment; and
that delivery of possession of the mortgaged property to the mortgagee can only operate to extinguish the mortgagor's liability if
the mortgagee had actually caused the foreclosure tale of the subject property when it recovered possession thereof

21. Artemio Katigbak v. CA, if the purchaser fails to take delivery and pay the purchase price of the subject matter of the contract, the vendor,
January 31, 1962 without the need of first rescinding the contract judicially, is entitled to resell the same, and if he is obliged to sell it
for less than the contract price, the buyer is liable for the difference. The loss should therefore be set off against the
sum claimed by appellee.
FACTS:
Artemio Katigbak upon reading an advertisement for the sale of the winch went to see Lundberg and inspected the equipment.
The price quoted was P12,000.00. Desiring a reduction of the price,Katigbak was referred to Evangelista, the owner. After the
meeting, it was agreed that Katigbak was to purchase the winch for P12,000.00, payable at P5,000.00 upon delivery
Upon appraisal, It was then stipulated that the amount necessary for the repairs will be advanced by Katigbak but deductible
from the initial payment of P5,000.00. The repairs were undertaken and the total ofP2,029.85 for spare parts was advanced
by Katigbak for the purpose. For one reason or another, the sale was not consummated and Katigbak sued Evangelista,
Lundberg and the latter's company, for the refund of such amount.
Lundberg and Evangelista filed separate Answers
o Lundberg: alleging non-liability for the amount since the same was purely a personal account between defendant
Evangelista and plaintiff Katigbak.
o Evangelista: contended that Katigbak refused to comply with his contract to purchase the same; that as a
result of such refusal he (Evangelista) was forced to sell the same to a third person for only P10,000.00, thus incurring
a loss of P2,000.00, which amount Katigbak should be ordered to pay, plus moral damages of P5,000.00 and P700.00
for attorney's fees.
lower court rendered judgment, ordering the defendants Daniel Evangelista and V. K. Lundberg to pay plaintiff
Court of Appeals, reversed the judgment. It held that if the purchaser fails to take delivery and pay the purchase price of the
subject matter of the contract, the vendor, without the need of first rescinding the contract judicially, is entitled to resell the
same, and if he is obliged to sell it for less than the contract price, the buyer is liable for the difference. The loss, which is the
subject matter of Evangelista's main counterclaim, should therefore be set off against the sum claimed by appellee.
Furthermore Lundberg was merely an agent of his co-appellant, he cannot be held liable to appellee in connection with the
refund of the sum advanced by the latter.
Plaintiff-appellee Katigbak brought the matter to this Court on appeal by certiorari. In his petition he claims that
the Court of Appeals erroneously applied the doctrine enunciated in the Hanlon v. Hausserman case, and failed to apply the
law relative to rescission of contracts.
ISSUE:
W/n Evangelista has the right to resell the equipment
HELD:
Yes. The herein petitioner failed to take delivery of the winch, subject matterof the contract and such failure or breach was,
according to the Court ofAppeals, attributable to him, a fact which We are bound to accept under existing jurisprudence. The
right to resell the equipment, therefore, cannot be disputed. It was also found by the Court of Appeals that in the subsequent

DANA| 21
saleof the winch to a third party, the vendor thereof lost P2,000.00, the sale having been only for P10,000.00,
instead of P12,000.00 as agreed upon, said difference to be borne by the supposed vendee who failed to take delivery and/or
pay the price.

DANA| 22