FRANK N.
LIU, deceased, substituted by his surviving spouse Diana signed the Loys’ contracts was not the registered owner. The registered
Liu, and children, namely: Walter, Milton, Frank, Jr., Henry and
Jockson, all surnamed Liu, Rebecca Liu Shui and Pearl Liu
Rodriguez, petitioners, vs. ALFREDO LOY, JR., TERESITA A. LOY
and ESTATE OF JOSE VAÑO, respondents.
G.R. No. 145982 July 3, 2003
FACTS: Teodoro Vaño (Teodoro), as attorney-in-fact of Jose Vaño, sold
seven lots to Benito Liu, through petitioner Frank Liu (Frank), and to Cirilo
Pangalo. The lots sold to Benito Liu were Lot Nos. 5, 6, 13, 14, and 15
while the lots sold to Cirilo Pangalo were Lot Nos. 14 and 15. When Jose
Vaño passed away Benito Liu stopped further payments but after the
Supreme Court declared valid the will of his father, Teodoro informed
Frank that he could already transfer the titles to the buyers’ names upon
payment of the balance of the purchase price. It was only after nine years
that Frank responded that he was ready to pay the balance of the
purchase price of the seven lots after he had purchased the lots formerly
sold to Benito Liu and Cirilo Panglao. He requested for the execution of a
deed of sale of the lots in his name and the delivery of the titles to him.
Despite repeated demands by Frank, Teodoro sold Lot No. 6 to
respondent Teresita Loy. Frank then filed a complaint against Teodoro for
specific performance, execution of deed of absolute sale, issuance of
certificates of title and construction of subdivision roads, before the Court
of First Instance and a notice of lis pendens on the seven lots was filed
before the Register of Deeds. A year after, Teodoro sold Lot No. 5 to
respondent Alfredo Loy.
When the complaint filed by Frank was dismissed, he filed his
claim to the probate court which was subsequently granted. Milagros
Vaño, who succeeded as administratrix of the Estate of Jose Vaño,
executed a deed of conveyance covering the seven lots in favor of Frank.
The probate court, however, also approved the sale to respondents
Teresita and Alfredo Loy upon their motion and new titles were issued
under their name.
As a result, Frank Liu filed a complaint for reconveyance or annulment of
title of Lot Nos. 5 and 6. The trial court confirmed the unilateral
extrajudicial rescission of the contract by the late Teodoro Vaño and it
was later on affirmed by the Court of Appeals.
ISSUE: Whether the registration by the Loys of their contracts of sale
made them the first registrants in good faith to defeat petitioner’s claim as
prior buyers.
HELD: No, registration by the Loys of their contracts of sale did not
defeat the right of petitioner as prior buyers because the person who
owner of Lot Nos. 5 and 6 was the “Estate of Jose Vaño.” Teodoro Vaño
was the seller in the contract of sale with Alfredo Loy, Jr., while the Estate
of Jose Vaño was the seller in the contract of sale with Teresita Loy.
Teodoro Vaño signed both contracts of sale. The rule is well-settled that
“one who buys from a person who is not the registered owner is not a
purchaser in good faith. This is because purchasers were under notice to
inquire why the land was not registered in the name of the person who
executed the contracts of sale. In this case, the Loys were under notice
that the lots belonged to the “Estate of Jose Vaño” and any sale of the
lots required court approval.
Moreover, the contracts of the Loys did not convey ownership of
the lots to them as against third persons because there was no approval
of the sale by the probate court and registration with the Register of
Deeds. The Court ruled that registration of the contracts without court
approval would be ineffective to bind third persons, especially creditors of
the estate. Otherwise, this will open the door to fraud on creditors of the
estate.
SPOUSES GODOFREDO ALFREDO and CARMEN LIMON ALFREDO
v SPOUSES ARMANDO BORRAS and ADELIA LOBATON BORRAS
FACTS:
The Alfredo spouses mortgaged their land to DBP. To pay their debt, they
sold the land to spouses Borras for P15,000. The latter also assumed to
pay the loan. Borras subsequently paid the balance of the purchase price
of the land for which Alfredo issued a receipt dated 11 March 1970 as
well as the corresponding owner’s duplicate copy of the land’s OCT.
Borras thereafter took possession of the said land. Later, they found out
that Alfredo sold the land again to other buyers by securing duplicate
copies of the OCTs upon petition with the court. Thus, they filed for
specific performance. Alfredo spouses claimed that the sale, not being in
writing, is unenforceable under the Statute of Frauds.
ISSUE: W/N the contract of sale is unenforceable under the Statute of
Frauds.
HELD: NO.
The Statute of Frauds provides that a contract for the sale of real property
shall be unenforceable unless the contract or some note or memorandum
of the sale is in writing and subscribed by the party charged or his agent.
The existence of the receipt dated 11 March 1970, which is a
memorandum of the sale, removes the transaction from the provisions of
the Statute of Frauds.
The Statute of Frauds applies only to executory contracts and not to
contracts either partially or totally performed. Thus, where one party has
performed one’s obligation, oral evidence will be admitted to prove the
agreement. In the instant case, the parties have consummated the sale of
the Subject Land, with both sellers and buyers performing their respective
obligations under the contract of sale. In addition, a contract that violates
the Statute of Frauds is ratified by the acceptance of benefits under the
contract. Alfredo spouses benefited from the contract because they paid
their DBP loan and secured the cancellation of their mortgage using the
money given by Borras. Alfredo also accepted payment of the balance of
the purchase price.
Alfredo spouses cannot invoke the Statute of Frauds to deny the
existence of the verbal contract of sale because they have performed
their obligations, and have accepted benefits, under the verbal contract.
Borras spouses have also performed their obligations under the verbal
contract. Clearly, both the sellers and the buyers have consummated the
verbal contract of sale of the Subject Land. The Statute of Frauds was
enacted to prevent fraud. This law cannot be used to advance the very
evil the law seeks to prevent.
CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CA
GR No. 116635
July 24, 1997
Facts:
One lot formerly owned by Victorio Nool has an area of 1 hectare. Another
lot previously owned by Francisco Nool has an area of 3.0880 hectares.
Spouses (plaintiffs) Conchita Nool and Gaudencio Almojera alleged that
they are the owners of the subject lands. They are in dire need of money,
they obtained a loan DBP , secured by a real estate mortgage on said
parcels of land, which were still registered in the names of Victorino and
Francisco Nool, at the time, Since the plaintiffs failed to pay the said loan,
the mortgage was foreclosed; that within the period of redemption, the
plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed
properties from DBP, which the latter did; and as a result, the titles of the
2 parcels of land in question were transferred to Anacleto; that as part of
their arrangement or understanding, Anacleto agreed to buy from Conchita
the 2 parcels of land , for a total price of P100,000.00, P30,000.00 of which
price was paid to Conchita, and upon payment of the balance of
P14,000.00, the plaintiffs were to regain possession of the 2 hectares of
land, which amounts spouses Anacleto Nool and Emilia Nebre failed to
pay. Anacleto Nool signed the private writing, agreeing to return subject
lands when plaintiffs have the money to redeem the same; defendant
Anacleto having been made to believe, then, that his sister, Conchita, still
had the right to redeem the said properties.
Issue: Is the purchase of the subject lands to Anacleto valid?
Held:
Nono dat quod non habet, No one can give what he does not have;
Contract of repurchase inoperative thus void.
Article 1505 of the Civil Code provides that “where goods are sold by a
person who is not the owner thereof, and who does not sell them under
authority or with consent of the owner, the buyer acquires no better title to
the goods than the seller had, unless the owner of the goods is by his
conduct precluded from denying the seller’s authority to
sell.” Jurisprudence, on the other hand, teaches us that “a person can sell
only what he owns or is authorized to sell; the buyer can as a consequence
acquire no more than what the seller can legally transfer.” No one can give
what he does not have — nono dat quod non habet. In the present case,
there is no allegation at all that petitioners were authorized by DBP to sell
the property to the private respondents. Further, the contract of repurchase
that the parties entered into presupposes that petitioners could repurchase
the property that they “sold” to private respondents. As petitioners “sold”
nothing, it follows that they can also “repurchase” nothing. In this light, the
contract of repurchase is also inoperative and by the same analogy, void.
LIETZ VS CA
Doctrine Syllabus:
Real Estate Sale; Price per unit; Delivery of the units sold is
imperative. Non-delivery results to reduction of purchase price. Delivery of
units more than agreed upon allows the buyer to (1) accept only the
amount originally agreed, or (2) pay for the additional units delivered.
Same; Lump sum sale; No reduction in the purchase price is
allowed, even if what was delivered is not what was specifically agreed
upon. PROVIDED, that there be no substantial discrepancy between the
estimate and what was actually delivered BUT MERE reasonable excess
or deficiency. Moreover, the boundaries are what make lands determinate.
Thus, boundaries are controlling even if there was a specification as to unit
area. The obligation, then, is to deliver what is within the boundaries.
Simple Story:
This is the story of someone selling ‘five’ (5) hectares of his land to
a buyer, based only on their estimation as to the actual area of the subject
land. The deed of absolute sale mentioned that the subject land consists
of, more or less, five (5) hectares, and it also included therein the
boundaries of said land. Incidentally, one (1) hectare of this land was
leased to three Italians, who were then planning to introduce improvements
thereon. The buyer soon discovered that the seller actually owned only four
(4) hectares of land, and with one hectare being leased, the buyer can only
obtain three (3) hectares.
 Buyer then sues seller and the Italian lessees, claiming that
according to Art. 1539, buyer is entitled to a reduction of the purchase price
– the principle on unit price sales when the subject land cannot be
delivered as stipulated in the contract. The Court disagreed, ruling that the
sale was made for a lump sum because the sale was for the entire five (5)
hectares, as estimated by the parties. Thus, absent any stipulation as to
price per unit, this cannot be a unit price sale. Hence, there can be no
reduction to the purchase price according to Art. 1542. The only condition,
though, is that in lump sum sales, the discrepancy between the estimation
and the actual area must not be substantial – the phrase, “more or less” or
similar words covers only a reasonable excess or deficiency that must
be adjudged according to the facts of any given case.
Additionally, if and even when the area of the land is specified
along with its boundaries (as in this case), such stipulated area is not
controlling. It is the boundaries which define the limits of a land and which
makes it determinate. As such, in a mass or lump sum sale of real estate,
it is not vital to be mathematically accurate as to the area. It is sufficient if
it can be identified among other lands. The obligation, thus, is to deliver
what is within the boundaries – not the area allegedly sold.
The Actual Case:
 Petitioner-buyer Rudolf Lietz, Inc. wanted to buy the lot of
Respondent-Seller Agapito Buriol, the year was 1987. The Deed
of Sale mentioned that it was for 5 hectares, more or less, including
therein the boundaries of said land and for P30,000.
 The land is at Capsalay Island, San Vicente, Palawan. One (1)
hectare of this land was leased to the other Italian-respondents,
Turatello and Sani, in 1986.
 The boundaries mentioned are mere descriptions: such as in the
North, Sec. 01-017; the remaining property of the seller in the East;
seashore in the South; and Sec. 01-018 in its West.
 Petitioner-buyer soon found out about the lease, and demanded
that the purchase price be reduced. In 1989, petitioner-buyer thus
filed for an annulment of lease with recovery of possession with
injunction and damages, seeking to annul the lease of the Italians,
prevent them from introducing improvements on the land, and for
respondent-seller to restore the excess payment.
 RTC dismissed petitioner’s complaint. The CA upheld the trial
court, ruling that the applicable rule is Art. 1542, which means that
the sale was for a lump sum and that the purchase price may not
be reduced.
 On appeal to the SC, petitioner raised these issues:
1. WoN Art. 1542 on lump sum sales, or Art. 1539 on unit
price sales, is applicable.
2. WoN the boundaries are intelligible enough to be more
controlling than the area stipulated
 Ruling:
1. The Court upheld the CA ruling that Art. 1542 governs.
 Ratio: because the Deed of Absolute Sale evinces
a lump sum sale (i.e., five (5) hectares of land,
more or less, for P30,000). There is no stipulation
as to price per unit, thus, it cannot be a unit price
sale.
2. The Court also upheld the boundaries mentioned.
 Ratio: because (1) it was proved that, at the ocular
inspection before the sale, respondent-seller
physically motioned and pointed to the subject land
for petitioner-buyer to confirm and see; (2) the fact
that petitioner-buyer assented to the deed of
absolute sale, confirming thereby the correctness
and intelligibility of the boundary description.
 Doctrinal Value:
1. The discrepancy between the estimation of the land area
and what it actually consists of must not be substantial. But
only reasonable excess or deficiency may be allowed
depending on the factual milieu of each case.
2. In case a lump sum sale included not only the boundaries
but also its area, the boundary description trumps over the
area stipulated because boundaries makes land a
determinate object. The obligation is to deliver what is
within said boundaries, even if the stipulated area sold
turns out to be more than the area within said boundaries.
3. The intelligibility of boundaries, so as to defeat its primacy
over stipulated area size, cannot be questioned when the
party claiming it is estopped by either having personal
knowledge of the land estimated or by assenting to the
deed of sale containing such boundary description.
RUDOLF LIETZ INC v CA
FACTS:
Buriol previously owned a parcel of unregistered land in Palawan. In 1986,
he entered into a lease agreement with Flaviano and Tiziana Turatello and
Sani (Italians) involving a hectare of his property. This agreement was for
a period of 25 years, renewable for another 25 years. After the paying
P10,000 downpayment, Turatello and Sani took possession of the land.
However, this agreement was only reduced into writing in 1987.
 After 11 months, Buriol sold the same parcel of land (5 hec) to Rudolf
Lietz Inc for P30,000. Later on, Rudolf Lietz Inc discovered that Buriol
owned only 4 hectares with one hectare covered by the lease; thus, only 3
hectares were delivered to it. Rudolf Lietz Inc instituted a complaint for the
annulment of the lease against Buriol, Sani and the Turatellos before the
RTC. RTC and CA ruled in favor of Buriol, Sani and Turatellos.
ISSUE:
Whether the sale between Buriol and Rudolf Lietz Inc is a lump sum or
unit price sale
HELD:
LUMP SUM SALE. The Deed of Absolute Sale shows that the parties
agreed on the purchase price on a predetermined area of 5 hectares within
the specified boundaries and not based on a particular rate per area. In
accordance with Art. 1542, there shall be no reduction in the purchase
price even if the area delivered to Rudolf Lietz Inc is less than that states
in the contract. In the instant case, the area within the boundaries as stated
in the contract shall control over the area agreed upon in the contract.
TEN FORTY VS CRUZ
FACTS:
• Petitioner filed an ejectment complaint against Marina Cruz(respondent)
before the MTC. Petitioner alleges that the land indispute was purchased
from Barbara Galino on December 1996, andthat said land was again
sold to respondent on April 1998;
• On the other hand, respondent answer with counterclaim that never was
there an occasion when petitioner occupied a portion of the premises. In
addition, respondent alleges that said land was a public land (respondent
filed a miscellaneous sales application with the Community Environment
and Natural Resources Office) and the action for ejectment cannot
succeed where it appears that respondent had been in possession of the
property prior to the petitioner;
• On October 2000, MTC ordered respondent to vacate the land and
surrender to petitioner possession thereof. On appeal, the RTC reversed
the decision. CA sustained the trial court’s decision.
ISSUE/S:
Whether or not petitioner should be declared the rightful owner of the
property.
HELD:
No. Respondent is the true owner of the land.1) The action filed by the
petitioner, which was an action for “unlawful detainer”, is improper. As the
bare allegation of petitioner’s tolerance of respondent’s occupation of the
premises has not been proven, the possession should be deemed illegal
from the beginning. Thus, the CA correctly ruled that the ejectment case
should have been for forcible entry. However, the action had already
prescribed because the complaint was filed on May 12, 1999 – a month
after the last day forfiling;2) The subject property had not been delivered
to petitioner; hence, it did not acquire possession either materially or
symbolically. As between the two buyers, therefore, respondent was first
in actual possession of the property.
As regards the question of whether there was good faith in the second
buyer. Petitioner has not proven that respondent was aware that her
mode of acquiring the property was defective at the time she acquired it
from Galino. At the time, the property — which was public land –had not
been registered in the name of Galino; thus, respondent relied on the tax
declarations thereon. As shown, the former’s name appeared on the tax
declarations for the property until its sale to the latter in 1998. Galino was
in fact occupying the realty when respondent took over possession. Thus,
there was no circumstance that could have placed the latter upon inquiry
or required her to further investigate petitioner’s right of ownership.
DOCTRINE/S:
Execution of Deed of Sale; Not sufficient as delivery. Ownership is
transferred not by contract but by tradition or delivery. Nowhere in the
Civil Code is it provided that the execution of a Deed of Sale is a
conclusive presumption of delivery of possession of a piece of real
estate. The execution of a public instrument gives rise only to a prima
facie presumption of delivery. Such presumption is destroyed when the
delivery is not effected, because of a legal impediment. Such constructive
or symbolic delivery, being merely presumptive, was deemed negated by
the failure of the vendee to take actual possession of the land sold.
Disqualification from Ownership of Alienable Public Land.
Private corporations are disqualified from acquiring lands of the public
domain, as provided under Section 3 of Article XII of the Constitution.
While corporations cannot acquire land of the public domain, they can
however acquire private land. However, petitioner has not presented
proof that, at the time it purchased the property from Galino, the property
had ceased to be of the public domain and was already private land. The
established rule is that alienable and disposable land of the public
domain held and occupied by a possessor — personally or through
predecessors-in-interest, openly, continuously, and exclusively for 30
years — is ipso jure converted to private property by the mere lapse of
time.
RULING:
The Supreme Court DENIED the petition.
URACA, et al. vs CA and VELEZ, JR., et al.
 G.R. No. 115158 September 5, 1997
Ponente: Justice Panganiban, Third Division
Facts: The Velezes were the owners of the lot and commercial building in
question located at Progreso and M.C. Briones Streets in Cebu City. The
petitioners were its lessees.
On July 8, 1985, the Velezes through Carmen Velez Ting wrote a letter to
petitioners offering to sell the subject property for P1,050,000.00 and to
reply within three days. Petitioners, through counsel, accepted the offer.
When Uraca went to Ting, Ting told her that there was a mistake in the
price. It should have been P1.4M, Uraca agreed to the new price to be
payable in installments with a down payment of P1M and the balance of
P400,000 to be paid in 30 days. Carmen Velez Ting did not accept the said
counter-offer of Emilia Uraca although this fact is disputed by Uraca.
No payment was made by to the Velezes on July 12 and 13, 1985. On
July 13, 1985, the Velezes sold property to Avenue Merchandising Inc. for
P1,050,000.00. The certificate of title of the said property was clean and
free of any annotation of adverse claims or lis pendens.
On July 31, 1985, petitioners filed the instant complaint against the
Velezes. On August 1, 1985, they also registered a notice of lis pendens
over the property in question with the Office of the Register of Deeds.
On October 30, 1985, the Avenue Group filed an ejectment case against
petitioners ordering the latter to vacate the commercial building standing
on the lot in question.
Petitoners filed an amended complaint impleading the Avenue Group as
new defendants after about 4 years after the filing of the original complaint.
RTC found two perfected contracts of sale between the Velezes and the
petitioners involving the real property in question. The first sale was for
P1,050,000.00 and the second was for P1,400,000.00. In respect to the
first sale, the trial court held that "[d]ue to the unqualified acceptance by
the plaintiffs within the period set by the Velezes, there consequently came
about a meeting of the minds of the parties not only as to the object certain
but also as to the definite consideration or cause of the contract. The
second sale merely constituted a mere modificatory novation which did not
extinguish the first sale. It also held that the Avenue Group were buyers in
bad faith.
The Court of Appeals held that there was a perfected contract of sale of
the property for P1,050,000.00 between the Velezes and herein
petitioners. It added, however, that such perfected contract of sale was
subsequently novated. However, it was mutually withdrawn, cancelled and
rescinded by novation, and was therefore abandoned by the parties when
Carmen Velez Ting raised the consideration of the contract by
P350,000.00, thus making the price P1.4M instead of the original price of
P1,050,000.00. Since there was no agreement as to the 'second' price
offered, there was no meeting of minds between the parties, hence, no
contract of sale was perfected.
CA added that, even if there was agreement as to the price and a second
contract was perfected, the later contract would be unenforceable under
the Statute of Frauds. It further held that such second agreement, if there
was one, constituted a mere promise to sell which was not binding for lack
of acceptance or a separate consideration.
Issues:
1.) Was there novation of the first contract?
2.) Was there a double sale of the real property involved?
Held:
On Novation
Novation is never presumed; it must be sufficiently established that a valid
new agreement or obligation has extinguished or changed an existing one.
The registration of a later sale must be done in good faith to entitle the
registrant to priority in ownership over the vendee in an earlier sale.
Article 1600 of the Civil Code provides that "(s)ales are extinguished by the
same causes as all other obligations, . . . ." Article 1231 of the same Code
states that novation is one of the ways to wipe out an obligation. Extinctive
novation requires: (1) the existence of a previous valid obligation; (2) the
agreement of all the parties to the new contract; (3) the extinguishment of
the old obligation or contract; and (4) the validity of the new one.
Novation is effected only when a new contract has extinguished an earlier
contract between the same parties. It must be proven as a fact either by
express stipulation of the parties or by implication derived from an
irreconcilable incompatibility between old and new obligations or contracts.
The petitioners and the Velezes clearly did not perfect a new contract
because the essential requisite of consent was absent, the parties having
failed to agree on the terms of the payment. Since the parties failed to enter
into a new contract that could have extinguished their previously perfected
contract of sale, there can be no novation of the latter. Consequently, the
first sale of the property in controversy, by the Velezes to petitioners for
P1,050,000.00, remained valid and existing.
On Double Sale
Prior registration of the disputed property by the second buyer does not by
itself confer ownership or a better right over the property. Article 1544
requires that such registration must be coupled with good faith.
Knowledge gained by the first buyer of the second sale cannot defeat the
first buyer's rights except where the second buyer registers in good faith
the second sale ahead of the first, as provided by the Civil Code.
Knowledge gained by the second buyer of the first sale defeats his rights
even if he is first to register the second sale, since such knowledge taintsI.
his prior registration with bad faith (Art. 1544). II.
The Avenue Group was a buyer and registrants in bad faith. They had
actual knowledge of the Velezes' prior sale of the same property to the
petitioners.
Hence, the third and not the second paragraph of Article 1544 should be
applied to this case. Under this provision, petitioners are entitled to the
ownership of the property because they were first in actual possession,
having been the property's lessees and possessors for decades prior to
the sale.
(The petition is GRANTED. The assailed Decision of the Court of Appeals
is hereby SET ASIDE and the dispositive portion of the trial court's decision
dated October 19, 1990 is REVIVED with the following MODIFICATION —
the consideration to be paid under par. 2 of the disposition is
P1,050,000.00 and not P1,400,000.00.)
Uraca v. CA
Facts:
The Velezes were the owners of the lot and commercial building in Cebu
while the petitioners were lessees of the said building. The Velezes through
Ting wrote a letter offering to sell the subject property for P1,050,000.00
and at the same time requesting the petitioners to reply in three days. Such
sale was accepted.
Uraca went to see Ting about the offer to sell but she was told by the latter
that the price was P1,400,000.00 in cash or managers check and not
P1,050,000.00 as erroneously stated in their letter-offer after some
haggling. Emilia Uraca agreed to the price of P1,400,000.00 but counter-
proposed that payment be paid in installments with a down payment of
P1,000,000.00 and the balance of P400,000 to be paid in 30 days. Carmen
Velez Ting did not accept the said counter offer of Emilia Uraca although
this fact is disputed by Uraca. However, no payment was made.
The Velezes sold the lot and commercial building to the Avenue Group for
P1,050,000.00 net of taxes, registration fees, and expenses of the sale. At
the time the Avenue Group purchased the subject property on July 13,
1985 from the Velezes, the certificate of title of the said property was clean
and free of any annotation of adverse claims or lis pendens.
Issues:
Whether or not the contract of sale was perfected; and
Whether or not the CA erred in not ruling that petitioners have
better rights to buy and own the Velezes property for registering their notice
of lis pendens ahead of the Avenue Groups registration of their deeds of
sale.
Held:
Novation is never presumed; it must be sufficiently established that a valid
new agreement or obligation has extinguished or changed an existing one.
The registration of a later sale must be done in good faith to entitle the
registrant to priority in ownership over the vendee in an earlier sale.
On the first issue: no extinctive novation.
The lynchpin of the assailed Decision is the public respondents conclusion
that the sale of the real property in controversy. The Court noted that the
petitioners accepted in writing and without qualification the Velezes written
offer to sell at P1,050,000.00 within the three-day period stipulated therein.
Hence, from the moment of acceptance on July 10, 1985, a contract of sale
was perfected since undisputedly the contractual elements of consent,
object certain and cause concurred.
Article 1600 of the Civil Code provides that (s)ales are extinguished by the
same causes as all other obligations, x x x. Article 1231 of the same Code
states that novation is one of the ways to wipe out an obligation. Extinctive
novation requires: (1) the existence of a previous valid obligation; (2) the
agreement of all the parties to the new contract; (3) the extinguishment of
the old obligation or contract; and (4) the validity of the new one.
On the second issue: double sale of an immovable.
Under the foregoing, the prior registration of the disputed property by the
second buyer does not by itself confer ownership or a better right over the
property.Article 1544 requires that such registration must be coupled with
good faith. Jurisprudence teaches us that (t)he governing principle is
primus tempore, potior jure (first in time, stronger in right). Knowledge
gained by the first buyer of the second sale cannot defeat the first buyers
rights except where the second buyer registers in good faith the second
sale ahead of the first, as provided by the Civil Code. Such knowledge of
the first buyer does not bar her from availing of her rights under the law,
among them, to register first her purchase as against the second buyer.
But in converso knowledge gained by the second buyer of the first sale
defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith This is the price
exacted by Article 1544 of the Civil Code for the second buyer being able
to displace the first buyer; that before the second buyer can obtain priority
over the first, he must show that he acted in good faith throughout.
DOUBLE SALES
RADIOWEALTH FINANCE COMPANY, petitioner,
vs.
MANUELITO S. PALILEO, respondent.
FACTS:
In April 1970, defendant spouses Enrique Castro and Herminio R. Castro
(spouse Castro) sold to herein respondent Manuelito Palileo a parcel of
unregistered coconut land in Surigao del Norte. The sale is evidenced by
a notarized Deed of Absolute Sale, but the deed was not registered in the
Registry of Property for unregistered lands in the province of Surigao del
Norte. Since the execution of the deed of sale, Palileo who was then
employed in Lianga, Surigao del Sur, exercised acts of ownership over the
land through his mother Rafaela Palileo, as administratrix or overseer.
Manuelito Palileo has continuously paid the real estate taxes on said land
from 1971 until the present.
In November 1976, the CFI of Manila rendered a judgment was rendered
against defendant Enrique T. Castro to pay herein petitioner Radiowealth
Finance Company (Radiowealth), the sum of P22,350.35 with interest rate
of 16% per annum from November 2, 1975 until fully paid, and upon the
finality of the judgment, a writ of execution was issued. The Provincial
Sheriff Marietta E. Eviota, through defendant Deputy Provincial Sheriff
Leopoldo Risma, levied upon and finally sold at public auction the subject
land that defendant Enrique Castro had sold to Palileo in 1970. The said
Provincial Sheriff executed a certificate of sale was by the in favor of
Radiowealth as the only bidder, and upon expiration of the redemption
period, she also executed a deed of final sale. Both documents were
registered with the Registry of Deeds.
Learning of what happened to the land, Palileo filed an action for recovery
of the subject property. The court a quo rendered a decision in favor of
Palileo, which the Court of Appeals affirmed.
ISSUE:
Who is the rightful owner of the subject property?
COURT RULING:
The Supreme Court likewise affirmed the appellate court’s decision on this
case. There is no doubt that had the subject property been a registered
land, this case would have been decided in favor of Radiowealth since it
was the company that had its claim first recorded in the Registry of Deeds
for it is the act of registration that operates to convey and affect registered
land. Therefore, a bonafide purchaser of a registered land at an execution
sale acquires a good title as against a prior transferee, if such transfer was
unrecorded.
However, a different set of rules applies in the case at bar which deals with
a parcel of unregistered land. Under Act No. 3344, registration of
instruments affecting unregistered lands is "without prejudice to a third
party with a better right." The afore quoted phrase has been held by the
Supreme Court to mean that the mere registration of a sale in one's favor
does not give him any right over the land if the vendor was not anymore
the owner of the land having previously sold the same to somebody else
even if the earlier sale was unrecorded. Applying this principle, the 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.
xxxxx
Double Sale
G.R. No. 142403 March 26, 2003
ALEJANDRO GABRIEL and ALFREDO GABRIEL, petitioners,
vs.
SPOUSES PABLO MABANTA and ESCOLASTICA COLOBONG,
DEVELOPMENT BANK OF THE PHILIPPINES (Isabela Branch) and
ZENAIDA TAN-REYES, respondents.
FACTS:
On October 25, 1975 spouses Mabanta mortgaged 2 parcels of land with
the DBP as collateral for a P14,000 loan. In 1980, they sold the lots to
Susana Soriano with the right to repurchase the property within 2 years.
They failed to do repurchase. In 1984, they convinced petitioner Alejandro
Gabriel to purchase the lot from Soriano as a result, DBP had to restructure
the loan making Gabriel as the mortgagor. In 1982 however, one lot was
sold to Zenaida Tan-Reyes by the spouses Mabanta who in turn filed an
intervention to the case after not being a party in the instant case. As a
result, the petitioners filed for damages, and specific performance which
the trial court ruled in their favor holding that the sale between the spouses
Mabanta and Tan-Reyes null and void. On appeal, the CA modified the
trial court’s decision holding that the second sale was indeed valid.
ISSUE:
Whether or not the second sale in 1982 to Tan-Reyes is valid.
HELD:
Article 1544 of the Civil Code provides that should immovable property be
sold to different vendees, the ownership shall belong to the first person in
good faith to record it in the registry of property. Unfortunately, the
registration made by Zenaida Tan-Reyes of her deed of sale was not in
good faith, and for this reason in accordance with the same Article 1544,
the land shall pertain to the person who in good faith was first in
possession. There is no question that it is the Gabriels who are in
possession of the land.
SPOUSES ROQUE, Petitioner,
vs.
AGUADO, et.al, Respondent.
G.R. No. 193787 April 7, 2014
PONENTE: Perlas-Bernabe, J.
TOPIC: Contract of conditional sale, contract to sell, double sale
FACTS:
On July 21, 1977, petitioners-spouses Roque and the original
owners of the then unregistered Lot 18089 – namely, Rivero, et al.
executed the 1977 Deed of Conditional Sale over a 1,231-sq. m. portion
of Lot 18089 for a consideration of P30,775.00. The parties agreed that
Sps. Roque shall make an initial payment of P15,387.50 upon signing,
while the remaining balance of the purchase price shall be payable upon
the registration of Lot 18089, as well as the segregation and the
concomitant issuance of a separate title over the subject portion in their
names. After the deed’s execution, Sps. Roque took possession and
introduced improvements on the subject portion which they utilized as a
balut factory.
Pertinent provision of the 1977 Deed of Conditional Sale:
DEED OF CONDITIONAL SALE OF REAL PROPERTY
KNOW ALL MEN BY THESE PRESENTS:
xxx
That for and in consideration of the sum of THIRTY THOUSAND SEVEN
HUNDRED SEVENTY FIVE PESOS (P30,775.00), Philippine Currency,
payable in the manner hereinbelow specified, the VENDORS do hereby
sell, transfer and convey unto the VENDEE, or their heirs, executors,
administrators, or assignors, that unsegregated portion of the above lot, x
x x.
That the aforesaid amount shall be paid in two installments, the first
installment which is in the amount of __________ (P15,387.50) and the
balance in the amount of __________ (P15,387.50), shall be paid as
soon as the described portion of the property shall have been registered
under the Land Registration Act and a Certificate of Title issued
accordingly;
That as soon as the total amount of the property has been paid and the
Certificate of Title has been issued, an absolute deed of sale shall be
executed accordingly;
xxx
On August 12, 1991, Sabug, Jr, applied for a free patent over
the entire Lot 18089 and was eventually issued OCT No. M-59558 in his
name on October 21, 1991. On June 24, 1993, Sabug, Jr. and Rivero, in
her personal capacity and in representation of Rivero, et al., executed the
1993 Joint Affidavit, acknowledging that the subject portion belongs to
Sps. Roque and expressed their willingness to segregate the same from
the entire area of Lot 18089.
On December 8, 1999, however, Sabug, Jr., through the 1999
Deed of Absolute Sale, sold Lot 18089 to Aguado for P2,500,000.00,
who, in turn, caused the cancellation of OCT No. M-5955 and the
issuance of TCT No. M-96692 dated December 17, 199911 in her name.
Thereafter, Aguado obtained an P8,000,000.00 loan from the
Land Bank secured by a mortgage over Lot 18089. When she failed to
pay her loan obligation, Land Bank commenced extra-judicial foreclosure
proceedings and eventually tendered the highest bid in the auction sale.
Upon Aguado’s failure to redeem the subject property, Land Bank
consolidated its ownership, and TCT No. M-11589513 was issued in its
name on July 21, 2003.
On June 16, 2003, Sps. Roque filed a complaint for
reconveyance, annulment of sale, deed of real estate mortgage,
foreclosure, and certificate of sale, and damages before the RTC.
ISSUE:
Whether or not the 1977 Deed of Conditional Sale is a
conditional contract of sale or a contract to sell.
HELD:
It is a CONTRACT TO SELL. The Court held that where the
seller promises to execute a deed of absolute sale upon the completion
by the buyer of the payment of the purchase price, the contract is only a
contract to sell even if their agreement is denominated as a Deed of
Conditional Sale, as in this case. This treatment stems from the legal
characterization of a contract to sell, that is, a bilateral contract whereby
the prospective seller, while expressly reserving the ownership of the
subject property despite delivery thereof to the prospective buyer, binds
himself to sell the subject property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, such as, the full payment of
the purchase price. Elsewise stated, in a contract to sell, ownership is
retained by the vendor and is not to pass to the vendee until full payment
of the purchase price.
In contracts to sell the obligation of the seller to sell becomes
demandable only upon the happening of the suspensive condition, that is,
the full payment of the purchase price by the buyer. It is only upon the
existence of the contract of sale that the seller becomes obligated to
transfer the ownership of the thing sold to the buyer. Prior to the
existence of the contract of sale, the seller is not obligated to transfer the
ownership to the buyer, even if there is a contract to sell between them.
Final installment not paid thus no perfected contract of sale
Here, it is undisputed that Sps. Roque have not paid the final
installment of the purchase price. As such, the condition which would
have triggered the parties’ obligation to enter into and thereby perfect a
contract of sale in order to effectively transfer the ownership of the
subject portion from the sellers (i.e., Rivero et al.) to the buyers (Sps.
Roque) cannot be deemed to have been fulfilled. Consequently, the latter
cannot validly claim ownership over the subject portion even if they had
made an initial payment and even took possession of the same.
Conditional contract of sale and contract to sell in relation to double
sale
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by
the owner not to the party the seller contracted with, but to a third person,
as in the case at bench.
In a contract to sell, there being no previous sale of the
property, a third person buying such property despite the fulfillment
of the suspensive condition such as the full payment of the
purchase price, for instance, cannot be deemed a buyer in bad faith
and the prospective buyer cannot seek the relief of reconveyance of
the property.
There is no double sale in such case. Title to the property will transfer to
the buyer after registration because there is no defect in the owner-
seller’s title per se, but the latter, of course, may be sued for damages
by the intending buyer.