Manigque-Stone v. Cattleya Land – Double Sale
On August 30, 1993, the parties executed a Deed of
GR No. 195975
September 5, 2016
Doctrine: The sale of Philippine land to an alien or foreigner,
even if titled in the name of his Filipino spouse, violates the
Constitution and is this, void. There is no double sale to
speak of. Art. 1544 of the Civil Code, which provides the rule
on double sale, applies only to a situation where the same
property is validly sold to different vendees. In this case,
there is only one sale to advert to, that between the spouses
Tecson and respondent.
FACTS:
Sometime in July 1992, Cattleya Land, Inc. (Cattleya),
purchased properties from the spouses Tecson, a 8,805-square
meter parcel of land located at Doljo, Panglao, Bohol. They
found out that no encumbrances or liens on the subject property
had been annotated on the TCT thereof, except for an attachment
issued in connection with Civil Case No. 3399
entitled "Tantrade Corporation vs. Bohol Resort Hotel, Inc., et
al.".
On November 6, 1992, Cattleya entered into a Contract of
Conditional Sale with the Tecson spouses covering nine parcels
of land, including the subject property. The Contract of
Conditional Sale was entered in the Primary Book of the Office
of the Register of Deeds of Bohol that same day, per Entry No.
Page | 1
83422.
Absolute Sale covering the subject property. This Deed of
Absolute Sale was also entered in the Primary Book on October
4, 1993, per Entry No. 87549. However, neither the Contract of
Conditional Sale nor the Deed of Absolute Sale could be
annotated on the certificate of title covering the subject property
because the then Register of Deeds of Bohol, Atty. Narciso S.
De la Serna (Atty. De la Serna) refused to annotate both deeds.
According to Atty. De la Serna it was improper to do so because
of the writ of attachment that was annotated on the certificate of
title of the subject property, in connection with the said Civil
Case No. 3399. Subsequently, the parties asked for the
annotation again, to which Atty. De la Serna stated that he would
accede to the request only if he was presented with a court order
to that effect. Cabilao stated that he was not asking for a new
transfer of title, but only for an annotation on the original
certificate of title of the Deed of Absolute Sale. After the writ of
attachment was lifted due to the parties in such case reaching an
amicable settlement, Cattleya could still not successfully have
the registration of the sale. As a result, he could not have the title
of the property transferred to his name, also because the owner’s
copy of the transfer certificate was in the possession of the
Tecson spouses. The spouses however averred that such TCT
had been destroyed in a fire which broke out in Sierra Bullones,
Bohol.
Such claim turned out to be false. Cabilao found out that a copy
of the TCT was presented by a certain Taina, along with a Deed
of Sale executed by the Tecson spouses in favor of Taina. It
appears that the Tecson spouses sold the beach lot for US
$8,805.00 to Taina and her common-law husband, Michael
Stone. After payment of the purchase price, the owner’s copy of
the TCT covering the property was delivered to Taina.
Afterwhich, Cattleya instituted against Taina a civil action for
quieting of title and recovery of ownership and cancellation of
title with damages. Taina posits that the deed of sale in favor of
Cattleya was executed subsequent to the deed of sale that she
and Mike had entered into with the Tecson spouses, this, she was
the first acquire the in good faith. Cattleya argues that the earlier
sale between the spouses and Mike was absolutely null and void,
as this was a flagrant violation of the constitutional provision
barring aliens from acquiring real property in the Philippines,
The RTC ruled in favor of Cattleya. RTC stated that the sale in
favor of Taina constituted a double sale and that Cattleya had a
superior right to the lot, because Cattleya was the first to register
the same in good faith. Furthermore, Cattleya had no notice, nor
was it aware, of Taina’s claim to the subject property, and that
the only impediment it was aware of was the pending civil case.
On the other hand, the RTC stated that the sale in favor of Taina
and her common-law husband is patently null and void because
foreigners or aliens cannot acquire real property in the
Philippines in accordance to the Constitution. Second, the court
found that Taina was only Mike’s dummy, and their subsequent
marriage did not legitimize the purchase of the property. Lastly,
Taina admitted that at the time she caused the registration of the
sale, she was aware of the fact that the same was already sold to
Cattleya, which is constitutive of bad faith on her part. The CA
reaffirms the ruling of the RTC, but departed from the provisions
on double sale, which clearly favor petitioner Taina.
ISSUE: Whether or not the trial court and the Court of Appeals
gravely erred when it departed from provisions of the law and
established jurisprudence when it did not apply the rules on
double sale which clearly favor petitioner Taina
Page | 2
HELD:
Yes, the trial court and the Court of Appeals gravely erred when
it departed from provisions of the law and established
jurisprudence when it did not apply the rules on double sale
which clearly favor petitioner Taina.
Given the plain and explicit language of this constitutional
mandate, it has been held that "[a]liens, whether individuals or
corporations, are disqualified from acquiring lands of the public
domain. Hence, they are also disqualified from acquiring private
lands. The primary purpose of the constitutional provision is the
conservation of the national patrimony." Given the fact that the
sale by the Tecson spouses to Taina as Mike's dummy
was totally abhorrent and repugnant to the Philippine
Constitution, and is thus, void ab initio, it stands to reason that
there can be no double sale to speak of here. Petitioner's
arguments, which rest on the assumption that there was a double
sale, must fail. In the first place, there is no double sale to speak
of. Art. 1544 of the Civil Code, which provides the rule on
double sale, applies only to a situation where the same property
is validly sold to different vendees. In this case, there is only one
sale to advert to, that between the spouses Tecson and
respondent.
Digested by: Nansei Kawamoto, 4A
SECOND DIVISION
[ G.R. No. 201883, November 16, 2016 ]
 SPOUSES DESIDERIO AND TERESA DOMINGO, thousand pesos. Sa aming napagkasunduan ako ay magbibigay
PETITIONERS, V. SPOUSES EMMANUEL AND TITA ng halagang (P100,000.00) one hundred thousand pesos para sa
MANZANO, FRANKLIN ESTABILLO, AND CARMELITA Reservision [sic] Fee.
AQUINO, RESPONDENTS.
Ayon sa aming napagkasunduan ililipat lamang ang Titulo ng
DECISION lupa na may no. 160752 at bahay pag nabayaran ko ng lahat
ang (P900,000.00) Nine Hundred Thousand Pesos hanggang
Marso ng 2001. Kami ay maghahati sa Gain Tax at
DEL CASTILLO, J.:
documentary stamps na babayaran sa B.I.R. ayon sa aming
This Petition for Review on Certiorari[1] seeks to set aside: a) napagkasunduan.
the January 4, 2012 Decision[2] of the Court of Appeals (CA) in
Kalakip nito ang xerox title ng titulo ng lupa at bahay. [6]
CA-G.R. CV No. 93662 which reversed the May 22, 2009
Petitioners paid the P100,000.00 reservation fee upon the
Decision[3] of the Regional Trial Court (RTC) of Caloocan
execution of the agreement. Thereafter, they also made
City, Branch 128 in Civil Case No. C-20102; and b) the CA's
payments on several occasions, amounting to P160,000.00.
May 18, 2012 Resolution[4] denying herein petitioners' Motion
However, they failed to tender full payment of the balance
for Reconsideration.
when the March 2001 deadline came. Even then, Estabillo
Factual Antecedents
advised petitioners to continue their payments; thus, they made
Respondents Emmanuel and Tita Manzano (the Manzanos) additional payments totaling P85,000.00. All in all, as of
were the registered owners of a 35,281-square meter parcel of November 2001, petitioners had made payment in the amount
land with improvements in Bagong Barrio, Caloocan City of P345,000.00.
(subject property), covered by Transfer Certificate of Title
All this time, the Manzanos remained in possession of the
(TCT) No. 160752.
subject property.
On June 1, 2001, the Manzanos, through their duly appointed
In December 2001, petitioners offered to pay the remaining
attorney-in fact and herein co-respondent Franklin Estabillo
P555,000.00 balance, but Estabillo refused to accept payment;
(Estabillo), executed a notarized agreement [5] with petitioners
instead, he advised petitioners to await respondent Tita
Desiderio and Teresa Domingo which provided, among others,
Manzano's (Tita) arrival from abroad.
that -
When Tita arrived, petitioners tendered payment of the
Ako, si Desiderio Domingo na nakatira sa 188 Gen. Mascardo
balance, but the former refused to accept it. Instead, she told
St. Bagong Barrio Kalookan City. Na bibilhin ko ang lupa at
them that the property was no longer for sale and she was
bahay ni Tita Manzano sa 168 Gen. Mascardo St. Bagong
forfeiting their payments. For this reason, petitioners caused
Barrio Kalookan City. Na ang may Special Power of Attorney
the annotation of an affidavit of adverse claim[7] upon TCT No.
si Franklin Estabillo sa halagang (P900,000.00) nine hundred
160752.
Page | 3
Soon thereafter, petitioners discovered that respondent
Carmelita Aquino (Aquino) bought the subject property on
May 7, 2002, and a new title - TCT No. C-359293 - had been
issued in her name. Their adverse claim was nevertheless
carried over to Aquino's new title.
Ruling of the Regional Trial Court
On May 23, 2002, petitioners filed a Complaint for specific
performance and damages with injunctive relief against
respondents. The case was docketed as Civil Case No. C-20102
and assigned to Branch 128 of the RTC of Caloocan City.
Petitioners sought to compel the Manzanos to accept payment
of the remaining balance, execute a deed of sale over the
subject property in their favor, and restrain the sale in favor of
Aquino.
Petitioners later filed an Amended Complaint, [8] praying further
that Aquino's new title- TCT No. C-359293 - be cancelled and
annulled, and that instead, the Manzanos' TCT No. 160752 be
reinstated, or alternatively, that a new title be issued in their
name upon confirmation of the sale in their favor and payment
of the outstanding balance.
In their respective Answers,[9] Aquino and Estabillo alleged
essentially that there was no sale between petitioners and the
Manzanos, but a mere offer to buy from petitioners, which was
refused due to late payment; that the case was premature for
failure to resort to conciliation; and that Aquino's new title was
indefeasible and may not be collaterally attacked. The
Manzanos, who appear to be living in the United States of
America, did not file a responsive pleading, for which reason
they were declared in default.
After the issues were joined, trial proceeded.
Page | 4
On May 22, 20091 the RTC issued a Decision declaring that,
as against Aquino, petitioners have a prior right over the
subject property. It held that the agreement between petitioners
and the Manzanos was a contract of sale. Applying Article
1544 of the Civil Code,[10] the RTC held that Aquino was a
buyer in bad faith, as she knew of petitioners' prior purchase
and registered adverse claim - and such knowledge was
equivalent to registration, and thus, the registration of her sale
was done in bad faith. Thus, the trial court decreed:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiffs and against defendants as
follows:
1. The defendant Spouses Emmanuel and Tita Manzano are
hereby ordered to execute a Deed of Absolute [sic] over a
house and lot covered by Transfer Certificate of Title No.
160752 of the Registry of Deeds of Kalookan City upon the
tender of payment by the plaintiffs in the amount of
Php555,000.00.
2. The Registry of Deeds is hereby ordered to cancel Transfer
Certificate of Title No. C-35[9]293 issued in favor defendant
[sic] Carmelita Aquino and Transfer Certificate of Title No.
160752 is ordered reinstated.
3. The defendant Carmelita Aquino is hereby ordered to
surrender possession of the property to the plaintiffs upon the
execution of the necessary deed of absolute sale.
4. The defendants Spouses Manzano and defendant Franklin
Estabillo are hereby ordered to pay, jointly and severally, the
plaintiffs the sum of Php30,000.00 as reasonable attorney's
fees.
5. The defendants Spouses Manzano and defendant Estabillo
are likewise ordered to pay, jointly and severally, the costs of
this suit.
SO ORDERED.[11]
Ruling of the Court of Appeals
Aquino filed an appeal before the CA, docketed as CA-G.R.
CV No. 93662. The appellate court initially referred the case
for mediation, but the parties failed to settle amicably.
On January 4, 2012, the CA rendered the assailed Decision
containing the following pronouncement:
We find for appellant.[12]
The crux of the instant petition is whether the agreement
between the spouses Manzano and appellees[13] is a contract of
sale, as the RTC ruled, or a contract to sell, as appellant
proposed. If it is a contract of sale, then Article 1544 of the
Civil Code applies, and the RTC's Decision stands on firm
ground, However, if the contract is merely a contract to sell,
the propriety of applying Art. 1544 falters, and appellant's
principal thrust in her Brief deserves discussion. Thus, the
resolution of this issue is decisive.
xxxx
We have applied the distinctions above and examined the
contract between the parties. In this regard, We differ from the
RTC and find that the Manzanos and appellees entered into a
mere contract to sell.
We quote the following provision from the contract, which is
particularly revealing of the contract's true nature:
Page | 5
'Ayon sa aming napagkasunduan, ililipat lamang ang Titulo ng
lupa na may no. 160752 at bahay pag nabayaran ko ng lahat ng
(P900,000.00) Nine Hundred thousand pesos hanggang Marso
ng 2001.'
[Translated as: According to our agreement, the title of the
land with no. 160752 and the house shall only be transferred
when I have completely paid the P900,000.00 by March 2001.]
The above passage clearly indicates that first, the ownership is
reserved to the vendors, and second, that the title of the subject
property passes to the buyers only upon full payment of
Php900,000.00 [in] March 2001. Additionally, appellees have
never even granted possession of the subject property, and that
no deed of sale, absolute or conditional, has been executed in
their favor. All have been held as indications that the
contracting parties have entered into a contract to sell.
Thus, with our determination of that character of the parties'
agreement as a contract to sell, We now proceed to illuminate
whether Art. 1544 indeed applies to the situation at bar.
Applicability of Art. 1544 to Contracts to Sell
Relevant cases affirm an indubitable rule: Article 1544 only
applies to instances of double sales, and not where one contract
is some other transaction, such as a contract to sell, even if the
latter concurs with a contract of sale over the same realty.
In Cheng v. Genato, et al.,[14] the Court succinctly clarified and
explained the reason behind such inapplicability, to wit:
'However, a meticulous reading of the aforequoted provision
(Art. 1544, Civil Code) shows that said law is not apropos to
the instant case. This provision connotes that the following
circumstances must concur:
'(a) The two (or more) sales transactions in the issue must
pertain to exactly the same subject matter, and must be valid
sales transactions. (b) The two (or more) buyers at odds over
the rightful ownership of the subject matter must each
represent conflicting interests; and (c) The two (or more)
buyers at odds over the rightful ownership of the subject matter
must each have bought from the very same seller.’
These situations obviously are lacking in a contract to sell for
neither a transfer of ownership nor a sales transaction has been
consummated. The contract to be binding upon the obligee or
the vendor depends upon the fulfillment or non-fulfillment of
an event.'
Later jurisprudence would then echo the above doctrine.
Especially persuasive is the ruling in Spouses Nabus and
Tolero v. Spouses Pacson,[15] as its facts closely resemble those
at bar. Distilled, those facts show that the Nabuses (the sellers)
entered into a contract with the Pacsons (the prospective
buyers) over a parcel of land. But the Pacsons failed to pay on
time; this notwithstanding, the Nabuses still accepted their late
payments. The Nabuses, however, failed to appear on the
designated date for the delivery of the final payment to them.
Later, the Pacsons heard that the land had been sold to Betty
Tolero, a third party, later adjudged found to be buyer in bad
faith. Tolero obtained a new title over the property pursuant to
the sale to her.
Thus, the Pacsons filed for the annulment of the deeds of sale,
the cancellation of the titles issued in favor of the buyer Betty
Tolero, and for damages. The RTC and the CA ruled for the
Pacsons, and against Betty Tolero.
The Supreme Court, however, disagreed, and upheld the rights
from the latter contract of sale. The Court ruled:
Page | 6
'Sale, by its very nature, is a consensual contract because it is
perfected by mere consent. The essential elements of a contract
of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price;
b) Determinate subject matter; and
c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered
as a Contract of Sale because the first essential element is
lacking. In a contract to sell, the prospective seller explicitly
reserves the transfer of title to the prospective buyer, meaning,
the prospective seller does not as yet agree or consent to
transfer ownership of the property subject of the contract to sell
until the happening of an event, which for present purposes we
shall take as the full payment of the purchase price. What the
seller agrees or obliges himself to do is to fulfill his promise to
sell the subject property when the entire amount of the
purchase price is delivered to him. In other words, the full
payment of the purchase price partakes of a suspensive
condition, the non-fulfillment of which prevents the obligation
to sell from arising and, thus, ownership is retained by the
prospective seller without further remedies by the prospective
buyer.'
The Court found that the Pacsons could have consigned the
amount to be paid to the Pacsons [sic], which would have
produced the effect of payment and fulfilled the suspensive
condition in a contract to sell, hence obligating the prospective
seller to transfer the title to the prospective buyers. The
Pacsons, however, failed to do so. In this case, appellees
unfortunately committed the same error.
In any case, the foregoing principles result in the rule that in
contracts to sell, specific performance is therefore an improper
remedy to compel the seller to execute the deed of sale before
full payment of the purchase price. Thus, in the Nabus case, the
Court held:
'Evidently, before the remedy of specific perfom1ance may be
availed of, there must be a breach of the contract.
Under a contract to sell, the title of the thing to be sold is
retained by the seller until the purchaser makes full payment of
the agreed purchase price. Such payment is a positive
suspensive condition, the non-fulfillment of which is not a
breach of contract but merely an event that prevents the seller
from conveying title to the purchaser. The non-payment of the
purchase price renders the contract to sell ineffective and
without force and effect. Thus, a cause of action, for specific
performance does not arise.'
As regards a subsequent 'buyer in bad faith' affecting prior
contracts to sell, the peculiarities of a contract to sell,
emphasized above, culminate in the unique doctrine that in
case a third person purchases a property subject of a prior
contract to sell, such buyer is protected from the taint of bad
faith under Article 1544. Here the ruling in Spouses Cruz and
Cruz v. Spouses Fernando and Fernando,[16] citing Coronel v.
Court of Appeals[17] enlightens, to wit:
'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
Page | 7
per se, but the latter, of course, may be sued for damages by the
intending buyer.'
Considering these well-settled precedents, We rule that: first,
the contract between the parties was a contract to sell; second,
that since there are no double sales over the same realty, Art.
1544 of the Civil Code is therefore inapplicable to the instant
case; third, that because the contract between the Manzanos
and the appellees was a contract to sell, and appellees have not
paid the full purchase price by full payment or consignment,
specific performance does not lie for a reconveyance of the
property; and fourth, by virtue of the inapplicability of Art.
1544 and the nature of a contract to sell, appellant cannot be
deemed in bad faith.
We find that such ruling soundly disposes of the other issues
raised by appellant in her favor, thereby needing no further
discussion.
In rendering Our pronouncement, We clarify that We are not
unmindful of Filinvest Development Corporation v. Golden
Haven Memorial Park[18] which appellees invoked in their
Brief. In the Filinvest case, where rights from a contract to sell
clashed with those from a contract of sale over the same realty,
indeed the Court applied the principle of a "bad faith buyer" in
a manner closely resembling an application of Art. 1544.
However, the facts of that case present a crucial difference.
In Filinvest, no titles were yet issued in the subsequent buyer's
name; the subsequent buyer merely sought to annotate his
sales. As such, the holding in Spouses Cruz v. Fernando, i.e.,
that title to the property will transfer upon registration without
the third person purchaser being held in bad faith, has not yet,
so to speak, locked in place against the intending buyer in the
earlier contract to sell. Thus, before registration of the sale, the
vendee may still be held in bad faith and the sale to him
annulled; but after registration, title will issue and the slighted
intending buyer can only recover damages from the seller,
because, as the Spouses Cruz v. Fernando case emphasized, the
owner-seller's title suffers no defect per se.
This is not, however, to say that appellees are deprived of
remedies. As found in the Nabus case, appellees are entitled to
the reimbursement of the sums they have paid, if only to
prevent the defendants' unjust enrichment. Appellees are also
entitled to nominal damages against the defendants Manzanos
and Estabillo. x x x
x x xx
In the matter of reimbursements, it bears stating that we are
also aware that the appellees paid less than two years'
installments on their contract. It is thus relevant to discuss R.A.
6552, or the 'Realty Installment Buyer Act' which has been
held applicable to contracts to sell realty on installments.
Significantly, in Rillo v. Court of Appeals,[19] the Court did not
grant reimbursements under the law to the prospective buyer
because the buyer paid less than two year's installments.
However, we find that this holding is inapplicable. In Rillo, the
prospective buyer claimed reimbursement under Sec. 4 of RA
6552. However, a reading of the law clarifies that Sec.
4[20] must be read in connection with Sec. 3, which provides:
'Sec. 3. In all transactions or contracts involving the sale or
financing of real estate on installment payments, including
residential condominium apartments but excluding industrial
lots, commercial buildings and sales to tenants under Republic
Act Numbered Thirty-eight hundred forty-four, as amended by
Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the
Page | 8
buyer is entitled to the following rights in case he defaults in
the payment of succeeding instalments: x x x’
Clearly, the above provision and Sec. 4 apply only when the
buyer defaults in payment. In case the defaulting buyer paid
less than two years' installments, R.A. 6552 grants him no right
to recover his installments. But appellees were not in default.
The acceptance by Estabillo of their late installments waived
the original period for payment, following Angeles v.
Calasanz.[21] We find that Estabillo's acceptance also bound his
principals, the Manzanos, who accepted the late payments,
amounting to a tacit ratification of the agent's acts, and
obligated the Manzanos to comply with its consequences.
Therefore, the period to pay the balance has not yet lapsed and
appellees were not in default.
Finally, we affirm the RTC's grant of attorney's fees and costs,
as defendants' unilateral cancellation of the contract and
subsequent sale to appellant, without reimbursing appellees of
their payments, constrained appellees to institute the present
action to protect their interests.
WHEREFORE, the Petition is GRANTED. The Decision of
the Regional Trial Court in Civil Case No. C-20102 dated 22
May 2009 is REVERSED and SET ASIDE. Judgment is
hereby rendered upholding the validity of the sale of the
subject property made by defendants Emmanuel Manzano and
Tita Manzano in favor of appellant Carmelita Aquino, as well
as the validity of Transfer Certificate of Title No. 359293
issued in the name of Carmelita Aquino. Defendants
Emmanuel Manzano and Tita Manzano and defendant Franklin
Estabillo are ordered to reimburse appellees Spouses Desiderio
and Teresa Domingo the sum of Three Hundred and Forty Five
Thousand Pesos (P345,000.00) corresponding to the
installment payments they have paid on the subject property,
with annual interest of twelve percent (12%) until fully paid.
Defendants Emmanuel Manzano, Tita Manzano, and Franklin
Estabillo are likewise ordered jointly and severally to pay
spouses Desiderio and Teresa Domingo nominal damages in
the amount of Ten Thousand Pesos (Pl0,000.00) and
reasonable attorney's fees amounting to Thirty Thousand Pesos
(P30,000.00) each with annual interest of twelve percent (12%)
until fully paid. Costs against defendants Emmanuel Manzano,
Tita Manzano, and Franklin Estabillo.
SO ORDERED.[22]
Petitioners filed a Motion for Reconsideration, which the CA
denied in its subsequent May 18, 2012 Resolution. Hence, the
present Petition.
Issues
In a March 24, 2014 Resolution,[23] this Court resolved to give
due course to the Petition, which contains the following
assignment of errors:
1. THE COURT OF APPEALS ERRED IN NOT
DISREGARDING THE ISSUE RAISED BY
RESPONDENT AQUINO FOR THE FIRST TIME ON
APPEAL THAT ARTICLE 1544 OF THE CIVIL
CODE IS NOT APPLICABLE TO THIS CASE.
2. THE COURT OF APPEALS ERRED IN HOLDING
THAT ARTICLE 1544 IS NOT APPLICABLE TO
THIS CASE.
3. THE COURT OF APPEALS ERRED IN NOT
AFFIRMING THE DECISION OF THE REGIONAL
TRIAL COURT OF CALOOCAN CITY.[24]
Page | 9
Petitioners' Arguments
In their Petition and Reply,[25] petitioners contend that
respondents Aquino and Estabillo are not entitled to the
defense that Article 1544 is not applicable in this case, since
they did not include the same in their answers below; that the
CA erred in not applying said Article 1544, in light of previous
Supreme Court rulings (Abarquez v. Court of
Appeal[26] and Filinvest Development Corporation v. Golden
Haven Memorial Park, Inc.[27]) to the effect that Article 1544
applies even when one of the double sale transactions involved
is a mere contract to sell; that Aquino was a purchaser in bad
faith as she clearly knew of the prior sale in their favor through
the adverse claim annotated on TCT No. 160752; and that their
annotation of an adverse claim on TCT No. 160752 is
equivalent to registration of ownership. [28]
Respondent Aquino's Arguments
Pleading affirmance, Aquino argues in her Comment (With
Manifestation)[29] that as correctly ruled by the CA, Article
1544 does not apply, and she is not barred from arguing so to
refute petitioners' insistence that the said provision applies; that
it was the RTC that introduced the applicability of Article 1544
to the case through its May 22, 2009 Decision - thus, the
necessity of arguing against it arose only on appeal; and that
the agreement between the Manzanos and petitioners being a
contract to sell, Article 1544 cannot apply since as between
them, no sale or transfer of ownership occurred, and when
petitioners failed to pay the purchase price in full, no breach of
contract necessarily occurred, but the agreement between them
simply became ineffective and without force and effect.
Finally, Aquino contends that the cited cases of Abarquez v.
Court of Appeals and Filinvest Development Corporation v.
Golden Haven Memorial Park, Inc. are not applicable in this
case, as misrepresented by petitioners: Abarquez does not
involve a contract to sell, while the Court clearly did not apply
Article 1544 in Filinvest.
Our Ruling
The Court denies the Petition.
On petitioners' contention that respondent Aquino may not
raise the issue pertaining to Article 1544 for the first time on
appeal, this Court holds that - as correctly noted by Aquino -
since the relevance of Article 1544 was tackled only in the
RTC's Decision, then it is understandable why she should
refute its applicability only on appeal.
Petitioners' main contention is that while their agreement with
the Manzanos was admittedly a mere contract to sell where title
is retained by the latter until full payment of the price, they
nonetheless have a superior right over the subject property, as
against Aquino, by virtue of the applicability of Article 1544
and the fact that Aquino was a buyer in bad faith.
This Court, however, agrees with the CA's pronouncement that
Article 1544 cannot apply to the present case. The appellate
court's disquisition is succinct; nothing more can be added to
what it has said. Just the same, the treatment and disposition of
cases of this nature is quite settled.
This ponente has had the occasion to rule that in a contract to
sell, payment of the price is a positive suspensive condition,
failure of which is not a breach of contract warranting
rescission but rather just an event that prevents the prospective
buyer from compelling the prospective seller to convey title. In
other words, the non fulfillment of the condition of full
payment renders the contract to sell ineffective and without
force and effect.[30]
Page | 10
x x x A contract to sell is one where the prospective seller
reserves the transfer of title to the prospective buyer until the
happening of an event, such as full payment of the purchase
price. What the seller obliges himself to do is to sell the subject
property only when the entire amount of the purchase price has
already been delivered to him. 'In other words, the full payment
of the purchase price partakes of a suspensive condition, the
non-fulfillment of which prevents the obligation to sell from
arising and thus, ownership is retained by the prospective seller
without further remedies by the prospective buyer'. x x x[31]
And it is precisely for the above reason that Article 1544 of the
Civil Code cannot apply. Since failure to pay the price in full in
a contract to sell renders the same ineffective and without force
and effect, then there is no sale to speak of. Even petitioners'
posture that their annotation of an adverse claim on TCT No.
160752 is equivalent to registration or claim of ownership
necessarily fails, on account of the fact that there was never a
sale in their favor - and without a sale in their favor, they could
not register or claim ownership of the subject property. Thus,
as between the parties to the instant case, there could be no
double sale which would justify the application of Article
1544. Petitioners failed to pay the purchase price in full, while
Aquino did, and thereafter she was able to register her purchase
and obtain a new certificate of title in her name. As far as this
Court is concerned, there is only one sale - and that is, the one
in Aquino's favor. "Since there is only one valid sale, the rule
on double sales under Article 1544 of the Civil Code does not
apply."[32]
With regard to the cases cited by petitioners, Abarquez v. Court
of Appeals and Filinvest Development Corporation v. Golden
Haven Memorial Park, Inc., suffice it to state that they do not
apply, In Abarquez, while the agreement entered into was a
contract to sell, the land subject of the sale was nonethe1ess
delivered to the buyer, who took possession thereof and even
constructed a house thereon. In the present case, the subject
property was never surrendered to petitioners and they were
never in possession thereof. There is a difference in the factual
milieu. On the other hand, the Filinvest case is not one
involving Article 1544; and while the Court therein held that a
notice of adverse claim is a "warning to third parties dealing
with the property that someone claims an interest in it or
asserts a better right than the registered owner,"[33] this is not
true as regards petitioners, As already stated, petitioners' failure
to pay the price in full rendered their contract to sell ineffective
and without force and effect, thus nullifying any claim or better
right they may have had.
WHEREFORE, the Petition is DENIED. The January 4, 2012
Decision and May 18,2012 Resolution of the Court of Appeals
in CA-G.R. CV No. 93662 are AFFIRMED with
MODIFICATION, in that the monetary awards shall earn
interest at the rate of 12% per annum up to June 30, 2013;
thereafter, the rate of interest shall be 6% per annum until
judgment is fully satisfied.[34]
SO ORDERED.
November 22, 2017
G.R. No. 222031
EMILIO CALMA, Petitioner
vs.
ATTY. JOSE M. LACHICA, JR.*, Respondent
Page | 11
DECISION
TIJAM, J.:
For Our resolution is a Petition for Review
on Certiorari1 under Rule 45, assailing the Decision2 dated
April 28, 2015 of the Court of Appeals (CA) in CA-G.R. CV
No. 93329, which reversed and set aside the Decision3 dated
January 20, 2009 of the Regional Trial Court (RTC) of
Cabanatuan City, Branch 30 in Civil Case No. 4355.
Factual Antecedents
Respondent Atty. Jose M. Lachica, Jr. filed a complaint for
Annulment of Void Deeds of Sale, Annulment of Titles,
Reconveyance, and Damages originally against Ricardo
Tolentino (Ricardo) and petitioner Emilio Calma, and later on,
Pablo Tumale (Pablo) was imp leaded as additional defendant
in a Second Amended Complaint.4
Subject of the said complaint was a 20,000-square meter parcel
of land situated in Sumacabeste, Cabanatuan City covered by
Transfer Certificate of Title (TCT) No. T-28380.5
Respondent, in his complaint, alleged that he was the absolute
owner and actual physical possessor of the subject property,
having acquired the same sometime in 1974 for PhP15,000
through sale from Ceferino Tolentino (Ceferino) married to
Victoria Calderon, who are Ricardo's parents. Consequently,
the subject property's title was delivered to respondent also in
1974. Allegedly, he and his tenant/helper Oscar Justo (Oscar)
has been in actual physical possession and cultivation of the
said land continuously since its acquisition up to present. 6
Unfortunately, however, the 1974 Deed of Sale was allegedly
lost. Hence, sometime in 1979, respondent and Ceferino agreed
to execute another deed of sale. Spouses Tolentino allegedly
took advantage of the situation and demanded an additional
PhP15,000 from respondent to which the latter heeded. Thus,
in the new Deed of Sale executed on April 29, 1979, the
consideration for the sale of the subject property was increased
to PhP30,000.7
After the notarization of the 1979 Deed of Sale on April 29,
1986, respondent requested Spouses Tolentino to execute an
Affidavit of Non-Tenancy and other documents required by the
Department of Agrarian Reform for the transfer of the title in
respondent's name. Again, taking advantage of the situation,
Ceferino and his son Ricardo allegedly requested respondent to
allow them to cultivate the 5,000-square meter portion of the
subject land. The father and son allegedly offered to process
the transfer of the title to respondent's name to persuade the
latter to grant their request. According to the respondent,
because of the trust, confidence, love, and respect that his
family had for Ceferino's family, he entrusted the notarized
Deed of Sale, TCT No. T-28380, and the other documents on
hand for the transfer of the title to his name and waited for the
Tolentinos to make good on their promise. 8
In the meantime, respondent, through Oscar, allegedly
continued to possess the entire subject property. 9
Respondent's employment in the government required him to
travel to several distant places within the country. 10 Hence, on
May 25, 1981, before leaving Nueva Ecija again and being
assigned to a far-away province, respondent caused the
annotation of a Notice of Adverse Claim on TCT No. T-28380
Page | 12
to protect his claimed rights and interest in the subject
property.11
Due to respondent's employment and also because of an illness,
he lost contact with the Tolentinos for a long period of time. 12
Sometime in March 2001, respondent returned to Cabanatuan
City and learned that Ceferino had already passed away.
Ricardo, on the other hand, was nowhere to be located despite
efforts to do so.13 He also found Pablo to have been placed in
possession of the 5,000-square meter portion of the subject
property by the Tolentinos sometime in 1986.14
Upon checking with the Office of the Register of Deeds as
regards to the processing of his title over the subject property,
he discovered that the same was transferred under the name of
Ricardo, which had been later on transferred to the petitioner
upon Ricardo's sale thereof to the latter. In fine, TCT No. T-
28380 under Ceferino's name was cancelled and replaced by
TCT No. T-68769 under Ricardo's name, which was then also
cancelled and replaced by TCT No. T-96168 now under
petitioner's name.15
Respondent argued that the sale between Ceferino and Ricardo
was null and void for being executed with fraud, deceit, breach
of trust, and also for lack of lawful consideration. Respondent
emphasized that not only was Ricardo in full knowledge of the
sale of the subject property to him by Ceferino, but also his
adverse claim was evidently annotated in the latter's title and
carried over to Ricardo's title. Respondent also alleged that
petitioner is an alien, a full-blooded Chinese citizen, hence, not
qualified to own lands in the Philippines, and is likewise a
buyer in bad faith.16
Respondent, thus, prayed for the annulment of the Deed of Sale
between Ceferino and Ricardo, as well as the Deed of Sale
between Ricardo and petitioner. TCT No. T-68769 under
Ricardo's name and TCT No. T- 96168 under petitioner's name
were likewise sought to be annulled. Respondent further
prayed for the ejectment of Pablo from the 5,000-square meter
portion of the subject property and the reconveyance of the
entire property to him. Exemplary damages, actual damages,
litigation expenses and attorney's fees were also prayed for. 17
To prove his case, respondent presented his testimony, the
testimonies of Oscar Justo and Herminiano Tinio, Sr., and
documentary evidence comprising of TCT No. T-28380 with
the annotation of his Notice of Adverse Claim dated May 25,
1981, the April 29, 1979 Deed of Sale, TCTT- 68769 with the
annotation of the same Notice of Adverse Claim and an entry
regarding the cancellation thereof albeit the validity of such
cancellation was challenged by the respondent, TCT No. T-
96168 dated December 22, 1998, March 6, 1989 Deed of
Absolute Sale, which he alleged to be certified copies thereof,
and the alleged original copy of the certificate to file action. 18
For their part, defendants before the trial court averred in their
Amended Answer19 that petitioner is a buyer in good faith and
for value, having acquired the subject property on July 10,
1998 through sale from Ricardo. They argued, among others,
that petitioner, despite merely relying on the correctness of
Ricardo's TCT, is duly protected by the law. It was stated in
Ricardo's title that respondent's adverse claim had already been
cancelled more than four years before the sale or on April 26,
1994. Thus, defendants argued that petitioner had no notice of
any defect in Ricardo's title before purchase of the subject
property.20
Page | 13
Petitioner presented the July 10, 1998 Deed of Absolute Sale,
TCT No. T-68769 with the annotation of the cancellation of
respondent's adverse claim, TCT No. T-96168, to prove good
faith in the acquisition of the subject property, and a copy of
his passport, Marriage Certificate, and Certificate of Live Birth
to prove his Filipino citizenship, contrary to respondent's
allegation.21
The RTC Ruling
The RTC ruled that petitioner is an innocent purchaser for
value and that he had already acquired his indefeasible rights
over the title. According to the trial court, while it may be true
that respondent's adverse claim was annotated in Ricardo's title,
the same title also shows that such adverse claim had already
been cancelled more than four years before he bought the
property. Moreover, the RTC ruled that respondent's cause of
action had already prescribed.22 The trial court also noted that
respondent failed to present any evidence on the alleged fraud
in the transfer of the title of subject property to petitioner.23
Ricardo was, however, held liable for the value of the property,
damages, and attorney's fees in favor of respondent as,
according to the RTC, Ricardo cannot claim good faith because
of the existence of the adverse claim.24
Lastly, the RTC ruled that respondent has no recourse against
Pablo, who is liable to petitioner as the lawful owner.
The RTC disposed, thus:
WHEREFORE, premises considered, judgment is hereby
rendered:
1. In favor of [respondent] and against Defendant Ricardo
Tolentino.
The latter is hereby ordered to pay:
a) Forty Thousand Pesos (₱40,000.00), the estimated assessed
value of the property formerly covered by TCT No. NT-68769
[sic], as actual damages;
b) One Hundred Thousand Pesos (₱l00,000.00) as moral
damages;
c) Fifty Thousand Pesos (₱50,000.00) as exemplary damages;
d) Eighty Thousand Pesos (₱80,000.00) as attorney's fees and
litigation expenses; and
2. Against [respondent] and in favor of the [petitioner] Emilio
Calma and Pablo Tumale dismissing this complaint against
them.
No evidence having been offered by Defendant's [sic] to prove
their Counterclaim, the same is, as it is, DISMISSED.
SO ORDERED.25
Respondent moved for the reconsideration of the said Decision,
but the RTC denied the motion on March 24, 2009.26
Thus, respondent appealed before the CA.
The CA Ruling
Page | 14
In its assailed Decision, the CA reversed the RTC's ruling,
finding that both Ricardo and petitioner were in bad faith in
their respective acquisitions of the subject property. Hence,
both their titles should be annulled. While upholding the RTC's
finding that the registration of title in Ricardo's name was null
and void as he had prior knowledge of the sale between his
father and respondent, the CA added that because of such bad
faith, Ricardo's title must be annulled. Consequently, as
Ricardo had no valid title to the subject property, he had
nothing to convey to petitioner.27
The CA then proceeded to discuss its finding of bad faith
against petitioner. The appellate court concluded that the
investigation conducted by petitioner on the title of the subject
property before purchase was not sufficient to consider him to
be a buyer in good faith. The CA noted petitioner's knowledge
of the annotation of an adverse claim on Ricardo's title and that
his act of asking assurance from Ricardo, the Register of
Deeds, and the bank where the subject property was mortgaged
prior to the sale to petitioner cannot be considered as diligent
efforts to protect his rights as a buyer. 28
The CA explained that petitioner should not have just relied on
the face of the title as the notice of adverse claim annotated on
Ceferino's title carried over to Ricardo's title for a total of 13
years before its cancellation should have alerted him to conduct
an actual inspection of the title.29 If only petitioner had
conducted an actual inspection of the property, the CA opined,
petitioner would have readily found that Oscar, respondent's
alleged tenant, had been occupying and tilling the land. 30 Thus,
despite the fact that petitioner registered his acquisition of the
subject property, since he was considered to be in bad faith,
such registration did not confer any right upon him. 31 Applying
the rule on double sale under Article 154432 of the Civil Code, in the name of Jose M Lachica, Jr.
as his registration is deemed to be no registration at all because married to Warlita Ordonio;
of his bad faith, the buyer who took prior possession of the
property in good faith shall be preferred. 33 4) x x x Ricardo Tolentino to pay
[respondent] Atty. Jose M Lachica, Jr.
The CA then disposed of the appeal as follows: the amounts of One Hundred Thousand
Pesos (₱100,000. 00) as moral damages
WHEREFORE, the appeal is hereby GRANTED. The appealed and Fifty Thousand Pesos (₱50, 000. 00)
Decision dated January 20, 2009 of the Regional Trial Court of as exemplary damages, the monetary
Cabanatuan City, Branch 30, in Civil Case No. 4355 awards to earn interest at six percent
for Annulment of Void Deeds of Sale, Cancellation of Titles, Re (6%) per annum from finality of this
conveyance, and Damages is hereby REVERSED and SET Decision until fully paid; and
ASIDE, and a NEW DECISION is hereby entered to read,
thus: 5) costs against x x x Ricardo Tolentino
and Emilio Calma."
"WHEREFORE, judgment is hereby rendered in favor of
[respondent] Atty. Jose M Lachica, Jr. and against x x x SO ORDERED.34
Ricardo Tolentino and [petitioner] Emilio Calma, declaring
[respondent} as the rightful owner of the subject land covered Hence, this petition.
under Transfer Certificate of Title No. T- 96168 of the Registry
of Deeds of Cabanatuan City, and ordering: The Issue

1) the annulment of the Deed of Sale The resolution of the instant controversy boils down to who
between Ricardo Tolentino and Ceferino between the petitioner and the respondent has better right over
Tolentino; the subject property.

2) the annulment of the Deed of Absolute The Ruling of the Court

Sale between Ricardo Tolentino and
Emilio Calma dated July 10, 1998; We rule for the petitioner.

3) the Register of Deeds of Cabanatuan Both the petitioner and the respondent claim ownership over
City to cancel Transfer Certificate of the subject property by virtue of acquisition through sale. To
Title No. T-96168 and to issue a new one

Page | 15
resolve the present controversy, thus, it is necessary to look
into the basis of each party's claimed rights.
Sale from Ceferino to
respondent
Respondent's claimed right over the subject property is
grounded upon his alleged acquisition of the same from
Ceferino by sale.
Both the RTC and the CA were convinced that the sale of the
subject property by Ceferino to respondent was valid and as
such, the latter has a valid claim of right over the same. This
can be gleaned from the RTC's Decision ordering Ricardo to
pay respondent damages due to the former's bad faith in the
acquisition of the subject property, recognizing thus the latter's
interest and right over the same. The CA upheld respondent's
rights over the subject property even more by ordering, among
others, the cancellation of petitioner's title and the transfer
thereof to respondent's name.
For this matter, thus, We adhere to the general rule of
refraining to scrutinize further the factual findings of the trial
court as affirmed by the appellate court.35 Besides, it must be
noted that Ricardo did not question the liability imposed
against him by the RTC and the CA anymore as only petitioner
came before Us in this petition. Hence, the question as to
respondent's right or the lack thereof in connection with
Ricardo's liability cannot be dealt with by this Court.
Consequently, We are constrained to uphold respondent's
claimed right over the subject property.
Page | 16
Sale from Ricardo to
Petitioner
Petitioner's claimed right over the subject property, on the
other hand, is grounded upon his acquisition of the same from
Ricardo by sale. Unlike the sale from Ceferino to respondent,
the Deed of Sale in petitioner's favor was registered with the
Registry of Deeds, giving rise to the issuance of a new
certificate of title in the name of the petitioner.
However, in ruling that respondent is the rightful owner of the
subject property, the CA ruled that no right was conferred upon
the petitioner by such sale primarily due to his predecessor's
bad faith in the acquisition of the subject property. The CA also
found that petitioner, like his predecessor, cannot be considered
as a buyer in good faith. These findings are grounded on the
fact that respondent's Notice of Adverse Claim appears in
Ceferino's title and carried over to Ricardo's title, which
according to the CA is sufficient notice to both Ricardo and the
petitioner of respondent's interests over the subject property.
The CA opined that such adverse claim should have alerted
petitioner to conduct an actual inspection of the property,
otherwise, he cannot be considered to be a buyer in good faith.
We do not agree.
The Torrens system was adopted to "obviate possible conflicts
of title by giving the public the right to rely upon the face of
the Torrens certificate and to dispense, as a rule, with the
necessity of inquiring further."36 From this sprung the doctrinal
rule that every person dealing with registered land may safely
rely on the correctness of the certificate of title issued therefor
and is in no way obliged to go beyond the certificate to
determine the condition of the property. 37 To be sure, this
Court is not unaware of the recognized exceptions to this rule,
to wit: (1.) when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to
make further inquiry; (2.) when the buyer has knowledge of a
defect or the lack of title in his vendor;38 or (3.) when the
buyer/mortgagee is a bank or an institution of similar nature as
they are enjoined to exert a. higher degree of diligence, care,
and prudence than individuals in handling real estate
transactions.39
Complementing this doctrinal rule is the concept of an innocent
purchaser for value, which refers to someone who buys the
property of another without notice that some other person has a
right to or interest in it, and who pays in full and fair the price
at the time of the purchase or without receiving any notice of
another person's claim.40
Section 44 of Presidential Decree No. 1529 or the Property
Registration Decree41 recognizes innocent purchasers for value
and their right to rely on a clean title:
Section 44. Statutory liens affecting title. - Every registered
owner receiving certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land
taking a certificate of title for value and good faith, shall hold
the same free from all encumbrances except those noted in said
certificate and any of the following encumbrances which may
be subsisting, namely:
First. Liens, claims or rights arising or existing under the laws
and Constitution of the Philippines which are not by law
required to appear of record in the Registry of Deeds in order
Page | 17
to be valid against subsequent purchasers or encumbrances of
record.
Second. Unpaid real estate taxes levied and assessed within
two years immediately preceding the acquisition of any right
over the land by an innocent purchaser for value, without
prejudice to the right of the government to collect taxes
payable before that period from the delinquent taxpayer alone.
Third. Any public highway or private way established or
recognized by law, or any government irrigation canal or
lateral thereof, if the certificate of title does not state that the
boundaries of such highway or irrigation canal or lateral
thereof have been determined.
Fourth. Any disposition of the property or limitation on the use
thereof by virtue of, or pursuant to, Presidential Decree No. 27
or any other law or regulations on agrarian reform. (emphasis
supplied)
Guided by the foregoing, We find that the circumstances
obtaining in this case show that petitioner is an innocent
purchaser for value who exercised the necessary diligence in
purchasing the property, contrary to the CA's findings.
The following facts are clear and undisputed: (1) petitioner
acquired the subject property through sale from Ricardo as
evidenced by a Deed of Absolute Sale dated July 10, 1998,
duly notarized on even date; (2) said sale was registered in the
Registry of Deeds, Cabanatuan City on December 22, 1998 as
evidenced by TCT No. T-96168; (3) petitioner made inquiries
with the Register of Deeds and the bank where the subject
property was mortgaged by Ricardo as regards the authenticity
and the status of Ricardo's title before proceeding with the
purchase thereof; and (4) petitioner was able to ascertain that
Ricardo's title was clean and free from any lien and
encumbrance as the said title, together with his inquiries,
showed that the only annotations in the said title were
respondent's 1981 adverse claim and its cancellation in 1994.
From the foregoing factual backdrop, there was no indicia that
could have aroused questions in the petitioner's mind regarding
the title of the subject property. Hence, We do not find any
cogent reason not to apply the general rule allowing the
petitioner to rely on the face of the title.
For one, it is clearly manifest in the records that while
respondent's adverse claim appears in Ricardo's title, it also
appears therein that the said adverse claim had already been
cancelled on April 26, 1994 or more than four years before
petitioner puchased the subject property. As correctly found by
the RTC, thus, Ricardo's title is already clean on its face, way
before petitioner puchased the same.
Further, respondent's allegation of fraud and petitioner's
knowledge of the transaction between him and Ceferino are not
supported by any evidence except bare allegations. It is basic
that an allegation of fraud must be substantiated. 42 Section 543 ,
Rule 8 provides that in all averments of fraud, the
circumstances constituting the same must be stated with
particularity. Moreover, fraud is a question of fact which must
be proved by clear and convincing evidence.44
At any rate, contrary to the CA's ruling, petitioner was never
remiss in his duty of ensuring that the property that he was
going to purchase had a clean title. Despite Ricardo's title being
Page | 18
clean on its face, petitioner still conducted an investigation of
his own by proceeding to the Register of Deeds, as well as to
the bank where said title was mortgaged, to check on the
authenticity and the status of the title. Thus, petitioner was
proven to be in good faith when he dealt with Ricardo and
relied on the title presented and authenticated to him by the
Register of Deeds and confirmed by the mortgagee-bank.
Respondent, on the other hand, failed to proffer evidence to
prove otherwise.
Notably, the CA's conclusions to the contrary are merely based
on assumptions and conjectures, such as that the bank's advice
for petitioner to buy the subject property was meant only for
the protection of the bank's interest; and that the annotation of
the adverse claim on Ceferino's title and carried over to
Ricardo's title for a total of 13 years before it was cancelled
should have aroused suspicion.45 These conclusions have no
factual or legal basis. What is essential on the matter of
petitioner's good faith in the acquisition of the subject property
is the cancellation of such adverse claim, which clearly appears
on the face of Ricardo's title.
As the fact that petitioner is an innocent purchaser for value
had been established, the validity and efficacy of the
registration, as well as the cancellation, of respondent's adverse
claim is immaterial in this case. What matters is that the
petitioner had no knowledge of any defect in the title of the
property that he was going to purchase and that the same was
clean and free of any lien and encumbrance on its face by
virtue of the entry on the cancellation of adverse claim therein.
Thus, petitioner may safely rely on the correctness of the
entries in the title.
Even the defect in Ricardo's title due to his bad faith in the
acquisition of the subject property, as found by both the RTC
and the CA, should not affect petitioner's rights as an innocent
purchaser for value. The CA patently erred in ruling that since
Ricardo had no valid title on the subject property due to his bad
faith, he had nothing to convey to the petitioner. It is settled
that a defective title may still be the source of a completely
legal and valid title in the hands of an innocent purchaser for
value.46
Petitioner has a better
right of ownership over
the subject property
Applying now the rule on double sale under Article 1544 of the
Civil Code, petitioner's right as an innocent purchaser for value
who was able to register his acquisition of the subject property
should prevail over the unregistered sale of the same to the
respondent. Article 1544 states:
If the same thing should have been sold to different vendees,
the ownership shall be transferred to the person who may have
first taken possession thereof in good faith, if it should be
movable property.
Should it be immovable property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
Registry of Property.
Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession; and, in
the absence thereof, to the person who presents the oldest title,
provided there is good faith. (emphasis supplied)
Page | 19
With that, We find no necessity to belabor on the other issues
raised in the petition.
WHEREFORE, premises considered, the Decision dated
April 28, 2015 of the Court of Appeals is REVERSED and
SET ASIDE. Accordingly, the Decision dated January 20,
2009 of the Regional Trial Court of Cabanatuan City, Branch
30, is hereby REINSTATED.
SO ORDERED.
CARMELITA FUDOT v. CATTLEYA LAND, GR No.
171008, 2007-09-13
Facts:
On 23 January 1995, petitioner presented for registration
before the Register of Deeds the owner's copy of the title of the
subject property, together with the deed of sale purportedly
executed by the Tecsons in favor of petitioner on 19 December
1986.
Issues:
BETWEEN 2 BUYERS OF REGISTERED LAND, WHO
HAS THE BETTER RIGHT-IS IT THE FIRST BUYER WHO
WAS GIVEN THE OWNER'S DUPLICATE TCT
TOGETHER WITH A DEED OF SALE IN 1986, OR THE
SECOND BUYER IN 1992 WITH ONLY A DEED OF SALE.
Ruling:
In the first place, there is no double sale to speak of Art. 1544 a flaw or defect in the title of the seller or of such liens or
of the Civil Code,[24] which provides the rule on double sale, encumbrances which, as to him, is equivalent to... registration
applies only to a situation where the same property is validly (see Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18
sold to different vendees. In this case, there is only one... sale October 1988; Hernandez vs. Sales, 69 Phil 744; Tajonera s.
to advert to, that between the spouses Tecson and respondent. Court of Appeals, L-26677, 27 March 1981) (Emphasis
supplied)
Even assuming that there was double sale in this
case, petitioner would still not prevail. The pertinent portion of Principles:
Art. 1544 provides:
years
Art. 1544. x x x.
The registration contemplated under Art. 1544 has been held to
Should it be immovable property, the ownership shall belong to refer to registration under Act 496 Land Registration Act (now
the person acquiring it who in good faith first recorded it in the PD 1529) which considers the act of registration as the
Registry of Property. operative act that binds the land (see Mediante v. Rosabal, 1
O.G.
The act of registration shall be the operative act to convey or
affect the land insofar as third persons are concerned, and in all [12] 900, Garcia v. Rosabal, 73 Phil 694).
cases under this Decree, the registration shall be made in the
office of the Register of Deeds for the province or city where
the land lies.
(Emphasis supplied)
Why it took petitioner nine (9) years to present the deed and
the owner's copy, she had no credible explanation; but it is
clear that when she finally did, she already had constructive
notice of the deed of... sale in respondent's favor. Without a
doubt, respondent had acquired a better title to the property.
On lands covered by the Torrens System, the purchaser
acquires such rights and interest as they appear in the
certificate of title, unaffected by any prior lien or encumbrance
not noted therein. The... purchaser is not required to explore
farther than what the Torrens title, upon its face, indicates. The
only exception is where the purchaser has actual knowledge of

Page | 20