SALES AUGUST 27, 2015 37

G.R. No. 13203 September 18, 1918BEHN, MEYER & CO. (LTD.),plaintiff-appellant,vs.TEODORO R. YANCO,defendant-appellee.Crossfield & O'Brien for appellant.Charles C. Cohn for appellee.MALCOLM,J.:The first inquiry to be determined is what was the contract between the parties.The memorandum agreement executed by the duly authorized representatives of the parties to this action reads:Contract No. 37.MANILA, 7 de marzo, de 1916.

Confirmanos haber vendido a Bazar Siglo XX, 80 drums Caustic Soda 76 per cent "Carabao" brand al precio de Dollar Gold Nine and 75/100 per 100-lbs., c.i.f. Manila, pagadero against delivery of documents. Embarque March, 1916.Comprador Bazar Siglo XXde Teodoro R. YangcoJ. Siquia

VendoresBEHN, MEYER & CO. (Ltd.) O. LOMBECK.

This contract of sale can be analyzed into three component parts.1. SUBJECT MATTER AND CONSIDERATION.Facts. The contract provided for "80 drums Caustic Soda 76 per cent "Carabao" brandal precio de DollarGold Nine and 75/100 1-lbs."Resorting to the circumstances surrounding the agreement are we are permitted to do, in pursuance of this provision, the merchandise was shipped from New York on the steamshipChinese Prince. The steamship was detained by the British authorities at Penang, and part of the cargo, including seventy-one drums of caustic soda, was removed. Defendant refused to accept delivery of the remaining nine drums of soda on the ground that the goods were in bad order. Defendant also refused the optional offer of the plaintiff, of waiting for the remainder of the shipment until its arrival, or of accepting the substitution of seventy-one drums of caustic soda of similar grade from plaintiff's stock. The plaintiff thereupon sold, for the account of the defendant, eighty drums of caustic soda from which there was realized the sum of P6,352.89. Deducting this sum from the selling price of P10,063.86, we have the amount claimed as damages for alleged breach of the contract.Law. It is sufficient to note that the specific merchandise was never tendered. The soda which the plaintiff offered to defendant was not of the "Carabao" brand, and the offer of drums of soda of another kind was not made within the time that a March shipment, according to another provision the contract, would normally have been available.2. PLACE OF DELIVERY.Facts. The contract provided for "c.i.f. Manila,pagaderoagainst delivery of documents."Law. Determination of the place of delivery always resolves itself into a question of act. If the contract be silent as to the person or mode by which the goods are to be sent, delivery by the vendor to a common carrier, in the usual and ordinary course of business, transfers the property to the vendee. A specification in a contact relative to the payment of freight can be taken to indicate the intention of the parties in regard to the place of delivery. If the buyer is to pay the freight, it is reasonable to suppose that he does so because the goods become his at the point of shipment. On the other hand, if the seller is to pay the freight, the inference is equally so strong that the duty of the seller is to have the goods transported to their ultimate destination and that title to property does not pass until the goods have reached their destination. (SeeWilliston on Sales, PP. 406-408.)The letters "c.i.f." found in British contracts stand for cost, insurance, and freight. They signify that the price fixed covers not only the cost of the goods, but the expense of freight and insurance to be paid by the seller. (Irelandvs.Livingston, L. R., 5 H. L., 395.) Our instant contract, in addition to the letters "c.i.f.," has the word following, "Manila." Under such a contract, an Australian case is authority for the proposition that no inference is permissible that a seller was bound to deliver at the point of destination. (Bowdenvs.Little, 4 Comm. [Australia], 1364.)In mercantile contracts of American origin the letters "F.O.B." standing for the words "Free on Board," are frequently used. The meaning is that the seller shall bear all expenses until the goods are delivered where they are to be "F.O.B." According as to whether the goods are to be delivered "F.O.B." at the point of shipment or at the point of destination determines the time when property passes.Both the terms "c.i.f." and "F.O.B." merely make rules of presumption which yield to proof of contrary intention. As Benjamin, in his work on Sales, well says: "The question, at last, is one of intent, to be ascertained by a consideration of all the circumstances." For instance, in a case of Philippine origin, appealed to the United States Supreme Court, it was held that the sale was complete on shipment, though the contract was for goods, "F.O.B. Manila," the place of destination the other terms of the contract showing the intention to transfer the property. (United Statesvs.R. P. Andrews & Co. [1907], 207 U.S., 229.)With all due deference to the decision of the High Court of Australia, we believe that the word Manila in conjunction with the letters "c.i.f." must mean that the contract price, covering costs, insurance, and freight, signifies that delivery was to made at Manila. If the plaintiff company has seriously thought that the place of delivery was New York and Not Manila, it would not have gone to the trouble of making fruitless attempts to substitute goods for the merchandise named in the contract, but would have permitted the entire loss of the shipment to fall upon the defendant. Under plaintiffs hypothesis, the defendant would have been the absolute owner of the specific soda confiscated at Penang and would have been indebted for the contract price of the same.This view is corroborated by the facts. The goods were not shipped nor consigned from New York to plaintiff. The bill of lading was for goods received from Neuss Hesslein & Co. the documents evidencing said shipment and symbolizing the property were sent by Neuss Hesslein & Co. to the Bank of the Philippine Islands with a draft upon Behn, Meyer & Co. and with instructions to deliver the same, and thus transfer the property to Behn, Meyer & Co. when and if Behn, Meyer & Co. should pay the draft.The place of delivery was Manila and plaintiff has not legally excused default in delivery of the specified merchandise at that place.3. TIME OF DELIVERY.Facts. The contract provided for: "Embarque: March 1916," the merchandise was in fact shipped from New York on the SteamshipChinese Princeon April 12, 1916.Law. The previous discussion makes a resolution of this point unprofitable, although the decision of the United States Supreme Court in Norringtonvs.Wright (([1885], 115 U.S., 188) can be read with profit. Appellant's second and third assignments of error could, if necessary, be admitted, and still could not recover.THE CONTRACT.To answer the inquiry with which we begun this decision, the contract between the parties was for 80 drums of caustic soda, 76 per cent "Carabao" brand, at the price of $9.75 per one hundred pounds, cost, insurance, and freight included, to be shipped during March, 1916, to be delivered to Manila and paid for on delivery of the documents.PERFORMANCE.In resume, we find that the plaintiff has not proved the performance on its part of the conditions precedent in the contract. The warranty the material promise of the seller to the buyer has not been complied with. The buyer may therefore rescind the contract of sale because of a breach in substantial particulars going to the essence of the contract. As contemplated by article 1451 of the Civil Code, the vendee can demand fulfillment of the contract, and this being shown to be impossible, is relieved of his obligation. There thus being sufficient ground for rescission, the defendant is not liable.The judgment of the trial court ordering that the plaintiff take nothing by its action, without special finding as to costs, is affirmed, with the costs of this instance. Against the appellant. So ordered.Arellano, C.J., Torres, Johnson, Street and Avancea, JJ.,concur.

[G.R. No. L-8717.November 20, 1956.]GENERAL FOODS CORPORATION,Plaintiff-Appellant, vs. NATIONAL COCONUT CORPORATION,Defendant-Appellee.D E C I S I O NREYES, J. B. L.,J.:AppellantGeneral Foods Corporation is a foreign corporation organized under the laws of the State of Delaware, U. S. A., and licensed to do business in the Philippines;chan roblesvirtualawlibrarywhileAppelleeNational Coconut Corporation (otherwise called NACOCO), was, on the date of the transaction in question, a corporation created by Commonwealth Act No. 518, but later abolished and place in liquidation by Executive Order No. 3727 dated November 24, 1950.On September 23, 1947,Appelleesold toAppellant1,500 (later reduced to 1,000) long tons of copra, at $164 (later reduced to $163) per ton of 2,000 pounds, under the following terms and conditions:chanroblesvirtuallawlibraryCONTRACT NO. RH-3551FRANKLIN BAKER DIVISION OF GENERAL FOODS CORPORATION15th & Bloomfield StreetsHoboken, New JerseyWE CONFIRM HAVING PURCHASED FOR YOU TODAY from Messrs. National Coconut Corporation, Manila, Philippine Islands, through Mercantile, Inc., Manila, P. I.COMMODITY:chanroblesvirtuallawlibraryCOPRA Fair Merchantable Quality, Basis6% F. F. A.QUALITY:chanroblesvirtuallawlibraryAs per rule 100 of National Institute ofOilseeds Products.QUANTITY:chanroblesvirtuallawlibraryFifteen Hundred (1500) tons of 2,240 poundseach. Seller has the option of delivering 5 percent more or less of the contracted quantity,such surplus or deficiency to be settled asfollows:chanroblesvirtuallawlibraryOn the basis of the delivered weightup to 3 per cent at the contract price and anyexcess or deficiency beyond this 3 per cent atthe market price of the day of arrival at port ofdischarge, this market price to be fixed by theExecutive Committee of the National Instituteof Oilseeds Products. Each shipment to betreated as a separate contract.PACKING:chanroblesvirtuallawlibraryIn bulk. SHIPMENT:chanroblesvirtuallawlibraryNovember, 1947, earlierif possible, from Philippine Islands.PRICE:chanroblesvirtuallawlibraryOne hundred and sixty-four dollars ($164) perton of 2,000 pounds, CIF New York.PAYMENT:chanroblesvirtuallawlibraryBuyers to open immediately by cable in favorof Sellers Irrevocable Letter of Credit throughthe Philippine National Bank for 95 per cent ofinvoice value based on shipping weight inexchange for the following documents:chanroblesvirtuallawlibrary1.Provisional Invoice.2.Full set of negotiable ocean bills of lading, freight charges fully prepaid and showing the material on board.3.Weight Certificate confirming quantity shown on invoice and bill of lading.4.Consular invoice or certificate of origin in duplicate.5.Loading survey report and weight certificate of Superintendence Corporation.6.Consular form No. 197 (Pure Food & Drug Certificate).Balance due to be paid promptly upon ascertainment and based upon outturn weights and quality at port of discharge.WEIGHTS:chanroblesvirtuallawlibraryNet landed weights.SAMPLING:chanroblesvirtuallawlibraryAs per Rule 101 of National Instituteof Oilseeds Products.INSURANCE:chanroblesvirtuallawlibraryBuyer to provide valid insurance forMarine and War risks for 110 percent of CIF contract value. Seller toallow buyer from the CIF price anamount equivalent to the current rateof insurance prevailing on the date ofshipment, in lieu of sellers coveringusual marine insurance themselves.CLAUSE PARAMOUNT:chanroblesvirtuallawlibraryThis contract is subject to publishedrules of the National Institute ofOilseeds Products adopted and nowin force, which are hereby made apart hereof. Any dispute arising underthis contract shall be settled by aBoard of Arbitrators selected by theChairman of the Foreign CommerceAssociation of the San FranciscoChamber of Commerce and to bejudged according to the rules of theNational Institute of OilseedsProducts and the findings of saidBoard will be final and binding uponall the signatories hereto, providingsuch rules are not in conflict withexisting Government regulations.The above shipment to be made under Franklin Bakers license No. 26429. This contract covers the sale made by the Nacoco thru the Mercantile, Inc. dated September 9, 1947 in the Philippines. (Exhibit A).From November 14 to December 3, 1947,Appelleeshipped 1054.6278 short tons of copra toAppellanton board the S. S. Mindoro. The weighing of the cargo was done by the Luzon Brokerage Co., in its capacity as agent of the General Superintendence Co., Ltd., of Geneva, Switzerland, by taking the individual weight of each bag of copra and summing up the total gross weight of the shipment, then weighing a certain number of empty bags to determine the average tare of the empty bags, which was subtracted from the gross weight of the shipment to determine the net weight of the cargo. On the strength of the net weigh thus found,Appelleeprepared and remitted toAppellantthe corresponding bills of lading and other documents, and withdrew from the latters letter of credit 95 per cent of the invoice value of the shipment, or a total of $136,686.95.Upon arrival in New York, the net cargo was reweighed byAppellantand was found to weigh only 898.792 short tons. Deducting from the value of the shortage the sum of $8,092.02 received byAppellantfrom the insurer for 58.25 long tons lost or destroyed even before the copra was loaded on board the vessel,Appellantdemanded fromAppelleethe refund of the amount of $24,154.59. Sometime after the receipt ofAppellants demand, theAppellee, through its officers-in-charge Jose Nieva, Sr., acknowledged in a letter liability for the deficiency in the outturn weights of the copra and promised payment thereof as soon as funds were available (Exhibit B). ThenAppelleewas, as already stated, abolished and went into liquidation.Appellantsubmitted its claim to the Board of Liquidators, which refused to pay the same;chan roblesvirtualawlibrarywherefore, it filed the present action in the Court of First Instance of Manila to recover fromDefendant-Appelleethe amount of $24,154.49 and the 17 per cent exchange tax thereon which, under the provisions of Republic Act 529, had to be paid in order to remit said amount to the United States, plus attorneys fees and costs. The Court a quo found for theDefendantand dismissed the complaint;chan roblesvirtualawlibraryhence, this appeal byPlaintiff.Plaintiff-Appellants theory is that although the sale between the parties quoted a CIF New York price, the agreement contemplated the payment of the price according to the weight and quality of the cargo upon arrival in New York, the port of destination, and that therefore, the risk of the shipment was upon the seller.Defendant-Appellee, on the other hand, insists that the contract in question was an ordinary C. I. F. agreement wherein delivery to the carrier is delivery to the buyer, and that the shipment having been delivered to the buyer and the latter having paid its price, the sale was consummated.There is no question that under an ordinary C.I.F. agreement, delivery to the buyer is complete upon delivery of the goods to the carrier and tender of the shipping and other documents required by the contract and the insurance policy taken in the buyers behalf (77C.J.S. 983;chan roblesvirtualawlibrary46 Am. Jur. 313;chan roblesvirtualawlibraryII Williston on Sales, 103 107). There is equally no question that the parties may, by express stipulation or impliedly (by making the buyers obligation depend on arrival and inspection of the goods), modify a CIF contract and throw the risk upon the seller until arrival in the port of destination (77 CJS 983- 984;chan roblesvirtualawlibraryWilliston, supra, 116;chan roblesvirtualawlibraryalso Willits vs. Abekobei, 189 NYS 525;chan roblesvirtualawlibraryNational Wholesale Grocery Co. vs. Mann. 146 NE 791, Klipstein vs. Dilsizian, 273 F 473).In the transaction now in question, despite the quoted price of CIF New York, and the right of the seller to withdraw 95 per cent of the invoice price from the buyers letter of credit upon tender of the shipping and other documents required by the contract, the express agreement that the Net Landed Weights were to govern, and the provision that the balance of the price was to be ascertained on the basis of outturn weights and quality of the cargo at the port of discharge, indicate an intention that the precise amount to be paid by the buyer depended upon the ascertainment of the exact net weight of the cargo at the port of destination. That is furthermore shown by the provision that the seller could deliver 5 per cent more or less than the contracted quantity, such surplus or deficiency to be paid on the basis of the delivered weight.In our opinion, the governing rule may be found in the decision of the Supreme Court of New York in the case of Warner, Barnes & Co. vs. Warner Sugar R. Co., 192 NYS 151, cited inAppellees brief (pp. 16-19.) In said case, the parties had expressly agreed that the payment of the price was to be according to landed weights, and that delivery of the goods shipped from the Philippine Islands to New York was to be in New York ex vessel at wharf;chan roblesvirtualawlibrarybut it was also agreed that the seller had the right, upon presentation of full shipping documents, including full insurance, to draw upon theDefendantsfor 90 per cent of the invoice price, evidencing an intent to give the buyers dominion over the goods and to place the risk of loss upon them. The reasonable construction given by the Court to this contract was that:chanroblesvirtuallawlibrarythough the seller was required to deliver the goods at a customary wharf in New York, and the price could not be finally determined until the goods were landed, yet the property in the goods and the risk of loss was intended to pass when the full shipping documents were presented, including an insurance policy. If the goods were totally lost, then by the express terms of the contract the buyers were to pay the full amount of invoice and if the goods were partially lost, then it is fairly inferable that, while payment was to be made according to landed weights, the seller should not be deprived of the right to show that these landed weights were diminished by loss or damage due to the risk of the voyage. Any other construction of the contract would require the seller to provide insurance for the buyer for a loss which falls not on the buyer, but on the seller. (Emphasis supplied.)The same could be said in the instant case. While the risk of loss was apparently placed on theAppellantafter delivery of the cargo to the carrier, it was nevertheless agreed that the payment of the price was to be according to the net landed weight. The net landed or outturn weight of the cargo, upon arrival in New York, was 898.692 short tons. Although the evidence shows that the estimated weight of the shipment when it left Manila was 1,054.6278 tons, theAppelleehad the burden of proof to show that the shortage in weight upon arrival in New York was due to risks of the voyage and not the natural drying up of the copra while in transit, or to reasonable allowances for errors in the weighing of the gross cargo and the empty bags in Manila. In the absence of such proof on the part of the shipper-Appellee, we are constrained to hold that the net landed weight of the shipment in New York should control, as stipulated in the agreement, and that therefore, theAppelleeshould be held liable for the amount of $24,154.59 which it had overdrawn fromAppellants letter of credit.Appelleecontends that as it was only the balance due to be paid that was to be ascertained and based upon outturn weights and quality at port of discharge, as provided in the contract, there was no more balance due to be ascertained at the port of discharge because it had already received full payment of the copra it sent to theAppellantwhen it withdrew $136,686.95 from the latters letter of credit. The argument is untenable. The provision regarding the ascertainment of the balance due based upon outturn weight and quality of the shipment at the port of discharge, should not be construed separately from the stipulation that the net landed weight was to control. The manifest intention of the parties was for the total price to be finally ascertained only upon determining the net weight and quality of the goods upon arrival in New York, most likely because the cargo in question, being copra, by nature dries up and diminishes in weight during the voyage;chan roblesvirtualawlibrarythat no bulk weigher was available in Manila so that the best that could be done was to get the gross weight of the shipment and deduct the average tare of the empty bags;chan roblesvirtualawlibraryand that the buyer in New York had no agent in Manila to represent it and protect its interest during the weighing of the cargo. The intention of the parties to be bound by the outturn or net landed weight in New York is clearly shown in the letter ofAppellees then officer-in-charge Jose Nieva, Sr., acknowledging liability for the deficiency in the outturn weight of the copra (Exhibit B). Although this letter may not be considered an admission of liability on the part ofAppelleein the absence of a showing that Nieva was authorized to admit liability for the corporation, it is nevertheless competent evidence of the intention of the parties, particularly the NACOCO, to be bound by the net landed weight or outturn weight of the copra at the port of discharge.With respect toAppellants claim for damages equivalent to the 17 per cent excise tax which it has to pay in order to remit the sum of $24,154.59 to the United States, such excise tax is no longer imposed in view of the trade (Laurel-Langley) agreement, so that it need not be taken into account.Wherefore, the judgment appealed from is reversed and theAppelleeNational Coconut Corporation is ordered to pay theAppellantGeneral Foods Corporation the equivalent in Philippine currency of the amount of $24,154.59, with legal interest from the time of the filing of the complaint. No pronouncement as to costs.SO ORDERED.

(CANT FIND THE FULL TEXT OF THIS. SAYS ITS UNREPORTED)Pacific Vegetable Oil Corporation v. Angel SingzonGR. No. L-7917 (Unreported Case)

Facts:This is an action instituted by the plaintiff, a foreign corporation, against the defendant to recover the sum of P157,760 as damages suffered by plaintiff as a consequence of the failure of the defendant to deliver 300 tons of copra which he sold and bound himself to deliver to the plaintiff.

Singzon in August 1947, acting through a broker in San Francisco, sold to Pacific 500 tons of copra for shipment in September and October 1947. The agreed price to be covered by an irrevocable letter of credit for the contract price. Thus, pursuant to this, the Bank of California, on behalf of Pacific, opened an irrevocable letter of credit with China Bank in the Philippines. Singzon failed to ship the 500 tons of copra, but upon negotiation through the broker, a conditional amicable settlement was arrived at under which Singzon promised to ship on February 1948, the amount of 300 tons of copra with the understanding that if he effectually ship said 300 tons of copra not later than February, the original contract would be considered cancelled. But that should he fail to ship said 300 tons, Singzon shall pay Pacific $10,000 as damages and shall furthermore be obliged to fulfill all his obligations under original contract.

Singzon failed to ship and deliver the 300 tons of copra to Pacific according to their agreement. Thereafter, Pacific demanded from Singzon the payment of $10,000 but he failed and refused to ship the 500 tons of copra. As a result of the default, Pacific was forced to purchase copra from the world marker and thus incurred additional expenses.

Hence, this action is filed by Pacific. Singzon, in defense, filed a motion to dismiss on the ground that Pacific Vegetable Oil Corp. (Pacific) failed to obtain license to transact business in the Philippines and consequently, it had no personality to file the action. RTC denied the motion. It also denied MR. However, the Court of Appeals reversed and dismissed the case holding that Pacific had no personality to institute the present case even if it afterwards obtained a license to transact business upon the theory that this belated act did not have the effect of curing the defect.

Issue: W/N appellant transacted business in the Philippines in contemplation of law?

Decision: No, it was transacted in the US.It appears from the facts that the copra in question was actually sold by the defendant to the plaintiff in the US. It also appears that the contract was entered into in the US by appellees broker and appellants representatives. It further appears that the payment of the price was to be made at San Francisco, California, through a letter of credit to be opened at the Bank of California. And with respect to the delivery of copra, it likewise appears that the price agreed upon was $142 per 2,000 lbs., c.i.f. Pacific Coast. This means that the vendor was to pay not only the cost of the goods, but also the freight and insurance expenses, and, it was judicially interpreted, this is taken to indicate that the delivery is to be made at the port of destination. It is therefore cleat that the contract covering the copra has not only entered into in the US but it was agreed to be consummated there. It follows that Pacific has not transacted business in the Philippines in contemplation of Sections 68 and 69 of the Corporation Law which require any foreign corporation to obtain a license before it could transact business, or before it could have personality to file suit in the Philippines.

It appearing that Pacific has not transacted business in the Philippines and as such it is not required to obtain a license before acquiring personality to bring court action, it may be stated that the appellant, even if a foreign corporation, can maintain the present action because, as aptly said by this Court, it was never the purpose of the Legislature to exclude a foreign corporation which happens to obtain an isolated order for business in the Philippines, from securing redress in the Philippine courts, and thus, in effect, to permit persons to avoid their contracts made with such foreign corporation. Wherefore, the decision appealed from is reversed. Pacific is entitled to prosecute its claim in the Philippine courts against Singzon.

G.R. No. 122463 December 19, 2005RUDOLF LIETZ, INC.,Petitioner,vs.THE COURT OF APPEALS, AGAPITO BURIOL, TIZIANA TURATELLO & PAOLA SANI,Respondents.D E C I S I O NTinga,J.:This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, praying for the annulment of theDecision1dated April 17, 1995 and theResolution2dated October 25, 1995 of the Court of Appeals in CA-G.R. CV No. 38854. The Court of Appeals affirmed theDecision3in Civil Case No. 2164 of the Regional Trial Court (RTC), Branch 48, of Palawan and Puerto Princesa City with the modification that herein respondents Tiziana Turatello and Paola Sani are entitled to damages, attorneys fees, and litigation expenses.The dispositive portion of the RTCDecisionreads:WHEREFORE, in view of the foregoing and as prayed for by the defendants, the instant complaint is hereby DISMISSED. Defendants counterclaim is likewise DISMISSED. Plaintiff, however, is ordered to pay defendant Turatello and Sanis counsel the sum ofP3,010.38 from August 9, 1990 until fully paid representing the expenses incurred by said counsel when the trial was cancelled due to the non-appearance of plaintiffs witnesses. With costs against the plaintiff.SO ORDERED.4As culled from the records, the following antecedents appear:Respondent Agapito Buriol previously owned a parcel of unregistered land situated at Capsalay Island, Port Barton, San Vicente, Palawan. On August 15, 1986, respondent Buriol entered into a lease agreement with Flavia Turatello and respondents Turatello and Sani, all Italian citizens, involving one (1) hectare of respondent Buriols property. The lease agreement was for a period of 25 years, renewable for another 25 years. The lessees took possession of the land after paying respondent Buriol a down payment ofP10,000.00.5The lease agreement, however, was reduced into writing only in January 1987.On November 17, 1986, respondent Buriol sold to petitioner Rudolf Lietz, Inc. the same parcel of land for the amount ofP30,000.00. TheDeed of Absolute Saleembodying the agreement described the land as follows:A parcel of land, consisting of FIVE (5) hectares, more or less, a portion of that parcel of land declared in the name of Agapito Buriol, under Tax Declaration No. 0021, revised in the year 1985, together with all improvements thereon, situated at the Island of Capsalay, Barangay Port Barton, municipality of San Vicente, province of Palawan which segregated from the whole parcel described in said tax declaration, has the following superficial boundaries: NORTH, Sec. 01-017; and remaining property of the vendor; EAST, by Seashore; SOUTH, 01-020; and WEST, by 01-018 (now Elizabeth Lietz).6Petitioner later discovered that respondent Buriol owned only four (4) hectares, and with one more hectare covered by lease, only three (3) hectares were actually delivered to petitioner. Thus, petitioner instituted on April 3, 1989 a complaint forAnnulment of Lease with Recovery of Possession with Injunction and Damagesagainst respondents and Flavia Turatello before the RTC. The complaint alleged that with evident bad faith and malice, respondent Buriol sold to petitioner five (5) hectares of land when respondent Buriol knew for a fact that he owned only four (4) hectares and managed to lease one more hectare to Flavia Turatello and respondents Tiziana Turatello and Paola Sani. The complaint sought the issuance of a restraining order and a writ of preliminary injunction to prevent Flavia Turatello and respondents Turatello and Sani from introducing improvements on the property, the annulment of the lease agreement between respondents, and the restoration of the amount paid by petitioner in excess of the value of the property sold to him. Except for Flavia Turatello, respondents filed separate answers raising similar defenses of lack of cause of action and lack of jurisdiction over the action for recovery of possession. Respondents Turatello and Sani also prayed for the award of damages and attorneys fees.7After trial on the merits, the trial court rendered judgment on May 27, 1992, dismissing both petitioners complaint and respondents counterclaim for damages. Petitioner and respondents Turatello and Sani separately appealed the RTCDecisionto the Court of Appeals, which affirmed the dismissal of petitioners complaint and awarded respondents Turatello and Sani damages and attorneys fees. The dispositive portion of the Court of AppealsDecisionreads:WHEREFORE, the decision appealed from is hereby AFFIRMED, with the following modification:Plaintiff-appellant Rudolf Lietz, Inc. is hereby (1) ordered to pay defendants-appellants Turatello and Sani, the sum ofP100,000.00 as moral damages; (2)P100,000.00 as exemplary damages; (3)P135,728.73 as attorneys fees; and (4)P10,000.00 as litigation expenses.SO ORDERED.8Petitioner brought to this Court the instant petition after the denial of its motion for reconsideration of the Court of AppealDecision. The instant petition imputes the following errors to the Court of Appeals.I. IN DEFENDING AGAPITO BURIOLS GOOD FAITH AND IN STATING THAT ASSUMING THAT HE (BURIOL) WAS IN BAD FAITH PETITIONER WAS SOLELY RESPONSIBLE FOR ITS INEXCUSABLE CREDULOUSNESS.II. IN ASSERTING THAT ARTICLES 1542 AND 1539 OF THE NEW CIVIL CODE ARE, RESPECTIVELY, APPLICABLE AND INAPPLICABLE IN THE CASE AT BAR.III. IN NOT GRANTING PETITIONERS CLAIM FOR ACTUAL AND EXEMPLARY DAMAGES.IV. IN GRANTING RESPONDENTS TIZIANA TURATELLO AND PAOLA SANI EXHORBITANT [sic] AMOUNTS AS DAMAGES WHICH ARE EVEN BEREFT OF EVIDENTIARY BASIS.9Essentially, only two main issues confront this Court, namely: (i) whether or not petitioner is entitled to the delivery of the entire five hectares or its equivalent, and (ii) whether or not damages may be awarded to either party.Petitioner contends that it is entitled to the corresponding reduction of the purchase price because the agreement was for the sale of five (5) hectares although respondent Buriol owned only four (4) hectares. As in its appeal to the Court of Appeals, petitioner anchors its argument on the second paragraph of Article 1539 of the Civil Code, which provides:Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules:If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated.. . . .The Court of AppealsDecision, however, declared as inapplicable the abovequoted provision and instead ruled that petitioner is no longer entitled to a reduction in price based on the provisions of Article 1542 of the Civil Code, which read:Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or lesser area or number than that stated in the contract.The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated.Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.10In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties agree on a stated purchase price for an immovable the area of which may be declared based on an estimate or where both the area and boundaries are stated.In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 154211of the Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price although there be a greater or lesser area or number than that stated in the contract. However, the discrepancy must not be substantial. A vendee of land, when sold in gross or with the description "more or less" with reference to its area, does not therebyipso factotake all risk of quantity in the land. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency.12Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial.13Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.14As correctly noted by the trial court and the Court of Appeals, the sale between petitioner and respondent Buriol involving the latters property is one made for a lump sum. TheDeed of Absolute Saleshows that the parties agreed on the purchase price on a predetermined area of five hectares within the specified boundaries and not based on a particular rate per area. In accordance with Article 1542, there shall be no reduction in the purchase price even if the area delivered to petitioner is less than that stated 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.The Court rejects petitioners contention that the propertys boundaries as stated in theDeed of Absolute Saleare superficial and unintelligible and, therefore, cannot prevail over the area stated in the contract. First, as pointed out by the Court of Appeals, at an ocular inspection prior to the perfection of the contract of sale, respondent Buriol pointed to petitioner the boundaries of the property. Hence, petitioner gained a fair estimate of the area of the property sold to him. Second, petitioner cannot now assail the contents of theDeed of Absolute Sale, particularly the description of the boundaries of the property, because petitioners subscription to theDeed of Absolute Saleindicates his assent to the correct description of the boundaries of the property.Petitioner also asserts that respondent Buriol is guilty of misleading petitioner into believing that the latter was buying five hectares when he knew prior to the sale that he owned only four hectares. The review of the circumstances of the alleged misrepresentation is factual and, therefore, beyond the province of the Court. Besides, this issue had already been raised before and passed upon by the trial court and the Court of Appeals. The factual finding of the courts below that no sufficient evidence supports petitioners allegation of misrepresentation is binding on the Court.The Court of Appeals reversed the trial courts dismissal of respondents Turatello and Sanis counterclaim for moral and exemplary damages, attorneys fees and litigation expenses. In awarding moral damages in the amount ofP100,000 in favor of Turatello and Sani, the Court of Appeals justified the award to alleviate the suffering caused by petitioners unfounded civil action. The filing alone of a civil action should not be a ground for an award of moral damages in the same way that a clearly unfounded civil action is not among the grounds for moral damages.15Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.16With the deletion of the award for moral damages, there is no basis for the award of exemplary damages.WHEREFORE, the instant petition for review on certiorari is GRANTED in PART. The Court of AppealsDecisionin CA-G.R. CV No. 38854 is AFFIRMED with the MODIFICATION that the award of moral and exemplary damages is DELETED.SO ORDERED.

G.R. No. 128573 January 13, 2003NAAWAN COMMUNITY RURAL BANK INC.,petitioner,vs.THE COURT OF APPEALS and SPOUSES ALFREDO AND ANNABELLE LUMO,respondents.CORONA, J.:Under the established principles of land registration, a person dealing with registered land may generally rely on the correctness of a certificate of title and the law will in no way oblige him to go beyond it to determine the legal status of the property.Before us is a Petition for Review on Certiorari challenging the February 7, 1997 Decision1of the Court of Appeals in CA-G.R. CV No. 55149, which in turn affirmed the decision2of the Regional Trial Court of Misamis Oriental, Branch 18 as follows:"WHEREFORE, the plaintiffs-spouses are adjudged the absolute owners and possessors of the properties in question (Lot 18583, under TCT No. T-50134, and all improvements thereon) and quieting title thereto as against any and all adverse claims of the defendant. Further, the sheriff's certificate of sale, Exhibit 4; 4-A; Sheriff's deed of final conveyance, Exhibit 5, 5-A; Tax Declarations No. 71211, Exhibit 7, and any and all instrument, record, claim, encumbrance or proceeding in favor of the defendant, as against the plaintiffs, and their predecessor-in-interest, which may be extant in the office of the Register of Deeds of Province of Misamis Oriental, and of Cagayan de Oro City, and in the City Assessor's Office of Cagayan de Oro City, are declared as invalid and ineffective as against the plaintiffs' title."The counterclaim is dismissed for lack of merit."SO ORDERED."3The facts of the case, as culled from the records, are as follows:On April 30, 1988, a certain Guillermo Comayas offered to sell to private respondent-spouses Alfredo and Annabelle Lumo, a house and lot measuring 340 square meters located at Pinikitan, Camaman-an, Cagayan de Oro City.Wanting to buy said house and lot, private respondents made inquiries at the Office of the Register of Deeds of Cagayan de Oro City where the property is located and the Bureau of Lands on the legal status of the vendor's title. They found out that the property was mortgaged for P8,000 to a certain Mrs. Galupo and that the owner's copy of the Certificate of Title to said property was in her possession.Private respondents directed Guillermo Comayas to redeem the property from Galupo at their expense, giving the amount of P10,000 to Comayas for that purpose.On May 30, 1988, a release of the adverse claim of Galupo was annotated on TCT No. T-41499 which covered the subject property.In the meantime, on May 17, 1988, even before the release of Galupo's adverse claim, private respondents and Guillermo Comayas, executed a deed of absolute sale. The subject property was allegedly sold for P125,000 but the deed of sale reflected the amount of only P30,000 which was the amount private respondents were ready to pay at the time of the execution of said deed, the balance payable by installment.On June 9, 1988, the deed of absolute sale was registered and inscribed on TCT No. T-41499 and, on even date, TCT No. T-50134 was issued in favor of private respondents.After obtaining their TCT, private respondents requested the issuance of a new tax declaration certificate in their names. However, they were surprised to learn from the City Assessor's Office that the property was also declared for tax purposes in the name of petitioner Naawan Community Rural Bank Inc. Records in the City Assessor's Office revealed that, for the lot covered by TCT No. T-50134, Alfredo Lumo's T/D # 83324 bore the note: "This lot is also declared in the name of Naawan Community Rural Bank Inc. under T/D # 71210".Apparently, on February 7, 1983, Guillermo Comayas obtained a P15,000 loan from petitioner Bank using the subject property as security.At the time said contract of mortgage was entered into, the subject property was then an unregistered parcel of residential land, tax-declared in the name of a certain Sergio A. Balibay while the residential one-storey house was tax-declared in the name of Comayas.Balibay executed a special power of attorney authorizing Comayas to borrow money and use the subject lot as security. But the Deed of Real Estate Mortgage and the Special Power of Attorney were recorded in the registration book of the Province of Misamis Oriental, not in the registration book of Cagayan de Oro City. It appears that, when the registration was made, there was only one Register of Deeds for the entire province of Misamis Oriental, including Cagayan de Oro City. It was only in 1985 when the Office of the Register of Deeds for Cagayan de Oro City was established separately from the Office of the Register of Deeds for the Province of Misamis Oriental.For failure of Comayas to pay, the real estate mortgage was foreclosed and the subject property sold at a public auction to the mortgagee Naawan Community Rural Bank as the highest bidder in the amount of P16,031.35. Thereafter, the sheriff's certificate of sale was issued and registered under Act 3344 in the Register of Deeds of the Province of Misamis Oriental.On April 17, 1984, the subject property was registered in original proceedings under the Land Registration Act. Title was entered in the registration book of the Register of Deeds of Cagayan de Oro City as Original Certificate of Title No. 0-820, pursuant to Decree No. N-189413.On July 23, 1984, Transfer Certificate of Title No. T-41499 in the name of Guillermo P. Comayas was entered in the Register of Deeds of Cagayan de Oro City.Meanwhile, onSeptember 5, 1986, the period for redemption of the foreclosed subject property lapsed and the MTCC Deputy Sheriff of Cagayan de Oro City issued and delivered to petitioner bank thesheriff's deed of final conveyance. This time, the deed was registered under Act 3344 and recorded in the registration book of the Register of Deeds of Cagayan de Oro City.By virtue of said deed, petitioner Bank obtained a tax declaration for the subject house and lot.Thereafter, petitioner Bank instituted an action for ejectment against Comayas before the MTCC which decided in its favor. On appeal, the Regional Trial Court affirmed the decision of the MTCC in a decision dated April 13, 1988.On January 27, 1989, the Regional Trial Court issued an order for the issuance of a writ of execution of its judgment. The MTCC, being the court of origin, promptly issued said writ.However, when the writ was served, the property was no longer occupied by Comayas but herein private respondents, the spouses Lumo who had, as earlier mentioned, bought it from Comayas on May 17, 1988.Alarmed by the prospect of being ejected from their home, private respondents filed an action for quieting of title which was docketed as Civil Case No. 89-138. After trial, the Regional Trial Court rendered a decision declaring private respondents as purchasers for value and in good faith, and consequently declaring them as the absolute owners and possessors of the subject house and lot. Petitioner appealed to the Court of Appeals which in turn affirmed the trial court's decision.Hence, this petition.Petitioner raises the following issues:I. WHETHER OR NOT THE SHERIFF'S DEED OF FINAL CONVEYANCE WAS DULY EXECUTED AND REGISTERED IN THE REGISTER OF DEEDS OF CAGAYAN DE ORO CITY ON DECEMBER 2, 1986;II. WHETHER OR NOT REGISTRATION OF SHERIFF'S DEED OF FINAL CONVEYANCE IN THE PROPER REGISTRY OF DEEDS COULD BE EFFECTIVE AS AGAINST SPOUSES LUMO.Both parties cite Article 1544 of the Civil Code which governs the double sale of immovable property.Article 1544 provides:". . . . 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."Petitioner bank contends that the earlier registration of the sheriff's deed of final conveyance in the day book under Act 3344 should prevail over the later registration of private respondents' deed of absolute sale under Act 496,4as amended by the Property Registration Decree, PD 1529.This contention has no leg to stand on. It has been held that, where a person claims to have superior proprietary rights over another on the ground that he derived his title from a sheriff's sale registered in the Registry of Property, Article 1473 (now Article 1544) of the Civil Code will apply only if said execution sale of real estate is registered under Act 496.5Unfortunately, the subject property was still untitled when it was already acquired by petitioner bank by virtue of a final deed of conveyance. On the other hand, when private respondents purchased the same property, it was covered by the Torrens System.Petitioner also relies on the case ofBautista vs. Fule6where the Court ruled that the registration of an instrument involving unregistered land in the Registry of Deeds creates constructive notice and binds third person who may subsequently deal with the same property.However, a close scrutiny of the records reveals that, at the time of the execution and delivery of the sheriff's deed of final conveyance on September 5, 1986, the disputed property was already covered by the Land Registration Act and Original Certificate of Title No. 0-820 pursuant to Decree No. N189413 was likewise already entered in the registration book of the Register of Deeds of Cagayan De Oro City as of April 17, 1984.Thus, from April 17, 1984, the subject property was already under the operation of the Torrens System. Under the said system, registration is the operative act that gives validity to the transfer or creates a lien upon the land.Moreover, the issuance of a certificate of title had the effect of relieving the land of all claims except those noted thereon. Accordingly, private respondents, in dealing with the subject registered land, were not required by law to go beyond the register to determine the legal condition of the property. They were only charged with notice of such burdens on the property as were noted on the register or the certificate of title. To have required them to do more would have been to defeat the primary object of the Torrens System which is to make the Torrens Title indefeasible and valid against the whole world.Private respondents posit that, even assuming that the sheriff's deed of final conveyance in favor of petitioner bank was duly recorded in the day book of the Register of Deeds under Act 3344, ownership of the subject real property would still be theirs as purchasers in good faith because they registered the sale first under the Property Registration Decree.The rights created by the above-stated statute of course do not and cannot accrue under an inscription in bad faith. Mere registration of title in case of double sale is not enough; good faith must concur with the registration.7Petitioner contends that the due and proper registration of the sheriff's deed of final conveyance on December 2, 1986 amounted to constructive notice to private respondents. Thus, when private respondents bought the subject property on May 17, 1988, they were deemed to have purchased the said property with the knowledge that it was already registered in the name of petitioner bank.Thus, the only issue left to be resolved is whether or not private respondents could be considered as buyers in good faith.The "priority in time" principle being invoked by petitioner bank is misplaced because its registration referred to land not within the Torrens System but under Act 3344. On the other hand, when private respondents bought the subject property, the same was already registered under the Torrens System. It is a well-known rule in this jurisdiction that persons dealing with registered land have the legal right to rely on the face of the Torrens Certificate of Title and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry.8Did private respondents exercise the required diligence in ascertaining the legal condition of the title to the subject property so as to be considered as innocent purchasers for value and in good faith?We answer in the affirmative.Before private respondents bought the subject property from Guillermo Comayas, inquiries were made with the Registry of Deeds and the Bureau of Lands regarding the status of the vendor's title. No liens or encumbrances were found to have been annotated on the certificate of title. Neither were private respondents aware of any adverse claim or lien on the property other than the adverse claim of a certain Geneva Galupo to whom Guillermo Comayas had mortgaged the subject property. But, as already mentioned, the claim of Galupo was eventually settled and the adverse claim previously annotated on the title cancelled. Thus, having made the necessary inquiries, private respondents did not have to go beyond the certificate of title. Otherwise, the efficacy and conclusiveness of the Torrens Certificate of Title would be rendered futile and nugatory.Considering therefore that private respondents exercised the diligence required by law in ascertaining the legal status of the Torrens title of Guillermo Comayas over the subject property and found no flaws therein, they should be considered as innocent purchasers for value and in good faith.Accordingly, the appealed judgment of the appellate court upholding private respondents Alfredo and Annabelle Lumo as the true and rightful owners of the disputed property is affirmed.WHEREFORE, petition is hereby DENIED.SO ORDERED.

G.R. No. 167412 February 22, 2006JUANITA NAVAL,Petitioner,vs.COURT OF APPEALS, JUANITO CAMALLA, JAIME NACION, CONRADO BALILA, ESTER MOYA and PORFIRIA AGUIRRE,Respondents.D E C I S I O NYNARES-SANTIAGO,J.:This petition for review assails the Decision1of the Court of Appeals dated December 14, 2004, in CA-G.R. SP No. 86736, which reversed the Decision2of the Regional Trial Court (RTC) of Naga City, Branch 26, in Civil Case No. 2004-0054 affirming the Decision3of the Municipal Circuit Trial Court (MCTC) of Magarao-Canaman, Camarines Sur, as well as the Resolution4dated February 17, 2005 denying petitioners motion for reconsideration.The facts of the case are as follows:On December 2, 1969, Ildefonso A. Naval sold a parcel of land located in Sto. Tomas, Magarao, Camarines Sur, consisting of 858 sq. m. to Gregorio B. Galarosa. The sale was recorded in the Registry of Property of the Registry of Deeds of Camarines Sur on December 3, 1969 pursuant to Act No. 3344, the law governing registrations of all instruments on unregistered lands.5Subsequently, Gregorio sold portions of the land to respondents Conrado Rodrigo Balilla6on November 4, 1976, Jaime Nacion7on January 10, 1977 and spouses Ireneo and Ester Moya8in July 1977, and Juanito Camalla9on September 4, 1987. All buyers occupied the portion they bought, built improvements thereon, and paid the taxes due thereto.10The controversy arose when petitioner Juanita Naval, the great granddaughter of Ildefonso, was issued on April 1, 1975 by the Register of Deeds of Camarines Sur an Original Certificate of Title (OCT) No. RP-5386 (29791), covering 733 sq. m. of the subject land.11She claimed that she bought the subject land from Ildefonso in 1972.12On November 10, 1977, petitioner filed a complaint for recovery of possession against Bartolome Aguirre, Conrado Balila,13Ireneo Moya, Jaime Nacion and Domingo Nacion, which was docketed as Civil Case No. 306.14However, the case was dismissed15without prejudice16for failure to prosecute the action for an unreasonable length of time.Almost 20 years later, or on April 21, 1997, petitioner re-filed the complaint for recovery of possession with damages before the MCTC of Magarao-Canaman, Camarines Sur, against Juanita17Camalla, Diosdado Balila, Conrado Balila, Forferia18Aguirre, Jaime Nacion and Ester Moya. The case was docketed as Civil Case No. 994.After trial, the MCTC rendered its decision, the dispositive portion reads as follows:WHEREFORE, for all the foregoing consideration, decision is hereby rendered in favor of the plaintiff and against defendants:1) Declaring the plaintiff to be the legal owner of the land as described in paragraph 2 of the complaint;2) Ordering defendants Juanito Camalla, Diosdado Balila, Conrado Balila, Porferia Aguirre and Jaime Nacion to vacate the property in question and to deliver its possession to the plaintiff;3) Ordering Ester Moya to vacate the fifty (50) square meters occupied by her and to relinquish its possession to the plaintiff;4) Dismissing the respective claims for damages of the parties.Pronouncing no costs.SO ORDERED.19Aggrieved, respondents appealed the decision to the RTC of Naga City, which affirmedin totothe assailed decision.20Respondents thereafter elevated the case to the Court of AppealsviaRule 42 of the Rules of Court. Finding the prior registration of the deed of sale between Ildefonso and Gregorio with the Register of Deeds as a constructive notice to subsequent buyers, the appellate court reversed the decision of the RTC. Thus,WHEREFORE, premises considered, the present petition is hereby GRANTED. The appealed decision of the courta quois hereby REVERSED and SET ASIDE and a new judgment is hereby entered dismissing respondent's complaint for recovery of possession with damages. Petitioners' counterclaim for damages is likewise dismissed for lack of legal and factual bases.No pronouncement as to costs.SO ORDERED.21Hence, this petition assigning the following errors:ITHE COURT OF APPEALS ERRED IN DECLARING THAT GREGORIO GALAROSA HAS RIGHTFULLY ACQUIRED OWNERSHIP OVER THE LOT COVERED BY OCT RP #5386 (29791) AND DECLARING HIM TO HAVE POSSESSED THE LOT BEFORE THE ALLEGED SALES TO RESPONDENTS.IITHE COURT OF APPEALS ERRED IN HOLDING THAT THE PAYMENT OF TAXES BY RESPONDENTS WERE(sic)EVIDENCE OF LAWFUL POSSESSION AND OWNERSHIP.IIITHE COURT OF APPEALS ERRED IN DECLARING THAT THE LOTS CLAIMED BY THE RESPONDENTS HAVE BEEN POSSESSED BY THEM IN GOOD FAITH DESPITE THEIR KNOWLEDGE OF THE EXISTENCE OF OCT RP #5386(29791).22Petitioner claims that she has superior rights over the subject land because the sale between Ildefonso and Gregorio and the subsequent registration thereof with the Register of Deeds had no legal effect since the subject land was declared in the name of Agrifina Avila while the tax declaration cancelled by Gregorios was that of Gregorio Boaga. Petitioner thus assails the right claimed by Gregorio over the subject land from which the respondents derived their respective claims.23On the other hand, respondents contend that the registered sale by Ildefonso to Gregorio in 1969 of the subject land, from whom they derive their claims, vests them with better right than the petitioner; that registration under Act No. 3344 served as constructive notice to the whole world, including the petitioner, who claimed to have purchased the subject land from Ildefonso in 1972, but failed to present evidence to prove such acquisition.24We deny the petition.Prefatorily, a perusal of the records reveals that during the trial, petitioner vigorously asserted that the subject land was the exclusive property of Ildefonso who sold it to her in 1972.25However, in this appeal, petitioner assails the ownership not only of Gregorio but also of Ildefonso by alleging that at the time the latter sold the land to Gregorio, the same was declared in the name of Agrifina Avila. When a party adopts a certain theory in the court below, he is not allowed to change his theory on appeal, for to allow him to do so would not only be unfair to the other party, but it would also be offensive to the basic rules of fair play, justice and due process.26In this appeal, the issue for resolution is who has the superior right to a parcel of land sold to different buyers at different times by its former owner.It is not disputed that the subject land belonged to Ildefonso and that it was not registered under the Torrens System27when it was sold to Gregorio in 1969 and to the petitioner in 1972. Further, the deed of sale between Ildefonso and Gregorio was registered with the Register of Deeds of Camarines Sur pursuant to Act No. 3344, as shown by Inscription No. 54609 dated December 3, 1969, Page 119, Volume 186, File No. 55409 at the back thereof.In holding that respondents have a better right to possess the subject land in view of thebona fideregistration of the sale with the Register of Deeds of Camarines Sur by Ildefonso and Gregorio, the Court of Appeals applied Article 1544 of the Civil Code, which provides:ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have 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.While we agree with the appellate court that respondents have superior right over the petitioner on the subject property, we find Article 1544 inapplicable to the case at bar since the subject land was unregistered at the time of the first sale. The registration contemplated under this provision has been held to refer to registration under the Torrens System, which considers the act of registration as the operative act that binds the land.28Thus, inCarumba v. Court of Appeals,29we held that Article 1544 of the Civil Code has no application to land not registered under Torrens System.The law applicable therefore is Act No. 3344, which provides for the registration of all instruments on land neither covered by the Spanish Mortgage Law nor the Torrens System. Under this law, registration by the first buyer is constructive notice to the second buyer that can defeat his right as such buyer in good faith.Applying the law, we held inBautista v. Fule30that the registration of an instrument involving unregistered land in the Registry of Deeds creates constructive notice and binds third person who may subsequently deal with the same property. We also held inBayoca v. Nogales31that:Verily, there is absence of prior registration in good faith by petitioners of the second sale in their favor. As stated in the Santiago case, registration by the first buyer under Act No. 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer. On account of the undisputed fact of registration under Act No. 3344 by [the first buyers], necessarily, there is absent good faith in the registration of the sale by the [second buyers] for which they had been issued certificates of title in their names. It follows that their title to the land cannot be upheld. x x x.Even if petitioner argues that she purchased and registered the subject land in good faith and without knowledge of any adverse claim thereto, respondents still have superior right over the disputed property. We held inRayos v. Reyes32that:"[T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and the purchaser is buying the same from the registered owner whose title to the land is clean x x x in such case the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value." Since the properties in question are unregistered lands, petitioners as subsequent buyers thereof did so at their peril. Their claim of having bought the land in good faith,i.e.,without notice that some other person has a right to or interest in the property, would not protect them if it turns out, as it actually did in this case, that their seller did not own the property at the time of the sale.It is an established principle that no one can give what one does not have,nemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.33In the case at bar, since Ildefonso no longer owned the subject land at the time of the sale to the petitioner, he had nothing to sell and the latter did not acquire any right to it.Even if we apply Article 1544, the facts would nonetheless show that respondents and their predecessors-in-interest registered first the source of their ownership and possession,i.e., the 1969 deed of sale, and possessed the subject land at the earliest time. Applying the doctrine of "priority in time, priority in rights" or "prius tempore, potior jure," respondents are entitled to the ownership and possession of the subject land.34True, a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified, enlarged or diminished except in a direct proceeding permitted by law.35Moreover, Section 32 of Presidential Decree No. 1529 provides that "[u]pon the expiration of said period of one year, the decree of registration and the certificate of title shall become incontrovertible."However, it does not deprive an aggrieved party of a remedy in law. What cannot be collaterally attacked is the certificate of title and not the title or ownership which is represented by such certificate. Ownership is different from a certificate of title.36The fact that petitioner was able to secure a title in her name did not operate to vest ownership upon her of the subject land. Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein.37It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others.38Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.39As correctly held by the Court of Appeals, notwithstanding the indefeasibility of the Torrens title, the registered owner may still be compelled to reconvey the registered property to its true owners. The rationale for the rule is that reconveyance does not set aside or re-subject to review the findings of fact of the Bureau of Lands. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property or its title which has been wrongfully or erroneously registered in another persons name, to its rightful or legal owner, or to the one with a better right.40Finally, the Court of Appeals correctly held that an action for reconveyance does not prescribe when the plaintiff is in possession of the land to be reconveyed, as in this case. Thus, inLeyson v. Bontuyan:41x x x [T]his Court declared that an action for reconveyance based on fraud is imprescriptible where the plaintiff is in possession of the property subject of the acts. InVda. de Cabrera v. Court of Appeals, the Court held:... [A]n action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property, but this rule applies onlywhen the plaintiff or the person enforcing the trust is not in possession of the property,since if a person claiming to be the owner thereof is in actual possession of the property, as the defendants are in the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession.Similarly, in the case ofDavid v. Malay, the same pronouncement was reiterated by the Court:... There is settled jurisprudence that one who is in actual possession of a piece of land claiming to be owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of the court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession. No better situation can be conceived at the moment for Us to apply this rule on equity than that of herein petitioners whose ... possession of the litigated property for no less than 30 years and was suddenly confronted with a claim that the land she had been occupying and cultivating all these years, was titled in the name of a third person. We hold that in such a situation the right to quiet title to the property, to seek its reconveyance and annul any certificate of title covering it, accrued only from the time the one in possession was made aware of a claim adverse to his own, and it is only then that the statutory period of prescription commences to run against such possessor.The paramount reason for this exception is based on the theory that registration proceedings could not be used as a shield for fraud. Moreover, to hold otherwise would be to put premium on land-grabbing and transgressing the broader principle in human relations that no person shall unjustly enrich himself at the expense of another.WHEREFORE, in view of the foregoing, the petition isDENIED. The Decision of the Court of Appeals dated December 14, 2004, in CA-G.R. SP No. 86736, dismissing petitioners complaint for recovery of possession and respondents counterclaim for damages for lack of legal and factual bases, and the Resolution dated February 17, 2005 denying the motion for reconsideration, areAFFIRMED.SO ORDERED.

G.R. No. 121165 September 26, 2006HON. DOMINADOR F. CARILO, Presiding Judge, R.T.C. XI-19 Digos, Davao del Sur, BONIFACIO J. GUYOT, Clerk of Court and Provincial Sheriff of Davao del Sur, ALFREDO C. SENOY, Deputy Prov. Sheriff assigned to R.T.C. XI-19 Digos, Davao del Sur, MARCOS D. RISONAR, JR., ., Registrar of Deeds of Davao del Sur, and MARIA GONZALES,petitioners,vs.HON. COURT OF APPEALS, MARIA PAZ DABON and ROSALINDA DABON,respondents.R E S O L U T I O NQUISUMBING,J.:For review on certiorari is the Decision1dated February 22, 1995 of the Court of Appeals in CA-G.R. SP No. 23687, which annulled and set aside the judgment and orders of the Regional Trial Court (RTC) of Digos, Davao del Sur, Branch 19, in Civil Case No. 2647,Maria Gonzales v. Priscilla Manio and Jose Manio.The facts as culled from the records are as follows:On April 2, 1990, petitioner Maria Gonzales filed a complaint against the spouses Priscilla and Jose Manio with the RTC of Digos, Davao del Sur, Branch 19. Gonzales sought the execution of the deed of sale in her favor for the property she bought from Priscilla Manio. She also asked for damages and attorney's fees.Gonzales alleged that on April 26, 1988, she paidP10,000 to Priscilla as downpayment on theP400,000 purchase price of the lot with improvements, since Priscilla had a special power of attorney from her son, Aristotle, the owner of the land. They also agreed that the balance would be paid within three months after the execution of the deed of sale. Yet, after the lapse of the period and despite repeated demands, Priscilla did not execute the deed of sale. Thus, Gonzales filed an action for specific performance against the spouses Priscilla and Jose Manio.For failure to file an Answer, the Manios were declared in default and Gonzales was allowed to present evidenceex parte.After trial, the court rendered judgment in favor of Gonzales, which we quote verbatim:WHEREFORE, premises considered, it is hereby ordered that judgment is rendered in favor of plaintiff and against defendants, ordering defendants:1) To execute the final deed of sale and transfer of the property mentioned in paragraph 4 above to plaintiff, or should the defendant refuse to execute the deed of sale, the Clerk of Court be directed to execute the same upon plaintiff's depositing of the sum ofP390,000.00 with the Clerk of Court as complete and valid payment thereof to defendant Priscilla Manio;2) To pay plaintiff the sum ofP100,000.00 for moral damages andP50,000.00 for exemplary damages;3) To pay plaintiff the sum ofP50,000.00 for attorney's fees plusP700.00 per appearances of plaintiff's counsel before this Honorable Court as appearance fees;4) To pay plaintiff the sum ofP5,000.00 as litigation expenses.SO ORDERED.2Gonzales deposited with the Clerk of Court theP390,000 balance of the price and filed a motion for execution.3She later withdrew the motion because the trial court's decision was not properly served on the defendants. After numerous delays, the sheriff finally personally served a copy of the decision on Priscilla on August 4, 1990, at the ungodly hour of 12:00 midnight at Sitio Wilderness, Barangay Mount Carmel, Bayugan, Agusan del Sur.4Since there was no appeal, the trial court's decision became final and executory. But the writ of execution was not served upon the defendants, since according to the Sheriff's Return, the defendants could not be located. The sheriff, likewise, informed the trial court that the money judgment could be readily satisfied by the petitioner's cash deposit should the trial court grant the motion to release the cash deposit filed by Gonzales.5Subsequently, Gonzales filed a motion asking that the Clerk of Court be directed to be the one to execute a deed of conveyance. Gonzales also filed a motion to withdraw the cash deposit for the balance of the price to offset the award of damages. The trial court granted both motions but later modified the amount toP207,800.On October 29, 1990, Gonzales filed a petition for the nullification of the Owner's Duplicate Certificate of Title No. 16658 and asked that a new certificate be issued in her name to give effect to the deed of conveyance since Priscilla refused to relinquish the owner's duplicate copy.Consequently, the trial court declared the owner's duplicate copy of TCT No. 16658 void, and directed the City Civil Registrar to issue a new certificate of title in favor of Gonzales. The orders were reiterated in subsequent orders and TCT No. T-23690 was issued under the name of Gonzales.On December 14, 1990, herein respondents Maria Paz Dabon and Rosalina Dabon, claiming to have bought the aforementioned lot from Aristotle Manio filed before the Court of Appeals a petition for annulment of judgment and orders of the RTC inCivil Case No. 2647. The case was docketed as CA G.R. SP No. 23687, entitled "Maria Paz Dabon and Rosalina Dabon v. Hon. Dominador F. Carillo, Presiding Judge, RTC Branch 19, Digos, Davao del Sur; Bonifacio J. Guyot, Clerk of Court and Provincial Sheriff of Davao del Sur; Alfredo C. Senoy, Deputy Prov. Sheriff assigned to RTC Br. 19, Digos, Davao del Sur; Marcos D. Risonar, Jr., Registrar of Deeds of Davao del Sur; and Maria Gonzales." The Dabons alleged therein that the judgment of the trial court was voidab initiobecause of lack of jurisdiction over their persons, as the real parties in interest, and that they were fraudulently deprived of their right to due process. They also prayed for a Temporary Restraining Order and for Preliminary Prohibitory Injunction against Gonzales. They gave the trial court a notice of their action for the annulment of the judgment and subsequent orders in Civil Case No. 2647.6Meanwhile, Gonzales filed before the trial court a motion for the issuance of a writ of possession. The Dabons filed an opposition on the following grounds: (1) The writ of possession cannot be enforced because the defendants named in the writ, the Manios, were no longer in possession of the property; (2) They had bought the lot with the improvements therein and had taken possession, although they had not yet registered their ownership with the Register of Deeds; and (3) The court did not acquire jurisdiction over them as the real parties in interest.On December 17, 1990, the Court of Appeals, without giving due course to the petition, issued a resolution restraining the trial court from implementing its Decision dated June 19, 19907and its subsequent orders thereto in Civil Case No. 2647 until further notice from the Court of Appeals. It also required Gonzales to file her Comment.8The Court of Appeals in a resolution denied the application for preliminary injunction and appointed a commissioner to receive evidence of the parties.9Following the Commissioner's report, the Court of Appeals found that (1) the contract of sale between Gonzales and Priscilla was unenforceable because the sale was evidenced by a handwritten note which was vague as to the amount and which was not notarized; (2) the trial court did not acquire jurisdiction over the indispensable parties; and (3) the proceedings were attended with fraud. The Court of Appeals nullified the judgment of the RTC in Civil Case No. 2647 and cancelled TCT No. T-23690. The dispositive portion of said judgment reads as follows:WHEREFORE, premises considered, the questioned decision, dated June 19, 1990 (and all orders arising therefrom), of the Regional Trial Court (Branch 19) in Digos, Davao del Sur is hereby ANNULLED and SET ASIDEand the Transfer Certificate of Title No. T-23690 which was issued thereafter declared null and void and ordered canceled. Costs against the private respondent.SO ORDERED.10On July 17, 1995, Gonzales' Motion for Reconsideration was denied. Hence, the instant petition, assigning the following errors:IThe Honorable Court of Appeals erred in not holding that the purchase of the disputed property by petitioner Maria Gonzales from Aristotle Manio thru the latter's mother and attorney-in-fact was a valid contract as between the contracting parties.IITHE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER MARIA GONZALES WAS IN GOOD FAITH IN BUYING THE DISPUTED PROPERTY FROM ARISTOTLE MANIO THRU THE LATTER'S MOTHER AND ATTORNEY-IN-FACT.IIITHE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING IN THE INSTANT CASE THE DOCTRINE IN DOUBLE SALE UNDER ARTICLE 1544 OF THE CIVIL CODE OF THE PHILIPPINES.IVTHE HONORABLE COURT OF APPEALS GRAVELY FAILED TO APPRECIATE THE FACT THAT PRIVATE RESPONDENTS' [PETITIONERS BELOW]CLAIM IS HIGHLY INCREDIBLE, IMPROBABLE, AND FRAUDULENT.VTHE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT PRIVATE RESPONDENTS MARIA PAZ DABON AND ROSALINA DABON HAVE NO RIGHT TO BRING THE INSTANT SUIT.VICOROLLARILY, THE HONORABLE COURT OF APPEALS ERRED IN NOT SUSTAINING PETITIONER MARIA GONZALES' [PRIVATE RESPONDENT BELOW]CLAIM FOR DAMAGES AGAINST THE PRIVATE RESPONDENTS [PETITIONERS BELOW].11Simply, the threshold issues in this petition are: (1) whether the Court of Appeals erred in declaring the sale of the land to Gonzales by Priscilla invalid; (2) whether there was basis to annul the judgment of the RTC; and (3) whether the Dabons could file the action for annulment of judgment.We shall discuss the issues jointly.Prefatorily, we note that named as petitioners are Presiding Judge Dominador Carillo; Bonifacio Guyot, Alfredo Senoy, Clerk of Court and Deputy Sheriff of the same court, respectively; Marcos D. Risonar, Registrar of Deeds of Davao del Sur; and Maria Gonzales. In our view, petitioner Gonzales apparently had impleaded Judge Carillo, Guyot, Senoy and Risonar in this petition by merely reversing the designation of said public officers among the respondents below in the Court of Appeals, as now among the petitioners herein. Since they are not interested parties and would not benefit from any of the affirmative reliefs sought, only Maria Gonzales remains as the genuine party-petitioner in the instant case.We now come to the main issues: (1) Was there sufficient basis to annul the judgment in Civil Case No. 2647? (2) Are the Dabons proper parties to file the petition for annulment of judgment?Petitioner Gonzales contends that the respondents do not have standing before the Court of Appeals to file a petition for annulment of the judgment in Civil Case No. 2647 because respondents were not parties therein. Petitioner maintains that respondents have no right that could be adversely affected by the judgment because they are not the owners of the property. Petitioner claims that the Court of Appeals should have applied the doctrine of double sale to settle the issue of ownership and declare her the true owner of the property. Petitioner concludes that respondents not being the owners and are not real parties in interest in the complaint for specific performance have no right to bring the action for annulment of the judgment. According to petitioner Gonzales, she did not implead Aristotle as defendant in Civil Case No. 2647 since a decision against Priscilla, Aristotle's attorney-in-fact, would bind Aristotle also.Respondents (Maria Paz and Rosalina Dabon) now insist that they are parties in interest as buyers, owners and possessors of the contested land and that they had been fraudulently deprived of their day in court during the proceedings in the trial court in Civil Case No. 2647. They have no remedy in law other than to file a case for the annulment of judgment of the trial court in said case.Petitioner Gonzales should be reminded of Section 3 of Rule 3 of the Rules on Civil Procedure which explicitly states that an action should be brought against the real party in interest,12and in case the action is brought against the agent, the action must be brought against an agent acting in his own name and for the benefit of an undisclosed principal without joining the principal,exceptwhen the contract involves things belonging to the principal.13The real party in interest is the party who would be benefited or injured by the judgment or is the party entitled to the avails of the suit. We have held that in such a situation, an attorney-in-fact is not a real party in interest and that there is no law permitting an action to be brought by and against an attorney-in-fact.14Worth stressing, the action filed by Gonzales before the RTC is for specific performance to compel Priscilla to execute a deed of sale, involving real property which, however, does not belong to Priscilla but to Aristotle Manio, the son of Priscilla. The complaint only named as defendant Priscilla, joined by her spouse, yet Priscilla had no interest on the lot and can have no interest whatever in any judgment rendered. She was not acting in her own name, nor was she acting for the benefit of an undisclosed principal. The joinder of all indispensable parties is a conditionsine qua nonof the exercise of judicial powers, and the absence of indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present.15Accordingly, the failure to implead Aristotle Manio as defendant renders all proceedings in the Civil Case No. 2647, including the order granting the cancellation of TCT No. 16658 and issuance of a new title, null and void.It is settled that a person need not be a party to the judgment sought to be annulled.16What is essential is that he can prove his allegation that the judgment was obtained by fraud or collusion and he would be adversely affected thereby,17because if fully substantiated by preponderance of evidence, those allegations could be the basis for annulment of the assailed judgment.In the present case, even if respondents were not parties to the specific performance case, any finding that there was extrinsic fraud in the institution of the complaint,i.e.exclusion of the real party in interest, and collusion between petitioner and Sheriff Senoy, would adversely affect the respondents' ownership and thus, could be their basis for annulment of the judgment.Pertinently, Section 2 of Rule 47 of the Rules on Civil Procedure explicitly provides the two grounds for annulment of judgment, namely: extrinsic fraud and lack of jurisdiction.18There is extrinsic fraud when a party has been prevented by fraud or deception from presenting his case. Fraud is extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured. The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.19It must be distinguished from intrinsic fraud which refers to acts of a party at a trial which prevented a fair and just determination of the case, and which could have been litigated and determined at the trial or adjudication of the case.20In its Decision dated February 22, 1995, the Court of Appeals found that indices of fraud attended the case before the trial court:First, the plaintiff deliberately excluded the Dabons as party to the case despite knowledge that the Dabons had alleged that they had bought the land from Aristotle.Second, the Sheriff's Return was suspiciously served on a Saturday, at midnight, on August 4, 1990.Third, the trial court ordered the plaintiff to deposit the full payment of property, but subsequently ordered its withdrawal.Lastly, there was no notice given to the person named in the certificate of title which Gonzales wanted to be annulled.Of the indices of fraud cited by the Court of Appeals, the failure to comply with the notification requirement in the petition for the cancellation of title amounts to extrinsic fraud. Under the Property Registration Decree, all parties in interest shall be given notice.21There is nothing in the records that show Gonzales notified the actual occupants or lessees of the property. Further, the records show that Gonzales had known of the sale of the land by Aristotle to the Dabons and despite her knowledge, the former did not include the Dabons in her petition for the annulment of title. Deliberately failing to notify a party entitled to notice also constitutes extrinsic fraud.22This fact is sufficient ground to annul the order allowing the cancellation of title in the name of Gonzales.Likewise, under Rule 47, a judgment is void for lack of jurisdiction over the persons of the real parties in interest,i.e., Aristotle Manio and the Dabons.Lastly, petitioner insists that the contract of sale between her and Priscilla was valid and enforceable because under the provision on double sale,23she owned the land because she bought the lot on April 26, 1988, while the same was allegedly sold to the Dabons on October 19, 1989. In our view, the doctrine on double sale holds no relevance in this case. The pertinent article of the Civil Code provides:ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first 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 recorded it in the Registry of Property.Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and in the absence thereof; to the person who presents the oldest title, provided there is good faith.Otherwise stated, where it is immovable property that is the subject of a double sale, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. The requirement of the law is two-fold: acquisition in good faith and registration in good faith.24At this juncture, we must emphasize that the action for annulment of judgment under Rule 47 of the Rules of Court does not involve the merits of the final order of the trial court.25The issue of whether before us is a case of double sale is outside the scope of the present petition for review. The appellate court only allowed the reception of extraneous evidence to determine extrinsic fraud. To determine which sale was valid, review of evidence is necessary. This we cannot do in this petition. An action for annulment of judgment is independent of the case where the judgment sought to be an