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Philippine Suburban Dev Corp vs Auditor General (internetsourced)G.R. No. L-19545Subject: SalesDoctrine:Constructive or legal delivery

Facts:On June 8, 1960, at a meeting with the Cabinet, the President of the

Philippines, acting on the reports of the Committee created to survey suitablelots for relocating squatters in Manila and suburbs, approved in principle theacquisition by the Peoples Homesite and Housing Corporation of theunoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacan and ofanother area either in Las Pias or Paraaque, Rizal, or Bacoor, Cavite forthose who desire to settle south of Manila. On June 10, 1960, the Board ofDirectors of the PHHC passed Resolution No. 700 (Annex C) authorizingthe purchase of the unoccupied portion of the Sapang Palay Estate at P0.45per square meter subject to the following conditions precedent:

3. That the President of the Philippines shall first provide the PHHCwith the necessary funds to effect the purchase and development ofthis property from the proposed P4.5 million bond issue to be

absorbed by the GSIS.4. That the contract of sale shall first be approved by the AuditorGeneral pursuant to Executive Order dated February 3, 1959.

On July 13, 1960, the President authorized the floating of bonds underRepublic Act Nos. 1000 and 1322 in the amount of P7,500,000.00 to beabsorbed by the GSIS, in order to finance the acquisition by the PHHC of theentire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter.

On December 29,1960, Petitioner Philippine Suburban DevelopmentCorporation, as owner of the unoccupied portion of the Sapang Palay Estateand the Peoples Homesite and Housing Corporation, entered into a contract

embodied in a public instrument entitled Deed of Absolute Sale wherebythe former conveyed unto the latter the two parcels of land abovementioned.This was not registered in the Office of the Register of Deeds until March 14,1961, due to the fact, petitioner claims, that the PHHC could not at onceadvance the money needed for registration expenses.

In the meantime, the Auditor General, to whom a copy of the contract hadbeen submitted for approval in conformity with Executive Order No. 290,expressed objections thereto and requested a re-examination of the contract,in view of the fact that from 1948 to December 20, 1960, the entire haciendawas assessed at P131,590.00, and reassessed beginning December 21,1960 in the greatly increased amount of P4,898,110.00.

It appears that as early as the first week of June, 1960, prior to the signing ofthe deed by the parties, the PHHC acquired possession of the property, withthe consent of petitioner, to enable the said PHHC to proceed immediatelywith the construction of roads in the new settlement and to resettle thesquatters and flood victims in Manila who were rendered homeless by thefloods or ejected from the lots which they were then occupying.

On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC

to withhold the amount of P30,099.79 from the purchase price to be paid by itto the Philippine Suburban Development Corporation. Said amountrepresented the realty tax due on the property involved for the calendar year1961. Petitioner, through the PHHC, paid under protest the abovementionedamount to the Provincial Treasurer of Bulacan and thereafter, or on June 13,1961, by letter, requested then Secretary of Finance Dominador Aytona toorder a refund of the amount so paid. Upon recommendation of theProvincial Treasurer of Bulacan, said request was denied by the Secretary ofFinance in a letter-decision dated August 22, 1961.

**Petitioner claimed that it ceased to be the owner of the land in questionupon the execution of the Deed of Absolute Sale on December 29, 1960. It isnow claimed in this appeal that the Auditor General erred in disallowing therefund of the real estate tax in the amount of P30,460.90 because aside fromthe presumptive delivery of the property by the execution of the deed of saleon December 29, 1960, the possession of the property was actually deliveredto the vendee prior to the sale, and, therefore, by the transmission ofownership to the vendee, petitioner has ceased to be the owner of theproperty involved, and, consequently, under no obligation to pay the realproperty tax for the year 1961.**Respondent, however, argues that the presumptive delivery of the propertyunder Article 1498 of the Civil Code does not apply because of therequirement in the contract that the sale shall first be approved by the AuditorGeneral, pursuant to the Executive Order.

ISSUE: WON there was already a valid transfer of ownership between theparties.

HELD:Considering the aforementioned approval and authorization by the Presidentof the Philippines of the specific transaction in question, the prior approval bythe Auditor General envisioned by Administrative Order would therefore, notbe necessary.

Under the civil law, delivery (tradition) as a mode of transmission ofownership maybe actual (real tradition) or constructive (constructivetradition). 2 When the sale of real property is made in a public instrument, theexecution thereof is equivalent to the delivery of the thing object of the

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contract, if from the deed the contrary does not appear or cannot clearly beinferred. 3In other words, there is symbolic delivery of the property subject of the saleby the execution of the public instrument, unless from the express terms ofthe instrument, or by clear inference therefrom, this was not the intention ofthe parties. Such would be the case, for instance, when a certain date isfixed for the purchaser to take possession of the property subject of theconveyance, or where, in case of sale by installments, it is stipulated that

until the last installment is made, the title to the property should remain withthe vendor, or when the vendor reserves the right to use and enjoy theproperties until the gathering of the pending crops, or where the vendor hasno control over the thing sold at the moment of the sale, and, therefore, itsmaterial delivery could not have been made.In the case at bar, there is no question that the vendor had actually placedthe vendee in possession and control over the thing sold, even before thedate of the sale. The condition that petitioner should first register the deed ofsale and secure a new title in the name of the vendee before the latter shallpay the balance of the purchase price, did not preclude the transmission ofownership. In the absence of an express stipulation to the contrary, thepayment of the purchase price of the good is not a condition, precedent tothe transfer of title to the buyer, but title passes by the delivery of the goods.WHEREFORE,the appealed decision is hereby reversed, and the realproperty tax paid under protest to the Provincial Treasurer of Bulacan bypetitioner Philippine Suburban Development Corporation, in the amount ofP30,460,90, is hereby ordered refunded. Without any pronouncement as tocosts.

SARMIENTO VS. LESACA

FACTS:

On January 18, 1949, plaintiff bought from defendant two parcels ofland for P5,000; that after the sale, plaintiff tried to take actualphysical possession of the lands but was prevented from doing so byone Martin Deloso who claims to be the owner thereof;

on February 1, 1949, plaintiff instituted an action before the TenancyEnforcement Division of the Department of Justice to oust saidMartin Deloso from the possession of the lands, which action shelater abandoned for reasons known only to her;

on December 12, 1949, plaintiff wrote defendant asking the lattereither to change the lands sold with another of the same kind andclass or to return the purchase price together with the expenses shehad incurred in the execution of the sale, plus 6 per cent interest;

and that since defendant did not agree to this proposition as

evidenced by her letter dated December 21,1949, plaintiff filed thepresent action.

ISSUES: Can plaintiff rescind the contract of sale in view of defendant'sfailure to deliver the possession of the lands?

HELD: Yes. this action is based on Article 1124 of the same Code, which

provides:Art 1124. The right to resolve reciprocal obligations, in case one ofthe obligors should fail to comply with that which is incumbent uponhim, is deemed to be implied.The person prejudiced may choose between exacting the fulfillmentof the obligation or its resolution with indemnity for losses andpayment of interest in either case. He may also demand theresolution of the obligation even after having elected its fulfillment,should the latter be found impossible.

Undoubtedly in a contract of purchase and sale the obligation of the parties isreciprocal, and, as provided by the law, in case one of the parties fails tocomply with what is incumbent upon him to do, the person prejudiced may

either exact the fulfillment of the obligation or rescind the sale. Since plaintiffchose the latter alternative, it cannot be disputed that her action is inaccordance with law.

Santos v. Santos

Facts:1. Petitioner Zenaida M. Santos is the widow of Salvador Santos, a

brother of private respondents Calixto, Alberto, Antonio, allsurnamed Santos and Rosa Santos-Carreron.

2. The Spouses Jesus and Rosalia Santos owned a parcel of land withan area of 154 sq.m. located at Sta. Cruz, Manila. On said land was

a 4-dour apartment for rent administered by Rosalia. Jesus andRosalia had five children: Salvador, Calixto, Alberto, Antonio, andRosa.

3. On January 19, 1959, Jesus and Rosalia executed a deed of sale ofthe properties in favour of their children, Salvador and Rosa. Rosathen sold her share to Salvador. Despite the said transfer, Rosaliacontinued to lease and receive receive rentals from the apartmentunits.

4. On November 1, 1979, Jesus died. On January 9, 1985, Salvadordied. The following month of the same year, Rosalia passed away.Zenaida, claiming to be Salvadors heir, demanded the rent from thelate Rosalias tenant, Antonio Hombrebueno, who refused to pay. An

ejectment suit against him was filed and decided in favour ofZenaida.

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5. On January 5, 1989, herein private respondents instituted an actionfor reconveyance of property with preliminary injunction againstZenaida alleging that the two deeds of sale executed on January 19,1959 and November 20, 1973 were simulated for lack ofconsideration and were executed to accommodate Salvador ingenerating funds for his business ventures.

6. Zenaida denied, arguing that Salvador was the registered owner ofthe property, which could only be subjected to encumbrances or

liens annotated on the title; that the respodnents right toreconveyance was already barred by prescription and laches; andthat the complaint stated no cause of action.

7. RTC decided in favour of respondents, stating that the Rosalia andJesus continued to possess the property and to exercise rights ofownership through the receiving of monthly rentals and the paymentof realty taxes. The lower court ruled that the deeds of sale werefictitious.

8. CA affirmed, stating that in order for the execution of a publicinstrument to effect tradition, the vendor shall have had control overthe thing sold, at the moment of sale.

Issues (Sales-related):1. Are payments of realty taxes and retention of possession indications

of continued ownership by the original owners?2. Is a sale through a public instrument tantamount to delivery of the

thing sold?

Held:1. Yes, however, they must be supported by other effective proofs to

become sufficient indications of continued ownership. In the caseherein, Jesus and Rosalia continued to possess and administer theproperty and enjoy its fruits by leasing it to third persons. Both Rosaand Salvador did not exercise any right of ownership over it. Further,in property agreements concerning the land, Salvador still sought thepermission of his mother. Salvador also surrendered the title to hismother after registering the property in his name. These are clearindications that ownership still remained with the original owners.

2. No, nowhere in the NCC does it provide that execution of a deed ofsale is a conclusive presumption of delivery of possession. The Codemerely said that the execution shall be equivalent to delivery. Thepresumption can be rebutted by clear and convincing evidence.Presumptive delivery can be negated by the failure of the vendee totake actual possession of the land sold.

a. Danguilan v. IAC for the execution of a public instrument toeffect tradition, the purchaser must be placed in control ofthe thing sold. When there is no impediment to prevent the

thing sold from converting to tenancy of the purchaser by the

sole will of the vendor, symbolic delivery through theexecution of a public instrument is sufficient.

As found by both the trial and appellate courts and amply supported by theevidence on record, Salvador was never placed in control of the property.The original sellers retained their control and possession. Therefore, therewas no real transfer of ownership.

Board of Liquidators vs Floro

Facts:Melencio Malabanan entered into an agreement with the Board of Liquidators(The Board) for the salvage of surplus properties sunk in in territorial watersoff the provinces of Mindoro, La Union, and Batangas. They agreed thatMalabanan was assigned the right, title and interest in and to all the surplusproperties salvaged, and shall therefore pay the Government for such whichshall be made monthly.Malabanan submitted a recovery report dated July 26, 1954, wherein it isstated that he had recovered a total of 13,107 pieces of steel mattings fromthe operations. Four months previously, Malabanan had entered into an

agreement with Exequiel Floro, agreeing that Floro would advance toMalabanan certain sums of money, not to exceed P25,000.00,repayment,thereof being secured by quantities of steel mattings which Malabanan wouldconsign to Floro. Pursuant thereto, Floro claims to have made total advancesto the sum of P24,224.50.It appears that as Malabanan was not able to repay Floro's advances. SoFloro sold 11,047 pieces of steel mattings to Eulalio Legaspi for the sum ofP24,803.40.Seventeen days later, on August 21, 1954, Malabanan filed in the Court ofFirst Instance of Manila a petition for voluntary insolvency,attaching thereto aSchedule of Accounts, in which the Board was listed as one of the creditorsfor P10,874.46, and Exequiel Floro for P24,220.50, as well as several pieces

of steel mattings obtained from the waters.The controversy of the case arose when Malabanan listed the steel mattingsas its properties, which was opposed by the Board claiming ownership overthe steel mattings recoveredfrom the salvaging operations.Floro opposed this and contended that such steel mattings are owned byEulalio Legaspi by virtue of a deed of sale executed in his favor, executed byFloro pursuant to a previous contract between Malabanan and Floro.CFI: declared Malabanan as the owner of the steel mattings under hiscontract with the board, thus, Floro was properly authorized to dispose of themattings (sale to Legaspi).The Board contends that Malabanan did not acquire ownership over the steelmattings for failure to comply with certain terms of the contract, allegedly

constituting conditions precedent for the transfer of title.Hence!

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Issues:

1: WON , based on the contract between Malabanan and the Board, deliveryof the surplus properties salvaged (steel mattings)were never intended to bedelivered to Malabanan.Held: There is nothing in the terms of the public instrument in question fromwhich an intent to withhold delivery or transfer of title may be inferred.

While there can be reservation of title in the seller until full payment of theprice (Article 1478, N.C.C.), or, until fulfillment of a condition (Article 1505,N.C.C.); and while execution of a public instrument amounts to delivery onlywhen from the deed the contrary does not appear or cannot clearly beinferred (Article 1498, supra), there is nothing in the said contract which maybe deemed a reservation of title, or from which it may clearly be inferred thatdelivery was not intended.The contention that there was no delivery is incorrect. While there was nophysical tradition, there was one by agreement (traditio longa manu) inconformity with Article 1499 of the Civil Code.

Art. 1499 The delivery of movable property may likewise be made by themere consent or agreement of the contracting parties, if the thing sold cannotbe transferred to the possession of the vendee at the time of the sale!.2 WON Malabanan has title to the steel mattings.

HELD: YES. Malabanan has title to the steel mattings. The Court held thatthecontract between Malabanan and the Board had effect of vestingMalabanan withtitle to, or ownership of the steel mattings in question as soonas they werebrought up from the bottom of the sea. This was shown from theagreement between the parties wherein it is said that ownership of thegoods passed to Malabanan as soon as they were recovered or salvagedand not only after payment of the stipulated price. The contention that therewas no delivery is incorrect. While there was no physical tradition, there wasone by agreement (tradition longa manu) in conformity with Article 1499 ofthe Civil Code. Art. 1499. The delivery of movable property may likewise bemade by the mere consent or agreement of thecontracting parties, if the thingsold cannot be transferred to the possession of thevendee at the time of thesale. As observed earlier, there is nothing in the terms of the publicinstrument in question from which an intent to withhold delivery ortransfer oftitle may be inferred.

Abuan v. Garcia (Celebrado)

En Banc | G.R. No. L-20091 | 30 July 1965 | Bengzon, C.J.DOCTRINE: In delivery brevi manu, ownership of the thing sold is acquiredby the vendee from the moment it is delivered to him in any other manner

signifying an agreement that the possession is transferred from the vendor tothe vendee. Full payment of purchase price, unless theres stipulation tocontrary, does not affect the ownership of the property already possessed by,and delivered to, the vendee.

FACTS:This is an action for legal redemption under 119 of the Public Land Lawwhich provides that:

Every conveyance of land acquired under the free patent orhomestead provisions, when proper, shall be subject to re-purchaseby the applicant, his widow, or legal heirs, for a period of five yearsfrom the date of conveyance.

A homestead is acquired by Laureano Abuan. After his death, it passed tohis legal heirs (Perpetua Abuan, et al). OCT in his name was cancelled andreplaced by TCT No. T-5486 issued in the heirs names.

On August 7, 1953, Abuans heirs sold the parcel of land to EustaquioGarcia, et al, evidenced by a Deed of Absolute Sale and TCT No. T-5906was issued to them.

Abuans heirs filed an action to recover the land, alleging that the deed ofabsolute sale had been executed through fraud, without consideration.However, the case was subsequently settled amicably, when the partiesentered into an Agreement under the terms of which Garcias paid P500.00on that day as partial payment of the purchase price of the land, andpromised to pay the balance of P1,500.00 on or before April 30, 1955, with agrace period of thirty days. The parties also stipulated in said Agreement thatit shall supersede all previous agreements or contracts heretofore enteredinto and executed by and between plaintiff and defendants, involving thesame parcel of Riceland!Claiming that full payment had been effected only sometime in May 1955,

Abuans heirs instituted the present action on March 4, 1960. Garcias movedto dismiss because the five-year redemption period had already expired.

ISSUE:WON the five-year period (within which plaintiffs may exercise their right ofrepurchase) begins to run on August 7, 1953, when the Deed of AbsoluteSale was executed.

HELD:YES. The law speaks of five years from date of conveyance. Conveyancemeans transfer of ownership; it means the date when the title to the land istransferred from one person to another. The five-year period should,therefore, be reckoned with from the date that defendants acquiredownership of the land.

Art. 1477 provides that ownership of the thing sold shall be transferred to the

vendee upon the actual or constructive delivery thereof; and Art. 1496

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points out that ownership of the thing sold is acquired by the vendee fromthe moment it is delivered to himin any of the ways specified in Arts. 1497to 1501. Under Art. 1498, when the sale is made through a public instrument as in this case the execution thereof shall be equivalent to thedeliveryof the thing which is the object of the contract, if from the deed thecontrary does NOT appear or cannot be clearly inferred. This manner ofdelivery of the thing through the execution of a public document is commonto personal as well as real property.

The deed of sale was executed on August 7, 1953, which was supersededby the Agreement of February 28, 1955, as to the terms and conditions ofpayment of the purchase price. The latter agreement did NOT operate torevest the ownershipof the land in the plaintiffs.It is apparent that five years had elapsed since it starts from the date of theexecution of the instrument of conveyance.

Important part; brevi manuBut assuming arguendothat the deed of sale is null and void, as the heirs of

Abuan aver, we can consider the date of the Agreement as the time withinownership is vested. True, it is a private instrument which could NOT beconstrued as constructive delivery under Art. 1498. But Art. 1496 explicitlyprovides that ownership of the thing sold is acquired by the vendee from themoment it is delivered to him in any other manner signifying anagreement that the possession is transferred from the vendor to thevendee. The intention to give possession (and ownership) is manifest in theagreement entered into by the parties, especially considering the followingcircumstances: (1) the payment of part of the purchase price, there being NOstipulation in the agreement that ownership will NOT vest in the vendees untilfull payment of the price; and (2) the fact that the agreement was entered intoin consideration of heirs desistance, as in fact they did desist, in prosecutingtheir reivindicatory action, thereby leaving the property in the hands ofGarciasas owners thereof, necessarily. This was delivery brevi manupermissible under Arts. 1499 and 1501.

The circumstance that full payment was made only in May 1955, does NOTalter the fact that ownership of the land is transferred to Garcias upon theexecution of the agreement with the intention of letting them hold it asowners. In the absence of an express stipulation to the contrary, the paymentof the price is NOT a condition precedent to the transfer of ownership, whichpasses by delivery of the thing to the buyer.

Heirs of Pedro Escanlar v CAOctober 23, 1997Romero, J.

Facts:

1. Spouses Guillermo Nombre and Victoriana Cari-an-Nombre died.Guillermos heirs are his nephews and grandnephews. Victorianasheir is Gregorio Cari-an.

2. Gregorio Cari-ans heirs executed a Deed of Sale lot pertaining to "portion pro-indiviso of Victoriana in favor of Escanlar, who is thelessee. The Deed stated that it shall become effective only uponapproval by the CFI of Negros Occidental.

3. Escanlar heirs paid by installment the Cari-an heirs after the

stipulated date of payment.4. Being former lessees, Escanlar heirs continued in possession.Interestingly, they continued to pay rent.

5. Probate court approved a motion filed by Cari-an and Nombre heirsto sell their shares. Cari-an heirs sold theirs to spouses Chua.

6. Cari-an heirs sought to cancel sale in favor of Escanlar. This wasapproved by probate court. Certificates of title were issued in thename of Chua.

7. Trial court: Deed of Sale executed in favor of Chua, which wasapproved by probate court, is upheld.

8. CA: Affirmed. The Deed of Sale in favor of Escanlar is a contract tosell which shall be effective only upon approval by the probate courtand upon full payment.

Issues/Held:1. WON the Deed of Sale in favor of Escanlar is a contract to sell.

NO2. WON approval by the probate court is necessary for the validity of

sale. NO3. WON Cari-an heirs can rescind the contract. NO

Ratio:1. It is a contract of sale because:

a. Cari-an heirs did not reserve the ownershipb. No stipulation that Cari-an heirs can unilaterally rescind in

case of non-paymentPrior to the sale, Escanlar heirs were in possession.

Upon sale, they remained in possession, not as lessees but asowners through symbolic delivery known as tradition brevi manu.Under Art 1477, ownership is acquired by actual of constructivedelivery of the thing.

2. The approval by the probate court affected only the effectivity not thevalidity of the contract. Besides, the need for approval exists onlywhere specific properties of the estate and not when only indivisibleshares of heirs are sold.

3. Although Escanlar heirs failed to pay on the due date, the Cari-anheirs made no judicial demand for rescission. The Escanlar heir paid

after the deadline ad the Cari-an heirs accepted.

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The fact that Escanlar heirs continued paying rent is not anadmission that they have not fully paid the purchase price. They did sobecause what they purchased are only the hereditary shares of theCari-an and not the entire estate.

Disposition:The sale to Chua is valid except to the extent of what was sold to

Escanlar. However, since the probate court did not award the individualshares of each heir because all the properties had already been sold, it is notcertain how much the Cari-ans are entitled to with respect to the two lots.

The proceedings have attained finality and cannot be reopened.However, it can be assumed that the Cari-an heirs are entitled to half of eachproperty. Thus, Escanlar heirs own the said half and ought to deliverpossession of the other half to Chua.

AMIGO VS. TEVESG.R. No. L-6389November 29, 1954

FACTS:- On August 11, 1937, Macario Amigo and Anacleto Cagalitanexecuted in favor of their son, Marc el ino Amigo , a po werof attorney granting to the latter, among others, the power"to lease, let, bargain, transfer, convey and sell, remise, release,mortgage and hypothecate, part or any of the properties . . . uponsuch terms and conditions, and under such covenants as he shallthink fit.

- On October 30, 1938, Marcelino Amigo, in his capacity as attorney-in-fact, executed a deed of sale of a parcel of land for a priceof P3,000 in favor of Serafin Teves stipulating therein that thevendors could repurchase the land within a period of 18 months from

the date of the sale.- In the same document, it was also stipulated that vendors wouldremain in possession of the land as lessees for a period of 18months subject to the following terms and conditions:(a) the lessees shall pay P180 as rent every six months from thedate of the agreement;(b) the period of the lease shall terminate on April 30, 1940;(c) in case of litigation, the lessees shall pay P100 as attorney'sfees; and(d) in case of failure to pay any rental as agreed upon, thelease shal l automat ical ly terminate and the r ight ofown ers hip of ven dee sha ll become absolute.

- On July 20, 1939, the spouses Macario Amigo and AnacletaCagalitan donated to their sons Justino Amigo and Pastor

Amigo seve ra l pa rcels of land includ ing thei r right torepurchase the land in litigation

- The deed of donation was made in a public ins trument, was dulyaccepted by the donees, and was registered in the Officeof the Register of Deeds.

- The vendors-lessees paid the rental corresponding to the first sixmonths, but not the rental for the subsequent semester, and so onJanuary 8, 1940, Serafin Teves, the vendee-lessor, executed an"Affidavit of Consolidation of Title" in view of the failure of thelessees to pay the rentals as agreed upon, and registered saidaffidavit in the Office of the Register of Deeds who issued to SerafinTeves the corresponding transfer of title over the land in question.

- On March 9, 1940, Just ino Amigo and Pastor Amigo, asdonees of the right to repurchase the land in question, offeredto repurchase the land from Serafin Teves by tendering to him thepayment of the redemption price but the latter refused on the groundthat the ownership had already been consolidated in him aspurchaser a retro.

ISSUES:- Whether or not the lease covenant contained in the

deed of sale with pacto de retro executed by Marcelino Amigoas attorney-in-fact in favor of Serafin Teves is not germane to, norwithin the purview of, the powers granted to said attorney-in-fact and,therefore, is ultra vires and null and void.

HELD:- No. The lease covenant contained in the deed of sale with

pacto de retro executed by Marcelino Amigo as attorney-in-fact infavor of Serafin Teves is not germane to, nor within thep u r v i e w o f , t h e p o w e r s g r a n t e d t o s a i d a t t o r n e y - i n -f a c t a n d , therefore, is not ultra vires and is valid.

RATIO- The power granted to the agent is so broad that it practically covers

the celebrat ion of any contract and the conclusion of anycovenant or st ipulat ion. Among the powers granted are: tobargain, contract, agree for, purchase, receive, and keeplands, tenements, hereditaments, and accept the seizing andpossessing of al l land s," or "to lease , let , barga in,transfer, convey and sell , re mi se , re le as e, mo rtgage andhypothecate . . . upon such terms and conditions, and undersuch covenants as he shall think fit ."

- When the power of attorney says that the agent can enter into anycontract concerning the land, or can sell the land under any term orcondition and covenant he may think fit, means that he can act in the

same manner and with the same breath and lat i tude as

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the pr incipal could concerning the proper ty. The factthat the agent has acted in accordance wi th the wish ofhis principals can be inferred from their attitude in donating to theherein petitioners the right to redeem the land under the terms andconditions appearing in the deed of sale executed by their agent.

- The lease covenant embodied in the deed of sale is common incontracts involving sales of land with pacto de retro.

- The lease that a vendor executes on the property may be consideredas a means of delivery or tradition by constitutum possessorium.

- Where the vendor a retro continues to occupy the land as lessee, byfiction of law, the possession is deemed to be constituted in thevendee by virtue of this mode of tradition. It can be said that thecovenant regarding the lease of the land sold is germane tothe contract of sale with pacto de retro.

Behn, Meyer & Co. v. Yangco

Facts:! Memorandum of Agreement (Contract 37) was executed between

the parties for sale of 80 drums of caustic soda, to be delivered onMarch 1916 at Manila

! (as per the contract c.i.f. Manila, pagadero against delivery ofdocuments)

! Merchandise was shipped from NY on the steamship ChinesePrince but was detained at Penang, Malaysia

! While detained, British authorities removed 71 drums! Yangco refused to accept delivery of the remaining drums (goods in

bad order), the optional offer of waiting until arrival of remainder, andthe substitution of goods of similar grade

!

Company sold for the account of Yangco 80 drums of caustic soda.The difference between this realized sum and the purchase price isclaimed by the Company as damages for breach

Issue:w/n the place of delivery is Manilaw/n the time of delivery is on March 1916

Held:1. Yes, the stipulation that the expenses for freight and shipment are borneby the vendor raises a disputable presumption that the deliver is to be madeat the goods ultimate destination Manila. Such presumption was nevercountermanded by proof to the contrary.

Determination of the place of delivery is a question of fact.! If the contract is silent: delivery by the vendor to a common carrier, in

the usual and ordinary course of business, transfers the property tothe vendee.

! If there is a specification in a contact: taken to indicate the intentionof the parties in regard to the place of delivery.

o If the buyer is to pay the freight, it is reasonable to supposethat he does so because the goods become his at the point

of shipment.o On the other hand, if the seller is to pay the freight, theinference is equally so strong that the duty of the seller is tohave the goods transported to their ultimate destination andthat title to property does not pass until the goods havereached their destination.

The letters c.i.f. found in British contracts stand for cost, insurance, andfreight. It means that the price paid covers not only the cost of the goods, butthe expenses of freight and insurance to be paid by the seller. In Americancontracts, F.O.B. or free on board is the counterpart.

If the Company really believed that NY was the place of delivery, it shouldhave let Yangco bear the entire loss of the shipment under the hypothesisthat the latter would have been absolute owner of the soda confiscated. Thisview is supported by the fact that the goods were neither shipped norconsigned to the Company and instead the bill of lading was for goodsreceived from Neuss Hesslein & Co. The documents evidencing saidshipment and symbolizing the property were sent by Neuss Hesslein & Co. toBPI with a draft upon Behn, Meyer & Co. and with instructions to deliver thesame, and thus transfer the property to Behn, Meyer & Co. when and ifBehn, Meyer & Co. should pay the draft.

2. Yes, as the contract provided. Actual shipment however took place onApril 1916.

Company did not prove that it complied with conditions precedent to thecontract. This entitles the vendee to choose either specific performance orrescission. Rescission is proper because demanding fulfilment of the contractis no longer possible, thus Yangco is relieved of his obligation to pay theprice.

GENERAL FOODS v NACOCO(November 20, 1956)

FACTS: General Foods is a foreign corporation licensed to do business in thePhilippines.

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National Coconut Corporation (NACOCO) sold to General Foods 1500 tonsof long copra under the terms:

a. Quantity: Seller could deliver 5% more or less than the contractedquantity, and thesurplus/deficiency shall be paid on the basis of the deliveredweight.

b. Price: CIF New York.c. Payment: Buyers to open an Irrevocable Letter of Credit for 95%

of invoice value based on shipping weight.d. Balance of the price was to be ascertained on the basis of outturn

weights and quality of the cargo at the port of discharge.e. Weights: Net landed weights.

In the Philippines, the net cargo was weighed at 1054 tons, the allegedweight delivered by NACOCO. NACOCO then withdrew 95% (or $136,000)of the amount in the Letter of Credit in favor of NACOCO. In New York, the net cargo was reweighed and found to weigh only 898short tons. General Foods demanded the refund of the amount of $24000. NACOCOs officers-in-charge acknowledged in a letter liability thedeficiency and promised payment as soon asfunds were available. However, NACOCO was abolished and went into liquidation. The Board ofLiquidators refused to pay the claim of General Foods. General Foods then filed to recover $24,000 and 17% exchange tax plusattorneys fees and costs. General Foods alleges that although the sale quoted CIF New York, theagreement contemplated the payment of the price according to the weightand quality of the cargo upon arrival in New York (port of destination).Therefore, the risk of shipment was upon the seller. NACOCO alleges that the contract is an ordinary CIF, which means thatdelivery to the carrier is delivery to the buyer. Therefore, the shipment havingbeen delivered to the buyer and the buyer having paid the price, the sale wasconsummated.

ISSUES:

1. Whether the weight in New York should be the basis upon payment of theprice of copra should be made. Yes. The weight in New York should be the basis.2. Whether what is to be ascertained based upon the outturn weights andquality at port of discharge was only the balance due to be paid. No. Thebalance due to be paid is not the only basis.

HELD: Under an ordinary CIF agreement, delivery to the buyer is complete upondelivery of the goods to the carrier and tender of the shipping and otherdocuments required by the contract and the insurance policy are taken in thebuyers behalf. However, the parties may, by express stipulation, modify a

CIF contract and throw the risk upon the seller until the arrival in the port ofdestinations. In this case, the terms of the contract indicate and intention that the preciseamount to be paid by the buyer depended upon the ascertainment of theexact net weight of the cargo at the point of destination:

a. Net landed weights were to govern.b. The balance of the price was to be ascertained on the basis ofoutturn weights and quality of the cargo at the port of discharge.c. The seller could deliver 5% more or less than the contracted

quantity, and the surplus/deficiency shall be paid on the basis of thedelivered weight. While the risk of loss was apparently placed on General Foods after thedelivery of the cargo to the carrier, it was agreed that the payment of theprice was to be according to the net landed weight which is 898 (weighed inNew York) and not 1054 (weighed in thePhilippines).

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NACOCO had the burden to prove that the shortage due to risks of voyageand not the natural drying up of copra. In other words, if the weight deficiencywas due to the risks of the voyage, General Food would not have beenentitled to any claim in the deficiency. The provision on the balance of the price was to be ascertained on thebasis of outturn weights and quality of the cargo at the port of dischargeshould not be construed separately from the provision that the netlanded weight was to control. The manifest intention of the parties was for the total price to be finallyascertained only upon determining the net weight and quality of the goodsupon arrival in New York, most likely because the nature of copra is that itdries up and diminishes weight during the voyage. In fact, this intention was shown by the letter of the officer-in-charge ofNACOCO acknowledging NACOCOs liability to General Foods. Though thisletter of acknowledgement should not be construed as an admission ofliability of NACOCO, it is nevertheless competent evidence of NACOCOsintention to be bound by the net landed weight or outturn weight of the copraat the port of discharge.

Express Credit v VelascoFacts:

9. On May 25, 1988 respondents purchased on installment, fromspouses Jesus and Lorelei Garcia a house and lot in quezon city

10. A Deed of Absolute Sale was executed whereby the Garcia spousesbound themselves to deliver the title of the property purchased, freefrom all liens and encumbrances within 15 days from full payment.

11. After repeated demands, respondents went to the Register of Deedsin Quezon City and discovered that the Garcia spouses hadmortgaged the property to petitioner, Express credit FinancingCorporation, for P250,000 on June 15, 1989, or more than a yearafter the property was sold to them.

12. the respondents filed a case for Quieting of Title and SpecificPerformance against the Garcia spouses before the court a quo,whereby they caused registration of a notice of lis pendens on thetitle

13. On October 7, 1992, Express credit foreclosed on the property indefiance of the notice of lis pendens and the Writ of PreliminaryInjunction issued by the lower court

Issues (Sales-related):3. WON Express Credit is a purchaser in good faith?4. Who has the better right, the respondents or the purchaser in the

foreclosure proceeding.

Held:3. No4. The respondents

Ratio:

1. Based on the facts presented, it was clear that two creditinvestigators of Express Credit visited the subject property toinvestigate concerning the occupants on the property and theywere informed that the property was already purchased by therespondents

A purchaser cannot close his eyes to facts which should put areasonable man upon his guard and claim that he acted in good faithunder the belief that there was no defect in the title of the vendor

His mere refusal to believe that such defect exists, or his willfulclosing of his eyes to the possibility of the existence of a defectin his vendors title, will not make him an innocent purchaserfor value

It is true that a person dealing with the owner of registered land is notbound to go beyond the certificate of title. He may rely on the noticesof the encumbrances on the property annotated on the certificate oftitle or absence of any annotation. However, we note that the Garciaspouses are unlike other mortgagors. They are in the business ofconstructing and selling townhouses and are past masters in realestate transactions

2. This is a case of double sale: The first sale is the unregistered saleof the property covered by TCT No. 3250 by the Garcia spouses tothe respondents; the second is the sale during the foreclosureproceedings by the Ex-Officio Sheriff in favor of the petitioner as the

winning bidder.

An innocent purchaser for value or any equivalent phraseshall be deemed to include,under the Torrens System, the innocent lessee, mortgagee, andother encumbrancer forvalue.

Thus, due to the fact that it was proven that express credit isnot a innocent purchaser of value, then he has lost his right inregards to its interest in the property.

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Carbonell v CA CarlosTheFierce

FACTS:

On January 27, 1955, respondent Jose Poncio executed a privatememorandum of sale of his parcel of land with improvements situated in SanJuan, Rizal in favor of petitioner Rosario Carbonell who knew that the saidproperty was at that time subject to a mortgage in favor of the Republic

Savings Bank (RSB) for the sum of P1,500.00. Carbonell secured theconsent of the President of RSB for her to assume Poncios mortgage.Four days later, Poncio, in another private memorandum, bound himself tosell the same property for an improved price to one Emma Infante for thesum of P2,357.52,with the latter still assuming the existing mortgage debt infavor of the RSB in the amount of P1,177.48. Thus, in February 2, Poncioexecuted a formal registerable deed of sale in her (Infante's) favor.Note: Carbonell and Poncio were cousins, both natives of Batanes. Thedocument evidencing the sale of land by Poncio in favor of Carbonell waswritten in the Batanes dialect. Carbonell (first buyer),Poncio (vendor), andInfante, were adjacent neighbors in San Juan, Rizal.

When the first buyer Carbonell saw the seller Poncio a few days afterwards,bringing the formal deed of sale for the latter's signature and the balance ofthe agreed cash payment, she was told that he could no longer proceed withformalizing the contract with her (Carbonell) because he had alreadyformalized a sales contract in favor of Infante. Poncio even said that he couldnot withdraw from his deal with Infante, even if he were to go to jail.

Carbonell sought to contact Infante, but the latter refused to see her. Takenote that the house of Infante was just behind the house of Carbonell.

To protect her legal rights as the first buyer, Carbonell registered onFebruary 8, 1955with the Register of Deeds her adverse claim as first buyer

entitled to the property. Meanwhile, Infante, the second buyer, was able toregister the sale in her favor only on February 12, 1955, so that the transfercertificate of title issued in her name carried the duly annotated adverseclaim of Carbonell as the first buyer.Infante took immediate possession of the lot involved, built therein a wall andgate.

ISSUE:

Who has the superior right over the subject property?

COURT RULING:

The Supreme Court reversed the appellate courts decision and declared thefirst buyer Carbonell to have the superior right over the subject property,relying on Article 1544 of the Civil Code.

Article 1544. If the same thing should have been sold todifferent vendees, the ownership shall be transferred to theperson who may have first taken possession thereof in goodfaith, if it should be movable property.

Should it be immovable property, the ownership shallbelong to the person acquiring it who in good faith firstrecordedit in the Registry of Property.

Should there be no inscription, the ownership shall pertain tothe person who in good faith was first in the possession;and, in the absence thereof, to the person who presents theoldest title, provided there is good faith.

Unlike the first and third paragraphs of Article 1544, which accord preferenceto the one who first takes possession in good faith of personal or realproperty, the second paragraph directs that ownership of immovable propertyshould be recognized in favor of one "who in good faith first recorded" hisright. Under the first and third paragraphs, good faith must characterize theprior possession, while under the second paragraph, good faith mustcharacterize the act of anterior registration.

Aside from the fact that Carbonell was the first to register the land, shealso registered it in good faith:

1. Carbonell was the only buyer thereofand the title of Poncio wasstill in his name solely encumbered by bank mortgage dulyannotated thereon.

2. Carbonell was not aware - and she could not have been aware -of any sale to Infante as there was no such sale to Infante then.

3. Carbonell wanted to meet Infante but the latter refused so toprotect her legal rights, Carbonell registered her adverse claim onFebruary 8, 1955.

Hence, Carbonell's prior purchase of the land was made in good faith which did not cease after Poncio told her on January 31, 1955 of his secondsale of the same lot to Infante. Under the circumstances, this recording ofCarbonells adverse claim should be deemed to have been done in goodfaith and should emphasize Infante's bad faith when the latter registered herdeed of sale 4 days later.Infante, on the other hand was in bad faith when she registered the land:

1. Infante refused to see Carbonell who wanted to see her afterCarbonell was informed by Poncio that he sold the lot to Ingfante

several days before Infante registered her deed of sale.

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With an aristorcratic disdain unworthy of the good breeding of goodChristian and good neighbor, Infante snubbed Carbonell like a leperand refused to see her. ANG TARAY!

2. Carbonell was already in possession of the mortgage passbook andPoncios copy of the mortgage contract, when Poncio sold the lot toInfante. In the normal course of business, the bank must haveinformed Infante about the assumption of the mortgage debt ofPoncio by Carbonell.

3. Infante should have inquired from Poncio why he was no longer inpossession of the mortgage passbook and from Carbonell why shewas in possession of the same.

4. Carbonell registered on February 8, 1955 her adverse claim, whichwas accordingly annotated on Poncios title, four days before Infanteregistered on February 12, 1955 her deed of sale.

Tanglao v Parungao (Ayesha) [general rule on double sale priortempore, prior jure]October 5, 2007SPOUSES MARIANO S. TANGLAO and CORAZON M.TANGLAO, petitioners,vs.SPOUSES CORAZON S. PARUNGAO and LORENZO G. PARUNGAO(deceased), substituted by LAWRENCE S. PARUNGAO, MARY CHRISTINEPARUNGAO-CURUTCHET, LORDBERT S. PARUNGAO, LODELBERTO S.PARUNGAO and MA. CECILIA PARUNGAO-HERNANDEZ, respondents.SANDOVAL-GUTIERREZ, J.:

SUMMARY: A Contract to Sell was executed between the seller SpringHomes and the 1st buyer Parungao spouses to sell several parcels of land,stipulating a downpayment and the balance to be paid in 1 year. TheParungao spouses subsequently failed to pay the installments while theycontinued introducing improvements on the lot. Five years later,

notwithstanding the occupancy and the improvements introduced by the 1stbuyer, a second buyer Tanglao spouses bought 2 lots from Spring Homes ina Deed of Absolute Sale. These lots were included in the parcels of landbought by the 1st buyer. Thereafter, the 2nd buyer forcibly entered thepremises by opening its gate and doors and entering its premises. Acomplaint for the annulment of the 2nd sale was sought by the first buyer.The SC held that in cases of an immovable being sold to two persons, Art1544 applies.

DOCTRINE: The rules laid down in Art 1544 requires good faith on the partof the person claiming ownership. Good faith is essential being the basicpremise of the preferential rights granted to the person claiming ownership of

the immovable. Settled is the rule that a buyer of real property in possession

of persons other than the seller must be wary and should investigate therights of those in possession, for without such inquiry the buyer can hardly beregarded as a buyer in good faith and cannot have any right over theproperty. Without any investigation on the part of a buyer the later instrumentcreates no right as against the first purchaser, for the rights secured under

Art. 1544 do not accrue unless such inscription is done in good faith. To holdotherwise would reduce the Torrens system to a shield for the commission offraud.

FACTS:

1992, spouses Lorenzo and Corazon Parungao, respondents,purchased from Spring Homes Subdivision (Spring Homes) LotNos. 1, 2, 3, and 4 with a total area of 486 square meters (sq. m.)at P1,350 per sq. m. or a total price of P656,100

o also bought Lot Nos. 7, 8, and 9 with a total area of 457 sq.m. at P1,550.00 per sq. m. or a total price of P708,360.00

o all these lots are located at Block VI, Phase II-C, SpringHomes, Barangay Culiat, Calamba City, Laguna

Respondents made a down payment of P536k, leaving a balanceof P828,450 exclusive of interest

November 1992, respondents introduced improvements on thelots consisting of a concrete perimeter fence with cyclone wires ontop, a heavy steel gate, and two fish breeding buildings, all at a costofP945k

o also elevated the ground level of the lots by filling them withearth and "adobe

Under the terms of the Contracts to Sellsigned by respondents andSpring Homes, balance of P828,450.00 was to be paid within 1 yearfrom its execution; and that should they apply for a loan as paymentfor the balance, they would continue to pay the monthly installmentuntil fully paid

Respondents failed to pay the installments; also failed to secure

a loan because Spring Homes refused to deliver to them the TCTsrequired in their application for a loan secured by a real estatemortgage

o Roy Madamba, salesman-representative of Spring Homes,gave respondents only copies of the Contracts to Sell

April 11, 1997, Spring Homes executed 2 separate Deeds ofAbsolute Sale in favor of spouses Mariano and Corazon Tanglao,petitioners

o TCTs were cancelled and in lieu thereof, new were issued inthe names of petitioners

o turned out that the lots sold to them were among thelots previously sold to respondents

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letter of September 15, 1997, respondents demanded that SpringHomes deliver to them the corrected Contracts to Sell, as well as theTCTs covering the lots they purchased

Meanwhile, petitioners took possession of 2 lots they bought;forcibly opened the steel gate as well as the doors of the buildingsand entered the premises

o respondents demanded an explanation from Spring Homes.Bertha Pasic, its treasurer, apologized and promised she

would settle the matter with petitioners -> but not settled July 15, 1999, respondents filed with the HLURB a complaint for

annulment of deed of sale and/or return of investment for the seven(7) lots and costs of improvements, plus interest and damages

o Spring Homes, Pasic, and Messiah did not file theirrespective answers to the complaint, nor did they appearduring the hearings

October 3, 2000, HLURB Arbiter dismissed complaint filed againstrespondents Felipa Messiah and Spouses Tanglao for lack of merit;Spring Homes to pay complainants

August 24, 2001, HLURB Board of Commissioners reversed ArbitersDecision

o

valid and subsisting the contract to sello Directing complainants to immediately update their account

and directing respondent Spring Homes to accept paymentand to deliver title to complainants upon full payment of thepurchases price

o invalid the deed of absolute sale in favor of the spousesTanglao

o respondent Spring Homes to refund to respondent spousesTanglao all the amounts paid

o Spring Homes to pay administrative fine of P10,000.00 forunsound business practice

! HLURB Board of Commissioners found that at the

time of the sale of the two lots in question topetitioners, the contracts between respondents andSpring Homes were still subsisting. Moreover, thefence and existing structures erected on thepremises should have forewarned petitioners thatthere are adverse claimants of the two lots

o Petitioners MR deniedo Appeal to OP also dismissed

CA also dismissedo perfected contract to sell between respondents and Spring

Homes as early as 1992o contract was subsisting at the time of the second sale,

respondents have a superior right over the lots

ISSUE: who between the petitioners and respondents have the right ofownership over the two lots (respondents)

HELD: CA affirmed

RATIO:The ownership of immovable property sold to two different persons atdifferent times is governed by NCC 1544

Art. 1544. If the same thing should have been sold to differentvendees, the ownership shall be transferred to the person who mayhave 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 Registryof Property.Should there be no inscription, the ownership shall pertain to the

person who in good faith was first in possession and, in the absencethereof, to the person who presents the oldest title, provided there isgood faith.

In double sales of immovable property, the governing principle is priustempore, prius jure(first in time, stronger in right).

Payongayong v CA: under Article 1544, preferential rights shall beaccorded to:

(1) the person acquiring it who in good faith first recorded it in the Registry ofProperty(2) in default thereof to the person who in good faith was first in possession(3) in default thereof, to the person who presents the oldest title, providedthere is good faith.

In all of these cases, good faith is essential, being the basicpremise of the preferential rights granted to the person claimingownership of the immovable.

Occea v. Esponilla: rules in the application of 1544:(1) Knowledge by the first buyer of the second sale cannot defeat the firstbuyers rights except when the second buyer first registers in good faith thesecond sale; and(2) Knowledge gained by the second buyer of the first sale defeats his rightseven if he is first to register, since such knowledge taints his registration withbad faith.

act of registration by the second buyer must be coupled with goodfaith, meaning, the registrant must have no knowledge of the defector lack of title of his vendor or must not have been aware of factswhich should put him upon such inquiry and investigation as mightbe necessary to acquaint him with the defects in the title of hisvendor

CAB: whether petitioners, the second buyers, are purchasers in good faith

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A purchaser in good faith or innocent purchaser for value is onewho buys property and pays a full and fair price for it at the timeof the purchase or before any notice of some other personsclaim on or interest in it

burden of proving the status of a purchaser in good faith lies uponhim who asserts that status and it is not sufficient to invoke theordinary presumption of good faith

HLURB Arbiter, the HLURB Commission, the Office of the President,

and CA found that at the time of the second sale to petitioners bySpring Homes, there were alreadyoccupantsand improvementson the two lots in question

o should have put petitioners on their guard.o a buyer of real property in possession of persons other

than the seller must be wary and should investigate therights of those in possession, for without such inquirythe buyer can hardly be regarded as a buyer in goodfaith and cannot have any right over the property.

As the petitioners cannot be considered buyers in good faith, they cannot relyupon the indefeasibility of their TCTs in view of the doctrine that the defenseof indefeasibility of a torrens title does not extend to transferees who take thecertificate of title in bad faith

Considering that respondents who, in good faith, were first inpossession of the subject lots, we rule that the ownershipthereof pertains to them.

TOPIC: DOUBLE SALES

RICARDO CHENG VS RAMON GENATO, ERNESTO R. DAJOSE & SOCORRO B. DA JOSE,G.R. No. 129760 29 December 1998Martinez, J.:FACTS: Respondent Ramon B. Genato is the owner of two parcels of land

located at Paradise Farms, San Jose Del Monte, Bulacan who entered into aContract to Sell with respondent-spouses Ernesto R. Da Jose and Socorro B.Da Jose for which the purchase price was P80.00 per square; P50,000.00shall be paid as partial down payment at the time of execution of thisContract to Sell; and that P950,000 as full payment shall be paid 30 daysafter the execution of the contract to sell after the buyer has satisfactorilyverified the authenticity of the documents. The contract was in a publicinstrument and was duly annotated at the back of the two certificates of title.Sps Da Jose asked for and was granted by respondent Genato an extensionof another 30 days - until November 5, 1989. Without due notice to the DaJose spouses, Genato executed an Affidavit to Annul the Contract to Sell.Ricardo Cheng expressed his desire to buy Genatos property. Genato

showed him the TCT with annotation of the contract with Sps Da Jose andthe affidavit of cancelling such contract. Cheng paid him P50,000 upon the

assurance that the previous contract will be annulled. When Genato was inRegistry of Deeds in Meycauayan, Bulacan to register the annulment of thecontract with the Sps Da Jose, by coincidence, the two parties met and lateron in the day, Genato decided to continue the Contract he had with them.Genato returned the P50,000 to Cheng. Da Jose spouses paid Genato thecomplete down payment of P950,000.00. Cheng instituted a complaint forspecific performance to compel Genato to execute a deed of sale for checkhe gave was a partial payment to the total agreed purchase price of thesubject properties and considered as an earnest money for which Genatoacceded. RTC ruled in favor of Cheng which was reversed by the CA.ISSUE:1. WON Article 1544 is applicable2. Who has a better right to the land, Cheng or Da Jose spouses?HELD:1. YES Although generally, rule on Double Sales does not apply inContract to Sell, the governing principle of Article 1544: PRIMUSTEMPORE, PORTIOR JURE (first in time, stronger in right) shouldapply. For not only was the contract between herein respondents first intime; it was also registered long before petitioners intrusion as a secondbuyer. This principle only applies when the special rules provided in theaforcited article of Civil Code do not apply or fit the specific circumstancesmandated under said law or by jurisprudence interpreting the article.2. SPS DA JOSE -- The rule exacted by Article 1544 of the Civil Code for thesecond buyer to be able to displace the first buyer are: (1) that the secondbuyer must show that he acted in good faith (i.e. in ignorance of the firstsale and of the first buyer's rights) from the time of acquisition until title istransferred to him by registration or failing registration, by delivery ofpossession; (2) the second buyer must show continuing good faith andinnocence or lack of knowledge of the first sale until his contract ripensinto full ownership through prior registration as provided by law. Although theDa Jose spouses, as first buyers, knew of the second transaction it will notbar them from availing of their rights granted by law, among them, to registerfirst their agreement as against the second buyer. In contrast, knowledge

gained by Cheng of the first transaction between the Da Jose spouses andGenato defeats his rights even if he is first to register the second transaction,since such knowledge taints his prior registration with bad faith.

Spouses Paylago and Dimaandal v. Jarabe Namingit27 March 1968J. J.B.L. Reyes

Facts:" Anselmo Lacatan originally owned the entire lot including the portion

of the lot in question. He died and a new title was issued in the nameof his sons and heirs, Vidal and Florentino Lacatan.

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" When Vidal died, his heirs executed a deed of sale in favor ofspouses Paylago on March 23, 1953 over a portion of the lot with anarea of 3.95 ha.

" When Florentino died, his heirs executed a deed of sale in favor ofspouses Paylago on December 31, 1953 over a portion of the lotwith an area of 2.84 ha.

" On March 2, 1954, by virtue of the registration of the 2 deeds of sale,a new TCT was issued in favor of the Paylago spouses. Asubsequent subdivision survey for the purpose of segregatingthe 2 portions of land disclosed that a 0.5 ha portion of the landpurchased by the spouses was being occupied by Jarabe.Hence, Paylago spouses instituted an action to recoverpossession and ownership of said portion.

" Lower Court: Rendered judgment in favor of Jarabe, declaring heras the owner of the land in question with right to retain possession ofsaid land. The Paylago spouses were not purchasers in good faith.

" CA:Affirmed in toto lower courts decision." Lower Court and CAs factual findings:

- That on 1938, Hilario Jarabe, husband of respondentpurchased the 0.5 ha land from Apolonio Lacatan, whichsale is evidenced by an unregistered deed of sale;

- That Apolonio, in turn bought the land from AnselmoLacatan, the original owner;- That the first deed of sale, which was also unregistered,was lost during the Japanese occupation;- That respondent Jarabe had been in continued possessionas owner of land in question from 1938 to present; and- That Paylagos knew about this fact as admitted in a deedof lease they earlier executed.

Issue:W/N the Paylago spouses as registered buyers have better right over Jarabe,the prior but unregistered purchaser.

Held:No, Jarabe has a better right over the 0.5 ha land.

Ratio:As between two purchasers, the one who registered the sale in his favor ingood faith has a preferred right over the other who has not registered histitle even if he is in actual possession of the immovable property (basis: Art.1544 and jurisprudence).

The fundamental premise of the preferential rights established by Art. 1544 isgood faith. Short of the qualifying circumstance of good faith, the mantle oflegal protection and consequential guarantee of indefeasibility of title to the

registered property will not in any way shelter the recording purchaseragainst known and just claims of a prior though unregistered buyer.

In this case, although the Paylagos deeds of sale are registered andJarabes deed of sale is not registered, the Paylagos acquisition andsubsequent registration were tainted with bad faith. As such, it cannot prevailover Jarabes rights. A purchaser who has knowledge of facts, which shouldput him upon inquiry and investigation as to possible defects of the title of thevendor and fails to make such an inquiry and investigation, cannot claim thathe is a purchaser in good faith. Knowledge of a prior transfer of a registeredproperty by a subsequent purchaser makes him a buyer in bad faith and hisknowledge of such transfer vitiates his title acquired by virtue of the laterinstrument of conveyance, which creates no right as against the first buyer.

Paylagos knew beforehand that Jarabe owned the land in question. It wasadmitted by Paylagos in a deed of lease (par. 3) they executed. Consideringalso that the boundaries of the lands Paylagos bought were well defined,they must have known that the portion occupied by Jarabe under claim ofownership and leased to them by the latter was included in the description.Coupled with their knowledge that Jarabes husband bought the same from

Apolonio, Paylagos should have inquired and made an investigation as to the

possible defects of the title of the Lacatan heirs. This they failed to do so.They cannot now claim complete ignorance of Jarabes claim over theproperty.

AGRICULTURAL AND HOME EXTENSION DEVELOPMENTGROUP v. CASeptember 3, 1992

Cruz, JPURCHASER IN GOOD FAITH; DEFINED. A purchaser in good faith is

defined as "one who buys the property of another without notice that someother person has a right to or interest in such property and pays a full and fairprice for the same at the time of such purchase or before he has notice of theclaim or interest of some other person in the property."FACTS:

Spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a19-hectare parcel of landin Las Pias, Rizal.

Owners duplicate copy of the title was turned over to Gundran.However, Gundran did not register the Deed of Absolute Salebecause he said he was advised of the existence of notices of lispendens on the title.

Later, Gundran and petitioner, Agricultural and Home

Development Group, entered into a Joint Venture Agreementfor

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the improvement and subdivision of the land. This agreementwas also NOT annotated on the title.

4 years after the first sale, spouses Diaz again entered intoanother contract of sale of the same property with respondentLibrado Cabautan.

CFI ordered issuance of a new owners copy of the certificate of titleto the Diaz spouses, who had alleged the loss of their copy. Noticesof lis pendens annotated on the title were canceledand the Deedof Sale in favor of private respondent Cabautan wasRECORDED. A new title was issued in respondent's name in lieu ofthe canceled title.

Gundran instituted an action for reconveyance against respondentCabautan and Josefa Mia seeking the cancellation of Cabautan'snew title and the issuance of a new certificate of title in his (Gundran)name.

Petitioner filed a complaint in intervention with substantially the sameprayers

CFI dismissed Gundrans complaint and petitioners complaint inintervention for lack of merit. CA affirmed with modification. Hencethis petition.

ISSUES:1.Who has a better right over the property? Respondent.2. W/N respondent is a purchaser in good faith. Yes.

HELD/RATIO:1. Following NCC ART 1544, the lower courts were justified in accordingpreferential rights to the private respondent, who had registered the sale inhis favor, as against the petitioners co-venturer whose right to the sameproperty had not been recorded.

2. A purchaser in good faith is defined as "one who buys the propertyof another without notice that some other person has a right to orinterest in such property and pays a full and fair price for the same atthe time of such purchase or before he has notice of the claim orinterest of some other person in the property."

An examination of seller's title discloses no annotation of any sale, lien,encumbrance or adverse claim in favor of Gundran or the petitioner. Well-settled is the rule that when the property sold is registered under the Torrenssystem, registration is the operative act to convey or affect the land insofaras third persons are concerned. Thus, a person dealing with registered landis only charged with notice of the burdens on the property which are noted onthe register or certificate of title.

While it is true that notices of lis pendens in favor of other personswere earlier inscribed on the title, these did not have the effect of

establishing a lien or encumbrance on the property affected.Their onlypurpose was to give notice to third persons and to the whole world thatany interest they might acquire in the property pending litigationwouldbe subject to the result of the suit . Cabautan took this risk. Significantly,three days after the execution of the deed of sale in his favor, the notices oflis pendens were canceled. Cabautan therefore acquired the land freeof any liens or encumbrances and so could claim to be a purchaser ingood faith and for value.

The petitioner insists that it was already in possession of the disputedproperty when Cabautan purchased it and that he could not have not knownof that possession. Such knowledge should belie his claim that he was aninnocent purchaser for value. However, the lower courts found no evidenceof the alleged possession, hence Court rejected this contention in deferenceto the factual finding of the former.

Side Note: The petitioner also invoked the lower courts ruling in Casis v CAto the effect that the registration of the sale in favor of the second purchaserand the issuance of a new certificate of title in his favor did not in any mannervest in him any right of possession and ownership over the subject propertybecause the seller, by reason of their prior sale, had already lost whatever

right or interest she might have had in the property at the time the secondsale was made. However, Court said that this excerpt was included in the

ponencia only as part of the narration of the background facts and was notthereby adopted as a doctrine of the Court. In addition, the Court said(quoting Justice Paras): "true, no one can sell what he does not own, but thisis merely the general rule. Is Art. 1544 then an exception to the general rule?In a sense, yes, by reason of public convenience; in still another sense, itreally reiterates the general rule in that insofar as innocent third persons areconcerned, the registered owner (in the case of real property) is still theowner, with power of disposition.

MARCIANO RIVERA, Plaintiff-Appellant, v. ONG CHE,Defendant-Appellee.

SALE; ACQUISITION OF TITLE BY SECOND PURCHASER. The ownerof certain mill machinery exposed it for sale upon the premises of L, withauthority in the latter to sell it. While the property remained at this place theowner, acting through another agent, C, sold the property to the plaintiff R.Before it was removed by the latter, L, by mistake, sold part of the samemachinery to the defendant O, who purchased in good faith and tookpossession. Held: In an action brought by the plaintiff to recover the disputedproperty, the defendant had acquired the title under article 1473 of the CivilCode.

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FACTS:

The house of Lichauco, or Lichauco Brother had offered for salecertain old machinery and boilers which were deposited and exposedfor sale in a yard at Tanduay, Manila.

The plaintiff, Marciano Rivera, alleges that upon January 8, 1912, hepurchased some of this old material for the price of P5.50, andreceived a receipt from Cresanto Lichauco showing that he hadbecome such purchaser. These things consisted, according to saidreceipt, of 2 complete steam-boilers, with chimneys; 1 steam motorcomplete; one pair of twin rice hullers complete, and a feeding pump(donkey) for boilers.

The plaintiff, however, did not take possession of the property, whichremained in the same place.

On February 9, 1912, the defendants, Ong Che, bought fromLichauco Brothers a lot of old iron, machinery, and junk for the sumof P1,100. This purchaser took immediate possession of thematerials purchased by him.

Later, when Marciano Rivera appeared to take possession of thethings of which he supposed himself to the purchaser, under thereceipt given by Crisanto Lichauco, he found that many of the

accessory and auxiliary parts of the boilers, motor, and rice mill werewanting; and upon investigation it developed that these articles wereheld by the defendant, Ong Che, and were claimed by him as ownerby virtue of the purchase effected by him on February 9.

The plaintiff thereupon instituted the present action to recover thearticles in question alleging that he was the true owner thereof.

Court of First Instance Manila judgment was ruled in favor of OngChe.

ISSUES: who has better right over the machinery and boilersHELD: the defendant had acquired the title under article 1473 of the CivilCode.

Ong Che, was a purchaser of these articles in good faith. It is

furthermore uncontroverted that he acquired possession by virtue ofhis purchase. He, therefore, undoubtedly has, under article 1473 ofthe Civil Code, a better title than the first purchaser, who has neverhad possession at all.

The case presented is that where two different agents of the sameowner successively negotiated sales to two different purchasers, andit is obvious that, under the article of the Civil Code cited above, thesecond purchaser having acquired possession first must be declaredthe true owner. In our view of the facts it was merely a case where amistake was made by the house of Lichauco in selling somethingthat had already been sold.

It was incumbent upon the plaintiff to prove title in himself, as against

the defendant, by a preponderance of the evidence; and he could notrecover merely upon the weakness of the defendants title. The trial

court held that the plaintiff had failed to prove title in himself andthere is no reason for disturbing the judgment on this point. Thedefendant had, in his favor, the fact that he was purchaser in goodfaith and had acquired lawful possession. There is a presumptionarising from such possession that he was the owner (sec. 334 [10],Code of Civil Procedure); and the mere fact, if such it be, that theproperty originally belonged to Galo Lichauco was not sufficient,without more, to defeat a title acquired by the defendant through thehouse of Lichauco.