Sales, 3rd Batch, Full Text
Sales, 3rd Batch, Full Text
Sales, 3rd Batch, Full Text
No.
L-19545
April
18,
1975
PHILIPPINE
SUBURBAN
DEVELOPMENT
CORPORATION,
petitioner,
vs.
THE
AUDITOR
GENERAL,
PEDRO
M.
GIMENEZ,
respondent.
ANTONIO,
J.:
Appeal
by
certiorari
from
the
decision
dated
December
11,
1961,
of
then
Auditor
General
Pedro
M.
Gimenez,
disallowing
the
request
of
petitioner
for
the
refund
of
real
estate
tax
in
the
amount
of
P30,460.90
paid
to
the
Provincial
Treasurer
of
Bulacan.
The
facts
of
the
case
are
as
follows:
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
suitable
lots
for
relocating
squatters
in
Manila
and
suburbs,
and
of
the
Social
Welfare
Administrator
together
with
the
recommendation
of
the
Manager
of
the
Government
Service
Insurance
System,
approved
in
principle
the
acquisition
by
the
People's
Homesite
and
Housing
Corporation
of
the
unoccupied
portion
of
the
Sapang
Palay
Estate
in
Sta.
Maria,
Bulacan
for
relocating
the
squatters
who
desire
to
settle
north
of
Manila,
and
of
another
area
either
in
Las
Pias
or
Paraaque,
Rizal,
or
Bacoor,
Cavite
for
those
who
desire
to
settle
south
of
Manila.
The
project
was
to
be
financed
through
the
flotation
of
bonds
under
the
charter
of
the
PHHC
in
the
amount
of
P4.5
million,
the
same
to
be
absorbed
by
the
Government
Service
Insurance
System.
The
President,
through
the
Executive
Secretary,
informed
the
PHHC
of
such
approval
by
letter
bearing
the
same
date
(Annex
"B").
On
June
10,
1960,
the
Board
of
Directors
of
the
PHHC
passed
Resolution
No.
700
(Annex
"C")
authorizing
the
purchase
of
the
unoccupied
portion
of
the
Sapang
Palay
Estate
at
P0.45
per
square
meter
"subject
to
the
following
conditions
precedent:
t.hqw
1.
That
the
confirmation
by
the
OEC
and
the
President
of
the
purchase
price
of
P0.45
per
sq.
m.
shall
first
be
secured,
pursuant
to
OEC
Memorandum
Circular
No.
114,
dated
May
6,
1957.
2.
That
the
portion
of
the
estate
to
be
acquired
shall
first
be
defined
and
delineated.
3.
That
the
President
of
the
Philippines
shall
first
provide
the
PHHC
with
the
necessary
funds
to
effect
the
purchase
and
development
of
this
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
Auditor
General
pursuant
to
Executive
Order
dated
February
3,
1959.
5.
The
vendor
shall
agree
to
the
dismissal
with
prejudice
of
Civil
Case
No.
Q-3332
C.F.I.
Quezon
City,
entitled
"Phil.
Suburban
Dev.
Corp.
V.
Ortiz,
et
al."
On
July
13,
1960,
the
President
authorized
the
floating
of
bonds
under
Republic
Act
Nos.
1000
and
1322
in
the
amount
of
P7,500,000.00
to
be
absorbed
by
the
GSIS,
in
order
to
finance
the
acquisition
by
the
PHHC
of
the
entire
Sapang
Palay
Estate
at
a
price
not
to
exceed
P0.45
per
sq.
meter.
On
December
29,1960,
after
an
exchange
of
communications,
Petitioner
Philippine
Suburban
Development
Corporation,
as
owner
of
the
unoccupied
portion
of
the
Sapang
Palay
Estate
(specifically
two
parcels
covered
by
TCT
Nos.
T-23807
and
T-23808),
and
the
People's
Homesite
and
Housing
Corporation,
entered
into
a
contract
embodied
in
a
public
instrument
entitled
"Deed
of
Absolute
Sale"
(Annex
"F")
whereby
the
former
conveyed
unto
the
latter
the
two
parcels
of
land
abovementioned,
under
the
following
terms
and
conditions,
among
others:
t.hqw
1.
That
for
and
in
consideration
of
the
sum
of
THREE
MILLION
THREE
HUNDRED
EIGHTY-SIX
THOUSAND
TWO
HUNDRED
TWENTY
THREE
(P3,386,223.00)
PESOS,
Philippine
currency,
to
be
paid
by
the
VENDEE
to
the
herein
VENDOR
in
the
manner
outlined
hereinbelow,
the
VENDOR
by
these
presents
does
hereby
sell,
transfer
and
convey
by
way
of
absolute
sale
unto
the
VENDEE,
its
successors,
administrators
or
assigns,
the
above
described
two
(2)
parcels
of
land,
together
with
all
the
improvements
existing
thereon;
2.
That
the
payment
of
the
consideration
mentioned
in
paragraph
1
above
shall
be
made
as
follows:
(a)
The
vendee
is
presently
negotiating
or
securing
from
the
GOVERNMENT
SERVICE
INSURANCE
SYSTEM,
by
virtue
of
a
directive
of
the
President
of
the
Philippines,
a
loan
for
the
purchase
of
the
above
described
two
(2)
parcels
of
land
in
anticipation
of
the
purchase
by
the
said
GOVERNMENT
SERVICE
INSURANCE
SYSTEM
of
the
bonds
to
be
floated
by
the
National
Government
to
enable
the
VENDEE
to
make
this
purchase,
and
from
whatever
amount
may
be
granted
as
loan
by
the
GOVERNMENT
SERVICE
INSURANCE
SYSTEM
to
the
VENDEE,
ONE
MILLION
SEVEN
HUNDRED
TEN
THOUSAND
(P1,710,000.00)
PESOS
shall
be
retained
by
the
said
VENDEE
for
the
purpose
of
paying
and
clearing
the
existing
lien
annotated
at
the
back
of
the
aforesaid
Transfer
Certificates
of
Title
Nos.
T-23807
and
T-23808,
said
payment
to
be
made
directly
to
the
MORTGAGEES
and
the
difference
shall
be
paid
to
the
VENDOR,
provided
that
this
first
payment
shall
not
be
less
than
ONE
MILLION
SEVEN
HUNDRED
TEN
THOUSAND
(P1,710,000.00)
PESOS
and
the
VENDOR
is
hereby
constituted
as
Attorney-in-fact
and
authorized
to
receive
from,
and
the
GOVERNMENT
SERVICE
INSURANCE
SYSTEM
is
directed
to
pay
the
balance
of
the
loan
direct
to
the
herein
VENDOR
chargeable
against
VENDEE's
loan
from
the
GOVERNMENT
SERVICE
INSURANCE
SYSTEM;
provided,
however,
That
should
this
amount
be
more
than
sufficient
to
cover
the
said
mortgage
lien,
the
VENDEE
shall
pay
the
difference
to
the
VENDOR;
and
provided,
further,
That
the
VENDOR
shall
take
charge
of
the
preparation
and
registration
of
the
documents
necessary
in
clearing
the
above
referred
to
mortgage
lien,
with
the
understanding
that
the
expenses
for
preparation,
notarization,
registration,
including
documentary
stamps,
and
other
expenses
for
the
cancellation
of
said
mortgage
lien
shall
be
for
the
account
of
the
VENDOR
and
shall
be
advanced
by
the
VENDEE
to
the
VENDOR;
(b)
That
out
of
the
sum
of
P1,710,000.00
to
be
retained
by
the
VENDEE
mentioned
in
the
immediately
preceding
paragraph
2(a)
for
the
purpose
of
discharging
the
said
mortgage
lien,
the
VENDEE
shall
deduct
and
further
retain
or
keep
as
a
trust
fund
the
amount
of
FORTY
THOUSAND
(P40,000)
PESOS,
Philippine
Currency,
to
answer
for
the
remaining
Notice
of
Lis
Pendens
annotated
at
the
back
of
Transfer
Certificate
of
Title
Nos.
T-23807
and
T-23808
until
such
lien
shall
have
been
discharged
or
cancelled,
the
VENDEE
binding
itself
to
deliver
forthwith
the
said
amount
of
P40,000.00
unto
the
successful
party
involved
in
said
Notice
of
Lis
Pendens;
(c)
The
remaining
balance
of
the
total
consideration
in
the
amount
of
ONE
MILLION
SIX
HUNDRED
SEVENTY-SIX
THOUSAND
TWO
HUNDRED
TWENTY-THREE
PESOS
(P1,676,223.00),
Philippine
Currency,
or
whatever
amount
is
not
paid
by
virtue
of
the
first
payment
mentioned
in
paragraph
(a)
above,
shall
be
paid
by
the
VENDEE
unto
the
VENDOR
immediately
upon
the
VENDEE's
obtaining
sufficient
funds
from
proceeds
of
bonds
floated
by
the
VENDEE
or
the
Government
for
the
purchase
of
the
properties
subject
of
this
transaction;
provided,
however,
That
full
and
complete
payment
of
the
balance
mentioned
in
this
particular
paragraph
2(c)
shall
be
made
or
paid
by
the
VENDEE
within
a
period
of
sixty
(60)
days
from
date
of
delivery
of
title
by
the
VENDOR
in
the
name
of
the
VENDEE;
and
provided,
further,
That
this
sixty
(60)
days
period
may
be
extended
for
another
period
of
sixty
(60)
days
upon
written
request
by
the
VENDEE
at
least
five
(5)
days
prior
to
the
expiration
of
the
said
sixty
(60)
days
period.
Should
there
be
instituted
any
legal
action,
however,
for
the
collection
of
any
amounts
due
from
the
VENDEE
in
favor
of
the
VENDOR,
the
VENDEE
binds
itself
to
pay
unto
the
VENDOR
a
sum
equivalent
to
twenty-five
(25%)
per
centum
of
the
total
balance
due
from
the,
VENDEE
in
favor
of
the
VENDOR
as
and
by
way
of
attorney's
fees,
and
the
costs
of
suit;
3.
That
the
VENDOR
hereby
warrants
to
defend
the
title
and
ownership
of
the
VENDEE
to
the
two
(2)
parcels
of
land
above
described
from
any
claim
or
claims
of
third
parties
whomsoever;
(4.)
That
all
expenses
for
the
preparation
and
notarization
of
this
document
shall
be
for
the
account
of
the
VENDOR;
provided,
however,
That
registration
and
issuance
of
certificates
of
title
in
the
name
of
the
VENDEE
shall
be
for
the
account
of
the
VENDEE."
(Annex
"F")
The
above
document
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
once
advance
the
money
needed
for
registration
expenses.
In
the
meantime,
the
Auditor
General,
to
whom
a
copy
of
the
contract
had
been
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
hacienda
was
assessed
at
P131,590.00,
and
reassessed
beginning
December
21,
1960
in
the
greatly
increased
amount
of
P4,898,110.00.
Said
objections
were
embodied
in
a
letter
to
the
President,
dated
January
9,
1961,
but
this
notwithstanding,
the
President,
through
the
Executive
Secretary,
approved
the
Deed
of
Absolute
Sale
on
February
1,
1961.
It
appears
that
as
early
as
the
first
week
of
June,
1960,
prior
to
the
signing
of
the
deed
by
the
parties,
the
PHHC
acquired
possession
of
the
property,
with
the
consent
of
petitioner,
to
enable
the
said
PHHC
to
proceed
immediately
with
the
construction
of
roads
in
the
new
settlement
and
to
resettle
the
squatters
and
flood
victims
in
Manila
who
were
rendered
homeless
by
the
floods
or
ejected
from
the
lots
which
they
were
then
occupying
(Annexes
"D"
and
"D-1").
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
it
to
the
Philippine
Suburban
Development
Corporation.
Said
amount
represented
the
realty
tax
due
on
the
property
involved
for
the
calendar
year
1961
(Annex
"G").
Petitioner,
through
the
PHHC,
paid
under
protest
the
abovementioned
amount
to
the
Provincial
Treasurer
of
Bulacan
and
thereafter,
or
on
June
13,
1961,
by
letter,
requested
then
Secretary
of
Finance
Dominador
Aytona
to
order
a
refund
of
the
amount
so
paid.
Petitioner
claimed
that
it
ceased
to
be
the
owner
of
the
land
in
question
upon
the
execution
of
the
Deed
of
Absolute
Sale
on
December
29,
1960.
Upon
recommendation
of
the
Provincial
Treasurer
of
Bulacan,
said
request
was
denied
by
the
Secretary
of
Finance
in
a
letter-decision
dated
August
22,
1961.
Pertinent
portions
of
this
decision
are
quoted
hereunder:
t.hqw
....
the
records
show
that
the
deed
of
sale
executed
on
December
29,
1960
...
was
approved
by
the
President
upon
favorable
recommendation
of
the
Cabinet
and
the
Committee
created
for
the
purpose
of
surveying
suitable
lots
which
may
be
acquired
for
relocating
squatters
in
Manila
on
February
1,
1961
only
and
that
said
instrument
of
sale
was
registered
with
the
Register
of
Deeds
on
March
14,
1961.
That
Corporation,
as
vendor,
maintains
that
in
view
of
the
execution
of
the
deed
of
sale
on
December
29,
1960
it
ceased
to
be
the
owner
of
the
property
involved
and
that
consequently
it
was
under
no
obligation
to
pay
the
real
property
tax
thereon
effective
January
1,
1961.
In
support
of
its
stand,
that
Corporation
cites
Article
1498
of
the
New
Civil
Code
of
the
Philippines
which
provides
that
"when
the
sale
is
made
through
a
public
instrument,
the
execution
thereof
shall
be
equivalent
to
the
delivery
of
the
thing
which
is
the
object
of
the
contract,
if
from
the
deed
the
contrary
does
not
appear
or
cannot
clearly
be
inferred"
and
Article
1496
of
the
same
Code
which
states
that
"the
ownership
of
the
thing
sold
is
acquired
by
the
vendee
from
the
moment
it
is
delivered
to
him
in
any
of
the
ways
specified
in
Articles
1497
to
1501,
or
in
any
other
manner
signifying
an
agreement
that
the
possession
is
transferred
from
the
vendor
to
the
vendee."
On
the
other
hand,
the
Provincial
Treasurer
contends
that,
as
under
the
Land
Registration
Act
(Act
No.
496)
the
Philippine
Suburban
Development
Corporation
is
still
the
owner
of
the
property
until
the
deed
of
sale
covering
the
same
has
been
actually
registered,
the
vendor
is
still
liable
to
the
payment
of
real
property
tax
for
the
calendar
year
1961.
It
is
now
claimed
in
this
appeal
that
the
Auditor
General
erred
in
disallowing
the
refund
of
the
real
estate
tax
in
the
amount
of
P30,460.90
because
aside
from
the
presumptive
delivery
of
the
property
by
the
execution
of
the
deed
of
sale
on
December
29,
1960,
the
possession
of
the
property
was
actually
delivered
to
the
vendee
prior
to
the
sale,
and,
therefore,
by
the
transmission
of
ownership
to
the
vendee,
petitioner
has
ceased
to
be
the
owner
of
the
property
involved,
and,
consequently,
under
no
obligation
to
pay
the
real
property
tax
for
the
year
1961.
Respondent,
however,
argues
that
the
presumptive
delivery
of
the
property
under
Article
1498
of
the
Civil
Code
does
not
apply
because
of
the
requirement
in
the
contract
that
the
sale
shall
first
be
approved
by
the
Auditor
General,
pursuant
to
the
Executive
Order
dated
February
3,
1959
and
later
by
the
President,
and
that
the
petitioner
should
register
the
deed
and
secure
a
new
title
in
the
name
of
the
vendee
before
the
government
can
be
compelled
to
pay
the
balance
of
P1,676,223.00
of
the
purchase
price.
Respondent
further
contends
that
since
the
property
involved
is
a
land
registered
under
the
Land
Registration
Act
(Act
No.
496),
until
the
deed
of
sale
has
been
actually
registered,
the
vendor
remains
as
the
owner
of
the
said
property,
and,
therefore,
liable
for
the
payment
of
real
property
tax.
We
find
the
petition
meritorious.
I
.
It
cannot
be
denied
that
the
President
of
the
Philippines,
on
June
8,
1960,
at
his
Cabinet
meeting,
approved
and
authorized
the
purchase
by
the
national
government,
through
the
PHHC,
of
the
unoccupied
portion
of
the
property
of
petitioner;
that
on
June
10,
1960,
the
PHHC,
acting
pursuant
to
the
aforecited
approval
of
the
President,
passed
its
Resolution
No.
700
approving
and
authorizing
the
purchase
of
the
unoccupied
portion
of
said
property;
and
that
after
the
PHHC
took
possession
of
the
aforementioned
property
on
the
first
week
of
June,
1960
to
use
it
as
a
resettlement
area
for
squatters
and
flood
victims
from
Manila
and
suburbs,
the
President
of
the
Philippines
at
his
Cabinet
meeting
on
June
13,
1960,
approved
and
authorized
the
purchase
by
the
PHHC
of
the
entire
property
consisting
of
752.4940
hectares,
instead
of
only
the
unoccupied
portion
thereof
as
was
previously
authorized.
Considering
the
aforementioned
approval
and
authorization
by
the
President
of
the
Philippines
of
the
specific
transaction
in
question,
and
the
fact
that
the
contract
here
involved
which
is
for
a
special
purpose
to
meet
a
special
situation
was
entered
into
precisely
to
implement
the
Presidential
directive,
the
prior
approval
by
the
Auditor
General
envisioned
by
Administrative
Order
No.
290,
dated
February
3,
1959,
would
therefore,
not
be
necessary.
As
We
held
in
Federation
of
the
United
NAMARCO
Distributors
v.
National
Marketing
Corporation,
1
the
approval
by
the
Auditor
General
contemplated
by
Administrative
Order
No.
290
dated
February
3,
1959,
refers
to
contracts
in
general,
ordinarily
entered
into
by
government
offices
and
government-owned
or
controlled
corporations,
and
not
to
a
contract
for
a
special
purpose,
to
meet
a
special
situation
and
entered
into
in
implementation
of
a
Presidential
directive
to
solve
and
emergency.
In
other
words,
where
the
contract
already
bears
the
approval
of
the
President,
the
action
of
the
Auditor
General
would
no
longer
be
necessary
because
under
the
said
Administrative
Order,
the
President
has,
at
any
rate,
the
final
say.
II
Under
the
civil
law,
delivery
(tradition)
as
a
mode
of
transmission
of
ownership
maybe
actual
(real
tradition)
or
constructive
(constructive
tradition).
2
When
the
sale
of
real
property
is
made
in
a
public
instrument,
the
execution
thereof
is
equivalent
to
the
delivery
of
the
thing
object
of
the
contract,
if
from
the
deed
the
contrary
does
not
appear
or
cannot
clearly
be
inferred.
3
In
other
words,
there
is
symbolic
delivery
of
the
property
subject
of
the
sale
by
the
execution
of
the
public
instrument,
unless
from
the
express
terms
of
the
instrument,
or
by
clear
inference
therefrom,
this
was
not
the
intention
of
the
parties.
Such
would
be
the
case,
for
instance,
when
a
certain
date
is
fixed
for
the
purchaser
to
take
possession
of
the
property
subject
of
the
conveyance,
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
with
the
vendor,
or
when
the
vendor
reserves
the
right
to
use
and
enjoy
the
properties
until
the
gathering
of
the
pending
crops,
4
or
where
the
vendor
has
no
control
over
the
thing
sold
at
the
moment
of
the
sale,
and,
therefore,
its
material
delivery
could
not
have
been
made.
5
In
the
case
at
bar,
there
is
no
question
that
the
vendor
had
actually
placed
the
vendee
in
possession
and
control
over
the
thing
sold,
even
before
the
date
of
the
sale.
The
condition
that
petitioner
should
first
register
the
deed
of
sale
and
secure
a
new
title
in
the
name
of
the
vendee
before
the
latter
shall
pay
the
balance
of
the
purchase
price,
did
not
preclude
the
transmission
of
ownership.
In
the
absence
of
an
express
stipulation
to
the
contrary,
the
payment
of
the
purchase
price
of
the
good
is
not
a
condition,
precedent
to
the
transfer
of
title
to
the
buyer,
but
title
passes
by
the
delivery
of
the
goods.
6
III
.
We
fail
to
see
the
merit
in
respondent's
insistence
that,
although
possession
was
transferred
to
the
vendee
and
the
deed
of
sale
was
executed
in
a
public
instrument
on
December
29,
l960,
the
vendor
still
remains
as
owner
of
the
property
until
the
deed
of
sale
is
actually
registered
with
the
Office
of
the
Register
of
Deeds,
because
the
land
sold
is
registered
under
the
Torrens
System.
In
a
long
line
of
cases
already
decided
by
this
Court,
the
constant
doctrine
has
been
that,
as
between
the
parties
to
a
contract
of
sale,
registration
is
not
necessary
to
make
it
valid
and
effective,
for
actual
notice
is
equivalent
to
registration.
7
Indeed,
Section
50
of
the
Land
Registration
Act
provides
that,
even
without
the
act
of
registration,
a
deed
purporting
to
convey
or
affect
registered
land
shall
operate
as
a
contract
between
the
parties.
The
registration
is
intended
to
protect
the
buyer
against
claims
of
third
persons
arising
from
subsequent
alienations
by
the
vendor,
and
is
certainly
not
necessary
to
give
effect
to
the
deed
of
sale,
as
between
the
parties
to
the
contract.
8
The
case
of
Vargas
v.
Tancioco,
9
cited
by
respondent,
refers
to
a
case
involving
conflicting
rights
over
registered
property
and
those
of
innocent
transferees
who
relied
on
the
clean
titles
of
the
properties
in
question.
It
is,
therefore,
not
relevant
to
the
case
at
bar.
In
the
case
at
bar,
no
rights
of
third
persons
are
involved,
much
less
is
there
any
subsequent
alienation
of
the
same
property.
It
is
undisputed
that
the
property
is
in
the
possession
of
the
vendee,
even
as
early
as
the
first
week
of
June,
1960,
or
six
(6)
months
prior
to
the
execution
of
the
Deed
of
Absolute
Sale
on
December
29,
1960.
Since
the
delivery
of
possession,
coupled
with
the
execution
of
the
Deed
of
Absolute
Sale,
had
consummated
the
sale
and
transferred
the
title
to
the
purchaser,
10
We,
therefore,
hold
that
the
payment
of
the
real
estate
tax
after
such
transfer
is
the
responsibility
of
the
purchaser.
However,
in
the
case
at
bar,
the
purchaser
PHHC
is
a
government
entity
not
subject
to
real
property
tax.
11
WHEREFORE,
the
appealed
decision
is
hereby
reversed,
and
the
real
property
tax
paid
under
protest
to
the
Provincial
Treasurer
of
Bulacan
by
petitioner
Philippine
Suburban
Development
Corporation,
in
the
amount
of
P30,460,90,
is
hereby
ordered
refunded.
Without
any
pronouncement
as
to
costs.
G.R.
No.
L-33397
June
22,
1984
ROMEO
F.
EDU,
in
his
capacity
as
Commissioner
of
Land
Transportation,
EDUARDO
DOMINGO,
CARLOS
RODRIGUEZ
and
PATRICIO
YAMBAO
in
their
capacity
as
ANCAR
Agents,
petitioners,
vs.
HONORABLE
AMADOR
E.
GOMEZ,
in
his
capacity
as
Judge
of
the
Court
of
First
Instance
of
Manila,
Branch
1,
THE
SHERIFF
of
Quezon
City,
and
LUCILA
ABELLO,
respondents.
RELOVA,
J.:
Subject
matter
of
this
case
is
a
1968
model
Volkswagen,
bantam
car,
Engine
No.
H-5254416,
Chassis
No.
118673654,
allegedly
owned
by
Lt.
Walter
A.
Bala
of
Clark
Airbase,
Angeles
City,
under
whose
name
the
car
was
allegedly
registered
on
May
19,
1970
at
the
Angeles
City
Land
Transportation
Commission
Agency,
under
File
No.
2B-7281.
The
Office
of
the
Commission
on
Land
Transportation
received
a
report
on
August
25,
1970
from
the
Manila
Adjustment
Company
that
the
abovementioned
car
was
stolen
on
June
29,
1970
from
the
residence
of
Lt.
Bala,
at
63
Makiling
Street,
Plaridel
Subdivision,
Angeles
City.
Petitioners
Eduardo
Domingo,
Carlos
Rodriguez,
and
Patricio
Yambao,
agents
of
Anti-
Carnapping
Unit
(ANCAR)
of
the
Philippine
Constabulary,
on
detail
with
the
Land
Transportation
Commission,
on
February
2,
1971,
recognized
subject
car
in
the
possession
of
herein
private
respondent
Lucila
Abello
and
immediately
seized
and
impounded
the
car
as
stolen
property.
Likewise,
herein
petitioner
Romeo
F.
Edu,
then
Commissioner
of
Land
Transportation,
seized
the
car
pursuant
to
Section
60
of
Republic
Act
4136
which
empowers
him
to
seize
the
motor
vehicle
for
delinquent
registration
aside
from
his
implicit
power
deducible
from
Sec.
4(5),
Sec.
5
and
31
of
said
Code,
"to
seize
motor
vehicles
fraudulently
or
otherwise
not
properly
registered."
On
February
15,
1971,
herein
private
respondent
Lucila
Abello
filed
a
complaint
for
replevin
with
damages
in
respondent
court,
docketed
as
Civil
Case
No.
82215,
impleading
herein
petitioners,
praying
for
judgment,
among
others,
to
order
the
sheriff
or
other
proper
officer
of
the
court
to
take
the
said
property
(motor
vehicle)
into
his
custody
and
to
dispose
of
it
in
accordance
with
law.
On
February
18,
1971,
respondent
judge
of
the
then
Court
of
First
Instance
of
Manila
issued
the
order
for
the
seizure
of
the
personal
property.
Solicitor
Vicente
Torres,
appearing
for
the
herein
petitioners,
submits
that
the
car
in
question
legally
belongs
to
Lt.
Walter
A.
Bala
under
whose
name
it
is
originally
registered
at
Angeles
City
Land
Transportation
Commission
Agency;
that
it
was
stolen
from
him
and,
upon
receipt
by
the
Land
Transportation
Commissioner
of
the
report
on
the
theft
case
and
that
the
car
upon
being
recognized
by
the
agents
of
the
ANCAR
in
the
possession
of
private
respondent
Lucila
Abello,
said
agents
seized
the
car
and
impounded
it
as
stolen
vehicle.
With
respect
to
the
replevin
filed
by
private
respondent
Lucila
Abello,
respondent
Court
of
First
Instance
Judge
found
that
the
car
in
question
was
acquired
by
Lucila
Abello
by
purchase
from
its
registered
owner,
Marcelino
Guansing,
for
the
valuable
consideration
of
P9,000.00,
under
the
notarial
deed
of
absolute
sale,
dated
August
11,
1970;
that
she
has
been
in
possession
thereof
since
then
until
February
3,
1971
when
the
car
was
seized
from
her
by
the
petitioners
who
acted
in
the
belief
that
it
is
the
car
which
was
originally
registered
in
the
name
of
Lt.
Walter
A.
Bala
and
from
whom
it
was
allegedly
stolen
sometime
in
June
1970.
Finding
for
the
private
respondent,
respondent
judge
held
that
The
complaint
at
bar
is
for
replevin,
or
for
the
delivery
of
personal
property,
based
on
the
provisions
of
Rule
60,
Sections
1
and
2
of
the
Rules
of
Court.
All
the
requirements
of
the
law
are
present
in
the
verified
averments
in
the
complaint,
viz:
1.
That
plaintiff
is
the
owner
of
the
automobile
in
question.-
petition.
2.
That
the
aforesaid
property
was
seized
from
her
against
her
will
not
for
a
tax
assessment
or
fine
pursuant
to
law,
not
under
a
writ
of
execution
or
attachment
against
her
properties;
3.
That
the
property
is
wrongfully
detained
by
the
defendants,
who
allegedly
seized
it
from
her
on
February
3,
1971,
"allegedly
for
the
purpose
of
verifying
the
same"
(see
par.
3,
Complaint),
but
have
refused
since
then
until
now
to
return
the
same
to
the
plaintiff.
4.
That
plaintiff
was
ready
to
put
up
a
bond
in
double
the
value
of
the
car,
and
has
in
fact
already
put
up
an
P18,000.00
bond
to
the
defendants
for
the
return
thereof
to
the
latter,
if
that
shall
be
the
ultimate
judgment
of
the
court,
and
to
pay
defendants
damages
that
they
may
incur.
The
issuance
therefore,
by
this
Court
of
the
order
of
seizure
of
the
said
chattel
by
the
sheriff
and
for
the
latter
to
take
it
into
his
custody,
is
precisely
pursuant
to
the
existing
law,
governing
the
subject.
If
defendants
object
to
the
seizure,
the
remedy
provided
for
by
law
is
set
out
in
Section
5
of
Rule
60
and
that
is
for
them
to
put
up
a
counter-bond
for
the
same
amount
of
P18,000.00,
which
is
double
the
value
of
the
car
in
question.
Defendants
may
not
ignore
the
law
under
the
claim
that,
on
complaint
of
a
certain
party,
the
Manila
Adjustment
Company,
they
have
a
right
to
seize
the
same
as
it
appears
to
be
the
property
that
was
stolen
from
Lt.
Walter
A.
Bala
several
months
ago.
(p.
19,
Rollo)
There
is
no
merit
in
the
petition
considering
that
the
acquirer
or
the
purchaser
in
good
faith
of
a
chattel
of
movable
property
is
entitled
to
be
respected
and
protected
in
his
possession
as
if
he
were
the
true
owner
thereof
until
a
competent
court
rules
otherwise.
In
the
meantime,
as
the
true
owner,
the
possessor
in
good
faith
cannot
be
compelled
to
surrender
possession
nor
to
be
required
to
institute
an
action
for
the
recovery
of
the
chattel,
whether
or
not
an
indemnity
bond
is
issued
in
his
favor.
The
filing
of
an
information
charging
that
the
chattel
was
illegally
obtained
through
estafa
from
its
true
owner
by
the
transferor
of
the
bona
fide
possessor
does
not
warrant
disturbing
the
possession
of
the
chattel
against
the
will
of
the
possessor.
Finally,
the
claim
of
petitioners
that
the
Commission
has
the
right
to
seize
and
impound
the
car
under
Section
60
of
Republic
Act
4136
which
reads:
Sec.
60.
The
lien
upon
motor
vehicles.
Any
balance
of
fees
for
registration,
re-registration
or
delinquent
registration
of
a
motor
vehicle,
remaining
unpaid
and
all
fines
imposed
upon
any
vehicle
owner,
shall
constitute
a
first
lien
upon
the
motor
vehicle
concerned.
is
untenable.
it
is
clear
from
the
provision
of
said
Section
60
of
Republic
Act
4136
that
the
Commissioner's
right
to
seize
and
impound
subject
property
is
only
good
for
the
proper
enforcement
of
lien
upon
motor
vehicles.
The
Land
Transportation
Commission
may
issue
a
warrant
of
constructive
or
actual
distraint
against
motor
vehicle
for
collection
of
unpaid
fees
for
registration,
re-registration
or
delinquent
registration
of
vehicles.
ACCORDINGLY,
the
petition
is
hereby
DENIED.
G.R.
No.
L-64159
September
10,
1985
CIRCE
S.
DURAN
and
ANTERO
S.
GASPAR,
petitioners,
vs.
INTERMEDIATE
APPELLATE
COURT,
ERLINDA
B.
MARCELO
TIANGCO
and
RESTITUTO
TIANGCO,
respondents.
RELOVA,
J.:
The
respondent
then
Court
of
Appeals
rendered
judgment,
modifying
the
decision
of
the
then
Court
of
First
Instance
of
Rizal,
which
reads
as
follows:
(1)
the
complaint
of
the
plaintiffs
(herein
petitioners)
is
hereby
DISMISSED;
(2)
the
defendants-appellants
spouses
Erlinda
B.
Marcelo
Tiangco
and
Restituto
Tiangco
(herein
private
respondents)
are
hereby
declared
the
lawful
owners
of
the
two
(2)
parcels
of
land
and
all
the
improvements
thereon
including
the
12-door
apartment
thereon
described
in
the
complaint,
in
the
counterclaim,
in
the
cross-claim,
and
in
the
Sheriff's
Certificate
of
Sale;
(3)
the
plaintiffs-appellants
and
the
defendant-appellee
Fe
S.
Duran
are
hereby
ordered
to
deliver
to
(the
Tiangcos)
the
two
parcels
of
land
and
all
the
improvements
thereon
including
the
12-door
apartment
thereon,
subject
matter
of
the
complaint,
counterclaim,
and
cross-claim,
and
in
the
Sheriff's
Certificate
of
Sale;
(4)
the
plaintiffs-appellants
and
the
defendant-appellee
Fe
S.
Duran
are
hereby
ordered
to
pay
solidarily
to
the
Tiangcos
the
sum
of
Two
Thousand
Four
Hundred
Pesos
(P2,400)
a
month
from
May
16,
1972
until
delivery
of
possession
of
the
properties
in
question
to
said
Tiangco
spouses,
representing
rentals
collected
by
plaintiffs-appellants
and
defendant-
appellee
Fe
S.
Duran;
(5)
the
plaintiffs-appellants
and
defendant-appellee
Fe
S.
Duran
are
hereby
ordered
to
pay
solidarily
to
the
spouses
Tiangco
the
sum
of
Twenty
Thousand
Pesos
(P20,000)
as
damages
for
attorney's
fees,
and
the
sum
of
Twenty-Five
Thousand
Pesos
(P25,000)
for
moral
damages,
and
the
costs.
(pp.
149-150,
Rollo)
The
antecedent
facts
showed
that
petitioner
Circe
S.
Duran
owned
two
(2)
parcels
of
land
(Lots
5
and
6,
Block
A,
Psd
32780)
covered
by
Transfer
Certificate
of
Title
No.
1647
of
the
Register
of
Deeds
of
Caloocan
City
which
she
had
purchased
from
the
Moja
Estate.
She
left
the
Philippines
in
June
1954
and
returned
in
May
1966.
On
May
13,
1963,
a
Deed
of
Sale
of
the
two
lots
mentioned
above
was
made
in
favor
of
Circe's
mother,
Fe
S.
Duran
who,
on
December
3,
1965,
mortgaged
the
same
property
to
private
respondent
Erlinda
B.
Marcelo-Tiangco.
When
petitioner
Circe
S.
Duran
came
to
know
about
the
mortgage
made
by
her
mother,
she
wrote
the
Register
of
Deeds
of
Caloocan
City
informing
the
latter
that
she
had
not
given
her
mother
any
authority
to
sell
or
mortgage
any
of
her
properties
in
the
Philippines.
Failing
to
get
an
answer
from
the
registrar,
she
returned
to
the
Philippines.
Meanwhile,
when
her
mother,
Fe
S.
Duran,
failed
to
redeem
the
mortgage
properties,
foreclosure
proceedings
were
initiated
by
private
respondent
Erlinda
B.
Marcelo
Tiangco
and,
ultimately,
the
sale
by
the
sheriff
and
the
issuance
of
Certificate
of
Sale
in
favor
of
the
latter.
Petitioner
Circe
S.
Duran
claims
that
the
Deed
of
Sale
in
favor
of
her
mother
Fe
S.
Duran
is
a
forgery,
saying
that
at
the
time
of
its
execution
in
1963
she
was
in
the
United
States.
On
the
other
hand,
the
adverse
party
alleges
that
the
signatures
of
Circe
S.
Duran
in
the
said
Deed
are
genuine
and,
consequently,
the
mortgage
made
by
Fe
S.
Duran
in
favor
of
private
respondent
is
valid.
With
respect
to
the
issue
as
to
whether
the
signature
of
petitioner
Circe
S.
Duran
in
the
Deed
of
Sale
is
a
forgery
or
not,
respondent
appellate
court
held
the
same
to
be
genuine
because
there
is
the
presumption
of
regularity
in
the
case
of
a
public
document
and
"the
fact
that
Circe
has
not
been
able
to
satisfactorily
prove
that
she
was
in
the
United
States
at
the
time
the
deed
was
executed
in
1963.
Her
return
in
1966
does
not
prove
she
was
not
here
also
in
1963,
and
that
she
did
not
leave
shortly
after
1963.
She
should
have
presented
her
old
passport,
not
her
new
one.
But
even
if
the
signatures
were
a
forgery,
and
the
sale
would
be
regarded
as
void,
still
it
is
Our
opinion
that
the
Deed
of
Mortgage
is
VALID,
with
respect
to
the
mortgagees,
the
defendants-appellants.
While
it
is
true
that
under
Art.
2085
of
the
Civil
Code,
it
is
essential
that
the
mortgagor
be
the
absolute
owner
of
the
property
mortgaged,
and
while
as
between
the
daughter
and
the
mother,
it
was
the
daughter
who
still
owned
the
lots,
STILL
insofar
as
innocent
third
persons
are
concerned
the
owner
was
already
the
mother
(Fe
S.
Duran)
inasmuch
as
she
had
already
become
the
registered
owner
(Transfer
Certificates
of
Title
Nos.
2418
and
2419).
The
mortgagee
had
the
right
to
rely
upon
what
appeared
in
the
certificate
of
title,
and
did
not
have
to
inquire
further.
If
the
rule
were
otherwise,
the
efficacy
and
conclusiveness
of
Torrens
Certificate
of
Titles
would
be
futile
and
nugatory.
Thus
the
rule
is
simple:
the
fraudulent
and
forged
document
of
sale
may
become
the
root
of
a
valid
title
if
the
certificate
has
already
been
transferred
from
the
name
of
the
true
owner
to
the
name
indicated
by
the
forger
(See
De
la
Cruz
v.
Fable,
35
Phil.
144;
Blondeau
et
al.
v.
Nano
et
al.,
61
Phil.
625;
Fule
et
al.
v.
Legare
et
al.,
7
SCRA
351;
see
also
Sec.
55
of
Act
No.
496,
the
Land
Registration
Act).
The
fact
that
at
the
time
of
the
foreclosure
sale
proceedings
(1970-72)
the
mortgagees
may
have
already
known
of
the
plaintiffs'
claim
is
immaterial.
What
is
important
is
that
at
the
time
the
mortgage
was
executed,
the
mortgagees
in
good
faith
actually
believed
Fe
S.
Duran
to
be
the
owner,
as
evidenced
by
the
registration
of
the
property
in
the
name
of
said
Fe
S.
Duran
(pp.
146-147,
Rollo)."
In
elevating
the
judgment
of
the
respondent
appellate
court
to
Us
for
review,
petitioners
discussed
questions
of
law
which,
in
effect
and
substance,
raised
only
one
issue
and
that
is
whether
private
respondent
Erlinda
B.
Marcelo-Tiangco
was
a
buyer
in
good
faith
and
for
value.
Guided
by
previous
decisions
of
this
Court,
good
faith
consists
in
the
possessor's
belief
that
the
person
from
whom
he
received
the
thing
was
the
owner
of
the
same
and
could
convey
his
title
(Arriola
vs.
Gomez
dela
Serna,
14
Phil.
627).
Good
faith,
while
it
is
always
to
be
presumed
in
the
absence
of
proof
to
the
contrary,
requires
a
well-founded
belief
that
the
person
from
whom
title
was
received
was
himself
the
owner
of
the
land,
with
the
right
to
convey
it
(Santiago
vs.
Cruz,
19
Phil.
148).
There
is
good
faith
where
there
is
an
honest
intention
to
abstain
from
taking
any
unconscientious
advantage
from
another
(Fule
vs.
Legare,
7
SCRA
351).
Otherwise
stated,
good
faith
is
the
opposite
of
fraud
and
it
refers
to
the
state
of
mind
which
is
manifested
by
the
acts
of
the
individual
concerned.
In
the
case
at
bar,
private
respondents,
in
good
faith
relied
on
the
certificate
of
title
in
the
name
of
Fe
S.
Duran
and
as
aptly
stated
by
respondent
appellate
court
"[e]ven
on
the
supposition
that
the
sale
was
void,
the
general
rule
that
the
direct
result
of
a
previous
illegal
contract
cannot
be
valid
(on
the
theory
that
the
spring
cannot
rise
higher
than
its
source)
cannot
apply
here
for
We
are
confronted
with
the
functionings
of
the
Torrens
System
of
Registration.
The
doctrine
to
follow
is
simple
enough:
a
fraudulent
or
forged
document
of
sale
may
become
the
ROOT
of
a
valid
title
if
the
certificate
of
title
has
already
been
transferred
from
the
name
of
the
true
owner
to
the
name
of
the
forger
or
the
name
indicated
by
the
forger."
(p.
147,
Rollo)
Thus,
where
innocent
third
persons
relying
on
the
correctness
of
the
certificate
of
title
issued,
acquire
rights
over
the
property,
the
court
cannot
disregard
such
rights
and
order
the
total
cancellation
of
the
certificate
for
that
would
impair
public
confidence
in
the
certificate
of
title;
otherwise
everyone
dealing
with
property
registered
under
the
torrens
system
would
have
to
inquire
in
every
instance
as
to
whether
the
title
had
been
regularly
or
irregularly
issued
by
the
court.
Indeed,
this
is
contrary
to
the
evident
purpose
of
the
law.
Every
person
dealing
with
registered
land
may
safely
rely
on
the
correctness
of
the
certificate
of
title
issued
therefor
and
the
law
will
in
no
way
oblige
him
to
go
behind
the
certificate
to
determine
the
condition
of
the
property.
Stated
differently,
an
innocent
purchaser
for
value
relying
on
a
torrens
title
issued
is
protected.
A
mortgagee
has
the
right
to
rely
on
what
appears
in
the
certificate
of
title
and,
in
the
absence
of
anything
to
excite
suspicion,
he
is
under
no
obligation
to
look
beyond
the
certificate
and
investigate
the
title
of
the
mortgagor
appearing
on
the
face
of
said
certificate.
Likewise,
We
take
note
of
the
finding
and
observation
of
respondent
appellate
court
in
that
petitioners
were
guilty
of
estoppel
by
laches
"in
not
bringing
the
case
to
court
within
a
reasonable
period.
Antero
Gaspar,
husband
of
Circe,
was
in
the
Philippines
in
1964
to
construct
the
apartment
on
the
disputed
lots.
This
was
testified
to
by
Circe
herself
(tsn.,
p.
41,
Nov.
27,
1973).
In
the
process
of
construction,
specifically
in
the
matter
of
obtaining
a
building
permit,
he
could
have
discovered
that
the
deed
of
sale
sought
to
be
set
aside
had
been
executed
on
May
13,
1963
(the
building
permit
needed
an
application
by
the
apparent
owner
of
the
land,
namely,
Circe's
mother,
Fe
S.
Duran).
And
then
again
both
plaintiffs
could
have
intervened
in
the
foreclosure
suit
but
they
did
not.
They
kept
silent
until
almost
the
last
moment
when
they
finally
decided,
shortly
before
the
sheriff's
sale,
to
file
a
third-party
claim.
Clearly,
the
plaintiffs
can
be
faulted
for
their
estoppel
by
laches."
(p.
148,
Rollo)
IN
VIEW
OF
THE
FOREGOING,
We
find
the
petition
without
merit
and
hereby
AFFIRMED
in
toto
the
decision
of
respondent
appellate
court
promulgated
on
August
12,
1981.
G.R.
No.
L-12342
August
3,
1918
A.
A.
ADDISON,
plaintiff-appellant,
vs.
MARCIANA
FELIX
and
BALBINO
TIOCO,
defendants-appellees.
FISHER,
J.:
By
a
public
instrument
dated
June
11,
1914,
the
plaintiff
sold
to
the
defendant
Marciana
Felix,
with
the
consent
of
her
husband,
the
defendant
Balbino
Tioco,
four
parcels
of
land,
described
in
the
instrument.
The
defendant
Felix
paid,
at
the
time
of
the
execution
of
the
deed,
the
sum
of
P3,000
on
account
of
the
purchase
price,
and
bound
herself
to
pay
the
remainder
in
installments,
the
first
of
P2,000
on
July
15,
1914,
and
the
second
of
P5,000
thirty
days
after
the
issuance
to
her
of
a
certificate
of
title
under
the
Land
Registration
Act,
and
further,
within
ten
years
from
the
date
of
such
title
P10,
for
each
coconut
tree
in
bearing
and
P5
for
each
such
tree
not
in
bearing,
that
might
be
growing
on
said
four
parcels
of
land
on
the
date
of
the
issuance
of
title
to
her,
with
the
condition
that
the
total
price
should
not
exceed
P85,000.
It
was
further
stipulated
that
the
purchaser
was
to
deliver
to
the
vendor
25
per
centum
of
the
value
of
the
products
that
she
might
obtain
from
the
four
parcels
"from
the
moment
she
takes
possession
of
them
until
the
Torrens
certificate
of
title
be
issued
in
her
favor."
It
was
also
covenanted
that
"within
one
year
from
the
date
of
the
certificate
of
title
in
favor
of
Marciana
Felix,
this
latter
may
rescind
the
present
contract
of
purchase
and
sale,
in
which
case
Marciana
Felix
shall
be
obliged
to
return
to
me,
A.
A.
Addison,
the
net
value
of
all
the
products
of
the
four
parcels
sold,
and
I
shall
obliged
to
return
to
her,
Marciana
Felix,
all
the
sums
that
she
may
have
paid
me,
together
with
interest
at
the
rate
of
10
per
cent
per
annum."
In
January,
1915,
the
vendor,
A.
A.
Addison,
filed
suit
in
Court
of
First
Instance
of
Manila
to
compel
Marciana
Felix
to
make
payment
of
the
first
installment
of
P2,000,
demandable
in
accordance
with
the
terms
of
the
contract
of
sale
aforementioned,
on
July
15,
1914,
and
of
the
interest
in
arrears,
at
the
stipulated
rate
of
8
per
cent
per
annum.
The
defendant,
jointly
with
her
husband,
answered
the
complaint
and
alleged
by
way
of
special
defense
that
the
plaintiff
had
absolutely
failed
to
deliver
to
the
defendant
the
lands
that
were
the
subject
matter
of
the
sale,
notwithstanding
the
demands
made
upon
him
for
this
purpose.
She
therefore
asked
that
she
be
absolved
from
the
complaint,
and
that,
after
a
declaration
of
the
rescission
of
the
contract
of
the
purchase
and
sale
of
said
lands,
the
plaintiff
be
ordered
to
refund
the
P3,000
that
had
been
paid
to
him
on
account,
together
with
the
interest
agreed
upon,
and
to
pay
an
indemnity
for
the
losses
and
damages
which
the
defendant
alleged
she
had
suffered
through
the
plaintiff's
non-fulfillment
of
the
contract.
The
evidence
adduced
shows
that
after
the
execution
of
the
deed
of
the
sale
the
plaintiff,
at
the
request
of
the
purchaser,
went
to
Lucena,
accompanied
by
a
representative
of
the
latter,
for
the
purpose
of
designating
and
delivering
the
lands
sold.
He
was
able
to
designate
only
two
of
the
four
parcels,
and
more
than
two-thirds
of
these
two
were
found
to
be
in
the
possession
of
one
Juan
Villafuerte,
who
claimed
to
be
the
owner
of
the
parts
so
occupied
by
him.
The
plaintiff
admitted
that
the
purchaser
would
have
to
bring
suit
to
obtain
possession
of
the
land
(sten.
notes,
record,
p.
5).
In
August,
1914,
the
surveyor
Santamaria
went
to
Lucena,
at
the
request
of
the
plaintiff
and
accompanied
by
him,
in
order
to
survey
the
land
sold
to
the
defendant;
but
he
surveyed
only
two
parcels,
which
are
those
occupied
mainly
by
the
brothers
Leon
and
Julio
Villafuerte.
He
did
not
survey
the
other
parcels,
as
they
were
not
designated
to
him
by
the
plaintiff.
In
order
to
make
this
survey
it
was
necessary
to
obtain
from
the
Land
Court
a
writ
of
injunction
against
the
occupants,
and
for
the
purpose
of
the
issuance
of
this
writ
the
defendant,
in
June,
1914,
filed
an
application
with
the
Land
Court
for
the
registration
in
her
name
of
four
parcels
of
land
described
in
the
deed
of
sale
executed
in
her
favor
by
the
plaintiff.
The
proceedings
in
the
matter
of
this
application
were
subsequently
dismissed,
for
failure
to
present
the
required
plans
within
the
period
of
the
time
allowed
for
the
purpose.
The
trial
court
rendered
judgment
in
behalf
of
the
defendant,
holding
the
contract
of
sale
to
be
rescinded
and
ordering
the
return
to
the
plaintiff
the
P3,000
paid
on
account
of
the
price,
together
with
interest
thereon
at
the
rate
of
10
per
cent
per
annum.
From
this
judgment
the
plaintiff
appealed.
In
decreeing
the
rescission
of
the
contract,
the
trial
judge
rested
his
conclusion
solely
on
the
indisputable
fact
that
up
to
that
time
the
lands
sold
had
not
been
registered
in
accordance
with
the
Torrens
system,
and
on
the
terms
of
the
second
paragraph
of
clause
(h)
of
the
contract,
whereby
it
is
stipulated
that
".
.
.
within
one
year
from
the
date
of
the
certificate
of
title
in
favor
of
Marciana
Felix,
this
latter
may
rescind
the
present
contract
of
purchase
and
sale
.
.
.
."
The
appellant
objects,
and
rightly,
that
the
cross-complaint
is
not
founded
on
the
hypothesis
of
the
conventional
rescission
relied
upon
by
the
court,
but
on
the
failure
to
deliver
the
land
sold.
He
argues
that
the
right
to
rescind
the
contract
by
virtue
of
the
special
agreement
not
only
did
not
exist
from
the
moment
of
the
execution
of
the
contract
up
to
one
year
after
the
registration
of
the
land,
but
does
not
accrue
until
the
land
is
registered.
The
wording
of
the
clause,
in
fact,
substantiates
the
contention.
The
one
year's
deliberation
granted
to
the
purchaser
was
to
be
counted
"from
the
date
of
the
certificate
of
title
...
."
Therefore
the
right
to
elect
to
rescind
the
contract
was
subject
to
a
condition,
namely,
the
issuance
of
the
title.
The
record
show
that
up
to
the
present
time
that
condition
has
not
been
fulfilled;
consequently
the
defendant
cannot
be
heard
to
invoke
a
right
which
depends
on
the
existence
of
that
condition.
If
in
the
cross-
complaint
it
had
been
alleged
that
the
fulfillment
of
the
condition
was
impossible
for
reasons
imputable
to
the
plaintiff,
and
if
this
allegation
had
been
proven,
perhaps
the
condition
would
have
been
considered
as
fulfilled
(arts.
1117,
1118,
and
1119,
Civ.
Code);
but
this
issue
was
not
presented
in
the
defendant's
answer.
However,
although
we
are
not
in
agreement
with
the
reasoning
found
in
the
decision
appealed
from,
we
consider
it
to
be
correct
in
its
result.
The
record
shows
that
the
plaintiff
did
not
deliver
the
thing
sold.
With
respect
to
two
of
the
parcels
of
land,
he
was
not
even
able
to
show
them
to
the
purchaser;
and
as
regards
the
other
two,
more
than
two-
thirds
of
their
area
was
in
the
hostile
and
adverse
possession
of
a
third
person.
The
Code
imposes
upon
the
vendor
the
obligation
to
deliver
the
thing
sold.
The
thing
is
considered
to
be
delivered
when
it
is
placed
"in
the
hands
and
possession
of
the
vendee."
(Civ.
Code,
art.
1462.)
It
is
true
that
the
same
article
declares
that
the
execution
of
a
public
instruments
is
equivalent
to
the
delivery
of
the
thing
which
is
the
object
of
the
contract,
but,
in
order
that
this
symbolic
delivery
may
produce
the
effect
of
tradition,
it
is
necessary
that
the
vendor
shall
have
had
such
control
over
the
thing
sold
that,
at
the
moment
of
the
sale,
its
material
delivery
could
have
been
made.
It
is
not
enough
to
confer
upon
the
purchaser
the
ownership
and
the
right
of
possession.
The
thing
sold
must
be
placed
in
his
control.
When
there
is
no
impediment
whatever
to
prevent
the
thing
sold
passing
into
the
tenancy
of
the
purchaser
by
the
sole
will
of
the
vendor,
symbolic
delivery
through
the
execution
of
a
public
instrument
is
sufficient.
But
if,
notwithstanding
the
execution
of
the
instrument,
the
purchaser
cannot
have
the
enjoyment
and
material
tenancy
of
the
thing
and
make
use
of
it
himself
or
through
another
in
his
name,
because
such
tenancy
and
enjoyment
are
opposed
by
the
interposition
of
another
will,
then
fiction
yields
to
reality
the
delivery
has
not
been
effected.
As
Dalloz
rightly
says
(Gen.
Rep.,
vol.
43,
p.
174)
in
his
commentaries
on
article
1604
of
the
French
Civil
code,
"the
word
"delivery"
expresses
a
complex
idea
.
.
.
the
abandonment
of
the
thing
by
the
person
who
makes
the
delivery
and
the
taking
control
of
it
by
the
person
to
whom
the
delivery
is
made."
The
execution
of
a
public
instrument
is
sufficient
for
the
purposes
of
the
abandonment
made
by
the
vendor;
but
it
is
not
always
sufficient
to
permit
of
the
apprehension
of
the
thing
by
the
purchaser.
The
supreme
court
of
Spain,
interpreting
article
1462
of
the
Civil
Code,
held
in
its
decision
of
November
10,
1903,
(Civ.
Rep.,
vol.
96,
p.
560)
that
this
article
"merely
declares
that
when
the
sale
is
made
through
the
means
of
a
public
instrument,
the
execution
of
this
latter
is
equivalent
to
the
delivery
of
the
thing
sold:
which
does
not
and
cannot
mean
that
this
fictitious
tradition
necessarily
implies
the
real
tradition
of
the
thing
sold,
for
it
is
incontrovertible
that,
while
its
ownership
still
pertains
to
the
vendor
(and
with
greater
reason
if
it
does
not),
a
third
person
may
be
in
possession
of
the
same
thing;
wherefore,
though,
as
a
general
rule,
he
who
purchases
by
means
of
a
public
instrument
should
be
deemed
.
.
.
to
be
the
possessor
in
fact,
yet
this
presumption
gives
way
before
proof
to
the
contrary."
It
is
evident,
then,
in
the
case
at
bar,
that
the
mere
execution
of
the
instrument
was
not
a
fulfillment
of
the
vendors'
obligation
to
deliver
the
thing
sold,
and
that
from
such
non-fulfillment
arises
the
purchaser's
right
to
demand,
as
she
has
demanded,
the
rescission
of
the
sale
and
the
return
of
the
price.
(Civ.
Code,
arts.
1506
and
1124.)
Of
course
if
the
sale
had
been
made
under
the
express
agreement
of
imposing
upon
the
purchaser
the
obligation
to
take
the
necessary
steps
to
obtain
the
material
possession
of
the
thing
sold,
and
it
were
proven
that
she
knew
that
the
thing
was
in
the
possession
of
a
third
person
claiming
to
have
property
rights
therein,
such
agreement
would
be
perfectly
valid.
But
there
is
nothing
in
the
instrument
which
would
indicate,
even
implicitly,
that
such
was
the
agreement.
It
is
true,
as
the
appellant
argues,
that
the
obligation
was
incumbent
upon
the
defendant
Marciana
Felix
to
apply
for
and
obtain
the
registration
of
the
land
in
the
new
registry
of
property;
but
from
this
it
cannot
be
concluded
that
she
had
to
await
the
final
decision
of
the
Court
of
Land
Registration,
in
order
to
be
able
to
enjoy
the
property
sold.
On
the
contrary,
it
was
expressly
stipulated
in
the
contract
that
the
purchaser
should
deliver
to
the
vendor
one-fourth
"of
the
products
...
of
the
aforesaid
four
parcels
from
the
moment
when
she
takes
possession
of
them
until
the
Torrens
certificate
of
title
be
issued
in
her
favor."
This
obviously
shows
that
it
was
not
forseen
that
the
purchaser
might
be
deprived
of
her
possession
during
the
course
of
the
registration
proceedings,
but
that
the
transaction
rested
on
the
assumption
that
she
was
to
have,
during
said
period,
the
material
possession
and
enjoyment
of
the
four
parcels
of
land.
Inasmuch
as
the
rescission
is
made
by
virtue
of
the
provisions
of
law
and
not
by
contractual
agreement,
it
is
not
the
conventional
but
the
legal
interest
that
is
demandable.
It
is
therefore
held
that
the
contract
of
purchase
and
sale
entered
into
by
and
between
the
plaintiff
and
the
defendant
on
June
11,
1914,
is
rescinded,
and
the
plaintiff
is
ordered
to
make
restitution
of
the
sum
of
P3,000
received
by
him
on
account
of
the
price
of
the
sale,
together
with
interest
thereon
at
the
legal
rate
of
6
per
annum
from
the
date
of
the
filing
of
the
complaint
until
payment,
with
the
costs
of
both
instances
against
the
appellant.
So
ordered.
G.R.
No.
L-21998
November
10,
1975
CALIXTO
PASAGUI
and
FAUSTA
MOSAR,
plaintiffs-appellants,
vs.
ESTER
T.
VILLABLANCA,
ZOSIMO
VILLABLANCA,
EUSTAQUIA
BOCAR
and
CATALINA
BOCAR
defendants-appellees.
ANTONIO,
J.:
The
only
issue
posed
by
this
appeal
is
whether
or
not,
from
the
nature
of
the
action
pleaded
as
appears
in
the
allegations
of
the
complaint,
the
aforesaid
action
is
one
of
forcible
entry,
within
the
exclusive
jurisdiction
of
the
municipal
court.
.
On
February
4,
1963,
appellants
Calixto
Pasagui
and
Fausta
Mosar
filed
a
complaint
with
the
Court
of
First
Instance
at
Tacloban
City,
alleging
that
onNovember
15,
1962,
for
and
in
consideration
of
Two
Thousand
Eight
Hundred
Pesos
(P2,800.00),
they
bought
from
appellees
Eustaquia
Bocar
and
Catalina
Bocar
a
parcel
of
agricultural
land
with
an
area
of
2.6814
hectares,
situated
in
Hamindangon,
Pastrana,
Leyte;
that
the
corresponding
document
of
sale
was
executed,
notarized
on
the
same
date,
and
recorded
in
the
Registry
of
Deeds
of
Tacloban,
Leyte
on
November
16,
1962;
that
during
the
first
week
of
February,
1963,
defendant
spouses
Ester
T.
Villablanca
and
Zosimo
Villablanca,
"illegally
and
without
any
right,
whatsoever,
took
possession
of
the
above
property
harvesting
coconuts
from
the
coconut
plantation
thereon,
thus
depriving
plaintiffs"
of
its
possession;
that
despite
demands
made
by
the
plaintiffs
upon
the
above-
mentioned
defendants
"to
surrender
to
them
the
above-described
property
and
its
possession"
the
latter
failed
or
refused
to
return
said
parcel
of
land
to
the
former,
causing
them
damage;
and
that
Eustaquia
and
Catalina
Bocar,
vendors
of
the
property,
are
included
defendants
in
the
complaint
by
virtue
of
the
warranty
clause
contained
in
the
document
of
sale.
Plaintiffs
prayed
for
a
decision
ordering
defendants
to
surrender
the
possession
of
the
parcel
of
land
above-described
to
them
and
to
pay
damages
in
the
amounts
specified.
.
On
February
21,
1963,
appellees
moved
to
dismiss
the
complaint
on
the
ground
that
the
Court
of
First
Instance
had
no
jurisdiction
over
the
subject
matter,
the
action
being
one
of
forcible
entry.
Appellants
opposed
the
Motion
to
Dismiss
asserting
that
the
action
is
not
one
for
forcible
entry
inasmuch
as
in
the
complaint,
there
is
no
allegation
that
the
deprivation
of
possession
was
effected
through
"force,
intimidation,
threat,
strategy
or
stealth."
.
On
May
13,
1963,
the
trial
court
issued
an
order
dismissing
the
complaint
for
lack
of
jurisdiction,
it
appearing
from
the
allegations
in
the
complaint
that
the
case
is
one
for
forcible
entry
which
belongs
to
the
exclusive
jurisdiction
of
the
Justice
of
the
Peace
(now
Municipal
Court)
of
Pastrana,
Leyte.
The
first
Motion
for
Reconsideration
was
denied
on
May
27,
1963
and
the
second
was
likewise
denied
on
July
5,
1963.
From
the
aforementioned
orders,
appeal
on
a
pure
question
of
law
was
interposed
to
this
Court.
.
It
is
well-settled
that
what
determines
the
jurisdiction
of
the
municipal
court
in
a
forcible
entry
case
is
the
nature
of
the
action
pleaded
as
appears
from
the
allegations
in
the
complaint.
In
ascertaining
whether
or
not
the
action
is
one
of
forcible
entry
within
the
original
exclusive
jurisdiction
of
the
municipal
court,
the
averments
of
the
complaint
and
the
character
of
the
relief
sought
are
the
ones
to
be
consulted..
1
.
In
the
case
at
bar,
the
complaint
does
not
allege
that
the
plaintiffs
were
in
physical
possession
of
the
land
and
have
been
deprived
of
that
possession
through
force,
intimidation,
threat,
strategy,
or
stealth.
It
simply
avers
that
plaintiffs-
appellants
bought
on
November
12,
1962
from
defendants-appellees
Eustaquia
Bocar
and
Catalina
Bocar
the
parcel
of
land
in
question
for
the
amount
of
P2,800.00;
that
a
deed
of
sale
was
executed,
notarized
and
registered;that
"during
this
first
week
of
February,
1963,
defendants
Ester
T.
Villablanca
and
her
husband,
Zosimo
Villablanca,
illegally
and
without
any
right
whatsoever,
took
possession
of
the
above
described
property,
harvesting
coconuts
from
the
coconut
plantation
therein,
thus
depriving
of
its
possession
herein
plaintiffs,
and
causing
them
damages
for
the
amount
of
EIGHT
HUNDRED
PESOS
(P800.00)";
that
for
the
purpose
of
enforcing
the
vendors'
warranty
in
case
of
eviction,
Eustaquia
Bocar
and
Catalina
Bocar
were
also
included
as
defendants;
and,
therefore,
plaintiffs-appellants
pray
that
a
decision
be
rendered,
ordering
(a)
defendants
Ester
T.
Villablanca
and
her
husband,
Zosimo
Villablanca,
"to
surrender
the
possession
of
the
above
described
property
to
said
plaintiffs";
(b)
defendants
Ester
T.
Villablanca
and
her
husband,
Zosimo
Villablanca,
"to
pay
to
said
plaintiffs
the
amount
of
EIGHT
HUNDRED
PESOS
(P800.00)
as
damages
for
the
usurpation
by
them
of
said
property";
and
(c)
defendants
Eustaquia
Bocar
and
Catalina
Bocar
"to
pay
the
plaintiffs
the
amount
of
P2,800.00,
plus
incidental
expenses,
as
provided
for
by
Art.
1555
of
the
Civil
Code,
in
case
of
eviction
or
loss
of
ownership
to
said
above
described
property
on
the
part
of
plaintiffs."
.
It
is
true
that
the
execution
of
the
deed
of
absolute
sale
in
a
public
instrument
is
equivalent
to
delivery
of
the
land
subject
of
the
sale.
2
This
presumptive
delivery
only
holds
true
when
there
is
no
impediment
that
may
prevent
the
passing
of
the
property
from
the
hands
of
the
vendor
into
those
of
the
vendee.
It
can
be
negated
by
the
reality
that
the
vendees
actually
failed
to
obtain
material
possession
of
the
land
subject
of
the
sale..
3
It
appears
from
the
records
of
the
case
at
bar
that
plaintiffs-appellants
had
not
acquired
physical
possession
of
the
land
since
its
purchase
on
November
12,
1962.
As
a
matter
of
fact,
their
purpose
in
filing
the
complaint
in
Civil
Case
No.
3285
is
precisely
to
"get
the
possession
of
the
property."
4
In
order
that
an
action
may
be
considered
as
one
for
forcible
entry,
it
is
not
only
necessary
that
the
plaintiff
should
allege
his
prior
physical
possession
of
the
property
but
also
that
he
was
deprived
of
his
possession
by
any
of
the
means
provided
in
section
1,
Rule
70
of
the
Revised
Rules
of
Court,
namely:
force,
intimidation,
threats,
strategy
and
stealth.
For,
if
the
dispossession
did
not
take
place
by
any
of
these
means,
the
courts
of
first
instance,
not
the
municipal
courts,
have
jurisdictions..
5
The
bare
allegation
in
the
complaint
that
the
plaintiff
has
been
"deprived"
of
the
land
of
which
he
is
and
has
been
the
legal
owner
for
a
long
period
has
been
held
to
be
insufficient.
6
It
is
true
that
the
mere
act
of
a
trespasser
in
unlawfully
entering
the
land,
planting
himself
on
the
ground
and
excluding
therefrom
the
prior
possessor
would
imply
the
use
of
force.
In
the
case
at
bar,
no
such
inference
could
be
made
as
plaintiffs-appellants
had
not
claimed
that
they
were
in
actual
physical
possession
of
the
property
prior
to
the
entry
of
the
Villablancas.
Moreover,
it
is
evident
that
plaintiffs-appellants
are
not
only
seeking
to
get
the
possession
of
the
property,
but
as
an
alternative
cause
of
action,
they
seek
the
return
of
the
price
and
payment
of
damages
by
the
vendors
"in
case
of
eviction
or
loss
of
ownership"
of
the
said
property.
It
is,
therefore,
not
the
summary
action
of
forcible
entry
within
the
context
of
the
Rules.
.
WHEREFORE,
the
order
of
dismissal
is
hereby
set
aside,
and
the
case
remanded
to
the
court
a
quo
for
further
proceedings.
Costs
against
defendants-appellees.
.
G.R.
No.
L-31789
June
29,
1972
ANTONIO
R.
BANZON
and
ROSA
BALMACEDA,
petitioners,
vs.
HON.
FERNANDO
CRUZ,
Spouses
PEDRO
CARDENAS
and
LEONILA
BALUYOT
and
ASSOCIATED
INSURANCE
&
SURETY
COMPANY,
INC.
represented
by
INSURANCE
COMMISSIONER
in
her
capacity
as
LIQUIDATOR
OF
ASSOCIATED
INSURANCE
&
SURETY
COMPANY,
INC.,
respondents.
TEEHANKEE,
J.:p
An
original
action
to
enjoin
respondent
court
from
forcing
a
writ
of
possession
and
order
of
demolition
over
one
of
two
Caloocan
City
lots
originally
owned
by
petitioners-
spouses
pending
the
outcome
of
their
suit
for
reconveyance
of
said
lots
from
private
respondents.
Sometime
in
1952,
Maximo
Sta.
Maria
obtained
crop
loans
from
the
Philippine
National
Bank
(hereinafter
referred
as
the
bank).
Respondent
Associated
Insurance
&
Surety
Co.,
Inc.
(hereinafter
referred
to
as
Associated)
acted
as
surety
of
Sta.
Maria,
filing
surety
bonds
in
favor
of
the
bank
to
answer
for
prompt
repayment
of
the
loans.
Petitioner
Antonio
R.
Banzon
and
Emilio
Ma.
Naval
in
turn
acted
as
indemnitors
of
Associated
and
were
obligated
to
indemnify
and
hold
harmless
Associated
from
any
liability
thus
acting
as
surety
of
the
loan.
Sta.
Maria
failed
to
pay
his
obligations
to
the
bank,
which
accordingly
demanded
payment
from
Associated
as
surety.
Instead
of
paying
the
bank,
Associated
filed
a
complaint
dated
November
19,
1956
with
the
Court
of
First
Instance
of
Manila
1
against
debtor
Sta.
Maria
and
indemnitors
Banzon
and
Naval,
alleging
that
the
outstanding
obligations
of
Sta.
Maria
with
the
bank
guaranteed
by
it
amounted
to
P6,100.00,
P9,346.44
and
P14,811.32,
or
a
total
of
P30,257.86,
excluding
interest.
On
December
11,
1957,
the
said
court
rendered
judgment
ordering
Sta.
Maria,
Banzon
and
Naval
"to
pay
jointly
and
severally
unto
plaintiff
for
the
benefit
of
the
Philippine
National
Bank"
the
amounts
mentioned
above,
with
interest
thereon
at
12%
per
annum,
P593.76
for
premiums
and
documentary
stamps
due,
and
15%
attorney's
fees,
"the
15%
and
the
interest
to
be
paid
for
the
benefit
only
of
the
plaintiff."
What
happened
thereafter
is
narrated
in
the
decision
of
this
Court
rendered
on
November
29,
1968
in
the
appeal
instituted
by
petitioner
Banzon
and
his
spouse,
co-
petitioner
Rosa
Balmaceda,
from
a
subsequent
action
of
Associated
in
the
Court
of
First
Instance
of
Rizal
wherein
the
Rizal
court
ordered
Banzon
to
surrender
for
cancellation
his
owner's
duplicates
of
titles
to
his
two
Caloocan
City
lots
which
had
been
levied
upon
and
purchased
at
the
execution
sale
by
Associated
in
supposed
satisfaction
of
the
Manila
court's
judgment,
docketed
as
Case
L-23971
of
this
Court,
entitled
Associated
Ins.
&
Surety
Co.
Inc.
plaintiff-appellee
vs.
Antonio
Banzon
and
Rosa
Balmaceda,
defendants-appellants,
2
as
follows:
As
the
above
decision
3
became
final
and
executory,
the
corresponding
writ
of
execution
was
issued
and
levy
was
made
upon
the
properties
of
the
judgment
debtor
Antonio
R.
Banzon
covered
by
Transfer
Certificates
of
Title
Nos.
39685
and
53759
issued
in
his
name
by
the
Register
of
Deeds
of
Rizal.
The
first
covered
a
parcel
of
land
containing
an
area
of
650
square
meters
situated
in
Barrio
Calaanan,
Caloocan,
Rizal,
and
the
second,
another
parcel
of
650
square
meters
situated
in
the
same
barrio
of
the
same
municipality.
After
the
proceedings
required
by
law
in
connection
with
execution
sales,
the
aforesaid
properties
were
sold,
the
judgment
creditor,
Associated
Insurance
and
Surety
Co.,
Inc.,
having
been
the
highest
bidder,
for
the
total
sum
of
P41,000.00.
The
Sheriff
of
Rizal
issued
in
its
favor
the
corresponding
certificate
of
sale
dated
June
27,
1957,
which
was
duly
registered
on
June
30,
1959.
As
the
period
of
redemption
expired
on
June
20,
1960
without
the
judgment
debtor
or
any
proper
party
having
exercised
it,
the
judgment
creditor
and
purchaser
obtained
in
due
time
the
corresponding
final
certificate
of
sale,
which
was
likewise
duly
registered.
In
view
of
the
foregoing,
herein
petitioner-appellee
made
demands
upon
Antonio
R.
Banzon
to
deliver
to
it
the
owner's
duplicate
of
Certificate
of
Title
Nos.
39685
and
53759
mentioned
heretofore,
but
the
latter
refused
to
do
so.
As
a
result
it
filed
in
the
Court
of
First
Instance
of
Rizal
in
Case
No.
3885,
G.L.R.O.
Record
No.
11267,
a
petition
for
an
order
directing
Antonio
R.
Banzon
to
present
his
owner's
duplicate
of
Certificae
of
Title
Nos.
89685
and
53759
to
the
Register
of
Deeds
of
Rizal
for
cancellation,
and
for
another
order
directing
the
Register
of
Deeds
of
Rizal
to
cancel
said
duplicates
and
to
issue
new
transfer
certificates
of
title
covering
the
properties
in
the
name
of
petitioner.
Banzon
filed
his
opposition
to
the
petition
claiming
mainly
that
(1)
the
decision
of
the
Court
of
First
Instance
of
Manila
in
Civil
Case
No.
31237
was
void
as
far
as
he
was
concerned
because
he
had
never
been
summoned
in
connection
therewith,
an
that
(2)
the
levy
and
sale
of
the
properties
covered
by
the
petition
were
likewise
void
because
they
were
conjugal
properties
belonging
to
him
and
his
wife,
Rosa
Balmaceda.
After
a
hearing
on
the
motion
and
opposition
mentioned
above,
the
lower
court,
on
February
7,
1961,
rendered
a
decision
whose
dispositive
portion
is
as
follows:
"In
view
of
the
foregoing,
judgment
is
hereby
rendered
in
favor
of
the
petitioner
granting
the
relief
prayed
for.
The
oppositors
are
hereby
ordered
to
surrender
to
the
Register
of
Deeds
of
Rizal
the
Certificate
of
Title
in
question
for
cancellation
and
let
a
new
one
be
issued
in
the
name
of
the
petitioner."
In
this
appeal
interposed
by
them,
the
Banzons
seek
a
reversal
of
the
above
decision
upon
the
same
grounds
relied
upon
in
their
opposition
filed
in
the
lower
court.
4
This
Court
in
its
decision
of
November
29,
1968
affirmed
the
decision
of
the
trial
court,
relying
upon
the
lower
court's
findings
on
Banzon's
failure
to
substantiate
his
claims
which
"would
amount
to
a
deprivation
of
(Banzon's)
property
without
due
process
of
law"
had
he
but
discharged
his
burden
of
proof,
thus:
With
respect
to
appellant's
contention
that
Antonio
R.
Banzon
had
not
been
duly
served
with
summons
in
connection
with
Civil
Case
No.
31237
of
the
Court
of
First
Instance
of
Manila,
it
is
enough
for
us
to
quote
here
the
pertinent
portions
of
the
well-considered
decision
of
the
lower
court
"With
respect
to
the
first
contention
of
oppositors,
the
latter
in
effect
contends
that
not
having
been
served
by
summons,
Antonio
Banzon
never
became
a
party
defendant
to
the
aforesaid
civil
case
and
hence
not
bound
by
any
judgment
rendered
therein.
It
is
erroneous
on
the
part
of
the
petitioner
to
contend
that
the
objection
as
to
lack
of
jurisdiction
on
the
defendant's
person
has
been
waived
for
said
waiver
applies
only
when
summons
has
been
served
although
defectively,
such
as
one
not
served
by
the
proper
officer.
If
the
contention
of
the
oppositor
were
true,
that
is,
no
summons
was
ever
served
upon
him
and
that
he
was
completely
unaware
of
the
proceedings
in
the
civil
case
aforementioned,
the
properties
in
question
could
not
be
levied
upon
for
that
would
amount
to
a
deprivation
of
oppositor's
property
without
due
process
of
law.
"The
burden,
however,
rests
upon
the
oppositors
to
prove
that
there
was
in
fact
no
service
of
summons
and
this,
the
court
believes,
the
oppositors
have
failed
to
substantiate
with
sufficient
evidence.
It
is
a
fundamental
rule
that
the
regularity
of
all
official
actions
and
proceedings
will
be
presumed
until
the
contrary
is
proved.
In
said
civil
case
No.
31237,
the
records
show,
particularly
the
answer
and
the
motion
to
dismiss,
that
the
proceedings
were
conducted
by
counsel
in
behalf
of
all
the
defendants
therein
including
the
oppositor,
Antonio
Banzon.
The
presumption
therefore,
of
the
regularity
of
the
proceedings
as
against
said
defendant
will
be
maintained
including
the
fact
that
either
summons
was
duly
served
or
that
the
defendant
Banzon
voluntarily
appeared
in
court
without
such
summons.
It
is
therefore
incumbent
upon
the
oppositors
to
rebut
this
presumption
with
competent
and
proper
evidence
such
as
the
return
made
by
the
sheriff
who
served
the
summons
in
question.
This,
however,
the
oppositors
have
not
met.
"Moreover,
the
circumstances
of
the
case
all
the
more
bear
out
the
strength
of
this
presumption
when
it
considered
that
the
oppositor
Antonio
Banzon
received
a
notice
of
execution
and
levy
of
these
properties
and
notice
of
the
sale
of
the
same
at
public
auction.
Had
the
oppositors
have
been
prejudiced
by
being
deprived
of
due
process,
they
should
have
filed
either
a
third
party
claim
upon
the
property
levied
or
an
injunction
proceeding
to
prevent
its
sale
at
public
auction,
nor
would
they
have
allowed
the
consummation
of
the
sale
and
the
lapse
of
one
year
within
which
the
redemption
would
have
been
exercised.
These
facts
gravely
militate
against
the
merits
of
the
opposition,
not
only
insofar
as
it
strengthens
the
aforesaid
presumption
of
regularity,
but
also
insofar
as
they
are
indicative
of
the
fact
that
the
properties
levied
upon
are
not
conjugal
property
or
even
if
they
were
that
the
debt
involved
was
one
which
redound
to
the
benefit
of
the
family
for
which
the
conjugal
partnership
may
be
held
liable."
Appellants'
second
contention
namely,
that
the
properties
now
in
question
are
their
conjugal
properties,
is
belied
by
the
record
before
us
which
shows
that
Transfer
Certificate
of
Title
Nos.
39685
and
53759
were
issued
in
the
name
of
Antonio
R.
Banzon.
Moreover,
there
is
no
sufficient
evidence
in
the
record
to
show
that
the
properties
were
acquired
during
appellants'
marriage.
IN
VIEW
OF
ALL
THE
FOREGOING,
the
decision
appealed
from
is
hereby
affirmed,
with
costs.
5
It
has
now
been
exposed
that
notwithstanding
the
judgment
of
December
11,
1957
obtained
from
the
Manila
court
by
Associated
and
executed
by
it
against
petitioner
Banzon
as
indemnitor
"
for
the
benefit
of
the
Philippine
National
Bank,"
and
which
judgment
it
obtained
and
executed
on
the
representation
to
the
said
court
that
the
bank
was
exacting
payment
from
it
as
surety
of
the
debtor
Sta.
Maria's
loans,
and
that
it
was
therefore
enforcing
Banzon's
undertaking
as
indemnitor
in
turn
to
indemnify
it,
that
it
never
discharged
its
liability
as
surety
to
the
bank
nor
ever
made
any
payment
to
the
bank,
whether
in
money
or
property,
to
discharge
Sta.
Maria's
outstanding
obligations
as
guaranteed
by
it.
As
will
be
shown
later,
this
suit
of
Associated
against
Banzon
as
indemnitor
and
the
execution
against
him
of
the
judgment
obtained
in
trust
"for
the
benefit
of
the
PhiIippine
National
Bank"
were
absolutely
premature
and
uncalled
for,
since
Article
2071
of
the
Civil
Code
permits
the
surety,
even
before
having
paid,
to
proceed
only
"against
the
principal
debtor
...
(4)
when
the
debt
has
become
demandable,
by
reason
of
the
expiration
of
the
period
for
payment"
and
that
"the
action
of
the
guarantor
is
to
obtain
release
from
the
guaranty,
or
to
demand
a
security
that
shall
protect
him
from
any
proceedings
by
the
creditor
and
from
the
danger
of
insolvency
of
the
debtor."
In
fact,
since
the
bank
failed
to
exact
payment
from
Associated
as
surety
of
the
debtor
Maximo
Sta.
Maria's
matured
obligations,
the
bank
itself
filed
on
February
10,
1961,
its
own
complaint
with
the
Court
of
First
Instance
of
Pampanga
against
principal
debtor
Maximo
Sta.
Maria,
his
six
brothers
and
sisters
(who
had
executed
a
special
power
of
attorney
in
Sta.
Maria's
favor
to
mortgage
a
16-hectare
parcel
of
land
jointly
owned
by
all
of
them
as
security
also
for
the
bank's
loans),
and
Associated
itself,
surety,
as
defendants,
for
the
collection
of
the
outstanding
obligations
due
from
the
principal
debtor,
Maximo
Sta.
Maria.
After
trial,
the
court
ordered
all
the
defendants
jointly
and
severally
to
pay
the
bank
the
outstanding
amounts
due
on
the
crop
loans
to
Sta.
Maria,
which
as
of
that
much
later
date,
August
20,
1963,
amounted
only
to
P6,100.00
and
P9,346.44
or
a
total
of
P15,446.44,
exclusive
of
interests.
It
should
be
noted
therefore,
that
the
debtor
Sta.
Maria
had
been
making
payments
all
along
to
the
bank
on
account
of
his
crop
loans
so
much
so
that
by
1963,
the
total
principal
due
and
amount
outstanding
thereon
amounted
only
to
P15,446.44.
This
amounts
to
practically
one-half
of
the
advance
judgment
for
the
total
amount
of
P30,257.86,
excluding
interests,
obtained
by
Associated
six
(6)
years
earlier
in
1957
against
Banzon
"
for
the
benefit
of
the
Philippine
National
Bank"
allegedly
as
the
amount
due
from
Sta.
Maria
and
which
Associated
as
surety
would
have
to
pay
the
bank,
and
which
as
it
turns
out,
Associated
never
paid
to
the
bank.
These
facts
and
figures
are
of
record
in
this
Court's
decision
of
August
29,
1969,
in
Philippine
National
Bank
vs.
Sta.
Maria,
et
al.,"
wherein
it
is
further
recorded
that
"(D)efendant
Maximo
Sta.
Maria
and
his
surety,
defendant
Associated
Insurance
&
Surety
Co.,
Inc.
who
did
not
resist
the
action,
did
not
appeal
the
judgment
(sentencing
all
defendants
jointly
and
severally
to
pay
the
bank
the
above
referred
to
principal
amount
of
P15,446.44,
excluding
interests)."
This
Court
sustained
the
appeal
taken
by
the
debtor
Maximo
Sta.
Maria's
brothers
and
sisters,
and
reversed
the
lower
court's
judgment
against
them,
as
follows:
...
This
appeal
has
been
taken
by
his
six
brothers
and
sisters,
defendants-appellants
who
reiterate
in
their
brief
their
main
contention
in
their
Answer
to
the
complaint
that
under
the
special
power
of
attorney,
Exh.
E,
they
had
not
given
their
brother,
Maximo,
the
authority
to
borrow
money
but
only
to
mortgage
the
real
estate
jointly
owned
by
them;
and
that
if
they
are
liable
at
all,
their
liability
should
not
go
beyond
the
value
of
the
property
which
they
had
authorized
to
be
given
as
security
for
the
loans
obtained
by
Maximo.
In
their
answer,
defendants-appellants
had
further
contended
that
they
did
not
benefit
whatsoever
from
the
loans,
and
that
the
plaintiff
bank's
only
recourse
against
them
is
to
foreclose
on
the
property
which
they
had
authorized
Maximo
to
mortgage.
We
find
the
appeal
of
defendants-appellants,
except
for
defendant
Valeriana
Sta.
Maria
who
had
executed
another
special
power
of
attorney,
Exh.
E-1,
expressly
authorizing
Maximo
to
borrow
money
on
her
behalf,
to
be
well
taken.
1.
Plaintiff
bank
has
not
made
out
a
cause
of
action
against
defendants-appellants
(except
Valeriana),
so
as
to
hold
them
liable
for
the
unpaid
balances
of
the
loans
obtained
by
Maximo
under
the
chattel
mortgages
executed
by
him
in
his
own
name
alone.
xxx
xxx
xxx
6.
Finally,
as
to
the
10%
award
of
attorney's
fees,
this
Court
believes
that
considering
the
resources
of
plaintiff
bank
and
the
fact
that
the
principal
debtor,
Maximo
Sta.
Maria,
had
not
contested
the
suit,
an
award
of
five
(5%)
per
cent
of
the
balance
due
on
the
principal,
exclusive
of
interests,
i.e.,
a
balance
of
P6,100.00
on
the
first
cause
of
action
and
a
balance
of
P9,846.44
on
the
second
cause
of
action,
per
the
bank's
statements
of
August
20,
1968,
(Exhs.
Q-1
and
BB-1
respectively)
should
be
sufficient.
WHEREFORE,
the
judgment
of
the
trial
court
against
defendant-appellants
Emeteria,
Teofilo,
Quintin,
Rosario
and
Leonila,
all
surnamed
Sta.
Maria
is
hereby
reversed
and
set
aside,
with
costs
in
both
instances
against
plaintiff.
The
judgment
against
defendant-appellant
Valeriana
Sta.
Maria
is
modified
in
that
her
liability
is
held
to
be
joint
and
not
solidary,
and
the
award
of
attorney's
fees
is
reduced
as
set
forth
in
the
preceding
paragraph,
without
costs
in
this
instance.
The
bank
thus
collected
directly
from
its
debtor
Sta.
Maria
the
amounts
owing
to
it,
with
Associated
never
having
put
in
one
centavo.
Per
the
bank's
letter
dated
February
20,
1970
to
Associated,
it
informed
Associated
that
the
amounts
of
its
judgment
credit
against
judgment
defendants
in
the
aforementioned
case
terminated
by
this
Court's
decision
of
August
29,
1969,
"had
already
been
satisfied
as
of
February
16,
1970
by
virtue
of
the
payment
made
by
and
thru
the
Provincial
Sheriff
of
Bataan
on
the
proceeds
of
the
extra-judicial
sale
of
the
mortgaged
properties
of
defendants
Sta.
Marias,"
in
view
of
which
"we
(Philippine
National
Bank)
have
now
released
the
Associated
Insurance
&
Surety
Co.,
Inc.
of
its
joint
obligation
with
Maximo
Sta.
Maria
et
al.
in
the
aforementioned
case."
7
This
should
have
put
an
end
to
the
matter
and
Banzon's
two
lots
therefore
restored
fully
to
his
ownership,
but
for
certain
complications
involving
the
intervention
of
the
other
private
respondents,
the
spouses
Pedro
Cardenas
and
Leonila
Baluyot,
and
Associated's
own
unjustifiable
actions,
as
shall
presently
be
seen.
According
to
the
Banzons'
petition
at
bar,
sometime
in
1965,
even
before
ownership
over
the
two
parcels
of
land
belonging
to
the
Banzons
could
be
consolidated
in
the
name
of
Associated
(since
the
judgment
was
"
for
the
benefit
of
the
Philippine
National
Bank"
and
it
had
not
discharged
its
surety's
liability
to
the
bank),
Associated
"in
clear
collusion
and
confederation
with
(respondent)
Pedro
Cardenas,
allowed
and
permitted
the
latter
to
execute
and
levy
one
of
the
two
parcels
of
land
(that
covered
by
T.C.T.
No.
39685-Rizal,
Lot
6,
Block
No.
176
of
subdivision
plan
Psd-2896,
G.L.R.O.
Rec.
No.
11267)
for
a
judgment
debt
of
P5,100.00
(of
Associated
in
favor
of
Cardenas)
8
notwithstanding
that
the
property
in
question
was
worth
P130,000.00
more
or
less,
and
further
notwithstanding
the
fact
that
said
respondent
(Associated)
knew
the
property
was
merely
being
held
in
trust
by
it
for
the
benefit
of
the
Philippine
National
Bank
and
therefore,
not
being
the
legal
owner
thereof,
it
cannot
validly
dispose
of
it
in
any
manner."
9
Respondent
Cardenas
being
allegedly
the
lone
bidder
in
the
auction
sale
for
execution
of
his
P5,100.00-judgment
against
Associated
was
awarded
the
property
in
full
satisfaction
of
his
judgment,
and
eventually
succeeded
in
having
Banzon's
title
cancelled
and
a
new
one,
T.C.T.
No.
8567-Caloocan
City
issued
thereto
in
his
name,
notwithstanding
that
Associated's
right
thereto
was
still
sub-judice
in
Associated
vs.
Banzon,
to
be
resolved
much
later
yet
by
this
Court's
decision
of
November
29,
1968.
Associated
made
no
move
to
question
or
challenge
this
action
of
Cardenas,
notwithstanding
an
order
for
its
liquidation
and
dissolution
issued
on
December
31,
1965
by
the
Court
of
First
Instance
of
Manila
and
eventually
affirmed
by
this
Court
per
resolution
of
June
20,
1968
in
G.R.
No.
L-38934.
Nor
did
Associated
make
any
effort
to
resist
execution
on
said
property
of
Banzon's,
knowing
as
it
did
that
its
interest
in
said
property
was
impressed
with
a
trust
character
since
the
clear
tenor
and
intent
of
the
judgment
granted
against
Banzon
nominally
in
its
favor
but
expressly
"
for
the
benefit
of
the
Philippine
National
Bank"
was
to
make
the
execution
and
operation
of
the
judgment
contingent
or
conditioned
upon
Associated's
being
made
or
compelled
to
pay
the
bank,
which
contingency
never
materialized.
The
Cardenas
spouses
thereafter
filed
with
the
Court
of
First
Instance
of
Rizal,
Caloocan
City
Branch
XII,
Reg.
Case
No.
C-
211
(LRC
Case
No.
112167)
entitled
"Pedro
Cardenas,
et
al.,
petitioners
vs.
Antonio
Banzon,
et
al.,
respondents,"
to
secure
possession
from
the
Banzons
of
the
lot
covered
by
T.C.T.
No.
8567.
A
writ
of
possession
was
issued
in
said
case
on
May
21,
1965,
but
the
enforcement
thereof
was
held
in
abeyance
in
view
of
the
filing
with
the
same
court
of
Civil
Case
No.
C-531
entitled
"Antonio
Banzon,
et
al.
vs.
Pedro
Cardenas
and
Leonila
Baluyot,
Associated
Insurance
and
Surety
Co.,
Inc.
and
Benito
Macrohon."
Banzon's
complaint
in
Civil
Case
No.
C-531
was,
however,
dismissed
on
August
6,
1969,
on
the
ground
that
"the
matter
of
the
legality
of
the
transfer
of
ownership
of
the
property
in
question
from
the
plaintiff
to
the
Associated
Insurance
&
Surety
Co.,
Inc.,
has
been
upheld
by
the
Supreme
Court
in
its
decision
promulgated
on
November
29,
1968,
and
consequently
the
transfer
to
the
spouses
Pedro
Cardenas
and
Leonila
Baluyot
must
perforce
be
considered
also
as
valid
and
legal."
Consequently,
respondent
Cardenas
filed
a
motion
on
October
13,
1969,
in
Case
No.
C-211
for
the
issuance
of
an
alias
writ
of
possession;
this
was
granted
on
October
23,
1969.
The
alias
writ
was
served
on
Banzon,
who
refused
to
vacate
the
premises
and
to
remove
the
improvements
thereon.
In
view
of
this,
an
order
was
issued
on
December
9,
1969,
for
the
issuance
of
a
writ
of
demolition,
but
its
enforcement
was
held
in
abeyance
because
a
temporary
restraining
order,
later
changed
to
a
writ
of
preliminary
injunction,
was
issued
by
the
Court
of
Appeals
on
December
13,
1969,
in
view
of
the
filing
by
the
Banzons
with
the
said
appellate
court
of
a
petition
for
injunction.
10
On
February
28,
1970
the
Court
of
Appeals
rendered
judgment
dismissing
the
petition
because
it
found
the
same
to
be
allegedly
"merely
a
device
to
prevent
the
execution
of
a
final
judgment
by
the
filing
of
a
new
suit
based
upon
the
same
grounds
which
have
already
been
interposed
and
passed
upon
in
the
case
where
the
final
judgment
had
already
been
rendered
...
."
Cardenas
thereafter
filed
a
motion
for
the
enforcement
of
the
order
of
demolition
and
writ
of
possession
previously
issued
in
Reg.
Case
No.
C-211.
On
March
13,
1970,
Judge
Fernando
A.
Cruz
of
the
Court
of
First
Instance
of
Rizal,
Caloocan
City
Branch
XII,
issued
an
order
granting
the
motion.
11
On
March
13,
1970,
the
Banzons
having
learned
of
the
bank's
release
of
Associated
as
of
February
20,1970,
supra,
accordingly
filed
a
complaint
for
reconveyance
and
damages
with
the
Court
of
First
Instance
of
Manila
against
respondents
Associated
and
the
Cardenas
spouses.
12
In
their
complaint,
the
Banzons
impute
bad
faith,
collusion
and
confederation
between
Associated
and
the
Cardenases
with
regard
to
the
latter's
prematurely
obtaining
T.C.T.
No.
8567
covering
one
of
Banzon's
lots
in
their
name.
The
Banzons
therein
alleged
for
the
first
time
their
new
cause
of
action
based
on
the
subsequent
development
that
the
Philippine
National
Bank
had
collected
directly
on
February
16,
1970
from
the
principal
debtor
Sta.
Maria
the
loan
guaranteed
by
Associated
(which
amounted
only
to
a
principal
of
P15,446.44
as
of
August,
1963,
excluding
interests
or
just
one-half
of
the
premature
judgment
for
P30,257.88
excluding
interests
obtained
by
Associated
six
(6)
years
earlier
in
1957
against
Banzon
in
trust
and
for
the
benefit
of
the
bank
allegedly
as
the
amount
owed
by
Sta.
Maria
and
to
be
discharged
by
Associated,
which
Associated
never
discharged);
12a
and
that
the
bank,
per
its
letter
of
February
20,
1970
had
therefore
absolutely
released
Associated
of
any
liability
on
its
surety
undertaking.
12b
The
Banzons
therefore
prayed
for
the
return
and
reconveyance
of
their
two
parcels
of
land
covered
by
T.C.T.
No.
8567
(in
Cardenas'
name)
and
No.
53759
(still
in
Banzon's
name),
in
discharge
of
Associated's
implied
trust
not
to
unjustly
enrich
itself
and
appropriate
Banzon's
properties
at
absolutely
no
cost
to
itself.
On
March
16,
1970,
the
Sheriff
of
Caloocan
City
served
upon
the
Banzons
copy
of
the
aforesaid
order
giving
them
until
March
20,
1970,
within
which
to
deliver
possession
of
the
parcel
of
land
covered
by
T.C.T.
No.
8567,
and
to
remove
the
improvements
thereon;
otherwise,
the
said
sheriff
would
proceed
to
enforce
the
same.
Petitioners
Banzons
therefore
came
to
this
Court
on
March
20,
1970,
by
means
of
the
present
petition
for
injunction.
At
petitioners'
instance,
the
Court
on
March
24,
1970
restrained
respondents
and
their
representatives
from
enforcing
the
questioned
writ
of
execution
and
order
of
demolition,
and
respondent
Associated
from
disposing
in
any
manner
of
its
alleged
rights
and
interests
over
the
two
lots
in
question.
Respondents
Cardenas
spouses
filed
in
due
course
their
Answer
dated
April
2,
1970,
admitting
in
effect
the
antecedents
of
the
case
as
recited
above,
citing
even
this
Court's
decision
of
November
29,
1968
in
Associated
vs.
Banzon,
supra,
which
affirmed
the
money
judgment
in
favor
of
Associated
"
for
the
benefit
of
the
Philippine
National
Bank"
13
but
alleging
that
ownership
to
one
parcel
(Lot
6,
Block
176
covered
by
T.C.T.
No.
8567)
"has
already
absolutely
and
irrevocably
vested
in
herein
respondent
Pedro
Cardenas."
14
Said
respondents
further
averred
that
"there
is
no
longer
anything
that
may
be
restrained,"
since
per
the
sheriff's
return
of
March
23,
1970,
he
enforced
on
said
date
respondent
court's
writ
of
possession
and
demolition
order
and
demolished
all
the
improvements
erected
in
the
premises.
15
To
this
petitioners
countered
that
"the
special
deputy
sheriff
of
Rizal
did
succeed
in
demolishing
the
building
erected
on
that
lot
in
question.
This
he
did
notwithstanding
the
fact
that
he
has
been
duly
informed
by
petitioner
Banzon
of
the
existence
of
a
restraining
order
in
this
case.
However,
after
accomplishing
his
purpose,
he
and
his
men
left
the
premises."
16
Most
relevant,
however,
was
a
pleading
entitled
"Explanation
and
Manifestation"
dated
April
25,
1970
filed
by
Atty.
Feliberto
Castillo,
as
former
counsel
for
Associated
"in
the
interest
of
justice
and
in
the
name
of
truth
and
as
an
officer
of
the
Court,"
wherein
with
respect
to
the
summons
for
Associated
received
by
his
law
office,
he
manifests:
3.
That
he
is
entertaining
a
serious
doubt
whether
he
could
still
represent
the
Associated
Insurance
&
Surety
Co.,
Inc.
in
view
of
the
fact
that
in
Civil
Case
No.
56995
of
the
Court
of
First
Instance
of
Manila,
entitled
"Republic
of
the
Philippines,
represented
by
the
Insurance
Commissioner
vs.
Associated
Insurance
Surety
Co.,
Inc."
the
said
Court
of
First
Instance
of
Manila
ordered
the
liquidation
and
dissolution
of
this
surety
company,
which
was
appealed
to
the
Court
of
Appeals,
CA-G.
R.
No.
37985-R
but
affirmed
the
decision
of
the
Court
of
First
Instance
of
Manila
in
a
decision
promulgated
on
January
3,
1968,
which
was
appealed
again
by
the
Associated
Insurance
&
Surety
Co.,
Inc
to
the
Honorable
Tribunal,
G.R.
No.
L-29834,
also
affirming
the
decision
of
the
Court
of
Appeals
by
denying
the
petition
for
writ
of
certiorari
in
its
resolution
of
June
20,
1968,
and
therefore,
since
then,
the
decision
of
the
Court
of
First
Instance
of
Manila
ordering
the
liquidation
and
dissolution
of
the
Associate
Insurance
&
Surety
Co.,
Inc.
became
final
and
executory,
an
thereafter,
the
Insurance
Commissioner
demanded
the
surrender
of
books,
documents
and
other
papers
of
this
surety
company,
an
as
a
matter
of
fact,
books,
documents
and
other
papers
salvaged
were
already
surrendered
to
the
Insurance
Commissioner
for
liquidation
of
this
company,
so
that
by
virtue
thereof,
the
Insurance
Commissioner
being
the
liquidator
appointed
by
the
court
to
liquidate
the
Associated
Insurance
&
Surety
Co.,
Inc.,
is
now
the
legal
representative
of
this
surety
company
to
whom
a
copy
of
this
paper
will
be
furnished."
17
In
his
"Explanation
and
Manifestation,"
Atty.
Castillo
further
states
that
his
law
office
was
the
counsel
for
Associated
in
the
cases
involved
in
these
proceedings,
viz.,
Civil
Case
No.
31237
of
the
Court
of
First
Instance
of
Manila,
Case
No.
3885,
G.L.R.O.
Record
No.
11267
of
the
Court
of
First
Instance
of
Rizal,
for
consolidation
in
Associated's
favor
of
T.C.T.
No.
29685-Rizal
and
T.C.T.
No.
53759-Rizal,
and
in
G.R.
No.
L-23971
of
the
Supreme
Court,
Associated
vs.
Banzon,
supra,
affirming
on
November
29,
1968
the
Rizal
court's
judgment
for
consolidation;
and
That
since
Associated
was
ordered
liquidated
and
dissolved
by
the
Manila
court
of
first
instance
in
Civil
Case
No.
56995,
as
affirmed
by
the
Court
of
Appeals
in
CA-G.R.
No.
37985-R,
which
became
final
upon
this
Court's
denial
of
review
per
its
resolution
of
June
20,
1968
in
G.R.
No.
L-28934,
the
Insurance
Commissioner
as
the
appointed
liquidator
of
Associated
is
the
legal
representative
thereof
who
may
duly
act
for
Associated
and
upon
whom
summons
should
be
served;
That
even
before
the
promulgation
of
the
Supreme
Court
decision
on
November
29,
1968
in
Associated
vs.
Banzon
he,
as
counsel
for
Associated,
never
attempted
to
secure
new
titles
for
his
said
client,
considering
that
its
ownership
over
the
parcel
of
land
covered
by
them
was
then
"still
sub
judice;"
That
even
after
the
promulgation
of
the
said
Supreme
Court
decision,
he
never
attempted
to
secure
new
titles
for
his
client,
because
by
that
time
Associated
had
already
been
ordered
dissolved
and
liquidated,
hence,
to
be
represented
in
all
instances
by
the
Insurance
Commissioner
as
liquidator;
That
he
wonders
how
respondent
Pedro
Cardenas
was
able
to
secure
T.C.T.
No.
8567
(formerly
T.C.T.
No.
39685-
Rizal)
in
his
name
in
1965,
when
Associated,
which
really
owed
Cardenas
a
certain
sum,
could
only
secure
new
titles
over
the
parcels
of
land
after
not
before
November
29,
1968,
when
the
Supreme
Court's
decision
in
G.R.
No.
L-23971
was
promulgated;
and
that
in
his
opinion,
the
issuance
to
respondent
Cardenas
of
T.C.T.
No.
8567
was
"fraudulent
and
irregular
for
being
without
basis
when
the
same
was
issued,
so
that
the
register
of
deeds
of
Caloocan
City
committed
some
sort
of
mistakes
or
negligence
in
issuing
this
title
to
respondent
Pedro
Cardenas,
and
as
such,
this
T.C.T.
No.
8567
is
null
and
void
and
without
force
and
effect
and
calls
for
an
investigation
of
the
guilty
parties
responsible
for
the
issuance
of
this
T.C.T.
No.
8567
in
the
name
of
respondent
Pedro
Cardenas,
who
might
have
committed
some
falsifications;"
(for
indeed
how
could
Cardenas
cause
title
to
said
lot
to
be
transferred
to
Associated
for
him
in
turn
levy
against
it
for
his
P5,100.00
judgment
against
Associated
when
Associated's
case
against
Banzon
for
such
transfer
and
consolidation
of
title
was
then
still
pending
appeal
before
this
Court,
and
Associated's
judgment
against
Banzon
was
one
of
trust,
expressly
therein
declared
to
be
"for
the
benefit
of
the
Philippine
National
Bank?")
18
and
That
"anybody
who
will
attempt
to
offer
the
said
parcel
of
land
for
sale
would
be
committing
a
crime
as
the
position
of
the
same
belongs
exclusively
to
the
Insurance
Commissioner
who
is
the
liquidator
of
the
Associated
Instance
&
Security
Co.,
Inc.;
consequently,
the
petitioner
should
not
entertain
any
worry
as
said
parcel
of
land
is
not
being
disposed
of
not
only
because
the
power
to
sell
the
same
exclusively
belongs
to
the
Insurance
Commissioner
but
also
because
the
Associated
Insurance
&
Surety
Co.,
has
no
titles
yet
over
these
parcels
of
land
as
it
did
not
attempt
to
secure
any
even
before
and
after
the
promulgation
of
the
decision
of
the
Honorable
Tribunal
in
G.R.
No.
23971
in
view
of
the
circumstances
earlier
explained."
On
May
11,
1970,
we
issued
summons
on
the
Insurance
Commissioner
as
liquidator
of
Associated
to
answer
the
petition.
In
her
answer
filed
on
May
29,
1970,
the
Acting
Insurance
Commissioner
through
the
Solicitor
General
disclaimed
knowledge
of
practically
all
the
allegations
of
the
petition
for
lack
of
knowledge
or
information
sufficient
to
form
a
belief
as
to
their
truth,
manifesting
that
she
first
learned
of
the
material
facts
averred
in
the
petition
when
she
received
copy
of
Atty.
Castillo's
"Explanation
and
Manifestation",
because
the
records
and
documents
pertinent
to
this
case
were
not
among
those
surrendered
to
her,
and
affirming
she
is
the
liquidator
of
Associated
by
virtue
of
the
Manila
court's
order
dated
December
31,
1965
of
liquidation
and
dissolution
of
said
corporation,
as
follows:
3.
That
the
herein
Acting
Insurance
Commissioner
is
liquidator
of
Associated
Insurance
&
Surety
Co.,
Inc.
by
virtue
of
an
order
of
liquidation
and
dissolution
of
said
corporation
dated
December
31,
1965,
by
the
Court
of
First
Instance
of
Manila
in
Civil
Case
No.
56995,
which
decision
was
affirmed
on
appeal
by
the
Court
of
Appeals
in
its
decision
(CA-G.R.
No.
37895)
dated
January
3,
1968,
which
decision
was
again
affirmed
on
appeal
by
this
Honorable
Tribunal
when
it
denied
the
petition
for
a
writ
of
certiorari
in
its
Resolution
of
June
20,
1968
(G.R.
No.
L-38934)
and
which
on
July
9,
1968,
became
final
and
executory;
4.
That
by
virtue
of
the
aforesaid
decision,
the
Insurance
Commissioner
as
liquidator
of
Associated
Insurance
&
Surety
Co.,
Inc.,
is
vested
by
authority
of
law
with
the
title
to
all
of
the
property,
contracts,
and
rights
of
action
of
said
corporation
as
of
the
date
of
the
order
of
liquidation
(Sec.
175-C,
par.
3
of
the
Insurance
Act,
as
amended);
5.
That
any
subsequent
sale
or
disposition
of
the
property
of
said
corporation
without
the
knowledge
and
consent
of
the
herein
Acting
Insurance
Commissioner
and
approval
but
the
Liquidation
Court
is
contrary
to
law
and
null
and
void;
6.
That
after
the
aforesaid
order
of
liquidation
and
dissolution
became
final
and
executory,
the
Acting
Insurance
Commissioner
demanded
for
the
surrender
of
all
the
books,
documents
and
properties
of
Associated
Insurance
&
Surety
Co.,
Inc.
However,
the
records
and
documents
pertinent
to
the
above-entitled
case
were
not
among
those
surrendered
to
the
Insurance
Commissioner
and
it
was
only
upon
receipt
of
the
"Explanation
and
Manifestation"
of
Atty.
Feliberto
Castillo,
dated
April
25,
1970,
and
the
present
"Petition"
that
she
came
to
know
for
the
first
time
of
the
alleged
facts
averred
in
this
case."
19
A
"Motion
to
Dissolve
Temporary
Restraining
Order
and
to
Dismiss
Petition"
was
filed
on
February
12,
1971,
by
respondents
spouses
Cardenas
and
Baluyot.
They
contend
that
the
restraining
order
issued
by
this
Court
should
be
dissolved,
and
the
petition
itself,
insofar
as
they
are
concerned,
be
dismissed,
because
the
petition
is
predicated
on
petitioners'
complaint
for
reconveyance
and
damages
in
Civil
Case
No.
79244
before
Branch
VIII
of
the
Court
of
First
Instance
of
Manila,
and
the
said
court
issued
an
order
on
October
28,
1970,
dismissing
the
said
complaint
with
respect
to
defendants
therein
Cardenas
and
Baluyot,
which
dismissal
was
not
appealed
and
became
final
and
executory
on
January
5,
1971,
per
entry
of
judgment
attached
to
the
motion.
Consequently,
according
to
these
respondents,
the
temporary
restraining
order
issued
by
this
Court
enjoining
the
enforcement
of
the
writ
of
execution
and
the
order
of
demolition
in
Reg.
Case
No.
C-211
of
the
Court
of
First
Instance
of
Rizal,
has
become
inoperative
and
without
any
legal
basis,
the
present
petition
has
lost
its
legal
basis,
and
petitioners
have
no
more
cause
of
action
against
respondents
Cardenas
and
Baluyot.
The
said
order
of
dismissal
of
the
complaint
against
these
respondents
was
issued
pursuant
to
Section
5,
Rule
16
of
the
Rules
of
Court,
after
a
preliminary
hearing
on
the
affirmative
defenses
of
bar
by
prior
judgment
and
lack
of
cause
of
action
set
up
by
said
respondents
in
their
answer,
with
the
lower
court
opinion
that
petitioners'
action
was
already
barred
by
the
prior
judgments
of
this
Court
of
November
29,
1968
in
Associated
vs.
Banzon
and
of
the
Court
of
Appeals
of
February
28,
1970
in
Banzon
vs.
Hon.
Fernando
Cruz,
supra.
20
The
Solicitor
General
filed
on
March
29,
1971
on
behalf
of
the
Insurance
Commissioner
as
liquidator
of
Associated
a
strong
opposition
to
the
motion
to
dissolve
the
restraining
order
and
dismiss
the
petition.
21
The
commissioner-
liquidator
after
complaining
that
"she
is
still
demanding
for
the
surrender
of
all
the
books,
documents
and
properties
of
Associated"
and
that
"it
was
only
upon
receipt
on
March
11,
1971
of
the
voluminous
records
of
the
cases
handled
by
counsel
Feliberto
V.
Castillo
for
(Associated)
that
(her)
undersigned
counsel
have
verified
and
confirmed
the
truth
of
the
status
of
the
different
cases,"
contends
inter
alia
as
follows:
18.
That,
however,
during
the
pendency
of
the
aforesaid
appeal
of
petitioner
Antonio
R.
Banzon
with
this
Honorable
Tribunal
and
while
the
case
was
still
sub-judice,
particularly
on
February
8,
1964,
the
herein
respondent
Pedro
Cardenas
as
winning
party
in
a
case
entitled
"Pedro
Cardenas
vs.
Victoria
Vda.
de
Tengco
and
Pablo
Tuazon,"
Civil
Case
No.
36174,
Court
of
First
Instance
of
Manila,
and
where
the
Associated
Insurance
and
Surety
Co.,
Inc.
was
surety
for
the
defendants
therein,
executed
and
levied
upon
one
of
the
parcels
of
lands
involved
in
the
aforesaid
appeal.
Ultimately,
Pedro
Cardenas
was
able
to
acquire
the
land
in
question
(Lot
No.
6,
Block
No.
176,
then
covered
by
T.C.T.
No.
39685)
as
highest
bidder,
for
the
judgment
debt
of
defendants
in
said
action,
plus
incidental
expenses
for
the
sum
of
P5,100.00
only;
19.
That
subsequently
thereafter,
said
respondents
Cardenas,
thru
some
scheme
and
devise,
succeeded
in
having
the
title
of
said
parcel
of
land
transferred
in
their
names
under
T.C.T.
No.
8567,
Registry
of
Deeds
of
Caloocan
City,
on
May
5,
1965,
at
a
time
when
the
Associated
Insurance
&
Surety
Co.,
Inc.
had
not
yet
earned
the
authority
to
consolidate
in
its
name
said
property,
as
the
case
was
then
pending
with
this
Honorable
Tribunal.
As
alleged
in
paragraph
18
hereof,
the
question
of
consolidation
was
resolved
by
this
Honorable
Tribunal
on
February
28,
1968;
21a
20.
That
by
the
nature
of
the
decision
in
Civil
Case
No.
31237,
CFI,
Manila,
as
alleged
in
paragraph
15
hereof,
the
property
or
sums
of
money
recovered
from
defendants
therein
shall
be
reserved
for
the
benefit
of
the
Philippine
National
Bank
for
the
purpose
of
paying
the
principal
debtor's
(Maximo
Sta.
Maria's)
obligation
therein,
and
consequently,
the
Associated
Insurance
&
Surety
Co.,
Inc.
shall
hold
the
property
in
question
or
the
sums
recovered
in
said
action,
in
trust
and
for
the
purpose
of
paying
the
aforesaid
obligation
of
Maximo
Sta.
Maria.
22
21.
That
the
Associated
Insurance
&
Surety
Co.,
Inc.
failed
to
pay
from
its
own
funds
under
its
surety
undertaking,
nor
from
funds
realized
from
the
property
levied
upon
by
virtue
of
the
decision
in
Civil
Case
No.
31237,
CFI,
Manila,
but
on
the
other
hand,
the
principal
debtor
Sta.
Maria
paid
his
own
obligation
the
Philippine
National
Bank
thus,
releasing
it
(Associated
Insurance
&
Surety
Co.,
Inc.)
from
its
obligation
under
the
suretyship
undertaking
with
respect
to
said
obligation
of
Maximo
Sta.
Maria,
and
similarly
herein
petitioner
Antonio
R.
Banzon
was
released
from
this
obligation
as
co-indemnitor
in
said
undertaking;
22.
That
in
fairness
to
petitioners
Antonio
R.
Banzon
and
Rosa
Balmaceda,
the
two
parcels
of
land
executed
and
levied
upon
by
virtue
of
the
decision
in
Civil
Case
No.
31237,
Court
of
First
Instance
of
Manila,
deserve
to
be
reconveyed
to
them;
23.
That
one
of
the
lots
involved,
namely,
Lot
No.
6,
Block
No.
176
covered
by
T.C.T.
No.
8567,
Registry
of
Deeds
of
Caloocan
City,
in
the
names
of
the
present
respondents
Pedro
Cardenas
and
Leonila
Baluyot,
being
one
of
the
two
parcels
of
lands
levied
upon
in
Civil
Case
No.
31237
but
transferred
to
respondents
under
dubious
circumstances
and
patently
unauthorized
by
law,
should
be
ordered
reconveyed
to
the
Associated
Insurance
Co.,
Inc.
through
the
Insurance
Commissioner
for
the
purpose
stated
in
the
next
preceding
paragraph,
as
the
transaction
on
the
transfer
of
said
parcel
of
land
to
them
is
null
and
void
from
the
very
beginning."
23
Petitioners
likewise
oppose
the
motion
of
the
Cardenases.
They
contend
that
the
present
petition
is
not
solely
predicated
on
their
complaint
for
reconveyance
and
damages
in
Civil
Case
No.
79244
for,
as
admitted
by
the
Insurance
Commissioner,
they
are
entitled
to
the
reconveyance
of
the
lot
covered
by
T.C.T.
No.
8567
and
for
contribution
or
indemnification
for
damages
which
they
may
recover
from
Associated;
that
respondents
Cardenases
secured
said
title
fraudulently
and
irregularly
without
any
legal
basis,
hence,
said
title
having
been
anomalously
issued,
is
null
and
void
and
without
force
and
effect,
and,
that,
as
stated
by
Insurance
Commissioner-liquidator,
in
fairness
and
justice
to
petitioners,
the
two
parcels
of
land
levied
in
favor
of
Associated
by
virtue
of
the
decision
on
Civil
Case
No.
31237
should
be
reconveyed
to
them;
and
that
to
dissolve
the
temporary
restraining
order
and
to
dismiss
the
present
petition
would
leave
petitioners
without
a
legal
remedy.
In
a
minute
resolution
dated
April
19,
1971,
the
Court
denied
the
said
motion
of
respondents
Cardenas
and
Baluyot
"to
dissolve
temporary
restraining
order
and
to
dismiss
petition."
1.
The
immediate
objectives
of
this
petition
are:
(a)
to
enjoin
respondent
Judge
Fernando
Cruz
of
the
Court
First
Instance
of
Rizal,
Caloocan
City
Branch,
and
respondents
Pedro
Cardenas
and
Leonila
Baluyot,
and
their
representatives,
from
enforcing
the
writ
of
execution
and
of
demolition
issued
by
said
respondent
Judge
in
Reg.
Case
No.
C-211
in
relation
to
the
lot
covered
by
T.C.T.
No
8567;
and
(b)
to
enjoin
respondent
Associated
from
disposing
its
alleged
rights
and
interests
in
the
two
lots
covered
by
T.C.T.
No.
8567
and
T.C.T.
No.
53759,
the
injunction
in
both
cases
to
be
made
effective
during
the
pendency
of
the
reconveyance
case,
Civil
Case
No.
79244,
filed
by
petitioners
as
plaintiffs
before
the
Manila
court
of
first
instance.
The
real
and
substantive
objectives
of
the
petition
are
to
seek
the
rightful
restoration
and
reconveyance
to
petitioners
Banzons
of
their
two
Caloocan
city
lots,
covered
by
T.C.T.
No.
53759
(still
in
Banzon's
name,
but
on
the
back
whereof
is
annotated
the
sheriff's
final
deed
of
sale
in
favor
of
Associated)
and
by
T.C.T.
No.
8567
(in
the
name
of
respondents
Cardenases)
on
the
fundamental
ground
that
Associated's
levy
in
execution
of
said
lots
was
in
trust
for
the
benefit
of
the
Philippine
National
Bank
for
the
purpose
of
paying
the
bank
the
loan
obligation
of
Maximo
Sta.
Maria
which
Associated
had
guaranteed
as
surety
and
against
which
liability
Banzon
in
turn
as
indemnitor
had
undertaken
to
indemnify
and
hold
harmless
Associated.
Now,
the
basic
1957
judgment
of
the
Manila
court
sentencing
Banzon
to
pay
Associated
a
total
of
P30,257.86
excluding
interest,
"
for
the
benefit
of
the
Philippine
National
Bank"
expressly
made
of
record
the
said
court's
intent
and
disposition
that
the
execution
and
operation
of
its
judgment
against
Banzon
were
contingent
and
conditioned
upon
Associated
as
plaintiff-surety
actually
paying
or
being
made
or
compelled
to
pay
the
bank-creditor
an
equivalent
amount
as
guaranteed
by
it.
That
this
is
so
is
made
more
evident
when
we
consider
the
provisions
of
Article
2071
of
the
Civil
Code
which
permit
the
surety
to
file
such
an
advance
suit
against
the
principal
debtor
(not
against
an
indemnitor
such
as
Banzon)
only
to
obtain
release
from
the
guaranty
or
security
against
the
danger
of
the
debtor's
insolvency.
Where
the
debtor
directly
discharged
his
loan
obligation
to
the
bank
which
in
turn
released
Associated
from
its
suretyship
liability
without
Associated
having
incurred
a
centavo
of
liability,
it
is
indisputable
that
Associated
in
turn
would
necessarily
release
Banzon
as
indemnitor
and
the
basic
1957
judgment
would
be
inoperable
and
unenforceable
against
Banzon.
When
Associated
nevertheless
prematurely
and
contary
to
the
intent
and
condition
of
the
basic
1957
judgment
levied
in
execution
on
the
two
Caloocan
City
lots
of
Banzon
the
interest
it
acquired
was
clearly
impressed
with
a
trust
character.
Such
acquisition
of
Banzon's
properties
by
Associated
was
effected,
if
not
through
fraud
23a
on
Associated's
part,
certainly
through
mistake
23b
and
there
Associated
was
"by
force
of
law,
considered
a
trustee
of
implied
trust
for
the
benefit
of
the
person
from
whom
the
property
comes"
by
virtue
of
Article
1456
of
the
Code
23c
since
Associated
not
having
paid
nor
having
been
compelled
to
pay
the
bank
had
no
right
in
law
or
equity
to
so
execute
the
judgment
against
Banzon
as
indemnitor.
Had
there
been
no
fraudulent
concealment
or
suppression
of
the
fact
of
such
non-payment
by
Associated
or
a
mistaken
notion
just
assumed
without
factual
basis
that
Associted
had
paid
the
bank
and
was
thus
entitled
to
enforce
its
judgement
against
Banzon
as
indemnitor,
the
writ
for
execution
of
the
judgment
against
Banzon's
properties
would
not
been
issued.
23d
Furthermore,
Associated's
conduct,
upon
being
sued
by
the
Philippine
National
Bank
directly
with
the
principal
debtor
Sta.
Maria
for
collection
of
the
debt
23e
and
sentenced
by
the
Pampanga
court
of
first
instance
in
1963
(which
it
did
not
appeal)
to
pay
the
debt
in
the
much
lesser
amount
of
only
P15,446.44,
excluding
interests,
in
not
so
discharging
its
liability
notwithstanding
that
it
had
already
executed
its
1957
judgment
against
Banzon
as
indemnitor
and
taken
in
execution
Banzon's
two
properties,
was
indeed
rank
fraud.
Associated
therefore
stands
legally
bound
by
force
of
law
to
now
discharge
its
implied
trust
and
return
Banzon's
properties
to
him
as
their
true
and
rightful
owner.
The
obligation
imposed
upon
Associated
as
implied
trustee
to
so
restore
Banzon's
properties
becomes
even
more
compelling
when
it
is
considered
that
in
the
premature
execution
sale
by
virtue
of
the
basic
1957
judgment,
Associated
ostensibly
was
the
highest
bidder
therefor
applying
its
purported
judgment
credit
of
P41,000.00
when
in
law
such
judgment
was
not
subject
to
execution
since
the
condition
of
Associated
as
surety
being
made
to
pay
the
bank
to
make
the
judgment
operable
and
enforceable
had
not
materialized
and
in
fact
Associated
not
having
paid
anything
to
the
bank
did
not
possess
such
purported
judgment
credit
of
P41,000.00,
nor
did
it
put
out
a
single
centavo
for
which
it
could
hold
Banzon
answerable
and
therefore
take
Banzon's
properties
in
execution
and
satisfaction
thereof.
Actually,
as
already
indicated
above,
the
principal
debt
of
the
bank's
debtor,
when
directly
collected
by
the
bank
six
(6)
years
later,
amounted
merely
to
1/2
the
amount
or
P15,446.44
as
of
August,
1963,
excluding
interests.
23f
As
already
stated
above,
Associated
did
not
pay
even
this
much
lesser
amount,
notwithstanding
the
Pampanga
court's
judgment
against
it
in
the
suit
directly
filed
by
the
bank.
Finally,
it
would
be
an
outrage
on
simple
justice
and
iniquitous
unjust
enrichment
if
a
surety
such
as
Associated,
after
taking
title
in
execution
to
the
indemnitor's
properties
in
order
to
protect
or
reimburse
itself
from
liability
to
the
creditor
for
the
debt
guaranteed
by
it,
were
to
be
allowed
to
retain
ownership
of
the
properties
even
though
it
did
not
incur
or
discharge
its
liability
at
all,
since
it
succeeded
in
evading
payment
to
the
creditor
who
thereafter
collect
the
debt
directly
from
the
debtor.
Thus,
the
law
(Article
1456,
Civil
Code)
impresses
properties
thus
acquired
with
trust
character
and
constitutes
the
erring
surety
as
"trustee
of
an
implied
trust
for
the
benefit
of
the
person
from
who
the
property
comes,"
in
this
case,
Banzon
as
the
true
and
rightful
owner
of
the
properties.
2.
As
Cardenas
in
levying
in
turn
for
satisfaction
of
his
P5,100.00
judgment
against
Associated
on
one
of
Banzon's
lots
acquired
only
whatever
interest
Associated
had
in
the
lot,
and
with
the
knowledge
that
Associated's
basic
1957
judgment
against
Banzon
was
"for
the
benefit
of
the
Philippine
National
Bank"
and
hence
Associated's
interest
in
the
Banzon
properties
was
impressed
with
a
trust
character,
subject
to
the
obligation
of
Associated
as
implied
trustee
to
return
the
properties
to
Banzon,
the
trust
character
of
the
lot
titled
by
Cardenas
necessarily
passed
to
him.
Cardenas
could
not
claim
actual
or
absolute
ownership
of
the
lot
so
titled
but
could
only
hold
the
same
as
trustee,
like
Associated
as
his
causante
or
predecessor.
The
respondents
Cardenases'
pleadings
of
record
should
clearly
that
they
were
fully
aware
of
these
vital
antecedents
and
premises
of
the
suits
between
Associated
and
the
Banzons.
In
their
memorandum,
they
cite
the
Manila
court
of
first
instance's
basic
decision
in
Civil
Case
No.
31237
"condemning
defendants
to
pay
jointly
and
severally
upon
(sic)
plaintiff
(Associated)
but
for
the
benefit
of
the
Philippine
National
Bank"
24
the
several
amounts
sought
by
Associated,
as
surety,
totalling
P30,257.86.
As
far
as
their
own
claim
against
Associated
is
concerned,
they
likewise
recite
in
their
memorandum
that:
On
April
29,
1959,
then
Judge
(now
Justice)
Jesus
Perez
of
the
Court
of
First
Instance
of
Manila
rendered
a
decision
in
Civil
Case
No.
36194,
entitled
"Pedro
Cardenas
vs.
Victoria
Vda.
de
Tengco,
et
al."
ordering
the
defendants,
including
Associated
Insurance
&
Surety
Co.,
Inc.,
as
surety,
to
pay
certain
sums
of
money
to
Pedro
Cardenas.
The
liability
of
the
Associated
Insurance
&
Surety
Co.,
Inc.,
was
affirmed
by
the
Court
of
Appeals
in
a
Decision
promulgated
on
October
30,
1963,
in
CA-G.R.
No.
25227-R.
Consequently,
pursuant
to
a
Writ
of
Execution
issued
on
February
8,
1964,
the
City
Sheriff
of
Caloocan
sold
on
March
23,
1964
at
a
public
auction
to
Pedro
Cardenas,
the
highest
and
only
bidder,
all
the
"rights,
interests,
claims
and
title"
of
the
judgment-debtor
Associated
Insurance
&
Surety
Co.
Inc.,
over
the
property
plus
the
improvements
thereon
covered
by
Transfer
Certificate
of
Title
No.
39685
(one
on
the
properties
acquired
from
Antonio
Banzon).
The
property
not
having
been
redeemed
within
the
one
year
period,
a
Deed
of
Absolute
Sale
was
issued
in
favor
of
Pedro
Cardenas
on
April
2,
1965.
On
April
23,
1965,
Pedro
Cardenas
filed
a
petition
with
the
Court
of
First
Instance
of
Rizal,
Branch
XII,
Caloocan
City,
in
Registration
Case
No.
C-211
(LRC
Rec.
No.
11267),
entitled
"Pedro
Cardenas,
Petitioner,"
for
the
issuance
of
a
new
transfer
certificate
of
title
over
the
property
in
question
and
to
declare
null
and
void
the
one
previously
issued.
On
May
5,
1965,
a
Transfer
Certificate
of
Title
was
issued
by
the
Register
of
Deeds
of
Caloocan
City
in
the
name
of
Pedro
Cardenas
pursuant
to
the
order
of
the
court
in
aforecited
Registration
Case
No.
C-211,
dated
May
3,
1965,
as
amended.
25
It
is
obvious
that
since
what
Cardenas
acquired
in
his
execution
for
his
P5,100.00
judgment
against
Associated
was
only
"all
the
rights,
interests,
claims
and
title
of
the
judgment-debtor
(Associated)
over
the
property
...
(one
of
the
properties
acquired
from
Antonio
Banzon)"
and
Associated's
rights,
if
they
could
be
so
denominated,
over
Banzon's
properties
were
merely
those
of
a
trustee,
supra,
and
Cardenas
thereby
acquired
no
absolute
"rights,
interests,
claim
and
title"
at
all
but
Associated's
obligation
as
trustee
to
restore
Banzon's
lawful
properties
to
him.
3.
As
a
point
of
law,
even
though
under
Associated's
suretyship
agreement
guaranteeing
Sta.
Maria's
crop
loans
with
the
bank,
it
was
permitted,
supposedly
for
its
protection,
to
proceed
judicially
against
the
principal
debtor
and
indemnitors
even
prior
to
the
surety's
making
payment
to
the
creditor
bank,
Article
2071
of
the
Civil
Code
regulates
such
relations
and
provides
that
in
such
cases,
the
surety's
right
is
against
the
principal
debtor
and
that
"in
all
these
cases,
the
action
of
the
guarantor
is
to
obtain
release
from
the
guaranty,
or
to
demand
a
security
that
shall
protect
him
from
any
proceedings
by
the
creditor
and
from
the
danger
of
insolvency
of
the
debtor."
Associated
thus
did
not
even
have
any
valid
cause
of
action
against
Banzon
as
its
indemnitor,
but
could
proceed
only
against
Sta.
Maria
as
the
principal
debtor.
And
even
as
against
such
principal
debtor,
it
could
not
prematurely
demand
payment
even
before
it
had
paid
the
creditor,
its
action
being
limited
only
for
the
purpose
of
obtaining
release
from
the
guaranty
or
a
security
against
an
eventual
insolvency
of
the
debtor.
As
was
emphasized
by
Mr.
Justice
Reyes
for
the
Court
in
General
Indemnity
Co.,
Inc.
vs.
Alvarez,
26
while
a
guarantor
may
under
Article
2071
of
the
Civil
Code
proceed
against
the
principal
debtor,
even
before
having
paid,
when
the
debt
has
become
demandable,
"(T)he
last
paragraph
of
this
same
article,
however,
provides
that
in
such
instance,
the
only
action
the
guarantor
can
file
against
the
debtor
is
'to
obtain
release
from
the
guaranty,
or
to
demand
a
security
that
shall
protect
him
from
any
proceeding
by
the
creditor
and
from
the
danger
of
insolvency
of
the
debtor.'
An
action
by
the
guarantor
against
the
principal
debtor
for
payment,
before
the
former
has
paid
the
creditor,
is
premature."
4.
The
realization
of
the
Banzon's
rightful
objectives
in
law
and
equity
as
thus
restated
has
somewhat
been
hampered
and
beclouded
by
the
ineptitude
and
sorry
neglect
with
which
they
and/or
their
counsel
have
pursued
their
remedies
in
the
various
suits
brought
by
them.
To
cite
the
latest
instance,
the
pending
suit
filed
by
them
in
the
Manila
court
of
first
instance,
Civil
Case
No.
79244,
is
from
the
record
the
first
real
case
that
they
have
properly
filed
for
reconveyance
of
their
two
Caloocan
City
lots
based
on
their
new
cause
of
action
that
with
the
debtor's
direct
payment
to
the
bank,
Associated
had
been
released
as
surety
and
Banzon
consequently
likewise
released
as
Associated's
indemnitor,
and
therefore
Associated
in
discharge
of
the
implied
trust
under
which
it
executed
the
basic
1957
judgment
"
for
the
benefit
of
the
Philippine
National
Bank"
against
Banzon
was
now
called
upon
to
discharge
such
trust
and
reconvey
and
restore
Banzon's
properties
to
him.
Yet
Banzon
filed
no
appeal
from
the
Manila
Court's
dismissal
of
his
complaint
against
the
Cardenas
spouses
for
reconveyance
of
the
lot
wrongfully
titled
by
the
latter
on
the
lower
court's
mistaken
concept
that
this
Court's
decision
of
November
29,
1968
in
Associated
vs.
Banzon,
supra,
constituted
res
judicata
and
apparently
allowed
such
dismissal
to
become
final.
In
reality,
since
Associated
never
had
to
pay
the
bank,
Banzon's
two
lots,
which
had
been
levied
upon
prematurely
under
Associated's
judgment
against
Banzon
and
were
therefore
held
by
it
in
implied
trust
for
Banzon
by
force
of
law,
"deserve
to
be
reconveyed
to
them"
in
the
very
words
of
the
insurance
commissioner,
who
alone
and
officially
represents
and
acts
for
Associated
as
liquidator.
As
manifested
by
Associated's
former
counsel
even
when
Associated
was
acting
on
its
own
unauthorizedly
and
in
violation
of
law,
since
an
order
for
its
liquidation
and
dissolution
had
already
been
issued
by
the
Manila
court
since
December
31,
1965,
he,
as
Associated's
counsel,
never
attempted
to
transfer
Banzon's
titles
to
Associated
since
the
question
was
sub-judice
before
this
Court
and
resolved
only
per
its
decision
in
Associated
vs.
Banzon
of
November
29,
1968,
as
of
which
time,
this
Court
had
already
previously
affirmed
on
June
20,1968
in
G.R.
No.
L-28934,
the
Manila
court's
dissolution
and
liquidation
order
against
Associated
thus
removing
all
doubt
that
only
the
Insurance
Commissioner
as
liquidator
could
act
in
any
and
all
matters
for
Associated.
27
5.
Under
Sec.
175-C,
paragraph
3
of
the
Insurance
Act
as
amended,
28
the
Insurance
Commissioner
as
liquidator
of
Associated
was
vested
by
authority
of
law
with
the
title
to
all
of
the
property,
contracts
and
rights
of
action
of
Associated
as
of
the
date
of
the
judicial
order
of
liquidation,
and
any
sale
or
disposition
of
Associated's
properties
or
rights
without
the
knowledge
and
consent
of
the
insurance
commissioner
as
liquidator
and
without
the
approval
by
the
liquidation
court
is
contrary
to
law
and
null
and
void.
Accordingly,
petitioners
Banzons
are,
as
against
their
and
their
counsel's
neglect
and
inattention,
nevertheless
saved
from
the
otherwise
fatal
consequences
of
the
invoked
final
dismissal
of
their
complaint
against
the
Cardenases
in
Civil
Case
No.
79244
of
the
Manila
court
for
recovery
of
the
lot
wrongfully
titled
in
the
Cardenases'
name
per
T.C.T.
No.
8567.
Since
in
all
the
litigations
subsequent
to
Associated's
prematurely
obtaining
in
the
Manila
court
of
first
instance
in
Civil
Case
31237
the
basic
1957
judgment
as
surety
against
Banzon
as
a
mere
indemnitor
to
cover
the
principal
debtor
Sta.
Maria's
demandable
loans
to
the
bank
and
thereafter
levying
in
execution
on
Banzon's
two
Caloocan
City
lots,
notwithstanding
that
such
judgment
was
expressly
held
to
be
in
trust
and
for
the
benefit
of
the
bank,
the
insurance
commissioner,
as
liquidator
of
Associated
and
therefore
an
indispensable
party
was
never
impleaded
and
therefore
there
could
be
no
final
determination
of
said
actions.
Under
Rule
3,
section
7,
indispensable
parties
must
always
be
joined
either
as
plaintiffs
or
defendants,
for
the
court
cannot
proceed
without
them,
and
hence
all
judgments
and
proceedings
held
after
the
liquidation
and
dissolution
order
against
Associated
became
void
for
lack
of
an
indispensable
party
in
the
person
of
the
insurance
commissioner-liquidator.
The
insurance
commissioner
as
liquidator
of
Associated
by
authority
of
law
was
indisputably
an
indispensable
party
with
such
an
interest
in
the
controversies
affecting
the
judgment
for
Associated
(against
Banzon)
and
against
Associated
(in
favor
of
Cardenas)
that
a
final
decree
would
necessarily
affect
its
rights
(administered
by
the
Commissioner
in
the
public
interest
and
for
the
public's
protection)
so
that
the
courts
could
not
proceed
therein
without
the
commissioner-liquidator's
official
presence.
6.
The
wrongful
dismissal
by
the
Manila
court
of
the
Banzons'
reconveyance
suit,
Civil
Case
No.
79244,
as
against
the
Cardenases
thus
does
not
produce
what
would
otherwise
have
been
fatal
consequences
due
to
the
Banzons'
failure
to
appeal
from
such
dismissal.
Their
reconveyance
case
as
against
Associated
as
principal
defendant
remains
pending
in
court.
And
the
insurance
commissioner
as
liquidator
of
Associated,
now
that
she
is
fully
aware
of
the
status
of
these
antecedent
cases
after
she
finally
received
on
March
11,
1971
the
voluminous
records
thereof
which
had
hitherto
not
been
surrendered
to
her
office
despite
demands
therefor,
is
called
upon
to
appear
for
Associated
in
the
said
case,
if
she
has
not
as
yet
been
duly
impleaded
as
such
liquidator.
With
the
insurance
commissioner,
as
liquidator
of
Associated
and
an
indispensable
party
now
in
the
case,
the
said
reconveyance
suit
may
now
proceed
anew
and
the
Cardenas
spouses
caused
by
the
liquidator
to
be
duly
impleaded
anew
for
they
are
also
indispensable
parties
insofar
as
the
insurance
commissioner-liquidator's
claim
on
behalf
of
Associated
to
the
lot
covered
by
T.C.T.
No.
8567
issued
in
their
name
is
concerned.
Herein
petitioners
seek
principally
in
the
said
case
the
reconveyance
to
them
by
Associated
of
their
two
parcels
of
land
covered
by
T.C.T.
No.
8567
and
T.C.T.
No.
53759,
as
acquired
in
execution
by
Associated,
and
thereafter,
with
respect
to
the
lot
covered
by
T.C.T.
No.
8567,
by
the
Cardenases,
by
virtue
of
the
trust
character
impressed
upon
them
and
Associated's
duty
as
implied
trustee
to
restore
said
properties
to
the
Banzons.
Considering
that
the
insurance
commissioner
herself
,
who
now
legally
can
alone
represent
Associated
as
liquidator,
has
herein
recognized
such
trust
character
and
has
expressed
the
belief
that
the
said
lot,
no
less
than
the
other
lot
covered
by
T.C.T.
No.
8567,
should,
in
justice
to
petitioners,
be
reconveyed
to
them
on
account,
among
others,
of
petitioner
Banzon's
release
from
his
obligation
as
indemnitor
by
virtue
of
the
principal
debtor's
subsequent
payment
of
his
obligation
with
the
Philippine
National
Bank
which
likewise
released
Associated
from
any
liability
as
surety,
the
present
petition
should
therefore
be
granted
in
the
interest
of
justice
and
equity
so
as
to
enable
the
insurance
commissioner-
liquidator
in
due
course
to
discharge
the
trust
of
reconveying
Banzons'
properties
to
them.
7.
The
circumstances
that
respondents
Cardenases,
insofar
as
the
lot
wrongfully
claimed
by
them,
caused
the
Caloocan
City
special
deputy
sheriff
to
enforce
on
March
23,
1970
respondent
court's
challenged
order
of
demolition
and
writ
of
possession
on
the
very
day
that
this
Court
ordered
the
issuance
of
a
restraining
order
against
the
enforcement
of
said
challenged
order
and
writ,
and
notwithstanding
that
said
sheriff
was
duly
advised
by
Banzon
of
the
petition
at
bar
having
been
filed
on
March
20,
1970,
does
not
make
the
restraining
order
in
any
manner
moot.
The
Court
does
not
look
with
favor
upon
parties
"racing
to
beat
an
injunction
or
restraining
order"
which
they
have
reason
to
believe
might
be
forthcoming
from
the
Court
by
virtue
of
the
filing
and
pendency
of
the
appropriate
petition
therefor.
Where
the
restraining
order
or
preliminary
injunction
are
found
to
have
been
properly
issued,
as
in
the
case
at
bar,
mandatory
writs
shall
be
issued
by
the
Court
to
restore
matters
to
the
status
quo
ante.
29
In
the
case
at
bar,
with
the
insurance
commissioner
as
liquidator
of
Associated,
recognizing
through
the
Solicitor
General
that
the
Banzons'
two
lots
wrongfully
taken
from
them
by
Associated's
premature
actions
should
be
reconveyed
to
them,
there
is
established
a
clear
and
indubitable
showing
on
the
record
that
the
petitioners
are
entitled
to
a
writ
restoring
the
status
quo
ante.
A
mandatory
writ
shall
therefore
issue
commanding
respondent
court
to
forthwith
restore
petitioners
to
their
possession
of
Lot
6,
Block
176,
covered
by
T.C.T.
8567
from
which
they
have
been
removed
by
enforcement
of
said
respondent
court's
enjoined
order
of
demolition
and
writ
of
possession
dated
March
13,
1970,
Annex
"F"
of
the
petition.
As
to
petitioners'
building
thereon
claimed
to
be
worth
P10,000.00
(but
countered
by
Cardenas
to
be
a
"mere
barong-barong"
30),
respondent
court
shall
at
Banzon's
petition
cause
respondents
Cardenases
to
restore
the
demolished
building
or
pay
Banzon
the
determined
value
thereof.
As
to
the
fruits
of
possession
of
the
land,
with
Cardenas
acknowledging
that
he
has
been
leasing
the
same
to
a
third
person
at
P200.00
a
month,
31
respondents
Cardenases
shall
forthwith
pay
to
petitioners
Banzons
the
whole
amount
of
rentals
so
received
by
them
to
the
time
that
possession
of
the
lot
is
effectively
restored
to
petitioners.
By
the
very
nature
of
this
mandatory
writ,
the
same
shall
be
immediately
executory
upon
promulgation
of
this
decision.
WHEREFORE,
the
petition
for
a
permanent
injunction,
during
the
pendency
of
Civil
Case
No.
79244
of
the
Court
of
First
Instance
of
Manila
against
the
disposition
in
any
manner
of
the
two
parcels
of
land
subject
of
said
case
other
than
their
reconveyance
to
petitioners
as
the
true
and
rightful
owners
thereof
as
expressly
recognized
by
the
insurance
commissioner
as
liquidator
of
Associated
is
hereby
granted.
In
lieu
of
the
permanent
injunction
against
enforcement
of
respondent
court's
order
dated
March
13,
1970
in
Case
No.
C-211
thereof
ordering
the
delivery
of
possession
of
the
property
covered
by
T.C.T.
No.
8567
to
respondents
Cardenases
and
demolition
of
petitioners
Banzons'
improvements
thereon,
(which
were
prematurely
carried
out
by
respondent
court's
sheriff
on
March
23,
1970)
a
writ
of
mandatory
injunction
commanding
respondent
court
to
forthwith
restore
the
status
ante
quo
and
to
restore
petitioners
Banzons
to
full
possession
of
the
property
and
enjoyment
of
the
fruits
and
rentals
thereof
under
the
terms
and
conditions
stated
in
the
next
preceding
paragraph
is
hereby
issued,
which
shall
be
immediately
executory
upon
promulgation
of
this
decision.
With
costs
against
respondents
Pedro
Cardenas
and
Leonila
Baluyot.
This
decision
is
without
prejudice
to
such
civil
and
criminal
liability
as
the
officers
of
the
defunct
Associated
Insurance
&
Surety
Co.,
Inc.
may
have
incurred
by
virtue
of
their
acts
of
commission
and
omission
which
have
resuited
in
grave
prejudice
and
damage
to
petitioners
as
well
as
to
the
public
interest,
as
in
the
suppression
from
and
non-surrender
to
the
Insurance
Commissioner
as
liquidator
of
the
records
of
the
relevant
antecedent
cases,
and
in
the
possible
misrepresentation
to
the
courts
therein
that
Associated
had
duly
discharged
to
the
bank
its
liability
as
surety
and
could
therefore
lawfully
levy
on
the
properties
of
Banzon
as
indemnitor,
which
would
have
resulted
in
the
respondents'
unjust
enrichment
at
Banzon's
expense.
The
insurance
commissioner
is
directed
to
conduct
the
corresponding
investigation
for
the
purpose
of
filing
such
criminal
and
other
appropriate
actions
as
may
be
warranted
agains
the
responsible
parties.
So
ordered.
G.R.
No.
80298
April
26,
1990
EDCA
PUBLISHING
&
DISTRIBUTING
CORP.,
petitioner,
vs.
THE
SPOUSES
LEONOR
and
GERARDO
SANTOS,
doing
business
under
the
name
and
style
of
"SANTOS
BOOKSTORE,"
and
THE
COURT
OF
APPEALS,
respondents.
CRUZ,
J.:
The
case
before
us
calls
for
the
interpretation
of
Article
559
of
the
Civil
Code
and
raises
the
particular
question
of
when
a
person
may
be
deemed
to
have
been
"unlawfully
deprived"
of
movable
property
in
the
hands
of
another.
The
article
runs
in
full
as
follows:
Art.
559.
The
possession
of
movable
property
acquired
in
good
faith
is
equivalent
to
a
title.
Nevertheless,
one
who
has
lost
any
movable
or
has
been
unlawfully
deprived
thereof,
may
recover
it
from
the
person
in
possession
of
the
same.
If
the
possessor
of
a
movable
lost
or
of
which
the
owner
has
been
unlawfully
deprived
has
acquired
it
in
good
faith
at
a
public
sale,
the
owner
cannot
obtain
its
return
without
reimbursing
the
price
paid
therefor.
The
movable
property
in
this
case
consists
of
books,
which
were
bought
from
the
petitioner
by
an
impostor
who
sold
it
to
the
private
respondents.
Ownership
of
the
books
was
recognized
in
the
private
respondents
by
the
Municipal
Trial
Court,
1
which
was
sustained
by
the
Regional
Trial
Court,
2
which
was
in
turn
sustained
by
the
Court
of
Appeals.
3
The
petitioner
asks
us
to
declare
that
all
these
courts
have
erred
and
should
be
reversed.
This
case
arose
when
on
October
5,
1981,
a
person
identifying
himself
as
Professor
Jose
Cruz
placed
an
order
by
telephone
with
the
petitioner
company
for
406
books,
payable
on
delivery.
4
EDCA
prepared
the
corresponding
invoice
and
delivered
the
books
as
ordered,
for
which
Cruz
issued
a
personal
check
covering
the
purchase
price
of
P8,995.65.
5
On
October
7,
1981,
Cruz
sold
120
of
the
books
to
private
respondent
Leonor
Santos
who,
after
verifying
the
seller's
ownership
from
the
invoice
he
showed
her,
paid
him
P1,700.00.
6
Meanwhile,
EDCA
having
become
suspicious
over
a
second
order
placed
by
Cruz
even
before
clearing
of
his
first
check,
made
inquiries
with
the
De
la
Salle
College
where
he
had
claimed
to
be
a
dean
and
was
informed
that
there
was
no
such
person
in
its
employ.
Further
verification
revealed
that
Cruz
had
no
more
account
or
deposit
with
the
Philippine
Amanah
Bank,
against
which
he
had
drawn
the
payment
check.
7
EDCA
then
went
to
the
police,
which
set
a
trap
and
arrested
Cruz
on
October
7,
1981.
Investigation
disclosed
his
real
name
as
Tomas
de
la
Pea
and
his
sale
of
120
of
the
books
he
had
ordered
from
EDCA
to
the
private
respondents.
8
On
the
night
of
the
same
date,
EDCA
sought
the
assistance
of
the
police
in
Precinct
5
at
the
UN
Avenue,
which
forced
their
way
into
the
store
of
the
private
respondents
and
threatened
Leonor
Santos
with
prosecution
for
buying
stolen
property.
They
seized
the
120
books
without
warrant,
loading
them
in
a
van
belonging
to
EDCA,
and
thereafter
turned
them
over
to
the
petitioner.
9
Protesting
this
high-handed
action,
the
private
respondents
sued
for
recovery
of
the
books
after
demand
for
their
return
was
rejected
by
EDCA.
A
writ
of
preliminary
attachment
was
issued
and
the
petitioner,
after
initial
refusal,
finally
surrendered
the
books
to
the
private
respondents.
10
As
previously
stated,
the
petitioner
was
successively
rebuffed
in
the
three
courts
below
and
now
hopes
to
secure
relief
from
us.
To
begin
with,
the
Court
expresses
its
disapproval
of
the
arbitrary
action
of
the
petitioner
in
taking
the
law
into
its
own
hands
and
forcibly
recovering
the
disputed
books
from
the
private
respondents.
The
circumstance
that
it
did
so
with
the
assistance
of
the
police,
which
should
have
been
the
first
to
uphold
legal
and
peaceful
processes,
has
compounded
the
wrong
even
more
deplorably.
Questions
like
the
one
at
bar
are
decided
not
by
policemen
but
by
judges
and
with
the
use
not
of
brute
force
but
of
lawful
writs.
Now
to
the
merits
It
is
the
contention
of
the
petitioner
that
the
private
respondents
have
not
established
their
ownership
of
the
disputed
books
because
they
have
not
even
produced
a
receipt
to
prove
they
had
bought
the
stock.
This
is
unacceptable.
Precisely,
the
first
sentence
of
Article
559
provides
that
"the
possession
of
movable
property
acquired
in
good
faith
is
equivalent
to
a
title,"
thus
dispensing
with
further
proof.
The
argument
that
the
private
respondents
did
not
acquire
the
books
in
good
faith
has
been
dismissed
by
the
lower
courts,
and
we
agree.
Leonor
Santos
first
ascertained
the
ownership
of
the
books
from
the
EDCA
invoice
showing
that
they
had
been
sold
to
Cruz,
who
said
he
was
selling
them
for
a
discount
because
he
was
in
financial
need.
Private
respondents
are
in
the
business
of
buying
and
selling
books
and
often
deal
with
hard-up
sellers
who
urgently
have
to
part
with
their
books
at
reduced
prices.
To
Leonor
Santos,
Cruz
must
have
been
only
one
of
the
many
such
sellers
she
was
accustomed
to
dealing
with.
It
is
hardly
bad
faith
for
any
one
in
the
business
of
buying
and
selling
books
to
buy
them
at
a
discount
and
resell
them
for
a
profit.
But
the
real
issue
here
is
whether
the
petitioner
has
been
unlawfully
deprived
of
the
books
because
the
check
issued
by
the
impostor
in
payment
therefor
was
dishonored.
In
its
extended
memorandum,
EDCA
cites
numerous
cases
holding
that
the
owner
who
has
been
unlawfully
deprived
of
personal
property
is
entitled
to
its
recovery
except
only
where
the
property
was
purchased
at
a
public
sale,
in
which
event
its
return
is
subject
to
reimbursement
of
the
purchase
price.
The
petitioner
is
begging
the
question.
It
is
putting
the
cart
before
the
horse.
Unlike
in
the
cases
invoked,
it
has
yet
to
be
established
in
the
case
at
bar
that
EDCA
has
been
unlawfully
deprived
of
the
books.
The
petitioner
argues
that
it
was,
because
the
impostor
acquired
no
title
to
the
books
that
he
could
have
validly
transferred
to
the
private
respondents.
Its
reason
is
that
as
the
payment
check
bounced
for
lack
of
funds,
there
was
a
failure
of
consideration
that
nullified
the
contract
of
sale
between
it
and
Cruz.
The
contract
of
sale
is
consensual
and
is
perfected
once
agreement
is
reached
between
the
parties
on
the
subject
matter
and
the
consideration.
According
to
the
Civil
Code:
Art.
1475.
The
contract
of
sale
is
perfected
at
the
moment
there
is
a
meeting
of
minds
upon
the
thing
which
is
the
object
of
the
contract
and
upon
the
price.
From
that
moment,
the
parties
may
reciprocally
demand
performance,
subject
to
the
provisions
of
the
law
governing
the
form
of
contracts.
x
x
x
x
x
x
x
x
x
Art.
1477.
The
ownership
of
the
thing
sold
shall
be
transferred
to
the
vendee
upon
the
actual
or
constructive
delivery
thereof.
Art.
1478.
The
parties
may
stipulate
that
ownership
in
the
thing
shall
not
pass
to
the
purchaser
until
he
has
fully
paid
the
price.
It
is
clear
from
the
above
provisions,
particularly
the
last
one
quoted,
that
ownership
in
the
thing
sold
shall
not
pass
to
the
buyer
until
full
payment
of
the
purchase
only
if
there
is
a
stipulation
to
that
effect.
Otherwise,
the
rule
is
that
such
ownership
shall
pass
from
the
vendor
to
the
vendee
upon
the
actual
or
constructive
delivery
of
the
thing
sold
even
if
the
purchase
price
has
not
yet
been
paid.
Non-payment
only
creates
a
right
to
demand
payment
or
to
rescind
the
contract,
or
to
criminal
prosecution
in
the
case
of
bouncing
checks.
But
absent
the
stipulation
above
noted,
delivery
of
the
thing
sold
will
effectively
transfer
ownership
to
the
buyer
who
can
in
turn
transfer
it
to
another.
In
Asiatic
Commercial
Corporation
v.
Ang,11
the
plaintiff
sold
some
cosmetics
to
Francisco
Ang,
who
in
turn
sold
them
to
Tan
Sit
Bin.
Asiatic
not
having
been
paid
by
Ang,
it
sued
for
the
recovery
of
the
articles
from
Tan,
who
claimed
he
had
validly
bought
them
from
Ang,
paying
for
the
same
in
cash.
Finding
that
there
was
no
conspiracy
between
Tan
and
Ang
to
deceive
Asiatic
the
Court
of
Appeals
declared:
Yet
the
defendant
invoked
Article
464
12
of
the
Civil
Code
providing,
among
other
things
that
"one
who
has
been
unlawfully
deprived
of
personal
property
may
recover
it
from
any
person
possessing
it."
We
do
not
believe
that
the
plaintiff
has
been
unlawfully
deprived
of
the
cartons
of
Gloco
Tonic
within
the
scope
of
this
legal
provision.
It
has
voluntarily
parted
with
them
pursuant
to
a
contract
of
purchase
and
sale.
The
circumstance
that
the
price
was
not
subsequently
paid
did
not
render
illegal
a
transaction
which
was
valid
and
legal
at
the
beginning.
In
Tagatac
v.
Jimenez,13
the
plaintiff
sold
her
car
to
Feist,
who
sold
it
to
Sanchez,
who
sold
it
to
Jimenez.
When
the
payment
check
issued
to
Tagatac
by
Feist
was
dishonored,
the
plaintiff
sued
to
recover
the
vehicle
from
Jimenez
on
the
ground
that
she
had
been
unlawfully
deprived
of
it
by
reason
of
Feist's
deception.
In
ruling
for
Jimenez,
the
Court
of
Appeals
held:
The
point
of
inquiry
is
whether
plaintiff-appellant
Trinidad
C.
Tagatac
has
been
unlawfully
deprived
of
her
car.
At
first
blush,
it
would
seem
that
she
was
unlawfully
deprived
thereof,
considering
that
she
was
induced
to
part
with
it
by
reason
of
the
chicanery
practiced
on
her
by
Warner
L.
Feist.
Certainly,
swindling,
like
robbery,
is
an
illegal
method
of
deprivation
of
property.
In
a
manner
of
speaking,
plaintiff-appellant
was
"illegally
deprived"
of
her
car,
for
the
way
by
which
Warner
L.
Feist
induced
her
to
part
with
it
is
illegal
and
is
punished
by
law.
But
does
this
"unlawful
deprivation"
come
within
the
scope
of
Article
559
of
the
New
Civil
Code?
x
x
x
x
x
x
x
x
x
.
.
.
The
fraud
and
deceit
practiced
by
Warner
L.
Feist
earmarks
this
sale
as
a
voidable
contract
(Article
1390
N.C.C.).
Being
a
voidable
contract,
it
is
susceptible
of
either
ratification
or
annulment.
If
the
contract
is
ratified,
the
action
to
annul
it
is
extinguished
(Article
1392,
N.C.C.)
and
the
contract
is
cleansed
from
all
its
defects
(Article
1396,
N.C.C.);
if
the
contract
is
annulled,
the
contracting
parties
are
restored
to
their
respective
situations
before
the
contract
and
mutual
restitution
follows
as
a
consequence
(Article
1398,
N.C.C.).
However,
as
long
as
no
action
is
taken
by
the
party
entitled,
either
that
of
annulment
or
of
ratification,
the
contract
of
sale
remains
valid
and
binding.
When
plaintiff-appellant
Trinidad
C.
Tagatac
delivered
the
car
to
Feist
by
virtue
of
said
voidable
contract
of
sale,
the
title
to
the
car
passed
to
Feist.
Of
course,
the
title
that
Feist
acquired
was
defective
and
voidable.
Nevertheless,
at
the
time
he
sold
the
car
to
Felix
Sanchez,
his
title
thereto
had
not
been
avoided
and
he
therefore
conferred
a
good
title
on
the
latter,
provided
he
bought
the
car
in
good
faith,
for
value
and
without
notice
of
the
defect
in
Feist's
title
(Article
1506,
N.C.C.).
There
being
no
proof
on
record
that
Felix
Sanchez
acted
in
bad
faith,
it
is
safe
to
assume
that
he
acted
in
good
faith.
The
above
rulings
are
sound
doctrine
and
reflect
our
own
interpretation
of
Article
559
as
applied
to
the
case
before
us.
Actual
delivery
of
the
books
having
been
made,
Cruz
acquired
ownership
over
the
books
which
he
could
then
validly
transfer
to
the
private
respondents.
The
fact
that
he
had
not
yet
paid
for
them
to
EDCA
was
a
matter
between
him
and
EDCA
and
did
not
impair
the
title
acquired
by
the
private
respondents
to
the
books.
One
may
well
imagine
the
adverse
consequences
if
the
phrase
"unlawfully
deprived"
were
to
be
interpreted
in
the
manner
suggested
by
the
petitioner.
A
person
relying
on
the
seller's
title
who
buys
a
movable
property
from
him
would
have
to
surrender
it
to
another
person
claiming
to
be
the
original
owner
who
had
not
yet
been
paid
the
purchase
price
therefor.
The
buyer
in
the
second
sale
would
be
left
holding
the
bag,
so
to
speak,
and
would
be
compelled
to
return
the
thing
bought
by
him
in
good
faith
without
even
the
right
to
reimbursement
of
the
amount
he
had
paid
for
it.
It
bears
repeating
that
in
the
case
before
us,
Leonor
Santos
took
care
to
ascertain
first
that
the
books
belonged
to
Cruz
before
she
agreed
to
purchase
them.
The
EDCA
invoice
Cruz
showed
her
assured
her
that
the
books
had
been
paid
for
on
delivery.
By
contrast,
EDCA
was
less
than
cautious
in
fact,
too
trusting
in
dealing
with
the
impostor.
Although
it
had
never
transacted
with
him
before,
it
readily
delivered
the
books
he
had
ordered
(by
telephone)
and
as
readily
accepted
his
personal
check
in
payment.
It
did
not
verify
his
identity
although
it
was
easy
enough
to
do
this.
It
did
not
wait
to
clear
the
check
of
this
unknown
drawer.
Worse,
it
indicated
in
the
sales
invoice
issued
to
him,
by
the
printed
terms
thereon,
that
the
books
had
been
paid
for
on
delivery,
thereby
vesting
ownership
in
the
buyer.
Surely,
the
private
respondent
did
not
have
to
go
beyond
that
invoice
to
satisfy
herself
that
the
books
being
offered
for
sale
by
Cruz
belonged
to
him;
yet
she
did.
Although
the
title
of
Cruz
was
presumed
under
Article
559
by
his
mere
possession
of
the
books,
these
being
movable
property,
Leonor
Santos
nevertheless
demanded
more
proof
before
deciding
to
buy
them.
It
would
certainly
be
unfair
now
to
make
the
private
respondents
bear
the
prejudice
sustained
by
EDCA
as
a
result
of
its
own
negligence.1wphi1
We
cannot
see
the
justice
in
transferring
EDCA's
loss
to
the
Santoses
who
had
acted
in
good
faith,
and
with
proper
care,
when
they
bought
the
books
from
Cruz.
While
we
sympathize
with
the
petitioner
for
its
plight,
it
is
clear
that
its
remedy
is
not
against
the
private
respondents
but
against
Tomas
de
la
Pea,
who
has
apparently
caused
all
this
trouble.
The
private
respondents
have
themselves
been
unduly
inconvenienced,
and
for
merely
transacting
a
customary
deal
not
really
unusual
in
their
kind
of
business.
It
is
they
and
not
EDCA
who
have
a
right
to
complain.
WHEREFORE,
the
challenged
decision
is
AFFIRMED
and
the
petition
is
DENIED,
with
costs
against
the
petitioner.
G.R.
No.
L-66944
November
13,
1989
ALLIANCE
TOBACCO
CORPORATION,
INC.,
petitioner,
vs.
PHILIPPINE
VIRGINIA
TOBACCO
ADMINISTRATION,
FARMER'S
'VIRGlNlA
TOBACCO
REDRYING
COMPANY,
INC.
and
INTERMEDIATE
APPELLATE
COURT,
respondents.
FERNAN,
C.J.:
The
issue
in
the
instant
petition
for
review
on
certiorari
of
the
decision
of
the
then
Intermediate
Appellate
Court
is
whether
or
not
petitioner's
delivery
of
174
bales
of
tobacco
to
the
Farmer's
Virginia
Tobacco
Redrying
Company,
Inc.
(FVTR),
a
contractee
of
the
Philippine
Virginia
Tobacco
Administration
(PVTA)
perfected
the
contract
of
sale
between
petitioner
and
the
(PVTA)
so
as
to
hold
the
latter
liable
for
the
loss
of
said
bales
while
in
the
possession
of
the
FVTR.
The
PVTA
a
government
corporation
created
under
Republic
Act
No.
2265
to
promote
the
tobacco
industry,
entered
into
a
contract
of
procuring,
redrying
and
servicing
with
the
FVTR
for
the1963
tobacco
trading
operation.
1
In
June
of
that
year,
the
PVTA
also
entered
into
a
merchandising
loan
agreement
with
the
petitioner,
a
duly
incorporated
and
authorized
tobacco
trading
entity,
whereby
the
PVTA
agreed
to
lend
P25,500
to
the
petitioner
for
the
purchase
of
flue-
cured
Virginia
tobacco
from
bona
fide
Virginia
tobacco
former-producers.
2
The
following
month,
petitioner
shipped
to
the
FVTR
96
bales
of
tobacco
weighing
4,800
kilos
covered
by
Guia
No.
1
and
167
bales
weighing
8,350
kilos
covered
by
Guia
No.
2.
In
the
words
of
the
lower
court,
the
following
transpired:
...
Before
shipping
the
tobacco
to
the
Redrying
Plant,
the
plaintiff
(petitioner
herein)
obtained
a
Clearance
issued
by
the
Tobacco
Inspector,
authorizing
the
tobacco
shipment
to
proceed
to
the
Redrying
Plant.
Upon
the
arrival
of
the
tobacco
shipments
in
the
Redrying
Plant,
defendant
FVTR
at
Bauang,
La
Union
(Bauang
for
short),
they
were
listed
in
the
Log
Book,
after
which
the
tobacco
were
brought
inside
the
Redying
Compound.
The
Log
Book
was
then
submitted
to
the
Marketing
Department,
formerly
the
Trading
Department
and
kept
by
the
Branch
Manager,
Bauang,
Mr.
Jovencio
Pimentel,
assisted
by
Mr.
Pio
Balagot.
The
documents
submitted
accompanying
the
tobacco
shipments
were
the
BIR
clearance,
Clearance
from
the
Regional
Tobacco
Inspector
at
San
Fernando,
La
Union
(San
Fernando
for
short)
and
Guias
Nos.
1
and
2.
After
several
days,
the
grading
of
the
plaintiffs
tobacco
took
place
but
only
89
bales
from
Guia
No.
2
were
graded,
weighed
and
accepted.
The
remaining
bales
of
tobacco
in
Guia
No.
2
and
the
whole
of
Guia
No.
I
were
not
graded
and
weighed
because
after
grading
and
weighing
89
bales
of
Guia
No.
2,
some
officers
and
employees
in
the
premises
of
defendant
FVTR
asked
money
for
the
separate
grading
and
weighed
of
the
un-graded
and
un-weighed
tobacco
bales.
Because
the
rest
of
the
plaintiffs
tobacco
were
not
graded
and
weighed,
Aldegunda
Villanueva,
Business
Manager
of
the
plaintiff,
saw
the
Branch
Manager
of
the
defendant
FVTR
and
asked
him
to
have
their
tobacco
graded
and
weighed.
Since
the
grading
and
weighing
of
the
plaintiffs
tobacco
was
(sic)
not
resumed,
in
1965,
said
Business
Manager
personally
called
on
Atty.
Eduardo
Bananal,
Manager
of
the
defendant
PVTA
in
Manila
and
told
the
latter
that
some
tobacco
of
the
plaintiff
were
not
graded
and
weighed
and
were
no
longer
in
the
premises
of
defendant
FVTR's
Redrying
Plant,
Manager
Bananal
told
her
that
the
plaintiffs
tobacco
in
question
were
considered
accepted.
The
operations
of
defendant
FVTR
in
Bauang,
stopped
in
October
1963.
The
plaintiff
asked
that
its
ungraded
and
un-
weighed
tobacco
be
withdrawn
from
the
Redrying
Plant.
The
defendants
PVTA
and
FVTR
refused
to
allow
the
plaintiffs
request
because
according
to
them
the
tobacco
sought
to
be
withdrawn
were
subject
of
a
merchandising
loan
and
owned
by
defendant,
PVTA.
3
Unfortunately,
the
remaining
un-graded
and
un-weighed
174
bales
with
a
total
value
of
P28,382
were
lost
while
they
were
in
the
possession
of
the
FVTR
Having
learned
of
such
loss
in
1965,
petitioner
demanded
for
its
value
and
the
application
of
the
same
to
its
merchandising
loan
with
PVTA
but
both
the
latter
and
the
FVTR
refused
to
heed
said
demands.
4
Consequently,
petitioner
filed
in
the
then
Court
of
First
Instance
of
La
Union
a
complaint
against
PVTA
and
FVTR
praying
that
the
two
defendants
be
ordered
to
pay
it
P4,443
representing
the
value
of
the
89
bales
which
were
weighed,
graded
and
accepted
by
the
defendants,
P28,382.00
representing
the
value
of
the
lost
bales
of
tobacco
and/or
that
the
said
amount
be
applied
to
its
loan
with
PVTA
and
P4,000
as
attorney's
fees
and
litigation
expenses.
5
They
prayed
that
interest
be
charged
on
the
first
two
amounts.
FVTR
was
declared
in
default.
6
Thereafter,
petitioner
and
the
PVTA
submitted
a
stipulation
of
facts
and
agreed
that
a
partial
judgment
be
rendered
as
to
the
89
bales
of
tobacco
which
had
been
weighed
and
graded.
7
In
its
decision,
8
the
lower
court,
citing
Santiago
Virginia
Tobacco
Planters
Association
vs.
PVTA
ruled
that
the
PVTA,
9
should
not
be
held
responsible
for
the
lost
bales
of
tobacco
because
they
were
not
yet
properly
graded
and
weighed
and
that
petitioner
failed
to
present
the
weigher's
tally
sheets
and
warehouse
receipts
or
quedans.
The
dispositive
portion
of
the
decision
states:
WHEREFORE,
judgment
is
hereby
rendered
as
follows:
1.
Ordering
the
defendant
PVTA
to
pay
the
plantiff
the
amount
of
P9,323.11
which
is
the
agreed
value
of
the
plaintiffs
uncontested
89
bales
of
tobacco,
with
interest
at
the
legal
rate,
from
the
filing
of
the
Complaint
on
December
27,
1968,
up
to
its
full
payment;
2.
Ordering
the
defendant
PVTA
to
pay
the
plaintiff
the
amount
of
P1,000
as
attorney's
fee;
Since
the
plaintiff
admitted
that
it
has
a
merchandising
loan
of
P20,000
from
defendant
PVTA
the
amounts
to
be
paid
to
the
former
may
be
applied
by
the
latter
to
the
payment
of
said
loan
and
its
interest
at
the
agreed
rate.
3.
Dismissing
the
plaintiffs
complaint
regarding
the
96
bales
and
78
bales
of
tobacco
under
Guias
Nos.
1
and
2,
respectively.
There
is
no
pronouncement
as
to
costs.
SO
ORDERED.
10
Petitioner
appealed
to
the
then
Intermediate
Appellate
Court
which,
in
its
decision
of
March
20,
1984,
11
affirmed
in
toto
the
lower
court's
decision.
Hence,
petitioner
interposed
the
instant
petition
for
review
on
certiorari
of
the
appellate
court
decision.
It
contends
that
the
question
of
substance
decided
by
the
said
court
is
not
in
accord
with
the
decision
of
this
Court
in
Philippine
Virginia
Tobacco
Administration
vs.
De
los
Angeles,
12
and
that
the
said
"question
of
substance
boils
down
(to)
whether
or
not
there
is
a
perfected
contract
of
sale
between
petitioner
and
respondent
PVTA
with
respect
to
the
aforesaid
remaining
bales
of
tobacco."
13
On
the
other
hand,
the
herein
respondent
alleges
that,
without
having
been
weighed
or
graded,
the
tobacco
shipment
could
not
be
deemed
to
have
been
accepted
by
FVTR
much
less
the
PVTA
It
insists
that
the
Santiago
Virginia
Tobacco
Planters
Association,
Inc.
vs.
PVTA
case
(Santiago
case
for
brevity)
should
be
applied.
Furthermore,
the
petition
having
presented
only
the
factual
question
of
whether
or
not
the
tobacco
shipment
was
indeed
weighed
and
graded
at
the
redrying
plant,
the
same
must
be
denied.
14
On
January
13,
1986,
this
Court
denied
the
petition
for
lack
of
merit,
However
upon
petitioner's
motion
for
reconsideration
of
the
resolution
denying
the
petition,
the
Court
set
aside
said
resolution
of
January
13,
1986
and
gave
due
course
to
the
petition.
15
At
the
outset,
it
should
be
emphasized
that
the
lower
court
made
a
definitive
factual
finding
on
the
actual
and
physical
delivery
of
the
lost
bales
of
tobacco
from
the
petitioner
to
the
FVTR.
16
The
parties,
however,
disagree
as
to
the
legal
implications
of
such
delivery.
Petitioner
contends
that
it
bound
not
only
FVTR
but
also
the
PVTA
and
perfected
the
contract
of
sale
between
petitioner
and
the
PVTA
On
the
other
hand,
the
PVTA
argues
that
the
delivery
was
not
valid
and
binding
on
it
considering
that,
not
having
been
weighed
and
graded
by
its
agents,
it
had
not
duly
accepted
the
shipments
so
as
to
perfect
the
contract
of
sale.
Under
the
Santiago
case,
shipping
documents
and
check-lists
which
are
accomplished
prior
to
delivery
do
not
prove
actual
delivery.
To
prove
such
delivery,
documents
such
as
the
weigher's
tally
sheet
and
the
warehouse
receipts
which
are
accomplished
when
the
actual
delivery
is
made
are
necessary.
It
should
be
noted,
however,
that
the
factual
circumstances
extant
in
this
case
are
different
from
those
in
the
Santiago
case.
In
said
case,
there
was
a
need
to
prove
actual
delivery
because
the
petitioner
therein
demanded
for
the
payment
of
tobacco
shipments
which
were
allegedly
delivered
to
the
FVTR.
17
In
other
words,
the
actual,
physical
delivery
of
the
shipments
was
not
proven.
On
the
other
hand,
in
this
case,
the
lower
court
established
from
the
testimonies
of
witnesses
the
fact
that
petitioner
entrusted
to
the
FVTR
a
total
of
263
bales
of
tobacco
89
bales
of
which
were
even
actually
weighed
and
graded
in
the
redrying
plant.
18
However,
for
reasons
beyond
the
control
of
the
petitioner,
the
FVTR
refused
to
weigh
and
grade
the
remaining
174
bales.
On
top
of
this,
the
FVTR
also
refused
to
grant
petitioner's
request
to
withdraw
the
un-weighed
and
un-graded
shipments.
As
it
turned
out
later,
said
shipments
were
lost
while
in
the
custody
of
FVTR
thereby
placing
the
petitioner
in
a
"no
win"
situation.
The
Civil
Code
provides
that
ownerhip
of
the
thing
sold
shall
be
transferred
to
the
vendee
upon
the
actual
or
constructive
delivery
thereof.
19
There
is
delivery
when
the
thing
sold
is
placed
in
the
control
and
possession
of
the
vendee.
20
Indeed,
in
tobacco
trading,
actual
delivery
plays
a
pivotal
role.
The
peculiar
procedure
undergone
in
trading,
which
procedure
was
set
out
at
length
in
both
the
Santiago
and
the
PVTA
vs.
De
los
Angeles
cases,
reveals
that
delivery
seals
the
contract
of
sale
because
the
trader
loses
not
only
possession
but
also
control
over
the
shipment.
Outlined
by
the
PVTA
pursuant
to
its
power
"to
take
over
and
assume,
and
therefore
exclusively
direct,
supervise
and
control,
all
functions
and
operations
with
respect
to
the
processing,
warehousing,
and
trading
of
Virginia
tobacco,
the
provisions
of
ally
existing
law
to
the
contrary
notwithstanding,"
21
the
procedure
is
observed
by
everyone
involved
in
the
trade.
Verily,
the
tobacco
trading
procedure
conceived
and
formulated
by
the
PVTA
is
akin
to
a
contract
of
adhesion
wherein
only
one
party
has
a
hand
in
the
determination
of
the
terms.
But
observance
of
the
procedure
more
often
than
not
renders
a
trader
at
a
disadvantage.
The
moment
the
shipment
is
placed
in
the
hands
of
the
PVTA
or
its
representative
and
it
is
lost,
the
trader
is
left
empty-handed.
While
the
flaw
may
not
really
be
in
the
procedure
itself,
the
same
may
be
found
in
the
persons
charged
with
the
implementation
of
the
procedure.
Some
personnel
mishandle
the
shipment
to
the
detriment
of
the
trader.
Some
demand
grease
money
to
facilitate
the
trading
process.
Sadly,
this
is
what
happened
in
this
case.
Hence,
while
under
an
Ideal
situation,
we
would
have
found
merit
in
respondent
PVTA's
contention
that
the
contract
of
sale
could
not
have
been
perfected
pursuant
to
Article
1475
22
of
the
Civil
Code
because
to
determine
the
price
of
the
tobacco
traded,
the
shipment
should
first
be
inspected,
graded
and
weighed,
we
find
said
contention
misplaced
herein.
A
strict
interpretation
of
the
provision
of
Article
1475
may
result
in
adverse
effects
to
small
planters
who
would
not
be
paid
for
the
lost
products
of
their
toil.
Such
situation
was
what
the
ruling
in
PVTA
vs.
De
los
Angeles
sought
to
avoid.
Equity
and
fair
dealing,
the
anchor
of
said
case,
must
once
more
prevail.
Since
PVTA
had
virtual
control
over
the
lost
tobacco
bales,
delivery
thereof
to
the
FVTR
should
also
be
considered
effective
delivery
to
the
PVTA.
WHEREFORE,
the
decision
of
the
appellate
court
insofar
as
lt
affirms
the
decision
of
the
lower
court
directing
the
PVTA
to
pay
petitioner
the
amount
of
P9,823.11
for
the
89
bales
of
tobacco
is
hereby
affirmed.
Respondent
PVTA
is
likewise
ordered
to
pay
petitioner's
claim
of
P28,382.00
for
the
lost
174
bales
of
tobacco.
Both
amounts
are
subject
to
interest
at
the
legal
rate
from
the
filing
of
the
complaint
on
December
27,
1968
up
to
their
full
payment.
Should
the
petitioner
still
owe
respondent
PVTA
pursuant
to
the
merchandising
loan
agreement
between
them,
the
same
shall
be
offset
by
whatever
amount
the
petitioner
would
receive
from
the
respondent
PVTA
by
virtue
of
this
decision.
No
costs.
G.R.
No.
L-16394
December
17,
1966
JOSE
SANTA
ANA,
JR.
and
LOURDES
STO.
DOMINGO,
petitioners,
vs.
ROSA
HERNANDEZ,
respondent.
REYES,
J.B.L.,
J.:
Appeal
from
the
decision
of
the
Court
of
Appeals
in
its
Case
CA-G.R.
No.
20582-R,
in
effect
reversing
the
decision
of
the
Court
of
First
Instance
of
Bulacan
in
its
Civil
Case
No.
1036.
The
petitioners
herein,
spouses
Jose
Santa
Ana,
Jr.
and
Lourdes
Sto.
Domingo,
owned
a
115,850-square
meter
parcel
of
land
situated
in
barrio
Balasing,
Sta.
Maria,
Bulacan,
and
covered
by
Transfer
Certificate
of
Title
No.
T-3598.
On
28
May
1954,
they
sold
two
(2)
separate
portions
of
the
land
for
P11,000.00
to
the
herein
respondent
Rosa
Hernandez.
These
portions
were
described
in
the
deed
of
sale
as
follows:
Bahaguing
nasa
gawing
Hilagaan.
Humahanga
sa
Hilaga,
kina
Maria
Perez,
at
Aurelio
Perez;
sa
Timugan,
sa
lupang
kasanib;
sa
Silanganan,
kay
Mariano
Flores
at
Emilio
Ignacio;
sa
Kanluran,
kay
Cornelio
Ignacio;
Mayroong
(12,500),
m.c.
humigit
kumulang.
Bahaguing
nasa
gawing
Silanganan
Humahanga
sa
Hilagaan,
sa
kay
Rosa
Hernandez;
sa
Silanganan,
kay
Domingo
Hernandez
at
Antonio
Hernandez;
sa
Timugan,
sa
Sta.
Maria-Tigbi
Road;
at
sa
Kanluran,
sa
lupang
kasanib
(Jose
Sta.
Ana,
Jr.),
mayroong
(26,500)
metros
cuadrados,
humigit
kumulang.
After
the
sale
(there
were
two
other
previous
sales
to
different
vendees
of
other
portions
of
the
land),
the
petitioners-
spouses
caused
the
preparation
of
a
subdivision
plan,
Psd-43187,
was
approved
on
13
January
1955
by
the
Director
of
Lands.
Rosa
Hernandez,
however,
unlike
the
previous
vendees,
did
not
conform
to
the
plan
and
refused
to
execute
an
agreement
of
subdivision
and
partition
for
registration
with
the
Register
of
Deeds
of
Bulacan;
and
she,
likewise,
refused
to
vacate
the
areas
that
she
had
occupied.
Instead,
she
caused
the
preparation
of
a
different
subdivision
plan,
which
was
approved
by
the
Director
of
Lands
on
24
February
1955.
This
plan,
Psd-42844,
tallied
with
the
areas
that
the
defendant,
Rosa
Hernandez,
had
actually
occupied.
On
28
February
1955,
herein
petitioners-spouses
filed
suit
against
respondent
Rosa
Hernandez
in
the
Court
of
First
Instance
of
Bulacan,
claiming
that
said
defendant
was
occupying
an
excess
of
17,000
square
meters
in
area
of
what
she
had
bought
from
them.
Defendant
Rosa
Hernandez,
on
the
other
hand,
claimed
that
the
alleged
excess,
was
part
of
the
areas
that
she
bought.
The
trial
court
observed:
The
only
question,
therefore,
to
be
determined
by
the
Court
is
whether
or
not
the
plaintiffs
had
sold
two
portions
without
clear
boundaries
but
with
exact
areas
(12,500
sq.
m.
and
26,000
sq.
m.)
at
the
rate
of
P.29
per
square
meter
or,
as
defendant
Rosa
Hernandez
claimed,
two
portions,
the
areas
of
which
were
not
definite
but
which
were
well
defined
on
the
land
and
with
definite
boundaries
and
sold
for
the
lump
sum
of
P11,000.00.
Finding
for
the
plaintiffs,
the
said
court
ordered
the
defendant,
among
other
things,
to
vacate
"the
excess
portions
actually
occupied
by
her
and
to
confine
her
occupation
only
to
Lots
4-a
and
4-b
as
shown
in
the
plan,
Exhibit
E,
of
the
plaintiffs
.
.
.,"
referring
to
Psd-43187.
Not
satisfied
with
the
judgment,
defendant
Hernandez
appealed
to
the
Court
of
Appeals.
The
Court
of
Appeals
dismissed
the
complaint
and
declared
Rosa
Hernandez
the
owner
of
lots
4-a
and
4-b
in
her
plan,
Psd-42844,
upon
the
following
findings:
The
contract
between
appellees
and
appellant
(Exhibit
D)
provided
for
the
sale
of
two
separate
portions
of
the
same
land
for
the
single
consideration
of
P11,000.00.
Appellee
Jose
Santa
Ana,
Jr.
said
the
transaction
was
by
a
unit
of
measure
or
per
square
meter,
and
that
although
the
actual
total
purchase
price
of
the
two
parcels
of
land
was
P11,300.00
at
P0.29
per
square
meter
the
parties
agreed
to
the
sale
at
the
reduced
price
of
P11,000.00.
The
appellant
denied
this
claim
of
appellees.
Gonzalo
V.
Ignacio,
the
notarial
officer
before
the
contract
of
sale
was
executed,
failed
to
corroborate
Sta.
Ana
upon
this
point.
Upon
the
contrary,
Ignacio
testified
that
appellant
complained
to
him
and
the
appellees
to
the
effect
that
the
areas
stated
in
the
contract
were
less
than
the
actual
areas
of
the
parcels
of
land
being
sold
and
here
we
quote
the
notarial
officer's
own
words:
"That
the
area
stated
in
the
document
will
not
be
the
one
to
prevail
but
the
one
to
prevail
is
the
boundary
of
the
land
which
you
already
know."
(p.
74,
Innocencio).
Sta.
Ana
is
the
nephew
of
the
appellant,
and
the
former's
assurance
probably
appeased
the
latter
against
insisting
in
the
correction
of
the
areas
stated
in
the
contract
of
sale.
Two
witnesses
testified
for
the
appellant.
Jesus
Policarpio
divulged
that
the
same
parcels
of
land
involved
in
this
case
were
previously
offered
to
him
by
the
appellees
for
the
single
purchase
price
of
P12,000.00.
Julio
Hernandez
stated
that
his
sister,
the
herein
appellant,
had
offered
P10,000.00
as
against
the
appellees'
price
of
P12,000.00,
and
that
he
was
able
to
persuade
the
parties
to
meet
halfway
on
the
price.
Furthermore
the
previous
conveyances
made
by
the
appellees
for
other
portions
of
the
same
property
(Exhibits
B
and
C)
are
also
for
lump
sums.
The
difference
in
area
of
17,000
square
meters
is
about
one-half
of
the
total
area
of
the
two
parcels
of
land
stated
in
the
document,
but
not
for
this
alone
may
we
infer
gross
mistake
on
the
part
of
appellees.
The
appellees
admit
the
lands
in
question
were
separated
from
the
rest
of
their
property
by
a
long
and
continuous
"pilapil"
or
dike,
and
there
is
convincing
proof
to
show
that
the
bigger
lot
(Lot
4-a)
was
wholly
tenanted
for
appellees
by
Ciriaco
Nicolas
and
Santiago
Castillo
and
the
smaller
lot
(Lot
4-b)
was
wholly
tenanted
for
said
appellees
by
Gregorio
Gatchalian.
These
facts
support
the
theory
that
the
two
parcels
of
land
sold
to
the
appellant
were
identified
by
the
conspicuous
boundaries
and
the
extent
or
area
each
tenant
used
to
till
for
the
vendors.
Again,
appellees
should
not
be
heard
to
complain
about
the
deficiency
in
the
area
because
as
registered
owners
and
possessors
of
the
entire
land
since
1949
they
can
rightly
be
presumed
to
have
acquired
a
good
estimate
of
the
value
and
areas
of
the
portions
they
subsequently
sold.
The
Court
of
Appeals
concluded
by
applying
to
the
case
Article
1542
of
the
new
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
greater
or
less
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.
and
declared
Rosa
Hernandez
the
owner
of
the
whole
of
lots
4-a
and
4-b
of
her
own
subdivision
Plan
Psd-42844,
notwithstanding
their
increased
area
as
compared
to
that
specified
in
the
deed
of
sale.
In
turn,
the
Sta.
Ana
spouses
appealed
to
this
Court,
assigning
the
following
errors:
The
Court
of
Appeals
committed
a
grave
error
of
law
when
it
departed
from
the
accepted
and
usual
course
of
judicial
proceedings,
by
disturbing
the
findings
of
fact
of
the
trial
court,
made
upon
conflicting
testimonies
of
the
witnesses
for
the
plaintiffs,
now
in
the
petitioners,
and
the
defendant,
now
the
respondent,
Rosa
Hernandez.
The
Court
of
Appeals
committed
a
grave
error
of
law
when
it
held
that
the
deed
of
sale,
Exhibit
D,
was
for
a
lump
sum,
despite
the
fact
that
the
boundaries
given
therein
were
not
sufficiently
certain
and
the
boundaries
indicated
did
not
clearly
identify
the
land,
thereby
erroneously
deciding
a
question
of
substance
in
a
way
not
in
accord
with
law
and
the
applicable
decisions
of
this
Honorable
Court.
On
the
face
of
the
foregoing
assignments
of
error
and
the
petitioners'
discussions
thereabout,
their
position
can
be
summarized
as
follows:
that
the
Court
of
Appeals
erred
in
substituting
its
own
findings
of
fact
for
that
of
the
trial
court's,
without
strong
and
cogent
reasons
for
the
substitution,
contrary
to
the
rule
that
appellate
courts
shall
not
disturb
the
findings
of
fact
of
trial
courts
in
the
absence
of
such
strong
and
cogent
reasons;
and
that
Article
1542
of
the
Civil
Code
of
the
Philippines
does
not
apply,
allegedly
because
the
boundaries,
as
shown
in
the
deed
of
sale,
are
not
definite.
In
the
first
assignment
of
error,
the
petitioner
spouses
complain
against
the
failure
of
the
Court
of
Appeals
to
accept
the
findings
of
fact
made
by
the
Court
of
First
Instance.
The
credibility
of
witnesses
and
the
weighing
of
conflicting
evidence
are
matters
within
the
exclusive
authority
of
the
Court
of
Appeals,
and
it
is
not
necessarily
bound
by
the
conclusions
of
the
trial
court.
Both
the
Judiciary
Act
(R.A.
296,
section
29)
and
the
Rules
of
Court
(Rule
45,
section
2)
only
allow
a
review
of
decisions
of
the
Court
of
Appeals
on
questions
of
law;
and
numerous
decisions
of
this
Court
have
invariably
and
repeatedly
held
that
findings
of
fact
by
the
Court
of
Appeals
are
conclusive
and
not
reviewable
by
the
Supreme
Court
(Galang
vs.
Court
of
Appeals,
L-17248,
29
January
1962;
Fonacier
vs.
Court
of
Appeals,
96
Phil.
418,
421;
and
cases
therein
cited;
Onglengco
vs.
Ozaeta,
70
Phil.
43;
Nazareno
vs.
Magwagi,
71
Phil.
101).
Barring,
therefore,
a
showing
that
the
findings
complained
of
are
totally
devoid
of
support
in
the
record,
or
that
they
are
so
glaringly
erroneous
as
to
constitute
serious
abuse
of
discretion,
such
findings
must
stand,
for
this
Court
is
not
expected
or
required
to
examine
and
contrast
the
oral
and
documentary
evidence
submitted
by
the
parties.
As
pointed
out
by
former
Chief
Justice
Moran
in
his
Comments
on
the
Rules
of
Court
(1963
Ed.,
Vol.
2,
p.
412),
the
law
creating
the
Court
of
Appeals
was
intended
mainly
to
take
away
from
the
Supreme
Court
the
work
of
examining
the
evidence,
and
confine
its
task
for
the
determination
of
questions
which
do
not
call
for
the
reading
and
study
of
transcripts
containing
the
testimony
of
witnesses.
The
first
assignment
of
error
must,
therefore,
be
overruled.
We
now
turn
to
the
second.
Despite
the
incontestable
fact
that
the
deed
of
sale
in
favor
of
Rosa
Hernandez
recites
a
price
in
a
lump
sum
(P11,000.00)
for
both
lots
(Annex
"C",
Complaint,
Rec.
on
App.,
p.
21),
appellants
insist
that
the
recited
area
should
be
taken
as
controlling.
They
combat
the
application
of
Article
1542
of
the
Civil
Code,
on
the
ground
that
the
boundaries
given
in
the
deed
are
indefinite.
They
point
out
that
the
southern
boundary
of
the
small
parcel
is
merely
given
as
"lupang
kasanib"
and
that
the
same
occurs
with
the
western
boundary
of
the
bigger
lot,
which
is
recited
as
"lupang
kasanib
(Jose
Sta.
Ana,
Jr.)".
The
Court
of
Appeals,
however,
found
as
a
fact
that
the
two
parcels
of
land
sold
to
appellant
(i.e.,
appellee
herein,
Rosa
Hernandez)
were
identified
by
the
conspicuous
boundaries.
(Emphasis
supplied)
consisting
in
a
long
and
continuous
pilapil
or
dike
that
separated
the
lands
in
question
from
the
rest
of
the
property.
On
the
basis
of
such
findings,
that
can
not
be
questioned
at
this
stage,
for
reasons
already
shown,
it
is
unquestionable
that
the
sale
made
was
of
a
definite
and
identified
tract,
a
corpus
certum,
that
obligated
the
vendors
to
deliver
to
the
buyer
all
the
land
within
the
boundaries,
irrespective
of
whether
its
real
area
should
be
greater
or
smaller
than
what
is
recited
in
the
deed
(Goyena
vs.
Tambunting,
1
Phil.
490;
Teran
vs.
Villanueva,
56
Phil.
677;
Azarraga
vs.
Gay,
52
Phil.
599;
Mondragon
vs.
Santos,
87
Phil.
471).
And
this
is
particularly
true
where,
as
in
the
case
now
before
this
Court,
the
area
given
is
qualified
to
be
approximate
only
("humigit
kumulang",
i.e.,
more
or
less
Rec.
on
App.,
p.
22).
To
hold
the
buyer
to
no
more
than
the
area
recited
on
the
deed,
it
must
be
made
clear
therein
that
the
sale
was
made
by
unit
of
measure
at
a
definite
price
for
each
unit.
If
the
defendant
intended
to
buy
by
the
meter
be
should
have
so
stated
in
the
contract
(Goyena
vs.
Tambunting,
supra).
The
ruling
of
the
Supreme
Court
of
Spain,
in
construing
Article
1471
of
the
Spanish
Civil
Code
(copied
verbatim
in
our
Article
1542)
is
highly
persuasive
that
as
between
the
absence
of
a
recital
of
a
given
price
per
unit
of
measurement,
and
the
specification
of
the
total
area
sold,
the
former
must
prevail
and
determines
the
applicability
of
the
norms
concerning
sales
for
a
lump
sum.
La
venta
a
cuerpo
cierto
indudablemente
se
verifica
cuando
en
el
contrato
no
solo
no
es
precisado
el
precio
singular
por
unidad
de
medida,
sino
que
tampoco
son
indicadas
los
dimensiones
globales
bales
del
inmueble,
pero
tambien
se
verifica
cuando
aun
ng
habiendo
sido
indicado
un
precio
singular
por
unidad
de
medida,
sin
embargo
es
especificada
la
dimension
total
del
inmueble,
en
cuyo
ultimo
caso
entre
los
dos
indices
en
contraste,
constituido
uno
por
la
falta
de
un
precio
singular
por
unidad
de
medida,
y
otro
por
la
concrecion
de
las
dimensiones
globales
del
unmueble,
la
Ley
da
prevalencia
al
mero
y
presume
que
aquella
individualizacion
no
habia
tenido
para
las
partes
valor
esencial,
que
solo
constituia
una
superabundancia,
y
no
significa
que
las
partes
hayan
convenido
aquel
precio
global
solo
en
cuanto
el
inmueble
tuviese
efectivamente
aquellas
dimensiones
totales,
siendo
de
estimar
que
esta
es
una
presuncion
absoluta,
contra
la
cual
ni
el
comprador
ni
el
vendedor
pueden
articular
prueba
contraria.
Por
tanto,
ni
el
comprador
ni
el
vendedor
pueden
pretender
una
disminucicion
o,
respectivamente
un
suplemento
de
precio,
cuando
las
dimensiones
globales
del
unmueble
resulten
despues
mayores
o
menores
de
las
indicadas
en
el
contrato,
aunque
aduzcan
que
solo
en
tanto
han
convenido
el
aquel
precio
en
cuanto
creian
que
las
dimensiones
de
la
cosa
fueran
las
precisadas
en
el
contrato.
(Tribunal
Supreme
de
Espaa,
Sent.
de
26
Junio
1956;
Rep.
Jurisp.
Aranzadi,
2.729)
(Emphasis
supplied)
The
Civil
Code's
rule
as
to
sales
"a
cuerpo
cierto"
was
not
modified
by
Act
496,
section
58,
prohibiting
the
issuance
of
a
certificate
of
title
to
a
grantee
of
part
of
a
registered
tract
until
a
subdivision
plan
and
technical
description
are
duly
approved
by
the
Director
of
Lands,
and
authorizing
only
the
entry
of
a
memorandum
on
the
grantor's
certificate
of
title
in
default
of
such
plan.
The
latter
provision
is
purely
a
procedural
directive
to
Registers
of
Deeds
that
does
not
attempt
to
govern
the
rights
of
vendor
and
vendee
inter
se,
that
remain
controlled
by
the
Civil
Code
of
the
Philippines.
It
does
not
even
bar
the
registration
of
the
contract
itself
to
bind
the
land.
WHEREFORE,
the
decision
of
the
Court
of
Appeals,
in
its
case
No.
20582-R,
is
hereby
affirmed.
Costs
against
the
appellants,
Jose
Santa
Ana,
Jr.
and
Lourdes
Sto.
Domingo.
G.R.
No.
L-20046
March
27,
1968
ROMEO
PAYLAGO
and
ROSARIO
DIMAANDAL,
petitioners,
vs.
INES
PASTRANA
JARABE
and
THE
HONORABLE
COURT
OF
APPEALS,
respondents.
REYES
J.B.L.,:
This
is
an
appeal
by
certiorari
from
the
decision
of
the
Court
of
Appeals
affirming
the
lower
court's
decision
in
the
case
of
Romeo
Paylago,
et
al.
vs.
Ines
Pastrana
Jarabe,
CA-G.R.
No.
25031-R,
promulgated
on
June
6,
1962.
(Civil
Case
No.
R-709
of
the
Court
of
First
Instance
of
Oriental
Mindoro).
The
entire
lot
involved
in
this
suit
was
originally
covered
by
Homestead
Patent
issued
on
June
7,
1920
under
Act
No.
926
and
later
under
OCT
No.
251
of
the
Registry
of
Deeds
of
Mindoro,
issued
on
June
22,
1920
in
the
name
of
Anselmo
Lacatan.
On
May
17,
1948,
after
the
death
of
Anselmo
Lacatan,
TCT
No.
T-728
(which
cancelled
OCT
No.
251)
was
issued
in
the
name
his
two
sons
and
heirs,
Vidal
and
Florentino
Lacatan.
Vidal
Lacatan
died
on
August
27,
1950.
On
March
23,
1953,
Vidal
Lacatan's
heirs,
namely,
Maximo,
Tomas
and
Lucia
Lacatan,
executed
a
deed
of
sale
(Exh.
C)
in
favor
of
the
spouses
Romeo
Paylago
and
Rosario
Dimaandal,
plaintiffs-petitioners
herein,
over
a
portion
of
the
entire
lot
under
TCT
No.
T-728,
which
portion
is
described
as
follows:
North
Provincial
Road;
East
Property
of
Romeo
Paylago;
South
Property
of
Florentino
Lacatan;
West
Provincial
Road
(Nabuslot-Batingan);
containing
an
area
of
3.9500
hectares.
On
October
6,
1953,
Florentino
Lacatan
also
died,
leaving
as
his
heirs
his
widow
and
three
children,
Felipe,
Rosita
and
Florencia
Lacatan.
On
December
31,
1953,
the
said
children
of
Florentino
Lacatan
likewise
executed
a
deed
of
sale
(Exh.
D)
in
favor
of
the
same
vendees
over
another
portion
of
the
same
lot
described
as
follows:
North
Provincial
Road
(Calapan-Pinamalayan);
East
Heirs
of
Sotero
Mongo;
South
Aniceta
Lolong;
West
Heirs
of
Vidal
Lacatan;
with
an
area
of
2.8408
hectares.
On
March
2,
1954,
by
virtue
of
the
registration
of
the
two
deeds
of
sale
(Exhs.
C
and
D),
a
new
TCT
No.
T-4208
covering
the
total
area
of
6.7908
hectares
was
issued
in
favor
of
plaintiffs-petitioners,
the
Paylago
spouses.
A
subsequent
subdivision
survey
for
the
purpose
of
segregating
the
two
aforementioned
portions
of
land
described
in
the
deeds
(Exhs.
C
and
D)
as
well
as
in
the
new
TCT
No.
T-4208,
however,
disclosed
that
a
portion
(one
half
hectare)
of
the
total
area
purchased
by
plaintiffs-
petitioners
and
indicated
in
the
sketch
Exh.
B
at
a
point
marked
Exh.
B-1
was
being
occupied
by
defendant-respondent.
Hence,
the
action
to
recover
possession
and
ownership
of
the
said
portion.
Vis-a-vis
the
foregoing
undisputed
facts,
the
trial
court
and
the
Court
of
Appeals
found
that
a
portion
of
land
in
question
which
is
described
as
follows:
North
Provincial
Road;
East
Apolonio
Lacatan;
South
Anselmo
Lacatan;
West
Valentin
Lastica;
and
with
an
area
of
one
half
hectare
is
indicated
in
the
sketch
of
subdivision
plan
marked
Exh.
B-1
of
Exh.
B;
that
on
November
27,
1938,
the
said
portion
of
land
was
purchased
by
Hilario
Jarabe,
late
husband
of
defendant-respondent,
from
one
Apolonio
Lacatan,
which
sale
is
evidenced
by
an
unregistered
deed
of
sale
(Exh.
6);
that
Apolonio
Lacatan,
in
turn,
bought
the
same
in
1936
from
Anselmo
Lacatan,
the
original
registered
owner
in
whose
favor
OCT
No.
251
and
later
TCT
No.
T-4208
were
issued;
that
the
first
deed
of
sale,
also
unregistered,
executed
by
Anselmo
Lacatan
in
favor
of
Apolonio
Lacatan
was
lost
during
the
Japanese
occupation;
that
the
herein
defendant-respondent
has
been
in
possession
of
the
said
portion
continuously,
publicly,
peacefully
and
adversely
as
owner
thereof
from
1938
up
to
the
present;
and,
that
the
herein
plaintiffs-petitioners
knew,
nay,
admitted
in
a
deed
of
lease,
paragraph
3
(Exh.
4),
that
defendant-respondent
has
been
in
possession
of
the
premises
since
1945.
After
trial,
the
lower
court
held
that
plaintiffs-petitioners
were
not
purchasers
in
good
faith
and,
accordingly,
rendered
judgment
in
favor
of
defendant-respondent,
declaring
the
latter
as
owner
of
the
land
in
question
with
the
right
to
retain
possession
of
the
same.
The
decision
was
affirmed
in
toto
by
the
Court
of
Appeals.
From
the
evidence
adduced
by
the
parties
evolved
the
issue:
Who
has
a
better
right
in
case
of
double
sale
of
real
property,
the
registered
buyer
or
the
prior
but
unregistered
purchaser?
This
Court
has
formulated
in
no
uncertain
terms
the
general
principle
governing
the
matter:
as
between
two
purchasers,
the
one
who
has
registered
the
sale
in
his
favor,
in
good
faith,
has
a
preferred
right
over
the
other
who
has
not
registered
his
title,
even
if
the
latter
is
in
the
actual
possession
of
the
immovable
property
(Mendiola
v.
Pacalda,
10
Phil.
705;
Veguillas
v.
Jaucian,
25
Phil.
315;
Po
Sun
Tun
v.
Price,
54
Phil.
192).
Indeed,
the
foregoing
principle
finds
concrete
bases
in
the
pertinent
provisions
of
the
New
Civil
Code,
Article
1544,
providing
that
if
the
same
immovable
property
should
have
been
sold
to
different
vendees,
"the
ownership
shall
belong
to
the
person
acquiring
it
who
in
good
faith
first
recorded
it
in
the
registry
of
property."
There
is
no
question
that
the
sales
made
in
favor
of
plaintiffs-petitioners
were
registered
while
the
alleged
sale
executed
in
favor
of
defendant-respondent
was
not.
Applying
the
foregoing
principle
of
law
to
the
instant
case,
it
is
now
contended
by
plaintiffs-petitioners
that
their
certificate
of
title
must
prevail
over
defendant-respondent,
and
that
the
courts
below
correspondingly
committed
error
in
deciding
the
case
to
the
contrary.
But
there
is
more
than
meets
the
eye
in
the
case
at
bar.
While
plaintiffs-petitioners
have
a
registered
title,
it
cannot
be
denied
that
their
acquisition
and
subsequent
registration
were
tainted
with
the
vitiating
element
of
bad
faith.
It
was
so
found
by
both
the
Court
of
First
Instance
and
the
Court
of
Appeals,
and
their
finding
is
conclusive
upon
us.
Thus,
in
Evangelista
vs.
Montao,
93
Phil.
275,
279,
this
Court
ruled:
Both
the
Court
of
First
Instance
and
the
Court
of
Appeals
absolved
the
defendants,
having
found
and
declared
after
weighing
the
evidence
that
the
plaintiff,
was
not
a
purchaser
in
good
faith.
That
this
conclusion
is
a
finding
of
fact
and,
being
a
finding
of
fact,
not
subject
to
review,
is
too
plain
to
admit
of
argument.
Both
Courts
below
found
that
petitioners
knew
beforehand
that
the
parcel
of
land
in
question
was
owned
by
defendant-respondent.1wph1.t
In
its
decision
the
Court
of
Appeals
declared
that
"plaintiffs
herein
were
aware
of
that
peaceful,
continuous
and
adverse
possession
of
defendant
since
1945,
because
this
fact
is
admitted
by
said
plaintiffs
in
a
deed
of
lease,
paragraph
3
(Exhibit
4)
covering
a
portion
of
the
entire
lot,
and
situated
just
across
the
road
from
the
land
in
question."
(Dec.,
C.
App.,
p.
4).
Considering
that
the
boundaries
of
the
lands
that
the
petitioners
Paylago
purchased
in
1953
and
1954
were
well
defined,
they
must
have
known
that
the
portion
occupied
by
the
defendant-respondent
under
claim
of
ownership
and
leased
to
them
by
the
latter
was
included
in
the
description.
And
coupled
with
their
knowledge
that
defendant-
respondent
purchased
the
same
from
Apolonio
Lacatan,
plaintiffs-petitioners
should
have
inquired
and
made
an
investigation
as
to
the
possible
defects
of
the
title
of
the
Lacatan
heirs
over
the
entire
lot
sold
to
them,
granting
that
the
latter's
certificate
of
title
was
clear.
This,
they
failed
to
do.
They
cannot
now
claim
complete
ignorance
of
defendant-
respondent's
claim
over
the
property.
As
was
well
stated
in
one
case,
"a
purchaser
who
has
knowledge
of
facts
which
should
put
him
upon
inquiry
and
investigation
as
to
possible
defects
of
the
title
of
the
vendor
and
fails
to
make
such
inquiry
and
investigation,
cannot
claim
that
he
is
a
purchaser
in
good
faith
and
has
acquired
a
valid
title
thereto".
(Sampilo
vs.
Court
of
Appeals,
55
O.G.
No.
30,
p.
5772).
To
the
same
effect
is
the
following
doctrine
laid
down
by
the
Supreme
Court
in
the
case
of
Leung
Yee
v.
F.L.
Strong
Machinery
Co.
&
Williamson,
37
Phil.
644.
Said
the
Court:
One
who
purchases
real
estate
with
knowledge
of
a
defect
or
lack
of
title
in
his
vendor
cannot
claim
that
he
has
acquired
title
thereto
in
good
faith,
as
against
the
true
owner
of
the
land
or
of
an
interest
therein;
and
the
same
rule
must
be
applied
to
one
who
has
knowledge
of
facts
which
should
have
put
him
upon
such
inquiry
and
investigation
as
might
be
necessary
to
acquaint
him
with
the
defects
of
the
title
of
his
vendor.
A
purchaser
cannot
close
his
eyes
to
facts
which
should
put
a
reasonable
man
upon
his
guard
and
then
claims
that
he
acted
in
good
faith
under
the
belief
that
there
was
no
defect
in
the
title
of
the
vendor.
His
mere
refusal
to
believe
that
such
defect
exists,
or
his
willful
closing
of
his
eyes
to
the
possibility
of
the
existence
of
a
defect
in
his
vendor's
title,
will
not
make
him
an
innocent
purchaser
for
value,
if
it
afterwards
develops
that
the
title
was
defective,
and
it
appears
that
he
had
such
notice
of
the
defect
as
would
have
led
to
its
discovery
had
he
acted
with
that
measure
of
precaution
which
may
reasonably
be
required
of
a
prudent
man
in
a
like
situation.
The
fundamental
premise
of
the
preferential
rights
established
by
Article
1544
of
the
New
Civil
Code
is
good
faith
(Bernas
v.
Bolo,
81
Phil.
16).
To
be
entitled
to
the
priority,
the
second
vendee
must
not
only
show
prior
recording
of
his
deed
of
conveyance
or
possession
of
the
property
sold,
but
must,
above
all,
have
acted
in
good
faith,
that
is
to
say,
without
knowledge
of
the
existence
of
another
alienation
by
his
vendor
to
a
stranger
(Obras
Pias
v.
Ignacio,
17
Phil.
45;
Leung
Yee
v.
F.L.
Strong
Machinery
Co.,
et
al.,
op.
cit.;
Emas
v.
De
Zuzuarregui,
et
al.,
53
Phil.
197).
Short
of
this
qualifying
circumstance,
the
mantle
of
legal
protection
and
the
consequential
guarantee
of
indefeasibility
of
title
to
the
registered
property
will
not
in
any
way
shelter
the
recording
purchaser
against
known
and
just
claims
of
a
prior
though
unregistered
buyer.
Verily,
it
is
now
settled
jurisprudence
that
knowledge
of
a
prior
transfer
of
a
registered
property
by
a
subsequent
purchaser
makes
him
a
purchaser
in
bad
faith
and
his
knowledge
of
such
transfer
vitiates
his
title
acquired
by
virtue
of
the
later
instrument
of
conveyance
which
was
registered
in
the
Registry
of
Deeds
(Ignacio
v.
Chua
Hong,
52
Phil.
940;
Gustilo,
et
al.
v.
Maravilla,
48
Phil.
442;
Ramos,
et
al.
v.
Dueno,
et
al.,
50
Phil.
786).
The
registration
of
the
later
instrument
creates
no
right
as
against
the
first
purchaser.
For
the
rights
secured
under
the
provisions
of
Article
1544
of
the
New
Civil
Code
to
the
one
of
the
two
purchasers
of
the
same
real
estate,
who
has
secured
and
inscribed
his
title
thereto
in
the
Registry
of
Deeds,
do
not
accrue,
as
already
mentioned,
unless
such
inscription
is
done
in
good
faith
(Leung
Yee
v.
F.L.
Strong
Machinery
Co.,
et
al.,
op.
cit.).
To
hold
otherwise
would
reduce
the
Torrens
system
to
a
shield
for
the
commission
of
fraud
(Gustilo,
et
al.
v.
Maravilla,
op.
cit.).
Plaintiffs-petitioners
cited
the
case
of
Bacolod-Murcia
Milling
Co.,
Inc.
v.
De
la
Rama,
et
al.,
G.R.
No.
L-4526
September
1959,
to
disprove
bad
faith
ascribed
to
them.
But
the
citation
does
not
fit
with
the
facts
of
the
present
case.
It
is
to
be
noted
that
the
second
purchaser
in
the
De
la
Rama
case
had
no
knowledge
of
the
previous
sale
and
possession
of
the
first
purchaser
at
the
time
he
(second
purchaser)
acquired
the
property
involved
therein.
"(T)here
is
nothing
in
the
complaint
which
may
in
any
way
indicate
that
he
knew
such
possession
and
encumbrance
when
he
bought
the
property
from
its
owner."
Plaintiffs-petitioners
in
the
instant
case,
however,
had
knowledge
of
defendant-respondent's
claim
of
ownership
over
the
land
in
question
long
before
they
purchased
the
same
from
the
Lacatan
heirs.
They
were
even
told,
as
previously
intimated,
that
defendant-respondent
bought
the
land
from
Apolonio
Lacatan.
Thus,
it
could
easily
be
distinguished
that
the
second
purchaser
in
the
De
la
Rama
case
acted
with
good
faith,
i.e.,
without
knowledge
of
the
anterior
sale
and
claim
of
ownership
of
the
first
vendee,
whereas,
plaintiffs-petitioners
herein
acted
with
manifest
bad
faith
in
buying
the
land
in
question,
all
the
while
knowing
that
defendant-respondent
owns
the
same.
Such
knowledge
of
defendant-respondent's
ownership
of
the
land
is
more
than
enough
to
overthrow
the
presumption
of
good
faith
created
by
law
in
favor
of
plaintiffs-petitioners.
This
being
the
case,
we
cannot
just
close
our
eyes
and
blindly
stamp
our
approval
on
the
argument
of
plaintiffs-petitioners
that
they
have
the
better
right
simply
because
their
title
is
registered
and
as
such
is
indefeasible.
Plaintiffs-petitioners
also
contend
that
the
identity
of
the
land
in
question
has
not
been
established.
Again,
we
disagree.
Evidence
of
record,
both
oral
and
documentary,
unequivocally
show
that
the
said
portion
of
land
can
be
identified
and
segregated,
and
has
been
in
fact
identified
and
segregated
(Exh.
B-1),
from
the
entire
lot
covered
by
TCT
No.
T-4208
(Exh-
A)
issued
in
the
names
of
plaintiffs-petitioners.
The
boundaries
of
the
same
have
been
clearly
indicated
as
that
planted
by
madre
cacao
trees.
Even
the
surveyor
hired
by
plaintiffs-petitioners
was
able
to
fix
the
said
boundaries
in
such
a
manner
as
to
definitely
and
accurately
segregate
the
premises
from
the
adjoining
property.
How
could
plaintiffs-petitioners
now
argue
that
the
land
has
not
been
identified
when
the
Supreme
Court
itself
says
that
what
really
defines
a
piece
of
land
is
not
the
area
mentioned
in
the
description
but
the
boundaries
(Sanchez
v.
Director
of
Lands,
63
Phil.
378;
Buizer
v.
Cabrera,
etc.,
81
Phil.
669;
Bayot
v.
Director
of
Lands,
98
Phil.
935)?
Besides,
the
area
has
been
also
established
as
one-half
hectare.
Another
collateral
question
raised
by
plaintiffs-petitioners
is
the
admission
by
the
courts
a
quo
of
secondary
evidence
to
establish
the
contents
of
the
first
unregistered
deed
of
sale
executed
by
Anselmo
Lacatan
in
favor
of
Apolonio
Lacatan
when
the
loss
or
destruction
of
the
original
document,
according
to
them,
has
not
been
established.
Again,
the
findings
of
the
Court
of
Appeals
destroy
this
assertion
of
petitioners
(Dec.,
p.
5):
Undeniably
the
alleged
unregistered
document
could
no
longer
be
examined
by
the
parties
in
court,
because
it
was
lost
but
its
original,
however,
upon,
the
trial
court's
findings
which
we
have
no
reason
to
question
has
been
sufficiently
proved
as
having
existed.
As
observed
by
this
Supreme
Court,
"the
destruction
of
the
instrument
may
be
proved
by
any
person
knowing
the
fact.
The
loss
may
be
shown
by
any
person
who
knew
the
fact
of
its
loss,
or
by
any
one
who
has
made,
in
the
judgment
of
the
court,
a
sufficient
examination
of
the
place
or
places
where
the
document
or
papers
of
similar
character
are
kept
by
the
person
in
whose
custody
the
document
lost
was,
and
has
been
unable
to
find
it;
or
has
made
any
other
investigation
which
is
sufficient
to
satisfy
the
court
that
the
instrument
is
indeed
lost."
(Michael
&
Co.
v.
Enriquez,
33
Phil.
87).
And
"it
is
not
even
necessary
to
prove
its
loss
beyond
all
possibility
of
mistake.
A
reasonable
probability
of
its
loss
is
sufficient,
and
this
may
be
shown
by
a
bona
fide
and
diligent
search,
fruitlessly
made,
for
it
in
places
where
it
is
likely
to
be
found."
(Government
of
P.I.
v.
Martinez,
44
Phil.
817).
And
after
proving
the
due
execution
and
delivery
of
the
document,
together
with
the
fact
that
the
same
has
been
lost
or
destroyed,
its
contents
may
be
proved,
among
others,
by
the
recollection
of
witnesses
(Vaguillas
v.
Jaucian,
25
Phil.
315).
Finding
that
the
facts
and
the
law
support
the
same,
it
is
our
opinion,
and
so
hold,
that
the
appealed
decision
should
be,
as
it
is
hereby
affirmed.
Costs
against
petitioners
spouses
Paylago
and
Dimaandal.
G.R.
No.
L-19248
February
28,
1963
ILUMINADO
HANOPOL,
plaintiff-appellant,
vs.
PERFECTO
PILAPIL,
defendant-appellee.
BARRERA,
J.:
This
is
a
case
of
double
sale
of
the
same
parcel
of
unregistered
land
decided
by
the
Court
of
First
Instance
of
Leyte
(Civil
Case
No.
21)
in
favor
of
defendant-appellee
Perfecto
Pilapil,
originally
appealed
by
plaintiff-appellant
Iluminado
Hanopol
to
the
Court
of
Appeals,
but
later
certified
to
this
Court
for
proper
adjudication,
the
issues
involved
being
exclusively
of
law.
Appellant
Hanopol
claims
ownership
of
the
land
by
virtue
of
a
series
of
purchases
effected
in
1938
by
means
of
private
instruments,
executed
by
the
former
owners
Teodora,
Lucia,
Generosa,
Sinforosa
and
Isabelo,
all
surnamed
Siapo.
Additionally,
he
invokes
in
his
favor
a
decision
rendered
by
the
Court
of
First
Instance
of
Leyte
(in
Civil
Case
No.
412)
on
a
complaint
he
filed
on
June
16,
1948,
against
the
same
vendors,
who,
according
to
his
own
averments,
took
possession
of
the
said
property
in
December,
1945
through
fraud,
threat
and
intimidation,
pretending
falsely
to
be
the
owners
thereof
and
ejecting
the
tenants
of
Hanopol
thereon,
and
since
then
had
continued
to
possess
the
land.
Decision
declaring
him
the
exclusive
owner
of
the
land
in
question
and
ordering
therein
defendants
to
deliver
possession
thereof
was
rendered
on
September
21,
1958.
On
the
other
hand,
appellee
Pilapil
asserts
title
to
the
property
on
the
strength
of
a
duly
notarized
deed
of
sale
executed
in
his
favor
by
the
same
owners
on
December
3,
1945,
which
deed
of
sale
was
registered
in
the
Registry
of
Deeds
of
Leyte
on
August
20,
1948
under
the
provisions
of
Act
No.
3344.
Wherefore,
the
parties
respectfully
pray
that
the
foregoing
stipulation
of
facts
be
admitted
and
approved
by
this
Honorable
Court,
without
prejudice
to
the
parties
adducing
other
evidence
to
prove
their
case
not
covered
by
this
stipulation
of
facts.
1wph1.t
The
case
was
submitted
for
decision
without
any
testimonial
evidence,
both
parties
relying
exclusively
on
their
documentary
evidence
consisting,
on
the
part
of
Hanopol,
of
the
private
instruments
alluded
to
and
a
copy
of
the
decision
in
the
reivindicatory
case,
and
on
the
part
of
Pilapil,
the
notarized
deed
of
sale
in
his
favor
bearing
annotation
of
its
registration
under
Act
No.
3344.
As
thus
submitted,
the
trial
court
rendered
the
decision
adverted
to
at
the
beginning
of
this
opinion,
mainly
upon
the
authority
of
the
second
paragraph
of
Article
15441
of
the
New
Civil
Code,
which
is
a
reproduction
of
Article
1473
of
the
old
Civil
Code,
the
law
in
force
at
the
time
the
transaction
in
this
case
took
place.
Appellant
Hanopol
in
his
appeal
from
the
decision
of
the
trial
court
presents
two
questions
of
law;
firstly,
whether
or
not
the
judgment
in
the
former
case
No.
412
against
the
vendors
Siapos
is
binding
upon
the
defendant-appellee
as
their
successor-in-interest;
and
secondly,
whether
or
not
the
registration
of
the
second
deed
of
sale
in
favor
of
appellee
Pilapil
affects
his
right
as
the
first
vendee.
Under
the
first
assignment
of
error,
the
appellant
contends
that
inasmuch
as
appellee
claims
to
be
the
successor-in-
interest
of
the
vendors,
he
is
bound
by
the
judgment
rendered
against
the
latter.
This
contention
is
without
merit,
because
it
appears
from
the
documentary
evidence
that
appellee
Pilapil
derived
his
right
to
the
land
from
the
sale
to
him
of
the
said
property
on
December
3,
1945,
long
before
the
filing
of
the
complaint
against
the
vendors
in
1948.
He
was
not
made
a
party
in
the
case
against
the
Siapos,
and
there
was
not
even
a
claim
that
he
had
knowledge
of
said
litigation.
He
cannot,
therefore,
be
bound
by
such
judgment
in
view
of
the
provision
of
paragraph
(b),
Section
44
of
Rule
39
of
the
Rules
of
Court
which
speaks
of
the
effect
of
judgment
as
follows:
...
the
judgment
so
ordered
is,
in
respect
to
the
matter
directly
adjudged,
conclusive
between
the
parties
and
their
successors
in
interest
by
title
subsequent
to
commencement
of
the
action
or
special
proceeding,
litigating
for
the
same
thing
and
under
the
same
title
and
in
the
same
capacity.
(Emphasis
supplied)
Since
Pilapil
was
not
a
party
to
the
action
and
is
not
a
successor-in-interest
by
title
subsequent
to
the
commencement
of
the
action,
having
acquired
his
title
in
1945
and
the
action
filed
in
1948,
the
decision
in
said
case
cannot
be
binding
on
him.
Appellant
argues
under
the
second
issue
raised
by
him
that
the
registration
of
Pilapil's
notarized
deed
of
sale
in
1948
under
Act
No.
3344
"shall
be
understood
to
be
without
prejudice
to
a
third
party
with
a
better
right".
He
contends
that
since
at
the
time
the
Siapos
sold
the
land
in
question
in
1945
to
Pilapil,
the
former
were
no
longer
the
owners
as
they
had
already
sold
the
same
to
appellant
since
1938,
the
first
sale
to
him
is
a
better
right
which
cannot
be
prejudiced
by
the
registration
of
the
second
sale.
We
do
not
think
the
quoted
proviso
in
Act
No.
3344
justifies
appellant's
contention.
If
his
theory
is
correct,
then
the
second
paragraph
of
Article
1544
of
the
New
Civil
Code
(formerly
Article
1473
of
the
old
Code)
would
have
no
application
at
all
except
to
lands
or
real
estate
registered
under
the
Spanish
Mortgage
Law
or
the
Land
Registration
Act.
Such
a
theory
would
thus
limit
the
scope
of
that
codal
provision.
But
even
if
we
adopt
this
latter
view,
that
is,
that
Article
1544
(formerly
Article
1473)
only
applies
to
registered
land,
still
we
cannot
agree
with
the
appellant
that
by
the
mere
fact
of
his
having
a
previous
title
or
deed
of
sale,
he
has
acquired
thereby
what
is
referred
to
in
Act
No.
3344
as
the
"better
right"
that
would
be
unaffected
by
the
registration
of
a
second
deed
of
sale
under
the
same
law.
Under
such
theory,
there
would
never
be
a
case
of
double
sale
of
the
same
unregistered
property.
An
example
of
what
could
be
a
better
right
that
is
protected
against
the
inscription
of
a
subsequent
sale
is
given
in
the
case
of
Lichauco
v.
Berenguer
(39
Phil.
643).
The
facts
in
that
case
are
succinctly
stated
in
the
syllabus
thereof
as
follows:
....
In
1882
B
sold
to
S
a
piece
of
land.
After
the
sale
B
continued
in
the
possession
of
the
land
in
the
capacity
of
lessee
of
S
through
payment
of
rent,
and
continued
as
such
until
his
death
when
he
was
substituted
by
the
administrator
of
his
property.
In
1889
B
sold
again
the
same
piece
of
land
to
L
who
leased
it
to
B
himself
under
certain
conditions.
Both
sales
were
executed
in
a
public
instrument,
the
one
executed
in
favor
of
L
being
registered
only
in
1907.
Thus,
S
and
L
acquired
possession
of
the
land
through
the
same
vendor
upon
the
latter's
ceasing
to
be
the
owner
and
becoming
the
lessee
of
said
S
and
L,
respectively.
HELD:
(1)
That,
with
reference
to
the
time
prior
to
1907,
the
preference
should
be
in
favor
of
the
purchaser
who
first
took
possession
of
the
land,
because
this
possession,
according
to
the
law
in
force
prior
to
the
promulgation
of
the
Civil
Code,
constituted
the
consummation
of
the
contract,
and
also
because
afterwards
the
Civil
Code
expressly
establishes
that
possession
in
such
cases
transfers
the
ownership
of
the
thing
sold.
(2)
That,
when
a
person
buys
a
piece
of
land
and,
instead
of
taking
possession
of
it,
leases
it
to
the
vendor,
possession
by
the
latter
after
the
sale
is
possession
by
the
vendee,
and
such
possession,
in
case
of
a
double
sale,
determines
the
preference
in
favor
of
the
one
who
first
took
possession
of
it,
in
the
absence
of
inscription,
in
accordance
with
the
provision
of
article
1473
of
the
Civil
Code,
notwithstanding
the
material
and
personal
possession
by
the
second
vendee.
(Bautista
vs.
Sioson,
39
Phil.
Rep.,
615)
....
Because
L
had
to
receive
his
possession
from
B
who
was
a
mere
lessee
of
S
and
as
such
had
no
possession
to
give,
inasmuch
as
his
possession
was
not
for
himself
but
in
representation
of
S,
it
follows
that
L
never
possessed
the
land..
....
The
effect
which
the
law
gives
to
the
inscription
of
a
sale
against
the
efficacy
of
the
sale
which
was
not
registered
is
not
extended
to
other
titles
which
the
other
vendee
was
able
to
acquire
independently
as,
in
this
case,
the
title
by
prescription.
It
thus
appears
that
the
"better
right"
referred
to
in
Act
No.
3344
is
much
more
than
the
mere
prior
deed
of
sale
in
favor
of
the
first
vendee.
In
the
Lichauco
case
just
mentioned,
it
was
the
prescriptive
right
that
had
supervened.
Or,
as
also
suggested
in
that
case,
other
facts
and
circumstances
exist
which,
in
addition
to
his
deed
of
sale,
the
first
vendee
can
be
said
to
have
better
right
than
the
second
purchaser.
In
the
case
at
bar,
there
appears
to
be
no
clear
evidence
of
Hanopol's
possession
of
the
land
in
controversy.
In
fact,
in
his
complaint
against
the
vendors,
Hanopol
alleged
that
the
Siapos
took
possession
of
the
same
land
under
claim
of
ownership
in
1945
and
continued
and
were
in
such
possession
at
the
time
of
the
filing
of
the
complaint
against
them
in
1948.
Consequently,
since
the
Siapos
were
in
actual
occupancy
of
the
property
under
claim
of
ownership,
when
they
sold
the
said
land
to
appellee
Pilapil
on
December
3,
1945,
such
possession
was
transmitted
to
the
latter,
at
least
constructively,
with
the
execution
of
the
notarial
deed
of
sale,
if
not
actually
and
physically
as
claimed
by
Pilapil
in
his
answer
filed
in
the
present
case.
Thus,
even
on
this
score,
Hanopol
cannot
have
a
better
right
than
appellee
Pilapil
who,
according
to
the
trial
court,
"was
not
shown
to
be
a
purchaser
in
bad
faith".
WHEREFORE,
finding
no
error
in
the
decision
appealed
from,
the
same
is
hereby
affirmed,
with
costs
against
the
appellant.
So
ordered.
G.R.
No.
109410
August
28,
1996
CLARA
M.
BALATBAT,
petitioner,
vs.
COURT
OF
APPEALS
and
Spouses
JOSE
REPUYAN
and
AURORA
REPUYAN,
respondents.
TORRES,
JR.
,
J.:p
Petitioner
Clara
M.
Balatbat
instituted
this
petition
for
review
pursuant
to
Rule
45
of
the
Revised
Rules
of
Court
seeking
to
set
aside
the
decision
dated
August
12,
1992
of
the
respondent
Court
of
Appeals
in
CA-GR.
CV
No.
29994
entitled
"Alexandra
Balatbat
and
Clara
Balatbat,
plaintiffs-appellants
versus
Jose
Repuyan
and
Aurora
Repuyan,
defendants-
appellees",
the
dispositive
portion
of
which
reads:
1
WHEREFORE,
the
judgment
appealed
from
is
affirmed
with
the
modification
that
the
awards
of
P10,000.00
for
attorney's
fees
and
P5,000.00
as
costs
of
litigation
are
deleted.
SO
ORDERED.
The
records
show
the
following
factual
antecedents:
It
appears
that
on
June
15,
1977,
Aurelio
A.
Roque
filed
a
complaint
for
partition
docketed
as
Civil
Case
No.
109032
against
Corazon
Roque,
Alberto
de
los
Santos,
Feliciano
Roque,
Severa
Roque
and
Osmundo
Roque
before
the
then
Court
of
First
Instance
of
Manila,
Branch
IX.
2
Defendants
therein
were
declared
in
default
and
plaintiff
presented
evidence
ex-parte.
On
March
29,
1979,
the
trial
court
rendered
a
decision
in
favor
of
plaintiff
Aurelio
A.
Roque,
the
pertinent
portion
of
which
reads:
3
From
the
evidence,
it
has
been
clearly
established
that
the
lot
in
question
covered
by
Transfer
Certificate
of
Title
No.
51330
was
acquired
by
plaintiff
Aurelio
Rogue
and
Maria
Mesina
during
their
conjugal
union
and
the
house
constructed
thereon
was
likewise
built
during
their
marital
union.
Out
of
their
union,
plaintiff
and
Maria
Mesina
had
four
children,
who
are
the
defendants
in
this
case.
When
Maria
Mesina
died
on
August
28,
1966,
the
only
conjugal
properties
left
are
the
house
and
lot
above
stated
of
which
plaintiff
herein,
as
the
legal
spouse,
is
entitled
to
one-half
share
pro-indiviso
thereof.
With
respect
to
the
one-half
share
pro-indiviso
now
forming
the
estate
of
Maria
Mesina,
plaintiff
and
the
four
children,
the
defendants
here,
are
each
entitled
to
one-fifth
(1/5)
share
pro-indiviso.
The
deceased
wife
left
no
debt.
Wherefore,
judgment
is
hereby
rendered
ordering
the
partition
of
the
properties,
subject
matter
of
this
case
consisting
of
the
house
and
lot,
in
the
following
manner:
1.
Of
the
house
and
lot
forming
the
conjugal
properties,
plaintiff
is
entitled
to
one-half
share
pro-indiviso
thereof
while
the
other
half
forms
the
estate
of
the
deceased
Maria
Mesina;
2.
Of
the
Estate
of
deceased
Maria
Mesina,
the
same
is
to
be
divided
into
five
(5)
shares
and
plaintiff
and
his
four
children
are
entitled
each
to
one-fifth
share
thereof
pro-indiviso.
Plaintiff
claim
for
moral,
exemplary
and
actual
damages
and
attorney's
fees
not
having
been
established
to
the
satisfaction
of
the
Court,
the
same
is
hereby
denied.
Without
pronouncement
as
to
costs.
SO
ORDERED
On
June
2,
1979,
the
decision
became
final
and
executory.
The
corresponding
entry
of
judgment
was
made
on
March
29,
1979.
4
On
October
5,
1979,
the
Register
of
Deeds
of
Manila
issued
a
Transfer
Certificate
of
Title
No.
135671
in
the
name
of
the
following
persons
in
the
following
proportions:
5
Aurelio
A.
Roque
6/10
share
Severina
M.
Roque
1/10
share
Osmundo
M.
Roque
1/10
share
Feliciano
M.
Roque
1/10
share
Corazon
M.
Roque
1/10
share
On
April
1,
1980,
Aurelio
A.
Rogue
sold
his
6/10
share
in
T.C.T.
No.
135671
to
spouses
Aurora
Tuazon-Repuyan
and
Jose
Repuyan
as
evidenced
by
."Deed
of
Absolute
Sale."
6
On
July
21,
1980,
Aurora
Tuazon
Repuyan
caused
the
annotation
of
her
affidavit
of
adverse
claim
7
on
the
Transfer
Certificate
of
Title
No.
135671,
8
to
wit:
Entry
No.
5627/T-135671
NOTICE
OF
ADVERSE
CLAIM
Filed
by
Aurora
Tuazon
Repuyan,
married,
claiming
among
others
that
she
bought
6/10
portion
of
the
property
herein
described
from
Aurelio
Roque
for
the
amount
of
P50,000.00
with
a
down
payment
of
P5,000.00
and
the
balance
of
P45,000.00
to
be
paid
after
the
partition
and
subdivision
of
the
property
herein
described,
other
claims
set
forth
in
Doc.
No.
954,
page
18,
Book
94
of
________________
64
_______
PEDRO
DE
CASTRO,
Notary
Public
of
Manila.
Date
of
instrument
July
21,
1980
Date
of
inscription
July
21,
1980
at
3:35
p.m.
TERESITA
H.
NOBLEJAS
Acting
Register
of
Deeds
By:
RAMON
D.
MACARICAN
Acting
Second
Deputy
On
August
20,
1980,
Aurelio
A.
Roque
filed
a
complaint
for
"Rescission
of
Contract"
docketed
as
Civil
Case
No.
134131
against
spouses
Aurora
Tuazon-Repuyan
and
Jose
Repuyan
before
Branch
IV
of
the
then
Court
of
First
Instance
of
Manila.
The
complaint
is
grounded
on
spouses
Repuyan's
failure
to
pay
the
balance
of
P45,000.00
of
the
purchase
price.
9
On
September
5,
1980,
spouses
Repuyan
filed
their
answer
with
counterclaim.
10
In
the
meantime,
the
trial
court
issued
an
order
in
Civil
Case
No.
109032
(Partition
case)
dated
February
2,
1982,
to
wit:
11
In
view
of
all
the
foregoing
and
finding
that
the
amount
of
P100,000.00
as
purchase
price
for
the
sale
of
the
parcel
of
land
covered
by
TCT
No.
51330
of
the
Registry
of
Deeds
of
Manila
consisting
of
84
square
meters
situated
in
Callejon
Sulu,
District
of
Santa
Cruz,
Manila,
to
be
reasonable
and
fair,
and
considering
the
opportunities
given
defendants
to
sign
the
deed
of
absolute
sale
voluntarily,
the
Court
has
no
alternative
but
to
order,
as
it
hereby
orders,
the
Deputy
Clerk
of
this
Court
to
sign
the
deed
of
absolute
sale
for
and
in
behalf
of
defendants
pursuant
to
Sec.
10,
Rule
39
of
the
Rules
of
Court,
in
order
to
effect
the
partition
of
the
property
involved
in
this
case.
SO
ORDERED.
A
deed
of
absolute
sale
was
executed
on
February
4,
1982
between
Aurelio
S.
Roque,
Corazon
Roque,
Feliciano
Roque,
Severa
Roque
and
Osmundo
Roque
and
Clara
Balatbat,
married
to
Alejandro
Balatbat.
12
On
April
14,
1982,
Clara
Balatbat
filed
a
motion
for
the
issuance
of
a
writ
of
possession
which
was
granted
by
the
trial
court
on
September
14,
1982
"subject,
however,
to
valid
rights
and
interest
of
third
persons
over
the
same
portion
thereof,
other
than
vendor
or
any
other
person
or
persons
privy
to
or
claiming
any
rights
or
interests
under
it."
The
corresponding
writ
of
possession
was
issued
on
September
20,
1982.
13
On
May
20,
1982,
petitioner
Clara
Balatbat
filed
a
motion
to
intervene
in
Civil
Case
No.
134131
14
which
was
granted
as
per
court's
resolution
of
October
21,
1982.
15
However,
Clara
Balatbat
failed
to
file
her
complaint
in
intervention.
16
On
April
15,
1986,
the
trial
court
rendered
a
decision
dismissing
the
complaint,
the
pertinent
portion
of
which
reads:
17
The
rescission
of
contracts
are
provided
for
in
the
laws
and
nowhere
in
the
provision
of
the
Civil
Code
under
the
title
Rescissible
Contracts
does
the
circumstances
in
the
case
at
bar
appear
to
have
occurred,
hence,
the
prayer
for
rescission
is
outside
the
ambit
for
which
rescissible
[sic]
could
be
granted.
The
Intervenor
Plaintiff,
Clara
Balatbat,
although
allowed
to
intervene,
did
not
file
her
complaint
in
intervention.
Consequently,
the
plaintiff
having
failed
to
prove
with
sufficient
preponderance
his
action,
the
relief
prayed
for
had
to
be
denied.
The
contract
of
sale
denominated
as
"Deed
of
Absolute
Sale"
(Exh.
7
and
sub-markings)
being
valid
and
enforceable,
the
same
pursuant
to
the
provisions
of
Art.
1159
of
the
Civil
Code
which
says:
Obligations
arising
from
contracts
have
the
force
of
law
between
the
contracting
parties
and
should
be
complied
with
in
good
faith.
has
the
effect
of
being
the
law
between
the
parties
and
should
be
complied
with.
The
obligation
of
the
plaintiff
under
the
contract
being
to
have
the
land
covered
by
TCT
No.
135671
partitioned
and
subdivided,
and
title
issued
in
the
name
of
the
defendant
buyer
(see
page
2
par.
C
of
Exh.
7-A)
plaintiff
had
to
comply
thereto
to
give
effect
to
the
contract.
WHEREFORE,
judgment
is
rendered
against
the
plaintiff,
Aurelio
A.
Roque,
and
the
plaintiff
in
intervention,
Clara
Balatbat,
and
in
favor
of
the
defendants,
dismissing
the
complaint
for
lack
of
merit,
and
declaring
the
Deed
of
Absolute
Sale
dated
April
1,
1980
as
valid
and
enforceable
and
the
plaintiff
is,
as
he
is
hereby
ordered,
to
partition
and
subdivide
the
land
covered
by
T.C.T.
No.
135671,
and
to
aggregate
therefrom
a
portion
equivalent
to
6/10
thereof,
and
cause
the
same
to
be
titled
in
the
name
of
the
defendants,
and
after
which,
the
defendants,
and
after
which,
the
defendants,
and
after
which,
the
defendants,
and
after
which,
the
defendants
to
pay
the
plaintiff
the
sum
of
P45,000.00.
Considering
further
that
the
defendants
suffered
damages
since
they
were
forced
to
litigate
unnecessarily,
by
way
of
their
counterclaim,
plaintiff
is
hereby
ordered
to
pay
defendants
the
sum
of
P15,000.00
as
moral
damages,
attorney's
fees
in
the
amount
of
P5,000.00.
Costs
against
plaintiff.
SO
ORDERED.
On
March
3,
1987,
petitioner
Balatbat
filed
a
notice
of
lis
pendens
in
Civil
Case
No.
109032
before
the
Register
of
Deeds
of
Manila.
18
On
December
9,
1988,
petitioner
Clara
Balatbat
and
her
husband,
Alejandro
Balatbat
filed
the
instant
complaint
for
delivery
of
the
owners
duplicate
copy
of
T.C.T.
No.
135671
docketed
as
Civil
Case
No.
88-47176
before
Branch
24
of
the
Regional
Trial
Court
of
Manila
against
private
respondents
Jose
Repuyan
and
Aurora
Repuyan.
19
On
January
27,
1989,
private
respondents
filed
their
answer
with
affirmative
defenses
and
compulsory
counterclaim.
20
On
November
13,
1989,
private
respondents
filed
their
memorandum
21
while
petitioners
filed
their
memorandum
on
November
23,
1989.
22
On
August
2,
1990,
the
Regional
Trial
Court
of
Manila,
Branch
24,
rendered
a
decision
dismissing
the
complaint,
the
dispositive
portion
of
which
reads
:
23
Considering
all
the
foregoing,
this
Court
finds
that
the
plaintiffs
have
not
been
able
to
establish
their
cause
of
action
against
the
defendants
and
have
no
right
to
the
reliefs
demanded
in
the
complaint
and
the
complaint
of
the
plaintiff
against
the
defendants
is
hereby
DISMISSED.
On
the
counterclaim,
the
plaintiff
are
ordered
to
pay
defendants
the
amount
of
Ten
Thousand
Pesos
by
way
of
attorney's
fees,
Five
Thousand
Pesos
as
costs
of
litigation
and
further
to
pay
the
costs
of
the
suit.
SO
ORDERED.
Dissatisfied,
petitioner
Balatbat
filed
an
appeal
before
the
respondent
Court
of
Appeals
which
rendered
the
assailed
decision
on
August
12,
1992,
to
wit:
24
WHEREFORE,
the
judgment
appealed
from
is
affirmed
with
the
modification
that
the
awards
of
P10,000.00
for
attorney's
fees
and
P5,000.00
as
costs
of
litigation
are
deleted.
SO
ORDERED.
On
March
22,
1993,
the
respondent
Court
of
Appeals
denied
petitioner's
motion
for
reconsideration.
25
Hence,
this
petition
for
review.
Petitioner
raised
the
following
issues
for
this
Court's
resolution:
I
WHETHER
OR
NOT
THE
ALLEGED
SALE
TO
THE
PRIVATE
RESPONDENTS
WAS
MERELY
EXECUTORY
AND
NOT
A
CONSUMMATED
TRANSACTION?
II
WHETHER
OR
NOT
THERE
WAS
A
DOUBLE
SALE
AS
CONTEMPLATED
UNDER
ART.
1544
OF
THE
CIVIL
CODE?
III
WHETHER
OR
NOT
PETITIONER
WAS
A
BUYER
IN
GOOD
FAITH
AND
FOR
VALUE?
IV
WHETHER
OR
NOT
THE
COURT
OF
APPEALS
ERRED
IN
GIVING
WEIGHT
AND
CONSIDERATION
TO
THE
EVIDENCE
OF
THE
PRIVATE
RESPONDENTS
WHICH
WERE
NOT
OFFERED?
Petitioner
asseverates
that
the
respondent
Court
of
Appeals
committed
grave
abuse
of
discretion
tantamount
to
lack
or
excess
of
jurisdiction
in
affirming
the
appealed
judgment
considering
(1)
that
the
alleged
sale
in
favor
of
the
private
respondents
Repuyan
was
merely
executory;
(2)
that
there
is
no
double
sale;
(3)
that
petitioner
is
a
buyer
in
good
faith
and
for
value;
and
(4)
that
private
respondents
did
not
offer
their
evidence
during
the
trial.
Contrary
to
petitioner's
contention
that
the
sale
dated
April
1,
1980
in
favor
of
private
respondents
Repuyan
was
merely
executory
for
the
reason
that
there
was
no
delivery
of
the
subject
property
and
that
consideration/price
was
not
fully
paid,
we
find
the
sale
as
consummated,
hence,
valid
and
enforceable.
In
a
decision
dated
April
15,
1986
of
the
Regional
Trial
Court
of
Manila
Branch
IV
in
Civil
Case
No.
134131,
the
Court
dismissed
vendor's
Aurelio
Roque
complaint
for
rescission
of
the
deed
of
sale
and
declared
that
the
Sale
dated
April
1,
1980,
as
valid
and
enforceable.
No
appeal
having
been
made,
the
decision
became
final
and
executory.
It
must
be
noted
that
herein
petitioner
Balatbat
filed
a
motion
for
intervention
in
that
case
but
did
not
file
her
complaint
in
intervention.
In
that
case
wherein
Aurelio
Roque
sought
to
rescind
the
April
1,
1980
deed
of
sale
in
favor
of
the
private
respondents
for
non-payment
of
the
P45,000.00
balance,
the
trial
court
dismissed
the
complaint
for
rescission.
Examining
the
terms
and
conditions
of
the
"Deed
of
Sale"
dated
April
1,
1980,
the
P45,000.00
balance
is
payable
only
"after
the
property
covered
by
T.C.T.
No.
135671
has
been
partitioned
and
subdivided,
and
title
issued
in
the
name
of
the
BUYER"
hence,
vendor
Roque
cannot
demand
payment
of
the
balance
unless
and
until
the
property
has
been
subdivided
and
titled
in
the
name
of
private
respondents.
Devoid
of
any
stipulation
that
"ownership
in
the
thing
shall
not
pass
to
the
purchaser
until
he
has
fully
paid
the
price"
26,
ownership
in
thing
shall
pass
from
the
vendor
to
the
vendee
upon
actual
or
constructive
delivery
of
the
thing
sold
even
if
the
purchase
price
has
not
yet
been
fully
paid.
The
failure
of
the
buyer
has
not
yet
been
fully
paid.
The
failure
of
the
buyer
to
make
good
the
price
does
not,
in
law,
cause
the
ownership
to
revest
to
the
seller
unless
the
bilateral
contract
of
sale
is
first
rescinded
or
resolved
pursuant
to
Article
1191
of
the
New
Civil
Code.
27
Non-payment
only
creates
a
right
to
demand
the
fulfillment
of
the
obligation
or
to
rescind
the
contract.
With
respect
to
the
non-delivery
of
the
possession
of
the
subject
property
to
the
private
respondent,
suffice
it
to
say
that
ownership
of
the
thing
sold
is
acquired
only
from
the
time
of
delivery
thereof,
either
actual
or
constructive.
28
Article
1498
of
the
Civil
Code
provides
that
when
the
sale
is
made
through
a
public
instrument,
the
execution
thereof
shall
be
equivalent
to
the
delivery
of
the
thing
which
is
the
object
of
the
contract,
if
from
the
deed
the
contrary
does
not
appear
or
cannot
be
inferred.
29
The
execution
of
the
public
instrument,
without
actual
delivery
of
the
thing,
transfers
the
ownership
from
the
vendor
to
the
vendee,
who
may
thereafter
exercise
the
rights
of
an
owner
over
the
same.
30
In
the
instant
case,
vendor
Roque
delivered
the
owner's
certificate
of
title
to
herein
private
respondent.
It
is
not
necessary
that
vendee
be
physically
present
at
every
square
inch
of
the
land
bought
by
him,
possession
of
the
public
instrument
of
the
land
is
sufficient
to
accord
him
the
rights
of
ownership.
Thus,
delivery
of
a
parcel
of
land
may
be
done
by
placing
the
vendee
in
control
and
possession
of
the
land
(real)
or
by
embodying
the
sale
in
a
public
instrument
(constructive).
The
provision
of
Article
1358
on
the
necessity
of
a
public
document
is
only
for
convenience,
not
for
validity
or
enforceability.
It
is
not
a
requirement
for
the
validity
of
a
contract
of
sale
of
a
parcel
of
land
that
this
be
embodied
in
a
public
instrument.
31
A
contract
of
sale
being
consensual,
it
is
perfected
by
the
mere
consent
of
the
parties.
32
Delivery
of
the
thing
bought
or
payment
of
the
price
is
not
necessary
for
the
perfection
of
the
contract;
and
failure
of
the
vendee
to
pay
the
price
after
the
execution
of
the
contract
does
not
make
the
sale
null
and
void
for
lack
of
consideration
but
results
at
most
in
default
on
the
part
of
the
vendee,
for
which
the
vendor
may
exercise
his
legal
remedies.
33
Article
1544
of
the
New
Civil
Code
provides:
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
movable
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
present
the
oldest
title,
provided
there
is
good
faith.
Article
1544
of
the
Civil
Code
provides
that
in
case
of
double
sale
of
an
immovable
property,
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.
34
In
the
case
at
bar,
vendor
Aurelio
Roque
sold
6/10
portion
of
his
share
in
TCT
No.
135671
to
private
respondents
Repuyan
on
April
1,
1980.
Subsequently,
the
same
lot
was
sold
again
by
vendor
Aurelio
Roque
(6/10)
and
his
children
(4/10),
represented
by
the
Clerk
of
Court
pursuant
to
Section
10,
Rule
39
of
the
Rules
of
Court,
on
February
4,
1982.
Undoubtedly,
this
is
a
case
of
double
sale
contemplated
under
Article
1544
of
the
New
Civil
Code.
This
is
an
instance
of
a
double
sale
of
an
immovable
property
hence,
the
ownership
shall
vests
in
the
person
acquiring
it
who
in
good
faith
first
recorded
it
in
the
Registry
of
Property.
Evidently,
private
respondents
Repuyan's
caused
the
annotation
of
an
adverse
claim
on
the
title
of
the
subject
property
denominated
as
Entry
No.
5627/T-135671
on
July
21,
1980.
35
The
annotation
of
the
adverse
claim
on
TCT
No.
135671
in
the
Registry
of
Property
is
sufficient
compliance
as
mandated
by
law
and
serves
notice
to
the
whole
world.
On
the
other
hand,
petitioner
filed
a
notice
of
lis
pendens
only
on
February
2,
1982.
Accordingly,
private
respondents
who
first
caused
the
annotation
of
the
adverse
claim
in
good
faith
shall
have
a
better
right
over
herein
petitioner.
Moreover,
the
physical
possession
of
herein
petitioners
by
virtue
of
a
writ
of
possession
issued
by
the
trial
court
on
September
20,
1982
is
"subject
to
the
valid
rights
and
interest
of
third
persons
over
the
same
portion
thereof,
other
than
vendor
or
any
other
person
or
persons
privy
to
or
claiming
any
rights
to
interest
under
it."
36
As
between
two
purchasers,
the
one
who
has
registered
the
sale
in
his
favor,
has
a
preferred
right
over
the
other
who
has
not
registered
his
title
even
if
the
latter
is
in
actual
possession
of
the
immovable
property.
37
Further,
even
in
default
of
the
first
registrant
or
first
in
possession,
private
respondents
have
presented
the
oldest
title.
38
Thus,
private
respondents
who
acquired
the
subject
property
in
good
faith
and
for
valuable
consideration
established
a
superior
right
as
against
the
petitioner.
Evidently,
petitioner
cannot
be
considered
as
a
buyer
in
good
faith.
In
the
complaint
for
rescission
filed
by
vendor
Aurelio
Roque
on
August
20,
1980,
herein
petitioner
filed
a
motion
for
intervention
on
May
20,
1982
but
did
not
file
her
complaint
in
intervention,
hence,
the
decision
was
rendered
adversely
against
her.
If
petitioner
did
investigate
before
buying
the
land
on
February
4,
1982,
she
should
have
known
that
there
was
a
pending
case
and
an
annotation
of
adverse
claim
was
made
in
the
title
of
the
property
before
the
Register
of
Deeds
and
she
could
have
discovered
that
the
subject
property
was
already
sold
to
the
private
respondents.
It
is
incumbent
upon
the
vendee
of
the
property
to
ask
for
the
delivery
of
the
owner's
duplicate
copy
of
the
title
from
the
vendor.
A
purchaser
of
a
valued
piece
of
property
cannot
just
close
his
eyes
to
facts
which
should
put
a
reasonable
man
upon
his
guard
and
then
claim
that
he
acted
in
good
faith
and
under
the
belief
that
there
were
no
defect
in
the
title
of
the
vendor.
39
One
who
purchases
real
estate
with
knowledge
of
a
defect
or
lack
of
title
in
his
vendor
cannot
claim
that
he
has
acquired
title
thereto
in
good
faith
as
against
the
true
owner
of
the
land
or
of
an
interest
therein;
and
the
same
rule
must
be
applied
to
one
who
has
knowledge
of
facts
which
should
have
put
him
upon
such
inquiry
and
investigation
as
might
be
necessary
to
acquaint
him
with
the
defects
in
the
title
of
his
vendor.
Good
faith,
or
the
want
of
it
is
not
a
visible,
tangible
fact
that
can
be
seen
or
touched,
but
rather
a
state
or
condition
of
mind
which
can
only
be
judged
of
by
actual
or
fancied
tokens
or
signs.
40
In
fine,
petitioner
had
nobody
to
blame
but
herself
in
dealing
with
the
disputed
property
for
failure
to
inquire
or
discover
a
flaw
in
the
title
to
the
property,
thus,
it
is
axiomatic
that
culpa
lata
dolo
aequiparatur
gross
negligence
is
equivalent
to
intentional
wrong.
IN
VIEW
OF
THE
FOREGOING
PREMISES,
this
petition
for
review
is
hereby
DISMISSED
for
lack
of
merit.
No
pronouncement
as
to
costs.
G.R.
No.
L-28740
February
24,
1981
FERMIN
Z.
CARAM,
JR.,
petitioner,
vs.
CLARO
L.
LAURETA,
respondent.
FERNANDEZ,
J.:
This
is
a
petition
for
certiorari
to
review
the
decision
of
the
Court
of
Appeals
promulgated
on
January
29,
1968
in
CA-G.
R.
NO.
35721-R
entitled
"Claro
L.
Laureta,
plaintiff-appellee
versus
Marcos
Mata,
Codidi
Mata
and
Fermin
Caram,
Jr.,
defendants-
appellants;
Tampino
(Mansaca),
et
al.
Intervenors-appellants,"
affirming
the
decision
of
the
Court
of
First
Instance
of
Davao
in
Civil
Case
No.
3083.
1
On
June
25,
1959,
Claro
L.
Laureta
filed
in
the
Court
of
First
Instance
of
Davao
an
action
for
nullity,
recovery
of
ownership
and/or
reconveyance
with
damages
and
attorney's
fees
against
Marcos
Mata,
Codidi
Mata,
Fermin
Z.
Caram,
Jr.
and
the
Register
of
Deeds
of
Davao
City.
2
On
June
10,
1945,
Marcos
Mata
conveyed
a
large
tract
of
agricultural
land
covered
by
Original
Certificate
of
Title
No.
3019
in
favor
of
Claro
Laureta,
plaintiff,
the
respondent
herein.
The
deed
of
absolute
sale
in
favor
of
the
plaintiff
was
not
registered
because
it
was
not
acknowledged
before
a
notary
public
or
any
other
authorized
officer.
At
the
time
the
sale
was
executed,
there
was
no
authorized
officer
before
whom
the
sale
could
be
acknowledged
inasmuch
as
the
civil
government
in
Tagum,
Davao
was
not
as
yet
organized.
However,
the
defendant
Marcos
Mata
delivered
to
Laureta
the
peaceful
and
lawful
possession
of
the
premises
of
the
land
together
with
the
pertinent
papers
thereof
such
as
the
Owner's
Duplicate
Original
Certificate
of
Title
No.
3019,
sketch
plan,
tax
declaration,
tax
receipts
and
other
papers
related
thereto.
3
Since
June
10,
1945,
the
plaintiff
Laureta
had
been
and
is
stin
in
continuous,
adverse
and
notorious
occupation
of
said
land,
without
being
molested,
disturbed
or
stopped
by
any
of
the
defendants
or
their
representatives.
In
fact,
Laureta
had
been
paying
realty
taxes
due
thereon
and
had
introduced
improvements
worth
not
less
than
P20,000.00
at
the
time
of
the
filing
of
the
complaint.
4
On
May
5,
1947,
the
same
land
covered
by
Original
Certificate
of
Title
No.
3019
was
sold
by
Marcos
Mata
to
defendant
Fermin
Z.
Caram,
Jr.,
petitioner
herein.
The
deed
of
sale
in
favor
of
Caram
was
acknowledged
before
Atty.
Abelardo
Aportadera.
On
May
22,
1947,
Marcos
Mata,
through
Attys.
Abelardo
Aportadera
and
Gumercindo
Arcilla,
filed
with
the
Court
of
First
Instance
of
Davao
a
petition
for
the
issuance
of
a
new
Owner's
Duplicate
of
Original
Certificate
of
Title
No.
3019,
alleging
as
ground
therefor
the
loss
of
said
title
in
the
evacuation
place
of
defendant
Marcos
Mata
in
Magugpo,
Tagum,
Davao.
On
June
5,
1947,
the
Court
of
First
Instance
of
Davao
issued
an
order
directing
the
Register
of
Deeds
of
Davao
to
issue
a
new
Owner's
Duplicate
Certificate
of
Title
No.
3019
in
favor
of
Marcos
Mata
and
declaring
the
lost
title
as
null
and
void.
On
December
9,
1947,
the
second
sale
between
Marcos
Mata
and
Fermin
Caram,
Jr.
was
registered
with
the
Register
of
Deeds.
On
the
same
date,
Transfer
Certificate
of
Title
No.
140
was
issued
in
favor
of
Fermin
Caram
Jr.
5
On
August
29,
1959,
the
defendants
Marcos
Mata
and
Codidi
Mata
filed
their
answer
with
counterclaim
admitting
the
existence
of
a
private
absolute
deed
of
sale
of
his
only
property
in
favor
of
Claro
L.
Laureta
but
alleging
that
he
signed
the
same
as
he
was
subjected
to
duress,
threat
and
intimidation
for
the
plaintiff
was
the
commanding
officer
of
the
10th
division
USFIP
operating
in
the
unoccupied
areas
of
Northern
Davao
with
its
headquarters
at
Project
No.
7
(Km.
60,
Davao
Agusan
Highways),
in
the
Municipality
of
Tagum,
Province
of
Davao;
that
Laureta's
words
and
requests
were
laws;
that
although
the
defendant
Mata
did
not
like
to
sell
his
property
or
sign
the
document
without
even
understanding
the
same,
he
was
ordered
to
accept
P650.00
Mindanao
Emergency
notes;
and
that
due
to
his
fear
of
harm
or
danger
that
will
happen
to
him
or
to
his
family,
if
he
refused
he
had
no
other
alternative
but
to
sign
the
document.
6
The
defendants
Marcos
Mata
and
Codidi
Mata
also
admit
the
existence
of
a
record
in
the
Registry
of
Deeds
regarding
a
document
allegedly
signed
by
him
in
favor
of
his
co-defendant
Fermin
Caram,
Jr.
but
denies
that
he
ever
signed
the
document
for
he
knew
before
hand
that
he
had
signed
a
deed
of
sale
in
favor
of
the
plaintiff
and
that
the
plaintiff
was
in
possession
of
the
certificate
of
title;
that
if
ever
his
thumb
mark
appeared
in
the
document
purportedly
alienating
the
property
to
Fermin
Caram,
did
his
consent
was
obtained
through
fraud
and
misrepresentation
for
the
defendant
Mata
is
illiterate
and
ignorant
and
did
not
know
what
he
was
signing;
and
that
he
did
not
receive
a
consideration
for
the
said
sale.
7
The
defendant
Fermin
Caram
Jr.
filed
his
answer
on
October
23,
1959
alleging
that
he
has
no
knowledge
or
information
about
the
previous
encumbrances,
transactions,
and
alienations
in
favor
of
plaintiff
until
the
filing
of
the
complaints.
8
The
trial
court
rendered
a
decision
dated
February
29,
1964,
the
dispositive
portion
of
which
reads:
9
1.
Declaring
that
the
deed
of
sale,
Exhibit
A,
executed
by
Marcos
Mata
in
favor
of
Claro
L.
Laureta
stands
and
prevails
over
the
deed
of
sale,
Exhibit
F,
in
favor
of
Fermin
Caram,
Jr.;
2.
Declaring
as
null
and
void
the
deed
of
sale
Exhibit
F,
in
favor
of
Fermin
Caram,
Jr.;
3.
Directing
Marcos
Mata
to
acknowledge
the
deed
of
sale,
Exhibit
A,
in
favor
of
Claro
L.
Laureta;
4.
Directing
Claro
L.
Laureta
to
secure
the
approval
of
the
Secretary
of
Agriculture
and
Natural
Resources
on
the
deed,
Exhibit
A,
after
Marcos
Mata
shall
have
acknowledged
the
same
before
a
notary
public;
5.
Directing
Claro
L.
Laureta
to
surrender
to
the
Register
of
Deeds
for
the
City
and
Province
of
Davao
the
Owner's
Duplicate
of
Original
Certificate
of
Title
No.
3019
and
the
latter
to
cancel
the
same;
6.
Ordering
the
Register
of
Deeds
for
the
City
and
Province
of
Davao
to
cancel
Transfer
Certificate
of
Title
No.
T-
140
in
the
name
of
Fermin
Caram,
Jr.;
7.
Directing
the
Register
of
Deeds
for
the
City
and
Province
of
Davao
to
issue
a
title
in
favor
of
Claro
L.
Laureta,
Filipino,
resident
of
Quezon
City,
upon
presentation
of
the
deed
executed
by
Marcos
Mata
in
his
favor,
Exhibit
A,
duly
acknowledged
by
him
and
approved
by
the
Secretary
of
Agriculture
and
Natural
Resources,
and
8.
Dismissing
the
counterclaim
and
cross
claim
of
Marcos
Mata
and
Codidi
Mata,
the
counterclaim
of
Caram,
Jr.,
the
answer
in
intervention,
counterclaim
and
cross-claim
of
the
Mansacas.
The
Court
makes
no
pronouncement
as
to
costs.
SO
ORDERED.
The
defendants
appealed
from
the
judgment
to
the
Court
of
Appeals.
10
The
appeal
was
docketed
as
CA-G.R.
NO.
35721-
R.
The
Court
of
Appeals
promulgated
its
decision
on
January
29,
1968
affirming
the
judgment
of
the
trial
court.
In
his
brief,
the
petitioner
assigns
the
following
errors:
11
I
THE
RESPONDENT
COURT
OF
APPEALS
ERRED
IN
CONCLUDING
THAT
IRESPE
AND
APORTADERA
WERE
ATTORNEYS-IN-
FACT
OF
PETITIONER
CARAM
FOR
THE
PURPOSE
OF
BUYING
THE
PROPERTY
IN
QUESTION.
II
THE
RESPONDENT
COURT
OF
APPEALS
ERRED
IN
CONCLUDING
THAT
THE
EVIDENCE
ADDUCED
IN
THE
TRIAL
COURT
CONSTITUTE
LEGAL
EVIDENCE
OF
FRAUD
ON
THE
PART
OF
IRESPE
AND
APORTADERA
AT
TRIBUTABLE
TO
PETITIONER.
III
THE
RESPONDENT
COURT
OF
APPEALS
COMMITTED
GRAVE
ERROR
OF
LAW
IN
HOLDING
THAT
KNOWLEDGE
OF
IRESPE
AND
APORTADERA
OF
A
PRIOR
UNREGISTERED
SALE
OF
A
TITLED
PROPERTY
ATTRIBUTABLE
TO
PETITIONER
AND
EQUIVALENT
IN
LAW
OF
REGISTRATION
OF
SAID
SALE.
IV
THE
RESPONDENT
COURT
OF
APPEALS
ERRED
IN
NOT
HOLDING
THAT
AN
ACTION
FOR
RECONVEYANCE
ON
THE
GROUND
OF
FRAUD
PRESCRIBES
WITHIN
FOUR
(4)
YEARS.
The
petitioner
assails
the
finding
of
the
trial
court
that
the
second
sale
of
the
property
was
made
through
his
representatives,
Pedro
Irespe
and
Atty.
Abelardo
Aportadera.
He
argues
that
Pedro
Irespe
was
acting
merely
as
a
broker
or
intermediary
with
the
specific
task
and
duty
to
pay
Marcos
Mata
the
sum
of
P1,000.00
for
the
latter's
property
and
to
see
to
it
that
the
requisite
deed
of
sale
covering
the
purchase
was
properly
executed
by
Marcos
Mata;
that
the
Identity
of
the
property
to
be
bought
and
the
price
of
the
purchase
had
already
been
agreed
upon
by
the
parties;
and
that
the
other
alleged
representative,
Atty.
Aportadera,
merely
acted
as
a
notary
public
in
the
execution
of
the
deed
of
sale.
The
contention
of
the
petitioner
has
no
merit.
The
facts
of
record
show
that
Mata,
the
vendor,
and
Caram,
the
second
vendee
had
never
met.
During
the
trial,
Marcos
Mata
testified
that
he
knows
Atty.
Aportadera
but
did
not
know
Caram.
12
Thus,
the
sale
of
the
property
could
have
only
been
through
Caram's
representatives,
Irespe
and
Aportadera.
The
petitioner,
in
his
answer,
admitted
that
Atty.
Aportadera
acted
as
his
notary
public
and
attorney-in-fact
at
the
same
time
in
the
purchase
of
the
property.
13
The
petitioner
contends
that
he
cannot
be
considered
to
have
acted
in
bad
faith
because
there
is
no
direct
proof
showing
that
Irespe
and
Aportadera,
his
alleged
agents,
had
knowledge
of
the
first
sale
to
Laureta.
This
contention
is
also
without
merit.
The
Court
of
Appeals,
in
affirming
the
decision
of
the
trial
court,
said:
14
The
trial
court,
in
holding
that
appellant
Caram.
Jr.
was
not
a
purchaser
in
good
faith,
at
the
time
he
bought
the
same
property
from
appellant
Mata,
on
May
5,
1947,
entirely
discredited
the
testimony
of
Aportadera.
Thus
it
stated
in
its
decision:
The
testimony
of
Atty.
Aportadera
quoted
elsewhere
in
this
decision
is
hollow.
There
is
every
reason
to
believe
that
Irespe
and
he
had
known
of
the
sale
of
the
property
in
question
to
Laureta
on
the
day
Mata
and
Irespe,
accompanied
by
Leaning
Mansaca,
went
to
the
office
of
Atty.
Aportadera
for
the
sale
of
the
same
property
to
Caram,
Jr.,
represented
by
Irespe
as
attorney-in-fact.
Ining
Mansaca
was
with
the
two
Irespe
and
Mata
to
engage
the
services
6f
Atty.
Aportadera
in
the
annulment
of
the
sale
of
his
land
to
Laureta.
When
Leaning
Mansaca
narrated
to
Atty.
Aportadera
the
circumstances
under
which
his
property
had
been
sold
to
Laureta,
he
must
have
included
in
the
narration
the
sale
of
the
land
of
Mata,
for
the
two
properties
had
been
sold
on
the
same
occassion
and
under
the
same
circumstances.
Even
as
early
as
immediately
after
liberation,
Irespe,
who
was
the
witness
in
most
of
the
cases
filed
by
Atty.
Aportadera
in
his
capacity
as
Provincial
Fiscal
of
Davao
against
Laureta,
must
have
known
of
the
purchases
of
lands
made
by
Laureta
when
he
was
regimental
commander,
one
of
which
was
the
sale
made
by
Mata.
It
was
not
a
mere
coincidence
that
Irespe
was
made
guardian
ad
litem
of
Leaning
Mansaca,
at
the
suggestion
of
Atty.
Aportadera
and
attorney-in-fact
of
Caram,
Jr.
The
Court
cannot
help
being
convinced
that
Irespe,
attorney-in-fact
of
Caram,
Jr.
had
knowledge
of
the
prior
existing
transaction,
Exhibit
A,
between
Mata
and
Laureta
over
the
land,
subject
matter
of
this
litigation,
when
the
deed,
Exhibit
F,
was
executed
by
Mata
in
favor
of
Caram,
Jr.
And
this
knowledge
has
the
effect
of
registration
as
to
Caram,
Jr.
RA
pp.
123-124)
We
agree
with
His
Honor's
conclusion
on
this
particular
point,
on
two
grounds
the
first,
the
same
concerns
matters
affecting
the
credibility
of
a
witness
of
which
the
findings
of
the
trial
court
command
great
weight,
and
second,
the
same
is
borne
out
by
the
testimony
of
Atty.
Aportadera
himself.
(t.s.n.,
pp.
187-190,
213-215,
Restauro).
Even
if
Irespe
and
Aportadera
did
not
have
actual
knowledge
of
the
first
sale,
still
their
actions
have
not
satisfied
the
requirement
of
good
faith.
Bad
faith
is
not
based
solely
on
the
fact
that
a
vendee
had
knowledge
of
the
defect
or
lack
of
title
of
his
vendor.
In
the
case
of
Leung
Yee
vs.
F.
L.
Strong
Machinery
Co.
and
Williamson,
this
Court
held:
15
One
who
purchases
real
estate
with
knowledge
of
a
defect
or
lack
of
title
in
his
vendor
can
not
claim
that
he
has
acquired
title
thereto
in
good
faith,
as
against
the
true
owner
of
the
land
or
of
an
interest
therein,
and
the
same
rule
must
be
applied
to
one
who
has
knowledge
of
facts
which
should
have
put
him
upon
such
inquiry
and
investigation
as
might
be
necessary
to
acquaint
him
with
the
defects
in
the
title
of
his
vendor.
In
the
instant
case,
Irespe
and
Aportadera
had
knowledge
of
circumstances
which
ought
to
have
put
them
an
inquiry.
Both
of
them
knew
that
Mata's
certificate
of
title
together
with
other
papers
pertaining
to
the
land
was
taken
by
soldiers
under
the
command
of
Col.
Claro
L.
Laureta.
16
Added
to
this
is
the
fact
that
at
the
time
of
the
second
sale
Laureta
was
already
in
possession
of
the
land.
Irespe
and
Aportadera
should
have
investigated
the
nature
of
Laureta's
possession.
If
they
failed
to
exercise
the
ordinary
care
expected
of
a
buyer
of
real
estate
they
must
suffer
the
consequences.
The
rule
of
caveat
emptor
requires
the
purchaser
to
be
aware
of
the
supposed
title
of
the
vendor
and
one
who
buys
without
checking
the
vendor's
title
takes
all
the
risks
and
losses
consequent
to
such
failure.
17
The
principle
that
a
person
dealing
with
the
owner
of
the
registered
land
is
not
bound
to
go
behind
the
certificate
and
inquire
into
transactions
the
existence
of
which
is
not
there
intimated
18
should
not
apply
in
this
case.
It
was
of
common
knowledge
that
at
the
time
the
soldiers
of
Laureta
took
the
documents
from
Mata,
the
civil
government
of
Tagum
was
not
yet
established
and
that
there
were
no
officials
to
ratify
contracts
of
sale
and
make
them
registerable.
Obviously,
Aportadera
and
Irespe
knew
that
even
if
Mata
previously
had
sold
t
he
Disputed
such
sale
could
not
have
been
registered.
There
is
no
doubt
then
that
Irespe
and
Aportadera,
acting
as
agents
of
Caram,
purchased
the
property
of
Mata
in
bad
faith.
Applying
the
principle
of
agency,
Caram
as
principal,
should
also
be
deemed
to
have
acted
in
bad
faith.
Article
1544
of
the
New
Civil
Code
provides
that:
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
recordered
it
in
the
Registry
of
Property.
Should
there
be
no
inscription,
the
ownership
shag
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.
(1473)
Since
Caram
was
a
registrant
in
bad
faith,
the
situation
is
as
if
there
was
no
registration
at
all.
19
The
question
to
be
determined
now
is,
who
was
first
in
possession
in
good
faith?
A
possessor
in
good
faith
is
one
who
is
not
aware
that
there
exists
in
his
title
or
mode
of
acquisition
any
flaw
which
invalidates
it.
20
Laureta
was
first
in
possession
of
the
property.
He
is
also
a
possessor
in
good
faith.
It
is
true
that
Mata
had
alleged
that
the
deed
of
sale
in
favor
of
Laureta
was
procured
by
force.
21
Such
defect,
however,
was
cured
when,
after
the
lapse
of
four
years
from
the
time
the
intimidation
ceased,
Marcos
Mata
lost
both
his
rights
to
file
an
action
for
annulment
or
to
set
up
nullity
of
the
contract
as
a
defense
in
an
action
to
enforce
the
same.
Anent
the
fourth
error
assigned,
the
petitioner
contends
that
the
second
deed
of
sale,
Exhibit
"F",
is
a
voidable
contract.
Being
a
voidable
contract,
the
action
for
annulment
of
the
same
on
the
ground
of
fraud
must
be
brought
within
four
(4)
years
from
the
discovery
of
the
fraud.
In
the
case
at
bar,
Laureta
is
deemed
to
have
discovered
that
the
land
in
question
has
been
sold
to
Caram
to
his
prejudice
on
December
9,
1947,
when
the
Deed
of
Sale,
Exhibit
"F"
was
recorded
and
entered
in
the
Original
Certificate
of
Title
by
the
Register
of
Deeds
and
a
new
Certificate
of
Title
No.
140
was
issued
in
the
name
of
Caram.
Therefore,
when
the
present
case
was
filed
on
June
29,
1959,
plaintiff's
cause
of
action
had
long
prescribed.
The
petitioner's
conclusion
that
the
second
deed
of
sale,
"Exhibit
F",
is
a
voidable
contract
is
not
correct.
I
n
order
that
fraud
can
be
a
ground
for
the
annulment
of
a
contract,
it
must
be
employed
prior
to
or
simultaneous
to
the,
consent
or
creation
of
the
contract.
The
fraud
or
dolo
causante
must
be
that
which
determines
or
is
the
essential
cause
of
the
contract.
Dolo
causante
as
a
ground
for
the
annulment
of
contract
is
specifically
described
in
Article
1338
of
the
New
Civil
Code
of
the
Philippines
as
"insidious
words
or
machinations
of
one
of
the
contracting
parties"
which
induced
the
other
to
enter
into
a
contract,
and
"without
them,
he
would
not
have
agreed
to".
The
second
deed
of
sale
in
favor
of
Caram
is
not
a
voidable
contract.
No
evidence
whatsoever
was
shown
that
through
insidious
words
or
machinations,
the
representatives
of
Caram,
Irespe
and
Aportadera
had
induced
Mata
to
enter
into
the
contract.
Since
the
second
deed
of
sale
is
not
a
voidable
contract,
Article
1391,
Civil
Code
of
the
Philippines
which
provides
that
the
action
for
annulment
shall
be
brought
within
four
(4)
years
from
the
time
of
the
discovery
of
fraud
does
not
apply.
Moreover,
Laureta
has
been
in
continuous
possession
of
the
land
since
he
bought
it
in
June
1945.
A
more
important
reason
why
Laureta's
action
could
not
have
prescribed
is
that
the
second
contract
of
sale,
having
been
registered
in
bad
faith,
is
null
and
void.
Article
1410
of
the
Civil
Code
of
the
Philippines
provides
that
any
action
or
defense
for
the
declaration
of
the
inexistence
of
a
contract
does
not
prescribe.
In
a
Memorandum
of
Authorities
22
submitted
to
this
Court
on
March
13,
1978,
the
petitioner
insists
that
the
action
of
Laureta
against
Caram
has
prescribed
because
the
second
contract
of
sale
is
not
void
under
Article
1409
23
of
the
Civil
Code
of
the
Philippines
which
enumerates
the
kinds
of
contracts
which
are
considered
void.
Moreover,
Article
1544
of
the
New
Civil
Code
of
the
Philippines
does
not
declare
void
a
second
sale
of
immovable
registered
in
bad
faith.
The
fact
that
the
second
contract
is
not
considered
void
under
Article
1409
and
that
Article
1544
does
not
declare
void
a
deed
of
sale
registered
in
bad
faith
does
not
mean
that
said
contract
is
not
void.
Article
1544
specifically
provides
who
shall
be
the
owner
in
case
of
a
double
sale
of
an
immovable
property.
To
give
full
effect
to
this
provision,
the
status
of
the
two
contracts
must
be
declared
valid
so
that
one
vendee
may
contract
must
be
declared
void
to
cut
off
all
rights
which
may
arise
from
said
contract.
Otherwise,
Article
1544
win
be
meaningless.
The
first
sale
in
favor
of
Laureta
prevails
over
the
sale
in
favor
of
Caram.
WHEREFORE,
the
petition
is
hereby
denied
and
the
decision
of
the
Court
of
Appeals
sought
to
be
reviewed
is
affirmed,
without
pronouncement
as
to
costs.
G.R.
No.
104482
January
22,
1996
BELINDA
TAEDO,
for
herself
and
in
representation
of
her
brothers
and
sisters,
and
TEOFILA
CORPUZ
TAEDO,
representing
her
minor
daughter
VERNA
TAEDO,
petitioners,
vs.
THE
COURT
OF
APPEALS,
SPOUSES
RICARDO
M.
TAEDO
AND
TERESITA
BARERA
TAEDO,
respondents.
PANGANIBAN,
J.:
Is
a
sale
of
future
inheritance
valid?
In
multiple
sales
of
the
same
real
property,
who
has
preference
in
ownership?
What
is
the
probative
value
of
the
lower
court's
finding
of
good
faith
in
registration
of
such
sales
in
the
registry
of
property?
These
are
the
main
questions
raised
in
this
Petition
for
review
on
certiorari
under
Rule
45
of
the
Rules
of
Court
to
set
aside
and
reverse
the
Decision1
of
the
Court
of
Appeals2
in
CA-G.R.
CV
NO.
24987
promulgated
on
September
26,
1991
affirming
the
decision
of
the
Regional
Trial
Court,
Branch
63,
Third
Judicial
Region,
Tarlac,
Tarlac
in
Civil
Case
No.
6328,
and
its
Resolution
denying
reconsideration
thereof,
promulgated
on
May
27,
1992.
By
the
Court's
Resolution
on
October
25,
1995,
this
case
(along
with
several
others)
was
transferred
from
the
First
to
the
Third
Division
and
after
due
deliberation,
the
Court
assigned
it
to
the
undersigned
ponente
for
the
writing
of
this
Decision.
The
Facts
On
October
20,
1962,
Lazardo
Taedo
executed
a
notarized
deed
of
absolute
sale
in
favor
of
his
eldest
brother,
Ricardo
Taedo,
and
the
latter's
wife,
Teresita
Barera,
private
respondents
herein,
whereby
he
conveyed
to
the
latter
in
consideration
of
P1,500.00,
"one
hectare
of
whatever
share
I
shall
have
over
Lot
No.
191
of
the
cadastral
survey
of
Gerona,
Province
of
Tarlac
and
covered
by
Title
T-13829
of
the
Register
of
Deeds
of
Tarlac",
the
said
property
being
his
"future
inheritance"
from
his
parents
(Exh.
1).
Upon
the
death
of
his
father
Matias,
Lazaro
executed
an
"Affidavit
of
Conformity"
dated
February
28,
1980
(Exh.
3)
to
"re-affirm,
respect,
acknowledge
and
validate
the
sale
I
made
in
1962."
On
January
13,
1981,
Lazaro
executed
another
notarized
deed
of
sale
in
favor
of
private
respondents
covering
his
"undivided
ONE
TWELVE
(1/12)
of
a
parcel
of
land
known
as
Lot
191
.
.
.
"
(Exh.
4).
He
acknowledged
therein
his
receipt
of
P10,000.00
as
consideration
therefor.
In
February
1981,
Ricardo
learned
that
Lazaro
sold
the
same
property
to
his
children,
petitioners
herein,
through
a
deed
of
sale
dated
December
29,
1980
(Exh.
E).
On
June
7,
1982,
private
respondents
recorded
the
Deed
of
Sale
(Exh.
4)
in
their
favor
in
the
Registry
of
Deeds
and
the
corresponding
entry
was
made
in
Transfer
Certificate
of
Title
No.
166451
(Exh.
5).
Petitioners
on
July
16,
1982
filed
a
complaint
for
rescission
(plus
damages)
of
the
deeds
of
sale
executed
by
Lazaro
in
favor
of
private
respondents
covering
the
property
inherited
by
Lazaro
from
his
father.
Petitioners
claimed
that
their
father,
Lazaro,
executed
an
"Absolute
Deed
of
Sale"
dated
December
29,
1980
(Exit.
E).
Conveying
to
his
ten
children
his
allotted
portion
tinder
the
extrajudicial
partition
executed
by
the
heirs
of
Matias,
which
deed
included
the
land
in
litigation
(Lot
191).
Petitioners
also
presented
in
evidence:
(1)
a
private
writing
purportedly
prepared
and
signed
by
Matias
dated
December
28,
1978,
stating
that
it
was
his
desire
that
whatever
inheritance
Lazaro
would
receive
from
him
should
be
given
to
his
(Lazaro's)
children
(Exh.
A);
(2)
a
typewritten
document
dated
March
10,
1979
signed
by
Lazaro
in
the
presence
of
two
witnesses,
wherein
he
confirmed
that
he
would
voluntarily
abide
by
the
wishes
of
his
father,
Matias,
to
give
to
his
(Lazaro's)
children
all
the
property
he
would
inherit
from
the
latter
(Exh.
B);
and
(3)
a
letter
dated
January
1,
1980
of
Lazaro
to
his
daughter,
Carmela,
stating
that
his
share
in
the
extrajudicial
settlement
of
the
estate
of
his
father
was
intended
for
his
children,
petitioners
herein
(Exh.
C).
Private
respondents,
however
presented
in
evidence
a
"Deed
of
Revocation
of
a
Deed
of
Sale"
dated
March
12,
1981
(Exh.
6),
wherein
Lazaro
revoked
the
sale
in
favor
of
petitioners
for
the
reason
that
it
was
"simulated
or
fictitious
without
any
consideration
whatsoever".
Shortly
after
the
case
a
quo
was
filed,
Lazaro
executed
a
sworn
statement
(Exh.
G)
which
virtually
repudiated
the
contents
of
the
Deed
of
Revocation
of
a
Deed
of
Sale
(Exh.
6)
and
the
Deed
of
Sale
(Exh.
4)
in
favor
of
private
respondents.
However,
Lazaro
testified
that
he
sold
the
property
to
Ricardo,
and
that
it
was
a
lawyer
who
induced
him
to
execute
a
deed
of
sale
in
favor
of
his
children
after
giving
him
five
pesos
(P5.00)
to
buy
a
"drink"
(TSN
September
18,
1985,
pp.
204-205).
The
trial
court
decided
in
favor
of
private
respondents,
holding
that
petitioners
failed
"to
adduce
a
proponderance
of
evidence
to
support
(their)
claim."
On
appeal,
the
Court
of
Appeals
affirmed
the
decision
of
the
trial
court,
ruling
that
the
Deed
of
Sale
dated
January
13,
1981
(Exh.
9)
was
valid
and
that
its
registration
in
good
faith
vested
title
in
said
respondents.
The
Issues
Petitioners
raised
the
following
"errors"
in
the
respondent
Court,
which
they
also
now
allege
in
the
instant
Petition:
I.
The
trial
court
erred
in
concluding
that
the
Contract
of
Sale
of
October
20,
1962
(Exhibit
7,
Answer)
is
merely
voidable
or
annulable
and
not
void
ab
initio
pursuant
to
paragraph
2
of
Article
1347
of
the
New
Civil
Code
involving
as
it
does
a
"future
inheritance".
II.
The
trial
court
erred
in
holding
that
defendants-appellees
acted
in
good
faith
in
registering
the
deed
of
sale
of
January
13,
1981
(Exhibit
9)
with
the
Register
of
Deeds
of
Tarlac
and
therefore
ownership
of
the
land
in
question
passed
on
to
defendants-appellees.
III.
The
trial
court
erred
in
ignoring
and
failing
to
consider
the
testimonial
and
documentary
evidence
of
plaintiffs-
appellants
which
clearly
established
by
preponderance
of
evidence
that
they
are
indeed
the
legitimate
and
lawful
owners
of
the
property
in
question.
IV.
The
decision
is
contrary
to
law
and
the
facts
of
the
case
and
the
conclusions
drawn
from
the
established
facts
are
illogical
and
off-tangent.
From
the
foregoing,
the
issues
may
be
restated
as
follows:
1.
Is
the
sale
of
a
future
inheritance
valid?
2.
Was
the
subsequent
execution
on
January
13,
1981
(and
registration
with
the
Registry
of
Property)
of
a
deed
of
sale
covering
the
same
property
to
the
same
buyers
valid?
3.
May
this
Court
review
the
findings
of
the
respondent
Court
(a)
holding
that
the
buyers
acted
in
good
faith
in
registering
the
said
subsequent
deed
of
sale
and
(b)
in
"failing
to
consider
petitioners'
evidence"?
Are
the
conclusions
of
the
respondent
Court
"illogical
and
off-tangent"?
owners
(p.
80).
Ricardo
Taedo
controverted
this
and
testified
that
he
learned
for
the
first
time
of
the
deed
of
sale
executed
by
Lazaro
in
favor
of
his
children
"about
a
month
or
sometime
in
February
1981"
(p.
111,
tsn,
Nov.
28,
1984).
.
.
.6
The
respondent
Court,
reviewing
the
trial
court's
findings,
refused
to
overturn
the
latter's
assessment
of
the
testimonial
evidence,
as
follows;
We
are
not
prepared
to
set
aside
the
finding
of
the
lower
court
upholding
Ricardo
Taedo's
testimony,
as
it
involves
a
matter
of
credibility
of
witnesses
which
the
trial
judge,
who
presided
at
the
hearing,
was
in
a
better
position
to
resolve.
(Court
of
Appeals'
Decision,
p.
6.)
In
this
connection,
we
note
the
tenacious
allegations
made
by
petitioners,
both
in
their
basic
petition
and
in
their
memorandum,
as
follows:
1.
The
respondent
Court
allegedly
ignored
the
claimed
fact
that
respondent
Ricardo
"by
fraud
and
deceit
and
with
foreknowledge"
that
the
property
in
question
had
already
been
sold
to
petitioners,
made
Lazaro
execute
the
deed
of
January
13,
1981;
2.
There
is
allegedly
adequate
evidence
to
show
that
only
1/2
of
the
purchase
price
of
P10,000.00
was
paid
at
the
time
of
the
execution
of
the
deed
of
sale,
contrary
to
the
written
acknowledgment,
thus
showing
bad
faith;
3.
There
is
allegedly
sufficient
evidence
showing
that
the
deed
of
revocation
of
the
sale
in
favor
of
petitioners
"was
tainted
with
fraud
or
deceit."
4.
There
is
allegedly
enough
evidence
to
show
that
private
respondents
"took
undue
advantage
over
the
weakness
and
unschooled
and
pitiful
situation
of
Lazaro
Taedo
.
.
."
and
that
respondent
Ricardo
Taedo
"exercised
moral
ascendancy
over
his
younger
brother
he
being
the
eldest
brother
and
who
reached
fourth
year
college
of
law
and
at
one
time
a
former
Vice-Governor
of
Tarlac,
while
his
younger
brother
only
attained
first
year
high
school
.
.
.
;
5.
The
respondent
Court
erred
in
not
giving
credence
to
petitioners'
evidence,
especially
Lazaro
Taedo's
Sinumpaang
Salaysay
dated
July
27,
1982
stating
that
Ricardo
Taedo
deceived
the
former
in
executing
the
deed
of
sale
in
favor
of
private
respondents.
To
be
sure,
there
are
indeed
many
conflicting
documents
and
testimonies
as
well
as
arguments
over
their
probative
value
and
significance.
Suffice
it
to
say,
however,
that
all
the
above
contentions
involve
questions
of
fact,
appreciation
of
evidence
and
credibility
of
witnesses,
which
are
not
proper
in
this
review.
It
is
well-settled
that
the
Supreme
Court
is
not
a
trier
of
facts.
In
petitions
for
review
under
Rule
45
of
the
Revised
Rules
of
Court,
only
questions
of
law
may
be
raised
and
passed
upon.
Absent
any
whimsical
or
capricious
exercise
of
judgment,
and
unless
the
lack
of
any
basis
for
the
conclusions
made
by
the
lower
courts
be
amply
demonstrated,
the
Supreme
Court
will
not
disturb
their
findings.
At
most,
it
appears
that
petitioners
have
shown
that
their
evidence
was
not
believed
by
both
the
trial
and
the
appellate
courts,
and
that
the
said
courts
tended
to
give
more
credence
to
the
evidence
presented
by
private
respondents.
But
this
in
itself
is
not
a
reason
for
setting
aside
such
findings.
We
are
far
from
convinced
that
both
courts
gravely
abused
their
respective
authorities
and
judicial
prerogatives.
As
held
in
the
recent
case
of
Chua
Tiong
Tay
vs.
Court
of
Appeals
and
Goldrock
Construction
and
Development
Corp.7
The
Court
has
consistently
held
that
the
factual
findings
of
the
trial
court,
as
well
as
the
Court
of
Appeals,
are
final
and
conclusive
and
may
not
be
reviewed
on
appeal.
Among
the
exceptional
circumstances
where
a
reassessment
of
facts
found
by
the
lower
courts
is
allowed
are
when
the
conclusion
is
a
finding
grounded
entirely
on
speculation,
surmises
or
conjectures;
when
the
inference
made
is
manifestly
absurd,
mistaken
or
impossible;
when
there
is
grave
abuse
of
discretion
in
the
appreciation
of
facts;
when
the
judgment
is
premised
on
a
misapprehension
of
facts;
when
the
findings
went
beyond
the
issues
of
the
case
and
the
same
are
contrary
to
the
admissions
of
both
appellant
and
appellee.
After
a
careful
study
of
the
case
at
bench,
we
find
none
of
the
above
grounds
present
to
justify
the
re-evaluation
of
the
findings
of
fact
made
by
the
courts
below.
In
the
same
vein,
the
ruling
in
the
recent
case
of
South
Sea
Surety
and
Insurance
Company,
Inc.
vs.
Hon.
Court
of
Appeals,
et
al.8
is
equally
applicable
to
the
present
case:
We
see
no
valid
reason
to
discard
the
factual
conclusions
of
the
appellate
court.
.
.
.
(I)t
is
not
the
function
of
this
Court
to
assess
and
evaluate
all
over
again
the
evidence,
testimonial
and
documentary,
adduced
by
the
parties,
particularly
where,
such
as
here,
the
findings
of
both
the
trial
court
and
the
appellate
court
on
the
matter
coincide.
(emphasis
supplied)
G.R.
No.
140889
May
9,
2002
DOROTEA
TANONGON,1
petitioner,
vs.
FELICIDAD
SAMSON,
CASINO
OSIN,
ALBERTO
BERBES
and
LUISITO
VENUS,
respondents.
PANGANIBAN,
J.:
The
Labor
Code
grants
the
National
Labor
Relations
Commission
(NLRC)
sufficient
authority
and
power
to
execute
final
judgments
and
awards.
Thus,
a
third-party
claim
of
ownership
on
a
levied
property
should
not
necessarily
prevent
execution,
particularly
where
--
as
in
the
present
case
--
the
surrounding
circumstances
point
to
a
fraudulent
claim.
In
fact,
the
disputed
contract
of
sale
here
is
not
merely
rescissible;
it
is
simulated
or
fictitious
and,
hence,
void
ab
initio.
The
Case
Before
us
is
a
Petition
for
Review
on
Certiorari
challenging
the
August
31,
1999
Decision2
and
the
November
19,
1999
Resolution3
of
the
Court
of
Appeals4
(CA)
in
CA-GR
No.
51128.
The
assailed
Decision
disposed
as
follows:
"WHEREFORE,
the
petition
is
GRANTED.
The
decision
dated
March
9,
1998
of
the
NLRC,
including
its
resolution
dated
March
31,
1998
and
May
18,
1998
are
hereby
REVERSED
and
SET
ASIDE.
No
pronouncement
as
to
costs."5
The
challenged
Resolution
denied
the
Motion
for
Reconsideration.
The
Facts
The
facts
of
this
case
are
summarized
by
the
CA
in
this
wise:
"Cayco
Marine
Service
["CAYCO"
hereafter]
is
engaged
in
the
business
of
hauling
oil.
It
is
owned
and
operated
by
Iluminada
Cayco
Olizon
(Olizon).
Both
are
[respondents
in
the
NLRC
case].
[Respondents]
Felicidad
Samson,
Casiano
A.
Osin,
Alberto
Belbes
and
Luisito
Venus
were
among
the
employees
of
[CAYCO
and/or
Olizon].
"On
March
9,
1994,
[respondents]
filed
a
complaint
against
[CAYCO
and
Olizon]
for
illegal
dismissal,
[underpayment]
of
wages,
non-payment
of
holiday
pay,
rest
day
pay
and
leave
pay.
The
labor
arbiter
dismissed
the
complaint
for
lack
of
merit.
On
appeal,
it
was
reversed
by
the
NLRC.
It
ruled:
'PREMISES
CONSIDERED,
the
appeal
is
hereby
GRANTED
and
the
decision
of
the
labor
arbiter
dated
17
April
1995
is
hereby
SET
ASIDE.
'Accordingly,
[CAYCO
and
Olizon
are]
directed
to
pay
the
complainants
the
following:
(a)
Separation
pay
equivalent
to
one
(1)
month
salary
for
every
year
of
service
computed
from
the
dates
of
hiring
of
complainants
Luisito
Venus,
Felicidad
Samson,
Alberto
Belbes
and
Casiano
Osin
on
the
various
dates
of
01
June
1989,
10
March
1962,
01
January
1982,
and
01
February
1980,
respectively,
up
to
the
date
of
this
Decision;
(b)
Backwages
from
the
dates
of
dismissal
of
complainants
Luisito
Venus,
Felicidad
Samson,
Alberto
Belbes
and
Casiano
Osin
on
23
June
1991,
31
March
1992,
20
September
1991
and
20
September
1991,
respectively,
up
to
the
date
of
this
Decision,
less
earnings
elsewhere;
(c)
Five
(5)
days
service
incentive
leave
pay
limited
to
the
three
(3)
years
back
from
the
filing
of
the
complaint.
SO
RESOLVED.'
"[CAYCO
and
Olizon]
sought
reconsideration
of
the
NLRC's
decision
but
it
proved
futile.
On
appeal
to
the
Supreme
Court,
via
a
petition
for
certiorari
under
Rule
65
of
the
Rules
of
Court,
the
Court
resolved
to
deny
the
petition
for
non-
compliance
with
par.
4,
Supreme
Court
Circular
1-88,
x
x
x
and
also
for
the
failure
of
[CAYCO
and
Olizon]
to
establish
grave
abuse
of
discretion
on
the
part
of
the
NLRC.
Accordingly,
the
decision
of
the
NLRC
became
final
and
executory
on
April
29,
1997.
"On
June
25,
1997,
the
NLRC
Research
and
Investigation
Unit
submitted
to
the
labor
arbiter
the
judgment
award
for
each
[respondent],
computed
as
follows:
1.
F.
Samson
-
P
401,931.41
2.
L.
Venus
-
P
259,912.80
3.
A.
Belbes
-
P
258,854.17
4.
C.
Osin
-
P
271,724.17
P1,192,422.55
"On
June
24,
a
writ
of
execution
was
issued
directing
the
NLRC
sheriff
to
collect
from
[CAYCO
and
Olizon]
the
aforementioned
amount.
"On
August
8,
1997,
after
the
notice
of
levy/sale
on
execution
of
personal
property
was
issued,
[CAYCO
and/or
Olizon's]
motor
tanker
was
[seized],
to
be
sold
at
public
auction
on
August
19,
1997.
"However,
on
August
15,
1997,
a
certain
Dorotea
Tanongon
(Tanongon),
x
x
x
[petitioner]
herein,
filed
a
third
party
claim
before
the
labor
arbiter,
alleging
that
she
was
the
owner
of
the
subject
motor
tanker,
having
acquired
the
same
from
Olizon
on
July
29,
1997,
for
and
in
consideration
of
P1,100,000.00.
"On
October
15,
1997,
the
labor
arbiter
issued
an
order
dismissing
the
third
party
claim
for
lack
of
merit.
Tanongon,
in
collaboration
with
Olizon,
appealed
to
the
NLRC.
In
a
decision
dated
March
9,
1998,
the
NLRC
reversed
that
of
the
labor
arbiter.
The
NLRC
ruled:
'WHEREFORE,
the
order
appealed
from
is
hereby
REVERSED.
Let
the
execution
of
the
third
party
claimant's
subject
property
be
lifted
and
its
sale
restrained.
SO
ORDERED.'"6
Ruling
of
the
Labor
Arbiter
In
his
October
15,
1997
Order,7
the
labor
arbiter
dismissed
petitioner's
third-party
claim,
because
the
Deed
of
Absolute
Sale
between
Olizon
and
Tanongon
had
been
executed
only
on
July
29,
1997,
after
the
NLRC
Decision
became
final
and
executory
on
April
29,
1997.
The
labor
arbiter
agreed
with
private
respondents
that
the
sale
had
been
entered
into
to
defraud
them
as
judgment
creditors
of
the
Cayco
Marine
Service
(CAYCO).
Hence,
he
directed
the
sheriff
to
proceed
with
the
execution
and
the
sale
of
the
subject
property.
Ruling
of
the
NLRC
Upon
appeal
by
petitioner,
the
NLRC
reversed
the
labor
arbiter
on
two
grounds.
First,
the
power
of
the
NLRC
sheriff
to
execute
judgments
extended
only
to
properties
unquestionably
belonging
to
the
judgment
debtor.
Here,
the
Certificate
of
Ownership
over
the
subject
vessel
was
in
petitioner's
name.
Hence,
the
vessel
was
not
unquestionably
the
property
of
CAYCO.
Second,
under
Article
1387
of
the
Civil
Code,
alienations
of
property
in
the
fraud
of
creditors
would
give
rise
only
to
rescissible
contracts.
Thus,
judicial
rescission
was
required
before
the
third-party
claim
could
be
disregarded.
Thus,
in
its
March
9,
1998
Decision,8
the
NLRC
lifted
the
Writ
of
Execution
previously
imposed
on
the
subject
vessel
and
restrained
its
sale.
Ruling
of
the
Court
of
Appeals
The
CA
ruled
that
a
judicial
rescission
was
not
necessary
to
determine
the
legitimacy
of
the
sale
between
Olizon
and
Tanongon.
It
opined
that
the
Deed
of
Sale
was
evidently
conceived
and
executed
for
the
purpose
of
placing
the
subject
motor
tanker
beyond
the
reach
of
the
Writ
of
Execution.
Based
on
the
circumstances
surrounding
the
sale
and
considering
Olizon's
financial
difficulties,
the
purported
transfer
of
ownership
was
dubious.
It
was
akin
to
a
simulated
or
fictitious
transfer,
in
which
no
independent
judicial
action
was
necessary
to
invalidate
the
sale.9
The
claim
of
petitioner
that
she
was
a
buyer
in
good
faith
was
debunked
by
the
CA
on
the
ground
that
purchasers
could
not
close
their
eyes
to
facts
that
should
put
reasonable
persons
on
guard.
The
records
show
that
the
sale
was
hastily
concluded;
the
tanker
and
the
necessary
documents
were
immediately
delivered
to
the
new
owner.
These
facts
confirmed
respondents'
suspicion
that
Olizon
had
intended
to
overcome
the
enforcement
of
the
Writ
of
Execution.
They
also
revealed
that
she
slowed
down,
if
not
stopped,
the
operation
of
her
business.
This
fact
should
have
moved
Tanongon
to
ascertain,
before
acquiring
the
property,
if
the
seller
had
no
unsettled
obligations.
The
power
of
the
NLRC
to
enforce
its
final
judgment,
order
or
award
under
Article
224
(a
&
b)
of
the
Labor
Code,
as
amended,
is
not
a
"knight
without
might."
Paragraph
b
of
the
same
provision
authorizes
the
NLRC
to
take
such
measures
under
extant
laws
as
may
be
necessary
to
ensure
compliance
with
its
decision.
Hence,
this
Petition.10
The
Issues
In
her
Memorandum,11
petitioner
raises
the
following
issues:
"(1)
Whether
or
not
Petitioner
Dorotea
M.
Tanongon
is
a
buyer
in
good
faith
and
for
value[;]
"(2)
Whether
or
not
the
Court
of
Appeals
acted
with
grave
abuse
of
discretion
amounting
to
lack
or
in
excess
of
jurisdiction
in
deciding
against
the
herein
petitioner
as
per
its
decision
dated
August
31,
1999[;
and]
"(3)
Whether
or
not
[p]etitioner
is
entitled
to
equal
protection
under
the
Constitution
and
the
law."12
This
Court's
Ruling
The
Petition
has
no
merit.
First
Issue:
Good
Faith
of
Petitioner
There
is
sufficient
basis
to
affirm
the
CA
finding
that
petitioner
was
a
buyer
in
bad
faith.
The
judgment
favoring
respondents
against
CAYCO
and
Olizon
(for
back
wages,
separation
pay
and
service
incentive
leave
pay)
was
rendered
on
July
18,
1996,
and
affirmed
by
the
Second
Division
of
this
Court
via
its
January
15,
1997
Resolution.
The
Writ
of
Execution
was
issued
by
the
labor
arbiter
on
July
24,
1997.
The
sale
of
the
levied
tanker,
however,
was
made
only
on
July
29,
1997.
Hence,
the
CA
correctly
ruled
that
the
act
of
Olizon
was
a
"cavalier
attempt
to
evade
payment
of
the
judgment
debt."
She
obviously
got
word
of
the
issuance
of
the
Writ
and
disposed
of
the
tanker
to
prevent
its
sale
on
execution.
Despite
knowledge
of
these
antecedents,
petitioner
bought
the
tanker
barely
ten
days
before
it
was
levied
upon
on
August
8,
1997.
It
is
not
only
the
proximity
in
time
that
supports
this
finding.
Under
Article
1387
of
the
Civil
Code,
alienations
by
onerous
title
are
presumed
to
be
fraudulent
when
done
by
persons
against
whom
some
judgment
has
been
rendered
or
some
writ
of
attachment
issued
in
any
instance.13
We
stress
that
in
the
present
case,
the
Writ
of
Attachment
has
been
issued,
the
levy
already
made
and,
as
will
later
be
discussed,
the
property
still
in
the
name
of
Olizon
and
CAYCO.
It
is
also
more
than
coincidental
that
the
purchase
price
for
the
tanker
was
P1,100,000.00,
while
Olizon's
judgment
debt
to
respondents
amounted
to
P1,192,422.55.
A
purchaser
in
good
faith
or
an
innocent
purchaser
for
value
is
one
who
buys
property
and
pays
a
full
and
fair
price
for
it
at
the
time
of
the
purchase
or
before
any
notice
of
some
other
person's
claim
on
or
interest
in
it.14
We
emphasize
that
one
cannot
close
one's
eyes
to
facts
that
should
put
a
reasonable
person
on
guard
and
still
claim
to
have
acted
in
good
faith.
Petitioner
should
have
inquired
whether
Olizon
had
other
unsettled
obligations
and
encumbrances
that
could
burden
the
subject
property.
Any
person
engaged
in
business
would
be
wary
of
buying
from
a
company
that
is
closing
shop,
because
it
may
be
dissipating
its
assets
to
defraud
its
creditors.
Equally
important,
factual
findings
of
the
CA
are
given
much
weight
when
supported
by
substantial
evidence.15
Petitioner
has
not
given
us
any
sufficient
or
cogent
reason
to
reverse
the
appellate
court.
Second
Issue:
Necessity
of
Judicial
Rescission
The
NLRC
ruled
that
the
subject
tanker
could
not
be
levied
upon
and
sold
on
execution
for
two
reasons:
(1)
the
sheriff
was
acting
outside
his
authority
when
he
levied
on
properties
that
were
not
unquestionably
owned
by
the
judgment
debtor;
and
(2)
the
sale
of
the
tanker
appeared
to
have
been
made
to
defraud
creditors
and,
therefore,
judicial
rescission
was
required.
The
CA
held,
in
overruling
the
NLRC,
that
the
Commission
possessed,
under
Article
224
(a
and
b),16
powers
necessary
to
implement
and
enforce
the
latter's
final
judgments,
decisions,
orders
and
awards.
The
appellate
court
ruled
further
that
the
disputed
contract
was
not
merely
rescissible;
it
was
simulated
or
fictitious
and,
thus,
void
ab
initio.
We
agree
with
the
Court
of
Appeals.
A
third-party
claim
on
a
levied
property
does
not
automatically
prevent
execution.
Under
Rule
39
of
the
Revised
Rules
of
Court,
execution
is
a
remedy
afforded
by
law
for
the
enforcement
of
a
judgment,
its
object
being
to
obtain
satisfaction
of
the
decision
on
which
the
writ
is
issued.17
In
executing
a
money
judgment
against
the
property
of
the
obligor,
the
sheriff
shall
levy
on
all
properties
belonging
to
the
judgment
debtor
as
is
amply
sufficient
to
satisfy
the
decision
and
the
costs;
and
shall
sell
the
same,
paying
to
the
judgment
creditor
as
much
of
the
proceeds
as
will
satisfy
the
amount
of
the
debt
and
costs.18
Sheriffs
who
levy
upon
properties
other
than
those
of
the
judgment
debtors
are
acting
beyond
the
limits
of
their
authority.19
When
a
third-party
claim
is
filed,
the
sheriff
is
not
bound
to
proceed
with
the
levy
of
the
property
unless
the
judgment
creditor
or
the
latter's
agent
posts
an
indemnity
bond
against
the
claim.20
Where
the
bond
is
filed,
the
remedy
of
the
third-party
claimant
is
to
file
an
independent
reivindicatory
action
against
the
judgment
creditor
or
the
purchaser
of
the
property
at
public
auction.21
The
NLRC
should
not
have
automatically
lifted
the
levy
and
restrained
execution,
just
because
a
third-party
claim
had
been
filed.
Further,
judicial
rescission
is
not
necessary
in
the
case
at
bar.
The
NLRC
lifted
the
levy
on
the
subject
property,
ruling
that
its
sheriff
could
execute
its
judgments
only
on
properties
"unquestionably
belonging
to
the
judgment
debtor."
It
observed
that
the
Certificate
of
Ownership
over
the
disputed
vessel
was
in
the
name
of
the
third-party
claimant,
herein
petitioner.
Petitioner's
claim
of
ownership
over
the
disputed
tanker
is
not
supported
by
the
evidence
on
record.
The
Maritime
Industry
Authority
(Marina)
administrator
wrote
the
parties
in
two
separate
letters,
which
said
that
the
registration
of
the
disputed
vessel
under
petitioner's
name
had
not
been
effected,
and
that
the
Certificates
of
Ownership
and
Vessel
Registry
covering
the
motor
tanker
M/T
Petron
7-C
had
not
been
released.
The
reasons
were
Marina's
receipt
of
the
Entry
of
Judgment
issued
by
the
Supreme
Court
on
April
29,
1997,
and
the
Notice
of
Levy/Sale
on
Execution
of
Personal
Property
covering
the
subject
vessel.22
Under
Article
573
of
the
Code
of
Commerce,
the
acquisition
of
a
vessel
must
appear
on
a
written
instrument,
which
shall
not
produce
any
effect
with
respect
to
third
persons
if
not
inscribed
in
the
Registry
of
Vessels.
Insofar
as
third
persons
like
herein
respondents
were
concerned,
the
ownership
of
the
disputed
vessel
remained
with
Olizon
and
CAYCO;
thus,
the
CA
correctly
held
that
the
NLRC
could
proceed
with
the
levy
and
the
sale
on
execution.
Third
Issue:
Equal
Protection
of
the
Law
Petitioner
protests
that
the
CA
gave
undue
importance
to
respondent
laborers
by
invoking
the
protection
of
labor
mandated
by
Article
II,
Section
18
of
the
1987
Constitution,
and
Articles
4
and
221
of
the
Labor
Code.
Claiming
violation
of
her
right
to
equal
protection
of
the
law,
she
argues
that
she
deserves
social
justice,
as
held
by
this
Court
in
Guido
v.
Rural
Progress
Administration23
and
Cabatan
v.
Court
of
Appeals24
which
ruled
that
capital,
too,
was
entitled
to
protection.
The
contention
of
petitioner
is
untenable.
She
cannot
be
given
the
mantle
granted
to
capital
or
management,
because
she
does
not
appear
to
be
connected
in
any
way
to
the
ownership
or
the
management
of
CAYCO
or
Olizon.
She
is
impleaded
here
merely
as
the
alleged
buyer
of
the
M/T
Petron
7-C.
If
this
contention
is
an
admission
that
she
is
a
dummy
for
CAYCO
or
Olizon,
then
the
charge
of
a
fictitious
sale
to
defraud
judgment
creditors
becomes
even
more
evident
and
credible.
WHEREFORE,
the
Petition
is
DENIED
and
the
assailed
Decision
AFFIRMED.
Costs
against
petitioner.
G.R.
No.
132161
January
17,
2005
CONSOLIDATED
RURAL
BANK
(CAGAYAN
VALLEY),
INC.,
petitioner,
vs.
THE
HONORABLE
COURT
OF
APPEALS
and
HEIRS
OF
TEODORO
DELA
CRUZ,
respondents.
TINGA,
J.:
Petitioner
Consolidated
Rural
Bank,
Inc.
of
Cagayan
Valley
filed
the
instant
Petition
for
Certiorari1
under
Rule
45
of
the
Revised
Rules
of
Court,
seeking
the
review
of
the
Decision2
of
the
Court
of
Appeals
Twelfth
Division
in
CA-G.R.
CV
No.
33662,
promulgated
on
27
May
1997,
which
reversed
the
judgment3
of
the
lower
court
in
favor
of
petitioner;
and
the
Resolution4
of
the
Court
of
Appeals,
promulgated
on
5
January
1998,
which
reiterated
its
Decision
insofar
as
respondents
Heirs
of
Teodoro
dela
Cruz
(the
Heirs)
are
concerned.
From
the
record,
the
following
are
the
established
facts:
Rizal,
Anselmo,
Gregorio,
Filomeno
and
Domingo,
all
surnamed
Madrid
(hereafter
the
Madrid
brothers),
were
the
registered
owners
of
Lot
No.
7036-A
of
plan
Psd-10188,
Cadastral
Survey
211,
situated
in
San
Mateo,
Isabela
per
Transfer
Certificate
of
Title
(TCT)
No.
T-8121
issued
by
the
Register
of
Deeds
of
Isabela
in
September
1956.5
On
23
and
24
October
1956,
Lot
No.
7036-A
was
subdivided
into
several
lots
under
subdivision
plan
Psd-
50390.
One
of
the
resulting
subdivision
lots
was
Lot
No.
7036-A-7
with
an
area
of
Five
Thousand
Nine
Hundred
Fifty-Eight
(5,958)
square
meters.6
On
15
August
1957,
Rizal
Madrid
sold
part
of
his
share
identified
as
Lot
No.
7036-A-7,
to
Aleja
Gamiao
(hereafter
Gamiao)
and
Felisa
Dayag
(hereafter,
Dayag)
by
virtue
of
a
Deed
of
Sale,7
to
which
his
brothers
Anselmo,
Gregorio,
Filomeno
and
Domingo
offered
no
objection
as
evidenced
by
their
Joint
Affidavit
dated
14
August
1957.8
The
deed
of
sale
was
not
registered
with
the
Office
of
the
Register
of
Deeds
of
Isabela.
However,
Gamiao
and
Dayag
declared
the
property
for
taxation
purposes
in
their
names
on
March
1964
under
Tax
Declaration
No.
7981.9
On
28
May
1964,
Gamiao
and
Dayag
sold
the
southern
half
of
Lot
No.
7036-A-7,
denominated
as
Lot
No.
7036-A-7-B,
to
Teodoro
dela
Cruz,10
and
the
northern
half,
identified
as
Lot
No.
7036-A-7-A,11
to
Restituto
Hernandez.12
Thereupon,
Teodoro
dela
Cruz
and
Restituto
Hernandez
took
possession
of
and
cultivated
the
portions
of
the
property
respectively
sold
to
them.13
Later,
on
28
December
1986,
Restituto
Hernandez
donated
the
northern
half
to
his
daughter,
Evangeline
Hernandez-del
Rosario.14
The
children
of
Teodoro
dela
Cruz
continued
possession
of
the
southern
half
after
their
fathers
death
on
7
June
1970.
In
a
Deed
of
Sale15
dated
15
June
1976,
the
Madrid
brothers
conveyed
all
their
rights
and
interests
over
Lot
No.
7036-A-
7
to
Pacifico
Marquez
(hereafter,
Marquez),
which
the
former
confirmed16
on
28
February
1983.17
The
deed
of
sale
was
registered
with
the
Office
of
the
Register
of
Deeds
of
Isabela
on
2
March
1982.18
Subsequently,
Marquez
subdivided
Lot
No.
7036-A-7
into
eight
(8)
lots,
namely:
Lot
Nos.
7036-A-7-A
to
7036-A-7-H,
for
which
TCT
Nos.
T-149375
to
T-149382
were
issued
to
him
on
29
March
1984.19
On
the
same
date,
Marquez
and
his
spouse,
Mercedita
Mariana,
mortgaged
Lots
Nos.
7036-A-7-A
to
7036-A-7-D
to
the
Consolidated
Rural
Bank,
Inc.
of
Cagayan
Valley
(hereafter,
CRB)
to
secure
a
loan
of
One
Hundred
Thousand
Pesos
(P100,000.00).20
These
deeds
of
real
estate
mortgage
were
registered
with
the
Office
of
the
Register
of
Deeds
on
2
April
1984.
On
6
February
1985,
Marquez
mortgaged
Lot
No.
7036-A-7-E
likewise
to
the
Rural
Bank
of
Cauayan
(RBC)
to
secure
a
loan
of
Ten
Thousand
Pesos
(P10,000.00).21
As
Marquez
defaulted
in
the
payment
of
his
loan,
CRB
caused
the
foreclosure
of
the
mortgages
in
its
favor
and
the
lots
were
sold
to
it
as
the
highest
bidder
on
25
April
1986.22
On
31
October
1985,
Marquez
sold
Lot
No.
7036-A-7-G
to
Romeo
Calixto
(Calixto).23
Claiming
to
be
null
and
void
the
issuance
of
TCT
Nos.
T-149375
to
T-149382;
the
foreclosure
sale
of
Lot
Nos.
7036-A-7-A
to
7036-A-7-D;
the
mortgage
to
RBC;
and
the
sale
to
Calixto,
the
Heirs-now
respondents
herein-represented
by
Edronel
dela
Cruz,
filed
a
case24
for
reconveyance
and
damages
the
southern
portion
of
Lot
No.
7036-A
(hereafter,
the
subject
property)
against
Marquez,
Calixto,
RBC
and
CRB
in
December
1986.
Evangeline
del
Rosario,
the
successor-in-interest
of
Restituto
Hernandez,
filed
with
leave
of
court
a
Complaint
in
Intervention25
wherein
she
claimed
the
northern
portion
of
Lot
No.
7036-A-7.
In
the
Answer
to
the
Amended
Complaint,26
Marquez,
as
defendant,
alleged
that
apart
from
being
the
first
registrant,
he
was
a
buyer
in
good
faith
and
for
value.
He
also
argued
that
the
sale
executed
by
Rizal
Madrid
to
Gamiao
and
Dayag
was
not
binding
upon
him,
it
being
unregistered.
For
his
part,
Calixto
manifested
that
he
had
no
interest
in
the
subject
property
as
he
ceased
to
be
the
owner
thereof,
the
same
having
been
reacquired
by
defendant
Marquez.27
CRB,
as
defendant,
and
co-defendant
RBC
insisted
that
they
were
mortgagees
in
good
faith
and
that
they
had
the
right
to
rely
on
the
titles
of
Marquez
which
were
free
from
any
lien
or
encumbrance.28
After
trial,
the
Regional
Trial
Court,
Branch
19
of
Cauayan,
Isabela
(hereafter,
RTC)
handed
down
a
decision
in
favor
of
the
defendants,
disposing
as
follows:
WHEREFORE,
in
view
of
the
foregoing
considerations,
judgment
is
hereby
rendered:
1.
Dismissing
the
amended
complaint
and
the
complaint
in
intervention;
2.
Declaring
Pacifico
V.
Marquez
the
lawful
owner
of
Lots
7036-A-7
now
Lots
7036-A-7-A
to
7036-A-7-H,
inclusive,
covered
by
TCT
Nos.
T-149375
to
T-149382,
inclusive;
3.
Declaring
the
mortgage
of
Lots
7036-A-7-A,
7036-A-7-B,
7036-A-7-C
and
7036-A-7-D
in
favor
of
the
defendant
Consolidated
Rural
Bank
(Cagayan
Valley)
and
of
Lot
7036-A-7-E
in
favor
of
defendant
Rural
Bank
of
Cauayan
by
Pacifico
V.
Marquez
valid;
4.
Dismissing
the
counterclaim
of
Pacifico
V.
Marquez;
and
5.
Declaring
the
Heirs
of
Teodoro
dela
Cruz
the
lawful
owners
of
the
lots
covered
by
TCT
Nos.
T-33119,
T-33220
and
T-
7583.
No
pronouncement
as
to
costs.
SO
ORDERED.29
In
support
of
its
decision,
the
RTC
made
the
following
findings:
With
respect
to
issues
numbers
1-3,
the
Court
therefore
holds
that
the
sale
of
Lot
7036-A-7
made
by
Rizal
Madrid
to
Aleja
Gamiao
and
Felisa
Dayag
and
the
subsequent
conveyances
to
the
plaintiffs
and
intervenors
are
all
valid
and
the
Madrid
brothers
are
bound
by
said
contracts
by
virtue
of
the
confirmation
made
by
them
on
August
14,
1957
(Exh.
B).
Are
the
defendants
Pacifico
V.
Marquez
and
Romeo
B.
Calixto
buyers
in
good
faith
and
for
value
of
Lot
7036-A-7?
It
must
be
borne
in
mind
that
good
faith
is
always
presumed
and
he
who
imputes
bad
faith
has
the
burden
of
proving
the
same
(Art.
527,
Civil
Code).
The
Court
has
carefully
scrutinized
the
evidence
presented
but
finds
nothing
to
show
that
Marquez
was
aware
of
the
plaintiffs
and
intervenors
claim
of
ownership
over
this
lot.
TCT
No.
T-8121
covering
said
property,
before
the
issuance
of
Marquez
title,
reveals
nothing
about
the
plaintiffs
and
intervenors
right
thereto
for
it
is
an
admitted
fact
that
the
conveyances
in
their
favor
are
not
registered.
The
Court
is
therefore
confronted
with
two
sales
over
the
same
property.
Article
1544
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
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.
x
x
x
"
(Underscoring
supplied).
From
the
foregoing
provisions
and
in
the
absence
of
proof
that
Marquez
has
actual
or
constructive
knowledge
of
plaintiffs
and
intervenors
claim,
the
Court
has
to
rule
that
as
the
vendee
who
first
registered
his
sale,
Marquez
ownership
over
Lot
7036-A-7
must
be
upheld.30
The
Heirs
interposed
an
appeal
with
the
Court
of
Appeals.
In
their
Appellants
Brief,31
they
ascribed
the
following
errors
to
the
RTC:
(1)
it
erred
in
finding
that
Marquez
was
a
buyer
in
good
faith;
(2)
it
erred
in
validating
the
mortgage
of
the
properties
to
RBC
and
CRB;
and
(3)
it
erred
in
not
reconveying
Lot
No.
7036-A-7-B
to
them.32
Intervenor
Evangeline
del
Rosario
filed
a
separate
appeal
with
the
Court
of
Appeals.
It
was,
however,
dismissed
in
a
Resolution
dated
20
September
1993
for
her
failure
to
pay
docket
fees.
Thus,
she
lost
her
standing
as
an
appellant.33
On
27
May
1997,
the
Court
of
Appeals
rendered
its
assailed
Decision34
reversing
the
RTCs
judgment.
The
dispositive
portion
reads:
WHEREFORE,
the
decision
appealed
from
is
hereby
REVERSED
and
SET
ASIDE.
Accordingly,
judgment
is
hereby
rendered
as
follows:
1.
Declaring
the
heirs
of
Teodoro
dela
Cruz
the
lawful
owners
of
the
southern
half
portion
and
Evangeline
Hernandez-del
Rosario
the
northern
half
portion
of
Lot
No.
7036-A-7,
now
covered
by
TCT
Nos.
T-149375
to
T-149382,
inclusive;
2.
Declaring
null
and
void
the
deed
of
sale
dated
June
15,
1976
between
Pacifico
V.
Marquez
and
the
Madrid
brothers
covering
said
Lot
7036-A-7;
3.
Declaring
null
and
void
the
mortgage
made
by
defendant
Pacifico
V.
Marquez
of
Lot
Nos.
7036-A-7-A,
7036-A-7-B,
7036-A-7-C
and
7036-A-7-D
in
favor
of
the
defendant
Consolidated
Rural
Bank
and
of
Lot
7036-A-7-E
in
favor
of
defendant
Rural
Bank
of
Cauayan;
and
4.
Ordering
Pacifico
V.
Marquez
to
reconvey
Lot
7036-A-7
to
the
heirs
of
Teodoro
dela
Cruz
and
Evangeline
Hernandez-
del
Rosario.
No
pronouncement
as
to
costs.
SO
ORDERED.35
In
upholding
the
claim
of
the
Heirs,
the
Court
of
Appeals
held
that
Marquez
failed
to
prove
that
he
was
a
purchaser
in
good
faith
and
for
value.
It
noted
that
while
Marquez
was
the
first
registrant,
there
was
no
showing
that
the
registration
of
the
deed
of
sale
in
his
favor
was
coupled
with
good
faith.
Marquez
admitted
having
knowledge
that
the
subject
property
was
"being
taken"
by
the
Heirs
at
the
time
of
the
sale.36
The
Heirs
were
also
in
possession
of
the
land
at
the
time.
According
to
the
Decision,
these
circumstances
along
with
the
subject
propertys
attractive
locationit
was
situated
along
the
National
Highway
and
was
across
a
gasoline
stationshould
have
put
Marquez
on
inquiry
as
to
its
status.
Instead,
Marquez
closed
his
eyes
to
these
matters
and
failed
to
exercise
the
ordinary
care
expected
of
a
buyer
of
real
estate.37
Anent
the
mortgagees
RBC
and
CRB,
the
Court
of
Appeals
found
that
they
merely
relied
on
the
certificates
of
title
of
the
mortgaged
properties.
They
did
not
ascertain
the
status
and
condition
thereof
according
to
standard
banking
practice.
For
failure
to
observe
the
ordinary
banking
procedure,
the
Court
of
Appeals
considered
them
to
have
acted
in
bad
faith
and
on
that
basis
declared
null
and
void
the
mortgages
made
by
Marquez
in
their
favor.38
Dissatisfied,
CRB
filed
a
Motion
for
Reconsideration39
pointing
out,
among
others,
that
the
Decision
promulgated
on
27
May
1997
failed
to
establish
good
faith
on
the
part
of
the
Heirs.
Absent
proof
of
possession
in
good
faith,
CRB
avers,
the
Heirs
cannot
claim
ownership
over
the
subject
property.
In
a
Resolution40
dated
5
January
1998,
the
Court
of
Appeals
stressed
its
disbelief
in
CRBs
allegation
that
it
did
not
merely
rely
on
the
certificates
of
title
of
the
properties
and
that
it
conducted
credit
investigation
and
standard
ocular
inspection.
But
recalling
that
intervenor
Evangeline
del
Rosario
had
lost
her
standing
as
an
appellant,
the
Court
of
Appeals
accordingly
modified
its
previous
Decision,
as
follows:
WHEREFORE,
the
decision
dated
May
27,
1997,
is
hereby
MODIFIED
to
read
as
follows:
WHEREFORE,
the
decision
appealed
from
is
hereby
REVERSED
and
SET
ASIDE
insofar
as
plaintiffs-appellants
are
concerned.
Accordingly,
judgment
is
hereby
rendered
as
follows:
1.
Declaring
the
Heirs
of
Teodoro
dela
Cruz
the
lawful
owners
of
the
southern
half
portion
of
Lot
No.
7036-A-7;
2.
Declaring
null
and
void
the
deed
of
sale
dated
June
15,
1976
between
Pacifico
V.
Marquez
and
the
Madrid
brothers
insofar
as
the
southern
half
portion
of
Lot
NO.
(sic)
7036-A-7
is
concerned;
3.
Declaring
the
mortgage
made
by
defendant
Pacifico
V.
Marquez
in
favor
of
defendant
Consolidated
Rural
Bank
(Cagayan
Valley)
and
defendant
Rural
Bank
of
Cauayan
as
null
and
void
insofar
as
the
southern
half
portion
of
Lot
No.
7036-A-7
is
concerned;
4.
Ordering
defendant
Pacifico
V.
Marquez
to
reconvey
the
southern
portion
of
Lot
No.
7036-A-7
to
the
Heirs
of
Teodoro
dela
Cruz.
No
pronouncement
as
to
costs.
SO
ORDERED.41
Hence,
the
instant
CRB
petition.
However,
both
Marquez
and
RBC
elected
not
to
challenge
the
Decision
of
the
appellate
court.
Petitioner
CRB,
in
essence,
alleges
that
the
Court
of
Appeals
committed
serious
error
of
law
in
upholding
the
Heirs
ownership
claim
over
the
subject
property
considering
that
there
was
no
finding
that
they
acted
in
good
faith
in
taking
possession
thereof
nor
was
there
proof
that
the
first
buyers,
Gamiao
and
Dayag,
ever
took
possession
of
the
subject
property.
CRB
also
makes
issue
of
the
fact
that
the
sale
to
Gamiao
and
Dayag
was
confirmed
a
day
ahead
of
the
actual
sale,
clearly
evincing
bad
faith,
it
adds.
Further,
CRB
asserts
Marquezs
right
over
the
property
being
its
registered
owner.
The
petition
is
devoid
of
merit.
However,
the
dismissal
of
the
petition
is
justified
by
reasons
different
from
those
employed
by
the
Court
of
Appeals.
Like
the
lower
court,
the
appellate
court
resolved
the
present
controversy
by
applying
the
rule
on
double
sale
provided
in
Article
1544
of
the
Civil
Code.
They,
however,
arrived
at
different
conclusions.
The
RTC
made
CRB
and
the
other
defendants
win,
while
the
Court
of
Appeals
decided
the
case
in
favor
of
the
Heirs.
Article
1544
of
the
Civil
Code
reads,
thus:
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
possession;
and,
in
the
absence
thereof,
to
the
person
who
presents
the
oldest
title,
provided
there
is
good
faith.
The
provision
is
not
applicable
in
the
present
case.
It
contemplates
a
case
of
double
or
multiple
sales
by
a
single
vendor.
More
specifically,
it
covers
a
situation
where
a
single
vendor
sold
one
and
the
same
immovable
property
to
two
or
more
buyers.42
According
to
a
noted
civil
law
author,
it
is
necessary
that
the
conveyance
must
have
been
made
by
a
party
who
has
an
existing
right
in
the
thing
and
the
power
to
dispose
of
it.43
It
cannot
be
invoked
where
the
two
different
contracts
of
sale
are
made
by
two
different
persons,
one
of
them
not
being
the
owner
of
the
property
sold.44
And
even
if
the
sale
was
made
by
the
same
person,
if
the
second
sale
was
made
when
such
person
was
no
longer
the
owner
of
the
property,
because
it
had
been
acquired
by
the
first
purchaser
in
full
dominion,
the
second
purchaser
cannot
acquire
any
right.45
In
the
case
at
bar,
the
subject
property
was
not
transferred
to
several
purchasers
by
a
single
vendor.
In
the
first
deed
of
sale,
the
vendors
were
Gamiao
and
Dayag
whose
right
to
the
subject
property
originated
from
their
acquisition
thereof
from
Rizal
Madrid
with
the
conformity
of
all
the
other
Madrid
brothers
in
1957,
followed
by
their
declaration
of
the
property
in
its
entirety
for
taxation
purposes
in
their
names.
On
the
other
hand,
the
vendors
in
the
other
or
later
deed
were
the
Madrid
brothers
but
at
that
time
they
were
no
longer
the
owners
since
they
had
long
before
disposed
of
the
property
in
favor
of
Gamiao
and
Dayag.
Citing
Manresa,
the
Court
of
Appeals
in
1936
had
occasion
to
explain
the
proper
application
of
Article
1473
of
the
Old
Civil
Code
(now
Article
1544
of
the
New
Civil
Code)
in
the
case
of
Carpio
v.
Exevea,46
thus:
In
order
that
tradition
may
be
considered
performed,
it
is
necessary
that
the
requisites
which
it
implies
must
have
been
fulfilled,
and
one
of
the
indispensable
requisites,
according
to
the
most
exact
Roman
concept,
is
that
the
conveyor
had
the
right
and
the
will
to
convey
the
thing.
The
intention
to
transfer
is
not
sufficient;
it
only
constitutes
the
will.
It
is,
furthermore,
necessary
that
the
conveyor
could
juridically
perform
that
act;
that
he
had
the
right
to
do
so,
since
a
right
which
he
did
not
possess
could
not
be
vested
by
him
in
the
transferee.
This
is
what
Article
1473
has
failed
to
express:
the
necessity
for
the
preexistence
of
the
right
on
the
part
of
the
conveyor.
But
even
if
the
article
does
not
express
it,
it
would
be
understood,
in
our
opinion,
that
that
circumstance
constitutes
one
of
the
assumptions
upon
which
the
article
is
based.
This
construction
is
not
repugnant
to
the
text
of
Article
1473,
and
not
only
is
it
not
contrary
to
it,
but
it
explains
and
justifies
the
same.
(Vol.
10,
4th
ed.,
p.
159)47
In
that
case,
the
property
was
transferred
to
the
first
purchaser
in
1908
by
its
original
owner,
Juan
Millante.
Thereafter,
it
was
sold
to
plaintiff
Carpio
in
June
1929.
Both
conveyances
were
unregistered.
On
the
same
date
that
the
property
was
sold
to
the
plaintiff,
Juan
Millante
sold
the
same
to
defendant
Exevea.
This
time,
the
sale
was
registered
in
the
Registry
of
Deeds.
But
despite
the
fact
of
registration
in
defendants
favor,
the
Court
of
Appeals
found
for
the
plaintiff
and
refused
to
apply
the
provisions
of
Art.
1473
of
the
Old
Civil
Code,
reasoning
that
"on
the
date
of
the
execution
of
the
document,
Exhibit
1,
Juan
Millante
did
not
and
could
not
have
any
right
whatsoever
to
the
parcel
of
land
in
question."48
Citing
a
portion
of
a
judgment
dated
24
November
1894
of
the
Supreme
Court
of
Spain,
the
Court
of
Appeals
elucidated
further:
Article
1473
of
the
Civil
Code
presupposes
the
right
of
the
vendor
to
dispose
of
the
thing
sold,
and
does
not
limit
or
alter
in
this
respect
the
provisions
of
the
Mortgage
Law
in
force,
which
upholds
the
principle
that
registration
does
not
validate
acts
or
contracts
which
are
void,
and
that
although
acts
and
contracts
executed
by
persons
who,
in
the
Registry,
appear
to
be
entitled
to
do
so
are
not
invalidated
once
recorded,
even
if
afterwards
the
right
of
such
vendor
is
annulled
or
resolved
by
virtue
of
a
previous
unrecorded
title,
nevertheless
this
refers
only
to
third
parties.49
In
a
situation
where
not
all
the
requisites
are
present
which
would
warrant
the
application
of
Art.
1544,
the
principle
of
prior
tempore,
potior
jure
or
simply
"he
who
is
first
in
time
is
preferred
in
right,"50
should
apply.51
The
only
essential
requisite
of
this
rule
is
priority
in
time;
in
other
words,
the
only
one
who
can
invoke
this
is
the
first
vendee.
Undisputedly,
he
is
a
purchaser
in
good
faith
because
at
the
time
he
bought
the
real
property,
there
was
still
no
sale
to
a
second
vendee.52
In
the
instant
case,
the
sale
to
the
Heirs
by
Gamiao
and
Dayag,
who
first
bought
it
from
Rizal
Madrid,
was
anterior
to
the
sale
by
the
Madrid
brothers
to
Marquez.
The
Heirs
also
had
possessed
the
subject
property
first
in
time.
Thus,
applying
the
principle,
the
Heirs,
without
a
scintilla
of
doubt,
have
a
superior
right
to
the
subject
property.
Moreover,
it
is
an
established
principle
that
no
one
can
give
what
one
does
not
havenemo
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.53
In
this
case,
since
the
Madrid
brothers
were
no
longer
the
owners
of
the
subject
property
at
the
time
of
the
sale
to
Marquez,
the
latter
did
not
acquire
any
right
to
it.
In
any
event,
assuming
arguendo
that
Article
1544
applies
to
the
present
case,
the
claim
of
Marquez
still
cannot
prevail
over
the
right
of
the
Heirs
since
according
to
the
evidence
he
was
not
a
purchaser
and
registrant
in
good
faith.
Following
Article
1544,
in
the
double
sale
of
an
immovable,
the
rules
of
preference
are:
(a)
the
first
registrant
in
good
faith;
(b)
should
there
be
no
entry,
the
first
in
possession
in
good
faith;
and
(c)
in
the
absence
thereof,
the
buyer
who
presents
the
oldest
title
in
good
faith.
54
Prior
registration
of
the
subject
property
does
not
by
itself
confer
ownership
or
a
better
right
over
the
property.
Article
1544
requires
that
before
the
second
buyer
can
obtain
priority
over
the
first,
he
must
show
that
he
acted
in
good
faith
throughout
(i.e.,
in
ignorance
of
the
first
sale
and
of
the
first
buyers
rights)from
the
time
of
acquisition
until
the
title
is
transferred
to
him
by
registration
or
failing
registration,
by
delivery
of
possession.55
In
the
instant
case,
the
actions
of
Marquez
have
not
satisfied
the
requirement
of
good
faith
from
the
time
of
the
purchase
of
the
subject
property
to
the
time
of
registration.
Found
by
the
Court
of
Appeals,
Marquez
knew
at
the
time
of
the
sale
that
the
subject
property
was
being
claimed
or
"taken"
by
the
Heirs.
This
was
a
detail
which
could
indicate
a
defect
in
the
vendors
title
which
he
failed
to
inquire
into.
Marquez
also
admitted
that
he
did
not
take
possession
of
the
property
and
at
the
time
he
testified
he
did
not
even
know
who
was
in
possession.
Thus,
he
testified
on
direct
examination
in
the
RTC
as
follows:
ATTY.
CALIXTO
Q
Can
you
tell
us
the
circumstances
to
your
buying
the
land
in
question?
A
In
1976
the
Madrid
brothers
confessed
to
me
their
problems
about
their
lots
in
San
Mateo
that
they
were
being
taken
by
Teodoro
dela
Cruz
and
Atty.
Teofilo
A.
Leonin;
that
they
have
to
pay
the
lawyers
fee
of
P10,000.00
otherwise
Atty.
Leonin
will
confiscate
the
land.
So
they
begged
me
to
buy
their
properties,
some
of
it.
So
that
on
June
3,
1976,
they
came
to
Cabagan
where
I
was
and
gave
them
P14,000.00,
I
think.
We
have
talked
that
they
will
execute
the
deed
of
sale.
Q
Why
is
it,
doctor,
that
you
have
already
this
deed
of
sale,
Exh.
14,
why
did
you
find
it
necessary
to
have
this
Deed
of
Confirmation
of
a
Prior
Sale,
Exh.
15?
A
Because
as
I
said
a
while
ago
that
the
first
deed
of
sale
was
submitted
to
the
Register
of
Deeds
by
Romeo
Badua
so
that
I
said
that
because
when
I
became
a
Municipal
Health
Officer
in
San
Mateo,
Isabela,
I
heard
so
many
rumors,
so
many
things
about
the
land
and
so
I
requested
them
to
execute
a
deed
of
confirmation.56
.
.
.
ATTY.
CALIXTO-
Q
At
present,
who
is
in
possession
on
the
Riceland
portion
of
the
lot
in
question?
A
I
can
not
say
because
the
people
working
on
that
are
changing
from
time
to
time.
Q
Why,
have
you
not
taken
over
the
cultivation
of
the
land
in
question?
A
Well,
the
Dela
Cruzes
are
prohibiting
that
we
will
occupy
the
place.
Q
So,
you
do
not
have
any
possession?
A
None,
sir.57
One
who
purchases
real
property
which
is
in
actual
possession
of
others
should,
at
least,
make
some
inquiry
concerning
the
rights
of
those
in
possession.
The
actual
possession
by
people
other
than
the
vendor
should,
at
least,
put
the
purchaser
upon
inquiry.
He
can
scarcely,
in
the
absence
of
such
inquiry,
be
regarded
as
a
bona
fide
purchaser
as
against
such
possessions.58
The
rule
of
caveat
emptor
requires
the
purchaser
to
be
aware
of
the
supposed
title
of
the
vendor
and
one
who
buys
without
checking
the
vendors
title
takes
all
the
risks
and
losses
consequent
to
such
failure.59
It
is
further
perplexing
that
Marquez
did
not
fight
for
the
possession
of
the
property
if
it
were
true
that
he
had
a
better
right
to
it.
In
our
opinion,
there
were
circumstances
at
the
time
of
the
sale,
and
even
at
the
time
of
registration,
which
would
reasonably
require
a
purchaser
of
real
property
to
investigate
to
determine
whether
defects
existed
in
his
vendors
title.
Instead,
Marquez
willfully
closed
his
eyes
to
the
possibility
of
the
existence
of
these
flaws.
For
failure
to
exercise
the
measure
of
precaution
which
may
be
required
of
a
prudent
man
in
a
like
situation,
he
cannot
be
called
a
purchaser
in
good
faith.60
As
this
Court
explained
in
the
case
of
Spouses
Mathay
v.
Court
of
Appeals:61
Although
it
is
a
recognized
principle
that
a
person
dealing
on
a
registered
land
need
not
go
beyond
its
certificate
of
title,
it
is
also
a
firmly
settled
rule
that
where
there
are
circumstances
which
would
put
a
party
on
guard
and
prompt
him
to
investigate
or
inspect
the
property
being
sold
to
him,
such
as
the
presence
of
occupants/tenants
thereon,
it
is,
of
course,
expected
from
the
purchaser
of
a
valued
piece
of
land
to
inquire
first
into
the
status
or
nature
of
possession
of
the
occupants,
i.e.,
whether
or
not
the
occupants
possess
the
land
en
concepto
de
dueo,
in
concept
of
owner.
As
is
the
common
practice
in
the
real
estate
industry,
an
ocular
inspection
of
the
premises
involved
is
a
safeguard
a
cautious
and
prudent
purchaser
usually
takes.
Should
he
find
out
that
the
land
he
intends
to
buy
is
occupied
by
anybody
else
other
than
the
seller
who,
as
in
this
case,
is
not
in
actual
possession,
it
would
then
be
incumbent
upon
the
purchaser
to
verify
the
extent
of
the
occupants
possessory
rights.
The
failure
of
a
prospective
buyer
to
take
such
precautionary
steps
would
mean
negligence
on
his
part
and
would
thereby
preclude
him
from
claiming
or
invoking
the
rights
of
a
"purchaser
in
good
faith."62
This
rule
equally
applies
to
mortgagees
of
real
property.
In
the
case
of
Crisostomo
v.
Court
of
Appeals,63
the
Court
held:
It
is
a
well-settled
rule
that
a
purchaser
or
mortgagee
cannot
close
his
eyes
to
facts
which
should
put
a
reasonable
man
upon
his
guard,
and
then
claim
that
he
acted
in
good
faith
under
the
belief
that
there
was
no
defect
in
the
title
of
the
vendor
or
mortgagor.
His
mere
refusal
to
believe
that
such
defect
exists,
or
his
willful
closing
of
his
eyes
to
the
possibility
of
the
existence
of
a
defect
in
the
vendors
or
mortgagors
title,
will
not
make
him
an
innocent
purchaser
or
mortgagee
for
value,
if
it
afterwards
develops
that
the
title
was
in
fact
defective,
and
it
appears
that
he
had
such
notice
of
the
defects
as
would
have
led
to
its
discovery
had
he
acted
with
the
measure
of
a
prudent
man
in
a
like
situation.64
Banks,
their
business
being
impressed
with
public
interest,
are
expected
to
exercise
more
care
and
prudence
than
private
individuals
in
their
dealings,
even
those
involving
registered
lands.
Hence,
for
merely
relying
on
the
certificates
of
title
and
for
its
failure
to
ascertain
the
status
of
the
mortgaged
properties
as
is
the
standard
procedure
in
its
operations,
we
agree
with
the
Court
of
Appeals
that
CRB
is
a
mortgagee
in
bad
faith.
In
this
connection,
Marquezs
obstention
of
title
to
the
property
and
the
subsequent
transfer
thereof
to
CRB
cannot
help
the
latters
cause.
In
a
situation
where
a
party
has
actual
knowledge
of
the
claimants
actual,
open
and
notorious
possession
of
the
disputed
property
at
the
time
of
registration,
as
in
this
case,
the
actual
notice
and
knowledge
are
equivalent
to
registration,
because
to
hold
otherwise
would
be
to
tolerate
fraud
and
the
Torrens
system
cannot
be
used
to
shield
fraud.
65
While
certificates
of
title
are
indefeasible,
unassailable
and
binding
against
the
whole
world,
they
merely
confirm
or
record
title
already
existing
and
vested.
They
cannot
be
used
to
protect
a
usurper
from
the
true
owner,
nor
can
they
be
used
for
the
perpetration
of
fraud;
neither
do
they
permit
one
to
enrich
himself
at
the
expense
of
others.66
We
also
find
that
the
Court
of
Appeals
did
not
err
in
awarding
the
subject
property
to
the
Heirs
absent
proof
of
good
faith
in
their
possession
of
the
subject
property
and
without
any
showing
of
possession
thereof
by
Gamiao
and
Dayag.
As
correctly
argued
by
the
Heirs
in
their
Comment,67
the
requirement
of
good
faith
in
the
possession
of
the
property
finds
no
application
in
cases
where
there
is
no
second
sale.68
In
the
case
at
bar,
Teodoro
dela
Cruz
took
possession
of
the
property
in
1964
long
before
the
sale
to
Marquez
transpired
in
1976
and
a
considerable
length
of
timeeighteen
(18)
years
in
factbefore
the
Heirs
had
knowledge
of
the
registration
of
said
sale
in
1982.
As
Article
526
of
the
Civil
Code
aptly
provides,
"(H)e
is
deemed
a
possessor
in
good
faith
who
is
not
aware
that
there
exists
in
his
title
or
mode
of
acquisition
any
flaw
which
invalidates
it."
Thus,
there
was
no
need
for
the
appellate
court
to
consider
the
issue
of
good
faith
or
bad
faith
with
regard
to
Teodoro
dela
Cruzs
possession
of
the
subject
property.
Likewise,
we
are
of
the
opinion
that
it
is
not
necessary
that
there
should
be
any
finding
of
possession
by
Gamiao
and
Dayag
of
the
subject
property.
It
should
be
recalled
that
the
regularity
of
the
sale
to
Gamiao
and
Dayag
was
never
contested
by
Marquez.69
In
fact
the
RTC
upheld
the
validity
of
this
sale,
holding
that
the
Madrid
brothers
are
bound
by
the
sale
by
virtue
of
their
confirmation
thereof
in
the
Joint
Affidavit
dated
14
August
1957.
That
this
was
executed
a
day
ahead
of
the
actual
sale
on
15
August
1957
does
not
diminish
its
integrity
as
it
was
made
before
there
was
even
any
shadow
of
controversy
regarding
the
ownership
of
the
subject
property.
Moreover,
as
this
Court
declared
in
the
case
of
Heirs
of
Simplicio
Santiago
v.
Heirs
of
Mariano
E.
Santiago
,70
tax
declarations
"are
good
indicia
of
possession
in
the
concept
of
an
owner,
for
no
one
in
his
right
mind
would
be
paying
taxes
for
a
property
that
is
not
in
his
actual
or
constructive
possession."71
WHEREFORE,
the
Petition
is
DENIED.
The
dispositive
portion
of
the
Court
of
Appeals
Decision,
as
modified
by
its
Resolution
dated
5
January
1998,
is
AFFIRMED.
Costs
against
petitioner.
COL.
FRANCISCO
DELA
MERCED,
substituted
by
his
heirs,
namely,
BLANQUITA
E.
DELA
MERCED,
LUIS
CESAR
DELA
MERCED,
BLANQUITA
E.
DELA
MERCED
(nee
MACATANGAY)
and
MARIA
OLIVIA
M.
PAREDES,
petitioners,
vs.
GOVERNMENT
SERVICE
INSURANCE
SYSTEM
(GSIS)
and
SPOUSES
VICTOR
and
MILAGROS
MANLONGAT,
respondents.
YNARES-SANTIAGO,
J.:
This
is
a
petition
for
review
under
Rule
45
of
the
Rules
of
Court,
seeking
to
set
aside
the
decision
of
the
Court
of
Appeals
dated
May
21,
1999
in
CA-G.R.
CV
No.
55034,[1]
which
reversed
the
decision
of
the
Regional
Trial
Court
of
Pasig,
Metro
Manila,
Branch
160,
in
Civil
Cases
Nos.
51410
and
51470.[2]
The
antecedent
facts,
as
culled
from
the
records,
are
as
follows:
Governor
Jose
C.
Zulueta
and
his
wife
Soledad
Ramos
were
the
owners
of
parcels
of
land
consisting
of
100,986
square
meters,
known
as
the
Antonio
Village
Subdivision,
Orambo,
Pasig
City.
The
parcels
of
land
were
registered
in
their
names
under
Transfer
Certificates
of
Title
Nos.
26105,[3]
37177[4]
and
50256[5]
of
the
Registry
of
Deeds
of
the
Province
of
Rizal.
On
September
25,
1956,
the
Zuluetas
obtained
a
loan
of
P520,000.00
from
the
Government
Service
Insurance
System,
as
security
for
which
they
mortgaged
the
lands
covered
by
TCT
No.
26105.
It
was
expressly
stipulated
in
the
mortgage
deed
that
certain
lots
within
TCT
No.
26105
shall
be
excluded
from
the
mortgage
because
they
have
been
either
previously
sold
to
third
parties
or
donated
to
the
government.
The
Zulueta
spouses
obtained
an
additional
loan
from
the
GSIS
on
March
6,
1957
in
the
amount
of
P190,000.00,
as
security
for
which
they
mortgaged
the
land
covered
by
TCT
No.
50256.
On
April
4,
1957,
the
Zuluetas
obtained
another
loan
from
GSIS
this
time
in
the
amount
of
P1,000,000.00,
which
they
secured
by
mortgaging
parcels
of
land
included
in
TCT
Nos.
26105
and
37177.
On
September
3,
1957,
the
Zulueta
spouses
executed
a
contract
to
sell
whereby
they
undertook
to
sell
to
Francisco
dela
Merced
and
Evarista
Mendoza
lots
identified
as
Lots
6,
7,
8
and
10,
Block
2
(formerly
Block
4),
Antonio
Subdivision
covered
by
TCT
No.
26105.[6]
On
October
26,
1972,
after
full
payment
by
Col.
dela
Merced
of
the
purchase
price,
a
Deed
of
Absolute
Sale
was
executed
by
the
Zuluetas
in
his
favor.
On
October
15,
1957,
another
loan
was
extended
by
GSIS
to
the
Zulueta
spouses
in
the
amount
of
P1,398,000.00,
secured
by
a
mortgage
on
the
properties
included
in
TCT
Nos.
26105
and
50256.
The
Zuluetas
defaulted
in
the
payment
of
their
loans.
Thus,
GSIS
extrajudicially
foreclosed
the
mortgages
and,
at
the
foreclosure
sale
held
on
August
16,
1974,
GSIS
was
awarded
the
mortgaged
properties
as
the
highest
bidder.
Since
the
Zuluetas
did
not
redeem
the
properties
within
the
reglementary
period,
title
to
the
properties
was
consolidated
to
GSIS.
Later,
on
March
25,
1982,
GSIS
held
a
sale
at
public
auction
of
its
acquired
assets.
Elizabeth
D.
Manlongat
and
Ma.
Therese
D.
Manlongat,
the
children
of
Victor
and
Milagros
Manlongat,
purchased
Lot
6,
Block
2
of
Antonio
Village.[7]
On
August
22,
1984,
a
complaint
for
declaratory
relief,
injunction
and
damages,
docketed
as
Civil
Case
No.
51410,
was
filed
with
the
Regional
Trial
Court
of
Pasig,
Branch
160,
by
Victor
Lemonsito
and
several
others,[8]
against
Benjamin
Cabusao,
in
his
capacity
as
In-Charge
of
the
Municipal
Task
Force
on
Squatters
of
the
Municipal
Engineers
Office
of
Pasig,
spouses
Domini
and
Olivia
Suarez
and
spouses
Victor
and
Milagros
Manlongat.[9]
Plaintiffs
therein
averred
that
they
were
owners
of
houses
in
various
lots
in
Antonio
Village,
having
constructed
the
same
with
the
permission
of
the
late
Jose
C.
Zulueta
before
the
same
was
foreclosed
by
GSIS;
that
defendants
Suarez
and
Manlongat
claimed
to
be
vendees
of
lots
in
Antonio
Village;
and
that
defendant
Cabusao
was
threatening
to
demolish
plaintiffs
houses
on
the
alleged
ground
that
they
were
squatters
on
the
lots.
On
September
7,
1984,
Col.
dela
Merced
also
instituted
Civil
Case
No.
51470
with
the
Regional
Trial
Court
of
Pasig,
Branch
154,
against
GSIS
and
the
spouses
Zulueta,
praying,
among
others,
that
the
foreclosure
sale,
insofar
as
his
lots
were
concerned,
be
declared
null
and
void.[10]
Meanwhile,
Col.
dela
Merced
filed
a
complaint-in-intervention
in
Civil
Case
No.
51410,[11]
wherein
he
prayed
that
plaintiffs
complaint
be
dismissed
and
defendants
titles
to
lots
6,
7
and
8,
Block
2
be
declared
null
and
void.
The
complaint
in
Civil
Case
No.
51410
was
dismissed
for
failure
of
plaintiffs
to
prosecute,
but
the
complaint-in-
intervention
of
Col.
dela
Merced
was
allowed
to
proceed
against
defendants
Suarez
and
Manlongat.[12]
On
September
5,
1986,
upon
motion
of
plaintiff
Col.
dela
Merced,
the
trial
court
ordered
the
consolidation
of
Civil
Case
No.
51470
with
Civil
Case
No.
51410.[13]
On
October
23,
1987,
the
Regional
Trial
Court
of
Pasig,
Branch
160,
rendered
its
decision,
the
dispositive
portion
of
which
reads:
WHEREFORE,
judgment
is
hereby
rendered
in
Civil
Case
No.
51410:
1.
Declaring
Lots
6,
7,
8
and
10
of
Block
2,
and
Lot
8
of
Block
8
which
are
the
subject
of
the
action,
as
the
exclusive
property
of
the
intervenor.
Consequently,
the
certificates
of
Title
of
the
defendants
covering
said
property
lots
are
declared
null
and
void;
and
in
Civil
Case
No.
51470:
1.
Declaring
the
foreclosure
proceedings
conducted
by
defendant
GSIS,
insofar
as
they
affected
the
lots
in
question,
as
null
and
void,
including
the
consolidation
of
ownership
thereof
by
the
GSIS,
and
the
sale
of
the
lots
to
defendant
Manlongat
spouses;
2.
Declaring
the
certificates
of
title
issued
to
GSIS
covering
the
aforesaid
lots,
as
well
as
those
issued
to
defendant
Manlongat
spouses
by
virtue
of
the
sale
executed
by
the
former
in
favor
of
the
latter,
as
null
and
void;
and
directing
the
Office
of
the
Register
of
Deeds
of
Pasig,
Metro
Manila,
to
issue
a
new
one
in
the
name
of
the
plaintiff
Francisco
Mendoza
dela
Merced;
3.
Ordering
the
defendants,
jointly
and
severally,
to
pay
the
plaintiff
the
sums
of
P100,000.00
as
moral
damages;
P50,000.00
as
exemplary
damages;
and
P50,000.00
by
way
of
attorneys
fees;
plus
costs.
SO
ORDERED.[14]
The
GSIS
and
Manlongat
spouses
filed
separate
appeals.
The
Court
of
Appeals
held
that
the
trial
court
erred
in
declaring
defendants
as
having
waived
their
right
to
present
evidence.
Thus,
on
April
19,
1994,
the
Court
of
Appeals
set
aside
the
decision
of
the
trial
court
and
remanded
the
case
to
the
lower
court
for
the
reception
of
evidence
of
defendants
Manlongat
and
GSIS.[15]
In
the
meantime,
on
March
19,
1988,
Col.
dela
Merced
passed
away
and
was
substituted
by
his
heirs.
On
December
27,
1996,
the
Regional
Trial
Court
of
Pasig,
Branch
160,
rendered
a
decision,
the
dispositive
portion
of
which
reads:
WHEREFORE,
judgment
is
hereby
rendered:
1.
Declaring
the
foreclosure
sale
of
Lot
Nos.
6,
7,
8
and
10
of
Block
2,
and
Lot
8
of
Block
8
and
certificate
of
Titles
issued
to
GSIS
covering
the
aforesaid
lots
as
well
as
those
issued
to
defendant
Manlongat
spouses
as
null
and
void;
2.
Declaring
plaintiff-intervenor
as
the
true
and
lawful
owner
of
the
aforesaid
lots;
3.
Ordering
the
Register
of
Deeds
of
Pasig,
Metro
Manila
to
issue
new
titles
in
the
name
of
plaintiff-intervenor
or
his
substituted
heirs
namely
Blanquita
dela
Merced-Macatangay,
Blanquita
Errea
dela
Merced,
Luis
dela
Merced
and
Maria
Olivia
dela
Merced
Paredes;
4.
Ordering
defendants
GSIS
and
spouses
Manlongat
jointly
and
severally
to
pay
attorneys
fees
of
P20,000.00
and
to
pay
the
costs.
SO
ORDERED.[16]
The
trial
court
made
the
following
findings:
The
mortgage
contract
signed
by
the
Zulueta
spouses
of
the
property
covered
by
TCT
No.
26105
in
favor
of
GSIS
(Exh.
C-
C-1
Merced)
contained
the
following
provisions:
Note:
The
following
lots
which
form
part
of
TCT
No.
26105
are
not
covered
by
this
mortgage
contract
due
to
sale
to
third
parties
and
donation
to
government.
1.
Lots
No.
1
to
13,
Block
No.
1
-
6,138
sq.m.
2.
Lots
Nos.
1
to
11,
Block
No.
2
-
4,660
sq.m.
3.
Lot
No.
15,
Block
No.
3
------
487
sq.m.
4.
Lot
No.
17,
Block
No.
4
------
263
sq.m.
5.
Lot
No.
1,
Block
No.
7
--------
402
sq.m.
6.
Road
Lots
Nos.
1,
2,
3
&
4
--
22,747
sq.m.
Evidently,
lot
numbers
1
to
11,
Block
2
to
include
plaintiff-intervenors
lots
were
excluded
from
the
mortgage.
In
fact,
in
a
letter
dated
October
1,
1956,
defendant
GSIS
confirmed
that
portions
of
the
subdivision
such
as
lots
Nos.
1
to
11,
Block
2
x
x
x
have
already
been
sold
x
x
x.
(Exh.
B-1
Merced)
The
intent
of
the
parties
was
clear
to
exclude
from
the
mortgage
the
properties
claimed
by
plaintiff-intervenor,
among
others,
where
he
introduced
improvements
since
1955.
On
October
26,
1972,
the
spouses
Zulueta
executed
the
corresponding
deed
of
sale
in
favor
of
plaintiff-intervenor
(Exh.
C).
The
contention
of
defendant
GSIS
and
defendants
Victor
and
Milagros
Manlongat
that
Lot
Nos.
6,
7,
8
&
10
are
not
the
lots
excluded
from
the
mortgage
by
the
spouses
Zulueta
to
the
GSIS
cannot
be
given
credence.
Evidence
reveal
that
lots
6,
7,
8
and
10,
Block
2,
with
a
total
area
of
1,405
square
meters
of
the
Antonio
Village
Subdivision
were
excluded
from
the
September
25,
1956
mortgage
contract
executed
by
defendants
in
favor
of
GSIS.
(Exh.
C,
C-1
Merced,
9-1-95)
Defendant
GSIS
in
fact
had
admitted
in
its
answer,
the
letter
to
plaintiff
acknowledging
that
there
has
been
no
problem
with
respect
to
Lot
8,
Block
8
of
the
said
property.
Obviously,
defendant
recognized
the
ownership
of
intervenor
of
the
mentioned
lots.
It
is
further
to
be
noted
that
plan
Pcs-5889
was
not
yet
in
existence
when
the
mortgage
was
executed
in
1956.
Besides
defendant
GSIS
had
knowledge
of
the
possession
of
intervenor.
While
the
deed
of
sale
between
the
Zuluetas
and
plaintiff-intervenor
was
never
registered
nor
annotated
in
the
title
and
executed
only
after
one
(1)
year,
defendant
GSIS
had
knowledge
of
the
possession
of
intervenor
of
the
lots;
that
defendant
GSIS
was
not
acting
in
good
faith
when
it
accepted
the
mortgage
of
the
questioned
lots.
Plaintiff-intervenor
in
1957
built
a
house
and
introduced
improvement
and
built
a
house
of
strong
structure
on
lots
6
&
7
and
with
the
other
lots
serving
as
backyard
and
for
28
years
had
paid
dues
on
the
lots.[17]
Respondents
appealed
the
decision
to
the
Court
of
Appeals,
where
the
same
was
docketed
as
CA-G.R.
CV
No.
55034.
On
May
21,
1999,
the
Court
of
Appeals
reversed
the
decision
of
the
trial
court.
Petitioners
filed
a
Motion
for
Reconsideration
which
was
denied
on
October
4,
1999.
Hence,
the
instant
petition
for
review,
raising
the
following
assignments
of
error:
FIRST
ASSIGNMENT
OF
ERROR
THE
COURT
A
QUO
ACTED
CONTRARY
TO
LAW
AND
JURISPRUDENCE
IN
TOTALLY
DISREGARDING
THE
ADMISSION
OF
DEFENDANT
GSIS
THAT
THE
LOTS
IN
QUESTION
WERE
EXCLUDED
FROM
THE
MORTGAGE
SECOND
ASSIGNMENT
OF
ERROR
THE
COURT
A
QUO
ACTED
CONTRARY
TO
LAW
AND
JURISPRUDENCE
IN
NOT
RULING
THAT
(A)
PLAINTIFF
HAS
BEEN
IN
POSSESSION
OF
THE
SUBJECT
LOTS
SINCE
1955
CONTINUOUSLY
UNTIL
THE
PRESENT
AND
(B)
GSIS
HAD
KNOWLEDGE
OF
PLAINTIFFS
POSSESSION
THIRD
ASSIGNMENT
OF
ERROR
THE
COURT
A
QUO
ACTED
CONTRARY
TO
LAW
AND
JURISPRUDENCE
IN
ITS
FAILURE
TO
APPRECIATE
THE
SIGNIFICANCE
OF
PLAINTIFFS
CONTINUOUS
OPEN
AND
ADVERSE
POSSESSION
IN
THE
CONCEPT
OF
OWNER
FOR
28
YEARS
AND
THE
ACTUAL
KNOWLEDGE
OF
GSIS
OF
SUCH
POSSESSION
FOURTH
ASSIGNMENT
OF
ERROR
THE
COURT
A
QUO
ACTED
CONTRARY
TO
LAW
AND
JURISPRUDENCE
IN
RULING
THAT
NO
JUDGMENT
CAN
BE
RENDERED
AGAINST
THE
SPOUSES
MANLONGAT
WITHOUT
VIOLATING
THEIR
RIGHT
TO
DUE
PROCESS
OF
LAW[18]
In
essence,
petitioners
allege
that
the
foreclosure
sale
was
null
and
void
because
the
mortgage
executed
by
the
parties,
insofar
as
the
properties
previously
sold
to
petitioners
were
concerned,
was
also
void
from
the
beginning.
Petitioners
had
been
in
continuous
and
open
possession
thereof
before
and
during
the
time
of
the
mortgage,
more
specifically,
since
1955
continuously
up
to
the
present,
and
GSIS
had
knowledge
thereof.
Furthermore,
respondent
GSIS
admitted
that
the
lots
in
questions
were
excluded
from
the
mortgage.
Finally,
under
Presidential
Decree
No.
957,
also
known
as
The
Subdivision
and
Condominium
Buyers
Protective
Decree,
petitioners
are
entitled
to
the
issuance
of
their
corresponding
title
over
the
lots
after
having
completed
their
payments
to
the
subdivision
owner.[19]
Petitioners
aver
that
when
the
Zuluetas
mortgaged
their
properties
to
GSIS
on
October
15,
1957,
they
were
no
longer
the
owners
of
the
lots
subject
of
this
litigation,
the
same
having
been
sold
to
Francisco
dela
Merced
by
virtue
of
the
contract
to
sell
executed
on
September
3,
1957.
Hence,
the
mortgage
was
void
from
its
inception
and
GSIS,
as
mortgagee,
acquired
no
better
right
notwithstanding
the
registration
of
the
mortgage.
Petitioners
also
argued
that
GSIS
was
a
mortgagee
in
bad
faith
as
it
had
been
negligent
in
ascertaining
and
investigating
the
condition
of
the
subject
lots
mortgaged
to
it
as
well
as
the
rights
of
petitioners
who
were
already
in
possession
thereof
at
the
time
of
mortgage.
Furthermore,
petitioners
cite
the
judicial
admission
of
respondent
GSIS
in
its
answer
before
the
trial
court,
wherein
it
recognized
the
rights
of
ownership
of
Francisco
dela
Merced
over
Lot
8,
Block
8
and
of
Eva
Mendoza
dela
Merced
over
Lot
10,
Block
2
of
TCT
26105.
Respondent
GSIS
countered
that
it
cannot
be
legally
presumed
to
have
acknowledged
petitioners
rights
over
Lot
8,
Block
8
of
TCT
26105.
With
regard
to
the
possession
of
petitioners,
respondent
GSIS
invoked
the
ruling
of
the
Court
of
Appeals
that
the
mere
possession
of
petitioner
cannot
stand
against
the
registered
titles
of
GSIS
and
its
buyers,
Elizabeth
and
Ma.
Therese
Manlongat.
Moreover,
Lot
6,
Block
2
(formerly
Block
4)
of
the
Antonio
Village
Subdivision
was
acquired
by
Elizabeth
Manlongat
in
a
public
bidding,
as
a
consequence
of
which
TCT
No.
PT-94007
was
issued
to
her.
Respondent
GSIS
also
maintained
that
the
lots
being
claimed
by
petitioners
were
included
in
the
real
estate
mortgage
executed
by
the
Zuluetas
in
favor
of
GSIS;
and
that
the
inclusion
of
the
subject
lots
in
the
mortgage
was
confirmed
by
Manuel
Ibabao,
an
employee
of
the
Acquired
Assets
Department
of
GSIS.
For
their
part,
respondent
spouses
Manlongat
alleged
that
since
Francisco
dela
Merced
never
registered
the
contract
to
sell
and
deed
of
absolute
sale
with
the
Register
of
Deeds,
the
same
cannot
affect
the
rights
of
third
persons
such
as
their
daughter,
Elizabeth
Manlongat,
who
dealt
in
good
faith
with
GSIS
as
the
prior
registered
owner.
The
petition
is
impressed
with
merit.
Petitioners
rights
of
ownership
over
the
properties
in
dispute,
albeit
unregistered,
are
superior
to
the
registered
mortgage
rights
of
GSIS
over
the
same.
The
execution
and
validity
of
the
contract
to
sell
dated
September
3,
1957
executed
by
the
Zulueta
spouses,
as
the
former
subdivision
owner,
in
favor
of
Francisco
dela
Merced,
are
beyond
cavil.
There
is
also
no
dispute
that
the
contract
to
sell
was
entered
into
by
the
parties
before
the
third
mortgage
was
constituted
on
October
15,
1957
by
the
Zuluetas
in
favor
of
GSIS
on
the
property
covered
by
TCT
No.
26105,
which
included
the
subject
lots.
Francisco
dela
Merced
was
able
to
fully
pay
the
purchase
price
to
the
vendor,
who
later
executed
a
deed
of
absolute
sale
in
his
favor.
However,
the
Zuluetas
defaulted
on
their
loans;
hence,
the
mortgage
was
foreclosed
and
the
properties
were
sold
at
public
auction
to
GSIS
as
the
highest
bidder.
In
the
case
of
State
Investment
House,
Inc.
v.
Court
of
Appeals,[20]
it
was
held
that:
STATEs
registered
mortgage
right
over
the
property
is
inferior
to
that
of
respondents-spouses
unregistered
right.
The
unrecorded
sale
between
respondents-spouses
and
SOLID
is
preferred
for
the
reason
that
if
the
original
owner
(SOLID,
in
this
case)
had
parted
with
his
ownership
of
the
thing
sold
then
he
no
longer
had
ownership
and
free
disposal
of
that
thing
so
as
to
be
able
to
mortgage
it
again.
Registration
of
the
mortgage
is
of
no
moment
since
it
is
understood
to
be
without
prejudice
to
the
better
right
of
third
parties.
In
the
same
vein,
therefore,
the
registered
right
of
GSIS
as
mortgagee
of
the
property
is
inferior
to
the
unregistered
right
of
Francisco
dela
Merced.
The
unrecorded
sale
between
Francisco
dela
Merced
as
the
vendee
of
the
property
and
the
Zuluetas,
the
original
owners,
is
preferred
for
the
same
reason
stated
above.
Respondents
cannot
even
assert
that
as
mortgagee
of
land
registered
under
the
Torrens
system,
GSIS
was
not
required
to
do
more
than
rely
upon
the
certificate
of
title.
As
a
general
rule,
where
there
is
nothing
on
the
certificate
of
title
to
indicate
any
cloud
or
vice
in
the
ownership
of
the
property,
or
any
encumbrance
thereon,
the
purchaser
is
not
required
to
explore
further
than
what
the
Torrens
Title
upon
its
face
indicates
in
quest
for
any
hidden
defect
or
inchoate
right
that
may
subsequently
defeat
his
right
thereto.
This
rule,
however,
admits
of
an
exception
as
where
the
purchaser
or
mortgagee
has
knowledge
of
a
defect
or
lack
of
title
in
the
vendor,
or
that
he
was
aware
of
sufficient
facts
to
induce
a
reasonably
prudent
man
to
inquire
into
the
status
of
the
property
in
litigation.[21]
In
the
case
at
bar,
GSIS
is
admittedly
a
financing
institution.
In
its
answer
to
the
complaint
filed
with
the
trial
court,
GSIS
admitted
knowledge
that
the
spouses
Jose
C.
Zulueta
and
Soledad
B.
Ramos
owned
the
Antonio
Subdivision
when
they
mortgaged
the
same
with
GSIS.
In
Sunshine
Finance
and
Investment
Corp.
v.
Intermediate
Appellate
Court,[22]
we
held
that
when
the
purchaser
or
mortgagee
is
a
financing
institution,
the
general
rule
that
a
purchaser
or
mortgagee
of
land
is
not
required
to
look
further
than
what
appears
on
the
face
of
the
title
does
not
apply.
Further:
Nevertheless,
we
have
to
deviate
from
the
general
rule
because
of
the
failure
of
petitioner
in
this
case
to
take
the
necessary
precautions
to
ascertain
if
there
was
any
flaw
in
the
title
of
the
Nolascos
and
to
examine
the
condition
of
the
property
they
sought
to
mortgage.
The
petitioner
is
an
investment
and
financing
corporation.
We
presume
it
is
experienced
in
its
business.
Ascertainment
of
the
status
and
condition
of
properties
offered
to
it
as
security
for
the
loans
it
extends
must
be
a
standard
and
indispensable
part
of
its
operations.
Surely
it
cannot
simply
rely
on
an
examination
of
a
Torrens
certificate
to
determine
what
the
subject
property
looks
like
as
its
condition
is
not
apparent
in
the
document.
The
land
might
be
in
a
depressed
area.
There
might
be
squatters
on
it.
It
might
be
easily
inundated.
It
might
be
an
interior
lot
without
convenient
access.
These
and
other
similar
factors
determine
the
value
of
the
property
and
so
should
be
of
practical
concern
to
the
petitioner.[23]
There
is
nothing
in
the
records
of
this
case
to
indicate
that
an
ocular
inspection
report
was
conducted
by
GSIS,
or
whether
it
investigated,
examined
and
assessed
the
subdivision
lots
when
they
were
offered
as
security
for
the
loans
by
the
original
owners.
The
only
inventory
made
by
GSIS
based
on
its
documentary
evidence
was
prepared
by
its
officers
employed
with
the
Acquired
Assets
Department,
but
that
was
after
the
foreclosure
sale
was
already
conducted
and
not
before
the
mortgage
was
constituted
over
the
property.
The
constructive
knowledge
of
GSIS
of
the
defect
in
the
title
of
the
subject
property,
or
lack
of
such
knowledge
due
to
its
negligence,
takes
the
place
of
registration
of
the
rights
of
petitioners.
Likewise,
in
Philippine
National
Bank
v.
Office
of
the
President,[24]24
we
held
that
---
As
between
these
small
lot
buyers
and
the
gigantic
financial
institutions
which
the
developers
deal
with,
it
is
obvious
that
the
law
---
as
an
instrument
of
social
justice
---
must
favor
the
weak.
Indeed,
the
petitioner
Bank
had
at
its
disposal
vast
resources
with
which
it
could
adequately
protect
its
loan
activities,
and
therefore
is
presumed
to
have
conducted
the
usual
due
diligence
checking
and
ascertained
(whether
thru
ocular
inspection
or
other
modes
of
investigation)
the
actual
status,
condition,
utilization
and
occupancy
of
the
property
offered
as
collateral.
It
could
not
have
been
unaware
that
the
property
had
been
built
on
by
small
lot
buyers.
On
the
other
hand,
private
respondents
obviously
were
powerless
to
discover
the
attempt
of
the
land
developer
to
hypothecate
the
property
being
sold
to
them.
It
was
precisely
in
order
to
deal
with
this
kind
of
situation
that
P.D.
957
was
enacted,
its
very
essence
and
intendment
being
to
provide
a
protective
mantle
over
helpless
citizens
who
may
fall
prey
to
the
razzmatazz
of
what
P.D.
957
termed
unscrupulous
subdivision
and
condominium
sellers.[25]
In
the
case
at
bar,
GSIS
admitted
in
its
answer
that
it
received
a
letter
from
Francisco
dela
Merced
on
August
27,
1981,
stating
that
he
had
acquired
the
subject
lots
by
virtue
of
a
deed
of
absolute
sale
executed
in
his
favor
by
the
Zulueta
spouses.[26]
GSIS
also
admitted
the
fact
that
on
October
17,
1980,
its
Deputy
General
Counsel
wrote
Francisco
dela
Merced
stating
that
his
claim
of
ownership
over
Block
8,
Lot
8,
of
TCT
No.
26105
had
no
problem;
but
his
claim
to
Lots
6,
7,
10
and
11
of
Block
2,
of
the
same
title,
was
not
very
clear.[27]
Clearly,
therefore,
GSIS
had
full
knowledge
of
the
claim
of
ownership
of
dela
Merced
over
the
aforementioned
lots
even
before
their
sale
at
public
auction
to
Elizabeth
Manlongat.
Coming
now
to
the
last
issue
---
whether
Elizabeth
Manlongat,
as
purchaser
of
Lot
6,
Block
2
at
an
auction
sale
conducted
by
GSIS,
had
a
better
right
than
petitioners
---
we
must
rule
in
the
negative.
It
should
be
borne
in
mind
that
the
title
of
Manlongat
was
derived
through
sale
or
transfer
from
GSIS,
whose
acquisition
over
the
property
proceeded
from
a
foreclosure
sale
that
was
null
and
void.
Nemo
potest
plus
juris
ad
alium
transferre
quam
ipse
habet.
No
one
can
transfer
a
greater
right
to
another
than
he
himself
has.[28]
In
other
words,
the
subsequent
certificates
of
title
of
GSIS
and
of
Manlongat
over
the
property
are
both
void,
because
of
the
legal
truism
that
the
spring
cannot
rise
higher
than
the
source.
Further,
Manlongat
cannot
claim
that
she
was
a
purchaser
in
good
faith.
The
records
categorically
reflect
that
neither
Manlongat
nor
her
predecessor-in-interest,
GSIS,
possessed
the
property
prior
to
or
after
the
former
bought
the
same
at
an
auction
sale.
In
fact,
at
the
time
the
lots
were
sold
to
Manlongat,
petitioners
were
not
only
in
actual
possession
thereof,
but
their
father,
Francisco
dela
Merced,
had
already
built
a
house
thereon.
Again,
a
cautious
and
prudent
purchaser
would
usually
make
an
ocular
inspection
of
the
premises,
this
being
standard
practice
in
the
real
estate
industry.
Should
such
prospective
buyer
find
out
that
the
land
she
intends
to
buy
is
being
occupied
by
anybody
other
than
the
seller,
who,
in
this
case,
was
not
in
actual
possession,
it
would
then
be
incumbent
upon
her
to
verify
the
extent
of
the
occupants
possessory
rights.
The
failure
of
a
prospective
buyer
to
take
such
precautionary
steps
would
mean
negligence
on
her
part
and
would
thereby
preclude
her
from
claiming
or
invoking
the
rights
of
a
purchaser
in
good
faith.
WHEREFORE,
in
view
of
the
foregoing,
the
petition
is
GRANTED.
The
decision
of
the
Court
of
Appeals
is
REVERSED
AND
SET
ASIDE.
The
decision
of
the
Regional
Trial
Court
of
Pasig
City,
Branch
160,
in
Civil
Cases
Nos.
51410
and
51470,
is
REINSTATED.
The
foreclosure
sale
of
Lot
Nos.
6,
7,
8
and
10
of
Block
2
and
Lot
8
of
Block
8
of
the
property
originally
covered
by
TCT
26105,
and
the
subsequent
certificates
of
titles
issued
to
GSIS
as
well
as
TCT
No.
PT-94007
in
the
name
of
Elizabeth
Manlongat,
are
declared
NULL
AND
VOID.
The
Register
of
Deeds
of
Pasig
City
is
ordered
to
CANCEL
all
present
certificates
of
title
in
the
name
of
GSIS
and
Elizabeth
Manlongat
covering
the
above-mentioned
properties,
and
to
ISSUE
new
certificates
of
title
over
the
same
in
the
name
of
petitioners
as
co-owners
thereof.
Respondents
GSIS
and
spouses
Victor
and
Milagros
Manlongat
are
ORDERED
to
pay,
jointly
and
severally,
attorneys
fees
in
the
increased
amount
of
P50,000.00,
and
to
pay
the
costs.
G.R.
No.
124242
January
21,
2005
SAN
LORENZO
DEVELOPMENT
CORPORATION,
petitioner,
vs.
COURT
OF
APPEALS,
PABLO
S.
BABASANTA,
SPS.
MIGUEL
LU
and
PACITA
ZAVALLA
LU,
respondents.
TINGA,
J.:
From
a
coaptation
of
the
records
of
this
case,
it
appears
that
respondents
Miguel
Lu
and
Pacita
Zavalla,
(hereinafter,
the
Spouses
Lu)
owned
two
(2)
parcels
of
land
situated
in
Sta.
Rosa,
Laguna
covered
by
TCT
No.
T-39022
and
TCT
No.
T-
39023
both
measuring
15,808
square
meters
or
a
total
of
3.1616
hectares.
On
20
August
1986,
the
Spouses
Lu
purportedly
sold
the
two
parcels
of
land
to
respondent
Pablo
Babasanta,
(hereinafter,
Babasanta)
for
the
price
of
fifteen
pesos
(P15.00)
per
square
meter.
Babasanta
made
a
downpayment
of
fifty
thousand
pesos
(P50,000.00)
as
evidenced
by
a
memorandum
receipt
issued
by
Pacita
Lu
of
the
same
date.
Several
other
payments
totaling
two
hundred
thousand
pesos
(P200,000.00)
were
made
by
Babasanta.
Sometime
in
May
1989,
Babasanta
wrote
a
letter
to
Pacita
Lu
to
demand
the
execution
of
a
final
deed
of
sale
in
his
favor
so
that
he
could
effect
full
payment
of
the
purchase
price.
In
the
same
letter,
Babasanta
notified
the
spouses
about
having
received
information
that
the
spouses
sold
the
same
property
to
another
without
his
knowledge
and
consent.
He
demanded
that
the
second
sale
be
cancelled
and
that
a
final
deed
of
sale
be
issued
in
his
favor.
In
response,
Pacita
Lu
wrote
a
letter
to
Babasanta
wherein
she
acknowledged
having
agreed
to
sell
the
property
to
him
at
fifteen
pesos
(P15.00)
per
square
meter.
She,
however,
reminded
Babasanta
that
when
the
balance
of
the
purchase
price
became
due,
he
requested
for
a
reduction
of
the
price
and
when
she
refused,
Babasanta
backed
out
of
the
sale.
Pacita
added
that
she
returned
the
sum
of
fifty
thousand
pesos
(P50,000.00)
to
Babasanta
through
Eugenio
Oya.
On
2
June
1989,
respondent
Babasanta,
as
plaintiff,
filed
before
the
Regional
Trial
Court
(RTC),
Branch
31,
of
San
Pedro,
Laguna,
a
Complaint
for
Specific
Performance
and
Damages1
against
his
co-respondents
herein,
the
Spouses
Lu.
Babasanta
alleged
that
the
lands
covered
by
TCT
No.
T-
39022
and
T-39023
had
been
sold
to
him
by
the
spouses
at
fifteen
pesos
(P15.00)
per
square
meter.
Despite
his
repeated
demands
for
the
execution
of
a
final
deed
of
sale
in
his
favor,
respondents
allegedly
refused.
In
their
Answer,2
the
Spouses
Lu
alleged
that
Pacita
Lu
obtained
loans
from
Babasanta
and
when
the
total
advances
of
Pacita
reached
fifty
thousand
pesos
(P50,000.00),
the
latter
and
Babasanta,
without
the
knowledge
and
consent
of
Miguel
Lu,
had
verbally
agreed
to
transform
the
transaction
into
a
contract
to
sell
the
two
parcels
of
land
to
Babasanta
with
the
fifty
thousand
pesos
(P50,000.00)
to
be
considered
as
the
downpayment
for
the
property
and
the
balance
to
be
paid
on
or
before
31
December
1987.
Respondents
Lu
added
that
as
of
November
1987,
total
payments
made
by
Babasanta
amounted
to
only
two
hundred
thousand
pesos
(P200,000.00)
and
the
latter
allegedly
failed
to
pay
the
balance
of
two
hundred
sixty
thousand
pesos
(P260,000.00)
despite
repeated
demands.
Babasanta
had
purportedly
asked
Pacita
for
a
reduction
of
the
price
from
fifteen
pesos
(P15.00)
to
twelve
pesos
(P12.00)
per
square
meter
and
when
the
Spouses
Lu
refused
to
grant
Babasantas
request,
the
latter
rescinded
the
contract
to
sell
and
declared
that
the
original
loan
transaction
just
be
carried
out
in
that
the
spouses
would
be
indebted
to
him
in
the
amount
of
two
hundred
thousand
pesos
(P200,000.00).
Accordingly,
on
6
July
1989,
they
purchased
Interbank
Managers
Check
No.
05020269
in
the
amount
of
two
hundred
thousand
pesos
(P200,000.00)
in
the
name
of
Babasanta
to
show
that
she
was
able
and
willing
to
pay
the
balance
of
her
loan
obligation.
Babasanta
later
filed
an
Amended
Complaint
dated
17
January
19903
wherein
he
prayed
for
the
issuance
of
a
writ
of
preliminary
injunction
with
temporary
restraining
order
and
the
inclusion
of
the
Register
of
Deeds
of
Calamba,
Laguna
as
party
defendant.
He
contended
that
the
issuance
of
a
preliminary
injunction
was
necessary
to
restrain
the
transfer
or
conveyance
by
the
Spouses
Lu
of
the
subject
property
to
other
persons.
The
Spouses
Lu
filed
their
Opposition4
to
the
amended
complaint
contending
that
it
raised
new
matters
which
seriously
affect
their
substantive
rights
under
the
original
complaint.
However,
the
trial
court
in
its
Order
dated
17
January
19905
admitted
the
amended
complaint.
On
19
January
1990,
herein
petitioner
San
Lorenzo
Development
Corporation
(SLDC)
filed
a
Motion
for
Intervention6
before
the
trial
court.
SLDC
alleged
that
it
had
legal
interest
in
the
subject
matter
under
litigation
because
on
3
May
1989,
the
two
parcels
of
land
involved,
namely
Lot
1764-A
and
1764-B,
had
been
sold
to
it
in
a
Deed
of
Absolute
Sale
with
Mortgage.7
It
alleged
that
it
was
a
buyer
in
good
faith
and
for
value
and
therefore
it
had
a
better
right
over
the
property
in
litigation.
In
his
Opposition
to
SLDCs
motion
for
intervention,8
respondent
Babasanta
demurred
and
argued
that
the
latter
had
no
legal
interest
in
the
case
because
the
two
parcels
of
land
involved
herein
had
already
been
conveyed
to
him
by
the
Spouses
Lu
and
hence,
the
vendors
were
without
legal
capacity
to
transfer
or
dispose
of
the
two
parcels
of
land
to
the
intervenor.
Meanwhile,
the
trial
court
in
its
Order
dated
21
March
1990
allowed
SLDC
to
intervene.
SLDC
filed
its
Complaint-in-
Intervention
on
19
April
1990.9
Respondent
Babasantas
motion
for
the
issuance
of
a
preliminary
injunction
was
likewise
granted
by
the
trial
court
in
its
Order
dated
11
January
199110
conditioned
upon
his
filing
of
a
bond
in
the
amount
of
fifty
thousand
pesos
(P50,000.00).
SLDC
in
its
Complaint-in-Intervention
alleged
that
on
11
February
1989,
the
Spouses
Lu
executed
in
its
favor
an
Option
to
Buy
the
lots
subject
of
the
complaint.
Accordingly,
it
paid
an
option
money
in
the
amount
of
three
hundred
sixteen
thousand
one
hundred
sixty
pesos
(P316,160.00)
out
of
the
total
consideration
for
the
purchase
of
the
two
lots
of
one
million
two
hundred
sixty-four
thousand
six
hundred
forty
pesos
(P1,264,640.00).
After
the
Spouses
Lu
received
a
total
amount
of
six
hundred
thirty-two
thousand
three
hundred
twenty
pesos
(P632,320.00)
they
executed
on
3
May
1989
a
Deed
of
Absolute
Sale
with
Mortgage
in
its
favor.
SLDC
added
that
the
certificates
of
title
over
the
property
were
delivered
to
it
by
the
spouses
clean
and
free
from
any
adverse
claims
and/or
notice
of
lis
pendens.
SLDC
further
alleged
that
it
only
learned
of
the
filing
of
the
complaint
sometime
in
the
early
part
of
January
1990
which
prompted
it
to
file
the
motion
to
intervene
without
delay.
Claiming
that
it
was
a
buyer
in
good
faith,
SLDC
argued
that
it
had
no
obligation
to
look
beyond
the
titles
submitted
to
it
by
the
Spouses
Lu
particularly
because
Babasantas
claims
were
not
annotated
on
the
certificates
of
title
at
the
time
the
lands
were
sold
to
it.
After
a
protracted
trial,
the
RTC
rendered
its
Decision
on
30
July
1993
upholding
the
sale
of
the
property
to
SLDC.
It
ordered
the
Spouses
Lu
to
pay
Babasanta
the
sum
of
two
hundred
thousand
pesos
(P200,000.00)
with
legal
interest
plus
the
further
sum
of
fifty
thousand
pesos
(P50,000.00)
as
and
for
attorneys
fees.
On
the
complaint-in-intervention,
the
trial
court
ordered
the
Register
of
Deeds
of
Laguna,
Calamba
Branch
to
cancel
the
notice
of
lis
pendens
annotated
on
the
original
of
the
TCT
No.
T-39022
(T-7218)
and
No.
T-39023
(T-7219).
Applying
Article
1544
of
the
Civil
Code,
the
trial
court
ruled
that
since
both
Babasanta
and
SLDC
did
not
register
the
respective
sales
in
their
favor,
ownership
of
the
property
should
pertain
to
the
buyer
who
first
acquired
possession
of
the
property.
The
trial
court
equated
the
execution
of
a
public
instrument
in
favor
of
SLDC
as
sufficient
delivery
of
the
property
to
the
latter.
It
concluded
that
symbolic
possession
could
be
considered
to
have
been
first
transferred
to
SLDC
and
consequently
ownership
of
the
property
pertained
to
SLDC
who
purchased
the
property
in
good
faith.
Respondent
Babasanta
appealed
the
trial
courts
decision
to
the
Court
of
Appeals
alleging
in
the
main
that
the
trial
court
erred
in
concluding
that
SLDC
is
a
purchaser
in
good
faith
and
in
upholding
the
validity
of
the
sale
made
by
the
Spouses
Lu
in
favor
of
SLDC.
Respondent
spouses
likewise
filed
an
appeal
to
the
Court
of
Appeals.
They
contended
that
the
trial
court
erred
in
failing
to
consider
that
the
contract
to
sell
between
them
and
Babasanta
had
been
novated
when
the
latter
abandoned
the
verbal
contract
of
sale
and
declared
that
the
original
loan
transaction
just
be
carried
out.
The
Spouses
Lu
argued
that
since
the
properties
involved
were
conjugal,
the
trial
court
should
have
declared
the
verbal
contract
to
sell
between
Pacita
Lu
and
Pablo
Babasanta
null
and
void
ab
initio
for
lack
of
knowledge
and
consent
of
Miguel
Lu.
They
further
averred
that
the
trial
court
erred
in
not
dismissing
the
complaint
filed
by
Babasanta;
in
awarding
damages
in
his
favor
and
in
refusing
to
grant
the
reliefs
prayed
for
in
their
answer.
On
4
October
1995,
the
Court
of
Appeals
rendered
its
Decision11
which
set
aside
the
judgment
of
the
trial
court.
It
declared
that
the
sale
between
Babasanta
and
the
Spouses
Lu
was
valid
and
subsisting
and
ordered
the
spouses
to
execute
the
necessary
deed
of
conveyance
in
favor
of
Babasanta,
and
the
latter
to
pay
the
balance
of
the
purchase
price
in
the
amount
of
two
hundred
sixty
thousand
pesos
(P260,000.00).
The
appellate
court
ruled
that
the
Absolute
Deed
of
Sale
with
Mortgage
in
favor
of
SLDC
was
null
and
void
on
the
ground
that
SLDC
was
a
purchaser
in
bad
faith.
The
Spouses
Lu
were
further
ordered
to
return
all
payments
made
by
SLDC
with
legal
interest
and
to
pay
attorneys
fees
to
Babasanta.
SLDC
and
the
Spouses
Lu
filed
separate
motions
for
reconsideration
with
the
appellate
court.12
However,
in
a
Manifestation
dated
20
December
1995,13
the
Spouses
Lu
informed
the
appellate
court
that
they
are
no
longer
contesting
the
decision
dated
4
October
1995.
In
its
Resolution
dated
11
March
1996,14
the
appellate
court
considered
as
withdrawn
the
motion
for
reconsideration
filed
by
the
Spouses
Lu
in
view
of
their
manifestation
of
20
December
1995.
The
appellate
court
denied
SLDCs
motion
for
reconsideration
on
the
ground
that
no
new
or
substantial
arguments
were
raised
therein
which
would
warrant
modification
or
reversal
of
the
courts
decision
dated
4
October
1995.
Hence,
this
petition.
SLDC
assigns
the
following
errors
allegedly
committed
by
the
appellate
court:
THE
COURT
OF
APPEALS
ERRED
IN
HOLDING
THAT
SAN
LORENZO
WAS
NOT
A
BUYER
IN
GOOD
FAITH
BECAUSE
WHEN
THE
SELLER
PACITA
ZAVALLA
LU
OBTAINED
FROM
IT
THE
CASH
ADVANCE
OF
P200,000.00,
SAN
LORENZO
WAS
PUT
ON
INQUIRY
OF
A
PRIOR
TRANSACTION
ON
THE
PROPERTY.
THE
COURT
OF
APPEALS
ERRED
IN
FAILING
TO
APPRECIATE
THE
ESTABLISHED
FACT
THAT
THE
ALLEGED
FIRST
BUYER,
RESPONDENT
BABASANTA,
WAS
NOT
IN
POSSESSION
OF
THE
DISPUTED
PROPERTY
WHEN
SAN
LORENZO
BOUGHT
AND
TOOK
POSSESSION
OF
THE
PROPERTY
AND
NO
ADVERSE
CLAIM,
LIEN,
ENCUMBRANCE
OR
LIS
PENDENS
WAS
ANNOTATED
ON
THE
TITLES.
THE
COURT
OF
APPEALS
ERRED
IN
FAILING
TO
APPRECIATE
THE
FACT
THAT
RESPONDENT
BABASANTA
HAS
SUBMITTED
NO
EVIDENCE
SHOWING
THAT
SAN
LORENZO
WAS
AWARE
OF
HIS
RIGHTS
OR
INTERESTS
IN
THE
DISPUTED
PROPERTY.
THE
COURT
OF
APPEALS
ERRED
IN
HOLDING
THAT
NOTWITHSTANDING
ITS
FULL
CONCURRENCE
ON
THE
FINDINGS
OF
FACT
OF
THE
TRIAL
COURT,
IT
REVERSED
AND
SET
ASIDE
THE
DECISION
OF
THE
TRIAL
COURT
UPHOLDING
THE
TITLE
OF
SAN
LORENZO
AS
A
BUYER
AND
FIRST
POSSESSOR
IN
GOOD
FAITH.
15
SLDC
contended
that
the
appellate
court
erred
in
concluding
that
it
had
prior
notice
of
Babasantas
claim
over
the
property
merely
on
the
basis
of
its
having
advanced
the
amount
of
two
hundred
thousand
pesos
(P200,000.00)
to
Pacita
Lu
upon
the
latters
representation
that
she
needed
the
money
to
pay
her
obligation
to
Babasanta.
It
argued
that
it
had
no
reason
to
suspect
that
Pacita
was
not
telling
the
truth
that
the
money
would
be
used
to
pay
her
indebtedness
to
Babasanta.
At
any
rate,
SLDC
averred
that
the
amount
of
two
hundred
thousand
pesos
(P200,000.00)
which
it
advanced
to
Pacita
Lu
would
be
deducted
from
the
balance
of
the
purchase
price
still
due
from
it
and
should
not
be
construed
as
notice
of
the
prior
sale
of
the
land
to
Babasanta.
It
added
that
at
no
instance
did
Pacita
Lu
inform
it
that
the
lands
had
been
previously
sold
to
Babasanta.
Moreover,
SLDC
stressed
that
after
the
execution
of
the
sale
in
its
favor
it
immediately
took
possession
of
the
property
and
asserted
its
rights
as
new
owner
as
opposed
to
Babasanta
who
has
never
exercised
acts
of
ownership.
Since
the
titles
bore
no
adverse
claim,
encumbrance,
or
lien
at
the
time
it
was
sold
to
it,
SLDC
argued
that
it
had
every
reason
to
rely
on
the
correctness
of
the
certificate
of
title
and
it
was
not
obliged
to
go
beyond
the
certificate
to
determine
the
condition
of
the
property.
Invoking
the
presumption
of
good
faith,
it
added
that
the
burden
rests
on
Babasanta
to
prove
that
it
was
aware
of
the
prior
sale
to
him
but
the
latter
failed
to
do
so.
SLDC
pointed
out
that
the
notice
of
lis
pendens
was
annotated
only
on
2
June
1989
long
after
the
sale
of
the
property
to
it
was
consummated
on
3
May
1989.1awphi1.nt
Meanwhile,
in
an
Urgent
Ex-Parte
Manifestation
dated
27
August
1999,
the
Spouses
Lu
informed
the
Court
that
due
to
financial
constraints
they
have
no
more
interest
to
pursue
their
rights
in
the
instant
case
and
submit
themselves
to
the
decision
of
the
Court
of
Appeals.16
On
the
other
hand,
respondent
Babasanta
argued
that
SLDC
could
not
have
acquired
ownership
of
the
property
because
it
failed
to
comply
with
the
requirement
of
registration
of
the
sale
in
good
faith.
He
emphasized
that
at
the
time
SLDC
registered
the
sale
in
its
favor
on
30
June
1990,
there
was
already
a
notice
of
lis
pendens
annotated
on
the
titles
of
the
property
made
as
early
as
2
June
1989.
Hence,
petitioners
registration
of
the
sale
did
not
confer
upon
it
any
right.
Babasanta
further
asserted
that
petitioners
bad
faith
in
the
acquisition
of
the
property
is
evident
from
the
fact
that
it
failed
to
make
necessary
inquiry
regarding
the
purpose
of
the
issuance
of
the
two
hundred
thousand
pesos
(P200,000.00)
managers
check
in
his
favor.
The
core
issue
presented
for
resolution
in
the
instant
petition
is
who
between
SLDC
and
Babasanta
has
a
better
right
over
the
two
parcels
of
land
subject
of
the
instant
case
in
view
of
the
successive
transactions
executed
by
the
Spouses
Lu.
To
prove
the
perfection
of
the
contract
of
sale
in
his
favor,
Babasanta
presented
a
document
signed
by
Pacita
Lu
acknowledging
receipt
of
the
sum
of
fifty
thousand
pesos
(P50,000.00)
as
partial
payment
for
3.6
hectares
of
farm
lot
situated
at
Barangay
Pulong,
Sta.
Cruz,
Sta.
Rosa,
Laguna.17
While
the
receipt
signed
by
Pacita
did
not
mention
the
price
for
which
the
property
was
being
sold,
this
deficiency
was
supplied
by
Pacita
Lus
letter
dated
29
May
198918
wherein
she
admitted
that
she
agreed
to
sell
the
3.6
hectares
of
land
to
Babasanta
for
fifteen
pesos
(P15.00)
per
square
meter.
An
analysis
of
the
facts
obtaining
in
this
case,
as
well
as
the
evidence
presented
by
the
parties,
irresistibly
leads
to
the
conclusion
that
the
agreement
between
Babasanta
and
the
Spouses
Lu
is
a
contract
to
sell
and
not
a
contract
of
sale.
Contracts,
in
general,
are
perfected
by
mere
consent,19
which
is
manifested
by
the
meeting
of
the
offer
and
the
acceptance
upon
the
thing
which
are
to
constitute
the
contract.
The
offer
must
be
certain
and
the
acceptance
absolute.20
Moreover,
contracts
shall
be
obligatory
in
whatever
form
they
may
have
been
entered
into,
provided
all
the
essential
requisites
for
their
validity
are
present.21
The
receipt
signed
by
Pacita
Lu
merely
states
that
she
accepted
the
sum
of
fifty
thousand
pesos
(P50,000.00)
from
Babasanta
as
partial
payment
of
3.6
hectares
of
farm
lot
situated
in
Sta.
Rosa,
Laguna.
While
there
is
no
stipulation
that
the
seller
reserves
the
ownership
of
the
property
until
full
payment
of
the
price
which
is
a
distinguishing
feature
of
a
contract
to
sell,
the
subsequent
acts
of
the
parties
convince
us
that
the
Spouses
Lu
never
intended
to
transfer
ownership
to
Babasanta
except
upon
full
payment
of
the
purchase
price.
Babasantas
letter
dated
22
May
1989
was
quite
telling.
He
stated
therein
that
despite
his
repeated
requests
for
the
execution
of
the
final
deed
of
sale
in
his
favor
so
that
he
could
effect
full
payment
of
the
price,
Pacita
Lu
allegedly
refused
to
do
so.
In
effect,
Babasanta
himself
recognized
that
ownership
of
the
property
would
not
be
transferred
to
him
until
such
time
as
he
shall
have
effected
full
payment
of
the
price.
Moreover,
had
the
sellers
intended
to
transfer
title,
they
could
have
easily
executed
the
document
of
sale
in
its
required
form
simultaneously
with
their
acceptance
of
the
partial
payment,
but
they
did
not.
Doubtlessly,
the
receipt
signed
by
Pacita
Lu
should
legally
be
considered
as
a
perfected
contract
to
sell.
The
distinction
between
a
contract
to
sell
and
a
contract
of
sale
is
quite
germane.
In
a
contract
of
sale,
title
passes
to
the
vendee
upon
the
delivery
of
the
thing
sold;
whereas
in
a
contract
to
sell,
by
agreement
the
ownership
is
reserved
in
the
vendor
and
is
not
to
pass
until
the
full
payment
of
the
price.22
In
a
contract
of
sale,
the
vendor
has
lost
and
cannot
recover
ownership
until
and
unless
the
contract
is
resolved
or
rescinded;
whereas
in
a
contract
to
sell,
title
is
retained
by
the
vendor
until
the
full
payment
of
the
price,
such
payment
being
a
positive
suspensive
condition
and
failure
of
which
is
not
a
breach
but
an
event
that
prevents
the
obligation
of
the
vendor
to
convey
title
from
becoming
effective.23
The
perfected
contract
to
sell
imposed
upon
Babasanta
the
obligation
to
pay
the
balance
of
the
purchase
price.
There
being
an
obligation
to
pay
the
price,
Babasanta
should
have
made
the
proper
tender
of
payment
and
consignation
of
the
price
in
court
as
required
by
law.
Mere
sending
of
a
letter
by
the
vendee
expressing
the
intention
to
pay
without
the
accompanying
payment
is
not
considered
a
valid
tender
of
payment.24
Consignation
of
the
amounts
due
in
court
is
essential
in
order
to
extinguish
Babasantas
obligation
to
pay
the
balance
of
the
purchase
price.
Glaringly
absent
from
the
records
is
any
indication
that
Babasanta
even
attempted
to
make
the
proper
consignation
of
the
amounts
due,
thus,
the
obligation
on
the
part
of
the
sellers
to
convey
title
never
acquired
obligatory
force.
On
the
assumption
that
the
transaction
between
the
parties
is
a
contract
of
sale
and
not
a
contract
to
sell,
Babasantas
claim
of
ownership
should
nevertheless
fail.
Sale,
being
a
consensual
contract,
is
perfected
by
mere
consent25
and
from
that
moment,
the
parties
may
reciprocally
demand
performance.26
The
essential
elements
of
a
contract
of
sale,
to
wit:
(1)
consent
or
meeting
of
the
minds,
that
is,
to
transfer
ownership
in
exchange
for
the
price;
(2)
object
certain
which
is
the
subject
matter
of
the
contract;
(3)
cause
of
the
obligation
which
is
established.27
The
perfection
of
a
contract
of
sale
should
not,
however,
be
confused
with
its
consummation.
In
relation
to
the
acquisition
and
transfer
of
ownership,
it
should
be
noted
that
sale
is
not
a
mode,
but
merely
a
title.
A
mode
is
the
legal
means
by
which
dominion
or
ownership
is
created,
transferred
or
destroyed,
but
title
is
only
the
legal
basis
by
which
to
affect
dominion
or
ownership.28
Under
Article
712
of
the
Civil
Code,
"ownership
and
other
real
rights
over
property
are
acquired
and
transmitted
by
law,
by
donation,
by
testate
and
intestate
succession,
and
in
consequence
of
certain
contracts,
by
tradition."
Contracts
only
constitute
titles
or
rights
to
the
transfer
or
acquisition
of
ownership,
while
delivery
or
tradition
is
the
mode
of
accomplishing
the
same.29
Therefore,
sale
by
itself
does
not
transfer
or
affect
ownership;
the
most
that
sale
does
is
to
create
the
obligation
to
transfer
ownership.
It
is
tradition
or
delivery,
as
a
consequence
of
sale,
that
actually
transfers
ownership.
Explicitly,
the
law
provides
that
the
ownership
of
the
thing
sold
is
acquired
by
the
vendee
from
the
moment
it
is
delivered
to
him
in
any
of
the
ways
specified
in
Article
1497
to
1501.30
The
word
"delivered"
should
not
be
taken
restrictively
to
mean
transfer
of
actual
physical
possession
of
the
property.
The
law
recognizes
two
principal
modes
of
delivery,
to
wit:
(1)
actual
delivery;
and
(2)
legal
or
constructive
delivery.
Actual
delivery
consists
in
placing
the
thing
sold
in
the
control
and
possession
of
the
vendee.31
Legal
or
constructive
delivery,
on
the
other
hand,
may
be
had
through
any
of
the
following
ways:
the
execution
of
a
public
instrument
evidencing
the
sale;32
symbolical
tradition
such
as
the
delivery
of
the
keys
of
the
place
where
the
movable
sold
is
being
kept;33
traditio
longa
manu
or
by
mere
consent
or
agreement
if
the
movable
sold
cannot
yet
be
transferred
to
the
possession
of
the
buyer
at
the
time
of
the
sale;34
traditio
brevi
manu
if
the
buyer
already
had
possession
of
the
object
even
before
the
sale;35
and
traditio
constitutum
possessorium,
where
the
seller
remains
in
possession
of
the
property
in
a
different
capacity.36
Following
the
above
disquisition,
respondent
Babasanta
did
not
acquire
ownership
by
the
mere
execution
of
the
receipt
by
Pacita
Lu
acknowledging
receipt
of
partial
payment
for
the
property.
For
one,
the
agreement
between
Babasanta
and
the
Spouses
Lu,
though
valid,
was
not
embodied
in
a
public
instrument.
Hence,
no
constructive
delivery
of
the
lands
could
have
been
effected.
For
another,
Babasanta
had
not
taken
possession
of
the
property
at
any
time
after
the
perfection
of
the
sale
in
his
favor
or
exercised
acts
of
dominion
over
it
despite
his
assertions
that
he
was
the
rightful
owner
of
the
lands.
Simply
stated,
there
was
no
delivery
to
Babasanta,
whether
actual
or
constructive,
which
is
essential
to
transfer
ownership
of
the
property.
Thus,
even
on
the
assumption
that
the
perfected
contract
between
the
parties
was
a
sale,
ownership
could
not
have
passed
to
Babasanta
in
the
absence
of
delivery,
since
in
a
contract
of
sale
ownership
is
transferred
to
the
vendee
only
upon
the
delivery
of
the
thing
sold.37
However,
it
must
be
stressed
that
the
juridical
relationship
between
the
parties
in
a
double
sale
is
primarily
governed
by
Article
1544
which
lays
down
the
rules
of
preference
between
the
two
purchasers
of
the
same
property.
It
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.
The
principle
of
primus
tempore,
potior
jure
(first
in
time,
stronger
in
right)
gains
greater
significance
in
case
of
double
sale
of
immovable
property.
When
the
thing
sold
twice
is
an
immovable,
the
one
who
acquires
it
and
first
records
it
in
the
Registry
of
Property,
both
made
in
good
faith,
shall
be
deemed
the
owner.38
Verily,
the
act
of
registration
must
be
coupled
with
good
faith
that
is,
the
registrant
must
have
no
knowledge
of
the
defect
or
lack
of
title
of
his
vendor
or
must
not
have
been
aware
of
facts
which
should
have
put
him
upon
such
inquiry
and
investigation
as
might
be
necessary
to
acquaint
him
with
the
defects
in
the
title
of
his
vendor.39
Admittedly,
SLDC
registered
the
sale
with
the
Registry
of
Deeds
after
it
had
acquired
knowledge
of
Babasantas
claim.
Babasanta,
however,
strongly
argues
that
the
registration
of
the
sale
by
SLDC
was
not
sufficient
to
confer
upon
the
latter
any
title
to
the
property
since
the
registration
was
attended
by
bad
faith.
Specifically,
he
points
out
that
at
the
time
SLDC
registered
the
sale
on
30
June
1990,
there
was
already
a
notice
of
lis
pendens
on
the
file
with
the
Register
of
Deeds,
the
same
having
been
filed
one
year
before
on
2
June
1989.
Did
the
registration
of
the
sale
after
the
annotation
of
the
notice
of
lis
pendens
obliterate
the
effects
of
delivery
and
possession
in
good
faith
which
admittedly
had
occurred
prior
to
SLDCs
knowledge
of
the
transaction
in
favor
of
Babasanta?
We
do
not
hold
so.
It
must
be
stressed
that
as
early
as
11
February
1989,
the
Spouses
Lu
executed
the
Option
to
Buy
in
favor
of
SLDC
upon
receiving
P316,160.00
as
option
money
from
SLDC.
After
SLDC
had
paid
more
than
one
half
of
the
agreed
purchase
price
of
P1,264,640.00,
the
Spouses
Lu
subsequently
executed
on
3
May
1989
a
Deed
of
Absolute
Sale
in
favor
or
SLDC.
At
the
time
both
deeds
were
executed,
SLDC
had
no
knowledge
of
the
prior
transaction
of
the
Spouses
Lu
with
Babasanta.
Simply
stated,
from
the
time
of
execution
of
the
first
deed
up
to
the
moment
of
transfer
and
delivery
of
possession
of
the
lands
to
SLDC,
it
had
acted
in
good
faith
and
the
subsequent
annotation
of
lis
pendens
has
no
effect
at
all
on
the
consummated
sale
between
SLDC
and
the
Spouses
Lu.
A
purchaser
in
good
faith
is
one
who
buys
property
of
another
without
notice
that
some
other
person
has
a
right
to,
or
interest
in,
such
property
and
pays
a
full
and
fair
price
for
the
same
at
the
time
of
such
purchase,
or
before
he
has
notice
of
the
claim
or
interest
of
some
other
person
in
the
property.40
Following
the
foregoing
definition,
we
rule
that
SLDC
qualifies
as
a
buyer
in
good
faith
since
there
is
no
evidence
extant
in
the
records
that
it
had
knowledge
of
the
prior
transaction
in
favor
of
Babasanta.
At
the
time
of
the
sale
of
the
property
to
SLDC,
the
vendors
were
still
the
registered
owners
of
the
property
and
were
in
fact
in
possession
of
the
lands.l^vvphi1.net
Time
and
again,
this
Court
has
ruled
that
a
person
dealing
with
the
owner
of
registered
land
is
not
bound
to
go
beyond
the
certificate
of
title
as
he
is
charged
with
notice
of
burdens
on
the
property
which
are
noted
on
the
face
of
the
register
or
on
the
certificate
of
title.41
In
assailing
knowledge
of
the
transaction
between
him
and
the
Spouses
Lu,
Babasanta
apparently
relies
on
the
principle
of
constructive
notice
incorporated
in
Section
52
of
the
Property
Registration
Decree
(P.D.
No.
1529)
which
reads,
thus:
Sec.
52.
Constructive
notice
upon
registration.
Every
conveyance,
mortgage,
lease,
lien,
attachment,
order,
judgment,
instrument
or
entry
affecting
registered
land
shall,
if
registered,
filed,
or
entered
in
the
office
of
the
Register
of
Deeds
for
the
province
or
city
where
the
land
to
which
it
relates
lies,
be
constructive
notice
to
all
persons
from
the
time
of
such
registering,
filing,
or
entering.
However,
the
constructive
notice
operates
as
suchby
the
express
wording
of
Section
52from
the
time
of
the
registration
of
the
notice
of
lis
pendens
which
in
this
case
was
effected
only
on
2
June
1989,
at
which
time
the
sale
in
favor
of
SLDC
had
long
been
consummated
insofar
as
the
obligation
of
the
Spouses
Lu
to
transfer
ownership
over
the
property
to
SLDC
is
concerned.
More
fundamentally,
given
the
superiority
of
the
right
of
SLDC
to
the
claim
of
Babasanta
the
annotation
of
the
notice
of
lis
pendens
cannot
help
Babasantas
position
a
bit
and
it
is
irrelevant
to
the
good
or
bad
faith
characterization
of
SLDC
as
a
purchaser.
A
notice
of
lis
pendens,
as
the
Court
held
in
Natao
v.
Esteban,42
serves
as
a
warning
to
a
prospective
purchaser
or
incumbrancer
that
the
particular
property
is
in
litigation;
and
that
he
should
keep
his
hands
off
the
same,
unless
he
intends
to
gamble
on
the
results
of
the
litigation."
Precisely,
in
this
case
SLDC
has
intervened
in
the
pending
litigation
to
protect
its
rights.
Obviously,
SLDCs
faith
in
the
merit
of
its
cause
has
been
vindicated
with
the
Courts
present
decision
which
is
the
ultimate
denouement
on
the
controversy.
The
Court
of
Appeals
has
made
capital43
of
SLDCs
averment
in
its
Complaint-in-Intervention44
that
at
the
instance
of
Pacita
Lu
it
issued
a
check
for
P200,000.00
payable
to
Babasanta
and
the
confirmatory
testimony
of
Pacita
Lu
herself
on
cross-examination.45
However,
there
is
nothing
in
the
said
pleading
and
the
testimony
which
explicitly
relates
the
amount
to
the
transaction
between
the
Spouses
Lu
and
Babasanta
for
what
they
attest
to
is
that
the
amount
was
supposed
to
pay
off
the
advances
made
by
Babasanta
to
Pacita
Lu.
In
any
event,
the
incident
took
place
after
the
Spouses
Lu
had
already
executed
the
Deed
of
Absolute
Sale
with
Mortgage
in
favor
of
SLDC
and
therefore,
as
previously
explained,
it
has
no
effect
on
the
legal
position
of
SLDC.
Assuming
ex
gratia
argumenti
that
SLDCs
registration
of
the
sale
had
been
tainted
by
the
prior
notice
of
lis
pendens
and
assuming
further
for
the
same
nonce
that
this
is
a
case
of
double
sale,
still
Babasantas
claim
could
not
prevail
over
that
of
SLDCs.
In
Abarquez
v.
Court
of
Appeals,46
this
Court
had
the
occasion
to
rule
that
if
a
vendee
in
a
double
sale
registers
the
sale
after
he
has
acquired
knowledge
of
a
previous
sale,
the
registration
constitutes
a
registration
in
bad
faith
and
does
not
confer
upon
him
any
right.
If
the
registration
is
done
in
bad
faith,
it
is
as
if
there
is
no
registration
at
all,
and
the
buyer
who
has
taken
possession
first
of
the
property
in
good
faith
shall
be
preferred.
In
Abarquez,
the
first
sale
to
the
spouses
Israel
was
notarized
and
registered
only
after
the
second
vendee,
Abarquez,
registered
their
deed
of
sale
with
the
Registry
of
Deeds,
but
the
Israels
were
first
in
possession.
This
Court
awarded
the
property
to
the
Israels
because
registration
of
the
property
by
Abarquez
lacked
the
element
of
good
faith.
While
the
facts
in
the
instant
case
substantially
differ
from
that
in
Abarquez,
we
would
not
hesitate
to
rule
in
favor
of
SLDC
on
the
basis
of
its
prior
possession
of
the
property
in
good
faith.
Be
it
noted
that
delivery
of
the
property
to
SLDC
was
immediately
effected
after
the
execution
of
the
deed
in
its
favor,
at
which
time
SLDC
had
no
knowledge
at
all
of
the
prior
transaction
by
the
Spouses
Lu
in
favor
of
Babasanta.1a\^/phi1.net
The
law
speaks
not
only
of
one
criterion.
The
first
criterion
is
priority
of
entry
in
the
registry
of
property;
there
being
no
priority
of
such
entry,
the
second
is
priority
of
possession;
and,
in
the
absence
of
the
two
priorities,
the
third
priority
is
of
the
date
of
title,
with
good
faith
as
the
common
critical
element.
Since
SLDC
acquired
possession
of
the
property
in
good
faith
in
contrast
to
Babasanta,
who
neither
registered
nor
possessed
the
property
at
any
time,
SLDCs
right
is
definitely
superior
to
that
of
Babasantas.
At
any
rate,
the
above
discussion
on
the
rules
on
double
sale
would
be
purely
academic
for
as
earlier
stated
in
this
decision,
the
contract
between
Babasanta
and
the
Spouses
Lu
is
not
a
contract
of
sale
but
merely
a
contract
to
sell.
In
Dichoso
v.
Roxas,47
we
had
the
occasion
to
rule
that
Article
1544
does
not
apply
to
a
case
where
there
was
a
sale
to
one
party
of
the
land
itself
while
the
other
contract
was
a
mere
promise
to
sell
the
land
or
at
most
an
actual
assignment
of
the
right
to
repurchase
the
same
land.
Accordingly,
there
was
no
double
sale
of
the
same
land
in
that
case.
WHEREFORE,
the
instant
petition
is
hereby
GRANTED.
The
decision
of
the
Court
of
Appeals
appealed
from
is
REVERSED
and
SET
ASIDE
and
the
decision
of
the
Regional
Trial
Court,
Branch
31,
of
San
Pedro,
Laguna
is
REINSTATED.
No
costs.
G.R.
No.
L-27587
February
18,
1970
AMADO
CARUMBA,
petitioner,
vs.
THE
COURT
OF
APPEALS,
SANTIAGO
BALBUENA
and
ANGELES
BOAQUIA
as
Deputy
Provincial
Sheriff,
respondents.
REYES,
J.B.L.,
J.:
Amado
Carumba
petitions
this
Supreme
Court
for
a
certiorari
to
review
a
decision
of
the
Court
of
Appeals,
rendered
in
its
Case
No.
36094-R,
that
reversed
the
judgment
in
his
favor
rendered
by
the
Court
of
First
Instance
of
Camarines
Sur
(Civil
Case
4646).
The
factual
background
and
history
of
these
proceedings
is
thus
stated
by
the
Court
of
Appeals
(pages
1-2):
On
April
12,
1955,
the
spouses
Amado
Canuto
and
Nemesia
Ibasco,
by
virtue
of
a
"Deed
of
Sale
of
Unregistered
Land
with
Covenants
of
Warranty"
(Exh.
A),
sold
a
parcel
of
land,
partly
residential
and
partly
coconut
land
with
a
periphery
(area)
of
359.09
square
meters,
more
or
less,
located
in
the
barrio
of
Santo
Domingo,
Iriga,
Camarines
Sur,
to
the
spouses
Amado
Carumba
and
Benita
Canuto,
for
the
sum
of
P350.00.
The
referred
deed
of
sale
was
never
registered
in
the
Office
of
the
Register
of
Deeds
of
Camarines
Sur,
and
the
Notary,
Mr.
Vicente
Malaya,
was
not
then
an
authorized
notary
public
in
the
place,
as
shown
by
Exh.
5.
Besides,
it
has
been
expressly
admitted
by
appellee
that
he
is
the
brother-
in-law
of
Amado
Canuto,
the
alleged
vendor
of
the
property
sold
to
him.
Amado
Canuto
is
the
older
brother
of
the
wife
of
the
herein
appellee,
Amado
Carumba.
On
January
21,
1957,
a
complaint
(Exh.
B)
for
a
sum
or
money
was
filed
by
Santiago
Balbuena
against
Amado
Canuto
and
Nemesia
Ibasco
before
the
Justice
of
the
Peace
Court
of
Iriga,
Camarines
Sur,
known
as
Civil
Case
No.
139
and
on
April
15,
1967,
a
decision
(Exh.
C)
was
rendered
in
favor
of
the
plaintiff
and
against
the
defendants.
On
October
1,
1968,
the
ex-officio
Sheriff,
Justo
V.
Imperial,
of
Camarines
Sur,
issued
a
"Definite
Deed
of
Sale
(Exh.
D)
of
the
property
now
in
question
in
favor
of
Santiago
Balbuena,
which
instrument
of
sale
was
registered
before
the
Office
of
the
Register
of
Deeds
of
Camarines
Sur,
on
October
3,
1958.
The
aforesaid
property
was
declared
for
taxation
purposes
(Exh.
1)
in
the
name
of
Santiago
Balbuena
in
1958.
The
Court
of
First
instance,
finding
that
after
execution
of
the
document
Carumba
had
taken
possession
of
the
land,
planting
bananas,
coffee
and
other
vegetables
thereon,
declared
him
to
be
the
owner
of
the
property
under
a
consummated
sale;
held
void
the
execution
levy
made
by
the
sheriff,
pursuant
to
a
judgment
against
Carumba's
vendor,
Amado
Canuto;
and
nullified
the
sale
in
favor
of
the
judgment
creditor,
Santiago
Balbuena.
The
Court,
therefore,
declared
Carumba
the
owner
of
the
litigated
property
and
ordered
Balbuena
to
pay
P30.00,
as
damages,
plus
the
costs.
The
Court
of
Appeals,
without
altering
the
findings
of
fact
made
by
the
court
of
origin,
declared
that
there
having
been
a
double
sale
of
the
land
subject
of
the
suit
Balbuena's
title
was
superior
to
that
of
his
adversary
under
Article
1544
of
the
Civil
Code
of
the
Philippines,
since
the
execution
sale
had
been
properly
registered
in
good
faith
and
the
sale
to
Carumba
was
not
recorded.
We
disagree.
While
under
the
invoked
Article
1544
registration
in
good
faith
prevails
over
possession
in
the
event
of
a
double
sale
by
the
vendor
of
the
same
piece
of
land
to
different
vendees,
said
article
is
of
no
application
to
the
case
at
bar,
even
if
Balbuena,
the
later
vendee,
was
ignorant
of
the
prior
sale
made
by
his
judgment
debtor
in
favor
of
petitioner
Carumba.
The
reason
is
that
the
purchaser
of
unregistered
land
at
a
sheriff's
execution
sale
only
steps
into
the
shoes
of
the
judgment
debtor,
and
merely
acquires
the
latter's
interest
in
the
property
sold
as
of
the
time
the
property
was
levied
upon.
This
is
specifically
provided
by
section
35
of
Rule
39
of
the
Revised
Rules
of
Court,
the
second
paragraph
of
said
section
specifically
providing
that:
Upon
the
execution
and
delivery
of
said
(final)
deed
the
purchaser,
redemptioner,
or
his
assignee
shall
be
substituted
to
and
acquire
all
the
right,
title,
interest,
and
claim
of
the
judgment
debtor
to
the
property
as
of
the
time
of
the
levy,
except
as
against
the
judgment
debtor
in
possession,
in
which
case
the
substitution
shall
be
effective
as
of
the
time
of
the
deed
...
(Emphasis
supplied)
While
the
time
of
the
levy
does
not
clearly
appear,
it
could
not
have
been
made
prior
to
15
April
1957,
when
the
decision
against
the
former
owners
of
the
land
was
rendered
in
favor
of
Balbuena.
But
the
deed
of
sale
in
favor
of
Canuto
had
been
executed
two
years
before,
on
12
April
1955,
and
while
only
embodied
in
a
private
document,
the
same,
coupled
with
the
fact
that
the
buyer
(petitioner
Carumba)
had
taken
possession
of
the
unregistered
land
sold,
sufficed
to
vest
ownership
on
the
said
buyer.
When
the
levy
was
made
by
the
Sheriff,
therefore,
the
judgment
debtor
no
longer
had
dominical
interest
nor
any
real
right
over
the
land
that
could
pass
to
the
purchaser
at
the
execution
sale.1
Hence,
the
latter
must
yield
the
land
to
petitioner
Carumba.
The
rule
is
different
in
case
of
lands
covered
by
Torrens
titles,
where
the
prior
sale
is
neither
recorded
nor
known
to
the
execution
purchaser
prior
to
the
levy;2
but
the
land
here
in
question
is
admittedly
not
registered
under
Act
No.
496.
WHEREFORE,
the
decision
of
the
Court
of
Appeals
is
reversed
and
that
of
the
Court
of
First
Instance
affirmed.
Costs
against
respondent
Santiago
Balbuena.