4b civ rev cases

7/25/2019 4B Civ Rev Cases

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TABLE OF CONTENTS

1. Dignos v.Court of Appeals ............................................................................................ 3

2. Hulst v. PR Builders ........................................................................................................ 3

3.

Toyota Shaw, Inc. v. Court of Appeals ......................................................................... 4

4. Spouses Edrada v. Spouses Ramos ............................................................................... 4

5. Sanchez v. Rigos ............................................................................................................... 5

6. Guzman, Bocaling & Co., vs Bonnevie ......................................................................... 6

7. Riviera Filipina, Inc. v. Court of Appeals..................................................................... 7

8. Paraaque Kings Enterprises, Incorporated v. Court of Appeals............................. 9

9. Lao v. Genato .................................................................................................................. 10

10.Alcantara-Daus v. Spouses De Leon ........................................................................... 11

11.Sampaguita Pictures, Inc. v. Jalwindor Manufacturers, Inc.................................... 13

12.Philippine National Bank v. Severo Eugenio Lo, et al. ............................................. 13

13.Philippine Suburban Development Corporation v. The Auditor General PedroGimenez .......................................................................................................................... 14

14.Norkis Distributors v. Court of Appeals and Alberto Nepales............................... 15

15.A.A. Addison v. Marciana Felix and Balbino Tioco.................................................. 16

16.Ten Forty Realty and Development Corporation v. Marina Cruz.......................... 17

17.Jesus Teran v. Francisca Villanueva, Viuda De Riosa, Et Al.................................... 18

18.Consolidated Rural Bank (Cagayan Valley), Inc., v. Court of Appeals and Heirs

of Teodoro Dela Cruz .................................................................................................... 1919.Martinez v. Court of Appeals....................................................................................... 21

20.Fudot v. Cattleya Land, Inc. ......................................................................................... 22

21.Lillian M. Mercado, et al. v. Allied Banking Corporation........................................ 22

22.Spouses Amancio et al. v. Court of Appeals, et al..................................................... 23

23.Alejandro Gabriel and Alfredo Gabriel, v. Spouses Pablo Mabanta et al.............. 24

24.Narcisa Sanchez v. Roque Ramos................................................................................ 26

25.Crisanto Lichauco, et al., v. Jose Berenguer............................................................... 27

26.Carlos Palanca vs. The Director of Lands, et al., ....................................................... 29

27.Sigaya v. Mayuga ........................................................................................................... 30

28.Yap Kim Chuan v. Tiaoqui ........................................................................................... 30

29.Moles vs. IAC ................................................................................................................. 31

30.Bricktown Development Corporation v. Amor Tierra Development Corporation .......................................................................................................................................... 32

31.EDCA Publishing & Distributing Corp. v. Spouses Leonor And Gerardo Santos,doing business under the name and style of "Santos Bookstore," and Court ofAppeals ............................................................................................................................ 33

32.Pilar T. Ocampo vs. Court of Appeals and Magdalena S. Villaruz ........................ 34

33.Southern Motors, Inc. v. Moscoso ............................................................................... 35

34.Nonato v. IAC ................................................................................................................. 36

35.Luis Ridad and Lourdes Ridad v. Filipinas Investment and Finance Corp.......... 37

36.Daniel L. Borbon II and Francisco L. Borbon v. Servicewide Specialists, Inc. & CA .......................................................................................................................................... 38


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37.Pascual vs. Universal Motors Corp. ............................................................................ 39

38.Magna Financial Services Group, Inc., v. Colarina................................................... 40

39.Filipinas Investment & Finance Corporation v. Julian R. Vitug, Jr. and SupremeSales & Development Corporation.............................................................................. 40

40.

Olympia Housing, Inc., vs. Panasiatic Travel Corporation and Ma. NelidaGalvez-Ycasiano ............................................................................................................. 42

41.Pedro A. Felicen Sr. (Deceased), substituted by his Widow, Beatriz Lanuevo andhis Children, Eleuterio, Pedro, Jr., Clarita, Fernando and Jose Maria, allsurnamed Felicen v.Severino Orias, et al.................................................................... 43

42.Heirs of Dominga Tabora vda. De Macoy, represented by Generoso Macoy v.Court Of Appeals et al................................................................................................... 45

43.Felisa R. Paez, et al. v. Francisco Magno..................................................................... 46

44.Mauricio N. Cachola, Sr., represented by his attorney-in-fact, Nilo C. Cachola v.Court of Appeals et al.................................................................................................... 47

45.

Primary Structures Corp. v. Sps. Anthony S. Valencia and Susan T. Valencia..... 49

46.Dominico Etcuban vs. Court of Appeals.................................................................... 49

47.Manuel Melencio, Mariano Melencio, Pura Melencio, and Caridad Melencio vs.Dy Tiao Lay ..................................................................................................................... 50

48.W.H. Tipton, Chief of the Bureau of Lands and Administrator of the Estate of theSan Lazaro Hospital vs. Roman Martinez Y Andueza............................................. 51

49.Viuda E Hijos De Pio Barretto Y Cia., v. Albo & Sevilla, Inc., et al......................... 52

50.Claudina vda. de Villaruel, Et Al. v. Manila Motor Co., Inc. and ArturoColmenares ..................................................................................................................... 54

51.

M. Goldstein v. Roces, et al........................................................................................... 56

52.Paz S. Baens v. Court of Appeals and Chua Seng..................................................... 56

53.Bernardo Dizon, substituted by his heirs, Dominina Alvendia Vda. De Dizon, etal. v. Ambrosio Magsaysay and Nicanor Padilla...................................................... 57

54.Jespajo Realty Corporation v. Court of Appeals, Tan Te Gutierrez and Co Tong58

55.Rudolf Lietz, Inc., v. Court of Appeals et al............................................................... 59

56.Juanita Naval v. Court of Appeals et al...................................................................... 60

57.Hon. Dominador F. Carilo, Maria Gonzales v. Court of Appeals........................... 61

58.

Consolidated Rural Bank v. Court of Appeals.......................................................... 6159.Estate of Lino Olaguer v. Ongjoco............................................................................... 63

60.Abrigo v. De Vera .......................................................................................................... 63

61.Acabal v. Acabal ............................................................................................................. 64

62.Jestra Development And Management Corporation v. Daniel Ponce Pacifico..... 65

63.Garcia v. Court of Appeals ........................................................................................... 66

64.Valdez v. Court of Appeals .......................................................................................... 67


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Dignos v.Court of AppealsG.R. No. L-59266, 29 February 1988

FACTS: Dignos spouses were owners of a parcel of land in Opon, Lapu-LapuCity. Dignos spouses sold the said parcel of land to plaintiff-appellant, payable in

two installments, with an assumption of indebtedness with the First InsularBank.

On November 25, 1965, the Dignos spouses sold the same land in favor ofdefendants spouses, Luciano Cabigas and Jovita L. De Cabigas, who were thenU.S. citizens, for the price of P35,000.00. A deed of absolute sale was executed bythe Dignos spouses in favor of the Cabigas spouses, and which was registered inthe Office of the Register of Deeds.

As the Dignos spouses refused to accept from plaintiff-appellant the balance of

the purchase price of the land, and as plaintiff- appellant discovered the secondsale made by defendants-appellants to the Cabigas spouses, plaintiff-appellantbrought the present suit. Petitioners claim that when they sold the land to theCabigas spouses, the contract of sale was already rescinded.

ISSUE:Is the second sale of the same parcel of land to another buyer due to nonpayment of the complete purchase price by the seller subject to automaticrescission?

HELD:No.

It is undisputed that petitioners never notified private respondents Jabil bynotarial act that they were rescinding the contract, and neither did they file a suitin court to rescind the sale. The most that they were able to show is a letter ofCipriano Amistad who, claiming to be an emissary of Jabil, informed the Dignosspouses not to go to the house of Jabil because the latter had no money andfurther advised petitioners to sell the land in litigation to another party.

It has been ruled, however, that "where time is not of the essence of theagreement, a slight delay on the part of one party in the performance of hisobligation is not a sufficient ground for the rescission of the agreement" (Tagubav. Vda. de Leon, supra). Considering that private respondent has only a balanceof P4,000.00 and was delayed in payment only for one month, equity and justicemandate as in the aforecited case that Jabil be given an additional period withinwhich to complete payment of the purchase price.

Hulst v. PR BuildersG.R. No. 156364, September 3, 2007

FACTS:An execution sale was executed by the sheriff. However, a petition wasfiled seeking to nullify such sale on the ground of the gross inadequacy of the

price.

ISSUE:Is the gross inadequacy of a price in an execution sale a valid ground tonullify such sale on the theory that the lesser the price the easier it is for theowner to effect redemption.


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HELD:In other words, gross inadequacy of price does not nullify an executionsale. In an ordinary sale, for reason of equity, a transaction may be invalidated onthe ground of inadequacy of price, or when such inadequacy shocks one'sconscience as to justify the courts to interfere; such does not follow when the lawgives the owner the right to redeem as when a sale is made at public auction,

upon the theory that the lesser the price, the easier it is for the owner to effectredemption. When there is a right to redeem, inadequacy of price should not bematerial because the judgment debtor may re-acquire the property or else sell hisright to redeem and thus recover any loss he claims to have suffered by reason ofthe price obtained at the execution sale. Thus, respondent stood to gain ratherthan be harmed by the low sale value of the auctioned properties because itpossesses the right of redemption. More importantly, the subject matter inBarrozois the auction sale, not the levy made by the Sheriff.

Toyota Shaw, Inc. v. Court of AppealsG.R. No. L-116650. May 23, 1995DAVIDE, JR., J.

FACTS:A agreement for the sale of a car was reduced into writing via a VehicleSales Proposal. The stipulations include the sale is subject to the availability ofthe unit; the price is subject to change without prior notice; and that the car willbe picked up at a specific date and time. There is also an agreed down paymentand payment through a financing company in monthly amortization for thebalance. The down payment did not make specific reference to the car. There was

no mention as to the full purchase price and the manner the installments are tobe paid.

ISSUE:Whether or not there was a perfected contract of sale?

HELD:No, because the written agreement of the parties may be considered aspart of the initial phase of the generation or negotiation stage of a contract ofsale.

The Vehicle Sales Proposal was a mere proposal which was aborted in lieu ofsubsequent events. It follows that the VSP created no demandable right in favorof Sosa for the delivery of the vehicle to him, and its non-delivery did not causeany legally indemnifiable injury.

Spouses Edrada v. Spouses RamosG.R. No. 154413 August 31, 2005Tinga, J.:

FACTS:A written acknowledgment was drafted acknowledging that a fishingvessel owned by another is now in the possession and now the responsibility of

the other party. The document further states that the documents pertaining tothe sale and agreement of payments between the parties are to follow. Theagreed price for the vessel is Nine Hundred Thousand Only (P900,000.00).

ISSUE:Whether or not there was a perfected contract of sale.


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HELD:No, because there was no agreement as to the transfer of ownership. Acontract of sale must evince the consent on the part of the seller to transfer anddeliver and on the part of the buyer to pay. An examination of the documentreveals that there is no perfected contract of sale. The agreement may confirm thereceipt by respondents of the two vessels and their purchase price. However,

there is no equivocal agreement to transfer ownership of the vessel, but a merecommitment that "documents pertaining to the sale and agreementof payments are to follow."

Sanchez v. RigosG.R. No. L-25494 June 14, 1972

FACTS: Plaintiff Nicolas Sanchez and defendant Severina Rigos executed aninstrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised

and committed ... to sell" to Sanchez for the sum of P1,510.00, a parcel of landwithin two (2) years from said date with the understanding that said option shallbe deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right tobuy the property" within the stipulated period. Inasmuch as several tenders ofpayment of the sum of Pl,510.00, made by Sanchez within said period, wererejected by Mrs. Rigos, on March 12, 1963, the former deposited said amountwith the Court of First Instance of Nueva Ecija and commenced against the latterthe present action, for specific performance and damages.

After the filing of defendant's answer admitting some allegations of thecomplaint, denying other allegations thereof, and alleging, as special defense,that the contract between the parties "is a unilateral promise to sell, and the samebeing unsupported by any valuable consideration, by force of the New CivilCode, is null and void" on February 11, 1964, both parties, assisted by theirrespective counsel, jointly moved for a judgment on the pleadings. Accordingly,on February 28, 1964, the lower court rendered judgment for Sanchez, orderingMrs. Rigos to accept the sum judicially consigned by him and to execute, in hisfavor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced topay P200.00, as attorney's fees, and other costs. Hence, this appeal by Mrs. Rigos.

ISSUE: Whether or not an option contract unsupported by a separate

consideration is binding.

HELD:Citing Atkins, Kroll and Co., Inc. v. Cua Hian Tek, the Court ruled that anoption is unilateral: a promise to sell at the price fixed whenever the offereeshould decide to exercise his option within the specified time. After accepting thepromise and before he exercises his option, the holder of the option is not bound tobuy. He is free either to buy or not to buy later. In this case, however, uponaccepting herein petitioner's offer a bilateral promise to sell and to buy ensued,and the respondent ipso factoassumed the obligation of a purchaser. He did notjust get the right subsequently to buy or not to buy. It was not a mere option

then; it was a bilateral contract of sale. If the option is given without aconsideration, it is a mere offer of a contract of sale, which is not binding untilaccepted. If, however, acceptance is made before a withdrawal, it constitutes abinding contract of sale, even though the option was not supported by asufficient consideration.


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In other words, since there may be no valid contract without a cause orconsideration, the promisor is not bound by his promise and may, accordingly,withdraw it. Pending notice of its withdrawal, his accepted promise partakes,however, of the nature of an offer to sell which, if accepted, results in a perfectedcontract of sale.

Guzman, Bocaling & Co., vs BonnevieG.R. No. 86150 March 2, 1992

FACTS: Africa Valdez de Reynoso leased a parcel of land with two buildingsconstructed thereon to Raoul S. Bonnevie and Christopher Bonnevie, for a periodof one year beginning August 8, 1976, at a monthly rental of P4,000.00, with anagreement that should Africa decide to sell the property, the respondent lesseeshall be given the first priority to purchase the same. Then on November 1976,

Africa sent a letter to the respondents that she was selling the property for theamount of P600,000 less a mortgage loan of P100,000, giving them 30 daysto exercise their right of first priority. Failure to exercise the said right,respondents should vacate the property not later than March 1977.Then on January 1977, Africa informed that the property have been sold to thepetitioner, because respondents failed to exercise their right to do such.Respondent s on the other hand informed Africa that they have not receivedtheir letter and refused to vacate the property. And on April of the same year,Africa demanded that they vacate the property for failure to pay rent for fourmonths, which they refused. Hence a complaint for ejectment was filed against

them. During the pendency of the ejectment case, respondent filed an action forannulment of the sale between Africa and the herein petitioner and for thecancellation of the transfer certificate of title in the name of the latter. Asking alsothat Africa be required to sell the property to them under the same terms andconditions agreed upon in the Contract of Sale in favor of the petitioner. Then onMay 1980, the City Court ruled that the respondent to vacate the premises, anddeliver possession of the property to the petitioner as well as pay the rent due tothem. Upon appeal to the Court of First Instance of Manila, affirmed the saidejection case with modification and granted respondents petition to cancel theDeed of Sale executed between Africa and the petitioner and ordered her to sellthe property to respondent, and for petitioner and Africa to pay respondent fordamages. CA affirmed the said decision but with modification on the amountof damages. Hence the petition.

ISSUE:Whether or not a contract may be rescinded even if it is valid.

HELD: Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwisevalid may nonetheless be subsequently rescinded by reason of injury to thirdpersons, like creditors. The status of creditors could be validly accorded theBonnevies for they had substantial interests that were prejudiced by the sale ofthe subject property to the petitioner without recognizing their right of first

priority under the Contract of Lease.

According to Tolentino, rescission is a remedy granted by law to the contractingparties and even to thirdpersons, to secure reparation for damages caused to themby a contract, even if this should be valid, by means of the restoration of things totheir condition at the moment prior to the celebration of said contract.It is a reliefallowed for the protection of one of the contracting parties and even third


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persons from all injury and damage the contract may cause, or to protect someincompatible and preferent right created by the contract. Recission implies acontract which, even if initially valid, produces a lesion or pecuniary damage tosomeone that justifies its invalidation for reasons of equity.

It is true that the acquisition by a third person of the property subject of thecontract is an obstacle to the action for its rescission where it is shown that suchthird person is in lawful possession of the subject of the contract and that he didnot act in bad faith. However, this rule is not applicable in the case before usbecause the petitioner is not considered a third party in relation to the Contractof Sale nor may its possession of the subject property be regarded as acquiredlawfully and in good faith.

Riviera Filipina, Inc. v. Court of Appeals

G.R. No. 117355, April 5, 2002De Leon, Jr., J.:

FACTS:Riviera Filipina, Inc. instituted a suit to compel the defendants Juan L.Reyes, now deceased, Philippine Cypress Construction & DevelopmentCorporation, Cornhill Trading Corporation, and Urban Development Bank totransfer the title covering a 1,018 square meter parcel of land located alongEDSA, Quezon City for alleged violation of Rivieras right of first refusal.

Reyes executed a ten-year renewable Contract of Lease with Riviera. The said

parcel of land was subject of a Real Estate Mortgage executed by Reyes in favorof Prudential Bank. Since the loan remained unpaid upon maturity, themortgagee bank extrajudicially foreclosed the mortgage thereon. At the publicauction sale, the mortgagee bank emerged as the highest bidder. Realizing thathe could not possibly raise in time the money needed to redeem the property,Reyes decided to sell the same.

Since paragraph 11 of the lease contract expressly provided that the "LESSEEshall have the right of first refusal should the LESSOR decide to sell the propertyduring the term of the lease," Reyes offered to sell the subject property to Rivierafor P5,000.00 per square meter. However, Angeles bargained for P3,500.00 persquare meter. Seven months later, Angeles communicated with Reyes Rivierasoffer to purchase the subject property for P4,000.00 per square meter. However,Reyes did not accept the offer. This time he asked for P6,000.00 per square metersince the value of the property in the area had appreciated in view of the plans ofAraneta to develop the vicinity. After series of negotiations on the price, Reyeswas firm to sell the property at P6,000.00 per square meter. In a letter to Riviera,Reyes expressed that much as it is his earnest desire to really give Riviera thepreference to purchase the subject property, the latter unfortunately failed to takeadvantage of such opportunity and thus lost its right of first refusal.

Meanwhile, Reyes confided to Rolando P. Traballo, a close family friend andpresident of Cypress, his predicament about the nearing expiry date of theredemption period and the money for which he could not raise on time, therebyoffering the property to him for P6,000.00 per square meter. Traballo expressedinterest in buying the said property. Traballo bargained for P5,300.00 per squaremeter. After considering the reasons cited by Traballo for his quoted price, Reyesaccepted the same. Later, Cypress and its partner in the venture, Cornhill


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Trading Corporation, were able to come up with the amount sufficient to coverthe redemption money, with which Reyes paid to the Prudential Bank to redeemthe subject property. A Deed of Absolute Sale covering the property wasexecuted by Reyes in favor of Cypress and Cornhill for P5,395,400.00. Cypressand Cornhill mortgaged the property to Urban Development Bank for

P3,000,000.00.

Thereafter, Riviera sought from Reyes, Cypress and Cornhill a resale of theproperty to it claiming that its right of first refusal under the lease contract wasviolated.

ISSUE:Whether or not the right of first refusal of the lessee Riviera was violatedwhen the owner-lessor Reyes sold the leased property to Cypress and Cornhill,after failed negotiations on the price between Riviera and Reyes.

HELD:No, the right of first refusal of Riviera was not violated. The prevailingdoctrine is that a right of first refusal means identity of terms and conditions tobe offered to the lessee and all other prospective buyers and a contract of saleentered into in violation of a right of first refusal of another person, while valid,is rescissible.

However, general propositions do not decide specific cases. Rather, laws areinterpreted in the context of the peculiar factual situation of each proceeding. Inthe case at bar, the Court finds that the intention of the parties shall be accordedprimordial consideration and in case of doubt, their contemporaneous and

subsequent acts shall be principally considered.

An examination of the attendant particulars of the case is not persuasive ofRivieras view. The actions of the parties to the contract of lease, Reyes andRiviera, shaped their understanding and interpretation of the lease provision"right of first refusal" to mean simply that should the lessor Reyes decide to sellthe leased property during the term of the lease, such sale should first be offeredto the lessee Riviera. That is what exactly ensued between Reyes and Riviera, aseries of negotiations on the price per square meter of the subject property withneither party, especially Riviera, unwilling to budge from his offer.It can clearly be discerned from Rivieras letters that it was so intractable in itsposition and took obvious advantage of the knowledge of the time element in itsnegotiations with Reyes as the redemption period of the subject foreclosedproperty drew near. Riviera strongly exhibited a "take-it or leave-it" attitude inits negotiations with Reyes, quoted its "fixed and final" price as P5,000.00 and notany peso more, and voiced out that it had other properties to consider so Reyesshould decide and make known its decision "within fifteen days." It evendowngraded its offer when Reyes offered anew the property to it, such thatwhatever amount Reyes initially receives from Riviera would absolutely beinsufficient to pay off the redemption price. Naturally, Reyes had to disagreewith Rivieras highly disadvantageous offer. Nary a howl of protest or shout of

defiance spewed forth from Rivieras lips, as it were, but a seemingly whimper ofacceptance when the counsel of Reyes strongly expressed in a letter that Rivierahad lost its right of first refusal. Riviera cannot now be heard that had it beeninformed of the offer of P5,300.00 of Cypress and Cornhill, it would havematched said price.


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Paraaque Kings Enterprises, Incorporated v. Court of AppealsG.R. No. 111583, February 26, 1997Panganiban, J.:

FACTS: Catalina L. Santos is the owner of eight parcels of land located at

Paraaque, Metro Manila. Frederick Chua leased such property from Santos andthe said lease was registered in the Register of Deeds. Chua assigned all hisrights and interest and participation in the leased property to Lee Ching Bing, byvirtue of a deed of assignment and with the conformity of defendant Santos, thesaid assignment was also registered. Lee Ching Bing also assigned all his rightsand interest in the leased property to Paraaque Kings Enterprises, Incorporatedby virtue of a deed of assignment and with the conformity of defendant Santos,the same was duly registered.

The assigned leased contract provides that in case the leased properties subject

are sold or encumbered, lessors shall impose as a condition that the buyer ormortgagee thereof shall recognize and be bound by all the terms and conditionsof this lease agreement and in case of sale, lessee shall have the first option orpriority to buy the properties subject of the lease.

Santos sold the eight parcels of land subject of the lease to David Raymundo forP5,000,000.00. The said sale was allegedly in contravention of the contract oflease, for the first option or priority to buy was not offered by Santos topetitioner. Upon petitioner's request to rectify the error, Santos had the propertyreconveyed to her. She subsequently offered it for sale to petitioner for P15

Million and give the latter 10 days to make good of the offer. Petitioner offered tobuy it for P5 Million but before replying to such offer to purchase, Santosexecuted another deed of sale in favor of Raymundo for P9 Million.

Petitioner alleges that the sale was simulated and that there was a collusionbetween the defendants in the sales of the leased properties. It seeks that thedeed of sale be annulled and that the leased properties be sold to it.

ISSUE:Whether or not the lessee-petitioner's contractual right of first option orpriority to buy has been violated when the lessor Santos offered to sell the sameto petitioner at P15 Million but resold the parcels of land to Raymundo, astranger, for P9 Million.

HELD:YES. In order to have full compliance with the contractual right grantingpetitioner the first option to purchase, the sale of the properties for the amount ofP9 million, the price for which they were finally sold to Raymundo, should havelikewise been first offered to petitioner.

In the case of Guzman, Bocaling & Co. vs. Bonnevie, it has been held that thebasis of the right of first refusal must be the current offer to sell of the seller oroffer to purchase of any prospective buyer. Only after the optionee fails to

exercise its right of first priority under the same terms and within the periodcontemplated, could the owner validly offer to sell the property to a third person,again, under the same terms as offered to the optionee. This doctrine has beenreiterated in the case of Equatorial Realty vs. Mayfair Theater, Inc.

Moreover, the Deed of Assignment included the option to purchase. One of suchrights included in the contract of lease and, therefore, in the assignments of


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rights was the lessee's right of first option or priority to buy the propertiessubject of the lease, as provided in paragraph 9 of the assigned lease contract.The deed of assignment need not be very specific as to which rights andobligations were passed on to the assignee. It is understood in the generalprovision that all specific rights and obligations contained in the contract of lease

are those referred to as being assigned. Needless to state, Santos gave herunqualified conformity to both assignments of rights.

Lao v. Genato137 SCRA 85-86

FACTS:On June 25, 1980, Sotero Jr., with due notice to all his co-heirs, movedto sell certain properties of the deceased to pay off certain debts. The motion wasgranted. So, Sotero Jr. sold to his son, Sotero III, the subject property which the

latter sold to William Go. Respondent-heir Florida Nuqui, moved to annul thesale on the ground that it was made in violation of the court's order and that theconsideration of the two sales were grossly inadequate. Sotero Jr. opposedNuquis motion alleging that the actual consideration of the sale wasP200,000.00 and they agreed that preference will be given to close familymembers to keep the property within the family. Nuqui filed a Reply, statingthat the two sales were but a single transaction simultaneously hatched andconsummated in one occasion. The other heirs joined Nuquis motion. Go movedto intervene and manifested that he paid Sotero III P225,000.00 and being apurchaser in good faith and for value, his title to the property is indefeasible

pursuant to law.

On February 6, 1981, petitioner spouses moved to intervene and alleged thatSotero Jr, without revealing that the property had already been sold to WilliamGo, entered into a Mutual Agreement of Promise to Sell to them for P270,000which was reduced to P220,000.00; that they paid earnest money of P70,000;that the balance of P150,000 was to be paid upon the production of the TCT andthe execution of the final Deed of Sale; that Sotero III the was merely anominal party because the negotiation and transactions were between the SoteroJr. and petitioners; that the contract of sale has been perfected because earnestmoney was already paid; that the sale in favor of Go was made to defraud theestate and the other heirs; At the hearing, petitioners submitted a copy of theContract of mortgage executed by Sotero Jr in favor of Juan Lao, one of thepetitioners, whereby the former mortgaged "all his undivided interest in theestate of his deceased mother. After several days of hearing, respondentJudge allowed all the interested parties to bid for the property. Go bidP280,000.00. Petitioners bid P282,000.00, spot cash. All the heirs, except theadministrator (Sotero Jr.), filed a Motion Ex Parte stated that the offer of WilliamGo appears the highest obtainable price and that of the petitioners was notbeen made within a reasonable period. So, they submitted an amicablesettlement to which the petitioners opposed because they offered to buy the

property for 300,000. Despite said opposition, respondent Judge approvedthe Amicable Settlement.

ISSUE: Whether or not respondent Judge is guilty of grave abuse of discretionin 1) approving the amicable settlement and confirming the two (2) Deeds of Salein question; and 2) in not accepting the offer of the petitioners in the amount ofP300,000.00 for the purchase of the lot in question.


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HELD: Sotero Jr. as administrator occupies a position of the highest trust andconfidence. In the case at bar, the sale was made necessary "in order to settleother existing obligations of the estate. In order to guarantee faithful compliancewith the authority granted, respondent Judge ordered him to submit to thisCourt for approval the transactions made by

him." The sale to his son was for the grossly low price of only P75,000,00.Dionisio III has no income whatsoever and still a dependent of Dionisio, Jr. Ontop of that, not a single centavo, of the P75,000.00 was ever accounted for norreported by Dionisio, Jr. to the probate court. Neither did he submit saidtransaction as mandated by the order for its approval. This sale was confirmedand legalized by His Honor's approval of the assailed Amicable Settlement. Nodoubt, respondent Judge's questioned approval violates Article 1409 of the NewCivil Code and cannot work to confirm nor serve to ratify a fictitious contractwhich is non-existent and void from the very beginning. The heirs assent to suchan illegal scheme does not legalize the same. The offer by the petitioner of

P300,000.00 for the purchase of the property in question does not appearseriously disputed on record. As against the price stated in the assailedCompromise Agreement the former amount is decidedly more beneficial andadvantageous not only to the estate, the heirs of the descendants, but moreimportantly to its creditors, for whose account and benefit the sale wasmade. No satisfactory and convincing reason appeared given for the rejectionand/or non-acceptance of said offer thus giving rise to a well-groundedsuspicion that a collusion of some sort exists between the administrator and theheirs to defraud the creditors and the government.

Alcantara-Daus v. Spouses De LeonG.R. No. 149750, June 16, 2003

FACTS: Spouses De Leon are the owners of a parcel of land situated in theMunicipality of San Manuel, Pangasinan with an area of Four Thousand TwoHundred Twelve square meters more or less. Respondent Hermoso De Leoninherited the said lot from his father Marcelino De Leon by virtue of a Deed ofExtra-Judicial Partition. Said lot is covered by Original Certificate of Title No.22134 of the Land Records of Pangasinan.

Sometime 1960s, Spouses De Leon engaged the services of the late Atty.Florencio Juan to take care of the documents of their properties. They wereasked to sign voluminous documents by the latter. After the death of Atty. Juan,some documents surfaced and most revealed that their properties had beenconveyed by sale or quitclaim to Hermosos brothers and sisters, to Atty. Juanand his sisters, when in truth and in fact, no such conveyances were everintended by them. Furthermore, respondent found out that his signature in theDeed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leonwas forged. They discovered that the land in question was sold by Rodolfo deLeon to Aurora Alcantara

Spouses De Leon demanded the annulment of the document and re-conveyancebut defendants refused. Petitioner, Aurora Alcantara-Daus averred that shebought the land in question in good faith and for value on December 1975 andthat she has been in continuous, public, peaceful, open possession over the sameand has been appropriating the produce thereof without objection from anyone.


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The RTC of Urdaneta, Pangasinan rendered its Decision in favor of hereinpetitioner. It ruled that respondents claim was barred by laches, because morethan 18 years had passed since the land was sold. It further ruled that since itwas a notarial document, the Deed of Extrajudicial Partition in favor of Rodolfode Leon was presumptively authentic.

ISSUES: Whether or not the Deed of Absolute executed by Rodolfo De Leon overthe land in question in favor of petitioner was perfected and binding upon theparties therein?

Whether or not the evidentiary weight of the Deed of Extrajudicial Partition withQuitclaim, executed by respondent Hermoso de Leon, Perlita de Leon andCarlota de Leon in favor of Rodolfo de Leon was overcome by more than apreponderance of evidence of respondents?

HELD:

First Issue:NO. It is during the delivery that the law requires the seller to have the right totransfer ownership of the thing sold. In general, a perfected contract of salecannot be challenged on the ground of the sellers non-ownership of the thingsold at the time of the perfection of the contract.Further, even after the contract of sale has been perfected between the parties, itsconsummation by delivery is yet another matter. It is through tradition or

delivery that the buyer acquires the real right of ownership over the thing sold.Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not theowner of the land he delivered to petitioner. Thus, the consummation of thecontract and the consequent transfer of ownership would depend on whether hesubsequently acquired ownership of the land in accordance with Article 1434 ofthe Civil Code. Therefore, we need to resolve the issue of the authenticity and thedue execution of the Extrajudicial Partition and Quitclaim in his favor.

Second Issue:NO. As a general rule, the due execution and authenticity of a document must bereasonably established before it may be admitted in evidence. Notarialdocuments, however, may be presented in evidence without further proof oftheir authenticity, since the certificate of acknowledgment is prima facie evidenceof the execution of the instrument or document involved. To contradict facts in anotarial document and the presumption of regularity in its favor, the evidencemust be clear, convincing and more than merely preponderant.

The CA ruled that the signature of Hermoso De Leon on the ExtrajudicialPartition and Quitclaim was forged. However, this factual finding is in conflictwith that of the RTC. While normally this Court does not review factual issues,this rule does not apply when there is a conflict between the holdings of the CA

and those of the trial court, as in the present case.

After poring over the records, the SC finds no reason to reverse the factualfinding of the appellate court. A comparison of the genuine signatures ofHermoso De Leon with his purported signature on the Deed of ExtrajudicialPartition with Quitclaim will readily reveal that the latter is a forgery. As aptly


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held by the CA, such variance cannot be attributed to the age or the mechanicalacts of the person signing.

Sampaguita Pictures, Inc. v. Jalwindor Manufacturers, Inc.

G.R. No. L-43059. October 11, 1979De Castro,J.:

FACTS:Sampaguita Pictures, Inc. leased to Capitol 300, Inc. a roof deck of itsbuilding with the agreement that any permanent improvements made on theproperty by Capitol shall belong to Sampaguita. Shortly, Capitol installed glassand wooden jalousies on the leased premises. The glass and wooden jalousieswere purchased on credit from Jalwindor Manufacturers, Inc. Upon Capitolsfailure to pay, Jalwindor levied on the glass and wooden jalousies.

ISSUE:Was the execution on the said properties proper? Is payment essential forthe transfer of ownership in a contract of sale?

HELD:No. The properties were no longer owned by Capitol when they werelevied upon. Ownership is not transferred by perfection of the contract but bydelivery, either actual or constructive. This is true even if the purchase has beenmade on credit. Payment of the purchase price is not essential to the transfer ofownership as long as the property sold has been delivered. Ownership isacquired from the moment the thing sold was delivered the vendee, as when it isplaced in his control and possession.

Philippine National Bank v. Severo Eugenio Lo, et al.G.R. No. L-26937. October 5, 1927Villamor,J.:

FACTS:Lo and King, together with Lian Ping, Hun, On Yem Ke Lam, and SiengPeng formed a commercial partnership under the name of Tai Sing Co. LianPing was appointed as the general manager. Lian Ping executed a power ofattorney in favor of A.Y. Kelam authorizing him to act in his stead as managerand administrator of the partnership and to obtain a loan from PNB. Propertieswere mortgaged as security for the loan. PNB instituted an action to collect.

ISSUE: Describe the liability of general partners with respect to partnershipliabilities.

HELD: All the members of a general partnership, be they managing partnersthereof or not, shall be personally and solidarily liable with all their property, forthe results of the transactions made in the name and for the account of thepartnership, under the signature of the latter, and by a person authorized to useit.


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Philippine Suburban Development Corporation v. The Auditor GeneralPedro GimenezG.R. No. L-19545 April 18, 1975Antonio, J.

FACTS: On December 29,1960, Petitioner Philippine Suburban DevelopmentCorporation, as owner of the unoccupied portion of the Sapang Palay Estate andthe Peoples Homesite and Housing Corporation, entered into a contractembodied in a public instrument entitled Deed of Absolute Sale whereby theformer conveyed unto the latter the two parcels of land abovementioned. Thiswas 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 themoney 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, expressedobjections thereto and requested a re-examination of the contract, in view of thefact that from 1948 to December 20, 1960, the entire hacienda was assessed atP131,590.00, and reassessed beginning December 21, 1960 in the greatly increasedamount of P4,898,110.00.

It appears that as early as the first week of June, 1960, prior to the signing of thedeed by the parties, the PHHC acquired possession of the property, with theconsent of petitioner, to enable the said PHHC to proceed immediately with theconstruction of roads in the new settlement and to resettle the squatters and

flood victims in Manila who were rendered homeless by the floods or ejectedfrom the lots which they were then occupying.

On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC towithhold the amount of P30,099.79 from the purchase price to be paid by it to thePhilippine Suburban Development Corporation. Said amount represented therealty tax due on the property involved for the calendar year 1961. Petitioner,through the PHHC, paid under protest the abovementioned amount to theProvincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter,requested then Secretary of Finance to order a refund of the amount so paid.Upon recommendation of the Provincial Treasurer of Bulacan, said request wasdenied by the Secretary of Finance in a letter-decision dated August 22, 1961.

Petitioner claimed that it ceased to be the owner of the land in question upon theexecution of the Deed of Absolute Sale on December 29, 1960. It is now claimedin this appeal that the Auditor General erred in disallowing the refund of the realestate tax in the amount of P30,460.90 because aside from the presumptivedelivery 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 tothe 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 propertyunder Article 1498 of the Civil Code does not apply because of the requirementin the contract that the sale shall first be approved by the Auditor General,pursuant to the Executive Order.


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

HELD: Considering the aforementioned approval and authorization by thePresident of the Philippines of the specific transaction in question, the prior

approval by the Auditor General envisioned by Administrative Order wouldtherefore, not be necessary.

Under the civil law, delivery (tradition) as a mode of transmission of ownershipmaybe actual (real tradition) or constructive (constructive tradition).

When the sale of real property is made in a public instrument, the executionthereof is equivalent to the delivery of the thing object of the contract, if from thedeed the contrary does not appear or cannot clearly be inferred.

In other words, there is symbolic delivery of the property subject of the sale bythe execution of the public instrument, unless from the express terms of theinstrument, or by clear inference therefrom, this was not the intention of theparties. Such would be the case, for instance, when a certain date is fixed for thepurchaser 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 ismade, the title to the property should remain with the vendor, or when thevendor reserves the right to use and enjoy the properties until the gathering ofthe pending crops, or where the vendor has no control over the thing sold at themoment of the sale, and, therefore, its material delivery could not have been

made.

In the case at bar, there is no question that the vendor had actually placed thevendee in possession and control over the thing sold, even before the date of thesale. The condition that petitioner should first register the deed of sale and securea new title in the name of the vendee before the latter shall pay the balance of thepurchase price, did not preclude the transmission of ownership. In the absence ofan express stipulation to the contrary, the payment of the purchase price of thegood is not a condition, precedent to the transfer of title to the buyer, but titlepasses by the delivery of the goods.

Norkis Distributors v. Court of Appeals and Alberto NepalesG.R. No. 91029. February 7, 1991Grio-Aquino, J.

FACTS: Alberto Nepales bought a motorcycle from Norkis Distributors inBacolod. The motorcycle, worth P7,500 was sold on credit, payable with a Letterof Guaranty from the Development Bank of the Philippines.

Nepales executed a chattel mortgage on the motorcycle in favor of DBP. Norkis

issued a sales invoice to Nepales and registered it under Nepales name in theLand Transportation Commission, in compliance with DBP requirements.Norkis remained in possession of the unit.

Four months later, Norkis released the motorcycle to a certain Julian Nepales.The motorcycle figured in a vehicular collission and was a total wreck whilebeing driven by a certain Zacarias Payba.


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The DBP released the proceeds of the Letter of Guaranty to Norkis and thereafterNepales demanded the delivery of the motorcycle. For Norkis failure to deliverthe motorcycle, Nepales filed an action for specific performance.

Norkis concedes that there was no "actual" delivery of the vehicle, but insists that

there was constructive delivery of the unit upon: (1) the issuance of the salesinvoice, (2) the registration of the unit in Nepales name, and (3) the issuance ofthe official receipt. Hence, according to Norkis, Nepales as owner should bearthe loss.

ISSUE:Who should bear the risk of loss when there is no actual delivery of theobject of the sale?

HELD: Affirming the decision of the Court of Appeals, the Supreme Courtreiterated that Article 1496 of the Civil Code which provides that "in the absence

of an express assumption of risk by the buyer, the things sold remain at seller'srisk until the ownership thereof is transferred to the buyer," is applicable in thecase at bar for there was neither an actual nor constructive delivery of the thingsold.

The Court of Appeals correctly ruled that the purpose of the execution of thesales invoice dated September 20, 1979 and the registration of the vehicle in thename of Alberto Nepales with the Land Registration Commission was not totransfer the ownership and dominion over the motorcycle to him, but only tocomply with the requirements of the DBP for processing private respondent's

motorcycle loan. The circumstances in the case itself more than amply rebut thedisputable presumption of delivery upon which Norkis anchors its defense toNepales' action.

A.A. Addison v. Marciana Felix and Balbino TiocoG.R. No. L-12342, August 3, 1918

FACTS: Addison sold to Marciana Felix, 4 parcels of land, on June 11, 1914,evidenced by a public instrument. In the Contract of Sale, both agreed that Felixwill pay P3,000 upon execution of the deed, and pay the remaining balance ininstallments. The first installment of P2,000 to be paid on July 15, 1914, while thesecond P5,000 to be paid 30 days after the issuance of the certificate of title of theproperty. They further agreed that within 10 years from the date of such title,Felix would pay Addison P10.00 for each bearing coconut tree, while P5.00 fornon bearing trees, provided that the total price should not exceed P85,000. It wasalso agreed that Felix was to deliver to Addison 25% of the value of the productsthat she might obtain from the 4 parcels from the moment she take possession ofthem until the certificate of title be issued in her favor. Notwithstanding theforegoing stipulations, the parties agreed that within 1 year from the date of thecertificate of title, the parties may rescind the contract of sale, and as a result,

they should make necessary restitution.

For failure of Felix to pay the first installment, Addison brought a suit before theCFI of Manila for the recovery of payment. Felix in defense alleging that Addisonfailed to deliver the lands that were subject to the sale despite of the demandsmade upon him. Hence, she filed a counterclaim demanding for the recession ofthe contract.


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The trial courts judgment was rendered in favour of Felix, and ordered theplaintiff to return the P3,000 received by virtue of the contract plus interest rateof 10%. Thus for this appeal.

ISSUE:Whether or not the trial court erred in rescinding the contract when the

stipulation on rescission clearly indicate that the said right may be exercised onlywithin one year from the date of the certificate of title in favour of Felix, when inthis case, the properties involved has net yet been registered?

HELD: No. The Court finds the argument of Addison untenable. Althoughunder the Code, the thing is considered to be delivered when it is placed in thehands and possession of the vendee, and in case of real property, the same articledeclares that the execution of a public instrument is equivalent to delivery of thething which is the object of the contract, in order that there be symbolic deliverywhich may produce the effect of tradition, it is necessary that the vendor shall

have had such control over the thing sold at the moment of sale. It is not enoughto confer upon the purchaser the ownership and the right of possession. Thething sold must be placed in his control. When there is no impediment to preventthe thing from passing into the tenancy of the purchaser, symbolic deliverythrough execution of a public instrument is sufficient. However, when despiteexecution of the public instrument, the purchaser cannot have the enjoyment andmaterial tenancy of the thing sold, because such tenancy and enjoyment areopposed by the interposition of another will, delivery has not been effected.

In this case, Addison was only able to designate 2 of the 4 parcels, because more

than 2/3 of these were found to be in possession of Juan Villafuerte, who claimedto be the owner of the parts so occupied by him. Addison, in fact, admitted thatthe purchaser would have to bring suit to obtain possession of the land. It isevident, then that the mere execution of the instrument was not a fulfilment ofthe vendors' obligation to deliver the thing sold, and that from such non-fulfillment arises the purchaser's right to demand, as she has demanded, therescission of the sale and the return of the price.

Ten Forty Realty and Development Corporation v. Marina CruzG.R. No. 151212, September 10, 2003

FACTS: Ten Forty Realty filed an ejectment suit against Cruz before the MTC.The corporation argued that the property in issue was purchased by them fromGalino on December 1996, and that the same property was again sold to Cruz onApril 1998. Cruz, in answer, argued that Ten Forty Realty never occupied thesaid property. In addition, the property was a public land and the action forejectment cannot succeed where it shows that she has been in possession of theproperty prior to Ten Forty.

On October 2000, the trial court ruled in favour of Ten Forty, thereby ordering

her to leave the land and surrender to Ten Forty the possession thereof. Thedecision was reversed by the RTC, which was thereafter affirmed by the CA.

ISSUE:Whether or not Marina Cruz should be declared as the rightful owner ofthe property in issue considering that she has prior possession of the same?


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HELD: Yes. The Supreme Court ruled on several issues. First, the propertyinvolved had not yet been delivered to the corporation, therefore, it did notacquire possession either materially or symbolically. Under the Civil Code, asbetween two buyers, the first who acquires actual possession shall have betterright over the property.

Second, the corporation failed to prove before the Court that when Cruzsubsequently acquired the property, she was aware that her acquisition wasdefective. During such time, the property had not yet been registered in thename of Galino, it was still in record, a public property. She relied on the taxdeclaration under the name of Galino, and the fact that the latter is occupying theproperty when she took over the possession. Hence, there was no circumstancewhich would have placed her into doubt that required her to further investigateGalinos ownership.

Jesus Teran v. Francisca Villanueva, Viuda De Riosa, Et Al.G.R. No. L-34697, March 26, 1932Villamor,J.:

FACTS: On October 6, 1928, the parties in this case executed the deed of sale,whereby the defendants sold to the plaintiff for P4,000 the parcel of land thereindescribed as containing an area of 34 hectares, 52 ares, and 43 centares.

The plaintiff brought this action for rescission of the contract, with damages,

upon discovering that the parcel of land contained only about then hectares.

The trial court found no evidence of bad faith on the part of the defendants, andwe agree with this finding. This land, with the same area stated in the contract,was inherited by the defendants from their late father, Mariano Villanueva; andthe same area appears in the tax declaration given to the plaintiff by an agent ofthe defendants, named Rafael Villanueva. The latter, accompanied by theplaintiff, inspected the land. Villanueva pointed out some of the boundaries, asthey did not go over all of them. Without further investigating the area of theland, the plaintiff agreed to purchase it for the sum of four thousand pesos,paying the amount and taking possession thereof. The plaintiff alleges that afterthe 1928 harvest he discovered that the boundaries pointed out to him by RafaelVillanueva were not the real ones, and, in order to ascertain the exact area of theland, he went to the cadastral office in Malinao and got a sketch of the propertywhich shows that the land in question contains only ten hectares, and not thirty-four, as appears in the deed of sale.In view of these facts, the plaintiff now seeks to rescind the contract on theground that the property contains a smaller area than that stated in the deed ofsale. Evidently this is a sale of real estate with area and boundaries given, for alump sum and not so much per unit of measure, provided for in article 1471 ofthe Civil Code.

ISSUE:Whether or not the contract may be rescinded.

HELD:No. Whenever a certain real estate is sold for a lump sum the rule in lawis that there shall be no increase or decrease in price even if the area or extent isfound to be more or less than that stated in the contract; but, if the vendor cannotdeliver to the vendee all that is included within the boundaries stated in the


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contract the latter has the option either to reduce the price in proportion to thedeficiency, or to set aside the contract. In this case the Civil Code presumes thatthe purchaser had in mind a determined piece of land, and that he ascertained itsarea and quality before the contract was perfected. If he did not do so, or it,having done so, he made no objection and consented to the transaction, he can

blame no one but himself; and, because it is presumed that he intended to buy adetermined object, any proof of misrepresentation will not avail him, neither willit vitiate the transaction.

Furthermore, inAzarraga v. Gay (52 Phil., 599), it was held that When thepurchaser proceeds to make investigations by himself, and the vendor doesnothing to prevent such investigation from being as complete as the formermight made false representations to him. One who contracts for the purchase ofreal estate is reliance on the representations and statements of the vendor as to itscharacter and value, but after he has visited and examined it for himself, and has

had the means and opportunity of verifying such statements, cannot avoid thecontract on the ground that they were false or exaggerate.

The plaintiff had ample opportunity to investigate the conditions of the land hewas purchasing, without the defendant's doing anything to prevent him frommaking as many inquiries as he deemed expedient, for which reason he cannotnow allege that the vendors made false representations.

In the present case the parties did not consider the area as an essential element ofthe contract. There is no evidence of record that the parties fixed the price at so

much per hectare. The contract is valid and binding upon the parties.

Consolidated Rural Bank (Cagayan Valley), Inc., v. Court of Appeals andHeirs of Teodoro Dela CruzG.R. No. 132161. January 17, 2005Tinga,J.:

FACTS: Rizal, Anselmo, Gregorio, Filomeno and Domingo, all surnamed Madrid(hereafter the Madrid brothers), were the registered owners of Lot No. 7036-A ofplan Psd-10188, Cadastral Survey 211, situated in San Mateo, Isabela.

On 23 and 24 October 1956, Lot No. 7036-A was subdivided into several lots. On15 August 1957, Rizal Madrid sold part of his share identified to Aleja Gamiaoand Felisa Dayag to which his brothers Anselmo, Gregorio, Filomeno andDomingo offered no objection. The deed of sale was not registered with theOffice of the Register of Deeds of Isabela. However, Gamiao and Dayag declaredthe property for taxation purposes in their names on March 1964 under TaxDeclaration No. 7981.

On 28 May 1964, Gamiao and Dayag sold the southern half to Teodoro dela

Cruz, and the northern half to Restituto Hernandez. Thereupon, Teodoro delaCruz and Restituto Hernandez took possession of and cultivated the portions ofthe property respectively sold to them.

Later, on 28 December 1986, Restituto Hernandez donated the northern half tohis daughter, Evangeline Hernandez-del Rosario. The children of Teodoro dela


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Cruz continued possession of the southern half after their fathers death on 7June 1970.

In a Deed of Saledated 15 June 1976, the Madrid brothers conveyed all their rightsand interests over Lot No. 7036-A-7 to Pacifico Marquez. The deed of sale was

registered with the Office of the Register of Deeds of Isabela on 2 March 1982.

Subsequently, Marquez subdivided Lot No. 7036-A-7 into eight (8) lots for whichTCT Nos. T-149375 to T-149382 were issued to him on 29 March 1984. On thesame 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 CagayanValley (hereafter, CRB) to secure a loan of One Hundred Thousand Pesos(P100,000.00). These deeds of real estate mortgage were registered with the Officeof the Register of Deeds on 2 April 1984.On 6 February 1985, Marquezmortgaged 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). As Marquez defaulted in thepayment of his loan, CRB caused the foreclosure of the mortgages in its favorand the lots were sold to it as the highest bidder on 25 April 1986.

On 31 October 1985, Marquez sold Lot No. 7036-A-7-G to Romeo Calixto(Calixto). The Heirs-now respondents herein-represented by Edronel dela Cruz,filed a case for reconveyance and damages the southern portion of Lot No. 7036-A (hereafter, the subject property) against Marquez, Calixto, RBC and CRB inDecember 1986.

Evangeline del Rosario, the successor-in-interest of Restituto Hernandez, filedwith leave of court a Complaint in Intervention wherein she claimed the northernportion of Lot No. 7036-A-7.

In theAnswer to the Amended Complaint, Marquez, as defendant, alleged thatapart from being the first registrant, he was a buyer in good faith and forvalue. He also argued that the sale executed by Rizal Madrid to Gamiao andDayag was not binding upon him, it being unregistered. For his part, Calixtomanifested that he had no interest in the subject property as he ceased to be theowner thereof, the same having been reacquired by defendant Marquez.

CRB, as defendant, and co-defendant RBC insisted that they were mortgagees ingood faith and that they had the right to rely on the titles of Marquez which werefree from any lien or encumbrance.

ISSUE:Whether or not the rule on double sale is applicable in the case.

HELD: The petition is devoid of merit. Like the lower court, the appellate courtresolved the present controversy by applying the rule on double sale provided inArticle 1544 of the Civil Code. They, however, arrived at differentconclusions. The RTC made CRB and the other defendants win, while the Court

of Appeals decided the case in favor of the Heirs.

The provision is not applicable in the present case. It contemplates a case ofdouble or multiple sales by a single vendor. More specifically, it covers asituation where a single vendor sold one and the same immovable property totwo or more buyers. According to a noted civil law author, it is necessary that theconveyance must have been made by a party who has an existing right in the


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thing and the power to dispose of it. It cannot be invoked where the twodifferent contracts of sale are made by two different persons, one of them notbeing the owner of the property sold. And even if the sale was made by the sameperson, if the second sale was made when such person was no longer the ownerof the property, because it had been acquired by the first purchaser in full

dominion, the second purchaser cannot acquire any right.

In the case at bar, the subject property was not transferred to several purchasersby a single vendor. In the first deed of sale, the vendors were Gamiao and Dayagwhose right to the subject property originated from their acquisition thereof fromRizal Madrid with the conformity of all the other Madrid brothers in 1957,followed by their declaration of the property in its entirety for taxation purposesin their names. On the other hand, the vendors in the other or later deed werethe Madrid brothers but at that time they were no longer the owners since theyhad long before disposed of the property in favor of Gamiao and Dayag.

In a situation where not all the requisites are present which would warrant theapplication of Art. 1544, the principle ofprior tempore, potior jureor simply hewho is first in time is preferred in right,should apply. The only essentialrequisite of this rule is priority in time; in other words, the only one who caninvoke this is the first vendee. Undisputedly, he is a purchaser in good faithbecause at the time he bought the real property, there was still no sale to asecond vendee. 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 Madridbrothers 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 asuperior right to the subject property.

Moreover, it is an established principle that no one can give what one does nothave nemo dat quod non habet. Accordingly, one can sell only what one owns or isauthorized to sell, and the buyer can acquire no more than what the seller cantransfer legally. In this case, since the Madrid brothers were no longer theowners of the subject property at the time of the sale to Marquez, the latter didnot acquire any right to it.

In any event, assuming arguendothat Article 1544 applies to the present case, theclaim of Marquez still cannot prevail over the right of the Heirs since accordingto the evidence he was not a purchaser and registrant in good faith.

In the instant case, the actions of Marquez have not satisfied the requirement ofgood faith from the time of the purchase of the subject property to the time ofregistration. Found by the Court of Appeals, Marquez knew at the time of thesale that the subject property was being claimed or taken by the Heirs. Thiswas a detail which could indicate a defect in the vendors title which he failed toinquire into.

Martinez v. Court of AppealsG.R. No. 123547; 21 May 2001Mendoza,J.:

ISSUE: Can the second purchaser in a case of double sales of immovableproperty (under Article 1544 of the New Civil Code) claim the presence of good


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faith despite the fact that he had previously seen the construction of a house onthe same lot?

HELD:NO. A purchaser who is aware of facts which should put a reasonableman upon his guard cannot turn a blind eye and later claim that he acted in good

faith. The fact that there are persons, other than the vendors, in actual possessionof the disputed lot should have put the purchaser on inquiry as to the nature ofthe builders right over the property.Mere reliance on the assurance of a thirdperson regarding the assertion that the lot had not been previously sold toanother purchaser does not meet the standard of good faith required underArticle 1544.

Fudot v. Cattleya Land, Inc.G.R. No. 171008; 13 September 2007

Tinga,J.:

ISSUE: Can there be a case of double sales under Article 1544 of the New CivilCode if the first purchasers alleged right is based on a Deed of Sale that waslater on declared by the trial a forgery?

HELD: NO. Despite the fact that one deed of sale was registered ahead of theother, Art. 1544 of the Civil Code will not apply where said deed is found to be aforgery, the result of this being that the right of the other vendee should prevail.Art. 1544 of the Civil Code, which provides the rule on double sale, applies only

to a situation where the same property is validly sold to different vendees. Theact of registration does not validate an otherwise void contract. Registration is amere ministerial act by which a deed, contract, or instrument is sought to beinscribed in the records of the Office of the Register of Deeds and annotated atthe back of the certificate of title covering the land subject of the deed, contract,or instrument. While it operates as a notice of the deed, contract, or instrument toothers, it does not add to its validity nor converts an invalid instrument into avalid one as between the parties, nor amounts to a declaration by the state thatthe instrument is a valid and subsisting interest in the land. The registration of avoid deed is not an impediment to a declaration by the courts of its invalidity.

Lillian M. Mercado, et al. v. Allied Banking CorporationGR No. 171460. July 24, 2007Chico-Nazario,J.:

FACTS: Perla executed a Special Power of Attorney in favor of her husband,Julian Mercado over several pieces of real property registered under her name,authorizing the latter to perform several acts.

On the strength of the aforesaid SPA, Julian obtained a loan from the

respondent. Still using the subject property as security, Julian obtainedadditional loan from the respondent. It appears, however, that there was noproperty identified in the SPA and registered with the Registry of Deeds. Whatwas identified in the SPA instead was the property different from the one usedas security for loan.


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Julian defaulted on the payment of his loan obligations. Thus, respondentinitiated extra-judicial foreclosure proceedings over the subject property whichwas subsequently sold at public auction wherein respondent was the highestbidder.

ISSUE:Is there a valid mortgage constituted over the subject property?

HELD:It was Julian who obtained the loan obligations from respondent whichhe secured with the mortgage of the subject property. The property mortgagedwas owned by his wife Perla, considered a third party to the loan obligationsbetween Julian and respondent. It was, thus, a situation recognized by the lastparagraph of Article 2085 of the Civil Code that third persons who are notparties to the principal obligation may secure the latter by pledging ormortgaging their own property. There is no question therefore that Julian wasvested with the power to mortgage the pieces of property indentified in the

SPA, however, the subject property was not among those enumerated therein.Julian was not conferred by Perla with the authority to mortgage the subjectproperty under the terms of the SPA, the real estate mortgages Julian executedover the said property are therefore unenforceable.

Spouses Amancio et al. v. Court of Appeals, et al.G.R. No. 152627. September 16, 2005.Chico-Nazario,J.:

FACTS: A parcel of land situated in Marikina was previously owned by theSarmiento spouses by virtue of a deed of absolute sale executed on July 17,1972. The subject land was mortgaged by the Sarmiento spouses to CarlosMoran Sison as a security for a sixty-five thousand three hundred seventypesos and 25/100 loan obtained by the Sarmiento spouses from Mr. Sison.Upon failure of the Sarmiento spouses to pay the loan, Mr. Sison initiated theextra-judicial foreclosure sale of the mortgaged property, and the said propertywas foreclosed.

Jose Puzon purchased the same property in an auction sale conducted by theMunicipal Treasurer of Marikina for non-payment of taxes. After paying

P3,400.00, he was issued a certificate of sale and caused it to be registered in theRegistry of Deeds of Marikina. No redemption having been made by theSarmiento spouses, a final bill of sale was issued in his favor.

On August 16, 1986, Mr. Puzon sold the property in question to hereinplaintiff-appellee. By virtue of such sale, a transfer certificate of title over thesubject property was issued in favor of the plaintiff-appellee. Records showthat Mr. Puzon assured the plaintiff-appellee that he will take care of thesquatters in the subject property by filing an ejectment case against them.However, Mr. Puzon failed to comply with his promise.

ISSUE:Is there good faith on the part of the purchaser?

HELD:Verily, every person dealing with registered land may safely rely on thecorrectness of the certificate of title issued therefor and the law will in no wayoblige him to go behind the certificate to determine the condition of theproperty. Thus, the general rule is that a purchaser may be considered a


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purchaser in good faith when he has examined the latest certificate of title. Anexception to this rule is when there exist important facts that would createsuspicion in an otherwise reasonable man to go beyond the present title and toinvestigate those that preceded it. Thus, it has been said that a person whodeliberately ignores a significant fact which would create suspicion in an

otherwise reasonable man is not an innocent purchaser for value. A purchasercannot close his eyes to facts which should put a reasonable man upon hisguard, and then claim that he acted in good faith under the belief that therewas no defect in the title of the vendor.

The fact that private respondent RRC did not investigate the Sarmientospouses claim over the subject land despite its knowledge that Pedro Ogsiner,as their overseer, was in actual possession thereof means that it was not aninnocent purchaser for value upon said land. Article 524 of the Civil Codedirects that possession may be exercised in ones name or in that of another. In

herein case, Pedro Ogsiner had informed RRC that he was occupying thesubject land on behalf of the Sarmiento spouses. Being a corporation engagedin the business of buying and selling real estate, it was gross negligence on itspart to merely rely on Mr. Puzons assurance that the occupants of the propertywere mere squatters considering the invaluable information it acquired fromPedro Ogsiner and considering further that it had the means and theopportunity to investigate for itself the accuracy of such information.

Alejandro Gabriel and Alfredo Gabriel, v. Spouses Pablo Mabanta et al.

G.R. No. 142403. March 26, 2003Sandoval-Gutierrez, J.:

FACTS:Spouses Pablo and Escolastica Mabanta were the registered owners oftwo lots located in Patul and Capaltitan, Santiago, Isabela, with an area of 512and 15,000 square meters, covered by Transfer Certificates of Title (TCT) Nos.72705 and 72707, respectively. On October 25, 1975, they mortgaged both lotswith the Development Bank of the Philippines (DBP) as collateral for a loan ofP14,000.00.

Five years thereafter or on September 1, 1980, spouses Mabanta sold the lots toSusana Soriano by way of a Deed of Sale of Parcels of Land With Assumption ofMortgage.[4] Included in the Deed is an agreement that they could repurchasethe lots within a period of two (2) years.

Spouses Mabanta failed to repurchase the lots. But sometime in 1984, they wereable to convince Alejandro Gabriel to purchase the lots from Susana Soriano. Asconsideration, Alejandro delivered to Susana a 500-square meter residential lotwith an actual value of P40,000.00 and paid spouses Mabanta the sum ofP5,000.00. On May 15, 1984, spouses Mabanta executed a Deed of Sa le withAssumption of Mortgagein favor of Alejandro. For her part, Susana executed a

document entitled Cancellation of Contract whereby she transferred toAlejandro all her rights over the two lots.

Alejandro and his son Alfredo cultivated the lots. They also caused therestructuring of spouses Mabantas loan with the DBP. However, when theywere ready to pay the entire loan, they found that spouses Benito and Pura Tanhad paid it and that the mortgage was already cancelled.


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On August 18, 1985, Benito Tan and Alejandro Tridanio, a barangay official,approached Alejandro to refund to him the P5,000.00 he paid to spousesMabanta. Alejandro refused because Tan was unwilling to return the formers500-square meter lot delivered to Susana as purchase price for thelots. Thereafter, spouses Tan tried to eject Alejandro from the lot covered by TCT

No. 72707.

On September 17, 1985, Alejandro and Alfredo filed with the Regional TrialCourt, Branch 21, Santiago, Isabela a complaint (involving the lot covered byTCT No. 72707) for specific performance, reconveyance and damages with anapplication for a preliminary injunction against spouses Mabanta, spouses Tan,the DBP and barangay officials Dominador Maylem and Alejandro Tridanio. Indue time, these defendants filed their respective answers.

During the proceedings, it turned out that it was spouses Tans daughter,

Zenaida Tan-Reyes who bought one of the lots (covered by TCT No. 72707) fromspouses Mabanta on August 21, 1985. Not having been impleaded as a party-defendant, she filed an answer-in-intervention alleging that she is the registeredowner of the lot covered by TCT No. 72707; that she purchased it from spousesMabanta in good faith and for value; that she paid their loan with the DBP inthe amounts of P17,580.88 and P16,845.17 per Official Receipts Nos. 1749539 and1749540, respectively; that the mortgage with the DBP was cancelled and spousesMabanta executed a Deed of Absolute Sale in her favor; and that TCT No. T -72707 was cancelled and in lieu thereof, TCT No. T-160391 was issued in hername.

On April 12, 1991, the trial court rendered its Decision sustaining the right ofAlejandro and Alfredo Gabriel over the lot covered by TCT No. 72707 (now TCTNo. T-160391)

ISSUE: Whether or not the second sale of the disputed lot executed by spousesMabanta in favor of Zenaida Tan-Reyes is valid under Article 1544 of the CivilCode.

HELD:We have consistently held that in cases of double sale of immovables,what finds relevance and materiality is not whether or not the second buyer wasa buyer in good faith but whether or not said second buyer registers such secondsale in good faith, that is, without knowledge of any defect in the title of theproperty sold. In Salvoro vs. Tanega, we had the occasion to rule that if avendee in a double sale registers the sale after he has acquired knowledge thatthere was a previous sale of the same property to a third party or that anotherperson claims said property in a previous sale, the registration will constitute aregistration in bad faith and will not confer upon him any right.

Mere registration of title is not enough, good faith must concur with theregistration. To be entitled to priority, the second purchaser must not only

establish prior recording of his deed, but must have acted in good faith, withoutknowledge of the existence of another alienation by the vendor to the other. Inthe old case of Leung Yee vs. F. L. Strong Machinery, Co. and Williamson, thisCourt ruled: One who purchases a real estate with knowledge of a defect of titlein his vendor cannot claim that he has acquired title thereto in good faith asagainst the true owner of the land or of an interest therein; and the same rulemust be applied to one who has knowledge of facts which should have put him


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upon such inquiry and investigation as might be necessary to acquaint him withthe defects in the title of his vendor. A purchaser cannot close his eyes to factswhich should put a reasonable man upon his guard, and then claim that he actedin good faith under the belief that there was no defect in the title of thevendor. His mere refusal to believe that such a defect exists, or his willful

closing of his eyes to the possibility of the existence of a defect in his vendorstitle will not make him an innocent purchaser for value, if it afterwards developsthat the title was in fact defective, and it appears that he had such notice of thedefect as would have led to its discovery had he acted with that measure ofprecaution which may reasonably be required of a prudent man in a likesituation.

In fine, we hold that respondent Zenaida Tan-Reyes did not act in good faithwhen she bought the lot and had the sale registered.

Narcisa Sanchez v. Roque RamosG.R. No. L-13442, December 20, 1919Avancea, J.:

FACTS: This is an action for the recovery of a piece of land described in thesecond paragraph of the complaint. This land is in the defendant's possessionand formerly belonged to Ciriaco Fernandez. On July 1, 1910, Ciriaco Fernandezsold it to the spouses Marcelino Gomez and Narcisa Sanchez under pacto deretro for the period of one year. This also was executed in a public instrument.

Marcelino Gomez and Narcisa Sanchez never took material possession of theland. The period for repurchase elapsed without the vendor making use of it. OnJuly 3, 1912, Ciriaco Fernandez again sold the same land, by means of a privatedocument, to Roque Ramos who immediately took material possession thereof.By applying article 1473 of the Civil Code, the trial court declared preferable thesale executed to the defendant and absolved him from the complaint.

ISSUE: Whether or not the sale executed to the plaintiff must be declaredpreferable.

HELD:By the same article applied by the lower court, we are of the opinion thatthe sale executed to the plaintiff must be declared preferable.

To what kind of possession does this article refer? Possession is acquired by thematerial occupancy of the thing or right possessed, or by the fact that the latter issubjected to the action of our will, or by the appropriate acts and legal formalitiesestablished for acquiring possession (art. 438, Civil Code.). By a simplereasoning, it appears that, because the law does not mention to which of thesekinds of possession the article refers, it must be understood that it refers to all ofthese kinds. The proposition that this article, according to its letter, refers to thematerial possession and excludes the symbolic does not seem to be founded

upon a solid ground. It is said that the law, in the gradation of the causes ofpreference between several sales, fixes, first, possession and then the date of thetitle and, as a public instrument is a title, it is claimed that the inference is thatthe law has deliberately intended to place the symbolic possession, which theexecution of the public document implies after the material possession. Thisargument, however, would only be forceful if the title, mentioned by this article,includes public instruments, and this would only be true if public instruments


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are not included in the idea of possession spoken of in said article. In otherwords, the strength of the argument rests in that this possession is precisely thematerial and does not include the symbolic. Consequently, the argument isdeficient for it is begging the same question, because if this possession includesthe symbolic, which is acquired by the execution of a public instrument, it should

be understood that the title, mentioned by the law as the next cause ofpreference, does not include public instruments.

Furthermore, our interpretation of this article 1473 is more in consonance withthe principles of justice. The execution of a public instrument is equivalent to thedelivery of the realty sold (art. 1462, Civil Code) and its possession by the vendee(art. 438). Under these conditions the sale is considered consummated andcompletely transfers to the vendee all of the vendor's rights of ownershipincluding his real right over the thing. The vendee by virtue of this sale hasacquired everything and nothing, absolutely nothing, is left to the vendor. From

this moment the vendor is a stranger to the thing sold like any other who hasnever been its owner. As the thing is considered delivered, the vendor has nolonger the obligation of even delivering it. If he continues taking materialpossession of it, it is simply on account of vendee's tolerance and, in this sense,his possession is vendor's possession. And if the latter should have to ask him forthe delivery of this material possession; it would not be by virtue of the sale,because this has been already consummated and has produced all its effects, butby virtue of the vendee's ownership, in the same way as said vendee couldrequire of another person although same were not the vendor. This means thatafter the sale of a realty by means of a public instrument, the vendor, who resells

it to another, does not transmit anything to the second vendee and if the latter,by virtue of this second sale, takes material possession of the thing, he does it asmere detainer, and it would be unjust to protect this detention against the rightsto the thing lawfully acquired by the first vendee.

From the foregoing it follows that the plain

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