G.R. No.
215014
REBECCA FULLIDO, Petitioner,
vs.
GINO GRILLI, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the May 31, 2013
Decision  and the September 24, 2014  Resolution of the Court of Appeals (CA) in CA-G.R.
1 2
CEB-SP No. 06946, which affirmed the April 26, 2012 Decision  of the Regional Trial Court,
3
Branch 47, Tagbilaran City (RTC) in Civil Case No. 7895, reversing the March 31, 2011
Decision  of the Municipal Circuit Trial Court, Dauis, Bohol (MCTC) in Civil Case No. 244, a case
4
for unlawful detainer filed by Gino Grilli (Grilli) against Rebecca Fullido (Fullido).
The Facts
Sometime in 1994, Grilli, an Italian national, met Fullido in Bohol and courted her. In 1995, Grilli
decided to build a residential house where he and Fullido would to stay whenever he would be
vacationing in the country. Grilli financially assisted Fullido in procuring a lot located in Biking I,
Dauis, Bohol, from her parents which was registered in her name under Transfer Certificate of
Title (TCT) No. 30626.  On the said property, they constructed a house, which was funded by
5
Grilli. Upon completion, they maintained a common-law relationship and lived there whenever
Grilli was on vacation in the Philippines twice a year.
In 1998, Grilli and Fullido executed a contract of lease,   a memorandum of
6
agreement  (MOA) and a special power of attorney  (SPA), to define their respective rights over
7 8
the house and lot.
The lease contract stipulated, among others, that Grilli as the lessee, would rent the lot,
registered in the name of Fullido, for a period of fifty (50) years, to be automatically renewed for
another fifty (50) years upon its expiration in the amount of P10,000.00 for the whole term of the
lease contract; and that Fullido as the lessor, was prohibited from selling, donating, or
encumbering the said lot without the written consent of Grilli. The pertinent provisions of the
lease contract over the house and lot are as follows:
That for and in consideration of the total amount of rental in the amount of TEN THOUSAND
(P10,000.00) PESOS, Philippine Currency, paid by the LESSEE to the LESSOR, receipt of
which is hereby acknowledged, the latter hereby leases to the LESSEE a house and lot, and all
the furnishings found therein, land situated at Biking I, Dauis, Bohol, Philippines, absolutely
owned and belonging to the LESSOR and particularly described as follows, to wit:
xxxx
That the LESSOR and the LESSEE hereby agree as they have agreed to be bound by the
following terms and conditions, to wit:
1. That the term of the lease shall be FIFTY (50) YEARS from August 16, 1998 to August 15,
2048, automatically renewed for the same term upon the expiration thereof;
xxx
7. That the LESSOR is strictly prohibited to sell, donate, encumber, or in any manner convey the
property subject of this lease to any third person, without the written consent of the LESSEE. 9
The said lease contract was duly registered in the Register of Deeds of Bohol.
The MOA, on the other hand, stated, among others, that Grilli paid for the purchase price of the
house and lot; that ownership of the house and lot was to reside with him; and that should the
common-law relationship be terminated, Fullido could only sell the house and lot to whomever
Grilli so desired. Specifically, the pertinent terms of the MOA read:
NOW WHEREFORE, FOR AND IN CONSIDERATION of the foregoing premises, the parties
hereto agree as they hereby covenant to agree that the FIRST PARTY (Grilli) shall permanently
reside on the property as above-mentioned, subject to the following terms and conditions:
1. That ownership over the above-mentioned properties shall reside absolutely with
herein FIRST PARTY, and the SECOND PARTY (Fullido) hereby acknowledges the
same;
2. That the SECOND PARTY is expressly prohibited to sell the above-stated property,
except if said sale is with the conformity of the FIRST PARTY;
3. That the SECOND PARTY hereby grants the FIRST PARTY, the absolute and
irrevocable right, to reside in the residential building so constructed during his lifetime, or
any time said FIRST PARTY may so desire;
4. That in the event the common-law relationship terminates, or when the SECOND
PARTY marries another, or enters into another common-law relationship with another,
said SECOND PARTY shall be obliged to execute a DEED OF ABSOLUTE SALE over
the above-stated parcel of land and residential building, in favor of whomsoever the
FIRST PARTY may so desire, and be further obliged to turn over the entire consideration
of the said sale to the FIRST PARTY , or if the law shall allow, the FIRST PARTY shall
retain ownership of the said land, as provided for in paragraph 7 below;
 xxx
7. That if the cases referred to in paragraph 4 shall occur and in the event that a future
law shall be passed allowing foreigners to own real properties in the Philippines, the
ownership of the above-described real properties shall pertain to the FIRST PARTY, and
the herein undersigned SECOND PARTY undertakes to execute all the necessary
deeds, documents, and contracts to effect the transfer of title in favor of the FIRST
PARTY;
xxx. 10
Lastly, the SPA allowed Grilli to administer, manage, and transfer the house and lot on behalf of
Fullido. Initially, their relationship was harmonious, but it turned sour after 16 years of living
together. Both charged each other with infidelity. They could not agree who should leave the
common property, and Grilli sent formal letters to Fullido demanding that she vacate the
property, but these were unheeded. On September 8, 2010, Grilli filed a complaint for unlawful
detainer with prayer for issuance of preliminary injunction against Fullido before the MCTC,
docketed as Civil Case No. 244.
Grilli’s Position
The complaint stated that the common-law relationship between Grilli and Fullido began
smoothly, until Grilli discovered that Fullido was pregnant when he arrived in the Philippines in
2002. At first, she told him that the child she was carrying was his. After the delivery of the child,
however, it became apparent that the child was not his because of the discrepancy between the
child’s date of birth and his physical presence in the Philippines and the difference between the
baby’s physical features and those of Grilli. Later on, she admitted that the child was indeed
sired by another man.
Grilli further claimed that he was so devastated that he decided to end their common-law
relationship. Nevertheless, he allowed Fullido to live in his house out of liberality and generosity,
but this time, using another room. He did not demand any rent from Fullido over the use of his
property.
After a year, Fullido became more hostile and difficult to handle. Grilli had to make repairs with
his house every time he arrived in the Philippines because she was not maintaining it in good
condition. Fullido also let her two children, siblings and parents stay in his house, which caused
damage to the property. He even lost his personal belongings inside his house on several
occasions. Grilli verbally asked Fullido to move out of his house because they were not getting
along anymore, but she refused. He could no longer tolerate the hostile attitude shown to him by
Fullido and her family, thus, he filed the instant complaint.
Fullido’s Position
Fullido countered that she met Grilli sometime in 1993 when she was still 17 years old working
as a cashier in Alturas Supermarket. Grilli was then a tourist in Bohol who persistently courted
her.
At first, Fullido was hesitant to the advances of Grilli because she could not yet enter into a valid
marriage. When he assured her and her parents that they would eventually be married in three
years, she eventually agreed to have a relationship with him and to live as common-law
spouses. Sometime in 1995, Grilli offered to build a house for her on a parcel of land she
exclusively owned which would become their conjugal abode. Fullido claimed that their
relationship as common-law spouses lasted for more than 18 years until she discovered that
Grilli had found a new and younger woman in his life. Grilli began to threaten and physically hurt
her by knocking her head and choking her.
When Fullido refused to leave their house even after the unlawful detainer case was filed, Grilli
again harassed, intimidated and threatened to hurt her and her children. Thus, she filed a
petition for Temporary Protection Order (TPO) and Permanent Protection Order (PPO) against
Grilli under Republic Act (R.A.) No. 9262 before the Regional Trial Court, Branch 3, Bohol (RTC-
Branch 3). In an Order,  dated February 23, 2011, the RTC-Branch 3 granted the TPO in favor
11
of Fullido and directed that Grilli must be excluded from their home.
Fullido finally asserted that, although it was Grilli who funded the construction of the house, she
exclusively owned the lot and she contributed to the value of the house by supervising its
construction and maintaining their household.
The MCTC Ruling
In its decision, dated March 31, 2011, the MCTC dismissed the case after finding that Fullido
could not be ejected from their house and lot. The MCTC opined that she was a co-owner of the
house as she contributed to it by supervising its construction. Moreover, the MCTC respected
the TPO issued by RTC-Branch 3 which directed that Grilli be removed from Fullido’s residence.
The dispositive portion of the MCTC decision reads:
WHEREFORE, judgment is hereby rendered:
1. Dismissing the instant case;
2. Ordering the Plaintiff to pay to Defendant the amount of Fifty Thousand Pesos
(P50,000.00) as moral damages, and Twenty Thousand Pesos (P20,000.00) as
exemplary damages, and Twenty Thousand Pesos (P20,000.00) as Attorney’s
Fees; and
 3. Denying the prayer for the issuance of Preliminary Mandatory Injunction.
SO ORDERED. 12
Not in conformity, Grilli elevated the matter before the RTC.
The RTC Ruling
In its decision, dated April 26, 2012, the RTC reversed and set aside the MCTC decision. The
RTC was of the view that Grilli had the exclusive right to use and possess the house and lot by
virtue of the contract of lease executed by the parties. Since the period of lease had not yet
expired, Fullido, as lessor, had the obligation to respect the peaceful and adequate enjoyment of
the leased premises by Grilli as lessee. The RTC opined that absent a judicial declaration of
nullity of the contract of lease, its terms and conditions were valid and binding. As to the TPO,
the RTC held that the same had no bearing in the present case which merely involved the
possession of the leased property.
Aggrieved, Fullido instituted an appeal before the CA alleging that her land was unlawfully
transferred by Grilli to a certain Jacqueline Guibone (Guibone), his new girlfriend, by virtue of the
SPA earlier executed by Fullido.
The CA Ruling
In its assailed decision, dated May 31, 2013, the CA upheld the decision of the RTC
emphasizing that in an ejectment case, the only issue to be resolved would be the physical
possession of the property. The CA was also of the view that as Fullido executed both the MOA
and the contract of lease, which gave Grilli the possession and use of the house and lot, the
same constituted as a judicial admission that it was Grilli who had the better right of physical
possession. The CA stressed that, if Fullido would insist that the said documents were voidable
as her consent was vitiated, then she must institute a separate action for annulment of contracts.
Lastly, the CA stated that the TPO issued by the RTC-Branch 3 under Section 21 of R.A. No.
9262 was without prejudice to any other action that might be filed by the parties.
Fullido filed a motion for reconsideration,  but she failed to attach the proofs of service of her
13
motion. For said reason, it was denied by the CA in its assailed resolution, dated September 24,
2014.
Hence, this present petition raising the following:
ISSUES
I
THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND DEPARTED FROM
ESTABLISHED LAW AND JURISPRUDENCE IN DENYING THE PETITION FOR REVIEW
AND IN AFFIRMING THE DECISION OF RTC BOHOL BRANCH 47 EJECTING PETITIONER
FROM THE SUBJECT PROPERTIES, WHICH EJECTMENT ORDER IS ANCHORED ON
PATENTLY NULL AND VOID CONTRACTS.
II
THE HONORABLE COURT OF APPEALS GRAVELY ERRED AND DEPARTED FROM
ESTABLISHED LAW IN AFFIRMING THE DECISION OF THE RTC BOHOL BRANCH 47
EJECTING PETITIONER FROM THEIR CONJUGAL ABODE WHERE RESPONDENT HAS
BEEN EARLIER ORDERED TO VACATE BY VIRTUE OF A PERMANENT PROTECTION
ORDER THUS EFFECTIVELY SETTING ASIDE, NEGATING AND/OR VIOLATING AN
ORDER ISSUED BY A COURT OF CO-EQUAL JURISDICTION.
III
THE HONORABLE COURT OF APPEALS LIKEWISE ERRED AND DEPARTED FROM
ESTABLISHED LAW AND JURISPRUDENCE IN DENYING THE PETITIONER’S MOTION
FOR RECONSIDERATION, AMONG OTHERS, FOR NONCOMPLIANCE WITH SECTION 1
RULE 52 VIS-À-VIS SECTION 13, RULE 13 OF THE 1997 RULES OF CIVIL PROCEDURE. 14
Fullido argues that she could not be ejected from her own lot based on the contract of lease and
the MOA because those documents were null and void for being contrary to the Constitution, the
law, public policy, morals and customs; that the MOA prevented her from disposing or selling her
own land, while the contract of lease favoring Grilli, a foreigner, was contrary to the Constitution
as it was a for a period of fifty (50) years, and, upon termination, was automatically renewable for
another fifty (50) years; that the TPO, which became a PPO by virtue of the July 5, 2011
Decision  of RTC-Branch 3, should not be defeated by the ejectment suit; and that the CA
15
should have liberally applied its procedural rules and allowed her motion for reconsideration.
In his Comment,  Grilli countered that he was the rightful owner of the house because a
16
foreigner was not prohibited from owning residential buildings; that the lot was no longer
registered in the name of Fullido as it was transferred to Guibone, covered by TCT No. 101-
2011000335; that if Fullido wanted to assail the lease contract, she should have first filed a
separate action for annulment of the said contract, which she did in Civil Case No. 8094, pending
before the Regional Trial Court of Bohol; and that by signing the contracts, Fullido fully agreed
with their terms and must abide by the same.
In her Reply,  Fullido insisted that the contract of lease and the MOA were null and void, thus,
17
these could not be the source of Grilli’s de facto possession.
The Court’s Ruling
The Court finds the petition meritorious.
Unlawful detainer is an action to recover possession of real property from one who unlawfully
withholds possession thereof after the expiration or termination of his right to hold possession
under any contract, express or implied. The possession of the defendant in unlawful detainer is
originally legal but became illegal due to the expiration or termination of the right to possess. The
only issue to be resolved in an unlawful detainer case is the physical or material possession of
the property involved, independent of any claim of ownership by any of the parties. 18
In this case, Fullido chiefly asserts that Grilli had no right to institute the action for unlawful
detainer because the lease contract and the MOA, which allegedly gave him the right of
possession over the lot, were null and void for violating the Constitution. Contrary to the findings
of the CA, Fullido was not only asserting that the said contracts were merely voidable, but
she was consistently invoking that the same were completely void.  Grilli, on the other
19
hand, contends that Fullido could not question the validity of the said contracts in the present
ejectment suit unless she instituted a separate action for annulment of contracts. Thus, the Court
is confronted with the issue of whether a contract could be declared void in a summary action of
unlawful detainer.
Under the circumstances of the case, the Court answers in the affirmative.
A void contract cannot be the
source of any right; it cannot
be utilized in an ejectment suit
A void or inexistent contract may be defined as one which lacks, absolutely either in fact or in
law, one or some of the elements which are essential for its validity.  It is one which has no force
20
and effect from the very beginning, as if it had never been entered into; it produces no effect
whatsoever either against or in favor of anyone.  Quod nullum est nullum producit
21
effectum. Article 1409 of the New Civil Code explicitly states that void contracts also cannot be
ratified; neither can the right to set up the defense of illegality be waived.  Accordingly, there is
22
no need for an action to set aside a void or inexistent contract.23
A review of the relevant jurisprudence reveals that the Court did not hesitate to set aside a void
contract even in an action for unlawful detainer. In Spouses Alcantara v. Nido,  which involves
24
an action for unlawful detainer, the petitioners therein raised a defense that the subject land was
already sold to them by the agent of the owner. The Court rejected their defense and held that
the contract of sale was void because the agent did not have the written authority of the owner to
sell the subject land.
Similarly, in Roberts v. Papio,  a case of unlawful detainer, the Court declared that the defense
25
of ownership by the respondent therein was untenable. The contract of sale invoked by the latter
was void because the agent did not have the written authority of the owner. A void contract
produces no effect either against or in favor of anyone.
In Ballesteros v. Abion,  which also involves an action for unlawful detainer, the Court disallowed
26
the defense of ownership of the respondent therein because the seller in their contract of sale
was not the owner of the subject property. For lacking an object, the said contract of sale was
void ab initio.
Clearly, contracts may be declared void even in a summary action for unlawful detainer because,
precisely, void contracts do not produce legal effect and cannot be the source of any rights. To
emphasize, void contracts may not be invoked as a valid action or defense in any court
proceeding, including an ejectment suit. The next issue that must be resolved by the Court is
whether the assailed lease contract and MOA are null and void.
<>The lease contract and the
MOA circumvent the
constitutional restraint against
foreign ownership of lands.
Under Section 1 of Article XIII of the 1935 Constitution, natural resources shall not be alienated,
except with respect to public agricultural lands and in such cases, the alienation is limited to
Filipino citizens. Concomitantly, Section 5 thereof states that, save in cases of hereditary
succession, no private agricultural land shall be transferred or assigned except to individuals,
corporations, or associations qualified to acquire or hold lands of the public domain in the
Philippines. The prohibition on the transfer of lands to aliens was adopted in the present 1987
Constitution, under Sections 2, 3 and 7 of Article XII thereof. Agricultural lands, whether public or
private, include residential, commercial and industrial lands. The purpose of prohibiting the
transfer of lands to foreigners is to uphold the conservation of our national patrimony and ensure
that agricultural resources remain in the hands of Filipino citizens. 27
The prohibition, however, is not limited to the sale of lands to foreigners. It also covers leases of
lands amounting to the transfer of all or substantially all the rights of dominion. In the landmark
case of Philippine Banking Corporation v. Lui She,  the Court struck down a lease contract of a
28
parcel of land in favor of a foreigner for a period of ninety-nine (99) years with an option to buy
the land for fifty (50) years. Where a scheme to circumvent the Constitutional prohibition against
the transfer of lands to aliens is readily revealed as the purpose for the contracts, then the illicit
purpose becomes the illegal cause rendering the contracts void. Thus, if an alien is given not
only a lease of, but also an option to buy, a piece of land by virtue of which the Filipino
owner cannot sell or otherwise dispose of his property, this to last for 50 years, then it
becomes clear that the arrangement is a virtual transfer of ownership whereby the owner
divests himself in stages not only of the right to enjoy the land but also of the right to dispose of it
— rights which constitute ownership. If this can be done, then the Constitutional ban against
alien landholding in the Philippines, is indeed in grave peril.
29
In Llantino v. Co Liong Chong,  however, the Court clarified that a lease contract in favor of
30
aliens for a reasonable period was valid as long as it did not have any scheme to circumvent the
constitutional prohibition, such as depriving the lessors of their right to dispose of the land. The
Court explained that "[a]liens are not completely excluded by the Constitution from use of lands
for residential purposes. Since their residence in the Philippines is temporary, they may be
granted temporary rights such as a lease contract which is not forbidden by the Constitution.
Should they desire to remain here forever and share our fortune and misfortune, Filipino
citizenship is not impossible to acquire."   The lessee-foreigner therein eventually acquired
31
Filipino citizenship.
Consequently, Presidential Decree (P.D.) No. 471 was enacted to regulate the lease of lands to
aliens.  It provides that the maximum period allowable for the duration of leases of private lands
1avvphi1
to aliens or alien-owned corporations, associations, or entities not qualified to acquire private
lands in the Philippines shall be twenty-five (25) years, renewable for another period of twenty-
five (25) years upon mutual agreement of both lessor and lessee.  It also provides that any
32
contract or agreement made or executed in violation thereof shall be null and void ab
initio.
33
Based on the above-cited constitutional, legal and jurisprudential limitations, the Court finds that
the lease contract and the MOA in the present case are null and void for virtually transferring the
reigns of the land to a foreigner.
As can be gleaned from the contract, the lease in favor of Grilli was for a period of fifty (50)
years, automatically extended for another fifty (50) years upon the expiration of the original
period. Moreover, it strictly prohibited Fullido from selling, donating, or encumbering her land to
anyone without the written consent of Grilli. For a measly consideration of P10,000.00, Grilli
would be able to absolutely occupy the land of Fullido for 100 years, and she is powerless to
dispose the same. The terms of lease practically deprived Fullido of her property rights and
effectively transferred the same to Grilli.
Worse, the dominion of Grilli over the land had been firmly cemented by the terms of the MOA as
it reinforced Grilli’s property rights over the land because, first, it brazenly dictated that
ownership of the land and the residential building resided with him. Second, Fullido was
expressly prohibited from transferring the same without Grilli’s conformity. Third, Grilli would
permanently reside in the residential building. Fourth, Grilli may capriciously dispose Fullido’s
property once their common-law relationship is terminated. This right was recently exercised
when the land was transferred to Guibone. Lastly, Fullido shall be compelled to transfer the land
to Grilli if a law would be passed allowing foreigners to own real properties in the Philippines.
Evidently, the lease contract and the MOA operated hand-in-hand to strip Fullido of any dignified
right over her own property. The term of lease for 100 years was obviously in excess of the
allowable periods under P.D. No. 471. Even Grilli admitted that "this is a case of an otherwise
valid contract of lease that went beyond the period of what is legally permissible."34 Grilli had
been empowered to deprive Fullido of her land’s possession, control, disposition and even its
ownership. The jus possidendi, jus utendi, jus fruendi, jus abutendi and, more importantly,
the jus disponendi – the sum of rights which composes ownership – of the property were
effectively transferred to Grilli who would safely enjoy the same for over a century. The title of
Fullido over the land became an empty and useless vessel, visible only in paper, and was only
meant as a dummy to fulfill a foreigner’s desire to own land within our soils. It is disturbing how
these documents were methodically formulated to circumvent the constitutional prohibition
against land ownership by foreigners. The said contracts attempted to guise themselves as a
lease, but a closer scrutiny of the same revealed that they were intended to transfer the
dominion of a land to a foreigner in violation of Section 7, Article XII of the 1987 Constitution.
Even if Fullido voluntary executed the same, no amount of consent from the parties could
legalize an unconstitutional agreement. The lease contract and the MOA do not deserve an iota
of validity and must be rightfully struck down as null and void for being repugnant to the
fundamental law. These void documents cannot be the source of rights and must be treated as
mere scraps of paper.
Grilli does not have a
cause of action for
unlawful detainer
Ultimately, the complaint filed by Grilli was an action for unlawful detainer. Section 1 of Rule 70
of the Rules of Court lays down the requirements for filing a complaint for unlawful detainer, to
wit:
Who may institute proceedings, and when. – Subject to the provision of the next succeeding
section, a person deprived of the possession of any land or building by force, intimidation, threat,
strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or termination
of the right to hold possession, by virtue of any contract, express or implied, or the legal
representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time
within one (1) year after such unlawful deprivation or withholding of possession, bring an action
in the proper Municipal Trial Court against the person or persons unlawfully withholding or
depriving of possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.
[Emphasis Supplied]
A complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following:
(1) initially, possession of property by the defendant was by contract with or by tolerance of the
plaintiff; (2) eventually, such possession became illegal upon notice by plaintiff to defendant of
the termination of the latter’s right of possession; (3) thereafter, the defendant remained in
possession of the property and deprived the plaintiff of the enjoyment thereof; and (4) within one
year from the last demand on defendant to vacate the property, the plaintiff instituted the
complaint for ejectment. 35
The Court rules that Grilli has no cause of action for unlawful detainer against Fullido. As can be
gleaned from the discussion above, the complainant must either be a lessor, vendor, vendee, or
other person against whom the possession of any land or building is unlawfully withheld. In other
words, the complainant in an unlawful detainer case must have some right of possession over
the property.
In the case at bench, the lease contract and the MOA, from which Grilli purportedly drew his right
of possession, were found to be null and void for being unconstitutional. A contract that violates
the Constitution and the law is null and void ab initio and vests no rights and creates no
obligations. It produces no legal effect at all.  Hence, as void contracts could not be the source
36
of rights, Grilli had no possessory right over the subject land. A person who does not have any
right over a property from the beginning cannot eject another person possessing the same.
Consequently, Grilli’s complaint for unlawful detainer must be dismissed for failure to prove his
cause of action.
In Pari Delicto Doctrine
is not applicable
On a final note, the Court deems it proper to discuss the doctrine of in pari delicto. Latin for "in
equal fault," in pari delicto connotes that two or more people are at fault or are guilty of a crime.
Neither courts of law nor equity will interpose to grant relief to the parties, when an illegal
agreement has been made, and both parties stand in pari delicto. 37
The application of the doctrine of in pari delicto is not always rigid. An accepted exception arises
when its application contravenes well-established public policy. In this jurisdiction, public policy
has been defined as that principle of the law which holds that no subject or citizen can lawfully
do that which has a tendency to be injurious to the public or against the public good.  Thus,
38
whenever public policy is advanced by either party, they may be allowed to sue for relief against
the transaction.39
In the present case, both Grilli and Fullido were undoubtedly parties to a void contract. Fullido,
however, was not barred from filing the present petition before the Court because the matters at
hand involved an issue of public policy, specifically the Constitutional prohibition against land
ownership by aliens. As pronounced in Philippine Banking Corporation v. Lui She, the said
constitutional provision would be defeated and its continued violation sanctioned if the lands
continue to remain in the hands of a foreigner.  Thus, the doctrine of in pari delicto shall not be
40
applicable in this case.
WHEREFORE, the petition is GRANTED. The May 31, 2013 Decision of the Court of Appeals
and its September 24, 2014 Resolution in CA-G.R. CEB-SP No. 06946 are
hereby REVERSED and SET ASIDE. The complaint filed by Gino Grilli before the Municipal
Circuit Trial Court, Dauis-Panglao, Dauis, Bohol, docketed as Civil Case No. 244,
is DISMISSED for lack of cause of action.
SO ORDERED.
G.R. No. 200274
MELECIO DOMINGO, Petitioner,
vs.
SPOUSES GENARO MOLINA and ELENA B. MOLINA, substituted by ESTER
MOLINA, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari  filed by the petitioner Melecio
1
Domingo (Melecio) assailing the August 9, 2011 decision  and January 10, 2012 resolution  of
2 3
the Court of Appeals (CA) in CA-G.R. CV No. 94160.
THE FACTS
In June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in Camiling,
Tarlac, consisting of a one-half undivided portion over an 18, 164 square meter parcel of land.
The sale was annotated on the Original Certificate of Title (OCT) No. 16354 covering the subject
property.
During his lifetime, Anastacio borrowed money from the respondent spouses Genaro and Elena
Molina (spouses Molina). On September 10, 1978 or 10 years after Flora’s death , Anastacio
4
sold his interest over the land to the spouses Molina to answer for his debts. The sale to the
spouses Molina was annotated at the OCT of the subject property.  In 1986, Anastacio died.
5 6
In May 19, 1995, the sale of Anastacio’s interest was registered under Transfer Certificate of
Title (TCT) No. 272967[[7]] and transferred the entire one-half undivided portion of the land to
the spouses Molina.
Melecio, one of the children of Anastacio and Flora, learned of the transfer and filed a Complaint
for Annulment of Title and Recovery of Ownership (Complaint) against the spouses Molina on
May 17, 1999. 8
Melecio claims that Anastacio gave the subject property to the spouses Molina to serve as THE RTC RULING
collateral for the money that Anastacio borrowed. Anastacio could not have validly sold the
interest over the subject property without Flora’s consent, as Flora was already dead at the time The Regional Trial Court (RTC) dismissed  the case because Melecio failed to establish his
15

of the sale. claim that Anastacio did not sell the property to the spouses Molina.

Melecio also claims that Genaro Molina must have falsified the document transferring Anastacio The RTC also held that Anastacio could dispose of conjugal property without Flora’s consent
and Flora’s one-half undivided interest over the land. Finally, Melecio asserts that he occupied since the sale was necessary to answer for conjugal liabilities.
the subject property from the time of Anastacio’s death up to the time he filed the Complaint.
9

The RTC denied Melecio’s motion for reconsideration of the RTC ruling. From this ruling,
Melecio presented the testimonies of the Records Officer of the Register of Deeds of Tarlac, and Melecio proceeded with his appeal to the CA.
of Melecio’s nephew, George Domingo (George). 10

THE CA RULING
The Records Officer testified that he could not locate the instrument that documents the transfer
of the subject property ownership from Anastacio to the spouses Molina. The Records Officer In a decision dated August 9, 2011, the CA affirmed the RTC ruling in toto.
also testified that the alleged sale was annotated at the time when Genaro Molina’s brother was
the Register of Deeds for Camiling, Tarlac.11

The CA held that Melecio failed to prove by preponderant evidence that there was fraud in the
conveyance of the property to the spouses Molina. The CA gave credence to the OCT
Melecio’s nephew George, on the other hand, testified that he has been living on the subject annotation of the disputed property sale.
property owned by Anastacio since 1986. George testified, however, that aside from himself,
there were also four other occupants on the subject property, namely Jaime Garlitos, Linda
The CA also held that Flora’s death is immaterial because Anastacio only sold his rights,
Sicangco, Serafio Sicangco and Manuel Ramos. 12

excluding Flora’s interest, over the lot to the spouses Molina.  The CA explained that "[t]here is
1âwphi1

no prohibition against the sale by the widower of real property formerly belonging to the conjugal
The spouses Molina asserted that Anastacio surrendered the title to the subject property to partnership of gains" .
16

answer for his debts and told the spouses Molina that they already own half of the land. The
spouses Molina have been in possession of the subject property before the title was registered
Finally, the CA held that Melecio’s action has prescribed. According to the CA, Melecio failed to
under their names and have religiously paid the property’s real estate taxes.
file the action within one year after entry of the decree of registration.
The spouses Molina also asserted that Melecio knew of the disputed sale since he accompanied
Melecio filed a motion for reconsideration of the CA Decision. The CA denied Melecio’s motion
Anastacio several times to borrow money. The last loan was even used to pay for Melecio’s
for reconsideration for lack of merit.
17

wedding. Finally, the spouses Molina asserted that Melecio built his nipa hut on the subject
property only in 1999, without their knowledge and consent. 13

THE PETITION
The spouses Molina presented Jaime Garlitos (Jaime) as their sole witness and who is one of
the occupants of the subject lot. Melecio filed the present petition for review on certiorari to challenge the CA ruling.

Jaime testified that Elena Molina permitted him to build a house on the subject property in 1993.
Jaime, together with the other tenants, planted fruit bearing trees on the subject property and
gave portions of their harvest to Elena Molina without any complaint from Melecio. Jaime further
testified that Melecio never lived on the subject property and that only George Domingo, as the
caretaker of the spouses Molina, has a hut on the property.
Meanwhile, the spouses Molina died during the pendency of the case and were substituted by
their adopted son, Cornelio Molina.14
Melecio principally argues that the sale of land belonging to the conjugal partnership without the
wife’s consent is invalid.
Melecio also claims that fraud attended the conveyance of the subject property and the absence
of any document evidencing the alleged sale made the transfer null and void. Finally, Melecio
claims that the action has not yet prescribed.
The respondents, on the other hand, submitted and adopted their arguments in their Appeal
Brief .
18
First, Melecio’s counsel admitted that Anastacio had given the lot title in payment of the debt
amounting to Php30,000.00. The delivery of the title is constructive delivery of the lot itself based
on Article 1498, paragraph 2 of
the Civil Code.
Second, the constructive delivery of the title coupled with the spouses Molina’s exercise of
attributes of ownership over the subject property, perfected the sale and completed the transfer
of ownership.
Conjugal partnership of gains established before and after the effectivity of the Family Code are
governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property
Relations Between Husband and Wife) of the Family Code. This is clear from Article 105 of the
Family Code which states:
x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains already
established between spouses before the effectivity of this Code, without prejudice to vested
rights already acquired in accordance with the Civil Code or other laws, as provided in Article
256.
The conjugal partnership of Anastacio and Flora was dissolved when Flora died in 1968,
pursuant to Article 175 (1) of the Civil Code  (now Article 126 (1) of the Family Code).
22

THE ISSUES
The core issues of the petition are as follows: (1) whether the sale of a conjugal property to the
spouses Molina without Flora’s consent is valid and legal; and (2) whether fraud attended the
transfer of the subject property to the spouses Molina.
OUR RULING
Article 130 of the Family Code requires the liquidation of the conjugal partnership upon death of
a spouse and prohibits any disposition or encumbrance of the conjugal property prior to the
conjugal partnership liquidation, to quote:
Article 130. Upon the termination of the marriage by death, the conjugal partnership property
shall be liquidated in the same proceeding for the settlement of the estate of the
deceased.

We deny the petition. If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the conjugal
partnership property either judicially or extrajudicially within one year from the death of the
deceased spouse. If upon the lapse of the six month period no liquidation is made, any
It is well settled that when the trial court’s factual findings have been affirmed by the CA, the
disposition or encumbrance involving the conjugal partnership property of the terminated
findings are generally conclusive and binding upon the Court and may no longer be reviewed on
marriage shall be void. x x x (emphases supplied)
Rule 45 petitions.  While there are exceptions  to this rule, the Court finds no applicable
19 20

exception with respect to the lower courts’ finding that the subject property was Anastacio and
Flora’s conjugal property. Records before the Court show that the parties did not dispute the
conjugal nature of the property.
While Article 130 of the Family Code provides that any disposition involving the conjugal property
without prior liquidation of the partnership shall be void, this rule does not apply since the
provisions of the Family Code shall be "without prejudice to vested rights already acquired in
accordance with the Civil Code or other laws." 23

Melecio argues that the sale of the disputed property to the spouses Molina is void without
Flora’s consent.
An implied co-ownership
among Flora’s heirs governed
We do not find Melecio’s argument meritorious.
the conjugal properties
pending liquidation and
Anastacio and Flora’s partition.
conjugal partnership was
dissolved upon Flora’s death.
In the case of Taningco v. Register of Deeds of Laguna,  we held that the properties of a
24

dissolved conjugal partnership fall under the regime of co-ownership among the surviving
There is no dispute that Anastacio and Flora Domingo married before the Family Code’s spouse and the heirs of the deceased
effectivity on August 3, 1988 and their property relation is a conjugal partnership. 21
spouse until final liquidation and partition. The surviving spouse, however, has an actual and
vested one-half undivided share of the properties, which does not consist of determinate and
segregated properties until liquidation
and partition of the conjugal partnership.
An implied ordinary co-ownership ensued among Flora’s surviving heirs, including Anastacio,
with respect to Flora’s share of the conjugal partnership until final liquidation and partition;
Anastacio, on the other hand, owns one-half of the original conjugal partnership properties as his
share, but this is an undivided interest.
Article 493 of the Civil Code on co-ownership provides:
Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits
pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are involved. But the effect of the
alienation or the mortgage, with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the termination of the co-ownership.
(399) (emphases supplied)
Thus, Anastacio, as co-owner, cannot claim title to any specific portion of the conjugal properties
without an actual partition being first done either by agreement or by judicial decree.
Nonetheless, Anastacio had the right to freely sell and dispose of his undivided interest in the
subject property.
The spouses Molina became
co-owners of the subject
property to the extent of
Anastacio’s interest.
The OCT annotation of the sale to the spouses Molina reads that "[o]nly the rights, interests
and participation of Anastacio Domingo, married to Flora Dela Cruz, is hereby sold,
transferred, and conveyed unto the said vendees for the sum of ONE THOUSAND PESOS
(P1,000.00) which pertains to an undivided one-half (1/2) portion and subject to all other
conditions specified in the document x x x"  (emphases supplied). At the time of the sale,
25
Anastacio’s undivided interest in the conjugal properties consisted of: (1) one-half of the entire
conjugal properties; and (2) his share as Flora’s heir on the conjugal properties.
Anastacio, as a co-owner, had the right to freely sell and dispose of his undivided interest, but
not the interest of his co-owners. Consequently, Anastactio’s sale to the spouses Molina without
the consent of the other co-owners was not totally void, for Anastacio’s rights or a portion thereof
were thereby effectively transferred, making the spouses Molina a co-owner of the subject
property to the extent of Anastacio’s interest. This result conforms with the well-established
principle that the binding force of a contract must be recognized as far as it is legally possible to
do so (quando res non valet ut ago, valeat quantum valere potest). 26
The spouses Molina would be a trustee for the benefit of the co-heirs of Anastacio in respect of
any portion that might belong to the co-heirs after liquidation and partition. The observations of
Justice Paras cited in the case of Heirs of Protacio Go, Sr. V. Servacio  are instructive:
27
x x x [I]f it turns out that the property alienated or mortgaged really would pertain to the share of
the surviving spouse, then said transaction is valid. If it turns out that there really would be, after
liquidation, no more conjugal assets then the whole transaction is null and void. But if it turns out
that half of the property thus alienated or mortgaged belongs to the husband as his share in the
conjugal partnership, and half should go to the estate of the wife, then that corresponding to the
husband is valid, and that corresponding to the other is not. Since all these can be determined
only at the time the liquidation is over, it follows logically that a disposal made by the surviving
spouse is not void ab initio. Thus, it has been held that the sale of conjugal properties cannot be
made by the surviving spouse without the legal requirements. The sale is void as to the share of
the deceased spouse (except of course as to that portion of the husband’s share inherited by her
as the surviving spouse). The buyers of the property that could not be validly sold become
trustees of said portion for the benefit of the husband’s other heirs, the cestui que trust ent. Said
heirs shall not be barred by prescription or by laches.
Melecio’s recourse as a co-owner of the conjugal properties, including the subject property, is an
action for partition under Rule 69 of the Revised Rules of Court. As held in the case of Heirs of
Protacio Go, Sr., "it is now settled that the appropriate recourse of co-owners in cases where
their consent were not secured in a sale of the entire property as well as in a sale merely of the
undivided shares of some of the co-owners is an action for PARTITION under Rule 69 of the
Revised Rules of Court." 28
The sale of the subject
property to the spouses Molina
was not attended with fraud.
On the issue of fraud, the lower courts found that there was no fraud in the sale of the disputed
property to the spouses Molina.
The issue of fraud would require the Court to inquire into the weight of evidentiary matters to
determine the merits of the petition and is essentially factual in nature. It is basic that factual
questions cannot be cannot be entertained in a Rule 45 petition, unless it falls under any of the
recognized exceptions  found in jurisprudence. The present petition does not show that it falls
29
under any of the exceptions allowing factual review.
The CA and RTC conclusion that there is no fraud in the sale is supported by the evidence on
record.
Melecio' s argument that no document was executed for the sale is negated by the CA finding
that there was a notarized deed of conveyance executed between Anastacio and the spouses
Molina, as annotated on the OCT of the disputed property.
Furthermore, Melecio's belief that Anastacio could not have sold the property without his
knowledge cannot be considered as proof of fraud to invalidate the spouses Molina's registered
title over the subject property.30
Prevailing jurisprudence uniformly holds that findings of facts of the trial court, particularly when
affirmed by the Court of Appeals, are binding upon t his court.  31
Considering these findings, we find no need to discuss the other issues raised by Melecio.
WHEREFORE, we hereby DENY the petition for review on certiorari. The decision dated August
9, 2011 of the Court of Appeals in CA-G.R. CV No. 94160 is AFFIRMED.
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.
Emiliano S. Samson, R. Balderrama-Samson, Mary Anne B. Samson for petitioner.
Cendana Santos, Delmundo & Cendana for private 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,   which was sustained by the Regional Trial
1
Court,   which was in turn sustained by the Court of Appeals.   The petitioner asks us to declare
2 3
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.   EDCA prepared the corresponding invoice and delivered the books as ordered, for
4
which Cruz issued a personal check covering the purchase price of P8,995.65.   On October 7,
5
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.   EDCA then went to the police, which set a trap and
7
arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Peña
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.   As
10
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,  the plaintiff sold some cosmetics to Francisco Ang,
11
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   of the Civil Code providing, among other things
12
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,  the plaintiff sold her car to Feist, who sold it to Sanchez, who sold it to
13
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.  We cannot see the justice in transferring EDCA's loss
1âwphi1
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 Peña, 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-19545 April 18, 1975
PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION, petitioner,
vs.
THE AUDITOR GENERAL, PEDRO M. GIMENEZ, respondent.
Magno L. Dajao for petitioner.
First Assistant Solicitor General Esmeraldo Umali and Solicitor Sumilang V. Bernardo for
respondent.
ANTONIO, J.:
ñé+.£ªwph!1
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 Piñas or Parañaque, 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:  têñ.£îhqwâ£
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: têñ.£îhqwâ£
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: 
têñ.£îhqwâ£
.... 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,  the approval by the Auditor General contemplated by Administrative Order No. 290
1
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).  When the sale of real property is made in
2
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,  or where the
4
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.  Indeed, Section 50 of the Land
7
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
Subdivision situated along Wilson Street, Greenhills, San Juan City which are portions of a
parcel of land previously registered in the name of Luis A. Pujalte on October 29, 1945 and
covered by Transfer Certificate of Title ("TCT") No. (-78865) (-2668) -93165 ("Mother Title") of
the Register of Deeds for the City of Manila.

Plaintiffs-appellants Roberto S. Sylianteng and Caesar S. Sylianteng ("appellants") base their

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,   We, therefore, hold that the payment of the real estate tax after such
10
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. 205879               April 23, 2014
SKUNAC CORPORATION and ALFONSO F. ENRIQUEZ, Petitioners,
vs.
ROBERTO S. SYLIANTENG and CAESAR S. SYLIANTENG, Respondents.
claim of ownership over the subject lots a Deed of Absolute Sale executed in their favor by their
mother, Emerenciana Sylianteng ("Emerenciana"), on June 27, 1983. Appellants further allege
that Emerenciana acquired the lots from the late Luis Pujalte [Luis] through a Deed of Sale dated
June 20, 1958 as reflected in Entry No. P.E. 4023, annotated on the covering TCT, by virtue of
which she was issued TCT No. 42369. Then, when she sold the lots to appellants, TCT No.
39488, covering the same, was issued in their names.
[Herein petitioners] Skunac Corporation ("Skunac") and Alfonso F. Enriquez ("Enriquez"), on the
other hand, claim that a certain Romeo Pujalte who was declared by the RTC of Pasig City,
Branch 151 in Special Proceedings No. 3366 as the sole heir of Luis Pujalte, caused the
reconstitution of the Mother Title resulting to its cancellation and the issuance of TCT No. 5760-R
in his favor. Romeo Pujalte then allegedly sold the lots to Skunac and Enriquez in 1992. Thus,
from TCT No. 5760-R, TCT No. 5888-R, for Lot 1 was issued in the name of Skunac, while TCT
No. 5889-R for Lot 2 was issued in the name of Enriquez.
[Respondents] contend that they have a better right to the lots in question because the
transactions conveying the same to them preceded those claimed by [petitioners] as source of
the latter's titles. [Respondents] further assert that [petitioners] could not be considered as
innocent purchasers in good faith and for value because they had prior notice of the previous
transactions as stated in the memorandum of encumbrances annotated on the titles covering the
subject lots. [Petitioners], for their part, maintain that [respondents] acquired the lots under
questionable circumstances it appearing that there was no copy of the Deed of Sale, between
Emerenciana and Luis Pujalte, on file with the Office of the Register of Deeds.3

DECISION
PERALTA, J.:
This treats of the petition for review on certiorari assailing the Decision  and Resolution  of the
Court of Appeals (CA), dated August 10, 2012 and February 18, 2013, respectively, in CA-G.R.
CV No. 92022.
The factual and procedural antecedents of the case, as narrated by the CA, are as follows:
The civil cases before the [Regional Trial Court of Pasig City) involved two (2) parcels of land
identified as Lot 1, with an area of 1,250 square meters (Civil Case No. 63987) and Lot 2, with
an area of 990 square meters (Civil Case No. 63988), both found in Block 2 of the Pujalte
On November 16, 2007, the Regional Trial Court of Pasig (RTC) rendered judgment in favor of
herein petitioners. The dispositive portion of the RTC Decision reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the defendants
1 2
and against the plaintiffs:
1. Declaring as null and void TCT No. 42369 in the name of Emerciana (sic) Sylianteng
and TCT No. 39488 in the name of plaintiffs herein and ordering the cancellation thereof;
2. Declaring the herein defendants as buyers in good faith and for value; and
3. Declaring TCT No. 5888-R in the name of SKUNAC Corporation and TCT No. 5889-R
in the name of Alfonso Enriquez as valid.
The complaint-in-intervention is ordered dismissed.
With costs against the plaintiffs.
SO ORDERED. 4
Herein respondents then filed an appeal with the CA.
On August 10, 2012, the CA promulgated its assailed Decision, disposing as follows:
WHEREFORE, in light of all the foregoing, the appeal is GRANTED. The decision dated
November 16, 2007 of Branch 160, Regional Trial Court of Pasig City in Civil Case No. 63987 is
hereby REVERSED and SET ASIDE.
Judgment is hereby rendered in favor of plaintiffs-appellants Roberto S. Sylianteng and Caesar
S. Sylianteng and against defendants-appellees Skunac Corporation and Alfonso F. Enriquez,
and intervenor-appellee Romeo N. Pujalte:
1. Declaring as null and void Transfer Certificate of Title No. 5760-R in the name of
Romeo N. Pujalte, Transfer Certificate of Title No. 5888-R in the name of Skunac
Corporation, and Transfer Certificate of Title No. 5889-R in the name of Alfonso F.
Enriquez;
2. Upholding the validity of Transfer Certificate of Title No. 42369 in the name of
Emerenciana Sylianteng, and Transfer Certificate of Title No. 39488 in the names of
Roberto S. Sylianteng and Caesar S. Sylianteng; and
3. Ordering defendants-appellees Skunac Corporation and Alfonso F. Enriquez, and
intervenor-appellee Romeo N. Pujalte, jointly and severally, to pay plaintiffs-appellants
Roberto S. Sylianteng and Caesar S. Sylianteng:
a. Moral damages in the amount of ₱500,000.00,
b. Exemplary damages in the amount of ₱500,000.00,
c. Attorney's fees in the amount of ₱250,000.00, and
d. The costs of suit.
SO ORDERED. 5 (d) When the judgment is based on a misapprehension of facts;
Petitioners filed a Motion for Reconsideration, but the CA denied it in its Resolution dated
February 18, 2013.
Hence, the instant petition with the following assignment of errors:
I. THE HONORABLE COURT OF APPEALS ERRED IN APPLYING IN THE CASE THE
PROVISION OF THE CIVIL CODE ON DOUBLE SALE OF A REGISTERED LAND.
II. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT
RESPONDENTS FAILED TO PROVE THE EXISTENCE OF SALE BETWEEN LUIS
PUJALTE AND THEIR PREDECESSOR-IN-INTEREST, EMERENCIANA SYLIANTENG.
III. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING NULL AND
VOID TCT NO. 42369 PURPORTED TO HAVE BEEN ISSUED TO EMERENCIANA
SYLIANTENG BY THE REGISTER OF DEEDS OF QUEZON CITY.
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING THAT
PETITIONERS ARE THE LAWFUL OWNERS OF THE SUBJECT LOTS SINCE THEY
HAVE VALIDLY ACQUIRED THE SAME FROM ROMEO PUJALTE, THE SOLE HEIR
OF LUIS PUJALTE.
V. THE HONORABLE COURT OF APPEALS ERRED IN AWARDING MORAL AND
EXEMPLARY DAMAGES AS WELL AS ATTORNEY'S FEES AND COST OF SUIT TO
RESPONDENTS CONSIDERING THAT PETITIONERS WERE NOT IN BAD FAITH IN
PURCHASING THE SUBJECT LOTS. 6
The petition lacks merit.
At the outset, the Court observes that the main issues raised in the instant petition are
essentially questions of fact. It is settled that, as a rule, in petitions for review on certiorari under
Rule 45 of the Rules of Court, only questions of law may be put in issue.  Questions of fact
7
cannot be entertained. There are, however, recognized exceptions to this rule, to wit:
(a) When the findings are grounded entirely on speculation, surmises, or conjectures;
(b) When the inference made is manifestly mistaken, absurd, or impossible;
(c) When there is grave abuse of discretion;
(e) When the findings of facts are conflicting;
 (f) When in making its findings the CA went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee;
(g) When the CA’s findings are contrary to those by the trial court;
(h) When the findings are conclusions without citation of specific evidence on which they
are based;
(i) When the facts set forth in the petition as well as in the petitioner’s main and reply
briefs are not disputed by the respondent;
(j) When the findings of fact are premised on the supposed absence of evidence and
contradicted by the evidence on record; or
(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties,
which, if properly considered, would justify a different conclusion. 8
In the instant case, the findings of the CA and the RTC are conflicting. It, thus, behooves this
Court to entertain the questions of fact raised by petitioners and review the records of this case
to resolve these conflicting findings. Thus, this Court held in the case of Manongsong v.
Estimo  that:
9
We review the factual and legal issues of this case in light of the general rules of evidence and
the burden of proof in civil cases, as explained by this Court in Jison v. Court of Appeals:
x x x Simply put, he who alleges the affirmative of the issue has the burden of proof, and upon
the plaintiff in a civil case, the burden of proof never parts. However, in the course of trial in a
civil case, once plaintiff makes out a prima facie case in his favor, the duty or the burden of
evidence shifts to defendant to controvert plaintiff's prima facie case, otherwise, a verdict must
be returned in favor of plaintiff. Moreover, in civil cases, the party having the burden of proof
must produce a preponderance of evidence thereon, with plaintiff having to rely on the strength
of his own evidence and not upon the weakness of the defendant’s. The concept of
"preponderance of evidence" refers to evidence which is of greater weight, or more convincing,
that which is offered in opposition to it; at bottom, it means probability of truth. 10
Coming to the merits of the case, the abovementioned assignment of errors boils down to two
basic questions: (1) whether or not respondents' predecessor-in-interest, Emerenciana, validly
acquired the subject lots from Luis, and (2) whether or not respondents, in turn, validly acquired
the same lots from Emerenciana.
The Court rules in the affirmative, but takes exception to the CA's and RTC's application of
Article 1544 of the Civil Code.
Reliance by the trial and appellate courts on Article 1544 of the Civil Code is misplaced. The
requisites that must concur for Article 1544 to apply are:
(a) The two (or more sales) transactions must constitute valid sales;
(b) The two (or more) sales transactions must pertain to exactly the same subject matter;
(c) The two (or more) buyers at odds over the rightful ownership of the subject matter
must each represent conflicting interests; and
(d) The two (or more) buyers at odds over the rightful ownership of the subject matter
must each have bought from the very same seller. 11
Obviously, said provision has no application in cases where the sales involved were initiated not
by just one but two vendors.  In the present case, the subject lots were sold to petitioners and
12
respondents by two different vendors – Emerenciana and Romeo Pujalte (Romeo). Hence,
Article 1544 of the Civil Code is not applicable.
Nonetheless, the Court agrees with the findings and conclusion of the CA that Emerenciana's
acquisition of the subject lots from Luis and her subsequent sale of the same to respondents are
valid and lawful. Petitioners dispute such finding. To prove their contention, they assail the
authenticity and due execution of the deed of sale between Luis and Emerenciana.
Petitioners contend that respondents' presentation of the "duplicate/carbon" original of the Deed
of Sale  dated June 20, 1958 is in violation of the best evidence rule under Section 3, Rule 130
13
of the Rules of Court.  The Court does not agree.
14
The best evidence rule is inapplicable to the present case. The said rule applies only when the
content of such document is the subject of the inquiry.  Where the issue is only as to whether
15
such document was actually executed, or exists, or on the circumstances relevant to or
surrounding its execution, the best evidence rule does not apply and testimonial evidence is
admissible.  Any other substitutionary evidence is likewise admissible without need to account
16
for the original.  In the instant case, what is being questioned is the authenticity and due
17
execution of the subject deed of sale. There is no real issue as to its contents.
In any case, going to the matter of authenticity and due execution of the assailed document,
petitioners do not dispute that the copy of the deed of sale that respondents submitted as part of
their evidence is a duplicate of the original deed of sale dated June 20, 1958. It is settled that a
signed carbon copy or duplicate of a document executed at the same time as the original is
known as a duplicate original and maybe introduced in evidence without accounting for the non-
production of the original.18
Moreover, Section 4 (b), Rule 130 of the Rules of Court provides that "[w]hen a document is in
two or more copies executed at or about the same time, with identical contents, all such copies
are equally regarded as originals."
In addition, evidence of the authenticity and due execution of the subject deed is the fact that it
was notarized. The notarization of a private document converts it into a public
document.  Moreover, a notarized instrument is admissible in evidence without further proof of
19
its due execution, is conclusive as to the truthfulness of its contents, and has in its favor the
presumption of regularity.  This presumption is affirmed if it is beyond dispute that the
20
notarization was regular.  To assail the authenticity and due execution of a notarized document,
21
the evidence must be clear, convincing and more than merely preponderant. 22
In the present case, petitioners failed to present convincing evidence to prove that the
notarization of the subject deed was irregular as to strip it of its public character. On the contrary,
a certified copy of page 26 of the notarial register of the notary public who notarized the subject
deed of sale, which was issued by the Records Management and Archives Office of Manila,
shows that the sale of the subject lots by Luis to Emerenciana was indeed regularly notarized. 23
Petitioners further argue that the deed of sale between Emerenciana and Luis was not registered
with the Register of Deeds of Quezon City. The Court, however, agrees with the CA that the said
deed was, in fact, registered as evidenced by official receipts  issued to this effect. Petitioners,
24
again, did not present any evidence to assail the authenticity of these documents.
Petitioners also question the authenticity of the subject deed of sale (Exhibit "B-1-C") by arguing
that only one copy of such deed was prepared as only one document number was assigned by
the notary to the said deed. Petitioners claim that this is contrary to the claim of respondents that
the said deed of sale was prepared, executed and notarized in several copies. The Court is not
persuaded.
It is true that Section 246, Article V, Title IV, Chapter II of the Revised Administrative Code
provides that "[t]he notary shall give to each instrument executed, sworn to, or acknowledged
before him a number corresponding to the one in his register, and shall also state on the
instrument the page or pages of his register on which the same is recorded." In this regard, the
Court agrees with respondents' contention that the "instrument" being referred to in the
abovequoted provision is the deed or contract which is notarized. It does not pertain to the
number of copies of such deed or contract. Hence, one number is assigned to a deed or contract
regardless of the number of copies prepared and notarized. Each and every copy of such
contract is given the same document number. It is, thus, wrong for petitioners to argue that only
one copy of the June 20, 1958 deed of sale was prepared and notarized, because only one
document number appears on the notarial book of the notary public who notarized the said deed.
On the contrary, evidence shows that at least two copies of the subject deed of sale was
prepared and notarized – one was submitted for registration with the Register of Deeds of
Quezon City and the other was retained by Emerenciana, which is the copy presented in
evidence by respondents.
As to petitioners' contention that the copy of the deed of sale presented by respondents in
evidence is of dubious origin because it does not bear the stamp "RECEIVED" by the Register of
Deeds of Quezon City, suffice it to state that the Court finds no cogent reason to disagree with
respondents' contention that the duplicate original of the subject deed of sale which they
presented as evidence in court could not have been received by the Register of Deeds of
Quezon City because only the original copy, and not the duplicate original, was submitted to the
Register of Deeds for registration.
Petitioners also question the authenticity of and the entries appearing on the copy of the title
covering the subject properties in the name of Luis. However, the Court finds no cogent reason
to doubt the authenticity of the document as well as the entries appearing therein, considering
that the parties (herein petitioners and respondents) stipulated  that the machine copy of TCT
25
No. 78865 in the name of Luis, marked as Exhibit "DDD" for respondents, is a faithful
reproduction of the original copy of the said title, including the memorandum of encumbrances
annotated therein. Included in the memorandum of encumbrances is Entry No. P.E. 4023, which
states, thus:
This certificate of title is hereby cancelled (sic) partially with respect to Lots 1 and 2, Blk. 2 by
virtue of a Deed of Sale ratified on June 20, 1958 before Armenio P. Engracia of Notary for the
City of Manila and Transfer Certificate of Title No. 42369 is issued in the name of Vendee,
Emerenciana A.S. de Sylianteng, filing the aforesaid Deed under T-No. 42369. 26
The same entry appears in Exhibit "11" for petitioners. 27
P.E. No. 4023 has been entered on TCT No. 78865 by the then Acting Register of Deeds of San
Juan.  Petitioners assail the regularity of such entry. However, one of the disputable
1âwphi1
presumptions provided under Section 3 (m), Rule 131 of the Rules of Court is that official duty
has been regularly performed. Under the said Rule, this presumption shall be considered
satisfactory unless contradicted and overcome by other evidence. In the present case,
petitioners failed to present sufficient evidence to contradict the presumption of regularity in the
performance of the duties of then Acting Register of Deeds of San Juan.
Petitioners, nonetheless, insist that they have valid title over the subject properties. They trace
their respective titles from that of Romeo. Romeo, in turn, derives his supposed ownership of
and title over the subject lots from his claim that he is the sole heir of the estate of his alleged
predecessor-in-interest, Luis. Evidence, however, shows that Romeo never became the owner of
the subject properties for two reasons.
First, as shown above, the disputed lots were already sold by Luis during his lifetime. Thus,
these parcels of land no longer formed part of his estate when he died. As a consequence,
Romeo's sale of the disputed lots to petitioners was not affirmed by the estate court, because the
subject parcels of land were not among those included in the said estate at the time that Romeo
was appointed as the administrator thereof. As shown in its October 11, 1993 Order,  the RTC of
28
Pasig, acting as an estate court, denied Romeo's motion for approval of the sale of the subject
lots, because these properties were already sold to respondents per report submitted by the
Register of Deeds of San Juan.
In fact, as early as July 14, 1960, prior to Romeo's appointment as administrator of the estate of
Luis, Paz L. Vda. de Pujalte (Paz), the mother of Luis, who was then appointed administratrix of
the estate of the latter, in her Inventory and Appraisal  which was submitted to the estate court,
29
already excluded the subject properties among those which comprise the estate of Luis.
Subsequently, in the Project of Partition  of the residual estate of Luis, dated March 22, 1963,
30
Paz again did not include the disputed lots as part of such residual estate. Hence, Romeo's sale
of the subject lots to petitioners is invalid as it is settled that any unauthorized disposition of
property under administration is null and void and title does not pass to the purchasers. 31
Second, even granting that the subject lots formed part of the estate of Luis, it was subsequently
proven in a separate case that Romeo is not his heir. In a criminal case for use of falsified
documents filed against Romeo, it was proven that his claim of heirship is spurious. In the said
criminal case, his birth certificate and the marriage certificate of his supposed parents, which he
presented before the estate court, to prove his claim that he is the sole heir of Luis, were found
by the criminal court to be falsified.  In this regard, it bears to note the disquisition of the CA as
32
to the legitimacy of Romeo's claim, and its subsequent effect on petitioners' rights to the disputed
properties, to wit:
Appellees' [herein petitioners'] predicament is further compounded by Romeo Pujalte's conviction
on November 18, 2005 of the offense of Use of Falsified Documents, for falsifying the documents
that enabled him to deceive the estate court and have himself named as Luis Pujalte's sole heir.
He did not appeal his conviction and, instead, applied for probation. It goes without saying that
the documents purportedly conveying the lots in question to appellees and which are founded on
Romeo Pujalte's alleged rights over the estate of the late Luis Pujalte do not deserve any
consideration at all. x x x
33
Indeed, not being an heir of Luis, Romeo never acquired any right whatsoever over the subject
lots, even if he was able to subsequently obtain a title in his name. It is a well-settled principle
that no one can give what one does not have, nemo dat quod non habet.  One can sell only
34
what one owns or is authorized to sell, and the buyer can acquire no more right than what the
seller can transfer legally.  Since Romeo has no right to the subject lots, petitioners, who simply
35
stepped into the shoes of Romeo, in turn, acquired no rights to the same.
In addition, and as correctly pointed out by the CA, petitioners' position is neither helped by the
fact that, in the present case, Romeo filed a Verified Complaint-in-Intervention  with the RTC,
36
denying that he sold the subject lots to petitioners and claiming that the same properties still form
part of the estate of Luis.
Stretching petitioners' contention a bit further, granting that both petitioners and respondents
bought the disputed lots in good faith by simply relying on the certificates of the sellers, and
subsequently, acquiring titles in their own names, respondents' title shall still prevail. It is a
settled rule that when two certificates of title are issued to different persons covering the same
land in whole or in part, the earlier in date must prevail, and, in case of successive registrations
where more than one certificate is issued over the land, the person holding a prior certificate is
entitled to the land as against a person who relies on a subsequent certificate.  The titles of
37
respondents, having emanated from an older title, should thus be upheld.
Anent petitioners' bad faith, this Court finds no persuasive reason to depart from the findings of
the CA that petitioners had prior knowledge of the estate proceedings involving the subject lots
and that they have notice of the defect in the title of Romeo.
It is true that a person dealing with registered land need not go beyond the title. However, it is
equally true that such person is charged with notice of the burdens and claims which are
annotated on the title.  In the instant case, The Torrens Certificate of Title (TCT No. 5760-R) in
38
the name of Romeo, which was the title relied upon by petitioners, also contained Entry No. P.E.
4023, quoted above, which essentially informs petitioners that the lots which they were about to
buy and which they in fact bought, were already sold to Emerenciana.  This entry should have
39
alerted petitioners and should have prodded them to conduct further investigation. Simple
prudence would have impelled them as honest persons to make deeper inquiries to clear the
suspiciousness haunting Romeo's title. On the contrary, rather than taking caution in dealing with
Romeo, petitioners, instead, subsequently executed deeds of sale  over the same properties but
40
all of which were, nonetheless, disallowed by the estate court in its Order  dated October 11,
41
1993 on the ground that the said lots were already sold, this time, by Emerenciana to
respondents. In this regard, petitioners acted in bad faith.
Thus, as correctly held by the CA, respondents are entitled to moral damages. Moral damages
are treated as compensation to alleviate physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury resulting from a wrong.  In the instant case, respondents satisfactorily established their
42
claim for moral damages. They endured suffering brought about by Romeo's bad faith in using
falsified documents to enable himself to acquire title to and sell the subject lots to petitioners to
the prejudice of respondents. Respondents also suffered by reason of petitioners' stubborn
insistence in buying the said properties despite their knowledge of the defect in the title of
Romeo.  Though moral damages are not capable of pecuniary estimation, the amount should be
43
proportional to and in approximation of the suffering inflicted.  Respondents sought the award of
44
₱1,000,000.00 as moral damages from each of the petitioners, but the Court agrees with the CA
that the total amount of ₱500,000.00 is sufficient for both respondents.
As to exemplary damages, these are imposed by way of example or correction for the public
good, in addition to moral, temperate, liquidated or compensatory damages.  They are imposed
45
not to enrich one party or impoverish another, but to serve as a deterrent against or as a
negative incentive to curb socially deleterious actions.  While respondents were again seeking
46
the amount of ₱1,000,000.00 as exemplary damages from each of the petitioners, the CA
correctly reduced it to a total of ₱500,000.00.
Respondents are also entitled to attorney's fees, as awarded by the CA, on the strength of the
provisions of Article 2208 of the Civil Code which provides, among others, that such fees may be
recovered when exemplary damages are awarded, when the defendant's act or omission has
compelled the plaintiff to litigate with third persons, or in any other case where the court deems it
just and equitable that attorney's fees and expenses of litigation should be recovered.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals,
dated August 10, 2012 and February 18, 2013, respectively, in CA-G.R. CV No. 92022, are
AFFIRMED.
SO ORDERED.
G.R. No. 195975, September 05, 2016
TAINA MANIGQUE-STONE, Petitioner, v. CATTLEYA LAND, INC., AND
SPOUSES TROADIO B. TECSON AND ASUNCION ORTALIZ-
TECSON, Respondents.
DECISION
DEL CASTILLO, J.:
The sale of Philippine land to an alien or foreigner, even if titled in the name of his
Filipino spouse, violates the Constitution and is thus, void.
Assailed in this Petition for Review on Certiorari1 are the August 16, 2010
Decision2 of the Court of Appeals (CA) which dismissed the appeal by Taina
Manigque-Stone (Taina) in CA-G.R. CV No. 02352, and its February 22, 2011
Resolution,3 which denied Taina's motion for reconsideration4 thereon.
Factual Antecedents
Sometime in July 1992, Cattleya Land, Inc. (Cattleya) sent its legal counsel, Atty.
Federico C. Cabilao, Jr. (Atty. Cabilao, Jr.), to Tagbilaran City to investigate at the
Office of the Register of Deeds in that city the status of the properties of spouses
Col. Troadio B. Tecson (Col. Tecson) and Asuncion Tecson (collectively, Tecson
spouses), which Cattleya wanted to purchase. One of these properties, an 8,805-
square meter parcel of land located at Doljo, Panglao, Bohol, is registered in the
name of the Tecson spouses, and covered by Transfer Certificate of Title (TCT) No.
17655 (henceforth, the subject property). Atty. Cabilao, Jr. found that no
encumbrances or liens on the subject property had been annotated on the TCT
thereof, except for an attachment issued in connection with Civil Case No. 3399
entitled "Tantrade Corporation vs. Bohol Resort Hotel, Inc., et al." 5
On November 6, 1992, Cattleya entered into a Contract of Conditional Sale with the
Tecson spouses covering nine parcels of land, including the subject property. In this
transaction the Tecson spouses were represented by Atty. Salvador S. Pizarras
(Atty. Pizarras). The Contract of Conditional Sale was entered in the Primary Book of
the Office of the Register of Deeds of Bohol that same day, per Entry No. 83422. On
August 30, 1993, the parties executed a Deed of Absolute Sale covering the subject
property. This Deed of Absolute Sale was also entered in the Primary Book on
October 4, 1993, per Entry No. 87549. However, neither the Contract of Conditional
Sale nor the Deed of Absolute Sale could be annotated on the certificate of title
covering the subject property because the then Register of Deeds of Bohol, Atty.
Narciso S. De la Serna (Atty. De la Serna) refused to annotate both deeds.
According to Atty. De la Serna it was improper to do so because of the writ of
attachment that was annotated on the certificate of title of the subject property, in
connection with the said Civil Case No. 3399.6
On December 1, 1993, Atty. Cabilao, Jr. and Atty. Pizarras, in representation of their
respective clients, again requested Atty. De la Serna to annotate the Deed of
Absolute Sale and all other pertinent documents on the original certificate of title
covering the subject property. But Atty. De la Serna refused anew – this time saying
that he would accede to the request only if he was presented with a court order to
that effect. Atty. De la Serna still refused the request to annotate, even after Atty.
Cabilao, Jr. had told him that all that he (Atty. Cabilao, Jr.) was asking was for the
Deed of Absolute Sale to be annotated on the original certificate of title, and not for
Atty. De la Serna to issue a new transfer of title to the subject property.7
The writ of attachment on the certificate of title to the subject property was,
however, lifted, after the parties in Civil Case No. 3399 reached an amicable
settlement or compromise agreement. Even then, however, Cattleya did not still
succeed in having the aforementioned Deed of Absolute Sale registered, and in
having title to the subject property transferred to its name, because it could not
surrender the owner's copy of TCT No. 17655, which was in possession of the
Tecson spouses. According to Cattleya, the Tecson spouses could not deliver TCT
No. 17655 to it, because according to the Tecson spouses this certificate of title had
been destroyed in a fire which broke out in Sierra Bullones, Bohol.8
This claim by the Tecson spouses turned out to be false, however, because Atty.
Cabilao, Jr. came to know, while following up the registration of the August 30, 1993
Deed of Absolute Sale at the Office of the Register of Deeds of Bohol, that the
owner's copy of TCT No. 17655 had in fact been presented by Taina at the Office of
the Register of Deeds of Bohol, along with the Deed of Sale that was executed by
the Tecson spouses, in favor of Taina covering the subject property.9
It appears that when Taina's then common-law husband, Michael (Mike) Stone,
visited Bohol sometime in December 1985, he fell in love with the place and decided
to buy a portion of the beach lot in Doljo, Panglao, Bohol. They met with Col.
Tecson, and the latter agreed to sell them a portion of the beach lot for
US$8,805.00. Mike and Taina made an initial downpayment of US$1,750.00 (or
equivalent P35,000.00 at that time) for a portion of a beach lot, but did not ask for
a receipt for this initial downpayment. On June 1, 1987, a Deed of Absolute Sale
covering the subject portion was executed by Col. Tecson in Taina's favor.
Subsequent payments were made by Mike totalling P40,000.00, as of August 29,
1986, although another payment of P5,000.00 was made sometime in August 1987.
The last payment in the amount of P32,000.00, was made in September 1987.10 In
1990, Troadio Tecson, Jr., the son of Col. Tecson and Taina's brother-in-law,
delivered to Taina the owner's copy of TCT No. 17655.11
In the meantime, in October 1986, Taina and Mike got married.
On April 25, 1994, Taina filed a Notice of Adverse Claim covering the subject
portion, after she learned that Col. Tecson and his lawyer had filed a petition for the
issuance of a second owner's copy over TCT No. 17655.12
On February 8, 1995, Taina sought to have her Deed of Absolute Sale registered
with the Office of the Register of Deeds of Bohol, and on that occasion presented the
owner's copy of TCT No. 17655. Taina also caused a Memorandum of Encumbrance
to be annotated on this certificate of title. The result was that on February 10, 1995,
a new certificate of title, TCT No. 21771, was issued in the name of Taina, in lieu of
TCT No. 17655, in the name of the Tecson spouses.13 The subject property is
described in TCT No. 21771 as follows:
A parcel of Land (Lot 5 of the consolidation-subdivision plan Pcs-07-000907, being a
portion of lots I-A and I-B, Psd-07-02-12550, LRC. Rec. No. ___), situated in the
Barrio of Doljo, Municipality of Panglao, Province of Bohol, Island of Bohol. Bounded
on the North, along lines 15-16-1 by Bohol Strait; on the East and Southeast, along
line 1-2 by Lot 4 of the consolidation-subdividion plan; along line 3-4 by Primitivo
Hora; and along line 4-5 by Lot 6 of the consolidation-subdivision plan; on the South
and Southwest, along line 5-6-7-8 by Andres Guimalan; along line 8-9 by
[Bienvenido] Biosino; along lines 9-10-11-12-13-14 by Angel Hora; and on the
West, along lines 14-15 by Lot 7 of the consolidation-subdivision plan. Beginning at
a point marked "1" on plan, being S. 83 deg. 08'E., 1045.79 m. from triangulation
point TIP, USCGS, 1908, Doljo, Panglao, Bohol; containing an area of EIGHT
THOUSAND EIGHT HUNDRED AND FIVE (8,805) SQUARE METERS, more or less.14
Whereupon, Cattleya instituted against Taina a civil action for quieting of title and/or
recovery of ownership and cancellation of title with damages.15 Docketed as Civil
Case No. 5782 of the Regional Trial Court (RTC) of Bohol at Tagbilaran City, Cattleya
therein initially impleaded Atty. De la Serna as party defendant; but as the latter
had already retired as Register of Deeds of Bohol, both parties agreed to drop his
name from the case.16
Taina likewise filed a motion for leave to admit a third-party complaint against the
Tecson spouses; this motion was granted by the RTC.17
After due proceedings, the RTC of Bohol gave judgment18 for Cattleya, thus:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of
the plaintiff and against the defendant in the main case as follows:
1. Quieting the title or ownership of the plaintiff in Lot 5 by declaring the sale in its
favor as valid and enforceable by virtue of a prior registration of the sale in
accordance with the provisions of Presidential Decree No. 1529 otherwise known as
the Property Registration Decree;
2. Ordering the cancellation of Transfer Certificate of Title No. 21771 in the name of
defendant TAINA MANIGQUE-STONE and the issuance of a new title in favor of the
plaintiff after payment of the required fees; and
3. Ordering the defendant to desist from claiming ownership and possession thereof.
Without pronouncement as to costs.
As to defendant's third[-]party complaint against spouses x x x Tecson[,] x x x
judgment is hereby rendered as follows:
1. Ordering the return of the total amount of Seventy-seven Thousand (P77,000.00)
Pesos to the third[-]party plaintiff with legal rate of interest from the time of the
filing of the third[-]party complaint on June 28, 2004 until the time the same shall
have been fully satisfied; and
2. Ordering the payment of P50,000.00 by way of moral and exemplary damages
and x x x of attorney's fees in the amount of P30,000.00 and to pay the costs.
SO ORDERED.19
In finding for Cattleya, the RTC held that the sale entered by the Tecson spouses
with Cattleya and with Taina involving one and the same property was a double
sale, and that Cattleya had a superior right to the lot covered thereby, because
Cattleya was the first to register the sale in its favor in good faith; that although at
the time of the sale the TCT covering the subject property could not yet be issued,
and the deed of sale could not be annotated thereon due to a pending case between
the vendors-spouses (Tecson spouses) and Tantrade, Inc., the evidence
convincingly showed nonetheless that it was Cattleya that was the first to register
the sale in its favor with the Office of the Provincial Registry of Deeds of Bohol on
October 4, [1993] as shown in Entry No. 87549.20 Furthermore, the RTC found that
Cattleya had no notice, nor was it aware, of Taina's claim to the subject property,
and that the only impediment it (Cattleya) was aware of was the pending case (Civil
Case No. 3399) between Tantrade Corporation and Bohol Resort Hotel, Inc.21
On the other hand, the RTC found Taina's position untenable because: First, the
June 1, 1987 sale between Col. Tecson and Mike, Taina's then common-law
husband, was a patent nullity, an absolutely null and void sale, because under the
Philippine Constitution a foreigner or alien cannot acquire real property in the
Philippines. Second, at the time of the sale, Taina was only Mike's dummy, and their
subsequent marriage did not validate or legitimize the constitutionally proscribed
sale earlier made in Mike's favor. And third, no less than Taina herself admitted that
at the time she caused the sale to be registered and title thereto issued to her, she
knew or was otherwise aware that the very same lot had already been sold to
Cattleya, or at least claimed by the latter – and this is a state of affairs constitutive
of bad faith on her part.22
The RTC likewise held that neither parties in the main case was entitled to damages,
because they failed to substantiate their respective claims thereto.23
As regards Taina's third-party complaint against the Tecson spouses, the RTC
ordered the return or restitution to her of the sum of P77,000.00, plus legal interest.
Likewise awarded by the RTC in Taina's favor were moral and exemplary damages in
the amount of P50,000.00 and attorney's fees in the amount of P30,000.00 plus
costs.24
Dissatisfied with this judgment, Taina appealed to the CA.
Ruling of the Court of Appeals
On August 16, 2010, the CA handed down the assailed Decision,25  which contained
cralawred
the following decretal portion:
WHEREFORE, the challenged Decision of the Regional Trial Court dated [August 10,
2007] is hereby AFFIRMED with MODIFICATIONS; to wit:
1. Quieting the title of ownership of the plaintiff-appellee, CATTLEYA LAND, INC. in
the above-described property by declaring the sale in its favor as valid and
enforceable;
2. Ordering the cancellation of Transfer Certificate of Title No. 21771 in the name of
defendant-appellant TAINA MANIGQUE-STONE;
3. Ordering the registration of the Deed of Absolute Sale involving the subject
property executed in favor of CATTLEYA LAND, INC. and the issuance x x x of a new
title in favor of the plaintiff-appellee CATTLEYA LAND, INC. ate payment of the
required fees; and
4. Ordering the defendant-appellant, TAINA MANIGQUE-STONE to desist from
claiming ownership and possession thereof. Without pronouncement as to cost.
As to the third-party defendants-appellees, the spouses Troadio B. Tecson and
Asuncion Ortaliz Tecson, judgment is hereby rendered as follows:
1. Ordering third-party defendants-appellees, spouses TROADIO B. TECSON and
ASUNCION ORTALIZ TECSON, [to] return x x x the total amount of Seventy-seven
Thousand (P77,000.00) Pesos to the defendant-appellant, TAINA MANIGQUE-
STONE, with legal rate of interest from the time of filing of the third[-]party
complaint on June 28, 2004 until the time the same shall have been fully satisfied;
and
2. Ordering third-party defendants-appellees, spouses TROADIO B. TECSON and
ASUNCION ORTALIZ TECSON [to pay] P50,000.00 to the defendant-appellant,
TAINA MANIGQUE-STONE by way of moral and exemplary damages and [to pay]
attorney's fees in the amount of P30,000.00 x x x.
No pronouncement as to cost.
SO ORDERED.26
In support of its Decision, the CA ratiocinated —
Article 1498 of the Civil Code provides that, as a rule, the execution of a notarized
deed of sale is equivalent to the delivery of a thing sold. In this case, the
notarization of the deed of sale of TAINA is defective. TAINA testified that the deed
of sale was executed and signed by Col. Troadio Tecson in Bohol but was notarized
in Manila without the vendors appearing personally before the notary public.
Additionally, Article 1477 of the Civil Code provides that the ownership of the thing
sold is transferred upon the actual or constructive delivery thereof; however, the
delivery of the owner's copy of TCT 17655 to TAINA is dubious. It was not the
owner, Col. Troadio Tecson, himself who delivered the same but his son who also
happens to be TAINA's brother-in-law. Hence, the foregoing circumstances negate
the fact that there was indeed an absolute delivery or transfer of ownership.
Anent the issue on validity of the sale to Taina Manigque-Stone, the fundamental
law is perspicuous in its prohibition against aliens from holding title or acquiring
private lands, except only by way of legal succession or if the acquisition was made
by a former natural-born citizen.
A scrutiny of the records would show that the trial court aptly held that the
defendant-appellant was only a dummy for Mike Stone who is a foreigner. Even if
the Deed of Absolute Sale is in the name of Taina Manigque-Stone that does not
change the fact that the real buyer was Mike Stone, a foreigner. The appellant
herself had admitted in court that the buyer was Mike Stone and at the time of the
negotiation she was not yet legally married to Mike Stone. They cannot do indirectly
what is prohibited directly by the law.
To further militate against her stand, the appellant herself testified during the cross
examination:
Q: Now, the Deed of Sale states that the buyer is Taina Manigque-Stone?
A: Yes.
   
Q: And not Mike Stone who according to you was the one who paid the entire
consideration and was the one who negotiated with Colonel Tecson. Will you kindly tell
the Court how come it was your name who placed [sic] in the Deed of Sale?
A: Because an American, foreign national cannot buy land here.
Q: Yes because an American national, foreigner cannot own land here.
A: Yes.
   
Q: And so the Deed of Sale was placed in your name, correct?
A: Yes.
The above testimony is a clear admission against interest. An admission against
interest is the best evidence which affords the greatest certainty of the facts in
dispute. The rationale for the rule is based on the presumption that no man would
declare anything against himself unless such declaration is true. Accordingly, it is
rational to presume that the testimony corresponds with the truth, and she bears
the burden if it does not.
Moreover, TAINA asserts in the brief that 'ownership of the lot covered by TCT
21771 is held by her, a Filipino. As long as the lot is registered in the name of a
Filipino, the trial court is barred from inquiring [into] its legality.' Such assertion is
bereft of merit.
The Honorable Supreme Court, in identifying the true ownership of a property
registered in the name of a Filipina who was married to a foreign national,
pronounced in Borromeo vs. Descallar that:
'It is settled that registration is not a mode of acquiring ownership. It is only a
means of confirming the fact of its existence with notice to the world at large.
Certificates of title are not a source of right. The mere possession of a title does not
make one the true owner of the property. Thus, the mere fact that respondent has
the titles of the disputed properties in her name does not necessarily, conclusively
and absolutely make her the owner [thereof]. The rule on indefeasibility of title
likewise does not apply to respondent. A certificate of title implies that the title is
quiet, and that it is perfect, absolute and indefeasible. However, there are well-
defined exceptions to this rule, as when the transferee is not a holder in good faith
and did not acquire the subject properties for a valuable consideration. This is the
situation in the instant case. Respondent did not contribute a single centavo in the
acquisition of the properties. She had no income of her own at that time, nor did she
have any savings. x x x'27
Taina moved for reconsideration28 of the CA's Decision, but the CA thumbed down
this motion in its February 22, 2011 Resolution.29 Hence, the present Petition.
Issues
Before this Court, petitioner puts forward the following questions of law for
resolution:
1. Whether the assailed Decision is legally correct in holding that petitioner is a
mere dummy of Mike.
2. Whether the assailed Decision is legally correct in considering that the verbal
contract of sale between spouses Tecson and Mike transferred ownership to a
foreigner, which falls within the constitutional ban on sales of land to foreigners.
3. Whether the assailed Decision is legally correct in not considering that, assuming
that the sale of land to Mike violated the Constitution, the same has been cured by
the subsequent marriage of petitioner to Mike and by the registration of the land in
the name of petitioner, a Filipino citizen.
4. Whether the assailed Decision is legally correct in not applying the rules on
double sale, which clearly favor petitioner Taina.30
In amplification thereof, petitioner advances these arguments:
I double sales, controls this case.
The trial court and the Court of Appeals departed from the clear provisions of the
law and established jurisprudence when it failed to consider that the Filipino wife of
Mike Stone, petitioner Taina Manigque-Stone[,] has the legal capacity and the
conjugal partnership interests to enter into a contract of deed of absolute sale with
respondent Sps. Troadio B. Tecson and Asuncion Ortaliz Tecson.
II
The trial court and the Court of Appeals departed from the provisions of the law and
established jurisprudence when it failed to consider that the verbal contract of sale
of land to Mike Stone was unenforceable and did not transfer ownership to him, to
fall within the constitutional ban on foreigners owning lands in the Philippines.
III
The trial court and the Court of Appeals departed from established jurisprudence,
when it failed to consider that, assuming arguendo that the sale of land to Mike
Stone violated the Constitutional ban on foreign ownership of lands, the same has
been cured by the subsequent marriage of petitioner and Mike Stone, and [the
subsequent issuance of title] in the name of petitioner.
IV
The Court of Appeals gravely erred and departed from established rules of evidence
when it ruled that the delivery of the owner's copy of TCT 17655 to petitioner Taina
is dubious.
V
The trial court and the Court of Appeals gravely erred when it departed from
provisions of the law and established jurisprudence when it did not apply the rules
on double sale which clearly favor petitioner Taina.31
The fundamental issue for resolution in the case at bench is whether the sale of land
by the Tecson spouses to Michael Stone a.k.a. Mike, a foreigner or alien, although
ostensibly made in Taina's name, was valid, despite the constitutional prohibition
against the sale of lands in the Philippines to foreigners or aliens. A collateral or
secondary issue is whether Article 1544 of the Civil Code, the article which governs
Petitioner's Arguments
In praying that the CA Decision be overturned Taina posits that while Mike's legal
capacity (to own or acquire real property in the Philippines) was not entirely
unassailable, there was nevertheless no actual violation of the constitutional
prohibition against the acquisition or purchase by aliens or foreigners of lands in the
Philippines, because in this case no real transfer of ownership had been effected in
favor of Mike, from Col. Tecson;32 that all payments made by Mike to Col. Tecson
must be presumed to have come from the community property he had with Taina,
because Mike had been her (Taina's) common-law-husband from 1982 up to the day
they were married, in 1986; hence, in this context, she (Taina) was not exactly
Mike's dummy at all, but his active partner;33 that it is of no consequence that she
(Taina) had knowledge that Cattleya had likewise purchased or acquired the subject
lot because the deed of sale in favor of Cattleya was executed subsequent to the
deed of sale that she and Mike had entered into with the Tecson spouses, thus, she
was the first to acquire ownership of the subject lot in good faith;34 that assuming
for argument's sake that neither she nor Cattleya was a purchaser in good faith, still
she was the first one to acquire constructive possession of the subject lot pursuant
to Article 1544 3rd paragraph of the Civil Code, and for this reason she had acquired
lawful title thereto.35
Respondent Cattleya Land's arguments
Cattleya counters that there could not have been a double sale in the instant case
because the earlier sale between Col. Tecson and Mike was absolutely null and void,
as this was a flagrant violation of the constitutional provision barring or prohibiting
aliens or foreigners from acquiring or purchasing land in the Philippines; hence,
there was only one valid sale in this case, and that was the sale between Col.
Tecson and Cattleya.36
Court's Resolution with respect to Respondents-Spouses Tecson
This Court's Resolution dated June 20, 2012 noted, amongst others, the
Manifestation filed by Cattleya, which inter alia stated: (1) that Col. Tecson died on
December 7, 2004; (2) that Taina instituted a third-party complaint against the
Tecson spouses; (3) that in this third-party complaint the Tecson spouses were
declared in default by the trial court; (4) that this default order was not appealed by
the Tecson spouses; (5) that the present appeal by Taina from the CA Decision will
in no way affect or prejudice the Tecson spouses, given the fact that these spouses
did not appeal from the default order, and (6) that the instant Petition be submitted
for resolution without the Comment of the Tecson spouses.37 In the Resolution of
February 26, 2014, this Court noted that since Asuncion Tecson had failed to submit
to this Court the name of the legal representative of her deceased husband Col.
Tecson within the period which expired on October 3, 2013, this Court was
dispensing with the Comment of the Tecson spouses in the instant Petition.38
Our Ruling
This Petition is bereft of merit.
Section 7, Article XII of the 1987 Constitution states that:
Save in cases of hereditary succession, no private lands shall be transferred or
conveyed except to individuals, corporations, or associations qualified to acquire or
hold lands of the public domain.
Given the plain and explicit language of this constitutional mandate, it has been held
that "[a]liens, whether individuals or corporations, are disqualified from acquiring
lands of the public domain. Hence, they are also disqualified from acquiring private
lands. The primary purpose of the constitutional provision is the
conservation of the national patrimony."39
In the case at bench, Taina herself admitted that it was really Mike who paid with
his own funds the subject lot; hence, Mike was its real purchaser or buyer. More
than that, it bears stressing that if the deed of sale at all proclaimed that she
(Taina) was the purchaser or buyer of the subject property and this subject property
was placed under her name, it was simply because she and Mike wanted to skirt or
circumvent the constitutional prohibition barring or outlawing foreigners or aliens
from acquiring or purchasing lands in the Philippines. Indeed, both the CA and the
RTC exposed and laid bare Taina's posturing and pretense for what these really are:
that in the transaction in question, she was a mere dummy, a spurious stand-in, for
her erstwhile common-law husband, who was not a Filipino then, and never
attempted to become a naturalized Filipino citizen thereafter. The CA put things in
correct perspective, thus —
A scrutiny of the records would show that the trial court aptly held that the
defendant-appellant was only a dummy for Mike Stone who is a foreigner. Even if
the Deed of Absolute Sale is in the name of Taina Manigque-Stone that
does not change the fact that the real buyer was Mike Stone, a foreigner. The
appellant herself had admitted in court that the buyer was Mike Stone and at the
time of the negotiation she was not yet legally married to Mike Stone. They cannot
do indirectly what is prohibited directly by the law.40 (Emphasis supplied)
Citing the RTC's proceedings of December 7, 2004, the CA adverted to the following
testimony by the petitioner during her cross-examination thus –
(Atty. Monteclar)
Q: Now, the Deed of Sale states that the buyer is Taina Manigque-Stone?
A: Yes.
   
Q: And not Mike Stone who according to you was the one who paid the entire
consideration and was the one who negotiated with Colonel Tecson. Will you kindly tell
the Court how come it was your name who placed [sic] in the Deed of Sale?
A: Because an American, foreign national cannot buy land here.
Q: Yes because an American national, foreigner cannot own land here.
A: Yes.
   
Q: And so the Deed of Sale was placed in your name, correct?
A: Yes.41 (Emphasis supplied)
It is axiomatic, of course, that this Court is not a trier of facts. Subject to well-
known exceptions, none of which obtains in the instant case, this Court is bound by
the factual findings of the CA, especially where such factual findings, as in this case,
accorded in the main with the RTC's own findings.42
Given the fact that the sale by the Tecson spouses to Taina as Mike's dummy
was totally abhorrent and repugnant to the Philippine Constitution, and is thus,
void ab initio, it stands to reason that there can be no double sale to speak of here.
In the case of Fudot v. Cattleya Land, Inc.,43 which fortuitously also involved the
Tecson spouses and Cattleya, we held thus —
The petition is bereft of merit.
Petitioner's arguments, which rest on the assumption that there was a double sale,
must fail.
In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code,
which provides the rule on double sale, applies only to a situation where the same
property is validly sold to different vendees. In this case, there is only one sale to
advert to, that between the spouses Tecson and respondent.
In Remalante v. Tibe, this Court ruled that the Civil Law provision on double sale is
not applicable where there is only one valid sale, the previous sale having been
found to be fraudulent. Likewise, in Espiritu and Apostol v. Valerio, where the
same parcel of land was purportedly sold to two different parties, the Court held
that despite the fact that one deed of sale was registered ahead of the other, Art.
1544 of the Civil Code will not apply where said deed is found to be a forgery, the
result of this being that the right of the other vendee should prevail.
The trial court declared that the sale between the spouses Tecson and petitioner is
invalid, as it bears the forged signature of Asuncion. x x x44 (Citations
omitted; Emphasis supplied)
In view of the fact that the sale in the case at bench is worse off (because it
is constitutionally infirm) than the sale in the Fudot case, which merely involves a
violation of the pertinent provisions of the Civil Code, this Court must affirm, as it
hereby affirms the CA's ruling that, "there is only one sale to reckon with, that is,
the sale to Cattleya.45
Again, our holding in Muller v. Muller,46 which is almost on all fours with the case at
bench, can only strengthen and reinforce our present stance. In Muller, it appears
that German national Helmut Muller (Helmut), alien or foreigner husband of the
Filipina Elena Buenaventura Muller (Elena), bought with his capital funds a parcel of
land in Antipolo City and also paid for the construction of a house thereon. This
Antipolo property was registered under the name of Elena under TCT No. 219438.
Subsequently, Helmut instituted a petition for separation of properties with the RTC
of Quezon City. After due proceedings, the RTC of Quezon City rendered judgment
terminating the regime of absolute community of property between Helmut and
Elena. The RTC also decreed the separation of properties between the spouses. With
respect to the Antipolo property, the RTC held that although it was acquired with the
use of Helmut's capital funds, nevertheless the latter could not recover his
investment because the property was purchased in violation of Section 7, Article XII
of the Constitution. Dissatisfied with the RTC's judgment, Helmut appealed to the CA
which upheld his appeal. The CA ruled that: (1) Helmut merely prayed for
reimbursement of the purchase price of the Antipolo property, and not that he be
declared the owner thereof; (2) Elena's ownership over this property was considered
as ownership-in-trust for Helmut; (3) there is nothing in the Constitution which
prohibits Helmut from acquiring ownership of the house.
However, on a Petition for Review on Certiorari, this Court reversed the CA and
reinstated the RTC's ruling. In sustaining the RTC, this Court once again stressed
the absolute character of the constitutional prohibition against ownership of lands
in this country by foreigners or aliens:
The Court of Appeals erred in holding that an implied trust was created and resulted
by operation of law in view of petitioner's marriage to respondent. Save for the
exception provided in cases of hereditary succession, respondent's disqualification
from owning lands in the Philippines is absolute. Not even an ownership in trust is
allowed. Besides, where the purchase is made in violation of an existing statute and
in evasion of its express provision, no trust can result in favor of the party who is
guilty of the fraud. To hold otherwise would allow circumvention of the
constitutional prohibition.47 (Citation omitted; Emphasis supplied)
The same absolute constitutional proscription was reiterated anew in the
comparatively recent case of Matthews v. Taylor,48 erroneously invoked by Taina.
Taina claims that this case supports her position in the case at bench allegedly
because, like her case, the alien or foreigner husband in the Matthews case
(Benjamin A. Taylor, a British subject) likewise provided the funds for the purchase
of real property by his Filipino wife (Joselyn C. Taylor) and this Court allegedly
sustained said wife's ownership over the property.49 That Taina's claim is a clear
misapprehension of the thrust and purport of the ruling enunciated in
the Matthews case is put to rest by what this Court said there —
In light of the foregoing jurisprudence, we find and so hold that Benjamin has no
right to nullify the Agreement of Lease between Joselyn and petitioner. Benjamin,
being an alien, is absolutely prohibited from acquiring private and public
lands in the Philippines. Considering that Joselyn appeared to be the designated
'vendee' in the Deed of Sale of said property, she acquired sole ownership
there[of]. This is true even if we sustain Benjamin's claim that he provided
the funds for such acquisition. By entering into such contract knowing that
it was illegal, no implied trust was created in his favor; no reimbursement
for his expenses can be allowed; and no declaration can be made that the
subject property was part of the conjugal/community property of the
spouses. In any event, he had and has no capacity or personality to question the
subsequent lease of the Boracay property by his wife on the theory that in so doing,
he was merely exercising the prerogative of a husband in respect [to] conjugal
property. To sustain such a theory would countenance indirect controversion
of the constitutional prohibition. If the property were to be declared
conjugal, this would accord the alien husband a substantial interest and
right over the land, as he would then have a decisive vote as to its transfer
or disposition. This is a right that the Constitution does not permit him to
have. (Citation omitted; emphasis and underscoring supplied)50
The other points raised by petitioner in the present Petition for Review are collateral
or side issues and need not detain this Court any further. Suffice it to say that the
chief or main constitutional issue that has been addressed and resolved in the
present Petition has effectively subsumed or relegated to inconsequence the other
collateral or side issues raised herein.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated
August 16, 2010 and its Resolution dated February 22, 2011 in CA-G.R. CV No.
02352 being in conformity with the law and with this Court's jurisprudential
teachings, are hereby AFFIRMED in toto.
SO ORDERED.
G.R. No. 200009, January 23, 2017
SPRING HOMES SUBDIVISION CO., INC., SPOUSES PEDRO L. LUMBRES AND
REBECCA T. ROARING, Petitioners, v. SPOUSES PEDRO TABLADA, JR. AND
ZENAIDA TABLADA, Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari  under Rule 45 of the Rules of
Court seeking to reverse and set aside the Decision1 dated May 31, 2011 and
Resolution2 dated January 4, 2012 of the Court of Appeals (CA) in CA-G.R. CV No.
94352 which reversed and set aside the Decision3 dated September 1, 2009, of the
Regional Trial Court (RTC),  Branch 92, Calamba City.
The factual antecedents are as follows.
On October 12, 1992, petitioners, Spouses Pedro L. Lumbres and Rebecca T.
Roaring, (Spouses Lumbres) entered into a Joint Venture Agreement with Spring
Homes Subdivision Co., Inc., through its chairman, the late Mr. Rolando B. Pasic, for
the development of several parcels of land consisting of an area of 28,378 square
meters. For reasons of convenience and in order to facilitate the acquisition of
permits and licenses in connection with the project, the Spouses Lumbres
transferred the titles to the parcels of land in the name of Spring Homes.4
On January 9, 1995, Spring Homes entered into a Contract to Sell with respondents,
Spouses Pedro Tablada, Jr. and Zenaida Tablada, (Spouses Tablada)  for the sale of
a parcel of land located at Lot No. 8, Block 3, Spring Homes Subdivision, Barangay
Bucal, Calamba, Laguna, covered by Transfer Certificate of Title (TCT) No. T-
284037. On March 20, 1995, the Spouses Lumbres filed with the RTC of Calamba
City a complaint for Collection of Sum of Money, Specific Performance and Damages
with prayer for the issuance of a Writ of Preliminary Attachment against Spring
Homes for its alleged failure to comply with the terms of the Joint Venture
Agreement.5 Unaware of the pending action, the Spouses Tablada began
constructing their house on the subject lot and thereafter occupied the same. They
were then issued a Certificate of Occupancy by the Office Building Official.
Thereafter, on January 16, 1996, Spring Homes executed a Deed of Absolute Sale in
favor of the Spouses Tablada, who paid Spring Homes a total of P179,500.00, more
than the P157,500.00 purchase price as indicated in the Deed of Absolute Sale.6 The
title over the subject property, however, remained with Spring Homes for its failure
to cause the cancellation of the TCT and the issuance of a new one in favor of the
Spouses Tablada, who only received a photocopy of said title.
Subsequently, the Spouses Tablada discovered that the subject property was
mortgaged as a security for a loan in the amount of over P4,000,000.00 with
Premiere Development Bank as mortgagee and Spring Homes as mortgagor. In fact,
since the loan remained unpaid, extrajudicial proceedings were
instituted.7 Meanwhile, without waiting for trial on the  specific performance and
sum of money complaint, the Spouses Lumbres and Spring Homes entered into a
Compromise Agreement, approved by the Calamba RTC on October 28, 1999,
wherein Spring Homes conveyed the subject property, as well as several others, to
the Spouses Lumbres.8 By virtue of said agreement, the Spouses Lumbres were
authorized to collect Spring Homes' account receivables arising from the conditional
sales of several properties, as well as to cancel said sales, in the event of default in
the payment by the subdivision lot buyers. In its capacity as mortgagee, Premiere
Development Bank was included as a party in the Compromise Agreement.9
In the exercise of the power granted to them, the Spouses Lumbres started
collecting deficiency payments from the subdivision lot buyers. Specifically, they
sent demand letters to the Spouses Tablada for the payment of an alleged
outstanding balance of the purchase price of the subject property in the amount of
P230,000.00. When no payment was received, the Spouses Lumbres caused the
cancellation of the Contract to Sell previously executed by Spring Homes in favor of
the Spouses Tablada. On December 22, 2000, the Spouses Lumbres and Spring
Homes executed a Deed of Absolute Sale over the subject property, and as a result,
a new title, TCT No. T-473055, was issued in the name of the Spouses Lumbres.10
On June 20, 2001, the Spouses Tablada filed a complaint for Nullification of Title,
Reconveyance and Damages against Spring Homes and the Spouses Lumbres
praying for the nullification of the second Deed of Absolute Sale executed in favor of
the Spouses Lumbres, as well as the title issued as a consequence thereof, the
declaration of the validity of the first Deed of Absolute Sale executed in their favor,
and the issuance of a new title in their name.11 The Sheriffs Return dated August 1,
2001 indicated that while the original copy of the complaint and the summons were
duly served upon the Spouses Lumbres, summons was not properly served upon
Spring Homes because it was reportedly no longer existing as a corporate entity.12
On August 14, 2001, the Spouses Lumbres filed a Motion to Dismiss the case
against them raising as grounds the non-compliance with a condition precedent and
lack of jurisdiction of the RTC over the subject matter. They alleged that the
Spouses Tablada failed to avail of conciliatory proceedings, and that the RTC has no
jurisdiction since the parties, as well as property in question, are all located at
Calamba City, and that the action instituted by the Spouses Tablada praying for the
nullification of the Compromise Agreement actually corresponds to a nullification of
a judgement issued by a co-equal trial court. The Spouses Tablada opposed by
alleging that Spring Homes holds office at Paraiiaque City, falling under the
exception from the requirement of barangay conciliatory proceedings and that the
action they filed was for nullification of title issued to the Spouses Lumbres as a
result of a double sale, which is rightly under the jurisdiction of the trial court. They
also emphasized that as non-parties to the Compromise Agreement, the same is not
binding upon them. The Motion to Dismiss was eventually denied by the trial court
on October 2, 2001.13
Interestingly, on even date, the Spouses Lumbres filed an ejectment suit of their
own before the Municipal Trial Court in Cities (MTCC) of Calamba City demanding
that the Spouses Tablada vacate the subject property and pay rentals due thereon.
The MTCC, however, dismissed the suit ruling that the Spouses Lumbres registered
their title over the subject property in bad faith. Such ruling was reversed by the
RTC which found that there was no valid deed of absolute sale between the Spouses
Tablada and Spring Homes. Nevertheless, the CA, on appeal, agreed with the MTCC
and reinstated the decision thereof. This was affirmed by the Court in Spouses
Lumbres v. Spouses Tablada  14 on February 23, 2007.
Meanwhile, on the nullification and reconveyance of title suit filed by the Spouses
Tablada, the RTC noted that Spring Homes has not yet been summoned. This
caused the Spouses Tablada to move for the discharge of Spring Homes as a party
on the ground that the corporation had already ceased to exist. The Spouses
Lumbres, however, opposed said motion claiming that Spring Homes is an
indispensable party.15 The RTC ordered the motion to be held in abeyance until the
submission of proof on Spring Homes' corporate status. In the meantime, trial
ensued. Eventually, it was shown that Spring Homes' certificate of registration was
revoked on September 29, 2003.16
On September 1, 2009, the RTC rendered its Decision dismissing the Spouses
Tablada's action for lack of jurisdiction over the person of Spring Homes, an
indispensable party.17 According to the trial court, their failure to cause the service
of summons upon Spring Homes was fatal for Spring Homes was an indispensable
party without whom no complete determination of the case may be reached.18 In
support thereof, the RTC cited the pronouncement in Uy v. CA, et. al.19 that the
absence of an indispensable party renders all subsequent actuations of the court null
and void for want of authority to act not only as to the absent parties but even as to
those present.20 In the instant case, the Spouses Tablada prayed that the Deed of
Absolute Sale executed by Spring Homes in favor of the Spouses Lumbres be
declared null and void and that Spring Homes be ordered to deliver the owner's
duplicate certificate of title covering the subject lot. Thus, without jurisdiction over
Spring Homes, the case could not properly proceed.21 The RTC added that the
Spouses Tablada's subsequent filing of the motion to discharge does serve as an
excuse for at that time, the certificate of registration of Spring Homes had not yet
been cancelled or revoked by the Securities and Exchange Commission (SEC). In
fact, the assumption that it was already dissolved when the suit was filed does not
cure the defect, because the dissolution of a corporation does not render it beyond
the reach of courts considering the fact that it continues as a body corporate for the
winding up of its affairs.22
In its Decision dated May 31, 2011, however, the CA reversed and set aside the RTC
Decision finding that Spring Homes is not an indispensable party. It held that Spring
Homes may be the vendor of the subject property but the title over the same had
already been issued in the name of the Spouses Lumbres. So any action for
nullification of the said title causes prejudice and involves only said spouses, the
registered owners thereof. Thus, the trial court may very well grant the relief prayed
for by the Spouses Lumbres.23 In support thereof, the appellate court cited the
ruling in Seno, et. al. v. Mangubat, et. al.24 wherein it was held that in the
annulment of sale, where the action was dismissed against defendants who, before
the filing of said action, had sold their interests in the subject land to their co-
defendant, the said dismissal against the former, who are only necessary parties,
will not bar the action from proceeding against the latter as the remaining
defendant, having been vested with absolute title over the subject property.25 Thus,
the CA maintained that the RTC's reliance on Uy v. CA is misplaced for in said case,
it was imperative that an assignee of interests in certain contracts be impleaded,
and not the assignor, as the RTC interpreted the ruling to mean. Thus, the doctrine
in Uy actually bolsters the finding that it is the Spouses Lumbres, as assignee of the
subject property, and not Spring Homes, as assignor, who are the indispensable
parties.26
Moreover, considering that the RTC had already concluded its trial on the case and
the presentation of evidence by both parties, the CA deemed it proper to proceed to
rule on the merits of the case. At the outset, the appellate court noted that the
ruling of the Court in Spouses Lumbres v. Spouses Tablada  back in 2007 cannot
automatically be applied herein for said ruling involves an ejectment case that is
effective only with respect to the issue of possession and cannot be binding as to
the title of the subject property.
This notwithstanding, the CA ruled that based on the records, the first sale between
Spring Homes and the Spouses Tablada must still be upheld as valid, contrary to the
contention of the Spouses Lumbres that the same was not validly consummated due
to the Spouses Tablada's failure to pay the full purchase price of P409,500.00.
According to the appellate court, the first Deed of Absolute Sale clearly indicated
that the consideration for the subject property was P157,500.00.27 The Spouses
Lumbres' argument that such Deed of Absolute Sale was executed only for the
purpose of securing a loan from PAG-IBIG in favor of the Spouses Tablada was
unsubstantiated. In fact, even the second Deed of Absolute Sale executed by Spring
Homes in favor of the Spouses Lumbres, as well as several receipts presented,
indicated the same amount of P157,500.00 as purchase price. As for the amount of
P409,500.00 indicated in the Contract to Sell executed between Spring Homes and
the Spouses Tablada, the CA adopted the findings of the Court in Spouses Lumbres
v. Spouses Tablada  in 2007 and held that the amount of P409,500.00 is actually
composed not only of the subject parcel of land but also the house to be constructed
thereon. But since it was proven that it was through the Spouses Tablada's own
hard-earned money that the house was constructed, there existed no balance of the
purchase price in the amount of P230,000.00 as the Spouses Lumbres vehemently
insist, viz.:
Further, the spouses Lumbres alleged that what was legal and binding between
Spring Homes and plaintiffs-appellants [spouses Tablada] was the Contract to
Sell which, in part, reads: chanRoblesvirtualLawlibrary
3. That the SELLER, for and in consideration of the payments and other terms and
conditions hereinafter to be designated, has offered to sell and the BUYER has
agreed to buy certain parcel of land more particularly described as follows:chanRoblesvirtualLawlibrary
Blk. No. P- 111 Lot No. Area Sq. Meter Price Per sq. Meter Total Selling Price
3 8 105 P1,500  
42 6,000  
P409,500
Similar to the ruling of the Supreme Court in Spouses Lumbres v. Spouses Tablada,
despite there being no question that the total land area of the subject property was
One Hundred Five (105) square meters, there appears in the said contract to sell a
numerical value of Forty Two (42) square meters computed at the rate of Six
Thousand Pesos (6,000.00) per square meter. We agree with the findings of the
Supreme Court in this regard that the Forty Two (42) square meters
referred only to the land area of the house to be constructed in the subject
property. Since the spouses Lumbres failed to disprove the plaintiffs-
appellants [spouses Tablada] claim that it was through their own hard
earned money that enabled them to fund the construction and completion
of their house and not Spring Homes, there existed no balance of the
purchase price to begin with. It is important to note that what the
plaintiffs-appellants [spouses Tablada] bought from Spring Homes was a
vacant lot. Nowhere in the Deed of Absolute Sale executed between
plaintiffs-appellants [spouses Tablada] and Spring Homes was it indicated
that the improvements found thereon form part of the subject property,
lest, that any improvements existed thereto. It was only through the
plaintiffs-appellants (spouses Tablada] own efforts that a house was
constructed on the subject property. 28
The appellate court further stressed that at the time when the Spouses Tablada
entered into a contract of sale with Spring Homes, the title over the subject property
was already registered in the name of Spring Homes. Thus, the Deed of Absolute
Sale between Spring Homes and the Spouses Tablada was valid and with sufficient
consideration for every person dealing with a 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 beyond the certificate to determine the condition of the property.29
In the end, the CA upheld the ruling of the Court in Spouses Lumbres v. Spouses
Tablada that notwithstanding the fact that the Spouses Lumbres, as the second
buyer, registered their Deed of Absolute Sale, in contrast to the Spouses Tablada
who were not able to register their Deed of Absolute Sale precisely because of
Spring Home's failure to deliver the owner's copy of the TCT, the Spouses Tablada's
right could not be deemed defeated as the Spouses Lumbres were in bad faith for
even before their registration of their title, they were already informed that the
subject property was already previously sold to the Spouses Tablada, who had
already constructed their house thereon.30 Thus, the CA disposed the case as
follows:
chanRoblesvirtualLawlibrary
WHEREFORE, in view of the foregoing premises, the instant appeal is hereby
GRANTED. The assailed Decision dated September 1, 2009 in Civil Case No. 3117-
2001-C is hereby ANNULLED AND SET ASIDE. Accordingly, the Register of Deeds of
Calamba, Laguna, is hereby directed to cancel Transfer Certificate of Title No. T-
473055 registered in the name of the defendants-appellees spouses Pedro L.
Lurnbres and Rebecca T. Roaring Lurnbres and, in lieu thereof, issue a new one in
the name of plaintiffs-appellants.
SO ORDERED. 31
When their Motion for Reconsideration was denied by the CA in its Resolution dated
January 4, 2012, the Spouses Lumbres filed the instant petition invoking the
following arguments:
chanRoblesvirtualLawlibrary
I.
THE COURT OF APPEALS ERRED IN NOT DISMISSING THE APPEAL FOR LACK OF
JURISDICTION OF THE TRIAL COURT OVER THE PERSON OF SPRING HOMES AS AN
INDISPENSABLE PARTY.
II.
THE COURT OF APPEALS ERRED IN ORDERING THAT RESPONDENTS, NOT
PETITIONERS, WERE PURCHASERS OF THE PROPERTY IN GOOD FAITH, WHICH IS
NOT IN ACCORD WITH ESTABLISHED FACTS, LAW, AND JURISPRUDENCE.
In the instant petition, the Spouses Lumbres insist that the Spouses Tablada have
not yet paid the balance of the purchase price of the subject property in the amount
of P230,000.00 despite repeated demands.32 They also insist that since Spring
Homes, an indispensable party, was not duly summoned, the CA should have
affirmed the RTC's dismissal of the instant complaint filed by the Spouses Tablada
for lack of jurisdiction.33 Citing the RTC's Decision, the Spouses Lumbres reiterated
that even assuming that Spring Homes had been dissolved at the time of the filing
of the complaint, the same does not excuse the failure to implead it for it still
continues as a body corporate for three (3) years after revocation of its certificate of
incorporation.34
Moreover, the Spouses Lumbres faulted the CA in upholding the findings of the
Court in ·the 2007 case entitled Spouses Lumbres v. Spouses Tablada for the issue
therein only involves physical possession and not ownership. Contrary to the
findings of the CA, the Spouses Lumbres claim that the Spouses Tablada were not
purchasers in good faith for their failure to react to their repeated demands for the
payment of the P230,000.00.35 In fact, the Spouses Tablada even admitted that they
would pay the P230,000.00 upon the release of the PAG-IBIG loan.36 Thus, the
purported Deed of Absolute Sale between Spring Homes and the Spouses Tablada is
void for having no valuable consideration, especially since it was issued merely for
purposes of the loan application from PAG-IBIG. On the other hand, the Spouses
Lumbres claim that they were in good faith since the First Deed of Absolute Sale
between Spring Homes and the Spouses Tablada was not annotated at the back of
the subject property's title.37
The petition is bereft of merit.
At the outset, it must be noted that Spring Homes is not an indispensable party.
Section 7,38 Rule 3 of the Revised Rules of Court defines indispensable parties as
parties-in-interest without whom there can be no final determination of an action
and who, for this reason, must be joined either as plaintiffs or as defendants.39 Time
and again, the Court has held that a party is indispensable, not only if he has an
interest in the subject matter of the controversy, but also if his interest is such that
a final decree cannot be made without affecting this interest or without placing the
controversy in a situation where the final determination may be wholly inconsistent
with equity and good conscience.40 He is a person whose absence disallows the court
from making an effective, complete, or equitable determination of the controversy
between or among the contending parties.41 Conversely, a party is not indispensable
to the suit if his interest in the controversy or subject matter is distinct and divisible
from the interest of the other parties and will not necessarily be prejudiced by a
judgment which does complete justice to the parties in court.42 If his presence would
merely permit complete relief between him and those already parties to the action
or will simply avoid multiple litigation, he is not indispensable.
In dismissing the complaint for lack of jurisdiction, the trial court relied on Uy v. CA,
et. al.43 and held that since Spring Homes, an indispensable party, was not
summoned, it had no authority to proceed. But as aptly observed by the CA, the
doctrine in Uy hardly serves as basis for the trial court's conclusions and actually
even bolsters the finding that it is the Spouses Lumbres, as assignee of the subject
property, and not Spring Homes, as assignor, who are the indispensable parties. In
said case, the Public Estates Authority (PEA), tasked to complete engineering works
on the Heritage Memorial Park project, assigned all of its interests therein to
Heritage Park Management Corporation (HPMC). When a complaint was filed against
the PEA in connection with the project, the Court affirmed the dismissal thereof
holding that HPMC, as assignee of PEA's interest, should have been impleaded,
being the indispensable party therein. The pertinent portion of the Decision
states:chanRoblesvirtualLawlibrary
Based on the Constmction Agreement, PEA entered into it in its capacity as Project
Manager, pursuant to the PFTA. According to the provisions of the PFTA, upon
the formation of the HPMC, the PEA would turn over to the HPMC all the
contracts relating to the Heritage Park. At the time of the filing of the CIAC
Case on May 31, 2001, PEA ceased to be the Project Manager of the
Heritage Park Project, pursuant to Section 11 of the PFTA. Through a Deed
of Assignment, PEA assigned its interests in all the existing contracts it
entered into as the Project Manager for Heritage Park to HPMC. As early as
March 17, 2000, PEA officially turned over to HPMC all the documents and
equipment in its possession related to the Heritage Park Project. Petitioner was duly
informed of these incidents through a letter dated March 13, 2000. Apparently, as
of the date of the filing of the CIAC Case, PEA is no longer a party-in-
interest. Instead, it is now CIAC Case, PEA is no longer a party-in-interest.
Instead, it is now private respondent HPMC, as the assignee, who stands to
be benefited or injured by the judgment in the suit. In its absence, there
cannot be a resolution of the dispute of the parties before the court which
is effective, complete or equitable. We thus reiterate that HPMC is an
indispensable party.44
Moreover, as held by the CA, the pronouncement in Seno, et. al. v. Mangubat, et.
al.45 is instructive. In said case, the petitioner therein entered into an agreement
with certain respondents over a parcel of land, which agreement petitioner believed
to be merely an equitable mortgage but respondents insisted to be a sale. The
agreement, however, was embodied in a document entitled "Deed of Absolute Sale."
Consequently, respondents were able to obtain title over the property in their
names. When two of the three respondents sold their shares to the third
respondent, the third respondent registered the subject property solely in his name.
Thereafter, the third respondent further sold said property to another set of
persons. Confronted with the issue of whether the two respondents who sold their
shares to the third respondent should be impleaded as indispensable parties in an
action filed by petitioner to reform the agreement and to annul the subsequent sale,
the Court ruled in the negative, viz.:
The first issue We need to resolve is whether or not defendants Andres
Evangelista and Bienvenido Mangubat are indispensable parties. Plaintiffs
contend that said defendants being more dummies of defendant Marcos Mangubat
and therefore not real parties in interest, there is no room for the application of Sec.
7, Rule 3 of the Revised Rules of Court.
xxxx
In the present case, there are no rights of defendants Andres Evangelista
and Bienvenido Mangubat to be safeguarded if the sale should be held to be
in fact an absolute sale nor if the sale is held to be an equitable mortgage.
Defendant Marcos Mangubat became the absolute owner of the subject
property by virtue of the sale to him of the shares of the aforementioned
defendants in the property. Said defendants no longer have any interest in
the subject property. However, being parties to the instrument sought to be
reformed, their presence is necessary in order to settle all the possible issues of tile
controversy. Whether the disputed sale be declared an absolute sale or an equitable
mortgage, the rights of all the defendants will have been amply protected.
Defendants-spouses Luzame in any event may enforce their rights against
defendant Marcos Mangubat.46
Similarly, by virtue of the second Deed of Absolute Sale between Spring Homes and
the Spouses Lumbres, the Spouses Lumbres became the absolute and registered
owner of the subject property herein. As such, they possess that certain interest in
the property without which, the courts cannot proceed for settled is the doctrine that
registered owners of parcels of land whose title is sought to be nullified should be
impleaded as an indispensable party.47 Spring Homes, however, which has already
sold its interests in the subject land, is no longer regarded as an indispensable
party, but is, at best, considered to be a necessary party whose presence is
necessary to adjudicate the whole controversy, but whose interests are so far
separable that a final decree can be made in- its absence without affecting it.48 This
is because when Spring Homes sold the property in question to the Spouses
Lumbres, it practically transferred all its interests therein to the said Spouses. In
fact, a new title was already issued in the names of the Spouses Lumbres. As such,
Spring Homes no longer stands to be directly benefited or injured by the judgment
in the instant suit regardless of whether the new title registered in the names of the
Spouses Lumbres is cancelled in favor of the Spouses Tablada or not. Thus, contrary
to the ruling of the RTC, the failure to summon Spring Homes does not deprive it of
jurisdiction over the instant case for Spring Homes is not an indispensable party.
On the merits of the case, the Court likewise affirms the findings of the CA. The
issue here involves what appears to be a double sale. First, the Spouses Tablada
entered into a Contract to Sell with Spring Homes in 1995 which was followed by a
Deed of Absolute Sale in 1996. Second, in 2000, the Spouses Lumbres and Spring
Homes executed a Deed of Absolute Sale over the same property. The Spouses
Lumbres persistently insist that the first Deed of Sale executed by the Spouses
Tablada is void for having no valuable consideration. They argue that out of the
P409,500.00 purchase price under the Contract to Sell, the Spouses Tablada merely
paid P179,500.00, failing to pay the rest in the amount of P230,000.00 despite
demands.
There is no merit in the contention.
As the CA held, it is clear from the first Deed of Absolute Sale that the consideration
for the subject property is P157,500.00. In fact, the same amount was indicated as
the purchase price in the second Deed of Absolute Sale between Spring Homes and
the Spouses Lumbres. As for the varying amounts contained in the Contract to Sell,
the Court notes that the same has already been duly addressed by the Court in the
2007 Spouses Lumbres v. Spouses Tablada49 case, the pertinent portions of which
states: chanRoblesvirtualLawlibrary
In claiming their right of possession over the subject lot, petitioners made much of
the judicially approved Compromise Agreement in Civil Case No. 2194-95-C,
wherein Spring Homes' rights and interests over the said lot under its Contract to
Sell with the respondents were effectively assigned to them. Petitioners argue
that out of the whole P409,500.00 purchase price under the respondents
Contract to Sell with Spring Homes, the respondents were able to pay only
P179,500.00, leaving a balance of P230,000.00.
Upon scrutiny, however, the CA astutely observed that despite there being no
question that the total land area of the subject lot is 105 square meters, the
Contract to Sell executed and entered into by Spring Homes and the respondent
spouses states:
chanRoblesvirtualLawlibrary
3. That the SELLER, for and in consideration of the payments and other terms and
conditions hereinafter to be designated, has offered to sell and the BUYER has
agreed to buy certain parcel of land more particularly described as follows:
chanRoblesvirtualLawlibrary
Blk. No. P- 111 Lot No. Area Sq. Meter Price Per sq. Meter Total Selling Price
3 8 105 P1,500  
42 6,000  
P409,500
The two deeds of absolute sale as well as the respondents' Tax Declaration
No. 019-1342 uniformly show that the land area of the property covered by
TCT No. T-284037 is 105 square meters.The parties never contested its actual
land area.
However, while there is only one parcel of land being sold, which is Lot 8,
Blk. 3, paragraph "1" above of the Contract to Sell speaks of two (2) land
areas, namely, "105" and "42," and two (2) prices per square meter, to wit:
"P1,500" and "P6,000."As correctly observed by the CA: chanRoblesvirtualLawlibrary
It does not require much imagination to understand why figures "3," "8," "105" and
"P1,500" appear in the paragraph "1" of the Contract to Sell. Certainly "3" stands for
"Blk. No.," "8" stands for "Lot No.," "105" stands for the land area and "P1,500"
stands for the price per square meter. However, this Court is perplexed as regards
figures "42" and "6,000" as they are not accompanied by any "Blk. No." and/or "Lot
No." In other words, while there is only one parcel of land being sold, paragraph "1"
of the Contract to Sell contains two land areas and two prices per square meter.
There is no reason for the inclusion of land area in the computation when it was
established beyond cavil that the total area being sold is only 105 square meters.
Likewise, there is no explanation why there is another rate for the additional 42
square meters, which was pegged at P6,000 per square meter, while that of 105
square meters was only P1,500.00.
The CA could only think of one possible explanation: the Contract to Sell refers
only to a single lot with a total land area of 105 square meters. The 42
square meters mentioned in the same contract and therein computed at the
rate of 116,000 per square meter refer to the cost of the house which
would be constructed by the respondents on the subject lot through a Pag-
Ibig loan. The land area of the house to be constructed was pegged at 42 square
meters because of the following restrictions in the Contract to Sell:
chanRoblesvirtualLawlibrary
9. The lot(s) subject matter of this contract are subject to the following
restrictions:
chanRoblesvirtualLawlibrary
a) Any building which may be constructed at anytime in said lot(s) must be strong x
x x. Said building must not be constructed at a distance of less than (2) meters from
any boundaries of the lot(s).
b) The total area to be voted to buildings or structures shall not exceed eighty
percent (80%) of the total area of the lot(s).50
Thus, while the Spouses Lumbres would like Us to believe that based on the
Contract to Sell, the total selling price of the subject property is P409,500.00, the
contract itself, as well as the surrounding circumstances following its execution,
negate their argument. As appropriately found by the Court, said amount actually
pertains to the sum of: (1) the cost of the land area of the lot at 105 square meters
priced at P1,500 per square meter; and (2) the cost of the house to be constructed
on the land at 42 square meters priced at P6,000 per square meter. But it would be
a grave injustice to hold the Spouses Tablada liable for more than the cost of the
land area when it was duly proven that they used their own funds in the
construction of the house. As shown by the records, the Spouses Tablada was forced
to use their own money since their PAG-IBIG loan application did not materialize,
not through their own fault, but because Spring Homes failed, despite repeated
demands, to deliver to them the owner's duplicate copy of the subject property's
title required by the loan application. In reality, therefore, what Spring Homes really
sold to the Spouses Tablada was only the lot in the amount of P157,500.00, since
the house was constructed thereon using the Spouses Tablada's own money. In fact,
nowhere in the Contract to Sell was it stated that the subject property includes any
improvement thereon or that the same even exists. Moreover, as previously
mentioned, in both the first and second Deeds of Absolute Sale, it was indicated that
the amount of the property subject of the sale is only P157,500.00. Accordingly, the
Court held further in Spouses Lumbres v. Spouses Tablada:
Looking at the above-quoted portion of the Contract to Sell, the CA found
merit in the respondents' contention that the total selling price of P409,500
includes not only the price of the lot but also the cost of the house that
would be constructed thereon. We are incline to agree. The CA went on to
say:chanRoblesvirtualLawlibrary
It could be argued that the contract to sell never mentions the construction
of any house or building on the subject property. Had it been the intention
of the parties that the total selling price would include the amount of the
house that would be taken from a loan to be obtained from Pag Ibig, they
could have specified so. However, one should not lose sight of the fact that
the contract to sell is an accomplished form. [Respondents,] trusting Spring
Homes, could not be expected to demand that another contract duly reflective of
their agreements be utilized instead of the accomplished form. The terms and
conditions of the contract may not contemplate the inclusion of the cost of the house
in the total selling price, but the entries typewritten thereon sufficiently reveal the
intentions of the parties.
The position of the [respondents] finds support in the documents and
subsequent actuations of Bertha Pasic, the representative of Spring Homes.
[Respondents] undeniably proved that they spent their own hard earned
money to construct a house thereon after their Pag-Ibig loan did not
materialize. It is highly unjust for the [respondents] to pay for the amount
of the house when the loan did not materialize due to the failure of Spring
Homes to deliver the owner's duplicate copy of TCT No. T 284037.

xxxx
If the total selling price was indeed P409,500.00, as [petitioners] would
like to poster, said amount should have appeared as the consideration in
the deed of absolute sale dated January 15, 1996. However, only
P157,500.00 was stated. The amount stated in the Deed of Absolute Sale dated
January 15, 1996 was not only a portion of the selling price, because the Deed of
Sale dated December 22, 2000 also reflected P157,500.00 as consideration. It is not
shown that [petitioners] likewise applied for a loan with Pag-Ibig. The reasonable
inference is that the consistent amount stated in the two Deeds of Absolute
Sale was the true selling price as it perfectly jibed with the computation in
the Contract to Sell.
We find the CA's reasoning to be sound. At any rate, the execution of the January
16, 1996 Deed of Absolute Sale in favor of the respondents effectively rendered the
previous Contract to Sell ineffective and canceled. Furthermore, we find no merit in
petitioners' contention that the first sale to the respondents was void for want of
consideration. As the CA pointed out in its assailed decision:
chanRoblesvirtualLawlibrary
Other than the [petitioners'] self-serving assertion that the Deeds of
Absolute Sale was executed solely for the purpose of obtaining a Pag-Ibig
loan, no other concrete evidence was tendered to justify the execution of
the deed of absolute sale. They failed to overcome the clear and convincing
evidence of the [respondents] that as early as July 5, 1995 the latter had already
paid the total amount of P179,500.00, much bigger than the actual purchase price
for the subject land.51
There is, therefore, no factual or legal basis for the Spouses Lumbres to claim that
since the Spouses Tablada still had an outstanding balance of P230,000.00 from the
total purchase price, the sale between Spring Homes and the Spouses Tablada was
void, and consequently, they were authorized to unilaterally cancel such sale, and
thereafter execute another one transferring the subject property in their names. As
correctly held by the Court in Spouses Lumbres v. Spouses Tablada,52 the first Deed
of Sale executed in favor of the Spouses Tablada is valid and with sufficient
consideration. Thus, in view of this validity of the sale subject of the first Deed of
Absolute Sale between Spring Homes and the Spouses Tablada, the Court shall now
determine who, as between the two spouses herein, properly acquired ownership
over the subject property. In this regard, Article 1544 of the Civil Code reads:
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. (Emphasis supplied)
The principle of primus tempore, potior jure  (first in time, stronger in right) gains
greater significance in case of a double sale of immovable property.53 Thus, the
Court has consistently ruled that ownership of an immovable property which is the
subject of a double sale 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.54 The requirement
of the law then is two-fold: acquisition in good faith and registration in good faith.
Good faith must concur with the registration 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. If it is shown
that a buyer was in bad faith, the alleged registration they have made amounted to
no registration at all.55
Here, the first buyers of the subject property, the Spouses Tablada, were able to
take said property into possession but failed to register the same because of Spring
Homes' unjustified failure to deliver the owner's copy of the title whereas the second
buyers, the Spouses Lumbres, were able to register the property in their names. But
while said the Spouses Lumbres successfully caused the transfer of the title in their
names, the same was done in bad faith. As correctly observed by the Court
in Spouses Lumbres v. Spouses Tablada,56 the Spouses Lumbres cannot claim good
faith since at the time of the execution of their Compromise Agreement with Spring
Homes, they were indisputably and reasonably informed that the subject lot was
previously sold to the Spouses Tablada. They were also already aware that the
Spouses Tablada had constructed a house thereon and were in physical possession
thereof. They cannot, therefore, be permitted to freely claim good faith on their part
for the simple reason that the First Deed of Absolute Sale between Spring Homes
chanRoblesvirtualLawlibrary
and the Spouses Tablada was not annotated at the back of the subject property's
title. It is beyond the Court's imagination how spouses Lumbres can feign ignorance
to the first sale when the records clearly reveal that they even made numerous
demands on the Spouses Tablada to pay, albeit erroneously, an alleged balance of
the purchase price.
Indeed, knowledge gained by the first buyer of the second sale cannot defeat the
first buyer's rights except only as provided by law, as in cases where the second
buyer first registers in good faith the second sale ahead of the first.57 Such
knowledge of the first buyer does bar her from availing of her rights under the law,
among them, first her purchase as against the second buyer. But conversely,
knowledge gained by the second buyer of the first sale defeats his rights even if he
is first to register the second sale, since such knowledge taints his prior registration
with bad faith.58
Accordingly, in order for the Spouses Lumbres to obtain priority over the Spouses
Tablada, the law requires a continuing good faith and innocence or lack of
knowledge of the first sale that would enable their contract to ripen into full
ownership through prior registration.59 But from the very beginning, the Spouses
Lumbres had already known of the fact that the subject property had previously
been sold to the Spouses Tablada, by virtue of a valid Deed of Absolute Sale. In
fact, the Spouses Tablada were already in possession of said property and had even
constructed a house thereon. Clearly then, the Spouses Lumbres were in bad faith
the moment they entered into the second Deed of Absolute Sale and thereafter
registered the subject property in their names. For this reason, the Court cannot,
therefore, consider them as the true and valid owners of the disputed property and
permit them to retain title thereto.
WHEREFORE, premises considered, the instant petition is DENIED. The assailed
Decision dated May 31, 2011 and Resolution dated January 4, 2012 of the Court of
Appeals in CA-G.R. CV No. 94352 are hereby AFFIRMED.
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.
Coronel Law Office for petitioners.
The Solicitor General for 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 —
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.

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.
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.

4. That plaintiff was ready to put up a bond in double the value of the car, and SO ORDERED.
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) [G.R. No. 222530. October 16, 2019.]
 MR. AND MRS. ERNESTO MANLAN, petitioners, vs. MR.
AND MRS. RICARDO BELTRAN, respondents.
DECISION
INTING, J  :
p the barangay lupon. When conciliation failed, respondents filed an action
Before this Court is a petition 1 for review under Rule 45 of the Rules
of Court assailing the Decision 2 dated April 29, 2015 and
Resolution 3 dated December 4, 2015 of the Court of Appeals (CA) in CA-
G.R. CV No. 01395 which affirmed in toto the Decision 4 dated April 5,
2006 of Branch 40, Regional Trial Court (RTC), Dumaguete City.
The Antecedents
The present case involves the conflicting claims of two sets of
buyers over a parcel of land. One group avers of having bought the
property from one of its co-owners and building their house thereon in
good faith. Meanwhile, the other group claims of having bought the same
land from all the co-owners and registered it in good faith.
Specifically, the subject matter here is a 1,214 square meter (sq.m.)
land situated in Barangay Calindagan, Dumaguete City forming part of Lot
1366-E and originally owned in common by Serbio, Anfiano, Engracia,
Carmela, Manuel, Teresito, Corazon, Segundina, and Leonardo, all
surnamed Orbeta (collectively referred as "the Orbetas").
On May 5, 1983, Spouses Ernesto and Rosita Manlan (petitioners)
bought a 500 sq.m. portion of the subject property from Manuel Orbeta for
P30,000.00. After receiving the advance payment of P15,000.00, Manuel
Orbeta allowed petitioners to occupy it. 5
On October 21, 1986, the Orbetas (except for Manuel Orbeta who
was already deceased; thus, represented by his wife Emiliana Villamil
Orbeta) executed a Deed of Absolute Sale (DOAS) conveying the 714
sq.m. portion of the same property to Spouses Ricardo and Zosima Beltran
(respondents). On November 20, 1990, respondents bought the remaining
500 sq.m. from the Orbetas, 6 as evidenced by another
DOAS. 7 Consequently, on January 28, 1991, the subject property was
registered in respondents' name under Transfer Certificate of Title (TCT)
No. 20152. 8
Thereafter, respondents demanded from petitioners to vacate the
property in dispute, but to no avail. Thus, they brought the matter to
for quieting of title and recovery of possession of the 500 sq.m. portion of
the subject land. 9
In the Complaint, 10 respondents claimed to be the absolute owners
of the subject property having bought it from the Orbetas.
In their Answer, 11 petitioners alleged that they bought the 500 sq.m.
portion of the disputed land from Serbio and Manuel Orbeta in 1983.
As counterclaim, they contended that the DOAS dated November
20, 1990, executed by respondents and the Orbetas, was fictitious, having
been procured by means of falsification and insidious scheme and
machination because at the time it was notarized, one of the co-owners,
Serbio, was already dead. Accordingly, the deed could not be a source of
respondents' right over the contested land.
Ruling of the RTC
In its April 5, 2006, Decision, 12 the RTC ruled that respondents had
a better title over the subject property. The dispositive portion of its
decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered as follows:
A. The plaintiffs are entitled to the possession of the
500[-]square meter portion of Lot 1366-E covered by Transfer
Certificate of Title No. 2015[2]; 13
B. The defendants are declared to be builders or possessors
in good faith entitled to reimbursement of all improvements and
expenses, both necessary and useful, introduced into the
 500[-]square meter portion of Lot 1366-E with right of retention as
provided by Articles 448 and 546 of the Civil Code;
C. The defendants are ordered to vacate the 500[-]square
meter portion of Lot 1366-E after reimbursement, as stated in
paragraph B, by the plaintiffs;
No costs.
SO ORDERED. 14
Although the RTC found that the notarization of the DOAS dated
November 20, 1990 was defective, it, nevertheless, ruled that the defect
did not affect the legality of the conveyance from the Orbetas to
respondents. Moreover, it ruled that petitioners could not collaterally attack
the validity of respondents' title. Thus, it upheld the transfer of rights from
the Orbetas to respondents.
Aggrieved, petitioners elevated the case to the CA.
Ruling of the CA
On April 29, 2015, the CA promulgated the assailed
Decision 15 affirming the RTC ruling, to wit:
WHEREFORE, all the foregoing proffered, the instant appeal
is DENIED. The Decision dated April 5, 2006 of the RTC, Branch
40, Dumaguete City is hereby AFFIRMED.
SO ORDERED. 16
The CA held that the rule on double sales under Article 1544 of
the New Civil Code does not apply here. It explained that there is double
sale only when the same property is validly sold by one vendor to different
vendees. It ruled that Lot 1366-E was not transferred by a single vendor to
several purchasers considering that respondents bought the contested lot
from the original co-owners, the Orbetas, while petitioners bought the
same contested property from Manuel Orbeta. 17
Likewise, the CA affirmed the RTC ruling that respondents had a
better right over the subject property as they proved their valid conveyance
from all the co-owners of the property. It also upheld the RTC findings that
the defect in the notarization of the deed of sale dated November 20, 1990
did not affect the transfer of rights from the Orbetas to respondents. It ruled
that a defective notarization, simply means that the deed of sale should be
treated as a private document, which could be proved by anyone who saw
the document executed or written, or by evidence anent the genuineness
of the signature or handwriting of the maker. Lastly, it found that
respondents were able to prove the authenticity and due execution of the
questioned deed of sale. 18
Petitioners moved for reconsideration, but the RTC denied it for lack
of merit in the assailed Resolution 19 dated December 4, 2015.
In the instant petition, petitioners argue that: (1) the rules on double
sale are applicable; (2) the CA erred in not considering that respondents
were in bad faith in purchasing the subject property; (3) the DOAS dated
November 20, 1990 is fraudulent as it was not validly notarized; and (4) the
defective notarization in the deed of sale affected the validity of TCT No.
20152.
In a nutshell, petitioners raise the issue of whether the DOAS dated
November 20, 1990 is valid. 20
Ruling of the Court
The petition is unmeritorious.
At the outset, it must be emphasized that this Court is not a trier of
facts and only questions of law must be raised in a petition filed under Rule
45 of the Rules of Court. 21 Moreover, this Court accords finality on the
factual findings of the trial courts, especially when such findings are
affirmed by the appellate court, as in the case at bench. 22 Although said
rule admits certain exceptions, 23 none of which was proved here. Thus,
this Court is not duty-bound to analyze and weigh all over again the
evidence already considered in the proceedings before the trial court.
More particularly, petitioners proffer factual issues such as whether
respondents were in bad faith when they bought the property from the
Orbetas and whether respondents fraudulently executed the Deed of Sale
dated November 20, 1990. These factual matters are not within the
province of this Court to look into, save only in exceptional circumstances
which are not present here. As such, this Court gives credence to the
factual evaluation made by the trial court which was affirmed by the CA.
Based on the foregoing, the Court limits its discussion on the
following questions of law: (1) whether the rules on double sale under
Article 1544 of the New Civil Code are applicable; (2) whether the defective
notarization affects the legality of sale; and (3) whether petitioners
collaterally attacked the respondents' Torrens title.
On whether the rules on double sale are applicable.
Petitioners insist that this is a plain case of double sale. They argue
that they bought in good faith the 500 sq.m. portion of Lot 1366-E in 1983,
while respondents bought the subject property only in 1990. They stress
that they have a better right over the property following the rules on double
sale under Article 1544 of the New Civil Code. 24
We disagree.
Petitioners' reliance on Article 1544 of the New Civil Code is
misplaced.
Article 1544 of the New 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.
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.
In Cheng v. Genato, 25 the Court enumerated the requisites in order
for Article 1544 to apply, viz.:
(a) The two (or more) sales transactions in issue must pertain to
exactly the same subject matter, and must be valid sales
transactions.
(b) The two (or more) buyers at odds over the rightful ownership of
the subject matter must each represent conflicting interests;
and
(c) The two (or more) buyers at odds over the rightful ownership of
the subject matter must each have bought from the very same
seller. 26
In fine, there is double sale when the same thing is sold to different
vendees by a single vendor. 27 It only means that Article 1544 has no
application in cases where the sales involved were initiated not just by one
vendor but by several vendors. 28
Here, petitioners and respondents acquired the subject property
from different transferors. The DOAS 29 dated November 20, 1990 shows
that all of the original co-owners (except for Manuel and Serbio, who are
already deceased) sold the subject lot to respondents. On the other hand,
the Receipt and Promissory Note 30 both dated May 5, 1983, reveal that
only Manuel sold the lot to petitioners. As found by the RTC and the CA,
nothing on the records shows that Manuel was duly authorized by the other
co-owners to sell the subject property in 1983.
Evidently, there are two sets of vendors who sold the subject land to
two different vendees. Thus, this Court upholds the findings of the trial
court and the CA that the rule on double sale is not applicable in the instant
case.
On whether the defective notarization
affects the legality of the sale.
Petitioners maintain that the DOAS dated November 20, 1990
cannot be a source of rights for respondents because the notarization was
defective. They contend that when the deed of sale was notarized, one of
its signatories was already dead. In simple terms, petitioners assail the
deed of sale as it was obtained by respondents through fraud.
Petitioners are mistaken.
 Basic is the rule in civil law that the necessity of a public document
for contracts which transmit or extinguish real rights over immovable
property, as mandated by Article 1358 31 of the Civil Code, is only for
convenience. It is not essential for its validity or enforceability. 32 In other
words, the failure to follow the proper form prescribed by Article 1358 of
the Civil Code does not render the acts or contracts invalid. 33 Where a
contract is not in the form prescribed by law, the parties can merely compel
each other to observe that form, once the contract has been perfected. 34
In addition, it has been held, time and again, that a sale of a real
property that is not consigned in a public instrument is, nevertheless, valid
and binding among the parties. 35 This is in accordance with the time-
honored principle that even a verbal contract of sale of real estate
produces legal effects between the parties. 36 Contracts are obligatory, in
whatever form they may have been entered into, provided all the essential
requisites for their validity are present. 37
Following these principles, the defective notarization of the DOAS
dated November 20, 1990 does not affect the validity of the transaction
between the Orbetas and respondents. It has no effect on the transfer of
rights over the subject property from the Orbetas to respondents.
A defective notarization will merely strip the document of its public
character and reduce it to a private instrument. 38 Consequently, when
there is a defect in the notarization of a document, the clear and convincing
evidentiary standard normally attached to a duly notarized document is
dispensed with, and the measure to test the validity of such document is
preponderance of evidence. 39 The document with a defective notarization
shall be treated as a private document and can be examined under the
parameters of Section 20, Rule 132 of the Rules of Court which provides
that, "before any private document offered as authentic is received in
evidence, its due execution and authenticity must be proved either: (a) by
anyone who saw the documentt executed or written; or (b) by evidence of
the genuineness of the signature or handwriting of the maker x x x." 40
In the instant case, Ricardo Beltran (Ricardo) positively testified that
he personally went to the Orbetas and that he was actually present when
the Orbetas signed the contract. 41 He likewise testified that while the deed
of sale was not signed by the Orbetas before the notary public, they
appeared before the latter and affirmed that their signatures therein were
authentic. 42 Ricardo has personal knowledge of the fact that the Orbetas
signed the questioned deed of sale. 43 Beyond doubt, respondents proved,
by preponderant evidence, that they are the rightful owners of the subject
property.
Moreover, the non-appearance of the parties before the notary
public who notarized the document neither nullifies nor renders the parties'
transaction void ab initio. 44 The failure of the Orbetas to appear before the
notary public when they signed the questioned deed of sale does not nullify
the parties' transaction.
Based on the foregoing, the Court finds that the CA did not err in
ruling that the DOAS dated November 20, 1990 is valid and binding.
On whether the petitioners
collaterally attacked the
respondents' title.
Petitioners postulate that their counterclaim 45 in the
Answer 46 constitutes a direct attack on respondents' title, which is allowed
under the rules.
Their claim holds no water.
Section 48 of Presidential Decree No. 1529 or the Property
Registration Decree, proscribes a collateral attack to a certificate of
title, viz.:
Sec. 48. Certificate not subject to collateral attack. — A
certificate of title shall not be subject to collateral attack. It cannot
be altered, modified or cancelled except in a direct proceeding in
accordance with law.
In Sps. Sarmiento v. Court of Appeals, 47 this Court differentiated a
direct and collateral attack in this wise:
An action is deemed an attack on a title when the object of
the action or proceeding is to nullify the title, and thus challenge the
judgment pursuant to which the title was decreed. The attack is
direct when the object of the action is to annul or set aside such
 judgment, or enjoin its enforcement. On the other hand, the attack
is indirect or collateral when, in an action to obtain a different relief,
an attack on the judgment is nevertheless made as an incident
thereof. 48 (Citations omitted.)
In the instant case, petitioners argue that respondents are not
innocent purchasers for value and were in bad faith in registering the
subject lot. Such claim is merely incidental to the principal case of quieting
of title and recovery of possession, and thus, an indirect attack on
respondents' title.
Citing Sampaco v. Lantud (Sampaco) 49 and Development Bank of
the Phils. v. CA and Carlos Cajes (DBP), 50 petitioners insist that their
counterclaim is a direct attack against respondents' title. After a careful
perusal, petitioners cannot invoke Sampaco and DBP in their favor.
Considering that the factual milieu in these cases is not on all fours with
the instant case. In Sampaco, therein petitioner filed a counterclaim and
prayed for the cancellation of respondent's title and reconveyance of the
subject property; thus:
x x x Petitioner filed a counterclaim for actual and moral
damages, and attorney's fees for the unfounded complaint and
prayed for its dismissal. He also sought the cancellation of
respondent's OCT No. P-658 and the reconveyance of the subject
parcel of land. 51 (Italics supplied)
Similarly, in DBP the counterclaim filed by private respondent therein
was specifically for reconveyance of land which was erroneously registered
in the name of another person; thus:
x x x Having been the sole occupant of the land in
question, private respondent may seek reconveyance of his
property despite the lapse of more than 10 years.
Nor is there any obstacle to the determination of the validity of TCT
No. 10101. It is true that the indefeasibility of torrens titles cannot
be collaterally attacked. In the instant case, the original complaint is
for recovery of possession filed by petitioner against private
respondent, not an original action filed by the latter to question the
validity of TCT No. 10101 on which petitioner bases its right. To rule
on the issue of validity in a case for recovery of possession is
tantamount to a collateral attack. However, it should not be
overlooked that private respondent filed a counterclaim against
petitioner, claiming ownership over the land and seeking
damages. 52 (Italics supplied)
From the extant jurisprudence, there is no arguing that for a
counterclaim to be considered a direct attack on the title, it must
specifically pray for annulment of the questioned title and reconveyance of
ownership of the subject property.
After a careful scrutiny of petitioners' counterclaim in this case, this
Court finds that they did not specifically ask for the reconveyance of the
subject property to them. Nothing in the petitioners' counterclaim indicates
that they were praying for reconveyance of Lot 1366-E. Instead, they
merely repleaded their allegations in the Answer. 53
Finally, in Co v. Court of Appeals, 54 the Court through the pen of
Justice Florenz Regalado judiciously discussed matters relating to
counterclaim, thus:
Anent the issue on whether the counterclaim attacking the
validity of the Torrens title on the ground of fraud is a collateral
attack, we distinguish between the two remedies against a
judgment or final order. A direct attack against a judgment is made
through an action or proceeding the main object of which is to
annul, set aside, or enjoin the enforcement of such judgment, if not
yet carried into effect; or, if the property has been disposed of, the
aggrieved party may sue for recovery. A collateral attack is made
when, in another action to obtain a different relief, an attack on the
judgment is made as an incident in said action. This is proper only
when the judgment, on its face, is null and void, as where it is
patent that the court which rendered said judgment has no
jurisdiction.
In their reply dated September 11, 1990, petitioners argue
that the issues of fraud and ownership raised in their so-called
compulsory counterclaim partake of the nature of an independent
complaint which they may pursue for the purpose of assailing the
validity of the transfer certificate of title of private respondents. That
theory will not prosper.
 While a counterclaim may be filed with a subject matter or for
a relief different from those in the basic complaint in the case, it
does not follow that such counterclaim is in the nature of a separate
and independent action in itself. In fact, its allowance in the action is [G.R. No. 151212. September 10, 2003.]
subject to explicit conditions, as above set forth, particularly in its
TEN FORTY REALTY AND DEVELOPMENT CORP., Represented by its
required relation to the subject matter of the opposing party's claim.
President, VERONICA G. LORENZANA, Petitioner, v. MARINA
Failing in that respect, it cannot even be entertained as a CRUZ, Respondent.
counterclaim in the original case but must be filed and pursued as
an altogether different and original action. DECISION
It is evident that the objective of such claim is to nullify the
title of private respondents to the property in question, which
thereby challenges the judgment pursuant to which the title was PANGANIBAN, J.:
decreed. This is apparently a collateral attack which is not
permitted under the principle of indefeasibility of a Torrens title. It is
In an ejectment suit, the question of ownership may be provisionally ruled upon for
well settled that a Torrens title cannot be collaterally attacked. The the sole purpose of determining who is entitled to possession de facto. In the
issue on the validity of title, i.e., whether or not it was fraudulently present case, both parties base their alleged right to possess on their right to own.
issued, can only be raised in an action expressly instituted for that Hence, the Court of Appeals did not err in passing upon the question of ownership to
purpose. Hence, whether or not petitioners have the right to claim be able to decide who was entitled to physical possession of the disputed land. chanrob1es virtua1 1aw 1ibrary

ownership of the land in question is beyond the province of the

instant proceeding. That should be threshed out in a proper action.
The two proceedings are distinct and should not be
confused. 55 (Citations omitted; Italics supplied.)
When confronted with respondents' title, petitioners argue that
respondents procured it through fraudulent means because the questioned
deed of sale is fictitious. This Court, however, finds that petitioners'
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to
nullify the August 31, 2001 Decision 2 and December 19, 2001 Resolution 3 of the
Court of Appeals (CA) in CA-G.R. SP No. 64861. The dispositive portion of the
assailed Decision is as follows:
jgc:chanrobles.com.ph

objective in alleging respondents' bad faith in securing the title is to annul

and set aside the judgment pursuant to which such title was decreed.
Apparently, the attack on the proceeding granting respondents' title was
made as an incident in the main action for quieting of title and recovery of
possession. Evidently, petitioners' action is a collateral attack on the
respondents' title, which is prohibited under the rules.
"WHEREFORE, premises considered, the petition is hereby DISMISSED and the
Decision dated May 4, 2001 is hereby AFFIRMED." 4
The assailed Resolution denied petitioner’s Motion for Reconsideration.
The Facts

WHEREFORE, the petition is DENIED. The Decision dated April 29,

2015 and the Resolution dated December 4, 2015 of the Court of Appeals The facts of the case are narrated by the CA as follows: jgc:chanrobles.com.ph

in CA-G.R. CV No. 01395 are AFFIRMED.

"A complaint for ejectment was filed by [Petitioner Ten Forty Realty and
SO ORDERED. Development Corporation] against . . . [Respondent Marina Cruz] before the
Municipal Trial Court in Cities (MTCC) of Olongapo City, docketed as Civil Case 4269,
which alleged that: petitioner is the true and absolute owner of a parcel of lot and
residential house situated in #71 18th Street, E.B.B. Olongapo City, particularly
described as:chanrob1es virtual 1aw library
‘A parcel of residential house and lot situated in the above-mentioned address
containing an area of 324 square meters more or less bounded on the Northeast by
041 (Lot 255, Ts-308); on the Southeast by 044 (Lot 255, Ts-308); on the
Southwest by 043 (Lot 226-A & 18th street) and on the Northwest by 045 (Lot 227,
Ts-308) and declared for taxation purposes in the name of [petitioner] under T.D.
No. 002-4595-R and 002-4596. chanrob1es virtua1 1aw 1ibrary
having acquired the same on December 5, 1996 from Barbara Galino by virtue of a
Deed of Absolute Sale; the sale was acknowledged by said Barbara Galino through a
‘Katunayan’; payment of the capital gains tax for the transfer of the property was
evidenced by a Certification Authorizing Registration issued by the Bureau of
Internal Revenue; petitioner came to know that Barbara Galino sold the same
property on April 24, 1998 to Cruz, who immediately occupied the property and
which occupation was merely tolerated by petitioner; on October 16, 1998, a
complaint for ejectment was filed with the Barangay East Bajac-Bajac, Olongapo
City but for failure to arrive at an amicable settlement, a Certificate to File Action
was issued; on April 12, 1999 a demand letter was sent to [respondent] to vacate
and pay reasonable amount for the use and occupation of the same, but was
ignored by the latter; and due to the refusal of [respondent] to vacate the premises,
petitioner was constrained to secure the services of a counsel for an agreed fee of
P5,000.00 as attorney’s fee and P500.00 as appearance fee and incurred an
expense of P5,000.00 for litigation.
"In respondent’s Answer with Counterclaim, it was alleged that: petitioner is not
qualified to own the residential lot in dispute, being a public land; according to
Barbara Galino, she did not sell her house and lot to petitioner but merely obtained
a loan from Veronica Lorenzana; the payment of the capital gains tax does not
necessarily show that the Deed of Absolute Sale was at that time already in
existence; the court has no jurisdiction over the subject matter because the
complaint was filed beyond the one (1) year period after the alleged unlawful
deprivation of possession; there is no allegation that petitioner had been in prior
possession of the premises and the same was lost thru force, stealth or violence;
evidence will show that it was Barbara Galino who was in possession at the time of
the sale and vacated the property in favor of respondent; never was there an
occasion when petitioner occupied a portion of the premises, before respondent
occupied the lot in April 1998, she caused the cancellation of the tax declaration in
the name of Barbara Galino and a new one issued in respondent’s name; petitioner
obtained its tax declaration over the same property on November 3, 1998, seven (7)
months [after] the respondent [obtained hers]; at the time the house and lot [were]
bought by respondent, the house was not habitable, the power and water
connections were disconnected; being a public land, respondent filed a
miscellaneous sales application with the Community Environment and Natural
Resources Office in Olongapo City; and the action for ejectment cannot succeed
where it appears that respondent had been in possession of the property prior to the
petitioner." 5
In a Decision 6 dated October 30, 2000, the Municipal Trial Court in Cities (MTCC)
ordered respondent to vacate the property and surrender to petitioner possession
thereof. It also directed her to pay, as damages for its continued unlawful use, P500
a month from April 24, 1999 until the property was vacated, P5,000 as attorney’s
fees, and the costs of the suit.
On appeal, the Regional Trial Court 7 (RTC) of Olongapo City (Branch 72) reversed
the MTCC. The RTC ruled as follows: 1) respondents entry into the property was not
by mere tolerance of petitioner, but by virtue of a Waiver and Transfer of Possessory
Rights and Deed of Sale in her favor; 2) the execution of the Deed of Sale without
actual transfer of the physical possession did not have the effect of making
petitioner the owner of the property, because there was no delivery of the object of
the sale as provided for in Article 1438 of the Civil Code; and 3) being a corporation,
petitioner was disqualified from acquiring the property, which was public land.
Ruling of the Court of Appeals
Sustaining the RTC, the CA held that petitioner had failed to make a case for
unlawful detainer, because no contract — express or implied — had been entered
into by the parties with regard to possession of the property. It ruled that the action
should have been for forcible entry, in which prior physical possession was
indispensable — a circumstance petitioner had not shown either.
The appellate court also held that petitioner had challenged the RTC’s ruling on the
question of ownership for the purpose of compensating for the latter’s failure to
counter such ruling. The RTC had held that, as a corporation, petitioner had no right
to acquire the property which was alienable public land.
Hence, this Petition. 8
Issues
Petitioner submits the following issues for our consideration: jgc:chanrobles.com.ph
"1. The Honorable Court of Appeals had clearly erred in not holding that
[r]espondent’s occupation or possession of the property in question was merely
through the tolerance or permission of the herein [p]etitioner;
" [2.] The Honorable Court of Appeals had likewise erred in holding that the
ejectment case should have been a forcible entry case where prior physical
possession is indispensable; and
" [3.] The Honorable Court of Appeals had also erred when it ruled that the herein
[r]espondent’s possession or occupation of the said property is in the nature of an
exercise of ownership which should put the herein [p]etitioner on guard." 9
WHETHER OR NOT MARINA CRUZ MAY BE EJECTED FROM THE PROPERTY.
NO.
The Court’s Ruling
The Petition has no merit.
First Issue: chanrob1es virtual 1aw library
Alleged Occupation by Tolerance
Petitioner faults the CA for not holding that the former merely tolerated
respondent’s occupation of the subject property. By raising this issue, petitioner is in
effect asking this Court to reassess factual findings. As a general rule, this kind of
reassessment cannot be done through a petition for review on certiorari under Rule
45 of the Rules of Court, because this Court is not a trier of facts; it reviews only
questions of law. 10 Petitioner has not given us ample reasons to depart from the
general rule.
On the basis of the facts found by the CA and the RTC, we find that petitioner failed
to substantiate its case for unlawful detainer. Admittedly, no express contract
existed between the parties. Not shown either was the corporation’s alleged
tolerance of respondent’s possession. chanrob1es virtua1 1aw 1ibrary
While possession by tolerance may initially be lawful, it ceases to be so upon the
owner’s demand that the possessor by tolerance vacate the property. 11 To justify
an action for unlawful detainer, the permission or tolerance must have been present
at the beginning of the possession. 12 Otherwise, if the possession was unlawful
from the start, an action for unlawful detainer would be an improper remedy.
Sarona v. Villegas 13 elucidates thus: jgc:chanrobles.com.ph
"A close assessment of the law and the concept of the word ‘tolerance’ confirms our
view heretofore expressed that such tolerance must be present right from the start
of possession sought to be recovered, to categorize a cause of as one of unlawful
detainer not of forcible entry. Indeed, to hold otherwise would espouse a dangerous
doctrine. And for two reasons. First. Forcible entry into the land is an open challenge
to the right of the possessor. Violation of that right authorizes the speedy redress —
in the inferior court — provided for in the rules. If one year from the forcible entry is
allowed to lapse before suit is filed, then the remedy ceases to be speedy; and the
possessor is deemed to have waived his right to seek relief in the inferior court.
Second, if a forcible entry action in the inferior court is allowed after the lapse of a
number of years, then the result may well be that no action for forcible entry can
really prescribe. No matter how long such defendant is in physical possession,
plaintiff will merely make a demand, bring suit in the inferior court — upon a plea of
tolerance to prevent prescription to set in — and summarily throw him out of the
land. Such a conclusion is unreasonable. Especially if we bear in mind the postulates
that proceedings of forcible entry and unlawful detainer are summary in nature, and
that the one year time bar to suit is but in pursuance of the summary nature of the
action." 14
In this case, the Complaint and the other pleadings do not recite any, averment of
fact that would substantiate the claim of petitioner that it permitted or tolerated the
occupation of the property by Respondent Cruz. The Complaint contains only bare
allegations that 1) respondent immediately occupied the subject property after its
sale to her, an action merely tolerated by petitioner; 15 and 2) her allegedly illegal
occupation of the premises was by mere tolerance. 16
These allegations contradict, rather than support, petitioner’s theory that its cause
of action is for unlawful detainer. First, these arguments advance the view that
respondent’s occupation of the property was unlawful at its inception. Second, they
counter the essential requirement in unlawful detainer cases that petitioner’s
supposed act of sufferance or tolerance must be present right from the start of a
possession that is later sought to be recovered. 17
As the bare allegation of petitioner’s tolerance of respondent’s occupation of the
premises has not been proven, the possession should be deemed illegal from the
beginning. Thus, the CA correctly ruled that the ejectment case should have been
for forcible entry — an action that had already prescribed, however, when the
Complaint was filed on May 12, 1999. The prescriptive period of one year for forcible
entry cases is reckoned from the date of respondent’s actual entry into the land,
which in this case was on April 24, 1998.
Second Issue: chanrob1es virtual 1aw library
Nature of the Case
Much of the difficulty in the present controversy stems from the legal
characterization of the ejectment Complaint filed by petitioner. Specifically, was it
for unlawful detainer or for forcible entry?
The answer is given in Section 1 of Rule 70 of the Rules of Court, which we
reproduce as follows: jgc:chanrobles.com.ph
"SECTION 1. Who may institute proceedings, and when. — Subject to the provisions
of the next succeeding section, a person deprived of the possession of any land or
building by force, intimidation, threat, strategy, or stealth, or a vendor, vendee, or
other person against whom the possession of any land or building is unlawfully
withheld after expiration or termination of the right to hold possession, by virtue of
any contract, express or implied, or the legal representatives or assigns of any such
lessor, vendor, vendee, or other person, may, at any time within one (1) year after
such unlawful deprivation or withholding of possession, bring an action in the proper
Municipal Trial Court against the person or persons unlawfully withholding or
depriving of possession, or any person or persons claiming under them, for the
restitution of such possession, together with damages and costs.’’
While both causes of action deal only with the sole issue of physical or de facto
possession, 18 the two cases are really separate and distinct, as explained below: jgc:chanrobles.com.ph
". . . . In forcible entry, one is deprived of physical possession of land or building by
means of force, intimidation, threat, strategy, or stealth. In unlawful detainer, one
unlawfully withholds possession thereof after the expiration or termination of his
right to hold possession under any contract, express or implied. In forcible entry,
the possession is illegal from the beginning and the basic inquiry centers on who has
the prior possession de facto. In unlawful detainer, the possession was originally
lawful but became unlawful by the expiration or termination of the right to possess,
hence the issue of rightful possession is decisive for, in such action, the defendant is
in actual possession and the plaintiff’s cause of action is the termination of the
defendant’s right to continue in possession.
"What determines the cause of action is the nature of defendant’s entry into the
land. If the entry is illegal, then the action which may be filed against the intruder
within one year therefrom is forcible entry. If, on the other hand, the entry is legal
but the possession thereafter became illegal, the case is one of unlawful detainer
which must be filed within one year from the date of the last demand." 19
It is axiomatic that what determines the nature of an action as well as which court
has jurisdiction over it are the allegations in the complaint 20 and the character of
the relief sought. 21
In its Complaint, petitioner alleged that, having acquired the subject property from
Barbara Galino on December 5 1996, 22 it was the true and absolute owner 23
thereof; that Galino had sold the property to Respondent Cruz on April 24, 1998; 24
that after the sale, the latter immediately occupied the property, an action that was
merely tolerated by petitioner; 25 and that, in a letter given to respondent on April
12, 1999, 26 petitioner had demanded that the former vacate the property, but that
she refused to do so. 27 Petitioner thereupon prayed for judgment ordering her to
vacate the property and to pay reasonable rentals for the use of the premises,
attorney’s fees and the costs of the suit. 28
The above allegations appeared to show the elements of unlawful detainer. They
also conferred initiatory jurisdiction on the MTCC, because the case was filed a
month after the last demand to vacate — hence, within the one-year prescriptive
period.
However, what was actually proven by petitioner was that possession by respondent
had been illegal from the beginning. While the Complaint was crafted to be an
unlawful detainer suit, petitioner’s real cause of action was for forcible entry, which
had already prescribed. Consequently, the MTCC had no more jurisdiction over the
action.
The appellate court, therefore, did not err when it ruled that petitioner’s Complaint
for unlawful detainer was a mere subterfuge or a disguised substitute action for
forcible entry, which had already prescribed. To repeat, to maintain a viable action
for forcible entry, plaintiff must have been in prior physical possession of the
property; this is an essential element of the suit. 29
Third Issue: chanrob1es virtual 1aw library
Alleged Acts of Ownership
Petitioner next questions the CA’s pronouncement that respondent’s occupation of
the property was an exercise of a right flowing from a claim of ownership. It submits
that the appellate court should not have passed upon the issue of ownership,
because the only question for resolution in an ejectment suit is that of possession de
facto.
Clearly, each of the parties claimed the right to possess the disputed property
because of alleged ownership of it. Hence, no error could have been imputed to the
appellate court when it passed upon the issue of ownership only for the purpose of
resolving the issue of possession de facto. 30 The CA’s holding is moreover in accord
with jurisprudence and the law.
Execution of a Deed of Sale Not Sufficient as Delivery
In a contract of sale, the buyer acquires the thing sold only upon its delivery "in any
of the ways specified in Articles 1497 to 1501, or any other manner signifying an
agreement that the possession is transferred from the vendor to the vendee." 31
With respect to incorporeal property, Article 1498 lays down the general rule: the
execution of a public instrument shall be equivalent to the delivery of the thing that
is the object of the contract if, from the deed, the contrary does not appear or
cannot be clearly inferred.chanrob1es virtua1 1aw 1ibrary
However, ownership is transferred not by contract but by tradition or delivery. 32
Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is a
conclusive presumption of delivery of possession of a piece of real estate. 33
This Court has held that the execution of a public instrument gives rises only to a
prima facie presumption of delivery. Such presumption is destroyed when the
delivery is not effected because of a legal impediment. 34 Pasagui v. Villablanca 35
had earlier ruled that such constructive or symbolic delivery, being merely
presumptive, was deemed negated by the failure of the vendee to take actual
possession of the land sold.
It is undisputed that petitioner did not occupy the property from the time it was
allegedly sold to it on December 5, 1996 or at any time thereafter. Nonetheless, it
maintains that Galino’s continued stay in the premises from the time of the sale up
to the time respondent’s occupation of the same on April 24, 1998, was possessions
held on its behalf and had the effect of delivery under the law. 36
Both the RTC and the CA disagreed. According to the RTC, petitioner did not gain
control and possession of the property, because Galino had continued to exercise
ownership rights over the realty. That is, she had remained in possession, continued
to declare it as her property for tax purposes and sold it to respondent in 1998.
For its part, the CA found it highly unbelievable that petitioner — which claims to be
the owner of the disputed property — would tolerate possession of the property by
respondent from April 24, 1998 up to October 16, 1998. How could it have been so
tolerant despite its knowledge that the property had been sold to her, and that it
was by virtue of that sale that she had undertaken major repairs and improvements
on it?
Petitioner should have likewise been put on guard by respondent’s declaration of the
property for tax purposes on April 23, 1998, 37 as annotated in the tax certificate
filed seven months later. 38 Verily, the tax declaration represented an adverse claim
over the unregistered property and was inimical to the right of petitioner.
Indeed, the above circumstances derogated its claim of control and possession of
the property.
Order of Preference in Double Sale of Immovable Property
The ownership of immovable property sold to two different buyers at different times
is governed by Article 1544 of the Civil Code, which reads as follows: jgc:chanrobles.com.ph
"Article 1544. . . .
"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."
cralaw virtua1aw library
Galino allegedly sold the property in question to petitioner on December 5, 1996
and, subsequently, to respondent on April 24, 1998. Petitioner thus argues that
being the first buyer, it has a better right to own the realty. However, it has not
been able to establish that its Deed of Sale was recorded in the Registry of Deeds of
Olongapo City. 39 Its claim of an unattested and unverified notation on its Deed of
Absolute Sale 40 is not equivalent to registration. It admits that, indeed, the sale
has not been recorded in the Registry of Deeds. 41
In the absence of the required inscription, the law gives preferential right to the
buyer who in good faith is first in possession. In determining the question of who is
first in possession, certain basic parameters have been established by jurisprudence.
First, the possession mentioned in Article 1544 includes not only material but also
symbolic possession. 42 Second, possessors in good faith are those who are not
aware of any flaw in their title or mode of acquisition. 43 Third, buyers of real
property that is in the possession of persons other than the seller must be wary —
they must investigate the rights of the possessors. 44 Fourth, good faith is always
presumed; upon those who allege bad faith on the part of the possessors rests the
burden of proof. 45
Earlier, we ruled that the subject property had not been delivered to petitioner;
hence, it did not acquire possession either materially or symbolically. As between
the two buyers, therefore, respondent was first in actual possession of the property.
Petitioner has not proven that respondent was aware that her mode of acquiring the
property was defective at the time she acquired it from Galino. At the time, the
property — which was public land — had not been registered in the name of Galino;
thus, respondent relied on the tax declarations thereon. As shown, the former’s
name appeared on the tax declarations for the property until its sale to the latter in
1998. Galino was in fact occupying the realty when respondent took over
possession. Thus, there was no circumstance that could have placed the latter upon
inquiry or required her to further investigate petitioner’s right of ownership.
Disqualification from Ownership of Alienable Public Land
Private corporations are disqualified from acquiring lands of the public domain, as
provided under Section 3 of Article XII of the Constitution, which we quote: jgc:chanrobles.com.ph
"Sec. 3. Lands of the public domain are classified into agricultural, forest or timber,
mineral lands, and national parks. Agricultural lands of the public domain may be
further classified by law according to the uses to which they may be devoted.
Alienable lands of the public domain shall be limited to agricultural lands. Private
corporations or associations may not hold such alienable lands of the public domain
except by lease, for a period not exceeding twenty-five years, and not to exceed one
thousand hectares in area. Citizens of the Philippines may not lease not more than
five hundred hectares, or acquire not more than twelve hectares thereof by
purchase, homestead, or grant. . . . ." (Emphasis supplied)
While corporations cannot acquire land of the public domain, they can however
acquire private land. 46 Hence, the next issue that needs to be resolved is the
determination of whether the disputed property is private land or of the public
domain.
According to the certification by the City Planning and Development Office of
Olongapo City, the contested property in this case is alienable and disposable public
land. 47 It was for this reason that respondent filed a miscellaneous sales
application to acquire it. 48
On the other hand, petitioner has not presented proof that, at the time it purchased
the property from Galino, the property had ceased to be of the public domain and
was already private land. The established rule is that alienable and disposable land
of the public domain held and occupied by a possessor — personally or through
predecessors-in-interest, openly, continuously, and exclusively for 30 years — is
ipso jure converted to private property by the mere lapse of time. 49
In view of the foregoing, we affirm the appellate court’s ruling that respondent is
entitled to possession de facto. This determination, however, is only provisional in
nature. 50 Well-settled is the rule that an award of possession de facto over a piece
of property does not constitute res judicata as to the issue of its ownership. 51
WHEREFORE, this Petition is DENIED and the assailed Decision AFFIRMED. Costs
against petitioner. chanrob1es virtua1 1aw 1ibrary
SO ORDERED.
G.R. No. 156973             June 4, 2004
SPOUSES TOMAS OCCEÑA and SILVINA OCCEÑA, petitioners,
vs.
LYDIA MORALES OBSIANA ESPONILLA, ELSA MORALES OBSIANA SALAZAR and
DARFROSA OBSIANA SALAZAR ESPONILLA, respondents.
DECISION
PUNO, J.:
The case at bar involves a portion of the 1,198-square meter residential lot (lot no. 265) situated
in Sibalom, Antique, originally owned by spouses Nicolas and Irene Tordesillas under OCT No.
1130. The Tordesillas spouses had three (3) children, namely: Harod, Angela and Rosario, the
latter having been survived by her two (2) children, Arnold and Lilia de la Flor.
After the death of the Tordesillas spouses, the lot was inherited by their children Harod and
Angela, and grandchildren Arnold and Lilia. In 1951, the heirs executed a Deed of Pacto de
Retro Sale1 in favor of Alberta Morales covering the southwestern portion of the lot with
an area of 748 square meters.
Three (3) years later, in 1954, Arnold and Lilia executed a Deed of Definite Sale of Shares,
Rights, Interests and Participations2 over the same 748 sq. m. lot in favor of Alberta
Morales. The notarized deed also attested that the lot sold by vendors Arnold and Lilia to Alberta
were their share in the estate of their deceased parents.
Alberta possessed the lot as owner, constructed a house on it and appointed a caretaker
to oversee her property. Thereafter, in July 1956, vendor Arnold de la Flor borrowed the OCT
from Alberta covering the lot. He executed an Affidavit3 acknowledging receipt of the OCT in trust
and undertook to return said title free from changes, modifications or cancellations.
In 1966, Arnold and Angela, nephew and daughter respectively of the Tordesillas spouses,
without the knowledge of Alberta, executed a Deed of Extrajudicial Settlement4 declaring the
two of them as the only co-owners of the undivided 1,198 sq. m. lot no. 265, without
acknowledging their previous sale of 748 sq. m. thereof to Alberta. A number of times,
thereafter, Alberta and her nieces asked Arnold for the OCT of the land but Arnold just kept on
promising to return it.
In 1983, Arnold executed an Affidavit of Settlement of the Estate5 of Angela who died in 1978
without issue, declaring himself as the sole heir of Angela and thus consolidating the title of the
entire lot in his name.
In 1985, vendee Alberta Morales died. Her nieces-heirs, Lydia, Elsa and Dafrosa, succeeded
in the ownership of the lot. Months later, as the heirs were about to leave for the United
States, they asked Arnold to deliver to them the title to the land so they can register it in their
name. Arnold repeatedly promised to do so but failed to deliver the title to them.
On December 4, 1986, after Alberta’s heirs left for the States, Arnold used the OCT he borrowed
from the deceased vendee Alberta Morales, subdivided the entire lot no. 265 into three
sublots, and registered them all under his name, viz: lot no. 265-A (with TCT No. 16895), lot
no. 265-B (with TCT No. 16896) and lot no. 265-C (with TCT No. 16897). He then paid the real
estate taxes on the property.
On August 13, 1990, Arnold sold lot nos. 265-B & C to spouses Tomas and Sylvina Occeña,
which included the 748 sq. m. portion previously sold to Alberta Morales. A Deed of Absolute
Sale6 over said lots was executed to the Occeña spouses and titles were transferred to their
names.
In 1993, after the death of Arnold, the three (3) nieces-heirs of Alberta Morales learned about the
second sale of their lot to the Occeña spouses when they were notified by caretaker Abas that
they were being ejected from the land. In 1994, the heirs filed a case7 for annulment of sale and
cancellation of titles, with damages, against the second vendees Occeña spouses. In their
complaint, they alleged that the Occeñas purchased the land in bad faith as they were aware
that the lots sold to them had already been sold to Alberta Morales in 1954. They averred that
before the sale, when Tomas Occeña conducted an ocular inspection of the lots, Morito Abas,
the caretaker appointed by Alberta Morales to oversee her property, warned them not to push
through with the sale as the land was no longer owned by vendor Arnold as the latter had
previously sold the lot to Alberta Morales who had a house constructed thereon.
For their part, the Occeña spouses claimed that the OCT in the name of the original owners of
the lots, the Tordesillas spouses, was cancelled after it was subdivided between Angela and
Arnold in 1969; that new TCTs had been issued in the latter’s names; that they were unaware
that the subject lots were already previously sold to Morales as they denied that Tomas had a
talk with caretaker Abas on the matter; that as of December 4, 1987, the TCTs covering the lots
were in the name of Arnold and his wife, without any adverse claim annotated thereon; that
vendor Arnold represented to them that the occupants they saw on the land were squatters and
that he merely tolerated their presence; that they did not personally investigate the alleged
squatters on the land and merely relied on the representation of vendor Arnold; that
sometime in 1966-1967, Arnold and his co-heir Angela caused the survey of the original lot and
subdivided it into 3 lots, without opposition from Morales or her heirs. Thus, three (3) TCTs were
issued in 1969 to Arnold and Angela and, two of the lots were then sold to the Occeña spouses,
again without objection from Alberta Morales.
The Occeña spouses alleged that they were buyers in good faith as the titles to the subject lots
were free from liens or encumbrances when they purchased them. They claimed that in 1989,
Arnold offered to sell the subject lots to them. On August 13, 1990, after they verified with the
Antique Registry of Deeds that Arnold’s TCTs were clean and unencumbered, Arnold signed the
instrument of sale over the subject lots in favor of the Occeñas for ₱100,000.00 and new titles
were issued in their names.
The Occeñas likewise set up the defenses of laches and prescription. They argue that Alberta
and plaintiffs-heirs were barred from prosecuting their action as they failed to assert their right for
forty (40) years. Firstly, they point out that vendor Arnold and Angela subdivided the entire lot in
1966 and declared themselves as the only co-owners thereof in the deed of extrajudicial
settlement. Alberta Morales failed to oppose the inclusion of her 748 sq. m. lot in the deed. Thus,
the title to the entire lot no. 256 was transferred to the names of Arnold and Angela. Secondly,
preparatory to the division of the lots, vendor Arnold had the land surveyed but Alberta again
failed to oppose the same. Finally, Alberta and her heirs who are claiming adverse rights over
the land based on the 1951 Deed of Pacto de Retro Sale and the 1954 Deed of Definite Sale of
Shares failed for 40 years to annotate their adverse claims on the new titles issued to Arnold and
Angela, enabling the latter to possess a clean title and transfer them to the Occeña spouses.
After trial, the lower court rendered a decision declaring the Occeña spouses as buyers in good
faith and ruled that the action of the heirs was time-barred.
On appeal by Alberta’s heirs, the Court of Appeals reversed the decision of the trial court. It
found that the Occeñas purchased the land in bad faith and that the action filed by Alberta’s heirs
was not barred by prescription or laches. The dispositive portion reads:
 WHEREFORE, the instant appeal is hereby GRANTED. Accordingly, the assailed
decision is hereby REVERSED and SET ASIDE and a new one is rendered declaring the
Deed of Absolute Sale dated August 13, 1990 executed between Arnold de la Flor in
favor of defendants-appellees null and void and ordering the cancellation of Transfer
Certificate of Title Nos. 16896, 16897, T-18241 and T-18242.
SO ORDERED.8
Hence this appeal where petitioner-spouses Occeña raise the following issues:
I property sold.10 The defense of indefeasibility of a Torrens title does not extend to a transferee
WHETHER OR NOT A VERBAL INFORMATION COULD BE MADE TO PREVAIL
OVER A CLEAN CERTIFICATE OF TITLE OF A REGISTERED LAND WHICH IS
FREE OF ANY LIEN OR ENCUMBRANCE ANNOTATED ON ITS CERTIFICATE OF
TITLE OR ANY ADVERSE CLAIM RECORDED WITH THE REGISTER OF DEEDS.
II
WHETHER OR NOT A BUYER OF A REGISTERED LAND IS OBLIGATED TO MAKE
INQUIRIES OF ANY POSSIBLE DEFECT OR ADVERSE CLAIM AFFECTING ITS
OWNERSHIP WHICH DOES NOT APPEAR ON THE CERTIFICATE OF TITLE.
III
WHETHER OR NOT THE PERIOD OF MORE THAN FORTY (40) YEARS WITHOUT
POSITIVE ACTION TAKEN BY RESPONDENTS, AS WELL AS BY ALBERTA
MORALES, TO PROTECT THEIR INTEREST CAN BE CONSIDERED LACHES AND
THUS THEIR PRESENT ACTION HAS PRESCRIBED.
On the first two issues, petitioner-spouses claim that they were purchasers of the land in good
faith as the law does not obligate them to go beyond a clean certificate of title to determine the
condition of the property. They argue that a person dealing with registered land is only charged
with notice of the burden on the property annotated on the title. When there is nothing on the 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 the title in quest of any hidden defect or
inchoate right that may subsequently defeat his right thereto. They claim they had every right to
purchase the land despite the verbal warning made by caretaker Abas as the information was
mere hearsay and cannot prevail over the title of the land which was free from any
encumbrance.
Their arguments do not persuade.
The petition at bar presents a case of double sale of an immovable property. Article 1544 of the
New Civil Code provides that in case an immovable property is sold to different vendees, the
ownership shall belong: (1) to the person acquiring it who in good faith first recorded it in the
Registry of Property; (2) should there be no inscription, the ownership shall pertain to the
person who in good faith was first in possession; and, (3) in the absence thereof, to the
person who presents the oldest title, provided there is good faith.
In all cases, good faith is essential. It is the basic premise of the preferential rights granted to the
one claiming ownership over an immovable.9 What is material is whether the second buyer first
registers the second sale in good faith, i.e., without knowledge of any defect in the title of the
who takes the certificate of title in bad faith, with notice of a flaw.11
The governing principle of prius tempore, potior jure (first in time, stronger in right) enunciated
under Art. 1544 has been clarified, thus:
x x x Knowledge by the first buyer of the second sale cannot defeat the first buyer’s
rights except when the second buyer first registers in good faith the second
sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register, since
such knowledge taints his registration with bad faith (see also Astorga vs. Court of
Appeals, G.R. No. 58530, 26 December 1984). In Cruz vs. Cabaña (G.R. No. 56232, 22
June 1984, 129 SCRA 656), it was held that it is essential, to merit the protection of
Art. 1544, second paragraph, that the second realty buyer must act in good faith in
registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99
and Crisostomo vs. CA, G.R. No. 95843, 02 September 1992).12
In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase and
registration of the land. A purchaser in good faith and for value is one who buys property
without notice that some other person has a right to or interest in such property and pays its fair
price before he has notice of the adverse claims and interest of another person in the same
property. So it is that the "honesty of intention" which constitutes good faith implies a freedom
from knowledge of circumstances which ought to put a person on inquiry. At the trial,
Tomas Occeña admitted that he found houses built on the land during its ocular inspection prior
to his purchase. He relied on the representation of vendor Arnold that these houses were owned
by squatters and that he was merely tolerating their presence on the land. Tomas should have
verified from the occupants of the land the nature and authority of their possession instead of
merely relying on the representation of the vendor that they were squatters, having seen for
himself that the land was occupied by persons other than the vendor who was not in possession
of the land at that time. The settled rule is that a buyer of real property in the possession of
persons other than the seller must be wary and should investigate the rights of those in
possession. Without such inquiry, the buyer can hardly be regarded as a buyer in good
faith and cannot have any right over the property.13 A purchaser cannot simply close his eyes
to facts which should put a reasonable man on his guard and then claim that he acted in good
faith under the belief that there was no defect in the title of his vendor.14 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 later
develops that the title was in fact defective, and it appears that he would have notice of the
defect had he acted with that measure of precaution which may reasonably be required of a
prudent man in a similar situation.
Indeed, the general rule is that one who deals with property registered under the Torrens system
need not go beyond the same, but only has to rely on the title. He is charged with notice only of
such burdens and claims as are annotated on the title. However, this principle does not apply
when the party has actual knowledge of facts and circumstances that would impel a reasonably
cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack
of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the
status of the title of the property in litigation. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in good faith.15
The evidence of the private respondents show that when Tomas Occeña conducted an ocular
inspection of the land prior to the second sale, Abas, the caretaker of the house which Alberta
Morales built on the land, personally informed Tomas that the lot had been previously sold by the
same vendor Arnold to Alberta Morales. With this information, the Occeñas were obliged to look
beyond the title of their vendor and make further inquiries from the occupants of the land as to
their authority and right to possess it. However, despite this information about a prior sale, the
Occeñas proceeded with the purchase in haste. They did not inquire from Abas how they could
get in touch with the heirs or representatives of Alberta to verify the ownership of the land.
Neither do the records reveal that they exerted effort to examine the documents pertaining to the
first sale. Having discovered that the land they intended to buy was occupied by a person other
than the vendor not in actual possession thereof, it was incumbent upon the petitioners to verify
the extent of the occupant’s possessory rights.16 The Occeñas did nothing and chose to ignore
and disbelieve Abas’ statement.
On the third issue, we hold that the action to annul title filed by respondents-heirs is not barred
by laches and prescription. Firstly, laches is a creation of equity and its application is controlled
by equitable considerations. Laches cannot be used to defeat justice or perpetuate fraud and
injustice. Neither should its application be used to prevent the rightful owners of a property from
recovering what has been fraudulently registered in the name of
another.17 Secondly, prescription does not apply when the person seeking annulment of title or
reconveyance is in possession of the lot because the action partakes of a suit to quiet title which
is imprescriptible.18 In this case, Morales had actual possession of the land when she had a
house built thereon and had appointed a caretaker to oversee her property. Her undisturbed
possession of the land for a period of fifty (50) long years gave her and her heirs a continuing
right to seek the aid of a court of equity to determine the nature of the claim of ownership of
petitioner-spouses.19 As held by this Court in Faja vs. Court of Appeals:20
x x x There is settled jurisprudence that one who is in actual possession of a piece of
land claiming to be owner thereof may wait until his possession is disturbed or his
title attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the
aid of a court of equity to ascertain and determine the nature of the adverse
claim and its effect on his own title, which right can be claimed only by one who is in
possession. x x x The right to quiet title to the property, seek its reconveyance
and annul any certificate of title covering it accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is only then that
the statutory period of prescription commences to run against such possessor.
In the case at bar, Morales’ caretaker became aware of the second sale to petitioner-spouses
only in 1991 when he received from the latter a notice to vacate the land. Respondents-heirs did
not sleep on their rights for in 1994, they filed their action to annul petitioners’ title over the land.
It likewise bears to stress that when vendor Arnold reacquired title to the subject property by
means of fraud and concealment after he has sold it to Alberta Morales, a constructive trust was
created in favor of Morales and her heirs. As the defrauded parties who were in actual
possession of the property, an action of the respondents-heirs to enforce the trust and recover
the property cannot prescribe. They may vindicate their right over the property regardless of the
lapse of time.21 Hence, the rule that registration of the property has the effect of constructive
notice to the whole world cannot be availed of by petitioners and the defense of prescription
cannot be successfully raised against respondents.
In sum, the general rule is that registration under the Torrens system is the operative act which
gives validity to the transfer of title on the land. However, it does not create or vest title especially
where a party has actual knowledge of the claimant’s actual, open and notorious possession of
the property at the time of his registration.22 A buyer in bad faith has no right over the land. As
petitioner-spouses failed to register the subject land in good faith, ownership of the land pertains
to respondent-heirs who first possessed it in good faith.
IN VIEW WHEREOF, the petition is DISMISSED. No costs.
SO ORDERED.