SECOND DIVISION

[G.R. No. 150913. February 20, 2003.]

SPOUSES TEOFILO and SIMEONA RAYOS, and GEORGE RAYOS ,

petitioners, vs . DONATO REYES, SATURNINO REYES, TOMASA R.
BUSTAMANTE and TORIBIA R. CAMELO , respondents.

Villamora A. Tolete for petitioners.

Floro T. Abelon for private respondents.
SYNOPSIS
Petitioner assailed the decision of the Court of Appeals which a rmed in toto
the Decision of the Regional Trial Court of Alaminos, Pangasinan declaring void the
separate Deeds of Absolute Sale executed by Francisco Tazal in favor of Blas Rayos,
and to spouses Teo lo and Simeona Rayos and by Blas Rayos to the same spouses, all
encompassing the three parcels of land sold under the Deed of Sale with Right to
Repurchase in favor of Mamerto Reyes, predecessor-in-interest of the respondents. In
its Decision, the trial court declared the respondents, heirs of Mamerto Reyes, as
absolute owners of the subject property and ordered petitioner-spouses to vacate and
surrender the subject lot in favor of the respondents. It rationalized that petitioners did
not present any evidence to prove that they and their predecessor-in-interest were able
to repurchase the property within the period of redemption.
Among others, petitioners argued that the consignation of P724.00 in the civil
case provides the best evidence of the repurchase of the subject property and had the
full effect of redeeming the properties from respondents and their predecessors-in-
interest.
The Court denied the petition and a rmed the decision of the Court of Appeals
a rming in toto the decision of the court a quo, except for the sole modi cation to
delete and set aside the award of damages. The Court found no evidence to prove that
petitioners paid at any time the repurchase price for the three parcels of land in dispute
except for the deposit of P724.00 in the then Court of First Instance which, however, fell
short of all the acts necessary for a valid consignation and discharge of their obligation
to respondents. First, petitioners failed to offer a valid and unconditional tender of
payment. Consignation and tender of payment must not be encumbered by conditions
if they are to produce the intended result of ful lling the obligation. Here, petitioners'
tender of payment of P724.00 was conditional upon his waiver of the two-year
redemption period stipulated in the deed of sale with right to repurchase. Second,
petitioners failed to notify respondents of the intention to deposit the amount with the
court. The consignation as a means of payment is void without any announcement of
the intention to resort to consignation rst being made to the persons interested in the
ful llment of the obligation. Third, petitioners failed to show the acceptance by the
creditor of the amount deposited as full settlement of the obligation, or in the
alternative, a declaration by the court of the validity of the consignation. While it was
held that the approval of the court or the obligee's acceptance of the deposit is not
necessary where the obligor has performed all acts necessary to a valid consignation
such that court approval thereof cannot be doubted, the ruling is, however, applicable
only where there is unmistakable evidence on record that the prerequisites of a valid
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 consignation are present, especially the conformity of the proffered payment to the
terms of the obligation which is to be paid. In the instant case, there was no clear and
preponderant evidence that the consignation of P724.00 satis ed all the requirements
for validity and enforceability. Mamerto Reyes likewise vehemently contested the
propriety of the consignation. Petitioners, therefore, cannot rely upon sheer speculation
and unfounded inference to construe the Decision of the then Court of First Instance as
one impliedly approving the consignation and perfecting the redemption of the three
parcels of land. Thus, the Court held that the failure of the petitioners to comply with
the requirements rendered the consignation ineffective.

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; EXTINGUISHMENT OF

OBLIGATIONS; CONSIGNATION; PREREQUISITES TO BE EFFECTIVE; NOT COMPLIED
WITH IN CASE AT BAR. — In order that consignation may be effective the debtor must
show that (a) there was a debt due; (b) the consignation of the obligation had been made
because the creditor to whom a valid tender of payment was made refused to accept it;
(c) previous notice of the consignation had been given to the person interested in the
performance of the obligation; (d) the amount due was placed at the disposal of the court;
and, (e) after the consignation had been made the person interested was noti ed thereof.
In the instant case, petitioners failed, rst , to offer a valid and unconditional tender of
payment; second, to notify respondents of the intention to deposit the amount with the
court; and third, to show the acceptance by the creditor of the amount deposited as full
settlement of the obligation, or in the alternative, a declaration by the court of the validity
of the consignation. The failure of petitioners to comply with any of these requirements
rendered the consignation ineffective. AaDSTH

2. ID.; ID.; ID.; CONSIGNATION AND TENDER OF PAYMENT; MUST NOT BE

ENCUMBERED BY CONDITIONS IF THEY ARE TO PRODUCE THE INTENDED RESULT OF
FULFILLING THE OBLIGATION; CASE AT BAR. — Consignation and tender of payment must
not be encumbered by conditions if they are to produce the intended result of ful lling the
obligation. In the instant case, the tender of payment of P724.00 was conditional and void
as it was predicated upon the argument of Francisco Tazal that he was paying a debt
which he could do at any time allegedly because the 1 September 1957 transaction was a
contract of equitable mortgage and not a deed of sale with right to repurchase. The
ostensible purposes of offering the amount in connection with a purported outstanding
debt were to evade the stipulated redemption period in the deed of sale which had already
expired when the tender of payment was made and Civil Case No. A-245 was instituted,
and as a corollary, to avail of the thirty (30)-day grace period under Art. 1606 of the Civil
Code within which to exercise the right to repurchase. Mamerto Reyes was therefore
within his right to refuse the tender of payment offered by petitioners because it was
conditional upon his waiver of the two (2)-year redemption period stipulated in the deed of
sale with right to repurchase.
3. ID.; ID.; ID.; CONSIGNATION; WITHOUT ANY ANNOUNCEMENT OF THE
INTENTION TO RESORT TO CONSIGNATION FIRST BEING MADE TO THE PERSONS
INTERESTED IN THE FULFILLMENT OF OBLIGATION, THE CONSIGNATION AS A MEANS
OF PAYMENT IS VOID; CASE AT BAR. — Moreover, petitioners failed to prove in Civil Cases
Nos. A-245 and A-2032 that any form of notice regarding their intention to deposit the
amount of P724.00 with the Court of First Instance had been served upon respondents.
This requirement is not ful lled by the notice which could have ensued from the ling of
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 the complaint in Civil Case No. A-245 or the stipulation made between Francisco Tazal and
Mamerto Reyes regarding the consignation of P724.00. The latter constitutes the second
notice required by law as it already concerns the actual deposit or consignation of the
amount and is different from the rst notice that makes known the debtor's intention to
deposit the amount, a requirement missing in the instant case. Without any announcement
of the intention to resort to consignation rst being made to the persons interested in the
fulfillment of the obligation, the consignation as a means of payment is void.
4. ID.; ID.; ID.; ID.; APPROVAL OF THE COURT OR THE OBLIGEE'S ACCEPTANCE OF
THE DEPOSIT IS NOT NECESSARY WHERE ALL THE PREREQUISITES FOR VALIDITY
THEREOF ARE PRESENT; CASE AT BAR. — To be sure, while it has been held that approval
of the court or the obligee's acceptance of the deposit is not necessary where the obligor
has performed all acts necessary to a valid consignation such that court approval thereof
cannot be doubted, Sia v. Court of Appeals clearly advises that this ruling is applicable only
where there is unmistakable evidence on record that the prerequisites of a valid
consignation are present, especially the conformity of the proffered payment to the terms
of the obligation which is to be paid. In the instant case, since there is no clear and
preponderant evidence that the consignation of P724.00 satis ed all the requirements for
validity and enforceability, and since Mamerto Reyes vehemently contested the propriety
of the consignation, petitioners cannot rely upon sheer speculation and unfounded
inference to construe the Decision of the Court of First Instance as one impliedly
approving the consignation of P724.00 and perfecting the redemption of the three (3)
parcels of land.
5. ID.; ID.; ID.; ID.; COURT'S DECLARATION THAT THE CONSIGNATION HAS BEEN
PROPERLY MADE WILL RELEASE THE DEBTOR FROM LIABILITY; CASE AT BAR. — It
should be recalled that one of the requisites of consignation is the ling of the complaint
by the debtor against the creditor. Hence it is the judgment on the complaint where the
court declares that the consignation has been properly made that will release the debtor
from liability. Should the consignation be disapproved by the court and the case
dismissed, there is no payment and the debtor is in mora and he shall be liable for the
expenses and bear the risk of loss of the thing. To sanction the argument of petitioners
and in the process excuse them from their responsibility of securing from the trial court in
Civil Case No. A-245 a categorical declaration that the consignation of P724.00 had
complied with all the essential elements for its validity would only dilute the rule requiring
absolute compliance with the requisites of consignation. It also disturbs a steady and
stable status of proprietary rights, i.e., ". . . el acreedor tan solo, y no el juez, puede autorizar
la variacion que para los derechos de aquel suponga la que se intente en el objeto, cuantia
o forma de las obligaciones," since parties are left guessing on whether the repurchase of
the properties had been effected. In a broader sense, this uncertain state will only depress
the market value of the land and virtually paralyze efforts of the landowner to meet his
needs and obligations and realize the full value of his land.

6. ID.; ESTOPPEL AND LACHES; ESSENCE; PRINCIPLE NOT APPLICABLE TO CASE

AT BAR. — Moreover, we do not think that respondents' causes of action in Civil Case No.
A-2032 are now barred by estoppel and laches: The essence of estoppel and laches is the
failure or neglect for an unreasonable and unexplained length of time to do that which by
exercising due diligence could or should have been done earlier; it is the negligence or
omission to assert a right within a reasonable time warranting a presumption that the
party entitled to assert it either has abandoned or declined to assert it although there is no
absolute rule as to what constitutes staleness of demand as each case is to be
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 determined according to its particular circumstances. In the instant case, it was prudent
and discerning for respondents and their predecessor-in-interest Mamerto Reyes that they
deferred any action against petitioners, i.e., Civil Case No. A-2032, to recover ownership
and possession of the three (3) pieces of real estate, until the nality of judgment in Civil
Case No. A-245. For patiently electing not to inundate our courts of justice with cases the
outcome of which may well depend upon the then pending civil suit, respondents cannot
now be penalized by barring their complaint in Civil Case No. A-2032 on the equitable
grounds of estoppel and laches.
7. ID.; SALES; ISSUE OF GOOD FAITH AND BAD FAITH OF BUYER IS RELEVANT
ONLY WHERE SUBJECT OF SALE IS REGISTERED LAND AND THE PURCHASER IS BUYING
THE SAME FROM THE REGISTERED OWNER WHOSE TITLE TO THE LAND IS CLEAN. — We
also nd no reason to disturb our ndings upon petitioners' assertion that they were
purchasers of the three (3) parcels of land in good faith and for value. As we held in David
v. Bandin, "the issue of good faith or bad faith of the buyer is relevant only where the
subject of the sale is registered land and the purchaser is buying the same from the
registered owner whose title to the land is clean . . . in such case the purchaser who relies
on the clean title of the registered owner is protected if he is a purchaser in good faith for
value." Since the properties in question are unregistered lands, petitioners as subsequent
buyers thereof did so at their peril. Their claim of having bought the land in good faith, i.e.,
without notice that some other person has a right to or interest in the property, would not
protect them if it turns out, as it actually did in this case, that their seller did not own the
property at the time of the sale.
8. ID.; ID.; BURDEN OF PROVING THE STATUS OF A PURCHASER IN GOOD FAITH
AND FOR VALUE LIES UPON HIM WHO ASSERTS THAT STATUS; CASE AT BAR. — At any
rate, petitioners failed to discharge their burden of proof that they were purchasers of the
three (3) parcels of land in good faith. For, as we ruled in Embrado v. Court of Appeals , the
burden of proving the status of a purchaser in good faith and for value lies upon him who
asserts that status, which is not discharged by simply invoking the ordinary presumption
of good faith, i.e., that everyone is presumed to act in good faith, since the good faith that
is here essential is integral with the very status which must be established. In the
proceedings a quo, what is evident is the admitted fact of payment made by Mamerto
Reyes as respondents' predecessor-in-interest of the taxes on the properties prior to and
at the time when the contracts of sale in favor of petitioner-spouses were perfected, which
undoubtedly con rms the precedence of respondents' possession of the parcels of land in
question. This situation should have compelled petitioners to investigate the right of
respondents over the properties before buying them, and in the absence of such inquiry,
the rule is settled that a buyer in the same circumstances herein involved cannot claim to
be a purchaser in good faith.
9. ID.; ID.; ID.; DOUBLE SALES; RULE NOT APPLICABLE ABSENT GOOD FAITH ON
THE PART OF PURCHASER OF UNREGISTERED LAND. — The absence of good faith on the
part of petitioner-spouses Teo lo and Simeona Rayos in purchasing the three (3) parcels
of unregistered land precludes the application of the rule on double sales enunciated in
Art. 1544 of the Civil Code. In any event, even if we apply Art. 1544, the facts would
nonetheless show that respondents and their predecessor-in-interest registered rst the
source of their ownership and possession, i.e., the 1 September 1957 deed of sale with
right to repurchase, held the oldest title, and possessed the real properties at the earliest
time. Applying the doctrine of "priority in time, priority in rights" or "prius tempore, potior
jure," respondents are entitled to the ownership and possession of the parcels of land in
dispute. aCIHcD

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 10. ID.; DAMAGES; ACTUAL DAMAGES; CANNOT BE AWARDED ABSENT PROOF
THEREOF. — Finally, on the issue of damages, we agree with petitioners that respondents
failed to prove their entitlement to actual damages for litigation expenses of P20,000.00,
attorney's fees of P10,000.00 and exemplary damages of P50,000.00 plus costs. No
evidence to prove actual damages was offered in Civil Case No. A-2032 since the parties
therein submitted the case for decision on the basis of their respective memoranda, hence
no actual damages can be awarded.
11. ID.; ID.; EXEMPLARY DAMAGES; AWARD THEREOF UNWARRANTED ABSENT
CLEAR AND CONVINCING PROOF THAT A PARTY ACTED IN A WANTON, FRAUDULENT,
RECKLESS, OPPRESSIVE OR MALEVOLENT MANNER. — In the same manner, there is no
clear and convincing showing that petitioners acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner to warrant the imposition of exemplary damages in
respondents' favor. In any event, exemplary damages cannot be adjudicated in the instant
case since there is no award of moral, temperate or compensatory damages.
12. ID.; ID.; ATTORNEY'S FEES; MERE FILING OF A COMPLAINT DOES NOT IPSO
FACTO ENTITLE A PARTY TO AN AWARD THEREOF. — Similarly, we cannot award
attorney's fees since there is no stipulation to grant the same nor were exemplary
damages awarded or were improperly imposed as in the instant case. It is appropriate to
stress that the mere ling of a complaint does not ipso facto entitle a party to attorney's
fees since this act is a means sanctioned by law to protect rights and interests even if
found subsequently to be unmeritorious.

DECISION

BELLOSILLO , J : p

AT STAKE IN THIS PETITION FOR REVIEW is the ownership of three (3) parcels of
unregistered land with an area of approximately 130,947 square meters situated in Brgy.
Sapa, Burgos, Pangasinan, the identities of which are not disputed.
The three (3) parcels were formerly owned by the spouses Francisco and Asuncion
Tazal who on 1 September 1957 sold them for P724.00 to respondents' predecessor-in-
interest, one Mamerto Reyes, with right to repurchase within two (2) years from date
thereof by paying to the vendee the purchase price and all expenses incident to their
reconveyance. After the sale the vendee a retro took physical possession of the properties
and paid the taxes thereon. 1
The otherwise inconsequential sale became controversial when two (2) of the three
(3) parcels were again sold on 24 December 1958 by Francisco Tazal for P420.00 in favor
of petitioners' predecessor-in-interest Blas Rayos without rst availing of his right to
repurchase the properties.
In the meantime, on 1 September 1959 the conventional right of redemption in favor
of spouses Francisco and Asuncion Tazal expired without the right being exercised by
either the Tazal spouses or the vendee Blas Rayos.
After the expiration of the redemption period, Francisco Tazal attempted to
repurchase the properties from Mamerto Reyes by asserting that the 1 September 1957
deed of sale with right of repurchase was actually an equitable mortgage and offering the
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 amount of P724.00 to pay for the alleged debt. 2 But Mamerto Reyes refused the tender of
payment and vigorously claimed that their agreement was not an equitable mortgage. 3
On 9 May 1960 Francisco Tazal led a complaint with the Court of First Instance of
Pangasinan against Mamerto Reyes, docketed as Civil Case No. A-245, for the declaration
of the 1 September 1957 transaction as a contract of equitable mortgage. He also prayed
for an order requiring defendant Mamerto Reyes to accept the amount of P724.00 which
he had deposited on 31 May 1960 with the trial court as full payment for his debt, and
canceling the supposed mortgage on the three (3) parcels of land with the execution of the
corresponding documents of reconveyance in his favor. 4 Defendant denied plaintiff's
allegations and maintained that their contract was a sale with right of repurchase that had
long expired.
On 22 June 1961 Francisco Tazal again sold the third parcel of land previously
purchased by Mamerto Reyes to petitioner-spouses Teo lo and Simeona Rayos for
P400.00. On 1 July 1961 petitioner spouses bought from Blas Rayos for P400.00 the two
(2) lots that Tazal had sold at the rst instance to Mamerto Reyes and thereafter to Blas
Rayos. Curiously, these contracts of sale in favor of petitioner-spouses were perfected
while Civil Case No. A-245 was pending before the trial court.
On 26 September 1962 the parties in Civil Case No. A-245 submitted a stipulation of
facts upon which the Court of First Instance would decide the case. They admitted the
genuineness and due execution of the 1 September 1957 deed of sale with right of
repurchase although they were in disagreement as to its true character. They also
acknowledged the consignation of P724.00 in the Court of First Instance on 31 May 1960
and the payment of taxes by Mamerto Reyes on the three (3) parcels of land from 1958 to
1962. 5
On 5 January 1963 the trial court in Civil Case No. A-245 rejected the contention of
Francisco Tazal that the deed of sale executed on 1 September 1957 was an equitable
mortgage but held that Tazal could nonetheless redeem the three (3) parcels of land within
thirty (30) days from nality of judgment by paying to Mamerto Reyes the purchase price
of P724.00 and all expenses to execute the reconveyance, i.e., the expenses of the contract
and the necessary and useful expenses made on the properties as required by Art. 1616 of
the Civil Code. The dispositive portion of the trial court's decision reads —
WHEREFORE, the Court, hereby renders judgment declaring the contract . . .
entered into by the plaintiffs and the defendant and captioned 'Deed of Sale with
Right to Repurchase' as a true sale with right to repurchase . . . and not an
equitable mortgage . . . and declaring the plaintiffs entitled to repurchase the
property in question within thirty (30) days from nality of this decision, without
pronouncement as to cost. 6

Mamerto Reyes appealed the Decision to the Court of Appeals, 7 which in turn
elevated the appeal to this Court 8 since only questions of law were involved. 9 When
Mamerto Reyes died in 1986, petitioner-spouses Teo lo and Simeona Rayos wrested
physical possession of the disputed properties from Reyes's heirs.
On 16 May 1990 this Court considered the case closed and terminated for failure of
the parties therein to manifest their interest to further prosecute the case. On 20 June
1990 the judgment in Civil Case No. A-245 became final and executory.
Subsequent to the nality of judgment in Civil Case No. A-245 petitioner-spouses
did nothing to repurchase the three (3) parcels of land within the thirty (30)-day grace
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 period from nality of judgment since, according to them, they believed that the
consignation of P724.00 in the civil case had perfected the repurchase of the disputed
properties.
On 6 July 1992 respondents as heirs of Mamerto Reyes executed an a davit
adjudicating to themselves the ownership of the parcels of land and declared the
properties in their names for assessment and collection of real estate taxes. On 19
January 1993 respondents registered the 1 September 1957 deed of sale with right of
repurchase with the register of deeds.
On 8 July 1993 respondents led a complaint for damages and recovery of
ownership and possession of the three (3) parcels of land in dispute against herein
petitioner-spouses Teo lo and Simeona Rayos and petitioner George Rayos as
administrator thereof before the Regional Trial Court of Alaminos, Pangasinan. 1 0 It was
respondents' theory that neither petitioners nor their predecessors-in-interest Francisco
Tazal and Blas Rayos repurchased the properties before buying them in 1958 and 1961 or
when the judgment in Civil Case No. A-245 became nal and executory in 1990, hence the
sale of the three (3) parcels of land to petitioner-spouses did not transfer ownership
thereof to them.
Petitioners argued on the other hand that the consignation of P724.00 in Civil Case
No. A-245 had the full effect of redeeming the properties from respondents and their
predecessor-in-interest, and that respondents were guilty of estoppel and laches since
Mamerto Reyes as their predecessor-in-interest did not oppose the sale to Blas Rayos and
to petitioner-spouses Teo lo and Simeona Rayos. The parties then led their respective
memoranda after which the case was submitted for decision.
On 15 November 1996 the trial court promulgated its Decision in Civil Case No. A-
2032 nding merit in respondents' claim for damages as well as ownership and
possession of the disputed parcels of land from petitioners. 1 1 The court declared void the
separate deeds of absolute sale thereof executed by Francisco Tazal in favor of Blas
Rayos and to spouses Teo lo and Simeona Rayos and by Blas Rayos to the same spouses,
and ordered herein petitioners and Francisco Tazal to vacate and reconvey the lands to
respondents as heirs of Mamerto Reyes and to pay actual damages for litigation expenses
in the sum of P20,000.00, attorney's fees of P10,000.00, and exemplary damages of
P50,000.00 plus costs. The court a quo rationalized that petitioners did not present
evidence to prove that they and their predecessor-in-interest were able to repurchase the
property within the period of redemption set forth by the Court of First Instance in Civil
Case No. A-245. 1 2 Petitioners appealed the Decision to the Court of Appeals. 1 3
On 31 May 2001 the appellate court promulgated its Decision a rming in toto the
judgment appealed from. 1 4 The Court of Appeals held that the deposit of P724.00 on 31
May 1960 in Civil Case No. A-245 was done belatedly, i.e., after the two (2) year-period
from 1 September 1957, the date of the sale as stated in the deed of sale between the
spouses Francisco and Asuncion Tazal and Mamerto Reyes, and did not cover the entire
redemption price, i.e., the selling price of P724.00 plus the expenses of executing the
contract and the necessary and useful expenses made on the properties. The appellate
court further ruled that estoppel and laches did not bar the cause of action of respondents
as plaintiffs in Civil Case No. A-2032 since Mamerto Reyes as their predecessor-in-interest
actively resisted the claim of Francisco Tazal in Civil Case No. A-245 to treat the 1
September 1957 sale as an equitable mortgage and to authorize the redemption of the
parcels of land in dispute beyond the two (2)-year period stipulated in the sale with right to
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 repurchase. Hence, the instant petition for review.
Petitioners argue that the consignation of P724.00 in Civil Case No. A-245 provides
the best evidence of the repurchase of the three (3) parcels of land; that the consignation
was admitted by Mamerto Reyes himself in the stipulation of facts and approved implicitly
by the Court of First Instance when it held the 1 September 1957 transaction as a contract
of sale with right of repurchase; that respondents failed to prove the existence of other
expenses, i.e., the expenses of the contract and the necessary and useful expenses made
on the properties, required by Art. 1616 of the Civil Code to be paid in addition to the
purchase price of P724.00 so that petitioners may validly exercise the right to repurchase
the real estate; that Mamerto Reyes as respondents' predecessor-in-interest was guilty of
estoppel and laches for not seeking the annulment of the contracts of sale in favor of Blas
Rayos and petitioner-spouses Teo lo and Simeona Rayos; that petitioner-spouses are
buyers in good faith and for value of the three (3) parcels of land; and nally, that there is
no legal basis for awarding damages since Civil Case No. A-2032 was decided solely on
the basis of the parties' memoranda and not upon any evidence offered.
It appears that petitioners hinge their arguments upon the validity of the
consignation of P724.00 and accept the proposition that if the consignation is declared
void the subsequent sales to Blas Rayos and petitioner-spouses would be ineffective to
transfer ownership of the disputed parcels and concomitantly would vest respondents
with the ownership and possession thereof.
On the other hand, respondents maintain that the absence of an express or at least
discernible court approval of the consignation of P724.00 in Civil Case No. A-245
prevented the repurchase of the parcels of land in question; that the deposit of only
P724.00 did not cover all the expenses required by Art. 1616 of the Civil Code for a valid
repurchase of the properties; that Mamerto Reyes as their predecessor-in-interest was not
guilty of estoppel and laches in not ling a complaint to annul the contracts of sale in favor
of Blas Rayos and petitioner-spouses Teo lo and Simeona Rayos since during that time
Civil Case No. A-245 was pending before the courts; that petitioner-spouses are not
buyers in good faith and for value since they knew that the parcels of land had been
previously sold to Mamerto Reyes and that, in any event, the rule protecting buyers in good
faith and for value applies only to transactions involving registered lands and not to
unregistered lands as in the instant case; and nally, that the award of damages is amply
supported by their pleadings in the trial court.
We deny the instant petition for review and a rm the decision of the court a quo,
except for the sole modi cation to delete and set aside the award of damages. There is no
evidence to prove that petitioners paid at any time the repurchase price for the three (3)
parcels of land in dispute except for the deposit of P724.00 in the Court of First Instance
which however fell short of all the acts necessary for a valid consignation and discharge of
their obligation to respondents.
In order that consignation may be effective the debtor must show that (a) there was
a debt due; (b) the consignation of the obligation had been made because the creditor to
whom a valid tender of payment was made refused to accept it; (c) previous notice of the
consignation had been given to the person interested in the performance of the obligation;
(d) the amount due was placed at the disposal of the court; and, (e) after the consignation
had been made the person interested was notified thereof. 1 5
In the instant case, petitioners failed, first to offer a valid and unconditional tender of
payment; second, to notify respondents of the intention to deposit the amount with the
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 court; and third, to show the acceptance by the creditor of the amount deposited as full
settlement of the obligation, or in the alternative, a declaration by the court of the validity
of the consignation. The failure of petitioners to comply with any of these requirements
rendered the consignation ineffective. 1 6
Consignation and tender of payment must not be encumbered by conditions if they
are to produce the intended result of ful lling the obligation. 1 7 In the instant case, the
tender of payment of P724.00 was conditional and void as it was predicated upon the
argument of Francisco Tazal that he was paying a debt which he could do at any time
allegedly because the 1 September 1957 transaction was a contract of equitable
mortgage and not a deed of sale with right to repurchase. The ostensible purposes of
offering the amount in connection with a purported outstanding debt were to evade the
stipulated redemption period in the deed of sale which had already expired when the
tender of payment was made and Civil Case No. A-245 was instituted, and as a corollary, to
avail of the thirty (30)-day grace period under Art. 1606 of the Civil Code within which to
exercise the right to repurchase. 1 8 Mamerto Reyes was therefore within his right to refuse
the tender of payment offered by petitioners because it was conditional upon his waiver of
the two (2)-year redemption period stipulated in the deed of sale with right to repurchase.
Moreover, petitioners failed to prove in Civil Cases Nos. A-245 and A-2032 that any
form of notice regarding their intention to deposit the amount of P724.00 with the Court of
First Instance had been served upon respondents. This requirement is not ful lled by the
notice which could have ensued from the ling of the complaint in Civil Case No. A-245 or
the stipulation made between Francisco Tazal and Mamerto Reyes regarding the
consignation of P724.00. The latter constitutes the second notice required by law as it
already concerns the actual deposit or consignation of the amount and is different from
the rst notice that makes known the debtor's intention to deposit the amount, a
requirement missing in the instant case. 1 9 Without any announcement of the intention to
resort to consignation rst being made to the persons interested in the ful llment of the
obligation, the consignation as a means of payment is void. 2 0
It is also futile to argue that the deposit of P724.00 with the Court of First Instance
could have perfected the redemption of the three (3) parcels of land because it was not
approved by the trial court, much less accepted by Mamerto Reyes or his heirs, herein
respondents. The dispositive portion of the Decision in Civil Case No. A-245, which reads ".
. . the Court, hereby renders judgment declaring the contract . . . entered into by the
plaintiffs and the defendant and captioned 'Deed of Sale with Right to Repurchase' as a
true sale with right to repurchase . . . and not an equitable mortgage . . . and declaring the
plaintiffs entitled to repurchase the property in question within thirty (30) days from finality
of this decision . . . " plainly rejected the complaint for lack of merit and necessarily also
the consignation done pursuant thereto. This conclusion is buttressed by the directive of
the trial court in the body of the Decision that Francisco Tazal " may still exercise the right
to repurchase the property in question by returning to the [Mamerto Reyes] the purchase
price of P724.00 plus all expenses incident to the reconveyance within the period of thirty
(30)-days from the time this decision becomes nal . . . " 2 1 The obvious reference of this
statement was the stipulation made by the parties therein that "the defendant [Mamerto
Reyes] has been paying the taxes on said properties from 1958 to 1969 . . ." 2 2 where the
taxes paid constituted necessary expenses that petitioners had to reimburse to
respondents' predecessor-in-interest aside from the P724.00 earlier deposited by Tazal.
To be sure, while it has been held that approval of the court or the obligee's
acceptance of the deposit is not necessary where the obligor has performed all acts
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 necessary to a valid consignation such that court approval thereof cannot be doubted, Sia
v. Court of Appeals 2 3 clearly advises that this ruling is applicable only where there is
unmistakable evidence on record that the prerequisites of a valid consignation are present,
especially the conformity of the proffered payment to the terms of the obligation which is
to be paid. 2 4 In the instant case, since there is no clear and preponderant evidence that
the consignation of P724.00 satis ed all the requirements for validity and enforceability,
and since Mamerto Reyes vehemently contested the propriety of the consignation,
petitioners cannot rely upon sheer speculation and unfounded inference to construe the
Decision of the Court of First Instance as one impliedly approving the consignation of
P724.00 and perfecting the redemption of the three (3) parcels of land.
It should be recalled that one of the requisites of consignation is the ling of the
complaint by the debtor against the creditor. Hence it is the judgment on the complaint
where the court declares that the consignation has been properly made that will release
the debtor from liability. Should the consignation be disapproved by the court and the case
dismissed, there is no payment and the debtor is in mora and he shall be liable for the
expenses and bear the risk of loss of the thing. 2 5
To sanction the argument of petitioners and in the process excuse them from their
responsibility of securing from the trial court in Civil Case No. A-245 a categorical
declaration that the consignation of P724.00 had complied with all the essential elements
for its validity would only dilute the rule requiring absolute compliance with the requisites
of consignation. 2 6 It also disturbs a steady and stable status of proprietary rights, i.e., ". . .
el acreedor tan solo, y no el juez, puede autorizar la variacion que para los derechos de
aquel suponga la que se intente en el objeto, cuantia o forma de las obligaciones," 2 7 since
parties are left guessing on whether the repurchase of the properties had been effected. In
a broader sense, this uncertain state will only depress the market value of the land and
virtually paralyze efforts of the landowner to meet his needs and obligations and realize
the full value of his land.
Moreover, we do not think that respondents' causes of action in Civil Case No. A-
2032 are now barred by estoppel and laches. The essence of estoppel and laches is the
failure or neglect for an unreasonable and unexplained length of time to do that which by
exercising due diligence could or should have been done earlier; it is the negligence or
omission to assert a right within a reasonable time warranting a presumption that the
party entitled to assert it either has abandoned or declined to assert it although there is no
absolute rule as to what constitutes staleness of demand as each case is to be
determined according to its particular circumstances. 2 8
In the instant case, it was prudent and discerning for respondents and their
predecessor-in-interest Mamerto Reyes that they deferred any action against petitioners,
i.e., Civil Case No. A-2032, to recover ownership and possession of the three (3) pieces of
real estate, until the nality of judgment in Civil Case No. A-245. For patiently electing not
to inundate our courts of justice with cases the outcome of which may well depend upon
the then pending civil suit, respondents cannot now be penalized by barring their complaint
in Civil Case No. A-2032 on the equitable grounds of estoppel and laches.
We also nd no reason to disturb our ndings upon petitioners' assertion that they
were purchasers of the three (3) parcels of land in good faith and for value. As we held in
David v. Bandin, "the issue of good faith or bad faith of the buyer is relevant only where the
subject of the sale is registered land and the purchaser is buying the same from the
registered owner whose title to the land is clean . . . in such case the purchaser who relies
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 on the clean title of the registered owner is protected if he is a purchaser in good faith for
value." 2 9 Since the properties in question are unregistered lands, petitioners as
subsequent buyers thereof did so at their peril. Their claim of having bought the land in
good faith, i.e., without notice that some other person has a right to or interest in the
property, would not protect them if it turns out, as it actually did in this case, that their
seller did not own the property at the time of the sale.
At any rate, petitioners failed to discharge their burden of proof that they were
purchasers of the three (3) parcels of land in good faith. For, as we ruled in Embrado v.
Court of Appeals, 3 0 the burden of proving the status of a purchaser in good faith and for
value lies upon him who asserts that status, which is not discharged by simply invoking the
ordinary presumption of good faith, i.e., that everyone is presumed to act in good faith,
since the good faith that is here essential is integral with the very status which must be
established.
In the proceedings a quo, what is evident is the admitted fact of payment made by
Mamerto Reyes as respondents' predecessor-in-interest of the taxes on the properties
prior to and at the time when the contracts of sale in favor of petitioner-spouses were
perfected, which undoubtedly con rms the precedence of respondents' possession of the
parcels of land in question. This situation should have compelled petitioners to investigate
the right of respondents over the properties before buying them, and in the absence of
such inquiry, the rule is settled that a buyer in the same circumstances herein involved
cannot claim to be a purchaser in good faith.
The absence of good faith on the part of petitioner-spouses Teo lo and Simeona
Rayos in purchasing the three (3) parcels of unregistered land precludes the application of
the rule on double sales enunciated in Art. 1544 of the Civil Code. 3 1 In any event, even if we
apply Art. 1544, the facts would nonetheless show that respondents and their
predecessor-in-interest registered rst the source of their ownership and possession, i.e.,
the 1 September 1957 deed of sale with right to repurchase, held the oldest title, and
possessed the real properties at the earliest time. Applying the doctrine of "priority in time,
priority in rights" or "prius tempore, potior jure," respondents are entitled to the ownership
and possession of the parcels of land in dispute.
Finally, on the issue of damages, we agree with petitioners that respondents failed
to prove their entitlement to actual damages for litigation expenses of P20,000.00,
attorney's fees of P10,000.00 and exemplary damages of P50,000.00 plus costs. No
evidence to prove actual damages was offered in Civil Case No. A-2032 since the parties
therein submitted the case for decision on the basis of their respective memoranda, hence
no actual damages can be awarded. 3 2 In the same manner, there is no clear and
convincing showing that petitioners acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner to warrant the imposition of exemplary damages in respondents' favor.
3 3 In any event, exemplary damages cannot be adjudicated in the instant case since there
is no award of moral, temperate or compensatory damages. 3 4
Similarly, we cannot award attorney's fees since there is no stipulation to grant the
same nor were exemplary damages awarded or were improperly imposed as in the instant
case. 3 5 It is appropriate to stress that the mere ling of a complaint does not ipso facto
entitle a party to attorney's fees since this act is a means sanctioned by law to protect
rights and interests even if found subsequently to be unmeritorious.
WHEREFORE, the instant Petition for Review is DENIED. The assailed Decision of the
Court of Appeals in CA-G.R. CV No. 55789 a rming in toto the Decision of the Regional
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 Trial Court, Branch 54, Alaminos, Pangasinan in Civil Case No. A-2032, i.e., declaring void
the Deeds of Absolute Sale executed by Francisco Tazal in favor of Blas Rayos, and by the
latter in favor of Teo lo Rayos, and by Francisco Tazal in favor of Teo lo Rayos dated 22
June 1961, all encompassing the three (3) parcels of land sold under the Deeds of Sale
with the Right to Repurchase, insofar as they authorized the transfer of ownership and
possession thereof to petitioner-spouses Teo lo and Simeona Rayos; proclaiming
respondents Donato Reyes, Saturnino Reyes, Tomasa R. Bustamante and Toribia R. Camelo
who are heirs of Mamerto Reyes as absolute owners of the property in question free from
all liens and encumbrances; and, ordering petitioner-spouses Teo lo and Simeona Rayos,
petitioner George Rayos and Francisco Tazal and/or their agents or representatives to
vacate and surrender the parcels of land in favor of respondents Donato Reyes, Saturnino
Reyes, Tomasa R. Bustamante and Toribia R. Camelo, are AFFIRMED with the SOLE
MODIFICATION that the award of actual damages for litigation expenses, attorney's fees
and exemplary damages plus costs is DELETED and SET ASIDE. No costs. SaICcT

SO ORDERED.
Mendoza, Quisumbing, Austria-Martinez and Callejo, Sr., JJ., concur.

Footnotes
1. Record, p. 111.

2. Id., p. 162.
3. Id.

4. Id., p. 79.

5. Id., p. 9.
6. Penned by Judge Gregorio A. Legaspi; id., p. 130.

7. Docketed as CA-G.R. No. 32778-R.

8. Docketed as No. L-36487.

9. Resolution penned by Associate Justice Ramon G. Gaviola Jr. and concurred in by Associate
Justices Ruperto G. Martin and Lourdes P. San Diego of the Seventh Division.
10. Docketed as Civil Case No. A-2032.

11. Penned by Judge Jules A. Mejia of RTC-Br. 54, Alaminos, Pangasinan.

12. Record, pp. 168-173.

13. Docketed as CA-G.R. CV No. 55789.

14. Penned by then Associate Justice (now Court Administrator) Presbitero J. Velasco Jr. and
concurred in by Associate Justices Bienvenido L. Reyes and Juan Q. Enriquez Jr. of the
Special Twelfth Division.
15. Soco v. Militante, 208 Phil. 151 (1983).

16. Ponce De Leon v. Syjuco, 90 Phil. 311 (1951).

17. Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc. ; No. L-25885, 18 August 1972, 46
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 SCRA 381; Rustia v. Aguinaldo, 93 Phil. 729 (1953).
18. The provision reads in part; "However, the vendor may still exercise the right to repurchase
within thirty days from the time nal judgment was rendered in a civil action on the
basis that the contract was a true sale with right to repurchase."

19. See RTC Decision in Civil Case No. A-2032.

20. Limkako v. Teodoro, 74 Phil. 313 (1943).

21. Record, pp. 11-12.

22. Id., p. 9.

23. 92 Phil. 355 (1952).

24. China Insurance and Surety Co. v. B.K. Berkenkotter, 83 Phil. 459 (1949).
25. IV E.P. Caguioa, Comments and Cases in Civil Law, 372 (1983).

26. See RTC Decision in Civil Case No. A-3032.

27. China Insurance and Surety Co. v. B.K. Berkenkotter, supra at 462.

28. Reyes v. Court of Appeals, G.R. No. 127608, 30 September 1999, 315 SCRA 626.

29. G.R. No. 48322, 8 April 1987, 149 SCRA 140, 150–151; Sales v. Court of Appeals , G.R. No.
40145, 29 July 1992, 211 SCRA 858.

30. G.R. No. 51457, 27 June 1994, 233 SCRA 355.

31. This provision states: "If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have rst 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 rst recorded it in
the Registry of Property. Should there be no inscription, the ownership shall pertain to the
person who in good faith was rst in the possession; and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith."
32. Civil Code, Art. 2199.

33. Id., Art. 2232.

34. Id., Art. 2234.

35. Id., Art. 2208.

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