CASES ON SALES

1. Goyena v. Tambunting, 1 Phil. 490 (cdasia copy-paste)

Facts:
The plaintiff's principal owned a tract of land and the building thereon
known as No. 20 Calle San Jose, Ermita, Manila. This tract contained 152.46
square meters of land. A broker, representing the plaintiff, stated to the
defendant that this lot was for sale and, on information received from the
plaintiff, that it measured 23 meters in front and 8 meters in depth.
The broker had nothing more to do with the matter, and the plaintiff and
defendant had certain negotiations between themselves concerning the sale.
On March 13, 1901, the defendant signed the following document:

"On this date I have bought from Don Francisco Yrureta Goyena a lot at No.
20 Calle San Jose, Ermita, for the sum of thirty-two hundred pesos, this
money to be paid as soon as the bill of sale is signed. Manila, March 12, 1901.
(Signed) Tambunting."

The plaintiff signed a similar document. What the negotiations between the
parties were prior to the signing of these documents does not appear. There
is no evidence whatever in the record that they came to any agreement in
regard to the sale other than the one contained in the papers of March 12.
The defendant took from the of ce of the notary employed to make the formal
transfer the title papers which showed the area of the lot of land to be 152.46
square meters, kept them for several days, and returned them to the notary.
On the day assigned for the execution of the instrument, all the parties being
in the of ce of the notary, the defendant told the latter to insert in the writing
the price, $3,200, and then refused to sign it because the lot did not contain
the area which the plaintiff, through the broker, had represented that it
contained. He expressed his willingness to sign it if a proportional reduction
was made in the price. This the plaintiff refused to make, and this action was
brought under article 1451 of the Civil Code.

Issue: Is this a perfect contract?

Ruling:
Hence it follows that, whether evidenced by a public instrument or by a
private document, the contract is what the words of the parties indicate. It
will not avail the defendant to say, "But my intention was not what my words
express." The defendant bought a speci c article and agreed to pay $3,200 for
it. The fact that the article is not as large as he thought it was does not relieve
him from the necessity of paying that price. It was just such cases as this that
article 1471, 1, was intended to cover. If the defendant intended to buy by the
meter he should have so stated in the contract. Not only does the contract not
 so state, but there is no evidence in the case that the parties ever discussed at
all the price which should be paid for each meter.
There was considerable evidence in the case concerning an agreement by the
plaintiff to reduce the price and the plaintiff in answering interrogatories
propounded by the defendant said that, after the objection of the defendant
to carry out the contract, he did agree to make a proportional reduction. The
case shows, however, that this answer and the testimony of the defendant
and his witness referred to a conversation at the house of the defendant, and
that this statement of the plaintiff was made when he thought that the
difference was slight, not amounting to more than a meter or two, and that a
proportional reduction would not decrease the price more than 20 or 30
pesos. We do not think that this admission of the defendant is suf cient of
itself to prove a contract by measure in the face of the written document and
the entire absence of other evidence to that end. We rather construe it as
indicating a willingness on the part of the plaintiff to abate a tri e from what
he was entitled to demand with the purpose of obtaining an amicable
settlement of the controversy and avoiding litigation.
Upon the whole evidence we think the judgment below is right, and it is
accordingly affirmed, with costs of this instance against the defendant.

2. Union Motors Corp. v. Spouses Bernal, July 20, 2001 (Real: Union Motor
Corp. v. Court of Appeals)

On Sep. 14, 1979, respondent Sps. Bernal purchased from Union Motor Corporation
(UMC) 1 Cimarron Jeepney for P37,758 to be paid in installments. For this, Sps.
Bernal executed a promissory note and a deed of chattel mortgage in favor of UMC.
Meanwhile, UMC entered into a contract of assignment of the promissory note and
chattel mortgage with respondent Jardine-Manila Finance (JMF). Through Sosmeña,
an agent of UMC, the Sps. Bernal would pay the amount of the promissory note to
JMF being the assignee of UMC.

To effectuate the sale as well as the assignment, Sps. Bernal were required to sign a
notice of assignment, a deed of assignment, a sales invoice, a registration certificate,
an affidavit, and a disclosure statement. The ps. Bernal were obliged to sign for the
reason that, according to Sosmeña, it was requirement of UMC and JMCF for the Sps.
Bernal to accomplish all documents in order to have their application approved.
Upon the Sps. Bernal’s tender of downpayment of P10,037, and UMC’s acceptance of
the same, UMC approved the sale. Although the Sps. Bernal have not yet physically
possessed the vehicle, Sosmeña required them to sign the receipt as a condition for
the delivery of the vehicle.

Sps. Bernal continued paying the installments even if the vehicle remained
undelivered inasmuch as JMF promised to deliver. Sps. Bernal paid a total of P7,507
before they discontinued paying on account of non-delivery of the vehicle.
According to Sps. Bernal, the reason why the vehicle was not delivered was due to
the fact that Sosmeña allegedly took the vehicle in his personal capacity.
On Sep. 11, 1981, JMF filed a complaint for a sum of money against Sps. Bernal
before the CFI Manila. The case was later transferred to RTC Makati, the complaint
was amended to include UMC as alternative defendant, the reason that if Sps.
Bernal’s reason for non-payment was UMC’s failure to deliver, UMC should pay. Sps.
Bernal filed an answer with cross-claim against UMC and counterclaim against JMF.

RTC: (1) JNF to pay Sps. Bernal P7,507 plus legal interest
(2) UMC to pay Sps. Bernal the downpayment of P10,037 plus interest
(3) UMC to pay JNF P23,238 plus interest and attorney’s fees
(4) UMC to pay Sps. Bernal 20,000 as moral damages, 10,000 as atty.’s fee
CA: Affirmed the RTC’s decision

ISSUE WON there has been a delivery, physical or constructive, of the vehicle – NO

Sps. Bernal did not come into possession of the vehicle that was supposed to be
delivered to them by UMC. The registration certificate, receipt and sales invoice that
they signed were explained during the hearing. According to testimonial evidence,
the said documents were signed as a part of the processing and for the approval of
their application to buy the vehicle. Without such signed documents, no sale, much
less delivery, of the vehicle could be made. The documents were not therefore an
acknowledgement of the physical acquisition of the vehicle but merely a
requirement of UMC so that the vehicle would be delivered to them.

The SC has held that the issuance of a sales invoice does not prove transfer of
ownership to the buyer; an invoice is nothing more than a detailed statement of the
nature, quantity, and cost of the thing sold and has been considered not a bill of sale.

The registration certificate signed does not conclusively prove that constructive
delivery was made or that ownership has been transferred to Sps.Bernal. Like the
receipt and the invoice, the signing of the registration certificate was qualified by
the fact that it was a requirement for the sale to be approved. In all forms of
delivery, it is necessary that the act of delivery, actual or constructive, should be
couple with the intention of the delivering the thing. Without such intention, there is
no delivery. The critical factor in the different modes of effecting delivery which
gives legal effect to the act, is the actual intention of the vendor to deliver, and its
acceptance by the vendee.

In Addision vs. Felix, the SC held that in order that symbolic delivery may produce
the effect of tradition, it is necessary that the vendor shall have had control over the
thing sold, that, at the moment of the sale, its material delivery could have been
made. It is not enough to confer ownership and the right of possession. The thing
sold must be placed in the vendee’s control. When there is no impediment to
prevent the thing sold passing into the tenancy of the purchaser by the sole will of
the vendor, symbolic delivery through the execution of a public instrument is
sufficient. But if, despite the execution of instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or through
another in his name, because such tenancy and enjoyment are opposed by the
interposition of another will, then fiction yields to reality – the delivery has not been
effected.

Here, the act of signing the registration certificate was not intended to transfer
ownership of the vehicle as UMC still needed the same for the approval of the
financing contract with JMF.

Inasmuch as there was neither physical nor constructive delivery of a determinate

thing, the thing sold remained at the seller’s risk. UMC should therefore bear the loss
of the vehicle after Sosmeña allegedly stole the same.

UMC’s reliance on the Chattel Mortgage Contract does not help its assertion that
ownership has been transferred since there was neither delivery nor transfer of
possession. Consequently, this contract has no legal effect inasmuch as the Sps.
Bernal are not the absolute owners thereof, ownership of the mortgagor being an
essential requirement of a valid mortgage contract.

Lastly, Sps. Bernal presented sufficient evidence to prove that Sosmeña took
delivery and possession of the vehicle in his personal capacity as shown by a
document on which he personally acknowledged the receipt of the registration
certificate from JMF. Also, it was proven that Sps. Bernal went several times to UMC
to demand the vehicle.
DISPOSITIVE CA is AFFIRMED with MODIFICATION, moral damages is deleted

3. Phil. Virginia Tobacco Adm. V. De los Angeles, 87 SCRA 9 (Real: 87 SCRA

197)

Doctrine: An irrevocable letter of credit cannot, during its lifetime, be cancelled or

modified without the express permission of the beneficiary.
Facts: Timoteo Sevilla, proprietor and General Manager of the Philippine
Associated Resources (PAR) was awarded in a public bidding the right to import
Virginia leaf tobacco. Subsequently, the Philippine Virginia Tobacco Administration
(PVTA) and Sevilla entered into a contract for the importation of 85 million kilos of
Virginia leaf tobacco and a counterpart exportation of 2.53 million kilos of tobacco
and 5.1 million kilos of farmer’s and tobacco at P3.00 a kilo. In accordance with their
contract Sevilla purchased from PVZTA and exported 2,101.470 kilos of tobacco,
paying the PVTA the sum of P2,482,938.50 and leaving a balance of P3,713,908.91.
Before respondent Sevilla could import the counterpart blending Virginia tobacco,
amounting to 525,560 kilos, Republic Act No. 4155 was passed and took effect on
June 20, 1 964, authorizing the PVTA to grant import privileges at the ratio of 4 to 1
instead of 9 to 1 and to dispose of all its tobacco stock at the best price available.

Because of the prevailing export or world market price under which Sevilla will be
exporting at a loss, the agreement was further amended to require Sevilla would
open an irrevocable letter of credit with the Prudential Bank and Trust Co.
(Prudential) in favor of the PVTA to secure the payment of said balance, drawable
upon the release from the Bureau of Customs of the imported Virginia blending
tobacco. While Sevilla was trying to negotiate the reduction of the procurement cost
of the 2,101.479 kilos of PVTA tobacco already exported which attempt was denied
by PVTA and also by the Office of the President. PVTA attempted to collect from the
letter of Credit with Prudential. Sevilla filed an injunction for the release of funds with
Prudential in the sala of Judge Delos Santos. Judge Delos Santos issued the
injunction order and in a subsequent petition, ordered the funds of the letter of credit
released to Sevilla.

Issue: Whether or not Judge Sevilla acted with grave abuse of discretion in releasing
the funds to the applicant of the letter of credit.

Held: Judge Delos Santos violated the irrevocability of the letter of credit issued by
respondent Bank in favor of petitioner. An irrevocable letter of credit cannot, during
its lifetime, be cancelled or modified Without the express permission of the
beneficiary. Consequently, if the finding the trial on the merits is that respondent
Sevilla has ailieged unpaid balance due the petitioner, such unpaid obligation would
be unsecured.

4. Sun Brothers Appliances, Inc. v. Perez, April 30, 1963

SUMMARY: Sun Bro Appliances and Perez entered into a Conditional Sale Agreement on an air conditioner. The
agreement states that the buyer shall bear the loss for any cause, but the title is not transferred until full
payment. The item was burned, Perez refused to pay the balance invoking fortuitous event as cause of loss. The
court ordered Perez to pay.

DOCTRINE: The agreement making the buyer responsible for any loss whatsoever, fortuitous or otherwise, even if
the title to the property remains in the vendor, is neither contrary to law, nor to morals or public policy.

SELLER Sun Brothers Appliances, Inc. SUBJECT Admiral Air Conditioner

PROPERTY:
BUYER Perez DOCUMENT: Conditional Sale Agreement

FACTS:
- Sun bros and Perez entered into a Conditional Sale Agreement of an Admiral air conditioner, the price
of which is 1,678php
- The agreement contains the ff. stipulations:

"2. Title to said property shall vest in the Buyer only upon full payment of the entire account as herein
provided, and only upon complete performance of all the other conditions herein specified:

"3. The Buyer shall keep said property in good condition and properly protected against the elements,
at his/its address above-stated, and undertakes that if said property or any part thereof be lost,
damaged, or destroyed for any causes, he shall suffer such loss, or repair such damage, it being
distinctly understood and agreed that said property remains at Buyer's risk after delivery;"

- Pursuant to the contract, sun bros. delivered the item and was received by Perez
- Perez made a downpayment of 274php and the item was installed by sun bro representatives
- The said air conditioner was burned where it was installed by the plaintiff (no details about the fire in
the case). The defendant claims that the destruction was due to force majeure.
 - Perez did not pay any of the monthly installments leaving a balance of 1, 404php

ACTION AND PRAYER:

Action to recover the balance of the item’s price

CFI RULING: Ordered Perez to pay

- As the buyer would be liable in case of loss for any cause, such buyer assumed liability even in case of loss
by fortuitous event

Points of Contention Buyer’s interpretation Seller’s interpretation

The contract stipulates
that title would vest only
upon full payment of the
price
It follows that the vendor
bears the loss in this case
(bec. Full payment not yet
made)
The risk of loss was
expressly stipulated to be
undertaken by the buyer,
even if the title to the
property sold remained

The phrase “for any
cause” in the agreement
Should not be interpreted
to include fortuitous
events.
Although 1174, CC
recognizes an exception to
FE when parties expressly
stipulate, “for any cause”
did not indicate such
intention
the terms "any cause"
used in the agreement
includes a fortuitous
event, and an express
stipulation making the
vendee responsible in
such case is valid
The stipulation in the
contract of sale whereby
the buyer shall be liable
for any loss, damage or
destruction for any cause,
is not contrary to law,
morals or public policy
and is specifically
authorized to be
stipulated upon between
the parties by Article
1174 of the Civil Code

ISSUE: Who should bear the loss? - Buyer

RATIO:

I. The agreement making the buyer responsible for any loss whatsoever, fortuitous or otherwise, even if the title to
the property remains in the vendor, is neither contrary to law, nor to morals or public policy.

II. Citing American decisions, the court held that the loss did not relieve the buyer from his obligation to pay

III. Reason for the rule:

1. The absolute and unconditional nature of the vendee's promise to pay for the goods. The promise is nowise
dependent upon the transfer of the absolute title.

2. The fact that the vendor has fully performed his contract and has nothing further to do except receive
payment, and the vendee received what he bargained for when he obtained the right of possession and use
of the goods and the right to acquire title upon making full payment of the price

3. Providing an incentive to care properly for the goods, they being exclusively under the control and dominion
of the vendee

DISPOSITIVE: Judgment of lower court affirmed.

5. Aznar v. Yapdiangco, March 31, 1965

FACTS:
Teodoro Santos advertised the sale of his FORD FAIRLANE 500 in a
newspaper. On L. De Dios went to the house of Teodoro and talked to his son
Ireneo Santos and said that his uncle Vicente Marella is interested in buying
the said car.

The next day, Ireneo went to the house of Marella and they agreed to the
price of P14,700 on the understanding that it will be paid after the car has
been registered in the latter’s name.
A deed of sale was executed and the registration was changed to the name of
Marella. Ireneo went to Marella to get the payment and deliver the car who
informed him that he is P2,000 short of the money and that they need to go
to his sister to get it. Ireneo, together with De Dios and an unidentified man
went to a house.

Once inside, De Dios asked Ireneo to wait in the sale. After waiting in vain, he
went down and discovered that the car was gone.

Marella was able to sell the car to plaintiff-appellant Jose Aznar and while
attending to registration, the car was seized by Phil. Constabulary due to the
report of the incident.

ISSUE:
Between the two parties, who has the better right?

HELD:
Teodoro Santos has the better right. Marella did not have any title to the
property under litigation because the same was never delivered to him. He
may have the contract but he never acquired valid title. Although the keys to
the car may have been given to the unidentified companion, it may be done
only because that companion took them to the place where the sister of
Marella was supposed to live. The car was evidently stolen and that the buyer
did not acquire any valid title thereto.

6. Chua Hai v. Judge Kapunan, June 30, 1958

FACTS:
Soto purchased from Youngstown Hardware 700 galvanized iron sheets and
round iron bars. He issued as payment a check drawn against Security Bank.
Soto then sold the sheets, some of them to Chua Hai. Meanwhile, the check
issued for payment was dishonored due to insufficiency of funds. This
prompted the hardware store to file a case of estafa against Soto and prayed
for the return of the sheets. This was opposed by Chua on the part of the
 sheets he purchased. Notwithstanding this opposition, the court ordered for
its return.

HELD:
To deprive Chua, who was in good faith, of the possession of the sheets, may
it be temporarily or permanently, is in violation of the rule laid down in
Article 559. Possession of chattels in good faith is equivalent to title, until
ordered by the proper court to restore the thing to the owner who was
illegally derpived thereof. Until such decree is issued, the possessor as
presumptive owner is entitled to the enjoyment and holding of the thing.
Further, the hardware store or Ong was not unlawfully deprived of the
sheets. There was a perfected contract of sale between it and Soto. There was
delivery, by virtue of which, Soto was able to acquire title over the sheets and
bars. The failure of the buyer to pay the purchase price doesn't automatically
revest ownership to the seller until the contract of sale has been first
rescinded or resolved. Hence, until the contract between Soto and Ong has
been set aside by the competent court, the validity of Chua’s possession
cannot be disputed and his right to possession thereof should be respected.

DOUBLE SALES

1. Addison v. Felix, August 3, 1918

FACTS:
Petitioner Addison sold four parcels of land to Defendant spouses Felix and Tioco located
in LucenaCity. Respondents paid 3K for the purchase price and promised to pay the remaining by
installment. The contract provides that the purchasers may rescind the contract within one year
after the issuance of title on their name.

The petitioner went to Lucena for the survey designaton and delivery of the land but only 2
parcels were designated and 2/3 of it was in possession of a Juan Villafuerte.
The other parcels were not surveyed and designated by Addison.

Addison demanded from petitioner the payment of the first installment but the latter contends that
there was no delivery and as such, they are entitled to get back the 3K purchase price they gave
upon the execution of the contract.

ISSUE:
WON there was a valid delivery.

HELD:
The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels
of land, he was not even able to show them to the purchaser; and as regards the other two, more
than two-thirds of their area was in the hostile and adverse possession of a third person.

It is true that the same article declares that the execution of a public instruments is equivalent to
the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery
may produce the effect of tradition, it is necessary that the vendor shall have had such control
over the thing sold that, at the moment of the sale, its material delivery could have been made. It
is not enough to confer upon the purchaser the ownership and the right of possession. The thing
sold must be placed in his control. When there is no impediment whatever to prevent the thing
sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery
through the execution of a public instrument is sufficient. But if there is an impediment, delivery
cannot be deemed effected.

2. Campillo v. CA, May 29, 1984

Facts: Tomas de Vera was the owner of two parcels of land in Tondo, Manila. In 1961, de
Vera sold the lands to Simplicio Santos. Santos however did not register the sale in the
Registry of Deeds, which means that the land was still under de Vera’s name.
On the other hand, de Vera was indebted to Sostenes Campillo. Campillo obtained a
favorable judgment for sum of money against de Vera. De Vera’s 3 parcels of land,
including those sold to Santos, were levied in 1962 in favor of Campillo. Campillo acquired
the land and he was able to have the lands be registered under his name.
ISSUE: Who has better right over the property: Santos who first bought it withouto
registering it or Campillo who subsequently purchased it at a public auction and have it
registered under his name?
HELD: Campillo has the right over the said properties. It is settled in this jurisdiction that a
sale of real estate, whether made as a result of a private transaction or of a foreclosure or
execution sale, becomes legally effective against third persons only from the date of its
registration. Santos purchase of the two parcels of land may be valid but it is not
enforceable against third persons for he failed to have it registered.
Campillo is a purchaser in good faith as he was not aware of any previous sale for Santos
never caused the annotation of the sale.
Section 51, PD No. 1529, otherwise known as the Property Registration Decree, provides as
follows:
Section 51. Conveyance and other dealings by registered owner. – An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the same
in accordance with existing laws. He may use such forms of deeds, mortgages, leases or
other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or
other voluntary instrument except a will purporting to convey or affect registered land
shall take effect as a conveyance or bind the land, but shall operate only as a contract
between the parties and as evidence of authority to the Register of Deeds to make
registration.
“The act of registration shall be the operative act to convey or affect the land insofar
as third persons are concerned, and in all cases under this Decree, the registration
shall be made in the office of the Register of Deeds for the province or city where the
land lies.

The purchaser (Campillo) in the execution sale of the registered land in suit, acquires
such right and interest as appears in the certificate of title unaffected by prior lien or
encumbrances not noted therein. This must be so in order to preserve the efficacy and
conclusiveness of the certificate of title which is sanctified under our Torrens system of land
registration.

3. Leonardo v. Maravilla & Nadal, November 27, 2002

FACTS:
Mariano Torres, predecessor-in-interest of respondents, owns a parcel of land
covered by TCT No. 2355 (34515). The said land was sold by Mariano to Eusebio Roxas
but the latter was not able to register the same due to a legal dispute between Mariano
and a certain Francisco Fernandez. Mariano eventually won that case in 1972.

Petitioner now buys the lot from Eusebio Roxas and asked that it be registered under his
name. He was not able to do so because the Owner’s Duplicate Certificate of Title
(ODCT) was still in the hands of respondents and that the Register of Deeds made an
affidavit that the original copy of TCT No. 2355 (34515) could not be retrieved or located
in their office. Petitioner files an adverse claim. On May 1993, the Register of Deeds
found the original TCT of the land and annotated thereon the adverse claim filed by
petitioner on May 20, 1993.

Petitioner claims that he is the lawful owner of said land having purchased it from
Eusebio Roxas and having protected his rights through the annotation of adverse claim
when the register of Deeds found the Original TCT. Respondents counter that the action
has been barred by prescription and laches, it being filed only 21 years from the time the
right of action has commenced. Petitioner claims that his action is an accion
reivindicatoria which prescribes in 30 years.

ISSUE:
Whether or not petitioner’s action is barred by prescription and laches.

HELD:
Yes. Petitioner’s action is actually an action for specific performance. It is a
fundamental principle that ownership does not pass by mere stipulation but by delivery.
The delivery of a thing constitutes a necessary and indispensable requisite for the
purpose of acquiring the ownership of the same by virtue of a contract. The execution of
the contract is only a presumptive, not conclusive delivery which can be rebutted by
evidence to the contrary, as when there is failure on the part of the vendee to take
material possession of the land subject of the sale in the concept of a purchaser-owner.

Since in this jurisdiction it is a fundamental and elementary principle that ownership does
not pass by mere stipulation but only by delivery, and the execution of a public document
does not constitute sufficient delivery where the property involved is in the actual and
adverse possession of third persons, it becomes incontestable that even if included in
the contract, the ownership of the property in dispute did not pass.

Clearly, the case filed by petitioner was an action for specific performance of a written
contract of sale which, pursuant to Article 1144 of the Civil Code, prescribes in 10 years
from the accrual of the right of action. the annotation on May 20, 1993 of the November
13, 1972 affidavit of adverse claim on TCT No. 2355 (34515) afforded no protection to
petitioner for the same reason that said belated assertion of his alleged right over the
property is barred by prescription and laches.
Moreover, the affidavit of adverse claim registered by petitioner in 1972 was ineffective.
The law enforced at the time petitioner filed an adverse claim was Section 110 of Act
496, also known as the Land Registration Act.

Likewise, there is no merit in petitioner's assertion that the prescriptive period should
commence to run only on May 18, 1993 when the original copy of Transfer Certificate of
Title No. 2355 (34515) was retrieved by the Register of Deeds. The loss of the original
title will not prevent petitioner’s pursuit to enforce his right. Otherwise stated, the
recovery of the original title or the reconstitution thereof is not the only means by which
petitioner could protect his right. Under Article 1155 of the Civil Code - "[t]he prescription
of actions is interrupted when they are filed in court, when there is a written extrajudicial
demand by the creditors, and when there is any written acknowledgement of the debt by
the debtor." Petitioner therefore may pursue either judicial or extrajudicial means
manifesting his interest in the questioned property in order to interrupt the prescriptive
period.

Certainly, petitioner’s action filed on September 6, 1993 is barred by the 10 year

prescriptive period from the accrual of his alleged right of action on September 29, 1972.
In the same vein, said action is barred by laches having allowed 21 years to lapse before
enforcing his alleged right. Laches is defined as 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 negligence or omission to assert a right within a
reasonable time, warranting presumption that the party entitled to assert it has
abandoned it or has declined to assert it.

4. Paylago v. Jarabe, March 27, 1968

Facts: The entire lot involved in this suit was originally registered in the
name of Anselmo Lacatan. After his death, the transfer certificate was issued
in the name his two sons and heirs, Vidal and Florentino Lacatan. After Vidal
Lacatan died, his heirs executed a deed of sale of a portion of their lot in favor
of petitioners-spouses. Years after, Florentino Lacatan also died. His heirs
likewise executed a deed of sale in favor of the same vendees over a portion
of the same lot.
Upon the registration of the two deeds of sale, a new TCT was issued
in favor of petitioners-spouses. However, subsequent subdivision survey for
the purpose of segregating the two portions of land described in the deeds
revealed that a portion of the total area purchased by petitioners was being
occupied by defendant-respondent. Hence, an action to recover possession
and ownership of the said portion was filed.
The lower court rendered judgment in favor of respondent, and was
affirmed in toto by the Court of Appeals

Issue: Who has a better right in case of double sale of real property, the
registered buyer or the prior but unregistered purchaser?
 Held: As held by the Court, the general rule in this matter is that, between
two purchasers, the one who has registered the sale in his favor, in good
faith, has a preferred right over the other who has not registered his title,
even if the latter is in the actual possession of the immovable property. This
is in accordance with Art 1544, providing that if the same immovable
property should have been sold to different vendees, "the ownership shall
belong to the person acquiring it who in good faith first recorded it in the
registry of property. However, it was found that their acquisition and
subsequent registration were tainted with the vitiating element of bad faith;
petitioners knew beforehand that the parcel of land in question was owned
by respondent.
The fundamental premise of the preferential rights established by Article
1544 of the New Civil Code is good faith. To be entitled to the priority, the
second vendee must not only show prior recording of his deed of conveyance
or possession of the property sold, but must, above all, have acted in good
faith, that is to say, without knowledge of the existence of another alienation
by his vendor to a stranger.

5. Development Bank of the Philippines v. Mangawang, June 30, 1964

Facts: Gavino Amposta applied with the Director of Lands for the issuance of a
homestead patent over a parcel of land. Pending action on his application, cadastral
proceedings were instituted by the government wherein Amposta filed an answer
praying for the adjudication of the same land in his favor. In 1920, the cadastral
court rendered decision awarding the land to Amposta. Since no advice on this
matter was given either to the Bureau of Lands or to the Governor General, the latter
issued in favor of Amposta a Homestead Patent covering the same land, and an
Original Certificate of Title No. 100 issued to him. In 1922, the cadastral court issued
a decree of registration of the land in favor of Amposta pursuant to the decision
rendered in the cadastral case, and an Original Certificate of Title No. 2668 was
issued to him covering the same property. In1941, Amposta sold the land to Santos
Camacho surrendering to him Original Certificate of Title No. 100, and because of
this transfer said title was cancelled and transfer Certificate of Title No. 5506 was
issued in the name of Camacho. In 1946, Santos Camacho sold the land to Bonifacio
Camacho as a result of which Transfer Certificate of Title No. 248 was issued to the
latter. In 1948, Bonifacio Camacho mortgaged the land to the Rehabilitation Finance
Corporation (now Development Bank of the Philippines), and having failed to pay
the loan as agreed upon the land was sold at public auction to said bank as the
highest bidder. The period of redemption having elapsed without Camacho being
able to redeem the property, a final deed of sale was executed in favor of the bank,
and Transfer Certificate of Title No. 6961 was issued in its name. Meanwhile, in
1947, Gavino Amposta again sold the same property to Lazaro and Arsenio
Mangawang for the sum of P2,000.00, the vendees executing a mortgage on the land
to secure the payment of the balance. Having paid the balance of the purchase price,
and an absolute deed of sale was executed in their favor. In connection with this
transaction, Amposta surrendered to the vendees the title that was issued to him in
the cadastral case, which was later substituted by Transfer Certificate of Title No.
1098 issued in the name of the vendees. The Mangawang brothers took possession
thereof, and upon learning of this transfer, the DBP, which as already stated became
the owner of the property, commenced the present action against them in the Court
of First Instance of Bataan to recover its possession and damages. The
court rendered decision awarding the land to the Mangawang brothers. Hence, this
appeal.

ISSUE: W/N the Mangawang brothers have better right over the subject property.

HELD:
Since both purchasers apparently have acted in good faith the Court cannot
but conclude that the sale made by Amposta to Santos Camacho is the valid one
considering that when Amposta sold the same land to the Mangawang brothers he
had nothing more to sell even if the title he surrendered to them is one issued
covering the same property. In legal contemplation, therefore, Amposta sold a
property he no longer owned, and hence the transaction is legally ineffective. On the
other hand, the case can also be treated as one of double sale, where a person sells
the same land to two different persons who are unaware of the flaw that lies in its
title, and where the law adjudicates the property to the purchaser who first
registers the transaction in his name in the registry of property. In applying this
principle, the Court cannot conclude that the title should likewise be adjudicated to
appellant whose predecessor-in-interest acquired and registered the property much
ahead in point of time than the appellees. Verily, the title acquired by the latter is
invalid and ineffective, contrary to the finding of the court a quo.

6. Carreon v. Agcaoile, February 23, 1961 (Real: Carreon v. Agcaoili)

Where the buyer of the land was an enlisted man in Philippine constabulary
and seldom went home to visit his relatives, the mere fact that he was a
townmate of the vendor is not sufficient basis to conclude that he knew that
the latter had children by a first marriage. Fraud cannot be presumed. It must
be established by clear and sufficient evidence.

7. Carumba v. CA, February 18, 1970

Facts: Spouses Amado Canuto and Nemesia Ibasco, by virtue of a deed of

sale, sold a parcel of landin favour of the spouses Amado Carumba and Benita
Canuto. The referred deed of sale was never registered notary, was not then
an authorized notary public in the place. It has also been expressly admitted
Amado Canuto is the older brother of the wife of Amado Carumba.
A complaint for a sum or money was filed against Amado Canuto and
Nemesia Ibasco by Santiago Balbuena, and a decision was rendered in favor
against them. The ex-officio Sheriff, issued a "Definite Deed of Sal of the
property now in question in favor of Santiago Balbuena, which instrument of
 sale was registered. The aforesaid property was declared for taxation
purposes in the name of Santiago Balbuena.
The Court of First instance nullified the sale in favor of the judgment creditor,
Santiago Balbuena. However upon appeal, the appellate court declared that
there having been a double sale of the land subject of the suit Balbuena's title
was superior to that of the other; the execution being properly registered in
good faith and that the sale to Carumba was not recorded.

Issue: w/n there is double sale

Held: Under the invoked Article 1544 registration in good faith prevails
over possession in the event of a double sale by the vendor of the same piece
of land to different vendees, however it does not apply to the present case,
even if Balbuena, the later vendee, was ignorant of the prior sale made by his
judgment debtor in favor of petitioner Carumba. The reason is that the
purchaser of unregistered land at a sheriff's execution sale only steps into the
shoes of the judgment debtor, and merely acquires the latter's interest in the
property sold as of the time the property was levied upon.
But the deed of sale in favor of Canuto had been executed earlier.
Addiotnally, the fact that petitioner Carumba had taken possession of the
unregistered land sold, sufficed to vest ownership on the said buyer. When
the levy was made by the Sheriff, therefore, the judgment debtor no longer
had dominical interest nor any real right over the land that could pass to the
purchaser at the execution sale. Hence, the latter must yield the land to
petitioner Carumba.

8. Sps. Santiago v. CA, August 14, 1995

SYLLABUS
1. CIVIL LAW; CONTRACTS; SALES; DOUBLE SALE OF REAL PROPERTY;
PRESUMPTION OF GOOD FAITH ON THE PART OF THE PURCHASER
PREVAILS IN THE ABSENCE OF ANY DIRECT EVIDENCE OF BAD FAITH;
CASE AT BAR. — It is axiomatic that good faith is always presumed. There
being absent any direct evidence of bad faith, there is need to examine what
respondent Court of Appeals said are indices of bad faith on the part of
petitioners. Even though on the date of the execution of deed of sale on July
30, 1979, in favor of petitioners, respondent Arevalo was still a complete
stranger to the transaction, Arevalo having purchased the property only on
September 13, 1982, respondent court found it "most irregular" that the no
copy of document of sale in favor of petitioners was filed with The Records
Management and Archives Division in Manila, and that while said deed of sale
is dated July (mistakenly stated by respondent court as June) 30, 1979, the
notarial commission of the attesting notary public was stated as expiring on
December 31, 1982, or more than 2 years from the date of notarization of the
document. The due execution of the deed of sale, it must be emphasized, is
not disputed. The sellers are not repudiating the sale. Respondent court in
examining the deed just expressed its misgivings on the lack of a copy thereof
with the Records Management and Archives Division, and on the commission
of the notary extending to more than the usual 2 years, and thereupon took
the same as badges of bad faith. But how could there be bad faith when at
that time petitioners were the only buyers. There were not even talks or
negotiations for the sale of the property to respondent Arevalo, as indeed he
did not enter the picture until 1982 or some 3 years after the execution of the
deed in favor of petitioners or for a longer period if we reckon the sale from
1978 when the offer to sell of Evelyn Mercado was accepted by petitioners.
And surely, the parties to a notarized document are not the persons obligated
to furnish a copy thereof to the Records Management and Archives Division,
such task being that of the notary. The failure of the notary public to so
furnish a copy of the deed to the proper office is a ground for disciplining
him, but certainly not for invalidating the document or for setting aside the
transaction therein involved. A clear typographical error concerning the
expiry year of the notary's commission cannot be made a basis to destroy the
presumption of good faith and hold petitioners in bad faith. They were not
responsible for such minor and innocuous error. But more importantly, it is
to be noted that neither Arevalo nor respondent court questions the fact that
the notary was duly and legally commissioned as such at time he notarized
the deed of sale in favor of petitioners. The Court of Appeals would also count
against petitioners the circumstance that the deed of sale of July 30, 1979
was executed before the respective special powers of attorney of the other
co-owners were executed. The inference of bad faith based on the above
circumstance is misplaced. None of the co- owners has repudiated the sale, or
for that matter, their respective powers of attorney. At that time, as has been
herein repeatedly emphasized, respondent Arevalo was yet an ingredient to
be factored into the picture some 3 years hence. There could thus have been
no design or intent to defraud him, a completely unknown entity as he was at
that time. We believe that petitioners cannot be said to be in bad faith simply
because they had the deed of sale executed even if not all the co-owners had
executed their respective special powers of attorney. Consider thus the
following: (a) petitioners were holding on to and had in their possession the
certificate of title of the sellers; (b) petitioners had the sellers' general
powers of attorney — which of course were unavailing to transfer ownership
over realty; (c) petitioners waited until all the necessary special powers of
attorney were obtained before they registered the sale. In fine, whatever
defects there may have been in the deed of sale are improper bases for
respondent court to draw the conclusion that petitioners are in bad faith. If
any co-owner had questioned the deed before the registration, the
assumption of bad faith may be correct, but such inference cannot be claimed
by respondent Arevalo, a person who was not yet a buyer at that time and
who was a complete stranger to the first transaction. How could petitioners
even attempt to defraud a future buyer whom they did not know as a
possible buyer at the time the deed of sale was executed.
2. ID.; ID.; ID.; PURCHASER FOR VALUE; WHEN CONSIDERED IN BAD
FAITH; CASE AT BAR. — The records do not show the extent to which
respondent Arevalo conducted ocular inspections of the lot subject of the
double sale. If he limited himself to an examination of the Torrens title kept
by the Register of Deeds, he is guilty of negligence in not asking for the
owner's duplicate copy of the said title, which of course could not be given to
him as the same had been turned over to petitioners a long time before
Arevalo purchased the lot. Evelyn Mercado had no owner's copy of the title to
give to Arevalo. We ruled in De Guzman, Jr. vs. Court of Appeals (156 SCRA
701 [1987]: The failure of appellees to take the ordinary precautions which a
prudent man would have taken under the circumstances, specially in buying
a piece of land in the actual, visible and public possession of another person,
other than the vendor, constitutes gross negligence amounting to bad faith.
"In this connection, it has been held that where, as in this case, the land sold
is in the possession of a person other than the vendor, the purchaser is
required to go beyond the certificate of title and ma[k]e inquiries concerning
the rights of the actual possessor. Failure to do so would make him a
purchaser in bad faith. (Incala vs. Mendoza, CA-G.R. No. 13677-R, November
9, 1965; De Jesus vs. Revilla, CA-G.R. No. 13562-R October 5, 1965; Martelino
vs. Manikan, CA-G.R No. 32792-R, June 22, 1956] . . . One who purchases real
property which is in the actual possession of another should, at least make
some inquiry concerning the right of those in possession. The actual
possession by other than the vendor should, at least put the purchaser upon
inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona
fide purchaser as against such possessors (Conspecto vs. Fruto, 31 Phil. 144).
"Appellant has been and continues to be in actual possession of the property,
and her deed of pacto de retro sale dates back to 1957 while the deed of sale
in favor of appellees was executed in 1970; and there is no showing that
appellant's possession and her pacto de retro sale were done in bad faith. If
the second buyer in a double sale of real property does not insist in obtaining
possession of the owner's copy of the Torrens title, does not inspect the
property in the absence of said copy to ascertain who is in possession, and
does not try to have the deed of sale registered until after he learns that there
was a buyer of the same lot ahead of him, his rights cannot prevail over the
first buyer who did all these things.

3. ID.; ID.; ID.; REGISTRATION IN GOOD FAITH; OPERATIVE FACT THAT

VESTS TITLE TO OWNERSHIP; CASE AT BAR. — In any event, even if
petitioners had known of the second sale, they still have the superior right,
absent as there is prior registration in good faith by respondent Arevalo of
the second sale in his favor. Most enlightening in this regard are the words of
a noted civilist, a colleague in this Division, to the effect: The governing
principle is prius tempore, potior jure (first in time, stronger in right).
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. Cabana (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, Crisostomo vs. CA,
G.R. 95843, 02 September 1992). Registration of the second buyer under Act
3344, providing for the registration of all instruments on land neither
covered by the Spanish Mortgage Law nor the Torrens System (Act 496),
cannot improve his standing since Act 3344 itself expresses that registration
thereunder would not prejudice prior rights in good faith (see Carumba vs.
Court of Appeals, 31 SCRA 558). Registration, however, by the first buyer
under Act 3344 can have the effect of constructive notice to the second buyer
that can defeat his right as such buyer in good faith (see Arts. 708-709, Civil
Code; see also Revilla vs. Galindez, 107 Phil. 480; Taguba vs. Peralta, 132
SCRA 700). Art. 1544 has been held to be inapplicable to execution sales of
unregistered land, since the purchaser merely steps into the shoes of the
debtor and acquires the latter's interest as of the time the property is sold
(Carumba vs. Court of Appeals , 31 SCRA 558; see also Fabian vs. Smith, Bell
& Co., 8 Phil. 496) or when there is only one sale (Remalante vs. Tibe, 158
SCRA 139).

9. Tan v. CA, September 9, 1998

SYNOPSIS
Herein private respondent led a complaint for recovery of property against
herein petitioners. He claimed that he owns the subject properties as he
bought it in 1954 from Mr. Tan Keh but was unable to effect immediate
transfer of title in his own favor in view of his foreign nationality at the time
of the sale. He alleged that, in 1958, Mr. Tan Keh executed a deed of sale to
Remigio Tan, his brother and father of petitioners, with the understanding
that the subject properties are to be held in trust by Remigio for the bene t of
private respondent. aSCHcA
Petitioners led a motion to dismiss the complaint, which was granted by the
RTC. On appeal to the Court of Appeals, the latter reversed the trial court's
decision.
The aw in the conclusion of the respondent court that the complaint stated a
cause of action is that, while conveniently echoing the general rule that
averments in the complaint are deemed hypothetically admitted upon the
ling of a motion to dismiss grounded on the failure to state a cause of action,
it did not take into account the equally established limitations to such rule,
i.e., that a motion to dismiss does not admit the truth of mere epithets of
fraud; nor allegations of legal conclusions; nor an erroneous statement of
law. A more judicious resolution of a motion to dismiss, therefore,
necessitates that the court be not restricted to the consideration of the facts
alleged in the complaint and inferences fairly deducible therefrom. Courts
may consider other facts within the range of judicial notice as well as
relevant laws and jurisprudence which the courts are bound to take into
account, and they are also fairly entitled to examine records/documents duly
incorporated into the complaint by the pleader himself in ruling on the
demurrer to the complaint. CaTcSA
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS;
AVERMENTS IN THE COMPLAINT DEEMED HYPOTHETICALLY
ADMITTED UPON FILING OF MOTION TO DISMISS GROUNDED ON
FAILURE TO STATE CAUSE OF ACTION; LIMITATIONS TO THE RULE. —
The aw in this conclusion is that, while conveniently echoing the general rule
that averments in the complaint are deemed hypothetically admitted upon
the ling of a motion to dismiss grounded on the failure to state a cause of
action, it did not take into account the equally established limitations to such
rule, i.e., that a motion to dismiss does not admit the truth of mere epithets of
fraud; nor allegations of legal conclusions; nor an
erroneous statement of law; nor mere inferences or conclusions from facts
not stated; nor mere conclusions of law; nor allegations of fact that falsity of
which is subject to judicial notice; nor matters of evidence; nor surplusage
and irrelevant matter; nor scandalous matter inserted merely to insult the
opposing party; nor to legally impossible facts; nor to facts which appear
unfounded by a record incorporated in the pleading, or by a document
referred to; and nor to general averments contradicted by more specific
averments. aHSAIT
2. ID.; ID.; ID.; RESOLUTION OF MOTION TO DISMISS; COURT NOT
RESTRICTED TO THE FACTS ALLEGED IN THE COMPLAINT AND
INFERENCES DEDUCIBLE THEREFROM. — A more judicious resolution of a
motion to dismiss, therefore, necessitates that the court be not restricted to
the consideration of the facts alleged in the complaint and inferences fairly
deducible therefrom. Courts may consider other facts within the range of
judicial notice as well as relevant laws and jurisprudence which the courts
are bound to take into account and they are also fairly entitled to examine
records/documents duly incorporated into the complaint by the pleader
himself in ruling on the demurrer to the complaint.
3. ID.; EVIDENCE; CONCLUSIVE PRESUMPTION; LESSEE IS ESTOPPED OR
PREVENTED FROM DISPUTING THE TITLE OF HIS LANDLORD. — The
execution of a lease contract between Remigio Tan as lessor and private
respondent as lessee over the subject properties, the existence of which is
established not only by a copy thereof attached to petitioners' motion to
dismiss as Annex "1" but by private respondent's own admission re ected in
paragraph 6 of the complaint, already belies private respondent's claim of
ownership. This is so because Article 1436 of the Civil Code. Section 2, Rule
131 of the Rules of Court and settled jurisprudence consistently instruct that
a lessee is estopped or prevented from disputing the title of his landlord.
4. CIVIL LAW; OWNERSHIP; MORTGAGE CONSTITUTED AND
SUCCESSFUL ACQUISITION OF TRANSFER CERTIFICATE OF TITLE OVER
SUBJECT PROPERTIES; ACTS OF STRICT DOMINION WHICH ARE
ANATHEMA TO THE CONCEPT OF A CONTINUING AND SUBSISTING
TRUST. — In the Memorandum of Encumbrances found at the back of TCT
No. 53284 issued in the name of Remigio Tan in 1958 attached as Annex "B"
to the complaint, there appears a mortgage constituted by Remigio Tan over
the subject properties in favor of Philippine Commercial and Industrial Bank
in 1963 to guarantee a principal obligation in the sum of P245,000.00.
Remigio could not have mortgaged the subject properties had he not been
the true owner thereof, inasmuch as under Article 2085 of the New Civil
Code, one of the essential requisites for the validity of a mortgage contract is
that the mortgagor be the absolute owner of the thing mortgaged. There is
thus no denying that Remigio Tan's successful acquisition of a transfer certi
cate of title (TCT No. 53284) over the subject properties in his name after
having his brother's (Alejandro Tan Keh) title thereto cancelled, and
execution of a mortgage over the same properties in favor of Philippine
Commercial and Industrial Bank, undoubtedly, are acts of strict dominion
which are anathema to the concept of a continuing and subsisting trust
private respondent relies upon.
5. ID.; SALE; DOUBLE SALE; BUYER IN POSSESSION OF TORRENS TITLE
AND HAD THE DEED OF SALE REGISTERED PREVAILS. — Private
respondent alleged that he bought the subject properties from Alejandro Tan
Keh in 1954 but nonetheless failed to present any document evidencing the
same, while Remigio Tan, as the other buyer, had in his name TCT No. 53284
duly registered in the Registry of Deeds of Manila on October 13, 1958.
Remigio Tan, beyond doubt, was the buyer entitled to the subject properties
since the prevailing rule is that in the double sale of real property, the buyer
who is in possession of a Torrens title and had the deed of sale registered
must prevail.
6. REMEDIAL LAW; EVIDENCE; PAROL EVIDENCE; DEAD MAN'S
STATUTE. — Petitioners are in possession of TCT No. 117898 which
evidences their ownership of the subject properties. On the other hand,
private respondent relies simply on the allegation that he is entitled to the
properties by virtue of a sale between him and Alejandro Tan Keh who is
now dead. Obviously, private respondent will rely on parol evidence which,
under the circumstances obtaining, cannot be allowed without violating the
"Dead Man's Statute" found in Section 23, Rule 130 of the Rules of Court.
7. ID.; ID.; ID.; ID.; OBJECT AND PURPOSE OF THE RULE. — The object and
purpose of the rule is to guard against the temptation to give false testimony
in regard of the transaction in question on the part of the surviving party, and
further to put the two parties to a suit upon terms of equality in regard to the
opportunity to giving testimony. If one party to the alleged transaction is
precluded from testifying by death, insanity, or other mental disabilities, the
other party is not entitled to the undue advantage of giving his own
uncontradicted and unexplained account of the transaction.
 8. CIVIL LAW; PRESCRIPTION OF OWNERSHIP AND OTHER RIGHTS;
RIGHT TO SEEK RECONVEYANCE OF PROPERTY ACTUALLY IN
POSSESSION OF PLAINTIFF IS IMPRESCRIPTIBLE ONLY IF IT COVERS
SITUATION WHERE POSSESSION IS IN THE CONCEPT OF AN OWNER;
HEIRS OF JOSE OLVIGA VS. CA, ET AL. — Reliance on the Olviga case is
misplaced. Private respondents in Olviga were actually occupying the subject
land fraudulently registered in the name of Jose Olviga in a cadastral
proceeding as owners. The rightful application of the doctrine highlighted
inOlviga that the right to seek reconveyance of property actually in
possession of the plaintiff is imprescriptible would only cover a situation
where the possession is in the concept of an owner. But by a further reading
of Olviga which emphasized that ". . . if a person claiming to be the owner
thereof is in actual possession of the property, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not
prescribe.
9. ID.; CASE AT BAR. — In this case, however, private respondent's
occupation of the subject properties was never in the concept of an owner
since he was a mere lessee who, as herein before discussed, is estopped from
denying the title of Remigio Tan as owner-lessor. At best, private
respondent's stay on the properties as lessee was by "license or by mere
tolerance" which, under Article 1119 of the Civil Code, "shall not be available
for the purposes of possession." It thus becomes evident that the ling of
private respondent's complaint in 1993 — thirty ve (35) years after TCT No.
53284 in the name of Remigio Tan was registered and eighteen (18) years
after the issuance of TCT No. 117898 in the names of petitioners — was way
beyond the ten (10)-year time limit within which reconveyance of property
based on an implied trust should be instituted. Private respondent's cause of
action, assuming that it exists, has clearly prescribed.
10. ID.; LACHES; A LESSEE CANNOT ASSERT ADVERSE CLAIM OF
OWNERSHIP AGAINST LESSOR-OWNER. — Private respondent's
possession of the subject properties cannot be made the basis to de ect the
effects of laches because he is a mere lessee who, to repeat, cannot assert any
adverse claim of ownership over the subject properties against the lessor-
owner. His mistake, if it is one, is that he tarried for thirty (30) years before
formally laying claim to the subject properties before the court. Considerable
delay in asserting one's right before a court of justice is strongly persuasive
of the lack of merit of his claim, since it is human nature for a person to
enforce his right when the same is threatened or invaded. Thus, private
respondent is estopped by laches from questioning the ownership of the
subject properties. 


10. Cardente v. Rubin, November 27, 1987 (Real: Cardente v. IAC)

FACTS
 o This is a simple case of a double sale of an immovable property. The trial court decided
in favor of the first vendee although the sale was by a private document. The then
Intermediate Appellate Court reversed and set aside the decision of the lower court. The
public respondent appellate court ruled in favor of the second buyers, who registered
their deed of sale. Hence, the present petition for review by certiorari.
o Sometime in 1956, Francisca Cardente, for and on behalf of her grandson,
petitioner Ignacio Cardente, who was then a minor, and now married to his co-
petitioner, purchased from Isidro Palanay one hectare of land. Immediately after
the purchase, the Cardentes took possession of the land and planted various
crops and trees thereon. They have been in continuous possession ever since,
adverse to the whole world. Unfortunately, however, the private document
evidencing the sale of the one-hectare lot to petitioner Ignacio Cardente was lost
and never found despite diligent efforts exerted to locate the same.

o Some four years later, on August 18, 1960, Isidro Palanay sold the entire
property, including the one-hectare portion already sold to Cardente, to the
private respondents, Ruperto Rubin and his wife. The deed of sale was registered
and a new title was issued in favor of the Rubin spouses. Notwithstanding the
second sale, or because of it, Isidro Palanay, with the written conforme of his
wife, Josepha de Palanay, on December 9, 1972, executed a public document in
favor of petitioner Ignacio Cardente conforming the sale to him (Cardente) in
1956 of the one hectare portion. The deed of confirmation likewise states that
the subsequent vendee, respondent Ruperto Rubin, was informed by Palanay of
the first sale of the one-hectare portion to Cardente.

ISSUES

o Whether the private respondents, Sps. Rubin, acted in good faith when they
registered the deed of sale.
o Whether the private respondents, Sps. Rubin, have the better right over the
property.

HELD

o On the first issue: No, the Sps. Rubin did not act in good faith when they
registered the deed of sale.

o That possession (by the petitioners) would have been enough to arouse the
suspicion of the private respondents as to the ownership of the entire area
which they were about to purchase. Their failure to inquire and to investigate
the basis of the petitioners' actual occupation of the land forming a substantial
part of what they were buying militates against their deposited lack of
knowledge of the first sale, "A purchaser cannot close his eyes to facts which
should put a reasonable man upon his guard and then claim that he acted in
good faith under the belief that there was no defect in the title of the
 vendor." We have warned time and again that a buyer of real property which is
in the possession of persons other than the seller must be wary and should
investigate the rights of those in possession. Otherwise, without such inquiry,
the buyer can hardly be regarded as a buyer, in good faith.

o On the second issue: The petitioners, Cardentes, have the better right
over the property.

o The private respondents' avowals that they had never Known of the Prior
sale until the issues were joined at the trial court, for. before that, they
merely tolerated the continued presence of the original occupants, Francisca
and Eugenia Cardente, and Ignacio, in the premises, out of simple pity for the
two old women, is too pat to be believed. For if these were so, the reason why
the private respondents continued to tolerate the occupation by the
petitioners of the contested property even after the demise of the two old
women escapes us. Rubin's allegation that this was because they were still in
good terms with the petitioners is too lame an excuse to deserve even a scant
consideration, The private respondents' total lack of action against the actual
occupants of a good portion of the land described in their torrens title can
only be construed as acceptance on their part of the existence of the prior
sale and then resignation to the fact that they did not own the one-hectare
portion occupied by the petitioners. Present these facts, the foisted ignorance
of the respondents as to the first sale is an empty pretense. Their seventeen
years of inaction and silence eloquently depict a realization of lack of right.

11. Carbonell v. CA, 69 SCRA [1976]

Facts:
 Respondent Jose Poncio was the owner of the parcel of land located in
Rizal. (Area – more or less 195 sq. m.)
 The said lot was subject to mortgage in favor of the Republic Savings Bank
for the sum of P1,500.00.
 Carbonell and respondent Emma Infante offered to buy the said lot from
Poncio.
 Poncio offered to sell his lot to Carbonell excluding the house on which he
and his family stayed. Carbonell accepted the offer and proposed the price
of P9.50/sq. m..
 Poncio accepted the price on the condition that from the purchase price
would come the money to be paid to the bank.
 January 27, 1995: The parties executed a document in the Batanes dialect
which is translated as: CONTRACT FOR ONE HALF LOT WHICH I (Poncio)
BOUGHT FROM.
 Carbonell asked a lawyer to prepare the deed of sale and delivered the
document, together with the balance of P400, to Jose Poncio. (Note:
Carbonell already paid P200 for the mortgage debt of Poncio + obligated
herself to pay the remaining installments.)
  However, when she went to Poncio, the latter informed her that he could no
longer proceed with the sale as the lot was already sold to Emma Infante
and that he could not withdraw with the sale.
 Poncio admitted that on January 30, 1995, Mrs. Infante improved her offer
and he agreed to sell the land and its improvements to her for P3,535.00.
 In a private memorandum agreement, Poncio bound to sell to Infante the lot
for the sum of P2,357.52, with Infante still assuming the mortgage debt of
P1,177.48. (Note: The full amount of mortgage debt was already paid by the
Infantes)
 February 2, 1995: A deed of sale was executed between Poncio and
Infante.
 February 8, 1995: Knowing that the sale to Infante has not been registered,
Carbonell filed an adverse claim.
 February 12, 1995: The deed of sale was registered but it has an annotation
of the adverse claim of Carbonell.
 Thereafter, Emma Infante took possession of the lot, built a house and
introduced some improvements.
 In June 1995, Carbonell filed a complaint praying that she be declared the
lawful owner of the land, that the subsequent sale to spouses Infante be
declared null and void, and that Jose Poncio be ordered to execute the
corresponding deed of conveyance of said land in her favor
 RTC ruled that the sale to spouses Infante was null and void. After re-trial, it
reversed its ruling. CA ruled in favor of Carbonell but after a MfR, it reversed
its ruling and ruled in favor of the Infantes.

Issue: WON Carbonell has a superior right over Emma Infante. YES

Held:

Article 1544 provides that for double sale of an immovable property, the
ownership shall belong to the person who first acquired it in good faith and
recorded it in the Registry of Property
Article 1544, New Civil Code, which is decisive of this case, recites:
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 movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.

The buyer must act in good faith in registering the deed of sale
It is essential that the buyer of realty must act in good faith in registering his deed
of sale to merit the protection of the second paragraph of said Article 1544.
Unlike the first and third paragraphs of said Article 1544, which accord
preference to the one who first takes possession in good faith of personal or real
property, the second paragraph directs that ownership of immovable property
should be recognized in favor of one "who in good faith first recorded" his right.
Under the first and third paragraph, good faith must characterize the act of
anterior registration.

Rule when there is inscription or not

If there is no inscription, what is decisive is prior possession in good faith. If there
is inscription, as in the case at bar, prior registration in good faith is a pre-
condition to superior title.

Carbonell was in good faith when she bought the lot

When Carbonell bought the lot from Poncio on January 27, 1955, she was the
only buyer thereof and the title of Poncio was still in his name solely encumbered
by bank mortgage duly annotated thereon. Carbonell was not aware — and she
could not have been aware — of any sale of Infante as there was no such sale to
Infante then.

Hence, Carbonell's prior purchase of the land was made in good faith. Her good
faith subsisted and continued to exist when she recorded her adverse claim four
(4) days prior to the registration of Infantes's deed of sale.

Carbonell’s good faith did not cease when she was informed by Poncio
about the sale to Emma Infante
After learning about the second sale, Carbonell tried to talk to the Infantes but the
latter refused.
(Exact words of the SC: With an aristocratic disdain unworthy of the good
breeding of a good Christian and good neighbor, Infante snubbed Carbonell like
a leper and refused to see her.)

So Carbonell did the next best thing to protect her right — she registered her
adversed claim on February 8, 1955. Under the circumstances, this recording of
her adverse claim should be deemed to have been done in good faith and should
emphasize Infante's bad faith when she registered her deed of sale four (4) days
later on February 12, 1955.

The Infantes were in bad faith (5 indications of bad faith listed below)
Bad faith arising from previous knowledge by Infante of the prior sale to
Carbonell is shown by the following facts:
1. Mrs. Infante refused to see Carbonell.
Her refusal to talk to Carbonell could only mean that she did not want to listen to
Carbonell's story that she (Carbonell) had previously bought the lot from Poncio.
2. Carbonell was already in possession of mortgage passbook and copy of the
mortgage contract. (Not Poncio’s saving deposit passbook.)
Infante naturally must have demanded from Poncio the delivery to her of his
mortgage passbook and mortgage contract so that the fact of full payment of his
bank mortgage will be entered therein; and Poncio, as well as the bank, must
have inevitably informed her that said mortgage passbook could not be given to
her because it was already delivered to Carbonell.
3. Emma Infante did not inquire why Poncio was no longer in possession of the
mortgage passbook and why it was in Carbonell’s possession.
The fact that Poncio was no longer in possession of his mortgage passbook and
that the said mortgage passbook was already in possession of Carbonell, should
have compelled Infante to inquire from Poncio why he was no longer in
possession of the mortgage passbook and from Carbonell why she was in
possession of the same.
4. Emma Infante registered the sale under her name after Carbonell filed an
adverse claim 4 days earlier.
Here she was again on notice of the prior sale to Carbonell. Such registration of
adverse claim is valid and effective.
5. Infante failed to inquire to Poncio WON he had already sold the property to
Carbonell especially that it can be shown that he was aware of the offer made by
Carbonell.
Poncio alleged in his answer that Mrs. Infante and Mrs. Carbonell offered to buy
the lot at P15/sq. m. which offers he rejected as he believed that his lot is worth
at least P20.00/sq. m. It is therefore logical to presume that Infante was told by
Poncio and consequently knew of the offer of Carbonell which fact likewise
should have put her on her guard and should have compelled her to inquire from
Poncio whether or not he had already sold the property to Carbonell

The existence of prior sale to Carbonell was duly established

From the terms of the memorandum, it tends to show that the sale of the property
in favor of Carbonell is already an accomplished act. As found by the trial court,
to repeat the said memorandum states "that Poncio is allowed to stay in the
property which he had sold to the plaintiff ..., it tends to show that the sale of the
property in favor of the plaintiff is already an accomplished act..."

There was an adequate consideration or price for the sale in favor of

Carbonell
Poncio agreed to sell the same to Carbonell at P9.50 per square meter, on
condition that Carbonell:
1. should pay (a) the amount of P400.00 to Poncio and the arrears in the amount
of P247.26 to the bank
2. should assume his mortgage indebtedness.
The bank president agreed to the said sale with assumption of mortgage in favor
of Carbonell an Carbonell accordingly paid the arrears of P247.26.

It is evident therefore that there was ample consideration, and not merely the
sum of P200.00, for the sale of Poncio to Carbonell of the lot in question.
The subject property was identified and described
The court has arrived at the conclusion that there is sufficient description of the
lot referred to in Exh. As none other than the parcel of lot occupied by the
defendant Poncio and where he has his improvements erected. The Identity of
the parcel of land involved herein is sufficiently established by the contents of the
note Exh. 'A'.

12. Radiowealth Finance Company v. Paileo, May 20, 1991

FACTS: Defendant spouses Castro sold to plaintiff-appellee Palileo (private

respondent herein), a parcel of unregistered coconut land situated in Surigao
del Norte. The sale is evidenced by a notarized Deed of Absolute Sale (Exh.
“E”). The deed was not registered in the Registry of Property for unregistered
lands. Since the execution of the deed of sale, appellee Palileo exercised acts
of ownership over the land through his mother as administratrix or overseer.
Appellee has continuously paid the real estate taxes on said land from 1971
until the present.
A judgment was rendered against defendant Castro by the then CFI to pay
herein defendant-appellant Radiowealth Finance Company (petitioner
herein). Upon the finality of the judgment, a writ of execution was issued.
Pursuant to said writ, defendant provincial Sheriff levied upon and finally
sold at public auction the subject land that defendant Enrique Castro had
earlier sold to appellee Palileo. A certificate of sale was executed by the
Provincial Sheriff in favor of defendant- appellant Radiowealth Finance
Company, being the only bidder. After the period of redemption has (sic)
expired, a deed of final sale was also executed by the same Provincial Sheriff.
Both the certificate of sale and the deed of final sale were registered with the
RD.
Learning of what happened to the land, private respondent Palileo filed an
action for quieting of title over the same. After a trial on the merits, the
court a quo rendered a decision in his favor. On appeal, the decision of the
trial court was affirmed. Hence, this petition for review on certiorari.
ISSUE: Who, as between two buyers of unregistered land, is the rightful
owner—the first buyer in a prior sale that was unrecorded, or the second
buyer who purchased the land in an execution sale whose transfer was
registered in the RD
HELD: PALILEO HAS THE SUPERIOR RIGHT OVER THE LAND
There is no doubt that had the property in question been a registered land,
this case would have been decided in favor of petitioner since it was
petitioner that had its claim first recorded in the RD.
It must be stressed however that this case deals with a parcel of unregistered
land and a different set of rules applies. We affirm the decision of the CA.
Under Act No. 3344, registration of instruments affecting unregistered lands
is “without prejudice to a third party with a better right”. The aforequoted
phrase has been held by this Court to mean that the mere registration of a
sale in one’s favor does not give him any right over the land if the
 vendor was not anymore the owner of the land having previously sold the
same to somebody else even if the earlier sale was unrecorded.
Applying this principle, the CA correctly held that the execution sale of the
unregistered land in favor of petitioner is of no effect because the land no
longer belonged to the judgment debtor as of the time of the said execution
sale.
NOTES: Findings of fact of the CA are conclusive on this Court and will not be
disturbed unless there is grave abuse of discretion. The finding of the CA that
the property in question was already sold to private respondent by its
previous owner before the execution sale is evidenced by a deed of sale. Said
deed of sale is notarized and is presumed authentic. There is no substantive
proof to support petitioner’s allegation that the document is fictitious or
simulated. With this in mind, We see no reason to reject the conclusion of the
CA that private respondent was not a mere administrator of the property.
That he exercised acts of ownership through his mother also remains
undisputed.

13. Villa-rey Transit v. Ferrer v. Villarama, October 29, 1969 (Real: Villa
Ray Transit Inc. v. Ferrer, 1968)

Facts:
On March 17, 1960, Policronio Quintos, Jr. was riding the petitioner’s bus,
when the said bus frontally hit the rear side of a bullcart filled with hay. The
protruding end of the bamboo pole at the rear of the cart penetrated the
windshield of the bus and landed at Policronio’s face. He died of traumatic
shock due to cerebral injuries. Private respondents are sisters and surviving
heirs of the deceased. They brought this action against Villa Rey Transit for
breach of contract of carriage. The trial court found that the death was
caused by the negligence of the bus driver, for whom petitioner was liable
under the contract of carriage with the deceased.
Issues:
(1) The number of years to be used as basis of computation
(2) The rate at which the losses sustained by respondents should be fixed
Held:

(1) The determination of the indemnity to be awarded to the heirs of a

deceased person has no fixed basis. Much is left to the discretion of the court
considering the moral and material damages involved, and so it has been said
that "(t)here can be no exact or uniform rule for measuring the value of a
human life and the measure of damages cannot be arrived at by precise
mathematical calculation, but the amount recoverable depends on the
particular facts and circumstances of each case. The life expectancy of the
deceased or of the beneficiary, whichever is shorter, is an important factor.'
Other factors that are usually considered are: (1) pecuniary loss to plaintiff
or beneficiary; (2) loss of support; (3) loss of service; (4) loss of society; (5)
mental suffering of beneficiaries; and (6) medical and funeral expenses."
Thus, life expectancy is, not only relevant, but, also, an importantelement in
fixing the amount recoverable by private respondents herein. Although it is
not the sole element determinative of said amount, no cogent reason has
been given to warrant its disregard and the adoption, in the case at bar, of a
purely arbitrary standard, such as a four-year rule. In short, the Court of
Appeals has not erred in basing the computation of petitioner's liability upon
the life expectancy of Policronio Quintos, Jr.

(2) With respect to the rate at which the damages shall be computed,
petitioner impugns the decision appealed from upon the ground that the
damages awarded therein will have to be paid now, whereas most of those
sought to be indemnified will be sufferedyears later. This argument is
basically true, and this is, perhaps, one of the reasons why the Alcantara case
points out the absence of a "fixed basis" for the ascertainment of the damages
recoverable in litigations like the one at bar. Just the same, the force of the
said argument of petitioner herein is offset by the fact that, although payment
of the award in the case at bar will have to take place upon the finality of the
decision therein, the liability of petitioner herein had been fixed at the rate
only of P2,184.00 a year, which is the annual salary of Policronio Quintos, Jr.
at the time of his death, as a young "training assistant" in the Bacnotan
Cement Industries, Inc. In other words, unlike the Alcantara case, on which
petitioner relies, the lower courts did not consider, in the present case,
Policronio's potentiality and capacity to increase his future income. Indeed,
upon the conclusion of his training period, he was supposed to have a better
job and be promoted from time to time, and, hence, to earn more, if not
considering the growing importance of trade, commerce and industry and
the concomitant rise in the income level of officers and employees therein
much more.

Damages consist, not of the full amount of his earnings, but of the support,
they received or would have received from him had he not died in
consequence of the negligence of petitioner's agent. In fixing the amount of
that support, We must reckon with the "necessary expenses of his own
living", which should be deducted from his earnings. Only net earnings, not
gross earning, are to be considered that is, the total of the
earnings less expenses necessary in the creation of such earnings or income
and less living and other incidental expenses.
All things considered, We are of the opinion that it is fair and reasonable to
fix the deductible living and other expenses of the deceased at the sum of
P1,184.00 a year, or about P100.00 a month, and that, consequently, the loss
sustained by his sisters may be roughly estimated at P1,000.00 a year or
P33,333.33 for the 33-1/3 years of his life expectancy. To this sum of
P33,333.33, the following should be added: (a) P12,000.00, pursuant to Arts.
104 and 107 of the Revised Penal Code, in relation to Article 2206 of our Civil
Code, as construed and applied by this Court; (b) P1,727.95, actually spent by
 private respondents for medical and burial expenses; and (c) attorney's fee,
which was fixed by the trial court, at P500.00, but which, in view of the
appeal taken by petitioner herein, first to the Court of Appeals and later to
this Supreme Court, should be increased to P2,500.00. In other words, the
amount adjudged in the decision appealed from should be reduced to the
aggregate sum of P49,561.28, with interest thereon, at the legal rate, from
December 29, 1961, date of the promulgation of the decision of the trial
court.

14. Filinvest Credit Corp. v. Phil. Acetylene, Co., Inc., January 30, 1982

The mere return of the mortgaged motor vehicle by the mortgagor does not constitute dation
in payment in the absence, express or implied of the true intention of the parties. Dacion en
pago is the transmission of the ownership of a thing by the debtor to the creditor as an
accepted equivalent of the performance of obligation.
Facts: Philippine Acetylene Co., Inc., purchased from one Alexander Lim, as
evidenced by a Deed of Sale marked as Exhibit G, a motor vehicle described as
Chevorlet, 1969 model with Serial No. 136699Z303652 for P55,247.80 with a down
payment of P20,000.00 and the balance of P35,247.80 payable, under the terms and
conditions of the promissory note thirty-four (34) monthly installments. As security for
the payment of said promissory note, the appellant executed a chattel mortgage over
the same motor vehicle in favor of Alexander Lim. Subsequently, on November 2,
1971. Alexander Lim assigned to the Filinvest Finance Corporation all his rights, title,
and interests in the promissory note and chattel mortgage by virtue of a Deed of
Assignment.

Thereafter, the Filinvest Finance Corporation, as a consequence of its merger with

the Credit and Development Corporation assigned to the new corporation, the herein
plaintiff-appellee Filinvest Credit Corporation, all its rights, title, and interests on the
aforesaid promissory note and chattel mortgage.

Upon failing to pay, Filinvest Credit Corporation sent a demand letter instructing the
mortgagor that “return the mortgaged property, which return shall be in full
satisfaction of its indebtedness pursuant to Article 1484 of the New Civil Code.” Lim
subsequently returned the vehicle.

Issue: Whether or not the return of the vehicle bars the foreclosure of the chattel
mortgage

Held: No. Filinvest did not consented, or at least intended, that the mere delivery to,
and acceptance by him, of the mortgaged motor vehicle be construed as actual
payment, more specifically dation in payment or dacion en pago. The fact that the
mortgaged motor vehicle was delivered to Filinvest does not necessarily mean that
ownership thereof, as juridically contemplated by dacion en pago, was transferred
from appellant to appellee.
The mere return of the mortgaged motor vehicle by the mortgagor does not
constitute dation in payment in the absence, express or implied of the true intention
of the parties. Dacion en pago is the transmission of the ownership of a thing by the
debtor to the creditor as an accepted equivalent of the performance of obligation.

In the absence of clear consent of appellee to the proferred special mode of

payment, there can be no transfer of ownership of the mortgaged motor vehicle from
appellant to appellee. If at all, only transfer of possession of the mortgaged motor
vehicle took place, for it is quite possible that appellee, as mortgagee, merely wanted
to secure possession to forestall the loss, destruction, fraudulent transfer of the
vehicle to third persons, or its being rendered valueless if left in the hands of the
appellant.

15. Artemio Katigbak v. CA, January 31, 1962

FACTS
- Katigbak, thru Lundberg, entered into agreement with Evangelista to
purchase winch for P12,000.00, payable at P5,000.00 upon delivery and the
P7,000.00 w/in 60 days. As winch needed some repairs, which could be done
in shop of Lundberg, it was stipulated that amt necessary for repairs will be
advanced by Katigbak, deductible fr initial payment. Repairs were
undertaken, P2,029.85 for spare parts was advanced by Katigbak. For one
reason, sale wasn’t consummated, Katigbak sued Evangelista, Lundberg and
the latter's company, for refund. The defendants filed separate answers,
Lundberg alleging non- liability for the refund since the same was purely a
personal account between Katigbak and Evangelista. Evangelista claimed
that while there was an agreement and that Katigbak advanced the payment
for the spare parts, Katigbak refused to comply with his contract to purchase;
that as a
result, he was forced to sell the winch to a third person for only P10,000.00,
thus incurring a loss of P2,000.00, which amount Katigbak should be ordered
to pay, plus damages.
ISSUE
WON vendee should be liable
HELD
YES- The herein petitioner failed to take delivery of the winch, subject matter
of the contract and such failure or breach was, according to the Court of
Appeals, attributable to him, a fact which is binding upon this Court. The
right to resell the equipment, therefore, cannot be disputed. It was also found
by the appellate court that in the subsequent sale of the winch to a third
party, the vendor thereof lost P2,000.00, said difference to be borne by the
supposed vendee who failed to take delivery and/or pay the price.