Kuenzle v. Macke • Kuenzle cites a case (Kuenzle v.

AS Watson) which the SC did not find to be

Date: December 16, 1909
Petitioner: KUENZLE & STREIFF (plaintiff and appellant)
Respondent: MACKE & CHANDLER ET AL. (defendants and appellees)
Ponente: MORELAND
Facts:
• Petitioner:
o January, 1907, he was the owner of the Oregon Saloon in Cavite,
consisting of bar, furniture, furnishings, and fixtures, of the value of
1,000 pesos;
o the defendant Jose Desiderio, as sheriff, levied upon such property
by virtue of an execution issued upon a judgment secured by the
defendant Macke & Chandler, against Stanley & Krippendorf;
o that said plaintiff notified the sheriff, in the manner provided by law,
that it was the owner and forbade the sale under said execution;
o hat, notwithstanding such claim upon the part of the plaintiff, the
said sheriff sold said goods under said execution; that said firm of
Macke & Chandler was the purchaser of said goods and the same
were delivered to it; that the defendants Bachrach, Elser, and Gale,
were the sureties upon the bond given to the sheriff by Macke &
Chandler before said goods were sold.
• Defendants:
o the property described by the plaintiff and sold at the execution sale
referred to was not the property of the plaintiff at the time of said
levy and sale, but was the property of Stanley & Krippendorf, who
were in possession of the same at the time of such levy.
o sale between Stanley & Krippendorf and plaintiff was never
recorded because it was in a private document
o property remained from the time of said sale forward in the
exclusive possession and control of said Stanley & Krippendorf,
and that they conducted the business subsequent to the execution
of said instrument exactly as they had prior thereto — in their own
name — purchasing goods and paying therefor without reference to
the plaintiff in this case.
applicable.
o That was a case of the sale of property upon the condition that the
title should remain in the vendor until the purchase price should be
fully paid
o And that in case of non-payment of the debt or any instalment, the
vendor would have a rights to take possession of the property and
deal with it as provided for in the contract
• That case was inapplicable because:
o In that case, the Court held that such a contract for the conditional
sale of goods was valid also as to third persons, provided
possession of the property was taken by the vendor before the
rights of third persons intervened against the same
• In this case, the bill of sale was not a conditional sale of property so the
principles in Kuenzle v. AS Watson are inapplicable.
• Chandler purchased the property at an execution sale. And so , Chandler
obtained a good title to the property as against Kuenzle
Dispositive: CFI AFFIRMED
Notes:
• The ownership of personal property cannot be transferred to the prejudice of
third persons except by delivery of the property itself.
• A sale without delivery gives the would-be purchaser no rights in said
property except those of a creditor.
• Where there is no express provision that the title shall not pass until
payment of the price, and the thing sold has been delivered, title passes
from the moment the thing sold is placed in the possession and control of
the buyer. In spite of the reciprocal nature of a sale, it is not the prior
payment of price that determines the effects of delivery of the subject matter.

Issue: What is the effect of the instrument of sale with regards to transferring property
from Krippendorf to Kuenzle - Chandler was able to obtain a good title (this was the
Court’s answer. So I guess the transaction between Krippendor & Kuenzle was
incomplete)

Held:
• SC cites the case of Fidelity & Deposit Company v. Wilson which laid down
a doctrine that ownership of personal property cannot be transferred to the
prejudice of third persons except by delivery of the property itself; and that a
sale without delivery gives the would-be purchaser no rights in those
property except those of a creditor
• The bill of sale in this case was a bill of sale of personal property. A bill of
sale of personal property, executed in a private document and unrecorded,
which property described there was not delivered and remained in
possession of the vendor, could have no effect against a person dealing with
the property upon the faith of appearances.
Ocejo Perez v. International Bank
Date: February 14, 1918
Petitioner: OCEJO, PEREZ & Co. (plaintiff and appellees)
Respondent: THE INTERNATIONAL BANKING CORPORATION (defendant and
appellant) FRANCISCO CHUA SECO, as assignee (intervener and appellant)
Ponente: FISHER
Facts:
• Chua Teng Chong of Manila, executed and delivered a promissory note to
the International Banking Corporation payable one month after date, for the
sum of P20,000. Attached to this was another private document stating that
Chua had deposited with the bank, as security for the said note, 5,000 piculs
of sugar in a warehouse situated at No 1008, Calle Toneleros, Binondo,
Manila.
• Plaintiff partnership Ocejo, Perez and Co. entered into contract with Chua for
the sale to him of 5,000 piculs of sugar. These were delivered by plaintiff to
Chua and stored in the buyer's warehouse situated at No. 119, Muelle de la
Industria. The buyer refused to make payment upon demand.
• On the same date the sugar was delivered to the plaintiff, the bank sent an
employee to inspect the sugar which according to the agreement, have been
stored in the Calle Toneleros warehouse. The bank's representative then
discovered that the amount of sugar in that warehouse did not exceed 1,800
piculs. The bank's representative went immediately to see Chua who
directed him to the rest of the sugar in the warehouse at No. 119, Muelle de
la Industria.
• Upon arrival at Muelle de la Industria, the bank rep found some 3,200 piculs
of sugar, of which he took immediate possession, closing the warehouse
with the bank's padlocks. The sugar seized by the bank in the Muelle de la
Industria is the same sugar which the plaintiff firm delivered to Chua Teng
Chong.
• Ocejo Perez & Co filed a complaint against the bank, alleging that the latter
was unlawfully holding some 4,711 piloness of sugar and prayed for the
possession of said sugar. It was able to replevin the personal property.
• By reason of the insolvency of Chua Teng Chong, Francisco Chua Seco was
appointed assignee of the property of the insolvent. A complaint in
intervention was filed by Chua Seco, in which he asserts a preferential right
to the sugar, as delivery already transferred ownership to Chua Teng Chong.
• By agreement of the parties, the sugar was sold and the proceeds of the
sale deposited in the bank, subject to the order of the court upon the final
disposition of the case.
• The CFI rendered judgment in favor of Oceja and from this decision appeals
have been taken by the bank and by the intervener.
Issue: W/N title to the sugar pass to the buyer upon its delivery to him - YES
Held:
• From the date the parties agreed in regard to the quantity of the sugar which
the seller was to deliver and the price which the buyer was to pay, the
contract was perfected. (Civil Code, art. 1450.) It is also clear that the
obligation of the seller to make delivery of the thing sold was not subject to
the condition that the buyer was to pay the price before delivery. The witness
Pomar, called on behalf of the seller, testified that the price was to be paid
after the completion of delivery. (Stenographic notes)
• Article 1462 of the Civil Code provides that the thing sold is deemed to be
delivered "when it passes into the possession and control of the buyer." It is
difficult to see how the seller could have divested himself more completely of
the possession of the sugar, or how he could have placed it more completely
under the control of the buyer.
• Seller was entitled to demand payment of the sugar at any time after the
delivery. No term having been stipulated within which the payment should be
made, payment was demandable at the time and place of the delivery of the
thing sold. (Civil Code, art. 1500.) The seller did not avail himself of his right
to demand payment as soon as the right to such payment arose, but as no
term for payment was stipulated, he was entitled, to require payment to be
made at any time after delivery, and it was the duty of the buyer to pay the
price immediately upon demand.
• As Manresa says tradition is a true mode of acquiring ownership "which
effects the passage of title and the birth of the right in rem. Therefore, the
delivery of the thing . . . signifies that title has passed from the seller to the
buyer."
• If the seller may make delivery of the thing sold and clothe the buyer with all
the appearances of ownership but without the passage of title until the
purchase price is actually paid, the consequences to the business
community would be deplorable. If the title did not pass, any sale which
might in the meantime be made by the buyer would be void, as no one can
transfer a greater interest than that which he possesses. With even greater
reason, the destruction of the thing in the possession of the buyer before
demand upon him for payment, would relieve him from the obligation to pay
— the thing perishes for its owner. (Tan Leonco vs. Go Inqui)
• The seller calls this transaction a cash sale, but, strictly speaking, it is not
cash sale. It is not like a sale made in a retail store, in which delivery and
payment are to be made simultaneously. The words 'cash sale' or 'terms
cash' in business dealings are frequently used when in reality a short period
of credit is contemplated. If delivery is consummated without requiring
payment to be made in advance or simultaneously, the seller grants a term
of credit to the buyer, however short and indeterminate it may be, and
waives his right to insist upon payment in advance or simultaneously with
delivery, but in lieu thereof he becomes entitled to payment upon demand
therefor.
• It is contended that there was an express agreement in this case that the
passage of the title should be subject to the payment of the price, as a
condition precedent. But in the case of Gonzalez v Rojas, the Court held,
o ...Ownership of things is not transferred by contract merely but by
delivery. Contracts only constitute titles or rights to the transfer or
acquisition of ownership, while delivery or tradition is the method of
accomplishing the same, the title and the method of acquiring it
being different in our law."
o (However the Court said that the pledge to the bank was
inefficacious as no effort was made to pledge the sugar which is the
subject matter of this case. Assuming an attempt was made to
pledge the sugar, the pledge so established would be void as
against third persons for not appearing by public instrument.
 • Also, the Court did not allow the action of replevin to be maintained. The
right to rescind a sale with respect to reciprocal obligations is not an
absolute one. It is the judgment of the court and not the mere will of the
plaintiff which produces the rescission of the sale. This being so, the action
of replevin will no lie upon the theory that the rescission has already taken
place and that the seller has recovered title to the thing sold.)

Dispositive: CFI REVERSED; HELD that the assignee of the bankruptcy of Chua
Teng Chong is entitled to the product of the sale of the sugar here in question, to wit,
P10,826.76, together with the interest accruing thereon, reserving to the seller the
right to file his claim in the insolvency proceedings

Notes:
• The thing sold is deemed to be delivered "when it passes into the
possession and control of the buyer."
• Absent the condition that the buyer was to pay the price before delivery,
ownership is already transferred after delivery.
• Contracts only constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the method of accomplishing the
same, the title and the method of acquiring it being different in our law.
Aznar v. Yapdiangco
Date: March 31, 1965
Petitioner: JOSE B. AZNAR (plaintiff-appellant)
Respondent: RAFAEL YAPDIANGCO (defendant-appellee); TEODORO SANTOS
(intervenor-appellee)
Ponente: REGALA
Facts:
• Teodoro Santos published ads in a newspaper for his Ford Fairlane 500
• Vicente Marella (through his nephew L. De Dios) expressed his intention to
buy the car.
• Irineo (Teodoro’s son) met Marella an agreed:
o Purchase price: 14700
o Payment after registration of the car in Marella’s name
• After executing the DOS and registratering at the Motor Vehicle Office, they
(Irineo and De Dios) went to Marella’s house.
o Irineo: Pay me now!
o Marella: I’m short of 2000, can I first go to my sister’s house?
o Irineo: Okay.
• Using the car (Irineo gave the keys to Marella to drive), they went to the
house of Marella’s sister.
o De Dios brought with him a companion and waited outside the
house.
o Irineo waited inside (at the sala) of the house.
o After a long while, Irineo went out just to find out that De Dios, his
companion, and the car was gone.
o Irineo went to Marella’s house, but no one was there.
• Marella apparently sold the car (despite the defect in title) to Joze Aznar.
• Santoses asked PC Chief Yapdiangco to seize the car (which they did)
• Aznar commenced CIVIL ACTION for REPLEVIN against Yapdiangco,
alleging that he was a buyer in good faith.
• LOWER COURT: Teodoro is the owner!

Issue: W/N the Teodoro is still the owner of the car - YES

Held:
• Marella never had the title to the car as the same was never delivered to
him, but that he rather STOLE it (NCC 1506 is NOT APPLICABLE, since the
title was VOID, not VOIDABLE)
• Marella is unable to sell it to Aznar!
• For ownership to be transferred, Irineo should have the intent to deliver the
car to Marella. His giving of the keys to De Dios to allow them to go to
Marella’s sister is not indicative of such intent (NCC 716).
• Since Teodoro was still the owner, he has right to recover it even from a
good faith purchaser (NCC 559). The only exception being if it was acquired
from a public sale.

Dispositive: CFI AFFIRMED

Asset Privatization Trust v. TJ Enterprises
Date: May 8, 2009
Petitioner: ASSET PRIVATIZATION TRUST
Respondent: T.J. ENTERPRISES
Ponente: TINGA
Facts:
• P was a gov’t entity created for the purpose to conserve, manage, and
dispose assets of government institutions.
• P had acquired from DBP assets consisting of machinery and refrigeration
equipment which were then stored at Golden City compound. The
compound was then leased to Creative Lines (which had the physical
possession thereof). These assets were being sold on an as-is-where-is
basis.
• Nov. 7, 1990 - P & R entered into an absolute deed of sale over certain
machinery and refrigeration equipment identified as Lots Nos. 2, 3 and 5.
o R paid the full amount of P84,000.00
• R demanded delivery of the machinery
• P issued a gate pass for R to pull out from the compound the properties
designated as Lots Nos. 3 and 5
• During the hauling of Lot No. 2, only 9 items out of 16 were pulled out by R.
• Creative Lines’ employees prevented R from hauling the remaining
machinery and equipment.
• R filed a complaint complaint for specific performance and damages against
P and Creative Lines.
o During the pendency of the case, R was able to pull out the
remaining machinery and equipment, but discovered later on that
they were damaged and had missing parts.
• P:
o Upon the execution of the deed of sale it had complied with its
obligation to deliver the object of the sale since there was no
stipulation to the contrary.
o It further argued that being a sale on an as-is-where-is basis, it was
the duty of R to take possession of the property.
o There was already a constructive delivery of the machinery and
equipment.
• RTC:
o Execution of the deed of absolute sale did not result in constructive
delivery of the machinery and equipment.
o At the time of the sale, P did not have control over the machinery
and equipment and, thus, could not have transferred ownership by
constructive delivery.
o P is liable for actual damages for breach of contract
• CA affirmed
Issues:
• W/N there was a constructive delivery of the machinery and equipment upon
the execution of the deed of absolute sale between P and R, hence P had
complied with its obligation to make delivery of the properties subject of the
contract of sale – NO
• W/N it was the duty of R to take possession of the property, the sale being
on an as-is-where-is basis – NO
• W/N the presence of the disclaimer of warranty in the deed of absolute sale
absolves it from all warranties – NO
• W/N the refusal of Creative Lines to allow the hauling of the machinery and
equipment was unforeseen and constituted a fortuitous event, hence P is not
liable - NO
Held:
On the First Issue
• The ownership of a thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof. The thing sold shall be understood as
delivered when it is placed in the control and possession of the vendee.
• As a general rule, when the sale is made through a public instrument,
the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does
not appear or cannot clearly be inferred.
• And with regard to movable property, its delivery may also be made by the
delivery of the keys of the place or depository where it is stored or kept. In
order for the execution of a public instrument to effect tradition, the
purchaser must be placed in control of the thing sold.
• However, the execution of a public instrument only gives rise to a prima facie
presumption of delivery. Such presumption is destroyed when the delivery is
not effected because of a legal impediment. It is necessary that the vendor
shall have control over the thing sold that, at the moment of sale, its material
delivery could have been made. Thus, a person who does not have actual
possession of the thing sold cannot transfer constructive possession
by the execution and delivery of a public instrument.
o Since it was not P but Creative Lines which had actual possession
of the property, there was no constructive delivery of the machinery
and equipment upon the execution of the deed of absolute sale or
upon the issuance of the gate pass.
o The presumption of constructive delivery is not applicable as it has
to yield to the reality that the purchaser was not placed in
possession and control of the property.
On the Second Issue
• The phrase as-is where-is basis pertains solely to the physical
condition of the thing sold, not to its legal situation. It is merely
descriptive of the state of the thing sold. Thus, the as-is where-is basis
merely describes the actual state and location of the machinery and
equipment sold by P to R. The depiction does not alter P's responsibility to
deliver the property to R.
On the Third Issue
• The vendor is bound to transfer the ownership of and deliver, as well
as warrant the thing which is the object of the sale. Ownership of the
thing sold is acquired by the vendee from the moment it its delivered to him.
• A perusal of the deed of absolute sale shows that both the vendor and the
vendee represented and warranted to each other that each had all the
requisite power and authority to enter into the deed of absolute sale and that
they shall perform each of their respective obligations under the deed of
absolute sale in accordance with the terms thereof.
o As there was no actual or constructive delivery of the things sold, P
has not performed its obligation to transfer ownership and
 possession of the things sold to R.
On the Fourth Issue
• Art. 1174: Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the obligation
requires assumption of risk, no person shall be responsible for those events
which could not be foreseen, or which though foreseen, were inevitable.
• The elements of a fortuitous event are:
(a) the cause of the unforeseen and unexpected occurrence, must
have been independent of human will;
(b) the event that constituted the caso fortuito must have been
impossible to foresee or, if foreseeable, impossible to avoid;
(c) the occurrence must have been such as to render it impossible for
the debtors to fulfill their obligation in a normal manner, and;
(d) the obligor must have been free from any participation in the
aggravation of the resulting injury to the creditor.
• A fortuitous event may either be an act of God, or natural occurrences
such as floods or typhoons, or an act of man such as riots, strikes or
wars. However, when the loss is found to be partly the result of a
person's participation— whether by active intervention, neglect or
failure to act— the whole occurrence is humanized and removed from
the rules applicable to a fortuitous event.
• Article 1504: Where actual delivery has been delayed through the fault of
either the buyer or seller the goods are at the risk of the party in fault. The
risk of loss or deterioration of the goods sold does not pass to the
buyer until there is actual or constructive delivery thereof.
o As previously discussed, there was no actual or constructive
delivery of the machinery and equipment. Thus, the risk of loss or
deterioration of property is borne by P. Thus, it should be liable for
the damages that may arise from the delay.

Dispositive: CA AFFIRMED

Notes:
• The execution of a public instrument only gives rise to a prima facie
presumption of delivery. Such presumption is destroyed when the delivery is
not effected because of a legal impediment. It is necessary that the vendor
shall have control over the thing sold that, at the moment of sale, its material
delivery could have been made. Thus, a person who does not have actual
possession of the thing sold cannot transfer constructive possession by the
execution and delivery of a public instrument.
Noel v. CA
Date: January 11, 1995
Petitioner: EDILBERTO NOEL (now PINITO W. MERCADO) as ADMINISTRATOR
OF THE INTESTATE ESTATE OF GREGORIO NANAMAN and HILARIA TABUCLIN
[59550]; PINITO W. MERCADO, as SPECIAL ADMINISTRATOR OF THE
INTESTATE ESTATE OF GREGORIO NANAMAN and HILARIA TABUCLIN [60636]
Respondent: COURT OF APPEALS and JOSE C. DELESTE [59550]; HONORABLE
COURT OF APPEALS and JOSE C. DELESTE [60636]
Ponente: QUIASON
Facts:
• Nanaman sps. were childless, legally married couple. Gregorio had child,
Virgilio, with another woman.
o Since Virgilio was 2 y.o. he was raised by Nanaman sps.
• During marriage Nanaman sps. acquired certain property including 34.7
hectare land (Iligan City)
o Lived there with Virgilio and 15 other tenants
• 1945: Gregorio died.
• Hilaria administered property with assistance from Virgilio to the exclusion of
Juan Nanaman, brother of Gregorio, and Esperanza and Caridad, daughters
of Gregorio by another woman.
• 1954: Hilaria and Virgilio executed DoS over same land in favor of R for
16,000. Document was registered and notarized.
• 1954: Hilaria died.
• Juan Nanaman appointed as special administrator of estate and included the
34.7 hectare of land in list of assets
• 1956: Edilberto took over as regular administrator but he was not able to
take possession of land as it was in possession of R and some heirs of
Hilaria.
• 1957: R and heirs executed an amicable settlement of estate
o R agreed to relinquish rights to ½ of land in favor of heirs for reason
that not all heirs agreed to the sale
o Court initially approved but set aside as some heirs questioned
settelement.
• Court ordered Noel to file action to recover land. In 1963, Noel filed action to
recover and to order R to pay rentals and atty’s fees.
• TC: R wins. Action for annulment had prescribed in 1958 as sale was
registered in 1954
• CA: R wins. ½ belonged to estate of Gregorio
o Transaction was indeed a sale. No fraud, mistake, or
misrepresentation attended execution
o Noel and Hilaria could not validly sell entire land as it was
conjugal property but only ½ share
o Since no fraud, mistake, or misreprensentation attended execution
of contract, prescriptive period is 10 years. Thus it has not yet
elapsed when action was filed in 1963.
o ½ of land belonged to estate of R
Issue: W/N Hilaria and Virgilio could validly dispose of land - Yes, but only insofar as
Hilaria’s undivided half of the estate is concerned
Held:
• Succession of estate of Gregorio governed by Spanish Civil Code of 1889 as
he died before effectivity of Civil Code
o Art. 953: spouse like Hilaria, who is survived by brothers or sisters
or children of brothers or sisters of the decedent, was entitled to
receive in usufruct the part of the inheritance pertaining to said
heirs.
o Art. 493: Hilaria, however had FULL OWNERSHIP over undivided
half of estate
o Virgilio was not an heir. Illegitimate children who were not natural
were disqualified to inherit.
• In a contract to sell, it is essential that seller is owner of property he is
selling.
o There was mistake in part of Hilaria and Virgilio in selling whole of
property
o Hilaria could only dispose of 1/2
• Under the law in f 1945, the surviving spouse was given the management of
the conjugal property until the affairs of the CGP were terminated.
o Surviving spouse became the owner of 1/2 interest of the conjugal
estate in his own right.
o he also became a trustee with respect to the other half for the
benefit of whoever may be legally entitled to inherit the said portion
• Laches do not apply
o Noel immediately filed an action to recover possession
o The action to recover the undivided half-interest of the collateral
heirs of Gregorio prescribes in ten years
o Action accrued only on 1954, when the deed of sale was
registered. Action not yet barred by prescription.
Dispositive: CA (1981) REVERSED; CA (1980) REINSTATED
Notes:
• In a contract of sale, it is essential that the seller is the owner of the property
he/she is selling. The surviving spouse only owns half of the conjugal estate;
he/she can alienate only that portion of the estate.
Hernaez v. Hernaez
Date: November 13, 1915 Held:
Petitioner: ROSENDO HERNAEZ y ESPINOSA (plaintiff and appellant) • The rule is that the holder of a prior equitable right has priority over the
Respondent: MATEO HERNAEZ y ESPINOSA ET AL. (defendants and appellants) purchaser of a subsequent estate without value, or with notice of the
Ponente: TRENT equitable right, but not as against a subsequent purchaser for value and
Facts: without notice.
• Spouses Pedro Hernaez and Juana Espinosa, died, leaving several • In this case, Rosendo is estopped from claiming the entire estates of his
legitimate descendants. father and mother because he had full knowledge of the prior sale to
• Neither of their estates had been divided up to the date of the institution of Alejandro.
this action but were both under administration. • He is only entitled to the remaining 13/18 shares of his mother’s estate
• Nov. 6, 1901: their son, Domingo Hernaez, sold all his interest in both his which remain unsold.
father's and mother's estate to his son, Vicente Hernaez. • Alejandro Montelibano is the rightful owner because he paid a valuable
• Notwithstanding the fact that Domingo had parted with all his interests in the consideration
estate of his two parents, he executed a document of sale in favor of
Alejandro Montelibano in which he conveyed all his undivided interest in his Dispositive: CFI AFFIRMED; MODIFIED — SUBSTITUTED, as the price of
father’s estate and 1/18 of his undivided interest in his mother’s estate. subrogation of the interest originally purchased by Jose Montelibano Uy-Cana, the
o On the same date, he executed another document in which he sum of P4,500, as set out in Exhibit 7, for the sum of P10,000, the consideration
conveyed to Jose Montelibano Uy-Cana 4/18 of his interest in his expressed in Exhibit 10
mother’s estate.
o Both sales were made with the connivance of his son. He is Notes:
effectually estopped from asserting his title as against either of the • The holder of a prior equitable right has priority over the purchaser of a
two vendees. subsequent estate (whether legal or equitable) without value, or with notice
• Aug. 19, 1912: Jose Montelibano Uy-Cana sold his interest in the estate to of the equitable right, but not as against a subsequent purchaser for value
Alejandro Montelibano. and without notice.
o By this transfer, the latter stood owner of all the interest of Domingo
Hernaez in the estate of Pedro Hernaez, and five-eighteenths of his
interest in the estate of Juana Espinosa as against Vicente
Hernaez.
• Rosendo Hernaez y Espinosa, another son of the deceased spouses and
administrator of the estates, was notified of Montelibano's purchases on
January 8, 1913, when he received notice of Montelibano's motion, entered
in the administration proceedings, asking that Montelibano be substituted as
assignee of the interests of various heirs of the estate which he had acquired
by purchase.
• Notwithstanding this knowledge, Rosendo Hernaez entered into a contract of
sale with Vicente Hernaez, whereby the latter purported to convey all the
interest, which he had acquired from his father, in the estate of the deceased
spouses.
o It will be remembered that he purchased his father's share of the
estate on Nov. 6, 1901; that he is estopped from asserting title to
any interest in his grandfather's estate and in five-eighteenths of his
grandmother's estate.
o Rosendo Hernandez purchased with full knowledge of these facts.
He, therefore, acquired thirteen-eighteenths of the interest of
Domingo Hernaez in the estate of the latter's mother and nothing
more.
• January 24, 1913: plaintiff instituted this action seeking to subrogate himself
in the rights acquired by Montelibano in the estate.

Issue: W/N Rosendo is estopped from seeking to subrogate himself in the rights
acquired by Montelibano in the estate – YES
Siy Cong Bien v. HSBC
Date: March 5, 1932
Petitioner: SIY CONG BlENG & Co., INC. (plaintiff and appellee)
Respondent: HONGKONG & SHANGHAI BANKING CORPORATION (defendant
and appellant)
Ponente: OSTRAND
Facts:
• June 25, 1926: certain negotiable warehouse receipts were pledged by Otto
Ranft to HSBC to secure the payment of his preexisting debts to the latter
• Baled hemp covered by the warehouse receipts was worth P31,635
• On June 25, 1926, Ranft called Siy Cong Bien’s office to purchase hemp
(abaca), and he was offered the bales of hemp as described in the receipts.
o The parties agreed to the aforesaid price. On the same date, the
queens and the covering invoice were sent to Ranft without the
hemp having been paid for.
o Siy Cong Bien’s understanding was that the payment would be
made against the same quedans. It appears that in previous
transactions of the same kind between the bank and Siy Cong
Bien, queens were paid 1-2 days after delivery.
• Otto Ranft died that night of June 25, 1926
• Upon finding out about his death, Siy Cong Bien immediately demanded the
return of the quedans, or the payment of the value, but was told that the
quedans had been sent to HSBC as soon as they were received by Ranft
• Shortly thereafter the plaintiff filed a claim for the aforesaid sum of P31,645
in the intestate proceedings of the estate of the deceased Otto Ranft
• In the meantime, Siy Cong Bien demanded from HSBC for the return of the
quedans or their value, which was refused by the bank on the ground that it
was a holder of the quedans in due course
• Lower court ruled in favor of Siy Cong Bien
o HSBC could not have acted in good faith for the reason that
according to its own witness, Thiele, the quedans were delivered to
the bank in order to secure Ranft’s debts for the payment of their
value and from which it might be deduced that HSBC knew that
value of quedans was not paid yet when the same were endorsed
to it
Issues:
• W/N Siy Cong Bien was entitled to the return of the quedans or the payment
of their value — NO
• W/N Siy Cong Bien is estopped to deny that HSBC had a valid title to the
quedans — YES
Held:
On the First Issue
• The "negotiable warehouse receipts—were "pledged by Otto Ranft to HSBC
to secure the payment of his preexisting debts to the latter", and taking into
consideration that the quedans were negotiable in form and duly endorsed in
blank by the plaintiff and by Otto Ranft, it follows that on the delivery of the
quedans to the bank they were no longer the property of the indorser
unless he liquidated his debt with the bank.
o First, quedans in question were negotiable in form
o Second, they were pledged by Otto Ranft to HSBC to secure the
payment of his preexisting debts
o Third, such of the quedans as were issued in the name of Siy Cong
Bien were duly endorsed in blank by the plaintiff and by Otto Ranft
o Fourth, 2 remaining quedans which were issued directly in the
name of Otto Ranft were also duly endorsed in blank by him
• When these quedans were negotiated, Otto Ranft was indebted to the HSBC
in the sum of P622,753.22, which indebtedness was partly covered by
quedans.
• It has been the practice of the bank in its transactions with Ranft that the
value of the quedans has been entered in the current accounts between
Ranft and the bank, but there is nothing in the record to show that the
bank has promised to pay the value of the quedans neither to Ranft nor
to the herein plaintiffs
On the Second Issue
• Siy Cong Bien voluntarily clothed Ranft with all the attributes of
ownership and upon which HSBC relied
• The warehouse receipt represents the goods, but the intrusting of the
receipt, as stated, is more than the mere delivery of the goods; it is a
representation that the one to whom the possession of the receipt has been
so intrusted has the title to the goods (Sec 40, Warehouse Receipts Act)
• If the owner of the goods permits another to have the possession or custody
of negotiable warehouse receipts running to the order of the latter, or to
bearer, it is a representation of title upon which bona fide purchasers for
value are entitled to rely, despite breaches of trust or violations of agreement
on the part of the apparent owner.
• Rule of equitable estoppel applies: where one of two innocent persons must
suffer a loss he who by his conduct made the loss possible must bear it.
• The bank is not responsible for the loss; the negotiable quedans were duly
negotiated to the bank and as far as the record shows, there has been no
fraud on the part of the defendant.
Dispositive: CFI REVERSED
Notes:
• Rule of equitable estoppel that where one of two innocent persons must
suffer a loss he who by his conduct made the loss possible must bear it.
Jalbuena v. Lizarraga
Date: December 24, 1915
Petitioner: VICENTA JALBUENA (plaintiff and appellant)
Respondent: SALVADOR LIZARRAGA et al. (defendants and appellees)
Ponente: TRENT
Facts:
• May 22, 1903 - Lizarraga, as judgment creditor, caused the sheriff of Iloilo to
levy upon a sugarmill of Ildefonso Doronila, the judgment debtor and
husband of Jalbuena.
• At the time of the levy, Doronila stated to the sheriff that the mill belonged to
him.
• The public sale took place in July, 1913.
• The purchaser at the public sale sold the mill to Lopez.
• November 26, 1913 – Jalbuena filed a case to recover the mill or its value
upon the ground that the same was her exclusive property and that her
husband had no interest therein.
• Trial Court: Dismissed Jalbuena’s petition. She’s estopped from asserting
her claim of ownership because she knew at the time of levy that the
property would be sold as the property of her husband. Still, she permitted
the sale to go forward without protest.
• She appealed to the SC.
another to believe a particular thing true, and to act upon such belief, he
cannot, in any litigation arising out of such declaration, act, or omission, be
permitted to falsify it.
• The phrase "stood by" does not import an actual presence, but implies
knowledge under such circumstances as to render it the duty of the
possessor to communicate it.
• Jalbuena had full knowledge of the fact that the property was going to be
sold to pay the debts of her husband. She did not communicate her claim
to the purchaser, and it is now too late to assert such a claim.
Dispositive: CFI AFFIRMED
Notes:
• When a person having title to or an interest in property knowingly stands by
and suffers it to be sold under a judgment or decree, without asserting his
title or right or making it known to the bidders, he cannot afterward set up his
claim.

Issue: W/N Jalbuena is estopped from claiming ownership of the sugarmill - YES

Held:
• When a person having title to or an interest in property knowingly
stands by and suffers it to be sold under a judgment or decree, without
asserting his title or right or making it known to the bidders, he cannot
afterward set up his claim.
• In this jurisdiction, under the general principle that one person may not
enrich himself at the expense of another, a judgment creditor would not be
permitted to retain the purchase price of the land sold as the property of a
judgment debtor after it has been made to appear that the judgment debtor
had no title to the land and that the purchaser had failed to secure title
thereto. However, this has nothing to do with the question of estoppel.
• An execution is an order to the sheriff to attach and sell the property of the
judgment debtor. If he sells the property of another person, he exceeds
his authority and the true owner may sue in trespass for damages or
for the recovery of the property, provided he has not lost his right to do
so by his own conduct.
• When a person having title to or an interest in property knowingly
stands by and suffers it to be sold under a judgment or decree, without
asserting his title or right or making it known to the bidders, he cannot
afterward set up his claim.
• Where the true owner of property, for however short a time, holds out
another, or, with knowledge of his own right, allows another to appear, as
the owner of or as having full power of disposition over the property, the
same being in the latter's actual possession, and innocent third parties are
thus led into dealing with some such apparent owner, they will be protected.
• §333 of the Code of Civil Procedure provides that "Whenever a party has, by
his own declaration, act, or omission, intentionally and deliberately led
Sun Bros. v. Velasco
Date: January 13, 1958
Petitioner: SUN BROTHERS & COMPANY (plaintiff and appellee)
Respondent: CO KANG CHIU (defendants and appellant)
Ponente: ANGELES
Facts:
• This case is about the sale and delivery of a refrigerator
• Sun Brothers & Co. (Sun) is a registered general co-partnership
• July 1, 1954: Sun delivered to Francisco Lopez 1 Admiral refrigerator
complete with transformer pursuant to a “Conditional Sale Agreement”
entered into by the parties:
○ Purchase Price: P1,700 - Only down payment of P500 was paid by
Lopez
○ Lopez not allowed to remove fridge from his address without the
express written consent of Sun
○ Fridge shall remain absolute property of Sun until Lopez has
paid purchase price in full
○ If terms are violated:
§ Sun may rescind contract of sale and recover possession
of the fridge
§ Any amount previously paid by Lopez shall be forfeited as
liquidated damages
• July 2, 1954: Lopez, without knowledge of Sun, sold fridge to J.V Trading
(owned by Jose Velasco) for P850 by misrepresenting himself as Jose Lim
and executing a document that he is the absolute owner
• July 3, 1954: Velasco, without knowledge of Sun, displayed fridge at his
store and sold it to Co Kang Chiu for the sum of P985
○ Fridge was delivered to Co Kang Chiu’s residence
1
• August 2: 1954: Sun filed a complaint for Replevin 1 for the possession of a
fridge
○ Writ was issued, deputy sheriff and Sun went to Co’s residence to
take the fridge
○ Upon Co’s request and filing of counter-bond the fridge was not
taken out of Co’s residence. Co filed a cross-caim against Velasco
and a counterclaim against Sun
• CFI: Sun as absolute owner based on par. 1 of Art. 1505, Co to return fridge
to Sun; Lopez to pay Sun P1700 + interest; Velasco to reimburse Co for cost
of fridge
• CA: Co is the absolute owner, Sun to deliver fridge to Co
Issue: W/N the Sun Brothers & Co is the absolute owner of the fridge – NO, Co is.
Held:
• Co Kang Chiu is absolute owner because he is a purchaser in good
faith from merchant store
• CC,Art. 1505: Subject to the provisions of this Title where goods are sold by
a person who is not the owner thereof, and who does not sell them under
1
a procedure whereby seized goods may be provisionally restored to their owner pending the outcome of an
action to determine the rights of the parties concerned.
authority or with the consent of the owner, the buyer acquires no better title
to the goods than the seller had, unless the owner of the goods is by his
conduct precluded from denying the seller’s authority to sell.
• Nothing in this Title, however, shall affect:
1. The provisions of any factors’ acts, recording laws, or any other
provision of law enabling the apparent owner of goods to dispose of
them as if he were true owner thereof;
2. The validity of any contract of sale under statutory power of sale or
under the other order of a court of competent jurisdiction
3. Purchase made in a merchant’s store, or in fairs, or markets, in
accordance with the Code of Commerce and special laws
• Francisco Lopez, conditional vendee never had title to fridge because of
stipulation in contract (in bold) and his failure to pay the purchase price.
When he sold it to Velasco, Velasco also did now acquire a right to the fridge
because Velaso is not a purchaser in good faith
○ He is not a purchaser in good faith because it is reasonably
expected from him to have inquired from lopez WON the fridge had
already been paid in full. His failure to do this is tantamount to
negligence
• Co Kang Chiu was an innocent purchaser, having purchased the fridge from
a merchant store – J.V. Trading (as defined in Code of Commerce)
○ Par. 3 of Art. 1505 must be applied
○ “This is a case of an imperfect or void title ripening into a valid one
as a result of some intervening causes…where the rights and
interests of a vendor comes into clash with that of an innocent
buyer for value the latter must be protected”
rd
• Par. 3’s purpose is to protect innocent 3 parties who have made purchases
at merchants’ stores in good faith and for value
○ Art. 559 (wherein owner of movable will pay possessor for return of
property) is not a remedy because Sun did not lose the fridge nor
was it unlawfully deprived from him
§ Not unlawfully deprived because Sun “voluntarily parted
with fridge pursuant to a contract of purchase and sale.
Circumstances that the price was not subsequently paid
did not render illegal a transaction w/c was valid and legal
at the beginning”
§ Proper remedy is Sun should file claim for indemnity
against Lopez
• CO Kang Chiu is absolute owner of fridge
Dispositive: CFI MODIFIED — DECLARED Co Kang Chiu to be the absolute owner;
HELD that he is entitled to the possession of the refrigerator in question; ORDERED
Francisco Lopez to pay to the plaintiff the full purchase price of the refrigerator in the
sum of P1,700, with 6% annual interest thereon from the date of the filIng of the
complaint in the Municipal Court until fully paid; DISMISSED the claim of Co Kang
Chiu for damages and attorney's fees
Notes:
The owner of property lost or illegally taken cannot recover it:
•
o If acquired in markets;
o If acquired in fairs (Art. 1505, CC; Code of Commerce, Art. 86);
o If acquired from stores of–
§ Legally registered merchants, or
§ Non-registered merchants whose stores are advertised or
open to the public for 8 consecutive days” (J.B.L. Reyes)
Masiclat v. Centeno • Art. 1505 does not apply since the transaction took place on Miranda Street
Date: May 31, 1956 and not in the public market.
Petitioner: LUCENA MASICLAT, ET AL. • Petitioner’s argument that they have a better title to the rice in virtue of the
Respondent: NATALIA CENTENO principle that where one of two persons must suffer by the fraud of a third
Ponente: PARAS person, the loss should fall upon him who has enabled the third person to do
Facts: the wrong. UNTENABLE.
• Defendant Centeno was the owner of 15 sacks of rice which was offered for o First, there is no finding that the unknown purchaser was the same
sale at her store near the Angeles (Pampanga) public market. person who sold the rice to Masiclat.
• Jan 21 1951: A person offered to purchase the rice at Php 26 per sack, • Second, Centeno was not negligent as to allow the purchaser to run away.
which the buyer promised to pay as soon as he would receive the price od
his adobe stones which were being unloaded from a truck parked at the Dispositive: CA AFFIRMED
opposite side of the street facing the defendant’s store.
• Because of this promise, defendant ordered for the rice to be loaded in the
aforementioned truck. The plaintiff Masiclat was the caretaker (ancargado).
• When the rice was loaded, the purchaser could not be found. Defendant
decided to unload the rice.
• The plaintiff then objected on the ground that he has bought it at Php
26/sack from a person whom he met only that morning for the first time.
• Defendant called a policeman and brought the rice to the Municipal building
pending investigation.
• Plaintiff then initiated this action for recovery.
• CFI favored the plaintiff.
• CA reversed.
o There was no clear evidence as to the identity of the purchaser who
bought the rice or as to whether the person was the one who sold it
to Masiclat.
o It held that Centeno did not lose ownership and possession of the
rice.
o The transaction did not take place in the store of the respondent.
§ Said store was situated on Miranda Street which is not
part of the public market (it only leads to the market).

Issue: W/N Centeno is entitled to the possession and ownership of the rice sold to an
unknown buyer – YES

Held:
• The appealed decision is correct.
• First, the evidence does not clearly show the identity of the person who tried
to buy the rice from Centeno. Neither is it shown that the same person was
the one who sold the commodity to Masiclat.
• Although a contract of sale is perfected upon consent as to the subject
matter and price, ownership is not considered transmitted until this property
is actually delivered and the purchaser has taken possession and paid the
price agreed upon.
• The sale here is not consummated. Even if the rice was loaded unto the
truck, Centeno did not intend to transfer its ownership until she was paid the
price.
o This is evidenced by her continued watch of the loading and her
demand that it be unloaded as soon as the unknown purchaser was
missing.
Tagatac v. Jimenez
Date: February 22, 1957
Petitioner: TRINIDAD C. TAGATAC (plaintiff and appellant)
Respondent: LIBERATO C. JIMENEZ (defendant and appellee)
Ponente: OCAMPO
Facts:
• Oct 1951: Trinidad Tagatac bought a car for $4,500 from Daanielson and
Kavarno Motors of Sta. Barbara, California.
• May 27, 2952: She brought the car to the PH
• In June, she was visted by her friend, Joseph Lee with a man named,
Warner Feist alias Warner Levy who was posing as a very rich man
• According to Feist, he was the manager of a corporation, China Pacific
Trading Co.; owned 2 cars and 2 houses in Baguio and that he as the
consignee of billions of pesos worth of textiles.
• He offered to buy her car for P15,000. Tagatac was amenable to the idea.
• June 18, 1952 @ 9-10am, the deed of sale was made. Tagatac signed the
private document and Feist paid by postdated check for the following day
and received the car.
• The PNB refused to honor the check and informed her that Feist has no
account nor funds in the banl.
• Tagatac immediately notified all enforcement agencies (Police, NBI, Phil.
Constabularyand Military) of the estafa.
• They failed to apprehend Feist and the car disappeared. Meanwhile, Feist
succeeded in having the certificate of the car transferred in his name.
• Aug. 18, 1952: Feist sold the car to Felix Sanchez of Imus, Cavite. The
certificate was subsequently transferred in his name
• Sanchez offered to sell the car to Liberato Jimenez. He investigated
Sanchez’ certificate thru the Motor Vehicle Office. He thereafter bought it for
P10,000.
• Jimenez later delivered the car to the California Car Exchange on Taft Ave.
Tagatac discovered the car in their possession and she demanded the
manager to deliver the same to her but was refused.
• Tagatac filed a suit for recovery of the possession of the car.
• PET: Defendant is a purchaser in bad faith because 3 days before the car
was transferred to him, he already knew that the car was subject of a search
warrant.
○ The search warrant pet is referring to is dated Sept 1, 1952. Def on
the same date filed a petition to dissolve the search warrant.
Admittedly, on that date, defendant was fully aware there were
some questions regarding the car.
○ Such knowledge already constitutes bad faith when the car was
transferred to him.
○ The judgement convicting Feist of estafa should have cause the LC
to order the restitution of the property swindled.
• RTC: Dimsissed. Confirmed Jimenez’ ownership
Issue: W/N Jimenez was a purchaser in good faith and thus entitled to the ownership
and possession of the car - YES
2
Held:
• Sec 69 (j) Rule 123, RoC. There is a disputable presumption that a person
found in possession of a thing taken in the doing of a recent wrongful act is
the taker and doer of the whole act. This presumption usually arises in cases
of stolen goods.
• Court cannot make this presumption because (1) the car was not stolen from
plaintiff and (2) defendant came into possession of the car 2 months after
Feist swindled it, so that even assuming that the car was stolen, defendant
could not have been presumed to have been the wrongdoer.
• It is a fact beyond dispute that def acquired the ar on August 21, he had no
knowledge of any flaw in the title of his seller. He therefore acted in good
faith. For all intents and purposes, def had every reason to assert that he
was the owner of the car on Sept 1.
• It is true that every person criminally liable is also civilly liable and such
includes restitution of thing itself even though it be found in the possession
2
of a third person who has acquired it by lawful means.
• The point of inquiry is whether Tagatac has been unlawfully deprived of
her car
• The facts of this case closely resemble Benjamin v Favis wherein the court
ruled that
○ The sale of the car of plaintiff has all the emelents essential for its
validity. The transaction came about openly. The failure to pay the
price did not and could not affect the validity of the transfer of title at
most it would give the vendor a right to resolve the contract under
Art 1124 but the title to the car would not revert to the seller until
the sale was set aside by Court. It is elementary that the rights of a
stranger in good faith, acquired before the resolution of the
contract, are entitled to protection
• In the case at bar, the fraud and deceit by Feist earmarks this sale as a
voidable contract (Art 1390, NCC)
• Being a voidable contract, it is susceptible of either ratification or
annulment.
○ If the contract is ratified, the action to annul it is extinguished and
the contract is cleansed from all its defects;
○ if it is annulled, the contracting parties are restored to their
respective situations before the contract and mutual restitution
follows
• However, as long as no action is taken by the party enetled, the contract of
sale remains valid and binding.
• Feist’s title when he transferred it to Sanchez, although defective and
voidable, had not been avoided and he therefore conferred a good title to the
buyer. No proof was shown that Sanchez, the buyer, was in bad faith.
• Even granting arguendo, that Sanchez acted in bad faith, and he acquired a
voidable title from Feist, considering that the subsequent buyer, Jimenez,
was a buyer in goof faith, for value, and without notice of any defect on
Sanchez’ title, he acquired a good title to the car.
• Good title means an indefeasible title to the car even against the original
owner, Tagatac.
Art. 104-105, RPC and Art 559, NCC
 • Even under the rules of equity, Jimenez has a better right to the car. Both he
and Tagatac were innocent parties, but it was pet’s gullibility which made
possible the swindling.
• As between them, it is petitioner who should bear the consequences as the
one whose acts made possible the injury must shoulder the consequences.

Dispositive: CFI AFFIRMED

De Garcia v. CA ○ Exception: When there is acquisition in good faith of possessor at
Date: January 30, 1971 public sale, in which case, owner cannot obtain its return without
Petitioner: CONSUELO S. DE GARCIA and ANASTACIO GARCIA reimbursing price —> not applicable in this case
Respondent: HON.COURT OF APPEALS,ANGELINA D. GUEVARA and JUAN B. • Re: P’s claim that NCC 541 applies
GUEVARA ○ The title of possessor in good faith is not that of ownership and
Ponente: FERNANPO does not really amount to title but is merely a presumptive title
6
Facts: sufficient to serve as basis for acquisitive prescription. NCC 1132
• R’s complaint: provides for a period of acquisitive prescription for movables
3
○ Oct. 27, 1947: R bought a diamond ring from R. Rebullida, Inc. through “uninterrupted possession for 4 years in good faith”
○ Feb. 1952: Ring was stolen from her house ○ Such presumption may be rebutted upon owner’s showing of illegal
○ Oct. 11, 1953: She recognized the ring on the finger of P (owner of deprivation
La Bulakeña restaurant) while they were talking ○ NCC 559 in fact assumes that possessor is not yet the owner.
○ P said she bought it from her comadre. R explained that it was Otherwise, had the possessor already acquired indefeasible title,
stolen from her house. Ring fit perfectly when R tried it. e.g., by adverse possession for a necessary period, even proof of
○ R and husband, P, and the latter’s attorney went to Mr. Rafael loss or illegal deprivation could not defeat such title.
Rebullida’s store. With 30 years of experience and the aid of high-
power lens, Mr. Rebullida confirmed it was the ring he sold to R. Dispositive: CA AFFIRMED
○ Ring was returned to P, who failed to deliver it despite R’s written
request
○ Sheriff served the writ of seizure (replevin), but P claimed the ring
was lost
• P’s version:
○ P purchased ring from Mrs. Miranda (third-party defendant), who
got it from Miss Angelita Hinahon, who in turn got it from the owner,
Aling Petring (Hinahon’s boarder)
○ Pawnshop owner says that diamond with P weighed 2.57 cts. while
lost diamond weighed 2.05 cts. only
4
○ NCC 541 should apply: possession in good faith = title
• Lower court: In favor of P
• CA: Reversed LC
○ R had worn ring for 6 years and had become familiar with it
○ Mr. Rebullida is disinterested witness because P and R were both
customers
○ P made no comment when Mr. Rebullida confirmed identity of ring
and did not answer R’s letter of demand asserting ownership
○ Aling Petring is a “rather dubious source,” turns out to be a
“mysterious and ephemeral figure,” and disappeared after 3 months
once she sold ring. Miss Hinahon did not even know her true and
full name and forwarding address.
○ P substituted a diamond-solitaire of R with a heavier stone

Issue: W/N R is entitled to recover the ring – YES

Held:
5
• NCC 559: R, having been unlawfully deprived of the ring, is entitled to
recover it from P
5
NCC 559: “The possession of movable property acquired in good faith is equivalent to a title. Nevertheless,
one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in

3
possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived,
Lady’s diamond ring, 18 cts., white gold mounting, with one 2.05 cts. diamond-solitaire and 4 brills 0.10 cts. has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price
total weight paid therefor.”
4 6
NCC 541: “A possessor in the concept of owner has in his favor the legal presumption that he possesses NCC 1132: “The ownership of movables prescribes through uninterrupted possession for four years in good
with a just title and he cannot be obliged to show or prove it.” faith.”
EDCA Publishing v. Santos
Date: April 26, 1990
Petitioner: EDCA PUBLISHING & DISTRIBUTING CORP.
Respondent: THE SPOUSES LEONOR and GERARDO SANTOS, doing business
under the name and style of “SANTOS BOOKSTORE,” and THE COURT OF
APPEALS
Ponente: CRUZ
Facts:
• Professor Jose Cruz placed an order by telephone with the petitioner
company for 406 books, payable on delivery. EDCA prepared the
corresponding invoice and delivered the books as ordered, for which Cruz
issued a personal check covering their purchase price of P8,995.65.
• Cruz sold 120 of the books to private respondent Leonor Santos who,
after verifying the seller's ownership from the invoice he showed her, paid
him P1,700.00.
• EDCA having become suspicious over a second order placed by Cruz even
before clearing of his first check, made inquiries with the De la Salle College,
where he had claimed to be a dean and was informed that there was no
such person in its employ. Further, it was verified that Cruz had no more
account or deposit with the Philippine Amanah Bank, against which he had
drawn the payment check.
• EDCA then went to the police, which set a trap and arrested Cruz.
Investigation disclosed his real name as Tomas de la Peña and his sale of
120 of the books he had ordered from EDCA to the private respondents.
• EDCA sought the assistance of the police, which forced their way into the
store of the private respondents and threatened Leonor Santos with
prosecution for buying stolen property. They seized the 120 books without
warrant, loading them in a van belonging to EDCA, and turned them over to
the petitioner.
• Private respondents sued for recovery of the books after demand for their
return was rejected by EDCA. A writ of preliminary attachment was issued
and the petitioner, after initial refusal, finally surrendered the books to the
private respondent.
• Contention of the petitioner is that the private respondents have not
established their ownership of the disputed books because they have
not even produced receipt to prove they had bought the stock.
• MTC, RTC and CA: recognized the transfer of ownership to the respondent.
• Petitioner’s contention: the private respondents have not established their
ownership of the disputed books because they have not even produced a
receipt to prove they had bought the stock.
Issues:
• W/N the respondent has the right of ownership of the movable property in
question - YES
• W/N the private respondents acquired the books in good faith - YES
Held:
On the First Issue
7
• The first sentence of Article 559 provides that "the possession of movable
property acquired in good faith is equivalent to a title," thus dispensing with
further proof.
• Leonor Santos first ascertained the ownership of the books from EDCA
invoice showing that they had been sold to Cruz, who said he was selling
them for a discount because he was in financial need. Private respondents
are in the business of buying and selling books and often deal with hard-up
sellers who urgently have to part with their books at reduced prices. To
Leonor Santos, Cruz must have been only one of the many such sellers she
was accustomed to dealing with. It is hardly bad faith for anyone in the
business of buying and selling books to buy them at a discount and resell
them for a profit.
On the Second Issue
• NO
• The petitioner argues:
○ that it was because the impostor acquired no title to the books
that he could have validly transferred to the private respondents.
○ the payment check bounced for lack of funds, there was a failure
of consideration that nullified the contract of sale between it
and Cruz.
○ the owner who has been unlawfully deprived of personal property is
entitled to its recovery except only where the property was
purchased at a public sale, in which event its return is subject to
reimbursement of the purchase price.
• The contract of sale is consensual and is perfected once agreement is
reached between the parties on the subject matter and the consideration.
8 9 10
• Citing Art. 1475 , Art. 1477 and Art. 1478 of the CC, Court held that
ownership in the thing sold shall not pass to the buyer until full payment of
the purchase price only if there is a stipulation to that effect. Otherwise,
the rule is that such ownership shall pass from the vendor to the vendee
upon the actual or constructive delivery of the thing sold even if the
purchase price has not yet been paid.
• Non-payment only creates a right to demand payment or to rescind the
contract, or to criminal prosecution in the case of bouncing checks. But
absent the stipulation above noted, delivery of the thing sold will
effectively transfer ownership to the buyer who can in turn transfer it to
another.
7
ART. 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless,
one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in
possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it in good
faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.
8
ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which
is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions of the law
governing the form of contracts.
9
ART. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.
10
ART. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has
fully paid the price.
 • ART. 559. The possession of movable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has
been unlawfully deprived thereof, may recover it from the person in
possession of the same. If the possessor of a movable lost or of which the
owner has been unlawfully deprived has acquired it in good faith at a public
sale, the owner cannot obtain its return without reimbursing the price paid
therefor.
• Actual delivery of the books having been made, Cruz acquired ownership
over the books which he could then validly transfer to the private
respondents. The fact that he had not yet paid for them to EDCA was a
matter between him and EDCA and did not impair the title acquired by the
private respondents to the books.
• Leonor Santos took care to ascertain first that the books belonged to Cruz
before she agreed to purchase them. The EDCA invoice Cruz showed her
assured her that the books had been paid for on delivery.
• By contrast, EDCA was less than cautious in dealing with the impostor.
Although it had never transacted with him before, it readily delivered the
books he had ordered (by telephone) and as readily accepted his personal
check in payment. He did not perform any due diligence in verifying the
identity of Cruz.
• The private respondent did not have to go beyond that invoice to satisfy
herself that the books being offered for sale by Cruz belonged to him; yet
she did. Although the title of Cruz was presumed under Article 559 by his
mere possession of the books, these being movable property, Leonor
Santos nevertheless demanded more proof before deciding to buy them.
• It would certainly be unfair now to make the private respondents bear the
prejudice sustained by EDCA as a result of its own negligence.

Dispositive: CA AFFIRMED

Notes:
• Possession of movable property acquired in good faith is equivalent to a
title.
• Contract of sale is consensual; Ownership shall pass from the vendor to the
vendee upon the actual or constructive delivery of the thing sold.
• Non-payment only creates a right to demand payment or to rescind the
contract, or to criminal prosecution
Bean v. Cadwallader Held:
Date: March 26, 1908 • Yes, both contracts were clear that Case will have to do no further than
Petitioner: A. W. BEAN, administrator of the estate of George Case, deceased placing the logs alongside a vessel to be sent to the point of delivery (coast
(plaintiff-appellee) of Basilan) by Cadwallader.
Respondent: THE B. W. CADWALLADER COMPANY (defendant- appellant) • In fact, evidence showed that on one occasion, Case had eighty men at the
Ponente: JOHNSON point of delivery to help load the logs on Cadwallader’s vessel.
Facts: • Evidence showed that logs were placed alongside the lighters, in
• Two written contracts were entered into by Case (represented here by accordance with the terms of the contract. It is immaterial whether all or
plaintiff Bean) and defendant Cadwallader. some were loaded onto the lighters.
o Contract 1: Case will sell to Cadwallader 8,000 to 10,000 cubic feet • The responsibility of Case ceased when he had the logs placed alongside
of native wood (Ipil and Molave) at 60 cents per cubic foot, and that the vessel of Cadwallader. In fact, the logs were fully at the disposal of the
Case is to deliver said pieces of wood to Cadwallader alongside latter when it attempted to load the logs on the lighters.
the latter’s ship in Basilan within 3 months of date of contract,
which was September 6, 1906. The logs were to be taken to Dispositive: CFI AFFIRMED; ORDERED Cadwallader to pay Bean the sum of
Manila. P10,033.39, with interest at the rate of 6 per cent per annum from the 3rd day of April,
o Contract 2: Case will sell to Cadwallader 15,000 cubic feet of 1906
native wood at the following prices per cubic foot: 25 cents for
Calantas, 10 cents if short and crooked; 60 cents for Ipil, 15 cents Notes:
if short; and 25 cents for Mangachupay wood), and with the same • A mere contract for the sale of goods, where nothing remains to be done by
delivery agreement as the previous contract to be effected within 3 the seller before making delivery, transfers the right of property, although
months of date of contract (January 3, 1906) the price has not been paid, nor the thing sold actually delivered to the
• For the first contract, Case informed Cadwallader via telegram that the purchaser.
lumber may be shipped on December 6, 1905, a date well within the 3-
month period. Case repeatedly asked Cadwallader of the date when the
latter’s vessel would arrive, but Cadwallader, in reply, said that they couldn’t
find a vessel to hire.
• On Christmas Day, Case went to Manila and, with Cadwallader, was able to
procure the services of Atlantic Gulf and Pacific Co. for the latter.
• Atlantic’s lighter (a kind of boat), arrived at the point in Basilan where the
lumber was awaiting shipment on January 22, 1906. However, its anchor
chain broke and the lighter was grounded on the beach.
• As for the second contract, new steps were taken by Case, along with
Cadwallader, to make arrangements for the transport of the lumber. The
logs were cut.
• On March 23, 1906, upon arrival of the lighter from Atlantic sent by
Cadwallader, no attempt at loading was made because of the unsettled
condition of the sea. Another attempt was made in early April but the anchor
chain broke again and forced the indefinite suspension of the shipment.
• Since then, there was no effort by Cadwallader to take away the lumber
covered by the two contracts.
• While all of this was happening, Cadwallader effected partial payments
amounting to P2,500 on December 29, 1905 for the first contract and
P1,000 on February 6, 1906 for the second contract.
• The Court of First Instance of Manila decided in favor of Bean (Case),
directing Cadwallader to pay the balance.

Issue: W/N there was delivery by Case as to compel Cadwallader to accomplish his
side of the contract (that is to pay for the logs) – YES
Ocejo v. International Bank
Date: February 14, 1918
Petitioner: OCEJO, PEREZ & Co. (plaintiffs and appellees)
Respondent: THE INTERNATIONAL BANKING CORPORATION (defendant and
appellant); FRANCISCO CHUA SECO, as assignee (intervener and appellant)
Ponente: FISHER
Facts:
• Chua Teng Chong of Manila, executed and delivered a promissory note to
the International Banking Corporation payable one month after date, for the
sum of P20,000. Attached to this was another private document stating that
Chua had deposited with the bank, as security for the said note, 5,000
piculs of sugar in a warehouse situated at No 1008, Calle Toneleros,
Binondo, Manila.
• Plaintiff partnership Ocejo, Perez and Co. entered into contract with Chua
for the sale to him of 5,000 piculs of sugar. These were delivered by plaintiff
to Chua and stored in the buyer's warehouse situated at No. 119, Muelle de
la Industria. The buyer refused to make payment upon demand.
• On the same date the sugar was delivered to the plaintiff, the bank sent an
employee to inspect the sugar which according to the agreement, have
been stored in the Calle Toneleros warehouse. The bank's representative
then discovered that the amount of sugar in that warehouse did not exceed
1,800 piculs. The bank's representative went immediately to see Chua who
directed him to the rest of the sugar in the warehouse at No. 119, Muelle de
la Industria.
• Upon arrival at Muelle de la Industria, the bank rep found some 3,200 piculs
of sugar, of which he took immediate possession, closing the warehouse
with the bank's padlocks. The sugar seized by the bank in the Muelle de la
Industria is the same sugar which the plaintiff firm delivered to Chua Teng
Chong.
• Ocejo Perez & Co filed a complaint against the bank, alleging that the latter
was unlawfully holding some 4,711 piloness of sugar and prayed for the
possession of said sugar. It was able to replevin the personal property.
• By reason of the insolvency of Chua Teng Chong, Francisco Chua Seco
was appointed assignee of the property of the insolvent. A complaint in
intervention was filed by Chua Seco, in which he asserts a preferential right
to the sugar, as delivery already transferred ownership to Chua Teng
Chong.
• By agreement of the parties, the sugar was sold and the proceeds of the
sale deposited in the bank, subject to the order of the court upon the final
disposition of the case.
• The CFI rendered judgment in favor of Oceja and from this decision appeals
have been taken by the bank and by the intervener.
Issue: W/N title to the sugar pass to the buyer upon its delivery to him – YES
Held:
• From the date the parties agreed in regard to the quantity of the sugar which
the seller was to deliver and the price which the buyer was to pay, the
contract was perfected. (Civil Code, art. 1450.) It is also clear that the
obligation of the seller to make delivery of the thing sold was not subject to
the condition that the buyer was to pay the price before delivery. The witness
Pomar, called on behalf of the seller, testified that the price was to be paid
after the completion of delivery. (Stenographic notes)
• Article 1462 of the Civil Code provides that the thing sold is deemed to be
delivered "when it passes into the possession and control of the buyer." It is
difficult to see how the seller could have divested himself more completely of
the possession of the sugar, or how he could have placed it more completely
under the control of the buyer.
• Seller was entitled to demand payment of the sugar at any time after the
delivery. No term having been stipulated within which the payment should be
made, payment was demandable at the time and place of the delivery of the
thing sold. (Civil Code, art. 1500.) The seller did not avail himself of his right
to demand payment as soon as the right to such payment arose, but as no
term for payment was stipulated, he was entitled, to require payment to be
made at any time after delivery, and it was the duty of the buyer to pay the
price immediately upon demand.
• As Manresa says tradition is a true mode of acquiring ownership "which
effects the passage of title and the birth of the right in rem. Therefore, the
delivery of the thing . . . signifies that title has passed from the seller to the
buyer."
• If the seller may make delivery of the thing sold and clothe the buyer with all
the appearances of ownership but without the passage of title until the
purchase price is actually paid, the consequences to the business
community would be deplorable. If the title did not pass, any sale which
might in the meantime be made by the buyer would be void, as no one can
transfer a greater interest than that which he possesses. With even greater
reason, the destruction of the thing in the possession of the buyer before
demand upon him for payment, would relieve him from the obligation to pay
— the thing perishes for its owner. (Tan Leonco vs. Go Inqui)
• The seller calls this transaction a cash sale, but, strictly speaking, it is not
cash sale. It is not like a sale made in a retail store, in which delivery and
payment are to be made simultaneously. The words 'cash sale' or 'terms
cash' in business dealings are frequently used when in reality a short period
of credit is contemplated. If delivery is consummated without requiring
payment to be made in advance or simultaneously, the seller grants a term
of credit to the buyer, however short and indeterminate it may be, and
waives his right to insist upon payment in advance or simultaneously with
delivery, but in lieu thereof he becomes entitled to payment upon demand
therefor.
• It is contended that there was an express agreement in this case that the
passage of the title should be subject to the payment of the price, as a
condition precedent. But in the case of Gonzalez v Rojas, the Court held,
o ...Ownership of things is not transferred by contract merely but by
delivery. Contracts only constitute titles or rights to the transfer or
acquisition of ownership, while delivery or tradition is the method of
accomplishing the same, the title and the method of acquiring it
being different in our law."
o (However the Court said that the pledge to the bank was
inefficacious as no effort was made to pledge the sugar which is the
subject matter of this case. Assuming an attempt was made to
pledge the sugar, the pledge so established would be void as
against third persons for not appearing by public instrument.
 • Also, the Court did not allow the action of replevin to be maintained. The
right to rescind a sale with respect to reciprocal obligations is not an
absolute one. It is the judgment of the court and not the mere will of the
plaintiff which produces the rescission of the sale. This being so, the action
of replevin will no lie upon the theory that the rescission has already taken
place and that the seller has recovered title to the thing sold.)

Dispositive: CFI REVERSED; HELD that Seco, the assignee of the bankruptcy of
Chua Teng Chong, is entitled to the product of the sale of the sugar here in question,
to wit, P10,826.76, together with the interest accruing thereon, reserving to the seller
the right to file his claim in the insolvency proceedings

Notes:
• The thing sold is deemed to be delivered "when it passes into the
possession and control of the buyer."
• Absent the condition that the buyer was to pay the price before delivery,
ownership is already transferred after delivery.
• Contracts only constitute titles or rights to the transfer or acquisition of
ownership, while delivery or tradition is the method of accomplishing the
same, the title and the method of acquiring it being different in our law.
Alfredo v. Borras
Date: June 17, 2003
Petitioner: SPOUSES GODOFREDO ALFREDO and CARMEN LIMON ALFREDO,
SPOUSES ARNULFO SAVELLANO and EDITHA B. SAVELLANO, DANTON D.
MATAWARAN, SPOUSES DELFIN F. ESPIRITU, JR. and ESTELA S. ESPIRITU and
ELIZABETH TUAZON
Respondent: SPOUSES ARMANDO BORRAS and ADELIA LOBATON BORRAS
Ponente: CARPIO
Facts:
• Spouses Alfredo mortgaged their 81, 524 sq.m land in Bataan with the DBP
for P7,000. To pay the debt, they sold same land to the Borras for P15,000
• Mar 11, 1970 – After the mortgage was released and the owners duplicate
copy of OCT was returned to the Alfredos, they delivered it to Adelia. They
then introduced the Borras as the new owners of the land to its old tenants,
the Natanawans
• Jan 1994 – Borras learned of hired persons cutting trees in the land under
orders from the alleged new owners; they later discovered that the Alfredos
sold portions of the land to several persons
• Feb 8, 1994 – Borras filed adverse claim with the Register of Deeds of
Bataan, where they discovered that the Alfredos secured a copy of the OCT
after claiming in court that they lost their duplicate copy
• Mar 28, 1994 – Borras amended their complaint to include subsequent
buyers of the land as additional defendants
• Jun 7, 1996 – RTC ruled in favor of the Borras, concluding that the
subsequent buyers were not innocent purchasers, and finding the following
facts as proof of perfected contract of sale:
o Alfredos delivered to the Borras the land
o Borras treated as their own tenants the tenants of the Alfredos
o Receipt of payment issued by Carmen served as acknowledgment,
if not ratification, of verbal sale between them
• CA affirmed the RTC decision, concluding that that the sale in this case
binds the conjugal partnership even if only the wife signed the receipt
because the proceeds of the sale were used for the benefit of the conjugal
partnership, based on Art 161 of CC
ruled that the contract of sale was voidable subject to annulment by
the husband.
o Following petitioners’ argument that Carmen sold the land to
spouses Borras without the consent of Carmen’s husband, the sale
would only be voidable and not void
• Godofredo can no longer question the sale – voidable contracts are
susceptible of ratification
o He introduced the Borras spouses to his tenants as new owners of
Subject Land
o Allowed Borras to enjoy possession of the land for 24 years – proof
of acquiescence to the sale and prescriptive period has long lapsed
• Art 161 CC – the conjugal partnership shall be liable for debts and
obligations contracted by the wife for the benefit of the conjugal partnership
o Alfredos used most of proceeds from the sale to pay their debt with
the DBP
o Even if Carmen sold the land without the consent of Godofredo, the
sale still binds the conjugal partnership
Dispositive: CA AFFIRMED
Notes:
• The physical delivery of the subject land constituted a transfer of ownership.
Ownership of the thing sold is transferred to the vendee upon its actual or
constructive delivery.

Issue: W/N the alleged sale of Subject Land by Carmen without the consent of her
husband results in a void contract – NO

Held:
• Godofredo and Carmen claim that the sale of the Subject Land to Armando
and Adelia is void on the ground that Carmen sold the Subject Land without
the marital consent of Godofredo
o FC provides that any alienation or encumbrance made by the
husband of the conjugal partnership property without the consent of
the wife is void. However, when the sale is made before the
effectivity of the Family Code, the applicable law is the Civil
Code
• Article 173 of the Civil Code provides that the disposition of conjugal
property without the wifes consent is not void but merely voidable
o Felipe v. Aldon – a wife sold some parcels of land belonging to the
conjugal partnership without the consent of the husband. The Court
Aviles v. Arcega does not have the effect of a symbolic delivery of the estate sold to the
Date: September 18, 1922 purchaser, if in the said document it is stipulated that the vendor was to
Petitioner: GENEROSA AVILES and her husband RUFINO VILLAFUERTE continue in possession of the property during a specified period of time. In
(plaintiffs-appellants) such a case, even after the lapse of the period stipulated, the purchaser
Respondent: SEGUNDA ARCEGA and FORTUNATO DE LEON (defendants- whose document contains such a stipulation does not acquire any title to the
appellees) estate, unless he should have taken possession of the property after the
Ponente: ROMUALDEZ lapse of said period. This being so, the second purchaser, to whom the
Facts: same property was sold after said period and who also failed to register his
• Oct. 10, 1917: Sps. Alcantara and Capulong sold to P a house for P497 document, acquires title to the thing sold, either by taking' physical
o during four months from execution, the vendors would continue in possession thereof, or by virtue of the symbolic delivery which ordinarily
possession of the house, the expenses for repairs, land and other takes place upon the execution of the public document.
tax to be for their account, as well as the payment of the rent for the
lot on which it is erected
o In a public document, but not registered
• Mar. 13, 1918: same property was sold by the same Sps. to R, who took
possession of the property, P never having taken possession thereof
o In a public document, but not registered
• TC:
o R are the owners of the house

Issue:
• W/N the title to the house in dispute was transferred in the first sale to P

Held:
• It was stipulated in the first sale that the vendors were in possession of the
house before, and at the time of, its conveyance, and continued thereafter in
said possession.
o P never had possession of the house either at the execution of the
deed of sale, or at any other time
o Such being the case, it cannot be presumed that she took
possession thereof at the expiration of the four months following the
sale, as stipulated by the parties
o Meanwhile, R took possession of said house then and there at the
time of sale
o Hence, the title to the house was transmitted not to the plaintiff but
to the defendants.
• Plaintiff cannot invoke symbolic delivery by the execution of the public
document of sale, inasmuch as there was not, nor could there have been,
such delivery, the same being prevented by the express stipulation
contained in the deed of sale, to the effect that the vendors did not part with
the possession of the house but would continue therein for four months.
• There is symbolic delivery when the sale is made in a public document, and
nothing appears therein to the contrary either expressly or impliedly; and no
such symbolic delivery can be held to take place when, as in the instant
case, there is in the document a stipulation to the contrary.

Dispositive: CFI AFFIRMED

Notes:
• Where an estate is sold to two different persons in public documents and
none of the sales is recorded in the registry, the execution of the document
Phil. Suburban v. Auditor General
Date: April 18, 1975
Petitioner: PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION
Respondent: THE AUDITOR GENERAL, PEDRO M. GIMENEZ
Ponente: ANTONIO
Facts:
• On June 8, 1960, the President of the Philippines approved in principle the
acquisition by the People's Homesite and Housing Corporation (PHHC) of
the unoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacan
for relocating the squatters who desire to settle north of Manila, and of
another area either in Las Piñas or Parañaque, Rizal, or Bacoor, Cavite for
those who desire to settle south of Manila.
• The project was to be financed through the flotation of bonds under the
PHHC charter amounting to P4.5 million. The President (through the
Executive Secretary) informed PHHC of the approval by a letter.
• Two days after, the Board of Directors of PHHC passed Resolution No. 700
authorizing the purchase of the unoccupied portion of the Sapang Palay
Estate at P0.45/square meter subject to conditions.
• On December 29, 1960, Philippine Suburban Development Corporation
(owner of the unoccupied portion of the Sapang Palay Estate) and PHHC
entered into a contract embodied in a public instrument entitled "Deed
of Absolute Sale” whereby Phil. Suburban conveyed two parcels of land to
PHHC.
• P3,386,223.00
• Mode of payment: loan will be secured from GSIS and P1,710,000
will be retained by PHHC for the purpose of paying and clearing the
existing lien annotated at the back of the aforesaid Transfer
Certificates of Title; from this P1,710,000, P40,000 will be deducted
to keep as trust fund to answer for the Notice of Lis Pendens
annotated at the back of the TCT; P1,676,223.00 balance paid
immediately upon obtaining sufficient funds from bonds floated by
PHHC or the government and full payment must be made 60 days
from the date of delivery of title
• Phil. Suburban will defend the title and ownership of PHHC from
any claims
• All expenses for the preparation and notarization of this document
shall be for the account of Phil. Suburban, but the registration and
the issuances of certificates shall be for the account of PHHC.
• The Deed of Absolute Sale was not registered in the Office of the Register of
Deeds until March 14, 1961 because PHHC was not able to advance money
for the registration, according to Phil. Suburban.
• The Auditor General requested a reexamination of the contract, because
from 1948 to December 20, 1960, the hacienda was assessed from
P131,590.00 to P4,898,110.00. The President was informed but still
approved the sale on February 1, 1961.
• As early as the first week of June 1960 (before the signing of deeds),
PHHC has already acquired possession of the land (with Phil.
Suburban’s consent) to construct roads and to resettle the squatters and
flood victims.
• Provincial Treasurer of Bulacan requested the PHHC to withhold the amount
of P30,099.79 from the purchase price, representing realty tax.
• Phil. Suburban, through the PHHC, paid under protest. It claimed that it
ceased to be the owner of the land in question upon the execution of the
Deed of Absolute Sale on December 29, 1960. Phil. Suburban requested a
refund. The Secretary of Finance denied the request.
• Phil. Suburban appealed:
• Aside from the presumptive delivery of the property by the
execution of the deed of sale on December 29, 1960, the
possession of the property was actually delivered to the PHHC prior
to the sale, hence by such transfer of ownership, Phil. Suburban
has no obligation to pay realty tax.
• PHHC:
• The presumptive delivery of the property under Article 1498 of the
Civil Code does not apply because of the requirement in the
contract that the sale shall first be approved by the Auditor General,
pursuant to the Executive Order dated February 3, 1959 and later
by the President.
• Phil. Suburban should register the deed and secure a new title in
the name of the PHHC before the government can be compelled to
pay the balance of P1,676,223.00 of the purchase price.
• Since the property involved is a land registered under the Land
Registration Act (Act No. 496), until the deed of sale has been
actually registered, Phil. Suburban remains as the owner of the said
property, therefore liable for real property tax.
Issue: W/N Phil. Suburban is liable for the real property tax of the land in question –
NO
Held:
• Phil. Suburban is not liable because it has transferred ownership of the
property to PHHC.
• The President already approved the purchase on June 8, 1960 at his
Cabinet meeting, and PHHC passed its resolution (No. 700) authorizing the
purchase. Hence, the prior approval by the Auditor General pursuant to
Administrative Order No. 290 (February 3, 1959) is not necessary.
• AO No. 290 refers to contracts in general and not to a contract for a special
purpose, to meet a special situation and entered into in implementation of a
Presidential directive to solve and emergency.
• When the sale of real property is made in a public instrument, its execution
is equivalent to the delivery of the thing object of the contract, if from the
deed the contrary does not appear or cannot clearly be inferred.
• There is symbolic delivery of the property subject of the sale by the
execution of the public instrument, unless from the express terms of the
instrument, or by clear inference, this was not the intention of the parties.
• In the case at bar, there is no question that Phil. Suburban had actually
placed PHHC in possession and control over the property sold, even
before the date of the sale (PHHC has acquired possession starting the
first week of June 1960; Deed of Absolute Sale: December 29, 1960).
 • As to the requirement of registration to the Office of the Register of Deeds,
between the parties to a contract of sale, registration is not necessary
to make it valid and effective, because actual notice is equivalent to
registration.
• Section 50 of the Land Registration Act provides that, even without
the act of registration, a deed purporting to convey or affect
registered land shall operate as a contract between the parties.
• The registration is intended to protect the buyer against claims of
third persons arising from subsequent alienations by the vendor,
and not to give effect to the sale.
• In the instant case, no rights of third persons and subsequent alienation are
involved; it is undisputed that the property is in the possession of PHHC six
(6) months prior to the execution of the Deed of Absolute Sale.
• Since the delivery of possession, coupled with the execution of the
Deed of Absolute Sale, had consummated the sale and transferred the
title to PHHC, the payment of the real estate tax after the transfer is the
responsibility of PHHC.
• However, PHHC is a government entity not subject to real property tax.

Dispositive: AUDITOR GENERAL DECISION REVERSED; ORDERED

REFUNDED the real property tax paid under protest to th e Provincial Treasurer of
Bulacan by petitioner Philippine Suburban Development Corporation, in the amount of
P30,460.90
Sarmiento v. Lesaca o The possession referred to in the contract evidently refers to actual
Date: June 30, 1960 possession and not merely symbolical inferable from the mere
Petitioner: ALEJANDRA BUGARIN VDA. DE SARMIENTO (plaintiff and appellee) execution of the document.
Respondent: JOSEFA R. LESACA (defendant and appellant) • Has Lesaca complied with this express commitment? NO
Ponente: BAUTISTA ANGELO o From the execution of the sale, Sarmiento was never able to take
Facts: possession of the lands due to the insistent refusal of Deloso to
• Jan. 18, 1949: Sarmiento bought from Lesaca two parcels of land for surrender them.
P5,000. o Although it is postulated in Art. 1462 that the execution of a public
• After the sale, Sarmiento tried to take actual physical possession of the document is equivalent to delivery, this legal fiction only holds true
lands but was prevented from doing so by one Martin Deloso who claimed to when there is no impediment that may prevent the passing of the
be the owner of the lands. property from the hands of the vendor into those of the vendee.
• Feb. 1, 1949: Sarmiento instituted an action before the Tenancy • Can Sarmiento rescind the contract of sale in view of Lesaca’s failure
Enforcement Division of the DOJ to oust Deloso from the possession of the to deliver the possession of the lands? YES
lands. She later abandoned the action for reasons known only to her. o In a contract of purchase and sale, the obligation of the parties is
• Dec. 12, 1949: Sarmiento wrote to Lesaca asking the latter either to change reciprocal, and, as provided by the law, in case one of the parties
the lands sold with another of the same kind and class or to return the fails to comply with what is incumbent upon him to do, the person
purchase price together with the expenses she had incurred in the execution prejudiced may either exact the fulfillment of the obligation or
of the sale plus interest. rescind the sale.
• Lesaca did not agree so Sarmiento filed the present action for rescission. o Since Sarmiento chose rescission, it cannot be disputed that her
• CFI ruled in favor of Sarmiento. action is in accordance with the law.
• CA certified the action to the SC for presenting only legal questions.
Dispositive: CFI AFFIRMED
Issue: W/N the execution of the deed of sale in a public document is equivalent to
delivery of possession of the lands sold to Sarmiento - YES Notes:
• When a contract of sale is executed, the vendor is bound to deliver to the
Held: vendee the thing sold by placing the vendee in the control and possession of
• When a contract of sale is executed, the vendor is bound to deliver to the the subject matter of the contract. However, if the sale is executed by means
vendee the thing sold by placing the vendee in the control and possession of of a public instrument, the mere execution of the instrument is equivalent to
the subject matter of the contract. However, if the sale is executed by means delivery unless the contrary appears or is clearly to be inferred from such
of a public instrument, the mere execution of the instrument is equivalent to instrument.
delivery unless the contrary appears or is clearly to be inferred from such
instrument.
• Art. 1461, OCC. The vendor is bound to deliver and warrant the thing which
is the subject matter of the sale.
• Art. 1462, OCC. The thing sold shall be deemed delivered when the vendee
is placed in control and possession thereof.
o If the sale should be made by means of a public instrument, the
execution thereof shall be equivalent to delivery of the thing which
is the subject matter of the contract unless the contrary appears or
is clearly to be inferred from such instrument.
• Is there any stipulation in the sale in question from which it can be
infer that Lesaca did not intend to deliver outright the possession of
the lands to Sarmiento? NONE
o On the contrary, it is clear that Lesaca intended to place Sarmiento
in actual possession of the lands immediately as can be inferred
from the stipulation that Sarmientio “takes actual possession
thereof… with full rights to dispose, enjoy, and make use thereof in
such manner and form as would be the most advantageous to
herself.”
Florendo v. Foz
Date: October 24, 1911
Petitioner: JOSE FLORENDO (plaintiff and appellee)
Respondent: EUSTAQUIO P. FOZ (defendant and appellant)
Ponente: ARELLANO
Facts:
• May 11, 1909 - Foz executed contract, ratified before a notary, selling to
Florendo his house and camarin together with the lots on which they are
erected for P6,000
• He had already received P2,000 of the P6,000. It was stipulated in the
contract that Florendo shall pay Foz the remaining P4,000 in Vigan “when I
go there any time during this month or next month”
o "In case of my being unable to go to Vigan, I authorize the said
Jose Florendo to pay my debt to the church at that place, as well
also (that is, I authorize him) to obtain the title papers of the house
that is the subject matter of this sale, and the said Florendo shall
send the remainder to me here in Manila.
§ (Foz had a mortgage credit due to the church “Obispado
de Nueva Segovia”)
o "Record is also made in this instrument that the rents of the said
properties may be collected by me only up to and including the
month of June; after such period, I shall have no further right to said
rents and Señor Florendo may then begin to collect them."
• This contract was signed by the party who executed it (Foz), by his wife and
two witnesses and ratified before a notary.
• Foz went to Vigan on June 23, 1909. Florendo, accompanied by a notary,
tendered to Foz P4,000, but Foz refused to receive them.
o According to Foz, the true price of the sale recorded in another
instrument held by Florendo, was P10,000. On the 2nd or 3rd day
after said instrument had been executed, Florendo repudiated the
contract while still in Manila.
o These facts were recorded by the notary in a notarial certificate.
• Florendo asked that Foz be sentenced:
o to comply with the contract of absolute purchase and sale by
delivering the property
o to pay to the plaintiff the rents of the entire realty from July 1, 1909,
until the judgment should be fulfilled, together with the legal interest
o that, out of the P4,000 deposited by the plaintiff in the municipal
treasury of Vigan, Ilocos Sur, payment be made to the Roman
Catholic Apostolic Church, in the said pueblo of Vigan, "Obispado
de Nueva Segovia," of the mortgage credit due that it holds against
Foz, and that the remainder left after paying all the debts be
delivered to Foz
o to pay the costs of the trial
• Foz claims that it was false that he had sold his property for P6,000
o If he signed the deed of sale, he was deceived in doing so. He
heard, or believed that he heard, when the deed of sale was
previously read to him, that the amount stated was P10,000 which
was the true price agreed upon between him and Florendo.
• CFI Ilocos Sur rendered judgment in conformity with plaintiff’s petition,
except with regard to fixing amount which Foz should pay as rent for
personal use of a part of the house.
• On appeal, the ff facts were disclosed:
o Foz had been offered the price of P8,000 the year before for his
property, which was worth more than P6,000.
§ In rebuttal, Florendo showed the price for which the
property had been acquired and its assessed valuation,
neither of which exceeded P6,000
o No evidence presented to assert Foz’ defense that he heard or
believed he heard hat the price stipulated in the deed was P10,000
o The court ordered the deposit of the remaining price of P4,000 to
be made in the provincial treasury, from which ruling Foz took an
exception, alleging that it was another defense of his, in support of
his refusal to deliver the property sold, that the rest of the price
thereof had not been properly deposited, either in May or in June,
1909.
o Foz ratified at the trial his answer in the notarial certificate of June
23, 1909, that is, his averment that another instrument had been
executed in which the true price of P10,000 was stipulated; but this
averment was not repeated nor proved during the whole trial.
Issue: W/N Florendo can compel Foz to deliver the property — YES, the contract is
valid and effective.
Held:
• Trial court found that neither the deceit alleged by Foz to have been
employed by Florendo in the execution of the contract, nor the falsity of the
instrument executed, was proved
• Consequently, the instrument of contract is valid and effective. From the
validity and force of the contract is derived the obligation on the part of the
vendor to deliver the thing sold.
• Pursuant to article 1466 of the Civil Code, the vendor shall not be bound to
deliver the thing sold, if the vendee should not have paid the price, or if a
period for the payment has not been fixed in the contract. If in the contract
a period has been fixed for the payment, the vendor must deliver the
thing sold.
• In Florendo and Foz’ contract, there was a period fixed for the payment.
o As stipulated in the contract, Florendo was to pay Foz the
remaining P4,000 in Vigan when Foz went to Vigan any time during
May or June, 1909. In case he was unable to go, Florendo was to
pay Foz’ debt to the Church of Vigan and thereafter send the
remainder of the payment to him in Manila.
• The provisions of the said article 1466, contain a rule and an exception:
o The rule is that the thing shall not be delivered, unless the price be
paid;
o The exception is that the thing must be delivered, though the price
is not first paid, if a time for such payment has been fixed in the
contract
• The discussion regarding whether the deposit of P4,000 was or was not
made, is impertinent. The conveyance of the thing sold does not depend
 on the payment of the price. If the period was fixed, the vendor,
notwithstanding that such period has not terminated, nor
consequently, that he has not collected the price, is obliged to deliver
the thing sold.
• After the lapse of the period for the delivery of the price, Florendo hastened
to pay it, and on account of Foz’ refusal to receive it, duly deposited it.
• It is the material delivery of the property sold which the defendant must
make in compliance with the contract, inasmuch as the formal delivery de
11
jure was made according to Art. 1462, par. 2, Civil Code:
o “When the sale should be made by means of a public instrument,
the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if in said instrument the contract
does not appear or may be clearly inferred.”
• The execution of the public instrument was really a formal or symbolical
delivery of the property sold and authorized the plaintiff to use the title of
ownership as proof that he was thenceforth the owner of the property.

Dispositive: CFI AFFIRMED

Notes:
• The execution of the public instrument was really a formal or symbolical
delivery of the property sold and authorized the plaintiff to use the title of
ownership as proof that he was thenceforth the owner of the property.

11
Art. 1498, NCC.
Masallo v. Cesar
Date: November 13, 1918
Petitioner: EULOGIO MASALLO (plaintiff and appellee)
Respondent: MARIA CESAR (defendant and appellant)
Ponente: FISHER
Facts:
• March 8, 1915 - while Maria Cesar, an 80 year-old woman, was in
possession of a parcel of land, Matea Crispino executed a deed to Masallo
to sell and transfer the land to Masallo.
o Crispino testified that she has not been in possession of the land
since the cessation of the Spanish sovereignty. However, the land
was mortgaged by her to Eugenia Perez.
o Perez testified that she was in possession of the land from 1889 to
1914.
• Upon execution of the deed to Masallo, he went to the land with his laborers
and commenced to plow it. Cesar approached them, with her daugher, and
said the land was hers; ordered Masallo and his men away.
• During this altercation, Cesar took a bolo and cut the rope traces by which
Masallo’s carabao was attached to the plow.
• Masallo then commenced an action for desahucio (eviction) in the court of
justice of the peace against Cesar.
• The remedy of forcible entry and detainer was intended to be used against
the usurper and not against the person wronged.
• The plaintiff in an action of forcible entry and detainer cannot succeed where
it appears that, as between himself and the defendant, the latter had a
possession antedating his own; and to ascertain this it is proper to look
to the situation as it existed before the first act of spoliation occurred.
• Masallo had acquired possession of the parcel of land in dispute on or about
the 8 March 1915 by purchase from Matea Crispino. But Crispino admits that
she did not have possession of the land when she executed and delivered
her deed to Masallo, the mere execution and delivery of the deed did not
constitute a delivery of possession.
Dispositive: CFI REVERSED; DISMISSED action of desahucio (eviction);
ORDERED Masallo to pay the costs
Notes:
• Where a dispute over possession arises between two persons, the person
first having actual possession, as between them, is the one who is entitled to
maintain the action for forcible entry and detainer.
• The mere execution and delivery of the deed did not constitute a delivery of
possession.

Issue: W/N the land is owned by Masallo –

Held:
• Until Masallo went to the land to plow it, on the strength of his deed from
Crispino, he had never been in possession of this property.
○ Perez’s possession is unimportant.
• Now, Cesar is in possession of the property and is asserting rights of
ownership over it. Masallo can only succeed upon proof of prior
possession in himself or someone to whose rights he has succeeded.
• In order to sustain an action of forcible entry and detainer, under §80 of the
Code of Civil Procedure, against an intruder who enters upon the land by
force, intimidation, threat, strategy, or stealth, the plaintiff must prove a
prior possession in himself
○ The right of action is conceded to be in the party whose actual and
peaceful possession antedates that of the other.
• Cesar had the prior peaceful possession of the disputed parcel of ground for
an indefinite period of time in the past. So when Masallo entered upon the
premises with his laborers and began plowing the land, it was he who was
guilty of the wrongful seizure of the property
• Cesar had a right to maintain an action of unlawful detainer against the
plaintiff to regain possession.
• Instead of instituting such an action, Cesar instead warned Masallo off.
• Where a dispute over possession arises between two persons, the
person first having actual possession, as between them, is the one
who is entitled to maintain the action for ejection.
○ Otherwise, a mere usurper might enter upon the property of
another and, by allowing himself to be ordered off, could acquire
the right to maintain the action of forcible entry and detainer,
however momentary his intrusion might have been.
Board of Liquidator v. Floro
Date: December 29, 1960
Petitioner: BOARD OF LIQUIDATORS (petitioner and appellant)
Respondent: EXEQUIEL FLORO, ET AL. (oppositors and appellees)
Ponente: REYES, J. B. L.
Facts:
• Board of Liquidators (Board) is a gov’t agency w/c took over the functions of
defunct Surplus Property Liquidating Committee
• June 14, 1952: Melecio Malabanan entered into an agreement w/ the Board
for the salvage of surplus properties sunk in territorial waters off the coasts
of Minoro, La Union and Batangas.
○ Effective for 1 year from start of operations
○ Extendible for total period of not more than 6 months
• June 10: Malabanan requested for extension of 1 year for operations in
Mindoro & Batangas
○ Board approved extension up to November 30, 1953
○ Nov 18: granted another extension up to August 31, 1954
• March 31, 1964: Malabanan entered into agreement with Exequiel Floro
where Floro would advance to Malabanan sums of money (not exceeding
P25k)
○ Repayment being secured by quantities of steel mattings which
Malabanan would consign to Floro
○ To be paid in certain period, upon expiration of which, Floro was
authorized to sell steel mattings in amount sufficient to pay off
advance
○ Total advances made: P24, 303.40
• Recovery report (July 26, 1954): 13, 107 pieces of steel matting in total
○ December 1953-April 30, 1954 -> 2,555
○ May 1, 1954 – June 30, 1954 -> 10, 552
• Malabanan not able to pay so Floro sold 11, 047 pieces to Eulalio Legaspi
for P24, 303.40
• Malabanan filed a petition for voluntary insolvency, attaching schedule of
accounts as follows:
○ Board (Manila Royalty): P10, 847. 46
○ Exequiel Floro (Salvaging Operations): P24, 220.50
• Also attached is inventory of Properties which reached an aggregate value
of P33, 707. Included in list is 11, 167 pieces of steel mattings w/c cost
around P33, 501.
• Board, claiming to be owner prayed for the exclusion of steel matting from
inventory and to further 1940 pieces of steel matting in insolvent account
(difference in number stated in insolvent’s recovery port and that in
inventory)
• Floro opposed saying that the steel matting is Eulalio Legaspi’s by virtue of a
deed of sale in his favor, as executed by Floro
• CA: Board’s petition is DENIED. Malabanan has ownership over steel
mattings under contract with Board. Floro is property authorized to dispose
under contract wth Malabanan, and sale to Legaspi is valid.
○ Board argues that Malabanan did not acquire ownership because
of his failure to comply with terms (suspensive conditions for
transfer of title):
§ payment of price
§ audit and check as to nature, quantity and value of
properties salvaged
§ weighing of properties
§ determination of site for storage
§ audit and verification from government
§ filing of performance bond
Issue: W/N Malabanan owns the pieces of steel matting - YES
Held:
• Contract bet Malabanan and Board vested Malabanan with title to, or
ownership of steel mattings, as soon as they were brought up from the
12
bottom of the sea based on stipulations1
• Many circumstances indicate that ownership of goods passed to Malabanan
as soon as salvaged (i.e. as soon as the salvor had gained effective
possession of goods) and not only after payment of price:
○ Post a bond of 10k
○ Operations were entirely Mabanan’s expense and risk
○ that gold, silver, copper, coins, currency, jewelry, precious stones,
etc. were excepted from the contract, and were instead required to
be turned over to the Board for disposition
○ that the expenses for storage, including guard service, were for
Malabanan's account
• While there can be reservation of title in the seller until full payment of the
price (Article 1478, N.C.C.), or, until fulfillment of a condition (Article 1505,
N.C.C.); and while execution of a public instrument amounts to delivery only
when from the deed the contrary does not appear or cannot clearly be
inferred (Article 1498, supra), there is nothing in the said contract which may
be deemed a reservation of title, or from which it may clearly be inferred that
delivery was not intended.
○ The contention that there was no delivery is incorrect. While there
was no physical tradition, there was one by agreement (traditio
longa manu) in conformity with Article 1499 of the Civil Code.
○ "Article 1499 — The delivery of movable property may likewise
be made by the mere consent or agreement of the contracting
parties, if the thing sold cannot be transferred to the
possession of the vendee at the time of the sale. . . ." As
observed earlier, there is nothing in the terms of the public
instrument in question from which an intent to withhold delivery or
transfer of title may be inferred.
• Board argues: Renewal of bond required for extension of contract. Since
there was no renewal of bond for extension of contract, contract ceased to
have effect and since the steel mattings were recovered during the extended
period of the contract, Malabanan has no rights thererto
12
"10. For and in consideration of the assignment by the BOARD OF LIQUIDATORS to the CONTRACTOR
(Malabanan) of all right, title and interest in and to all surplus properties salvaged by the CONTRACTOR
under this contract, the CONTRACTOR shall pay to the Government NINETY PESOS (P90.00) per long ton
(2,240 lbs.) of surplus properties recovered.
"11. Payment of the agreed price shall be made monthly during the first ten (10) days of every month on the
basis of recovery reports of sunken surplus properties salvaged during the preceding month, duly veri ed and
audited by the authorized representative of the BOARD OF LIQUIDATORS."
 • SC:
○ The pertinent portion of the contract provides:
○ "12. Jointly with the execution of this contract, the CONTRACTOR
shall file a bond in the amount of TEN THOUSAND (10,000.00)
Pesos to guarantee his faithful compliance with the terms and
conditions herein; Provided, that this contract shall not be
considered to have been executed notwithstanding the signing
hereof by the parties until said bond shall have been properly filed."
○ Malabanan filed a bond for period of 1 year (June 10, 1952 - June
10, 1953)
§ Principal contract (June 14, 1952) was extended to
November 30, 1953 (w/o bond) and then August 31. 1954.
(w/o bond)
§ Lapse of bond did not extinguish contract, it was only for
principal obligation. Also, Board could waive bond
requirement since it is for its benefit, which it did when it
extended the contract twice, fully knowing that the bond
had already expired.
§ There was no mention of requirement for bond renewal for
the extensions.

Dispositive: CFI AFFIRMED in so far as it declares the disputed goods to be the

property of the insolvent; but without prejudice to the right of the assignee in
insolvency to take whatever action may be proper to attack the alleged fraudulent
transfer of the steel matting to Eulalio Legaspi, and to make the proper parties
account for the difference between the number of pieces of steel matting stated in the
insolvent's recovery report, Annex "B" (13,107), and that stated in his inventory
(11,167)

Notes:
• Art. 1499 The delivery of movable property may likewise be made by the
mere consent or agreement of the contracting parties, if the thing sold
cannot be transferred to the possession of the vendee at the time of the
sale.
Heirs of Pedro Escanlar v. CA
Date: October 23, 1997
Petitioner: THE HEIRS OF PEDRO ESCANLAR, FRANCISCO HOLGADO and the
SPOUSES DR. EDWIN A. JAYME and ELISA TAN-JAYME [119777]; FRANCISCO
HOLGADO and HRS. OF PEDRO ESCANLAR, namely BERNARDO, FELY, SONIA,
LILY, DYESEBEL and NOEMI all surnamed ESCANLAR [120690]
Respondent: THE HON. COURT OF APPEALS, GENEROSA MARTINEZ, CARMEN
CARI-AN, RODOLFO CARI-AN, NELLY CHUA CARI-AN, for herself and as guardian
ad litem of her minor son, LEONELL C. CARI-AN, FREDISMINDA CARI-AN, the
SPOUSES PAQUITO CHUA and NEY SARROSA-CHUA and THE REGISTER OF
DEEDS OF NEGROS OCCIDENTAL [119777]; HON. COURT OF APPEALS,
GENEROSA MARTINEZ, CARMEN CARI-AN, RODOLFO CARI-AN, NELLY CHUA
CARI-AN, for herself and as guardian ad litem of her minor son, LEONELL C. CARI-
AN and FREDISMINDA CARI-AN, and SP. PAQUITO CHUA and NEY SARROSA
CHUA and REGISTER OF DEEDS OF NEGROS OCCIDENTAL [120690]
Ponente: ROMERO
Facts:
• Two parcels of land in Negros Occidental was part of the estate of Sps.
Guillermo and Victoriana Cari-an.
• Gregorio Cari-an (Victoriana’s nephew) was declared as her heir.
• 1971: Gregorio died. His wife and children (all Cari-an) were adjudged as
heirs.
• Sept 15 1978: The Cari-an heirs executed a Deed of Sale of Rights in favor
of Pedro Escanlar and Francisco Holgado.
○ Consideration: 275,000
○ They conveyed by absolute sale, all the rights, interests, and
participation as to ½ of the two parcels of land.
○ Escanlar and Holgado were concurrently the lessees.
§ They paid 50,000 at the time of the signing.
§ 225,000 shall be paid on or before May 1979.
○ Pending the complete payment, Vendors shall not assign, sell,
lease, nor mortgage the rights.
• Escanlar and Holgado were unable to pay by the due date.
○ However, the Cari-ans received at least 12 installments from
petitioners after May 1979.
• Being former lessees, petitioners continued in possession of the lots.
○ They continued to pay rent.
• Sept. 10, 1981: Petitioners invented in the proceedings of Nombre and Cari-
an as buyers of respondent Cari-an’s share in the lots.
• Sept. 21, 1982: Respondent Cari-ans sold 8 lots (including the subject lots)
to Sps. Chua for Php 1,850,000.
• Nov. 3 1982: Respondents Cari-an filed a case to cancel the sale against
Escanlar and Holgado on their failure to pay.
• April 20, 1983: Petitioners also sold their rights in the lots to Edwin jayme for
Php 735,000 and turned over possession.
• The court approved the sale to the Chuas and titles were issued in their
name.
○ The sale to the petitioners was declared null and void and so is the
sale to Jayme.
• CA affirmed the RTC.
○ The Sept 15 deed of sale in favor of the petitioners is a contract to
sell.
Issues:
• W/N the Sept 15 sale is a contract to sell - NO
• W/N the Sept 15 sale shall become effective only upon approval by the CFI -
Hereditary rights in an estate can be validly sold without need of court
approval
• W/N the Sept 15 sale may be rescinded - NO
Held:
On the First Issue
• In contracts to sell, ownership is retained by the seller and is not to pass until
the full payment of the price. Such payment is a positive suspensive
condition, the failure of which is not a breach of contract but simply an event
that prevented the obligation of the vendor to convey title from acquiring
binding force.
○ absent a proviso that title to the property sold is reserved in the
vendor until full payment of the purchase price nor a stipulation
giving the vendor the right to unilaterally rescind the contract the
moment the vendee fails to pay within a fixed period, by its nature,
it shall be declared a deed of absolute sale.
• It is a contract of sale.
○ First, private respondents as sellers did not reserve unto
themselves the ownership of the property until full payment of the
unpaid balance of P225,000.00.
○ Second, there is no stipulation giving the sellers the right to
unilaterally rescind the contract the moment the buyer fails to pay
within the fixed period. Prior to the sale, petitioners were in
possession of the subject property as lessees. Upon sale to them of
the rights, interests and participation as to the 1/2 portion pro
indiviso, they remained in possession, not in concept of lessees
anymore but as owners now through symbolic delivery known as
13
traditio brevi manu . Under Article 1477 of the Civil Code, the
ownership of the thing sold is acquired by the vendee upon actual
or constructive delivery thereof.
• In a contract of sale, the non-payment of the price is a resolutory condition
which extinguishes the transaction that, for a time, existed and discharges
the obligations created thereunder. The remedy of an unpaid seller in a
contract of sale is to seek either specific performance or rescission.
On the Second Issue
13
Ownership, under Roman law and the legal systems based on it, such as the Civil Law of the Philippines
based on the Spanish Civil Code, cannot be transferred by mere agreement. Non nudis pactis, sed traditione
dominia rerum transferentur. Tradition or delivery is needed to pass ownership. As a mode of acquisition
of property, it consists in putting a thing at the disposal of the person to whom one wishes to convey it. The
normal mode of accomplishing this is by real traditio or actual physical handing over of the thing by the
transferer to the transferee. In contrast, there may be symbolical tradition, belonging to the class called
feigned or fictitious tradition, one of which is traditio brevi manu where the buyer, being already in
possession of the thing sold due to some other cause such as lease, merely remains in possession
after the sale is effected, but now in concept of owner.
 • It is settled that court approval is necessary for the validity of any disposition
of the decedents estate. However, reference to judicial approval cannot
adversely affect the substantive rights of the heirs to dispose of their ideal
share in the co-heirship and/or co-ownership among the heirs.[30] It must be
recalled that during the period of indivision of a decedents estate, each heir,
being a co-owner, has full ownership of his part and may therefore alienate
it.[31] But the effect of the alienation with respect to the co-owners shall be
limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.
• Repondent Cari-ans should not be allowed to cancel the Sept 15 transaction
because the lack of approval is of their own making (they opposed motion
for approval of the sale filed by the petitioners).
On the Third Issue
• When the sellers, instead of availing of their right to rescind, accepted and
received delayed payments of installments beyond the period stipulated, and
the buyers were in arrears, the sellers in effect waived and are now
estopped from exercising said right to rescind.
• The Cari-ans were indeed paid the balance of the purchase price, despite
having accepted installments therefor belatedly. There is thus no ground to
rescind the contract of sale because of non-payment.
○ The amounts were consigned and they continued to pay rent
(indicative of their good faith).

Dispositive: CA REVERSED; REMANDED to RTC for P and PR Cari-an or their

successors-in-interest to determine exactly which 1⁄2 portion of Lot Nos. 1616 and
1617 will be owned by each party, at the option of petitioners; DIRECTED RTC to
order the issuance of the corresponding certificates of title in the name of the
respective parties and to resolve the matter of rental payments of the land not
delivered to the Chua spouses subject to the rates specified above with legal interest
from date of demand

Notes:
• In contrast to the actual physical delivery, there may be symbolical tradition,
belonging to the class called feigned or fictitious tradition, one of which is
traditio brevi manu where the buyer, being already in possession of the thing
sold due to some other cause such as lease, merely remains in possession
after the sale is effected, but now in concept of owner.
Amigo v. Teves
Date: November 29, 1954
Petitioner: PASTOR AMIGO and JUSTINO AMIGO
Respondent: SERAFIN TEVES
Ponente: BAUTISTA ANGELO
Facts:
• August 11, 1937, Macario Amigo and Anacleto Cagalitan executed in favor
of their son, Marcelino Amigo, a power of attorney granting to the latter,
among others, the power
○ "to lease, let, bargain, transfer, convey and sell, remise, release,
mortgage and hypothecate, part or any of the properties . . . upon
such terms and conditions, and under such covenants as he shall
think fit."
• 1938, Marcelino executed a deed of sale of a parcel of land for a price
of P3,000 in favor of Serafin Teves stipulating therein that the vendors
could repurchase the land within a period of 18 months from the date
of the sale.
• In the same document, it was also stipulated that the vendors would
remain in possession of the land as lessees for a period of 18 months
subject to the following terms and conditions:
○ the lessees shall pay P180 as rent every six months from the date
of the agreement;
○ the period of the lease shall terminate on April 30, 1940; (c) in case
of litigation, the lessees shall pay P100 as attorney's fees; and
○ in case of failure to pay any rental as agreed upon, the lease
shall automatically terminate and the right of ownership of
vendee shall become absolute.
• 1939, the spouses Amigo donated to their sons Justino and Pastor, the
several parcels of land including the right to purchase the subject land.
The deed of donation was in a public instrument, duly accepted by the
donees and registered in the Office of Register.
• The vendors-lessees paid the rental corresponding to the first six
months, but failed to pay for the next months.
• Jan 8, 1940: Teves, the vendee-lessor, executed an "Affidavit of
Consolidation of Title" in view of the failure of the lessees to pay the
rentals as agreed upon, and registered said affidavit in the Office of the
Register of Deeds of Negros Oriental, who, on January 28, 1940, issued to
Teves the corresponding transfer of title over the land
• PET: the covenant of lease contained in the deed whereby the vendors
agreed to remain in possession of the land as lessees is not germane to
Marcelino’s power of attorney and, therefore, he acted in excess of his
powers
• RTC/CA: Lease within the powers of the attorney in fact and therefore valid
and binding.
Issues:
ISSUES:
• W/N the lease covenant contained in the deed of sale with pacto de retro
executed by Marcelino Amigo as attorney-in-fact in favor of Teves is not
germane to, nor within the purview of, the powers granted to him and,
therefore, is ultra vires and null and void; - NO, it is valid
• W/N the penal clause stipulated in the lease covenant referring to the
automatic termination of the period of redemption is null and void - NO
• W/N petitioners should be allowed to repurchase the land on equitable
grounds considering the great disproportion between the redemption price
and the market value of the land on the date the period of redemption is
supposed to expire – NO
Held:
On the First Issue
• the power granted to the agent is so broad that it practically covers the
celebration of any contract and the conclusion of any covenant or stipulation
o “. . upon such terms and conditions, and under such covenants as
he shall think fit.”
• When the power of attorney says that the agent can enter into any
contract concerning the land, or can sell the land under any term or
condition and covenant he may think fit, it undoubtedly means that he
can act in the same manner and with the same breath and latitude as
the principal could concerning the property.
On the Second Issue
• We find nothing unusual in the lease covenant embodied in the deed of
sale for such is common in contracts involving sales of land with pacto
de retro.
• The lease that a vendor executes on the property may be considered
as a means of delivery or tradition by constitutum possessorium.
o Where the vendor a retro continues to occupy the land as lessee,
by fiction of law, the possession is deemed to be constituted in the
vendee by virtue of this mode of tradition
• We may say therefore that this covenant regarding the lease of the land sold
is germane to the contract of sale with pacto de retro.
• The automatic termination of the period of redemption is not contrary to law,
morals, or public order. In fact, it is a clause common in a sale with pacto de
retro, and as such it received the sanction of our courts.
• Dimatulac v Coronel: This case, however, was settled by a compromise by
virtue of which the vendor agreed to place the property at the disposal
of the vendee so that the latter may apply to products of the land to the
payment of the rent. Later, the vendor offered to redeem the property under
the contract of sale with pacto de retro, the period of redemption not having
as yet expired. The vendee refused the offer on the ground that her title to
the property had already been consolidated. This Court declared the lease
covenant contained in the contract as lawful, although it found that the
act of the vendee in taking possession of the land by way of
compromise constituted a waiver of the penal provision relative to the
acceleration of the period of redemption.
• In this case, there is no such waiver present as the vendee-lessor did
not offer any compromise and quick to assert his right by
consolidating his ownership right away.
On the Third Issue
• According to pet the assessed value of the land at the time of sale was
P4280 while the selling price was P3,000. And in 1940, the year when the
period of redemption was supposed to expire, the value of the land would be
P43,000.
 • While this contention may have some basis when considered with
reference to an absolute contract of sale, it loses weight when applied
to a contract of sale, with pacto de retro, where the price is usually less
than in absolute sale for the reason that in a sale with pacto de retro,
the vendor expects to re-acquire or redeem the property sold.

Dispositive: CA AFFIRMED

Notes:
• A lease covenant embodied in the deed of sale is valid for such is common
in contracts involving sales of land with pacto de retro. The lease that a
vendor executes on the property may be considered as a means of
delivery or tradition by constitutum possessorium. Where the vendor a
retro continues to occupy the land as lessee, by fiction of law, the
possession is deemed to be constituted in the vendee by virtue of this
mode of tradition. We may say therefore that this covenant regarding the
lease of the land sold is germane to the contract of sale with pacto de retro.
Bautista v. Sioson
Date: February 11, 1919
Petitioner: ROSALIO BAUTISTA (plaintiff and appellee)
Respondent: FRANCISCO SIOSON ET AL (defendants), RAYMUNDO DE LA CRUZ
(appellant)
Ponente: TORRES
Facts:
• September 4, 1912 – Defendant Sioson and his wife, Lorenza de la Cruz,
through a notarial instrument, sold to the plaintiff Rosalio Bautista, the
camarin (or warehouse of strong materials with an iron roof) and a house of
mixed materials with a nipa roof (the house is not in issue here).
o It was stipulated that if within two years from the date of the
contract the vendors or their successors in interest should not
repurchase said properties for the sum of P400, the price of the
sale, such sale should become absolute and thenceforth the
ownership in the properties sold should be consolidated, the
execution of another instrument being unnecessary.
• On the same date, September 4, 1912, Rosalio Bautista, through a notarial
instrument and by means of a constitum possessorium agreement, leased
the properties sold to him to the vendors Francisco Sioson and Lorenza de
la Cruz, for the price of P100 per annum, for the period of two years counted
from the date of the instrument.
• On June 12, 1913, Lorenza de la Cruz died.
• On August 5, 1914, Francisco Sioson executed before a notary a document
by which he sold under right of repurchase to the defendant Raymundo de la
Cruz, the camarin in question.
o The instrument also stipulated a right to repurchase within six
months for P422, the price of the purchase, and that if the
redemption is not made in the period stipulated, the sale shall
become absolute with no need for another instrument.
• Both documents were notarial instruments though not recorded in the
registry of the property.
• Bautista and de la Cruz both claimed exclusive ownership of the property.
• Bautista filed a complaint in CFI Rizal, alleging that such a sale was
executed and that the property was delivered to him on the same date. He
prayed for the court to hold that his ownership was consolidated as the
property was not repurchased and for Sioson to be ordered to pay rent due.
o Sioson did not answer. De la Cruz alleged that he possessed
exclusive ownership.
• CFI Rizal ruled in favor of Bautista. De la Cruz appealed.
Issue: W/N the camarin is owned by Bautista - YES
Held:
• The court decided in accordance with the provisions contained in the last
paragraph of Art. 1473 of the Civil Code, which states that: “Should there be
no entry, the property shall belong to the person who first took possession of
it in good faith...”
• Cruz acted in good faith in acquiring it, inasmuch as, through failure to enter
the property in the registry, there was no reason why the previous alienation
of the camarin should have been known as the first period for repurchase
had not lapsed and Sioson still occupied the property BUT the actual and
material possession of the camarin by Cruz does not constitute a
sufficient legal reason for holding the he has a better right to the
building than the first purchaser Rosalio Bautista, although the latter
was not in actual, physical, and material of the camarin that he had
purchased.
• Article 1462 of the Civil Code reads:
o A thing sold shall be considered as delivered, when it is placed in
the hands and possession of the vendee.
• When the sale should be made by means of a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is the
object of the contract, if in said instrument the contrary does not appear or
may be clearly inferred.
• By the execution of the deed of sale of September 4, 1912, Rosalio
Bautista entered into the material possession under title of owner, of
the camarin sold to him by Francisco Sioson, and, by virtue of another
instrument of lease, of the same date, the purchaser and owner of
the camarin conveyed and delivered this building to the lessee in view of
said contract. Under these perfectly legal suppositions it is unquestionable
that the purchaser Rosalio Bautista was the first person who entered
into the possession of the camarin as soon as he acquired it by virtue of
said sale.
• De la Cruz’s material possession was an unlawful possession as it was
transmitted to him by Francisco Sioson who, at the time of the second sale,
was only a tenant with not right to convey to de la Cruz the property.
• Tradition Constitutom Possessorium
o Seller continues to be in possession of the property sold by virtue of
a lease contract agreement with the vendee.
o The transferor retains physical control of the item to be transferred
but he acknowledges that the transferee henceforth owns the item
and that he retains it on behalf of the latter but no longer owns it.
Dispositive: CFI AFFIRMED
Notes:
• Article 1500. There may also be tradition constitutum possessorium.
• Ownership is transferred to the vendee and not retained by the one who
possesses the property by virtue of tradition constitutum possessorium.
Express Credit v. Velasco
Date: October 20, 2005
Petitioner: EXPRESS-CREDIT FINANCING CORPORATION
Respondent: SPS. MORTON AND JUANITA VELASCO
Ponente: QUISUMBING
Facts:
• On May 25, 1988, respondents purchased on installment, from Garcia
spouses a house and lot in Quezon City
• In July 1988, a Deed of Absolute Sale was executed
• Whereby the Garcia spouses bound themselves to deliver the title of the
property purchased, free from all liens and encumbrances within 15 days
from full payment.
• Respondents were thereafter informed by the Garcia spouses that since the
house on the property was still under construction, the lot was still covered
by the mother title and had no separate title as yet. They promised to give
the title after the construction was completed.
• In August 1988, the keys to the property were delivered to the respondents.
• Respondents followed up on the title
• Garcia spouses: since the Quezon City Hall was razed by a fire in June, the
title had to be reconstituted, so their separate title could not yet be delivered
to them. Respondents went to the Register of Deeds in Quezon City and
discovered that the Garcia spouses had mortgaged the property to
petitioner, Expresscredit Financing Corporation, for P250,000 on June 15,
1989, or more than a year after the property was sold to them.
• Respondents filed a case for Quieting of Title and Specific Performance
against the Garcia spouses before the court a quo, whereby they caused
registration of a notice of lis pendens on the title, attaching thereto a copy of
their complaint stating that they have been the owners of the said property
since May 25, 1988.
• Garcia spouses were subsequently declared in default for failing several
times to appear in court despite notice.
• On October 7, 1992, petitioner foreclosed on the property in defiance of the
notice of lis pendens and the Writ of Preliminary Injunction issued by the
lower court, enjoining petitioner from selling or in any manner disposing of
the property without permission from the court.
• Petitioner sold the property in a public auction where petitioner was the
highest bidder. Due to the failure of the Garcia spouses to redeem the
property, petitioner thereafter executed an Affidavit of Consolidation.
• RTC:
○ defendant [Expresscredit] Financing Corporation is an
innocent purchaser and is, therefore, in good faith. The
defendant corporations failure to make further inquiry apart from the
ocular inspection, concerning the rights of herein plaintiffs who
were in possession of the property thru their caretakers is not fatal
because it relied on the title on the property which is in the name of
Garcia.
• Plaintiffs are innocent purchasers. Had they registered the Deed of Sale
executed between them and Spouses Garcia, they [would] have,
undoubtedly, a preferential right over the property. Plantiff deserves to be
reimbursed.
• CA: reversed TC.
• Appellants Juanita and Morton Velasco are declared purchaser for value and
in good faith
• The Deed of Mortgage, Sheriffs Certificate of Sale, Affidavit of Consolidation
in favor of appellee [Expresscredit], and the Transfer Certificate of Title No.
69049 in the name of [Expresscredit], are hereby declared of no force and
effect;
• Defendants Jesus and Lorelei Garcia are hereby ordered to pay to
appellants Velasco
• Pet: double sale. The first sale is unregisterd. Second asle is during
foreclosure proceedings
Issue: W/N petitioners have preferential right over the property
Held:
Who has preferential right over the property? The respondents who acquired it
through prior purchase or the petitioner who acquired the same in a foreclosure sale
as the highest bidder?) No. There being a double sale, Spouses Velasco had the
preferential right.
• Article 1544 of the Civil Code is the rule on double sale. It provides:
• 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.
• An innocent purchaser for value or any equivalent phrase shall be deemed
to include, under the Torrens System, the innocent lessee, mortgagee, and
other encumbrancer for value. In Bautista v CA, where the thing sold twice is
an immovable, the one who acquires it and first registers it in the Registry of
Property, in good faith, shall be the owner.
• Who can be considered a purchaser in good faith?
• One who purchases real estate with knowledge of a defect or lack of title in
his vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or of an interest therein; and the same rule
must be applied to one who has knowledge of facts which should have put
him upon such inquiry and investigation as might be necessary to acquaint
him with the defects in the title of his vendor. (Leung Yee v. F.L. Strong
Machinery Co. and Williamson)
• ITC, property was already sold to the Velascos and they have been in
actual, physical, continuous and uninterrupted possession. Petitioners claim
that it purchased the property at an auction sale is of no
moment. Petitioner was neither a mortgagee nor a purchaser in good faith
and as such, could not acquire good title to the property as against the
former transferee.
o Two credit investigators of petitioner visited the subject property to
investigate concerning the occupants on the property. They were
promptly informed by the witness, who was the caretaker of the
property that the same had been sold to respondents by the Garcia
spouses . Petitioner, through its agents, had been informed of the
earlier sale of the subject property to the respondents.
o Since the Garcia spouses no longer had the right to alienate the
property, no valid mortgage was ever constituted on it. Since the
 mortgage contract was void, the foreclosure of the property was
ineffectual as well.
• A purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard and claim that he acted in good faith under the belief
that there was no defect in the title of the vendor. His mere refusal to believe
that such defect exists, or his willful closing of his eyes to the possibility of
the existence of a defect in his vendors title, will not make him an innocent
purchaser for value, if it afterwards develops that the title was in fact
defective, and it appears that he had such notice of the defect as would have
led to its discovery had he acted with that measure of precaution which may
reasonably be required of a prudent man in a like situation.
• Good faith or the lack of it, is a question of intention; but in ascertaining the
intention, courts are necessarily controlled by the evidence as to the conduct
and outward acts by which alone the inward motive may, with safety, be
determined.

Dispositive: CA AFFIRMED
Carbonell v. CA
Date: January 26, 1976
Petitioner: ROSARIO CARBONELL
Respondent: HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA
INFANTE and RAMON INFANTE
Ponente: MAKASIAR
Facts:
• Respondent Jose Poncio owner of land with improvements in San Juan,
Rizal. 195sqm, covered by a TCT and subject to mortgage in favor of
Republic Savings Bank for the sum of 1,500.
• Petitioner Rosario Carbonell, a cousin and neighbor of Poncio lived in the
adjoining lot.
• Both petitioners Rosario Carbonell and Respondent Emma Infante offered to
buy said lot from Poncio.
• Unable to keep up with the mortgage, resp. Poncio approached petitioner
and offered to sell said lot excluding the house wherein respondent lived.
Petitioner accepted and propsed the price of P9.50 per sqm. Resp agreed
and accepted the price proposed by petitioner on the condition that from the
price would come the money to be paid to the bank.
• Petitioner and respondent made and executed a contract which states that
Poncio could stay for a year on the lot Poncio sold Carbonell without paying
for anything. If after that year, Poncio could not find a place where to move
his house, he could still continue occupying the site but should pay rent.
• Petitioner thus asked Atty. Salvador Reyes to prepare the formal deed of
sale which she brought to Poncio together with the balance left to be paid.
• Poncio however told petitioner that he could not proceed with the sale
anymore because he had given the lot to respondent Emma Infante. Infante
started erecting a gate around the lot.
• Upon sending demand letters, Poncio admitted that Infante improved her
offer and that he agreed to sell the land and its improvements to her. Poncio
thus executed a formal deed of sale in favor of Infante. Infante thus
proceeded to assume the existing mortgage debt in favor of Republic
Savings Bank amounting to P1,177.
• Informed that the sale had not yet been registered, petitioner filed an
adverse claim. When Infante thus registered the land, the TCT was issued
but annotated with the adverse claim.
• On petitioner’s complaint, respondent moved to dismiss said complaint on
the ground, inter alie, that petitioner’s claim is unenforceable under the
Statue of Frauds. This motion was denied without prejudice to passing on
the question raised therein when the case would be tried on the merits.
• During trial, petitioner started presenting evidence of the sale, part of which
was the agreement aforementioned (allowing Poncio to stay for a year or
longer subject to the payment of rent). Poncio objected to the presnetiation
of parole evidence to prove the alleged sale. The trial court sustained the
objection and dismissed the complaint.
• From the dismissal, petitioner appealed to the Supreme Court which ruled
that the alleged sale had been partially performed so petitioner was entitled
to establish by parole evidence the existence of the contract. The case was
thus remanded.
• Upon remand, the court rendered a decision declaring the sale of Poncio to
Infante NULL AND VOID and ordered the conveyance to Carbonell.
• Infante thus filed a motion for re-trial which the court granted. After re-
hearing, the trial court reversed its decision, dismissing the complaint of
Carbonell.
• Carbonell thus appealed to respondent Court of Appeals who initially
rendered a decision favoring Carbonell.
• After Infantes motion for reconsideration, however, the CA reversed its
original decision and held in favor of Infante.
• Hence this appeal by certiorari.
Issues:
• W/N there was bad faith on the part of Infante’s purchase. YES.
• W/N the prior sale to Carbonell was duly established. YES.
• W/N there was adequate consideration or price for the sale in favor of
carbonell. YES.
Held:
On the First Issue
• When carbonnell bought the lot, she was the only buyer thereof and the title
of Poncio was still in his name, encumbered solely by bank mortgage.
Carbonell was not aware, nor chould she have been aware, of any sale of
Infante for there was no sale to begin with.
• Carbonell’s purchase was thus made in good faith. She recorded her
adverse claim four days prior to Infante’s registration. She also sought
audience with Infante who merely snubbed her and refused to see her.
• On the other hand, Infante’s bad faith is clear. She refused to see Carbonell
who wanted to see her after she was informed by Poncio that he sold the lot
to Infante. Ordinarily, one will not refuse to see a neighbor who lives in close
proximity. Her refusal to talk could only mean that she did not want to listen
to Carbonell’s claim that she had already bought the land. When she
registered her land, she was also appraised of Carbonell’s filing of adverse
claim. She was thus served notice of the prior sale to Carbonell as such
adverse claim was valid and effective.
On the Second Issue
• The document signed by Poncio states that Poncio was allowed to stay in
the land sold by him to plaintiff. As poncio is neither illiterate nor so ignorant
as to sign document without readings its contents, it is clear that the sale
had been agreed upon.
• This private memorandum is evidence of the prior sale. As a perfected sale
is consensual and consummated by mere consent, it is held binding on and
effective vetween the parties.
On the Third Issue
• It is evident that there was ample consideration (including the right to
continue to stay on the land without paying rent for one year). However,
Poncio, induced by the higher price offered to him by Infante, reneged on his
commitment to Carbonell.
• Being a consensual contract, however, the private document (stay for one
year without rent) effectively transferred the possession of the lot to the
vendee Carbonell by Constitutm Possessorium (article 1500, NCC) because
Poncio continued to retain physical possession of the lot as tenant and no
longer as owner thereof.
 • The transfer was further confirmed when Poncio agreed to the actual
payment by Carbonell of his mortgage arrears to the bank.

Dispositive: CA REVERSED; DECLARED Carbonnel to have the superior right to

the land in question; DIRECTED Carbonnel to reimburse to Infantes the sum of
P1,500.00 within 3 months from the finality of this decision; DIRECTED the Register
of Deeds of Rizal to cancel TCT No. 37842 issued in favor of Infantes covering the
disputed lot, which cancelled TCT No. 5040 in the name of Jose Poncio; ORDERED
the same to issue a new TCT in favor of Carbonell upon presentation of proof of
payment by her to Infantes of the aforesaid amount of P1,500.00; HELD that Infantes
may remove their aforementioned useful improvements from the lot within 3 months
from the finality of this decision, unless the Carbonell elects to acquire the same and
pays Infantes the amount of P13,429.00 within 3 months from the finality of this
decision; HELD that should Carbonell fail to pay the said amount within the
aforestated period of 3 months from the finality of this decision, the period of 3
months within which Infantes may remove their aforementioned useful improvements
shall commence from the expiration of the 3 months given Carbonell to pay for the
said useful improvements

Notes:
• Art 1544 provides:
o If the same thing should have been sold to different vendees, the
ownership shall e transferred to the person who may have first
taken possession thereof in good faith, if it should be movable
property.
o Should it be IMMOVABLE property, the ownership shall belong to
the person acquiring it who in good faith first recorded it in the
registrty of property.
o 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.
• It is essential that the buyer of realty must act in good faith in regsitering his
deed of sale to merit the protection of law.
Tanglao v. Parungao
Date: October 5, 2007
Petitioner: SPOUSES MARIANO S. TANGLAO and CORAZON M. TANGLAO
Respondent: SPOUSES CORAZON S. PARUNGAO and LORENZO G.
PARUNGAO (deceased), substituted by LAWRENCE S. PARUNGAO, MARY
CHRISTINE PARUNGAO-CURUTCHET, LORDBERT S. PARUNGAO,
LODELBERTO S. PARUNGAO and MA. CECILIA PARUNGAO-HERNANDEZ
Ponente: SANDOVAL-GUTIERREZ
Facts:
• 1992: Spouses Lorenzo and Corazon Parungao (respondents) purchased
9 lots from Spring Homes Subdivision located at Barangay Culiat, Calamba
City, Laguna. They made a down payment of P536,000, leaving a balance
of P828,450, exclusive of interest.
o They introduced improvements on the lots (a concrete perimeter
fence with cyclone wires on top, a heavy steel gate, and two fish
breeding buildings, all at a cost of P945,000). They also elevated
the ground level of the lots by filling them with earth and "adobe."
• Under the Contracts to Sell signed by Spouses Parungao, the balance of
P828,450.00 was to be paid by them within one year from its execution;
and that should they apply for a loan as payment for the balance, they would
continue to pay the monthly installment until their obligation is fully paid.
o They failed to pay the installments. They also failed to secure a
loan because Spring Homes refused to deliver to them the
Transfer Certificates of Title (TCTs) covering the lots required in
their application for a loan secured by a real estate mortgage.
• Apr. 11, 1997: Spring Homes executed two separate Deeds of Absolute
Sale in favor of Spouses Mariano and Corazon Tanglao (petitioners).
The previous TCTs covering the lots were cancelled, and in lieu thereof, two
new TCTs were issued in the names of Spouses Tanglao. The lots sold to
them were among those previously sold to Spouses Parungao.
• Spouses Tanglao took possession of the two lots they bought. They forcibly
opened the steel gate and the doors of the buildings to enter the premises.
• July 15, 1999: Spouses Parungao filed with the Housing and Land Use
Regulatory Board (HLURB) a complaint for annulment of deed of sale
and/or return of investment for the seven (7) lots and costs of improvements.
• The HLURB Board of Commissioners found that at the time of the sale of the
two lots to Spouses Tanglao, the contracts between Spouses Parungao and
Spring Homes were still subsisting. Moreover, the fence and existing
structures on the premises should have forewarned petitioners that there are
adverse claimants of the two lots.
• Eventually, Spouses Tanglao filed a petition for review with the CA. The CA
ruled in favor of Spouses Parungao, holding that they have a superior right
over the lots in question.
Issue: Who between the spouses have a superior right over the lots? – Spouses
st
Parungao (1 buyer)
Held:
• In double sales of immovable property, the governing principle is prius
tempore, prius jure (first in time, stronger in right).
• Payongayong v. Court of Appeals: Under Article 1544, preferential rights
shall be accorded to: (1) The person acquiring it who in good faith first
recorded it in the Registry of Property; (2) In default thereof to the person
who in good faith was first in possession; (3) In default thereof, to the
person who presents the oldest title, provided there is good faith.
o In all of these cases, good faith is essential, being the basic
premise of the preferential rights granted to the person
claiming ownership of the immovable.
• Occeña v. Esponilla: the Court, speaking through then Chief Justice Reynato
S. Puno, laid down the following rules in the application of Article 1544: (1)
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; and (2) 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.
o Differently put, the act of registration by the second buyer must
be coupled with good faith, meaning, the registrant must have
no knowledge of the defect or lack of title of his vendor or must
not have been aware of facts which should put him upon such
inquiry and investigation as might be necessary to acquaint him
with the defects in the title of his vendor.
• IN THIS CASE: Spouses Parungao are NOT purchasers in good faith.
o A purchaser in good faith or innocent purchaser for value is one
who buys property and pays a full and fair price for it at the time of
the purchase or before any notice of some other person’s claim on
or interest in it. The burden of proving the status of a purchaser in
good faith lies upon him who asserts that status and it is not
sufficient to invoke the ordinary presumption of good faith, that is,
that everyone is presumed to have acted in good faith.
o The HLURB and the Court of Appeals found that at the time of the
second sale, there were already occupants and improvements
on the two lots in question. These facts should have put
petitioners on their guard.
o Settled is the rule that a buyer of real property in possession
of persons other than the seller must be wary and should
investigate the rights of those in possession, for without such
inquiry the buyer can hardly be regarded as a buyer in good
faith and cannot have any right over the property.
o As the petitioners Tanglao cannot be considered buyers in good
faith, they cannot rely upon the indefeasibility of their TCTs in view
of the doctrine that the defense of indefeasibility of a torrens title
does not extend to transferees who take the certificate of title in
bad faith.
• Considering that respondents Parungao who, in good faith, were first in
possession of the subject lots, the Court ruled that the ownership
thereof pertains to them.
Dispositive: CA AFFIRMED
Cheng v. Genato
Date: December 29, 1998
Petitioner: RICARDO CHENG
Respondent: RAMON B. GENATO and ERNESTO R. DA JOSE & SOCORRO B. DA
JOSE
Ponente: MARTINEZ
Facts:
• Respondent Ramon B. Genato is the owner of two parcels of land (35,821
sq. m) in Paradise Farms, San Jose Del Monte, Bulacan, covered by TCTs.
• Sep. 6, 1989: Respondent Genato entered into a contract to sell with
respondent-spouses Ernesto R. Da Jose and Socorro B. Da Jose (Da
Jose spouses) over the above-mentioned two parcels of land.
o The contract was in a public instrument and was duly annotated at
the back of the two certificates of title on the same day.
o Clause 1 provides that the purchase price shall be P80/sq. m., of
which P50,000 shall be paid as partial down payment.
o Clause 3 provides that P950,000 as full payment shall be paid 30
days after the execution of the contract to sell after the vendee has
satisfactorily verified the authenticity of documents.
• Sps. Da Jose asked for and was granted by respondent Genato an
extension of 30 days until Nov. 5, 1989.
• Pending the effectivity of the extension period and without due notice to Sps.
Da Jose, Genato executed an Affidavit to Annul the Contract to Sell.
• Oct. 24, 1989: Petitioner Ricardo Cheng expressed his interest in buying the
subject properties
o Genato showed to Cheng copies of his TCTs and the annotations
at the back thereof of his Contract to Sell with the Da Jose
spouses.
o He also showed him the Affidavit to Annul the Contract to Sell
which has not been annotated at the back of the titles.
• Despite these, Cheng went ahead and issued a check for P50,000.00
upon the assurance by Genato that the previous contract with the Da
Jose spouses will be annulled for which Genato issued a handwritten
receipt.
• While Sps. Da Jose were at the Office of the Registry of Deeds of
Meycauayan, Bulacan, they met Genato by coincidence.
o Sps. Da Jose discovered about the affidavit to annul their
contract. After being reminded that Genato had given them (Sps.
Da Jose) an additional 30-day period to finish their verification of
his titles, that the period was still in effect, and that they were willing
and able to pay the balance of the agreed down payment later on in
the day, Genato decided to continue the Contract he had with
them.
• Genato sent a letter to Cheng, enclosing a BPI Cashier’s Check of P50,000
and expressed regret for inability to consummate their transaction.
• Thereafter, Sps. Da Jose paid Genato the complete payment of P950,000.
• Cheng instituted a complaint for specific performance to compel Genato to
execute a deed of sale to him of the subject properties and damages.
o He averred that the P50,000.00 check he gave was a partial
payment to the total agreed purchase price of the subject properties
and considered as an earnest money for which Genato
acceded. Thus, their contract was already perfected.
• RTC ruled in favor of Cheng which was reversed by CA.
Issues:
• W/N the Contract to Sell between Genato and Sps. Da Jose has been validly
rescinded or resolved – NO
• Who had a better right over the land? – Sps. Da Jose
Held:
On the First Issue
• In a Contract to Sell, there can be no rescission of an obligation that is still
non-existent since the suspensive condition, i.e. the payment of the
purchase price, has not occurred yet. No default can be ascribed to Sps.
Da Jose since the 30-day period has not yet expired. Even assuming Sps.
Da Jose defaulted, the Affidavit to Annul the Contract is uncalled for
because with or without the affidavit, non-payment of purchase price ipso
facto avoids the contract to sell.
• Nevertheless, Genato is not relieved from giving of a verbal or written
notice to Sps. Da Jose to rescind the contract since rescission is always
subject to review by the courts in case the alleged defaulter files a suit.
On the Second Issue
• Cheng contends that the contract between him and Genato is a Conditional
Contract of Sale.
o This was an issue which was not raised during the trial in court and
therefore cannot be raised for the first time on appeal. Assuming it
was a conditional contract of sale, it did not acquire any obligatory
force since the Contract to Sell between Sps. Da Jose and Genato
should first be cancelled or rescinded (a condition never met).
• The Court held that the agreement between Genato and Cheng is a Contract
to Sell. Generally, the rule on Double Sales does not apply to contracts to
sell. Article 1544 enumerates the circumstances that must concur:
o a) two (or more) sales transactions in the issue must pertain to
exactly the same subject matter, and must be valid sales
transactions; b) two (or more) buyers at odds over the rightful
ownership of the subject matter must each represent
conflicting interests; and c) two (or more) buyers at odds over
the rightful ownership of the subject matter must each have
bought from the very same seller.
o These situations obviously are lacking in a contract to sell for
neither a transfer of ownership nor a sales transaction has been
consummated. The contract to be binding upon the obligee or the
vendor depends upon the fulfillment or non-fulfillment of an event.
• HOWEVER, the governing principle, i.e. PRIMUS TEMPORE, PORTIOR
JURE (first in time, stronger in right) of Art. 1544 should apply.
• The rule exacted by Article 1544 of the Civil Code for the second buyer to be
able to displace the first buyer are:
o (1) that the second buyer must show that he acted in good
faith (i.e. in ignorance of the first sale and of the first buyers
rights) from the time of acquisition until title is transferred to him by
registration or failing registration, by delivery of possession; and (2)
 the second buyer must show continuing good faith and
innocence or lack of knowledge of the first sale until his contract
ripens into full ownership through prior registration as provided by
law.
• In the case at bar, the knowledge gained by the Sps. Da Jose, as first
buyers, of the new agreement between Cheng and Genato will not
defeat their rights as first buyers except where Cheng, as second
buyer, registers or annotates his transaction or agreement on the title
of the subject properties in good faith ahead of the Da Jose spouses.
Moreover, Sps. Da Jose, as first buyers, knew of the second transaction it
will not bar them from availing of their rights granted by law, among them, to
register first their agreement as against the second buyer.
• In contrast, knowledge gained by Cheng of the first transaction between
Sps. Da Jose and Genato defeats his rights even if he is first to register
the second transaction, since such knowledge taints his prior
registration with bad faith.
• Registration, as defined by Soler and Castillo, means any entry made in the
books of the registry, including both registration in its ordinary and strict
sense and cancellation, annotation, and even marginal notes. In its strict
acceptation, it is the entry made in the registry which records solemnly and
permanently the right of ownership and other real rights.
• Moreover, registration alone in such cases without good faith is not
sufficient. Good faith must concur with registration for such prior right
to be enforceable.
o In the instant case, the annotation made by the Sps. Da Jose on
the titles of Genato of their Contract to Sell more than satisfies this
requirement. Whereas in the case of Genato’s agreement with
Cheng such is unavailing. For even before the receipt was issued
to Cheng, information of such pre-existing agreement has been
brought to his knowledge which did not deter him from pursuing
his agreement with Genato.
• Leung Yee vs. F.L. Strong Machinery Co: “One who purchases real estate
with knowledge of a defect of title in his vendor cannot claim that he has
acquired title thereto in good faith as against an interest therein; and the
same rule must be applied to one who has knowledge of facts which should
have put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor. 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.”
o “So it is that the honesty of intention, the honest lawful intent, which
constitutes good faith implies a freedom from knowledge and
circumstances which ought to put a person on inquiry.”
• Based on these overwhelming evidence of bad faith on the part of herein
petitioner Ricardo Cheng, the award of damages made by the appellate
court is in order.

Dispositive: CA AFFIRMED
Agricultural and Home Extension v. CA
Date: September 3, 1992
Petitioner: AGRICULTURAL AND HOME EXTENSION DEVELOPMENT GROUP,
represented by Nicasio D. Sanchez, Sr., substituted by Milagros S. Bucu
Respondent: COURT OF APPEALS, and LIBRADO CABAUTAN
Ponente: CRUZ
Facts:
• On March 29, 1972, Andres Diaz and Josefa Mia sold to Bruno Gundran a
19-hectare parcel of land in Las Piñas, Rizal.
o The owner’s duplicate copy of the title was turned over to Gundran.
o He did not register the Deed of Absolute Sale because he said he
was advised in the Office of the Register of Deeds of Pasig of the
existence of notices of lis pendens on the title.
• On November 20, 1972, Gundran and Agricultural and Home Extension
Development Group (AHEDG) entered into a Joint Venture Agreement for
the improvement and subdivision of the parcel of land. This was not
annotated on the title.
• On August 30, 1976, Diaz and Mia entered into a contract of sale with
Librado Cabautan.
• On September 3, 1976, pursuant to an order by CFI Rizal, a new owner’s
copy of the certificate of title was issued to Diaz and Mia, who alleged that
their copy was lost.
o The notices of lis pendens were cancelled.
o The deed of sale in favor of Cabautan was recorded.
• Gundran filed an action for reconveyance before CFI Pasay City against
Cabautan and Mia, seeking to cancel the TCT under Cabautan’s name and
the issuance of a new one under his name.
• AHEDG, represented by Nicasio Sanchez, Sr. filed a complaint with
substantially the same allegations as Gundran’s.
• Both Gundran’s and AHEDG’s complaints were dismissed.
• CA affirmed CFI’s decision.
Issue: W/N Cabautan was a purchaser in good faith - YES
Held:
• Art. 154414 (NCC) governs cases wherein the same things was sold to
different vendees.
• In the case at bar, the first sale to Gundran was not registered while the
second sale to Cabautan was registered.
• The lower courts were justified in giving preferential rights to
Cabautan, who registered the sale, unlike AHEDG whose right to the
property had not been recorded.
• However, AHEDG contends that Cabautan was a purchase in bad faith
because he was aware of the lis pendens annotated at the back of the title.
14
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred
to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good
faith.
• A purchaser in good faith is "one who buys the property of another without
notice that some other person has a right to or interest in such property and
pays a full and fair price for the same at the time of such purchase or before
he has notice of the claim or interest of some other person in the property."
• The TCT covering the 19-hectare parcel has no annotation of any sale, lien,
encumbrance, or adverse claim in favor of Gundran or AHEDG.
• When the property sold is registered under the Torrens system,
registration is the operative act to convey the land when third persons
are concerned. Hence, a person dealing with registered land is only
charged with notice of the burdens on the property which are noted on
the title.
• Lis pendens in favor of other persons earlier inscribed on the title did not
have the effect of establishing a lien or encumbrance on the property
affected. Its purpose is to give notice to third persons and to the whole world
that any interest they might acquire in the property pending litigation would
be subject to the result of the suit.
• Three days after the execution of the deed of sale in Cabautan’s favor, the
notices of lis pendens were cancelled. He therefore acquired it free from
liens or encumbrances, thus, he can claim to be a purchaser in good
faith.
• AHEDG claims that it was already in possession of the land when Cabautan
purchased it, but there was no factual finding supporting it.
• Art. 1544 is clear and unequivocal; Cabautan bought the property in good
faith and, as an innocent purchaser for value, duly and promptly registered
the sale in his favor.
Dispositive: CA AFFIRMED
Notes:
• When the property sold is registered under the Torrens system, registration
is the operative act to convey the land when third persons are concerned.
Hence, a person dealing with registered land is only charged with notice of
the burdens on the property which are noted on the title.
Paylago v. Jarabe
Date: March 27, 1968
Petitioner: ROMEO PAYLAGO and ROSARIO DIMAANDAL
Respondent: INES PASTRANA JARABE and THE HONORABLE COURT OF
APPEALS
Ponente: REYES, J.B.L.
Facts:
• Anselmo Lacatan was a recipient of a lot covered by a Homestead Patent
and was later issued an OCT of the Registry of Deeds of Mindoro.
• On May 17, 1948, after the death of Anselmo, a new TCT cancelling the
OCT was issued in the name of his two sons and heirs, Vidal and Florentino.
• Vidal died on Aug. 27, 1950.
• March 23, 1953: Vidal’s heirs executed a deed of sale in favor of the
spouses Paylago over a portion of the lot with an area of 3.9500 hectares.
• Oct. 6, 1953: Florentino also died, leaving as his heirs his widow and three
children.
• Dec. 31, 1953: the children of Florentino likewise executed a deed of sale in
favor of the spouses Paylago with an area of 2.8408 hectares.
• March 2, 1954: by virtue of the registration of the 2 deeds of sale, a new
TCT covering the total are of 6.7908 hectares was issued in favor of the
spouses.
○ A subsequent survey for the purpose of segregating the two
portions, however, disclosed that one half hectare of the total area
purchased by the spouses was being occupied by Jarabe. Hence,
the action to recover possession and ownership of the said portion.
• Both the trial court and CA found that:
○ On Nov. 27, 1938, the said portion of the land was purchased by
Hilario Jarabe, the late husband of Jarabe, from Apolonio Lacatan,
which was evidence by an unregistered deed of sale.
○ Apolonio Lacatan, in turn, bought the same in 1936 from Anselmo,
the original registered owner.
○ The first deed of sale also unregistered, executed by Anselmo in
favor of Apolonio was lost during the Japanese occupation.
○ Jarabe has been in possession of the said portion continuously,
publicly, peacefully, and adversely as owner thereof since 1938
○ The spouses Paylago knew and even admitted in a deed of lease
that Jarabe has been in possession of the premises since 1945.
• The lower court held that the spouses Paylago were not purchasers in good
faith.
• CA affirmed in toto.
Issue: Who has a better right in case of double sale of real property, the registered
buyer or the prior but unregistered purchaser - the prior but unregistered purchaser
Held:
• The acquisition of the spouses Paylago and the subsequent
registration were tainted with the vitiating element of bad faith.
Dispositive: CA AFFIRMED
• General rule: as between two purchasers, the one who has registered the
sale in his favor, in good faith, has a preferred right over the other who has
not registered his title, even if the latter is in the actual possession of the
immovable property.
○ This principle finds basis in Art. 1544, NCC 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.
• Spouses Paylago argue that their certificate of title must prevail over Jarabe.
○ However, it cannot be denied that their acquisition and subsequent
registration of the property were tainted with bad faith.
• Both courts below found that the spouses knew beforehand that the parcel
of land in question was owned by Jarabe.
○ Considering that the boundaries of the lands that the Paylagos
purchased in 1953 and 1954 were well defined, they must have
known that the portion occupied by Jarabe under claim of
ownership and leased to them by the latter was included in the
description.
○ Coupled with their knowledge that Jarabe purchased the same from
Apolonio Lacatan, the spouses should have inquired and made an
investigation as to the possible defects of the title of the Lacatan
heirs over the entire lot sold to them, granting that the latter's
certificate of title was clear.
○ As stated in one case, “a purchaser who has knowledge of facts
which should put him upon inquiry and investigation as to possible
defects of the title of the vendor and fails to make such inquiry and
investigation, cannot claim that he is a purchaser in good faith and
has acquired a valid title thereto."
• The fundamental premise of the preferential rights established by Article
1544 of the New Civil Code is good faith. Short of this qualifying
circumstance, the mantle of legal protection and the consequential
guarantee of indefeasibility of title to the registered property will not in any
way shelter the recording purchaser against known and just claims of a prior
though unregistered buyer.
○ The registration of the later instrument creates no right as against
the first purchaser. For the rights secured under the provisions of
Article 1544 of the New Civil Code to the one of the two purchasers
of the same real estate, who has secured and inscribed his title
thereto in the Registry of Deeds, do not accrue, as already
mentioned, unless such inscription is done in good faith.
○ To hold otherwise would reduce the Torrens system to a shield for
the commission of fraud
• As to the loss or destruction of the original document, the Court held that the
“destruction of the instrument may be proved by any person knowing the
fact. The loss may be shown by any person who knew the fact of its loss, or
by anyone who has made, in the judgment of the court, a sufficient
examination of the place or places where the document or papers of similar
character are kept by the person in whose custody the document lost was,
and has been unable to find it; or has made any other investigation which is
sufficient to satisfy the court that the instrument is indeed lost."
Rivera v. Ong second purchaser having acquired possession first must be declared the
Date: December 21, 1917 true owner.
Petitioner: MARCIANO RIVERA, plaintiff and appellant • In our view of the facts it was merely a case where a mistake was made by
Respondent: ONG CHE, defendant and appellee the house of Lichauco in selling something that had already been sold.
Ponente: STREET
Facts: Dispositive: CFI AFFIRMED
• The house of Lichauco, or Lichauco Brother had offered for sale a certain
old machinery and boilers.
• Marciano Rivera, alleges that upon January 8, 1912, he purchased some of
this old material for the price of P5,500, and received a receipt from
Cresanto Lichauco showing that he had become such purchaser.
○ According to said receipt, he bought 2 complete steam-boilers, with
chimneys; one steam motor (15 x 30 inches) complete; one pair of
twin rice hullers complete, and a feeding pump (donkey) for boilers.
• Rivera however, did not take possession of the property, which remained
in the same place.
• On February 9, 1912, Ong Che bought from Lichauco Brothers a lot of old
iron, machinery, and junk for the sum of P1,100. This purchaser took
immediate possession of the materials purchased by him.
• Later, when Marciano Rivera appeared to take possession of the things of
which he supposed himself to the purchaser, under the receipt given by
Crisanto Lichauco, he found that many of the accessory and auxiliary parts
of the boilers, motor, and rice mill were wanting.
• Upon investigation it developed that these articles were held by Ong Che,
and were claimed by him as owner by virtue of the purchase effected by him
upon February 9, as stated above.

Issue: W/N Rivera was the owner of the articles — NO

Held:
• Ong Che was a purchaser in good faith and acquired possession by
virtue of his purchase. He has a better title than Rivera, who never had
possession at all, according to Art. 1473, CC.15 There is a presumption
arising from such possession that he was the owner.
• The house of Lichauco consists of Faustino and Gals Lichauco, and it would
seem that Crisanto Lichauco, who effected the sale of Rivera, is not a
member of that establishment.
• Crisanto testified that the articles he sold to Rivera were Galo’s property.
However, he also admits that the machinery sold by him to Rivera had been
taken out of an old mill owned by Lichauco Brothers in Dagupan; and it is not
made clear that Galo Lichauco had ever become its exclusive owner.
• Ong’s evidence shows that he bought his articles from Faustino Lichauco as
property of the house. Even conceding that the property belonged to Galo
Lichauco, the house of Lichauco had authority to sell it.
• Where 2 different agents of the same owner successively negotiated sales
to two different purchasers, it is obvious that, under the Civil Code, the

15
Art. 1544, NCC. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should be movable
property.
 st
Consolidated v. CA ○ if no registration, the 1 in possession who is also in good faith.
Date: January 17, 2005 ○ In absence thereof, buyer who presents oldest title and in good
Petitioner: CONSOLIDATED RURAL BANK (CAGAYAN VALLEY), INC. faith.
Respondent: THE HONORABLE COURT OF APPEALS and HEIRS OF TEODORO • Prior registration alone is not sufficient. Registered owner must also show he
DELA CRUZ was in good faith.
Ponente: TINGA ○ Marquez knew at time of sale that property was being claimed by
Facts: PR.
• Rizal, Anzelmo, Gregorio, Domingo Madrid (Brothers) are owners of Lot ○ This rule equally applies to mortgagee.
7036-A (San Mateo Isabela)
○ Brothers subdivided the lots Dispositive: CA AFFIRMED
• Rizal sold his share to Gamiao and Dayag.
○ Gamiao and Dayag sold southern half to Teodoro and northern half
to Restituto.
○ Restitute donated his part to his daughter, Evangeline.
○ Children of Teodoro continue in the possession of southern half.
• Madrid brothers conveyed rights over Lot 7036-A-7 to Marquez through a
Deed of Sale (this included the lot sold by Rizal)
• Marquez subdivided Lot in to 8 parts.
○ Lot A and D was mortgaged to P for a Php 100k loan.
○ Lot E was mortgaged to P for Php 10k loan.
○ Lot G was sold to Calixto.
• Marquez defaulted in loan. Foreclosure proceeding were initiated by P.
• PR filed complaint.
○ TCT issued to Marquez was void, and thus the mortgage
subsequently executed and the sale to Calixto is also void.
• Evangeline also filed complaint in intervention.
• Marquez’s arguments:
○ Buyer in good faith
○ Prior sale was not binding as it wasn’t registered.
• RTC: P wins. Marquez is the lawful owner due to good faith
• CA: PR wins.
○ Sale to Marquez is null and void.
○ Marquez had knowledge of previous sale.
○ Mortgagees also did not ascertain whether property was owned by
another

Issue: Who has a better right to the property? PR

Held:
• ART 1544 not applicable as subject property was not transferred to several
purchasers by a single vendor.
○ First deed: vendors were Gamiao and Dayag
○ Second deed: vendors were Madrid brothers but they were no
longer owners at the time.
• Where not all requisites of ART 1544 is present, principle of prior tempore,
potior jure should apply.
○ Heirs bought property first prior to Marquez thus they have superior
right.
• Following Art 1544 in double sale of immovables, the rules of preference
are:
st
○ 1 registrant in good faith
Carumba v. CA
Date: February 18, 1970
Petitioner: AMADO CARUMBA
Respondent: THE COURT OF APPEALS, SANTIAGO BALBUENA and ANGELES
BOAQUINA,as Deputy Provincial Sheriff
Ponente: REYES, J.B.L
Facts:
• Apr. 12 1955: Sps. Amado Canuto and Nemesia Ibasco sold a parcel of
land, partly residential and partly coconut land with an area of 359.09 sqm,
in Iriga, Camarines Sur, to the sps. Carumba for Php 350.
○ The deed of sale was never registered in the Registry of Deeds.
○ The Notary, Vincent Malaya, was not an authorized notary public.
○ NB: Canuto is the brother of the wife of Carumba.
• Jan 21 1957: A complaint for a sum of money was filed by Balbuena against
Canuto and Ibasco.
• Apr 15 1967: Justice of Peace ruled in favor of Balbuena.
• Oct 1 1968: The Sheriff issued a Definite Deed of Sale of the property in
question in favor of Balbuena.
• CFI: finding that after execution of the document Carumba had taken
possession of the land, planting bananas, coffee and other vegetables
thereon, declared him to be the owner of the property under a consummated
sale.
○ It held void the execution levy made by the sheriff, pursuant to a
judgment against Carumba's vendor, Amado Canuto.
○ It nullified the sale in favor of the judgment creditor, Santiago
Balbuena. The Court, therefore, declared Carumba the owner of
the litigated property and ordered Balbuena to pay P30.00, as
damages, plus the costs.
• CA affirmed, declaring that there having been a double sale of the land,
Balbuena’s title was superior to his adversary under Art. 1544 since the
execution of the sale had been properly registered in good faith and the sale
to Carumba was not recorded.
• The deed in favor of Canuto had been executed 2 years before (Apr 12
1955).
• While only embodied in a private document, coupled with the fact that buyer
Carumba had taken possession of the unregistered land sold, it sufficed that
buyer was vested with ownership.
• Upon the levy of the Sheriff, the judgement debtor no longer had dominical
interest/real right over the land that could pass to the purchaser at the
execution sale.
○ It must yield the land to Carumba.
• NB: The rule is different in case of lands covered by Torrens, where the prior
sale is neither recorded nor known to the execution purchaser prior to the
levy, but the land here is not registered.
Dispositive: CA REVERSED; CFI AFFIRMED
Notes:
• While under Art. 1544 registration in good faith prevails over possession in
the event of a double sale by the vendor of the same piece of land to
different vendees, said article is of no application to the case at bar
• The purchaser of unregistered land at a sheriff’s execution sale only steps
into the shoes of the judgement debtor, and merely acquires the latter’s
interest at the time it was levied upon.

Issue: W/N Balbuena’s title is superior to that of Carumba’s - NO

Held:
• While under Art. 1544 registration in good faith prevails over possession in
the event of a double sale by the vendor of the same piece of land to
different vendees, said article is of no application to the case at bar, even if
Balbuena, the later vendee, was ignorant of the prior sale made by his
judgment debtor in favor of petitioner Carumba.
• The purchaser of unregistered land at a sheriff’s execution sale only steps
into the shoes of the judgement debtor, and merely acquires the latter’s
interest at the time it was levied upon.
16
○ Sec. 35 of Rule 39
• Although the time of levy does not appear, it could not have been made prior
to Apr 15 1957 (when the decision was rendered).

16
Upon the execution and delivery of said (final) deed the purchaser, redemptioner, or his assignee shall be
substituted to and acquire all the right, title, interest, and claim of the judgment debtor to the property as of the
time of the levy, except as against the judgment debtor in possession, in which case the substitution shall be
effective as of the time of the deed
Dagupan v. Macam
Date: May 31, 1965
Petitioner: DAGUPAN TRADING COMPANY
Respondent: RUSTICO MACAM
Ponente: DIZON
Facts:
• In the year 1955, Sammy Maron and his seven brothers and sisters were
pro-indiviso owners of a parcel of unregistered land in Binmaley,
Pangasinan.
• On June 19 and September 21, 1955: While their application for
registration of said land under Act No. 496 was pending, they executed,
on two deeds of sale conveying the property to appellee, who
thereafter took possession thereof and proceeded to introduce
substantial improvements
• One month later, Original Certificate of Title No. 6942 covering the land
was issued in the name of the Marons, free from all liens and
encumbrances.
• 1956: by virtue of a final judgement rendered in Municipal Court of Manila
against Sammy Maron in favor of the Manila Trading and Supply
Company, levy was made upon whatever interest he had in the
aforementioned property, and thereafter said interest was sold at public
auction to the judgment creditor.
• The corresponding notice of levy, certificate of sale and the sheriff's
certificate of final sale in favor of the Manila Trading and Supply Co. —
because nobody exercised the right of redemption — were duly registered.
• March 1, 1958: Manila Trading subsequently sold all its rights and title
in the property to Dagupan.
• September 4, 1958: appellant commenced the action mentioned against
appellee Rustico Macam, praying that it be declared owner of one-eighth
portion of the land.
• RESP:
○ Maron's share in the property had been acquired by purchase by
appellee since June 19 and September 21, 1955, before the
issuance of the original certificate of title in their name; that at the
time levy in execution was made on Sammy Maron's share therein,
the latter had no longer any right or interest in said property; that
appellant and its predecessor in interest were cognizant of the facts
already mentioned; that since the sales made in his favor, he had
enjoyed uninterrupted possession of the property and introduced
considerable improvements therein.
• RTC: Dismissed the complaint
• CA: Affirmed.
Issue: Who has the better right as between appellant Dagupan Trading Company, on
the one hand, and appellee Rustico Macam, on the other, to the one-eighth share of
Sammy Maron in the property mentioned heretofore? – DAGUPAN
Held:
• If the property covered by the conflicting sales was:
○ Unregistered land – Macam would undoubtedly have the better
right in view of the fact that his claim is based on a prior sale
coupled with public, exclusive and continuous possession thereof
as owner.
○ Registered land – Dagupan has the better right because in case
of conveyance of registered real estate, the registration of the deed
of sale is the operative act that gives validity to the transfer.
§ This would be fatal to appellee's claim, the deeds of sale
executed in his favor by the Marons not having been
registered, while the levy, certificate of sale and the final
deed of sale were registered
§ Consequently, this registered conveyance must prevail
although posterior to the one executed in favor of Macam,
and Dagupan must be deemed to have acquired such
right, title and interest
• The present case, however, does not fall within either situation. Here
the sale in favor of appellee was executed before the land subject
matter thereof was registered, while the conflicting sale in favor of
appellant was executed after the same property had been registered.
• It is our considered view that what should determine the issue are the
provisions of the last paragraph of Section 35, Rule 39 of the Rules of
Court, to the effect that upon the execution and delivery of the final
certificate of sale in favor of the purchaser of land sold in an execution sale,
such purchaser "shall be substituted to and acquire all the right, title, interest
and claim of the judgment debtor to the property as of the time of the levy".
• What was the interest and claim of Sammy Maron on the one-eight
portion of the property inherited by him and his co-heirs, at the time of
the levy?
• The answer must necessarily be that he had none, because for a
considerable time prior to the levy, his interest had already been
conveyed to appellee, "fully and irretrievably"
• Consequently, subsequent levy made on the property for the purpose of
satisfying the judgment rendered against Sammy Maron in favor of the
Manila Trading Company was void and of no effect.
• The unregistered sale and the consequent conveyance of title and
ownership in favor of appellee could not have been cancelled and
rendered of no effect upon the subsequent issuance of the Torrens title
over the entire parcel of land.
• “In the inevitable conflict between a right of ownership already fixed
and established under the Civil Law — which cannot be affected by any
subsequent levy or attachment or executions — and a new law or system
which would make possible the overthrowing of such ownership on
admittedly artificial and technical grounds, the former must be upheld
and applied."
• Upon the execution of the deed of sale in his favor by Sammy Maron,
appellee took possession of the land conveyed as owner thereof, and
introduced considerable improvements therein. To deprive him now of the
same by sheer force of technicality would be against both justice and equity.
Dispositive: CA AFFIRMED
Notes:
• If the property covered by the conflicting sales was:
 ○ Unregistered land – Macam would undoubtedly have the better
right in view of the fact that his claim is based on a prior sale
coupled with public, exclusive and continuous possession thereof
as owner.
○ Registered land – Dagupan has the better right because in case
of conveyance of registered real estate, the registration of the deed
of sale is the operative act that gives validity to the transfer.
• “In the inevitable conflict between a right of ownership already fixed
and established under the Civil Law and a new law or system which
would make possible the overthrowing of such ownership on
admittedly artificial and technical grounds, the former must be upheld
and applied."
Hanopol v. Pilapil
Date: February 28, 1963
Petitioner: ILUMINADO HANOPOL, plaintiff-appellant
Respondent: PERFECTO PILAPIL, defendant-appellee
Ponente: BARRERA
Facts:
• The case involves a double sale of the same parcel of unregistered land
decided by the CFI of Leyte in favor of Pilapil.
○ Hanopol claims ownership of the land by virtue of a series of
purchases in 1938 by means of private instruments executed by the
former owenrs Teodora, Lucia, Generosa, Sinforosa, and Isabelo
all surnamed Siapo.
§ He claims that the Siapos took possession of the said
property on Dec. 1945 through fraud, threat, and
intimidation, pretending falsely to be owners thereof and
ejecting the tenants of Hanopol, but the decision declaring
him the exclusive owner of the land and ordering the
defendant to deliver the possession thereof was rendered
on Sept. 21, 1958.
○ Pilapil asserts his title on the ground of a duly notarized deed of
sale executed in his favor by the same owners (Siapo) on
December 3, 1945 which was registered on Aug. 20, 1948.
• CFI ruled in favor of Pilapil, based on Art. 1544 of the NCC which was a
reproduction of Art. 1473 of the OCC, the law in force at the time the
transaction took place.
who was a mere lessee of S, and had no possession to give, it
follows that L never possessed the land.
§ The effect which the law gives to the inscription of a sale
against the efficacy of the sale which was not registered is
NOT extended to other titles which the other vendee was
able to acquire independently the title by prescription.
§ HENCE, the “better right” referred to by Hanapol based on
Act. No. 3344 is much more than the mere prior deed of
sale in favor of the first vendee, as in the case of
Lichuaco, it was the prescriptive right that had
supervened.
• In the case at bar, there is no clear evidence of Hanapol’s possession
of land. In fact, his complaint against the vendors stated that the Siapos
took possession of the land under claim of ownership in 1945 and continued
and were in such possession until 1948.
• Since the Siapos were in actual occupancy of the property when they sold
the said land to Pilapil, such possession was transmitted to the latter (at
least constructively) through the notarial deed of sale.
• It should also be noted that according to the TC, Pilapil was not show to be a
purchaser in bad faith.
Dispositive: CFI AFFIRMED

Issues:
• W/N the judgment in the case he (Hanapol) filed against the Siaopos is
binding upon Pilapil as their successor-in-interest - NO
• W/N the registration of the second deed of sale (Pilapil) affects Hanopol’s
right as first vendee - NO

Held:
• Pilapil derived his right from a sale made in 1945, long before the filing of
Hanopol against the Siapos in 1948. He was not made a party in the case
and there was no claim that he had knowledge of the said litigation hence,
he cannot be bound by such judgment (Par. B, Sec. 44, Rule 39 of ROC).
• Hanapol argues that the registration of Pilapil’s notarized deed of sale in
1948 under Act. 3344 “shall be understood to be without prejudice to a third
party with a better right.” Furthermore, he contends that since at the time the
Siapos sold the land to Pilapil in 1945, the former were no longer the owners
as they had already sold the same to Hanapol since 1938.
○ The court disagrees with these arguments since such a theory
would limit the scope of Art. 1544 of NCC. Even if the article is
applied to registered land, Hanapol will not have a better right by
the mere fact of having a previous title or deed of sale since under
such theory, there would never be a case of double sale of the
same unregistered property.
○ A “better right” that is protected against the inscription of a
subsequent sale is illustrated in Lichuaco v Berenguer where the
court held: that because L had to receive his possession from B
Espiritu v. Valerio ○ As for Exhibit 2, it should have been enough that in the testimony,
Date: December 26, 1963 this was denied, but the Court also noted that the names Mariano
Petitioner: ESPERANZA ESPIRITU and ANTONIA APOSTOL Vegilia and Jose Aviles was written only by one man.
Respondent: FRANCISCO VALERIO
Ponente: DIZON Dispositive: CA AFFIRMED
Facts:
• Now respondent Francisco Valerio filed an action to quiet title against now- Notes:
petitioners Esperanza Espiritu and Antonia Apostol before the Court of First • In this case, the petitioners should have been declared as the owners if the
Instance of Pangasinan, alleging that he was the owner of a parcel of case only the sale of one parcel of land by the same vendor but in favor of
unregistered land containing an area of 8,573 square meters situated in two different vendees (Double Sale) as their deed of sale was registered 11
Barrio Olo, Municipality of Pangasinan. days earlier than that of the respondent (following the rules of Art 1544).
• CFI declared Valerio to be the owner of the land and enjoined the now- However, this was not so because this case also involved the issue of
petitioners Espiritu and Apostol from molesting Valerio in his peaceful whether or not the petitioners’ deed of sale was forged. As the SC upheld
possession of the land. Hence, this appeal by Espiritu and Apostol. the lower courts’ findings of forgery, the petition was denied and Art 1544
• PETITIONER’S ARGUMENT: was not applied.
○ Espiritu and Apostol argues that they acquired the land by
inheritance from the late Santiago Apostol, husband and father,
respectively of the petitioners, who bought it from Mariano Vegilia
on June 3, 1934, who in turn bought it from his niece, Pelagia
Vegilia, on May 26, 1932.
• RESPONDENT’S ARGUMENT:
○ Valerio acquired the land by a deed of sale executed by Pelagia
Vegilia as evidenced by a deed of sale on January 31,1955.

Issue: W/N the deed of sale allegedly executed by Pelagia Vegilia in favor of Mariano
Vegilia (Exhibit 1), and the subsequent deed of sale executed by Mariano to Santiago
(Exhibit 2), is valid? (According to SC, if they are valid, then the petition will be
meritorious in accordance with Art 1544 of the CC as the Deed of sale to the
petitioners was registered eleven days before the deed of sale to Valerio which was
registered on June 16,1955)

Held:
• Appeal not meritorious. There is no reason to overturn CA’s finding that the
alleged Deeds of sale were forged/ falsified.
• SC cited the trial court’s decision which said that if this case only concerned
the sale of one parcel of land by the same vendor but in favor of two different
vendees, Art 1544 should have applied. However, this is not the case as
there is a need to determine whether or not the deeds of sale alleged by
Espiritu and Apostol were falsified.
• Upheld the lower courts’ finding of forgery/falsification based on the
following:
○ Pelagia Vegilia and Mariano Vegilia testified that Pelagia did not
sell the land to Mariano Vegilia, and in turn, Mariano did not buy
from Pelagia.
○ It cannot be determined whose thumbmark is the one appearing in
Exhibit 1 as the thumbark precedes the name Anselmo Vegilia but
is also under the name Pelagia Vegilia.
○ Anselmo could not have written the name Anselmo Vegilia as it
was certified by Notary Public that Anselmo was physically
incapable.
Quimson v. Rosete and P60 a year thereafter until the possession of the property was restituted to the
Date: August 9, 1950 plaintiffs
Petitioner: TOMASA QUIMSON and MARCOS SANTOS
Respondent: FRANCISCO ROSETE Notes:
Ponente: TUASON • “If the same thing should have been sold to different vendees, the
Facts: ownership shall be transferred to the person who may have first taken
• The case involves a dispute over a parcel of land sold to 2 different persons. possession thereof in good faith….”
• The land originally belonged to the late Dionisio Quimson who, on June 7, • The possession mentioned in the Article 1473 (for determining who has
1932, executed and notarized a deed of sale over it in favor of his daughter better right when the same piece of land has been sold several times by the
and herein plaintiff Tomasa Quimson, but he continued in possession and vendor) includes not only the materials but also the symbolic possession,
enjoyment thereof. which is acquired by the EXECUTION of a public instrument.
• Dionisio Quimson sold the land to Sps. Agustin on May 3, 1935 with a
repurchase agreement within 6 years. He again sold the land on April 5,
1937 to Francisco Rosete, also with a repurchase agreement within 5 years,
and Rosete gave Quimson the money to avail the repurchase from Sps.
Agustin.
• Since then, Rosete has been in the possession and enjoyment of the land
even after the death of Dionisio on June 6, 1939.
• Tomasa filed with the Justice of Peace the registration of the land and
inscription of the deeds of sale. Tomasa arrived 1 hour earlier (9:30 AM)
than Rosete (10:30 AM).
• CFI ruled in favor of Tomasa.
• CA reversed, and held Rosete the rightful owner of the land on the ground
that physical possession by the purchaser was essential to the
consummation of a sale of real estate.
• Hence, this petition by Tomasa.

Issue: W/N Rosete, by virtue of physical possession of the land, was the rightful
owner of the same - NO

Held:
• The Court adopted its interpretation of Art. 1473 in the case of Sanchez vs.
Ramos that, for determining who has better right when the same piece of
land has been sold several times by the vendor, includes not only the
material but also the symbolic possession, which is acquired by the
execution of a public instrument.
• The proposition that 1473 refers to the material (physical) possession and
excludes the symbolic possession does not seem to be founded upon a solid
ground.
• The execution of a public instrument is equivalent to the delivery of the realty
sold (Art. 1462, CC) and its possession by the vendee (Art. 438, CC), and
under these conditions, the sale is considered consummated
• If [the vendor] continues taking material possession of it, it is simply on
account of the vendee’s tolerance and, in this sense, his possession is
vendor’s possession.
○ Rosete’s possession fell far short of having ripened into title by
prescription when the Tomasa commenced her action.

Dispositive: CA SET ASIDE; CFI AFFIRMED re: appraisal of damages— P180 for
the occupation of the land for the agricultural years 1943-44, 1944-45 and 1945-46,
Sanchez v. Ramos
Date: December 20, 1919
Petitioner: NARCISA SANCHEZ, plaintiff and appellant
Respondent: ROQUE RAMOS, defendant and appellee.
Ponente: AVANCEÑA
Facts:
• The land formerly belonged to Ciriaco Fernandez but is in the defendant,
Ramos’, possession.
• On July 1, 1910, Ciriaco Fernandez sold it to the spouses Marcelino Gomez
and Narcisa Sanchez under a pacto de retro with a repurchase period of one
year. This sale was executed in a public instrument. However, Marcelino
Gomez and Narcisa Sanchez never took material possession of the land.
The period for repurchase elapsed without the vendor making use of it.
• On July 3, 1912, Ciriaco Fernandez again sold the same land, by means of a
private document, to Roque Ramos who immediately took material
possession thereof.
• Sanchez filed this action against Ramos for recovery of the land.
• Trial court: by applying article 1473 of the Civil Code, declared preferable the
sale executed to the defendant and absolved him from the complaint.
the thing is considered delivered, the vendor has no longer the obligation of
even delivering it.
• We are of the opinion that the possession mentioned in article 1473 (for
determining who has better right when the same piece of land has been sold
several times by the same vendor) includes not only the material but also the
symbolic possession, which is acquired by the execution of a public
instrument.
• From the foregoing it follows that the plaintiff was the first to take possession
of the land, and consequently the sale executed to him is preferable.
Dispositive: CFI REVERSED; DECLARED Sanchez as owner of the land in
question; ORDERED Ramos to deliver the possession of the land to the Sanchez
Notes:
• The possession mentioned in Art 1473 Old Civil Code (for determining who
has better right when the same piece of land has been sold several times by
the same vendor) includes not only material but also the symbolic
possession, which is acquired by the execution of a public instrument.

Issue: Who is the rightful owner? - Sanchez

Held:
• Sanchez was first in possession in good faith. His possession was
symbolic possession, by the execution of the sale in a public
document.
17
• Art. 1473 , par. 2 Old Civil Code: “x x x Should it be real property, it shall
belong to the purchaser who first recorded it in the registry of deeds.”
• Not one of the documents in this case having been recorded, preference
must be decided in favor of the buyer who first took possession.
• To what kind of possession does this article refer? Possession is acquired
by the material occupancy of the thing or right possessed, or by the fact that
the latter is subjected to the action of our will, or by the appropriate acts and
legal formalities established for acquiring possession (art. 438, Civil Code.).
• By a simple reasoning, it appears that, because the law does not mention to
which of these kinds of possession the article refers, it must be understood
that it refers to all of these kinds.
• The execution of a public instrument is equivalent to the delivery of the realty
sold (art. 1462, Civil Code) and its possession by the vendee (art. 438).
Under these conditions the sale is considered consummated and completely
transfers to the vendee all of the vendor's rights of ownership including his
real right over the thing.
• The vendee by virtue of this sale has acquired everything and nothing,
absolutely nothing, is left to the vendor. From this moment the vendor is a
stranger to the thing sold like any other who has never been its owner. As

17
ART. 1473. If the same thing should have been sold to different vendees, the ownership shall be transferred
to the person who may have first taken possession thereof in good faith, if it should be personal property.
Should it be real property, it shall belong to the purchaser who first recorded it in the registry of deeds.
Should it not be recorded, the property shall belong to the person who first took possession of it in good faith,
or, in default of possession, to the person who presents the oldest title, provided there is good faith.
Beatingo v. Gasis • Since there was no inscription, the one who first took possession of the
Date: February 9, 2011 subject property in good faith has a better right
Petitioner: DOLORITA C. BEATINGO • The execution of the public instrument is of no moment
Respondent: LILIA BU GASIS o The Court has held that the execution of a public instrument gives
Ponente: NACHURA rise only to a prima facie presumption of delivery.
Facts: o It is deemed negated by the failure of the vendee to take actual
• First sale: May 19, 1998 – Dolorita Beatingo bought a piece of land from possession of the land sold
Flora G. Gasis o Beatingo admitted that she refused to make full payment on the
o Evidenced by notarized Deed of Absolute Sale subject property and take actual possession thereof because of the
o Oct 18, 1999 – Beatingo tried to have the sale registered but she presence of tenants on the subject property.
failed to do so as she failed to produce the owners duplicate • On the other hand, Lilia Bu Gasis showed that she purchased the subject
certificate of title property without knowledge that it had been earlier sold by Flora to Beatingo
• Beatingo thus filed a petition for issuance of the owners duplicate certificate and then took actual possession of property and exercised acts of ownership
of title by collecting rentals from the tenants who were occupying it .
o Lilia Bu Gasis opposed this, claiming that she was in possession of o She had reason to believe that there was no defect in her title since
the Original Certificate of Title (OCT) as she purchased the subject the owners duplicate copy of the OCT was delivered to her by the
property from Flora on January 27, 1999, as evidenced by a Deed seller upon full payment of the purchase price.
of Sale. (Second sale)
• Beatingo thus filed a complaint for Annulment and Cancellation of Sale, Dispositive: CA AFFIRMED
Reconveyance, Delivery of Title and Damages
o She claims that she is the rightful owner of the property
o Avers that Lilia Bu Gasis had been keeping the OCT despite
knowledge that Beatingo is the rightful owner
• Lilia Bu Gasis, on the other hand, claims she purchased the subject property
from Flora without knowledge of the prior sale of the same subject property
to Beatingo
o Claims to be an innocent purchaser for value
o Also claims that upon payment of the purchase price, she
immediately occupied the subject property and enjoyed its produce.
• RTC ruled in favor of Lilia Bu Gasis and dismissed the case
o Applied rule on double sale (Article 1544)
o Gave more weight to Lilia Bu’s evidence showing that she
immediately acquired possession of the subject property and
enjoyed its produce upon full payment of the purchase price.
o Since the two sales were not registered with the Registry of
Property and since Lilia Bu was in possession, she had a better
right
• CA dismissed appeal
• Hence this petition
o Beatingo claims that upon the execution of the public instrument
(the notarized deed of sale), she already acquired possession of
the land; hence, she already had possession prior to the actual
possession of Lilia Bu Gasis.

Issue: W/N Lilia Bu Gasis had a better right over the property – YES

Held:
• Present issue is a clear case of double sale, hence Article 1544 governs
• In the case at hand, the two sales were not registered with the Registry of
Property.
Roman v. Grimalt
Date: April 11, 1906
Petitioner: PEDRO ROMAN, plaintiff and appellant
Respondent: ANDRES GRIMALT, defendant and appellee
Ponente: TORRES
Facts:
• (Court discussed the petitioner and respondent’s side; they have conflicting
versions but SC ADOPTED GRIMALT’S SIDE)
• Petitioner’s side: Pedro Roman (SELLER)
○ Between June 13 and 23 1904, both parties through Fernando
Pastor verbally agreed upon the sale of the schooner18 Santa
Marina.
○ Grimalt agreed to buy the vessel and offered to pay through three
installments, P500 each on the 15th of July, September, November.
Roman agreed to the mode of payment.
○ Contract was perfected, and vessel was ready for delivery to
Grimalt when it sank on June 25 in Manila, such being a total loss
as a result of a severe storm.
○ On the 30th of June, Roman demanded payment which Grimalt
failed to do.
• Respondent’s side: Andres Grimalt (BUYER)
○ June 13, Roman offered to sell to Grimalt the vessel, with the
representation that the former owned it and that it was in a
seaworthy condition.
○ Grimalt accepted the offer of sale on condition that the title papers
were found to be satisfactory and that the vessel was seaworthy.
○ When the two went to Notary Public Calixto Reyes, the latter
informed them that the docs shown were insufficient to show
ownership over the vessel and to transfer title thereto.
○ As such, seller Roman promised to perfect his title.
○ On June 23, Roman called Grimalt to close the sale, and the latter
believing that Roman had perfected his title, wrote to Roman on the
same day setting the following day as the execution of the contract.
○ However, upon being informed that Roman didn’t do anything to
perfect his title, Grimalt insisted that he would buy it only if the
same were perfected and the vessel duly expected.
○ Vessel sank, so Roman filed case demanding payment. (SC
adopted facts according to Grimalt)
Issue: W/N Grimalt should pay – NO
Held:
• Sale of the vessel wasn’t perfected yet
• The sale of the schooner was not perfected and the purchaser did not
consent to the execution of the deed of transfer for the reason that the title of
the vessel was in the name of one Paulina Giron and not in the name of
Pedro Roman, the alleged owner. Roman promised, however, to perfect his
18
a sailing ship with two or more masts, typically with the foremast smaller than the mainmast, and having
gaff-rigged lower masts.
title to the vessel, but he failed to do so. The papers presented by him did
not show that he was the owner of the vessel.
• If no contract of sale was actually executed by the parties the loss of the
vessel must be borne by its owner and not by a party who only intended to
purchase it and who was unable to do so on account of failure on the part of
the owner to show proper title to the vessel and thus enable them to draw up
the contract of sale.
• The vessel was sunk in the bay on the afternoon of the 25th of June, 1904,
during a severe storm and before the owner had complied with the condition
exacted by the proposed purchaser, to wit, the production of the proper
papers showing that the plaintiff was in fact the owner of the vessel in
question.
• The defendant was under no obligation to pay the price of the vessel, the
purchase of which had not been concluded. The conversations had between
the parties and the letter written by defendant to plaintiff did not establish a
contract sufficient in itself to create reciprocal rights between the parties.
• It follows, therefore, that article 1452 of the Civil Code relative to the injury or
benefit of the thing sold after a contract has been perfected and articles
1096 and 1182 of the same code relative to the obligation to deliver a
specified thing and the extinction of such obligation when the thing is either
lost or destroyed, are not applicable to the case at bar.
• The first paragraph of article 1460 of the Civil Code and section 335 of the
Code of Civil Procedure are not applicable. These provisions contemplate
the existence of a perfected contract which can not, however, be enforced
on account of the entire loss of the thing or made the basis of an action in
court through failure to conform to the requisites provided by law.
Dispositive: CFI AFFIRMED; ORDERED that judgment be entered after the
expiration of twenty days from the date hereof in accordance herewith and ten days
thereafter let the case be remanded to the Court of First Instance for proper action
Norkis v. CA
Date: February 7, 1991
Petitioner: NORKIS DISTRIBUTORS, INC.
Respondent: THE COURT OF APPEALS & ALBERTO NEPALES
Ponente: GRIÑO-AQUINO
Facts:
• Petitioner Norkis distributes Yamaha motorcycles in Negros Occidental
• September 20, 1979: Respondent Alberto Nepales bought from the Norkis-
Bacolod branch a brand new Yamaha Wonderbike motorcycle for P7,500
○ He took a loan from the DBP to pay for it
○ As security for the loan, respondent executed a chattel mortgage
on the motorcycle
• Branch Manager Labajo issued a Sales Invoice showing that the contract of
sale had been perfected
○ Signed by Nepales
• In the meantime, the motorcycle remained in Norkis’ possession
• The motorcycle was registered by Norkis in the Land Transportaion
Commission in the name of Alberto Nepales
• January 22, 1980: The motorcycle was delivered to a certain Julian Nepales
(allegedly the agent of Alberto, but this is denied by Alberto)
○ Alberto and Julian presented the unit to DBP’s Appraiser-
Investigator Ernesto Arriesta at the DBP Offices
• February 3, 1980: Motorcycle met an accident at Binalbagan, Negros
Occidental
○ It was being driven by a certain Zacarias Payba at that time
○ The unit was a total wreck and was returned and stored inside
Norkis’ warehouse
• March 1980: DBP released the proceeds of respondent’s motocycle loan to
Norkis (P7,500)
○ Because the price of the motorcycle increased to P7,828,
respondent Nepales paid the difference of P328
• Nepales demanded the delivery of the motorcycle
○ Norkis did not deliver
• Nepales filed an action for specific performance with damages against
Norkis
• Petitioner’s argument: Motorcycle had already been delivered to Nepales
before the accident, therefore the risk of loss or damage had to be borne by
him as owner of the unit
• RTC: For respondent Nepales
• CA: Affirmed
Issue: W/N the respondent bears the risk of the loss – NO
Held:
• Petitioner’s argument:
o After the contract of sale has been perfected and even before
delivery (even before the ownership is transferred to the vendee),
the risk of loss is shifted from the vendor to the vendee
o The vendor becomes released from his obligation to deliver the
determinate thing sold while the vendee’s obligation to pay the
price subsists.
§ If the vendee had paid the price in advance the vendor
may retain the same.
§ The legal effect is that the vendee assumes the risk of
loss by fortuitous event (Art. 1262) after the perfection of
the contract to the time of delivery
o Also, there may have been no “actual” delivery but there was
constructive delivery upon:
§ Issuance of the sales invoice
§ Registration of the vehicle with the Land Transportation
Commission
§ Issuance of official receipt for payment of registration
fees
• Court: There was no delivery or transfer of ownership
o Issuance of sales invoice doesn’t prove transfer of ownership
o It is necessary that the act of delivery is coupled with the intention
of delivering the thing
• IN THIS CASE: When Norkis registered the motorcycle in the name of
respondent, Norkis didn’t intend yet to transfer the title or ownership
o Only did so to facilitate the execution of a chattel mortgage in
favor of the DBP for the release of the buyer’s motorcycle loan
o Norkis was merely complying with the requirement of the DBP for
processing respondent’s motorcycle loan
o Also, Alberto denied giving authority to Julian to take the
motorcycle. Payba (who was riding the motorcycle during the
accident) was not shown to be a representative or relative of
Alberto.
• Therefore Art 1496 must apply: In the absence of an express assumption
of risk by the buyer, the things sold remain at seller’s risk until the
ownership thereof is transferred to the buyer
Dispositive: CA AFFIRMED
Sun Bros v. Perez
Date: April 30, 1963
Petitioner: SUN BROTHERS APPLIANCES, INC., plaintiff-appellee
Respondent: DAMASO P. PEREZ, defendant-appellant
Ponente: LABRADOR
Facts:
• Perez bought an Air Conditioner from Sun Bros. under a conditional sale
agreement
○ Aircon was worth P1,678
○ Contract was signed on December 6, 1958.
○ Perez made a down payment of P274.
• the air-conditioner in question was delivered in the office of Perez on
December 14, 1959 but was totally destroyed by fire on December 28, 1958
• Sun Bros. filed action to recover the P1,404 from Perez
• Perez answered that the machine was destroyed by force majeure, not by
his fault and/or negligence and, therefore, he is not liable under the
conditional sale
• The agreement contained these 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:
• 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;"
• CFI ruled in favor of Sun Bros.; 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
• On appeal, Perez argued that:
○ inasmuch as the title to the property sold shall vest in the buyer
only upon full payment of the price, the loss should be borne by the
vendor
○ the phrase "for any cause" used in paragraph 2 of the agreement
may not be interpreted to include a fortuitous event absolutely
beyond the control of the appellant
○ although Article 1174 of the new Civil Code recognizes the
exception on fortuitous event when the parties to a contract
expressly so stipulate, the phrase "for any cause" used in the
contract did not indicate any intention of the parties that the loss of
the unit due to fortuitous event is to be included
• Sun Bros. answered:
○ 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
○ the risk of loss was expressly stipulated to be undertaken by the
buyer even if the title to the property sold remained, also by
stipulation, in the vendor
○ 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
Issue: W/N Perez is liable to pay the balance for the aircon - YES
Held:
• 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
• Where goods are sold and delivered to the vendor under an agreement that
the title is to remain in the vendor until payment, the loss or destruction of
the property while in the possession of the vendor before payment, without
his fault, does not relieve him from the obligation to pay the price, and he,
therefore, suffers the loss
○ There are several basis for this rule:
§ 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
§ 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
§ Policy of providing an incentive to care properly for the
goods, they being exclusively under the control and
dominion of the vendee
• The loss by fire or fortuitous event was expressly agreed in the contract to
be borne by the buyer and this express agreement is not contrary to law but
sanctioned by it as well as by the demands of sound, public policy
Dispositive: CFI AFFIRMED; HELD that the loss by fire or fortuitous event was
expressly agreed in the contract to be borne by the buyer and this express agreement
is not contrary to law but sanctioned by it as well as by the demands of sound, public
policy
Lawyer’s Coop v. Tabora and the ownership in the goods has been retained by the
Date: April 30, 1965 seller merely to secure performance by the buyer of his
Petitioner: LAWYERS COOPERATIVE PUBLISHING COMPANY, plaintiff-appellee obligations under the contract, the goods are at the
Respondent: PERFECTO A. TABORA, defendant- appellant buyer’s risk from the time of such delivery.”
Ponente: BAUTISTA ANGELO • Rule absolving a debtor from liability in case of fortuitous event applies only
Facts: when the obligation consists in the delivery of a determinate thing and there
• May 3, 1955 - Tabora bought from the Lawyers Cooperative Publishing is no stipulation holding him liable even in case of fortuitous event.
Company (LCPC) one set of AmJur with 48 volumes and 1954 pocket parts, ○ The obligation does not refer to a determinate thing, but is
plus a set of AmJur, General Index, 4 volumes, for P1,675.50 plus freight of pecuniary in nature, and the obligor bound himself to assume the
P6.90 total of P1,682.40. loss after the delivery of the goods to him.
○ Tabora paid P300.00, balance of P1,382.40. • In other words, the obligor, Tabora, agreed to assume any risk concerning
○ Contract stated that: title to and ownership of the books shall the goods from the time of their delivery.
remain with the seller until the purchase price shall have been
fully paid. Loss or damage to the books after delivery to the Dispositive: CFI MODIFIED— ELIMINATED liquid damages
buyer shall be borne by the buyer.
• 15 May 1955 – The books were delivered and receipted for by Tabora in his Notes:
law office in Naga. • The stipulation that the seller retains ownership of the books until the
• That night, a fire destroyed and burned the building where the law office and purchase price shall have been fully paid was agreed upon merely to
library of Tabora were located together with the abovementioned books and secure the performance by the buyer of his obligation. Rule absolving a
Tabora’s important documents and papers. debtor from liability in case of fortuitous event applies only when the
• This was immediately reported by Tabora to LCPC in a letter sent on May obligation consists in the delivery of a determinate thing and there is no
20, 1955. stipulation holding him liable even in case of fortuitous event.
• May 23 – LCPC, as a token of goodwill, sent to Tabora free of charge
volumes 75, 76, 77 and 78 of the Philippine Reports.
• Tabora failed to pay the monthly installments agreed upon on the balance
notwithstanding the long time that had elapsed. LCPC demanded payment
of the installments. Upon Tabora’s default, LCPC filed an action in CFI
Manila for recovery of the balance.
• Defendant: force majeure. The books were burned during the fire and since
the loss was due to force majeure he cannot be held responsible for the
loss. Since ownership of the books remained with the seller until full
payment, LCPC should bear the loss for the loss is always borne by the
owner.
• CFI: Granted LCPC’s petition. Tabora to pay P1,382.40, with legal interest
plus 25% as liquidated damages, and the costs of action.
• CA: certified the case to the SC for involving only questions of law.

Issue: W/N Tabora shall bear the loss – YES

Held:
• While as a rule the loss of the object of the contract of sale is borne by the
owner, or in case of force majeure the one under obligation to deliver the
object is exempt from liability, it does not apply herein.
• The stipulation that the seller retains ownership of the books until the
purchase price shall have been fully paid was agreed upon merely to
secure the performance by the buyer of his obligation.
• Also, the contract itself expressly provided that “loss or damage to the books
after delivery to the buyer shall be borne by the buyer.”
• Article 1504 of our Civil Code:
§ Where delivery of the goods has been made to the buyer
or to a bailee for the buyer, in pursuance of the contract
Song Fo v. Oria
Date: December 24, 1915
Petitioner: SONG Fo & Co., plaintiff and appellant
Respondent: MANUEL ORIA, defendant and appellant
Ponente: CARSON
Facts:
• Song Fo & Co. sold a launch to Manuel Oria for P16,500
○ Payable quarterly installments of P1k + 10% interest p.a.
• The launch was delivered to Oria in Manila but on the way to Samar, Oria’s
place of business, the launch was shipwrecked
○ No part of purchase price had ever been paid
• Song Fo then instituted an action for the recovery of the purchase price
• RTC: IN FAVOR OF SONG FO, Oria to pay 6k ONLY
○ Court declined to award total purchase price and instead awarded
only amount of installments that were demandable at the time
• According to Oria:
○ Contract obligated Song Fo to insure launch. They failed. to comply
so they should suffer the loss and recover only amount due at the
time of the action
Issues:
• W/N Song Fo & Co were obligated to insure the launch - YES
• W/N only the demandable interests should be awarded - NO
Held:
On the First Issue
• Contract expressly authorized Song Fo to insure
• The contract expressly authorized Song Fo & Co to insure the launch
therefore, it was their duty to insure the vessel if they could.
○ HOWEVER, no evidence that Song Fo obligated themselves to
insure the launch at all events, especially considering the long
period allowed for payment.
• Song Fo & Co. made a bona fide attempt to insure, and did all in their power
and adopted all available means which could reasonably be required of
them. But there was difficulty because local agents of marine insurance
companies did not want to insure because of:
○ Dangerous nature of the coast of Samar along which Oria desired
to operate the launch
○ Lack of confidence in the character and reputation of Oria
○ Local agents wanted to consult with their foreign principals but the
launch was lost before they could ascertain the wishes of the
foreigners
• Oria (who had exclusive control over the vessel) sent her from Manila to
Samar with the knowledge that:
○ Vessel was not insured yet
○ Song Fo & Co had no power to interfere during pending application
of insurance
• We so hold that Song Fo & Co. were not responsible under the contract for
the loss of the launch without insurance
On the Second Issue
• The total purchase price should be awarded
• Trial Court erred having relied upon Art. 1125 of the Civil Code, without
taking into consideration Art. 1129.
○ 1125: Obligations, the fulfillment of which has been fixed for a
certain day, are exigible only when such day arrives. By a certain
day is understood one which shall necessarily arrive, even when
the date of arrival is unknown.
• When the uncertainty consists in the arrival or non-arrival of the day, then
the obligations is conditional and shall be controlled by the proceeding
section.
○ 1129. The debtor shall lose all right to profit by the term:
○ When, after the obligation has been contracted, it appears that he
is insolvent, unless he gives security for the debt.
○ When he does not give to the creditor the security he is bound to
give.
○ When by his own acts, he acts, he has reduced such security after
giving it, or when it disappears through an unforeseen event (vis
major), unless it is immediately substituted by a new one equally
safe.
• The security for the payment of the purchase price of the launch itself having
disappeared as a result of an unforeseen event (vis major), and no other
security having been substituted therefor, Song Fo are entitled to recover not
only for the installments of the indebtedness duet at the time of the action,
but also for all installments which, but for the loss of the vessel had not
matured at that time.
Dispositive: CFI AFFIRMED; MODIFIED— INCREASED award to Song Fo & Co.
from P6,000 to P16,500 together with interest at the rate of ten per centum per
annum, from the 15th day of November, 1911
Notes:
• The debtor shall lose all right to profit by the term when by his own acts, he
acts, he has reduced such security after giving it, or when it disappears
through an unforeseen event (vis major), unless it is immediately substituted
by a new one equally safe.