Sales Some Digested CASES EXAM

EDUARDO FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, petitioners,vs.HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON, SALVADOR ALDON, AND THE HONORABLE COURT OF APPEALS, respondents.

FACTS:

Maximo Aldon married Gimena Almosara in 1936. They bought several pieces of land sometime between 1948 and 1950.In 1951, Gimena Almosara sold the lots to the spouses Eduardo Felipe and Hermogena V. Felipe. The sale was made without the consent of her husband,.On April 26, 1976, the heirs of Maximo Aldon, namely his widow Gimena and their children Sofia and Salvador Aldon filed a complaint that alleged that the plaintiffs were the owners of Lots 1370, 1371 and 1415; that they had orally mortgaged the same to the defendants; and an offer to redeem the mortgage had been refused so they filed the complaint in order to recover the three parcels of land.The trial court sustained the claim of the defendants and rendered judgment in favor of Spouses Felipe as lawful owners.The Court of Appeals set aside the decision of CFI declaring the parcels ‘were purchased by plaintiff Gimena Almosara and her late husband Maximo Aldon’ (the lots having been purchased during the existence of the marriage, the same are presumed conjugal) and inferentially, by force of law, could not, be disposed of by a wife without her husband’s consent. Hence this petition.

ISSUE: WON the sale made by Gimena is a defective contract but of what category?

HELD: It is a voidable contract. According to Art. 1390 of the Civil Code, among the voidable contracts are “[T]hose where one of the parties is incapable of giving consent to the contract.” (Par. 1.) In the instant case-Gimena had no capacity to give consent to the contract of sale. The capacity to give consent belonged not even to the husband alone but to both spouses.

The case of Sofia and Salvador Aldon is different. After the death of Maximo they acquired the right to question the defective contract insofar as it deprived them of their hereditary rights in their father’s share in the lands. The father’s share is one-half (1/2) of the lands and their share is two-thirds (2/3) thereof, one-third (1/3) pertaining to the widow.

The petitioners have been in possession of the lands since 1951. It was only in 1976 when the respondents filed action to recover the lands. In the meantime, Maximo Aldon died.

As to the second question, the children’s cause of action accrued from the death of their father in 1959 and they had thirty (30) years to institute it (Art. 1141, Civil Code.) They filed action in 1976 which is well within the period.

WHEREFORE, the decision of the Court of Appeals is hereby modified. Judgment is entered awarding to Sofia and Salvador Aldon their shares of the lands as stated in the body of this decision; and the petitioners as possessors in bad faith shall make an accounting of the fruits corresponding to the share aforementioned from 1959 and solidarity pay their value to Sofia and Salvador Aldon; costs against the petitioners.

FABILLO v IAC

FACTS: Florencio Fabillo contracted the services of Atty. Murillo to revive a lost case over his inheritance from his deceased sister Justinia. He sought to acquire the San Salvador and Pugahanay Properties that his sister left behind against the latter’s husband. They entered into a contract where a contingent fee in favor of Atty. Murillo in case the case won was agreed upon. The fee was 40% of the value of whatever benefit Florencio may derive from the suit—such as if the properties were sold, rented, or mortgaged. It was vague, however, regarding the fee in case Florencio or his heirs decide to occupy the house—allowing Atty. Murillo the option to occupy or lease 40% of the said house and lot. A compromise agreement was entered into where Florencio acquired both properties. Atty. Murillo installed a tenant in the Pugahanay Property; later on, Florencio claimed exclusive rights over the properties invoking Art. 1491 of the CC. Florencio and Atty. Murillo both died and were succeeded by their respective heirs.

ISSUE:

W/N contingent fees agreed upon are valid

HELD:

Contingent fees are not contemplated by the prohibition in Art. 1491 disallowing lawyers to purchase properties of their clients under litigation. The said prohibition applies only during the pendency of the litigation. Payment of the contingent fee is made after the litigation, and is thus not covered by the prohibition. For as long as there is no fraud or undue influence, or as long as the fees are not exorbitant, the same as valid and enforceable. It is even recognized by the Canons of Professional Ethics. However, considering that the contract is vague on the matter of division of the shares if Florencio occupies the property; the ambiguity is to be construed against Atty. Murillo being the one who drafted the contract and being a lawyer more knowledgeable about the law. The Court thus invoking the time-honored principle that a lawyer shall uphold the dignity of the legal profession, ordered only a contingent fee of P3,000 as reasonable attorney’s fees.

NAAWAN COMMUNITY RURAL BANK INC v CA

FACTS: Comayas offered to sell to the Lumo Spouses a house and lot. The property was already registered under the Torrens System that time and they made appropriate inquiries with the RD; they found out that it was mortgaged for P8,000, paid Comayas to settle the mortgage, and the release of the adverse claim was annotated in the title. Thereafter, they executed an Absolute Deed of Sale over the subject property and registered the same. However, it turns out that it was already previously sold to Naawan Community Rural Bank; it was then unregistered. The Bank foreclosed on the property, purchased the same, and registered it under Act 3344. Thus, the Bank sought to eject the spouses. However, the latter countered with an action for quieting of title.

ISSUE:

Who has a better title, Naawan or Lumo spouses?

HELD:

LUMO SPOUSES. Where a person claims to have superior property rights by virtue of a sheriff’s sale, the benefit of Art. 1544 applies favorably only if the property is registered under the Torrens System—not under Act 3344. Registration under the Torrens System is the operative act that gives validity to the transfer and creates lien upon the land. The spouses acquired their titles under the Torrens System and they acted in good faith by exercising due diligence; thus, they have a better right to the said property.

GABRIEL VS. MABANTA

FACTS:

On October 25, 1975 spouses Mabanta mortgaged 2 parcels of land with the DBP as collateral for a P14,000 loan.In 1980, they sold the lots to Susana Soriano with the right to repurchase the property within 2 years. They failed to dorepurchase. In 1984, they convinced petitioner Alejandro Gabriel to purchase the lot from Soriano. DBP had torestructure the loan making Gabriel as the mortgagor. However, when Gabriel, who was already cultivating the lots, wasready to pay the entire loan with DBP, they found that spouses Benito and Pura Tan had paid it and that the mortgagewas already cancelled.

It turned out that it was spouses Tan’s daughter, Zenaida Tan

-Reyes who bought one of the lotsfrom spouses Mabanta. As a result, the petitioners filed for damages, and specific performance which the trial courtruled in their favor holding that the sale between the spouses Mabanta and Tan-Reyes null and void. Reyes claims thatshe is a purchaser in good faith, and sought refuge in her certificate of title.

ISSUE:

Whether or not the second sale to Tan-Reyes is valid.

HELD:

The second sale to Tan-Reyes is not valid. In Art. 1544 of the Civil Code, Where it is an immovable property that is the subject of a double sale, ownership shall be transferred, (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and(3) in default thereof, to the person who presents the oldest title, provided there is good faith. The requirement of the law then is two-fold: acquisition in good faith and registration in good faith. In the case at bar, certain pieces of evidence, put together, would prove that respondent Reyes is not a buyer in good faith. The records show that on spouses Mabanta offered to her for sale the disputed lot. They told her it was mortgaged with respondent DBP and that she had to pay the loan if she wanted to buy it. As to her claim that she is a The Supreme Court consistently held that "in cases of double sale of immovables, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold." Mere registration of title is not enough, good faith must concur with the registration. To be entitled to priority, the second purchaser must not only establish prior recording of his deed, but must have acted in good faith, without knowledge of the existence of another alienation by the vendor to the other. For this reason in accordance with the same Article 1544, the land shall pertain to the person who in good faith was first in possession. There is no question that it is the Gabriels who are in possession of the land.

Ten Forty Realty vs CruzFACTS

-Ten Forty Realty filed a complaint of ejectment against Marina Cruz who has allegedly occupied the residential lot in Olongapo City, which they bought from Barbara Galino, by virtue of a Deed of Absolute Sale. It appears that Barbara sold the same lot to Marina who immediately occupied the land. Ten Forty is saying the occupation by Marina was merely tolerated by them.-Marina’s defense: (1) Ten Forty, being a corporation, is not qualified to own the property which is a public land.(2) Barbara Galino did not sell her property to Ten Forty but merely obtained a loan. (3) Ten Forty never occupied the property before she did. Barbara Galino was in possession at the time of the sale, and vacated the lot infavor of Marina. (4) She was the one who caused the cancellation of the tax declaration in the name of Barbara and a new one was issued in her name. (5) Ten Forty only obtained its tax declaration 7 months after she did.-MTCC ruled in favor of Ten Forty and ordered Marina to vacate.

-

RTC reversed. The RTC ruled as follows: 1) respondent’s entry into the property was not by mere tolerance of petitioner, but by virtue of a Waiver and Transfer of Possessory Rights and Deed of Sale in her favor; 2) the execution of the Deed of Sale without actual transfer of the physical possession did not have the effect of making petitioner the owner of the property, because there was no delivery of the object of the sale as provided for in Article 1428 of the Civil Code; and 3) being a corporation, petitioner was disqualified from acquiring the property, which was public land.-CA affirmed: Case cannot be unlawful detainer because there has been no prior contract between the parties. Neither can it be forcibly entry because there is no showing that there was prior physical possession by the petitioner.

ISSUE: WON Marina may be validly ejected from the property

NO

RULING:

1. In a contract of sale, the buyer acquires the thing sold only upon its delivery. The execution of a public instrument gives rise to a presumption of delivery, but this presumption is destroyed when delivery is not effected because of a legal impediment. Constructive delivery is deemed negated upon failure of vendee to take actual possession of the land. Ten Forty was not able to take possession and the SC found it highly unlikely that they allowed occupation of Marina by mere tolerance.2.In cases of double sale, the person who first recorded it in the Registry of Property shall be considered the lawful owner. In this case, however, petitioner was unable to establish that the Deed was recorded in the Registry of Deeds of Olongapo. An unverified notation on the Deed is not equivalent to a registration. In the absence of this requirement, the law gives preferential right to the buyer who in good faith is first in possession.3.To determine who is first in possession, the following parameters have been established: a. Possession includes not only material but also symbolic possession b. Possessors in good faith are not aware of any flaw in their title or mode of acquisition c. Buyers of property that is in possession of persons other than the seller must be wary – they must

investigated. Good faith is always presumed. Burden of proof rests on the one alleging bad faith. Property has not been delivered, hence Ten Forty did not acquire possession either materially or symbolically. Petitioner has not proven that respondent was aware of any defect to her title. At the time, the property had not been registered which was why Marina relied on tax declarations. Galino was actually occupying the property when respondent took possession. Thus, there was no circumstance that could have required her to investigate further.4.Private corporations are disqualified from acquiring lands of public domain. At the time of the sale, there is no evidence that the property had already ceased to be of public domain.

SPOUSES ISABELO and ERLINDA PAYONGAYONG, vs.HON. COURT OF APPEALS,

May 28, 2004 G.R. No. 144576 Third Division

CARPIO MORALES, J.:

Facts: Eduardo Mendoz is the registered owner of a parcel of land in Caloocan. He mortgaged the land to the Meralco Employees Savings and Loan Association (MESALA) to secure a loan. The mortgage was duly annotated on the title. After 2 years, Mendoza executed a Deed of Sale with Assumption of Mortgage over the parcel of land in favor of spouses Payongayong. It is stated in the deed that petitioners bound themselves to assume payment of the balance of the mortgage indebtedness of Mendoza to MESALA. Mendoza, without the knowledge of petitioners, mortgaged the same property to MESALA, again to secure another loan. Second mortgage was annotated in Mendoza’s title. Mendoza executed a Deed of Absolute Sale over still the same property in favor of respondent spouses Clemente and Rosalia Salvador. Spouses Salvador had the lot registered in their name after ocular inspection and verification from the Register of Deeds. Getting wind of the sale of the property to respondents, Payongayong filed for annulment sale with damages against Mendoza and spouses Salvador. Trial Court ruled in favor of Mendoza and Salvador. CA affirmed. Hence the petition.

Issue: Whether or not spouses Salvador are innocent purchasers for value

Held: Petition denied.

Where innocent third persons rely upon the correctness of a certificate of title and acquire rights over the property, the court cannot just disregard such rights. Otherwise, public confidence in the certificate of title, and ultimately, the Torrens system, would be impaired, for everyone dealing with registered property would still have to inquire at every instance whether the title has been regularly or irregularly issued.28

In respondents’ case, they did not only rely upon Mendoza’s title. Rosalia personally inspected the property and verified with the Registry of Deeds of Quezon City if Mendoza was indeed the registered owner. Given this factual backdrop, respondents did indeed purchase the property in good faith and accordingly acquired valid and indefeasible title thereto.

The law is thus in respondents’ favor. Article 1544 of the Civil Code so provides:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

There being double sale of an immovable property, as the above-quoted provision instructs, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith.

RUDOLF LIETZ INC v CA

FACTS:

Buriol previously owned a parcel of unregistered land in Palawan. In 1986, he entered into a lease agreement with Flaviano and Tiziana Turatello and Sani (Italians) involving a hectare of his property. This agreement was for a period of 25 years, renewable for another 25 years. After the paying P10,000 downpayment, Turatello and Sani took possession of the land. However, this agreement was only reduced into writing in 1987. After 11 months, Buriol sold the same parcel of land (5 hec) to Rudolf Lietz Inc for P30,000. Later on, Rudolf Lietz Inc discovered that Buriol owned only 4 hectares with one hectare covered by the lease; thus, only 3 hectares were delivered to it. Rudolf Lietz Inc instituted a complaint for the annulment of the lease against Buriol, Sani and the Turatellos before the RTC. RTC and CA ruled in favor of Buriol, Sani and Turatellos.

ISSUE:

Whether the sale between Buriol and Rudolf Lietz Inc is a lump sum or unit price sale

HELD: LUMP SUM SALE. The Deed of Absolute Sale shows that the parties agreed on the purchase price on a predetermined area of 5 hectares within the specified boundaries and not based on a particular rate per area. In accordance with Art. 1542, there shall be no reduction in the purchase price even if the area delivered to Rudolf Lietz Inc is less than that states in the contract. In the instant case, the area within the boundaries as stated in the contract shall control over the area agreed upon in the contract.

SPOUSES SALERA, VS. SPOUSES RODAJE

G.R. No. 135900

August 17, 2007

FACTS: The Petitioner spouses Salera filed with the RTC of Leyte, a complaint for quieting of title against spouses Rodaje, The Saleras alleged that they are the absolute owners of a parcel of land situated in Leyte. They acquired the property from the heirs of Brigido Tonacao as shown by a Deed of Absolute Sale; they had the document registered in the RD.

When they asked the Provincial Assessor to declare the property under their names for taxation purposes, they found that the Tax Declaration in the name of Brigido was already cancelled and another one was issued in the names of the Rodajes. Petitioners further alleged that they have been in possession of the property and the house they built thereon because they had paid the purchase price even before the execution of the deed of sale.

In their answer to the complaint, respondents Rodajes claimed that they are the absolute owners of the same property. They acquired it from Catalino Tonacao, the father of Brigido, in a Deed of Absolute Sale and the sale was registered in the RD and a Tax Declaration was issued in their names. Since then, they have been exercising their right of ownership over the property and the building constructed thereon peacefully, publicly, adversely and continuously. Apart from being the first registrants, they are buyers in good faith.

The RTC rendered a Decision declaring petitioners the rightful and legal owners of the property.

On appeal, the CA reversed and set aside the trial court’s Decision. Hence, this petition for Review on Certiorari

ISSUE: Which of the two contracts of sale is valid.

HELD: THE ONE IN FAVOR OF PETITIONERS SPOUSES SALERA

The petition is GRANTED. The assailed Decision of the CA is REVERSED and the Decision of the trial court is REINSTATED.

The Court of Appeals, in upholding the validity of the sale in favor of respondents, relied on Article 1544 of the Civil Code on double sale, thus:

As between two purchasers, the one who registered the sale in his favor has a preferred right over the other who has not registered his title, even if the latter is in actual possession of the immovable property A fortiori¸ the defendants-appellants have a superior right over the contested property inasmuch as they have both actual possession and prior registration of the conveyance. Dominium a possessione cepisse dicitur. Right is said to have its beginning from possession.

x x x

Since the controversy involves two deeds of sale over the same property, Article 1544 properly applies thereto.Following the above-quoted provision, the court a quo was not justified in according preferential rights to the plaintiffs-appellees, who had registered the sale in their favor later, as against the defendants-appellants.

The Court of Appeals is wrong. Article 1544 of the Civil Code contemplates a case of double sale or multiple sales by a single vendor. More specifically, it covers a situation where a single vendor sold one and the same immovable property to two or more buyers. It cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold. In the instant case, the property was sold by two different vendors to different purchasers. The first sale was between Catalino and herein respondents, while the second was between Brigido’s heirs and herein petitioners.

Respondents claim that they have been in possession of the lot even before the execution of the Deed of Absolute Sale on June 6, 1986. However, a perusal of the records of the case shows that petitioners are the ones in prior possession of the property.

Evidence submitted to the court, oral and documentary, established that respondents knew beforehand that the property was declared in the name of Brigido Tonacao for taxation purposes.Thus, respondents should have been wary in buying the property. Any lot buyer is expected to be vigilant, exercising utmost care in determining whether the seller is the true owner of the property and whether there are other claimants. There is no indication from the record that respondents first determined the status of the lot.

While tax declarations are not conclusive proofs of ownership, however, they are good indicia of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession. Hence, as between Brigido and Catalino, the former had better right to the property. In other words, Catalino, not being the owner or possessor, could not validly sell the lot to respondents.

The Court is convinced that respondents had knowledge that the disputed property was previously sold to petitioners by Brigido’s heirs. Obviously, aware that the sale to petitioners was not registered, they purchased the property and have the sale registered ahead of petitioners, who although in possession, failed to have their contract of sale registered immediately in the Registry of Deeds.

CARMELITA FUDOT, Petitioner, G.R. No. 171008

vs. September 13, 2007

CATTLEYA LAND, INC., VELASCO, JR., JJ. Respondent.

Facts:

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent) asked someone to check, on its behalf, the titles of nine (9) lots, the subject land included, which it intended to buy from the spouses Troadio and Asuncion Tecson. Finding no defect on the titles, respondent purchased the nine lots through a Deed of Conditional Sale on 6 November 1992. Subsequently, on 30 August 1993, respondent and the Tecsons executed a Deed of Absolute Sale over the same properties. The Deed of Conditional Sale and the Deed of Absolute Sale were registered with the Register of Deeds on 06 November 1992 and 04 October 1993, respectively. The Register of Deeds refused to actually annotate the deed of sale on the titles because of the existing notice of attachment pending before the Regional Trial Court of Bohol. The attachment was eventually cancelled by virtue of a compromise agreement between the Tecsons and their attaching creditor which was brokered by respondent. Titles to six (6) of the nine (9) lots were issued, but the Register of Deeds refused to issue titles to the remaining three (3) lots , because the titles covering the same were still unaccounted for.

Later, respondent learned that the Register of Deeds had already registered the deed of sale in favor of petitioner and issued a new title herein.

The respondent filed its Complaintfor Quieting Of Title &/Or Recovery Of Ownership, Cancellation Of Title With Damages before the Regional Trial Court of Tagbilaran City.

Issue:

Is the issuance of Deed of Sale valid?

Held:

On 31 October 2001, the trial court rendered its decision: (i) quieting the title or ownership of the subject land in favor of respondent; (ii) declaring the deed of sale between petitioner and spouses Tecson invalid; (iii) ordering the registration of the subject land in favor of respondent; (iv) dismissing respondent’s claim for damages against the Register of Deeds for insufficiency of evidence; (v) dismissing Asuncion’s claim for damages against petitioner for lack of factual basis; and (vi) dismissing petitioner’s counterclaim for lack of the required preponderance of evidence.

SPOUSES TANGLAO vs. SPOUSES PARUNGAO

G.R. No. 166913

October 5, 2007

[KNOWLEDGE BY FIRST BUYER]

FACTS: Spouses Parungao, purchased from Spring Homes 7 Subdivision Lots in Laguna. Respondents made a down payment, leaving a balance exclusive of interest. Respondents introduced improvements on the lots. Under the terms of the Contracts to Sell signed by respondents and Spring Homes, the balance of was to be paid by them within one year from its execution. Respondents failed to pay the installments.

Later, Spring Homes executed two separate Deeds of Absolute Sale in favor of spouses Tanglao, petitioners, wherein the former sold to the latter two lots. It turned out that the lots sold to them were among the lots previously sold to the spouses Parungao.

In a letter, respondents demanded that Spring Homes deliver to them the corrected Contracts to Sell, as well as the TCTs covering the lots they purchased.

Meanwhile, petitioners took possession of the two lots they bought. They forcibly opened the steel gate as well as the doors of the buildings and entered the premises.

When informed of these events, respondents demanded an explanation from Spring Homes; it apologized and promised she would settle the matter with petitioners. However, the controversy was not settled.

Respondent 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, plus interest and damages. Impleaded as respondents were Spring Homes and petitioners. Despite notice, Spring Homes did not appear during the hearings.

The HLURB Arbiter rendered a Decision ordering respondent Spring Homes to pay complainants by way of refund of payments and damages.

Dissatisfied with the ruling, respondents filed a petition for review with the HLURB Board of Commissioners. The HLURB Board of Commissioners reversed the Arbiter’s Decision and granted the petition for review. Petitioners filed a motion for reconsideration, but this was denied by the HLURB Board of Commissioners. Petitioners then filed an appeal with the Office of the President, which dismissed their appeal and affirmed the Decision of the HLURB Board of Commissioners. Petitioners’ MR was also denied by the said Office.

Eventually, petitioners filed with the CA a petition for review.The CA rendered its Decision dismissing the petition, hence this petition for Review on Certiorari

ISSUE: Who between the petitioners and respondents have the right of ownership over the two lots in controversy.

HELD: SPOUSES PARUNGAO, the first buyer.

PETITION DENIED. The Decision of the CA is AFFIRMED in toto.

The ownership of immovable property sold to two different persons at different times is governed by Article 1544 of the Civil Code,2 which provides:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have 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 possession and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

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.

In Occeña v. Esponilla,5 this Court, speaking through then Associate Justice (now 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. 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.

At the time of the second sale to petitioners by Spring Homes, there were already occupants and improvements on the two lots in question. These facts should have put petitioners on their guard. 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.

As the petitioners 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 who, in good faith, were first in possession of the subject lots, we rule that the ownership thereof pertains to them

Santos vs Lumbao

Facts:

1. Respondent spouses Lumbao filed an action for reconveyance with damages against petitioners. Petitioners are survivors and legitimate heirs of Rita Santos who allegedly sold 2 parcels of land to respondents when she was alive by virtue of a document called ‘bilihan ng lupa’, The repsondents even claimed that the execution of the document was signed and witnessed by petitioners Virgilio and Tadeo.

2. After having acquired the subject property, respondents Spouses Lumbao took actual possession and built a house which they occupied as exclusive owners up to the present. The respondents Spouses Lumbao made several verbal demands upon Rita, during her lifetime, and thereafter upon herein petitioners, to execute the necessary documents to effect the issuance of a separate title in their favor.

3. Respondents Spouses Lumbao alleged that prior to her death, Rita informed respondent Proserfina Lumbao she could not deliver the title to the subject property because the entire property inherited by her and her co-heirs from Maria had not yet been partitioned.

4. Finally, the respondents Lumbao claimed that petitioners, acting fraudulently and in conspiracy with one another, executed a Deed of Extrajudicial Settlement, adjudicating and partitioning among themselves and the other heirs, the estate left by Maria, which included the lot already sold to them. Due to refusal of petitioners to convey the said propert, the spouses filed the action.

5. The lower court (RTC) dismissed the complaint of ground of lack of cause of action as the spouses allegedly did not comply with the required barangay conciliation. The CA granted and ordered the petititoners to convey the land to the spouses, hence this petition.

Issue: Whether or not the admissions made are admissible and binding

YES. As a general rule, facts alleged in a party’s pleading are deemed admissions of that party and are binding upon him, but this is not an absolute and inflexible rule.

1. An answer is a mere statement of fact which the party filing it expects to prove, but it is not evidence. And in spite of the presence of judicial admissions in a party’s pleading, the trial court is still given leeway to consider other evidence presented.However, in the case at bar, petitioners had not adduced any other evidence to override the admission made in their answer that Virgilio and Tadeo actually signed the [Bilihan ng Lupa.  Hence, the general rule that the admissions made by a party in a pleading are binding and conclusive upon him applies in this case.

2. In the "Bilihan ng Lupa," dated 17 August 1979, the signatures of petitioners Virgilio and Tadeo appeared thereon. Moreover, in petitioners’ Answer and Amended Answer to the Complaint for Reconveyance with Damages, both petitioners Virgilio and Tadeo made an admission that indeed they acted as witnesses in the execution of the "Bilihan ng Lupa," dated 17 August 1979. However, in order to avoid their obligations in the said "Bilihan ng Lupa," petitioner Virgilio, in his cross-examination, denied having knowledge of the sale transaction and claimed that he could not remember the same as well as his appearance before the notary public due to the length of time that had passed.

ERNESTO V. YU and ELSIE O. YU, Petitioners, vs.BALTAZAR

PACLEB, Respondent.

NATURE OF THE CASE: This petition was filed to set aside the decision made by the

Court of Appeals in ruling that the respondent has the better right over the subject

property and is the true owner thereof.

FACTS: Respondent Baltazar Pacleb and his late first wife, Angelita Chan, are the

owners of parcel of land in Langcaan, Dasmarinas, Cavite covered by a transfer

certificate of title.

Sometime in September 1992, Ruperto Javier offered the said land to spouses Ernesto

and Elsie Yu. Javier claimed that he purchased the property from Rebecca Del Rosario

who bought it from spouses Baltazar Pacleb and Angelita Chan. Despite the alleged

sales being unregistered, the spouses Yu accepted the offer and made a down payment

and entered into an Agreement for the sale of the property. After giving the amount, the

spouses Yu discovered that a portion of the property was tenanted by Ramon Pacleb,

one of the respondent's sons. The petitioners then demanded the cancellation of their

agreement and the return of their initial payment.

Javier then made arrangements with Ramon to vacate the property and to pay Ramon

for his disturbance compensation. With that, Javier and the spouses YU proceeded to

enter into a Contract to Sell. But, Javier failed to comply with his obligations. So, on

April 23, 1993, the petitioners filed with the RTC a Complaint for specific performance

and damages against Javier to compel Javier to deliver to them ownership and

possession, and the title to the property.

            However, Javier did not appear in the proceedings and was declared in default,

so, the trial court rendered a decision in favor of the petitioners. The decision and its

Certificate of Finality were annotated in the title of the property.

            On March 10, 1995, the petitioners and Ramon and his wife entered into an

agreement that the spouses will pay Ramon P500,000 in exchange for the waiver of his

tenancy rights over the land.

            On October 12, 1995, the respondent filed a Complaint for annulment of deed of

sale and other documents arising from it claiming that the deed of sale supposedly

executed between him and his late first wife and Del Rosario was spurious and the

signatures were forged. He also moved for the summons to be served upon Del Rosario

via publication since her address cannot be found, but was denied. So, respondent

moved to dismiss the case which was granted by the trial court.

            On November 23, 1995, the petitioners filed an action for forcible entry against

the respondent with the MTC. They contend that they had prior physical possession

over the property through their trustee Ramon Pacleb, until the respondent ousted them

in September 1995. The MTC and the RTC ruled in favor of the petitioners, but the

Court of Appeals set aside the decisions of the lower courts. The CA decided that it was

the respondent who had prior physical possession of the property which was shown by

his payment of real estate taxes thereon.

            On May 29, 1996, respondent filed an instant case for removal of cloud from title

with damages alleging that the deed of sale between him and his late first wife could not

have been executed on the date appearing thereon. He claimed that he was residing in

the US at that time and that his late first wife died 20 years ago.

            On May 28, 1997, while the case was still pending, the respondent died, hence,

he was substituted by his surviving spouse and some of his children.

            On December 27, 2002, the respondent's case was dismissed and the

petitioners were held to be purchasers in good faith. The trial court also held that the

petitioners' action for specific performance against Javier was already final, and the trial

court also ordered the respondents' heirs and all other persons claiming under  them to

surrender the possession of the property to the petitioners. Upon appeal by the

respondent, the CA reversed the trial court's decision. Hence, this petition.

ISSUE: WON the action for specific performance filed by the petitioners against Javier

is not merely an action in personam, but an action in rem, and is thus, conclusive and

binding upon respondent even if he was not a party thereto since it involves a question

of possession and ownership of real property.

HELD: The action for specific performance and damages filed by petitioners against

Javier to compel him to perform his obligations under their Contract to Sell is an action

in personam.

The purpose of the action is to compel Javier to accept the full payment of the purchase

price, and to execute a deed of absolute sale over the property in favor of the

petitioners. The obligations of Javier mentioned attach to Javier alone and do not

burden the property. Thus, the complaint filed by the petitioners is an action in

personam and is binding only upon the parties properly impleaded therein and duly

heard or given an opportunity to be heard. So, the action cannot bind the respondent

since he was not a party therein and considering the fact that his signature and that of

his late first wife were forged in the deed of sale. Hence, the petition is denied and the

Court affirms the ruling of the CA finding the respondent having a better right over the

property as the true owner thereof.

Cebu Winland Development Corp. vs Ong Siao HuaG.R. No. 17321!a" 21# 2$$%Topic:Where Real Estate is sold per unit or number and Prescription of the action.&'C(S)Cebu Winland Development Corporation is the owner and developer of acondominium project called the Cebu Winland Tower Condominium. Ong Siao Hua isa buyer of two condominium units and four parking slots from petitioner.While the Cebu Winland Tower Condominium was under construction! petitionero"ered to sell to respondent condominium units at promotional prices. #s an addedincentive! petitioner o"ered a $% discount provided $&% of the purchase price ispaid as down payment and the balance paid in '( e)ual monthly installments. On *anuary +! ,--! respondent accepted the o"er of petitioner and bought twocondominium units designated as /nit 0os. '(& and '(&+! as well as four paringslots designated as slots -,! --! ,&, and ,&$ 1subject properties2.The area per condominium unit as indicated in petitioner's price list is 155 square meters and the price per square meter is P22, 3!."5. The price for the paring slot is 3'(&! &&& each. 4espondent! therefore! paid 3'! '-5!+.&5 as down payment and issued '( postdated checs in the amount of 3''$! ($&.6& per chec for the balance of the purchase price in the total amount of 3! $+'!$5.,-.On October ,&! ,--+! possession of the subject properties was turned over torespondent. #fter the purchase price was fully paid with the last chec dated *anuary $,! ,--6! respondent re)uested petitioner for the condominium certi7catesof title evidencing ownership of the units. /pon e8amination of the deed of absolute sale of /nit 0o. '(& and the identicaldocument for /nit 0o. '(&+! respondent was distressed to 7nd that the stated 9oorarea is only ,'6 s)uare meters contrary to the area indicated in the price list whichwas , s)uare meters.Respondent caused a #eri$cation sur#e% of the saidcondominium units and disco#ered that the actual area is onl% 11& square meters per unit.4espondent demanded from petitioner to refund the amount of 3'!&,(!,&.& representing e8cess payments for the di"erence in the area! computedas follows: , s).m. ; ,,& < ( 8 ' units < -& s).m. 8 3''!$65.- <3'!&,(!,&.&3etitioner refused to refund the said amount to respondent. Conse)uently! Ong SiaoHua 7led a Complaint on #ugust 6! ,--5 in the 4egional O=ce of the Housing and>and /se 4egulatory ?oard 1H>/4?2 in Cebu City! praying for the refund of 3'!&,(!,&.& plus interest! moral damages and attorney@s fees! including thesuspension of petitioner@s license to sell. The Housing and >and /se #rbiter dismissed the complaint and ruled thatrespondentAs action had already prescribed pursuant to #rticle ,($ in relation to#rticles ,$- and ,(' of the Civil Code. Ong Siao Hua appealed the decision to H>/4? and it a=rmed the #rbiterAs 7nding that the action had already prescribed and the same decision was also rendered by the O=ce of the 3resident. On Bebruary ,(! '&&+! the Court of #ppeals rendered the assailed Decision 7nding that respondent@s action has not prescribed. The C# reversed and set aside the assailed Decision and 4esolution of the O=ce of the 3resident.*SS+,S),.W0 Ong Siao HuaAs action has prescribed pursuant to #rticle ,($! in relation to #rticles ,$- and ,('.'.W0 the sale is one made with a statement of its area or at the rate of a certain price for a unit of measure and not for a lump sum.H,-D),.0O! the action has not prescribed. The resolution of the issue at bar necessitatesa scrutiny of the concept of delivery in the conte8t of the >aw on Sales or as used in #rticle ,($ of the Civil Code. /nder the Civil Code! the vendor is bound to transfer the ownership of and deliver the thing which is the object of the sale. /nder the Civil Code! ownership does not pass by mere stipulation but only bydelivery. Eanresa e8plains!t/e deliver" o0 t/e t/ing . . . signies t/attitle /as passed 0rom t/e seller to t/e bu"er.#ccording to Tolentino! thepurpose of delivery is not only for the enjoyment of the thing but also a mode of ac)uiring dominion and determines the transmission of ownership! the birth of the real right. The delivery under any of the forms provided by #rticles ,(-6 to,& of the Civil Codesignies t/at t/e transmission o0 oners/ip 0romvendor to vendee /as taen pla4e. #rticle ,(-6 contemplates what is nown as real or actual delivery! when thething sold is placed in the control and possession of the vendee. #rticle ,(-5! onthe one hand! refers to symbolic delivery by the e8ecution of a publicinstrument. Ft should be noted! however! that #rticle ,(-5 does not say that thee8ecution of the deed provides a conclusive presumption of the delivery of possession. Ft con7nes itself to providing that the e8ecution thereof is

e)uivalentto delivery! which means that the presumption therein can be rebutted bymeans of clear and convincing evidence. Thus! the presumptive delivery by thee8ecution of a public instrument can be negated by the failure of the vendee totae actual possession of the land sold.Deliver" as used in t/e -a on Sales re0ers to t/e 4on4urrent trans0ero0 to t/ings) 516 possession and 526 oners/ip. This is the rationalebehind the jurisprudential doctrine that presumptive delivery #iae8ecution of apublic instrument is negated by the reality that the vendee actually failed toobtain material possession of the land subject of the sale.27 *n t/e same vein#i0 t/e vendee is pla4ed in a4tual possession o0 t/e propert"# but b"agreement o0 t/e parties oners/ip o0 t/e same is retained b" t/e

vendor until t/e vendee /as 0ull" paid t/e pri4e# t/e mere trans0er o0 t/e possession o0 t/e propert" sube4t o0 t/e sale is not t/e deliver"4ontemplated in t/e -a on Sales or as used in 'rti4le 183 o0 t/e CivilCode.Ft appears that respondent was already placed in possession of the subjectproperties. However! it is crystal clear that the deeds of absolute sale were stillto be e8ecuted by the parties upon payment of the last installment. This factshows that ownership of the said properties was withheld by petitioner. Bollowingcase law! it is evident that the parties did not intend to immediately transferownership of the subject properties until full payment and the e8ecution of thedeeds of absolute sale. Conse)uently! there is no delivery to spea of in thiscase since what was transferred was possession only and not ownership of thesubject properties. The Court ruled that the transfer of possession of the subject properties onOctober ,&! ,--+ to respondent cannot be considered as delivery within thepurview of #rticle ,($ of the Civil Code. Ft follows that since there has been notransfer of ownership of the subject properties since the deeds of absolute salehave not yet been e8ecuted by the parties! the action 7led by respondent hasnot prescribed.'.GS. Ft is undisputed by the parties that the purchase price of the subjectproperties was computed based on the price list prepared by petitioner! or 3''!$65.- per s)uare meter. Clearly! the parties agreed on a sale at a rate of acertain price per unit of measure and not one for a lump sum. Hence! it is #rticle,$- and not #rticle ,(' which is the applicable law. #ccordingly! respondent isentitled to the relief a"orded to him under #rticle ,$-! that is! either aproportional reduction of the price or the rescission of the contract! at his option.4espondent chose the former remedy since he prayed in his Complaint for therefund of the amount of 3'! &,(!,&.& representing the proportional reductionof the price paid to petitioner.

ANTHONY ORDUNA ET. AL., VS EDUARDOFUENTEBELLA ET AL.,FACTS: During the lifetime of Gabriel Sr., he sold byinstallment a parcel of land to Orduna. The sale wasnot reduced in writing. After his father’s death, Gabriel Jr. inherited subjectlot and for which he was issued TCT. Since theGabriel Sr. – Orduna sales transaction called forpayment of the contract price in installments,Gabriel Jr. received payments from the Orduñas andeven authorized them to enclose the subject lot witha fence.Gabriel Jr. sold the land to respondents, whomsubsequently registered the land in their favor.Petitioners filed an annulment of title, which therespondent assailed. The RTC and CA found the purchaser-respondents’thesis on prescription correct stating in this regardthat Respondent’s TCT was issued on May 16, 2000 while petitioners filed their complaint for annulmentonly on July 3, 2001. To the courts below, the one-year prescriptive period to assail the issuance of acertificate of title had already elapsed. ISSUE: WON the action to annul title has prescribed.HELD: NO. Having possession of the subject lot,petitioners’ right to the reconveyance thereof, andthe annulment of the covering title, has notprescribed or is not time-barred. This is so for anaction for annulment of title or reconveyance basedon fraud is imprescriptible where the suitor is inpossession of the property subject of the acts,[36] theaction partaking as it does of a suit for quieting oftitle which is imprescriptible.[37] Such is the case inthis instance. Petitioners have possession of subjectlots as owners having purchased the same fromGabriel, Sr. subject only to the full payment of theagreed price. The prescriptive period for the reconveyance offraudulently registered real property is 10 years,reckoned from the date of the issuance of thecertificate of title, if the plaintiff is not inpossession, but imprescriptible if he is in possessionof the property.

 Thus, one who is in actualpossession of a piece of land claiming to be theowner thereof may wait until his possession isdisturbed or his title is attacked before taking stepsto vindicate his right. As it is, petitioners’ actionfor reconveyance is imprescriptible.(Note: As to enforceability of sale not reduced in writing, the statute of frauds (1403) will not apply because the contract has been partially executed.)

RUPERTA CANO VDA. DE VIRAY and JESUS CARLO GERARD VIRAY, Petitioners,

vs.

SPOUSES JOSE USI and AMELITA USI, Respondents.

Facts:

The case involves a lot originally owned by the Mendozas divided into seven parts, one part of which was sold to the petitioner. On the other hand, there was also a subject agreement between the Mendozas and Spouses Usi, Respondent wherein the subject lot was divided into 13 parts, some parts went to the Respondents. The conflict arose as to whom originally belongs the subject land.

In lieu, Spouses Usi instituted complaints against Viray, among others is a Petition for accion publiciana/reivindicatoria before the RTC. On the other hand, petitioners moved for the dismissal of the said petition, on the ground of litis pendencia and res judicata. The RTC dismissed the petition for failure to establish preponderant evidence to support their claim of title, possession and ownership over the subject lots. Hence, they appealed before the CA. The CA reversed RTC’s decision basing its ruling on the 2 notarized subject agreements. Viray appealed but was denied. Hence, this.

Issue:

Whether or not the Court of Appeals erred in ruling that Respondents are the legal and valid owners of the subject lot?

Ruling:

The court held that the petition is barred by res judicata – defined as one that operates as bar by prior judgement when there is a final judgement on merits rendered by a court with jurisdiction and the first and second action has identical parties, subject matter or cause of action.

The better right to possess and right of ownership cannot be relitigated because of res judicata.