EN BANC Defendant took the case to the Court of Appeals, but the
same is now before us by virtue of a certification issued
G.R. No. L-21263 April 30, 1965
LAWYERS COOPERATIVE PUBLISHING
COMPANY, plaintiff-appellee,
vs.
PERFECTO A. TABORA, defendant-appellant.
Paredes, Poblador, Cruz and Nazareno for plaintiff-
appellee.
Tabora and Concon for defendant-appellant.
BAUTISTA ANGELO, J.:
On May 3, 1955, Perfecto A. Tabora bought from the
Lawyers Cooperative Publishing Company one complete
set of American Jurisprudence consisting of 48 volumes
with 1954 pocket parts, plus one set of American
Jurisprudence, General Index, consisting of 4 volumes,
for a total price of P1,675.50 which, in addition to the
cost of freight of P6.90, makes a total of P1,682.40.
Tabora made a partial payment of P300.00, leaving a
balance of P1,382.40. The books were duly delivered and
receipted for by Tabora on May 15, 1955 in his law office
Ignacio Building, Naga City.
In the midnight of the same date, however, a big fire
broke out in that locality which destroyed and burned all
the buildings standing on one whole block including at
the law office and library of Tabora As a result, the
books bought from the company as above stated,
together with Tabora's important documents and papers,
were burned during the conflagration. This unfortunate
event was immediately reported by Tabora to the
company in a letter he sent on May 20, 1955. On May
23, the company replied and as a token of goodwill it
sent to Tabora free of charge volumes 75, 76, 77 and 78
of the Philippine Reports. As Tabora failed to pay he
monthly installments agreed upon on the balance of the
purchase price notwithstanding the long time that had
elapsed, the company demanded payment of the
installments due, and having failed, to pay the same, it
commenced the present action before the Court of First
Instance of Manila for the recovery of the balance of the
obligation. Plaintiff also prayed that defendant be
ordered to pay 25% of the amount due as liquidated
damages, and the cost of action.
Defendant, in his answer, pleaded force majeure as a
defense. He alleged that the books bought from the
plaintiff were burned during the fire that broke out in
Naga City on May 15, 1955, and since the loss was due
to force majeure he cannot be held responsible for the
loss. He prayed that the complaint be dismissed and that
he be awarded moral damages in the amount of
P15,000.00.
After due hearing, the court a quo rendered judgment for
the plaintiff. It ordered the defendant to pay the sum of
P1,382.40, with legal interest thereon from the filing of
the complaint, plus a sum equivalent to 25% of the total
amount due as liquidated damages, and the cost of
action.
by that Court that the case involves only questions of
law.
Appellant bought from appellee one set of American
Jurisprudence, including one set of general index,
payable on installment plan. It was provided in the
contract that "title to and ownership of the books shall
remain with the seller until the purchase price shall
have been fully paid. Loss or damage to the books after
delivery to the buyer shall be borne by the buyer." The
total price of the books, including the cost of freight,
amounts to P1,682.40. Appellant only made a down
payment of P300.00 thereby leaving a balance of
P1,382.40. This is now the import of the present action
aside from liquidated damages.
Appellant now contends that since it was agreed that the
title to and the ownership of the books shall remain with
the seller until the purchase price shall have been fully
paid, and the books were burned or destroyed
immediately after the transaction, appellee should be the
one to bear the loss for, as a result, the loss is always
borne by the owner. Moreover, even assuming that the
ownership of the books were transferred to the buyer
after the perfection of the contract the latter should not
answer for the loss since the same occurred
through force majeure. Here, there is no evidence that
appellant has contributed in any way to the occurrence
of the conflagration.1wph1.t
This contention cannot be sustained. 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,
the application of that rule does not here obtain because
the law on the contract entered into on the matter
argues against it. It is true that in the contract entered
into between the parties the seller agreed that the
ownership of the books shall remain with it until the
purchase price shall have been fully paid, but such
stipulation cannot make the seller liable in case of loss
not only because such was agreed merely to secure the
performance by the buyer of his obligation but in the
very contract it was expressly agreed that the "loss or
damage to the books after delivery to the buyer shall be
borne by the buyer." Any such stipulation is sanctioned
by Article 1504 of our Civil Code, which in part provides:
(1) Where delivery of the goods has been made to
the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in
the goods has been retained by the seller merely
to secure performance by the buyer of his
obligations under the contract, the goods are at
the buyer's risk from the time of such delivery.
Neither can appellant find comfort in the claim that
since the books were destroyed by fire without any fault
on his part he should be relieved from the resultant
obligation under the rule that an obligor should be held
exempt from liability when the loss occurs thru a
fortuitous event. This is because this rule only holds
true when the obligation consists in the delivery of a
determinate thing and there is no stipulation holding
him liable even in case of fortuitous event. Here these
qualifications are not present. The obligation does not
refer to a determinate thing, but is pecuniary in nature,
and the obligor bound himself to assume the loss after
the delivery of the goods to him. In other words, the
obligor agreed to assume any risk concerning the goods
from the time of their delivery, which is an exception to
the rule provided for in Article 1262 of our Civil Code.
Appellant likewise contends that the court a quo erred in
sentencing him to pay attorney's fees. This is merely the
result of a misapprehension for what the court a
quo ordered appellant to pay is not 25% of the amount
due as attorney's fees, but as liquidated damages, which
is in line with an express stipulation of the contract. We
believe, however, that the appellant should not be made
to pay any damages because his denial to pay the
balance of the account is not due to bad faith.
WHEREFORE, the decision appealed from is modified by
eliminating that portion which refers to liquidated
damages. No costs.
FIRST DIVISION
G.R. No. L-64159 September 10, 1985
CIRCE S. DURAN and ANTERO S. GASPAR, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, ERLINDA B. MARCELO
TIANGCO and RESTITUTO TIANGCO, respondents.
RELOVA, J.:
The respondent then Court of Appeals rendered judgment,
modifying the decision of the then Court of First Instance of
Rizal, which reads as follows:
(1) the complaint of the plaintiffs (herein petitioners) is hereby
DISMISSED;
(2) the defendants-appellants spouses Erlinda B. Marcelo Tiangco and
Restituto Tiangco (herein private respondents) are hereby declared the
lawful owners of the two (2) parcels of land and all the improvements
thereon including the 12-door apartment thereon described in the
complaint, in the counterclaim, in the cross-claim, and in the Sheriff's
Certificate of Sale;
(3) the plaintiffs-appellants and the defendant-appellee Fe S. Duran are
hereby ordered to deliver to (the Tiangcos) the two parcels of land and
all the improvements thereon including the 12-door apartment thereon,
subject matter of the complaint, counterclaim, and cross-claim, and in
the Sheriff's Certificate of Sale;
(4) the plaintiffs-appellants and the defendant-appellee Fe S. Duran are
hereby ordered to pay solidarily to the Tiangcos the sum of Two
Thousand Four Hundred Pesos (P2,400) a month from May 16, 1972
until delivery of possession of the properties in question to said Tiangco
spouses, representing rentals collected by plaintiffs-appellants and
defendant- appellee Fe S. Duran;
(5) the plaintiffs-appellants and defendant-appellee Fe S. Duran are
hereby ordered to pay solidarily to the spouses Tiangco the sum of
Twenty Thousand Pesos (P20,000) as damages for attorney's fees, and
the sum of Twenty-Five Thousand Pesos (P25,000) for moral damages,
and the costs. (pp. 149-150, Rollo)
The antecedent facts showed that petitioner Circe S. Duran
owned two (2) parcels of land (Lots 5 and 6, Block A, Psd 32780)
covered by Transfer Certificate of Title No. 1647 of the Register
of Deeds of Caloocan City which she had purchased from the
Moja Estate. She left the Philippines in June 1954 and returned
in May 1966.
On May 13, 1963, a Deed of Sale of the two lots mentioned
above was made in favor of Circe's mother, Fe S. Duran who, on
December 3, 1965, mortgaged the same property to private
respondent Erlinda B. Marcelo-Tiangco. When petitioner Circe
S. Duran came to know about the mortgage made by her
mother, she wrote the Register of Deeds of Caloocan City
informing the latter that she had not given her mother any
authority to sell or mortgage any of her properties in the
Philippines. Failing to get an answer from the registrar, she
returned to the Philippines. Meanwhile, when her mother, Fe S.
Duran, failed to redeem the mortgage properties, foreclosure
proceedings were initiated by private respondent Erlinda B.
Marcelo Tiangco and, ultimately, the sale by the sheriff and the
issuance of Certificate of Sale in favor of the latter.
Petitioner Circe S. Duran claims that the Deed of Sale in favor of
her mother Fe S. Duran is a forgery, saying that at the time of
its execution in 1963 she was in the United States. On the other
hand, the adverse party alleges that the signatures of Circe S.
Duran in the said Deed are genuine and, consequently, the
mortgage made by Fe S. Duran in favor of private respondent is
valid.
With respect to the issue as to whether the signature of
petitioner Circe S. Duran in the Deed of Sale is a forgery or not,
respondent appellate court held the same to be genuine
because there is the presumption of regularity in the case of a
public document and "the fact that Circe has not been able to
satisfactorily prove that she was in the United States at the time
the deed was executed in 1963. Her return in 1966 does not
prove she was not here also in 1963, and that she did not leave
shortly after 1963. She should have presented her old passport,
not her new one. But even if the signatures were a forgery, and
the sale would be regarded as void, still it is Our opinion that
the Deed of Mortgage is VALID, with respect to the mortgagees,
the defendants-appellants. While it is true that under Art. 2085
of the Civil Code, it is essential that the mortgagor be the
absolute owner of the property mortgaged, and while as between
the daughter and the mother, it was the daughter who still
owned the lots, STILL insofar as innocent third persons are
concerned the owner was already the mother (Fe S. Duran)
inasmuch as she had already become the registered
owner (Transfer Certificates of Title Nos. 2418 and 2419). The
mortgagee had the right to rely upon what appeared in the
certificate of title, and did not have to inquire further. If the rule
were otherwise, the efficacy and conclusiveness of Torrens
Certificate of Titles would be futile and nugatory. Thus the rule
is simple: the fraudulent and forged document of sale may
become the root of a valid title if the certificate has already been
transferred from the name of the true owner to the name
indicated by the forger (See De la Cruz v. Fable, 35 Phil. 144;
Blondeau et al. v. Nano et al., 61 Phil. 625; Fule et al. v. Legare
et al., 7 SCRA 351; see also Sec. 55 of Act No. 496, the Land
Registration Act). The fact that at the time of the foreclosure
sale proceedings (1970-72) the mortgagees may have already
known of the plaintiffs' claim is immaterial. What is important
is that at the time the mortgage was executed, the mortgagees
in good faith actually believed Fe S. Duran to be the owner, as
evidenced by the registration of the property in the name of said
Fe S. Duran (pp. 146-147, Rollo)."
In elevating the judgment of the respondent appellate court to
Us for review, petitioners discussed questions of law which, in
effect and substance, raised only one issue and that is whether
private respondent Erlinda B. Marcelo-Tiangco was a buyer in
good faith and for value.
Guided by previous decisions of this Court, good faith consists
in the possessor's belief that the person from whom he received
the thing was the owner of the same and could convey his title
(Arriola vs. Gomez dela Serna, 14 Phil. 627). Good faith, while it
is always to be presumed in the absence of proof to the
contrary, requires a well-founded belief that the person from
whom title was received was himself the owner of the land, with
the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is
good faith where there is an honest intention to abstain from
taking any unconscientious advantage from another (Fule vs.
Legare, 7 SCRA 351). Otherwise stated, good faith is the
opposite of fraud and it refers to the state of mind which is
manifested by the acts of the individual concerned. In the case
at bar, private respondents, in good faith relied on the
certificate of title in the name of Fe S. Duran and as aptly stated
by respondent appellate court "[e]ven on the supposition that
the sale was void, the general rule that the direct result of a
previous illegal contract cannot be valid (on the theory that the
spring cannot rise higher than its source) cannot apply here for
We are confronted with the functionings of the Torrens System
of Registration. The doctrine to follow is simple enough: a
fraudulent or forged document of sale may become the ROOT of
a valid title if the certificate of title has already been transferred
from the name of the true owner to the name of the forger or the
name indicated by the forger." (p. 147, Rollo)
Thus, where innocent third persons relying on the correctness of
the certificate of title issued, acquire rights over the property, the
court cannot disregard such rights and order the total cancellation
of the certificate for that would impair public confidence in the
certificate of title; otherwise everyone dealing with property
registered under the torrens system would have to inquire in every
instance as to whether the title had been regularly or irregularly
issued by the court. Indeed, this is contrary to the evident purpose
of the law. Every person dealing with registered land may safely rely
on the correctness of the certificate of title issued therefor and the
law will in no way oblige him to go behind the certificate to
determine the condition of the property. Stated differently, an
innocent purchaser for value relying on a torrens title issued is
protected. A mortgagee has the right to rely on what appears in the
certificate of title and, in the absence of anything to excite
suspicion, he is under no obligation to look beyond the certificate
and investigate the title of the mortgagor appearing on the face of
said certificate.
Likewise, We take note of the finding and observation of respondent
appellate court in that petitioners were guilty of estoppel by laches
"in not bringing the case to court within a reasonable period. Antero
Gaspar, husband of Circe, was in the Philippines in 1964 to
construct the apartment on the disputed lots. This was testified to
by Circe herself (tsn., p. 41, Nov. 27, 1973). In the process of
construction, specifically in the matter of obtaining a building
permit, he could have discovered that the deed of sale sought to be
set aside had been executed on May 13, 1963 (the building permit
needed an application by the apparent owner of the land, namely,
Circe's mother, Fe S. Duran). And then again both plaintiffs could
have intervened in the foreclosure suit but they did not. They kept
silent until almost the last moment when they finally decided,
shortly before the sheriff's sale, to file a third-party claim. Clearly,
the plaintiffs can be faulted for their estoppel by laches." (p. 148,
Rollo)
IN VIEW OF THE FOREGOING, We find the petition without merit
and hereby AFFIRMED in toto the decision of respondent appellate
court promulgated on August 12, 1981.
SO ORDERED.
EN BANC
G.R. No. L-18536 March 31, 1965
JOSE B. AZNAR, plaintiff-appellant,
vs.
RAFAEL YAPDIANGCO, defendant-appellee;
TEODORO SANTOS, intervenor-appellee.
Florentino M. Guanlao for plaintiff-appellant.
Rafael Yapdiangco in his own behalf as defendant-appellee.
Lorenzo Sumulong, R. B. Hilao and B. S. Felipe for intervenor-
appellee.
REGALA, J.:
This is an appeal, on purely legal questions, from a decision of
the Court of First Instance of Quezon City, Branch IV, declaring
the intervenor-appellee, Teodoro Santos, entitled to the
possession of the car in dispute.
The records before this Court disclose that sometime in
May, 1959, Teodoro Santos advertised in two
metropolitan papers the sale of his FORD FAIRLANE
500. In the afternoon of May 28, 1959, a certain L. De
Dios, claiming to be a nephew of Vicente Marella, went to
the Santos residence to answer the ad. However, Teodoro
Santos was out during this call and only the latter's son,
Irineo Santos, received and talked with De Dios. The
latter told the young Santos that he had come in behalf
of his uncle, Vicente Marella, who was interested to buy
the advertised car.
On being informed of the above, Teodoro Santos
instructed his son to see the said Vicente Marella the
following day at his given address: 1642 Crisostomo
Street, Sampaloc, Manila. And so, in the morning of May
29, 1959, Irineo Santos went to the above address. At
this meeting, Marella agreed to buy the car for
P14,700.00 on the understanding that the price would
be paid only after the car had been registered in his
name.
Irineo Santos then fetched his father who, together with
L. De Dios, went to the office of a certain Atty. Jose
Padolina where the deed of the sale for the car was
executed in Marella's favor. The parties to the contract
thereafter proceeded to the Motor Vehicles Office in
Quezon City where the registration of the car in Marella's
name was effected. Up to this stage of the transaction,
the purchased price had not been paid.
From the Motor Vehicles Office, Teodoro Santos returned
to his house. He gave the registration papers and a copy
of the deed of sale to his son, Irineo, and instructed him
not to part with them until Marella shall have given the
full payment for the car. Irineo Santos and L. De Dios
then proceeded to 1642 Crisostomo Street, Sampaloc,
Manila where the former demanded the payment from
Vicente Marella. Marella said that the amount he had on
hand then was short by some P2,000.00 and begged off
to be allowed to secure the shortage from a sister
supposedly living somewhere on Azcarraga Street, also in
Manila. Thereafter, he ordered L. De Dios to go to the
said sister and suggested that Irineo Santos go with him.
At the same time, he requested the registration papers
and the deed of sale from Irineo Santos on the pretext
that he would like to show them to his lawyer. Trusting
the good faith of Marella, Irineo handed over the same to
the latter and thereupon, in the company of L. De Dios
and another unidentified person, proceeded to the
alleged house of Marella's sister.
At a place on Azcarraga, Irineo Santos and L. De Dios
alighted from the car and entered a house while their
unidentified companion remained in the car. Once
inside, L. De Dios asked Irineo Santos to wait at the sala
while he went inside a room. That was the last that
Irineo saw of him. For, after a considerable length of time
waiting in vain for De Dios to return, Irineo went down to
discover that neither the car nor their unidentified
companion was there anymore. Going back to the house,
he inquired from a woman he saw for L. De Dios and he
was told that no such name lived or was even known
therein. Whereupon, Irineo Santos rushed to 1642
Crisostomo to see Marella. He found the house closed
and Marella gone. Finally, he reported the matter to his
father who promptly advised the police authorities.
That very same day, or on the afternoon of May 29, 1959
Vicente Marella was able to sell the car in question to the
plaintiff-appellant herein, Jose B. Aznar, for P15,000.00.
Insofar as the above incidents are concerned, we are
bound by the factual finding of the trial court that Jose
B. Aznar acquired the said car from Vicente Marella in
good faith, for a valuable consideration and without
notice of the defect appertaining to the vendor's title.
While the car in question was thus in the possession of Jose B.
Aznar and while he was attending to its registration in his
name, agents of the Philippine Constabulary seized and
confiscated the same in consequence of the report to them by
Teodoro Santos that the said car was unlawfully taken from
him.
In due time, Jose B. Aznar filed a complaint for replevin against
Captain Rafael Yapdiangco, the head of the Philippine
Constabulary unit which seized the car in question Claiming
ownership of the vehicle, he prayed for its delivery to him. In the
course of the litigation, however, Teodoro Santos moved and was
allowed to intervene by the lower court.
At the end of the trial, the lower court rendered a decision
awarding the disputed motor vehicle to the intervenor-appellee,
Teodoro Santos. In brief, it ruled that Teodoro Santos had been
unlawfully deprived of his personal property by Vicente Marella,
from whom the plaintiff-appellant traced his right.
Consequently, although the plaintiff-appellant acquired the car
in good faith and for a valuable consideration from Vicente
Marella, the said decision concluded, still the intervenor-
appellee was entitled to its recovery on the mandate of Article
559 of the New Civil Code which provides:
ART. 559. The possession of movable property
acquired in good faith is equivalent to title.
Nevertheless, one who 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.
From this decision, Jose B. Aznar appeals.
The issue at bar is one and simple, to wit: Between Teodoro
Santos and the plaintiff-appellant, Jose B. Aznar, who has a
better right to the possession of the disputed automobile?
We find for the intervenor-appellee, Teodoro Santos.
The plaintiff-appellant accepts that the car in question
originally belonged to and was owned by the intervenor-
appellee, Teodoro Santos, and that the latter was
unlawfully deprived of the same by Vicente Marella.
However, the appellant contends that upon the facts of
this case, the applicable provision of the Civil Code is
Article 1506 and not Article 559 as was held by the
decision under review. Article 1506 provides:
ART. 1506. Where the seller of goods has a
voidable title thereto, but his, title has not been
voided at the time of the sale, the buyer acquires
a good title to the goods, provided he buys them
in good faith, for value, and without notice of the
seller's defect of title.
The contention is clearly unmeritorious. Under the
aforequoted provision, it is essential that the seller
should have a voidable title at least. It is very clearly
inapplicable where, as in this case, the seller had no title
at all.
Vicente Marella did not have any title to the property
under litigation because the same was never delivered to
him. He sought ownership or acquisition of it by virtue of
the contract. Vicente Marella could have acquired
ownership or title to the subject matter thereof only by
the delivery or tradition of the car to him.
Under Article 712 of the Civil Code, "ownership and
other real rights over property are acquired and
transmitted by law, by donation, by testate and intestate
succession, and in consequence of certain contracts, by
tradition." As interpreted by this Court in a host of
cases, by this provision, ownership is not transferred by
contract merely but by tradition or delivery. Contracts
only constitute titles or rights to the transfer or
acquisition of ownership, while delivery or tradition is
the mode of accomplishing the same (Gonzales v. Rojas,
16 Phil. 51; Ocejo, Perez and Co. v. International Bank,
37 Phil. 631, Fidelity and Deposit Co. v. Wilson, 8 Phil.
51; Kuenzle & Streiff v. Wacke & Chandler, 14 Phil. 610;
Easton v. Diaz Co., 32 Phil. 180).
For the legal acquisition and transfer of
ownership and other property rights, the thing
transferred must be delivered, inasmuch as,
according to settled jurisprudence, the tradition
of the thing is a necessary and indispensable
requisite in the acquisition of said ownership by
virtue of contract. (Walter Laston v. E. Diaz &
Co. & the Provincial Sheriff of Albay, supra.)
So long as property is not delivered, the
ownership over it 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 as in the common law. (U.S. v. Sotelo, 28 Phil.
law. (Gonzales v. Roxas, 16 Phil. 51) 147)

In the case on hand, the car in question was never
delivered to the vendee by the vendor as to complete or
consummate the transfer of ownership by virtue of the
contract. It should be recalled that while there was
indeed a contract of sale between Vicente Marella and
Teodoro Santos, the former, as vendee, took possession
of the subject matter thereof by stealing the same while
it was in the custody of the latter's son.
There is no adequate evidence on record as to whether
Irineo Santos voluntarily delivered the key to the car to
the unidentified person who went with him and L. De
Dios to the place on Azcarraga where a sister of Marella
allegedly lived. But even if Irineo Santos did, it was not
the delivery contemplated by Article 712 of the Civil
Code. For then, it would be indisputable that he turned
it over to the unidentified companion only so that he
may drive Irineo Santos and De Dios to the said place on
Azcarraga and not to vest the title to the said vehicle to
him as agent of Vicente Marella. Article 712 above
contemplates that the act be coupled with the intent of
delivering the thing. (10 Manresa 132)
Finally, the plaintiff-appellant here contends that
inasmuch as it was the intervenor-appellee who had
caused the fraud to be perpetrated by his misplaced
confidence on Vicente Marella, he, the intervenor-
appellee, should be made to suffer the consequences
arising therefrom, following the equitable principle to
that effect. Suffice it to say in this regard that the right
of the owner to recover personal property acquired in
good faith by another, is based on his being dispossessed
without his consent. The common law principle that
where one of two innocent persons must suffer by a
fraud perpetrated by another, the law imposes the loss
upon the party who, by his misplaced confidence, has
enabled the fraud to be committed, cannot be applied in
a case which is covered by an express provision of the
new Civil Code, specifically Article 559. Between a
common law principle and a statutory provision, the
latter must prevail in this jurisdiction. (Cruz v.
Pahati, supra)
UPON ALL THE FOREGOING, the instant appeal is hereby
dismissed and the decision of the lower court affirmed in full.
Costs against the appellant.

The lower court was correct in applying Article 559 of

the Civil Code to the case at bar, for under it, the rule is
to the effect that if the owner has lost a thing, or if he
has been unlawfully deprived of it, he has a right to
recover it, not only from the finder, thief or robber, but
also from third persons who may have acquired it in
good faith from such finder, thief or robber. The said
article establishes two exceptions to the general rule of
irrevindicability, to wit, when the owner (1) has lost the
thing, or (2) has been unlawfully deprived thereof. In
these cases, the possessor cannot retain the thing as
against the owner, who may recover it without paying
any indemnity, except when the possessor acquired it in
a public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela
v. Finnick, 9 Phil. 482; Varela v. Matute, 9 Phil. 479;
Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p.
261.)

In the case of Cruz v. Pahati, et al., 52 O.G. 3053 this

Court has already ruled
that

Under Article 559 of the new Civil Code, a

person illegally deprived of any movable may
recover it from the person in possession of the
same and the only defense the latter may have is
if he has acquired it in good faith at a public
sale, in which case, the owner cannot obtain its
return without reimbursing the price paid
therefor. In the present case, plaintiff has been FIRST DIVISION
illegally deprived of his car through the G.R. No. 83432 May 20, 1991
ingenious scheme of defendant B to enable the RADIOWEALTH FINANCE COMPANY, petitioner,
vs.
latter to dispose of it as if he were the owner
MANUELITO S. PALILEO, respondent.
thereof. Plaintiff, therefore, can still recover
possession of the car even if it is in the GANCAYCO, J.:
possession of a third party who had acquired it
in good faith from defendant B. The maxim that If the same piece of land was sold to two different purchasers,
"no man can transfer to another a better title to whom shall ownership belong? Article 1544 of the Civil Code
than he had himself" obtains in the civil as well provides that in case of double sale of an immovable property,
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. There is
no ambiguity regarding the application of the law with respect
to lands registered under the Torrens System. Section 51 of
Presidential Decree No. 1529 (amending Section 50 of Act No.
496 clearly provides that the act of registration is the operative
act to convey or affect registered lands insofar as third persons
are concerned. Thus, a person dealing with registered land is
not required to go behind the register to determine the condition
of the property. He is only charged with notice of the burdens
on the property which are noted on the face of the register or
certificate of title. 1 Following this principle, this Court has time
and again held that a purchaser in good faith of registered land
(covered by a Torrens Title) acquires a good title as against all
the transferees thereof whose right is not recorded in the
registry of deeds at the time of the sale. 2
The question that has to be resolved in the instant petition is
whether or not the rule provided in Article 1544 of the Civil
Code as discussed above, is applicable to a parcel of
unregistered land purchased at a judicial sale. To be more
specific, this Court is asked to determine who, as between two
buyers of unregistered land, is the rightful ownerthe first
buyer in a prior sale that was unrecorded, or the second buyer
who purchased the land in an execution sale whose transfer
was registered in the Register of Deeds.
The facts as found by the Court of Appeals are as follows:
On April 13, 1970, defendant spouses Enrique Castro and
Herminia R. Castro sold to plaintiff-appellee Manuelito Palileo
(private respondent herein), a parcel of unregistered coconut land
situated in Candiis, Mansayaw, Mainit, Surigao del Norte. The
sale is evidenced by a notarized Deed of Absolute Sale (Exh. "E").
The deed was not registered in the Registry of Property for
unregistered lands in the province of Surigao del Norte. Since the
execution of the deed of sale, appellee Manuelito Palileo who was
then employed at Lianga Surigao del Sur, exercised acts of
ownership over the land through his mother Rafaela Palileo, as
administratrix or overseer. Appellee has continuously paid the
real estate taxes on said land from 1971 until the present (Exhs.
"C" to "C-7", inclusive).
On November 29, 1976, a judgment was rendered against
defendant Enrique T. Castro, in Civil Case No. 0103145 by the
then Court of First Instance of Manila, Branch XIX, to pay herein
defendant-appellant Radiowealth Finance Company (petitioner
herein), the sum of P22,350.35 with interest thereon at the rate of
16% per annum from November 2, 1975 until fully paid, and the
further sum of P2,235.03 as attorney's fees, and to pay the costs.
Upon the finality of the judgment, a writ of execution was issued.
Pursuant to said writ, defendant provincial Sheriff Marietta E.
Eviota, through defendant Deputy Provincial Sheriff Leopoldo
Risma, levied upon and finally sold at public auction the subject
land that defendant Enrique Castro had sold to appellee
Manuelito Palileo on April 13,1970. A certificate of sale was
executed by the Provincial Sheriff in favor of defendant- appellant
Radiowealth Finance Company, being the only bidder. After the
period of redemption has (sic) expired, a deed of final sale was
also executed by the same Provincial Sheriff. Both the certificate
of sale and the deed of final sale were registered with the Registry
of Deeds. 3
Learning of what happened to the land, private respondent
Manuelito Palileo filed an action for quieting of title over the
same. After a trial on the merits, the court a quo rendered a
decision in his favor. On appeal, the decision of the trial court
was affirmed. Hence, this petition for review on certiorari.
In its petition, Radiowealth Finance Company presents the
following errors:
1. THE COURT OF APPEALS ERRED IN NOT FINDING THAT
THE DEED OF ABSOLUTE SALE (EXHIBIT B) ALLEGEDLY
EXECUTED BY ENRIQUE CASTRO IN FAVOR OF APPELLEE
MANUELITO PALILEO, WAS SIMULATED OR FICTITIOUS.
2. THE COURT OF APPEALS ERRED IN NOT FINDING
APPELLEE MANUELITO PALILEO AS ADMINISTRATOR ONLY
OF THE DISPUTED PROPERTY; AND
3. THE COURT OF APPEALS ERRED IN NOT FINDING
DEFENDANT-APPELLANT RADIOWEALTH FINANCE COMPANY
OWNER OF THE DISPUTED PROPERTY BY REASON OF THE
CERTIFICATE OF SALE AND THE DEED OF FINAL SALE
WHICH WERE ALL REGISTERED IN THE REGISTER OF
DEEDS, HENCE, SUPERIOR TO THAT OF THE DEED OF SALE
IN POSSESSION OF MANUELITO PALILEO, FOR BEING NOT
REGISTERED. 4
As regards the first and second assigned errors, suffice it to
state that findings of fact of the Court of Appeals are conclusive
on this Court and will not be disturbed unless there is grave
abuse of discretion. The finding of the Court of Appeals that the
property in question was already sold to private respondent by
its previous owner before the execution sale is evidenced by a
deed of sale. Said deed of sale is notarized and is presumed
authentic. There is no substantive proof to support petitioner's
allegation that the document is fictitious or simulated. With this
in mind, We see no reason to reject the conclusion of the Court
of Appeals that private respondent was not a mere
administrator of the property. That he exercised acts of
ownership through his mother also remains undisputed.
Going now to the third assigned error which deals with the
main issue presented in the instant petition, We observe that
the Court of Appeals resolved the same in favor of private
respondent due to the following reason; what the Provincial
Sheriff levied upon and sold to petitioner is a parcel of land that
does not belong to Enrique Castro, the judgment debtor, hence
the execution is contrary to the directive contained in the writ
of execution which commanded that the lands and
buildings belonging to Enrique Castro be sold to satisfy the
execution. 5
There is no doubt that had the property in question been a
registered land, this case would have been decided in favor of
petitioner since it was petitioner that had its claim first recorded
in the Registry of Deeds. For, as already mentioned earlier, it is
the act of registration that operates to convey and affect
registered land. Therefore, a bona fide purchaser of a registered
land at an execution sale acquires a good title as against a prior
transferee, if such transfer was unrecorded.
However, it must be stressed that this case deals with a parcel
of unregistered land and a different set of rules applies. We
affirm the decision of the Court of Appeals.
Under Act No. 3344, registration of instruments affecting
unregistered lands is "without prejudice to a third party with a
better right". The aforequoted phrase has been held by this
Court to mean that the mere registration of a sale in one's favor
does not give him any right over the land if the vendor was not
anymore the owner of the land having previously sold the same
to somebody else even if the earlier sale was unrecorded.
The case of Carumba vs. Court of Appeals 6 is a case in point. It
was held therein that Article 1544 of the Civil Code has no
application to land not registered under Act No. 496. Like in the
case at bar, Carumba dealt with a double sale of the same
unregistered land. The first sale was made by the original
owners and was unrecorded while the second was an execution
sale that resulted from a complaint for a sum of money filed
against the said original owners. Applying Section 35, Rule 39
of the Revised Rules of Court, 7 this Court held that Article
1544 of the Civil Code cannot be invoked to benefit the
purchaser at the execution sale though the latter was a buyer in
good faith and even if this second sale was registered. It was
explained that this is because the purchaser of unregistered
land at a sheriffs execution sale only steps into the shoes of the
judgment debtor, and merely acquires the latter's interest in the
property sold as of the time the property was levied upon.
Applying this principle, the Court of Appeals correctly held that
the execution sale of the unregistered land in favor of petitioner
is of no effect because the land no longer belonged to the
judgment debtor as of the time of the said execution sale.
WHEREFORE, in view of the foregoing, the decision of the Court
of Appeals in CA-G.R. CV No. 10788 is hereby AFFIRMED. No
costs.
SO ORDERED.
SECOND DIVISION
G.R. No. 77423 March 13, 1989
SPOUSES DIOSDADO NUGUID AND MARIQUETA
VENEGAS, petitioners,
vs.
COURT OF APPEALS, AMORITA GUEVARRA, TERESITA
GUEVARRA, NARCISO GUEVARRA, MARCIANA DELA ROSA,
BERNABE BUENAVENTURA, AND JULIETA
BUENAVENTURA, respondents.
Jose F. Mahacop for petitioners.
Ramon L. Ortega for private respondents.
SARMIENTO, J.:
This petition seeks the reversal of the decision of the Court of
Appeals declaring the private respondents owners of one-half
portion of the property subject of this case.
The petitioners were the defendants in a suit commenced by the
private respondents before the Court of First Instance (now
Regional Trial Court) of Bataan. 1 The antecedent facts may be
summarized as follows:
The deceased spouses Victorino and Crisanta dela Rosa
were the registered owners of a parcel of land with an
area of 231 square meters, situated in Orani Bataan,
and covered by original Certificate of Title No. 3778. On
or about May 4, 1931, Victorino dela Rosa (widowed by
then) sold one-half of the said property to Juliana
Salazar for P 95.00. This sale, though evidenced by a
document, 2 was not registered. Immediately after the
sale, Juliana Salazar constructed a house on the lot she
purchased.
On March 10, 1964, petitioner spouses (defendants
below) caused the registration of a document entitled
"Kasulatan ng Partihan at Bilihan"' (hereinafter referred
to as Exhibit "D"), 3 dated June 6, 1961. In this
document, Marciana dela Rosa (who is among the
private respondents), Victoria Buenaventura, Ernesto
Buenaventura, Virgilio Buenaventura, and Felicisimo
Buenaventura-all heirs of Victorino and Crisanta dela
Rosa- sold to the petitioners the entire area of the
property abovementioned for the sum of P 300.00.
Subsequently, OCT No. 3778 was cancelled by the
Register of Deeds of Bataan, and Transfer Certificate of
Title No. T-12782 was issued in the names of the
petitioners.
The private respondents claim that Exhibit "D" is a
forged deed in that: 1) the signature of Marciana dela
Rosa appearing therein is a forgery; 2) it is not true that,
as stated in the deed, Luisa dela Rosa (sister of
Marciana), at the time of her death, was a widow; 3)
none of the heirs-signatories to the deed received any
consideration for the supposed sale; and 4) Luisa dela
Rosa is survived not only by four, but by five children
(the fifth child, respondent Julieta Buenaventura, was
not mentioned in the deed).
The private respondents allegedly discovered the forged
deed as well as the certificate of title in the name of the
petitioners much later, that is, on February 28, 1978,
when respondents Amorita Guevarra and Teresita
Guevarra thought of having the title of their grandmother
Juliana Salazar, registered.
On the other hand, the petitioners assert that sometime in the
latter part of 1960, the land subject of this case was offered to
them for sale by Nicolas dela Rosa, uncle of respondent
Marciana dela Rosa and grandfather of the other heirs-
signatories to Exhibit "D". Apparently, Nicolas dela Rosa
claimed that he had already purchased the shares of the heirs
over the subject property as evidenced by a private document
entitled "Kasunduan" (hereinafter referred to as Exhibit "6")
dated August 31, 1955; as a matter of fact, he had in his
possession the original certificate of title covering the property
in the name of the deceased Victorino and Crisanta dela Rosa.
He promised, however, that he would arrange for a direct sale to
be made by the heirs in favor of the petitioners. Consequently,
Exhibit "D" as mentioned earlier, was executed. The petitioners
stress that even before they decided to buy the subject property,
they made an ocular inspection thereof and questioned the
occupants therein to verify its real ownership. They underscore
the fact that the persons whom they found occupying the
property did not at all assert adverse ownership over the same.
The trial court rendered judgment dismissing the complaint
filed by the private respondents, but on appeal, this was
reversed by the Court of Appeals. 4 To quote the dispositive
portion of the appellate court's decision:
WHEREFORE, finding the decision of the
lower court to be with reversible error the
decision dated May 1, 1982 is hereby ordered
REVERSED and a new one entered declaring
plaintiffs to be owners of 115.5 square meters
of Lot 678. Defendants are hereby ordered to
execute a deed of reconveyance in favor of
plaintiffs over the said area within thirty (30)
days from the finality of this decision,
otherwise, the Register of Deeds will be
ordered to execute one in favor of the
plaintiffs. With costs against the defendants
plus attorney's fees in the amount of P
500.00.
SO ORDERED. 5
From the foregoing, this petition for review was filed.
We find merit in the petition.
From the start, the respondent court erred in treating the
private respondents as though they all belong to one group of
heirs whose right is derived from one ancestor, when actually,
the private respondents should be categorized into two groups.
To one group belong the respondents Amorita, Teresita and
Narcism, all surnamed Guevarra. As children of Pedro Guevarra
and Pascuala Tolentino, and grandchildren of Juliana Salazar,
they claim to have succeeded to the ownership over the onehalf
portion of land which was sold to Juliana Salazar. The
remaining private respondents, Marciana dela Rosa, Bernabe
Buenaventura, and Julieta Buenaventura, make up the second
group of heirs who claim to have derived, by succession, their
ownership over the other half of the subject property from their
predecessors-in-interest, the original registrants, Victorino and
Crisanta dela Rosa.
Analyzing the case before us in this manner, we can
immediately discern another error in the decision of the
respondent court, which is that said court, with absolutely no
basis, sweepingly adjudged all of the respondents co-owners of
one-half of the subject property. Clearly, it was a glaring error
for the Court of Appeals to have so ruled because as a matter of
fact, the respondent heirs of Victorino dela Rosa were claiming a
half of the entire property which is separate and distinct from
the other half claimed by the respondents Guevarras. 6
Surprisingly, none of the private respondents appealed the
above decision of the Court of Appeals. Consequently, they are
deemed to have accepted the said erroneous decision declaring
them, collectively, owners of one-half of the subject property. In
effect, only this portion of the Property is being presently
disputed by the contending parties. As regards the other
onehalf portion, it is now settled (by virtue of the private
respondents' acceptance of the Court of Appeals decision) that
the same is the property of the petitioners.
Insofar as the respondent heirs of Victorino dela Rosa are
concerned, undoubtedly they are not entitled to any portion of
the disputed property. Respondent Marciana dela Rosa is bound
by her signature appearing on Exhibit "D". This public
document evidencing the sale of the subject property to the
petitioners was executed with all the legal formalities of a public
document, to wit:
The "Kasulatan ng Partihan at Bilihan"
(Exhibit D, Exhibit 1) was duly witnessed by
Ricardo L. Santos and Pablo R.
Buenaventura, proven to be relatives both of
Marciana dela Rosa and the Buenaventuras
who were then at the municipal building of
Orani Bataan, when the '"Kasulatan ng
Partihan at Bilihan" was notarized by
Fernando J. Rivera, Justice of the peace of
Orani Bataan, in his capacity as ex
officio notary public. It should be noted that
all the parties were from Orani Bataan, and
the notary public, who notarized the
document, was the justice of the peace of
Orani Bataan, acting in his capacity as ex
officio notary public. 7
Indeed, the legal presumption of the regularity of the above
notarized contract was not rebutted successfully. The courts
below were one in concluding that the alleged forgery of
respondent Marciana dela Rosa's signature was not proven.
Likewise, the private respondents' allegation of absence of
consideration of the contract was not substantiated. Under Art.
1354 of the Civil Code, it is presumed that consideration exists
and is lawful, unless the debtor proves the contrary. 8
Noteworthy is the fact that of the five heirs who signed Exhibit
"D", only one, the respondent Marciana dela Rosa, impugned its
genuineness and due execution, as well as the authenticity of
her signature thereon; and she alone joined the other
respondents in this suit.
In the case of the respondents Bernabe Buenaventura and
Julieta Buenaventura, the trial court correctly declared that:
... With his signature appearing in the
"Kasulatan" 9 (Exhibit 6) and his affirmation
that his wife, Luisa dela Rosa, who was a
sister of Marciana dela Rosa and also a
daughter of Victorino dela Rosa and Crisanta
dela Cruz, had sold her share of Lot No. 678
to Nicolas dela Rosa, plaintiff Bernabe
Buenaventura could no longer be heard to
complain. And if, plaintiff Julieta
Buenaventura were prejudiced, her logical
recourse would be to go after her own kin. 10
Since no evidence was introduced on the point, the trial court
surmised that respondent Julieta Buenaventura was probably a
minor at the time of signing of Exhibits "D" and "6".
It must be noted that although respondent Bernabe
Buenaventura disowned his signature on Exhibit "6", there was
no effort on his part to prove such claim. Forgery cannot be
presumed. It must be proved. 11
At any rate, the question of whether or not the abovementioned
signatures were forged would become irrelevant if, on the other
hand, the petitioners are able to establish that they acquired
the subject property in good faith. For, indeed, an innocent
purchaser for value is protected such that when land has
already passed into the hands of an innocent purchaser for
value, reconveyance of the same can no longer be made.12
On the other hand, the claimed ownership of the respondent
heirs of Pedro and Pascuala Guevarra over the property is
anchored on the prior sale thereof to their grandmother, Juliana
Salazar. The situation, in effect, is that contemplated by Article
1544 of the Civil Code, 13 a double sale. Parenthetically,
although the second sale (to the petitioners herein) was made
by the heirs of the deceased Victorino dela Rosa, the said heirs
are deemed the judicial continuation of the personality of the
decedent.14 Essentially, therefore, the first and second sales
were made by the same person, as envisioned under Article
1544 of the Civil Code, quoted earlier (footnote No. 13). The
disputed property being immovable property, the ownership
should belong to the vendee who in good faith first recorded it
in the Registry of Property, pursuant to the same article.
It is an established fact that the first sale to Juliana Salazar
was not registered while the sale to the petitioners was
registered. However, it is contended by the respondents
Guevarras that they have a better right as against the
petitioners because the element of good faith was lacking as
regards the latter.
Whether or not there was good faith in the purchase of the land
and in the subsequent registration of title acquired in the
Registry of Property is, therefore, the central issue in this case.
We agree with the trial court's finding that the petitioners are
purchasers in good faith.
The Original Certificate of Title No. 3778 covering the entire
property was clean and free from any annotation of an
encumbrance, 15 and there was nothing whatsoever to indicate
on its face any vice or infirmity in the title of the registered
owners-the spouses Victorino and Crisanta dela Rosa. Thus,
the petitioners could not have known of the prior sale to Juliana
Salazar as, precisely, it was not registered. The general rule is
that if the property sold is registered land, the purchaser in
good faith has a right to rely on the certificate of title and is
under no duty to go behind it to look for flaws.16 This'
notwithstanding, the petitioners did not rely solely upon the
certificate of title. They personally inspected the subject
property. Undeniably, they found the same to be occupied by
two houses, one belonging to a certain Doray dela Rosa and the
other to spouses Pedro Guevarra and Pascuala Tolentino,
parents of the respondents Guevarras. Upon being informed of
the petitioners' desire to purchase the land, Doray dela Rosa
apparently offered to sell her house, which offer was accepted
by the petitioners. As regards the spouses Guevarra, we find no
reason to disturb the trial court's finding that they themselves
requested that they be allowed to refrain on the property until
such time that the petitioners would need the entire premises;
and in lieu of rentals to the petitioners, they offered to continue
paying the real estate taxes for one-half of the property as this
was their arrangement with the previous owners-to which
request the petitioners acceded.17 Evidently, neither Doray dela
Rosa nor the spouses Guevarra professed ownership over the
portions of land they were occupying; on the contrary, by their
actuations they expressly acknowledged that they were not the
real owners of the said property. The spouses Guevarra, in
particular, made no mention of the prior unregistered sale to
their predecessor-in-interest, Juliana Salazar. Thus, when the
petitioners registered the sale in their favor with the Register of
Deeds, they did so without any knowledge about the prior sale
in favor of Juliana Salazar. The petitioners, therefore, had acted
in good faith.
The basis for the Court of Appeals' conclusion that petitioners
were buyers in bad faith is, to say the least, ambiguous. Said
court appears to have relied on the singular circumstance that
the petitioners are, like the respondents, from Orani Bataan,
and as such, according to the court, they should have
personally known that the private respondents were the persons
in actual possession and not Doray dela Rosa and Pedro
Guevarra. The respondent court's premise, therefore, is that the
private respondents were the actual occupants of the property.
There is, however, nothing in the record to sustain the validity
of the above premise. At the time of the purchase, the
petitioners dealt with Pedro Guevarra and Pascuala Tolentino,
the latter being the actual occupants. The respondents
Guevarras children of the said Pedro and Pascuala Guevarra,
came into the picture only after their parents died. As for the
respondent heirs of Victorino dela Rosa, their being in actual
possession of any portion of the property was, likewise, simply
presumed or taken for granted by the Court of Appeals.
The private respondents can not honestly claim that they
became aware of the petitioners' title only in 1978. Ever since
the petitioners bought the property in 1961, they have occupied
the same openly, publicly, and continuously in the concept of
owners, even building their house thereon. For seventeen years
they were in peaceful possession, with the respondents
Guevarras occupying less than one-half of the same property. If
the petitioners are mere usurpers, why did the private
respondents complain only now? Moreover, they have not
bothered to explain in what capacity are the petitioners
occupying the land, if not as legal owners. Consequently, we are
more inclined to accept the petitioners' explanation that the
private respondents have initiated this suit because of their (the
petitioners') refusal to sell to the respondents Guevarras that
portion of the land which the latter are occupying, coupled with
the petitioners' demand for the said private respondents to
vacate the same.
Anent the other issues raised in the petition, these do not need
further discussion, being merely subordinate to the main issue
of good faith.
WHEREFORE, the petition is GRANTED. The decision of the
Court of Appeals is SET ASIDE, and that of the Court of First
Instance (now Regional Trial Court) of Bataan, Branch I is
hereby REINSTATED.
Costs against the private respondents.
SO ORDERED.