sales session8&9

8/12/2019 Sales Session8&9

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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 fordefendant-appellant.

BAUTISTA ANGELO, J.:

On May 3, 1955, Perfecto A. Tabora bought from the Lawyers Cooperative PublishingCompany one complete set of American Jurisprudence consisting of 48 volumes with1954 pocket parts, plus one set of American Jurisprudence, General Index, consistingof 4 volumes, for a total price of P1,675.50 which, in addition to the cost of freight ofP6.90, 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 byTabora 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 whichdestroyed 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 asabove stated, together with Tabora's important documents and papers, were burnedduring the conflagration. This unfortunate event was immediately reported by Taborato the company in a letter he sent on May 20, 1955. On May 23, the company repliedand as a token of goodwill it sent to Tabora free of charge volumes 75, 76, 77 and78 of the Philippine Reports. As Tabora failed to pay he monthly installments agreedupon on the balance of the purchase price notwithstanding the long time that hadelapsed, 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 Instanceof Manila for the recovery of the balance of the obligation. Plaintiff also prayed thatdefendant be ordered to pay 25% of the amount due as liquidated damages, and thecost of action.

Defendant, in his answer, pleaded force majeureas a defense. He alleged that thebooks bought from the plaintiff were burned during the fire that broke out in NagaCity on May 15, 1955, and since the loss was due to force majeurehe cannot be heldresponsible for the loss. He prayed that the complaint be dismissed and that he beawarded moral damages in the amount of P15,000.00.

After due hearing, the court a quorendered judgment for the plaintiff. It ordered thedefendant to pay the sum of P1,382.40, with legal interest thereon from the filing ofthe complaint, plus a sum equivalent to 25% of the total amount due as liquidateddamages, and the cost of action.

Defendant took the case to the Court of Appeals, but the same is now before us by

virtue of a certification issued by that Court that the case involves only questions oflaw.

Appellant bought from appellee one set of American Jurisprudence, including one setof 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 purchaseprice shall have been fully paid. Loss or damage to the books after delivery to thebuyer shall be borne by the buyer." The total price of the books, including the cost offreight, amounts to P1,682.40. Appellant only made a down payment of P300.00thereby leaving a balance of P1,382.40. This is now the import of the present actionaside from liquidated damages.

Appellant now contends that since it was agreed that the title to and the ownershipof the books shall remain with the seller until the purchase price shall have been fullypaid, 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 borneby the owner. Moreover, even assuming that the ownership of the books weretransferred to the buyer after the perfection of the contract the latter should notanswer for the loss since the same occurred throughforce majeure. Here, there is noevidence that appellant has contributed in any way to the occurrence of theconflagration.1wph1.t

This contention cannot be sustained. While as a rule the loss of the object of thecontract 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 ruledoes not here obtain because the law on the contract entered into on the matterargues against it. It is true that in the contract entered into between the parties theseller agreed that the ownership of the books shall remain with it until the purchaseprice shall have been fully paid, but such stipulation cannot make the seller liable incase of loss not only because such was agreed merely to secure the performance bythe 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 thebuyer." Any such stipulation is sanctioned by Article 1504 of our Civil Code, which inpart provides:

(1) Where delivery of the goods has been made to the buyer or to a bailee for thebuyer, 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 obligationsunder 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 destroyedby fire without any fault on his part he should be relieved from the resultantobligation under the rule that an obligor should be held exempt from liability whenthe loss occurs thru a fortuitous event. This is because this rule only holds true whenthe obligation consists in the delivery of a determinate thing and there is nostipulation holding him liable even in case of fortuitous event. Here thesequalifications 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 thedelivery 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 therule provided for in Article 1262 of our Civil Code.


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Appellant likewise contends that the court a quo erred in sentencing him to payattorney's fees. This is merely the result of a misapprehension for what the court aquoordered appellant to pay is not 25% of the amount due as attorney's fees, but asliquidated damages, which is in line with an express stipulation of the contract. Webelieve, however, that the appellant should not be made to pay any damagesbecause 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 portionwhich refers to liquidated damages. No costs.

Bengzon, C.J., Concepcion, Barrera, Paredes, Dizon, Regala, Makalintal, Bengzon,J.P., and Zaldivar, JJ., concur. Reyes, J.B.L., J., concurs in the result.


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We have therefore to decided who was to owner of the abaca carried on board theBais when it was wrecked, and who is entitled to collect the insurances on thatabaca.

The question resolves itself into an interpretation of the contract entered intobetween the parties (Exhibit B, PP. 60 and 61 of the record), which gave rise to thecommercial relations between Manuela Perez Lim Jocsing of Malitbog, Leyte, and thefirm of F.M. Yaptico of Cebu., This contract, which is written in Chinese characters,

was executed about the years 1909 by the said Lim Jocsing in favor of the firm F.M.Yaptico, or Chiat Seng, and by virtue thereof the defendant opened for him in itsbooks an account current and at the same time extended to him a credit of P15,000to be employed in the purchase of abaca and copra, which was his principal businessin the Island of Leyte, Jim Jocsing guaranteeing said credit with the business he hadestablished.

In the said contract appears the stipulation, among other things, that all the abacaand copra which Lim Jocsing might secure should to be delivered to the defendant

Yaptico and the value thereof should be credited on the shipper's account, said LimJocsing obligating himself to ship these article only Yaptico's steamers and to pay thelatter the freight charge set forth in the contract. Lim Jocsing bound himself to send

and deliver to Yaptico at least 10,000 piculs of abaca annually, but no quantity ofcopra was fixed, and if the abaca secured did not amount to 10,000 piculs he wouldpay the difference, and he obligated himself to pay to the defendant a commission of20 centavos for each picul sent; but the warehouse charges, fire insurance, andother expenses the abaca might occasion while it was stored in Cebu would be forthe account of the shipper Lim Jocsing. IN the forth paragraph it was agreed thatwhenever Yaptico should send a steamer to Lim Jocsing to get the abaca and coprahe would also furnish the latter money and merchandise in value approximating theamount of abaca and copra delivered. The fifth paragraph of the contract readsliterally: "The abaca and copra that I may deliver to be received on board by hisagent shall be for the account of Yaptico,. except in case I should otherwiseexpressly provide in writing."

In the remaining paragraph it was agreed how the account should be liquidated andthe debt paid to Yaptico.

Plaintiff claims that all the abaca and copra delivered and loaded upon Yaptico'ssteamer and sent to him in Cebu belonged to Lim Jocsing, who forwarded them inorder that the defendant might sell them on commission, not only because the

Yaptico firm is a commission firm and this kind of transactions form a large part of itsbusiness, but also from the context of the said contract (Exhibit B) it appears thatLim Jocsing could pay a commission of 20 centavos to Yaptico for each picul of abacaor copra sent to the latter; that these articles of merchandise should be shipped only

in the defendant's steamers at the freight rates stipulated; that furthermore said LimJocsing obligated himself to bear the expenses of storage, insurance, etc., upon the

goods while they were stored in Cebu; and therefore the defendant Yaptico had onvarious occasions telegraphed to Lim Jocsing in Malitbog the price quoted for abacaand copra in the Cebu market and at other times communicated to him by telegraphthe sales of his abaca or copra, giving the grade of the article, the selling price andthe buyer's name (Exhibit 16, p.47; Exhibit 17, p.49; Exhibit 20, p. 50; and Exhibit25, p. 53).

Finally, the plaintiff Lizardi produced in evidence various documents he had found

among the papers belonging to the deceased Lim Jocsing, some of which areinvoices for goods sent him by the defendant Yaptico; various extracts from LimJocsing's account current, which under the contract (Exhibit B) the defendant senthim monthly, in which extract Lim Jocsing is credited with the value of the sales ofcopra and abaca (Exhibit 6, 7, 8, and 12, ); some statements of sale of abaca sent toLim Jocsing by the defendant showing he quantity, grade, price, and buyer's name(Exhibits 9, 10, and 11). All these documents are drawn up in Chinese, but heircorresponding translations into Spanish are attached are attached to the originals. Inthe said statement of sale it appears that Lim Jocsing paid the expenses of the abacasold in Cebu, consisting of freight charges, drying, insurance, internal-revenue tax,and defendant's commission, expenses that by the terms of the contract (Exhibit B)Lim Jocsing was obligated to meet.

It is now alleged by the plaintiff that in view of these facts the conclusions isinevitable that the abaca which Lim Jocsing sent to the defendant Yaptico for sale oncommission did not become the latter's property, but continued to belong to the saidLim Jocsing and the trial; court so held.

Defendant maintains that by the clear and explicit terms of the fifth paragraph of thecontract (Exhibit B) it is understood without any effort whatsoever that all abacashipped and delivered on board his steamers became his property, unless LimJocsing expressly provided otherwise in writing. It cannot be denied that Lim Jocsingdid not expressly provided in writing for the equipment of the abaca that he deliveredon board the steamer Bais on October 13, 1912, according to the agreement. hemerely delivered it to the steamer's supercargo, without providing in writing for thedisposition of the abaca in a special manner under the terms of the contract.

The witness Benito Tan Unchuan, who examined the Spanish translation of thecontract Exhibit B, at the request of plaintiff's counsel, affirmed that it is faithful andexact. The fifth paragraph of this contract sets forth in a clear and positive manner,without leaving room for any reasonable doubt, that the intention of the contractingparties was that the abaca and copra which should be delivered and received onboard the defendant's steamers would be on account - that is to say, on account andat the risk of Yaptico, unless Lim Jocsing otherwise expressly provided in writing. It isclear that the merchandise which was shipped on defendant's account and ta his risk

would be in his charge and under his responsibility, because once received it becamehis property; and in case of loss, as has occurred, the defendant would be the only


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one prejudiced as the owner thereof.

Upon this understanding of the contract the parties had dealing during the three offour years they maintained commercial relations, for the manager of the Yaptico firmasserted that whenever Lim Jocsing had abaca or copra to forward, he sent himmoney and goods for a value equal to that of said merchandise which Lim Jocsingwas to receive and the latter obligated were made with money of the defendant, andfor these reasons he had an agent, named Go Tiu, who at the same time was the

supercargo of the shipper Lim Jocsing (sten. notes, p. 23). In fact, the insurancepolicies, Exhibit E, F, and G, demonstrate that in the months of February, April, andMay, 1912, Lim Jocsing insured in his own name certain shipments of abaca andcopra forwarded to the defendant in Cebu to be sold by him and these must havebeen acquired by Lim Jocsing with his own money; but the other policies, Exhibit Hand I, must undoubtedly have been for the insurance of the abaca and copracollected and acquired with money of the defendant, for they were issued in favor ofChiat Seng - that is, the defendant.

It is, therefore fact proven that, under clause 5 of the contract before mentioned,under the terms of which the contracting parties acted, the abaca and copradelivered by Lim Jocsing on board the steamer Bias for the defendant became the

latter's property, nor can the plaintiff be permitted to maintain a different theoryfrom that which clearly and indisputably appears in the fifth paragraph of thecontract, Exhibit B, for it is provided in article 1281 of the Civil Code that:

When the terms of an obligation stated in a written contract are clear and leave noroom for doubt, the plaint meaning of the wording thereof should be observed, it notbeing lawful to include therein things and cases different from those which theinterested parties intended to contract for. (Azarraga vs. Rodriquez, 9 Phil. Rep.,637.)

Persons who enter into a contract which is not contrary to law, to good morals, or topublic policy are bound by the terms of their agreement. (Santos vs. Marquez, 13Phil., Rep. 207; Alcantara vs. Alinea, 8 Phil. Rep., 11; Icaza vs. Perz, 5 Phil. Rep.,166.)

Moreland, in the first paragraph it was stipulated that, when Lim Jocsing sent hisproducts to the defendant the latter was to credit the former's account with the valueof the abaca and copra forwarded. Hence it follows that upon receiving the goodsand crediting Lim Jocsing's account current with the value thereof the defendantmade himself the real owner of the merchandise delivered and therefore had a rightto protect his interests by insuring it as he did. If the abaca lost in the wrecking ofthe Bais had not been insured, upon whom would the loss fallen? Under the

paragraph of the contract cited, Lim Jocsing would not have lost the value of theabaca because upon receipt of the goods on board the steamer the defendant had to

place the value thereof to the credit of Lim Jocsing, and whether the shipmentarrived at Cebu or not its value was already entered on his account, wherefore theone who would have suffered the loss in that case would have been the defendant;but as he insured it in his name and on his account to provided against accident andas the abaca belonged to him, it is just that he collect the value of the insurancethereon.

True it is that Lim Jocsing was on board the Bais with the abaca in question when it

was lost; and that when he was going in person to Cebu with his abaca, theshipment was his own money; but it is not proven in the record that Lim Jocsing haddisposed by letter of the abaca which disappeared, the value whereof was Yaptico'sand therefore once delivered on board the steamer to the supercargo, according tothe fifth paragraph of the contract, the abaca should be regarded as sold to Yapticoand as belonging to him, with the value of the insurance.

This theory is in conformity with the terms of the contract and is reasonable, forwhen the defendant extended credit to Lim Jocsing he furnished him in cash the sumof P15,000 and, furthermore, obligated himself to send money and goods ofapproximately the same value as the abaca and copra he should receive from LimJocsing, so that the latter might secure more, thus furnishing in advance the value of

the goods which Lim Jocsing obligated himself to deliver to the party who wasfurnishing him in advance the value of the shipment, and these goods, consisting ofcopra and abaca, forwarded and delivered to the agent of the defendant, became thereimbursement or payment of the sum advanced; wherefore it is only just that thedefendant, as owner of the money or of the value of the shipment, should beregarded as the owner thereof and consequently of the insurance, the premiums onwhich he had paid.

Plaintiff argues that it is ridiculous and in conflict with the other clauses of the saidcontract, Exhibit B, to suppose that the abaca and copra shipped on the defendant'ssteamer would be his property and yet that Lim Jocsing should be obligated to paythe freight charges, insurance, storage, and other expenses, for if Lim Jocsing hadnot been the owner of said article then he would not have been obligated to bearthose expenses.

The fact that Lim Jocsing had to reimburse these expenses does not conflict with theproperty rights of the defendant Yaptico in the abaca and copra received from LimJocsing, taking into consideration that the latter was doing business with capital ormoney of the defendant Yaptico, without payment of any premium or interest;wherefore nothing is more just than that the creditor should benefits from the freightcharges on his boats, from the commission on the sales, and that he be indemnifiedfor the expenses of storage, fire insurance, and so forth, because the defendantadvanced his money without getting any profits from the operations of buying up

abaca copra carried on by the said Lim Jocsing.


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The circumstances that the defendant Yaptico kept Lim Jocsing informed of the priceof the abaca and copra sold in Cebu, even of he goods delivered on board to thesupercargo, does not indicate ownership rights, but merely the interest Lim Jocsinghad in knowing the price of the sales, since the result of the latter would appear inthe account current and the amount the sale produced would be deducted from thesum advanced to him by the defendant.

As owner of the abaca the defendant Yaptico was interested in its preservation and

had the right to insure it against any risk or accident prejudicial to his interests, andsince the loss of the abaca would have injured Yaptico as the owner of both the fiberand the money with which it was acquired, nothing is more just than that when itwas insured the insurance should accrue to his benefits and in payment of the valueof the abaca, which he had already advanced.

For these reason the judgment appealed from must be reversed, and we shouldabsolved the defendant Yaptico from the complaint, as we hereby do, without specialfinding as to costs. So ordered.

Arellano, C.J., Johnson, Carson, Moreland, Trent and Araullo, JJ., concur.


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G.R. No. L-17527 April 30, 1963

SUN BROTHERS APPLIANCES, INC.,plaintiff-appellee, vs. DAMASO P. PEREZ,defendant-appellant.

Dominador A. Alafriz for plaintiff-appellee. Robert P. Halili & Associates fordefendant-appellant.

LABRADOR, J.:

This is an action brought by the plaintiff to recover from defendant the sum ofP1,404.00, the price of one Admiral Air Conditioner, Slim Style, Model 100-23-1 H.P.,Serial No. 2978828, delivered to the defendant by the plaintiff under a conditionalsale agreement entered into by and between them on December 6, 1958, in the Cityof Manila, plus stipulated interest of 12% from January 6, 1959 until the same is fullypaid, together with P200 as attorney's fees, and costs. Defendant answered that theair-conditioner in question was delivered to him installed in the office of thedefendant located at Gardiner street, Lucena, Quezon on December 14, 1959 butthat said air-conditioner was totally destroyed by fire which occured in the morningof December 28, 1958 at 2 o'clock. Defendant further claimed that the machine wasdestroyed by force majeure, not by the defendant's fault and/or negligence and,

therefore, he is not liable under the conditional sale, Annex "A", which the parties,plaintiff and defendant, had executed.

At the trial of the case the parties entered into a stipulation of facts, the mostimportant provision of which are as follows:

1. That defendant admits that on December 6, 1958, he entered into a ConditionalSale Agreement with the plaintiff, copy of which contract is attached to the complaintas Annex "A";

2. That pursuant to the terms and conditions provided in the said Conditional SaleAgreement the plaintiff delivered to the defendant (1) Admiral Air Conditioner SlimStyle Model 100-23-1 HP, Serial No. 2978828 with the contract price of P1,678.00and that said Air Conditioner was received by the defendant;

3. That defendant made a down payment of P274.00 on December 6, 1958, pursuantto the terms and conditions of the Conditional Sales Agreement; and Air Conditionerwas installed by the plaintiff, thru its representative, at Lucena, Quezon;

4. That said Air Conditioner was burned on December 27,1958, on or about 2:00o'clock in the morning, however, defendant will present evidence to show that the AirConditioner subject of the complaint herein was burned where it was installed by theplaintiff;

5. That defendant, after making down payment of P274.00 to the plaintiff, did not

pay any of the monthly installments of P78.00 thereafter, leaving a balance ofP1,404.00 in favor of the plaintiff;

6. That after defendant presents evidence to prove that the Air Conditioner wasburned where it was installed by the plaintiff to the satisfaction of this HonorableCourt, the parties agree to leave to this Honorable Court the resolution of the issuewhether loss by fire extinguishes the obligation of the defendant to pay to theplaintiff the subsequent installments of the initial payment;"

The Court of First Instance before which the action was brought rendered judgmentcondemning the defendant to pay the plaintiff the amount demanded in thecomplaint, including interest and attorney's fees. The defendant has appealed thecase directly to us as involving only a question of law.

The conditional sale executed by the plaintiff and defendant contained the followingstipulation:

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

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

The Court below declared that as the buyer would be liable in case of loss for anycause, such buyer assumed liability even in case of loss by fortuitous event; so itrendered judgment declaring defendant liable for the sun demanded together withinterest and attorney's fees.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts beadmitted and approved by this Honorable Court, without prejudice to the partiesadducing other evidence to prove their case not covered by this stipulation of facts.1wph1.t

In this Court on appeal defendant-appellant argues that inasmuch as the title to theproperty sold shall vest in the buyer only upon full payment of the price, the loss ofthe vendor; that the phrase "for any cause" used in paragraph 2 of the agreementmay not be interpreted to include a fortuitous event absolutely beyond the control ofthe appellant; and that although Article 1174 of the new Civil Code recognizes theexception on fortuitous event when the parties to a contract expressly so stipulate,the phrase "for any cause" used in the contract did not indicate any intention of theparties that the loss of the unit due to fortuitous event is to be included within the

responsibility of the vendor.


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In answer to the arguments above set forth the appellee argues that the stipulationin the contract of sale whereby the buyer shall be liable for any loss, damage ordestruction for any cause, is not contrary to law, morals or public policy and isspecifically authorized to be stipulated upon between the parties by Article 1174 ofthe Civil Code; that the risk of loss was expressly stipulated to be undertaken by thebuyer, even if the title to the property sold remained, also by stipulation, in thevendor; that the terms "any cause" used in the agreement includes a fortuitousevent, and an express stipulation making the vendee responsible in such case isvalid.

We believe that the agreement making the buyer responsible for any losswhatsoever, fortuitous or otherwise, even if the title to the property remains in thevendor, is neither contrary to law, nor to morals or public policy. We have held suchstipulation to be legal in the case of Government vs. Amechazurra, 10 Phil. 637(Tolentino, Commentaries on the Civil Code, Vol. IV, p. 120)and declare it to bebased on a sound public policy in conditional sales according to American decisions.

"The weight of authority support the rule that where goods are sold and delivered tothe vendor under an agreement that the title is to remain in the vendor untilpayment, the loss or destruction of the property while in the possession of thevendor before payment, without his fault, does not relieve him from the obligation to

pay the price, and he, therefore, suffers the loss. In accord with this rule are theprovisions of the Uniform Sales Act and the Uniform Conditional Sales Act. There areseveral basis for this rule. First is the absolute and unconditional nature of thevendee's promise to pay for the goods. The promise is nowise dependent upon thetransfer of the absolute title. Second is the fact that the vendor has fully performedhis contract and has nothing further to do except receive payment, and the vendeereceived what he bargained for when he obtained the right of possession and use ofthe goods and the right to acquire title upon making full payment of the price. A thirdbasis advanced for the rule is the policy of providing an incentive to care properly forthe goods, they being exclusively under the control and dominion of the vendee." (47

Am. Jur., pp. 81-82).

We, therefore, agree with the trial court that the loss by fire or fortuitous event was

expressly agreed in the contract to be borne by the buyer and this expressagreement is not contrary to law but sanctioned by it as well as by the demands ofsound, public policy. The judgment of the court below is affirmed, with costs againstdefendant-appellant.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, Barrera, Paredes, Dizon, Regalaand Makalintal, JJ., concur. Padilla, J., did not take part. Judgment affirmed.


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Ulep v. Court of Appeals, 472 SCRA 274, October 11, 2005

GARCIA, J.:

Under consideration is this petition for rev iew under Rule 45 of the Rulesof Court seeking the reversal and setting aside of the Decision[1] dated August 15,1995 of the Court of Appeals (CA) in CA-G.R. CV. No. 39333, and its Resolution[2]dated April 25, 1996, denying petitioners motion for reconsideration.

The assailed decision modified the June 17, 1991 decision[3] of theRegional Trial Court at Urdaneta, Pangasinan, Branch 48, in its Civil Case No. U-3929, an action for Quieting of Title, Reconveyance and Declaration of Nullity ofTitles and Subdivision Plan, with Damages, thereat commenced by the petitionersagainst the herein private respondents.

The factual antecedents:

Principal petitioners SAMUEL ULEP, now deceased and substituted by his heirs,and VALENTINA ULEP are brother-and-sister. Together with their siblings, namely,

Atinedoro Ulep and Rosita Ulep, they are ch ildren of the late Valentin Ulep.

During his lifetime, the father Valentin Ulep owned a parcel of land, identified

as Lot 840with an area of 3,270 square meters, located at Asingan, Pangasinan.

Sometime in 1950, the older Ulep sold the one-half (1/2) eastern portionofLot 840, comprising an area of 1,635 square meters, to respondent MaximaRodico, while the remaining one-half (1/2) western portionwith the same area,to his son Atinedoro Ulep married to Beatriz Ulep, and to his other daughter

Valentina Ulep.

On June 5, 1952, all the transferees of Lot 840, namely, Maxima Rodico (forthe eastern portion) and Atinedoro Ulep and Valentina Ulep (for the western portion),were jointly issued in their names Transfer Certificate of Title No. 12525.

On June 18, 1971, Atinedoro Ulep, his wife Beatriz and sister Valentina Ulep

sold the one-half (1/2) portion of the area sold to them by their father to theirbrother Samuel Ulep and the latters wife, Susana Repogia-Ulep. The portionsold to Samuel and Susana has an area of 817.5 square meters. The document ofsale was registered with the Office of the Registry of Deeds of Pangasinan onFebruary 20, 1973.

Later, an area of 507.5 square meters of the western portionof Lot 840 wassold by the spouses Atinedoro Ulep and Beatriz Ulep to respondent Warlito Paringitand the latters spouse Encarnacion Gante, who were then issued TCT No. 12688on September 23, 1975.

Evidently, all the foregoing transactions were done and effected without anactual ground partition or formal subdivision of Lot 840.

In June 1977, respondent Iglesia ni Cristo (INC) begun constructing itschapel on Lot 840. In the process, INC encroached portions thereof allegedlypertaining to petitioners and blocked their pathways.

This prompted Samuel Ulep and sister Rosita Ulep to make inquiries with theOffice of the Register of Deeds of Pangasinan. To their consternation, theydiscovered from the records of said office that a deed of sale bearing dateDecember 21, 1954, was

purportedly executed by their brother Atinedoro Ulep his, wife Beatriz and theirsister Valentina Ulep in favor of INC over a portion of 620 square meters, more orless, of Lot 840, and that on the basis of said deed, INC was issued TCT No. 12689on September 23, 1975[4] over the portion allegedly sold to it by the three. Samuelwas further shocked to find out that on July 9, 1975, an affidavit of subdivision wasexecuted by respondents INC, Maxima Rodicoand the spouses Warlito Paringitand Encarnation Gante, on the basis of which affidavit Lot 840 was subdividedinto four (4) lots, namely: (1) Lot 840-A, covered by TCT No. 16205 in his (Samuels)name that of his wife, Susana Repogia-Ulep; (2) Lot 840-B, covered by TCT No.12688 in the names of Warlito Paringit and the latters wife Encarnacion Gante; (3)Lot-C 840-C, covered by TCT No. 12689 in the name of INC; and (4) Lot 840-D,covered by TCT No. 12690[5] in the name of Maxima Rodico.

Such was the state of things when, on March 29, 1983, in the Regional TrialCourt at Pangasinan, the spouses Samuel Ulep and Susana Repogia-Ulep, thespouses Atinedoro Ulep and Beatriz Ulepand their sister Valentina Ulep, filedtheir complaint for Quieting of Title, Reconveyance and Declaration of Nullity of Titleand Subdivision Plan with Damages against respondents INC, Maxima Rodicoandthe spouses Warlito Paringit and Encarnacion Gante. In their complaint,docketed as Civil Case No. U-3929, the Uleps basically alleged that they andrespondents are co-owners of Lot 840 in the following proportions:

1,635 square meters to Maxima Rodico;

817.5 square meters to spouses Samuel Ulep and Susana Repogia-Ulep;

507.5 square meters to spouses Warlito Paringit and EncarnacionGante;

210 square meters to spouses Atinedoro Ulep and Beatriz Ulep, andValentina Ulep;

100 square meters to Iglesia Ni Cristo.[6]

In the same complaint, the spouses Atinedoro Ulep and Beatriz Ulep andtheir sister Valentina Ulep denied having executed a deed of sale in favor of INC overa portion of 620 square metersof Lot 840, claiming that their signatures appearingon the deed were forged. At the most, so they claimed, what they sold to INC wasonly 100 square meters and not 620 square meters. Petitioners Samuel Ulep and


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Valentina Ulep, along with the spouses Atinedoro Ulep and Beatriz Ulep, likewiseaverred that the subject lot was subdivided without their knowledge and consent.

In their common Answer, respondents Maxima Rodico and the spousesWarlito Paringit and Encarnacion Gante maintained that the segregation of theirshares was known to petitioners and that it was done with the consent of SamuelUlep himself.

For its part, INC, in its separate Answer, asserted that it purchased from the

spouses Atinedoro Ulep and Beatriz Ulep and their sister Valentina Ulep the portioncontaining 620 square metersof Lot 840 on December 21, 1954, as evidenced bya deed of sale duly registered with the Registry of Deeds of Pangasinan.

During the pendency of the proceedings in Civil Case No. U-3929, AtinedoroUlep died. Less than a month thereafter, or more specifically on November 16, 1987,

Atinedoros widow Beatriz Ulep and their children executed a deed of renunciation,thereunder waiving all their rights and interests over Lot 840 and relinquishing thesame in favor of the spouses Samuel Ulep and Susana Repogia-Ulep.[7]

Eventually, in a decision dated June 17, 1991, the trial court renderedjudgment, as follows:

There being no res adjudicata in this case as alreadydecided by the Court of Appeals, this Court renders judgment as borneout by the evidence presented in favor of the [petitioners] and againstthe [respondents], ordering the latter and all persons claiming titleunder them to vacate and surrender a portion of 520 sq. m. of theland in question in favor of the [petitioners] in such a way that[respondent] INC owns only 100 sq. m.; declaring and annulling thefollowing documents;

1. Deed of sale dated December 21, 1954 allegedly executed byplaintiffs-spouses Atinedoro Ulep and Beatriz Aguilar and

Valentina Ulep in favor of [respondent] INC, (Exh. A);

2. TCT No. 12689 issued to Iglesia Ni Cristo (Exh. K-1);

3. The affidavit of confirmation of subdivision, (Exh. K and Exh.2); and

4. TCT No. 12605 (Exh. K-4) and a new TCT No. be issued toinclude the original 817.5 sq. m. in favor of Samuel Ulepand Susan Repogia;

Declaring Lot No. 840 to be owned by the following partiesin the following proportions:

(a) 1,635 sq. m. eastern portion to[respondent] Maxima Rodico already covered by TCT

No. 12690 (Exh. K-3);

(b) 817.5 sq. m. to [petitioners] Samuel Ulepand Susana Repogia and a new TCT to be issued;

(c) ! of 210 sq. m. to [petitioners] SamuelUlep and Susana Repogia; and the other one-half or105 sq. m. to [petitioner] Valentina Ulep in accordancewith Exh. C, a deed of renunciation executed by the

heirs of Atinedoro Ulep who died in 1987 and hissurviving spouse Beatriz Aguilar and a new TransferCertificate of Title be issued;

(d) 507.5 sq. m. to [respondents] WarlitoParingit and Encarnacion Gante, already covered byTCT No. 12688 (Exh. K-2);

(e) 100 sq. m. to [respondent] Iglesia NiCristo; and a new title to be issued;

and ordering the Register of Deeds of Pangasinan, to issue newTransfer Certificate of Title in favor of [petitioners] Samuel Ulep and

Susana Repogia covering 817.5 sq. m.; and another new TransferCertificate of Title covering 105 sq. m. in favor of Valentina Ulep andthe other !of 210 sq. m. or 105 sq. m. in favor of Samuel Ulep andSusana Repogia pursuant to Exh. C; and still another new TransferCertificate of Title covering 100 sq. m. in favor of Iglesia Ni Cristoand for the latter to pay the costs.

SO ORDERED.[8] (Words in bracket ours).

Dissatisfied, respondent INC interposed an appeal to the Court of Appeals(CA), which appellate recourse was thereat docketed as CA-G.R. CV No. 39333. Fortheir part, respondents Maxima Rodico and the spouses Warlito Paringit andEncarnacion Gante opted not to appeal.

As stated at the threshold hereof, the appellate court, in its Decisiondated August 15, 1995, modified that of the trial court, thus:

WHEREFORE, premises considered, the appealedjudgment is MODIFIEDas above indicated. Accordingly, thedecretal portion of said judgment should read as follows:

1. The Deed of Absolute Sale dated December 21, 1954executed by plaintiffs-spouses Atinedoro Ulepand Beatriz Aguilar and Valentina Ulep in favor of[respondent] INC is declared valid (Exh. K-1).

2. Lot No. 840 is declared as owned by the following


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parties in the following proportions:

(f) 1,635 sq. m. eastern portion to [respondent]Maxima Rodico already covered by TCT No.12690 (Exh. K-3);

(g) 297.5 sq. m. to [petitioner]-spouses SamuelUlep and Susana Repogia;

(h) ! of 210 sq. m. to [petitioner]-spousesSamuel Ulep and Susana Repogia; and theother one-half or 105 sq. m. to ValentinaUlep in accordance with Exh. C, a deed ofrenunciation executed by the heirs of

Atinedoro Ulep who died in 1987 and hissurviving spouse Beatriz Aguilar;

(i) 507.5 sq. m. to [respondents] Warlito Paringitand Encarnacion Gante, already covered byTCT No. 12688 (Exh. K-2);

(j) 620 sq. m. to [respondent] INC, already

covered by TCT No. 12689 (Exh. K-1).

3. TCT No. 16205 registered in the names of[petitioner-spouses] Samuel and Susan Ulep (Exh. K-4) isannulled.

The Register of Deeds of Pangasinan is orderedto issue a new TCT in favor of [petitioner-spouses] SamuelUlep and Susana Repogia covering only 297.5 sq. m.; andanother new TCT covering 105 sq. m. in favor of ValentinaUlep and the other !of 210 sq. m. or 105 sq. m. in favor of[petitioner-spouses] Samuel Ulep and Susana Repogiapursuant to Exh. C. No Costs.

SO ORDERED.[9] (Words in brackets ours).

In so ruling, the Court of Appeals explained:

There is no adequate evidentiary demonstrationin the record that the deed of sale (dated December 21,1954 executed by Atinedoro Ulep, his wife Beatriz and sister

Valentina Ulep in favor of INC over the 620 square-meterarea of the western portion of Lot 840) is void andinefficacious on account of forgery.

As a public instrument which enjoys thepresumption of regularity, clear and convincing evidence is

necessary to contradict the terms thereof.

xxx xxx xxx

In the present case, the biased, interestedtestimony of [petitioners] cannot overcome the evidentiaryforce of the deed of sale which was acknowledged before anotary public, and hence, a public document.

xxx xxx xxx

The sale of 620 sq. m. in favor of [respondent]INC executed by vendors Atinedoro and Valentina Ulep isdated December 21, 1954, while the sale of 817.50 sq.meters by the same vendors to [petitioners] Samuel andSusana Ulep was made on June 18, 1971. [Respondent] INCregistered its 620 sq. meters on December 21, 1954 byreason of which TCT No. 12689 was issued in its name.[Petitioner-spouses] Samuel and Susana Ulep registered theland sold to them on February 9, 1977 and TCT No. 16205was issued in their names. Evidently, applying Article 1544,[petitioner] INCs ownership and title over the 620 sq.

meters prevail. The land consisting of 620 sq. meters wasfirst sold to INC and its title was registered first. Thus, thesame vendors could have sold only the remaining 297.50 sq.meters of Lot 840 to [petitioner-spouses] Samuel and SusanaUlep and TCT No. 16205 issued in the latters name for817.50 sq. meters is null and void. There is no evidence that[respondent] INC is guilty of bad faith in acquiring the 620sq. meters portion of Lot 840. (Words in bracket ours).

Their motion for reconsideration having been denied by the same courtin its equally challenged Resolution of April 25, 1996, petitioners are now with usvia the present recourse, faulting the appellate court as follows:

I.

THE HONORABLE COURT OF APPEALS ERRED IN NOTAFFIRMING THE DECISION DATED JUNE 17, 1991 (ANNEXA) OF THE TRIAL COURT, REGIONAL TRIAL COURT, FIRSTJUDICIAL REGION, BRANCH 48, URDANETA PANGASINAN INCIVIL CASE NO. 3929.

II.

AND IN THE ALTERNATIVE, THE HONORABLE COURT OFAPPEALS ERRED IN NOT AWARDING PETITIONERS SAMUELULEP AND SUSANA REPOGIA THE AREA OF 817.5 SQUAREMETERS AND IN NOT REDUCING THE SHARE OF PRIVATE


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question of intention. But in ascertaining the intention by which one is actuated on agiven occasion, courts are necessarily controlled by the evidence as to the conductand outward acts by which the inward motive may, with safety, be determined. So itis that the honesty of intention, the honest lawful intent, which constitutes goodfaith implies a freedom from knowledge and circumstances which ought to put aperson on inquiry. [17] Hence, proof of such knowledge overcomes the presumptionof good faith.

Here, the spouses Samuel Ulep and Susana Ulep were fully aware, or

could have been, if they had chosen to inquire, of the rights of INC under the deedof sale duly annotated on the common title of the spouses Atinedoro Ulep andBeatriz Ulep and Valentina Ulep. Verily, the sale to INC should prevail over the salemade to spouses Samuel and Susana because INC was the first registrant in goodfaith.

Petitioners allegation of forgery relative to the deed of sale executed onDecember 21, 1954 by the spouses Atinedoro Ulep, his wife Beatriz and sister

Valentina Ulep over the 620 square-meter portion of Lot 840 cannot be sustained. Asa rule, forgery cannot be presumed and must be proved by clear, positive andconvincing evidence, the burden for which lies on the party alleging it. The fact offorgery can only be established by a comparison between the alleged forgedsignature and the authentic and genuine signature of the person whose signature is

theorized to have been forged.[18]

Here, petitioners claim of forgery is unsupported by any substantialevidence other than their own self-serving testimonies. As it were, they failed topresent handwriting experts and other persons familiar with the handwriting of thespouses Atinedoro Ulep, his wife Beatriz and sister Valentina Ulep that would showthat their signatures appearing in the questioned deed of sale in favor of respondentINC were forged. Due to the technicality of the procedure involved in theexamination of forged documents, the expertise of questioned document examinersis usually helpful. These handwriting experts can help determine fundamental,significant differences in writing characteristics between the questioned and thestandard or sample specimen signatures, as well as the movement and manner ofexecution strokes.

Petitioners insist that the conveyance of only 100 square meters to INCwas in fact evidenced by a deed of sale notarized by a certain Atty. BenjaminFernandez.[19] However, they sorely failed to produce in court the said alleged deedof sale. They could have, at the very least, presented Atty. Fernandez to prove theexistence of that deed, but they did not. The only plausible conclusion is that no suchdeed exists.

On the other hand, to bolster its claim of ownership, respondent INCpresented the December 21, 1954 deed of sale executed in its favor by the spouses

Atinedoro and Beatriz Ulep and Valentina Ulep over a portion of 620 square meters ofLot 840. To be sure, INCs deed of sale was duly notarized by Atty. Bernabe SalcedoCalimlim.[20] Generally, a notarized document carries the evidentiary weightconferred upon it with respect to its due execution, and documents acknowledged

before a notary public have in their favor the presumption of regularity.[21] Thus,the notarized deed of sale executed on December 21, 1954 by Atinedoro Ulep, hiswife Beatriz and sister Valentina Ulep over the contested area in favor of respondentINC deserves full credence and is valid and enforceable in the absence, as here, ofoverwhelming evidence to the contrary.

In a last-ditch but futile attempt to persuade the Court, petitioners alternativelypray that INCs portion of 620 square meters of Lot 840, assuming that INC isentitled to it, should be taken from the western portion of the same lot sold to

respondent spouses Warlito Paringit and Encarnacion Gante, and not from them. Topetitioners, the share of the spouses Warlito and Encarnacion should accordingly bereduced from 507.5 square meters to only 197 square meters.

We note, however, that petitioners never raised before the trial court norbefore the appellate court the issue of Warlitos and Encarnacions entitlement to507.5 square meters. Quite the contrary, petitioners even alleged in their complaintthat the spouses Warlito Paringit and Encarnacion Gante are owners of 507.5 squaremeters of Lot 840. They never questioned the spouses ownership of said portion.This issue was only posed by petitioners in the instant petition before this Court. It iscertainly too late for them to raise said issue for the first time at this late stage of theproceedings.

Points of law, theories, issues and arguments not brought to theattention of the lower court need not be, and ordinarily will not be, consideredby a reviewing court, as these cannot be raised for the first time on appeal. Basicconsiderations of fair play, justice and due process underlie the rule. It would beunfair to the adverse party who would have no opportunity to present evidence incontra to the new theory, which it could have done had it been aware of it at thetime of the hearing before the trial court.[22]

Of course, this rule admits of certain exceptions. For one, issues of lackof jurisdiction, though not raised below, may be considered by the reviewing court asthey may be raised at any stage. For another, the reviewing court may also consideran issue not properly raised during trial when there is plain error. Likewise, it mayentertain such arguments when there are jurisprudential developments affecting the

issues, or when the issues raised present a matter of public policy.[23]Unfortunately for petitioners, however, none of these exceptions exists in this case.It is thus too late in the day for petitioners to raise in this recourse the sale made bythe spouses Atinedoro Ulep and Beatriz Ulep of the 507.5 square-meter area of Lot840 to the spouses Warlito Paringit and Encarnacion Gante. To allow petitioners todo so would be utterly unfair to the latter.

WHEREFORE, the petition is DENIED and the assailed decision andresolution of the Court of AppealsAFFIRMEDin toto.

Costs against petitioners.

SO ORDERED.


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G.R. No. L-13125 February 11, 1919

ROSALIO BAUTISTA,plaintiff-appellee, vs. FRANCISCO SIOSON, ET AL.,defendants. RAYMUNDO DE LA CRUZ,appellant.

Agapito Ignacio for appellant. A. Cruz Herrera for appellee.

TORRES, J.:

This appeal through bill of exceptions was filed by counsel for the defendantRaymundo de la Cruz from the judgment of December 29, 1916, whereby the judgeof the Court of First Instance of Rizal held (1) that Rosalio Bautista, the plaintiff, wasby merger the owner of the properties described in subparagraphs (a) and (b) ofparagraph 2 of the complaint; (2) ordered Raymundo de la Cruz to deliver to theplaintiff Bautista the camarinor warehouse, built of strong materials, described in thesubparagraph (a) above mentioned; (3) ordered Francisco Sioson to pay to saidplaintiff Bautista the sum of P200, the amount of the rent due; (4) absolvedFrancisco Santos Paulino from the compliant, as the evidence did not show that hehad taken possession of the house described in said subparagraph (b); and, finally(5) ordered each of the defendants Francisco Sioson and Raymundo de la Cruz topay one-half of the costs. The appellant moved for a new trial, which motion being

denied, he entered an exception, and, upon filing the proper bill of exceptions, thesame was approved and forwarded, together with a transcript of all the evidence tothe office of the clerk of this court.

On June 30, 1916, counsel for the plaintiff filed complaint in the Court of FirstInstance of Rizal, in which he alleged that on September 4, 1912, by virtue of acontract of sale executed on September 4, 1912, between the plaintiff RosalioBautista and the spouses Francisco Sioson and Lorenza de la Cruz, for the sale of acamarin or warehouse of strong materials with an iron roof and a house of mixedmaterials with a nipa roof both buildings constructed on lots situated in the townof Malabon, Rizal, and belonging to the chaplaincy known by the name of Concepcion

said buildings were delivered to him on the date of the contract, which was drawn

up before a notary, under the condition that the vendors might repurchase themwithin the term of two years, counted from the date of the contract; thatimmediately after the sale of the plaintiff leased the purchased buildings to saidvendor spouses, who had not paid the price of the lease, nor repurchased saidbuildings, notwithstanding that the term of the contract had elapsed with the resultthat the other defendant Raymundo de la Cruz was then (at the time of the filing ofthe complaint) in material possession of said camarin under title of owner, andFrancisco Santos Paulino was in possession of the house, also under a like title.Therefore he prayed the court to hold that the plaintiff's ownership in said buildingswas consolidated, to order the defendants to deliver them to the plaintiff, and toorder Francisco Sioson to pay to the plaintiff the price of the lease and to pay thecosts.

The defendants Francisco Sioson and Francisco Santos Paulino did not put in anappearance to answer the complaint, notwithstanding that they were duly

summoned. They were therefore declared in default.

Counsel for the defendant Raymundo de la Cruz admitted paragraphs 1 and 6 of thecomplaint, and denied generally and specifically the other paragraphs thereof. Inspecial defense he alleged that the camarin described in subparagraph (a) ,paragraph 2 of the complaint, was of the exclusive ownership of the defendantRaymundo de la Cruz. He therefore asked that his client be absolved from thecomplaint, with the costs against the plaintiff.

Upon the hearing of the case and the introduction of the evidence by the parties, thecourt decided the suit in the manner aforesaid.

It now behooves us to determine who is the owner of the camarin of strongmaterials with an iron roof, to which reference is made in subparagraph (a) ofparagraph 2 of the complaint: Whether it belongs to Rosalio Bautista, in whose favorits ownership became consolidated by the lapse of the term of two years without itshaving been repurchased by the vendors; or to Raymundo de la Cruz, to whomFrancisco Sioson likewise sold the said camarin on August 5, 1914, one year andeleven months after the sale of this building to the plaintiff Bautista, effected onSeptember 4, 1912.

In order that the issue raised in this suit may be properly decided we shall hereinmake a statement of the contracts executed by and between the litigants.

On September 4, 1912, the defendant Francisco Sioson and his wife Lorenza de laCruz, through a notarial instrument, sold to the plaintiff Rosalio Bautista the camarinin question, besides some other property, under the right of repurchase. It wasstipulated that if within two years from the date of the contract the vendors or theirsuccessors in interest should not repurchase said properties for the sum of P400, theprice of the sale, such sale should become absolute and thenceforth the ownership inthe properties sold should be consolidated, the execution of another instrumentbeing unnecessary. (Exhibit A, p. 10.)

On the same date, September 4, 1912, Rosalio Bautista, through a notarialinstrument, leased the properties sold to him to the vendors Francisco Sioson andLorenza de la Cruz, for the price of P100 per annum, for the period of two yearscounted from the date of the instrument. (Exhibit D, p. 15.)

On June 12, 1913, Lorenza de la Cruz died (Sten. notes, p. 29) and on August 5,1914, Francisco Sioson executed before a notary a document by which he sold underright of repurchase to the defendant Raymundo de la Cruz, the camarinin question.It was stipulated in this instrument that if within six months, counted from the 1st of

August, 1914, the vendor F rancisco Sioson should return to the purchase Raymundode la Cruz the sum of P422, the price of the purchase, then the purchaser Raymundode la Cruz would be obliged to execute in favor of said vendor Francisco Sioson aninstrument of resale, but that if within the period mentioned he should not make theredemption stipulated, said sale should become absolute, the execution of another


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instrument being unnecessary. (Exhibit 1, p. 17.)

From the instrument referred to in the preceding paragraphs it is concluded that theoriginal owner of the buildings in dispute, Francisco Sioson, and his wife, Lorenza dela Cruz, sold, on September 4, 1912, the house and the camarin to the plaintiffRosalio Bautista for P400, under agreement of their resale within the term of twoyears counted from said date; and that, on the same date, by means of aconstitutum possessorium agreement, and in another new notarial instrument, thepurchaser Bautista leased the properties sold to the vendors Francisco Sioson and

Lorenza de la Cruz at an annual rent of P100, for a period of two years counted fromthe date above mentioned.

After the lessee, Francisco Sioson, had been in possession of the properties leasedfor one year and eleven months, he sold the camarin, one of them, by virtue of anotarial instrument to Raymundo de la Cruz, under the agreement that if he did notredeem the camarin so sold within six months from the 1st of August, 1914, andreturn the sum of P422, such sale under right of repurchase should become absolute,the execution of another instrument being unnecessary.

As a resu lt of the two said alienation, both set forth in notarial instruments thoughnot recorded in the registry of property the issue raised and to be decided is, which

of the two purchasers, the plaintiff Bautista and the defendant Cruz, is the lawfulowner of the camarinsuccessively sold to the former and to the latter by the otherdefendant Francisco Sioson, its original owner, in accordance with the provisionscontained in article 1473 of the Civil Code, the last paragraph of which, among otherthings, prescribed:

Should there be no entry, the property shall belong to the person who first tookpossession of its in good faith . . .

In view of the fact that the deed of sale executed by Francisco Sioson, the owner ofthe camarin, and his wife, Lorenza de la Cruz, on September 4, 1912, in favor ofRosalio Bautista, was not entered in the registry of property, and of the further fact

that, upon the execution of the second sale of the same camarinby the said Sioson,which sale was made after the death of his wife Lorenza by virtue of an instrumentdated August 5, 1914, in favor of Raymundo de la Cruz, under agreement ofrepurchase for the price of P422 the term of two years fixed for the redemption ofthe camarinso sold had not yet expired, it may be presumed, in the absence of proofto the contrary, that the second purchaser Raymundo de la Cruz, on acquiring thecamarin of its original owner Francisco Sioson, who, according to the writtencontract, became a tenant or lessee of the camarin, was not aware of said first saleto Bautista, and believed that Sioson, who was in possession of the camarin, was stillthe owner thereof. Therefore, Cruz acted in good faith in acquiring it, inasmuch as,through failure to enter the property in the registry, there was no reason why theprevious alienation of the camarinshould have been known. But be all this as it may,nevertheless, the actual and material possession of the camarin by Cruz does not

constitute a sufficient legal reason for holding the he has a better right to thebuilding than the first purchaser Rosalio Bautista, although the latter was not in

actual, physical, and material of the camarinthat he had purchased. This conclusionis derived from a strict application of the provisions of said article 1473 of the CivilCode.

Both alienations, effected successively by Francisco Sioson in favor of Bautista andCruz, are recorded in notarial instruments, though they were not entered in theregistry of property. To determine who is the lawful owner of the camarinsold, if theprovisions of said article of the Code are to be observed, we have first to determinethe contention in regard to which of the two purchasers is in possession thereof, and

if, on the execution of the contract of lease by the first purchaser in favor of thevendor himself, the constitutum possessorium agreement is to be considered to havebeen stipulated, the conclusion must necessarily be reached as to which of the twopurchasers first took possession of the camarinsold, and also whether the materialpossession of the tenant is of a precarious nature, enjoyed in the same andrepresentation of the owner Bautista.

Article 1462 of the Civil Code reads:

A thing sold shall be considered as delivered, when it is placed in the hands andpossession of the vendee.

When the sale should be made by means of a public instrument, the executionthereof shall be equivalent to the delivery of the thing which is the object of thecontract, if in said instrument the contrary does not appear or may be clearlyinferred.

From the contest of this article it is deduced that the delivery or tradition of the thingsold may be real or actual, and feigned. The execution of a public instrumentconstitutes one of the kinds of symbolic tradition, but, in all the different manners bywhich the thing sold may be delivered, it is necessary that the record bear proof andthat it may be held that such delivery or tradition was determined by the will of theparties to deliver and receive, respectively, the thing that is the subject of thecontract.

In the contract of lease (Exhibit D, record, p. 15) the lessor, Rosalio Bautista, statesthat in his capacity as owner he leased to the spouses Francisco Sioson and Lorenzade la Cruz, among other properties, a camarinof strong material with an iron roof, atan annual rent of P100, the lessees binding themselves to report to the lessor anyact of disturbance committed by any other person, and all defects that might beoccasioned to the building. The execution of this instrument of lease shows that thecamarinwould be continued to be occupied by its previous owner and vendor after ithad been delivered, symbolically, by means of the instrument executed for thepurpose in favor of the purchaser, in order that he might hold it in the capacity oflessee, it being supposed, by a legal fiction, that the purchaser entered intopossession of the camarin sold, a form of possession utilized by the purchaser byvirtue of the clause known in law as constitutum possessorium, stipulated between

the contracting parties.


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So that by the execution of the deed of sale of September 4, 1912, Rosalio Bautistaentered into the material possession under title of owner, of the camarinsold to himby Francisco Sioson, and, by virtue of another instrument of lease, of the same date,the purchaser and owner of the camarinconveyed and delivered this building to thelessee in view of said contract. Under these perfectly legal suppositions it isunquestionable that the purchaser Rosalio Bautista was the first person who enteredinto the possession of the camarinas soon as soon as he acquired it by virtue of saidsale.

The material possession which the other defendant, Raymundo de la Cruz, nowenjoys, not only was subsequent by one year and eleven months, but also, on theother hand, is an unlawful possession which was transmitted to him by FranciscoSioson, who held the camarin precariously and in the capacity of tenant, and,consequently, without any right whatever to convey to Raymundo de la Cruz thepossession under title of owner referred to in article 1473, aforementioned of theCivil Code.

This article says: "If the same thing should have been sold to different vendees. . .;"but it must be understood that said sale was made by its original owner. In theinstant case Francisco Sioson, on affecting the second sale in favor of Raymundo dela Cruz, was in possession of the camarin and occupied it, not in the capacity ofowner, but in that of lessee or tenant, and therefore absolutely had no right todispose of the building in the capacity of owner thereof; consequently Sioson couldnot convey to the second purchaser the lawful possession of the disputed camarin.

After the foregoing elucidation of the main issue submitted to this court for dec ision,we deem it unnecessary to pass upon the other issues relative to whether FranciscoSioson could have sold, only after the death of his wife, the said camarin toRaymundo de la Cruz, and whether the price of the second sale was part of a largersum that pertained to the second purchaser, as proceeds derived from the game of

jueteng, inasmuch as, for the reasons above stated, it has been shown thatRaymundo de la Cruz could not have acquired any right in the camarin involved inthis suit; for Francisco Sioson, who sold to Cruz, occupied it as a mere tenant and notas owner, and, consequently, was unable to transmit to the purchaser any property

right whatever or lawful possession under title of owner.

For all the foregoing reasons, whereby the errors assigned to the judgment appealedfrom have been duly refuted, said judgment, being in conformity with the evidenceof record, should be, as it hereby is, affirmed, with the costs against the appellantRaymundo de la Cruz. So ordered.

Arellano, C.J., Johnson, Araullo, Street and Avancea, JJ.,concur.

Separate Opinions

CARSON, J., dissenting:

I dissent. Manresa, in his commentaries, on article 1473 of the Civil Code, clearlyindicates that the possession referred to in that article is the real, the physicalpossession of the property; and certain it is that to hold that the possessioncontemplated in this article may be secured without the performance of some actwhich will give notice to innocent subsequent purchasers, or of which subsequentpurchasers may inform themselves by due diligence tends to defeats the just andequitable provisions of the law.


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G.R. No. L-11907 February 27, 1919

FAUSTINO LICHAUCO, ET AL.,plaintiffs-appellants, vs. JOSE BERENGUER, ETAL.,defendants-appellees.

Sumulong & Estrada for appellants. Ramon Salinas for appellees.

AVANCEA, J.:

On July 26, 1882, by a public instrument (Exhibit A-1) Macario Berenguer and to,Cristino Singian with right of repurchase for an indefinite time the land in questionwhich is described as parcel one in the complaint.

On October 7, 1889, by means of another public instrument, Macario Berenguer soldthe same and to Cornelia Lauchangco with right of repurchase for the term of twoyears. It was stipulated that Macario Berenguer would take the land under a lease,paying an anual rent therefor, either in cash or in sugar at the option of CorneliaLauchangco. It was also stipulated that all the fruits of the land would be stored inCornelia Lauchangco's enfraderia(sugar packing house) in this city and the proceedsthereof would be applied to the payment of the price of the repurchase (Exhibit A).This sale was registered in 1907.

It appears that on September 2, 1890, Macario Berenguer, by virtue of a publicinstrument, sold again the land in question withpacto de retroto Cristiano Singian ata higher price but the amount paid on account of the sale of 1882 was considered asa part of the price. In the document wherein appears this contract, it is said thatCristiano Singian accepts the purchase in the name and representation of AnselmoSingian of whom he was the tutor. The contract does not express the period for theredemption (Exhibit A-1.)

On February 20, 1904, Anselmo Singian sold in an absolute sale, also by as publicinstrument, the same land to Macario Berenguer. Anselmo Singian states in thiscontract that the land was acquired by him form Macario Berenguer himself by virtue

of the above-mentioned contract of 1890 through his (Anselmo's) tutor, CristianoSingian. It was stipulated that the price of this sale should be paid within the periodof eight years and that, if it be not completely paid on the expiration of the term, theownership of the land should revert to Anselmo Singian (Exhibit X).

The parties to this action are: Faustino Lichauco and others, in their capacity as heirsof Cornelia Lauchangco, as plaintiff; Jose Berenguer, administrator of the estate ofMacario Berenguer, and Anselmo Singian in his own behalf, as defendants.

The plaintiffs pray that the sale of the land executed by Macario Berenguer in favorof Cornelia Lauchangco be declared absolute or that the defendant Jose Berenguerbe obliged to pay to the plaintiffs the sum of P3,000, the price of the repurchase,

with legal interest thereon from October 7, 1891, and the amount of P9,236.86, asrents due, as well as the amounts which would be due until the execution of the

sentence with the corresponding interests. The defendants Jose Berenguer prays thathe be absolved from the complaint and that the plaintiffs be obliged to execute inthis favor the document of repurchase of the land. The defendant Anselmo Singianprays that the sale of the land executed by Macario Berenguer in favor of CorneliaLauchangco be declared null and void and that he be declared absolute owner of thesaid land.

The trial court absolved owner of the said land, finding as to costs and from thisjudgment the plaintiffs appealed.

From what has been said, it appears that the land in question had been twice sold byMacario Berenguer: the first sale was made in 1882 in favor of Cristino Singian andthe second, in 1889, in favor of Cornelia Lauchangco, predecessor in interest of theplaintiffs. The question to be decided is, which of these two sales is to be preferred.Both were executed by means of public instruments. Considering the facts inconnection with the time prior to 1907, it follows that, since neither of theseinstruments was inscribed, the preference should be in favor of the purchaser whofirst took possession of the land, inasmuch as this possession, according to the law inforce prior to the promulgation of the Civil Code, constituted the consummation ofthe contract, and also inasmuch as the civil Code (article 1473) expressly providesthat possession in such cases transfers the ownership of the thing sold. The trialcourt accepted the fact that the defendant Anselmo Singian, by himself and througha representative, took possession of the land since its sale in 1882 and has beencontinuing in this possession up to the present time. There is evidence in the recordwhich establishes the conclusion, and there is no proof to the contrary.

It appears that after the sale in 1882 to Cristino Singian, the land was held, under alease through payment of an annul rent, by Macario Berenguer until his death, andeven after his death the administrator of his property continued the lease under thesame conditions until two years before this action was filed. It does not appearwhether, after the sale, Cristiano Singian first took possession of the land and thenleased it to Macario Berenguer or the land was immediately leased after the salewithout the lease having been preceded by direct possession on the party of thepurchaser, Cristino Singian. But, as regards the basis upon which this decision rests,

we accept the second alternative as true. It appears also that when the same landwas sold in 1889 by same Macario Berenguer to Cornelia Lauchangco, the latter didnot also take a direct possession of it but agreed to lease it to Macario Berenguerunder certain conditions. It thus appears that both Cristino Singian and CorneliaLauchangco in like manner took possession of the land through the same vendor,when the latter on ceasing to be the owner became the lessee of each of the formerrespectively. this court has held that when a person buys a piece of land and, insteadof taking possession of it, give it under a lease to the vendor, possession thereforeby the later after the sale is possession by the vendee, and such possession, in caseof a double sale, determine the preference in favor of the one who first tookpossession of it, in the absence of inscription, in accordance with the provision ofarticle 1473 of the Civil Code and notwithstanding the material and personalpossession by the second vendee. (Bautista vs. Sioson, p. 615, ante.) This doctrine is

with greater reason applicable to this cae in that the possession by the second


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vendee, granting that he had it, was under the same conditions as that of the firstvendee. Therefore, in determining the preference between both sales by reason ofthe priority of possession, supposing that both vendees had such possession in thesame manner as we have indicated, the decision must necessarily be in favor of thesale to Cristiano Singian who first enjoyed such possession.

But we can still say that Cornelia Lauchangco never had in the manner indicated thepossession of the land. She had to derive this possession from Macario Berenguer. Itis true that it was stipulated in the sale to her that Berenguer would cease to be the

owner and would be her lessee, but there is a lack of juridical reality to suppose thethis was equivalent to a delivery of possession, because on that date Berenguer hadno possession which he could transfer, inasmuch as he was then a mere lessee ofthe former vendee, Cristino Singian, and therefore his possession was not for himselfbut in representation of the latter.

At all events, if it be interpreted that, in case of a double sale and in the absence ofinscription, the preference between both can not be determined, according to article1473 of the Civil Code, by the possession which the stipulation implies that vendorceases to become owner and becomes the lessee of the vendee, it follows that, forthe purposes of this article, neither Cristino Singian nor Cornelia Lauchangco tookpossession of the land. Under this supposition the preference between both salesshall also have to be decided in favor of that made to Cristino Singian, because it isof a prior date. (Art. 1473, Civil Code.)

As has been stated, Macario Berenguer sold the land to Cristino Singian in 1882 andin 1890 he again sold it to Cristino Singian in his capacity as tutor of AnselmoSingian. The plaintiffs contend that according to this sale to defendant AnselmoSingian was effected only in 1890 and therefore was not anterior to that made toCornelia Lauchangco in 1889. We believe that this conclusion is erroneous. After thesale of 1882, Macario Berenguer took from Cristino Singian some more money whichamounted to P6,000 and this fact impelled him to make the sale in 1890 in which itwas stipulated that the amount paid in the sale of 1882 plus the P6,000 subsequentgiven by Cristino Singian to Macario Berenguer be considered as part of the pricereceived. it is true that in the sale of Cristino Singian in 1882 it was not stated that

he acted in his capacity as tutor of Anselmo Singian, but it appears that with thelatter's money the former paid the price in both sales. What really appears is that thesecond sale was made with the object of aggregating, as part of the price, theamount of P6,000 received subsequently by Macario Berenguer for the purposes ofthe purchase and not for the transmission of the ownership which was alreadyaffected. We accept as a fact that both the sale of 1882 and that of 1890 were madein favor of Anselmo Singian.

The registry in 1907 of the sale to Lauchangco does not alter the aspect of thequestion involved. From the time Singian took possession of the land up to that datetwenty-five years had elapsed. Thus, on the date in which the registry was made,Singian had acquired the ownership of the land by prescription. The registry couldhave destroyed the efficacy of the sale to Singian but not the legal effects of hispossession. The effect which the law gives to the registry of a sale, in case of a

double sale, against the efficacy of the sale that was not registered does not extendto the other titles which the other vendee may have gained independently, as thelittle of prescription in this case. And thus, even supposing that the sale to Singian,for lack of registry, had lost all its efficacy, in itself, as a title transferring ownershipas against the sale to Lauchangco which was registered, still there remains forSingian the title of prescription which has not been destroyed by another to thecontrary.

The fact that in 1904 Anselmo Singian in turn sold the land in question to Macario

Berenguer does not affect the merits of the case. In the said sale it was agreed thatBerenguer would pay the stipulated price within the period of eight years and if, atthe expiration of the eight years, the amount should not have been completely paid,the ownership of the land would revert to the vendor. It does not appear that nopayment on account of this price has been made and inasmuch as this paymentshould be proved by him who is obliged to do so, we accept as a fact that it was notso made. Under such circumstances, whatever effect may be attributed to the saleduring the said period of eight years, which was fixed for the payment of the price,cannot be given such effect after the expiration of the said period, without the pricehaving been paid. At all events, the ownership of the land sold reverted to thevendor.

We have reached the conclusion that the sale to Anselmo Singian represented by histutor Cristino Singian was valid and produced the effect of transferring in his favorthe ownership of the land in question. And, even disregarding the proper effect ofthis sale, the defendant Anselmo Singian has also acquired the ownership of the landby prescription.

Having reached the conclusion and as the action of the plaintiff against thedefendant Berenguer is entirely based upon the efficacy of the sale of the same landmade in favor of Cornelia Lauchangco, we have to hold also that the complaintagainst the latter is improper.

Therefore, we hereby affirm the judgment appealed form in so far as it absolves thedefendants from the complaint with the costs against the appellants. So ordered.

Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ. ,concur.


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G.R. No. L-20046 March 27, 1968

ROMEO PAYLAGO and ROSARIO DIMAANDAL,petitioners, vs. INESPASTRANA JARABE and THE HONORABLE COURT OF APPEALS, respondents.

M. de la Cruz for petitioners. M.G. Garcia for respondents.

REYES J.B.L.,:

This is an appeal by certiorari from the decision of the Court of Appealsaffirming the lower court's decision in the case of Romeo Paylago, et al. vs. InesPastrana Jarabe, CA-G.R. No. 25031-R, promulgated on June 6, 1962. (Civil Case No.R-709 of the Court of First Instance of Oriental Mindoro).

The entire lot involved in this suit was originally covered by Homestead Patentissued on June 7, 1920 under Act No. 926 and later under OCT No. 251 of theRegistry of Deeds of Mindoro, issued on June 22, 1920 in the name of AnselmoLacatan. On May 17, 1948, after the death of Anselmo Lacatan, TCT No. T-728(which cancelled OCT No. 251) was issued in the name his two sons and heirs, Vidaland Florentino Lacatan. Vidal Lacatan died on August 27, 1950.

On March 23, 1953, Vidal Lacatan's heirs, namely, Maximo, Tomas and LuciaLacatan, executed a deed of sale (Exh. C) in favor of the spouses Romeo Paylagoand Rosario Dimaandal, plaintiffs-petitioners herein, over a portion of the entire lotunder TCT No. T-728, which portion is described as follows:

North Provincial Road; East Property of Romeo Paylago; South Property ofFlorentino Lacatan; West Provincial Road (Nabuslot-Batingan);

containing an area of 3.9500 hectares.

On October 6, 1953, Florentino Lacatan also died, leaving as his heirs his

widow and three children, Felipe, Rosita and Florencia Lacatan. On December 31,1953, the said children of Florentino Lacatan likewise executed a deed of sale (Exh.D) in favor of the same vendees over another portion of the same lot described asfollows:

North Provincial Road (Calapan-Pinamalayan); East Heirs of SoteroMongo; South Aniceta Lolong; West Heirs of Vidal Lacatan;

with an area of 2.8408 hectares.

On March 2, 1954, by virtue of the registration of the two deeds of sale (Exhs.C and D), a new TCT No. T-4208 covering the total area of 6.7908 hectares was

issued in favor of plaintiffs-petitioners, the Paylago spouses. A subsequentsubdivision survey for the purpose of segregating the two aforementioned portions of

land described in the deeds (Exhs. C and D) as well as in the new TCT No. T-4208,however, disclosed that a portion (one half hectare) of the total area purchased byplaintiffs-petitioners and indicated in the sketch Exh. B at a point marked Exh. B-1was being occupied by defendant-respondent. Hence, the action to recoverpossession and ownership of the said portion.

Vis-a-vis the foregoing undisputed facts, the trial court and the Court ofAppeals found that a portion of land in question which is described as follows:

North Provincial Road; East Apolonio Lacatan; South Anselmo Lacatan; West Valentin Lastica;

and with an area of one half hectare is indicated in the sketch of subdivisionplan marked Exh. B-1 of Exh. B; that on November 27, 1938, the said portion of landwas purchased by Hilario Jarabe, late husband of defendant-respondent, from one

Apolonio Lacatan, which sale is evidenced by an unregistered deed of sale (Exh. 6);that Apolonio Lacatan, in turn, bought the same in 1936 from Anselmo Lacatan, theoriginal registered owner in whose favor OCT No. 251 and later TCT No. T-4208 wereissued; that the first deed of sale, also unregistered, executed by Anselmo Lacatan infavor of Apolonio Lacatan was lost during the Japanese occupation; that the hereindefendant-respondent has been in possession of the said portion continuously,

publicly, peacefully and adversely as owner thereof from 1938 up to the present;and, that the herein plaintiffs-petitioners knew, nay, admitted in a deed of lease,paragraph 3 (Exh. 4), that defendant-respondent has been in possession of thepremises since 1945.

After trial, the lower court held that plaintiffs-petitioners were not purchasersin good faith and, accordingly, rendered judgment in favor of defendant-respondent,declaring the latter as owner of the land in question with the right to retainpossession of the same. The decision was affirmed in toto by the Court of Appeals.

From the evidence adduced by the parties evolved the issue: Who has abetter right in case of double sale of real property, the registered buyer or the prior

but unregistered purchaser?

This Court has formulated in no uncertain terms the general principlegoverning the matter: as between two purchasers, the one who has registered thesale in his favor, in good faith, has a preferred right over the other who has notregistered his title, even if the latter is in the actual possession of the immovableproperty (Mendiola v. Pacalda, 10 Phil. 705; Veguillas v. Jaucian, 25 Phil. 315; Po SunTun v. Price, 54 Phil. 192). Indeed, the foregoing principle finds concrete bases in thepertinent provisions of the New Civil Code, Article 1544, providing that if the sameimmovable property should have been sold to different vendees, "the ownership shallbelong to the person acquiring it who in good faith first recorded it in the registry ofproperty."

There is no question that the sales made in favor of plaintiffs-petitioners were


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registered while the alleged sale executed in favor of defendant-respondent was not.Applying the foregoing principle of law to the instant case, it is now contended byplaintiffs-petitioners that their certificate of title must prevail over defendant-respondent, and that the courts below correspondingly committed error in decidingthe case to the contrary.

But there is more than meets the eye in the case at bar. While plaintiffs-petitioners have a registered title, it cannot be denied that their acquisition andsubsequent registration were tainted with the vitiating element of bad faith. It was so

found by both the Court of First Instance and the Court of Appeals, and their findingis conclusive upon us. Thus, in Evangelista vs. Montao, 93 Phil. 275, 279, this Courtruled:

Both the Court of First Instance and the Court of Appeals absolved thedefendants, having found and declared after weighing the evidence that the plaintiff,was not a purchaser in good faith. That this conclusion is a finding of fact and, beinga finding of fact, not subject to review, is too plain to admit of argument.

Both Courts below found that petitioners knew beforehand that the parcel ofland in question was owned by defendant-respondent.1wph1.t

In its decision the Court of Appeals declared that "plaintiffs herein were awareof that peaceful, continuous and adverse possession of defendant since 1945,because this fact is admitted by said plaintiffs in a deed of lease, paragraph 3(Exhibit 4) covering a portion of the entire lot, and situated just across the road fromthe land in question." (Dec., C. App., p. 4).

Considering that the boundaries of the lands that the petitioners Paylagopurchased in 1953 and 1954 were well defined, they must have known that theportion occupied by the defendant-respondent under claim of ownership and leasedto them by the latter was included in the description. And coupled with theirknowledge that defendant-respondent purchased the same from Apolonio Lacatan,plaintiffs-petitioners should have inquired and made an investigation as to the

possible defects of the title of the Lacatan heirs over the entire lot sold to them,granting that the latter's certificate of title was clear. This, they failed to do. Theycannot now claim complete ignorance of defendant-respondent's claim over theproperty. As was well stated in one case, "a purchaser who has knowledge of factswhich should put him upon inquiry and investigation as to possible defects of the titleof the vendor and fails to make such inquiry and investigation, cannot claim that heis a purchaser in good faith and has acquired a valid title thereto". (Sampilo vs. Courtof Appeals, 55 O.G. No. 30, p. 5772). To the same effect is the following doctrine laiddown by the Supreme Court in the case of Leung Yee v. F.L. Strong Machinery Co. &Williamson, 37 Phil. 644. Said the Court:

One who purchases real estate with knowledge of a defect or lack of title inhis vendor cannot claim that he has acquired title thereto in good faith, as against

the true owner of the land or of an interest therein; and the same rule must beapplied to one who has knowledge of facts which should have put him upon such

inquiry and investigation as might be necessary to acquaint him with the defects ofthe title of his vendor. A purchaser cannot close his eyes to facts which should put areasonable man upon his guard and then claims that he acted in good faith underthe belief that there was no defect in the title of the vendor. His mere refusal tobelieve that such defect exists, or his willful closing of his eyes to the possibility ofthe existence of a defect in his vendor's title, will not make him an innocentpurchaser for value, if it afterwards develops that the title was defective, and itappears that he had such notice of the defect as would have led to its discovery hadhe acted with that measure of precaution which may reasonably be required of a

prudent man in a like situation.

The fundamental premise of the preferential rights established by Article 1544of the New Civil Code is good faith (Bernas v. Bolo, 81 Phil. 16). To be entitled to thepriority, the second vendee must not only show prior recording of his deed ofconveyance or possession of the property sold, but must, above all, have acted ingood faith, that is to say, without knowledge of the existence of another alienationby his vendor to a stranger (Obras Pias v. Ignacio, 17 Phil. 45; Leung Yee v. F.L.Strong Machinery Co., et al., op. cit.; Emas v. De Zuzuarregui, et al., 53 Phil. 197).Short of this qualifying circumstance, the mantle of legal protection and theconsequential guarantee of indefeasibility of title to the registered property will not inany way shelter the recording purchaser against known and just claims of a priorthough unregistered buyer. Verily, it is now settled jurisprudence that knowledge of a

prior transfer of a registered property by a subsequent purchaser makes him apurchaser in bad faith and his knowledge of such transfer vitiates his title acquired byvirtue of the later instrument of conveyance which was registered in the Registry ofDeeds (Ignacio v. Chua Hong, 52 Phil. 940; Gustilo, et al. v. Maravilla, 48 Phil. 442;Ramos, et al. v. Dueno, et al., 50 Phil. 786). The registration of the later instrumentcreates no right as against the first purchaser. For the rights secured under theprovisions of Article 1544 of the New Civil Code to the one of the two purchasers ofthe same real estate, who has secured and inscribed his title thereto in the Registryof Deeds, do not accrue, as already mentioned, unless such inscription is done ingood faith (Leung Yee v. F.L. Strong Machinery Co., et al., op. cit.). To holdotherwise would reduce the Torrens system to a shield for the commission of fraud(Gustilo, et al. v. Maravilla, op. cit.).

Plaintiffs-petitioners cited the case of Bacolod-Murcia Milling Co., Inc. v. De laRama, et al., G.R. No. L-4526 September 1959, to disprove bad faith ascribed tothem. But the citation does not fit with the facts of the present case. It is to be notedthat the second purchaser in the De la Rama case had no knowledge of the previoussale and possession of the first purchaser at the time he (second purchaser) acquirethe property involved therein. "(T)here is nothing in the complaint which may in anyway indicate that he knew such possession and encumbrance when he boug

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