Sales Cases

G.R. No.
L-49654 February 26, 1981
VIRGILIO DIONISIO, petitioner,
vs.
HON. VICENTE PATERNO, in substitution on HON. BALTAZAR AQUINO as Minister of Public Highways and
Chairman of the Contract Price Adjustment Committee and HON. NEMESIO YABUT as Municipal Mayor of Makati,
Metro Manila, respondents.
BARREDO, J.:
Motion for reconsideration filed by respondent Commissioner of Highways of this Court's resolution of December 17, 1980
which made definite that the amount to be paid to petitioner should be P1,955,060.99, without interest. It is the prayer of
respondent in his motion for reconsideration that We deny the motion for reconsideration of petitioner dated August 24, 1980 of
Our decision of July 23, 1980 in which we held that in computing the adjustment of the payment of petitioner, PD 454 cannot
and should not be applied not only because of a Presidential Directive to that effect, but because legally, it is inapplicable, the
adjustment requested by him being one made. even before the work was began.
It should be noted at the outset that Our decision of July 23, 1980 is already final as to respondent Commissioner insofar at least
as the non-application of PD 454 is concerned, with the result that the ratio of 13.874% of adjustment recommended by the
CPAC Technical Committee is now binding on respondent.
What appears now to be the common thrust of the two motions for reconsideration before Us is the basis of the adjustment in
question. Petitioner's theory is that such basis should be the P17,741,755.80, the price stipulated in the contract of January 28,
1976, which, however, respondent claims assumes that the contract in question is a "lump sum" one, instead of being "a unit
price contract". What is striking, on the other hand, in the motion for reconsideration of respondent is the quotation from the
letter of respondent himself stating that:
Even if we do admit the legal as well as the factual basis of the Resolution, that is, the contractor should be
paid based on unit prices per government estimate (g. e.) updated as of February 7, 1976, the net balance due
the contractor is P518,932.08 only.
It is informed that subject contract is a 'unit price contract' as distinguished from a 'lump sum contract' which
means that payments to the contractor will be made only for the actual quantities of contract items performed
(or as built quantities) in accordance with plans and specifications. In a unit price contract, the contract amount
agreed upon is merely an estimate. Actual payments may be less or more than the contract amount depending
upon the actual quantities performed multiplied by the agreed unit prices.
It is true that the estimated quantities in the contract valued at unit prices per government estimate updated as
of February 7, 1976 was P20,203.340.90. But the actual quantities of contract items performed or
accomplished by the contractor as shown in the 'Final Statement of Work Accomplished' also valued at the
same updated unit prices is only P19,316,124.77. Since the contractor already received P18,290,674.58 per
Final Payment Voucher dated November 29, 1977 and price adjustment in the amount of P506,518.11, the net
balance, therefore, due the contractor is only P518,932.08.
Indeed, the foregoing assertions are quite revealing.
First, it is now clear that there is admittedly due to the petitioner a balance of P518,932.08 on top of the P506,518.11 which was
claimed was the only adjustment petitioner is entitled to per computation of Cabinet Price Adjustment Committee, and allegedly
approved by the President. As will be recalled, respondent's former position was adamantly that the adjustment was definitely
P506,518.11 only.
Now, it turns out after insistent protest and demand of petitioner that the actual work accomplished by petitioner, per
computation and records of the MPH office itself amounted to P18,290,674.58, while the only price adjustment granted to
petitioner on that basis of work actually accomplished was P506,518.11. One readily notes in these facts and figures something
1|M i d n i g h t A p p o i n t e e s
more than meets the eye in the way the MPH staff has been dealing with petitioner. It is true respondent asserts additionally that
the amount to which petitioner is entitled, per "the Final Statement of Work Accomplished, (was), also 'valued at the same
updated unit prices' is only P19,316,124.77", thereby admitting that indeed there is still a balance of P518,932.08 unpaid to
petitioner, in addition to the aforementioned P506,518.11, something at least implicitly denied before, since the Ministry was
insisting then that petitioner is entitled to no more than P506,518.11 already received by him as adjustment. Such assertion of
respondent, however, does not persuade Us that We have approached the matter here is controversy erroneously in Our decision
and the earlier resolution of petitioner's motion.
It cannot be denied that when the P506,518.11 adjustment was paid to petitioner, the same corresponded almost arithmetically
exactly to 2.86% of P17,741,755.80, the contract price, which means that the CPAC considered 2.86% as the proper adjustment
ratio and the "lump sum" as it was. In othetr words, such adjustment did not take into account the distinction now being pointed
out by respondent between "a unit price-contract" The only point of issue then was whether or not to apply P.D. 454 tot he
1
work here in dispute. As We have previously said as the thrust of Our decision of July 23, 1980, the crux of this controversy
2
lies in the failure of respondent commissioner to obey the presidential directive and even the law itself, which both make P.D.
454 inapplicable here. Parentically, it may be mentioned at this point thatg this motion for reconsideration respondent does not
discuss in any way the application or non-application of P.D. 454 hereto, seemingly agreeing that it does not . And as computed
before, an adjustment applying P.D. 454 would result in an adjustment of practically 2.86% on the lump sum compensation
stipulated in the contract, whereas, without applying P.D. 454, the percentage would be 13.874%, which was that petitioner
asked for since the start and upheld by Us in Our decision.
With these new considerations in mind, it is dificult for Us to understand how it can now be contended that the actual work
accomplished by petitioner was P18,290,674.58 and that said amount already included the unit price adjustment as of February
7, 1976. If that were so, then why was petitioner paid an adjustment of P506,518.11? And further, how come it is now admitted
that there is in fact still due the petitioner the sum of P518,932.08 on top of te above P506, 518.11? Such varying positions on
the part of the MPH staff (from 0 to P506,518.11 and now to P1,205,450.19) do not speak well of how they gave attention to
petitioner's request for adjustment. We perceive some seeming attempt to reduce the same, using one excuse and explanation or
another, obviously not well studied.
Now, considering that the 2.86% adjustment was predicated on the lump sum contract price of P17,741,755.80, it is but fair and
logical that with the non-application of P.d. 454, the corresponding point of reference, concededly, the actual work
accomplished, should remain as the basis in computing the adjustment to which petitioner is entitled. The so-called "unit price"
formula only now brought to the fore by respondent does not appeal to Us to be sufficiently justifiable. We have read the
contract and We have been unable to see any specific stipulation to such effect, even as the contract does provide that the lump
sum stipulated is "subject to change to conform with the actual quantities of work perpformed." Thus, with the admitted value
of work accomplished or performed by petitioner of P18,290,674.58. And applying the 13.874% factor found by the CPAC
Technical Commitee as reasonable and justified by the circumstance, it is evident that petitioner should have been given a total
3
adjustment of P2,537,648.19. Subtracting from this the P506.518.11 he has already received, Subtracting from this the
P506,518.11 he has already received, then there is due him the sum of P2,031,130.08. Of course, the Court cannot grant him
this sum because it exceeds what he had demanded and prayed for which is only P1,955 ,060.99.
WHEREFORE, it being anyway admitted by respondent in his own letter quoted in his motion for reconsideration that there is
still due petitioner the sum of P518,932.08 on top of the P506,518.11 already received by him as adjustment, which goes to
show that the figures of the MPH staff in this case cannot be readily relied upon, the motion for reconsideration of the
respondent is denied, whereas that of petitioner is granted in part, in the sense that instead of leaving the amount of the
adjustment to be paid petitioner to be decided administratively, as already intimidated in Our resolution of December 17, 1980,
We are taking it upon Ourselves to fix said amount at the same P1,955,060.99, only because the P2,031,130.08, he is actually
entitled to is in excess of what he has prayed for in his petition herein.
With this resolution, the Court feels that this controversy should be considered terminated. The Government is entitled as a rule
to the presumption of regularity and correctness in its actuations, but when as We have seen above, some elements of
inaccuracy in its stand appear not only once but on several occasions, it is but fair and just to those who contract or deal with the
government that they get what is due them, and, indeed, as soon as circumstances, giving allowance to the public interest, as
should always be the case, permit, as otherwise there would be reason to agree to the proposition that even the good faith of the
Government should be subject to proof.
Why mandamus lies under the above circumstances has already been explained by Us in Our decision. We hold that when the
only question is whether or not there is a clear legal right on the part of a petitioner to payment of a sum that can be determined
fairly and accurately without the need of a trial and, after all, the respondent admits liability, subject only to the determination of
the correct amount, mandamus is a possible remedy, when taking all circumstances into account, only unjust delay, inequity and
further injury to the petitioner would result.
IT IS SO ORDERED,
Concepcion, Jr., Fernandez and De Castro, JJ., concur.
Aquino J., concurs in the result.
Abad Santos, J., took no part.
G.R. No. 76031 March 2, 1994
MIGUEL SEMIRA, petitioner,
vs.
COURT OF APPEALS and BUENAVENTURA AN, respondents.
Antonio M. Chavez for petitioner.
Onofre K. Quizon for private respondent.
BELLOSILLO, J.:
Juana Gutierrez owned a parcel of land, later designated as Lot 4221, situated in Sto. Niño, Taysan, Batangas which she sold to
private respondent Buenaventura An for P850.00 by means of a "Kasulatan ng Bilihan ng Lupa" executed on 4 January
1961. Aside from the estimated area of 822.5 square meters appearing in the deed of sale, the following boundaries of the lot
1
are also stated: on the north, by Taysan-Lobo-Sto. Niño-Pinagbayanan and Sto. Niño-Dagatan Road (Junction or Intersection
road); on the east, by Sto. Niño-Pinagbayanan Road and Juana Gutierrez; on the south, by Sto. Niño School site; and, on the
west, by Sto. Niño-Dagatan Road.
Thereafter, private respondent entered the premises observing thereby the boundaries of the property and not the area given. 2
Subsequently, he acquired two (2) other parcels of land, Lot 4215 with an area of 8,606-square meters located on the east of Lot
4221 from the spouses Pascual Hornilla and Gliceria Ilao on 30 June 1964, and another lot with an area of 11,000-square meters
from Santiago Asi. Pascual Hornilla is the son of Juana Gutierrez.
On 18 October 1972, private respondent sold Lot 4221 to his nephew, Cipriano Ramirez, and spouse by means of another
"Kasulatan ng Bilihan ng Lupa" for P2,500.00, where the lot was described with the same area and boundaries mentioned in the
3
4 January 1961 "Kasulatan ng Bilihan ng Lupa" with the exception of the boundary on the east; which was changed from "Juana
Gutierrez" to "Buenaventura An" to reflect the acquisition by private respondent of the adjoining Lot 4215.
Like his uncle before him, Cipriano Ramirez occupied the lot by observing the boundaries stated in the document of sale.
Subsequently, he applied for a new tax declaration to replace the one in the name of his uncle but was denied in view of an
existing mortgage executed by Buenaventura An in favor of the Taysan Rural Bank, which was only settled in 1979.
On 12 March 1979, Cipriano Ramirez sold the lot to petitioner Miguel Semira for P20,000.00. However, the area stated in the
"Kasulatan ng Bilihan ng Lupa" was 2,200 square meters and not 822.5 appearing in the previous document. As delimited by
4
its boundaries, the lot is actually much bigger than 822.5 square meters. This was confirmed by the Taysan Cadastral Mapping
Survey conducted in 1974 where it is definitely stated that the area of Lot 4221 is 2,200 square meters; hence, the reason for the
change.
On 17 March 1979, Miguel Semira entered the very same premises previously occupied by Ramirez and began the construction
of a new rice-mill. However, on 18 April 1979, a complaint for forcible entry was filed against him by private respondent in the
Municipal Circuit Trial Court of Taysan-Lobo. The latter claimed that the area of Lot 4221 was 822.5 square meters only and
5
that the excess of 1,377 square meters forcibly occupied by petitioner formed part of Lot 4215 which he acquired from the
Hornillas in 1964.
Petitioner admits having entered the disputed portion on 17 March 1979, but denies having illegally done so. In his answer,
petitioner claims ownership over the property by invoking the 1979 deed of sale in his favor by Cipriano Ramirez.
Meanwhile, during the pendency of the case, private respondent applied for and was issued original Certificate of Title No. P-
12694 over the lots he purchased from the Hornillas and that from Santiago Asi with a combined area of 19,606 square meters.
However, the title was issued for 2 hectares, 8 ares and 33 centares or 20,833 square meters. No explanation was given for the
difference.
The case was initially dismissed for lack of jurisdiction. The municipal court of Taysan-Lobo ruled that since the issue of prior
6
physical possession could not be resolved without first deciding on the ownership, dismissal was proper since forcible entry
cases involve the sole issue of prior physical possession. However, upon motion, and in view of the passage of B.P. Blg. 129,
which took effect 14 August 1981, providing that "[m]etropolitan trial courts, municipal trial courts, and municipal circuit trial
courts, without distinction, may try cases of forcible entry and detainer even if the question of ownership is raised in the
pleadings and possession could not be resolved without deciding the ownership," the trial court modified its earlier resolution
7
and adjudged petitioner the rightful and lawful owner and possessor of the area in question and cannot therefore be ejected
therefrom. 8
Private respondent appealed to the Regional Trial Court which reversed the Municipal Circuit Trial Court, ruling that it was not
necessary to delve on the issue of ownership since the question of prior physical possession could be resolved independently,
and that since petitioner admitted having possessed the disputed area on 12 March 1979 while the possession of private
respondent began way back in 1964, the latter clearly had prior possession. Since petitioner did not specifically deny the
9
allegation of forcible deprivation of property in his Answer, the averment in that regard was deemed admitted under Sec. 1,
Rule 9, of the Rules of Court. As a final word, the RTC held that "no matter how righteous defendant's claim of ownership
10
over the property may be, he has not the right to take the law into his own hands by forcibly depriving plaintiff of his prior
actual possession of the property." 11
Petitioner appealed to the Court of Appeals, but without success. In its Decision of 22 April 1986, respondent appellate court
12
dismissed the petition for review and affirmed the RTC decision in toto. 13
Petitioner contends that the Court of Appeals erred: (1) in upholding this ejectment from the disputed area despite the absence
of clear and indubitable proof that private respondent had prior physical possession and that he was deprived of the same by
force, intimidation, strategy or stealth; and, (2) in not holding that the question of ownership is so necessarily involved that it
would be impossible to decide the question of bare possession without first setting that of ownership. 14
We agree with the position of petitioner and sustain the Municipal Circuit Trial Court in holding that in the case at bench the
issue of possession cannot be decide independently of the question of ownership. Hence, we reverse the Court of Appeals as
well as the Regional Trial Court.
In his complaint in the MCTC, private respondent claims constructive possession of the disputed portion since 30 June 1964
when he bought the same as part of Lot 4215 of the Hornilla spouses. Likewise, petitioner bases his occupancy of the disputed
portion on the 1979 sale of Lot 4221 in his favor, which he contends is separate and distinct from Lot 4215 of private
respondent. Clearly, the question of who has prior possession hinges on the question of who the real owner of the disputed
portion is. And the latter, in turn, depends on whether such portion is part of Lot 4215 of private respondent or of Lot 4221 of
petitioner.
It is not disputed that Lot 4221 of petitioner was once owned by private respondent; that the latter sold the same to his nephew,
Cipriano Ramirez, in 1972 for the lump sum of P2,500.00; that the "Kasulatan ng Bilihan ng Lupa" incorporated both the
estimated area and the definite boundaries of the land; and, that private respondent's nephew in turn sold the lot to petitioner in
1979 with the very same boundaries mentioned in the deed of sale executed in his favor by his uncle Buenaventura An.
Petitioner claims that owns the entire 2,200 square meters since it is the size of Lot 4221 following its established boundaries.
On the other hand, private respondent insists that he only sold 822.5 square meters, hence, his nephew could not have
transferred a bigger area to petitioner.
We sustain petitioner as did the Municipal Circuit Trial Court. We have repeatedly ruled that where land is sold for a lump sum
and not so much per unit of measure or number, the boundaries of the land stated in the contract determine the effects and scope
of the sale, not the area thereof. Hence, the vendors are obligated to deliver all the land included within the boundaries,
15
regardless of whether the real area should be greater or smaller than that recited in the deed. This is particularly true where the
area is described as "humigit kumulang," that is, more or less. These conclusions are drawn from Art. 1542 of the Civil code
16
which states —
In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or
number, there shall be no increase or decrease of the price, although there be a greater or less are or number
than that stated in the contract.
The same rule shall be applied when two or more immovables are sold for a single price; but if, besides
mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number
should be designated in the contract, the vendor shall be bound to deliver all that is included within said
boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do
so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the
contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated.
Hence, when private respondent Buenaventura An sold Lot 4221 to his nephew Cipriano Ramirez by means of a "Kasulatan ng
Bilihan ng Lupa" which incorporated both the area and the definite boundaries of the lot, the former transferred not merely the
822.5 square meters stated in their document of sale but the entire area circumscribed within its boundaries.
The fact that the area turned out to be 2,200 square meters; instead of only 822.5 square meters, is of no moment and does not
entitle private respondent to the difference because the definite object sold was Lot 4221 in its entirety and not just any unit of
measure or number. That the sale resulted in a disadvantage to private respondent does not confer on him any cause of action
17
against petitioner. 18
Besides, we are hardly convinced that Buenaventura An entered into the sale unaware that Lot 4221 actually had a much bigger
area than it purported to be. Even as early as the sale between him and his nephew, private respondent was already aware of the
difference between the stated area of Lot 4221 and its actual size. His nephew Cipriano Ramirez testified, and private
respondent did not dispute, that when asked why the area of Lot 4221 stated in their deed of sale was much smaller than the
actual size, private respondent explained that it was to minimize taxes. Private respondent likewise did not deny that his
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nephew merely transferred to petitioner the very same area which he himself had acquired and possessed in 1961 when he
bought the same from Juana Gutierrez, the original owner of the lot.
Considering the foregoing, it is not difficult to sustain petitioner over private respondent when the latter failed even to prove
prior possession in his favor. Absent such element, it cannot be said that he was forcibly deprived of the disputed portion.
Hence, his action for forcible entry must fail.
It should be emphasized, however, that the case before us is merely an action for forcible entry and that the issue of ownership
was decided for the sole purpose of resolving priority of possession. Hence, any pronouncement made affecting ownership of
the disputed portion is to be regarded merely as provisional, hence, does not bar nor prejudice an action between the same
parties involving title to the land. 20
WHEREFORE, the Decision of the Intermediate Appellate Court (now Court of Appeals) dated 22 April 1986 affirming that of
the Regional Trial Court of 13 January 1984 in toto is REVERSED and SET ASIDE and another one entered REINSTATING,
AFFIRMING and REITERATING the Decision of 4 May 1983 of the Municipal Circuit Trial Court of Taysan-Lobo, Batangas,
with costs against private respondent Buenaventura An.
SO ORDERED.
Cruz, Davide, Jr. Quiason and Kapunan, J., concur.
G.R. No. 196444
DASMARIÑAS T. ARCAINA and MAGNANI T. BANTA, Petitioners

vs.
NOEMI L. INGRAM, represented by MA. NENETTE L. ARCHINUE, Respondent
DECISION
JARDELEZA, J.:
This is a Petition for Review on Certiorari assailing the October 26, 2010 Decision and March 1 7, 2011 Resolution of the
1 2 3
Court of Appeals (CA) in CA-G.R. SP No. 107997, which affirmed with modification the March 11, 2009 Decision of the 4
Regional Trial Court-Branch 7 of Legazpi City (RTC). The RTC reversed the July 31, 2008 Order of the 3rd Municipal Circuit
5
Trial Court of Sto. Domingo-Manito in Albay (MCTC). The MCTC dismissed for insufficiency of evidence Civil Case No. S-
241-a case for recovery of ownership and title to real property, possession and damages with preliminary injunction (recovery
case)-filed by respondent Noemi L. Ingram (Ingram) against petitioners Dasmariñas T. Arcaina (Arcaina) and Magnani T.
Banta (Banta) [collectively, petitioners].
Arcaina is the owner of Lot No. 3230 (property) located at Salvacion, Sto. Domingo, Albay. Sometime in 2004, her attorney-in-
fact, Banta, entered into a contract with Ingram for the sale of the property. Banta showed Ingram and the latter’s attorney-in-
fact, respondent Ma. Nenette L. Archinue (Archinue), the metes and bounds of the property and represented that Lot No. 3230
has an area of more or less 6,200 aquare meters (sq.m.) per the tax declaration covering it. The contract price was
₱1,860,000.00, with Ingram making installment payments for the property from May 5, 2004 to February 10, 2005 totaling
₱1,715,000.00. Banta and Ingram thereafter executed a Memorandum of Agreement acknowledging the previous payments and
6
that Ingram still had an obligation to pay the remaining balance in the amount of ₱145,000.00. They also separately executed
7
deeds of absolute sale over the property in Ingram’s favor. Both deeds described the property to wit:
DESCRIPTION
A parcel of land Lot No. 3230, situated at Salvacion, Sto. Domingo, Albay, Bounded on the NE-by Lot 3184 on the SE-by
Seashore on the SW-Lot No. 3914 and on the NW-by Road with an area of SIX THOUSAND TWO HUNDRED (6,200) sq.
meters more or less. 8
Subsequently, Ingram caused the property to be surveyed and discovered that Lot No. 3230 has an area of 12,000 sq. m. Upon
learning of the actual area of the property, Banta allegedly insisted that the difference of 5,800 sq. m. remains unsold. This was
opposed by Ingram who claims that she owns the whole lot by virtue of the sale. Thus, Archinue, on behalf of Ingram,
9
instituted the recovery case, docketed as Civil Case No. S-241, against petitioners before the MCTC.
In her Complaint, Ingram alleged that upon discovery of the actual area of the property, Banta insisted on fencing the portion
which she claimed to be unsold. Ingram further maintained that she is ready to pay the balance of ₱145,000.00 as soon as
petitioners recognize her ownership of the whole property. After all, the sale contemplated the entire property as in fact the
boundaries of the lot were clearly stated in the deeds of sale. Accordingly, Ingram prayed that the MCTC declare her owner of
10
the whole property and order petitioners to pay moral damages, attorney's fees and litigation expenses. She also asked the court
to issue a writ of preliminary injunction to enjoin the petitioners from undertaking acts of ownership over the alleged unsold
portion. 11
In their Answer with Counterclaim, petitioners denied that the sale contemplates the entire property and contended that the
parties agreed that only 6,200 sq. m. shall be sold at the rate of ₱300.00 per sq. m. This, according to petitioners, is consistent
12
with the contemporaneous acts of the parties: Ingram declared only 6,200 sq. m. of the property for tax purposes, while Arcaina
declared the remaining portion under her name with no objection from Ingram. Petitioners averred that since Ingram failed to
show that that she has a right over the unsold portion of the property, the complaint for recovery of possession should be
dismissed. By way of counterclaim, petitioners asked for the payment of the balance of ₱145,000.00, as well as attorney's fees,
13
litigation expenses, and costs of suit. 14
Trial ensued. After Ingram presented her evidence, petitioners filed a demurrer on the grounds that (1) Ingram failed to
sufficiently establish her claim and (2) her claim lacks basis in fact and in law.
15
In its Order dated July 31, 2008, the MCTC granted petitioners' demurrer and counterclaim against Ingram, thus:
WHEREFORE, in view of the foregoing this instant case is hereby ordered DISMISSED for insufficiency of evidence.
Plaintiffs are further ordered to pay to the Defendants the remaining amount of ONE HUNDRED FORTY FIVE
THOUSAND (PhP 145,000.00) PESOS as counterclaim for the remaining balance of the contract as admitted by the Plaintiffs
during the Pre-Trial.
SO ORDERED. 16
The MCTC held that the testimonies of Ingram and her witnesses suffer from several inconsistencies and improbabilities. For
instance, while Archinue claimed that what was sold was the entire property, she also admitted in her cross-examination that she
was not present when the sale was consummated between Banta, Ingram and Ingram's husband Jeffrey. Further, Archinue stated
that she was made aware before their ocular visit to the property that the lot being sold is only 6,200 sq. m. based on the tax
declaration covering it. Ingram also had knowledge of the area of the property as confirmed by her husband Jeffrey's
17
testimony. Jeffrey also testified that Banta gave them a copy of the tax declaration of the property.18
The MCTC declared that the survey showed that the property was 12,000 sq. m. or more than what was stated in the deeds of
sale. For Ingram to be awarded the excess 5,800 sq. m. portion of the property, she should have presented evidence that she
19
paid for the surplus area consistent with Article 1540 of the Civil Code which reads:
Art. 1540. If, in the case of the preceding article, there is a greater area or number in the immovable than that stated in the
contract, the vendee may accept the area included in the contract and reject the rest. If he accepts the whole area, he must pay
for the same at the contract rate.
Accordingly, since Ingram failed to show that she paid for the value of the excess land area, the MCTC held that she cannot
claim ownership and possession of the whole property.
On appeal, the RTC reversed and set aside the Order of the MCTC, to wit:
WHEREFORE, premises considered, the assailed Decision dated July 31, 2008 by the Municipal [Circuit] Trial Court of Sto.
Domingo, Al bay is hereby REVERSED and SET ASIDE and a new judgment is hereby rendered as follows:
1. Ordering plaintiff-appellant [referring to Ingram] to pay the defendant-appellee [referring to Arcaina] the amount of
₱145,000.00 representing the remaining balance of the purchase price of Lot 3230;
2. Declaring Noemi L. Ingram the owner of the whole Lot 3230;
3. Ordering defendants-appellees Dasmariñas T. Arcaina and Magnani Banta or their agents to remove the fence constructed by
them on the said lot and to respect the peaceful possession of Noemi Ingram over the same;
4. Ordering defendants-appellees Dasmariñas Arcaina and Magnani Banta to pay jointly and severally the plaintiff-appellent
Noemi Ingram the amount of ₱5,000.00 as reasonable attorney's fees; and
5. To pay the cost of suit.
SO ORDERED. 20
The RTC found that neither of the parties presented competent evidence to prove the property's actual area. Except for a
photocopy of the cadastral map purportedly showing the graphical presentation of the property, no plan duly prepared and
approved by the proper government agency showing the area of the lot was presented. Hence, the RTC concluded that the area
of Lot No. 3230 as shown by the boundaries indicated in the deeds of sale is only 6,200 sq. m. more or less. Having sold Lot
No. 3230 to Ingram, Arcaina must vacate it. 21
In addition, the RTC held that Article 1542, which covers sale of real estate in lump sum, applies in this case.
Having apparently sold the entire Lot No. 3230 for a lump sum, Arcaina, as the vendor, is obligated to deliver all the land
included in the boundaries of the property, regardless of whether the real area should be greater or smaller than what is recited
in the deeds of sale. 22
In its Decision dated October 26, 2010, the CA affirmed the RTC's ruling with modification. It deleted paragraphs 4 and 5 of the
dispositive portion of the RTC's Decision, which ordered petitioners to pay ₱5,000.00 as attorney's fees and costs of suit,
respectively.23
The CA agreed with the RTC that other than the uniform statements of the parties, no evidence was presented to show that the
property was found to have an actual area of more or less 12,000 sq. m. It held that the parties' statements cannot be simply
admitted as true and correct because the area of the land is a matter of public record and presumed to have been recorded in the
Registry of Deeds. The CA noted that the best evidence should have been a certified true copy of the survey plan duly approved
by the proper government agency. 24
The CA also agreed with the RTC that the sale was made for a lump sum and not on a per-square-meter basis. The parties
merely agreed on the purchase price of ₱l,860,000.00 for the 6,200 sq. m. lot, with the deed of sale providing for the specific
boundaries of the property. Citing Rudolf Lietz, Inc. v. Court of Appeals, the CA explained that in case of conflict between the
25 26
area and the boundaries of a land subject of the sale, the vendor is obliged to deliver to the vendee everything within the
boundaries. This is in consonance with Article 1542 of the Civil Code. Further, the CA found the area in excess "substantial"
which, to its mind, "should have not escaped the discerning eye of an ordinary vendor of a piece of land." Thus, it held that the
27
RTC correctly ordered petitioners to deliver the entire property to Ingram.
The CA, however, deleted the award of attorney's fees and the costs of suit, stating that there was no basis in awarding them.
First, the RTC did not discuss the grounds for granting attorney's fees in the body of its decision. Second, Arcaina cannot be
faulted for claiming and then fencing the excess area of the land after the survey on her honest belief that the ownership
remained with her. 28
Petitioners moved for reconsideration, raising for the first time the issue of prescription. They pleaded that under Article
1543 of the Civil Code, Ingram should have filed the action within six months from the delivery of the property. Counting
29
from Arcaina's execution of the notarized deed of absolute sale on April 13, 2005, petitioners concluded that the filing of the
case only on January 25, 2006 is already time-barred. The CA denied petitioners' motion for reconsideration and ruled that
30
Article 1543 does not apply because Ingram had no intention of rescinding the sale. In fact, she instituted the action to recover
the excess portion of the land that petitioners claimed to be unsold. Thus, insofar as Ingram is concerned, that portion remained
undelivered. 31
Petitioners now assail the CA' s declaration that the sale of the property was made for a lump sum. They insist that they sold the
property on a per-square-meter basis, at the rate of ₱300.00 per sq. m. They further claim that they were aware that the property
contains more than 6,200 sq. m. According to petitioners, this is the reason why the area sold is specifically stated in the deeds
of sale. Unfortunately, in the drafting of the deeds, the word "portion" was omitted. They allege that contemporaneously with
the execution of the formal contract of sale, they delivered the area sold and constructed a fence delineating the unsold portion
of the property. Ingram allegedly recognized the demarcation because she introduced improvements confined to the area
32
delivered. Since the sale was on a per-square-meter basis, petitioners argue that it is Article 1539, and not Article 1542 of the
33 34
Civil Code, which governs. 35
In her Comment, Ingram accuses petitioners of raising new and irrelevant issues based on factual allegations which they cannot
in any case prove, as a consequence of their filing a demurrer to evidence. She maintains that the only issue for resolution is
36
whether the sale was made on a lump sum or per-square-meter basis. On this score, Ingram asserts that the parties intended the
sale of the entire lot, the boundaries of which were stated in the deeds of sale. These deeds of sale, as observed by the CA, did
not contain any qualification. 37
II
At the outset, we find that contrary to the findings of the RTC and the CA, the result of the survey conducted on the property
is not a disputed fact. In their Answer to the Complaint, petitioners admitted that when the property was surveyed, it yielded an
area of more or less 12,000 sq. m. Nevertheless, petitioners now proffer that they agree with the CA that the final survey of the
38
property is not yet approved; hence, there can be no valid verdict for the final adjudication of the parties' rights under the
contract of sale.39
We reject petitioners' contention on this point.
Judicial admissions made by the parties in the pleadings, or in the course of the trial or other proceedings in the same case, are
conclusive and do not require further evidence to prove them. These admissions cannot be contradicted unless previously shown
to have been made through palpable mistake or that no such admission was made. Petitioners do not deny their previous
40
admission, much less allege that they had made a palpable mistake. Thus, they are bound by it.
We now resolve the main issue in this case and hold that Lot No. 3230 was sold for a lump sum. In sales involving real estate,
the parties may choose between two types of pricing agreement: a unit price contract wherein the purchase price is determined
by way of reference to a stated rate per unit area (e.g, ₱1,000.00 per sq. m.) or a lump sum contract which states a full
purchase price for an immovable the area of which may be declared based on an estimate or where both the area and boundaries
are stated (e.g., ₱1 million for 1,000 sq. m., etc.). Here, the Deed of Sale executed by Banta on March 21, 2005 and the Deed
41 42
of Sale executed by Arcaina on April 13, 2005 both show that the property was conveyed to Ingram at the predetermined price
43
of ₱1,860,000.00. There was no indication that it was bought on a per-square-meter basis. Thus, Article 1542 of the Civil Code
governs the sale, viz.:
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in the
contract.
The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the
boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract,
the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number
specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is
lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what
has been stipulated.
The provision teaches that where both the area and the boundaries of the immovable are declared in a sale of real estate for a
lump sum, the area covered within the boundaries of the immovable prevails over the stated area. The vendor is obliged to
44
deliver all that is included within the boundaries regardless of whether the actual area is more than what was specified in the
contract of sale; and he/she shall do so without a corresponding increase in the contract price. This is particularly true when the
stated area is qualified to be approximate only, such as when the words "more or less" were used. 45
The deeds of sale in this case provide both the boundaries and the estimated area of the property. The land is bounded on the
North East by Lot No. 3184, on the South East by seashore, on the South West by Lot No. 3914 and on the North West by a
road. It has an area of more or less 6,200 sq. m. The uniform allegations of petitioners and Ingram, however, reveal that the
46
actual area within the boundaries of the property amounts to more or less 12,000 sq. m., with a difference of 5,800 sq. m. from
what was stated in the deeds of sale. With Article 1542 in mind, the RTC and the CA ordered petitioners to deliver the excess
area to Ingram.
They are mistaken.
In Del Prado v. Spouses Caballero, we were confronted with facts analogous to the present petition. Pending the issuance of
47
the Original Certificate of Title (OCT) in their name, Spouses Caballero sold a parcel of land to Del Prado. The contract of sale
stated both the property's boundaries and estimated area of more or less 4,000 sq. m. Later, when the OCT was issued, the
technical description of the property appeared to be 14,457 sq. m., more or less. Del Prado alleged that Spouses Caballero were
bound to deliver all that was included in the boundaries of the land since the sale was made for a lump sum. Although, we
agreed with Del Prado that the sale partakes of the nature of a lump sum contract, we did not apply Article 1542. In holding that
Del Prado is entitled only to the area stated in the contract of sale, we explained:
The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an exception. It
held:
"A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference to its area
does not thereby ipso facto take all risk of quantity in the land.
xxx
In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of ₱40,000.00 for
a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on
the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of sale of land in a mass, the specific
boundaries stated in the contract must control over any other statement, with respect to the area contained within its boundaries.
Black's Law Dictionary defines the phrase "more or less" to mean:
"About; substantially; or approximately; implying that both parties assume the risk of any ordinary discrepancy. The words are
intended to cover slight or unimportant inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d 408; and are
ordinarily to be interpreted as taking care of unsubstantial differences or differences of small importance compared to
the whole number of items transferred."
Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference in the area is
obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should be deemed
included in the deed of sale. (Emphasis supplied; citations omitted.)
48
In a lump sum contract, a vendor is generally obligated to deliver all the land covered within the boundaries, regardless of
whether the real area should be greater or smaller than that recited in the deed. However, in case there is conflict between the
49
area actually covered by the boundaries and the estimated area stated in the contract of sale, he/she shall do so only when the
excess or deficiency between the former and the latter is reasonable. 50
Applying Del Prado to the case before us, we find that the difference of 5,800 sq. m. is too substantial to be considered
reasonable. We note that only 6,200 sq. m. was agreed upon between petitioners and Ingram. Declaring Ingram as the owner of
the whole 12,000 sq. m. on the premise that this is the actual area included in the boundaries would be ordering the delivery of
almost twice the area stated in the deeds of sale. Surely, Article 1542 does not contemplate such an unfair situation to befall a
vendor-that he/she would be compelled to deliver double the amount that he/she originally sold without a corresponding
increase in price. In Asiain v. Jalandoni, we explained that "[a] vendee of a land when it is sold in gross or with the description
51
'more or less' does not thereby ipso facto take all risk of quantity in the land. The use of 'more or less' or similar words in
designating quantity covers only a reasonable excess or deficiency." Therefore, we rule that Ingram is entitled only to 6,200 sq.
52
m. of the property. An area of 5,800 sq. m. more than the area intended to be sold is not a reasonable excess that can be deemed
included in the sale. 53
Further, at the time of the sale, Ingram and petitioners did not have knowledge of the actual area of the land within the
boundaries of the property. It is undisputed that before the survey, the parties relied on the tax declaration covering the lot,
which merely stated that it measures more or less 6,200 sq. m. Thus, when petitioners offered the property for sale and when
Ingram accepted the offer, the object of their consent or meeting of the minds is only a 6,200 sq. m. property. The deeds of sale
merely put into writing what was agreed upon by the parties. In this regard, we quote with approval the ruling of the MCTC:
10 | M i d n i g h t A p p o i n t e e s
In this case, the Deed of Absolute Sale (Exhibit "M") dated April 13, 2005 is clear and unequivocal as to the area sold being up
to only 6,200 square meters. The agreement of the parties were clear and unambiguous, hence, the inconsistent and impossible
1âwphi1
testimonies of N[e]nette [Archinue] and the Spouses Ingram. No amount of extrinsic aids are required and no further extraneous
sources are necessary in order to ascertain the parties' intent, determinable as it is, from the document itself. The court is thus
convinced that the deed expresses truly the parties' intent as against the oral testimonies of Nenette, and the Spouses Ingram. 54
The contract of sale is the law between Ingram and petitioners; it must be complied with in good faith. Petitioners have already
performed their obligation by delivering the 6,200 sq. m. property. Since Ingram has yet to fulfill her end of the bargain, she 55
must pay petitioners the remaining balance of the contract price amounting to ₱145,000.00.
WHEREFORE, premises considered, the petition is GRANTED. The October 26, 2010 Decision and March 1 7, 2011
Resolution of the Court of Appeals in CA-G.R. SP No. 107997 are hereby REVERSED and SET ASIDE. The July 31, 2008
Order of the 3rd Municipal Circuit Trial Court of Sto. Domingo-Manito, dismissing Civil Case No. S-241 for insufficiency of
evidence, and ordering Ingram to pay ₱145,000.00 to petitioners, is hereby REINSTATED with MODIFICATION.
Ingram is ordered to pay petitioners the amount of ₱145,000.00 to earn interest at the rate of six percent (6%) per annum from
July 31, 2008 until the finality of this Decision. Thereafter, the total amount due shall earn legal interest at the rate of 6% per
56
annum until fully paid.

57
SO ORDERED.
FRANCIS H. JARDELEZA
Associate Justice
G.R. No. L-29449 December 29, 1928
LEODEGARIO AZARRAGA, Plaintiff-Appellee, vs. MARIA GAY, Defendant-Appellant.
Araneta and Zaragoza for appellant.

Azarraga and Panis for appellee.
VILLAMOR, J.:
By a public document Exhibit A, dated January 17, 1921, the plaintiff sold two parcels of lands to
the defendant for the lump sum of P47,000, payable in installments. chanroblesvirtualawlibrary chanrobles virtual law library
The conditions of the payment were: P5,000 at the time of signing the contract Exhibit A; P20,000
upon delivery by the vendor to the purchaser of the Torrens title to the first parcel described in the
deed of sale, P10,000 upon delivery by the vendor to the purchaser of Torrens title to the second
parcel; and lastly the sum of P12,000 one year after the delivery of the Torrens title to the second
parcel. chanroblesvirtualawlibrary chanrobles virtual law library
The vendee paid P5,000 to the vendor when the contract was signed. The vendor delivered the
Torrens title to the first parcel to the vendee who, pursuant to the agreement, paid him P20,000. In
the month of March 1921, Torrens title to the second parcel was issued and forthwith delivered by
the vendor to the vendee who, however, failed to pay the P10,000 as agreed, neither did she pay the
remaining P12,000 one year after having received the Torrens title to the second parcel. chanroblesvirtualawlibrary chanrobles virtual law library
The plaintiff here claims the sum of P22,000, with legal interest from the month of April 1921 on
the sum of P10,000, and from April 1922 on the sum of P12,000, until full payment of the amounts
claimed. chanroblesvirtualawlibrary chanrobles virtual law library
The defendant admits that she purchased the two parcels of land referred to by plaintiff, by virtue of
the deed of sale Exhibit A, but alleges in defense: (a) That the plaintiff knowing that the second
parcels of land he sold had an area of 60 hectares, by misrepresentation lead the defendant to
believe that said second parcel contained 98 hectares, and thus made it appear in the deed of sale
and induced the vendee to bind herself to pay the price of P47,000 for the two parcels of land,
which he represented contained an area of no less than 200 hectares, to which price the defendant
would not have bound herself had she known that the real area of the second parcel was 60
hectares, and, consequently, she is entitled to a reduction in the price of the two parcels in
proportion to the area lacking, that is, that the price be reduced to P38,000; (b) that the defendant,
in addition to the amounts acknowledged by the plaintiff, had paid other sums amounting to
P4,000; and (c) that the defendants never refused to pay the justly reduced price, but the plaintiff
refused to receive the just amount of the debt. chanroblesvirtualawlibrary chanrobles virtual law library
And by way of cross-complaint, the defendant prays that she be indemnified in the sum of P15,000
for damages sustained by her by reason of the malicious filing of the instant complaint. chanroblesvirtualawlibrary chanrobles virtual law library
The plaintiff, replying to the amended answer, alleges that the contract of sale in question was
made only for the lump sum of P47,000, and not at the rate of so much per hectare, and that the
defendant's claim for alleged damages has prescribed. chanroblesvirtualawlibrary chanrobles virtual law library
The lower court, having minutely analyzed the evidence adduced by the parties held that neither the
plaintiff nor the defendant gave any importance to the area of the land in consenting to the contract
in question, and that there having been no fraud when the parties agreed to the lump sum for the
two parcels of land described in the deed Exhibit A, following article 1471 of the Civil Code,
ordered the defendant to pay the plaintiff the sum of P19,300 with legal interest at 8 per cent per
annum from April 30, 1921 on the sum of P7,300, and from April 30, 1922, on the sum of P12,000.
And finally dismissed the defendant's cross-complaint, without special pronuncement as to
costs. chanroblesvirtualawlibrary chanrobles virtual law library
A motion for a new trial having been denied, this case was brought up to this court through the
proper bill of exceptions. chanroblesvirtualawlibrary chanrobles virtual law library
The appellant alleges that the trial court erred in not considering that the plaintiff induced the
defendant by deceit, to pay him the stipulated price for the two parcels he sold, stating falsely in the
deed of sale that the second of said parcels had an area of 98 hectares when he knew that in reality
it only had about 60 hectares more or less, or at least, if such deceit was not practised that mre that
there was a mistake on the part of Maria Gay in believing that said second parcel contained 98
hectares. chanroblesvirtualawlibrary chanrobles virtual law library
As a question of fact the trial court found from the evidence adduced by the parties, that the
plaintiff had not practised any deception in agreeing with the defendant upon the sale of the two
parcels of land described in Exhibit A. We concur with the trial court in this conclusion. It appears
of record that before the execution of the contract Exhibit A, the defendant went over the plaintiff's
land and made her wn calculations as to the area of said two parcels. But this not all. The plaintiff
delivered to the defendant the documents covering the land he was trying to sell. As to the first
parcel there is no question whatever and the defendant's contention is limited solely to the actual
area of the second parcel. The defendant had document Exhibit 4 in her possession which is the
deed by which the plaintiff acquired the land from the original owner, Crispulo Beramo, in which
document it appears that the area of the second parcel is about 70 hectares. It was the defendant
who intrusted the drawing of the deed of sale Exhibit A to her attorney and notary, Hontiveros, and
it is to be presumed that both she and the lawyer who drew the document Exhibit A, had read the
contents of the document Exhibit 4. The plaintiff declares that he signed the document between 5
and 7 in the afternoon of that day and he did not pay any attention to the area of the second parcel,
probably in the belief that in the drawing of the document the data concerning the area of the land
had been taken from the said Exhibit 4. The defendant testified that she received from the plaintiff a
note or piece of paper containing the data to be inserted in the contract Exhibit A. The plaintiff
denies this and said note or piece of paper was not presented at the trial. We are of opinion that this
testimony of the defendant's is unimportant, because, in reality, if the plaintiff had delivered Exhibit
4 to the defendant, there was no need to deliver to her another note to indicate the area of the
second which already appeared in the said Exhibit 4. chanroblesvirtualawlibrary chanrobles virtual law library
If, notwithstanding the fact that it appeared in Exhibit 4 that the area of the second parcel was,
approximately, 70 hectares, the defendant, however, stated in said document Exhibit A that said
second parcel contained 98 hectares as was admitted by him in his interviews with the plaintiff in
the months of April and June, 1924, then she has no right to claim from the plaintiff the shortage in
area of the second parcel. Furthermore, there is no evidence of record that the plaintiff made
representatin to the defendant as to the area of said second parcel, and even if he did make such
false representations as are now imputed to him by the defendant, the latter accepted such
representations at her own risk and she is the only one responsible for the consqunces of her
inexcusable credulousness. In the case of Songco vs. Sellner (37 Phil., 254), the court said:
The law allows considerable latitude to seller's statements, or dealer's talk; and experience teaches
that it as exceedingly risky to accept it at its face value. chanroblesvirtualawlibrary chanrobles virtual law library
Assertions concerning the property which is the subject of a contract of sale, or in regard to its
qualities and characteristics, are the usual and ordinary means used by sellers to obtain a high price
and are always understood as affording to buyers no grund from omitting to make inquires. A man
who relies upon such an affirmation made by a person whose interest might so readily prompt him
to exaggerate the value of his property does so at his peril, and must take the consequences of his
own imprudence.
The defendant had ample opportunity to appraise herself of the condition of the land which she
purchased, and the plaintiff did nothing to prevent her from making such investigation as she
deemed fit, and as was said in Songco vs. Sellner, supra, when the purchaser proceeds to make
investigations by himself, and the vendor does nothing to prevent such investigation from being as
complete as the former might wish, the purchaser cannot later allege that the vendor made false
representations to him. (National Cash Register Co. vs. Townsend, 137 N. C., 652; 70 L. R. A.,
349; Williamson vs. Holt, 147 N. C., 515.) The same doctrine has been sustained by the courts of
the United States in the following cases, among others: Misrepresentation by a vendor of real
property with reference to its area are not actionable, where a correct description of the property
was given in the deed and recorded chain of title, which the purchaser's agent undertook to
investigate and report upon, and the vendor made on effort to prevent a full investigation."
(Shappirio vs. Goldberg, 48 Law. ed., 419.) "One who contracts for the purchase of real estate in
reliance on the representations and statements of the vendor as to its character and value, but after
he has visited and examined it for himself, and has had the means and opportunity of verifying such
statements, cannot avoid the contract on the ground that they were false or exaggerated." (Brown
vs. Smith, 109 Fed., 26.) chanrobles virtual law library
That the defendant knew that the area of the second parcel was only about 70 hectares is shown by
the fact that she received the document Exhibit 4 before the execution of the contract Exhibit A, as
also Exhibit E-3 on September 30, 1920; which is the notification of the day for the trial of the
application for registratin of said parcel, wherein it appears that it had an area of 60 hectares more
or less, and by the fact that she received from the plaintiff in the month of June 1924 the copy of
the plans of the two parcels, wherein appear their respective areas; and yet, in spite of all this, she
did not complain of the difference in the area of said second parcel until the year 1926. Moreover,
the record contains several of the defendant's letters to the plaintiff in the years 1921 to 1925, in
which said defendant acknowledges her debt, and confining herself to petitioning for extentions of
time within which to make payment for the reasons given therein. But in none of these letters is
there any allusion to such lack of area, nor did she complain to the plaintiff of the supposed deceit
of which she believes she is a victim. All of which, in our opinion, shows that no such deceit was
practised, as the trial court rightly found. chanroblesvirtualawlibrary chanrobles virtual law library
As to the alleged error to the effect that the trial court failed to order the reduction from the price
due on the second parcel as stated in the contract of sale Exhibit A, the proportional price of the
area lacking, we are of the opinion that said error has no legal ground. chanroblesvirtualawlibrary chanrobles virtual law library
It appears that by the contract Exhibit A, the parties agreed to the sale of two parcels of land, the
first one containing 102 hectares, 67 ares and 32 centares, and the second one containing about 98
hectares, for the lump sum of P47,000 payable partly in cash and partly in installments. Said two
parcels are defind by means of the boundaries given in the instrument. Therefore, the case falls
within the provision of article 1471 of the Civil Code, which reads as follows:
ART. 1471. In case of the sale of real estate for a lump sum and not at the rate of a specified price
for each unit of measure, there shall be no increase or decrease of the price even if the area be
found to be more or less than that stated in the contract. chanroblesvirtualawlibrary chanrobles virtual law library
The same rule shall apply when two or more estates are sold for a single price; but, if in addition to
a statement of the boundaries, which is indispensable in every conveyance of real estate, the area of
the estate should be designated in the contract, the vendor shall be obliged to deliver all that is
included with such boundaries, even should it exceed the area specified in the contract; and, should
he not be able to do so, he shall suffer a reduction of the price in proportion to what is lacking of
the area, unless the contract be annulled by reason of the vendee's refusal to accept anything other
than that which was stipulated.
The plaintiff contends that, in accrdance with the first paragraph of this article, the defendant has no
right to ask for the reduction of price, whatever may be the area of the two parcels of land sold her.
On the ther hand, the defendant contends that, according to paragraph 2 of the same article of the
Civil Code, she has a right to ask for a reduction of the price due on the second parcel, in
proportion to the area lacking. chanroblesvirtualawlibrary chanrobles virtual law library
In his comments on the article cited, Manresa says, among other things:
. . . if the sale was made for a price per unit of measure or number, the consideration of the contract
with respect to the vendee, is the number of such units, or, if you wish, the thing purchased as
determined by the stipulated number of units. But if, on the other hand, the sale was made for a
lump sum, the consideration of the contract is the object sold, independently of its number or
measure, the thing as determined by the stipulated boundaries, which has been called in law
a determinate object. chanroblesvirtualawlibrary chanrobles virtual law library
This difference in consideration between the two cases implies a distinct regulation of the
obligation to deliver the object, because, for an acquittance delivery must be made in accordance
with the agreement of the parties, and the performance of the agreement must show the
confirmation in fact, of the consideratin which induces each of the parties to enter into the
contract. chanroblesvirtualawlibrary chanrobles virtual law library
From all this, it follows that the provisions of article 1471 concerning the delivery of determinate
objects had to be materially different from those governing the delivery of things sold a price per
unit of measure or number. Let us examine it, and for the sake of greater clearness, let us expound
it as we understand it. chanroblesvirtualawlibrary chanrobles virtual law library
With respect to the delivery of determinate objects two cases may arise, either the determinate
object is delivered as stipulated, that is, delivering everything included within the boundaries,
inasmuch as it is the entirety thereof that distinguishes the determinate object; or that such entirety
is impaired in the delivery by failing to deliver to the purchaser something included within the
boundaries. These are the two cases for which the Code has provided although, in our opinion, it
has not been sufficiently explicit in expressing the distinction; hence, at first sight, the article seems
somewhat difficult to understand. chanroblesvirtualawlibrary chanrobles virtual law library
The first paragraph and the first clause of the second paragraph of article 1471 deal with the first of
said cases; that is where everything included within the boundaries as set forth in the contract has
been delivered. The Code goes on to consider the case where a definite area or number has been
expressed in the contract, and enunciates the rule to be followed when, after delivery, the area
included within said bundaries is found not to coincide with the aforesaid content or number. Said
rule may be thus stated: Whether or not the object of sale be one realty for a lump sum, or two or
more for a single price also a lump sum, and, consequently, not for so much per unit of measure or
number, there shall be no increase or decrease in the price even if the area be found to be more or
less than that stated in the contract. chanroblesvirtualawlibrary chanrobles virtual law library
Thus understood the reason for the regulation is clear and no doubts can arise from its application.
It is concerned with determinate objects. The consideration of the contract, and the thing to be
delivered is a determinate object, and not the number of units it contains. The price is determined
with relation to it; hence, its greater or lesser area cannot influence the increase or decrease of the
price agreed upon. We have just learned the reason for the regulation, bearing in mind that the
Code has rightly considered an object as determinate for the purposes now treated, when it is a
single realty as when it is two or more, so long as they are solds for a single price constituting a
lump sum and not for a specified amount per unit of measure or number. chanroblesvirtualawlibrary chanrobles virtual law library
We have stated that the second possible case in the delivery of determinate objects is that in which,
on account or circumstances of diverse possible origins, everything included within the boundaries
is not delivered. chanroblesvirtualawlibrary chanrobles virtual law library
We have indicated about that where everything included within the boundaries is delivered there
can be no increase or decrease in price, no matter whether the area be more or less than that given
in the contract. From this a very important consequence follows, to wit: That if the vendor is bound
to deliver a determinate object, he is bound to deliver all of it, that is, everything within its
boundaries, in the contract, and that from the moment he fails to do so, either because he cannot, or
because, ignoring the meaning of the contract, he alleges that it contains a greater area than that
stipulated, the contract is partially unfulfilled and it is but just the certain actions be available to the
vendee for the protection of his right. chanroblesvirtualawlibrary chanrobles virtual law library
The rule in the latter case is found in the second paragraph of article 1471, with the exception of the
first clause which refers of the former hypothesis. This rule may be stated as follows: Whether or
not the object of the sale be one realty for a lump sum, or two or more for a single price also a lump
sum, and, consequently not at the rate of a specified price for each unit of measuring or number, the
vendor shall be bound to deliver everything that is included within the boundaries stated, although
it may exceed the area or number expressed in the contract; in case he cannot deliver it, the
purchaser shall have the right either to reduce the price proportionately to what is lacking of the
area or number, or to rescind the contract at his option. chanroblesvirtualawlibrary chanrobles virtual law library
Comprehending the meaning of a sale of a determinate object, it is easily understod how, in cases
wherein by virtue of the rule enunciated, the vendor has to deliver a greater area than that expressed
in the contract, there is, strictly speaking, no excess of area, inasmuch as one may always properly
ask, excess with respect to what? With respect to the area appearing in the deed, it will be
answered. But as this area was not taken into account in entering into the contract inasmuch as the
parties made neither the amount of the price, nor the efficacy of the contract to depend on the
number of its units; since area was written in to fulfill a formal requisite demanded by the present
rules upon the drawing of public instruments, but as a condition essential to the contract, which, if
it were not true, would not be consummated, it results in the long run, that this detail of the written
recital, with respect to which the excess is to be estimated, is so negligible, so inconsistent, so
haphazard, and in the vast majority of cases so wide of the mark, that it is impossible to calculate
the excess; and considering the nature of a contract of sale of a definite object, it cannot be strictly
held that there is any excess at all. chanroblesvirtualawlibrary chanrobles virtual law library
If everything within the stipulated boundaries is not delivered, then the determination object which
was the consideration of the contract for the vendee, is not delivered; hence his power to nullify it.
However, it might be (and this he alone can say), that although he has not received the object,
according to the stipulated terms, it suits him; hence his power to carry the contract into effect with
the just decrease in price referred to in the article under comment. chanroblesvirtualawlibrary chanrobles virtual law library
The manner in which the matter covered by this article was distributed in its two paragraphs
constributes to making it difficult to understand. The rule might have been clearly stated had the
first clause of the second paragraph been included in the first paragraph, the latter to end with the
words: "The same rule shall apply when two or more estates are sold fos a single price." And if by
constituting an independent paragraph, with the rest of the second paragraph, it were made to
appear more expressly that the rule of the second paragraph thus drawn referred to all the cases of
paragraph one, as we have expounded, namely, to the case of a sale of one single estate and that of
two or more for one single price, the rule would have been clearer. chanroblesvirtualawlibrary chanrobles virtual law library
In our opinion, this would have better answered what we deem to be the indubitable intention of the
legislator. chanroblesvirtualawlibrary chanrobles virtual law library
Some eminent commentators construe the last part of article 1471 in a different way. To them the
phrase "and should he not be able to do so" as applied to the vendor, does not mean as apparently it
does "should he not be able to deliver all that is included within the boundaries stated," but this
other thing namely, that if by reason of the fact that a less area is included within the boundaries
than that expressed in the contract, it is not possible for the vendor to comply therewith according
to its literal sense, he must suffer the effects of the nullity of the contract or a reduction of the price
proportionately what may be lacking of the area or number. It is added as a ground for this solution
that if the vendor fulfills the obligations, as stated in the article, by delivering what is not included
with in the boundaries, there can never be any case of proportionate reduction of the price on
account of shortage of area, because he does not give less who delivers all that he bound himself
to.
chanroblesvirtualawlibrary chanrobles virtual law library
According to this opinion, which we believe erroneous, if within the boundaries of the property
sold, there is included more area than that expressed in the title deeds, nothing can be claimed by
the vendor who losses the value of that excess, but if there is less area, then he loses also because
either the price is reduced or the contract is annulled. This theory would be anomalous in case of
sale of properties in bulk, but, especially, would work a gross injustice which the legislator never
intended. chanroblesvirtualawlibrary chanrobles virtual law library
There is no such thing. So long as the vendor can deliver, and for that reason, delivers all the land
included within the boundaries assigned to the property, there can be no claim whatsoever either on
his part, although the area may be found to be much greater than what was expressed, nor on the
part of the puchaser although that area may be in reality much smaller. But as he sold everything
within the boundaries and this is all the purchaser has paid, or must pay for whether much or little,
if afterwards it is found that he cannot deliver all, because, for instance, a part, a building, a valley,
various pieces of land, a glen, etc., are not his, there is no sale of a determinate object, there is no
longer a sale of the object agreed upon, and the solution given by the article is then just and logical:
Either the contract is annulled or the price reduced proportionately.
We have quoted from Manresa's Commentaries at length for a better understanding of the doctrine
on the matter, inasmuch as the contending counsel have inserted in their respective briefs only such
portions of said commentaries as relate to their respective contentions. chanroblesvirtualawlibrary chanrobles virtual law library
It may be seen from a careful reading of the commentaries on said article 1471, that the great
author distinguishes between the two cases dealt with in article 1471, and formulates the proper
rules for each. In the delivery of a determinate object, says the author, two cases may arise; either
the determinate object is delivered as stipulated, that is, delivering everything included within the
boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object; or that
such entirely is impaired in the delivery by failing to deliver to the purchaser something included
within the boundaries. For the first case, Manresa gives the following rule: "Whether or not the
object of the sale be one realty for a lump sum, or two or more for a single price also a lump sum,
and, consequently, not for so much per unit of measure or number, there shall be no increase or
decrease in the price ecven if the area be found to be more or less than that stated in the contract."
And for the second case, this other: "Whether or not the object of the sale one realty for a lump
sum, or two or more for a single price also a lump sum, and, consequently, not at the rate a
specified price for each unit of measure or number, the vendor shall be bnound to deliver
everything that is included within the boundaries stated, although it may exceed the area or number
expressed in the contract; in case he cannot deliver it, the purchaser shall have the right either to
reduce the price proportionately to what is lacking of the area or number, or to rescind the contract,
at his option." chanrobles virtual law library
Considering the facts of the present controversy, it seems clear to us that the rule formulated for the
second paragraph or article 1471 is inapplicable in the instant case inasmuch as all the land
included within the boundaries of the two parcels sold has been delivered inits entirety to the
vendee. There is no division of the land enclosed within the boundaries of the properties sold; the
determinate object which is the subject matter of the contract has been delivered by the vendor in
its entirety as he obligate himself to do. Therefore, there is no right to complain either on the part of
the vendor, even if there be a greater area than that stated in the deed, or on the part of the vendee,
though the area of the second parcel be really much smaller. (Irureta Goyena vs. Tambunting, 1
Phil., 490.) chanrobles virtual law library
With regard to the damages prayed for by the defendant, the lower court finally dismissed the
cross-complaint without special pronouncement as to costs. And according to the decision of the
Supreme Court od Spain of 1897, a judgment absolving a party from a claim of damages against
him, who has not contravened his obligations, does not violate articles 1101 and 1108 of the Civil
Code. chanroblesvirtualawlibrary chanrobles virtual law library
With respect to the question of interest, the lower court likewise held that, as the defendant had not
paid the sum of P7,300 on April 30, 1921, when the plaintiff had delivered the certificate of title,
she was in default from that date and also from the date of one year thereafter, with respect to the
sum of P12,000, contituting the last period of the obligation. We are of the opinion that the lower
court has committed no error which should be corrected by this court. chanroblesvirtualawlibrary chanrobles virtual law library
The judgment appealed from being in accordance with the law, it should be as it is hereby, affirmed
with costs against the appellant. So ordered. chanroblesvirtualawlibrary chanrobles virtual law library
Avanceña, C. J., Johnson, Street, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.
[G.R. NO. 122463 December 19, 2005]
RUDOLF LIETZ, INC., Petitioner, v. THE COURT OF APPEALS, AGAPITO BURIOL, TIZIANA

TURATELLO & PAOLA SANI, Respondents.
DECISION
TINGA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, praying for the annulment of
the Decision1 dated April 17, 1995 and the Resolution2 dated October 25, 1995 of the Court of Appeals in CA-G.R. CV
No. 38854. The Court of Appeals affirmed the Decision3 in Civil Case No. 2164 of the Regional Trial Court (RTC),
Branch 48, of Palawan and Puerto Princesa City with the modification that herein respondents Tiziana Turatello and Paola
Sani are entitled to damages, attorney's fees, and litigation expenses.
The dispositive portion of the RTC Decision reads:
WHEREFORE, in view of the foregoing and as prayed for by the defendants, the instant complaint is hereby
DISMISSED. Defendant's counterclaim is likewise DISMISSED. Plaintiff, however, is ordered to pay defendant Turatello
and Sani's counsel the sum of P3,010.38 from August 9, 1990 until fully paid representing the expenses incurred by said
counsel when the trial was cancelled due to the non-appearance of plaintiff's witnesses. With costs against the plaintiff.
SO ORDERED.4
As culled from the records, the following antecedents appear:
Respondent Agapito Buriol previously owned a parcel of unregistered land situated at Capsalay Island, Port Barton, San
Vicente, Palawan. On August 15, 1986, respondent Buriol entered into a lease agreement with Flavia Turatello and
respondents Turatello and Sani, all Italian citizens, involving one (1) hectare of respondent Buriol's property. The lease
agreement was for a period of 25 years, renewable for another 25 years. The lessees took possession of the land after
paying respondent Buriol a down payment of P10,000.00.5 The lease agreement, however, was reduced into writing only
in January 1987.
On November 17, 1986, respondent Buriol sold to petitioner Rudolf Lietz, Inc. the same parcel of land for the amount
of P30,000.00. The Deed of Absolute Sale embodying the agreement described the land as follows:
A parcel of land, consisting of FIVE (5) hectares, more or less, a portion of that parcel of land declared in the name of
Agapito Buriol, under Tax Declaration No. 0021, revised in the year 1985, together with all improvements thereon,
situated at the Island of Capsalay, Barangay Port Barton, municipality of San Vicente, province of Palawan which
segregated from the whole parcel described in said tax declaration, has the following superficial boundaries: NORTH,
Sec. 01-017; and remaining property of the vendor; EAST, by Seashore; SOUTH, 01-020; and WEST, by 01-018 (now
Elizabeth Lietz).6
Petitioner later discovered that respondent Buriol owned only four (4) hectares, and with one more hectare covered by
lease, only three (3) hectares were actually delivered to petitioner. Thus, petitioner instituted on April 3, 1989 a complaint
for Annulment of Lease with Recovery of Possession with Injunction and Damages against respondents and Flavia
Turatello before the RTC. The complaint alleged that with evident bad faith and malice, respondent Buriol sold to
petitioner five (5) hectares of land when respondent Buriol knew for a fact that he owned only four (4) hectares and
managed to lease one more hectare to Flavia Turatello and respondents Tiziana Turatello and Paola Sani. The complaint
sought the issuance of a restraining order and a writ of preliminary injunction to prevent Flavia Turatello and respondents
Turatello and Sani from introducing improvements on the property, the annulment of the lease agreement between
respondents, and the restoration of the amount paid by petitioner in excess of the value of the property sold to him. Except
for Flavia Turatello, respondents filed separate answers raising similar defenses of lack of cause of action and lack of
jurisdiction over the action for recovery of possession. Respondents Turatello and Sani also prayed for the award of
damages and attorney's fees.7
After trial on the merits, the trial court rendered judgment on May 27, 1992, dismissing both petitioner's complaint and
respondents' counterclaim for damages. Petitioner and respondents Turatello and Sani separately appealed the
RTC Decision to the Court of Appeals, which affirmed the dismissal of petitioner's complaint and awarded respondents
Turatello and Sani damages and attorney's fees. The dispositive portion of the Court of Appeals Decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED, with the following modification:
Plaintiff-appellant Rudolf Lietz, Inc. is hereby (1) ordered to pay defendants-appellants Turatello and Sani, the sum
of P100,000.00 as moral damages; (2) P100,000.00 as exemplary damages; (3) P135,728.73 as attorney's fees; and
(4) P10,000.00 as litigation expenses.
SO ORDERED.8
Petitioner brought to this Court the instant petition after the denial of its motion for reconsideration of the Court of
Appeal Decision. The instant petition imputes the following errors to the Court of Appeals.
I. IN DEFENDING AGAPITO BURIOL'S GOOD FAITH AND IN STATING THAT ASSUMING THAT HE
(BURIOL) WAS IN BAD FAITH PETITIONER WAS SOLELY RESPONSIBLE FOR ITS INEXCUSABLE
CREDULOUSNESS.
II. IN ASSERTING THAT ARTICLES 1542 AND 1539 OF THE NEW CIVIL CODE ARE, RESPECTIVELY,
APPLICABLE AND INAPPLICABLE IN THE CASE AT BAR.
III. IN NOT GRANTING PETITIONER'S CLAIM FOR ACTUAL AND EXEMPLARY DAMAGES.
IV. IN GRANTING RESPONDENTS TIZIANA TURATELLO AND PAOLA SANI EXHORBITANT [sic] AMOUNTS
AS DAMAGES WHICH ARE EVEN BEREFT OF EVIDENTIARY BASIS.9
Essentially, only two main issues confront this Court, namely: (i) whether or not petitioner is entitled to the delivery of the
entire five hectares or its equivalent, and (ii) whether or not damages may be awarded to either party.
Petitioner contends that it is entitled to the corresponding reduction of the purchase price because the agreement was for
the sale of five (5) hectares although respondent Buriol owned only four (4) hectares. As in its appeal to the Court of
Appeals, petitioner anchors its argument on the second paragraph of Article 1539 of the Civil Code, which provides:
Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is
mentioned in the contract, in conformity with the following rules:
If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or
number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated
in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and
the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated.
....
The Court of Appeals Decision, however, declared as inapplicable the abovequoted provision and instead ruled that
petitioner is no longer entitled to a reduction in price based on the provisions of Article 1542 of the Civil Code, which
read:
Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or
number, there shall be no increase or decrease of the price, although there be a greater or lesser area or number than that
stated in the contract.
boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or
number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion
to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure
to deliver what has been stipulated.
Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price contract, the
statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area
actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all
that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not
possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the
amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate. 10
In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties agree on a
stated purchase price for an immovable the area of which may be declared based on an estimate or where both the area
and boundaries are stated.
In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may
not measure up exactly with the area stated in the contract. According to Article 1542 11 of the Civil Code, in the sale of
real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no
increase or decrease of the price although there be a greater or lesser area or number than that stated in the contract.
However, the discrepancy must not be substantial. A vendee of land, when sold in gross or with the description "more or
less" with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of "more or less"
or similar words in designating quantity covers only a reasonable excess or deficiency. 12
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the
immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should
prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its
description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of
land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement
with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of
land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with
sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. 13 Thus, the obligation of
the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the
determinate object.14
As correctly noted by the trial court and the Court of Appeals, the sale between petitioner and respondent Buriol involving
the latter's property is one made for a lump sum. The Deed of Absolute Sale shows that the parties agreed on the purchase
price on a predetermined area of five hectares within the specified boundaries and not based on a particular rate per area.
In accordance with Article 1542, there shall be no reduction in the purchase price even if the area delivered to petitioner is
less than that stated in the contract. In the instant case, the area within the boundaries as stated in the contract shall control
over the area agreed upon in the contract.
The Court rejects petitioner's contention that the property's boundaries as stated in the Deed of Absolute Sale are
superficial and unintelligible and, therefore, cannot prevail over the area stated in the contract. First, as pointed out by the
Court of Appeals, at an ocular inspection prior to the perfection of the contract of sale, respondent Buriol pointed to
petitioner the boundaries of the property. Hence, petitioner gained a fair estimate of the area of the property sold to him.
Second, petitioner cannot now assail the contents of the Deed of Absolute Sale, particularly the description of the
boundaries of the property, because petitioner's subscription to the Deed of Absolute Sale indicates his assent to the
correct description of the boundaries of the property.
Petitioner also asserts that respondent Buriol is guilty of misleading petitioner into believing that the latter was buying
five hectares when he knew prior to the sale that he owned only four hectares. The review of the circumstances of the
alleged misrepresentation is factual and, therefore, beyond the province of the Court. Besides, this issue had already been
raised before and passed upon by the trial court and the Court of Appeals. The factual finding of the courts below that no
sufficient evidence supports petitioner's allegation of misrepresentation is binding on the Court.
The Court of Appeals reversed the trial court's dismissal of respondents Turatello and Sani's counterclaim for moral and
exemplary damages, attorney's fees and litigation expenses. In awarding moral damages in the amount of P100,000 in
favor of Turatello and Sani, the Court of Appeals justified the award to alleviate the suffering caused by petitioner's
unfounded civil action. The filing alone of a civil action should not be a ground for an award of moral damages in the
same way that a clearly unfounded civil action is not among the grounds for moral damages. 15
Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the
moral, temperate, liquidated or compensatory damages. 16 With the deletion of the award for moral damages, there is no
basis for the award of exemplary damages.
WHEREFORE, the instant Petition for Review on Certiorari is GRANTED in PART. The Court of Appeals Decision in
CA-G.R. CV No. 38854 is AFFIRMED with the MODIFICATION that the award of moral and exemplary damages is
DELETED.
SO ORDERED.
No. 47519. June 10, 1941

EMILIANO E. GARCIA, as guardian of Elisa, Maria, Anita, Pastor, Gabino, Jose and Pacita, all surnamed García,
plaintiff and appellant, vs. PAZ E. VELASCO (alias PAZ VELASCO), defendant and appellee.
MORAN, J.:
On July 1, 1929, Florentino Garcia, as duly appointed guardian of the minors, Elisa, Maria, Anita, Pastor,
Gabino, Jose and Pacita, all surnamed Garcia, leased to defendant Paz E. Velasco, for a period of ten years at an
annual rental of P750, a fish pond belonging to said minors, situated in Paombong, Bulacan. On May 22, 1931,
pursuant to authority granted him by the court, he sold the fishpond to said defendant for a lump sum of P14,000. On
October 29, 1935, Emiliano E. Garcia, who was appointed guardian in substitution of Florentino Garcia, was ordered
by the court to institute an appropriate action for the recovery from the defendant of the purchase price of the fish
pond. The action was instituted 'in the Court of First Instance of Manila where said guardian resides. Defendant, in a
special appearance, objected to the court's jurisdiction over her person, and on the overruling of the objection, a
demurrer was interposed reasserting the original ground of objection and adding, as another ground, want of the
court's jurisdiction over the subject matter of the action. The demurrer having been overruled, defendant filed her
answer in which she renewed her objection to the court's jurisdiction over her person and the subject matter, pleads
the special defense of payment, and sets upa counterclaim for P249.57. On the issues thus joined, the trial court
rendered judgment dismissing the action on the ground of lack of jurisdiction and that the amount claimed has
already been paid. Hence, this appeal.
Upon the question of jurisdiction raised, we are of the opinion that the trial court erred in sustaining
defendant's objection. True that the fish pond is situated in Bulacan and the authority for its sale emanated from the
Court of First Instance of the same province; but the action is for recovery of the purchase price and is not one
against" executors, administrators and guardians touching the performance of their official duties." It is, therefore, a
personal action and its venue should be laid "in any province where the defendant or any necessary defendant may
reside or be found, or in any province where the plaintiff or one of the plaintiffs resides, at the election of the
plaintiff." As the plaintiff is a resident of the City of Manila, the filing of the complaint therein was an exercise of his
right of election in accordance with law. Although, as a judicial policy, only residents should be appointed as
guardians (Guerrero vs. Teran, 13 Phil., 212), the fact that the plaintiff has been appointed as guardian by the Court
of First Instance of Bulacan does not necessarily exclude his residence in Manila as alleged in the complaint and not
directly denied in the answer.
On the issue of payment upon which defendant's claim was sustained, we find no ground for disturbing the findings
of the trial court; but upon the question of law of whether upon a sale of real property in gross and for a lump sum,
the purchaser may be entitled to an equitable reduction in the price in proportion to what is lacking in the area as
designated in the contract, the trial court credited the defendant the sum of P3,824 upon the evidence that the fish
pond purchased by him was only eight (8) hectares when it was described in the contract to contain "una extension
superficial de once (11) hectáreas, treinta y ocho (38) areas, y setenta y siete (77) centiáreas, pocomás o menos." The
question is controlled by article 1471 of the Civil Code which provides that "in case of the sale of real estate for a
lump sum and not at the rate of a specified price for each unit of measure or number there shall be no increase or
decrease of the price even if the area or number be found to be more or less than that stated in the contract." The
transaction here involved is, according to paragraph 5 of the deed of sale (Exhibit D), one for a lumpsum and not at a
specified price for each unit of measure and, therefore, no reduction can be authorized although the area was less
than what was stated in the contract. There are instances in which equitable relief may be granted to the purchaser, as
where the deficiency is very great for, under such circumstance, gross mistake may be inferred (Asiain vs. Jalandoni,
45 Phil., 296.) But, in the instant case, we are satisfied that, although the shortage amounts to practically one-fourth
of the total area, the purchaser clearly intended to take the risk of quantity, and that the area has been mentioned in
the contract merely for the purpose of description. From the circumstance that the defendant, before her purchase of
the fish pond, had been in possession and control thereof for two years as a lessee, she can rightly be presumed to
have acquired a good estimate of its value and area, and her subsequent purchase thereof must have been premised
on the knowledge of such value and area. Accordingly, she cannot now be heard to claim an equitable reduction in
the purchase price on the pretext that the property is much less than she thought it was.
Judgment is reversed, and defendant is hereby orderedto pay plaintiff the sum of P3,824, with costs against her.
Avanceña, C. J., Diaz, Laurel, and Horrilleno, JJ.,concur. Judgment reversed.
G.R. No. L-16394 December 17, 1966
JOSE SANTA ANA, JR. and LOURDES STO. DOMINGO, petitioners,

vs.
ROSA HERNANDEZ, respondent.
Manuel J. Serapio for petitioners..

J. T. de los Santos for respondent.
REYES, J.B.L., J.:
Appeal from the decision of the Court of Appeals in its Case CA-G.R. No. 20582-R, in effect reversing the decision of the
Court of First Instance of Bulacan in its Civil Case No. 1036.
The petitioners herein, spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo, owned a 115,850-square meter parcel of land
situated in barrio Balasing, Sta. Maria, Bulacan, and covered by Transfer Certificate of Title No. T-3598. On 28 May 1954, they
sold two (2) separate portions of the land for P11,000.00 to the herein respondent Rosa Hernandez. These portions were
described in the deed of sale as follows:
Bahaguing nasa gawing Hilagaan. Humahanga sa Hilaga, kina Maria Perez, at Aurelio Perez; sa Timugan, sa lupang
kasanib; sa Silanganan, kay Mariano Flores at Emilio Ignacio; sa Kanluran, kay Cornelio Ignacio; Mayroong (12,500),
m.c. humigit kumulang.
Bahaguing nasa gawing Silanganan Humahanga sa Hilagaan, sa kay Rosa Hernandez; sa Silanganan, kay Domingo
Hernandez at Antonio Hernandez; sa Timugan, sa Sta. Maria-Tigbi Road; at sa Kanluran, sa lupang kasanib (Jose Sta.
Ana, Jr.), mayroong (26,500) metros cuadrados, humigit kumulang.
After the sale (there were two other previous sales to different vendees of other portions of the land), the petitioners-spouses
caused the preparation of a subdivision plan, Psd-43187, was approved on 13 January 1955 by the Director of Lands. Rosa
Hernandez, however, unlike the previous vendees, did not conform to the plan and refused to execute an agreement of
subdivision and partition for registration with the Register of Deeds of Bulacan; and she, likewise, refused to vacate the areas
that she had occupied. Instead, she caused the preparation of a different subdivision plan, which was approved by the Director
of Lands on 24 February 1955. This plan, Psd-42844, tallied with the areas that the defendant, Rosa Hernandez, had actually
occupied.
On 28 February 1955, herein petitioners-spouses filed suit against respondent Rosa Hernandez in the Court of First Instance of
Bulacan, claiming that said defendant was occupying an excess of 17,000 square meters in area of what she had bought from
them. Defendant Rosa Hernandez, on the other hand, claimed that the alleged excess, was part of the areas that she bought.
The trial court observed:
The only question, therefore, to be determined by the Court is whether or not the plaintiffs had sold two portions
without clear boundaries but with exact areas (12,500 sq. m. and 26,000 sq. m.) at the rate of P.29 per square meter or,
as defendant Rosa Hernandez claimed, two portions, the areas of which were not definite but which were well defined
on the land and with definite boundaries and sold for the lump sum of P11,000.00.
Finding for the plaintiffs, the said court ordered the defendant, among other things, to vacate "the excess portions actually
occupied by her and to confine her occupation only to Lots 4-a and 4-b as shown in the plan, Exhibit E, of the plaintiffs . . .,"
referring to Psd-43187.
Not satisfied with the judgment, defendant Hernandez appealed to the Court of Appeals.
The Court of Appeals dismissed the complaint and declared Rosa Hernandez the owner of lots 4-a and 4-b in her plan, Psd-
42844, upon the following findings:
The contract between appellees and appellant (Exhibit D) provided for the sale of two separate portions of the same
land for the single consideration of P11,000.00. Appellee Jose Santa Ana, Jr. said the transaction was by a unit of
measure or per square meter, and that although the actual total purchase price of the two parcels of land was
P11,300.00 at P0.29 per square meter the parties agreed to the sale at the reduced price of P11,000.00. The appellant
denied this claim of appellees. Gonzalo V. Ignacio, the notarial officer before the contract of sale was executed, failed
to corroborate Sta. Ana upon this point. Upon the contrary, Ignacio testified that appellant complained to him and the
appellees to the effect that the areas stated in the contract were less than the actual areas of the parcels of land being
sold and here we quote the notarial officer's own words:
"That the area stated in the document will not be the one to prevail but the one to prevail is the boundary of the
land which you already know." (p. 74, Innocencio).
Sta. Ana is the nephew of the appellant, and the former's assurance probably appeased the latter against insisting in the
correction of the areas stated in the contract of sale.
Two witnesses testified for the appellant. Jesus Policarpio divulged that the same parcels of land involved in this case
were previously offered to him by the appellees for the single purchase price of P12,000.00. Julio Hernandez stated that
his sister, the herein appellant, had offered P10,000.00 as against the appellees' price of P12,000.00, and that he was
able to persuade the parties to meet halfway on the price. Furthermore the previous conveyances made by the appellees
for other portions of the same property (Exhibits B and C) are also for lump sums.
The difference in area of 17,000 square meters is about one-half of the total area of the two parcels of land stated in the
document, but not for this alone may we infer gross mistake on the part of appellees. The appellees admit the lands in
question were separated from the rest of their property by a long and continuous "pilapil" or dike, and there is
convincing proof to show that the bigger lot (Lot 4-a) was wholly tenanted for appellees by Ciriaco Nicolas and
Santiago Castillo and the smaller lot (Lot 4-b) was wholly tenanted for said appellees by Gregorio Gatchalian. These
facts support the theory that the two parcels of land sold to the appellant were identified by the conspicuous boundaries
and the extent or area each tenant used to till for the vendors. Again, appellees should not be heard to complain about
the deficiency in the area because as registered owners and possessors of the entire land since 1949 they can rightly be
presumed to have acquired a good estimate of the value and areas of the portions they subsequently sold.
The Court of Appeals concluded by applying to the case Article 1542 of the new Civil Code:
In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although there be greater or less area or number than that stated in
the contract.
boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area
or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in
proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede
to the failure to deliver what has been stipulated.
and declared Rosa Hernandez the owner of the whole of lots 4-a and 4-b of her own subdivision Plan Psd-42844,
notwithstanding their increased area as compared to that specified in the deed of sale.
In turn, the Sta. Ana spouses appealed to this Court, assigning the following errors:
The Court of Appeals committed a grave error of law when it departed from the accepted and usual course of judicial
proceedings, by disturbing the findings of fact of the trial court, made upon conflicting testimonies of the witnesses for
the plaintiffs, now in the petitioners, and the defendant, now the respondent, Rosa Hernandez.
The Court of Appeals committed a grave error of law when it held that the deed of sale, Exhibit D, was for a lump sum,
despite the fact that the boundaries given therein were not sufficiently certain and the boundaries indicated did not
clearly identify the land, thereby erroneously deciding a question of substance in a way not in accord with law and the
applicable decisions of this Honorable Court.
On the face of the foregoing assignments of error and the petitioners' discussions thereabout, their position can be summarized
as follows: that the Court of Appeals erred in substituting its own findings of fact for that of the trial court's, without strong and
cogent reasons for the substitution, contrary to the rule that appellate courts shall not disturb the findings of fact of trial courts in
the absence of such strong and cogent reasons; and that Article 1542 of the Civil Code of the Philippines does not apply,
allegedly because the boundaries, as shown in the deed of sale, are not definite.
In the first assignment of error, the petitioner spouses complain against the failure of the Court of Appeals to accept the findings
of fact made by the Court of First Instance. The credibility of witnesses and the weighing of conflicting evidence are matters
within the exclusive authority of the Court of Appeals, and it is not necessarily bound by the conclusions of the trial court. Both
the Judiciary Act (R.A. 296, section 29) and the Rules of Court (Rule 45, section 2) only allow a review of decisions of the
Court of Appeals on questions of law; and numerous decisions of this Court have invariably and repeatedly held that findings of
fact by the Court of Appeals are conclusive and not reviewable by the Supreme Court (Galang vs. Court of Appeals, L-17248,
29 January 1962; Fonacier vs. Court of Appeals, 96 Phil. 418, 421; and cases therein cited; Onglengco vs. Ozaeta, 70 Phil. 43;
Nazareno vs. Magwagi, 71 Phil. 101). Barring, therefore, a showing that the findings complained of are totally devoid of
support in the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings must
stand, for this Court is not expected or required to examine and contrast the oral and documentary evidence submitted by the
parties. As pointed out by former Chief Justice Moran in his Comments on the Rules of Court (1963 Ed., Vol. 2, p. 412), the
law creating the Court of Appeals was intended mainly to take away from the Supreme Court the work of examining the
evidence, and confine its task for the determination of questions which do not call for the reading and study of transcripts
containing the testimony of witnesses.
The first assignment of error must, therefore, be overruled. We now turn to the second.
Despite the incontestable fact that the deed of sale in favor of Rosa Hernandez recites a price in a lump sum (P11,000.00) for
both lots (Annex "C", Complaint, Rec. on App., p. 21), appellants insist that the recited area should be taken as controlling.
They combat the application of Article 1542 of the Civil Code, on the ground that the boundaries given in the deed are
indefinite. They point out that the southern boundary of the small parcel is merely given as "lupang kasanib" and that the same
occurs with the western boundary of the bigger lot, which is recited as "lupang kasanib (Jose Sta. Ana, Jr.)". The Court of
Appeals, however, found as a fact that —
the two parcels of land sold to appellant (i.e., appellee herein, Rosa Hernandez) were identified by the conspicuous
boundaries. (Emphasis supplied)
consisting in a long and continuous pilapil or dike that separated the lands in question from the rest of the property. On the basis
of such findings, that can not be questioned at this stage, for reasons already shown, it is unquestionable that the sale made was
of a definite and identified tract, a corpus certum, that obligated the vendors to deliver to the buyer all the land within the
boundaries, irrespective of whether its real area should be greater or smaller than what is recited in the deed (Goyena vs.
Tambunting, 1 Phil. 490; Teran vs. Villanueva, 56 Phil. 677; Azarraga vs. Gay, 52 Phil. 599; Mondragon vs. Santos, 87 Phil.
471). And this is particularly true where, as in the case now before this Court, the area given is qualified to be approximate only
("humigit kumulang", i.e., more or less Rec. on App., p. 22).
To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made by unit of
measure at a definite price for each unit.
If the defendant intended to buy by the meter be should have so stated in the contract (Goyena vs. Tambunting, supra).
The ruling of the Supreme Court of Spain, in construing Article 1471 of the Spanish Civil Code (copied verbatim in our Article
1542) is highly persuasive that as between the absence of a recital of a given price per unit of measurement, and the
specification of the total area sold, the former must prevail and determines the applicability of the norms concerning sales for a
lump sum.
La venta a cuerpo cierto indudablemente se verifica cuando en el contrato no solo no es precisado el precio singular por
unidad de medida, sino que tampoco son indicadas los dimensiones globales bales del inmueble, pero tambien se
verifica cuando aun ng habiendo sido indicado un precio singular por unidad de medida, sin embargo es especificada la
dimension total del inmueble, en cuyo ultimo caso entre los dos indices en contraste, constituido uno por la falta de un
precio singular por unidad de medida, y otro por la concrecion de las dimensiones globales del unmueble, la Ley da
prevalencia al mero y presume que aquella individualizacion no habia tenido para las partes valor esencial, que solo
constituia una superabundancia, y no significa que las partes hayan convenido aquel precio global solo en cuanto el
inmueble tuviese efectivamente aquellas dimensiones totales, siendo de estimar que esta es una presuncion absoluta,
contra la cual ni el comprador ni el vendedor pueden articular prueba contraria.
Por tanto, ni el comprador ni el vendedor pueden pretender una disminucicion o, respectivamente un suplemento de
precio, cuando las dimensiones globales del unmueble resulten despues mayores o menores de las indicadas en el
contrato, aunque aduzcan que solo en tanto han convenido el aquel precio en cuanto creian que las dimensiones de la
cosa fueran las precisadas en el contrato. (Tribunal Supreme de España, Sent. de 26 Junio 1956; Rep. Jurisp. Aranzadi,
2.729) (Emphasis supplied)
The Civil Code's rule as to sales "a cuerpo cierto" was not modified by Act 496, section 58, prohibiting the issuance of a
certificate of title to a grantee of part of a registered tract until a subdivision plan and technical description are duly approved by
the Director of Lands, and authorizing only the entry of a memorandum on the grantor's certificate of title in default of such
plan. The latter provision is purely a procedural directive to Registers of Deeds that does not attempt to govern the rights of
vendor and vendee inter se, that remain controlled by the Civil Code of the Philippines. It does not even bar the registration of
the contract itself to bind the land.
WHEREFORE, the decision of the Court of Appeals, in its case No. 20582-R, is hereby affirmed. Costs against the appellants,
Jose Santa Ana, Jr. and Lourdes Sto. Domingo.
Concepcion, C.J., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez, JJ., concur.
Castro, J., took no part.
G.R. No. L-20435 October 23, 1923
LUIS ASIAIN, plaintiff-appellant,
vs.
BENJAMIN JALANDONI, defendant-appellee.
Arroyo and Gurrea for appellant.

Francisco Soriano for appellee.
MALCOLM, J.:
Luis Asiain, the plaintiff-appellant in this case, is the owner of the hacienda known as "Maria" situated in the municipality of
La Carlota, Province of Occidental Negros, containing about 106 hectares. Benjamin Jalandoni, the defendant-appellee, is the
owner of another hacienda adjoining of Asiain.
Asiain and Jalandoni happening to meet no one of the days of May, 1920, Asiain said to Jalandoni that he was willing to sell a
portion of his hacienda for the sum of P55,000. With a wave of his hand, Asiain indicated the tract of land in question,
affirming that it contained between 25 and 30 hectares, and that the crop of sugar cane then planted would produce not less than
2,000 piculs of sugar. But Jalandoni, remaining doubtful as to the extent of the land and as to the amount of crop on it, Asiain
wrote Jalandoni the letter which follows:
HDA. MARIA May, 26, 1920.
MR. BENJAMIN JALANDONI.
DEAR BENJAMIN: I am in receipt of your letter and with regard to your statement that parcel does not contain 21 hectares I do
not believe. I bet anything that part only which is planted with cane contains more than 20 hectares, I bet 2 against 1.
If you agree, I would be that you pay only one-half. I am not a surveyor, but these days I had the pleasure to survey the land and
I know more or less its area. 1awph!l.net
Here we are not to deceive each other. If you like that parcel and if you want to buy it I will give you good propositions. I don't
know where and how they learned that I was selling the hacienda and they made me a good offer, but as we do not want to part
but with that parcel, hence my propositions are the following, in view of the time that has elapsed and the progress of the cane.
I assure (aseguro) that there are 2,000 piculs and sell on that basis, provided that the cane is milled in due time. In case the sugar
does not amount to 2,000 piculs, I will pay in sugar all such amount as will be necessary to complete the 2,000, but if after
milling the cane, as I say, there is an excess over 2,000 piculs, all the excess shall be mine. So that if you like, I make the sale
for the same price that we talked about and the same conditions, not a dime more or less.
Since you left it did rain, so the "alociman" (Philippine herb) of Guimib must die on the field, whether of the hacienda or of the
"lagatio." You have a contract for a lump sum. Now they have begun to plow the old plantations within the boundary some days
ago and you may rest and throw one (unintelligible), answer yes or no, so that I may decide.
Your friend LUIS ASIAIN
Sometime later, in July of the same year, Asiain and Jalandoni having met at Iloilo, they prepared and signed the memorandum-
agreement which follows:
Purchase of land of Mr. Luis Asiain and his wife Maria Cadenas, by B. Jalandoni, containing 25 hectares more or less
of land bounded by property of the purchaser, with its corresponding crop, estimated at 2,000 piculs, the total value of
which is 55 thousand. The price is to be paid by paying 30 thousand at the signing of the document, and 25 thousand
within one year, with interest at the rate of 10 per cent.
Mr. Asiain is under obligation to take care of all the plantation until the planting is finished and in case the crop
exceeds 2,000 piculs, all the excess will belong to Mr. Asiain.
The adjacent landowner on the north and the west is the vendor himself, on the east, B. Jalandoni, and on the south, B.
Jalandoni and the widow of Abdon Ferrer.
The purchaser is under obligation to answer for all the rights and obligations of the land with the central of Inchausti.
After the planting of the cane is completely finished, Mr. Asiain shall vacate the parcel sold to the purchaser.
The expenses for taking care of said plantation until the planting is completely finished will be for the account of the
vendor Mr. Asiain.
(Sgd.) "LUIS ASIAIN

"BENJAMIN JALANDONI"
During all of the period of negotiations, Jalandoni remained a doubting Thomas and was continually suggesting that, in his
opinion, the amount of the land and of the crop was overestimated. Asiain on his part always gave assurances in conformity
with the letter which he had written intended to convince Jalandoni that the latter was in error in his opinion. As a result, the
parties executed the agreement which follows:
This document, executed in the city of Iloilo, Province of Iloilo, Philippine Islands, by and between Messrs. Luis
Asiain and Benjamin Jalandoni, of age and residents of the municipality of La Carlota, Province of Occidental Negros,
Philippine Islands.
Witnesseth:
(1) That Luis Asiain does hereby promise and bind himself to sell to Benjamin Jalandoni a parcel of
land the hacienda "Maria" of the aforesaid Luis Asiain, situated in the municipality of La Carlota,
Province of Occidental Negros, P.I.
(2) That Benjamin Jalandoni does hereby promise and bind himself to purchase the aforesaid parcel of
land in the sum P55,000 upon certain conditions specified in a memorandum signed by the parties
which is in the hands of Attorneys Padilla & Treñas.
(3) That upon the signing of this agreement, the vendor shall have the right to collect from the
purchaser part of the price giving receipts thereof signed by said vendor.
(4) That in case the vendor should withdraw from the contract and desist from signing the document
of final sale, the purchaser shall have the right to collect from said vendor all such amount as may
have been advanced on account of this sale, with an indemnity of P15,000 as penalty.
(5) In case it is the purchaser who should withdraw from the contract of sale, then he will lose all such
amount as may have been paid in advance on account of this transaction.
In witness whereof, we have hereunto affixed our signatures, at Iloilo, Iloilo, this 12th day of July, 1920.
(Sgd) "LUIS ASIAIN
"BENJAMIN JALANDONI
Signed in the presence of:
(Sgd.) "ENGRACIO PADILLA

"P.T. TREÑAS"
Once in possession of the land, Jalandoni did two things. He had the sugar cane ground in La Carlota Sugar Central with the
result that it gave and output of P800 piculs and 23 cates of centrifugal sugar. When opportunity offered, he secured the
certificate of title of Asiain and produced a surveyor to survey the land. According to his survey, the parcel in question
contained an area of 118 hectares, 54 ares, and 22 centiares.
Of the purchase price of P55,000, Jalandoni had paid P30,000, leaving a balance unpaid of P25,000. To recover the sum of
P25,000 from Jalandoni or to obtain the certificate of title and the rent from him, action was begun by Asiain in the Court of
First Instance of Occidental Negros. To the complaint, an answer and a counter-complaint were interposed by the defendant, by
which it was asked that he be absolved from the complaint, that the contract be annulled, both parties to return whatever they
had received, and that he recover from the plaintiff the sum of P3,600 annually as damages. In a well-reasoned decision, the
Honorable Eduardo Gutierrez David, Judge of First Instance, declared null the document of purchase and its related
memorandum; absolved the defendant from the payment of P25,000; ordered the plaintiff to return to the defendant the sum of
P30,000 with legal interest from July 12, 1920; ordered the defendant to turn over to the plaintiff the tract of land and the
certificate of title No. 468, and absolved the plaintiff from the counter-complaint, — all without special finding as to the costs.
It is from said judgment that the plaintiff has appealed.
The true facts need not give us pause. They are as found by the trial judge and as pratically agreed to by the parties. It is only
necessary to keep in mind that apparently there was always a difference of opinion between Asiain and Jalandoni as to the area
of the tract and as to the crop of sugar cane; that the agreement between them mentions land containing 25 hectares more or
less, giving the boundaries, and a crop estimated and in one sense warranted at 2,000 piculs, and that in reality the land
contained only a little more than 18 hectares and produced a crop of only about 800 piculs. The legal consequences arising from
these facts are more difficult of determination.
Our Civil Code contains provisions which must be taken into consideration. Codal articles 1265, 1266, and 1269 relate to
consent given by reason of error and deceit. They provide the rules which shall avoid contracts for these and other reasons. But
the provisions of the Civil Code most directly pertinent are found in articles 1469, 1470, and 1471.
The first two mentioned articles, 1469 and 1470, are not applicable because of the proviso relating to the sale being made at a
certain price for each unit of measure or number — which is not our case. The facts seem to fall within article 1471. It first
paragraph provides that in case of the sale of real estate for a lump sum and not at the rate of specified price of each unit or
measure, there shall be no increase or decrease of the price even if the area be found to be more or less than that stated in the
contract. The next paragraph provides that the same rule is applicable when two or more estates are sold for a single price. Then
comes the following: ". . . but, if in addition to a statement of the boundaries, which is indispensable in every conveyance of real
estate, the area estate should be designated in the contract, the vendor shall be obliged to deliver all that is included within such
boundaries, even should it exceed the area specified in the contract; and, should he not be able to do so, he shall suffer a
reduction of the price in proportion to what is lacking of the area, unless the contract be annulled by reason of the vendee's
refusal to accept anything other than that which was stipulated."
A study of the Spanish commentators discloses that the meaning of article 1471 is not clear as it might be, and that they are not
unanimous in their views. Manresa gives emphasis to the intention of the parties and the option on the part of the purchaser to
rescind the contract. To quote from Manresa:
The rule in the latter case is found in the second paragraph of article 1471, with the exception of the first clause which
refers to the former hypothesis. This rule may be formulated as follows: Whether the case is one of sale of realty for a
lump sum or of two or more for a single price which is also a lump sum and, consequently, not at the rate of specified
price for each unit of measure or number, the vendor shall be bound to deliver all that is within the boundaries stated
although it may exceed the area or number expressed in the contract; in case he cannot deliver it, the purchaser shall
have the right to reduce the price proportionately to what is lacking of the area or number, or rescind the contract at his
option.
xxx xxx xxx
The manner in which the matter covered by this article was distributed in its two paragraphs contributes to making it
difficult to understand. The rule might have been clearly stated had the first clause of the second paragraph been
included in the first paragraph, the latter to end with the words, "The same rule shall apply when two or more estates
are sold for a single price." And if by constituting an independent paragraph, with the rest of the second paragraph, it
were made to appear more expressly that the rule of the second paragraph thus drawn referred to all the cases of
paragraph one, as we have expounded, namely, to the case of a sale of one single estate and that of two or more for one
single price, the precept would have been clearer.
In our opinion, this would have better answered what we deem to be indubitable intention of the legislator.
Some eminent commentators construe the last part of article 1471 in a different way. To them the phrase "and should
he not be able to do so" as applied to the vendor, does not mean as apparently it does "should he not be able to deliver
all that is included within the boundaries stated," but this other thing, namely, that if by reason of the fact that a less
area is included within the boundaries than that expressed in the contract, it is not possible for the vendor to comply
therewith according to its literal sense, he must suffer either the effects of the nullity of the contract or a reduction of
the price proportionately to what may be lacking of the area or number. It is added as a ground for this solution that if
the vendor fulfills the obligation, as stated in the article, by delivering what is not included within the boundaries, there
can never by any case of proportionate reduction of the price on account of shortage of an area, because he does not
give less who delivers all that he bound himself to.
According to this opinion, which we believe erroneous, if within the boundaries of the property sold, there is included
more than area than that expressed in the title deeds, nothing can be claimed by the vendor who losses the value of that
excess, but if there is less area, then he loses also, because either the price is reduced or the contract is annulled. This
theory would be anomalous in case of sale of properties in bulk, but, above all, would do gross injustice which the
legislator never intended.
There is no such thing. So long as the vendor can deliver, and for that reason, delivers all the land included within the
boundaries assigned to the property, there can be no claim whatsoever either on his part, although the area may be
found to be much greater than what was expressed, nor on the part of the purchaser although what area may be in
reality much smaller. But as he sold everything within the boundaries and this is all the purchaser has paid, or must pay,
for whether much or little, if afterwards, it is found that he cannot deliver all, because, for instance, a part, a building, a
valley, various pieces of land, a glen etc., are not his, there is no sale of a specified thing, there is longer a sale of the
object agreed upon, and the solution given by the article is then just and logical: Either the contract is annulled or the
price is reduced proportionately." (10 Comentarious al Codigo Civil, p. 157.)
The principle is deduced from the Code, that if land shall be sold within boundaries with an expression of the area and if the
area is grossly deficient, the vendee has an option, either to have the price reduced proportionately or to ask for the rescission of
the contract. The rule of the civil law is more favorable to the purchaser than is the common law. It gives the excess to the
purchaser without compensation to the vendor, where the property is sold by a specific description followed by the mention of
the quantity or measure, but allows the purchaser either to secure a deduction from the price in case a deficiency or to annul the
contract.
The decision of this court which gave most direct consideration to article 1471 of the Civil Code, now chiefly relied upon by the
appellant, is found in Irureta Goyena vs. Tambunting ([1902], 1 Phil., 490). The rule announced in the syllabus is this: "An
agreement to purchase a certain specified lot of land at a certain price is obligatory and enforceable regardless of the fact that its
area is less than that mentioned in the contract." Taken literally, this rule would lead to the result desired by the appellant. But
the syllabus naturally must be understood in relation what is found in the decision itself; and the fact was that the tract of land
was mentioned as being located at No. 20 Calle San Jose, Ermita, Manila. The private contract expressed a specific thing as the
object of the contract and specified a certain price. There was no statement in the document of the superficial area and no hint in
the record that either or both parties were misled. The facts, therefore, are different than those before us and the doctrine in the
Irureta Goyena vs. Tambunting case, can well be followed and distinguished.
A comparative study of the American Authorities throws considerable light on the situation. In volume 39 Cyc., page 1250,
under the subject "Vendor and Purchaser," is found the following:
If, in a contract of sale the quantity of the realty to be conveyed is indicated by a unit of area, as by the acre, a marked
excess or deficiency in the quantity stipulated for is a ground for avoiding the contract. Since it is very difficult, if not
impossible, to ascertain the quality of a tract with perfect accuracy, a slight excess or deficiency does not affect the
validity of the contract.
Where, however, the contract is not for the sale of a specific quantity of land, but for the sale of particular tract, or
designated lot or parcel, by name or description, for a sum in gross, and the transaction is bona fide, a mutual mistake
as to quantity, but not as to boundaries, will not generally entitle the purchaser to compensation, and is not ground for
rescission. But it is well settled that a purchaser of land, when it is sold in gross, or with the description, "more or less"
or "about," does not thereby ipso facto take all risk of quantity in the tract. If the difference between the real and the
represented quantity is very great, both parties act obviously under a mistake which it is the duty of a court of equity to
correct. And relief will be granted when the mistake is so material if the truth had been known to the parties the sale
would not have been made.
Volume 27 of the Ruling Case Law, pages 354, 434, 436, states what follows:
A mutual mistake as to the quantity of the land sold may afford ground for equitable relief. As has been said, if,
through gross and palpable mistake, more or less land should be conveyed than was in the contemplation of the seller to
part with or the purchaser to receive, the injured party would be entitled to relief in like manner as he would be for an
injury produced by a similar cause in a contract of any other species. And when it is evident that there has been a gross
mistake s to quantity, and the complaining party has not been guilty of any fraud or culpable negligence, nor has he
otherwise impaired the equity resulting from the mistake, he may be entitled to relief from the technical or legal effect
of his contract, whether it be executed or only executory. It has also been held that where there is a very great diference
between the actual and the estimated quantity of acres of land sold in gross, relief may be granted on the ground of
gross mistake. Relief, however, will not be granted as general rule where it appears that the parties intended a contract
of hazard, as where the sale is a sale in gross and not by acreage or quantity as a basis for the price; and it has been held
that a mistake on the part of the vendor of a town lot sold by description as to number on the plat, as to its area or
dimensions, inducing a sale thereof at smaller price than he would have asked had he been cognizant of its size, not in
any way occasioned or concealed by conduct of the purchaser, constitutes no ground for the rescission of the contract.
The apparent conflict and discrepancies in the adjudicated cases involving mistakes as to quantity arise not from a
denial of or a failure to recognize the general principle, but from the difficulty of its practical application in particular
cases in determining the questions whether the contract was done of hazard as to quantity or not and whether the
variance is unreasonable. The relative extent of the surplus or deficit cannot furnish, per se, an infallible criterion in
each case for its determination, but each case must be considered with reference not only to that but its other peculiar
circumstances. The conduct of the parties, the value, extent, and locality of the land, the date of the contract, the price,
and other nameless circumstances, are always important, and generally decisive. In other words, each case must depend
on its own peculiar circumstances and surroundings.
The rule denying relief in case of a deficit or an excess is frequently applied in equity as well as at law, but a court of
equity will not interfere on account of either a surplus or a deficiency where it is clear that the parties intend a contract
of hazard, and it is said that although this general rule may not carry into effect the real intention of the parties it is
calculated to prevent litigation. From an early date, courts of equity under their general jurisdiction to grant relief on
the ground of mistake have in case of mistake in the estimation of the acreage in tract sold and conveyed interposed
their aid to grant relief to the vendor where there was a large surplus over the estimated acreage, and to the purchaser
where there was large deficit. For the purpose of determining whether relief shall be granted the courts have divided the
cases into two general classes: (1) Where the sale is of a specific quantity which is usually denominated a sale by the
acre; (2) where the sale is usually called a sale in gross. . . .
Sales in gross for the purpose of equitable relief may be divided into various subordinate classifications: (1) Sales
strictly and essentially by the tract, without reference in the negotiation or in the consideration to any designated or
estimated quantity of acres; (2) sales of the like kind, in which, though a supposed quantity by estimation is mentioned
or referred to in the contract, the reference was made only for the purpose of description, and under such circumstances
or in such a manner as to show that the parties intended to risk the contingency of quantity, whatever it might be, or
how much so ever it might exceed or fall short of that which was mentioned in the contract; (3) sales in which it is
evident, from extraneous circumstances of locality, value, price, time, and the conduct and conversations of the
parties, that they did not contemplate or intend to risk more than the usual rates of excess or deficit in similar cases, or
than such as might reasonably be calculated on as within the range of ordinary contingency; (4) sales which, though
technically deemed and denominated sales in gross, are in fact sales by the acre, and so understood by the parties.
Contracts belonging to either of the two first mentioned classes, whether executed or executory, should not be modified
by the chancellor when there has been no fraud. But in sales of either the third of fourth kind, an unreasonable surplus
or deficit may entitle the injured party to equitable relief, unless he has, by his conduct, waived or forfeited his
equity. . . .
The memorandum-agreement between Asiain and Jalandoni contains the phrase or "more or less." It is the general view that this
phrase or others of like import, added to a statement of quantity, can only be considered as covering inconsiderable or small
differences one way or the other, and do not in themselves determine the character of the sale as one in gross or by the acre. The
use of this phrase in designating quantity covers only a reasonable excess or deficiency. Such words may indeed relieve from
exactness but not from gross deficiency.
The apparent conflict and discrepancies in the adjudicated cases arise not from a denial of or a failure to recognize the general
principles. These principles, as commonly agreed to, may be summarized as follows: A vendee of land when it is sold in gross
or with the description "more or less" does not thereby ipso facto take all risk of quantity in the land. The use of "more or less"
or similar words in designating quantity covers only a reasonable excess or deficiency. Mutual mistake of the contracting parties
to sale in regard to the subject-matter of the sale which is so material as to go to the essence of the contract, is a ground for relief
and rescission. It has even been held that when the parties saw the premises and knew the boundaries it cannot prevent relief
when there was mutual gross mistake as to quantity. Innocent and mutual mistake alone are sufficient grounds for rescission.
(Bigham vs. Madison [1899], 47 L. R. A., 267) The difficulty comes from the application of the principles in particular cases.
A practical demonstration of what has just been said is disclosed by the notes in volume 27 of Ruling Case Law, page 439. In
the following cases, relief was denied: Lawson vs. Floyd, 124 U. S., 108; 8 S. Ct., 409; 31 U. S. (L. ed.), 347 (estimated acreage
about 1,000 acres; shortage 368 acres); Frederick vs. Youngblood, 19 Ala., 680; 54 Am. Dec., 209 (estimated acreage 500 acres
more or less; shortage 39 acres); Jones vs. Plater, 2 Gill (Md.), 125; 41 Am. Dec., 408 (stated acreage 998 acres; shortage 55
acres); Frenche vs. State, 51 N. J. Eq., 624; 27 Atl., 140; 40 A. S. R., 548 (stated acreage 195-98/100 be the same more or less;
shortage 1-37/100); Faure vs. Martin, 7 N. Y., 210; 57 Am. Dec., 515 (stated acreage 96 acres more or less; deficit 10 acres);
Smith vs. Evans, 6 Bin. (Pa.), 102; 6 Am. Dec., 436 (shortage of 88 acres in tract conveyed as containing 991 1/4 acres more or
less); Jollife vs. Hite, 1 Call (Va.), 301; 1 Am. Dec., 519 (stated acreage 578 acres more or less; shortage 66 acres);
Pendleton vs. Stewart, 5 Call (Va.), 1;2 Am. Dec., 583 (stated acreage 1,100 acres more or less; shortage 160 acres);
Nelson vs. Matthews, 2 Hen. & M. (Va.), 164; 3 Am. Dec., 620 (stated acreage 852 acres more or less; shortage of 8 acres). In
the following cases relief was granted: Harrel vs. Hill, 19 Ark., 102; 68 Am. Dec., 202 (stated acreage 180 acres more or less;
deficit 84 acres); Solinger vs. Jewett, 25 Ind., 479; 87 Am. Dec., 372 (stated acreage 121 acres more or less; deficit 36 acres);
Hays vs. Hays, 126 Ind., 92; 25 N.E., 600; 11 L. R. A., 376 (stated acreage 28.4 acres more or less; deficit 5 acres); Baltimore,
etc., Land Soc. vs. Smith, 54 Md., 187; 39 Am. Rep., 374 (stated acreage about 65 acres; deficit 30 to 35 acres);
Newton vs. Tolles, 66 N. H., 136; 19 Atl., 1092; 49 A. S. R., 593; 9 L. R. A., 50 (stated acreage about 200 acres; deficit 65
acres); Couse vs. Boyles, 4 N. J. Eq., 212; 38 Am. Dec., 212 (stated acreage 135 acres more or less; deficit 30 acres)
Belknap vs. Sealey, 14 N. Y., 143; 67 Am. Dec., 120 (stated acreage 8 acres more or less; deficit 4 acres); Paine vs. Upton, 87
N.Y., 327; 41 Am. Rep., 371 (stated acreage "about 222 acres be the same more or less;" shortage 18 acres);
Bigham vs. Madison, 103 Tenn., 358; 52 S. W., 1074; 47 L. R. A., 267 (stated acreage 25 acres more or less; deficit 12 acres);
Smith vs. Fly, 24 Tex., 345; 76 Am. Dec., 109 (stated acreage 500 acres more or less; deficit 115 acres); Triplett vs. Allen, 26
Grat. (Va.), 721; 21 Am. Dec., 320 (stated acreage 166 acres more or less; deficit 10 acres); Epes vs. Saunders, 109 Va., 99; 63
S. E., 428; 132 A. S. R., 904 (stated acreage 75 acres more or less; deficit 22 acres); McComb vs. Gilkeson, 110 Va., 406; 66 S.
E., 77; 135 A. S. R., 944 (stated acreage 245 acres more or less; deficit 10 acres).
A case often cited and which on examination is found to contain a most exhaustive review of the decisions, is that of
Belknap vs. Sealey ([1856], 14 N.Y. 143; 67 Am. Dec.,, 120) The facts were: "Upon the merits of the controversy the case is
quite simple in its facts. The land in question is situated in the city of Brooklyn; and being valuable only for division and sale as
city lots, its valuable only for division and sale as city lots, its value is precisely in proportion to the quantity. In consideration
of the gross sum of fourteen thousand dollars, of which one thousand dollars was paid down, the defendant agreed to convey the
land to the plaintiff, describing it as "the premises conveyed to him by Samuel T. Roberts," by deed dated about nine months
previous. The deed of Roberts contained a definite description by meters and bounds, and stated the quantity to be "about nine
acres, more or less," excepting a certain parcel of one acre and six perches. The quantity in fact is only about half as much as
the deed asserted. The plaintiff, in agreeing to purchase the tract at the sum named, acted under a mistake which affected the
price nearly one half, and the judge has found that the seller was mistaken also. . . . The Judge has found that the actual quantity
was substantially and essentially less than the plaintiff supposed he was purchasing; and although the finding does not so state
in terms, there can be no difficulty, I think, in affirming that if the true quantity had been known, the contract would not have
been made. The agreement has never been consummated by a conveyance. These are the only essential facts in the case." The
learned Judge remarked: "The counsel for the defendant is obliged to contend, and he does not contend, that mere mistake as to
the quantity of land affords no ground of relief against a contract in the terms of the present one, however serious such mistake
may be, and although we can readily see the contract would never have been made if the quantity had been made known. The
convenience of such a rule has been insisted on, and in the denial of justice it certainly has the merit of simplicity. If the
doctrine is true as broadly as stated, then there is one class of contracts to which the settled maxim that equity will relieve
against mistake can have no application. Upon a careful examination of the cases cited, as well as upon principle, my
conclusion is, that agreements of this description are not necessarily proof against the maxims which apply to all others." Then
follows a review of the cases not alone of the state of New York and other states in the America Union but of England as well.
The rule was announced that equity will rescind a contract for the sale of land for mutual mistake as to the quantity of land
which the boundaries given in the contract contained, where the deficiency is material. "More or less," used in the contract in
connection with the statement of the quantity, will not prevent the granting of such relief.
Coordinating more closely the law and the facts in the instant case, we reach the following conclusions: This was not a contract
of hazard. It was a sale in gross in which there was a mutual mistake as to the quantity of land sold and as to the amount of the
standing crop. The mistake of fact as disclosed not alone by the terms of the contract but by the attendant circumstances, which
it is proper to consider in order to throw light upon the intention of the parties, is, as it is sometimes expressed, the efficient
cause of the concoction. The mistake with reference to the subject-matter of the contract is such that, at the option of the
purchaser, it is rescindable. Without such mistake the agreement would not have been made and since this is true, the agreement
is inoperative and void. It is not exactly a case of over reaching on the plaintiff's part, or of misrepresentation and deception, or
of fraud, but is more nearly akin to a bilateral mistake for which relief should be granted. Specific performance of the contract
can therefore not be allowed at the instance of the vendor.
The ultimate result is to put the parties back in exactly their respective positions before they became involved in the negotiations
and before accomplishment of the agreement. This was the decision of the trial judge and we think that decision conforms to the
facts, the law, and the principles of equity.
Judgment is affirmed, without prejudice to the right of the plaintiff to establish in this action in the lower court the amount of
the rent of the land pursuant to the terms of the complaint during the time the land was in the possession of the defendant, and to
obtain judgment against the defendant for that amount, with costs against the appellant. So ordered.
Johnson, Avanceña, Villamor and Romualdez, JJ., concur.

Johns, J., concurs in the result.
Street, J., dissents.
G.R. No. 194846, June 28, 2013
*
HOSPICIO D. ROSAROSO, ANTONIO D. ROSAROSO, MANUEL D. ROSAROSO, ALGERICA D.
ROSAROSO, AND CLEOFE R. LABINDAO, Petitioners, v. LUCILA LABORTE SORIA, SPOUSES HAM
SOLUTAN AND **LAILA SOLUTAN, AND MERIDIAN REALTY CORPORATION, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the December 4, 2009
Decision1 of the Court of Appeals (CA), in CA G.R. CV No. 00351, which reversed and set aside the July 30, 2004
Decision2 of the Regional Trial Court, Branch 8, 7th Judicial Region, Cebu City (RTC), in Civil Case No. CEB-16957, an
action for declaration of nullity of documents.
The Facts
Spouses Luis Rosaroso (Luis) and Honorata Duazo (Honorata) acquired several real properties in Daan Bantayan, Cebu
City, including the subject properties. The couple had nine (9) children namely: Hospicio, Arturo, Florita, Lucila,
Eduardo, Manuel, Cleofe, Antonio, and Angelica. On April 25, 1952, Honorata died. Later on, Luis married Lourdes
Pastor Rosaroso (Lourdes).
On January 16, 1995, a complaint for Declaration of Nullity of Documents with Damages was filed by Luis, as one of the
plaintiffs, against his daughter, Lucila R. Soria (Lucila); Lucila’s daughter, Laila S. Solutan (Laila); and Meridian Realty
Corporation (Meridian). Due to Luis’ untimely death, however, an amended complaint was filed on January 6, 1996, with
the spouse of Laila, Ham Solutan (Ham); and Luis’ second wife, Lourdes, included as defendants. 3
In the Amended Complaint, it was alleged by petitioners Hospicio D. Rosaroso, Antonio D. Rosaroso (Antonio), Angelica
D. Rosaroso (Angelica), and Cleofe R. Labindao (petitioners) that on November 4, 1991, Luis, with the full knowledge
and consent of his second wife, Lourdes, executed the Deed of Absolute Sale 4(First Sale) covering the properties with
Transfer Certificate of Title (TCT) No. 31852 (Lot No. 8); TCT. No. 11155 (Lot 19); TCT No. 10885 (Lot No. 22); TCT
No. 10886 (Lot No. 23); and Lot Nos. 5665 and 7967, all located at Daanbantayan, Cebu, in their favor. 5
They also alleged that, despite the fact that the said properties had already been sold to them, respondent Laila, in
conspiracy with her mother, Lucila, obtained the Special Power of Attorney (SPA),6 dated April 3, 1993, from Luis (First
SPA); that Luis was then sick, infirm, blind, and of unsound mind; that Lucila and Laila accomplished this by affixing
Luis’ thumb mark on the SPA which purportedly authorized Laila to sell and convey, among others, Lot Nos. 8, 22 and
23, which had already been sold to them; and that on the strength of another SPA 7 by Luis, dated July 21, 1993 (Second
SPA), respondents Laila and Ham mortgaged Lot No. 19 to Vital Lending Investors, Inc. for and in consideration of the
amount of P150,000.00 with the concurrence of Lourdes.8
Petitioners further averred that a second sale took place on August 23, 1994, when the respondents made Luis sign the
Deed of Absolute Sale9 conveying to Meridian three (3) parcels of residential land for P960,500.00 (Second Sale); that
Meridian was in bad faith when it did not make any inquiry as to who were the occupants and owners of said lots; and that
if Meridian had only investigated, it would have been informed as to the true status of the subject properties and would
have desisted in pursuing their acquisition.
Petitioners, thus, prayed that they be awarded moral damages, exemplary damages, attorney’s fees, actual damages, and
litigation expenses and that the two SPAs and the deed of sale in favor of Meridian be declared null and void ab initio.10
On their part, respondents Lucila and Laila contested the First Sale in favor of petitioners. They submitted that even
assuming that it was valid, petitioners were estopped from questioning the Second Sale in favor of Meridian because they
failed not only in effecting the necessary transfer of the title, but also in annotating their interests on the titles of the
questioned properties. With respect to the assailed SPAs and the deed of absolute sale executed by Luis, they claimed that
the documents were valid because he was conscious and of sound mind and body when he executed them. In fact, it was
Luis together with his wife who received the check payment issued by Meridian where a big part of it was used to foot his
hospital and medical expenses.11
Respondent Meridian, in its Answer with Compulsory Counterclaim, averred that Luis was fully aware of the
conveyances he made. In fact, Sophia Sanchez (Sanchez), Vice-President of the corporation, personally witnessed Luis
affix his thumb mark on the deed of sale in its favor. As to petitioners’ contention that Meridian acted in bad faith when it
did not endeavor to make some inquiries as to the status of the properties in question, it countered that before purchasing
the properties, it checked the titles of the said lots with the Register of Deeds of Cebu and discovered therein that the First
Sale purportedly executed in favor of the plaintiffs was not registered with the said Register of Deeds. Finally, it argued
that the suit against it was filed in bad faith. 12
On her part, Lourdes posited that her signature as well as that of Luis appearing on the deed of sale in favor of petitioners,
was obtained through fraud, deceit and trickery. She explained that they signed the prepared deed out of pity because
petitioners told them that it was necessary for a loan application. In fact, there was no consideration involved in the First
Sale. With respect to the Second Sale, she never encouraged the same and neither did she participate in it. It was purely
her husband’s own volition that the Second Sale materialized. She, however, affirmed that she received Meridian’s
payment on behalf of her husband who was then bedridden. 13
RTC Ruling
After the case was submitted for decision, the RTC ruled in favor of petitioners. It held that when Luis executed the
second deed of sale in favor of Meridian, he was no longer the owner of Lot Nos. 19, 22 and 23 as he had already sold
them to his children by his first marriage. In fact, the subject properties had already been delivered to the vendees who had
been living there since birth and so had been in actual possession of the said properties. The trial court stated that
although the deed of sale was not registered, this fact was not prejudicial to their interest. It was of the view that the actual
registration of the deed of sale was not necessary to render a contract valid and effective because where the vendor
delivered the possession of the parcel of land to the vendee and no superior rights of third persons had intervened, the
efficacy of said deed was not destroyed. In other words, Luis lost his right to dispose of the said properties to Meridian
from the time he executed the first deed of sale in favor of petitioners. The same held true with his alleged sale of Lot 8 to
Lucila Soria.14 Specifically, the dispositive portion of the RTC decision reads: cralavvonlinelawlibrary
IN VIEW OF THE FOREGOING, the Court finds that a preponderance of evidence exists in favor of the plaintiffs and
against the defendants. Judgment is hereby rendered: cralavvonlinelawlibrary
a. Declaring that the Special Power of Attorney, Exhibit "K," for the plaintiffs and Exhibit "3" for
the defendants null and void including all transactions subsequent thereto and all proceedings
arising therefrom; chanroblesvirtualawlibrary
b. Declaring the Deed of Sale marked as Exhibit "E" valid and binding; chanroblesvirtualawlibrary
c. Declaring the Deed of Absolute Sale of Three (3) Parcels of Residential Land marked as Exhibit
"F" null and void from the beginning; chanroblesvirtualawlibrary
d. Declaring the Deed of Sale, Exhibit "16" (Solutan) or Exhibit "FF," null and void from the
beginning; chanroblesvirtualawlibrary
e. Declaring the vendees named in the Deed of Sale marked as Exhibit "E" to be the lawful,
exclusive and absolute owners and possessors of Lots Nos. 8, 19, 22, and 23; chanroblesvirtualawlibrary
f. Ordering the defendants to pay jointly and severally each plaintiff P50,000.00 as moral damages;
and
g. Ordering the defendants to pay plaintiffs P50,000.00 as attorney’s fees; and P20,000.00 as
litigation expenses.
The crossclaim made by defendant Meridian Realty Corporation against defendants Soria and Solutan is ordered
dismissed for lack of sufficient evidentiary basis.
SO ORDERED."15
Ruling of the Court of Appeals
On appeal, the CA reversed and set aside the RTC decision. The CA ruled that the first deed of sale in favor of petitioners
was void because they failed to prove that they indeed tendered a consideration for the four (4) parcels of land. It relied on
the testimony of Lourdes that petitioners did not pay her husband. The price or consideration for the sale was simulated to
make it appear that payment had been tendered when in fact no payment was made at all. 16
With respect to the validity of the Second Sale, the CA stated that it was valid because the documents were notarized and,
as such, they enjoyed the presumption of regularity. Although petitioners alleged that Luis was manipulated into signing
the SPAs, the CA opined that evidence was wanting in this regard. Dr. Arlene Letigio Pesquira, the attending physician
of Luis, testified that while the latter was physically infirmed, he was of sound mind when he executed the first SPA. 17
With regard to petitioners’ assertion that the First SPA was revoked by Luis when he executed the affidavit, dated
November 24, 1994, the CA ruled that the Second Sale remained valid. The Second Sale was transacted on August 23,
1994, before the First SPA was revoked. In other words, when the Second Sale was consummated, the First SPA was still
valid and subsisting. Thus, "Meridian had all the reasons to rely on the said SPA during the time of its validity until the
time of its actual filing with the Register of Deeds considering that constructive notice of the revocation of the SPA only
came into effect upon the filing [of the] Adverse Claim and the aforementioned Letters addressed to the Register of Deeds
on 17 December 1994 and 25 November 1994, respectively, informing the Register of Deeds of the revocation of the first
SPA."18 Moreover, the CA observed that the affidavit revoking the first SPA was also revoked by Luis on December 12,
1994.19
Furthermore, although Luis revoked the First SPA, he did not revoke the Second SPA which authorized respondent Laila
to sell, convey and mortgage, among others, the property covered by TCT T-11155 (Lot No. 19). The CA opined that had
it been the intention of Luis to discredit the Second Sale, he should have revoked not only the First SPA but also the
Second SPA. The latter being valid, all transactions emanating from it, particularly the mortgage of Lot 19, its subsequent
redemption and its second sale, were valid.20 Thus, the CA disposed in this wise: cralavvonlinelawlibrary
WHEREFORE, the appeal is hereby GRANTED. The Decision dated 30 July 2004 is hereby REVERSED AND SET
ASIDE, and in its stead a new decision is hereby rendered: cralavvonlinelawlibrary
1. DECLARING the Special Power of Attorney, dated 21 July 1993, as valid; chanroblesvirtualawlibrary
2. DECLARING the Special Power of Attorney, dated 03 April 1993, as valid up to the time of its
revocation on 24 November 1994; chanroblesvirtualawlibrary
3. DECLARING the Deed of Absolute [sale], dated 04 November 1991, as ineffective and without any force
and effect; chanroblesvirtualawlibrary
4. DECLARING the Deed of Absolute Sale of Three (3) Parcels of Residential Land, dated 23 August 1994,
valid and binding from the very beginning; chanroblesvirtualawlibrary
5. DECLARING the Deed of Absolute Sale, dated 27 September 1994, also valid and binding from the very
beginning; chanroblesvirtualawlibrary
6. ORDERING the substituted plaintiffs to pay jointly and severally the defendant-appellant Meridian
Realty Corporation the sum of Php100,000.00 as moral damages, Php100,000.00 as attorney’s fee and
Php100,000.00 as litigation expenses; and
7. ORDERING the substituted plaintiffs to pay jointly and severally the defendant-appellants Leila Solutan
et al., the sum of Php50,000.00 as moral damages.
SO ORDERED.21
Petitioners filed a motion for reconsideration, but it was denied in the CA Resolution, 22 dated November 18, 2010.
Consequently, they filed the present petition with the following
ASSIGNMENT OF ERRORS
I.
THE HONORABLE COURT OF APPEALS (19TH DIVISION) GRAVELY ERRED WHEN IT DECLARED AS
VOID THE FIRST SALE EXECUTED BY THE LATE LUIS ROSAROSO IN FAVOR OF HIS CHILDREN OF
HIS FIRST MARRIAGE.
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT SUSTAINING AND AFFIRMING
THE RULING OF THE TRIAL COURT DECLARING THE MERIDIAN REALTY CORPORATION A BUYER
IN BAD FAITH, DESPITE THE TRIAL COURT’S FINDINGS THAT THE DEED OF SALE (First Sale), IS
GENUINE AND HAD FULLY COMPLIED WITH ALL THE LEGAL FORMALITIES.
III.
THE HONORABLE COURT OF APPEALS FURTHER ERRED IN NOT HOLDING THE SALE (DATED 27
SEPTEMBER 1994), NULL AND VOID FROM THE VERY BEGINNING SINCE LUIS ROSAROSO ON
NOVEMBER 4, 1991 WAS NO LONGER THE OWNER OF LOTS 8, 19, 22 AND 23 AS HE HAD EARLIER
DISPOSED SAID LOTS IN FAVOR OF THE CHILDREN OF HIS (LUIS ROSAROSO) FIRST MARRIAGE. [23
Petitioners argue that the second deed of sale was null and void because Luis could not have validly transferred the
ownership of the subject properties to Meridian, he being no longer the owner after selling them to his children. No less
than Atty. William Boco, the lawyer who notarized the first deed of sale, appeared and testified in court that the said deed
was the one he notarized and that Luis and his second wife, Lourdes, signed the same before him. He also identified the
signatures of the subscribing witnesses.24 Thus, they invoke the finding of the RTC which wrote: cralavvonlinelawlibrary
In the case of Heirs of Joaquin Teves, Ricardo Teves versus Court of Appeals, et al., G.R. No. 109963, October 13, 1999,
the Supreme Court held that a public document executed [with] all the legal formalities is entitled to a presumption of
truth as to the recitals contained therein. In order to overthrow a certificate of a notary public to the effect that a grantor
executed a certain document and acknowledged the fact of its execution before him, mere preponderance of evidence will
not suffice. Rather, the evidence must (be) so clear, strong and convincing as to exclude all reasonable dispute as to the
falsity of the certificate. When the evidence is conflicting, the certificate will be upheld x x x .
A notarial document is by law entitled to full faith and credit upon its face. (Ramirez vs. Ner, 21 SCRA 207). As such it
… must be sustained in full force and effect so long as he who impugns it shall not have presented strong, complete and
conclusive proof of its falsity or nullity on account of some flaw or defect provided against by law (Robinson vs.
Villafuerte, 18 Phil. 171, 189-190).25
Furthermore, petitioners aver that it was erroneous for the CA to say that the records of the case were bereft of evidence
that they paid the price of the lots sold to them. In fact, a perusal of the records would reveal that during the cross-
examination of Antonio Rosaroso, when asked if there was a monetary consideration, he testified that they indeed paid
their father and their payment helped him sustain his daily needs. 26
Petitioners also assert that Meridian was a buyer in bad faith because when its representative visited the site, she did not
make the necessary inquiries. The fact that there were already houses on the said lots should have put Meridian on its
guard and, for said reason, should have made inquiries as to who owned those houses and what their rights were over the
same.27
Meridian’s assertion that the Second Sale was registered in the Register of Deeds was a falsity. The subject titles, namely:
TCT No. 11155 for Lot 19, TCT No. 10885 for Lot 22, and TCT No. 10886 for Lot 23 were free from any annotation of
the alleged sale.28
After an assiduous assessment of the records, the Court finds for the petitioners.
The First Deed Of Sale Was Valid
The fact that the first deed of sale was executed, conveying the subject properties in favor of petitioners, was never
contested by the respondents. What they vehemently insist, though, is that the said sale was simulated because the
purported sale was made without a valid consideration. Under Section 3, Rule 131 of the Rules of Court, the following are
disputable presumptions: (1) private transactions have been fair and regular; (2) the ordinary course of business has been
followed; and (3) there was sufficient consideration for a contract.29 These presumptions operate against an adversary
who has not introduced proof to rebut them. They create the necessity of presenting evidence to rebut the prima facie case
they created, and which, if no proof to the contrary is presented and offered, will prevail. The burden of proof remains
where it is but, by the presumption, the one who has that burden is relieved for the time being from introducing evidence
in support of the averment, because the presumption stands in the place of evidence unless rebutted. 30
In this case, the respondents failed to trounce the said presumption. Aside from their bare allegation that the sale was
made without a consideration, they failed to supply clear and convincing evidence to back up this claim. It is elementary
in procedural law that bare allegations, unsubstantiated by evidence, are not equivalent to proof under the Rules of
Court.31
The CA decision ran counter to this established rule regarding disputable presumption. It relied heavily on the account of
Lourdes who testified that the children of Luis approached him and convinced him to sign the deed of sale, explaining that
it was necessary for a loan application, but they did not pay the purchase price for the subject properties. 32 This testimony,
however, is self-serving and would not amount to a clear and convincing evidence required by law to dispute the said
presumption. As such, the presumption that there was sufficient consideration will not be disturbed.
Granting that there was no delivery of the consideration, the seller would have no right to sell again what he no longer
owned. His remedy would be to rescind the sale for failure on the part of the buyer to perform his part of their obligation
pursuant to Article 1191 of the New Civil Code. In the case of Clara M. Balatbat v. Court Of Appeals and Spouses Jose
Repuyan and Aurora Repuyan,33 it was written: cralavvonlinelawlibrary
The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless
the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code. Non-payment
only creates a right to demand the fulfillment of the obligation or to rescind the contract. [Emphases supplied]
Meridian is Not a
Buyer in Good Faith
Respondents Meridian and Lucila argue that, granting that the First Sale was valid, the properties belong to them as they
acquired these in good faith and had them first recorded in the Registry of Property, as they were unaware of the First
Sale.34
Again, the Court is not persuaded.
The fact that Meridian had them first registered will not help its cause. In case of double sale, Article 1544 of the Civil
Code provides: cralavvonlinelawlibrary
ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person
who may have first possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it
in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in
the absence thereof; to the person who presents the oldest title, provided there is good faith.
Otherwise stated, ownership of an immovable property which is the subject of a double sale shall be transferred: (1) to the
person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who
in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there
is good faith. The requirement of the law then is two-fold: acquisition in good faith and registration in good faith. Good
faith must concur with the registration. If it would be shown that a buyer was in bad faith, the alleged registration they
have made amounted to no registration at all.
The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of a double
sale of immovable property. When the thing sold twice is an immovable, the one who acquires it and first records it in the
Registry of Property, both made in good faith, shall be deemed the owner. Verily, the act of registration must be
coupled with good faith— that is, the registrant must have no knowledge of the defect or lack of title of his vendor
or must not have been aware of facts which should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor.) 35 [Emphases and underlining supplied]
When a piece of land is in the actual possession of persons other than the seller, the buyer must be wary and should
investigate the rights of those in possession. Without making such inquiry, one cannot claim that he is a buyer in good
faith. When a man proposes to buy or deal with realty, his duty is to read the public manuscript, that is, to look and see
who is there upon it and what his rights are. A want of caution and diligence, which an honest man of ordinary prudence is
accustomed to exercise in making purchases, is in contemplation of law, a want of good faith. The buyer who has failed to
know or discover that the land sold to him is in adverse possession of another is a buyer in bad faith. 36 In the case
of Spouses Sarmiento v. Court of Appeals,37 it was written: cralavvonlinelawlibrary
Verily, 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.
Thus, the general rule is that a purchaser may be considered a purchaser in good faith when he has examined the latest
certificate of title. An exception to this rule is when there exist important facts that would create suspicion in an otherwise
reasonable man to go beyond the present title and to investigate those that preceded it. Thus, it has been said that a person
who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an
innocent purchaser for value. A purchaser cannot close his eyes to facts which should put a reasonable man upon his
guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. As we
have held:
The failure of appellees to take the ordinary precautions which a prudent man would have taken under the circumstances,
specially in buying a piece of land in the actual, visible and public possession of another person, other than the vendor,
constitutes gross negligence amounting to bad faith.
In this connection, it has been held that where, as in this case, the land sold is in the possession of a person other than the
vendor, the purchaser is required to go beyond the certificate of title to ma[k]e inquiries concerning the rights of the actual
possessor. Failure to do so would make him a purchaser in bad faith. (Citations omitted).
One who purchases real property which is in the actual possession of another should, at least make some inquiry
concerning the right of those in possession. The actual possession by other than the vendor should, at least put the
purchaser upon inquiry. He can scarely, in the absence of such inquiry, be regarded as a bona fide purchaser as against
such possessors. (Emphases supplied)
Prescinding from the foregoing, the fact that private respondent RRC did not investigate the Sarmiento spouses' claim
over the subject land despite its knowledge that Pedro Ogsiner, as their overseer, was in actual possession thereof means
that it was not an innocent purchaser for value upon said land. Article 524 of the Civil Code directs that possession may
be exercised in one's name or in that of another. In herein case, Pedro Ogsiner had informed RRC that he was occupying
the subject land on behalf of the Sarmiento spouses. Being a corporation engaged in the business of buying and selling
real estate, it was gross negligence on its part to merely rely on Mr. Puzon's assurance that the occupants of the property
were mere squatters considering the invaluable information it acquired from Pedro Ogsiner and considering further that it
had the means and the opportunity to investigate for itself the accuracy of such information. [Emphases supplied]
In another case, it was held that if a vendee in a double sale registers the sale after he has acquired knowledge of a
previous sale, the registration constitutes a registration in bad faith and does not confer upon him any right. If the
registration is done in bad faith, it is as if there is no registration at all, and the buyer who has first taken possession of the
property in good faith shall be preferred.38 In the case at bench, the fact that the subject properties were already in the
possession of persons other than Luis was never disputed. Sanchez, representative and witness for Meridian, even testified
as follows: cralavvonlinelawlibrary
x x x; that she together with the two agents, defendant Laila Solutan and Corazon Lua, the president of Meridian Realty
Corporation, went immediately to site of the lots; that the agents brought with them the three titles of the lots and Laila
Solutan brought with her a special power of attorney executed by Luis B. Rosaroso in her favor but she went instead
directly to Luis Rosaroso to be sure; that the lots were pointed to them and she saw that there were houses on it but she did
not have any interest of the houses because her interest was on the lots; that Luis Rosaroso said that the houses belonged
to him; that he owns the property and that he will sell the same because he is very sickly and he wanted to buy medicnes ;
that she requested someone to check the records of the lots in the Register of Deeds; that one of the titles was mortgaged
and she told them to redeem the mortgage because the corporation will buy the property; that the registered owner of the
lots was Luis Rosaroso; that in more or less three months, the encumbrance was cancelled and she told the prospective
sellers to prepare the deed of sale; that there were no encumbrances or liens in the title; that when the deed of absolute sale
was prepared it was signed by the vendor Luis Rosaroso in their house in Opra x x x. 39 (Underscoring supplied)
From the above testimony, it is clear that Meridian, through its agent, knew that the subject properties were in possession
of persons other than the seller. Instead of investigating the rights and interests of the persons occupying the said lots,
however, it chose to just believe that Luis still owned them. Simply, Meridian Realty failed to exercise the due diligence
required by law of purchasers in acquiring a piece of land in the possession of person or persons other than the seller. In
this regard, great weight is accorded to the findings of fact of the RTC. Basic is the rule that the trial court is in a better
position to examine real evidence as well as to observe the demeanor of witnesses who testify in the case. 40
WHEREFORE, the petition is GRANTED. The December 4, 2009 Decision and the November 18, 2010 Resolution of
the Court of Appeals, in CA-G.R. CV No. 00351, are REVERSED and SET ASIDE. The July 30, 2004 Decision of the
Regional Trial Court, Branch 8, 7th Judicial Region, Cebu City, in Civil Case No. CEB-16957, is hereby REINSTATED.
SO ORDERED.
[G.R. No. 92310. September 3, 1992.]
AGRICULTURAL AND HOME EXTENSION DEVELOPMENT GROUP, represented by Nicasio D. Sanchez,

Sr., substituted by Milagros S. Bucu, Petitioner, v. COURT OF APPEALS, and LIBRADO
CABAUTAN, Respondents.
Gideon C. Bondoc for Petitioner.
Balgos & Perez for Private Respondent.
SYLLABUS
1. CIVIL LAW; SPECIAL CONTRACTS; SALE; RULE IN CASE OF DOUBLE SALE; APPLICATION IN CASE AT
BAR. — Under Article 1544 of the Civil Code of the Philippines: Art. 1544. If the same thing should have been sold to
different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership
shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith. It is not disputed that the first sale to Gundran was not registered
while the second sale to Cabautan was registered. Following the above-quoted provision, the courts below were justified
in according preferential rights to the private respondent, who had registered the sale in his favor, as against the
petitioner’s co-venturer whose right to the same property had not been recorded.
2. ID.; ID.; ID.; PURCHASER IN GOOD FAITH; DEFINED. — A purchaser in good faith is defined as "one who buys
the property of another without notice that some other person has a right to or interest in such property and pays a full and
fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in
the property." cralaw virtua1aw library
3. ID.; ID.; ID.; ID.; SALE OF PROPERTY REGISTERED UNDER THE TORRENS SYSTEM; EFFECT OF NOTICE
OF LIS PENDENS ANNOTATED ON THE CERTIFICATE. — The petitioner claims, however, that Cabautan was a
purchaser in bad faith because he was fully aware of the notices of lis pendens at the back of TCT No. 287416 and of the
earlier sale of the land to Gundran. An examination of TCT No. 287416 discloses no annotation of any sale, lien,
encumbrance or adverse claim in favor of Gundran or the petitioner. Well-settled is the rule that when the property sold is
registered under the Torrens system, registration is the operative act to convey or affect the land insofar as third persons
are concerned. Thus, a person dealing with registered land is only charged with notice of the burdens on the property
which are noted on the register or certificate of title. While it is true that notices of lis pendens in favor of other persons
were earlier inscribed on the title, these did not have the effect of establishing a lien or encumbrance on the property
affected. Their only purpose was to give notice to third persons and to the whole world that any interest they might
acquire in the property pending litigation would be subject to the result of the suit.
DECISION
CRUZ, J.:
We are asked again to determine who as between two successive purchasers of the same land should be recognized as its
owner. The answer is simple enough. But we must first, as usual, plow through some alleged complications.
The pertinent background facts are as follows: chanrob1es virtual 1aw library
On March 29, 1972, the spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a 19-hectare parcel of land in Las
Piñas, Rizal, covered by TCT No. 287416. The owner’s duplicate copy of the title was turned over to Gundran. However,
he did not register the Deed of Absolute Sale because he said he was advised in the Office of the Register of Deeds of
Pasig of the existence of notices of lis pendens on the title. chanrobles law library
On November 20, 1972, Gundran and the herein petitioner, Agricultural and Home Development Group, entered into a
Joint Venture Agreement for the improvement and subdivision of the land. This agreement was also not annotated on the
title.
On August 30, 1976, the spouses Andres Diaz and Josefa Mia again entered into another contract of sale of the same
property with Librado Cabautan, the herein private Respondent.
On September 3, 1976, by virtue of an order of the Court of First Instance of Rizal, a new owner’s copy of the certificate
of title was issued to the Diaz spouses, who had alleged the loss of their copy. On that same date, the notices of lis
pendens annotated on TCT No. 287416 were canceled and the Deed of Sale in favor of private respondent Cabautan was
recorded. A new TCT No. S-33850/T-172 was thereupon issued in his name in lieu of the canceled TCT No. 287416.
On March 14, 1977, Gundran instituted an action for reconveyance before the Court of First Instance of Pasay City *
against Librado Cabautan and Josefa Mia seeking, among others, the cancellation of TCT No. 33850/T-172 and the
issuance of a new certificate of title in his name.
On August 31, 1977, the petitioner, represented by Nicasio D. Sanchez, Sr., filed a complaint in intervention with
substantially the same allegations and prayers as that in Gundran’s complaint.
In a decision dated January 12, 1987, 1 Gundran’s complaint and petitioner’s complaint in intervention were dismissed for
lack of merit. So was the private respondent’s counterclaims, for insufficiency of evidence.
Upon appeal, this decision was affirmed by the respondent Court of Appeals, with the modification that Josefa Mia was
ordered to pay Gundran the sum of P90,000.00, with legal interest from September 3, 1976, plus the costs of suit. 2
Under Article 1544 of the Civil Code of the Philippines: chanrob1es virtual 1aw library
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith, if it should be movable property. chanrobles virtual lawlibrary
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it
in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and,
in the absence thereof, to the person who presents the oldest title, provided there is good faith.
It is not disputed that the first sale to Gundran was not registered while the second sale to Cabautan was registered.
Following the above-quoted provision, the courts below were justified in according preferential rights to the private
respondent, who had registered the sale in his favor, as against the petitioner’s co-venturer whose right to the same
property had not been recorded.
The petitioner claims, however, that Cabautan was a purchaser in bad faith because he was fully aware of the notices of lis
pendens at the back of TCT No. 287416 and of the earlier sale of the land to Gundran. chanrobles virtual lawlibrary
A purchaser in good faith is defined as "one who buys the property of another without notice that some other person has a
right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has
notice of the claim or interest of some other person in the property." 3
An examination of TCT No. 287416 discloses no annotation of any sale, lien, encumbrance or adverse claim in favor of
Gundran or the petitioner. Well-settled is the rule that when the property sold is registered under the Torrens system,
registration is the operative act to convey or affect the land insofar as third persons are concerned. 4 Thus, a person
dealing with registered land is only charged with notice of the burdens on the property which are noted on the register or
certificate of title. 5
While it is true that notices of lis pendens in favor of other persons were earlier inscribed on the title, these did not have
the effect of establishing a lien or encumbrance on the property affected. Their only purpose was to give notice to third
persons and to the whole world that any interest they might acquire in the property pending litigation would be subject to
the result of the suit.
Cabautan took this risk. Significantly, three days after the execution of the deed of sale in his favor, the notices of lis
pendens were canceled by virtue of the orders of the Court of First Instance of Rizal, Branch 23, dated April 1, 1974, and
April 4, 1974. Cabautan therefore acquired the land free of any liens or encumbrances and so could claim to be a
purchaser in good faith and for value.
The petitioner insists that it was already in possession of the disputed property when Cabautan purchased it and that he
could not have not known of that possession. Such knowledge should belie his claim that he was an innocent purchaser for
value. However, the courts below found no evidence of the alleged possession, which we must also reject in deference to
this factual finding. chanrobles virtual lawlibrary
The petitioner’s reliance on Casis v. Court of Appeals 6 is misplaced.
The issue at bar is whether private respondent Cabautan is an innocent purchaser for value and so entitled to the priority
granted under Article 1544 of the Civil Code. The Casis case, on the other hand, involved the issues of whether or not:
1) certiorari was the proper remedy of the petitioner: 2) the previous petition for certiorari which originated from the
quieting of title case was similar to and, hence, a bar to the petition for certiorari arising from the forcible entry case; and
3) the court a quo committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the order
which dissolved the restraining order issued in connection with the ejectment case. The Court was not called upon in that
case to determine who as between the two purchasers of the subject property should be preferred.
The petitioner invokes the ruling of the lower court in that case to the effect that the registration of the sale in favor of the
second purchaser and the issuance of a new certificate of title in his favor did not in any manner vest in him any right of
possession and ownership over the subject property because the seller, by reason of their prior sale, had already lost
whatever right or interest she might have had in the property at the time the second sale was made.
This excerpt was included in the ponencia only as part of the narration of the background facts and was not thereby
adopted as a doctrine of the Court. It was considered only for the purpose of ascertaining if the court below had
determined the issue of the possession of the subject property pending resolution of the question of ownership. Obviously,
the Court could not have adopted that questionable ruling as it would clearly militate against the provision of Article
1544. chanrobles.com:cralaw:red
Worthy of note at this juncture is the observation of Justice Edgardo L. Paras, to wit: chanrob1es virtual 1aw library
True, no one can sell what he does not own, but this is merely the general rule. Is Art. 1544 then an exception to the
general rule? In a sense, yes, by reason of public convenience (See Aitken v. Lao, 36 Phil. 510); in still another sense, it
really reiterates the general rule in that insofar as innocent third persons are concerned, the registered owner (in the case of
real property) is still the owner, with power of disposition. 7
The language of Article 1544 is clear and unequivocal. In light of its mandate and of the facts established in this case, we
hold that ownership must be recognized in the private respondent, who bought the property in good faith and, as an
innocent purchaser for value, duly and promptly registered the sale in his favor.
WHEREFORE, the petition is DENIED and the questioned decision AFFIRMED in toto, with costs against the petitioner.
SO ORDERED.
Griño-Aquino, Medialdea and Bellosillo, JJ., concur.
G.R. No. L-45295 April 10, 1939
RUFO ARCENAS, Plaintiff-Appellant, vs. INOCENCIO DEL ROSARIO, ET AL., defendants.

INOCENCIO DEL ROSARIO, cross-plaintiff-appellant,
ESPERANZA CORDOVA and MATIAS SEVERINO, cross-defendants-appellees.
Jose Altavas for plaintiff-appellant.

Antonio Villasis for defendant-appellant.
Santiago Abella Vito for defendants-appellees.
CONCEPCION, J.: chanrobles virtual law library
This appeal has been taken: (1) from an order of June 17, 1936, sustaining a demurrer and
dismissing the complaint with the statement that the latter is not susceptible of amendment, and (2)
from another order of the same date dismissing the cross-complaint of the defendant Inocencio del
Rosario against his codefendants Esperanza Cordova and Matias Severino because of the dismissal
of the principal complaint. chanroblesvirtualawlibrary chanrobles virtual law library
THE COMPLAINT AND THE DEMURRER THERETO chanrobles virtual law library
The complaint was filed by Rufo Arcenas against Inocencio del Rosario, Esperanza Cordova,
Matias Severino and the registrar of deeds Salvador Villaruz. According to its allegations, the
defendant Inocencio del Rosario sold to the plaintiff, with the right of repurchase, on January 1,
1923, lot No. 3971 of the Capiz cadastre, covered by original certificate of title No. 5130. By virtue
of said sale, the plaintiff took possession of the land on the date of the deed of sale. Inocencio del
Rosario and not exercise his right of repurchase within the stipulated five-year period which
expired on January 1, 1928, or at any time thereafter. The plaintiff, thereupon, asked the registrar of
deeds to issue to him the transfer certificate of title to said lot, for which purpose he represented the
aforesaid deed of sale and an affidavit to the effect that the defendant Inocencio del Rosario had not
availed himself of his right of repurchase. The registrar of deeds refused to issue the transfer
certificate of title. chanroblesvirtualawlibrary chanrobles virtual law library
Paragraph 6 of the complaint reads:
That subsequently, that is, on May 31, 1934, the defendant Inocencio del Rosario with full
knowledge that he is no longer the owner or possessor of the land in question, lot No. 3971 of the
Capiz cadastre, in bad faith and with the intention of defrauding the plaintiff Rufo Arcenas,
notwithstanding the express warnings of the plaintiff and the assurances given by said defendant
Inocencio del Rosario to the plaintiff not to sell, convey, transfer or otherwise alienate and
encumber the said parcel of land, lot No. 3971, nevertheless said defendant Inocencio del Rosario,
made an absolute sale, conveyance and transfer thereof to the other defendant Esperanza Cordova
assisted by her husband Matias Severino, and said spouses, with full knowledge that said land had
already been sold long before, with the right of repurchase, by the said defendant Inocencio del
Rosario to the plaintiff Rufo Arcenas and that ownership thereof had consolidated in the latter, and
acting in bad faith and with the intention of defrauding the plaintiff Rufo Arcenas, against the
warnings of the said plaintiff and in breach of the promises of both defendants Inocencio del
Rosario, on the one hand, and Esperanza Cordova and Matias Severino, on the other, to repurchase
the land for P700, paying this amount to the plaintiff Rufo Arcenas, should he consent to said
repurchase, before entering into any transaction over the said land, the said spouses purchased the
land in question and received the deed of sale, conveyance and transfer executed in their favor by
the defendant Inocencio del Rosario, and they deliberately and maliciously hastened the registration
thereof in the office of the registrar of deeds of the Province of Capiz, Salvador Villaruz, the herein
defendant, who, nothwithstanding the plaintiff's protest and the notice of lis pendens made him,
registered the corresponding to lot No. 3971 which is the subject matter of this complaint, in favor
and in the name of the defendant Esperanza Cordova married to Matias Severino.
The complaint concludes with the plaintiff's prayer that he be declared the owner of the aforesaid
lot No. 3971 of the Capiz cadastre, and that the deed of sale executed by the defendant Inocencio
del Rosario in favor of the spouses Esperanza Cordova and Matias Severino be declared null and
void with other pronouncements in favor of the plaintiff. chanroblesvirtualawlibrary chanrobles virtual law library
The defendants Esperanza Cordova and Matias Severino interposed a demurrer to the complaint on
the ground that the facts alleged therein do not constitute a cause of action because, so they argue,
the deed of sale with the right of repurchase executed by Inocencio del Rosario in favor of said
defendant Esperanza Cordova was duly registered, a certificate of title having been issued her
name, whereas, the deed of sale in favor of the plaintiff Rufo Arcenas has been never been
registered in the registry of deeds. chanroblesvirtualawlibrary chanrobles virtual law library
The court sustained the demurrer and dismissed the compliant. chanroblesvirtualawlibrary chanrobles virtual law library
THE CROSS-COMPLAINT AND THE DEMURRER THERETO chanrobles virtual law library
The defendants Inocencio del Rosario filed his answer and a separate cross-complaint against the
spouses Esperanza Cordova and Matias Severino, alleging substantially that he notified said
defendants that the land referred to in the complaint, which the said spouses attempted to buy, was
already sold to the plaintiff for P700 with the right of repurchased by the cross-plaintiff and the
possession of the land was already delivered to the plaintiff. It is also alleged that the cross-
defendants underlooked to repurchase the questioned land from the plaintiff for P700, to be
deducted from the price of P2,000 agreed upon with the cross-plaintiff, provided that the latter
should execute without delay the deed of sale of the land, as was in fact done on May 31, 1934. The
cross-defendants - continues the cross-complaint - in malicious breach of their obligations, did not
repurchase the litigated land from the plaintiff, and they did not pay to the latter the sum of P700,
nor to the cross-plaintiff the sale price of the land, and in bad faith and with the intention of
defrauding the cross-plaintiff and the plaintiff, they caused the registration of the deed of sale
executed in their favor in the office of the register of deeds of Capiz, and obtained the cancellation
of the original certificate of title of the cross-plaintiff Inocencio del Rosario. In his prayer the cross-
plaintiff asked for the rescission of the sale of the land made by and between the cross-plaintiff and
the cross-defendants, and the cancellation of the transfer certificate of title issued in favor of said
cross-defendants. chanroblesvirtualawlibrary chanrobles virtual law library
The latter interposed a demurrer to the cross-complaint on the ground that the facts alleged therein
do not constitute a cause of action for the rescission of the said contract of repurchase and sale, one
of their arguments being that, inasmuch as there is no stipulation in the contract as to when the
defendants should pay the stipulated price of P2,000, said price should be paid upon the delivery of
the thing sold, and as under paragraph ( b) of the complaint, the land sold has not yet been
delivered to the purchasers, the cross-defendants, the latter are not guilty of any delay, wherefore,
the cross-plaintiff has no right to rescind the aforesaid contract of purchase and sale. chanroblesvirtualawlibrary chanrobles virtual law library
Instead of ruling upon the aforesaid demurrer, the court dismissed the cross-complaint due to the
dismissal of the principal complaint. chanroblesvirtualawlibrary chanrobles virtual law library
The two appealed orders of dismissal are clearly erroneous. With respect to the demurrer interposed
to the complaint, it is true that when real property is the subject matter of a double sale, the
purchaser who first registers it in the registry becomes the owner thereof under the provision of
article 1473 of the Civil Code; but this local provision should not be understood in an absolute
sense nor does it constitute a ground to sustain the demurrer, because the rights conferred by said
article upon one of the two purchasers of the same real property who has registered his title in the
registry of deeds, do not come into being if the registration is not made in good faith. (Leung
Yee vs. F. L. Strong Machinery Co. and Williamson, 37 Phil., 644.) And it is not only required that
the purchaser of the real property who has it registered should have done so in good faith, but also
for a valuable consideration. (Tuason vs. Raymundo, 28 Phil., 635, 637.) chanrobles virtual law library
In the instant case, the defendants Esperanza Cordova and Matias Severino, under the allegation of
the complaint which should be deemed admitted, when they interposed a demurrer, were not
purchases in good faith, inasmuch as they knew that the lot in question had been sold by the
defendant Inocencio del Rosario to the plaintiff with the right of repurchase and the said spouses
undertook to repurchase and the land by paying the plaintiff the price of P700 and the defendant
Inocencio del Rosario the balance of P1,300 to complete the stipulated price of P2,000; however,
according to the allegations of the said complaint, said spouses did not pay to the plaintiff the
amount of P700, or that of P1,300 to the defendant Inocencio del Rosario, and in bad faith
registered their deed in the registry of deeds. chanroblesvirtualawlibrary chanrobles virtual law library
One of the errors committed by the courts is the dismissal of the complaint without giving the
plaintiff an opportunity to amend it in violation of section 101 of the Code of Civil Procedure
providing that when the court sustains a demurrer, the party whose pleading is thus adjudged
defective may amend it within a time to be fixed by the court. chanroblesvirtualawlibrary chanrobles virtual law library
The statement made in the order of dismissal to the effect that the complaint is not susceptible of
amendment is clearly irregular. chanroblesvirtualawlibrary chanrobles virtual law library
The order dismissing the cross-complaint of Inocencio del Rosario against his codefendants
Esperanza Cordova and Matias Severino, is likewise erroneous because instead of ruling upon the
demurrer interposed to said cross-complaint, the court dismissed the same on the sole ground that
the principal complaint had been dismissed. Even assuming that the complaint in the present case
cannot be maintained, the cross-complaint of Inocencio del Rosario may stand, the best evidence of
this being the fact that in the same order of dismissal, the court reserved to the cross-complaint
Inocencio del Rosario the right to bring the action which he may deem proper against the cross-
defendants Esperanza Cordova and Matias Severino, for the recovery of the balance of the
indebtedness (that is, the stipulated price of the sale of the land), or for the rescission of the contract
of sale - a reservation which could not have been made if the dismissal of the principal complaint
were a bar to the continuation, substantiation and decision of the cross-complaint. chanroblesvirtualawlibrary chanrobles virtual law library
The appealed orders are reversed, the demurrers interposed to the complaint and cross-complaint
are overrruled and it is ordered that the case be returned to the court of origin for further
proceedings, with the costs of this instance to the appellees. So ordered.
Avance�a, C.J., Villa-Real, Imperial, Diaz, Laurel, and Moran, JJ., concur.
[G.R. No. 115158. September 5, 1997]
EMILIA M. URACA, CONCORDIA D. CHING and ONG SENG, represented by ENEDINO

H. FERRER, Petitioners, v. COURT OF APPEALS, JACINTO VELEZ, JR., CARMEN
VELEZ TING, AVENUE MERCHANDISING, INC., FELIX TING AND ALFREDO
GO, Respondents.
DECISION
PANGANIBAN, J.:
Novation is never presumed; it must be sufficiently established that a valid new agreement or
obligation has extinguished or changed an existing one. The registration of a later sale must be
done in good faith to entitle the registrant to priority in ownership over the vendee in an earlier sale.
Statement of the Case
These doctrines are stressed by this Court as it resolves the instant petition challenging the
December 28, 1993 Decision1 of Respondent Court of Appeals2 in CA-G.R. SP No. 33307, which
reversed and set aside the judgment of the Regional Trial Court of Cebu City, Branch 19, and
entered a new one dismissing the petitioners complaint. The dispositive portion of the RTC
decision reads:3 chanroblesvirtuallawlibrary
WHEREFORE, judgment is hereby rendered:
1) declaring as null and void the three (3) deeds of sale executed by the Velezes to Felix C. Ting,
Manuel Ting and Alfredo Go;
2) ordering Carmen Velez Ting and Jacinto M. Velez, Jr. to execute a deed of absolute sale in favor
of Concordia D. Ching and Emilia M. Uraca for the properties in question for P1,400,000.00,
which sum must be delivered by the plaintiffs to the Velezes immediately after the execution of
said contract;
3) ordering Carmen Velez Ting and Jacinto M. Velez, Jr. to reimburse Felix C. Ting, Manuel C.
Ting and Alfredo Go whatever amount the latter had paid to the former;
4) ordering Felix C. Ting, Manuel C. Ting and Alfredo Go to deliver the properties in question to
the plaintiffs within fifteen (15) days from receipt of a copy of this decision;
5) ordering all the defendants to pay, jointly and severally, the plaintiffs the sum of P20,000.00 as
attorneys fees.
SO ORDERED.
The Antecedent Facts
The facts narrated by the Court of Appeals are as follows: 4 chanroblesvirtuallawlibrary
The Velezes (herein private respondents) were the owners of the lot and commercial building in
question located at Progreso and M.C. Briones Streets in Cebu City.
Herein (petitioners) were the lessees of said commercial building. 5 chanroblesvirtuallawlibrary
On July 8, 1985, the Velezes through Carmen Velez Ting wrote a letter to herein (petitioners)
offering to sell the subject property for P1,050,000.00 and at the same time requesting (herein
petitioners) to reply in three days.
On July 10, 1985, (herein petitioners) through Atty. Escolastico Daitol sent a reply-letter to the
Velezes accepting the aforesaid offer to sell.
On July 11, 1985, (herein petitioner) Emilia Uraca went to see Carmen Ting about the offer to sell
but she was told by the latter that the price was P1,400,000.00 in cash or managers check and
not P1,050,000.00 as erroneously stated in their letter-offer after some haggling. Emilia Uraca
agreed to the price of P1,400,000.00 but counter-proposed that payment be paid in installments
with a down payment of P1,000,000.00 and the balance of P400,000 to be paid in 30 days. Carmen
Velez Ting did not accept the said counter-offer of Emilia Uraca although this fact is disputed by
Uraca.
No payment was made by (herein petitioners) to the Velezes on July 12, 1985 and July 13, 1985.
On July 13, 1985, the Velezes sold the subject lot and commercial building to the Avenue Group
(Private Respondent Avenue Merchandising Inc.) for P1,050,000.00 net of taxes, registration fees,
and expenses of the sale.
At the time the Avenue Group purchased the subject property on July 13, 1985 from the Velezes,
the certificate of title of the said property was clean and free of any annotation of adverse claims
or lis pendens.
On July 31, 1985 as aforestated, herein (petitioners) filed the instant complaint against the Velezes.
On August 1, 1985, (herein petitioners) registered a notice of lis pendens over the property in
question with the Office of the Register of Deeds. 6 chanroblesvirtuallawlibrary
On October 30, 1985, the Avenue Group filed an ejectment case against (herein petitioners)
ordering the latter to vacate the commercial building standing on the lot in question.
Thereafter, herein (petitioners) filed an amended complaint impleading the Avenue Group as new
defendants (after about 4 years after the filing of the original complaint).
The trial court found two perfected contracts of sale between the Velezes and the petitioners,
involving the real property in question. The first sale was for P1,050,000.00 and the second was
for P1,400,000.00. In respect to the first sale, the trial court held that [d]ue to the unqualified
acceptance by the plaintiffs within the period set by the Velezes, there consequently came about a
meeting of the minds of the parties not only as to the object certain but also as to the definite
consideration or cause of the contract. 7 And even assuming arguendo that the second sale was not
perfected, the trial court ruled that the same still constituted a mere modificatory novation which
did not extinguish the first sale. Hence, the trial court held that the Velezes were not free to sell the
properties to the Avenue Group.8 It also found that the Avenue Group purchased the property in
bad faith.9 chanroblesvirtuallawlibrary
Private respondents appealed to the Court of Appeals. As noted earlier, the CA found the appeal
meritorious. Like the trial court, the public respondent held that there was a perfected contract of
sale of the property for P1,050,000.00 between the Velezes and herein petitioners. It added,
however, that such perfected contract of sale was subsequently novated. Thus, it ruled: Evidence
shows that that was the original contract. However, the same was mutually withdrawn, cancelled
and rescinded by novation, and was therefore abandoned by the parties when Carmen Velez Ting
raised the consideration of the contract [by] P350,000.00, thus making the price P1,400,000.00
instead of the original price of P1,050,000.00. Since there was no agreement as to the second price
offered, there was likewise no meeting of minds between the parties, hence, no contract of sale was
perfected.10 The Court of Appeals added that, assuming there was agreement as to the price and a
second contract was perfected, the later contract would be unenforceable under the Statute of
Frauds. It further held that such second agreement, if there was one, constituted a mere promise to
sell which was not binding for lack of acceptance or a separate consideration. 11chanroblesvirtuallawlibrary
The Issues
Petitioners allege the following errors in the Decision of Respondent Court:
Since it ruled in its decision that there was no meeting of the minds on the second price offered
(P1,400,000.00), hence no contract of sale was perfected, the Court of Appeals erred in not holding
that the original written contract to buy and sell for P1,050,000.00 the Velezes property continued
to be valid and enforceable pursuant to Art. 1279 in relation with Art. 1479, first paragraph, and
Art. 1403, subparagraph 2 (e) of the Civil Code.
II
The Court of Appeals erred in not ruling that petitioners have better rights to buy and own the
Velezes property for registering their notice of lis pendens ahead of the Avenue Groups registration
of their deeds of sale taking into account Art. 1544, 2nd paragraph, of the Civil Code. 12 chanroblesvirtuallawlibrary
The Courts Ruling
The petition is meritorious.
First Issue: No Extinctive Novation
The lynchpin of the assailed Decision is the public respondents conclusion that the sale of the real
property in controversy, by the Velezes to petitioners for P1,050,000.00, was extinguished by
novation after the said parties negotiated to increase the price to P1,400,000.00. Since there was no
agreement on the sale at the increased price, then there was no perfected contract to enforce. We
disagree.
The Court notes that the petitioners accepted in writing and without qualification the Velezes
written offer to sell at P1,050,000.00 within the three-day period stipulated therein. Hence, from the
moment of acceptance on July 10, 1985, a contract of sale was perfected since undisputedly the
contractual elements of consent, object certain and cause concurred. 13 Thus, this question is posed
for our resolution: Was there a novation of this perfected contract?
Article 1600 of the Civil Code provides that (s)ales are extinguished by the same causes as all other
obligations, x x x. Article 1231 of the same Code states that novation is one of the ways to wipe out
an obligation. Extinctive novation requires: (1) the existence of a previous valid obligation; (2) the
agreement of all the parties to the new contract; (3) the extinguishment of the old obligation or
contract; and (4) the validity of the new one. 14 The foregoing clearly show that novation is effected
only when a new contract has extinguished an earlier contract between the same parties. In this
light, novation is never presumed; it must be proven as a fact either by express stipulation of the
parties or by implication derived from an irreconcilable incompatibility between old and new
obligations or contracts.15 After a thorough review of the records, we find this element lacking in
the case at bar.
As aptly found by the Court of Appeals, the petitioners and the Velezes did not reach an agreement
on the new price of P1,400,000.00 demanded by the latter. In this case, the petitioners and the
Velezes clearly did not perfect a new contract because the essential requisite of consent was absent,
the parties having failed to agree on the terms of the payment. True, petitioners made a qualified
acceptance of this offer by proposing that the payment of this higher sale price be made by
installment, with P1,000,000.00 as down payment and the balance of P400,000.00 payable thirty
days thereafter. Under Article 1319 of the Civil Code, 16 such qualified acceptance constitutes a
counter-offer and has the ineludible effect of rejecting the Velezes offer. 17 Indeed, petitioners
counter-offer was not accepted by the Velezes. It is well-settled that (a)n offer must be clear and
definite, while an acceptance must be unconditional and unbounded, in order that their concurrence
can give rise to a perfected contract. 18 In line with this basic postulate of contract law, a definite
agreement on the manner of payment of the price is an essential element in the formation of a
binding and enforceable contract of sale. 19 Since the parties failed to enter into a new contract that
could have extinguished their previously perfected contract of sale, there can be no novation of the
latter. Consequently, the first sale of the property in controversy, by the Velezes to petitioners
for P1,050,000.00, remained valid and existing.
In view of the validity and subsistence of their original contract of sale as previously discussed, it is
unnecessary to discuss public respondents theses that the second agreement is unenforceable under
the Statute of Frauds and that the agreement constitutes a mere promise to sell.
Second Issue: Double Sale of an Immovable
The foregoing holding would have been simple and straightforward. But Respondent Velezes
complicated the matter by selling the same property to the other private respondents who were
referred to in the assailed Decision as the Avenue Group.
Before us therefore is a classic case of a double sale -- first, to the petitioner; second, to the Avenue
Group. Thus, the Court is now called upon to determine which of the two groups of buyers has a
better right to said property.
Article 1544 of the Civil Code provides the statutory solution:
xxx xxx xxx
Should it be immovable property, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first
in the possession; and, in the absence thereof, to the person who presents the oldest title, provided
there is good faith.
Under the foregoing, the prior registration of the disputed property by the second buyer does not by
itself confer ownership or a better right over the property. Article 1544 requires that such
registration must be coupled with good faith. Jurisprudence teaches us that (t)he governing
principle is primus tempore, potior jure (first in time, stronger in right). Knowledge gained by the
first buyer of the second sale cannot defeat the first buyers rights except where the second buyer
registers in good faith the second sale ahead of the first, as provided by the Civil Code. Such
knowledge of the first buyer does not bar her from availing of her rights under the law, among
them, to register first her purchase as against the second buyer. But in converso knowledge gained
by the second buyer of the first sale defeats his rights even if he is first to register the second sale,
since such knowledge taints his prior registration with bad faith This is the price exacted by Article
1544 of the Civil Code for the second buyer being able to displace the first buyer; that before the
second buyer can obtain priority over the first, he must show that he acted in good faith throughout
(i.e. in ignorance of the first sale and of the first buyers rights) ---- from the time of acquisition
until the title is transferred to him by registration or failing registration, by delivery of
possession.20 (Emphasis supplied)
After a thorough scrutiny of the records of the instant case, the Court finds that bad faith tainted the
Avenue Groups purchase on July 13, 1985 of the Velezes real property subject of this case, and the
subsequent registration thereof on August 1, 1995. The Avenue Group had actual knowledge of the
Velezes prior sale of the same property to the petitioners, a fact antithetical to good faith. For a
second buyer like the Avenue Group to successfully invoke the second paragraph, Article 1544 of
the Civil Code, it must possess good faith from the time of the sale in its favor until the registration
of the same. This requirement of good faith the Avenue Group sorely failed to meet. That it had
knowledge of the prior sale, a fact undisputed by the Court of Appeals, is explained by the trial
court thus:
The Avenue Group, whose store is close to the properties in question, had known the plaintiffs to
be the lessee-occupants thereof for quite a time. Felix Ting admitted to have a talk with Ong Seng
in 1983 or 1984 about the properties. In the cross-examination, Manuel Ting also admitted that
about a month after Ester Borromeo allegedly offered the sale of the properties Felix Ting went to
see Ong Seng again. If these were so, it can be safely assumed that Ong Seng had consequently told
Felix about plaintiffs offer on January 11, 1985 to buy the properties for P1,000,000.00 and of their
timely acceptance on July 10, 1985 to buy the same at P1,050,000.00.
The two aforesaid admissions by the Tings, considered together with Uracas positive assertion that
Felix Ting met with her on July 11th and who was told by her that the plaintiffs had transmitted
already to the Velezes their decision to buy the properties at P1,050,000.00, clinches the proof that
the Avenue Group had prior knowledge of plaintiffs interest. Hence, the Avenue Group defendants,
earlier forewarned of the plaintiffs prior contract with the Velezes, were guilty of bad faith when
they proceeded to buy the properties to the prejudice of the plaintiffs. 21
chanroblesvirtuallawlibrary
The testimony of Petitioner Emilia Uraca supports this finding of the trial court. The salient
portions of her testimony follow:
BY ATTY. BORROMEO: (To witness)
Q According to Manuel Ting in his testimony, even if they know, referring to the Avenue Group,
that you were tenants of the property in question and they were neighbors to you, he did not inquire
from you whether you were interested in buying the property, what can you say about that?
A It was Felix Ting who approached me and asked whether I will buy the property, both the house
and the land and that was on July 10, 1985.
ATTY BORROMEO: (To witness)
Q What was your reply, if any?
A Yes, sir, I said we are going to buy this property because we have stayed for a long time there
already and we have a letter from Carmen Ting asking us whether we are going to buy the property
and we have already given our answer that we are willing to buy.
COURT: (To witness)
Q What do you mean by that, you mean you told Felix Ting and you showed him that letter of
Carmen Ting?
WITNESS:
A We have a letter of Carmen Ting where she offered to us for sale the house and lot and I told him
that I have already agreed with Concordia Ching, Ong Seng and my self that we buy the land. We
want to buy the land and the building.22 chanroblesvirtuallawlibrary
We see no reason to disturb the factual finding of the trial court that the Avenue Group, prior to the
registration of the property in the Registry of Property, already knew of the first sale to petitioners.
It is hornbook doctrine that findings of facts of the trial court, particularly when affirmed by the
Court of Appeals, are binding upon this Court 23 save for exceptional circumstances24 which we do
not find in the factual milieu of the present case. True, this doctrine does not apply where there is a
variance in the factual findings of the trial court and the Court of Appeals. In the present case, the
Court of Appeals did not explicitly sustain this particular holding of the trial court, but neither did it
controvert the same. Therefore, because the registration by the Avenue Group was in bad faith, it
amounted to no inscription at all. Hence, the third and not the second paragraph of Article 1544
should be applied to this case. Under this provision, petitioners are entitled to the ownership of the
property because they were first in actual possession, having been the propertys lessees and
possessors for decades prior to the sale.
Having already ruled that petitioners actual knowledge of the first sale tainted their registration, we
find no more reason to pass upon the issue of whether the annotation of lis pendens automatically
negated good faith in such registration.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is
hereby SET ASIDE and the dispositive portion of the trial courts decision dated October 19, 1990
is REVIVED with the following MODIFICATION -- the consideration to be paid under par. 2 of the
disposition is P1,050,000.00 and not P1,400,000.00. No Costs.
SO ORDERED.
Narvasa, C.J., (Chairman), and Melo, JJ., concur.
Davide Jr., J., (in the results).
[G.R. No. 4385. August 31, 1908. ]
WALTER E. OLSEN, Plaintiff-Appellant, v. BERT YEARSLEY, Defendant-Appellee.
Lionel D. Hargis for Appellant.
J. Courtney Hixson for Appellee.
SYLLABUS
1. SALE BY ONE NOT THE TRUE OWNER; INNOCENT PURCHASED FOR VALUE. — A cash register
was sold for a fixed price and the vendee made a part payment thereon, but it was orally agreed that title should
not pass until final payment was made. Subsequently the purchaser sold out his business, and, upon his
certificate that the register still belonged to the original vendor, the latter sold it to the plaintiff, but the machine
was still allowed to remain in the hands of the vendee of the original purchaser. Thereafter the person who
bought out the place of business resold the register to another person, into whose possession the same passed,
and who in turn transferred it to the defendant. The latter was a purchaser in good faith, but as he acquired the
register from one who was not the owner, and who had knowledge of the true ownership: Held, That the
plaintiff is unconditionally entitled to the possession of the machine.
DECISION
TRACEY, J. :
This is an appeal from a judgment of the Court of First Instance of the city of Manila, awarding to the plaintiff the possession of
a National Cash Register or payment of its value, P300, but providing further that the defendant might retain the register upon
the payment of P195 and become its owner.
One Myer Harris, the owner of a cash register, sold it for P330 to Louis Heymann, who paid down P140, leaving a balance of
P190, it being orally agreed that title to the’ property should not pass until the final payment of the purchase price. Thereafter,
Harris being about to depart for Iloilo, demanded the balance of the money and Heymann, being unable to pay it, made an offer
to return the register, which was accepted, the machine, however, being left in the place of business of Heymann, who was then
selling out to one Mrs. Booth. Thereupon Harris sold the register for P195 to Carl Hess, Heymann certifying in writing that
Harris was the owner. Hess thereafter sold it to the plaintiff, Olsen.
In the meantime, the register remained in the place of business which Heymann had sold out to Mrs. Booth, who in turn sold the
business to George M. Lack, who transferred it to this defendant. Of the previous history of the cash register, and of the claims
thereto of Harris, Hess, and Olsen, these owners of the business all had knowledge, with the exception of Yearsley. He was a
buyer in good faith, and, if he had bought from the true owner, would have brought himself under the protection of article 1473
of the Civil Code, providing that, when a thing is sold to different buyers, the property goes to him who first obtains possession.
He bought it, however, from a person who was not the owner and who had knowledge of the true ownership. Therefore his
defense can not prevail. The plaintiff is entitled to judgment for the possession of this machine, without any qualification
obliging him to make further payment therefor, or to surrender the machine upon payment to be made by the defendant.
So much of the judgment of the Court of First Instance as declares the plaintiff the owner of the machine and awards it to him,
is affirmed, and the remainder of the judgment is reversed, without costs of either instance. So ordered.
Arellano, C.J., Torres, Mapa, Carson and Willard, JJ., concur.
G.R. No. L-11907 February 27, 1919
FAUSTINO LICHAUCO, ET AL., plaintiffs-appellants,

vs.
JOSE BERENGUER, ET AL., defendants-appellees.
Sumulong & Estrada for appellants.

Ramon Salinas for appellees.
AVANCEÑA, 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 question which is described as parcel one in the complaint.
On October 7, 1889, by means of another public instrument, Macario Berenguer sold the same and to Cornelia Lauchangco with
right of repurchase for the term of two years. 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 Cornelia Lauchangco. It was also stipulated that all the fruits of
the land would be stored in Cornelia Lauchangco's enfraderia (sugar packing house) in this city and the proceeds thereof 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 public instrument, sold again the land in question
with pacto de retro to Cristiano Singian at a higher price but the amount paid on account of the sale of 1882 was considered as
a part of the price. In the document wherein appears this contract, it is said that Cristiano Singian accepts the purchase in the
name and representation of Anselmo Singian of whom he was the tutor. The contract does not express the period for the
redemption (Exhibit A-1.)
On February 20, 1904, Anselmo Singian sold in an absolute sale, also by as public instrument, the same land to Macario
Berenguer. Anselmo Singian states in this contract 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, Cristiano Singian. It was stipulated that the price of this
sale should be paid within the period of eight years and that, if it be not completely paid on the expiration of the term, the
ownership of the land should revert to Anselmo Singian (Exhibit X).
The parties to this action are: Faustino Lichauco and others, in their capacity as heirs of Cornelia Lauchangco, as plaintiff; Jose
Berenguer, administrator of the estate of Macario Berenguer, and Anselmo Singian in his own behalf, as defendants.
The plaintiffs pray that the sale of the land executed by Macario Berenguer in favor of Cornelia Lauchangco be declared
absolute or that the defendant Jose Berenguer be 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, as rents 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 that he
be absolved from the complaint and that the plaintiffs be obliged to execute in this favor the document of repurchase of the land.
The defendant Anselmo Singian prays that the sale of the land executed by Macario Berenguer in favor of Cornelia Lauchangco
be declared null and void and that he be declared absolute owner of the said land.
The trial court absolved owner of the said land, finding as to costs and from this judgment the plaintiffs appealed.
From what has been said, it appears that the land in question had been twice sold by Macario Berenguer: the first sale was made
in 1882 in favor of Cristino Singian and the second, in 1889, in favor of Cornelia Lauchangco, predecessor in interest of the
plaintiffs. 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 in connection with the time prior to 1907, it follows that, since neither of these instruments
was inscribed, the preference should be in favor of the purchaser who first took possession of the land, inasmuch as this
possession, according to the law in force prior to the promulgation of the Civil Code, constituted the consummation of the
contract, and also inasmuch as the civil Code (article 1473) expressly provides that possession in such cases transfers the
ownership of the thing sold. The trial court accepted the fact that the defendant Anselmo Singian, by himself and through a
representative, took possession of the land since its sale in 1882 and has been continuing in this possession up to the present
time. There is evidence in the record which 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 a lease through payment of an annul rent, by
Macario Berenguer until his death, and even after his death the administrator of his property continued the lease under the same
conditions until two years before this action was filed. It does not appear whether, after the sale, Cristiano Singian first took
possession of the land and then leased it to Macario Berenguer or the land was immediately leased after the sale without the
lease having been preceded by direct possession on the party of the purchaser, 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 land was sold in 1889 by
same Macario Berenguer to Cornelia Lauchangco, the latter did not also take a direct possession of it but agreed to lease it to
Macario Berenguer under certain conditions. It thus appears that both Cristino Singian and Cornelia Lauchangco 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 former respectively. this court has held that when a person buys a piece of land and, instead of taking possession of it, give it
under a lease to the vendor, possession therefore by the later after the sale is possession by the vendee, and such possession, in
case of a double sale, determine the preference in favor of the one who first took possession of it, in the absence of inscription,
in accordance with the provision of article 1473 of the Civil Code and notwithstanding the material and personal possession 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 vendee, granting that he had it, was under the same conditions as that of the first vendee. Therefore, in
determining the preference between both sales by reason of the priority of possession, supposing that both vendees had such
possession in the same manner as we have indicated, the decision must necessarily be in favor of the sale to Cristiano Singian
who first enjoyed such possession.
But we can still say that Cornelia Lauchangco never had in the manner indicated the possession of the land. She had to derive
this possession from Macario Berenguer. It is 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 the this was equivalent to a delivery of
possession, because on that date Berenguer had no possession which he could transfer, inasmuch as he was then a mere lessee
of the former vendee, Cristino Singian, and therefore his possession was not for himself but in representation of the latter.
At all events, if it be interpreted that, in case of a double sale and in the absence of inscription, the preference between both can
not be determined, according to article 1473 of the Civil Code, by the possession which the stipulation implies that vendor
ceases to become owner and becomes the lessee of the vendee, it follows that, for the purposes of this article, neither Cristino
Singian nor Cornelia Lauchangco took possession of the land. Under this supposition the preference between both sales shall
also have to be decided in favor of that made to Cristino Singian, because it is of a prior date. (Art. 1473, Civil Code.)
As has been stated, Macario Berenguer sold the land to Cristino Singian in 1882 and in 1890 he again sold it to Cristino Singian
in his capacity as tutor of Anselmo Singian. The plaintiffs contend that according to this sale to defendant Anselmo Singian was
effected only in 1890 and therefore was not anterior to that made to Cornelia Lauchangco in 1889. We believe that this
conclusion is erroneous. After the sale of 1882, Macario Berenguer took from Cristino Singian some more money which
amounted to P6,000 and this fact impelled him to make the sale in 1890 in which it was stipulated that the amount paid in the
sale of 1882 plus the P6,000 subsequent given by Cristino Singian to Macario Berenguer be considered as part of the price
received. 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 the latter's money the former paid the price in both sales. What really appears is that the second
sale was made with the object of aggregating, as part of the price, the amount of P6,000 received subsequently by Macario
Berenguer for the purposes of the purchase and not for the transmission of the ownership which was already affected. We
accept as a fact that both the sale of 1882 and that of 1890 were made in favor of Anselmo Singian.
The registry in 1907 of the sale to Lauchangco does not alter the aspect of the question involved. From the time Singian took
possession of the land up to that date twenty-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 could have destroyed the efficacy of the sale to Singian but
not the legal effects of his possession. 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 extend to the other titles which the other vendee may have gained
independently, as the little 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 ownership as against the sale to Lauchangco which was registered, still
there remains for Singian the title of prescription which has not been destroyed by another to the contrary.
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 that Berenguer would pay the stipulated price within the period of eight years and if, at the
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 no payment on account of this price has been made and inasmuch as this payment should be
proved by him who is obliged to do so, we accept as a fact that it was not so made. Under such circumstances, whatever effect
may be attributed to the sale during 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 price having been paid. At all events, the ownership of the land
sold reverted to the vendor.
We have reached the conclusion that the sale to Anselmo Singian represented by his tutor Cristino Singian was valid and
produced the effect of transferring in his favor the ownership of the land in question. And, even disregarding the proper effect of
this sale, the defendant Anselmo Singian has also acquired the ownership of the land by prescription.
Having reached the conclusion and as the action of the plaintiff against the defendant Berenguer is entirely based upon the
efficacy of the sale of the same land made in favor of Cornelia Lauchangco, we have to hold also that the complaint against the
latter is improper.
Therefore, we hereby affirm the judgment appealed form in so far as it absolves the defendants from the complaint with the
costs against the appellants. So ordered.
Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ., concur.
[G.R. No. L-7805. December 24, 1957.]
PETRONILO CASTAÑEDA, Petitioner, v. CATALINA M. DE LEON, and THE COURT OF

APPEALS, Respondents.
Jose W. Diokno for Petitioner.
Jesus Paredes for respondent Catalina de Leon.
SYLLABUS
PURCHASE AND SALE; WHEN PROPERTY WAS OLD TO TWO VENDEES; RIGHTS OF PARTIES TO
BE DETERMINED IN AN INDEPENDENT AND ORDINARY SUIT AND NOT IN PROCEEDING FOR
EXECUTION. — A complaint for injunction was instituted by PC against RL & FL to restrain the latter from
fencing lot No. 11 and for damages, and judgment having been rendered for plaintiff, a writ of execution was
issued directing defendants to demolish a house and other improvements erected thereon which writ was also
served upon CL who claims to be the owner of the house and the other improvements on the land, but was not
made a party to the case; that she acquired right over said lot from the spouses RL and FL for P1,000 and the
latter in turn acquired the whole parcel from PR and AB. CL introduced improvements thereon as well as the
erection of two houses of strong materials. After the first sale of the property to RL and FL, PR and her husband
again sold the land to the PC without first rescinding the previous sale. The problem is that the PR had sold the
residential land to two vendees, first to RL and later to PC; Held: that the issue as to whether or not CL may be
considered as privy to the rights of the defendants RL and FL includes the determination of the correlative
rights of the parties to be decided in an independent suit. The rights of CL who was constructed two houses and
a fence on one-half of the residential lot involved complicated questions of fact and good faith which should be
investigated and decided and certainly this can not be done in the proceedings for execution. The question can
be decided fairly and justly in an ordinary suit between the parties, as the correlative rights and obligations of
owner and builder were never at issue in Civil case No. Q-64 because CL was not allowed to be party thereto.
DECISION
LABRADOR, J.:
Certiorari against the decision of the Court of Appeals, 3rd Division, which reads as follows: jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the order of August 30, 1952 of the respondent judge, the Hon. Hermogenes Caluag.
(Appendix B) is hereby set aside. The Court of First Instance of Quezon City is ordered to set for hearing petitioner’s claim that
the decision in Civil Case No. Q-64 is not enforceable against her alleged rights to one-half of the property involved in said
case. Let evidence be presented to determine solely the question of whether or not petitioner Catalina M. de Leon is a successor
in interest by title subsequent to the commencement of the action in Civil Case No. Q-64 as contemplated by Rule 39, sec. 44
(b). Thereafter let the proper action be taken by the court a quo as its findings after the hearing herein ordered may warrant.
IT IS SO ORDERED." cralaw virtua1aw library
In civil case No. Q-64, a complaint for injunction was instituted by Petronilo Castañeda against Rosario B. de Leon and her
husband, Francisco de Leon, to restrain the latter from fencing the lot known as Lot No. 11, Block K-19 of the Diliman Estate
Subdivision and from making construction thereon and to pay damages. Q-64 was filed on October 17, 1949, and judgment in
favor of the plaintiff having been rendered a writ of execution was issued on February 6, 1952, directing the defendants to
demolish a house and other improvements erected on the land. This writ of execution was served upon Catalina de Leon, who
claims to be the owner of the house and the other improvements on the land. As Catalina de Leon refused to remove the house
and the other improvements, the judge issued an order requiring her to appear and explain why the building and the other
improvements should not be demolished. Complying with this order, Catalina de Leon filed a written explanation in which she
claims that she was not a party in civil case No. Q-64; that she acquired right to one-half of the land from the spouses Rosario
de Leon and Francisco de Leon for P1,000, and that the latter in turn acquired the whole parcel from Perfecta Roque and
Aurelio Bautista on July 11, 1949; that Catalina de Leon caused the portion sold to her to be fenced and order the erection of
two houses of strong materials with the consent of her predecessors-in-interest, Rosario de Leon and Perfecta Roque; that after
the first sale of the property in July, 1949 to Rosario B. de Leon and Francisco de Leon, Perfecta Roque and her husband again
sold the land to Petronilo Castañeda, who offered to buy the same for a higher price, but that this second sale by Perfecta Roque
was executed without first rescinding the former sale to Rosario B. de Leon and Francisco de Leon; that previous to the sale by
Perfecta Roque of the land to Petronilo Castañeda, Rosario B. de Leon and Francisco de Leon brought an action in the Court of
First Instance of Manila for specific performance (No. 9366), and this case resulted in a decision of December 22, 1950,
ordering Perfecta Roque to return P900 to plaintiff therein, Rosario B. de Leon, but that the spouses Rosario de Leon and
Francisco de Leon, having had some family trouble with Catalina de Leon, connived with Perfecta Roque and Petronilo
Castañeda to have the case dismissed to the prejudice of Catalina de Leon; and that before the final disposition of the action in
said civil case No. 9366 Perfecta Roque had sold the property to another buyer, Petronilo Castañeda, on October 3, 1949; that in
the subsequent suit that Castañeda brought against Rosario B. de Leon, No. Q-64, Catalina de Leon asked for permission to
intervene but the court denied the same.
Upon the submission of the above explanation, Petronilo Castañeda filed an opposition alleging that it is not true that Catalina
de Leon was not aware of the proceedings between Rosario B. de Leon and Petronilo Castañeda. Upon the filing of this
opposition, the Court of First Instance declared that the claim of Catalina de Leon on the property was a contingent one based
upon the ultimate consummation of the sale between Francisco and Rosario de Leon on one hand, and Perfecta Roque and
Aurelio Bautista on the other; that as the action that Rosario B. de Leon and her husband brought against Perfecta Roque
terminated in a dismissal, no right whatsoever has been acquired by the claimant Catalina de Leon. In consequence that court
found the explanation of Catalina de Leon without merit and ordered the removal of the house and the improvements that
Catalina de Leon had constructed on the property. It is against this order that the case was brought to the Court of Appeals, in
which the court finally decided the controversy in its order above quoted.
It will be seen from the order under consideration that the only issue directed to be determined upon the return of the case to the
court below is whether or not Catalina de Leon may be considered as a privy to the rights of the defendants Rosario B. de Leon
and Francisco de Leon in civil case No. Q-64, in which Petronilo Castañeda is plaintiff. Upon the resolution of that issue the
question as to whether or not the improvements of Catalina de Leon would be removed would be decided, according to the
decision appealed from. It is true that Catalina de Leon would be bound by the judgment in Q-64 if she is a privy to Rosario de
Leon and Francisco de Leon, defendants in the action. But the facts and circumstances disclosed in the explanation of Catalina
de Leon show that she had purchased the one-half portion of the land in good faith and also constructed her two houses and the
fence surrounding the lot also in good faith. And we can not agree that the limited issue remanded to the trial court for
determination would and can finally determine fully and completely the correlative rights and obligations of Petronilo
Castañeda, the apparent owner of the land, and Catalina de Leon, the owner of the house and the other improvements thereon.
The order of the Court of Appeals, while not containing any statement to the effect that the correlative rights of the said parties
have to be decided in an independent suit, may be interpreted to mean that the decision of the issue as to whether Catalina de
Leon is a privy would also determine said correlative rights. Catalina de Leon is not a party to the action instituted by Petronilo
Castañeda against Rosario de Leon and her husband, and her attempt to intervene was denied by the court. The explanation filed
by Catalina de Leon in the court below seems to show that she acquired her rights to the properties, consisting of one-half of the
land and two houses and other improvements built thereon, prior to the acquisition of the land by Petronilo Castañeda. Anyway,
Catalina de Leon bought one-half of the land on October 5, 1949 and the action that Castañeda against Rosario de Leon was
subsequent thereto, i.e., on October 17, 1949. Furthermore, it does not appear that any notice of lis pendens was ever noted on
the title of the property before Catalina de Leon built the house and made the improvements on the land.
The problem that has arisen proceeds from the fact that Perfecta Roque had sold the residential land to two vendees, first to
Rosario B. de Leon and later to Petronilo Castañeda. If justice is to be done to the rights of Rosario B. de Leon’s vendee,
Catalina de Leon, who had constructed two houses and a fence on one-half of the residential lot in question, complicated
questions of fact and good faith will have to be investigated and decided and certainly this can not be done in the proceedings
for execution. The question can be decided fairly and justly only in an ordinary suit between the parties, as the correlative rights
and obligations of owner and builder were never at issue in civil case No. Q-64 because Catalina de Leon was not allowed to be
a party to the suit.
For the foregoing considerations, the decision of the Court of Appeals is hereby affirmed insofar as it sets aside the order of
demolition issued by respondent judge, Hon. Hermogenes Caluag, on August 30, 1952, but that portion thereof which directs
the case to be remanded to the trial court for determination if Catalina de Leon may be considered a privy to Rosario de Leon, is
hereby set aside; and it is hereby declared and ordered that the correlative rights of Petronilo Castañeda and Catalina de Leon to
the land and the improvements thereon be decided in a separate action. No costs in the appeal.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion, Reyes, J. B. L., Endencia and Felix, JJ.,
concur.
G.R. No. L-22331 June 6, 1967
IN RE: PETITION FOR CONSOLIDATION OF TITLE IN THE VENDEES OF A HOUSE AND THE RIGHTS TO A
LOT.
MARIA BAUTISTA VDA. DE REYES, ET AL., vendees-petitioners-appellees.
RODOLFO LANUZA, vendor,
vs.
MARTIN DE LEON, intervenor-appellant.
Erasmo R. Cruz and C. R. Pascual for intervenor-appellant.

Augusto J. Salas for vendees-petitioners-appellees.
REGALA, J.:
Rodolfo Lanuza and his wife Belen were the owners of a two-story house built on a lot of the Maria Guizon Subdivision in
Tondo, Manila, which the spouses leased from the Consolidated Asiatic Co. On January 12, 1961, Lanuza executed a document
entitled "Deed of Sale with Right to Repurchase" whereby he conveyed to Maria Bautista Vda. de Reyes and Aurelia R.
Navarro the house, together with the leasehold rights to the lot, a television set and a refrigerator in consideration of the sum of
P3,000. The deed reads:
DEED OF SALE WITH RIGHT TO REPURCHASE KNOW ALL MEN BY THESE PRESENTS:
That I, RODOLFO LANUZA, Filipino, of legal age, married to Belen Geronimo, and residing at 783-D
Interior 14 Maria Guizon, Gagalangin, Tondo, Manila, hereby declare that I am the true and absolute owner of
a new two storey house of strong materials, constructed on a rented lot — Lot No. 12 of the Maria Guizon
Subdivision, owned by the Consolidated Asiatic Co. — as evidenced by the attached Receipt No. 292, and the
plan of the subdivision, owned by said company.
That for and in consideration of the sum of THREE THOUSAND PESOS (P3,000.00) which I have received
this day from Mrs. Maria Bautista Vda. de Reyes, Filipino, of legal age, widow; and Aurelia Reyes, married to
Jose S. Navarro, Filipinos, of legal ages, and residing at 1112 Antipolo St., Tondo, Manila, I hereby SELL,
CEDE, TRANSFER, AND CONVEY unto said Maria Bautista Vda. de Reyes, her heirs, succesors,
administrators and assigns said house, including my right to the lot on which it was constructed, and also my
television, and frigidaire "Kelvinator" of nine cubic feet in size, under the following conditions:
I hereby reserve for myself, my heirs, successors, administrators, and assigns the right to repurchase the above
mentioned properties for the same amount of P3,000.00, without interest, within the stipulated period of three
(3) months from the date hereof. If I fail to pay said amount of P3,000.00, within the stipulated period of three
months, my right to repurchase the said properties shall be forfeited and the ownership thereto shall
automatically pass to Mrs. Maria Bautista Vda. de Reyes, her heirs, successors, administrators, and assigns,
without any Court intervention, and they can take possession of the same. 1äwphï1.ñët
IN WITNESS WHEREOF, we have signed this contract in the City of Manila, this 12th day of January, 1961.
s/t RODOLFO LANUZA s/t MARIA BAUTISTA VDA. DE REYES

Vendor Vendee
s/t AURELIA REYES WITH MY MARITAL CONSENT:

Vendee s/t JOSE S. NAVARRO
When the original period of redemption expired, the parties extended it to July 12, 1961 by an annotation to this effect on the
left margin of the instrument. Lanuza's wife, who did not sign the deed, this time signed her name below the annotation.
It appears that after the execution of this instrument, Lanuza and his wife mortgaged the same house in favor of Martin de Leon
to secure the payment of P2,720 within one year. This mortgage was executed on October 4, 1961 and recorded in the Office of
the Register of Deeds of Manila on November 8, 1961 under the provisions of Act No. 3344.
As the Lanuzas failed to pay their obligation, De Leon filed in the sheriff's office on October 5, 1962 a petition for the extra-
judicial foreclosure of the mortgage. On the other hand, Reyes and Navarro followed suit by filing in the Court of First Instance
of Manila a petition for the consolidation of ownership of the house on the ground that the period of redemption expired on July
12, 1961 without the vendees exercising their right of repurchase. The petition for consolidation of ownership was filed on
October 19. On October 23, the house was sold to De Leon as the only bidder at the sheriffs sale. De Leon immediately took
possession of the house, secured a discharge of the mortgage on the house in favor of a rural bank by paying P2,000 and, on
October 29, intervened in court and asked for the dismissal of the petition filed by Reyes and Navarro on the ground that the
unrecorded pacto de retro sale could not affect his rights as a third party.
The parties1 thereafter entered into a stipulation of facts on which this opinion is mainly based and submitted the case for
decision. In confirming the ownership of Reyes and Navarro in the house and the leasehold right to the lot, the court said:
It is true that the original deed of sale with pacto de retro, dated January 12, 1961, was not signed by Belen Geronimo-
Lanuza, wife of the vendor a retro, Rodolfo Lanuza, at the time of its execution. It appears, however, that on the
occasion of the extension of the period for repurchase to July 12, 1961, Belen Geronimo-Lanuza signed giving her
approval and conformity. This act, in effect, constitutes ratification or confirmation of the contract (Annex "A"
Stipulation) by Belen Geronimo-Lanuza, which ratification validated the act of Rodolfo Lanuza from the moment of
the execution of the said contract. In short, such ratification had the effect of purging the contract (Annex "A"
Stipulation) of any defect which it might have had from the moment of its execution. (Article 1396, New Civil Code of
the Philippines; Tang Ah Chan and Kwong Koon vs. Gonzales, 52 Phil. 180)
Again, it is to be noted that while it is true that the original contract of sale with right to repurchase in favor of the
petitioners (Annex "A" Stipulation) was not signed by Belen Geronimo-Lanuza, such failure to sign, to the mind of the
Court, made the contract merely voidable, if at all, and, therefore, susceptible of ratification. Hence, the subsequent
ratification of the said contract by Belen Geronimo-Lanuza validated the said contract even before the property in
question was mortgaged in favor of the intervenor.
It is also contended by the intervenor that the contract of sale with right to repurchase should be interpreted as a mere
equitable mortgage. Consequently, it is argued that the same cannot form the basis for a judicial petition for
consolidation of title over the property in litigation. This argument is based on the fact that the vendors a
retro continued in possession of the property after the execution of the deed of sale with pacto de retro. The mere fact,
however, that the vendors a retro continued in the possession of the property in question cannot justify an outright
declaration that the sale should be construed as an equitable mortgage and not a sale with right to repurchase. The terms
of the deed of sale with right to repurchase (Annex "A" Stipulation) relied upon by the petitioners must be considered
as merely an equitable mortgage for the reason that after the expiration of the period of repurchase of three months
from January 12, 1961.
Article 1602 of the New Civil Code provides:
"ART. 1602. The contract shall be presumed to be in equitable mortgage, in any of the following cases;
xxx xxx xxx
"(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption
or granting a new period is executed.
xxx xxx xxx
In the present case, it appears, however, that no other instrument was executed between the parties extending the period
of redemption. What was done was simply to annotate on the deed of sale with right to repurchase (Annex "A"
Stipulation) that "the period to repurchase, extended as requested until July 12, 1961." Needless to say, the
purchasers a retro, in the exercise of their freedom to make contracts, have the power to extend the period of
repurchase. Such extension is valid and effective as it is not contrary to any provision of law. (Umale vs. Fernandez, 28
Phil. 89, 93)
The deed of sale with right to repurchase (Annex "A" Stipulation) is embodied in a public document. Consequently, the
same is sufficient for the purpose of transferring the rights of the vendors a retro over the property in question in favor
of the petitioners. It is to be noted that the deed of sale with right to repurchase (Annex "A" Stipulation) was executed
on January 12, 1961, which was very much ahead in point of time to the execution of the real estate mortgage on
October 4, 1961, in favor of intervenor (Annex "B" Stipulation). It is obvious, therefore, that when the mortgagors,
Rodolfo Lanuza and Belen Geronimo Lanuza, executed the real estate mortgage in favor of the intervenor, they were
no longer the absolute owners of the property since the same had already been sold a retro to the petitioners. The
spouses Lanuza, therefore, could no longer constitute a valid mortgage over the property inasmuch as they did not have
any free disposition of the property mortgaged. (Article 2085, New Civil Code.) For a valid mortgage to exist,
ownership of the property mortgaged is an essential requisite. A mortgage executed by one who is not the owner of the
property mortgaged is without legal existence and the registration cannot validate. (Philippine National Bank vs.
Rocha, 55 Phil. 497).
The intervenor invokes the provisions of article 1544 of the New Civil Code for the reason that while the real estate
mortgage in his favor (Annex "B" Stipulation) has been registered with the Register of Deeds of Manila under the
provisions of Act No. 3344 on November 3, 1961, the deed of sale with right to repurchase (Annex "A" Stipulation)
however, has not been duly registered. Article 1544 of the New Civil Code, however, refers to the sale of the same
property to two or more vendees. This provision of law, therefore, is not applicable to the present case which does not
involve sale of the same property to two or more vendees. Furthermore, the mere registration of the property mortgaged
in favor of the intervenor under Act No. 3344 does not prejudice the interests of the petitioners who have a better right
over the property in question under the old principle of first in time, better in right. (Gallardo vs. Gallardo, C.B., 46
O.G. 5568)
De Leon appealed directly to this Court, contending (1) that the sale in question is not only voidable but void ab initio for
having been made by Lanuza without the consent of his wife; (2) that the pacto de retro sale is in reality an equitable mortgage
and therefore can not be the basis of a petition for consolidation of ownership; and (3) that at any rate the sale, being
unrecorded, cannot affect third parties.
We are in accord with the trial court's ruling that a conveyance of real property of the conjugal partnership made by the husband
without the consent of his wife is merely voidable. This is clear from article 173 of the Civil Code which gives the wife ten
years within which to bring an action for annulment. As such it can be ratified as Lanuza's wife in effect did in this case when
she gave her conformity to the extension of the period of redemption by signing the annotation on the margin of the deed. We
may add that actions for the annulment of voidable contracts can be brought only by those who are bound under it, either
principally or subsidiarily (art. 1397), so that if there was anyone who could have questioned the sale on this ground it was
Lanuza's wife alone.
We also agree with the lower court that between an unrecorded sale of a prior date and a recorded mortgage of a later date the
former is preferred to the latter for the reason that if the original owner had parted with his ownership of the thing sold then he
no longer had the ownership and free disposal of that thing so as to be able to mortgage it again. Registration of the mortgage
under Act No. 3344 would, in such case, be of no moment since it is understood to be without prejudice to the better right of
third parties.2 Nor would it avail the mortgagee any to assert that he is in actual possession of the property for the execution of
the conveyance in a public instrument earlier was equivalent to the delivery of the thing sold to the vendee. 3
But there is one aspect of this case which leads us to a different conclusion. It is a point which neither the parties nor the trial
court appear to have sufficiently considered. We refer to the nature of the so-called "Deed of Sale with Right to Repurchase"
and the claim that it is in reality an equitable mortgage. While De Leon raised the question below and again in this Court in his
second assignment of error, he has not demonstrated his point; neither has he pursued the logical implication of his argument
beyond stating that a petition for consolidation of ownership is an inappropriate remedy to enforce a mortgage.
De Leon based his claim that the pacto de retro sale is actually an equitable mortgage on the fact that, first, the supposed
vendors (the Lanuzas) remained in possession of the thing sold and, second, when the three-month period of redemption expired
the parties extended it. These are circumstances which indeed indicate an equitable mortgage. 4 But their relevance emerges only
when they are seen in the perspective of other circumstances which indubitably show that what was intended was a mortgage
and not a sale.These circumstances are:
1. The gross inadequacy of the price. In the discussion in the briefs of the parties as well as in the decision of the trial court, the
fact has not been mentioned that for the price of P3,000, the supposed vendors "sold" not only their house, which they described
as new and as being made of strong materials and which alone had an assessed value of P4,000, but also their leasehold right
television set and refrigerator, "Kelvinator of nine cubic feet in size." indeed, the petition for consolidation of ownership is
limited to the house and the leasehold right, while the stipulation of facts of the parties merely referred to the object of the sale
as "the property in question." The failure to highlight this point, that is, the gross inadequacy of the price paid, accounts for the
error in determining the true agreement of the parties to the deed.
2. The non-transmission of ownership to the vendees. The Lanuzas, the supposed vendors did not really transfer their ownership
of the properties in question to Reyes and Navarro. What was agreed was that ownership of the things supposedly sold would
vest in the vendees only if the vendors failed to pay P3,000. In fact the emphasis is on the vendors payment of the amount rather
than on the redemption of the things supposedly sold. Thus, the deed recites that —
If I (Lanuza) fail to pay said amount of P3,000.00 within the stipulated period of three months, my right to repurchase
the said properties shall be forfeited and the ownership thereto automatically pass to Mrs. Maria Bautista Vda. de Reyes
. . . without any Court intervention and they can take possession of the same.
This stipulation is contrary to the nature of a true pacto de retro sale under which a vendee acquires ownership of the thing sold
immediately upon execution of the sale, subject only to the vendor's right of redemption. 5 Indeed, what the parties established
by this stipulation is an odious pactum commissorium which enables the mortgages to acquire ownership of the mortgaged
properties without need of foreclosure proceedings. Needless to say, such a stipulation is a nullity, being contrary to the
provisions of article 2088 of the Civil Code.6 Its insertion in the contract of the parties is an avowal of an intention to mortgage
rather than to sell.7
3. The delay in the filing of the petition for consolidation. Still another point obviously overlooked in the consideration of this
case is the fact that the period of redemption expired on July 12, 1961 and yet this action was not brought until October 19,
1962 and only after De Leon had asked on October 5, 1962 for the extra-judicial for closure of his mortgage. All the while, the
Lanuzas remained in possession of the properties they were supposed to have sold and they remained in possession even long
after they had lost their right of redemption.
Under these circumstances we cannot but conclude that the deed in question is in reality a mortgage. This conclusion is of far-
reaching consequence because it means not only that this action for consolidation of ownership is improper, as De Leon claims,
but, what is more that between the unrecorded deed of Reyes and Navarro which we hold to be an equitable mortgage, and the
registered mortgage of De Leon, the latter must be preferred. Preference of mortgage credits is determined by the priority of
registration of the mortgages,8 following the maxim "Prior tempore potior jure" (He who is first in time is preferred in
right.)9 Under article 2125 of the Civil Code, the equitable mortgage, while valid between Reyes and Navarro, on the one hand,
and the Lanuzas, on the other, as the immediate parties thereto, cannot prevail over the registered mortgage of De Leon.
Wherefore, the decision appealed from is reversed, hence, the petition for consolidation is dismissed. Costs against Reyes and
Navarro.
Concepcion, C.J., Dizon, Bengzon, J.P., Sanchez and Castro, JJ., concur.
Reyes, J.B.L., and Zaldivar, JJ., reserved their votes.
Makalintal, J., concurs in the result.

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G.R. No.

L-49654 February 26, 1981

Indeed, the foregoing assertions are quite revealing.

Concepcion, Jr., Fernandez and De Castro, JJ., concur.

Aquino J., concurs in the result.

Abad Santos, J., took no part.

G.R. No. 76031 March 2, 1994

Antonio M. Chavez for petitioner.

Onofre K. Quizon for private respondent.

Cruz, Davide, Jr. Quiason and Kapunan, J., concur.

G.R. No. 196444

DASMARIÑAS T. ARCAINA and MAGNANI T. BANTA, Petitioners

litigation expenses, and costs of suit. 14

2. Declaring Noemi L. Ingram the owner of the whole Lot 3230;

5. To pay the cost of suit.

RTC correctly ordered petitioners to deliver the entire property to Ingram.

Civil Code, which governs. 35

We reject petitioners' contention on this point.

Black's Law Dictionary defines the phrase "more or less" to mean:

annum until fully paid.

G.R. No. L-29449 December 29, 1928

LEODEGARIO AZARRAGA, Plaintiff-Appellee, vs. MARIA GAY, Defendant-Appellant.

Araneta and Zaragoza for appellant.

[G.R. NO. 122463 December 19, 2005]

RUDOLF LIETZ, INC., Petitioner, v. THE COURT OF APPEALS, AGAPITO BURIOL, TIZIANA

The dispositive portion of the RTC Decision reads:

As culled from the records, the following antecedents appear:

No. 47519. June 10, 1941

G.R. No. L-16394 December 17, 1966

JOSE SANTA ANA, JR. and LOURDES STO. DOMINGO, petitioners,

Manuel J. Serapio for petitioners..

The trial court observed:

G.R. No. L-20435 October 23, 1923

Arroyo and Gurrea for appellant.

HDA. MARIA May, 26, 1920.

MR. BENJAMIN JALANDONI.

Your friend LUIS ASIAIN

(Sgd.) "LUIS ASIAIN

Signed in the presence of:

(Sgd.) "ENGRACIO PADILLA

Johnson, Avanceña, Villamor and Romualdez, JJ., concur.

G.R. No. 194846, June 28, 2013

Ruling of the Court of Appeals

The First Deed Of Sale Was Valid

Again, the Court is not persuaded.

[G.R. No. 92310. September 3, 1992.]

AGRICULTURAL AND HOME EXTENSION DEVELOPMENT GROUP, represented by Nicasio D. Sanchez,

Gideon C. Bondoc for Petitioner.

Balgos & Perez for Private Respondent.

The petitioner’s reliance on Casis v. Court of Appeals 6 is misplaced.

Griño-Aquino, Medialdea and Bellosillo, JJ., concur.

G.R. No. L-45295 April 10, 1939

RUFO ARCENAS, Plaintiff-Appellant, vs. INOCENCIO DEL ROSARIO, ET AL., defendants.

Jose Altavas for plaintiff-appellant.

CONCEPCION, J.: chanrobles virtual law library

Paragraph 6 of the complaint reads:

[G.R. No. 115158. September 5, 1997]

EMILIA M. URACA, CONCORDIA D. CHING and ONG SENG, represented by ENEDINO

WHEREFORE, judgment is hereby rendered: