Naval v. CA
Carillo vs Court of Appeals
–
Maria Gonzales filed a complaint against the spouses Priscilla and Jose Manio with the RT of Davao del Sur. Gonzales sought the execution of the deed of sale in her favor for the property she bought from Priscilla. Gonzales alleged that she paid P10k (as downpayment) on the P400k purchase price of the lot which actually belong to Aristotle, Priscilla’s son (Priscilla had an SPA from him). They also agreed that the balance would be paid within 3 months. But Priscilla did not execute the deed of sale after demands. So Gonzales filed an action for specific performance.– The RTC held: In favor of Gonzales. The sheriff served a copy of the decision to Priscilla at midnight of August 4, 1990. The writ of execution, however, was not served upon the Manios because they could not be located, acc to the sheriff.
– Gonzales also filed a motion for the nullification of the owner’s duplicate certificate of title and asked that a new certificate be issued in her name. The RTC thus declared the owner’s duplicate certificate of title void, and issued a new TCT under Gonzales’ name.
– Then, herein respondents Maria Paz Dabon and Rosalina Dabon filed a petition before the CA for annulment of judgment and orders of the RTC. They claimed to have bought the lot from Aristotle Manio first. They allege that the judgment of the RTC was void because of lack of jurisd over their persons as the real parties in interest, and that they were fraudulently deprived of their right to due process.
– The CA held: The contract of sale between Gonzales and Priscilla was unenforceable because it was evidenced by a handwritten note which was vague as to the amount and which was not notarized, the trial court did not acquire jurisdiction over the indispensable parties, and the proceedings were attended with fraud.
– Gonzales claims that the CA should have applied the doctrine of double sale to settle the issue of ownership and declare her the true owner of the property.
Issue: Was there sufficient basis to annul the judgment?
YES.
First of all, the land actually belonged to Aristotle and not Priscilla, who was not acting in her own name. Accordingly, the failure to implead Aristotle renders all proceedings null and void.
There are two grounds for annulment of judgment: extrinsic fraud and lack of jurisdiction. Extrinsic fraud is when a party has been prevented by fraud or deception from presenting his case. The overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court. The CA found that indices of fraud attended the RTC case: Gonzales deliberately excluded the Dabons despite knowing that they bought the land from Aristotle, the sheriff served the copy of the decision at midnight on a Saturday, the trial court ordered Gonzales to deposit the full payment but subsequently ordered the withdrawal, and there was no notice given to the person named in the certificate of title which Gonzales wanted annulled.
Issue: Does Art 1544 (on double sales) apply here?
NO. Gonzales claims that Art 1544 should be applied, and that she owns the land because she bought the lot on April 26, 1988, while the Dabons allegedly bought it on Oct 19, 1989. But the action for annulment of judgment, under the Rules of Court, does not involve the merits of the final order of the trial court. The issue of whether before the SC is a case of double sale is outside the scope of the present petition. The appellate court only allowed the reception of extraneous evidence to determine extrinsic fraud. To determine which sale was valid, review of evidence is necessary and this Court cannot do that.
Petition denied. CA decision affirmed.
Consolidated Rural Bank (Cagayan Valley), Inc vs CA
–
The Madrid brothers (Rizal, Anselmo, Gregorio, Filomeno, and Domingo) were registered owners of a parcel of land in Isabela. They subdivided the land under a subdivision plan, and one of thesubdivision lots was Lot 7036-A-7. Rizal Madrid sold part of his share to Gamiao and Dayag, and Rizal’s brothers did not object. The deed of sale for this sale was not registered, but Gamiao and Dayag declared the property for taxation purposes.
–
Gamiao and Dayag then sold the southern part to Dela Cruz, and the northern part to Hernandez. Dela Cruz and Hernandez took possession of the land and cultivated it. Hernandez then donated his part to his daughter, while Dela Cruz’s children continued possession of their respective part.–
Then, in another deed of sale, the Madrid brothers conveyed all their rights and interests over Lot 7036-A-7 to Marquez. This deed of sale was registered.– Marquez then subdivided the lot and mortgage part of it to Consolidated Rural Bank (CRB) to secure a loan of P100k, and another part to the Rural Bank of Cauayan (RCB) to secure a loan of P10k. CRB then foreclosed the land because Marquez failed to pay.
– Marquez then sold another part of the land (it wasn’t mortgaged) to Calixto.
–
The Heirs of Dela Cruz filed a case for reconveyance and damages of the southern portion of Lot 7036-A against Marquez, Calixto, RBC and CRB.○
Marquez argues that apart from being the first registrant, he was a buyer in good faith and for value. He also argues that the sale by Rizal Madrid to Gamiao and Dayag was not binding upon him since it wasn’t registered. CRB also alleges that it was a mortgagee in good faith.○ RTC: Marquez is the lawful owner of the lot and the mortgages are valid. Applied Art 1544.
○
CA: Reversed. The heirs of Dela Cruz are the lawful owners of the southern half portion and the daughter of Hernandez of the northern half portion. The deed of sale between the Madrid brothers and Marquez is void, and so are the mortgages.Issue: Who has right over the property?
Held: The Heirs of Dela Cruz, NOT Marquez.
Art 1544 does not apply in this case. Art 1544 contemplates a case of double or multiple sales by a single vendor. More specifically, it covers a situation where a single vendor sold one and the same immovable property to two or more buyers. It is necessary that the conveyance must have been made by a party who has an existing right in the thing and the power to dispose of it. It cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property. And even if the sale was made by the same person, if the second sale was made when such person was no longer the owner, because it had been acquired by the first purchaser in full dominion, the second purchaser cannot acquire any right.
In the case at bar, the property was not transferred to several buyers by a single vendor. In the FIRST deed of sale, the vendors were Gamiao and Dayag. Their right to the property originates from their buying it from Rizal Madrid and his brothers all conformed to the sale. G & D declared the property for tax purposes too. On the other hand, the vendors in the LATER deed of sale were the Madrid brothers, but at that time they were no longer the owners since they had long before disposed of the property in favor of G & D.
In a situation where not all the req’s are present in order to apply Art 1544, the principle of prior tempore, potior jure or simply “he who is first in time is preferred in right” should apply. In this case, the sale to the Heirs by G & D, who first bought it from Rizal Madrid, was before the sale by the Madrid brothers to Marquez. The Heirs had also possessed the property for some time. So the Heirs have a superior right.
One can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally. In this case, since the Madrid brothers were no longer the owners of the subject property at the time of the sale to Marquez, Marquez did not acquire any right.
Even if Art 1544 did apply here, Marquez was not a purchaser and registrant in good faith. Marquez knew at the time of the sale that the property was being claimed or “taken” by the Heirs. He testified that he did not even know who was in possession. The actual possession by people other than the vendor should put the purchaser upon inquiry. That also applies to CRB, since banks, are expected to exercise more care and diligence. Since they merely relied on the certificates of title and failed to ascertain the status of the mortgaged properties (which is supposed to be standard procedure), CRB is a mortgagee in bad faith.
Carbonell vs CA
– Jose Poncio owned a parcel of land in Rizal covered by a TCT and subject to a mortgage in favor of Republic Savings Bank. Rosario Carbonell is Poncio’s cousin and lives in the adjoining lot. Emma Infante also lives adjacent to their lots.
– Carbonell and Infante offered to buy the lot from Poncio.
–
Poncio was unable to keep up with the installments due on the mortgage so he approached Carbonell and offered to sell the lot excluding the house. Carbonell accepted. Poncio and Carbonell then made a document in the Batanes dialect, which read, “Contract for ½ lot which I bought from Jose Poncio.” It indicated that Poncio can live on the lot he sold to Carbonell for a year, without rent.– When Carbonell arrived at Poncio’s house, however, Poncio told Carbonell that he could no longer proceed with the sale since he had already given the lot to Infante, and that he could not withdraw from his deal with Infante even if he had to go to jail. Infante then erected a wall around the lot with a gate.
– Carbonell registered an adverse claim on Feb 8, 1955. Infante’s deed of sale was registered on Feb 12, 1955. A TCT was issued to Infante with the annotation of Carbonell’s adverse claim.
– Carbonell then filed a complaint against Poncio and Infante asking that the land be declared in her favor.
Issue: Who has right over the land?
Held: Carbonell has superior right. The TCT in favor of Infante is cancelled.
– It is essential that the buyer must act in good faith in registering his deed of sale to merit the protection of the second paragraph of Art 1544 (it directs that ownership of immovable property should be recognized in favor of one who in good faith first recorded his right). If there is no
inscription, what is decisive is prior possession in good faith. If there is inscription, prior registration in good faith is a pre-condition to superior title.
– When Carbonell bought the lot, she was the only buyer and the title of Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon. Carbonell was not aware of any sale to Infante as there was no sale to Infante then. Hence, Carbonell’s prior purchase of the land was made
in good faith. Her good faith subsisted and continued to exist when she recorded her adverse claim 4 days before Infante’s registration of deed of sale.
–
Infante was in bad faith: She refused to see Carbonell, and did not harbor any suspicion even when Poncio was not in possession of the mortgage passbook and his copy of the mortgage contract (because they were given to Carbonell). Also, the notice of the adverse claim was made prior to the registration of her sale, therefore she had knowledge of that prior sale.Teehankee’s separate opinion:
– Both buyers may be deemed to be purchasers in good faith at the dates of purchase.
– The seller’s fraudulent act of informing the first buyer that he had wrongfully sold his property to another cannot be to the detriment of the first buyer.
– The governing principle is first in time, first in right. Knowledge gained by the first buyer of the second sale cannot defeat the first buyer’s rights except when the second buyer first registers in good faith the second sale against of the first. 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.
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 registration with bad faith.
– Before the second buyer can have priority over the first, he must show that he acted in good faith throughout (ignorance of the first sale and of the first buyer’s rights) from the time of acquisition until the title is transferred to him by registration or delivery of possession. The second buyer must show continuing good faith and innocence of the first sale until his contract ripens into full ownership.
CHENG vs. GENATO (1998)
1. Ramon Genato is the owner of 2 lots in Bulacan covered by a TCT. He entered into a contract with Da Jose spouses over the 2 lots. The contract was in a public instrument and was duly annotated.
2. There was a condition stated in the annotation that full payment will be paid in within 30 days after payment of downpayment worth 50k. Da Jose spouses asked for an extension when stipulated time of payment came.
3.
Pending the effectivity of the extension period, without notice to the spouses, Genato executed an Affidavit to Annul the Contract to Sell (affidavit). But such was not annotated at the back of the titles right away.4. Subsequently, Cheng expressed interest in the lots. Genato showed the TCT’s and the annotations at the back and the Affidavit. Cheng issued a check for 50k upon the assurance that the contract with the Da Jose spouses will be annulled for which Genato issued a handwritten receipt.
5. Genato deposited the check and Cheng kept on reminding him to register the affidavit. Genato then caused such registration.
6. Genato met by coincidence in the registry the Da Jose spouses. The spouses were shocked to know about the affidavit because the extension they asked was still in effect. With that, Genato decided to continue the Contract he had with them.
7. Genato advised Cheng of his decision of not pursuing the sale with him. Cheng sent a letter
demanding of compliance as for him there was already a perfected contract of sale. Genato returned the check but was refused by Cheng. Nevertheless, the contract with the spouses still pushed through 8. Cheng instituted a complaint for specific performance to compel Genato. LC held that the receipt
issued by Genato to Cheng meant a sale and not just a priority or an option to buy. Also, there was a valid rescission by virtue of the affidavit and concluded that Cheng should be preferred over the spouses.
9. However on appeal, the CA reversed the decision and that the prior contract to sell in favor of the spouses was not validly rescinded and that Cheng should pay damages for being in bad faith.
Issue: w/n the contract to sell with regard to the spouses was validly rescinded
– There can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred yet
– No default can be ascribed to the spouses since the period has not yet expired
– Genato should have made notice to the spouses regarding the rescission but he did not do so – Execution by Genato of the affidavit to annul the contract is not called for. Even with or without the
affidavit, their non-payment to complete the full downpayment ipso facto avoids their contract to sell, it being subject to a suspensive condition
–
When a contract is subject to suspensive condition, its effectivity can take place only if anf when the event which constitutes the condition happens or is fulfilled. If the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed– Thus, Cheng’s contention that the contract to sell between Genato and spouses was rescinded due to Genato’s unilateral rescission finds no support in this case
Issue: w/n Cheng’s contract with Genato was not just a contract to sell but a conditional contract of dale which gave him better rights, thus precluding the application of 1544
– Cheng was inconsistent in characterizing the contract he allegedly entered into
– In fact, both courts below correctly held that the receipt which was the result of their agreement is a contract to sell
– Even if it be treated as conditional contract of sale, it did not acquire obligatory force since it was subject to suspensive condition that the earlier contract of the spouses be cancelled first – a condition never met, as Genato redeemed himself by maintaining the contract with the spouses
– A reading of 1544 is not apropos to the case. The following circumstance must occur:
○ That 2 or more sales transactions in issue must pertain to exactly the same subject matter, and must be valid sales transactions
○ The 2 or more buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests
○ The 2 or more buyers at odds over the rightful ownership of the subject matter must each have bought from the very same seller
– These situations are obviously lacking. But even though, 1544 should still apply to the situation.
FIRST IN TIME, FIRST IN RIGHT. Not only was the contract between the spouses first in time, it was also registered before the intrusion of Cheng
–
The rule of 1544 for the 2nd buyer to be able to displace the 1st buyer are:○
That the 2nd buyer must show that he acted in good faith from the time of acquisition until title is transferred○
That 2nd buyer must show continuing good faith until contract ripens into full ownership–
The knowledge gained by Cheng of the 1st transaction defeats his rights even if he is the first to register the transaction since he can be considered in bad faith– Good faith must concur with registration for such prior right to be enforceable. The annotation made by the spouses on the titles more than satisy the requirement.
Issue: w/n it was error to hold him liable for damages
– No, Genato in bad faith when he filed suite for specific performance knowing fully well that his agreement with Genato did not push through
CA did not commit reversible error. Petition denied.
MENDOZA vs. KALAW