FIRST DIVISION
G.R. No. L-29972 January 26, 1976
ROSARIO CARBONELL, petitioner,
vs.
HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA INFANTE and RAMON INFANTE, respondents.
Separate Opinions
TEEHANKEE, J., concurring:
I concur. My concurrence proceeds from the same premise as the dissenting opinion of Justice Munoz Palma that both the conflicting buyers of the real property in question, namely, petitioner Rosario Carbonell as the first buyer may be deemed purchasers in good faith at the respective dates of their purchase.
The answer to the question of who between the two buyers in good faith should prevail is provided in the second paragraph of Article 1544 of the Civil Code1 (formerly Article 1473 of the old Civil Code) which ordains that "the ownership of the immovable property shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property."
In the case at bar, the seller executed on January 27, 1955 the private memorandum of sale of the property in favor of the first buyer Carbonell, However, six days later on February 2, 1955, the seller sold the property for a second time for an improved price, this time executing a formal registrable deed of sale in favor of the second buyer Infante.
So it was that when the first buyer Carbonell saw the seller a few days afterwards bringing the formal deed of sale for the seller's signature and the balance of the agreed cash payment, the seller told her that he could not proceed anymore with formalizing the first sale because he had already formalized the second sale in favor of the second buyer Infante.
Since Carbonell (the first buyer) did not have a formal registrable deed of sale, she did the next best thing to protect her legal rights and registered on February 8, 1955 with the Rizal Register of Deeds her adverse claim as first buyer entitled to the property. The second buyer Infante registered the deed of sale in her favor with the Rizal Register of Deeds only on February 12, 1955 (notwithstanding its having been executed ten days earlier on February 2, 1955), and therefore the transfer certificate of title issued in her favor carried the duly annotated adverse claim of Carbonell as the first buyer.
Both these registrations were in good faith and hence, as provided by the cited code article, the first buyer Carbonell as also the first registrant is legally entitled to the property.
The fact that Carbonell registered only an adverse claim as she had no registrable deed of sale is of no moment. The facts of record amply show that she had a written memorandum of sale, which was partially executed with the advance payment made by her for the seller's mortgage account with the bank, and which was perfected and binding in law by their accord on the subject matter and price. Carbonell could in law enforce in court her rights as first buyer under the memorandum agreement and compel the seller to execute in her favor a formal registrable deed of sale which would relate back to the date of the original memorandum agreement.
And under the cited code provision, Carbonell had to duly register such adverse claim as first buyer, as otherwise the subsequent registration of the second buyer's deed of sale would have obliterated her legal rights and enable the seller to achieve his fraudulent act of selling the property a second time for a better price in derogation of her prior right thereto.
The fact that the seller refused to execute the formal deed of sale in Carbonell's favor and (as was only to be expected) informed her that he could not proceed anymore with the sale because he had sold it for a second time for a better price did not convert her prior registration of her adverse claim into one of bad faith.
The fraudulent seller's act of informing the first buyer that he has wrongfully sold his property for a second time cannot work out to his own advantage and to the detriment of the innocent first buyer (by being considered as an "automatic registration" of the second sale) and defeat the first buyer's right of priority, in time in right and in registration.
The governing principle here is prius tempore, portior jure2 (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's rights except only as provided by the Civil Code and that is where the second buyer first registers in good faith the second sale ahead 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. But in other so 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 buyer's rights) — from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession. The second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law.
The above principles were aptly restated in a 1948 Court of Appeals decision in the case of Gallardo, vs. Gallardo penned by Justice J.B.L. Reyes, then a member of the appellate court.3 The facts of that case and the case at bar are virtually Identical, except that the earlier case was decided under the old Civil Code (Article 1473 thereof now reproduced as Article 1544 of the present Civil Code), and the ratio decidendi thereof, mutatis mutandis, is fully applicable, as follows:
Analysis of article 1473 of the Civil Code shows that before a second vendee can obtain priority over the first, it is indispensable that he should have acted in good faith, (that is to say, in ignorance of the rights of the first vendee's rights) until the title is transferred to him by actual or constructive delivery of the thing sold. This is the price exacted by law for his being able to displace the first vendee; and the mere fact that the second contract of sale was perfected in good faith is not sufficient if, before the title passes, the second vendee acquires knowledge of the first transaction. That the second buyer innocently agreed to purchase the land may protect him against responsibility of conspiring with his vendor to defraud the established rights of the first purchaser; but to defeat the latter's priority in time (based on the old principle "prius tempore, potior jure," first in time, better in right) the good faith or innocence of the posterior vendee must needs continue until his contract ripens into ownership by tradition or recording (Palanca vs. Director of lands, 43 Phil. 141, 154).
That the formal deed of conveyance to Gabino Gallardo was executed after that of Caoagas is of no moment, the contract of sale being perfected and binding by mere accord on the subject matter and the price, even if neither is delivered (Article 1450, Civil Code), the deed of conveyance will relate back to the date of the original agreement.4
Finally, in the present case, the first buyer's registration (February 8, 1955) concededly preceded the second buyer's registration (February 12, 1955) by four days, and therefore, as provided by the Civil Code, the first buyer thereby duly preserved her right of priority and is entitled to the property.
Footnotes
1 Fall text is reproduced in the main opinion, at page 7.
2 Also expressed as "Prior tempore, prior jure" (First in time, prior in right).
3 46 O.G. No. 11, p. 5568, Reyes, J.B.L., J. ponente and Gutierrez David and Borromeo, JJ. concurring.
4 Emphasis Supplied.
Separate Opinions
MUÑOZ PALMA, J., dissenting:
Strongly convinced as I am that the decision of the Court of Appeals under review should be affirmed, this dissenting opinion is being written.
We are here confronted with a double sale made by Jose Poncio of his 195-square meter lot located at V. Again St., San Juan, Rizal, covered by Transfer Certificate of Title No. 5040, the solution to which is found in Art. 1544 of the Civil Code, more particularly the second paragraph thereof which provides that should the thing sold be immovable property, the ownership shall belong to the person acquiring it who in good with first recorded it in the Registry of property.
1. The two purchasers, namely, petitioner Rosario Carbonell and respondent Emma Infante, are both purchasers in good faith.
That Rosario Carbonell is a buyer in good faith cannot be disputed for at the time negotiations for the purchase of the lot were being made between her and the vendor, Jose Poncio, as of January 27, 1955, there was no indication at all from the latter that another sale was being contemplated.
That Emma Infante is likewise a buyer in good faith is supported by: (a) an express finding of the trial court in its decision of January 20, 1965, to the effect that when the vendor and purchaser. Infante consummated the sale on or about January 29, 1955, an examination of the original of T.C.T. 5040 on file with the Register of Deeds of Rizal as well as the owner's duplicate revealed no annotation of any encumbrance or lien other than the mortgage in favor of the Republic Savings Bank (p. 92, Record on Appeal); (b) the findings of fact of the Court of Appeals given in the decision penned by then Justice Salvador V. Esguerra as well as in the first decision written by Justice Magno Gatmaitan which subsequently became the basis of the dissenting opinion to the majority, and from which I quote:
2. CONSIDERING: That as basis for discussion of this issue, it must have to be remembered that the first vendee, Rosario Carbonell, certainly was an innocent purchaser ... but also must it be remembered that Emma L. Infante, when she bought the property on 2 February, 1955, under Exhibit 3-Infante, neither had she before then been, preliminary informed of the first sate to Rosario ...; indeed as Emma has testified on this detail, it is easy to accept her declaration:
Q. When Mr. Jose Poncio offered you this land in question, did he tell you that the land was sold or otherwise promised to Mrs. Carbonell?
A. Of course not, otherwise will never buy.
(tsn. II:27)
in other words, at the respective dates of their purchase, both vendees, Rosario and Emma, were innocent and had acted in the best of good faith ... (pp. 9-10 of Justice Gatmaitan's decision found on pp. 76-77, rollo; see also p. 7 of his dissenting opinion found on p. 95, rollo).
Departing from a well-entrenched rule set down in a long array of decisions of this Court that factual findings of the trial court and of the Court -of Appeals are generally binding and conclusive,1 and that on appeal by certiorari, questions of fact are not to be determined nor reviewed by Us2 the Majority Opinion of my colleagues however undertakes a fact-finding process of its own, and draws the conclusion that Emma Infante was a buyer in bad faith because, among other things: (a) Emma allegedly refused to talk to Rosario Carbonell when the latter went to see her about the sale of the lot, which "is not the attitude expected of a good neighbor imbued with Christian charity and goodwill as well as a clean conscience" (p. 10, Majority Opinion); (b) "(B)efore or upon paying in full the mortgage indebtedness of Poncio to the bank. Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook as well as Poncio's mortgage contract. . and Poncio as well as the bank, must have inevitably informed here that said mortgage passbook could not be given to her because it was already delivered to Carbonell" (p. 9, Ibid); and (c) "... (T)he victim, therefore, 'of injustice and outrage is the widow Carbonell and not the Infantes, who without moral compunction exploited the greed and treacherous nature of Poncio, who, for love of money and without remorse of conscience, dishonored his own plighted word to Carbonell, his own cousin. ... Inevitably evident therefore from the foregoing discussion, is the bad faith of Emma Infante from the time she enticed Poncio to dishonor his contract with Carbonell, and instead to sell the lot to her (Infante) by offering Poncio a much higher price than the price for which he sold the same to Carbonell ..." (p. 20, Majority Opinion; all italicized portions supplied) — all of which are unsupported by the evidence and diametrically contrary to the findings of the court a quo and the appellate court sustaining the good faith of Emma Infante.
2. Inasmuch as the two purchasers are undoubtedly in good faith, the next question to be resolved is who of the two first registered her purchase or title in good faith.
In applying Art. 1544 of the Civil Code, it is not enough that the buyer bought the property in good faith, but that the registration of her title must also be accomplished in good faith.ℒαwρhi৷ This requirement of good faith is not only applicable to the second or subsequent purchaser but to the first as well.3
Construing and applying the second paragraph of Art. 1473 of the Spanish Civil Code which has been adopted verbatim in Art. 1544 of the Civil Code of the Philippines, this Court in Leung Lee vs. FL Strong Machinery Co., et al 37 Phil. 644, declared:
It has been suggested that since the provisions of article 1473 of the Civil Code require "good faith," in express terms, in relation to "possession" and title but contain no express requirement as to 'good faith' in relation to the "inscription" of the property in the registry, it must he presumed that good faith is not an essential requisite of registration in order that it may have the effect contemplated in this article. We cannot agree with this contention. It could not have been the intention of the legislator to base the preferential right secured under this article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of this section would open wide the door to fraud and collusion. The public records cannot be converted into instruments of fraud and oppression by one who secures an inscription therein in bad faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue under an inscription "in bad faith," to the benefit of the person who thus makes the inscription. (pp. 648-649, supra)
Good faith means "freedom from knowledge and circumstances which ought to put a person on inquiry";3
* it consists of an honest intention to abstain from taking any conscientious advantage of another.4
On this point it is my view that Rosario Carbonell cannot be held to have a title superior to that of Emma Infante for even if We were to concede that the notation of her adverse claim on February 8, 1955, was in the nature of registration of title as required in Art. 1544 of the Civil Code,5 the same was not accomplished in good faith. This is obvious from occurrences narrated in the Majority Opinion, thus: that on January 27, 1955, Carbonell and Jose Poncio made and executed the memorandum of sale, Exhibit A; that thereafter Carbonell asked Atty. Salvador Reyes to prepare the formal deed of sale which she brought to Poncio together with the amount of some P400.00, the balance she had to pay in addition to her assuming the mortgage obligation to Republic Savings Bank; that upon arriving at Poncio's house the latter told Carbonell that he could not proceed anymore with the sale because he had already given the lot to Emma Infants; that on February 5, 1955, Carbonell saw Emma Infante erecting a wall around the lot with a gate; that Carbonell consulted Atty. Jose Garcia who advised her to present an adverse claim with the office of the Register of Deeds, and that being informed that the sale in favor of Emma Infante had not yet been registered, Atty. Garcia prepared the notice of adverse claim which was signed and sworn to by Rosario Carbonell and registered on February 8, 1955. (see pp. 34, Decision)
At the time petitioner herein caused the annotation of her adverse claim she was, therefore, cognizant of facts which impaired her title to the property in question, and taking advantage of the situation that the second purchaser had not as yet registered her deed of sale, she went ahead of the second buyer and annotated what was only in the nature of an adverse claim inasmuch as she had no registrable document of sale at the time. That annotation of Carbonell's adverse claim did not produce any legal effects as to place her in a preferential situation to that of Infante, the second purchaser, for the simple reason that a registration made in bad faith is equivalent to no registration at all. It is a settled rule that the inscription in the registry, to be effective, must be made in good faith. (Pena, supra, p. 164)
3. One last point to be considered is the theory advanced by the dissenting opinion of Justice Gatmaitan that while Carbonell's registration of her adverse claim may indeed be considered in bad faith, nonetheless that of Infante was likewise in bad faith because at the time of the registration of the latter's deed of sale there was already inscribed on the original of the title on file with the Register of Deeds the adverse claim of Rosario Carbonell.
With due respect to the foregoing conclusion of highly respected Colleague, I hold the view that the act of the registration of Infante's deed of sale on February 12, 1955, was but a formality in the sense that it simply formalized what had already been accomplished earlier, that is, the registration of Infantes purchase as against Carbonell when the latter inquired knowledge of the second sale on or about January 27, 1955, when she brought the memorandum of sale, Exh. A, to Jose Poncio and was informed by the latter that he could not go through with the sale because he had already sold it to Emma Infante, which information was bolstered by the fact that Carbonell saw Infante erecting a wall around the lot on February 5.
We have long accepted the rule that knowledge is equivalent to registration. What would be the purpose of registration other than to give notice to interested parties and to the whole world of the existence of rights or liens against the property under question?
What has been clearly and succinctly postulated in T. de Winkleman and Winkleman vs. Veluz 1922, 43 Phil. 604, 609, is applicable to the case before Us, and We quote therefrom:
. . . The purpose of registering an instrument relating to land, annuities, mortgages, liens or any other class of real rights is to give notice to persons interested of the existence of these various liens against the property. If the parties interested have actual notice of the existence of such liens then the necessity for registration does not exist. Neither can one who has actual notice of existing liens acquire any rights in such property free from such liens by the mere fact that such liens have not been proven recorded. (citing Obras Pias vs. Devera Ignacio, 17 Phil. 45, 47).
We cannot overlook the fact that while it may be true that the vendor Poncio had signed the memorandum, Exh. A, from which it may be implied that he sold a lot to Carbonell, there were other things to be accomplished for purposes of binding third parties, the lot in question being registered land, such as the execution of a formal deed of sale. Such a document of sale was never signed by Poncio for according to petitioner Carbonell, when she presented to Poncio the corresponding document together with the sum of P400.00 which according to her was the balance of the purchase price after she had assumed the mortgage with the Republic Bank, she was informed by the vendor that the property had been sold to another. That sale was confirmed when Carbonell saw Infante erecting a wall around the lot on February 5, 1955. As of that moment when Carbonell had notice or actual knowledge of the second sale in favor of Emma Infante a valid registration of the latter's deed of sale was constituted as against Carbonell. Accordingly, Infante has a preferential right to the property, the registration of her sale having been effected in the foregoing manner, prior to the annotation of Carbonell's adverse claim on February 8, 1955.
The circumstances of the present case are strikingly similar to the hypothetical problem posed in Commentator Edgardo Paras' Book on the Civil Code of the Philippines and I wholeheartedly concur with his solution of the problem which is based on law. From him I quote:6
A sold a parcel of land with a torrens title to B on January 5. A week later, A sold the same land to C. Neither sale was registered. As soon as B learned of the sale in favor of C, he (B) registered an adverse claim stating that he was making the claim because the second sale was in fraud of his rights as first buyer. Later, C registered the deed of sale that had been made in his favor. Who is now the owner B or C?
Ans. C is clearly the owner, although he was the second buyer. This is so, not because of the registration of the sale itself but because of the AUTOMATIC registration in his favor caused by Bs knowledge of the first sale (actual knowledge being equivalent to registration). The purpose of registration is to notify. This notification was done because of Bs knowledge. It is wrong to assert that B was only trying to protect his right-for there was no more right to be protected. He should have registered the sale BEFORE knowledge came to him. It is now too late. It is clear from this that with respect to the principle "actual knowledge is equivalent to registration of the sale about which knowledge has been obtained' — the knowledge may be that-of either the FIRST or the SECOND buyer. (pp. 142-143, Vol. V, 1972 Ed.)
Aside from the fact that the sale to Infante was considered registered prior to the registration of Carbonell's notice of adverse claim, Infante also took immediate physical possession of the property by erecting a fence with a gate around the lot on February 5, at least tree days prior to Carbonell Is registration on February 8, 1955.
On top of all these, equity is on the side of Emma Infante. Under the Majority Opinion, Emma Infante stands to lose the lot she bought in good faith which was fully paid for plus the building she erected thereon for which she spent the total sun of a little less than P14,000.00, or equivalent to about P40,000.00 at the time the case was decided by the Appellate Court, considering that Rosario Carbonell is being given the option either to order the removal of the house or to acquire it at P13,429.00. On this point I agree with the following statement of Justice Esguerra who penned the decision of the Appellate Court, thus:
It is indeed inequitable and re revolting to one's sense of justice and fairness that Rosario Carbonell who paid out of her own money the sum of only P200.00 to the Republic Savings Bank for the account of Jose Poncio, which was the motivation for the execution of the private instrument, Exhibit A, should have a superior right to the land involved. The property has been improved at a great expense and a building of strong materials has been constructed thereon Emma Infants ho spent for her lot and building the total sum of P13,429.00 made, up of P11,929.00 for cost of land and improvements and the building and P1,500.00 to discharge the mortgage in favor of the Republic Savings Bank. with the present purchasing power of the peso this aft i more than 13 years, would be not equivalent to about P40,000.00. Courts should not lend a hand to the perpetration of such kind of injustice and outrage (see page 88, rollo)
I close paraphrasing the Supreme Court of Oklahoma in Phelps vs. Theime, et al., 217 p. 376; 377, that "equity is a right wiseneth that considerate all of the particular circumstances of the case and is also tempered with the sweetness of mercy." (quoting from St. Germain) In this case now before Us there is no need to invoke mercy, for all that is required is a wise consideration of the particular circumstances narrated above which warrant a judgment in favor of respondents Infants.
With all the foregoing, I vote for the affirmance of the decision under review.
Footnotes
1 Perez vs. Evite 1 SCRA 949;
Paredes vs. Borja, 3 SCRA 495;
De la Cruz vs. Dollete, 5 SCRA 257;
De Gala-Sison vs. Manalo, 8 SCRA 595;
Goduco vs. Court of Appeals, 14 SCRA 282;
Ramos vs. Pepsi Cola Bottling Co., 19 SCRA 289;
Mackay Radio & Tel. Co. vs. Rich 28 SCRA 699;
Ramirez Tel. Corp. vs. Bank of America, 29 SCRA 191;
Miguel vs. Court of Appeals, 29 SCRA 760;
People vs. Pareja, 30 SCRA, 693;
Chan vs. Court of Appeals, 33 SCRA 737;
People vs. Demetrio Sales, 44 SCRA 489;
Evangelista & Co., et al vs. Estrella Abad Santos, 51 SCRA 417;
Tiongco vs. De La Merced, 58 SCRA 89
Ramos vs. Court of Appeals, 63 SCRA 331;
Perido vs. Perido, 63 SCRA 97
Alaras et al. vs. Court of Appeals, et al. 64 SCRA 671
2 Tamayo vs. Callejo, 46 SCRA 27;
Tagumpay Minerals & Mining Ass. vs. Masangkay, 46 SCRA 608;
Fortus vs. Novero, 23 SCRA 1336
3 see Paras on the Civil Code of the Philippines, 1972 Vol. 5, pp. 142-143; Palancas director of Lands, 43 Phil. 149, 154; Pena Registration of Land Titles and Deeds, 1970 Ed., p. 164-1 Soriano et. al s Heirs of D. Magali, et al. 8 SCRA 489-1 Granados vs. Monton, 86 Phil. 42
3* Leung Lee vs. FL Strong machinery, supra.
4 Fule vs. De Legare, et al., L-17951, Feb. 28, 1963, -1 SCRA 351, 356
5 Jovellanos vs. Dimalanta, L-11736-37 Jan. 30, 1959 105 Phil. 1250.
6 Prof. Edgardo Paras is now a Judge of the Court of First Instance of the province of Bulacan
The Lawphil Project - Arellano Law Foundation
