VOL.

404,JUNE17,2003 145
Alfredovs.Borras
*
G.R.No.144225.June17,2003.

SPOUSES GODOFREDO ALFREDO and CARMEN LIMON

ALFREDO,SPOUSESARNULFOSAVELLANOandEDITHAB.
SAVELLANO, DANTON D. MATAWARAN, SPOUSES DELFIN
F. ESPIRITU, JR. and ESTELA S. ESPIRITU and ELIZABETH
TUAZON, petitioners, vs. SPOUSES ARMANDO BORRAS and
ADELIALOBATONBORRAS,respondents.

Civil Procedure Appeals Certiorari In a petition for review on

certiorariunderRule45,theSupremeCourtreviewsonlyerrorsoflawand
not errors of facts.In a petition for review on certiorari under Rule 45,
this Court reviews only errors of law and not errors of facts. The factual
findings of the appellate court are generally binding on this Court. This
applieswithgreaterforcewhenboththetrialcourtandtheCourtofAppeals
areincompleteagreementontheirfactualfindings.
CivilLawContractsSalesPerfectionThe contract of sale between
the spouses Godofredo and Carmen and the spouses Armando and Adelia
was a perfected contract.The contract of sale between the spouses
GodofredoandCarmenandthespousesArmandoandAdeliawasaperfected
contract. A contract is perfected once there is consent of the contracting
partiesontheobjectcertainandonthecauseoftheobligation.
Same Same Same Obligations The contract of sale of the subject
land has also been consummated because the sellers and buyers have
performed their respective obligations under the contract.Thecontractof
saleoftheSubjectLandhasalsobeenconsummatedbecausethesellersand
buyers have performed their respective obligations under the contract. In a
contractofsale,thesellerobligateshimselftotransfertheownershipofthe
determinate thing sold, and to deliver the same, to the buyer who obligates
himselftopayapricecertaintotheseller.
SameSameSameDeliveryThephysicaldeliveryofthesubjectland
also constituted a transfer of ownership.This physical delivery of the
SubjectLandalsoconstitutedatransferofownershipoftheSubjectLandto
Armando and Adelia. Ownership of the thing sold is transferred to the
vendeeuponitsactualorconstructivedelivery.
 Same Same Same Same Statute of Frauds The Statute of Frauds
applies only to executory contracts and not to contracts either partially or
totallyperformed.TheStatuteofFraudsappliesonlytoexecutorycon

_______________

*FIRSTDIVISION.

146

146 SUPREMECOURTREPORTSANNOTATED

Alfredovs.Borras

tractsandnottocontractseitherpartiallyortotallyperformed.Thus,where
one party has performed ones obligation, oral evidence will be admitted to
prove the agreement. In the instant case, the parties have consummated the
sale of the Subject Land, with both sellers and buyers performing their
respective obligations under the contract of sale. In addition, a contract that
violatestheStatuteofFraudsisratifiedbytheacceptanceofbenefitsunder
thecontract.GodofredoandCarmenbenefitedfromthecontractbecausethey
paidtheirDBPloanandsecuredthecancellationoftheirmortgageusingthe
moneygivenbyArmandoandAdelia.GodofredoandCarmenalsoaccepted
paymentofthebalanceofthepurchaseprice.
Same Same Same Same Conjugal Property Any alienation or
encumbrance made by the husband of the conjugal partnership property
withouttheconsentofthewifeisvoid.TheFamilyCode,whichtookeffect
on3August1988,providesthatanyalienationorencumbrancemadebythe
husbandoftheconjugalpartnershippropertywithouttheconsentofthewife
isvoid.However,whenthesaleismadebeforetheeffectivityoftheFamily
Code, the applicable law is the Civil Code. Article 173 of the Civil Code
providesthatthedispositionofconjugalpropertywithoutthewifesconsent
isnotvoidbutmerelyvoidable.
Same Same Same Same It is not necessary that the seller himself
deliverthetitle.Itisnotnecessarythatthesellerhimselfdeliverthetitleof
the property to the buyer because the thing sold is understood as delivered
whenitisplacedinthecontrolandpossessionofthevendee.
SameSameSameHomesteadPropertyAgranteeorhomesteaderis
prohibitedfromalienatingtoaprivateindividualalandgrantwithinthefive
years from the time that the patent or grant is issued.A grantee or
homesteaderisprohibitedfromalienatingtoaprivateindividualalandgrant
withinfiveyearsfromthetimethatthepatentorgrantisissued.Aviolation
ofthisprohibitionrendersasalevoid.Thisprohibition,however,expireson
the fifth year. From then on until the next 20 years the land grant may be
alienated provided the Secretary of Agriculture and Natural Resources
approves the alienation. The Secretary is required to approve the alienation
unless there are constitutional and legal grounds to deny the approval. In
this case, there are no apparent constitutional or legal grounds for the
SecretarytodisapprovethesaleoftheSubjectLand.
Same Same Same Same The failure to secure the approval of the
Secretary does not ipso facto make a sale void.The failure to secure the
approvaloftheSecretarydoesnotipsofactomakeasalevoid.Theabsence
ofapprovalbytheSecretarydoesnotnullifyasalemadeaftertheexpiration
ofthe5yearperiod,forinsucheventtherequirementofSection118ofthe
PublicLandActbecomesmerelydirectoryoraformality.Theap

147

VOL.404,JUNE17,2003 147

Alfredovs.Borras

proval may be secured later, producing the effect of ratifying and adopting
thetransactionasifthesalehadbeenpreviouslyauthorized.
Civil Procedure Actions Reconveyance Quieting of Title An action
forreconveyanceisonethatseekstotransferproperty,wrongfullyregistered
by another, to its rightful and legal owner.An action for reconveyance is
one that seeks to transfer property, wrongfully registered by another, to its
rightful and legal owner. The body of the pleading or complaint determines
the nature of an action, not its title or heading. Thus, the present action
shouldbetreatedasoneforreconveyance.
SameSameSamePrescriptionAnactionforreconveyancebasedon
an implied trust prescribes in ten years.To determine when the
prescriptive period commenced in an action for reconveyance, plaintiffs
possession of the disputed property is material. An action for reconveyance
based on an implied trust prescribes in ten years. The tenyear prescriptive
period applies only if there is an actual need to reconvey the property as
when the plaintiff is not in possession of the property. However, if the
plaintiff,astherealownerofthepropertyalsoremainsinpossessionofthe
property, the prescriptive period to recover title and possession of the
property does not run against him. In such a case, an action for
reconveyance, if nonetheless filed, would be in the nature of a suit for
quietingoftitle,anactionthatisimprescriptible.
SameSameSameSameTheprescriptiveperiodisreckonedfromthe
date of the issuance of the certificate of title.Correlating Section 53,
paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil
CodewithArticle1144(2)oftheCivilCode,supra,theprescriptiveperiod
forthereconveyanceoffraudulentlyregisteredrealpropertyisten(10)years
reckonedfromthedateoftheissuanceofthecertificateoftitlexxx.
 Same Same Same Same Prescription does not run against the
plaintiff in actual possession of the disputed land.Prescription does not
run against the plaintiff in actual possession of the disputed land because
suchplaintiffhasarighttowaituntilhispossessionisdisturbedorhistitle
is questioned before initiating an action to vindicate his right. His
undisturbed possession gives him the continuing right to seek the aid of a
courtofequitytodeterminethenatureoftheadverseclaimofathirdparty
anditseffectonhistitle.
SameSameSameLachesNeither is the action barred by laches.
Neitheristheactionbarredbylaches.Wehavedefinedlachesasthefailure
orneglect,foranunreasonabletime,todothatwhich,bytheexerciseofdue
diligence, could or should have been done earlier. It is negligence or
omissiontoassertarightwithinareasonabletime,warrantinga

148

148 SUPREMECOURTREPORTSANNOTATED

Alfredovs.Borras

presumption that the party entitled to assert it either has abandoned it or

declinedtoassertit.
SameSame Same In case a title is issued to the second buyer, the
first buyer may seek reconveyance of the property subject of the sale.The
settledruleiswhenownershiportitlepassestothebuyer,thesellerceases
to have any title to transfer to any third person. If the seller sells the same
landtoanother,thesecondbuyerwhohasactualorconstructiveknowledge
of the prior sale cannot be a registrant in good faith. Such second buyer
cannot defeat the first buyers title. In case a title is issued to the second
buyer, the first buyer may seek reconveyance of the property subject of the
sale.
LandRegistrationTorrensTitleIndefeasibilityFraudTheprinciple
ofindefeasibilityoftitledoesnotapplywherefraudattendedtheissuanceof
thetitlesasinthiscase.ThedefenseofindefeasibilityoftheTorrensTitle
doesnotextendtoatransfereewhotakesthecertificateoftitlewithnoticeof
a flaw in his title. The principle of indefeasibility of title does not apply
wherefraudattendedtheissuanceofthetitlesasinthiscase.

PETITIONforreviewoncertiorariofadecisionoftheCourtof
Appeals.

ThefactsarestatedintheopinionoftheCourt.
Ortiguera, Zuniga, Pomer, Salaria, Sison Law Offices for
petitioners.
DavidG.Paguioforprivaterespondents.
CARPIO,J.:

TheCase
1
BeforeusisapetitionforreviewassailingtheDecision oftheCourt
2
ofAppealsdated26November1999affirmingthedecision of the
Regional Trial Court of Bataan, Branch 4, in Civil Case No. DH
25694.PetitionersalsoquestiontheResolutionoftheCourtof

_______________

1 Penned by Associate Justice Martin S. Villarama, Jr. with Associate Justices

AngelinaSandovalGutierrezandRomeoA.Brawner,concurring,SixthDivision.
2PennedbyJudgePedroB.Villafuerte.

149

VOL.404,JUNE17,2003 149
Alfredovs.Borras

Appeals dated 26 July 2000 denying petitioners motion for

reconsideration.

TheAntecedentFacts

Aparceloflandmeasuring81,524squaremeters(SubjectLand)
in Barrio Culis, Mabiga, Hermosa, Bataan is the subject of
controversyinthiscase.TheregisteredownersoftheSubjectLand
were petitioner spouses, Godofredo Alfredo (Godofredo) and
CarmenLimonAlfredo(Carmen).TheSubjectLandiscoveredby
Original Certificate of Title No. 284 (OCT No. 284) issued to
GodofredoandCarmenunderHomesteadPatentNo.V69196.
On 7 March 1994, the private respondents, spouses Armando
Borras(Armando)andAdeliaLobatonBorras(Adelia),fileda
complaint for specific performance against Godofredo and Carmen
beforetheRegionalTrialCourtofBataan,Branch4.Thecasewas
docketedasCivilCaseNo.DH25694.
Armando and Adelia alleged in their complaint that Godofredo
and Carmen mortgaged the Subject Land for P7,000.00 with the
Development Bank of the Philippines (DBP). To pay the debt,
Carmen and Godofredo sold the Subject Land to Armando and
Adelia for P15,000.00, the buyers to pay the DBP loan and its
accumulated interest, and the balance to be paid in cash to the
sellers.
ArmandoandAdeliagaveGodofredoandCarmenthemoneyto
pay the loan to DBP which signed the release of mortgage and
returnedtheownersduplicatecopyofOCTNo.284toGodofredo
andCarmen.ArmandoandAdeliasubsequentlypaidthebalanceof
the purchase price of the Subject Land for which Carmen issued a
receiptdated11March1970.GodofredoandCarmenthendelivered
to Adelia the owners duplicate copy of OCT No. 284, with the
documentofcancellationofmortgage,officialreceiptsofrealtytax
payments,andtaxdeclarationinthenameofGodofredo.Godofredo
andCarmenintroducedArmandoandAdelia,asthenewownersof
theSubjectLand,totheNatanawans,theoldtenantsoftheSubject
Land. Armando and Adelia then took possession of the Subject
Land.
InJanuary1994,ArmandoandAdelialearnedthathiredpersons
had entered the Subject Land and were cutting trees under
instructionsofallegedlynewownersoftheSubjectLand.Subse

150

150 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

quently, Armando and Adelia discovered that Godofredo and

CarmenhadresoldportionsoftheSubjectLandtoseveralpersons.
On8February1994,ArmandoandAdeliafiledanadverseclaim
with the Register of Deeds of Bataan. Armando and Adelia
discovered that Godofredo and Carmen had secured an owners
duplicatecopyofOCTNo.284afterfilingapetitionincourtforthe
issuance of a new copy. Godofredo and Carmen claimed in their
petition that they lost their owners duplicate copy. Armando and
Adelia wrote Godofredo and Carmen complaining about their acts,
but the latter did not reply. Thus, Armando and Adelia filed a
complaintforspecificperformance.
On 28 March 1994, Armando and Adelia amended their
complainttoincludethefollowingpersonsasadditionaldefendants:
thespousesArnulfoSavellanoandEdithaB.Savellano,DantonD.
Matawaran,thespousesDelfinF.Espiritu,Jr.andEstelaS.Espiritu,
and Elizabeth Tuazon (Subsequent Buyers). The Subsequent
Buyers, who are also petitioners in this case, purchased from
GodofredoandCarmenthesubdividedportionsoftheSubjectLand.
The Register of Deeds of Bataan issued to the Subsequent Buyers
transfercertificatesoftitletothelotstheypurchased.
In their answer, Godofredo and Carmen and the Subsequent
Buyers (collectively petitioners) argued that the action is
unenforceable under the Statute of Frauds. Petitioners pointed out
thatthereisnowritteninstrumentevidencingtheallegedcontractof
sale over the Subject Land in favor of Armando and Adelia.
Petitioners objected to whatever parole evidence Armando and
Adeliaintroducedorofferedontheallegedsaleunlessthesamewas
inwritingandsubscribedbyGodofredo.Petitionersassertedthatthe
Subsequent Buyers were buyers in good faith and for value. As
counterclaim, petitioners sought payment of attorneys fees and
incidentalexpenses.
Trialthenfollowed.ArmandoandAdeliapresentedthefollowing
witnesses: Adelia, Jesus Lobaton, Roberto Lopez, Apolinario
Natanawan, Rolando Natanawan, Tomas Natanawan, and Mildred
Lobaton. Petitioners presented two witnesses, Godofredo and
ConstanciaCalonso.
On7June1996,thetrialcourtrendereditsdecisioninfavorof
ArmandoandAdelia.Thedispositiveportionofthedecisionreads:

151

VOL.404,JUNE17,2003 151
Alfredovs.Borras

WHEREFORE,premisesconsidered,judgmentisherebyrenderedinfavor
of plaintiffs, the spouses Adelia Lobaton Borras and Armando F. Borras,
and against the defendantspouses Godofredo Alfredo and Carmen Limon
Alfredo,spousesArnulfoSabellanoandEdithaB.Sabellano,spousesDelfin
F. Espiritu, Jr. and Estela S. Espiritu, Danton D. Matawaran and Elizabeth
Tuazon,asfollows:

1. DeclaringtheDeedsofAbsoluteSaleofthedisputedparcelofland
(covered by OCT No. 284) executed by the spouses Godofredo
Alfredo and Carmen Limon Alfredo in favor of spouses Arnulfo
Sabellano and Editha B. Sabellano, spouses Delfin F. Espiritu,
DantonD.MatawaranandElizabethTuazon,asnullandvoid
2. Declaring the Transfer Certificates of Title Nos. T163266 and T
163267 in the names of spouses Arnulfo Sabellano and Editha B.
SabellanoTransferCertificatesofTitleNos.T163268and163272
in the names of spouses Delfin F. Espiritu, Jr. and Estela S.
EspirituTransferCertificatesofTitleNos.T163269andT163271
in the name of Danton D. Matawaran and Transfer Certificate of
Title No. T163270 in the name of Elizabeth Tuazon, as null and
voidandthattheRegisterofDeedsofBataanisherebyorderedto
cancelsaidtitles
3. Ordering the defendantspouses Godofredo Alfredo and Carmen
Limon Alfredo to execute and deliver a good and valid Deed of
Absolute Sale of the disputed parcel of land (covered by OCT No.
284) in favor of the spouses Adelia Lobaton Borras and Armando
F.Borraswithinaperiodoften(10)daysfromthefinalityofthis
decision
4. OrderingdefendantspousesGodofredoAlfredoandCarmenLimon
AlfredotosurrendertheirownersduplicatecopyofOCTNo.284
issued to them by virtue of the Order dated May 20, 1992 of the
Regional Trial Court of Bataan, Dinalupihan Branch, to the
 RegistryofDeedsofBataanwithinten(10)daysfromthefinality
ofthisdecision,who,inturn,isdirectedtocancelthesameasthere
existsinthepossessionofhereinplaintiffsoftheownersduplicate
copyofsaidOCTNo.284and,torestoreand/orreinstateOCTNo.
284oftheRegisterofDeedsofBataantoitsfullforceandeffect
5. Ordering the defendantspouses Godofredo Alfredo and Carmen
Limon Alfredo to restitute and/or return the amount of the
respective purchase prices and/or consideration of sale of the
disputedparcelsoflandtheysoldtotheircodefendantswithinten
(10) days from the finality of this decision with legal interest
thereonfromdateofthesale

152

152 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

6. Ordering the defendants, jointly and severally, to pay plaintiff

spouses the sum of P20,000.00 as and for attorneys fees and
litigationexpensesand
7. Orderingdefendantstopaythecostsofsuit.

Defendantscounterclaimsareherebydismissedforlackofmerit.
3
SOORDERED.

PetitionersappealedtotheCourtofAppeals.
On26November1999,theCourtofAppealsissueditsDecision
affirmingthedecisionofthetrialcourt,thus:

WHEREFORE, premises considered, the appealed decision in Civil Case

No.DH25694 is hereby AFFIRMED in its entirety. Treble costs against
thedefendantsappellants.
4
SOORDERED.

On 26 July 2000, the Court of Appeals denied petitioners motion

forreconsideration.

TheRulingoftheTrialCourt

The trial court ruled that there was a perfected contract of sale
between the spouses Godofredo and Carmen and the spouses
ArmandoandAdelia.Thetrialcourtfoundthatalltheelementsofa
contractofsalewerepresentinthiscase.Theobjectofthesalewas
specificallyidentifiedasthe81,524squaremeterlotinBarrioCulis,
Mabigas,Hermosa,Bataan,coveredbyOCTNo.284issuedbythe
Registry of Deeds of Bataan. The purchase price was fixed at
P15,000.00,withthebuyersassumingtopaythesellersP7,000.00
DBPmortgageloanincludingitsaccumulatedinterest.Thebalance
ofthepurchasepricewastobepaidincashtothesellers.Thelast
paymentofP2,524.00constitutedthefullsettlementofthepurchase
price and this was paid on 11 March 1970 as evidenced by the
receiptissuedbyCarmen.
Thetrialcourtfoundthefollowingfactsasproofofaperfected
contract of sale: (1) Godofredo and Carmen delivered to Armando
and Adelia the Subject Land (2) Armando and Adelia treated as
theirowntenantsthetenantsofGodofredoandCarmen(3)Go

_______________

3Rollo,pp.4849.

4Ibid.,p.50.

153

VOL.404,JUNE17,2003 153
Alfredovs.Borras

dofredoandCarmenturnedovertoArmandoandAdeliadocuments
suchastheownersduplicatecopyofthetitleoftheSubjectLand,
taxdeclaration,andthereceiptsofrealtytaxpaymentsinthename
of Godofredo and (4) the DBP cancelled the mortgage on the
Subject Property upon payment of the loan of Godofredo and
Carmen.Moreover,thereceiptofpaymentissuedbyCarmenserved
as an acknowledgment, if not a ratification, of the verbal sale
between the sellers and the buyers. The trial court ruled that the
StatuteofFraudsisnotapplicablebecauseinthiscasethesalewas
perfected.
The trial court concluded that the Subsequent Buyers were not
innocent purchasers. Not one of the Subsequent Buyers testified in
court on how they purchased their respective lots. The Subsequent
Buyers totally depended on the testimony of Constancia Calonso
(Calonso) to explain the subsequent sale. Calonso, a broker,
negotiatedwithGodofredoandCarmenthesaleoftheSubjectLand
which Godofredo and Carmen subdivided so they could sell anew
portionstotheSubsequentBuyers.
CalonsoadmittedthattheSubjectLandwasadjacenttoherown
lot. The trial court pointed out that Calonso did not inquire on the
nature of the tenancy of the Natanawans and on who owned the
Subject Land. Instead, she bought out the tenants for P150,000.00.
ThebuyoutwasembodiedinaKasunduan.ApolinarioNatanawan
(Apolinario)testifiedthatheandhiswifeacceptedthemoneyand
signedtheKasunduanbecauseCalonsoandtheSubsequentBuyers
threatened them with forcible ejectment. Calonso brought
Apolinario to the Agrarian Reform Office where he was asked to
produce the documents showing that Adelia is the owner of the
Subject Land. Since Apolinario could not produce the documents,
the agrarian officer told him that he would lose the case. Thus,
Apolinario was constrained to sign the Kasunduan and accept the
P150,000.00.
AnotherindicationofCalonsosbadfaithwasherownadmission
thatshesawanadverseclaimonthetitleoftheSubjectLandwhen
she registered the deeds of sale in the names of the Subsequent
Buyers.Calonsoignoredtheadverseclaimandproceededwiththe
registrationofthedeedsofsale.
The trial court awarded P20,000.00 as attorneys fees to
ArmandoandAdelia.Injustifyingtheawardofattorneysfees,the
trialcourtinvokedArticle2208(2)oftheCivilCodewhichallowsa

154

154 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

courttoawardattorneysfees,includinglitigationexpenses,whenit
is just and equitable to award the same. The trial court ruled that
ArmandoandAdeliaareentitledtoattorneysfeessincetheywere
compelled to file this case due to petitioners refusal to heed their
justandvaliddemand.

TheRulingoftheCourtofAppeals

The Court of Appeals found the factual findings of the trial court
wellsupportedbytheevidence.Basedonthesefindings,theCourt
ofAppealsalsoconcludedthattherewasaperfectedcontractofsale
andtheSubsequentBuyerswerenotinnocentpurchasers.
TheCourtofAppealsruledthatthehandwrittenreceiptdated11
March1970issufficientproofthatGodofredoandCarmensoldthe
SubjectLandtoArmandoandAdeliauponpaymentofthebalance
ofthepurchaseprice.TheCourtofAppealsfoundtherecitalsinthe
receipt as sufficient to serve as the5 memorandum or note as a
writing under the Statute of Frauds. The Court of Appeals then
reiteratedtherulingofthetrialcourtthattheStatuteofFraudsdoes
notapplyinthiscase.
The Court of Appeals gave credence to the testimony of a
witness of Armando and Adelia, Mildred Lobaton, who explained
whythetitletotheSubjectLandwasnotinthenameofArmando
and Adelia. Lobaton testified that Godofredo was then busy
preparing to leave for Davao. Godofredo promised that he would
signallthepapersoncetheywereready.SinceArmandoandAdelia
were close to the family of Carmen, they trusted Godofredo and
Carmen to honor their commitment. Armando and Adelia had no
reason to believe that their contract of sale was not perfected or
validly executed considering that they had received the duplicate
copyofOCTNo.284andotherrelevantdocuments.Moreover,they
hadtakenphysicalpossessionoftheSubjectLand.
The Court of Appeals held that the contract of sale is not void
evenifonlyCarmensignedthereceiptdated11March1970.Citing
6
Felipe v. Heirs of Maximo Aldon, the appellate court ruled that a
contractofsalemadebythewifewithoutthehusbandsconsentis
notvoidbutmerelyvoidable.TheCourtofAppealsfurtherde

_______________

5Rollo,p.55.

6205Phil.537120SCRA628(1983).

155

VOL.404,JUNE17,2003 155
Alfredovs.Borras

claredthatthesaleinthiscasebindstheconjugalpartnershipevenif
only the wife signed the receipt because the proceeds of the sale
wereusedforthebenefitoftheconjugalpartnership.Theappellate
7
courtbasedthisconclusiononArticle161 oftheCivilCode.
The Subsequent Buyers of the Subject Land cannot claim that
theyarebuyersingoodfaithbecausetheyhadconstructivenoticeof
the adverse claim of Armando and Adelia. Calonso, who brokered
thesubsequentsale,testifiedthatwhensheregisteredthesubsequent
deedsofsale,theadverseclaimofArmandoandAdeliawasalready
annotated on the title of the Subject Land. The Court of Appeals
believed that the act of Calonso and the Subsequent Buyers in
forcibly ejecting the Natanawans from the Subject Land buttresses
theconclusionthatthesecondsalewastaintedwithbadfaithfrom
theverybeginning.
Finally,theCourtofAppealsnotedthattheissueofprescription
was not raised in the Answer. Nonetheless, the appellate court
explained that since this action is actually based on fraud, the
prescriptiveperiodisfouryears,withtheperiodstartingtorunonly
from the date of the discovery of the fraud. Armando and Adelia
discovered the fraudulent sale of the Subject Land only in January
1994. Armando and Adelia lost no time in writing a letter to
GodofredoandCarmenon2February1994andfiledthiscaseon7
March 1994. Plainly, Armando and Adelia did not sleep on their
rightsorlosetheirrightsbyprescription.
TheCourtofAppealssustainedtheawardofattorneysfeesand
imposedtreblecostsonpetitioners.

TheIssues
Petitionersraisethefollowingissues:

_______________

7 Article 161 of the Civil Code provides as follows: The conjugal partnership

shallbeliablefor:

(1) All debts and obligations contracted by the husband for the benefit of the conjugal
partnership,andthosecontractedbythewife,alsoforthesamepurpose,inthecaseswhereshe
maylegallybindthepartnership.
xxx.

156

156 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

Whether the alleged sale of the Subject Land in favor of Armando and
Adeliaisvalidandenforceable,where(1)itwasorallyenteredintoandnot
in writing (2) Carmen did not obtain the consent and authority of her
husband,Godofredo,whowasthesoleowneroftheSubjectLandinwhose
namethetitlethereto(OCTNo.284)wasissuedand(3)itwasenteredinto
duringthe25yearprohibitiveperiodforalienatingtheSubjectLandwithout
theapprovaloftheSecretaryofAgricultureandNaturalResources.

II

Whether the action to enforce the alleged oral contract of sale brought
after24yearsfromitsallegedperfectionhadbeenbarredbyprescriptionand
bylaches.

III

Whether the deeds of absolute sale and the transfer certificates of title
over the portions of the Subject Land issued to the Subsequent Buyers,
innocent purchasers in good faith and for value whose individual titles to
theirrespectivelotsareabsoluteandindefeasible,arevalid.

IV

WhetherpetitionersareliabletopayArmandoandAdeliaP20,000.00as
attorneys fees and litigation expenses and the treble costs, where the claim
ofArmandoandAdeliaisclearlyunfoundedandbaseless.

Whether petitioners are entitled to the counterclaim for attorneys fees

and litigation expenses, where they have sustained such expenses by reason
of institution
8
of a clearly malicious and unfounded action by Armando and
Adelia.

TheCourtsRuling

Thepetitioniswithoutmerit.
In a petition for review on certiorari under Rule 45,
9
this Court
reviews only errors of law and not errors of facts. The factual
findingsoftheappellatecourtaregenerallybindingonthis

_______________

8Rollo,pp.106107.

9WRedConstructionandDevelopmentCorporationv.CourtofAppeals,G.R.No.

122648,17August2000,338SCRA341.

157

VOL.404,JUNE17,2003 157
Alfredovs.Borras
10
Court. Thisapplieswithgreaterforcewhenboththetrialcourtand
the Court
11
of Appeals are in complete agreement on their factual
findings. In this case, there is no reason to deviate from the
findings of the lower courts. The facts relied upon by the trial and
appellate courts are borne out by the record. We agree with the
conclusionsdrawnbythelowercourtsfromthesefacts.

ValidityandEnforceabilityoftheSale

The contract of sale between the spouses Godofredo and Carmen

and the spouses Armando and Adelia was a perfected contract. A
contractisperfectedoncethereisconsentofthecontractingparties
12
on the object certain and on the cause of the obligation. In the
instantcase,theobjectofthesaleistheSubjectLand,andtheprice
certainisP15,000.00.Thetrialandappellatecourtsfoundthatthere
wasameetingofthemindsonthesaleoftheSubjectLandandon
the purchase price of P15,000.00. This is a finding of fact that is
bindingonthisCourt.Wefindnoreasontodisturbthisfindingsince
itissupportedbysubstantialevidence.
The contract of sale of the Subject Land has also been
consummated because the sellers and buyers have performed their
respective obligations under the contract. In a contract of sale, the
sellerobligateshimselftotransfertheownershipofthedeterminate
thing sold, and to deliver the same, to the13buyer who obligates
himself to pay a price certain to the seller. In the instant case,
GodofredoandCarmendeliveredtheSubjectLandtoArmandoand
Adelia,placingthelatterinactualphysicalpossessionoftheSubject
Land.ThisphysicaldeliveryoftheSubjectLandalsoconstituteda 14
transferofownershipoftheSubjectLandtoArmandoandAdelia.
Ownership of the thing sold is
15
transferred to the vendee upon its
actualorconstructivedelivery. GodofredoandCarmenalsoturned
over to Armando and Adelia the documents of ownership to the
SubjectLand,namelytheownersduplicatecopyof

_______________

10Ibid.

11Ibid.

12Article1318,CivilCode.

13Article1458,CivilCode.

14Pealosav.Santos,G.R.No.133749,23August2001,363SCRA545.

15Article1477,CivilCode.

158

158 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

OCT No. 284, the tax declaration and the receipts of realty tax
payments.
On the other hand, Armando and Adelia paid the full purchase
price as evidenced by the receipt dated 11 March 1970 issued by
Carmen. Armando and Adelia fulfilled their obligation to provide
theP7,000.00topaytheDBPloanofGodofredoandCarmen,and
to pay the latter the balance of P8,000.00 in cash. The P2,524.00
paidunderthereceiptdated11March1970wasthelastinstallment
tosettlefullythepurchaseprice.Indeed,uponpaymenttoDBPof
theP7,000.00andtheaccumulatedinterests,theDBPcancelledthe
mortgage on the Subject Land and returned the owners duplicate
copyofOCTNo.284toGodofredoandCarmen.
The trial and appellate courts correctly refused 16
to apply the
StatuteofFraudstothiscase.TheStatuteofFrauds providesthata
contract for the sale of real property shall be unenforceable unless
thecontractorsomenoteormemorandumofthesaleisinwriting
and subscribed by the party charged or his agent. The existence of
the receipt dated 11 March 1970, which is a memorandum of the
sale, removes the transaction from the provisions of the Statute of
Frauds.
TheStatuteofFraudsappliesonlytoexecutorycontractsandnot
17
to contracts either partially or totally performed. Thus, where one
partyhasperformedonesobligation,oralevidencewillbeadmitted
18
to prove the agreement. In the instant case, the parties have
consummated the sale of the Subject Land, with both sellers and
buyersperformingtheirrespectiveobligationsunderthecontractof
sale. In addition, a contract that violates the Statute of
19
Frauds is
ratifiedbytheacceptanceofbenefitsunderthecontract. Godofredo
andCarmenbenefitedfromthecontractbecausetheypaidtheirDBP
loanandsecuredthecancellationoftheirmortgageusingthemoney
given by Armando and Adelia. Godofredo and Carmen also
acceptedpaymentofthebalanceofthepurchaseprice.

_______________

16Article1403,CivilCode.

17 Article 1497 of the Civil Code. See also The Associated AngloAmerican
TobaccoCorporationv.CourtofAppeals,G.R.No.125602,29April1999,325SCRA
694.
18Ibid.

19Article1405,CivilCode.

159

VOL.404,JUNE17,2003 159
Alfredovs.Borras

GodofredoandCarmencannotinvoketheStatuteofFraudstodeny
the existence of the verbal contract of sale because they have
performed their20obligations, and have accepted benefits, under the
verbal contract, Armando and Adelia have also performed their
obligations under the verbal contract. Clearly, both the sellers and
the buyers have consummated the verbal contract of sale of the21
SubjectLand.TheStatuteofFraudswasenactedtopreventfraud.
This law cannot be used to advance the very evil the law seeks to
prevent.
Godofredo and Carmen also claim that the sale of the Subject
LandtoArmandoandAdeliaisvoidontwogrounds.First,Carmen
sold the Subject Land without the marital consent of Godofredo.
Second, the sale was made during the 25year period that the law
prohibits the alienation of land grants without the approval of the
SecretaryofAgricultureandNaturalResources.
Theseargumentsarewithoutbasis.
TheFamilyCode,whichtookeffecton3August1988,provides
that any alienation or encumbrance made by the husband of the
conjugal partnership property without the consent of the wife is
void. However, when the sale is made before the22effectivity of the
FamilyCode,theapplicablelawistheCivilCode.
Article 173 of the Civil Code provides that the disposition of
conjugalpropertywithoutthewifesconsentisnotvoidbutmerely
voidable.Article173reads:
Thewifemay,duringthemarriage,andwithintenyearsfromthetransaction
questioned,askthecourtsfortheannulmentofanycontractofthehusband
entered into without her consent, when such consent is required, or any act
orcontractofthehusbandwhichtendstodefraudherorimpairherinterest
in the conjugal partnership property. Should the wife fail to exercise this
right,sheorherheirs,afterthedissolutionofthemarriage,maydemandthe
valueofpropertyfraudulentlyalienatedbythehusband.

_______________

20 Mactan Cebu International Airport Authority v. Court of Appeals, 331 Phil.

1046263SCRA736(1996).
21Ibid.

22SpousesGuiangv.CourtofAppeals,353Phil.578291SCRA372(1998).

160

160 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras
23
InFelipev.Aldon, weappliedArticle173inacasewherethewife
sold some parcels of land belonging to the conjugal partnership
without the consent of the husband. We ruled that the contract of
sale was voidable subject to annulment by the husband. Following
petitioners argument that Carmen sold the land to Armando and
Adelia without the consent of Carmens husband, the sale would
onlybevoidableandnotvoid.
However, Godofredo can no longer24question the sale. Voidable
contractsaresusceptibleofratification. Godofredoratifiedthesale
whenheintroducedArmandoandAdeliatohistenantsasthenew
owners of the Subject Land. The trial court noted that Godofredo
failed to deny categorically on the witness stand the claim of the
complainants witnesses that Godofredo introduced
25
Armando and
Adelia as the new landlords of the tenants. That Godofredo and
Carmen allowed Armando and Adelia to enjoy possession of the
Subject Land for 24 years is formidable proof of Godofredos
acquiescence to the sale. If the sale was truly unauthorized, then
Godofredoshouldhavefiledanactiontoannulthesale.Hedidnot.
The prescriptive period to annul the sale has long lapsed.
GodofredosconductbelieshisclaimthathiswifesoldtheSubject
Landwithouthisconsent.
Moreover,GodofredoandCarmenusedmostoftheproceedsof
thesaletopaytheirdebtwiththeDBP.WeagreewiththeCourtof
Appeals that the sale redounded to the benefit of the conjugal
partnership.Article161oftheCivilCodeprovidesthattheconjugal
partnershipshallbeliablefordebtsandobligationscontractedbythe
wife for the benefit of the conjugal partnership. Hence, even if
Carmen sold the land without the consent of her husband, the sale
stillbindstheconjugalpartnership.
Petitioners contend that Godofredo and Carmen did not deliver
the title of the Subject Land to Armando and Adelia as shown by
thisportionofAdeliastestimonyoncrossexamination

Q NotitlewasdeliveredtoyoubyGodofredoAlfredo?
26
A IgotthetitlefromJulieLimonbecausemysistertoldme.

_______________

23Supra,seenote6.

24Article1390oftheCivilCode.

25Rollo,p.47.

26Ibid.,p.18.

161

VOL.404,JUNE17,2003 161
Alfredovs.Borras

Petitioners raise this factual issue for the first time. The Court of
Appealscouldhavepasseduponthisissuehadpetitionersraisedthis
earlier, At any rate, the cited testimony of Adelia does not
convincinglyprovethatGodofredoandCarmendidnotdeliverthe
SubjectLandtoArmandoandAdelia.Adeliascitedtestimonymust
beexaminedincontextnotonlywithherentiretestimonybutalso
withtheothercircumstances.
Adeliastatedduringcrossexaminationthatsheobtainedthetitle
of the Subject Land from Julie Limon (Julie), her classmate in
college and the sister of Carmen. Earlier, Adelias own sister had
securedthetitlefromthefatherofCarmen.However,Adeliassister,
whowasabouttoleavefortheUnitedStates,gavethetitletoJulie
becauseoftheabsence of the other documents. Adelias sister told
Adelia to secure the title from Julie, and this was how Adelia
obtainedthetitlefromJulie.
It is not necessary that the seller himself deliver the title of the
property to the buyer because the thing sold is understood as
delivered 27
when it is placed in the control and possession of the
vendee. To repeat, Godofredo and Carmen themselves introduced
the Natanawans, their tenants, to Armando and Adelia as the new
owners of the Subject Land. From then on, Armando and Adelia
actedasthelandlordsoftheNatanawans.Obviously,Godofredoand
Carmen themselves placed control and possession of the Subject
LandinthehandsofArmandoandAdelia.
Petitioners invoke the absence of approval of the sale by the
Secretary of Agriculture and Natural Resources to nullify the sale.
PetitionersneverraisedthisissuebeforethetrialcourtortheCourt
of Appeals. Litigants cannot raise an issue for the first time on
appeal,asthiswouldcontravenethebasicrulesoffairplay,justice
28
anddueprocess. However,wewilladdressthisnewissuetofinally
putanendtothiscase.
The sale of the Subject Land cannot be annulled on the ground
thattheSecretarydidnotapprovethesale,whichwasmadewithin
25yearsfromtheissuanceofthehomesteadtitle.Section

_______________

27 Article 1497 of the Civil Code. See also The Associated AngloAmerican
TobaccoCorporationv.CourtofAppeals,G.R.No.125602,29April1999,325SCRA
694.
28Sumbadv.CourtofAppeals,368Phil.52308SCRA575(1999).

162

162 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

118ofthePublicLandAct(CommonwealthActNo.141)readsas
follows:

SEC.118.ExceptinfavoroftheGovernmentoranyofitsbranches,units,
or institutions or legally constituted banking corporation, lands acquired
under free patent or homestead provisions shall not be subject to
encumbrance or alienation from the date of the approval of the application
and for a term of five years from and after the date of the issuance of the
patentorgrant.
xxx
Noalienation,transfer,orconveyanceofanyhomesteadafter5yearsand
beforetwentyfiveyearsaftertheissuanceoftitleshallbevalidwithoutthe
approval of the Secretary of Agriculture and Commerce, which approval
shallnotbedeniedexceptonconstitutionalandlegalgrounds.

Agranteeorhomesteaderisprohibitedfromalienatingtoaprivate
individualalandgrantwithinfiveyearsfromthetimethatthepatent
29
or grant
30
is issued. A violation of this prohibition renders a sale
void. This prohibition, however, 31
expires on the fifth year. From
then on until the next 20 years the land grant may be alienated
provided the Secretary of Agriculture and Natural Resources
approves the alienation. The Secretary is required to approve the
alienationunlessthereareconstitutionalandlegalgroundstodeny
the approval. In this case, there are no apparent constitutional or
legalgroundsfortheSecretarytodisapprovethesaleoftheSubject
Land.
 ThefailuretosecuretheapprovaloftheSecretarydoesnotipso
32
factomakeasalevoid. The absence of approval by the Secretary
doesnotnullifyasalemadeaftertheexpirationofthe5yearperiod,
forinsucheventtherequirementofSection118ofthePublicLand
33 34
Act becomes merely directory or a formality. The approval may
besecuredlater,producingtheeffectofratifyingandadopting

_______________

29Jacintov.Jacinto,105Phil.1218(1959).

30Ibid.

31Ibid.

32Ibid.

33Ibid.Evangelistav.Montano,93Phil.275(1953)Floresv.Plasina,94Phil.327

(1954).
34DelosSantosv.RomanCatholicChurchofMidsayap,94Phil.405(1954).

163

VOL.404,JUNE17,2003 163
Alfredovs.Borras
35
the transaction as if the sale had
36
been previously authorized As
heldinEvangelistav.Montano.

Section 118 of Commonwealth Act No. 141, as amended, specifically

enjoins that the approval by the Department Secretary shall not be denied
except on constitutional and legal grounds. There being no allegation that
there were constitutional or legal impediments to the sales, and no pretense
that if the sales had been submitted to the Secretary concerned they would
havebeendisapproved,approvalwasaministerialduty,tobehadasamatter
of course and demandable if refused. For this reason, and if necessary,
approvalmaynowbeappliedforanditseffectwillbetoratifyandadoptthe
transactionsasiftheyhadbeenpreviouslyauthorized.(Emphasissupplied)

ActionNotBarredbyPrescriptionandLaches

Petitioners insist that prescription and laches have set in. We

disagree.
TheAmendedComplaintfiledbyArmandoandAdeliawiththe
trial court is captioned as one for Specific Performance. In reality,
the ultimate relief sought by Armando and Adelia is the
reconveyance to them of the Subject Land. An action for
reconveyance is one that seeks to transfer property, 37
wrongfully
registeredbyanother,toitsrightfulandlegalowner. Thebodyof
thepleadingorcomplaintdeterminesthenatureofanaction,notits

38
titleorheading. Thus, the present action should be treated as one
 38
titleorheading. 39Thus, the present action should be treated as one
forreconveyance.
Article1456oftheCivil Code provides that a person acquiring
propertythroughfraudbecomesbyoperationoflawatrusteeofan
implied trust for the benefit of the real owner of the property. The
presence of fraud in this case created an implied trust in favor of
Armando and Adelia. This gives Armando and Adelia the right 40
to
seekreconveyanceofthepropertyfromtheSubsequentBuyers.

_______________

35Ibid.

3693Phil.275(1953).

37Ibid.

38Davidv.Malay,G.R.No.132644,19November1999,318SCRA711.

39Ibid.

40Ibid.SeealsoHeirsofOlvigav.CourtofAppeals,G.R.No.104813,21October

1993,227SCRA330.

164

164 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

Todeterminewhentheprescriptiveperiodcommencedinanaction
for reconveyance, plaintiffs possession of the disputed property is
material. An action for41 reconveyance based on an implied trust
prescribes in ten years. The tenyear prescriptive period applies
onlyifthereisanactualneedtoreconveythepropertyaswhenthe
42
plaintiff is not in possession of the property. However, if the
plaintiff,astherealownerofthepropertyalsoremainsinpossession
of the property, the prescriptive period to recover
43
title and
possessionofthepropertydoesnotrunagainsthim. Insuchacase,
an action for reconveyance, if nonetheless filed, would be in the
nature of a 44suit for quieting of title, an action that is
imprescriptible.
Inthiscase,theappellatecourtresolvedtheissueofprescription
byrulingthattheactionshouldprescribefouryearsfromdiscovery
ofthefraud.Wemustcorrectthiserroneousapplicationofthefour
45
yearprescriptiveperiod.InCarov.CourtofAppeals, weexplained
why an action for reconveyance based on an implied trust should
prescribe in ten years. In that case, the appellate court also
erroneouslyappliedthefouryearprescriptiveperiod.Wedeclaredin
Caro:

We disagree. The case of Liwalug Amerol, et al. v. Molok Bagumbaran,

G.R. No. L33261, September 30, 1987, 154 SCRA 396 illuminated what
usedtobeagrayareaontheprescriptiveperiodforanactiontoreconveythe
titletorealpropertyand,corollarily,itspointofreference:
xxxItmustberememberedthatbeforeAugust30,1950,thedateofthe
effectivityofthenewCivilCode,theoldCodeofCivilProcedure(ActNo.
190)governedprescription.Itprovided:

SEC.43.Othercivilactionshowlimited.Civilactionsotherthanfortherecovery
of real property can only be brought within the following periods after the right of
actionaccrues:
xxxxxxxxx

_______________

41Vda.deCabrerav.CourtofAppeals,335Phil.19267SCRA339(1997).

42Ibid.

43Supra,seenote38.

44Ibid.

45G.R.No.76148,20December1989,180SCRA401.

165

VOL.404,JUNE17,2003 165
Alfredovs.Borras

3.Withinfouryears:xxxAnactionforreliefonthegroundoffraud,buttherightof
action in such case shall not be deemed to have accrued until the discovery of the
fraud
xxxxxxxxx

Incontrast,underthepresentCivilCode,wefindthatjustasanimpliedor
constructive trust is an offspring of the law (Art. 1456, Civil Code), so is
thecorrespondingobligationtoreconveythepropertyandthetitletheretoin
favor of the true owner. In this context, and visavis prescription, Article
1144oftheCivilCodeisapplicable.

Article1144.Thefollowingactionsmustbebroughtwithintenyearsfromthetime
therightofactionaccrues:

(1) Uponawrittencontract
(2) Uponanobligationcreatedbylaw
(3) Uponajudgment.

xxxxxxxxx
(Emphasissupplied).

An action for reconveyance based on an implied or constructive trust

must perforce prescribe in ten years and not otherwise. A long line of
decisions of this Court, and of very recent vintage at that, illustrates this
rule. Undoubtedly, it is now wellsettled that an action for reconveyance
based on an implied or constructive trust prescribes in ten years from the
issuance of the Torrens title over the property. The only discordant note, it
seems,isBalbinvs.Medalla which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be explained
by the erroneous reliance on Gerona vs. de Guzman. But in Gerona, the
fraudwasdiscoveredonJune25,1948,henceSection43(3)ofActNo.190,
was applied, the new Civil Code not coming into effect until August 30,
1950 as mentioned earlier. It must be stressed, at this juncture, that article
1144andarticle1456,arenewprovisions.Theyhavenocounterpartsinthe
old Civil Code or in the old Code of Civil Procedure, the latter being then
resorted to as legal basis of the fouryear prescriptive period for an action
forreconveyanceoftitleofrealpropertyacquiredunderfalsepretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of
PresidentialDecreeNo.1529,whichprovides:

Inallcasesofregistrationprocuredbyfraud,theownermaypursueallhislegaland
equitableremediesagainstthepartiestosuchfraudwithoutprejudice,however,tothe
rightsofanyinnocentholderofthedecreeofregistrationontheoriginalpetitionor
application,xxx

This provision should be read in conjunction with Article 1456 of the

CivilCode,whichprovides:

166

166 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

Article1456.Ifpropertyisacquiredthroughmistakeorfraud,thepersonobtainingit
is,byforceoflaw,consideredatrusteeofanimpliedtrustforthebenefitoftheperson
fromwhomthepropertycomes.

Thelawtherebycreatestheobligationofthetrusteetoreconveytheproperty
and the title thereto in favor of the true owner. Correlating Section 53,
paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil
CodewithArticle1144(2)oftheCivilCode,supra,theprescriptiveperiod
forthereconveyanceoffraudulentlyregisteredrealpropertyisten(10)years
reckoned from the 46date of the issuance of the certificate of title x x x
(Emphasissupplied)

Following Caro, we have consistently held that an action 47

for
reconveyancebasedonanimpliedtrustprescribesintenyears. We
went further by specifying the reference point of the tenyear
prescriptiveperiodasthedateoftheregistrationofthedeedorthe
48
issuanceofthetitle.
HadArmandoandAdeliaremainedinpossessionoftheSubject
Land,theiractionforreconveyance,ineffectanactiontoquiettitle
to property, would not be subject to prescription. Prescription does
notrunagainsttheplaintiffinactualpossessionofthedisputedland
because such plaintiff has a right to wait until his possession is
disturbed or his title
49
is questioned before initiating an action to
vindicate his right. His undisturbed possession gives him the
continuingrighttoseektheaidofacourtofequitytodeterminethe
nature
50
of the adverse claim of a third party and its effect on his
title.
Armando and Adelia lost possession of the Subject Land when
the Subsequent Buyers forcibly drove away from the51Subject Land
theNatanawans,thetenantsofArmandoandAdelia. Thiscreated
anactualneedforArmandoandAdeliatoseekreconveyanceofthe
SubjectLand.Thestatuteoflimitationbecomesrelevantin

_______________

46Ibid.

47DevelopmentBankofthePhilippinesv.CourtofAppeals,G.R.No.129471, 28

April2000,331 SCRA 267David v. Malay,supra, see note 38 Vda. de Cabrera v.

CourtofAppeals,supra,seenote41.
48Supra,seenote38.

49Supra,seenote38.

50Supra,seenote38.

51 Rollo, p. 59 TSN, 8 March 1995, pp. 336337 (Rolando Natanawan) TSN, 23

November1994,p.262(AdeliaLobaton).

167

VOL.404,JUNE17,2003 167
Alfredovs.Borras

thiscase.Thetenyearprescriptiveperiodstartedtorunthedatethe
SubsequentBuyersregisteredtheirdeedsofsalewiththeRegisterof
Deeds.
The Subsequent Buyers bought the subdivided portions of the
Subject Land on 22 February 1994, the date of execution of their
deedsofsale.TheRegisterofDeedsissuedthetransfercertificates
of title to the Subsequent Buyers on 24 February 1994. Armando
and Adelia filed the Complaint on 7 March 1994. Clearly,
prescription could not have set in since the case was filed at the
earlystageofthetenyearprescriptiveperiod.
Neitheristheactionbarredbylaches.Wehavedefinedlachesas
thefailureorneglect,foranunreasonabletime,todothatwhich,by
the exercise
52
of due diligence, could or should have been done
earlier. It is negligence or omission to assert a right within a
reasonabletime,warrantingapresumptionthatthepartyentitledto 53
assert it either has abandoned it or declined to assert it. Armando
and Adelia discovered in January 1994 the subsequent sale of the
Subject Land and they filed this case on 7 March 1994. Plainly,
ArmandoandAdeliadidnotsleepontheirrights.
ValidityofSubsequentSaleofPortionsoftheSubjectLand

Petitionersmaintainthatthesubsequentsalemustbeupheldbecause
the Subsequent Buyers, the copetitioners of Godofredo and
Carmen, purchased and registered the Subject Land in good faith.
Petitioners argue that the testimony of Calonso, the person who
brokered the second sale, should not prejudice the Subsequent
Buyers. There is no evidence that Calonso was the agent of the
Subsequent Buyers and that she communicated to them what she
knew about the adverse claim and the prior sale. Petitioners assert
that the adverse claim registered by Armando and Adelia has no
legalbasistorenderdefectivethetransferoftitletotheSubsequent
Buyers.
We are not persuaded. Godofredo and Carmen had already sold
the Subject Land to Armando and Adelia, The settled rule is when
ownershiportitlepassestothebuyer,thesellerceasestohaveany
54
titletotransfertoanythirdperson. Ifthesellersellsthesame

_______________

52Coronelv.CourtofAppeals,331Phil.294263SCRA15(1996).

53Ibid.

54Ibid.

168

168 SUPREMECOURTREPORTSANNOTATED
Alfredovs.Borras

land to another, the second buyer who has actual or constructive 55

knowledge of the prior sale cannot be a registrant in good
56
faith.
Such second buyer cannot defeat the first buyers title. In case a
title is issued to the second buyer, the first57
buyer may seek
reconveyanceofthepropertysubjectofthesale.
Thus,
58
to merit protection under the second paragraph of Article
1544 oftheCivilCode,thesecondbuyermustactingoodfaithin
59
registering the deed. In this case, the Subsequent Buyers good
faith hinges on whether they had knowledge of the previous sale.
PetitionersdonotdisputethatArmandoandAdeliaregisteredtheir
adverse claim with the Registry of Deeds of Bataan on 8 February
1994. The Subsequent Buyers purchased their respective lots only
on 22 February, 1994 as shown by the date of their deeds of sale.
Consequently, the adverse claim registered prior to the second sale
charged the Subsequent Buyers 60
with constructive notice of the
defectinthetitleofthesellers, GodofredoandCarmen.
 It is immaterialwhether Calonso, the broker of the second sale,
communicated to the Subsequent Buyers the existence of the
adverseclaim.The registration of the adverse claim on 8 February
61
1994constituted,byoperationoflaw,noticetothewholeworld.

_______________

55Ibid.

56Ibid.

57Ibid.

58 Article 1544 of the Civil Code provides as follows: If the same thing should

havebeensoldtodifferentvendees,theownershipshallbetransferredtotheperson
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
acquiringitwhoingoodfaithfirstrecordeditintheRegistryofProperty.
Should there be no inscription, the ownership shall pertain to the person who in
goodfaithwasfirstinthepossessionand,intheabsencethereof,tothepersonwho
presentstheoldesttitle,providedthereisgoodfaith.
59Bayocav.Nogales,G.R.No.138201,12September2000,340SCRA154.

60SeeBalatbatv.CourtofAppeals,329Phil.858261SCRA128(1996)Ocampo

v.CourtofAppeals,G.R.No.97442,30June1994,233SCRA551.
61 Section 52 of the Property Registration Decree (PD No. 1529) provides as
follows:Constructivenoticeuponregistration.Everyxxxlien,

169

VOL.404,JUNE17,2003 169
Alfredovs.Borras

From that date onwards, the Subsequent Buyers were deemed to

have constructive notice of the adverse claim of Armando and
Adelia. When the Subsequent Buyers purchased portions of the
Subject Land on 22 February 1994, they already
62
had constructive
noticeoftheadverseclaimregisteredearlier. Thus,theSubsequent
Buyerswerenotbuyersingoodfaithwhentheypurchasedtheirlots
on 22 February 1994. They were also not registrants in good faith
whentheyregisteredtheirdeedsofsalewiththeRegistryofDeeds
on24February1994.
The Subsequent Buyers individual titles to their respective lots
arenotabsolutelyindefeasible.Thedefenseofindefeasibilityofthe
TorrensTitledoesnotextendtoatransfereewhotakesthecertificate
63
of title with notice of a flaw in his title. The principle of
indefeasibility of title does not apply
64
where fraud attended the
issuanceofthetitlesasinthiscase.

AttorneysFeesandCosts
We sustain the award of attorneys fees. The decision of the court
must state the grounds for the award
65
of attorneys fees. The trial
courtcompliedwiththisrequirement. Weagreewiththetrialcourt
thatifitwerenotforpetitionersunjustifiedrefusaltoheedthejust
and valid demands of Armando and Adelia, the latter would not
havebeencompelledtofilethisaction.
The Court of Appeals echoed the trial courts condemnation of
petitionersfraudulentmaneuveringsinsecuringthesecondsaleof
theSubjectLandtotheSubsequentBuyers.Wewillalsonotturna

_______________

x x x instrument or entry affecting registered land shall, if registered, filed or

enteredintheofficeoftheRegisterofDeedsfortheprovinceorcitywherethelandto
which it relates lies, be constructive notice to all persons from the time of such
registering, filing or entering. See also Caviles v. Bautista, G.R. No. 102648, 24
November 1999, 319 SCRA 24 Development Bank of the Philippines v. Acting
RegisterofDeedsofNuevaEcija,UDKNo.7671,23June1988,162SCRA450.
62Gardnerv.CourtofAppeals,G.R.No.L59952,31August1984,131SCRA584

PNBv.CourtofAppeals,G.R.No.L30831&L31176,21November1979,94SCRA
357.
63Supra,seenote41.

64Supra,seenote41.

65Ciprianov.CourtofAppeals,331Phil.1019263SCRA711.

170

170 SUPREMECOURTREPORTSANNOTATED
Peoplevs.Mallari

blindeyeonpetitionersbrazentactics.Thus,weupholdthetreble
costsimposedbytheCourtofAppealsonpetitioners.
WHEREFORE, the petition is DENIED and the appealed
decisionisAFFIRMED.Treblecostsagainstpetitioners.
SOORDERED.

Davide, Jr. (C.J., Chairman), Vitug, YnaresSantiago and

Azcuna,JJ.,concur.

Petitiondenied,judgmentaffirmed.

Note.An action for reconveyance based on violation of a

condition in the Deed of Donation should be instituted within ten
(10) years from the time of such violation. (Vda. de Delgado vs.
CourtofAppeals,363SCRA758[2001])

o0o
Copyright2017CentralBookSupply,Inc.Allrightsreserved.