G.R. No. 17900 - Cagaoan vs. Cagaoan

Parties Involved: Eugenio Cagaoan (Plaintiff and Appellant) and Felix Cagaoan (Defendant and Appellee), brothers and sons of Gregorio Cagaoan.
Context: Gregorio Cagaoan executed two deeds of gift: one on November 3, 1915, to Felix for four parcels of land, and another on October 26, 1918, to Eugenio for a parcel that overlaps with parcel No. 4 in Felix's deed.
Issues at Stake: Ownership of the disputed parcel, fraud allegations against Felix's deed, and the validity of the registration of said deed.

Deeds of Gift Validity:
- Both deeds were authenticated via Gregorio's thumbprint and accepted by the donees.
- A deed must be free from formal defects to be considered valid.
Possession and Registration:
- Eugenio took possession of his parcel immediately after the gift but failed to register it due to discrepancies in land description.
- Felix recorded his deed on June 10, 1919, but had no possession of parcel No. 4 despite holding parcels 1, 2, and 3 since 1915.

Indications of Deception:
- Evidence suggested potential deception in the execution of the deed favoring Felix, indicating that Gregorio may not have intended to donate the disputed parcel to him.
- The court recognized challenges in proving fraud without direct witness testimony from the deceived party.

Priority of Ownership:
- The case parallels situations where the same property is sold to two different parties. According to Article 1473 of the Civil Code:
  - The first party to record their title in the property registry holds superior rights.
  - If neither party records, the one who first takes possession in good faith prevails; if both have neither, the one with the oldest title, provided they acted in good faith, wins.
Felix’s Knowledge of Claims:
- The court noted that Felix had prior notice of Eugenio's claim before recording his deed, which negates his status as a "third person" under Article 34 of the Mortgage Law.
- This lack of good faith undermines Felix's position despite his registration of the deed.

Reversal of Lower Court's Decision:
- The trial court's judgment was reversed, declaring Eugenio the rightful owner of the disputed land.
- Felix's cross-complaint for possession was dismissed, and the registration of the land in his name was ordered to be cancelled.

Liability for Costs:
- Felix Cagaoan was ordered to pay the costs of the action in both instances.

Ownership Precedence: Possession in good faith and prior notice of claims are critical in determining ownership disputes.
Fraud Considerations: Circumstantial evidence can play a significant role in cases where direct proof of fraud is unavailable.
Legal Priorities in Property Registry: Registration alone does not confer ownership if the