Title
Carbonell vs. Court of Appeals
Case
G.R. No. L-29972
Decision Date
Jan 26, 1976
Poncio sold land to Carbonell, then to Infante. Infante registered first, acted in good faith, and improved the property. Court ruled in Infante's favor.
land ownership
dispute
first buyer

Case Summary (G.R. No. L-29972)

Factual Background

The property in dispute was a parcel of some one hundred ninety-five (195) square meters at 179 V. Agan St., San Juan, Rizal, covered by TCT No. 5040 and subject to a mortgage to Republic Savings Bank for P1,500.00. Jose Poncio was the registered owner and mortgagor. Rosario Carbonell, a cousin and neighbor, negotiated with Poncio and, on January 27, 1955, paid P200.00 to the bank toward arrears and executed, in the Batanes dialect, a private memorandum entitled “Contract for One Half Lot which I Bought from Jose Poncio” (Exhibit A) that, by its terms, described a sale excluding the house and permitted Poncio to remain on the lot one year rent-free. Thereafter Carbonell sought to formalize and pay the balance of the price and to assume the mortgage. Poncio then represented that he had sold the lot to Emma Infante, who executed a deed of sale on February 2, 1955 and paid Republic Savings Bank P1,500.00, and whose deed was registered on February 12, 1955. Carbonell registered an adverse claim on February 8, 1955. Emma and Ramon Infante took possession, made improvements, and expended substantial sums on the property.

Trial Court Proceedings

Carbonell filed suit on June 1, 1955, praying for declaration of ownership, annulment of the subsequent sale, reconveyance, damages, and attorney’s fees. Defendants moved to dismiss under the Statute of Frauds. The trial court initially sustained defendants’ objection to parol evidence and dismissed the complaint in an order dated April 26, 1956. On appeal, in G.R. No. L-11231, the Supreme Court reversed on May 12, 1958, holding that alleged partial performance removed the matter from the Statute of Frauds and remanded for further proceedings. After trial the court rendered judgment on December 5, 1962 in favor of Carbonell, declaring the sale to the Infantes void and ordering conveyance to Carbonell upon compliance with her covenants. Following motions and a granted new trial, the court on January 20, 1965 reversed itself and dismissed the complaint, finding that the Infantes’ claim was superior.

Court of Appeals Proceedings

Carbonell appealed to the Court of Appeals. On November 2, 1967 the Fifth Division reversed the trial court and declared Carbonell to have the superior right; it ordered reconveyance to her after reimbursement to the Infantes of P3,000.00 plus legal interest. The Infantes moved for reconsideration. A Special Division of Five of the Court of Appeals, by resolution dated October 30, 1968, granted reconsideration, annulled the November 2, 1967 decision, and affirmed the trial court’s January 20, 1965 dismissal; Justices Gatmaitan and Rodriguez dissented. Carbonell’s motion for reconsideration of the Special Division resolution was denied December 6, 1968, prompting the present petition for certiorari to this Court.

Issues Presented

The principal legal issues were whether the sale to Carbonell on January 27, 1955 validly vested ownership and was sufficiently evidenced to permit parol proof and partial performance; whether under Article 1544, New Civil Code, the person who in good faith first recorded his right or was first in good faith possession must prevail when immovable property was sold to different vendees; and whether Emma Infante acted in good or bad faith, which would determine entitlement to title and to reimbursement or removal of improvements.

Petitioner's Contentions

Carbonell maintained that she acquired ownership by virtue of the consensual sale evidenced by Exhibit A and by partial performance consisting of payment of P247.26 on the mortgage arrearages and receipt of the mortgage passbook, which converted Poncio’s possession into constitutum possessorium. She asserted that she registered an adverse claim in good faith on February 8, 1955, prior to Emma’s registration, and that Emma had knowledge of the prior sale and thus registered in bad faith. Carbonell sought reconveyance, cancellation of the Infantes’ title, reimbursement for the Infantes’ payment of the mortgage, and appropriate relief concerning the improvements.

Respondents' Contentions

The Infantes and Poncio contended that Exhibit A lacked essential elements required by the Statute of Frauds and did not describe the property or state the price with the certainty required for a valid memorandum of sale. They asserted that Emma Infante purchased and registered her deed in good faith and that she had a superior right under Article 1544, New Civil Code, by reason of registration and possession. The Infantes claimed entitlement to keep or be reimbursed for improvements introduced on the land.

Legal Standard under Article 1544

The Court set forth Article 1544, New Civil Code, explaining that when the same thing is sold to different vendees, for immovables ownership belongs to the person acquiring it who in good faith first recorded it in the Registry of Property; in the absence of inscription, priority goes to the person in good faith first in possession or, failing that, to the one presenting the oldest title provided there is good faith. The Court emphasized that, under the second paragraph, good faith must attend the act of anterior registration and that inscription in bad faith cannot confer priority.

Supreme Court’s Findings on Existence and Validity of the Prior Sale

The Court found that the prior sale to Carbonell was duly established. It accepted the genuineness and binding effect of Exhibit A, construed in context and corroborated by circumstances: the drafting of the memorandum in Poncio’s native Batanes dialect, Poncio’s signature, the partial payment toward mortgage arrearages, and delivery of the mortgage passbook to Carbonell. The Court reiterated its prior ruling in G.R. No. L-11231 that partial performance removed the transaction from the strict exclusion of the Statute of Frauds and entitled Carbonell to prove the sale by parol evidence. The Court held that the sale was consensual, perfected by consent, and that constitutum possessorium converted vendor’s possession into tenant-possession under Art. 1500, New Civil Code, thereby effecting transfer of ownership vis-à-vis third parties.

Supreme Court’s Findings on Good Faith, Notice and Registration

The Court held that Carbonell acted in good faith at the time of purchase and at the time she registered her adverse claim on February 8, 1955. The Court concluded that Emma Infante acted in bad faith in registering her deed of sale on February 12, 1955, because relevant circumstances put her on notice of the prior sale: refusal to see Carbonell when approached after Poncio’s purported second sale; the fact that Carbonell possessed Poncio’s mortgage passbook and copy of the mortgage contract after paying arrearages; the annotation of Carbonell’s adverse claim on the title prior to Emma’s registration; and other indicia that Emma knew or should have inquired into the prior transaction. The Court treated actual knowledge or facts that should have aroused inquiry as evidence of bad faith for purposes of Article 1544.

Findings on Description, Possession and Improvements

The Court held that Exhibit A sufficiently identified the lot by reference to the lot occupied by Poncio, its area, and the surrounding circumstances, rejecting the contention that it failed to describe the property. Having found the Infantes to be possessors in bad faith, the Court applied Arts. 546, 547, and 549, New Civil Code, and concluded that the Infantes could not recover for useful improvements as possessors in bad faith, but equity entitled them to remove such improvements unless Carbonell elected to purchase them. The Court directed Carbonell to reimburse the Infantes P1,500.00, the amount they paid to discharge the mortgage, and allowed the Infantes three months to remove improvements unless Carbonell paid P13,429.00 within the same period to acquire those improvements.

Disposition

The Supreme Court reversed the Court of Appeals Special Division resolution of October 30, 1968, declared Rosario Carbonell to have the superior right to the land, ordered cancellation of Transfer Certificate of Title No. 37842 issued in favor of the Infantes a

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