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.

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

Key Dates and Procedural Milestones

  • January 27, 1955: Carbonell and Poncio executed a private memorandum (in Batanes dialect) reflecting a sale of the lot (Exhibit "A"); Carbonell paid mortgage arrears and assumed obligations.
  • February 2, 1955: Poncio executed a formal deed of sale in favor of Emma Infante (payment and redemption of mortgage proceeded).
  • February 8, 1955: Carbonell signed, swore to, and registered an adverse claim at the Register of Deeds.
  • February 12, 1955: Infante’s deed of sale was registered and a TCT issued in her name with Carbonell’s adverse claim annotated.
  • Trial court decisions, appeals, retrial, and appellate rulings spanned the 1950s–1960s (including an earlier Supreme Court remand permitting parol evidence due to partial performance), culminating in the present Supreme Court decision by Justice Makasiar.

Factual Background

Carbonell, a neighbor and cousin of Poncio, negotiated and paid towards a sale on January 27, 1955 (price proposed P9.50/sq.m.), executed a private memorandum in the vendors’ native dialect allowing Poncio to remain on the lot rent-free for one year, paid the vendor’s mortgage arrears to the bank (P247.26, with adjustment), and assumed the mortgage obligation. After these events Poncio purportedly sold the same lot to Emma Infante for a higher price; Infante paid off the mortgage to the bank and later registered her deed. Carbonell, learning of Infante’s actions and seeing improvements by Infante, caused an adverse claim to be registered before Infante’s deed was registered. Infante took possession and expended on improvements (filling, wall, later construction of a bungalow).

Procedural History and Prior Rulings

  • Trial court initially dismissed Carbonell’s complaint for insufficiency under the Statute of Frauds; Supreme Court (earlier case L-11231) reversed, holding that the alleged partial performance removed the case from the Statute of Frauds and permitted parol evidence.
  • On remand, the trial court first ruled for Carbonell (declaring subsequent sale null and ordering reconveyance upon compliance), then, after a new trial, reversed and dismissed Carbonell’s complaint.
  • The Court of Appeals (Fifth Division) reversed in favor of Carbonell on November 2, 1967; a Special Division of the Court of Appeals later granted Infantes’ motion for reconsideration and reinstated the trial court decision, prompting the present review.

Legal Issue Presented

Which purchaser holds superior right to a registered parcel following a double sale of an immovable: the first vendee who had an earlier consensual sale and who registered an adverse claim before the second vendee’s registration, or the second vendee who obtained and registered a formal deed and took possession and made improvements? Sub-issues: effect of the Statute of Frauds and partial performance; sufficiency of the private memorandum (Exhibit "A"); good faith and priority under Article 1544; rights of possessors in bad faith regarding improvements.

Governing Rule — Article 1544 and Good Faith in Registration

Article 1544 establishes the rule for conflicting acquisitions of the same immovable: ownership belongs to the person who, in good faith, first recorded the right in the Registry of Property. The Court emphasized that for immovables, priority depends on prior registration in good faith; absent inscription, prior possession in good faith governs. Good faith, under the second paragraph, must characterize the anterior registration itself — i.e., the registrant must be free of knowledge or circumstances that should have put them on inquiry.

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

  • The Court accepted that Carbonell and Poncio executed the private memorandum (Exhibit "A") on January 27, 1955. The trial court and the Supreme Court’s earlier decision recognized that Exhibit "A" indicated an already consummated sale in that it allowed Poncio to remain as tenant for one year — a constitutum possessorium.
  • The Supreme Court had already held (in L-11231) that partial performance (payment of mortgage arrears, possession of Poncio’s mortgage passbook by Carbonell) removed the agreement from the operation of the Statute of Frauds and entitled Carbonell to prove the sale by parol evidence. The present Court reiterated that finding and accepted that partial performance and the memorandum corroborated Carbonell’s claim of a prior sale.

Court’s Analysis on Good Faith, Knowledge, and Priority

  • The Court found that Carbonell purchased in good faith and registered an adverse claim on February 8, 1955 — four days before Infante’s deed was registered on February 12, 1955. Carbonell’s good faith persisted through registration.
  • The Court concluded that Infante acted in bad faith at least at the time of registration because circumstances indicated she had notice of Carbonell’s prior purchase: Infante refused Carbonell’s attempts to confer (suggesting avoidance of exposure to prior sale claims), Carbonell was in possession of Poncio’s mortgage passbook (and had paid arrears and assumed mortgage obligations), and Carbonell observed Infante erecting a wall before Infante’s registration. The Court treated these facts as sufficient to infer Infante’s prior knowledge and bad faith.
  • Because Infante’s registration was tainted by bad faith, she could not be afforded the protection of prior, good-faith registration under Article 1544. The Court therefore awarded priority to Carbonell as the first registrant in good faith.

Treatment of the Statute of Frauds and Partial Performance

  • The Court reiterated that the Statute of Frauds does not bar enforcement where the oral sale of realty has been partly performed. The payment of mortgage arrears, assumption of mortgage liability, delivery of the vendor’s mortgage passbook to Carbonell and the provisions of Exhibit "A" (constitutum possessorium) collectively constituted partial performance sufficient to permit parol proof of the sale and to validate the transaction vis-à-vis third parties.

Sufficiency of Exhibit "A" as Description of the Property and Transfer of Possession

  • The Court held Exhibit "A" sufficiently identified the parcel (describing it as the lot occupied by Poncio with improvements and noting it as a half-lot in the context of original title segregation) and concluded that the memorandum, together with partial performance, evidenced a consensual sale that converted vendor’s possession into tenant-possession (constitutum possessorium), supporting a transfer of possessory rights to Carbonell.

Consideration and Adequacy of Price

  • The Court considered the agreed terms (price at P9.50/sq.m., payment of P247.26 arrears to the bank, balance to Poncio, and assumption of the mortgage) as adequate consideration. The Court rejected the characterization of Carbonell’s payments as merely token or unrelated to the sale, treating them as part performance and part of the sale’s consideration.

Rights Concerning Improvements and Equitable Relief

  • The Court found Infantes were possessors in bad faith and therefore not entitled to retention or reimbursement for useful improvements under Articles 546–547 as possessors in good faith would be. Nevertheless, in equity the Court allowed two alternatives: Carbonell must reimburse the Infantes P1,500 (amount paid by Infantes to discharge the mortgage) within three months; the Infantes may remove their useful improvements within three months unless Carbonell elects to pay them P13,429 (aggregate of P1,500 and P11,929 expended) within the same period. If Carbonell fails to pay for the improvements within three months, a separate three-month removal period begins for the Infantes. This approach balanced legal rules on possessors in bad faith with equitable considerations given the substantial improvements made.

Disposition and Orders

  • The Court reversed the Court of Appeals’ Special Division resolution and declared Carbonell to have superior right to the land.
  • Register of Deeds was directed to cancel the TCT issued in favor of the Infantes and to restore/cancel TC
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