GR 233455; (April, 2019) (Digest)
G.R. No. 233455. April 03, 2019.
HIPOLITO AGUSTIN AND IMELDA AGUSTIN, PETITIONERS, VS. ROMANA DE VERA, RESPONDENT.
FACTS
Petitioners Hipolito and Imelda Agustin entered into a “Contract to Purchase and Sale” with Gregorio De Vera over a parcel of land in 1986. They paid a partial sum, took immediate possession, built houses, paid realty taxes, and later annotated an adverse claim on the title in 2007. Gregorio, however, executed a Deed of Absolute Sale over the same property in favor of respondent Romana De Vera on September 3, 2007, which was registered in 2010, resulting in a new title issued in Romana’s name. Gregorio died shortly after the second sale. The Agustins filed a complaint seeking to annul the 2007 sale and to have their ownership under the 1986 contract recognized.
ISSUE
The core issue is whether the petitioners, as first buyers under a prior contract, have a superior right over the respondent, a subsequent buyer, and whether the 2007 sale to Romana is valid.
RULING
The Supreme Court ruled in favor of the petitioners, reinstating the Regional Trial Court’s decision. The legal logic centers on the nature of the 1986 agreement and the bad faith of the subsequent buyer. The Court clarified that the “Contract to Purchase and Sale” was a contract to sell, not a contract of sale. In a contract to sell, ownership is retained by the seller until full payment of the purchase price. Here, Gregorio retained ownership and the right to dispose of the property until the Agustins fully paid. However, the Agustins had already paid the full purchase price to Gregorio’s son, as found by the trial court, which constituted constructive delivery to Gregorio himself. This fulfillment of the suspensive condition entitled the Agustins to the execution of a final deed of sale and vested in them an equitable title.
Crucially, Romana was a buyer in bad faith. She purchased the property with full knowledge of the Agustins’ long-standing physical possession and the annotated adverse claim on the certificate of title. Under Article 1544 of the Civil Code, in cases of double sale, the first buyer who registers the sale in good faith acquires ownership. While the Agustins did not register a final deed, their prior possession and the annotated adverse claim served as constructive notice to the whole world, including Romana. Her knowledge of these facts at the time of her purchase constituted bad faith, disqualifying her from the protection of the law. Consequently, the 2007 sale was annulled, and the Agustins’ rights were upheld.