G.R. No. L-45295; April 10, 1939
RUFO ARCENAS, plaintiff-appellant, vs. INOCENCIO DEL ROSARIO, ET AL., defendants. INOCENCIO DEL ROSARIO, cross-plaintiff-appellant, ESPERANZA CORDOVA and MATIAS SEVERINO, cross-defendants-appellees.

FACTS

Plaintiff Rufo Arcenas purchased a lot from defendant Inocencio del Rosario under a pacto de retro sale in 1923, with a five-year repurchase period. Del Rosario failed to repurchase, and ownership consolidated in Arcenas. In 1934, del Rosario sold the same lot absolutely to spouses Esperanza Cordova and Matias Severino, who registered the sale and obtained a new certificate of title. Arcenas sued to have his ownership declared and the subsequent sale annulled. The spouses demurred, arguing Arcenas had no cause of action because their deed was registered, while his was not. The trial court sustained the demurrer and dismissed both the complaint and del Rosario’s cross-complaint for rescission against the spouses.

ISSUE

Did the trial court err in sustaining the demurrer and dismissing the complaint and cross-complaint?

RULING

Yes. The Supreme Court reversed the orders. On the complaint, the rule under Article 1473 of the Civil Code that the first registrant in good faith acquires ownership is not absolute. Registration must be coupled with good faith and valuable consideration. The complaint’s allegations, deemed admitted for purposes of demurrer, stated the spouses purchased with full knowledge of the prior sale and in bad faith, having promised but failed to pay Arcenas to repurchase the lot first. Thus, the demurrer should have been overruled. The court also erred in not allowing amendment of the complaint as required by procedural rules. On the cross-complaint, its dismissal merely because the principal complaint was dismissed was erroneous, as it could proceed independently. The case was remanded for further proceedings.

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