FIRST DIVISION

[G.R. No. 144225. June 17, 2003.]

SPOUSES GODOFREDO ALFREDO and CARMEN LIMON ALFREDO, SPOUSES ARNULFO
SAVELLANO and EDITHA B. SAVELLANO, DANTON D. MATAWARAN, SPOUSES DELFIN F.
ESPIRITU, JR. and ESTELA S. ESPIRITU and ELIZABETH TUAZON, Petitioners, v. SPOUSES
ARMANDO BORRAS and ADELIA LOBATON BORRAS, Respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for review assailing the Decision 1 of the Court of Appeals dated 26 November
1999 affirming the decision 2 of the Regional Trial Court of Bataan, Branch 4, in Civil Case No. DH-25694. Petitioners also question the Resolution of the Court of Appeals dated 26 July 2000 denying
petitioners motion for reconsideration.chanrob1es virtua1 1aw 1ibrary
The Antecedent Facts
A parcel of land measuring 81,524 square meters ("Subject Land") in Barrio Culis, Mabiga, Hermosa,
Bataan is the subject of controversy in this case. The registered owners of the Subject Land were
petitioner spouses, Godofredo Alfredo ("Godofredo") and Carmen Limon Alfredo ("Carmen"). The
Subject Land is covered by Original Certificate of Title No. 284 ("OCT No. 284") issued to Godofredo
and Carmen under Homestead Patent No. V-69196.
On 7 March 1994, the private respondents, spouses Armando Borras ("Armando") and Adelia Lobaton
Borras ("Adelia"), filed a complaint for specific performance against Godofredo and Carmen before the
Regional Trial Court of Bataan, Branch 4. The case was docketed as Civil Case No. DH-256-94.
Armando and Adelia alleged in their complaint that Godofredo and Carmen mortgaged the Subject Land
for P7,000.00 with the Development Bank of the Philippines ("DBP"). To pay the debt, Carmen and
Godofredo sold the Subject Land to Armando and Adelia for P15,000.00, the buyers to pay the DBP loan
and its accumulated interest, and the balance to be paid in cash to the sellers.
Armando and Adelia gave Godofredo and Carmen the money to pay the loan to DBP which signed the
release of mortgage and returned the owners duplicate copy of OCT No. 284 to Godofredo and Carmen.
Armando and Adelia subsequently paid the balance of the purchase price of the Subject Land for which
Carmen issued a receipt dated 11 March 1970. Godofredo and Carmen then delivered to Adelia the
owners duplicate copy of OCT No. 284, with the document of cancellation of mortgage, official receipts
of realty tax payments, and tax declaration in the name of Godofredo. Godofredo and Carmen introduced
Armando and Adelia, as the new owners of the Subject Land, to the Natanawans, the old tenants of the
Subject Land. Armando and Adelia then took possession of the Subject Land.
In January 1994, Armando and Adelia learned that hired persons had entered the Subject Land and were
cutting trees under instructions of allegedly new owners of the Subject Land. Subsequently, Armando and

Adelia discovered that Godofredo and Carmen had re-sold portions of the Subject Land to several
persons.chanrob1es virtua1 1aw 1ibrary
On 8 February 1994, Armando and Adelia filed an adverse claim with the Register of Deeds of
Bataan. Armando and Adelia discovered that Godofredo and Carmen had secured an owners duplicate
copy of OCT No. 284 after filing a petition in court for the issuance of a new copy. Godofredo and
Carmen claimed in their petition that they lost their owners duplicate copy. Armando and Adelia wrote
Godofredo and Carmen complaining about their acts, but the latter did not reply. Thus, Armando and
Adelia filed a complaint for specific performance.
On 28 March 1994, Armando and Adelia amended their complaint to include the following persons as
additional defendants: the spouses Arnulfo Savellano and Editha B. Savellano, Danton D. Matawaran, the
spouses Delfin F. Espiritu, Jr. and Estela S. Espiritu, and Elizabeth Tuazon ("Subsequent Buyers"). The
Subsequent Buyers, who are also petitioners in this case, purchased from Godofredo and Carmen the
subdivided portions of the Subject Land. The Register of Deeds of Bataan issued to the Subsequent
Buyers transfer certificates of title to the lots they purchased.
In their answer, Godofredo and Carmen and the Subsequent Buyers (collectively "petitioners") argued
that the action is unenforceable under the Statute of Frauds. Petitioners pointed out that there is no written
instrument evidencing the alleged contract of sale over the Subject Land in favor of Armando and Adelia.
Petitioners objected to whatever parole evidence Armando and Adelia introduced or offered on the alleged
sale unless the same was in writing and subscribed by Godofredo. Petitioners asserted that the Subsequent
Buyers were buyers in good faith and for value. As counterclaim, petitioners sought payment of attorneys
fees and incidental expenses.
Trial then followed. Armando and Adelia presented the following witnesses: Adelia, Jesus Lobaton,
Roberto Lopez, Apolinario Natanawan, Rolando Natanawan, Tomas Natanawan, and Mildred Lobaton.
Petitioners presented two witnesses, Godofredo and Constancia Calonso.
On 7 June 1996, the trial court rendered its decision in favor of Armando and Adelia. The dispositive
portion of the decision reads:chanrob1es virtual 1aw library
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs, the spouses
Adelia Lobaton Borras and Armando F. Borras, and against the defendant-spouses Godofredo Alfredo and
Carmen Limon Alfredo, spouses Arnulfo Sabellano and Editha B. Sabellano, spouses Delfin F. Espiritu,
Jr. and Estela S. Espiritu, Danton D. Matawaran and Elizabeth Tuazon, as follows:chanrob1es virtual 1aw
library
1. Declaring the Deeds of Absolute Sale of the disputed parcel of land (covered by OCT No. 284)
executed by the spouses Godofredo Alfredo and Carmen Limon Alfredo in favor of spouses Arnulfo
Sabellano and Editha B. Sabellano, spouses Delfin F. Espiritu, Danton D. Matawaran and Elizabeth
Tuazon, as null and void;
2. Declaring the Transfer Certificates of Title Nos. T-163266 and T-163267 in the names of spouses
Arnulfo Sabellano and Editha B. Sabellano; Transfer Certificates of Title Nos. T-163268 and 163272 in
the names of spouses Delfin F. Espiritu, Jr., and Estela S. Espiritu; Transfer Certificates of Title Nos. T163269 and T-163271 in the name of Danton D. Matawaran; and Transfer Certificate of Title No. T163270 in the name of Elizabeth Tuazon, as null and void and that the Register of Deeds of Bataan is
hereby ordered to cancel said titles;
3. Ordering the defendant-spouses Godofredo Alfredo and Carmen Limon Alfredo to execute and deliver

a good and valid Deed of Absolute Sale of the disputed parcel of land (covered by OCT No. 284) in favor
of the spouses Adelia Lobaton Borras and Armando F. Borras within a period of ten (10) days from the
finality of this decision;
4. Ordering defendant-spouses Godofredo Alfredo and Carmen Limon Alfredo to surrender their owners
duplicate copy of OCT No. 284 issued to them by virtue of the Order dated May 20, 1992 of the Regional
Trial Court of Bataan, Dinalupihan Branch, to the Registry of Deeds of Bataan within ten (10) days from
the finality of this decision, who, in turn, is directed to cancel the same as there exists in the possession of
herein plaintiffs of the owners duplicate copy of said OCT No. 284 and, to restore and/or reinstate OCT
No. 284 of the Register of Deeds of Bataan to its full force and effect;
5. Ordering the defendant-spouses Godofredo Alfredo and Carmen Limon Alfredo to restitute and/or
return the amount of the respective purchase prices and/or consideration of sale of the disputed parcels of
land they sold to their co-defendants within ten (10) days from the finality of this decision with legal
interest thereon from date of the sale;
6. Ordering the defendants, jointly and severally, to pay plaintiff-spouses the sum of P20,000.00 as and
for attorneys fees and litigation expenses; andchanrob1es virtua1 1aw 1ibrary
7. Ordering defendants to pay the costs of suit.
Defendants counterclaims are hereby dismissed for lack of merit.
SO ORDERED. 3
Petitioners appealed to the Court of Appeals.
On 26 November 1999, the Court of Appeals issued its Decision affirming the decision of the trial court,
thus:chanrob1es virtual 1aw library
WHEREFORE, premises considered, the appealed decision in Civil Case No. DH-256-94 is hereby
AFFIRMED in its entirety. Treble costs against the defendants-appellants.
SO ORDERED. 4
On 26 July 2000, the Court of Appeals denied petitioners motion for reconsideration.
The Ruling of the Trial Court
The trial court ruled that there was a perfected contract of sale between the spouses Godofredo and
Carmen and the spouses Armando and Adelia. The trial court found that all the elements of a
contract of sale were present in this case. The object of the sale was specifically identified as the
81,524-square meter lot in Barrio Culis, Mabigas, Hermosa, Bataan, covered by OCT No. 284
issued by the Registry of Deeds of Bataan. The purchase price was fixed at P15,000.00, with the
buyers assuming to pay the sellers P7,000.00 DBP mortgage loan including its accumulated
interest. The balance of the purchase price was to be paid in cash to the sellers. The last payment of
P2,524.00 constituted the full settlement of the purchase price and this was paid on 11 March 1970
as evidenced by the receipt issued by Carmen.
The trial court found the following facts as proof of a perfected contract of sale: (1) Godofredo and
Carmen delivered to Armando and Adelia the Subject Land; (2) Armando and Adelia treated as their own

tenants the tenants of Godofredo and Carmen; (3) Godofredo and Carmen turned over to Armando and
Adelia documents such as the owners duplicate copy of the title of the Subject Land, tax declaration, and
the receipts of realty tax payments in the name of Godofredo; and (4) the DBP cancelled the mortgage on
the Subject Property upon payment of the loan of Godofredo and Carmen. Moreover, the receipt of
payment issued by Carmen served as an acknowledgment, if not a ratification, of the verbal sale
between the sellers and the buyers. The trial court ruled that the Statute of Frauds is not applicable
because in this case the sale was perfected.
The trial court concluded that the Subsequent Buyers were not innocent purchasers. Not one of the
Subsequent Buyers testified in court on how they purchased their respective lots. The Subsequent Buyers
totally depended on the testimony of Constancia Calonso ("Calonso") to explain the subsequent sale.
Calonso, a broker, negotiated with Godofredo and Carmen the sale of the Subject Land which Godofredo
and Carmen subdivided so they could sell anew portions to the Subsequent Buyers.
Calonso admitted that the Subject Land was adjacent to her own lot. The trial court pointed out that
Calonso did not inquire on the nature of the tenancy of the Natanawans and on who owned the Subject
Land. Instead, she bought out the tenants for P150,000.00. The buy out was embodied in a Kasunduan.
Apolinario Natanawan ("Apolinario") testified that he and his wife accepted the money and signed the
Kasunduan because Calonso and the Subsequent Buyers threatened them with forcible ejectment. Calonso
brought Apolinario to the Agrarian Reform Office where he was asked to produce the documents showing
that Adelia is the owner of the Subject Land. Since Apolinario could not produce the documents, the
agrarian officer told him that he would lose the case. Thus, Apolinario was constrained to sign the
Kasunduan and accept the P150,000.00.
Another indication of Calonsos bad faith was her own admission that she saw an adverse claim on the
title of the Subject Land when she registered the deeds of sale in the names of the Subsequent Buyers.
Calonso ignored the adverse claim and proceeded with the registration of the deeds of sale.
The trial court awarded P20,000.00 as attorneys fees to Armando and Adelia. In justifying the
award of attorneys fees, the trial court invoked Article 2208 (2) of the Civil Code which allows a
court to award attorneys fees, including litigation expenses, when it is just and equitable to award
the same. The trial court ruled that Armando and Adelia are entitled to attorneys fees since they
were compelled to file this case due to petitioners refusal to heed their just and valid demand.
The Ruling of the Court of Appeals
The Court of Appeals found the factual findings of the trial court well supported by the evidence. Based
on these findings, the Court of Appeals also concluded that there was a perfected contract of sale and the
Subsequent Buyers were not innocent purchasers.chanrob1es virtua1 1aw 1ibrary
The Court of Appeals ruled that the handwritten receipt dated 11 March 1970 is sufficient proof
that Godofredo and Carmen sold the Subject Land to Armando and Adelia upon payment of the
balance of the purchase price. The Court of Appeals found the recitals in the receipt as "sufficient
to serve as the memorandum or note as a writing under the Statute of Frauds." 5 The Court of
Appeals then reiterated the ruling of the trial court that the Statute of Frauds does not apply in this
case.
The Court of Appeals gave credence to the testimony of a witness of Armando and Adelia, Mildred
Lobaton, who explained why the title to the Subject Land was not in the name of Armando and Adelia.
Lobaton testified that Godofredo was then busy preparing to leave for Davao. Godofredo promised that
he would sign all the papers once they were ready. Since Armando and Adelia were close to the family of

Carmen, they trusted Godofredo and Carmen to honor their commitment. Armando and Adelia had no
reason to believe that their contract of sale was not perfected or validly executed considering that they
had received the duplicate copy of OCT No. 284 and other relevant documents. Moreover, they had
taken physical possession of the Subject Land.
The Court of Appeals held that the contract of sale is not void even if only Carmen signed the
receipt dated 11 March 1970. Citing Felipe v. Heirs of Maximo Aldon, 6 the appellate court ruled
that a contract of sale made by the wife without the husbands consent is not void but merely
voidable. The Court of Appeals further declared that the sale in this case binds the conjugal
partnership even if only the wife signed the receipt because the proceeds of the sale were used for
the benefit of the conjugal partnership. The appellate court based this conclusion on Article 161 7 of
the Civil Code.
The Subsequent Buyers of the Subject Land cannot claim that they are buyers in good faith because they
had constructive notice of the adverse claim of Armando and Adelia. Calonso, who brokered the
subsequent sale, testified that when she registered the subsequent deeds of sale, the adverse claim of
Armando and Adelia was already annotated on the title of the Subject Land. The Court of Appeals
believed that the act of Calonso and the Subsequent Buyers in forcibly ejecting the Natanawans from the
Subject Land buttresses the conclusion that the second sale was tainted with bad faith from the very
beginning.
Finally, the Court of Appeals noted that the issue of prescription was not raised in the Answer.
Nonetheless, the appellate court explained that since this action is actually based on fraud, the
prescriptive period is four years, with the period starting to run only from the date of the discovery
of the fraud. Armando and Adelia discovered the fraudulent sale of the Subject Land only in
January 1994. Armando and Adelia lost no time in writing a letter to Godofredo and Carmen on 2
February 1994 and filed this case on 7 March 1994. Plainly, Armando and Adelia did not sleep on
their rights or lose their rights by prescription.
The Court of Appeals sustained the award of attorneys fees and imposed treble costs on petitioners.
The Issues
Petitioners raise the following issues:chanrob1es virtual 1aw library
I
Whether the alleged sale of the Subject Land in favor of Armando and Adelia is valid and
enforceable, where (1) it was orally entered into and not in writing; (2) Carmen did not obtain the
consent and authority of her husband, Godofredo, who was the sole owner of the Subject Land in
whose name the title thereto (OCT No. 284) was issued; and (3) it was entered into during the 25year prohibitive period for alienating the Subject Land without the approval of the Secretary of
Agriculture and Natural Resources.
II

Whether the action to enforce the alleged oral contract of sale brought after 24 years from its alleged
perfection had been barred by prescription and by laches.
III
Whether the deeds of absolute sale and the transfer certificates of title over the portions of the Subject
Land issued to the Subsequent Buyers, innocent purchasers in good faith and for value whose individual
titles to their respective lots are absolute and indefeasible, are valid.
IV
Whether petitioners are liable to pay Armando and Adelia P20,0000.00 as attorneys fees and
litigation expenses and the treble costs, where the claim of Armando and Adelia is clearly
unfounded and baseless.
V
Whether petitioners are entitled to the counterclaim for attorneys fees and litigation expenses,
where they have sustained such expenses by reason of institution of a clearly malicious and
unfounded action by Armando and Adelia. 8
The Courts Ruling
The petition is without merit.
In a petition for review on certiorari under Rule 45, this Court reviews only errors of law and not errors
of facts. 9 The factual findings of the appellate court are generally binding on this Court. 10 This applies
with greater force when both the trial court and the Court of Appeals are in complete agreement on their
factual findings. 11 In this case, there is no reason to deviate from the findings of the lower courts. The
facts relied upon by the trial and appellate courts are borne out by the record. We agree with the
conclusions drawn by the lower courts from these facts.chanrob1es virtua1 1aw 1ibrary
Validity and Enforceability of the Sale
The contract of sale between the spouses Godofredo and Carmen and the spouses Armando and
Adelia was a perfected contract. A contract is perfected once there is consent of the contracting
parties on the object certain and on the cause of the obligation. 12 In the instant case, the object of
the sale is the Subject Land, and the price certain is P15,000.00. The trial and appellate courts
found that there was a meeting of the minds on the sale of the Subject Land and on the purchase
price of P15,000.00. This is a finding of fact that is binding on this Court. We find no reason to
disturb this finding since it is supported by substantial evidence.
The contract of sale of the Subject Land has also been consummated because the sellers and buyers
have performed their respective obligations under the contract. In a contract of sale, the seller
obligates himself to transfer the ownership of the determinate thing sold, and to deliver the same, to
the buyer who obligates himself to pay a price certain to the seller. 13 In the instant case, Godofredo

and Carmen delivered the Subject Land to Armando and Adelia, placing the latter in actual
physical possession of the Subject Land. This physical delivery of the Subject Land also constituted
a transfer of ownership of the Subject Land to Armando and Adelia. 14 Ownership of the thing sold
is transferred to the vendee upon its actual or constructive delivery. 15 Godofredo and Carmen also
turned over to Armando and Adelia the documents of ownership to the Subject Land, namely the
owners duplicate copy of OCT No. 284, the tax declaration and the receipts of realty tax payments.
On the other hand, Armando and Adelia paid the full purchase price as evidenced by the receipt
dated 11 March 1970 issued by Carmen. Armando and Adelia fulfilled their obligation to provide
the P7,000.00 to pay the DBP loan of Godofredo and Carmen, and to pay the latter the balance of
P8,000.00 in cash. The P2,524.00 paid under the receipt dated 11 March 1970 was the last
installment to settle fully the purchase price. Indeed, upon payment to DBP of the P7,000.00 and the
accumulated interests, the DBP cancelled the mortgage on the Subject Land and returned the
owners duplicate copy of OCT No. 284 to Godofredo and Carmen.
The trial and appellate courts correctly refused to apply the Statute of Frauds to this case. The
Statute of Frauds 16 provides that a contract for the sale of real property shall be unenforceable
unless the contract or some note or memorandum of the sale is in writing and subscribed by the
party charged or his agent. The existence of the receipt, dated 11 March 1970, which is a
memorandum of the sale, removes the transaction from the provisions of the Statute of Frauds.
The Statute of Frauds applies only to executory contracts and not to contracts either partially or
totally performed. 17 Thus, where one party has performed ones obligation, oral evidence will be
admitted to prove the agreement. 18 In the instant case, the parties have consummated the sale of
the Subject Land, with both sellers and buyers performing their respective obligations under the
contract of sale. In addition, a contract that violates the Statute of Frauds is ratified by the
acceptance of benefits under the contract. 19 Godofredo and Carmen benefited from the contract
because they paid their DBP loan and secured the cancellation of their mortgage using the money
given by Armando and Adelia. Godofredo and Carmen also accepted payment of the balance of the
purchase price.
Godofredo and Carmen cannot invoke the Statute of Frauds to deny the existence of the verbal
contract of sale because they have performed their obligations, and have accepted benefits, under
the verbal contract. 20 Armando and Adelia have also performed their obligations under the verbal
contract. Clearly, both the sellers and the buyers have consummated the verbal contract of sale of
the Subject Land. The Statute of Frauds was enacted to prevent fraud. 21 This law cannot be used
to advance the very evil the law seeks to prevent.
Godofredo and Carmen also claim that the sale of the Subject Land to Armando and Adelia is void on two
grounds. First, Carmen sold the Subject Land without the marital consent of Godofredo. Second, the sale
was made during the 25-year period that the law prohibits the alienation of land grants without the
approval of the Secretary of Agriculture and Natural Resources.
These arguments are without basis.
The Family Code, which took effect on 3 August 1988, provides that any alienation or encumbrance made
by the husband of the conjugal partnership property without the consent of the wife is void. However,
when the sale is made before the effectivity of the Family Code, the applicable law is the Civil Code. 22
Article 173 of the Civil Code provides that the disposition of conjugal property without the wifes consent
is not void but merely voidable. Article 173 reads:chanrob1es virtual 1aw library

The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts
for the annulment of any contract of the husband entered into without her consent, when such consent is
required; or any act or contract of the husband which tends to defraud her or impair her interest in the
conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the
dissolution of the marriage, may demand the value of property fraudulently alienated by the husband.
In Felipe v. Aldon, 23 we applied Article 173 in a case where the wife sold some parcels of land
belonging to the conjugal partnership without the consent of the husband. We ruled that the contract of
sale was voidable subject to annulment by the husband. Following petitioners argument that Carmen sold
the land to Armando and Adelia without the consent of Carmens husband, the sale would only be
voidable and not void.chanrob1es virtua1 1aw 1ibrary
However, Godofredo can no longer question the sale. Voidable contracts are susceptible of
ratification. 24 Godofredo ratified the sale when he introduced Armando and Adelia to his tenants
as the new owners of the Subject Land. The trial court noted that Godofredo failed to deny
categorically on the witness stand the claim of the complainants witnesses that Godofredo
introduced Armando and Adelia as the new landlords of the tenants. 25 That Godofredo and
Carmen allowed Armando and Adelia to enjoy possession of the Subject Land for 24 years is
formidable proof of Godofredos acquiescence to the sale. If the sale was truly unauthorized, then
Godofredo should have filed an action to annul the sale. He did not. The prescriptive period to
annul the sale has long lapsed. Godofredos conduct belies his claim that his wife sold the Subject
Land without his consent.
Moreover, Godofredo and Carmen used most of the proceeds of the sale to pay their debt with the
DBP. We agree with the Court of Appeals that the sale redounded to the benefit of the conjugal
partnership. Article 161 of the Civil Code provides that the conjugal partnership shall be liable for
debts and obligations contracted by the wife for the benefit of the conjugal partnership. Hence,
even if Carmen sold the land without the consent of her husband, the sale still binds the conjugal
partnership.
Petitioners contend that Godofredo and Carmen did not deliver the title of the Subject Land to Armando
and Adelia as shown by this portion of Adelias testimony on cross-examination:chanrob1es virtual 1aw
library
Q No title was delivered to you by Godofredo Alfredo?
A I got the title from Julie Limon because my sister told me. 26
Petitioners raise this factual issue for the first time. The Court of Appeals could have passed upon this
issue had petitioners raised this earlier. At any rate, the cited testimony of Adelia does not convincingly
prove that Godofredo and Carmen did not deliver the Subject Land to Armando and Adelia. Adelias cited
testimony must be examined in context not only with her entire testimony but also with the other
circumstances.
Adelia stated during cross-examination that she obtained the title of the Subject Land from Julie
Limon ("Julie"), her classmate in college and the sister of Carmen. Earlier, Adelias own sister had
secured the title from the father of Carmen. However, Adelias sister, who was about to leave for the
United States, gave the title to Julie because of the absence of the other documents. Adelias sister
told Adelia to secure the title from Julie, and this was how Adelia obtained the title from Julie.

It is not necessary that the seller himself deliver the title of the property to the buyer because the
thing sold is understood as delivered when it is placed in the control and possession of the vendee.
27 To repeat, Godofredo and Carmen themselves introduced the Natanawans, their tenants, to
Armando and Adelia as the new owners of the Subject Land. From then on, Armando and Adelia
acted as the landlords of the Natanawans:, Obviously, Godofredo and Carmen themselves placed
control and possession of the Subject Land in the hands of Armando and Adelia.
Petitioners involve the absence of approval of the sale by the Secretary of Agriculture and Natural
Resources to nullify the sale. Petitioners never raised this issue before the trial court or the Court of
Appeals. Litigants cannot raise an issue for the first time on appeal, as this would contravene the basic
rules of fair play, justice and due process. 28 However, we will address this new issue to finally put an
end to this case.
The sale of the Subject Land cannot be annulled on the ground that the Secretary did not approve the sale,
which was made within 25 years from the issuance of the homestead title. Section 118 of the Public Land
Act (Commonwealth Act No. 141) reads as follows:chanrob1es virtual 1aw library
SEC. 118. Except in favor of the Government or any of its branches, units, institutions or legally
constituted banking corporation, lands acquired under free patent or homestead provisions shall not be
subject to encumbrance or alienation from the date of the approval of the application and for a term of
five years from and after the date of the issuance of the patent or grant.
x

No alienation, transfer, or conveyance of any homestead after 5 years and before twenty-five years after
the issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce,
which approval shall not be denied except on constitutional and legal grounds.
A grantee or homesteader is prohibited from alienating to a private individual a land grant within five
years from the time that the patent or grant is issued. 29 A violation of this prohibition renders a sale void.
30 This prohibition, however, expires on the fifth year. From then on until the next 20 years 31 the land
grant may be alienated provided the Secretary of Agriculture and Natural Resources approves the
alienation. The Secretary is required to approve the alienation unless there are "constitutional and legal
grounds" to deny the approval. In this case, there are no apparent constitutional or legal grounds for the
Secretary to disapprove the sale of the Subject Land.
The failure to secure the approval of the Secretary does not ipso facto make a sale void. 32 The absence
of approval by the Secretary does not nullify a sale made after the expiration of the 5-year period, for in
such event the requirement of Section 118 of the Public Land Act becomes merely directory 33 or a
formality. 34 The approval may be secured later, producing the effect of ratifying and adopting the
transaction as if the sale had been previously authorized. 35 As held in Evangelista v. Montano: 36
Section 118 of Commonwealth Act No. 141, as amended, specifically enjoins that the approval by the
Department Secretary "shall not be denied except on constitutional and legal grounds." There being no
allegation that there were constitutional or legal impediments to the sales, and no pretense that if the sales
had been submitted to the Secretary concerned they would have been disapproved, approval was a
ministerial duty, to be had as a matter of course and demandable if refused. For this reason, and if
necessary, approval may now be applied for and its effect will be to ratify and adopt the transactions as if
they had been previously authorized. (Emphasis supplied)chanrob1es virtua1 1aw 1ibrary

Action Not Barred by Prescription and Laches

Petitioners insist that prescription and laches have set in. We disagree.
The Amended Complaint filed by Armando and Adelia with the trial court is captioned as one for
Specific Performance. In reality, the ultimate relief sought by Armando and Adelia is the
reconveyance to them of the Subject Land. An action for reconveyance is one that seeks to transfer
property, wrongfully registered by another, to its rightful and legal owner. 37 The body of the
pleading or complaint determines the nature of an action, not its title or heading. 38 Thus, the
present action should be treated as one for reconveyance. 39
Article 1456 of the Civil Code provides that a person acquiring property through fraud becomes by
operation of law a trustee of an implied trust for the benefit of the real owner of the property. The
presence of fraud in this case created an implied trust in favor of Armando and Adelia. This gives
Armando and Adelia the right to seek reconveyance of the property from the Subsequent Buyers.
40
To determine when the prescriptive period commenced in an action for reconveyance, plaintiffs
possession of the disputed property is material. An action fr reconveyance based on an implied trust
prescribes in ten years. 41 The ten-year prescriptive period applies only if there is an actual need to
reconvey the property as when the plaintiff is not in possession of the property. 42 However, if the
plaintiff, as the real owner of the property also remains in possession of the property, the prescriptive
period to recover title and possession of the property does not run against him. 43 In such a case, an
action for reconveyance, if nonetheless filed, would be in the nature of a suit for quieting of title, an
action that is imprescriptible. 44
In this case, the appellate court resolved the issue of prescription by ruling that the action should prescribe
four years from discovery of the fraud. We must correct this erroneous application of the four-year
prescriptive period. In Caro v. Court of Appeals, 45 we explained why an action for reconveyance based
on an implied trust should prescribe in ten years. In that case, the appellate court also erroneously applied
the four-year prescriptive period. We declared in Caro:chanrob1es virtual 1aw library
We disagree. The case of Liwalug Amerol, Et. Al. v. Molok Bagumbaran, G.R. No. L-33261, September
30, 1987, 154 SCRA 396 illuminated what used to be a gray area on the prescriptive period for an action
to reconvey the title to real property and, corollarily, its point of reference:chanrob1es virtual 1aw library
. . . It must be remembered that before August 30, 1950, the date of the effectivity of the new Civil Code,
the old Code of Civil Procedure (Act No. 190) governed prescription. It provided:chanrob1es virtual 1aw
library
SEC. 43. Other civil actions; how limited. Civil actions other than for the recovery of real property can
only be brought within the following periods after the right of action accrues:chanrob1es virtual 1aw
library
x

3. Within four years: . . . An action for relief on the ground of fraud, but the right of action in such case
shall not be deemed to have accrued until the discovery of the fraud;

In contrast, under the present Civil Code, we find that just as an implied or constructive trust is an
offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property
and the title thereto in favor of the true owner. In this context, and vis-a-vis prescription, Article 1144 of
the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time the right of action
accrues:chanrob1es virtual 1aw library
(1) Upon a written contract;
(2) Upon an obligation created bylaw;
(3) Upon a judgment.
x

(Emphasis supplied).
An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years
and not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this
rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or
constructive trust prescribes in ten years from the issuance of the Torrens title over the property. The only
discordant note, it seems, is Balbin v. Medalla which states that the prescriptive period for a reconveyance
action is four years. However, this variance can be explained by the erroneous reliance on Gerona v. de
Guzman. But in Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190,
was applied, the new Civil Code not coming into effect until August 30, 1950 as mentioned earlier. It
must be stressed, at this juncture, that article 1144 and article 1456, are new provisions. They have no
counterparts in the old Civil Code or in the old Code of Civil Procedure, the latter being then resorted to
as legal basis of the four-year prescriptive period for an action for reconveyance of title of real property
acquired under false pretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of Presidential Decree No. 1529,
which provides:chanrob1es virtual 1aw library
In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies
against the parties to such fraud without prejudice, however, to the rights of any innocent holder of the
decree of registration on the original petition or application, . . .
This provision should be read in conjunction with Article 1456 of the Civil Code, which
provides:chanrob1es virtua1 1aw 1ibrary
Article 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
The law thereby creates the obligation of the trustee to reconvey the property and the title thereto in favor
of the true owner. Correlating Section 53, paragraph 3 of Presidential Decree No. 1529 and Article 1456

of the Civil Code with Article 1144(2) of the Civil Code, supra, the prescriptive period for the
reconveyance of fraudulently registered real property is ten (10) years reckoned from the date of the
issuance of the certificate of title . . . (Emphasis supplied) 46
Following Caro, we have consistently held that an action for reconveyance based on an implied trust
prescribes in ten years. 47 We went further by specifying the reference point of the ten-year prescriptive
period as the date of the registration of the deed or the issuance of the title. 48
Had Armando and Adelia remained in possession of the Subject Land, their action for
reconveyance, in effect an action to quiet title to property, would not be subject to prescription.
Prescription does not run against the plaintiff in actual possession of the disputed land because such
plaintiff has a right to wait until his possession is disturbed or his title is questioned before initiating
an action to vindicate his right. 49 His undisturbed possession gives him the continuing right to seek
the aid of a court of equity to determine the nature of the adverse claim of a third party and its
effect on his title. 50
Armando and Adelia lost possession of the Subject Land when the Subsequent Buyers forcibly
drove away from the Subject Land the Natanawans the tenants of Armando and Adelia. 51 This
created an actual need for Armando and Adelia to seek reconveyance of the Subject Land. The
statute of limitation becomes relevant in this case. The ten-year prescriptive period started to run
from the date the Subsequent Buyers registered their deeds of sale with the Register of Deeds.
The Subsequent Buyers bought the subdivided portions of the Subject Land on 22 February 1994, the date
of execution of their deeds of sale. The Register of Deeds issued the transfer certificates of title to the
Subsequent Buyers on 24 February 1994. Armando and Adelia filed the Complaint on 7 March 1994.
Clearly, prescription could not have set in since the case was filed at the early stage of the ten-year
prescriptive period.
Neither is the action barred by laches. We have defined laches as the failure or neglect, for an
unreasonable time, to do that which, by the exercise of due diligence, could or should have been
done earlier. 52 It is negligence or omission, to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or declined to assert it. 53
Armando and Adelia discovered in January 1994 the subsequent sale of the Subject Land and they
filed this case on 7 March 1994. Plainly, Armando and Adelia did not sleep on their rights.
Validity of Subsequent Sale of Portions of the Subject Land
Petitioners maintain that the subsequent sale must be upheld because the Subsequent Buyers, the copetitioners of Godofredo and Carmen, purchased and registered the Subject Land in good faith.
Petitioners argue that the testimony of Calonso, the person who brokered the second sale, should not
prejudice the Subsequent Buyers. There is no evidence that Calonso was the agent of the Subsequent
Buyers and that she communicated to them what she knew about the adverse claim and the prior sale.
Petitioners assert that the adverse claim registered by Armando and Adelia has no legal basis to render
defective the transfer of title to the Subsequent Buyers.
We are not persuaded. Godofredo and Carmen had already sold the Subject Land to Armando and Adelia.
The settled rule is when ownership or title passes to the buyer, the seller ceases to have any title to
transfer to any third person. 54 If the seller sells the same land to another, the second buyer who has
actual or constructive knowledge of the prior sale cannot be a registrant in good faith. 55 Such second
buyer cannot defeat the first buyers title. 56 In case a title is issued to the second buyer, the first buyer
may seek reconveyance of the property subject of the sale. 57

Thus, to merit protection under the second paragraph of Article 1544 58 of the Civil Code, the second
buyer must act in good faith in registering the deed. 59 In this case, the Subsequent Buyers good faith
hinges on whether they had knowledge of the previous sale. Petitioners do not dispute that Armando and
Adelia registered their adverse claim with the Registry of Deeds of Bataan on 8 February 1994. The
Subsequent Buyers purchased their respective lots only on 22 February 1994 as shown by the date of their
deeds of sale. Consequently, the adverse claim registered prior to the second sale charged the Subsequent
Buyers with constructive notice of the defect in the title of the sellers, 60 Godofredo and Carmen.
It is immaterial whether Calonso, the broker of the second sale, communicated to the Subsequent Buyers
the existence of the adverse claim. The registration of the adverse claim on 8 February 1994 constituted,
by operation of law, notice to the whole world. 61 From that date onwards, the Subsequent Buyers were
deemed to have constructive notice of the adverse claim of Armando and Adelia. When the Subsequent
Buyers purchased portions of the Subject Land on 22 February 1994, they already had constructive notice
of the adverse claim registered earlier. 62 Thus, the Subsequent Buyers were not buyers in good faith
when they purchased their lots on 22 February 1994. They were also not registrants in good faith when
they registered their deeds of sale with the Registry of Deeds on 24 February 1994.
The Subsequent Buyers individual titles to their respective lots are not absolutely indefeasible. The
defense of indefeasibility of the Torrens Title does not extend to a transferee who takes the certificate of
title with notice of a flaw in his title. 63 The principle of indefeasibility of title does not apply where fraud
attended the issuance of the titles as in this case. 64
Attorneys Fees and Costs
We sustain the award of attorneys fees. The decision of the court must state the grounds for the award of
attorneys fees. The trial court complied with this requirement. 65 We agree with the trial court that if it
were not for petitioners unjustified refusal to heed the just and valid demands of Armando and Adelia, the
latter would not have been compelled to file this action.
The Court of Appeals echoed the trial courts condemnation of petitioners fraudulent maneuverings in
securing the second sale of the Subject Land to the Subsequent Buyers. We will also not turn a blind eye
on petitioners brazen tactics. Thus, we uphold the treble costs imposed by the Court of Appeals on
petitioners.chanrob1es virtua1 1aw 1ibrary
WHEREFORE, the petition is DENIED and the appealed decision is AFFIRMED. Treble costs against
petitioners.
SO ORDERED.
Davide, Jr., C.J., Vitug, Ynares-Santiago and Azcuna, JJ., concur.
Endnotes:

1. Penned by Associate Justice Martin S. Villarama, Jr. with Associate Justices Angelina SandovalGutierrez and Romeo A. Brawner, concurring, Sixth Division.
2. Penned by Judge Pedro B. Villafuerte.

3. Rollo, pp. 48-49.

4. Ibid., p. 50.
5. Rollo, p. 55.
6. 205 Phil. 537 (1982).
7. Article 161 of the Civil Code provides as follows: "The conjugal partnership shall be liable
for:chanrob1es virtual 1aw library
(1) All debts and obligations contracted by the husband for the benefit of the conjugal partnership, and
those contracted by the wife, also for the same purpose, in the cases where she may legally bind the
partnership.
x

x"

8. Rollo, pp. 106-107.

9. W-Red Construction and Development Corporation v. Court of Appeals, G.R. No. 122648, 17 August
2000, 338 SCRA 341.
10. Ibid.
11. Ibid.
12. Article 1318, Civil Code.
13. Article 1458, Civil Code.
14. Pealosa v. Santos, G.R. No. 133749, 23 August 2001, 363 SCRA 545.
15. Article 1477, Civil Code.
16. Article 1403, Civil Code.
17. Article 1497 of the Civil Code. See also The Associated Anglo-American Tobacco Corporation v.
Court of Appeals, G.R. No. 125602, 29 April 1999, 325 SCRA 694.
18. Ibid.
19. Article 1405, Civil Code.
20. Mactan Cebu International Airport Authority v. Court of Appeals, 331 Phil. 1046 (1996).
21. Ibid.
22. Spouses Guiang v. Court of Appeals, 353 Phil. 578 (1998).
23. Supra, see note 6.

24. Article 1390 of the Civil Code.

25. Rollo, p. 47.
26. Ibid., p. 18.
27. Article 1497 of the Civil Code. See also The Associated Anglo-American Tobacco Corporation v.
Court of Appeals, G.R. No. 125602, 29 April 1999, 325 SCRA 694.
28. Sumbad v. Court of Appeals, 368 Phil. 52 (1999).
29. Jacinto v. Jacinto, 105 Phil. 1218 (1959).
30 Ibid.
31 Ibid.
32 Ibid.
33. Ibid.; Evangelista v. Montano, 93 Phil. 275 (1953); Flores v. Plasina, 94 Phil. 327 (1954).
34. De los Santos v Roman Catholic Church of Midsayap, 94 Phil. 405 (1954).
35. Ibid.
36. 93 Phil. 275 (1953).
37. Ibid.
38. David v. Malay, G.R. No. 132644, 19 November 1999, 318 SCRA 711.
39. Ibid.
40. Ibid. See also Heirs of Olviga v. Court of Appeals, G.R. No. 104813, 21 October 1993, 227 SCRA
330.
41. Vda. de Cabrera v. Court of Appeals, 335 Phil. 19 (1997).
42. Ibid.
43. Supra, see note 38.
44. Ibid.
45. G.R. No. 76148, 20 December 1989, 180 SCRA 401.
46. Ibid.
47. Development Bank of the Philippines, G.R. No. 129471, 28 April 2000, 331 SCRA 267; David v.
Malay, supra, see note 38; Vda. de Cabrera v. Court of Appeals, supra, see note 41.

48. Supra, see note 38.

49. Supra, see note 38.
50. Supra, see note 38.
51. Rollo, p. 59; TSN, 8 March 1995, pp. 336-337 (Rolando Natanawan); TSN, 23 November 1994, p.
262 (Adelia Lobaton).
52. Coronel v. Court of Appeals, 331 Phil. 294 (1996).
53. Ibid.
54. Ibid.
55. Ibid.
56. Ibid.
57. Ibid.
58. Article 1544 of the Civil Code provides as follows: "If the same thing should have been sold to
different vendees, the ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good
faith."cralaw virtua1aw library
59. Bayoca v. Nogales, G.R. No. 138201, 12 September 2000, 340 SCRA 154.
60. See Balatbat v. Court of Appeals, 329 Phil. 858 (1996); Ocampo v. Court of Appeals, G.R. No. 97442,
30 June 1994, 233 SCRA 551.
61. Section 52 of the Property Registration Decree (PD No. 1529) provides as follows: "Constructive
notice upon registration. Every . . . lien, . . . instrument or entry affecting registered land shall, if
registered, filed or entered in the office of the Register of Deeds for the province or city where the land to
which it relates lies, be constructive notice to all persons from the time of such registering, filing or
entering. See also Caviles v. Bautista, G.R. No. 102648, 24 November 1999, 319 SCRA 24; DBP v.
Acting Register of Deeds of Nueva Ecija, UDK No. 7671, 23 June 1988, 162 SCRA 450.
62. Gardner v. Court of Appeals, G.R. No. L-59952, 31 August 1984, 131 SCRA 584; PNB v. Court of
Appeals, G.R. No. L-30831 & L-31176, 21 November 1979, 94 SCRA 357.
63. Supra, see note 41.
64. Supra, see note 41.

65. Cipriano v. Court of Appeals, 331 Phil. 1019 (1996).

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