24 SUPREME COURT REPORTS ANNOTATED

Delfin vs. Valdez

*
G.R. No. 132281. September 15, 2006.

ROLENDO T. DELFIN, petitioner, vs. JOSEFINA L.

VALDEZ and JOSE V. LAGON, respondents.

Land Titles; Sales; Double Sales; The application of Article

1544 of the Civil Code presupposes the existence of two (2) valid
and binding contracts of sale.—While on the surface, there is
apparently a situation of double sale, in truth and in law, there is
only one: the sale of Lot No. 3-D-1 by Josefina to the petitioner on
June 4, 1987. Hence, Article 1544 of the Civil Code finds no
application in this case. The application of Article 1544 of the
Civil Code presupposes the existence of two (2) valid and
binding contracts of sale, which, under legal contemplation, is
made possible by the operation of the Torrens System whereunder
registration is the operative act which transfers title or ownership
of a titled property, such that before the first buyer registers his
sale to consolidate ownership and

_______________

* SECOND DIVISION.

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VOL. 502, SEPTEMBER 15, 2006 25

Delfin vs. Valdez

title in his favor, the seller who retains the title and ownership in
the meantime can validly transfer such title and ownership by
way of a second sale to another buyer, who, in case he succeeds in
registering said second sale before he acquired notice of the first
sale, can defeat the rights of the first buyer under Article 1544 of
the Civil Code.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
          Del Prado, Diaz & Associates Law Offices for
petitioner.
     Rex G. Rico for private respondent Lagon.
     Edgar Valdez for respondent Valdez.

GARCIA, J.:

In this petition for review under Rule 45 of the Rules of

Court, petitioner Rolendo T. Delfin
1
seeks the annulment
and setting aside of the Decision dated December 16, 1997
of the Court of Appeals
2
(CA), as reiterated in its Resolution
of January 26, 1998, in CA G.R. CV No. 48751, affirming
en toto an earlier decision of the Regional Trial Court
(RTC) of Sultan Kudarat, Branch 19, in an action to quiet
title thereat commenced by the petitioner against the
herein respondents, Josefina L. Valdez and Jose V. Lagon.
The material facts are undisputed:
The spouses Carlos Valdez, Sr. and Josefina de Leon-
Valdez (Josefina, hereafter), were the owners of a parcel of
land with an area of 24,725 square meters located in the
commercial district of Isulan, Sultan Kudarat. The
property

_______________

1 Penned by Associate Justice Oswaldo D. Agcaoili (now ret.) with

Associate Justice Fidel P. Purisima (now a retired member of this Court)
and Associate Justice Corona Ibay-Somera (now ret.), concurring; Rollo,
pp. 53-73.
2 Id., at p. 74.

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26 SUPREME COURT REPORTS ANNOTATED

Delfin vs. Valdez

was designated as Lot No. 3 of Pls-208-D-13 and covered by

Transfer Certificate of Title (TCT) No. T-19529 (T-1902)
issued on August 18, 1967. Carlos Valdez, Sr. died intestate
on March 26, 1966, survived by his widow, Josefina, and
their children, among whom is Carlos Valdez, Jr., a
practicing lawyer.
On December 28, 1978, Josefina caused the subdivision
of Lot No. 3 into eight (8) lots, namely, Lots Nos. 3-A to 3-
H, all fronting the national road. To enhance the value of
the property, she decided to sell a 4,094-square meter
portion thereof, more particularly Lot No. 3-C and a portion
of Lot No. 3-D to her co-respondent herein, Jose V. Lagon
(Lagon, for short), a successful businessman in Sultan
Kudarat who owned a construction firm and other business
enterprises: the Lagon Enterprises and the Rural Bank of
Isulan. He was also one of the clients of Josefina’s son,
Carlos Valdez, Jr.
Hence, on May 9, 1979, Josefina, through her attorney-
in-fact, Carlos Valdez, Jr., and Lagon entered into a
contract of sale involving the aforementioned 4,094-square
meter portion of what used to be Lot No. 3. No transfer
certificate of title could as yet be issued to Lagon because
at the time of the sale, the intestate estate of the late
Carlos Valdez, Sr. had still to be settled and partitioned.
On October 9, 1981, TCT No. T-19529, formerly covering
Lot No. 3 was cancelled and superseded by eight (8) titles
corresponding to the eight (8) resulting subdivision lots and
bearing the following particulars:

TCT No. Lot No. Area

16436 3-A 2,586 sq. meters
16437 3-B 2,802 sq. meters
16438 3-C 2,534 sq. meters
16439 3-D 3,198 sq. meters
16440 3-E 3,359 sq. meters

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VOL. 502, SEPTEMBER 15, 2006 27

Delfin vs. Valdez

16441 3-F 2,952 sq. meters

16442 3-G 3,650 sq. meters
16443 3-H 3,644 sq. meters

All the foregoing subdivision titles were under the name of

“Josefina L. Valdez, married to Carlos Valdez, Sr.”
Later, Josefina further caused the subdivision of Lot No.
3-D covered by TCT No. 16439, resulting in the existence of
Lot No. 3-D-1, containing an area of 1,551 square meters.
Lot No. 3-D-1 is the property involved in this case.
On June 4, 1987, Josefina sold Lot No. 3-D-1 to the
herein petitioner, Rolendo T. Delfin (Delfin, for brevity).
Delfin registered the sale on June 16, 1987 and obtained
TCT No. 20380 therefor in his name.
It turned out that the area comprising the entirety of
Lot No. 3-D-1 (1,551 square meters) which used to be a
portion of Lot No. 3-D was already included in the earlier
sale of May 9, 1979 between Josefina and Lagon over the
4,094-square meter portion of the mother lot, Lot No. 3.
On September 24, 1990, upon learning that a portion of
the property already sold to him was subsequently sold by
Josefina to Delfin, Lagon filed in the RTC of Sultan
Kudarat a complaint for specific performance with
damages against Josefina and her attorney-in-fact, Atty.
Carlos Valdez, Jr. Lagon’s complaint was docketed as Civil
Case No. 778, which eventually reached this Court in G.R.
No. 140715, entitled Josefina L. Valdez and 3 Carlos L.
Valdez, Jr. v. Court of Appeals and Jose Lagon, a petition
for review interposed by Josefina and Carlos Valdez, Jr.
against an amended decision of the CA in the aforesaid
civil case.
For his part, upon knowing of Civil Case No. 778, Delfin
instituted in the same court an action to quiet title against

_______________

3 September 24, 2004, 439 SCRA 55.

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28 SUPREME COURT REPORTS ANNOTATED

Delfin vs. Valdez

Josefina and Lagon, docketed as Civil Case No. 779, now

the subject of the present petition.
On January 20, 1995, the RTC of Sultan Kudarat,
Branch 90, upon its finding that Delfin, albeit a prior
registrant, was a purchaser in bad faith because he
allegedly knew the prior sale between Josefin and Lagon,
came out with its decision in Civil Case No. 779, dismissing
Delfin’s complaint for quieting of title and rendering
judgment for Lagon, to wit:

“WHEREFORE, upon all the foregoing considerations, judgment

is hereby rendered, dismissing [Delfin’s] complaint. In [Lagon’s]
counterclaim, judgment is hereby rendered:

(a) declaring [Delfin] a purchaser in bad faith, all

consequently, a possessor in bad faith of Lot No. 3-D-1 x x
x;
 (b) declaring [Lagon] to have a superior right to the land in
question, identified as Lot No. 3-D-1 x x x, the same being
a portion of or is included in the parcel of land priorly
purchased by said [Lagon];
(c) declaring the Deed of Absolute Sale x x x dated June 4,
1987, executed by x x x Josefina x x x in favor of x x x
Delfin, covering Lot No. 3-D-1 x x x together with its
corresponding Transfer Certificate of Title No. T-20380
issued in the name [Delfin], null and void;
(d) directing the Register of Deeds of Sultan Kudarat to
cancel Transfer Certificate of Title No. T-20380 in favor of
Delfin], covering the disputed lot x x x, and to issue a new
TRANSFER CERTIFICATE OF TITLE in favor of [Lagon]
covering said Lot No. 3-D-1 x x x;
(e) ordering [Delfin], and those acting for and in his behalf to
vacate Lot No. 3-D-1 x x x and surrender possession
thereof to [Lagon]: [Delfin] may remove his
aforementioned improvement from the said lot within
TWO (2) MONTHS from the finality of this JUDGMENT,
unless [Lagon] elects to acquire the same and pay [Delfin]
the amount of TEN (10) THOUSAND PESOS within TWO
(2) MONTHS from finality of this JUDGMENT. Should
[Lagon] fail to pay the said amount within the said period
of TWO (2) MONTHS from the finality of this Judgment,
the period of Two (2) Months within

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Delfin vs. Valdez

which [Delfin] may remove his aforesaid useful

improvement, consisting of a building housing the
IVY PHARMACY and the Medical Specialist Center
shall commence from the expiration of the TWO (2)
MONTHS given [Lagon] to pay for the said useful
improvement;

(f) ordering [Delfin] to pay [Lagon] the sums of:

  1. P50,000.00 by way of moral and exemplary damages;
  2. P50,000.00 by way of attorney’s fees;
  3. P30,000.00 by way of litigation expenses;
  4. P43,191.50 representing the actual airplane transportation
expenses incurred by [Lagon’s] lawyer’s attendance during
the trial of the x x x case; and further ordering [Delfin] to
pay the costs of suit.

4
 4
IT IS SO ORDERED.” (Words in brackets added.)

From the above decision of the RTC, Delfin immediately

went on appeal to the CA whereat his appellate recourse
was docketed as CA-G.R. CV No. 48751. As stated5 at the
outset hereof, the CA, in its challenged Decision dated
December 16, 1987, affirmed en toto that of the trial court.
With his motion for reconsideration having been denied by
the CA in its affirmatory Resolution of January 26, 1998,
Delfin is now with this Court via the present petition,
claiming that the appellate court erred—

1. when it ruled that petitioner was a buyer in bad

faith proceeding from evidence which are
unsubstantiated, hearsay or mere conjectures;
2. when it failed to rule the issue involving
[respondent] Josefina L. Valdez, which was timely
raised by petitioner in his appeal brief but
effectively brushed aside by affirmance in toto of
the lower court’s decision;

_______________

4 Reproduced from the CA decision of December 16, 1997.

5 Supra note 1.

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30 SUPREME COURT REPORTS ANNOTATED

Delfin vs. Valdez

3. when it did not leave the parties where they are

under the doctrine of pari delicto, which was timely
raised as a question of law in his appeal brief;
4. in awarding by way of reconveyance to respondent
Lagon the subject property not originally pleaded in
his counterclaim; and
5. in affirming the award of damages not supported by
substantial evidence.

We GRANT the petition, but upon a different ground.

From the very opening statement of the appellate court
in the decision under review, it is obvious that said court,
along with the court below it, resolved the controversy on
the premise that there exists a case of double sale. On
that premise, the CA and the trial court applied to this case
the provisions of Article 1544 of the Civil Code, which
reads:

ART. 1544. 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.

To the two (2) courts below, the two (2) sales of the lot in
question—Lot No. 3-D-1—re: (1) the sale entered into on
May 9, 1979 between Josefina, through her attorney-in-
fact, Atty. Carlos Valdez, Jr., in favor of Lagon over the
4,094-square meter portion of the former Lot No. 3 which
portion covered the entire area of Lot No. 3-D-1, referred to
herein as the first sale; and (2) the sale of Lot No. 3-D-1
entered into between Josefina and Delfin on June 4, 1987,
hereinafter referred to as the second sale.
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Delfin vs. Valdez

While on the surface, there is apparently a situation of

double sale, in truth and in law, there is only one: the sale
of Lot No. 3-D-1 by Josefina to the petitioner on June 4,
1987. Hence, Article 1544 of the Civil Code finds no
application in this case.
The application of Article 1544 of the Civil Code
presupposes the existence of two (2) valid and binding
contracts of sale, which, under legal contemplation, is
made possible by the operation of the Torrens System
whereunder registration is the operative act which
transfers title or ownership of a titled property, such that
before the first buyer registers his sale to consolidate
ownership and title in his favor, the seller who retains the
title and ownership in the meantime can validly transfer
such title and ownership by way of a second sale to another
buyer, who, in case he succeeds in registering said second
sale before he acquired notice of the first sale, can defeat
the rights of the first buyer under Article 1544 of the Civil
Code. 6
With our decision in Josefina L. Valdez and Carlos7
L. Valdez, Jr. v. Court of Appeals and Jose Lagon,
decided on September 24, 2004 and involving, among
others, Lot No. 3-D-1, the factual landscape of this case has
completely changed.
We quote the Court’s pertinent ruling in the aforesaid
case of Valdez:

“The respondent [Lagon] admitted in his complaint that he

undertook to construct the said building and transfer the Rural
Bank of Isulan to the property he had purchased from x x x
Josefina. The respondent [Lagon] affirmed the authenticity and
due execution of his affidavit and his obligations therein, and
testified, thus:

_______________

6 Penned by Associate Justice Romeo J. Callejo, Sr., with the

concurrence of Senior Associate Justice Reynato S. Puno and Associate
Justices Ma. Alicia Austria-Martinez, Dante O. Tinga and Minita V.
Chico-Nazario.
7 Supra note 3.

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32 SUPREME COURT REPORTS ANNOTATED

Delfin vs. Valdez

ATTY. VALDEZ:
Q Mr. Lagon, you testified that according to you the
construction of the same, the PCIB Isulan was a
compliance of your obligation under your contract with
the Valdezes, do you recall having testified on that?
A Yes, Sir.
Q With in (sic) how many years, by the say (sic), were you
supposed to comply with that condition by putting up a
bank or a commercial building in that area?
A Supposed to be five years, Sir.
Q From when?
A According to the affidavit, from the time I purchased
the property up to or from May 9, 1979 to 1984, Sir.
  x x x      x x x      x x x
In his letter to x x x Carlos, Jr., [Lagon], through counsel,
admitted the binding effect of his affidavit as follows:

It is hereby submitted therefore that there is in effect substantial

compliance on the part of Mr. Lagon with regards to the additional
condition laid down in his affidavit herein-referred to. If you deem it that
Mr. Lagon has not satisfactorily complied with all the obligations you
imposed upon him to do thereunder, it is made to reasons not of his own
making but due to factors brought about by circumstances then
prevailing, and elaboration on the same can only be properly stated on
the proper time to come.

Far from being a mere affidavit, the document embodies the

unequivocal undertaking of [Lagon] to construct a fully
operational commercial building and to transfer the Rural Bank
of Isulan to the subject property as part of the consideration of the
sale within five (5) years from the execution of the deed of sale, or
until May 9, 1984.
The intractable refusal of [Lagon] to pay the balance of the
purchase price of the property despite the petitioners’ (i.e.,
Josefina and Carlos Valdez, Jr.) demands had no legal basis. As
such, x x x Josefina’s refusal to deliver the Torrens title over the
subject property under x x x [Lagon’s] name was justified,
precisely because of x x x [Lagon’s] refusal to comply with his
obligation to pay the balance of the purchase price. Had x x x
[Lagon] paid the purchase price of the property, such failure on
the part of x x x Josefina to deliver the Torrens title to and under
the name of [Lagon] would have war

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Delfin vs. Valdez

ranted the suspension of the five-year period agreed upon for the
construction of a fully operational commercial building, as well as
the transfer of the aforesaid bank to the property. This is so
because absent such Torrens title under the name of x x x
[Lagon], no building permit for the construction of the buildings
could be secured.
Considering all the foregoing, the failure of x x x [Lagon] to
cause the construction of the commercial building and the
transfer of the bank to the property sold under the deed of sale
executed between him and x x x Josefina was due to x x x
[Lagon’s] own fault.
There was no need for x x x Josefina to make a
notarized demand to x x x [Lagon] or file an action to
rescind the deed of absolute sale to enable her to recover
the ownership of the property. This is so because x x x
Josefina and x x x [Lagon] had agreed that upon [his]
failure to construct a new and fully operational
commercial building and to cause the transfer of the Rural
Bank of Isulan to the property on or before May 9, 1984,
the deed of absolute sale would be deemed null and void
without need of any demand from x x x [Josefina and Atty.
Calos Valdes, Jr. Such agreement is evidenced by the
affidavit executed by x x x [Lagon] himself on April 27,
1981.
We do not agree with x x x [Lagon’s] contentions that x x x
Josefina through her son and attorney-in-fact x x x Carlos, Jr.,
had agreed to the sale of a portion of the property, the
construction of the PCIB branch office thereon, and the crediting
of the amount paid by the PCIB to x x x [Lagon’s] account, and
deducted from the balance of the purchase price. In the first place,
x x x [Lagon] failed to adduce a morsel of evidence that x x x
Josefina had knowledge of the said agreement and had agreed
thereto. Furthermore, x x x [Lagon] failed to adduce documentary
evidence that x x x Josefina authorized her son and attorney-in-
fact to enter into such an agreement.
It bears stressing that x x x [Josefina] specifically and
unequivocally required in the special power of attorney, as part of
the consideration of the sale of the property to x x x [Lagon], the
latter’s obligation to construct a new and fully operational
commercial building and transfer the Rural Bank of Isulan to the
property. Had she agreed to modify the Special Power of Attorney
she executed in favor of her son, x x x Carlos, Jr., for sure, she
would have executed a document to that effect. She did not do so.
x x x Carlos, Jr. could not lawfully bind x x x Josefina thereon
because he was not so author

34

34 SUPREME COURT REPORTS ANNOTATED

Delfin vs. Valdez

ized to enter into such an agreement with x x x [Lagon]; neither

can such authority be implied from the Special Power of Attorney
x x x Josefina executed in favor of her son, x x x Carlos, Jr.
In sum, then, x x x [Lagon] had no cause for specific
performance against x x x [Josefina and Carlos Valdez, Jr.]
However, x x x [Josefina and Carlos Valdez, Jr.] are obliged to
refund to x x x [Lagon] the latter’s partial payments for the
subject property.” (Words in brackets and parenthesis added;
Emphasis supplied)
Clear it is from the above that on account of Lagon’s failure
to comply with the terms and conditions of the so-called
first sale, this Court deemed that sale “null and void”
without need of any demand from Josefina and her son
Carlos Valdez, Jr. for Lagon to comply with the agreed
terms and conditions attendant to that so-called first sale.
With the reality that this Court in Valdez deemed the
socalled first sale as null and void by reason of Lagon’s
breach of the express terms and conditions relative thereto
before the second sale was entered into by and between
Josefina and Delfin, the provisions of Article 1544 of the
Civil Code on double sales do not apply. Josefina had full
and complete ownership over the subject lot (Lot No. 3-D-
1) at the time of the second sale, the obligation to return to
Lagon the sum of money originally received by her from the
latter notwithstanding. This title and ownership of Lot No.
3-D-1 was effectively transferred from Josefina to Delfin
with the issuance of a clean new transfer certificate of title
in the name of Delfin upon the registration of the second
sale.
Finding the inapplicability of Article 1544 of the Civil
Code to the present case, we see no need to address the
legal issues raised in this petition for having become moot
and academic.
WHEREFORE, the instant petition is GRANTED and
the assailed CA Decision and Resolution are hereby
ANNULLED and SET ASIDE and a new one entered
quieting the title of petitioner Rolendo T. Delfin over Lot
No. 3-D-1, now covered by TCT No. 20380 in his name, and
DISMISSING all counterclaims in Civil Case No. 779.
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VOL. 502, SEPTEMBER 15, 2006 35

Batulanon vs. People

Costs against respondent Jose V. Lagon.

SO ORDERED.

          Puno (Chairperson), Sandoval-Gutierrez, Corona

and Azcuna, JJ., concur.

Petition granted, assailed decision and resolution

annulled and set aside.

Notes.—A certificate is not conclusive evidence of title if

it is shown that the same land had already been registered
 and an earlier certificate for the same is in existence.
(Mathay, Jr. vs. Court of Appeals, 295 SCRA 556 [1998])
In cases of double sale of immovables, what finds
relevance and materiality is not whether or not the second
buyer was a buyer in good faith but whether or not said
second buyer registers such second sale in good faith, that
is, without knowledge of any defect in the title of the
property sold. (Bayoca vs. Nogales, 340 SCRA 154 [2000])

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