BENITO MANALANSAN, PLAINTIFF AND APPELLANT, VS. LUIS MANALANG, JULIO CUBA AND JOSE SY, DEFENDANTS AND APPELLEES.

The undisputed facts as found by the trial court may be summarized as follows:

The spouses Augusto Manalang and Victoria Dabu were the original owners
of the two-story building located at 2268-2270 España Street. On August
14, 1951, they executed a deed of chattel mortgage over this property
in favor of Benito Manalansan to secure the payment of a loan. Because
of their failure to pay the loan on the date of maturity, the mortgage
was foreclosed and on May 14, 1956, the sheriff of Manila sold the
building at public auction to the mortgagee Manalansan as the highest
bidder.

Thereafter, Manalansan went to the premises in
question to take possession thereof. There he found Jose Sy and Julio
Cuba occupying the building as tenants of Luis Manalang. Manalansan
consequently asked his lawyer to formally notify Luis Manalang and his
tenants to vacate the premises, and eventually filed this case against
them for the recovery of possession thereof.

At the trial,
defendant Luis Manalang established that the building in question was
sold to him on September 24, 1949, by the spouses Augusto Manalang and
Victoria Dabu with the right to repurchase within one year; that the
vendors failed to redeem the property within the period stipulated;
that the property had been assessed for taxation purposes in his name
for the years 1950-57, and he had paid the corresponding taxes thereon
for that period; that on January 25, 1955, he obtained a judgment from
the Municipal Court of Manila in Civil Case No. 34346 against Augusto
Manalang, et al., ordering the latter to vacate the building in
question; and that since the finality of the aforesaid judgment, he has
been in the possession of said building, which he leased to his
co-defendants Jose Sy and Julio Cuba.

Convinced that
defendant Luis Manalang had acquired full ownership of the building in
question before the execution of the deed of chattel mortgage relied
upon by plaintiff for his cause of action, the lower court rendered
judgment dismissing the complaint with costs. Unable to obtain
reconsideration of this judgment, plaintiff Manalansan appealed
directly to this Court.

It is urged by appellant that a
building, although standing on land belonging to another, is an
immovable property, as held by us in Evangelista vs. Alto Surety & Insurance Co., 108 Phil, 401; 55 Off. Gaz. (20)3672; Lopez vs.
Luzon Surety Co., Inc., 103 Phil., 98; 56 Off. Gaz. (13)2820; and other
cases; and that as the expiration of the period of redemption under
appellee’s contract of sale over the building in question with the
former owners Manalang and Dabu occurred after the New Civil Code had
already come into effect, the consolidation of his title over said
building should be governed by, and follow the procedure laid down in
Art. 1607 thereof, a new provision not found in the Old Code, to wit:

“Art. 1607. In case of real property,
the consolidation of ownership in the vendee by virtue of the failure
of the vendor to comply with the provisions of article 1676 shall not
be recorded in the Registry of Property without a judicial order, after
the vendor has been duly heard.”

We see no merit in the contention.

Assuming that the building here in question is such kind of real
property as is included within the scope of Art. 1607, a question that
we need not decide here, said Article can not apply to the contract of
sale con pacto de retro between appellee and the spouses
Manalang and Dabu for the reason that said contract was executed before
the New Civil Code came into effect. The nature of a sale with the
right of redemption is such that ownership over the thing sold is
transferred to the vendee upon execution of the contract, subject only
to the resolutory condition that the vendor exercise his right of
repurchase within the period agreed upon (Aquino vs. Deala, 63 Phil., 582; Lichauco vs. Berenguer, 20 Phil., 12; Aldereto vs.
Amandoron, 46 Phil., 488). Consequently, this contract is covered by
Art. 2255 of the transitional provisions of the New Code, providing:

“Art.
2255. The former laws shall regulate acts and contracts with a
condition or period, which were executed or entered into before tile
effectivity of this Code, even though the condition or period may still
be pending at the time this body of laws goes into effect.”

Furthermore, Art. 2252 of the New Code likewise provides that:

“Changes
and new provisions and rules laid down by this Code which may prejudice
or impair vested or acquired rights in accordance with the old
legislation shall have no retroactive effect.”

Under Article 1509 of the Old Code, the vendee irrevocably acquires
ownership over the thing sold upon failure of the vendor to
redeem—i.e., ownership is consolidated in the vendee by operation of
law (Dorado vs. Viriña, 34 Phil., 264; Rafols vs. Rafols, 22 Phil., 236; Gonzales vs. Salas, 49 Phil., 1; Krapfenbauer vs.
Orbeta, 52 Phil., 201). From the time appellee and his vendors executed
their sale with the right to repurchase, therefore, the former had
already acquired the right to consolidate full title over the building
in question merely upon his vendors’ failure to redeem, as well as the
right to sell or convey this acquired right for value, subject to no
other condition than that the vendors could repurchase within the
period stipulated. To impose upon appellee the additional conditions
found in Article 1607 for the consolidation of his ownership would thus
impair and diminish the rights that had already vested in him under the
Old Code.

Lastly, appellant contends that the sale with the
right to repurchase between appellee and his vendors should have been
registered as a notice to third persons, and so with appellee’s
consolidation of ownership; and that as appellant took the building in
question without notice of its former sale to or consolidation of
ownership in appellee because they had not been registered, he is not
bound thereby. Unfortunately for appellant, there is no registry of
buildings in this, jurisdiction apart from the lands on which they
stand, so that there is no legal compulsion to register, as notice to
third persons, transactions over or dealings on buildings that do not
belong to the owners of the lands on which they stand. Appellant should
have known this when he accepted a chattel mortgage on the building in
question and accordingly, he had a duty to conduct an investigation as
to his mortgagors’ title. Had he made such an Investigation, he would
have discovered that as of 1950, said building has already been
assessed for taxation purposes in the name of appellee, and taxes
thereon paid by the latter. This fact alone would have placed appellant
on his guard as to the supposed title of his mortgagors over said
building. Likewise, on January 25, 1955, before appellant bought the
same building at the public auction sale in foreclosure of his mortgage
thereon (on May 14,1956), appellee Manalang had obtained a final
judgment in the Municipal Court of Manila against appellant’s
mortgagors ejecting the latter from the premises, and in the records of
said case may be found an affidavit by Augusto Manalang recognizing
appellee’s ownership of said building and stating that he was occupying
the same only as mere tenant. Thus, whether on the basis of prior
possession or of earlier title, as required by Article 1544 of the
Civil Code off the Philippines (Art. 1473 of the old Code) in case of
double sale of unregistered property, appellee Luis Manalang is
entitled to priority.

Wherefore, the decision appealed from is affirmed, with costs against appellant Benito Manalansan.

Paras, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia, Barrera, and Gutierrez David, JJ., concur.