SPOUSES MAGDALINO AND CLEOFE BADILLA, PETITIONERS, VS. FE BRAGAT, RESPONDENT.

Badilla versus Bragat

The Case

This is a petition for review on certiorari brought by the spouses Magdalino and Cleofe Badilla against Fe Bragat, arising from two consolidated complaints over the ownership of a registered parcel of land in Cagayan de Oro City. Bragat sued for recovery of possession and damages; the Badillas sued to quiet title and to annul the transfer certificate of title issued to Bragat. The case matters because it gathers in one dispute a chain of double and even triple sales made by two different vendors, and it lets the Supreme Court restate, with precision, when ownership passes to a buyer upon delivery even under a verbal and installment sale, and how Article 1544 of the Civil Code resolves competing buyers of immovable property.

Procedural History

The two complaints were filed within days of each other in 1992 and were consolidated before Branch 25 of the Regional Trial Court of Cagayan de Oro City. After trial, the trial court ruled for Bragat. It found that the portion occupied by the Badillas fell within Bragat's titled property, that Bragat's title was valid as the fruit of a purchase in good faith and for value, and that the Badillas had failed to substantiate their claim, since the receipts they presented were dated after Ledesma had already sold the land to Bragat. The trial court dismissed the Badillas' complaint and ordered them to vacate the one hundred fifty-two square meter portion they occupied, to pay moral damages, reasonable rentals from March 1991 with legal interest, attorney's fees, litigation expenses, and costs.

On appeal, the Court of Appeals affirmed the trial court but modified the judgment. It found that Ledesma had sold only nine hundred ninety-one square meters to Bragat in 1978, so that the remaining twenty-four square meters of the one thousand fifteen square meter property had been validly sold to the Badillas in 1991 and had to be reconveyed to them. It deleted the awards of damages, attorney's fees, and costs, and remanded the case to the court of origin to determine the twenty-four square meter lot to be reconveyed. The Badillas then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Azur Pastrano and his wife Profitiza Ebaning originally owned Lot No. 19986 in Tablon, Cagayan de Oro City. On November 18, 1968, before any title was issued, they sold the lot to Eustaquio Ledesma, Junior by a Deed of Definite Sale of Unregistered Coconut and Residential Land. An original certificate of title covering one thousand fifteen square meters was later issued in 1980 in the name of Azur Pastrano.

In 1970, Ledesma sold a two hundred square meter portion of the lot to the spouses Magdalino and Cleofe Badilla on an installment basis. The sale was not reduced to writing, but the Badillas paid the initial price, took delivery and possession, built a house, and remained in possession; Ledesma even delivered to them the owner's duplicate copy of the original certificate of title. In 1978, Ledesma and his wife sold nine hundred ninety-one square meters of the same property to the spouses Florito and Fe Bragat by a Deed of Absolute Sale of a Residential Lot.

In 1984, the Pastranos executed a deed of absolute sale of the entire registered land in favor of Fe Bragat, and on the same day Azur Pastrano executed an affidavit of loss of the owner's duplicate certificate. Bragat then petitioned for and obtained a new owner's duplicate copy in 1987. On October 2, 1987, the Pastranos executed yet another deed of sale of the same registered land in favor of Bragat, and on its strength the original certificate was cancelled and a transfer certificate of title was issued in her name. When Bragat demanded in 1991 that the Badillas vacate, they refused and invoked their earlier purchase from Ledesma, and the two actions followed.

Issues

• Whether or not the Court may re-examine the factual findings of the trial court and the Court of Appeals in a petition for review under Rule 45.
• Whether or not ownership of the disputed portion passed to the spouses Badilla upon their verbal and installment purchase from Ledesma in 1970, with delivery of possession.
• Whether or not the deeds of sale executed by Pastrano in favor of Bragat in 1984 and 1987 are void, and whether Bragat's transfer certificate of title is void and should be cancelled.
• Whether or not Article 1544 of the Civil Code, on double sales of immovable property, awards the disputed portion to the Badillas.

Applicable Provisions

Article 1477 of the Civil Code provides:

The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.

This is the core rule that transferred ownership of the disputed portion to the Badillas upon delivery of possession in 1970.

Article 1497 of the Civil Code provides:

The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee.

This defines the delivery that the Court found had taken place when Ledesma surrendered the portion to the Badillas.

Article 1478 of the Civil Code provides:

The parties may stipulate that the ownership of the thing sold shall not be transferred to the vendee until the latter has paid the price, in whole or in part.

The Court used this to infer that ownership passed, because the parties had made no such reservation despite the installment arrangement.

Article 1544 of the Civil Code provides:

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.

This governs the multiple sales in this case and directs that, absent a good faith registration, the prior possessor in good faith prevails.

Ruling

On the first issue, the Court acknowledged the time-honored rule that only questions of law may be raised in a petition for review on certiorari, and that factual findings of the Court of Appeals affirming those of the trial court bind the Supreme Court. It held, however, that the rule admits exceptions, among them when the judgment is premised on a misapprehension of facts or is belied by the evidence on record, and it found this case within those exceptions.

On the second issue, the Court held that the courts below erred in misapprehending that ownership passed to the Badillas upon their purchase from Ledesma. The Pastranos had already sold the property to Ledesma in 1968, so they no longer owned it. When Ledesma sold a portion to the Badillas in 1970 and delivered possession, ownership of that portion passed to them. Although the sale was verbal and payable in installments, it was partially consummated, and the parties made no stipulation reserving ownership in the seller. The Court added that the Statute of Frauds bars only executory agreements, not verbal contracts that have been completed or partially consummated, so oral evidence was admissible. Since the Badillas had owned and occupied the portion since 1970, the title covering it was wrongfully issued.

On the third issue, the Court held that the deeds of sale of 1984 and 1987 were void for being simulated and for lack of a subject matter, since Pastrano was no longer owner, and Bragat herself knew this, having first bought the property from Ledesma in 1978. The Court stated the maxim that no one can give what one does not have, and that a buyer acquires no better title than the seller. It also noted that one signatory of the 1987 deed, Profitiza Pastrano, was already dead when it was executed.

On the fourth issue, the Court applied Article 1544 and held that Bragat could not claim good faith in recording her 1987 purchase, because that sale was simulated and she knew of the Badillas' occupation. Where neither buyer registered in good faith, the law awards the property to the one who first took possession in good faith, and that prior possessor, as to the one hundred fifty-two square meter portion, was indisputably the Badillas.

Doctrine

Ownership of the thing sold passes to the vendee upon actual or constructive delivery, and payment of the purchase price is not essential to the transfer as long as the property has been delivered. A verbal contract of sale that has been completed, executed, or partially consummated is not barred by the Statute of Frauds, which applies only to executory agreements. Under Article 1544 of the Civil Code, where the same immovable property is sold to different vendees, ownership belongs to the buyer who in good faith first recorded the sale; absent such inscription, to the buyer who in good faith was first in possession. A seller who no longer owns the property conveys nothing, and a buyer who knows of the seller's lack of ownership cannot claim good faith.

Disposition

The Supreme Court granted the petition, reversed and set aside the decision and resolution of the Court of Appeals, declared Transfer Certificate of Title No. T-47759 void, and ordered the issuance of two new titles: one in the name of the spouses Magdalino and Cleofe Badilla covering the one hundred fifty-two square meters they occupy, and one in the name of Fe Bragat covering the remaining eight hundred sixty-three square meters, based on the commissioner's survey plans.

Remember This

Memorize the line that delivery, not full payment, transfers ownership, and that a verbal sale already partially consummated escapes the Statute of Frauds. Examiners use this case to test Article 1544 of the Civil Code on double sales of immovable property and the rule that no one can give what one does not have.