Chua vs. Lo

A seller cannot convey title to property in excess of what was agreed upon in the original contract to sell; any sale of the excess area by a buyer who does not own it is void, and the registered owner of the segregated excess portion may successfully maintain an action to quiet title against the wrongful possessor.

Spouses Lolito and Myrna Chua owned a 21,644-square-meter coconut land in Sta. Cruz, Laguna. Between 1976 and 1977, they executed deeds purporting to sell portions totaling 5,012 square meters to sisters Delia and Josefina Becina. Following subdivision surveys and a confrontation among the parties regarding area discrepancies, a 1984 deed of sale was executed conveying Lot 505-B-2 (3,534 sqm) to Josefina, while the remaining portion was supposed to be subdivided to segregate an excess 600 square meters. The disputed 600 sqm was eventually sold to Sergio Chua (Lolito's brother) and titled in his name. However, Delia's heirs later sold the entire Lot 505-B-3 (2,078 sqm), which included the 600 sqm portion already titled to Sergio, to Agustin Lo Realty Corporation.

• Spouses Lolito Chua and Myrna Palomaria owned Lot 505 (21,644 sqm) in Sta. Cruz, Laguna, covered by Original Certificate of Title No. P-3264.
• On January 15, 1976, Myrna sold 4,612 sqm to sisters Delia and Josefina Becina; on August 5, 1977, Lolito sold an additional 400 sqm to the same buyers, totaling 5,012 sqm.
• On March 1, 1978, Lot 505 was subdivided into Lot 505-A (14,492 sqm) and Lot 505-B (7,152 sqm), with Lot 505-B titled under Lolito's name (TCT No. 83840).
• Lot 505-B was further subdivided into three lots: 505-B-1 (1,540 sqm), 505-B-2 (3,534 sqm), and 505-B-3 (2,078 sqm); Lot 505-B-3 was again subdivided into 505-B-3-A (600 sqm) and 505-B-3-B (1,478 sqm).
• A dispute arose when the spouses Chua claimed that allotting Lot 505-B-2 and 505-B-3 to the buyers (totaling 5,612 sqm) would exceed the 5,012 sqm originally sold by 600 sqm.
• During a confrontation at the office of Atty. Tomas Añonuevo, the parties agreed that Lot 505-B-2 (3,534 sqm) would be conveyed to Josefina, while Lot 505-B-3 would remain in Lolito's name but be subdivided to segregate the excess 600 sqm.
• On February 25, 1984, a Deed of Sale was executed transferring Lot 505-B-2 to Josefina (TCT No. T-101045 issued), while Lot 505-B-3 remained under Lolito's name (TCT No. T-101046).
• The segregated Lot 505-B-3-A (600 sqm) was subsequently sold by Lolito to his brother Sergio Chua, covered by TCT No. T-114915.
• Josefina and her spouse Agustin Lo forcibly occupied the entire Lot 505-B-3, encroaching upon Lot 505-B-3-A.
• Delia died on January 23, 1987, leaving her husband Victor Lo and children as heirs.
• On September 21, 1999, Victor Lo sold the entire Lot 505-B-3 (2,078 sqm) plus a non-existent Lot 505-B-4 to Agustin Lo Realty Corporation, which occupied the property and constructed a building thereon.
• The heirs of Delia executed a Deed of Extra-Judicial Partition and Sale of her estate and individual Deeds of Sale in favor of Agustin Lo Realty Corporation.

• The 1976 and 1977 transactions were contracts to sell, not absolute sales, reserving ownership with the vendors until full payment.
• The February 25, 1984 Deed of Sale was merely an off-shoot of the 1976 and 1977 contracts to sell, intended to convey only the agreed 5,012 sqm.
• Since Josefina received Lot 505-B-2 (3,534 sqm), Delia (and her heirs) were only entitled to the remaining 1,478 sqm, not the entire Lot 505-B-3 (2,078 sqm).
• Victor Lo's sale of the entire Lot 505-B-3 to Agustin Lo Realty Corporation included the 600 sqm excess area (Lot 505-B-3-A) which belonged to Sergio Chua, making the sale void as to that portion.
• Sergio Chua holds valid title to Lot 505-B-3-A under TCT No. T-114915, and respondents' possession casts a cloud on his title warranting an action to quiet title.

• The 1976 and 1977 deeds were absolute sales, not contracts to sell.
• The 1984 Deed of Sale conveyed Lot 505-B-2 (3,534 sqm) to Josefina as her share (2,506 sqm) plus the 500 sqm from a 1975 sale by Myrna, plus 528 sqm as compensation for damages due to delays, mortgages, and easements.
• Delia's heirs claimed they did not agree to Victor Lo's sale to Agustin Lo Realty Corporation, or that if they did, it was only valid as to their father's one-fifth pro-indiviso share.
• Respondents claimed entitlement to the entire Lot 505-B-3 as part of the original purchase and denied that the 600 sqm was excess area.

• Procedural Issues: N/A
• Substantive Issues:
  • Whether the 1976 and 1977 transactions between the spouses Chua and the Becina sisters were contracts to sell or contracts of sale.
  • Whether the February 25, 1984 Deed of Sale was a separate transaction or an off-shoot of the 1976 and 1977 agreements.
  • Whether Victor Lo had the right to sell the entire Lot 505-B-3 (2,078 sqm) to Agustin Lo Realty Corporation, or only 1,478 sqm representing Delia's share.
  • Whether petitioners are entitled to recover Lot 505-B-3-A (600 sqm) and have the title quieted in their favor.

• Procedural: N/A
• Substantive:
  • The 1976 and 1977 transactions were contracts to sell, not absolute contracts of sale, as the vendors expressly reserved ownership despite delivery, binding themselves to sell exclusively upon full payment of the purchase price.
  • The February 25, 1984 Contract of Sale was an off-shoot of the 1976 and 1977 contracts to sell, not a separate transaction, intended to implement the parties' agreement to physically partition the property.
  • By voluntary agreement, Josefina accepted Lot 505-B-2 (3,534 sqm), leaving Delia entitled to only 1,478 sqm (Lot 505-B-3-B); Delia's heirs are bound by this agreement and cannot claim the excess 600 sqm (Lot 505-B-3-A).
  • Victor Lo's sale of the entire Lot 505-B-3 (2,078 sqm) to Agustin Lo Realty Corporation was void insofar as it included the 600 sqm portion, as one cannot sell what he does not own (nemo dat quod non habet).
  • The action to quiet title was granted because Sergio Chua holds legal title under TCT No. T-114915, and the 1999 Deed of Sale casts a cloud on his title despite its prima facie validity.
  • Agustin Lo Realty Corporation was ordered to surrender possession of Lot 505-B-3-A (600 sqm) to Sergio Chua's estate.
  • The 1975 sale of 500 sqm by Myrna to Josefina was sustained as valid, and spouses Chua were ordered to execute the necessary documents to deliver this separate portion to Josefina.
  • The claim for 528 sqm as compensation for damages was denied for lack of evidence.

• Contract to Sell — A bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, the full payment of the purchase price. Applied to characterize the 1976 and 1977 transactions as conditional sales reserving title until payment, rather than absolute transfers.
• Quieting of Title — An action seeking adjudication that a claim of title or interest in property adverse to the claimant is invalid, to free him from the danger of hostile claim, and to remove a cloud upon title. The Court applied the two indispensable requisites: (1) plaintiff has legal or equitable title, and (2) the adverse claim is invalid despite prima facie appearance of validity.
• Nemo Dat Quod Non Habet — The principle that one cannot sell what he does not own. Applied to invalidate Victor Lo's sale of the 600 sqm portion of Lot 505-B-3-A which belonged to Sergio Chua, not to Delia's estate.
• Torrens System — The doctrine that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein, becoming incontrovertible after the expiration of the one-year period from the issuance of the decree of registration. Applied to confirm Sergio Chua's ownership of Lot 505-B-3-A.

• "By law, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, the full payment of the purchase price."
• "Thus, the Deed of Sale executed by Victor in favor of Agustin Lo Realty Corporation (which conveyed upon the latter 2,078 sq m of the lot) should be nullified as it includes the 600 sq m portion of a land not owned by the seller."
• "It is fundamental that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein."

• Spouses Edrada v. Spouses Ramos (505 Phil. 672) — Cited for the definition of a contract to sell.
• Cervantes v. Court of Appeals (404 Phil. 651) — Cited for the principle that one cannot sell what he does not own.
• Heirs of Pocdo v. Avila (730 Phil. 215) — Cited for the definition and purpose of an action to quiet title.
• Salvador v. Patricia, Inc. (799 Phil. 116) — Cited for the requisites of an action to quiet title.
• Arjonillo v. Pagulayan (G.R. No. 196074) — Cited for the principle that a certificate of title serves as evidence of indefeasible title.
• Republic v. Hachero (785 Phil. 784) — Cited for the incontrovertibility of title after the one-year period.

• Rule 45 of the Rules of Court — Procedural basis for the Petition for Review on Certiorari filed before the Supreme Court.
• Presidential Decree No. 1529 (Property Registration Decree), Section 46 — Implied in the discussion regarding the indefeasibility of certificates of title after the one-year period.