Ulep vs. Court of Appeals

In a double sale of immovable property under Article 1544 of the Civil Code, ownership belongs to the person who in good faith first recorded the sale in the Registry of Property; a second buyer who had knowledge of the first sale cannot displace the first registrant even if the second buyer eventually registers, because such knowledge taints the second buyer's registration with bad faith. A notarized deed of sale enjoys the presumption of regularity and may only be contradicted by clear and convincing evidence, which self-serving testimonies without handwriting expert testimony cannot provide.

Principal petitioners Samuel Ulep (now deceased) and Valentina Ulep, together with their siblings Atinedoro Ulep and Rosita Ulep, are children of the late Valentin Ulep, who owned Lot 840 (3,270 square meters) in Asingan, Pangasinan. Sometime in 1950, Valentin sold the eastern half of Lot 840 (1,635 square meters) to Maxima Rodico and the western half (1,635 square meters) to Atinedoro Ulep and Valentina Ulep. All transferees were jointly issued TCT No. 12525 on June 5, 1952. Subsequent conveyances from the western portion to various parties were made without an actual ground partition or formal subdivision of Lot 840, setting the stage for overlapping claims and the eventual dispute.

Valentin Ulep owned Lot 840, a parcel of land with an area of 3,270 square meters located in Asingan, Pangasinan. Sometime in 1950, he sold the eastern half (1,635 square meters) to Maxima Rodico and the western half (also 1,635 square meters) to his son Atinedoro Ulep and daughter Valentina Ulep. On June 5, 1952, all the transferees were jointly issued Transfer Certificate of Title No. 12525 in their names. On June 18, 1971, Atinedoro Ulep, his wife Beatriz, and Valentina Ulep sold a portion of 817.5 square meters of the western half to their brother Samuel Ulep and his wife Susana Repogia-Ulep; the deed of sale was registered on February 20, 1973. Later, Atinedoro and Beatriz sold 507.5 square meters of the western portion to Warlito Paringit and his wife Encarnacion Gante, who were issued TCT No. 12688 on September 23, 1975. All these transactions were effected without an actual ground partition or formal subdivision of Lot 840.

On December 21, 1954, a deed of sale was purportedly executed by Atinedoro Ulep, his wife Beatriz, and Valentina Ulep in favor of Iglesia ni Cristo (INC) over a portion of 620 square meters of Lot 840. This deed was notarized by Atty. Bernabe Salcedo Calimlim and registered with the Registry of Deeds of Pangasinan on January 5, 1955. On the basis of this deed, INC was issued TCT No. 12689 on September 23, 1975. On July 9, 1975, an affidavit of subdivision was executed by INC, Maxima Rodico, and the spouses Warlito Paringit and Encarnacion Gante, subdividing Lot 840 into four lots: Lot 840-A (TCT No. 16205, in the names of Samuel and Susana Ulep), Lot 840-B (TCT No. 12688, in the names of the Paringit spouses), Lot 840-C (TCT No. 12689, in the name of INC), and Lot 840-D (TCT No. 12690, in the name of Maxima Rodico).

In June 1977, INC began constructing its chapel on Lot 840, in the process encroaching on portions allegedly belonging to petitioners and blocking their pathways. Samuel Ulep and his sister Rosita inquired with the Register of Deeds and discovered the existence of the December 21, 1954 deed of sale in favor of INC and the subdivision affidavit. Samuel and the other Uleps claimed that the signatures of Atinedoro, Beatriz, and Valentina on the deed of sale to INC were forged, and that at most they had sold only 100 square meters to INC, not 620. They likewise averred that the subdivision was executed without their knowledge and consent.

On March 29, 1983, the spouses Samuel and Susana Ulep, the spouses Atinedoro and Beatriz Ulep, and Valentina Ulep filed a complaint for Quieting of Title, Reconveyance and Declaration of Nullity of Titles and Subdivision Plan with Damages against INC, Maxima Rodico, and the Paringit spouses, docketed as Civil Case No. U-3929. During the pendency of the case, Atinedoro Ulep died, and on November 16, 1987, his widow Beatriz and their children executed a deed of renunciation waiving all their rights and interests over Lot 840 in favor of Samuel and Susana Ulep. The trial court found for petitioners, annulling the deed of sale to INC and limiting INC's share to 100 square meters. The Court of Appeals reversed, declaring the deed valid and awarding 620 square meters to INC as first registrant in good faith under Article 1544, while reducing petitioners' share to 297.5 square meters. Petitioners' motion for reconsideration was denied, prompting the present petition.

• Factual Findings of Trial Court: Petitioner maintained that the trial court's factual findings, which favored them, should not have been disturbed by the Court of Appeals, the same being entitled to great weight and respect.
• Forgery of the Deed of Sale: Petitioner argued that the deed of sale dated December 21, 1954 conveying 620 square meters to INC was void because the signatures of the vendors — Atinedoro Ulep, Beatriz Ulep, and Valentina Ulep — were forged, and that what should be upheld was the sale of 817.5 square meters in their favor by the same vendors.
• Existence of a Prior 100-Square-Meter Sale: Petitioner insisted that the actual conveyance to INC was only 100 square meters, evidenced by a deed of sale notarized by a certain Atty. Benjamin Fernandez, and that INC's entitlement should be limited accordingly.
• Alternative Prayer — Reduction of Paringit Spouses' Share: In the alternative, petitioner prayed that if INC were entitled to 620 square meters, such area should be taken from the western portion sold to the Paringit spouses, reducing their share from 507.5 square meters to 197 square meters, rather than from petitioners' share.

• Validity of the Deed of Sale: INC asserted that it purchased 620 square meters of Lot 840 on December 21, 1954 from Atinedoro Ulep, Beatriz Ulep, and Valentina Ulep, as evidenced by a deed of sale duly registered with the Registry of Deeds, and that the deed enjoyed the presumption of regularity as a notarized public document.
• Priority Under Article 1544: INC's ownership and title over the 620 square meters prevailed over petitioners' claim because INC was the first buyer and the first to register, while petitioners registered their sale only eighteen years later.
• Knowledge of Respondents' Segregation: Respondents Maxima Rodico and the Paringit spouses maintained that the segregation of their shares was known to petitioners and was done with the consent of Samuel Ulep himself.

• Double Sale: Whether the Court of Appeals committed reversible error in applying Article 1544 of the Civil Code to hold that INC, as first buyer and first registrant in good faith, had a better right to the 620-square-meter portion of Lot 840 than petitioners, who were second buyers.
• Forgery: Whether the deed of sale dated December 21, 1954 in favor of INC was void on account of forgery of the vendors' signatures.
• Alternative Prayer: Whether petitioners could raise for the first time on appeal the issue of reducing the Paringit spouses' share from 507.5 square meters to 197 square meters.

• Double Sale: No. The Court of Appeals did not commit reversible error; INC was the first buyer and first registrant in good faith, while petitioners were second buyers with knowledge of the prior sale, which taints their registration with bad faith under Article 1544.
• Forgery: No. Petitioners failed to prove forgery by clear, positive, and convincing evidence; the notarized deed of sale enjoyed the presumption of regularity, which self-serving testimonies without handwriting expert evidence could not overcome.
• Alternative Prayer: No. The issue regarding the Paringit spouses' share was raised for the first time before the Supreme Court and cannot be entertained, no exception to the rule against raising new issues on appeal being applicable.

• Double Sale: The controversy was characterized as a classic case of double sale. On December 21, 1954, the vendors sold 620 square meters of the western portion of Lot 840 to INC and registered the sale on January 5, 1955. On January 18, 1971, the same vendors sold 817.5 square meters to petitioners, who registered only on February 22, 1973 — eighteen years after INC's registration. Under Article 1544, ownership of immovable property sold to different vendees belongs to the person who in good faith first recorded it in the Registry of Property. The governing principle is primus tempore, potior jure (first in time, stronger in right). Knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since such knowledge taints his registration with bad faith. Petitioners admitted awareness of an agreement between INC and the vendors involving a portion of Lot 840, which should have put them upon inquiry as to possible defects in their vendors' title. Because petitioners failed to demonstrate ignorance of the first sale from acquisition until registration, they could not claim good faith. INC, having registered first and without any evidence of bad faith on its part, held the superior right.

• Forgery: Forgery cannot be presumed and must be proved by clear, positive, and convincing evidence, the burden lying on the party alleging it. The fact of forgery can only be established by a comparison between the alleged forged signature and the authentic signature of the person whose signature is theorized to have been forged. Petitioners presented no handwriting experts or other persons familiar with the vendors' handwriting to show that the signatures on the questioned deed were forged; their claim rested solely on self-serving testimonies. Petitioners likewise failed to produce the alleged deed of sale for 100 square meters notarized by Atty. Benjamin Fernandez, nor did they present Atty. Fernandez to testify. The notarized deed of sale in favor of INC, acknowledged before a notary public, carried the presumption of regularity and deserved full credence in the absence of overwhelming evidence to the contrary, which petitioners did not present.

• Alternative Prayer: Petitioners never raised before the trial court or the Court of Appeals the issue of the Paringit spouses' entitlement to 507.5 square meters. On the contrary, petitioners alleged in their complaint that the Paringit spouses owned 507.5 square meters and never questioned their ownership. Points of law, theories, issues, and arguments not brought to the attention of the lower court need not, and ordinarily will not, be considered by a reviewing court, basic considerations of fair play, justice, and due process underlying the rule. None of the recognized exceptions — lack of jurisdiction, plain error, jurisprudential developments, or matters of public policy — was present. Raising the issue at this late stage would be unfair to the adverse party, who would have no opportunity to present contrary evidence.

• Double Sale of Immovable Property (Article 1544, Civil Code) — Where the same immovable property is sold to different vendees, ownership belongs to the person who in good faith first recorded the sale in the Registry of Property; if there is no inscription, to the person who in good faith was first in possession; and in the absence thereof, to the person who in good faith presents the oldest title. The governing principle is primus tempore, potior jure (first in time, stronger in right). Knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, because such knowledge taints his prior registration with bad faith. The second buyer must show good faith — ignorance of the first sale and of the first buyer's rights — from the time of acquisition until the title is transferred by registration or delivery of possession. In this case, INC was the first buyer and first registrant in good faith, while petitioners were second buyers with knowledge of the prior transaction, disqualifying them from priority under Article 1544.

• Presumption of Regularity of Notarized Documents — A notarized document carries evidentiary weight with respect to its due execution, and documents acknowledged before a notary public enjoy the presumption of regularity. To contradict the terms of a public instrument, clear and convincing evidence is necessary. In this case, the notarized deed of sale in favor of INC deserved full credence and was valid and enforceable, petitioners having failed to present overwhelming evidence to the contrary.

• Proof of Forgery — Forgery cannot be presumed and must be proved by clear, positive, and convincing evidence, the burden lying on the party alleging it. The fact of forgery can only be established by a comparison between the alleged forged signature and the authentic and genuine signature of the person whose signature is theorized to have been forged. Due to the technicality of the procedure involved in the examination of forged documents, the expertise of questioned document examiners is usually helpful. Petitioners' claim of forgery, unsupported by handwriting expert testimony or other substantial evidence beyond self-serving testimonies, could not be sustained.

• Rule Against Raising Issues for the First Time on Appeal — Points of law, theories, issues, and arguments not brought to the attention of the lower court need not, and ordinarily will not, be considered by a reviewing court, as these cannot be raised for the first time on appeal. Basic considerations of fair play, justice, and due process underlie the rule, as it would be unfair to the adverse party who would have no opportunity to present evidence contra the new theory. Recognized exceptions include issues of lack of jurisdiction, plain error, jurisprudential developments, and matters of public policy, none of which was present here.

• "Knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by the same provision of the Civil Code for the second buyer to be able to displace the first buyer; before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. ignorance of the first sale and of the first buyer's rights) from the time of acquisition until the title is transferred to him by registration, or, failing registration, by delivery of possession." — This passage articulates the ratio decidendi on the interplay between good faith and priority of registration in double sale cases, defining the standard the second buyer must meet to displace the first buyer under Article 1544.

• "As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence, the burden for which lies on the party alleging it. The fact of forgery can only be established by a comparison between the alleged forged signature and the authentic and genuine signature of the person whose signature is theorized to have been forged." — This states the canonical formulation of the doctrine on proof of forgery, frequently cited in subsequent jurisprudence on the evidentiary burden required to overturn a notarized document.

• "Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not, be, considered by a reviewing court, as these cannot be raised for the first time on appeal. Basic considerations of fair play, justice and due process underlie the rule." — This passage sets out the rule against raising new issues on appeal and its underlying rationale, a staple principle of Philippine appellate procedure.

• Philippine Airlines vs. Court of Appeals, 257 SCRA 33 [1996] — Cited for the proposition that factual findings of the Court of Appeals and lower courts are, as a rule, final and conclusive upon the Supreme Court, except where their findings are at odds with each other, as in this case.
• Abrigo vs. De Vera, 432 SCRA 544 [2004] — Cited for the enumeration of the hierarchy of rights under Article 1544: first registrant in good faith, then first possessor in good faith, then the buyer who in good faith presents the oldest title.
• Uraca vs. Court of Appeals, 278 SCRA 702 [1997] — Cited for the principle that knowledge of the second buyer of the first sale defeats his rights even if he is first to register, and that the second buyer must show good faith throughout from acquisition to registration.
• Claudel vs. Court of Appeals, 199 SCRA 113 [1991] — Cited for the rule that mere registration is not sufficient and good faith must concur with registration, else registration becomes an exercise in futility.
• Leung Yee vs. F.L. Strong Machinery Co., 37 Phil. 644 [1918] — Cited for the definition of good faith as implying freedom from knowledge of circumstances which ought to put a person on inquiry.
• Heirs of Severa P. Gregorio vs. Court of Appeals, 300 SCRA 565 [1998] — Cited for the doctrine that forgery cannot be presumed and must be proved by clear, positive, and convincing evidence through comparison of signatures.
• Basilio vs. Court of Appeals, 346 SCRA 321 [2000] — Cited for the presumption of regularity enjoyed by notarized documents acknowledged before a notary public.
• BPI vs. Leobrera, 416 SCRA 15 [2003]; Gevero vs. Intermediate Appellate Court, 189 SCRA 201 [1990] — Cited for the rule that issues not raised before the lower court cannot be raised for the first time on appeal.
• Del Rosario vs. Bonga, 350 SCRA 101 [2001] — Cited for the exceptions to the rule against raising new issues on appeal: lack of jurisdiction, plain error, jurisprudential developments, and matters of public policy.

• Article 1544, Civil Code of the Philippines — Governs double sales of property. For immovable property, ownership belongs to the person acquiring it who in good faith first recorded it in the Registry of Property; absent inscription, to the first possessor in good faith; absent possession, to the person who in good faith presents the oldest title. Applied to hold that INC, as first registrant in good faith, prevailed over petitioners, who were second buyers with knowledge of the prior sale.
• Rule 45, Rules of Court — Governs petitions for review on certiorari to the Supreme Court, under which the present petition was filed. While factual issues are generally not within the province of the Supreme Court, the conflicting factual findings of the two courts below justified an examination of the facts.
• Article VIII, Section 13, 1987 Constitution — Pertains to the certification requirement that conclusions in a division decision were reached in consultation before the case was assigned to the writer of the opinion.

Artemio V. Panganiban (Chairman), Angelina Sandoval-Gutierrez, Renato C. Corona, and Conchita Carpio Morales concurred. No separate concurring opinions were written.