Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISION G.R. No. 118114 December 7, 1995TEODORO ACAP, petitioner, vs.COURT OF APPEALS a! ED" DE LOS RE"ES, respondents. PAD#LLA, J.:This is a petition for revie on certiorari of the decision 1 of the !ourt of "ppeals, #nd Division, in !"$%.R. No. &'()), hich affir*ed the decision $ of the Re+ional Trial !ourt of ,i*a*a-lan, Ne+ros Occidental holdin+ that private respondent .d- de los Re-es had ac/uired onership of 0ot No. ((&1 of the !adastral Surve- of ,ini+aran, Ne+ros Occidental based on a docu*ent entitled 2Declaration of ,eirship and 3aiver of Ri+hts2, and orderin+ the dispossession of petitioner as leasehold tenant of the land for failure to pa- rentals.The facts of the case are as follos4The title to 0ot No. ((&1 of the !adastral Surve- of ,ini+aran, Ne+ros Occidental as evidenced b- O!T No. R$(#()5. The lot has an area of (&,)#1 s/. *eters. The title as issued and is re+istered in the na*e of spouses Santia+o Vas/ue6 and 0oren6a Oru*a. "fter both spouses died, their onl- son Feli7berto inherited the lot. In (5)8, Feli7berto e7ecuted a dul- notari6ed docu*ent entitled 2Declaration of ,eirship and Deed of "bsolute Sale2 in favor of !os*e Pido.The evidence before the court a quo established that since (5'1, petitioner Teodoro "cap had been the tenant of a portion of the said land, coverin+ an area of nine thousand five hundred 95,811: *eters. 3hen onership as transferred in (5)8 b- Feli7berto to !os*e Pido, "cap continued to bethe re+istered tenant thereof and reli+iousl- paid his leasehold rentals to Pido and thereafter, upon Pido;s death, to his ido 0aurenciana.The controvers- be+an hen Pido died intestate and on #) Nove*ber (5non debts and obli+ations hich the said parcel of land is 9sic: held liable.That !os*e Pido as survived b- his?her le+iti*ate heirs, na*el-4 0"@R.N!I"N" PIDO, ife, .0A, .RVIN, .0M.R, and .0.!,OR all surna*ed PIDO= children=That invo>in+ the provision of Section (, Rule )B of the Rules of !ourt, the above$*entioned heirs do hereb- declare unto CsicD ourselves the onl- heirs of the late !os*e Pido and that e hereb- adEudicate unto ourselves the above$*entioned parcel of land in e/ual shares.No, therefore, 3e 0"@R.N!I"N" %, .0A, .0M.R, .RVIN and .0.!,OR all surna*ed PIDO, do hereby waive, quitclaim all our rights, interests and participation overthe said parcel of land in favor of .DA D. 0OS R.A.S, of le+al a+e, 9f:ilipino, *arried to VIR%INI" D. 0OS R.A.S, and resident of ,ini+aran, Ne+ros Occidental, Philippines. . . . 4 9.*phasis supplied:The docu*ent as si+ned b- all of Pido;s heirs. Private respondent .d- de los Re-es did not si+n said docu*ent.It ill be noted that at the ti*e of !os*e Pido;s death, title to the propert- continued to be re+istered in the na*e of the Vas/ue6 spouses. @pon obtainin+ the Declaration of ,eirship ith 3aiver of Ri+hts in his favor, private respondent .d- de los Re-es filed the sa*e ith the Re+istr- of Deeds as part of a notice of an adverse claima+ainst the ori+inal certificate of title.Thereafter, private respondent sou+ht for petitioner 9"cap: to personall- infor* hi* that he 9.d-: had beco*e the ne oner of the land and that the lease rentals thereon should be paid to hi*. Private respondent further alle+ed that he and petitioner entered into an oral lease a+ree*ent herein petitioner a+reed to pa- ten 9(1: cavans of pala- per annum as lease rental. In (5e the trial court, respondent court as also convinced that thesaid docu*ent stands as prima facie proof of appellee;s 9private respondent;s: ownership of the landin dispute.3ith respect to its non$re+istration, respondent court noted that petitioner had actual >noled+e of the subEect saleof the land in dispute to private respondent because as earl- as (5ne of private respondent;s clai* over the said land but hich he thereafter denied, and that in (5noled+e of said sale hen he as su**oned b- the Ministr- of "+rarian Refor* to discuss private respondent;s clai* over the lot in /uestion. This conclusion has no basis both in fact and in la.On record, .7hibit 2D2, hich is the 2Declaration of ,eirship and 3aiver of Ri+hts2 as excluded b- the trial court in its order dated 27 August !!" because the docu*ent as neither re+istered ith the Re+istr- of Deeds nor identified b- the heirs of !os*e Pido. There is no shoin+ that private respondent had the sa*e docu*ent attached to or *ade part of the record. 3hat the trial court ad*itted as "nne7 2.2, a notice of adverse clai* filed ith the Re+istr- of Deeds hich contained the Declaration of ,eirship ith 3aiver of ri+hts and as annotated at the bac> of the Ori+inal !ertificate of Title to the land in /uestion." notice of adverse clai*, b- its nature, does not hoever prove private respondent;s onership over the tenanted lot. 2" notice of adverse clai* is nothin+ but a notice of a clai* adverse to the re+istered oner, the validit- of hich is -et to be established in court at so*e future date, and is no better than a notice of lis pendenshich is a notice of a case alread- pendin+ in court.2 15It is to be noted that hile the e7istence of said adverse clai* as dul- proven, there is no evidence hatsoever that a deed of sale as e7ecuted beteen !os*e Pido;s heirs and private respondent transferrin+ the ri+hts of Pido;s heirs to the land in favor of private respondent. Private respondent;s ri+ht or interest therefore in the tenanted lot re*ains an adverse clai* hich cannot b- itself be sufficient to cancel the O!T to the land and title the sa*e in private respondent;s na*e.!onse/uentl-, hile the transaction beteen Pido;s heirs and private respondent *a- be bindin+ on both parties, the ri+ht of petitioner as a re+istered tenant to the land cannot be perfunctoril- forfeited on a *ere alle+ation of private respondent;s onership ithout the correspondin+ proof thereof.Petitioner had been a re+istered tenant in the subEect land since (5'1 and reli+iousl- paid lease rentals thereon. In his *ind, he continued to be the re+istered tenant of !os*e Pido and his fa*il- 9after Pido;s death:, even if in (5, as if the sa*e ere ori+inall- si+ned and e7ecuted b- the V.ND...;It is further a+reed and understood b- the parties herein that the capital +ains ta7 and docu*entar- sta*ps on the sale shall be for the account of the V.NDOR= hereas, the re+istration fees and transfer ta7 thereon shall be the account of the V.ND...; 9.7h. ;";, pp. (($(#, Record:.;2On the sa*e date, and as part of the above$docu*ent, plaintiff "velina Velarde, ith the consent of her husband, Mariano, e7ecuted an @nderta>in+ 9.7h. ;!;, pp. (&$(B, Record:.;;7 7 77 7 77 7 7;3hereas, as per deed of Sale ith "ssu*ption of Mort+a+e, I paid Mr. David ". Ra-*undo the su* of .I%,T ,@NDR.D T,O@S"ND P.SOS 9P of the Philippine Islands in the a*ount of ON. MI00ION .I%,T ,@NDR.D T,O@S"ND P.SOS 9P(,, I have a+reed to pa- the *ort+a+e obli+ations on the propert- ith the Fan> in the na*e of Mr. David ". Ra-*undo, in accordance ith the ter*s and conditions of the said Deed of Real .state Mort+a+e, includin+ all interests and other char+es for late pa-*ent.;3,.R."S, this underta>in+ is bein+ e7ecuted in favor of Mr. David ". Ra-*undo, for purposes of attestin+ and confir*in+ our private understandin+ concernin+ the said *ort+a+e obli+ations to be assu*ed.;NO3, T,.R.FOR., for and in consideration of the fore+oin+ pre*ises, and the assu*ption of the *ort+a+e obli+ations of ON. MI00ION .I%,T ,@NDR.D T,O@S"ND P.SOS 9P(, of the Philippine Islands, I, Mrs, "velina D, Velarde ith the consent of *- husband, Mariano H. Velardo, do hereb- bind and obli+ate *-self, *- heirs, successors and assi+ns, to strictl- and faithfull- co*pl- ith the folloin+ ter*s and conditions4;(. That until such ti*e as *- assu*ption of the *ort+a+e obli+ations on the propert-purchased is approved b- the *ort+a+ee ban>, the Fan> of the Philippine Islands, I shall continue to pa- the said loan in accordance ith the ter*s and conditions of theDeed of Real .state Mort+a+e in the na*e of Mr. David ". Ra-*undo, the ori+inal Mort+a+or.;#. That, in the event I violate an- of the ter*s and conditions of the said Deed of Real .state Mort+a+e, I hereb- a+ree that *- donpa-*ent of P of the Philippine Islands on the *ort+a+e loan, shall be forfeited in favor of Mr. David ". Ra-*undo, as and b- a- of li/uidated da*a+es, ithout necessit- of notice or an- Eudicial declaration to that effect, and Mr.David ". Ra-*undo shall resu*e total and co*plete onership and possession of the propert- sold b- a- of Deed of Sale ith "ssu*ption of Mort+a+e, and the sa*e shall be dee*ed auto*aticall- cancelled and be of no further force or effect, in the sa*e *anner as it 9the: sa*e had never been e7ecuted or entered into.;&. That I a* e7ecutin+ the @nderta>in+ for purposes of bindin+ *-self, *- heirs, successors and assi+ns, to strictl- and faithfull- co*pl- ith the ter*s and conditionsof the *ort+a+e obli+ations ith the Fan> of the Philippine Islands, and the covenants, stipulations and provisions of this @nderta>in+.;That, David ". Ra-*undo, the vendor of the propert- *entioned and identified above, CdoesD hereb- confir* and a+ree to the underta>in+s of the Vendee pertinent to the assu*ption of the *ort+a+e obli+ations b- the Vendee ith the Fan> of the Philippine Islands. 9.7h. ;!;, pp. (&$(B, Record:.;2This underta>in+ as si+ned b- "velina and Mariano Velarde and David Ra-*undo.2It appears that the ne+otiated ter*s for the pa-*ent of the balance of P(.< *illion as fro* the proceeds of a loan that plaintiffs ere to secure fro* a ban> ith defendant;s help. Defendants had a standin+ approved credit line ith the Fan> of the Philippine Islands 9FPI:.The parties a+reed to avail of this, subEect to FPI;s approval of an application for assu*ption of *ort+a+e b- plaintiffs. Pendin+ FPI;s approval oCfD the application, plaintiffs ere to continue pa-in+ the *onthl- interests of the loan secured b- a real estate *ort+a+e.2Pursuant to said a+ree*ents, plaintiffs paid FPI the *onthl- interest on the loan secured b- the afore*entioned *ort+a+e for three 9&: *onths as follos4 Septe*ber (5, (5eise ad*itted this fact durin+ the hearin+ on Septe*ber (8, (55) 9p. B), t.s.n., Septe*ber (8, (5e the place of actual pa-*ent as ould dischar+e the obli+ation of a bu-er under a contract of sale.In a contract of sale, the seller obli+ates itself to transfer the onership of and deliver a deter*inate thin+s, and the bu-er to pa- therefor a price certain in *one- or its e/uivalent.(&Private respondents had alread- perfor*ed their obli+ation throu+h the e7ecution of the Deed of Sale, hich effectivel- transferred onership of the propert- to petitioner throu+h constructive deliver-. Prior ph-sical deliver- or possession is not le+all- re/uired, and the e7ecution of the Deed of Sale is dee*ed e/uivalent to deliver-.(BPetitioners, on the other hand, did not perfor* their correlative obli+ation of pa-in+ the contract pricein the *anner a+reed upon. 3orse, the- anted private respondents to perfor* obli+ations be-ond those stipulated in the contract before fulfillin+ their on obli+ation to pa- the full purchase price.Seco! #))+eValidity of the RescissionPetitioners li>eise clai* that the rescission of the contract b- private respondents as not Eustified, inas*uch as the for*er had si+nified their illin+ness to pa- the balance of the purchase price onl- a little over a *onth fro* the ti*e the- ere notified of the disapproval of their application for assu*ption of *ort+a+e. Petitioners also aver that the breach of the contract as not substantial as ould arrant a rescission. The- cite several cases(8 in hich this !ourt declared that rescission of acontract ould not be per*itted for a sli+ht or casual breach. Finall-, the- ar+ue that the- have substantiall- perfor*ed their obli+ation in +ood faith, considerin+ that the- have alread- *ade the initial pa-*ent of P