LDCS | SALES
OBLIGATIONS OF THE
SELLER
A. Preservation of the object of the sale
1163 Every person obliged to give something
Diligence of a good father is also obliged to take care of it with the
proper diligence of a good father of a
family unless the law or the stipulation
of the parties requires another
standard of care
1164 The creditor has a right to the fruits of
Accession the thing from the time the obligation
to deliver it arises. However he shall
acquire no real right over it until the
same has been delivered to him.
1165 When what is to deliver is a
determinate thing the creditor, in
addition to the right granted to him by
Art 1170, may compel the debtor to
make the delivery.
If the thing is indeterminate or generic,
he may ask that the obligation be
complied with at the expense of the
debtor.
If the obligor delays, or has promised to
deliver the same thing to two or more
persons who do not have the same
interests, he shall be responsible for
fortuitous event
1170 Those who in the performance of their
obligations are guilty of fraud,
negligence, or delay and those who in
any manner contravene the tenor
1171
thereof are liable for damages.
The fault or negligence of the obligor
consists in the omission of that
diligence which is required by the
nature of the obligation and
corresponds with the circumstances of
the persons, of the time and of the
place. When negligence shows bad
faith the provisions of article 1171 and
2201 paragraph 2 shall apply
If the law or contract does not state the
diligence which is to be observed in the
performance, that which is expected of
a good father of a family shall be
required.
B. Transfer of Ownership and delivery of the object
1477 The ownership of the thing sold
shall be transferred to the vendee
upon the actual or constructive
delivery thereof.
1. Concept of delivery or tradition
Daus v Sps De Leon
Facts: In July 1965, herein petitioners Silvestre T. Dignos and Isabela
Lumungsod de Dignos (spouses Dignos) sold their parcel of land in
Opon, Lapu–Lapu to herein private respondent Antonio Jabil for the
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sum of P28,000 payable for two installments, with an assumption of by notarial act that they were rescinding the contract, and neither
indebtedness with the First Insular Bank of Cebu in the sum of did they file a suit in court to rescind the sale. There is no showing
P12,000 and the next installment of P4,000 to be paid in September that Jabil properly authorized a certain Cipriano Amistad to tell
1965. In November 1965, the spouses Dignos sold the same parcel petitioners that he was already waiving his rights to the land in
of land for P35,000 to defendants Luciano Cabigas and Jovita L. de question.
Cabigas (spouses Cabigas) who were then US citizens, and executed
in their favor an Absolute Deed of Sale duly registered in the Office Sampaguita Pictures Inc., v. Jalwindor Manufacturers Inc
of the Register of Deeds.
Facts: Plaintiff-appellant Sampaguita Pictures, Inc. leased the
Upon discovery of the 2nd sale of the subject land, Jabil filed the
roofdeck of their Sampaguita Pictures Building to Capitol 300 Inc.
case at bar in the CFI of Cebu which rendered its Decision in August
and agreed that the premises shall be used for social purposes
1975 declaring the 2nd sale to the spouses Cabigas null and void ab
exclusively for the club’s members and guests; that all permanent
initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also
improvements made by lessee on the premises shall belong to the
ordered Jabil to pay the remaining P16,000 to the spouses Dignos
lessor without any obligation to reimburse; that these be
and to reimburse the spouses Cabigas a reasonable amount
considered as part of the consideration of the monthly rental; and
corresponding the expenses in the construction of hollow block
any remodeling, alteration and or addition be at the expense of
fences in the said parcel of land. The spouses Dignos were also
lessee. Glass and wooden jalousies were then purchased by Capitol
ordered to return the P35,000 to the spouses Cabigas.
from defendant-appellee Jalwindor Manufacturers Inc. which were
Both Jabil and the spouses Dignos appealed to the Court of Appeals,
delivered and installed in the premises. Capitol failed to pay the
which affirmed in July 1981 the CFI of Cebu’s Decision except for the
purchases prompting defendant-appellee to file an action for the
part of Jabil paying the expenses of the spouses Cabigas for building
collection of a sum of money with petition for preliminary
a fence. The spouses Dignos contested that the contract between
attachment. The parties submitted a Compromise Agreement to the
them and Jabil was merely a contract to sell and not a deed of sale.
trial court wherein Capitol acknowledged its indebtedness and
Issue : Is the contract between the parties a contract of sale or a
pending liquidation, the materials purchased will be considered as
contract to sell?
security. Thereafter, Capitol not only failed to comply with the
Held: The Supreme Court affirmed the Decision of the Court of
Compromise Agreement but also failed to pay rentals to plaintiff-
Appeals saying stated that all the elements of a valid contract of
appellant, causing their ejectment with damages paid to the latter.
sale are present in the document and that the spouses Dignos had
When the Sheriff of Quezon City levied upon the materials, plaintiff-
no right to sell the land in question because an actual delivery of its
appelant filed a third-party claim alleging that it is the owner of the
possession has already been made in favor of Jabil as early as March
same however, defendant-appellee filed an indemnity bond in favor
1965. It was also found that the spouses Dignos never notified Jabil

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of the Sheriff and the public auction pushed through with the latter
as the highest bidder. Plaintiff-appellant sought to nullify the sale in
an action filed with the Court of First Instance and for the issuance
of a writ of preliminary injuction against defendant-appellee from
detaching the materials. Based on the Stipulation of Facts
submitted, the lower court dismissed the complaint. The
subsequent motion for reconsideration was likewise denied hence
the instant petition.
Issue: WON the lower court erred in holding that there was no legal
transfer of ownership of the glass and wooden jalousies from
Capitol 300 Inc. to plaintiff-appellant?
Held: Court held in the affirmative. When the glass and wooden
jalousies in question were delivered and installed in the leased
premises, Capitol became the owner thereof. Ownership is not
transferred by perfection of the contract but by delivery, either
actual or constructive. This is true even if the purchase has been
made on credit, as in the case at bar. Payment of the purchase price
is not essential to the transfer of ownership as long as the property
sold has been delivered. Ownership is acquired from the moment
the thing sold was delivered to vendee, as when it is placed in his
control and possession.
Capitol entered into a lease contract with Sampaguita in 1964, and
the latter became the owner of the items in question by virtue of
the agreement in said contract. When levy or said items was made
on July 31, 1965, Capitol, the judgment debtor, was no longer the
owner thereof.
The items in question were illegally levied upon since they do not
belong to the judgment debtor. The power of the Court in execution
of judgment extends only to properties unquestionably belonging to
the judgment debtor. Execution sales affect the rights of judgment
debtor only, and the purchaser in the auction sale acquires only the
right as the debtor has at the time of sale. Since the items already
belong to Sampaguita and not to Capitol, the judgment debtor, the
levy and auction sale are, accordingly, null and void. Decision
reversed.
PNB v Ling
Facts: In September 1916, Severo Eugenio Lo and Ling, together
with Ping, Hun, Lam and Peng formed a commercial partnership
under the name of “Tai Sing and Co.,” with a capital of P40,000
contributed by said partners. The firm name was registered in the
mercantile registrar in the Province of Iloilo. Ping, in the articles of
partnership, was assigned as the general manager. However, in
1917, he executed a special power of attorney in favor of Lam to act
in his behalf as the manager of the firm. Subsequently, Lam
obtained a loan from PNB – the loan was under the firm’s name. In
the same year, Ping died in China. From 1918 to 1920, the firm, via
GM Lam, incurred other loans from PNB. The loans were not
objected by any of the partners. Later, PNB sued the firm for non-
payment. Lo, in his defense, argued that he cannot be liable as a
partner because the partnership, according to him, is void; that it is
void because the firm’s name did not comply with the requirement
of the Code of Commerce that a firm name should contain the
“names of all of the partners, of several of them, or only one of
them”. Lo also argued that the acts of Lam after the death of Ping is
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not binding upon the other partners because the special power of
attorney shall have already ceased.
ISSUE: Whether or not Lo is correct in both arguments.
HELD: No. The anomalous adoption of the firm name above noted
does not affect the liability of the general partners to third parties
under Article 127 of the Code of Commerce. The object of the Code
of Commerce in requiring a general partnership to transact business
under the name of all its members, of several of them, or of one
only, is to protect the public from imposition and fraud; it is for the
protection of the creditors rather than of the partners themselves.
It is unenforceable as between the partners and at the instance of
the violating party, but not in the sense of depriving innocent
parties of their rights who may have dealt with the offenders in
ignorance of the latter having violated the law; and that contracts
entered into by a partnership firm defectively organized are valid
when voluntarily executed by the parties, and the only question is
whether or not they complied with the agreement. Therefore, Lo
cannot invoke in his defense the anomaly in the firm name which
they themselves adopted. Lo was not able to prove his second
argument. But even assuming arguendo, his second contention does
not deserve merit because (a) Lam, in acting as a GM, is also a
partner and his actions were never objected to by the partners, and
(b) it also appeared from the evidence that Lo, Lam and the other
partners authorized some of the loans.
Norkis Distributor Inc, v CA
FACTS: Petitioner Norkis Distributors, Inc. is the distributor of
Yamaha motorcycles in Negros Occidental. On September 20,
1979,private respondent Alberto Nepales bought from the Norkis
Bacolod branch a brand new Yamaha Wonderbike motorcycleModel
YL2DX. The price of P7,500.00 was payable by means of a Letter of
Guaranty from the DBP, which Norkis agreedto accept. Credit was
extended to Nepales for the price of the motorcycle payable by DBP
upon release of his motorcycleloan. As security for the loan,
Nepales would execute a chattel mortgage on the motorcycle in
favor of DBP. Petitionerissued a sales invoice which Nepales signed
in conformity with the terms of the sale. In the meantime, however,
the motorcycle remained in Norkis’ possession. On January 22,
1980, the motorcycle was delivered ¬to a certain Julian Nepales,
allegedly the agent of Alberto Nepales. The motorcycle met an
accident on February 3, 1980 at Binalbagan,Negros Occidental. An
investigation conducted by the DBP revealed that the unit was being
driven by a certain ZacariasPayba at the time of the accident. The
unit was a total wreck was returned.On March 20, 1980, DBP
released the proceeds of private respondent’s motorcycle loan to
Norkis in the total sum of P7,500. As the price of the motorcycle
later increased to P7,828 in March, 1980, Nepales paid the
difference of P328 anddemanded the delivery of the motorcycle.
When Norkis could not deliver, he filed an action for specific
performance withdamages against Norkis in the RTC of Negros
Occidental. He alleged that Norkis failed to deliver the motorcycle
which hepurchased, thereby causing him damages. Norkis answered
that the motorcycle had already been delivered to
privaterespondent before the accident, hence, the risk of loss or
damage had to be borne by him as owner of the unit.
ISSUE: Whether or not there has been a transfer of ownership of
the motorcycle to Alberto Nepales.
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HELD: No.The issuance of a sales invoice does not prove transfer of
ownership of the thing sold to the buyer. An invoice isnothing more
than a detailed statement of the nature, quantity and cost of the
thing sold and has been considered not abill of sale. In all forms of
delivery, it is necessary that the act of delivery whether constructive
or actual, be coupled with the intention of delivering the thing. The
act, without the intention, is insufficient. When the motorcycle was
registered by Norkis in the name of private respondent, Norkis did
not intend yet to transfer the title or ownership to Nepales, but only
to facilitate the execution of a chattel mortgage in favor of the DBP
for the release of the buyer’s motorcycle loan.
Article 1496 of the Civil Code which provides that “in the absence of
an express assumption of risk by the buyer, the things sold remain
at seller’s risk until the ownership thereof is transferred to the
buyer,” is applicable to this case, for there was neither an actual nor
constructive delivery of the thing sold, hence, the risk of loss should
be borne by the seller, Norkis, which was still the owner and
possessor of the motorcycle when it was wrecked. This is in
accordance with the well¬ known doctrine of res perit domino.
Philippine Suburban Development v Auditor
FACTS: Petitioner Philippine Suburban Development Corporation, as
owner and People’s Homesite and Housing Corporation (PHHC),as
authorized by the President of the Philippines, entered into a
contract embodied in a public instrument entitled “Deed of
Absolute Sale” whereby the former conveyed unto the latter the
unoccupied portion of the Sapang Palay Estate. This was not
registered in the Office of the Register of Deeds until March 14,
1961, due to the fact, petitioner claims, that the PHHC could not at
once advance the money needed for registration expenses. On April
12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to
withhold the amount of P30,099.79 from the purchase price to be
paid by it to the Philippine Suburban Development Corporation.
Said amount represented the realty tax due on the property
involved for the calendar year 1961. Petitioner, through the PHHC,
paid under protest the abovementioned amount and thereafter, by
letter, requested then Secretary of Finance Dominador Aytona
to order a refund of the amount so paid. Upon recommendation of
the Provincial Treasurer of Bulacan, said request was denied by the
Secretary of Finance.
ISSUE: WON there was already a valid transfer of ownership
between the partiesand thus petitioner is entitled for a refund.
HELD: YES. there was already a valid transfer of ownership. Under
the civil law, delivery (tradition) as a mode of transmission of
ownership maybe actual (real tradition) or constructive
(constructive tradition). When the sale of real property is made in a
public instrument, the execution thereof is equivalent to the
delivery of the thing/object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred. In other
words, there is symbolic delivery of the property subject of the sale
by the execution of the public instrument, unless from the express
terms of the instrument, or by clear inference therefrom, this was
not the intention of the parties. made In the case at bar, there is no
question that the vendor had actually placed the vendee in
possession and control over the thing sold, even before the date of
the sale. The condition that petitioner should first register the deed
of sale and secure a new title in the name of the vendee before the
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latter shall pay the balance of the purchase price, did not preclude
the transmission of ownership. In the absence of an express
stipulation to the contrary, the payment of the purchase price of
the good is not a condition precedent to the transfer of title to the
buyer, but title passes by the delivery of the goods. It goes without
saying that the petitioner is entitled for a refund
a. Ways of effecting delivery
ACTUAL OR REAL
1497 The thing sold shall be understood as
ACTUAL delivered, when it is placed in the
control and possession of the vendee
1232 Payment means not only the delivery of
money but also the performance, in any
other manner, of an obligation.
1233 A debt shall not be understood to have
been paid unless the thing or service in
which the obligation consists has been
completely delivered or rendered, as
the case may be.
1234 If the obligation has been substantially
performed in good faith, the obligor
may recover as though there had been
a strict and complete fulfillment, less
damages suffered by the oblige.
1235 When the obligee accepts the
performance, knowing its
incompleteness or irregularity, and
without expressing any protest or
objection, the obligation is deemed
fully complied with.
1236 The creditor is not bound to accept
payment or performance by a third
person who has no interest in the
fulfillment of the obligation, unless
there is a stipulation to the contrary
Whoever pays for another may demand
from the debtor what he has paid,
except that if he paid without the
knowledge or against the will of the
debtor, he can recover only insofar as
the payment has been beneficial to the
debtor.
1237 Whoever pays on behalf of the debtor
without the knowledge or against the
will of the latter, cannot compel the
creditor to subrogate him in his rights,
such as those arising from a mortgage,
guaranty, or penalty.
1238 Payment made by a third person who
does not intend to be reimbursed by
the debtor is deemed to be a donation,
which requires the debtor's consent.
But the payment is in any case valid as
to the creditor who has accepted it.
1239 In obligations to give, payment made by
one who does not have the free
disposal of the thing due and capacity
to alienate it shall not be valid, without
prejudice to the provisions of Article
1427 under the Title on "Natural
Obligations."
1240 Payment shall be made to the person in
whose favor the obligation has been
constituted, or his successor in interest,
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or any person authorized to receive it.
1241 Payment to a person who is
incapacitated to administer his
property shall be valid if he has kept
the thing delivered, or insofar as the
payment has been beneficial to him
Payment made to a third person shall
also be valid insofar as it has redounded
to the benefit of the creditor. Such
benefit to the creditor need not be
proved in the following cases:
(1) If after the payment, the third
person acquires the creditor's rights;
(2) If the creditor ratifies the payment
to the third person;
(3) If by the creditor's conduct, the
debtor has been led to believe that the
third person had authority to receive
the payment.
1242 Payment made in good faith to any
person in possession of the credit shall
release the debtor
1243 Payment made to the creditor by the
debtor after the latter has been
judicially ordered to retain the debt
shall not be valid.
1244 The debtor of a thing cannot compel
the creditor to receive a different one,
although the latter may be of the same
value as, or more valuable than that
which is due.
In obligations to do or not to do, an act
or forbearance cannot be substituted
by another act or forbearance against
the obligee's will.
1245 Dation in payment, whereby property is
alienated to the creditor in satisfaction
of a debt in money, shall be governed
by the law of sales.
1246 When the obligation consists in the
delivery of an indeterminate or generic
thing, whose quality and circumstances
have not been stated, the creditor
cannot demand a thing of superior
quality. Neither can the debtor deliver a
thing of inferior quality. The purpose of
the obligation and other circumstances
shall be taken into consideration.
1247 Unless it is otherwise stipulated, the
extrajudicial expenses required by the
payment shall be for the account of the
debtor. With regard to judicial costs,
the Rules of Court shall govern.
1248 Unless there is an express stipulation to
that effect, the creditor cannot be
compelled partially to receive the
prestations in which the obligation
consists. Neither may the debtor be
required to make partial payments.
However, when the debt is in part
liquidated and in part unliquidated, the
creditor may demand and the debtor
may effect the payment of the former
without waiting for the liquidation of
the latter.
1249 he payment of debts in money shall be
made in the currency stipulated, and if
it is not possible to deliver such
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currency, then in the currency which is
legal tender in the Philippines.
The delivery of promissory notes
payable to order, or bills of exchange or
other mercantile documents shall
produce the effect of payment only
when they have been cashed, or when
through the fault of the creditor they
have been impaired.
In the meantime, the action derived
from the original obligation shall be
held in the abeyance
1250 In case an extraordinary inflation or
deflation of the currency stipulated
should supervene, the value of the
currency at the time of the
establishment of the obligation shall be
the basis of payment, unless there is an
agreement to the contrary.
1251 Payment shall be made in the place
designated in the obligation
There being no express stipulation and
if the undertaking is to deliver a
determinate thing, the payment shall
be made wherever the thing might be
at the moment the obligation was
constituted.
In any other case the place of payment
shall be the domicile of the debtor.
If the debtor changes his domicile in
bad faith or after he has incurred in
delay, the additional expenses shall be
borne by him.
These provisions are without prejudice
to venue under the Rules of Court.
CONSTRUCTIVE OR LEGAL
1498 When the sale is made through a
public instrument, the execution
thereof shall be equivalent to the
delivery of the thing which is the
object of the contract, if from the
deed the contrary does not appear or
cannot clearly be inferred.
With regard to movable property, its
delivery may also be made by the
delivery of the keys of the place or
depository where it is stored or kept.
1499 The delivery of movable property
may likewise be made by the mere
consent or agreement of the
contracting parties, if the thing sold
cannot be transferred to the
possession of the vendee at the time
of the sale, or if the latter already had
it in his possession for any other
reason.
1500 There may also be tradition
constitutum possessorium
1501 With respect to incorporeal property,
the provisions of the first paragraph
of article 1498 shall govern. In any
other case wherein said provisions
are not applicable, the placing of the
titles of ownership in the possession
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of the vendee or the use by the
vendee of his rights, with the
vendor's consent, shall be
understood as a delivery.
I. Public Instrument
Adisson v Felix
FACTS: The defendants-appellees spouses Maciana Felix and
Balbino Tioco purchased from plaintiff-appellant A.A. Addison four
parcels of land to which Felix paid, at the time of the execution of
the deed, the sum of P3,000 on account of the purchase price. She
likewise bound herself to the remainder in installments, the first of
P,2000 on July 15, 1914, the second of P5,000 thirty days after the
issuance to her of a certificate of title under the Land Registration
Act, and further, within ten years from the date of such title, P10 for
each cocoanut tree in bearing and P5 for each such tree not in
bearing that might be growing on said parcels of land on the date of
the issuance of title to her, with the condition that the total price
should not exceed P85,000. It was further stipulated that Felix was
to deliver to the Addison 25% of the value of the products that she
might obtain from the four parcels "from the moment she takes
possession of them until the Torrens certificate of title be issued in
her favor," and that within 1 year from the date of the certificate of
title in her favor, Marciana Felix may rescind the contract of
purchase and sale.
In January 1915, Addison , filed suit in the CFI of Manila to compel
Felix to pay the first installment of P2,000, demandable, in
accordance with the terms of the contract of sale. The defendants
Felix and her husband Tioco contended that Addison had absolutely
failed to deliver the lands that were the subject matter of the sale,
notwithstanding the demands they made upon him for this
purpose. The evidence adduced shows Addison was able to
designate only two of the four parcels, and more than two-thirds of
these two were found to be in the possession of one Juan
Villafuerte, who claimed to be the owner of the parts he so
occupied. The trial court held the contract of sale to be rescinded
and ordered Addison to return to Felix the P3,000 paid on account
of the price, together with interest thereon at the rate of 10% per
annum.
ISSUE: Was there a delivery made and, therefore, a transfer of
ownership of the thing sold?
HELD: The Supreme Court affirmed the decision of the lower court,
with modification that the interest thereon will be at the rate of 6%
(instead of 10%) per annum from the date of the filing of the
complaint until payment.
The thing is considered to be delivered when it is placed "in the
hands and possession of the vendee." It is true that the same article
declares that the execution of a public instrument is equivalent to
the delivery of the thing which is the object of the contract, but, in
order that this symbolic delivery may produce the effect of
tradition, it is necessary that the vendor shall have had such control
over the thing sold that, at the moment of the sale, its material
delivery could have been made. Symbolic delivery through the
execution of a public instrument is sufficient when there is no
impediment whatever to prevent the thing sold passing into the
tenancy of the purchaser by the sole will of the vendor. But if,
notwithstanding the execution of the instrument, the purchaser
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cannot have the enjoyment and material tenancy of the thing and
make use of it himself or through another in his name, because such
are opposed by a third person’s will, then the delivery has not been
effected. In the case at bar, therefore, it is evident, that the mere
execution of the instrument was not a fulfillment of the vendor's
obligation to deliver the thing sold, and that from such non-
fulfillment arises the purchaser's right to demand, as she has
demanded, the rescission of the sale and the return of the price.
Ten Forty Realty v. Cruz
FACTS: An ejectment suit was filed by petitioner Ten Forty against
Marina Cruz alleging that the former is the true and absolute owner
of a parcel of land and residential house located #71 18th st E.B.B
Olongapo ciity with an area of 324 square meters having acquired
said property from Barbara Galino by virtue of Deed of Absolute
Sale. After few years, petitioner Ten Forty learned that same
property was sold to Cruz who immediately occupied the property.
Failure to arrive at an amicable settlement, a demand letter was
sent to respondent Cruz to vacate and pay reasonable amount for
the occupation of the same, however, thus refused to vacate the
premises. A counterclaim was submitted by respondent contending
that petitioner is not qualified to the property being a public land,
that Galino did not sell the property to petitioner but merely
obtained a loan from Veronica Lorenzana, president of the
corporation, no allegation as to the prior possession of petitioner of
the subject land wherein Galino was the actual possessor when it
was sold and vacated the premises in favor of the respondent.
MTCC ruled in favor of petitioner and ordered respondent to vacate
the property and surrender the possession thereof to Ten Forty.
RTC reversed MTCC’s decision and ruled that the execution of Deed
of Absolute sale in favor of petitioner Ten Forty without actual
transfer of the physical possession did not have the effect of making
the petitioner the owner of the property because there was no
delivery of the object of the sale. An appeal was submitted to court
of Appeals which sustained the ruling of RTC.
ISSUE: Whether or not delivery occurred upon the execution of
Deed of sale to warrant possession over the subject land
HELD: Art 1498 lays down the rule that an execution of public
instrument shall be e0uivalent to the delivery of the thing that is the
object of the contract if, from the deed, the contrary does not
appear or cannot be clearly inferred ownership is transferred not by
contract but by actual delivery, civil code did not indicate that the
execution of deed of sale is a conclusive presumption of delivery of
possession of real estate. Supreme Court held that the execution of
public instrument is a prima facie presumption of delivery and may
be destroyed when actual delivery is not effected because of a legal
impediment. Petitioner Ten Forty never acquired the property from
the time it was sold to the corporation since Galino remained in
possession of the subject land and later vacated it after the second
sale to Cruz, hence, it remained under the control and possession of
Galino.
ii. Tradition longa manu
“Delivery with the long hand.” Traditio longa manu or “delivery
with the long hand” refers to the act of delivery of a transferring
party to the receiving party who does not yet have the object in
their possession. For example, if a party purchases a car from an
auto dealer that is on the auto dealer’s lot, the transferror auto
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dealer will deliver the vehicle to the transferee/purchaser at the
purchaser’s home
ii. Tradition brevi manu
Latin, meaning “delivery with the short hand.” Traditio brevi manu
or “delivery with the short hand” refers to the act of a person, to
whom an item is transferred, who is already in possession of the
item but not as the owner of the item. The concept prevents the
need for a needless “double delivery” for a party to take ownership
of an item they already have in their possession. It is a constructive
or implied delivery.
For example, a person who leases a car has possession of the
automobile although not the owner. If the lease contains an option
to buy, the lessee then could become a purchaser. It would be
needless and burdensome to require the lessee to return the car to
the lessor solely to afford the lessor/owner with the ability make a
legal delivery of the car back to the lessee/purchaser to legally
complete the act of a purchase. In essence, the car is delivered with
the short hand since the lessee already has the car in his or her
possession.
iii. Tradition constitutum possesorium
A Latin term used to describe the case where an item is sold by a
seller to a purchaser, but before it can be transferred to the new
owner (purchaser), the item is kept or stored by the former owner
(seller). Thus, the parties right over the object have changed despite
physical delivery to the new owner not having taken place.
The seller agrees to keep the item for the purchaser or when the
seller transfers ownership and retains a usufruct.
iv. Quasi tradition
QUASI TRADITION, civil law. A term used to designate that a person
is in the use of the property of another, which the latter suffers and
does not oppose. Lec. Elein. Sec. 396. It also signifies the act by
which the right of property is ceded in a thing to a person who is in
possession of it; as, if I loan a boat to Paul, and deliver it to him, and
afterwards I sell him the boat, it is not requisite that he should
deliver the boat to me, to be again delivered to him there is a quasi-
tradition or delivery.
Heirs of Arturo Beltran v Socc Beltran
Facts: The subject land was a part of a larger parcel of land
partitioned into three extra-judicially by the heirs of Constancia
Socco sometime in 1965. Respondent applied before the DAR the
purchase of the subject land stating that the land was adjudicated in
her favor. However, the Heirs of Reyes protested against the
application claiming that the subject land was owned by their
predecessor-in-interest evidenced by a conditional Contract to Sell
executed by the brother of the respondent and stated therein that
he was to inherit the subject parcel of land. The director of DAR
denied the application on the ground that she was not the actual
tiller of the land and abandoned the land for a period of 40years. On
appeal to the secretary of DAR, it was reversed and found that
petitioners’ predecessor-in-interest was not the actual occupant of
the said land. Petitioners sought remedy from the Office of the
President by appealing but the Office of the President rendered its
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Decision denying petitioners’ appeal and affirming the DAR
Secretary’s Decision. Consequently, petitioners filed an appeal
before the Court of Appeals, however, the Court of Appeals
affirmed the decision of the Office of the President.
Issue: Whether or not petitioners have a better right to the subject
property over the respondent
Held: Petitioners cannot derive title to the subject property by
virtue of the Contract to Sell. It was unmistakably stated in the
Contract and made clear to both parties thereto that the vendor,
Miguel R. Socco, was not yet the owner of the subject property and
was merely expecting to inherit the same as his share as a co-heir of
Constancia’s estate. It was also declared in the Contract itself that
Miguel R. Socco’s conveyance of the subject to the buyer, Arturo
Reyes, was a conditional sale. It is, therefore, apparent that the sale
of the subject property in favor of Arturo Reyes was conditioned
upon the event that Miguel Socco would actually inherit and
become the owner of the said property. Absent such occurrence,
Miguel R. Socco never acquired ownership of the subject property
which he could validly transfer to Arturo Reyes. Under Article 1459
of the Civil Code on contracts of sale, “The thing must be licit and
the vendor must have a right to transfer ownership thereof at the
time it is delivered.” The law specifically requires that the vendor
must have ownership of the property at the time it is delivered. It
was explicit in the Contract itself that, at the time it was executed,
Miguel R. Socco was not yet the owner of the property and was only
expecting to inherit it. Hence, there was no valid sale from which
ownership of the subject property could have transferred from
Miguel Socco to Arturo Reyes. Without acquiring ownership of the
subject property, Arturo Reyes also could not have conveyed the
same to his heirs, herein petitioners.
Rudolph Leitz Inc v CA
Facts: Respondent Agapito Buriol previously owned a parcel of
unregistered land situated at Capsalay Island, Port Barton, San
Vicente, Palawan. On August 15, 1986, respondent Buriol entered
into a lease agreement with Flavia Turatello and respondents
Turatello and Sani, all Italian citizens, involving one (1) hectare of
respondent Buriol’s property. The lease agreement was for a period
of 25 years, renewable for another 25 years. The lessees took
possession of the land after paying respondent Buriol a down
payment of P10,000.00. The lease agreement, however, was
reduced into writing only in January 1987. On November 17, 1986,
respondent Buriol sold to petitioner Rudolf Lietz, Inc. the same
parcel of land for the amount of P30,000.00. Petitioner later
discovered that respondent Buriol owned only four (4) hectares,
and with one more hectare covered by lease, only three (3) hectares
were actually delivered to petitioner. Thus, petitioner instituted on
April 3, 1989 a complaint for Annulment of Lease with Recovery of
Possession with Injunction and Damages against respondents and
Flavia Turatello before the RTC. The complaint alleged that with
evident bad faith and malice, respondent Buriol sold to petitioner
five (5) hectares of land when respondent Buriol knew for a fact
that he owned only four (4) hectares and managed to lease one
more hectare to Flavia Turatello and respondents Tiziana Turatello
and Paola Sani. The complaint sought the issuance of a restraining
order and a writ of preliminary injunction to prevent Flavia Turatello
and respondents Turatello and Sani from introducing improvements
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on the property, the annulment of the lease agreement between
respondents, and the restoration of the amount paid by petitioner
in excess of the value of the property sold to him. The trial court
rendered judgment on May 27, 1992, dismissing both petitioner’s
complaint and respondents’ counterclaim for damages. Petitioner
and respondents Turatello and Sani separately appealed the RTC
Decision to the Court of Appeals, which affirmed the dismissal of
petitioner’s complaint and awarded respondents Turatello and Sani
damages and attorney’s fees.
Issue: Whether or not petitioner is entitled to the delivery of the
entire five hectares or its equivalent
Held: Where both the area and the boundaries of the immovable
are declared, the area covered within the boundaries of the
immovable prevails over the stated area. In cases of conflict
between areas and boundaries, it is the latter which should prevail.
What really defines a piece of ground is not the area, calculated
with more or less certainty, mentioned in its description, but the
boundaries therein laid down, as enclosing the land and indicating
its limits. Thus, the obligation of the vendor is to deliver everything
within the boundaries, inasmuch as it is the entirety thereof that
distinguishes the determinate object. The sale between petitioner
and respondent Buriol involving the latter’s property is one made
for a lump sum. The Deed of Absolute Sale shows that the parties
agreed on the purchase price on a predetermined area of five
hectares within the specified boundaries and not based on a
particular rate per area. In accordance with Article 1542, there shall
be no reduction in the purchase price even if the area delivered to
petitioner is less than that stated in the contract. In the instant case,
the area within the boundaries as stated in the contract shall
control over the area agreed upon in the contract.
Salinas v. Faustino
Facts: Respondent Bienvenido S. Faustino by a Deed of Absolute
Sale dated June 27, 1962, purchased from his several co-heirs,
including his first cousins Benjamin Salinas and herein petitioner
Dolores Salinas, their respective shares to a parcel of land in the
name of their grandmother Carmen Labitan, located in Subic,
Zambales. On March 15, 1982, respondent Faustino, joined by his
wife, filed before the then Court of First Instance of Zambales a
complaint for recovery of possession with damages against
petitioner. Respondent spouses further alleged that they allowed
petitioner and co-heirs to occupy and build a house on a portion of
the land on the condition that they would voluntarily and
immediately remove the house and vacate that portion of the land
should the respondents need the land. When they asked petitioner
and her co-heir-occupants to remove the house and restore the
possession of the immediately-described portion of the land, they
refused, hence, the filing of the complaint. Petitioner claimed that
she is the owner of that portion of the land and alleges that her
signature in the June 27, 1962 Deed of Sale is forged. The RTC found
petitioner's claim of forgery unsupported. It nevertheless dismissed
the complaint. The boundaries of the land indicated in the Deed of
Sale are different from that of which is claimed by the respondents.
Even the tax declaration submitted by the plaintiff indicates
different boundaries with that of the land indicated in the Deed of
Sale.
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ISSUE: Whether or not a description of a lot area can be used as
evidence for purchase and ownership of the lot.
RULING: In a contract of sale of land in a mass, the specific
boundaries stated in the contract must control over any statement
with respect to the area contained within its boundaries. Thus, it is
the boundaries indicated in a deed of absolute sale, and not the
area in sq. m. mentioned therein 300.375 sq.m. in the Deed of Sale
in respondents favor that control in the determination of which
portion of the land a vendee acquires. In concluding that Faustino
acquired via the June 27, 1962 Deed of Sale the total land area of
753 sq. m., the Court of Appeals subtracted from the total land area
of 1,381 sq. m. reflected in Exh. A, which is Plan of Lot 3, Block 5-k,
Psd-8268, as prepared for Benjamin R. Salinas containing an area of
1,381 sq. m. and which was prepared on February 10, 1960 by a
private land surveyor, the 628 sq. m. area of the lot claimed by
Salinas as reflected in Tax Declaration No. 1017 in her name. As will
be shown shortly, however, the basis of the appellate court‘s
conclusion is erroneous. As the immediately preceding paragraph
reflects, the Plan of Lot 3, Bk 5-K, Psd-82 was prepared for Spouses
Faustino and Salinas‘ first cousin co-heir Benjamin Salinas on
February 10, 1960. Why the appellate court, after excluding the 628
sq. m. lot covered by a Tax Declaration in the name of petitioner
from the 1,381 sq. m. lot surveyed for Benjamin P. Salinas in 1960,
concluded that what was sold via the 1962 Deed of Sale to
respondent Faustino was the remaining 753 sq. m., despite the clear
provision of said Deed of Sale that what was conveyed was 300.375
sq. m., escapes comprehension. It defies logic, given that
respondents base their claim of ownership of the questioned 628
sq. m. occupied by Salinas on that June 27, 1962 Deed of Sale
covering a 300.375 sq. m. lot. The Court of Appeals thus doubly
erred in concluding that 1) what was sold to respondents via the
June 27, 1962 Deed of Sale was the 1,381 sq. m. parcel of land
reflected in the Plan-Exh. A prepared in 1960 for Benjamin Salinas,
and 2) Salinas occupied 628 sq. m. portion thereof, hence, Spouses
Faustino own the remaining 753 sq. m.
De Leon v. Ong
Facts: On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3
parcels of land to Benita T. Ong(respondent). The said properties
were mortgaged to a financial institution; Real Savings & Loan
Association Inc. (RSLAI). The parties then executed a notarized deed
of absolute sale with assumption of mortgage. As indicated in the
deed of mortgage, the parties stipulated that the petitioner (de
Leon) shall execute a deed of assumption of mortgage in favor of
Ong (respondent)after full payment of the P415,000. They also
agreed that the respondent (Ong) shall assume the mortgage. The
respondent then subsequently gave petitioner P415,000 as partial
payment. On the other hand, de Leon handed the keys to Ong and
de Leon wrote a letter to inform RSLAI that the mortgage will be
assumed by Ong. Thereafter, the respondent took repairs and made
improvements in the properties. Subsequently, respondent learned
that the same properties were sold to a certain Viloria after March
10, 1993 and changed the locks, rendering the keys given to her
useless. Respondent proceeded to RSLAI but she was informed that
the mortgage has been fully paid and that the titles have been given
to the said person. Respondent then filed a complaint for specific
performance and declaration of nullity of the second sale and
damages. The petitioner contended that respondent does not have
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a cause of action against him because the sale was subject to a
condition which requires the approval of RSLAI of the mortgage.
Petitioner reiterated that they only entered into a contract to sell.
The RTC dismissed the case. On appeal, the CA upheld the sale to
respondent and nullified the sale to Viloria. Petitioner moved for
reconsideration to the SC.
Issue: Whether or not a double sale?
Held: the disputed properties were sold validly on two separate
occasions by the same seller to the two different buyers in good
faith. 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. In this instance, petitioner
delivered the properties to respondent when he executed the
notarized deed22 and handed over to respondent the keys to the
properties. For this reason, respondent took actual possession and
exercised control thereof by making repairs and improvements
thereon. Clearly, the sale was perfected and consummated on
March 10, 1993. Thus, respondent became the lawful owner of the
properties.
Asset Privatization Trust v. Tj Enterprises
Facts: Petitioner was a government entity created for the purpose
to conserve, to provisionally manage and to dispose assets of
government institutions. It had acquired assets consisting of
machinery and refrigeration equipment stored at the Golden City
compound which was leased to and in the physical possession of
Creative Lines, Inc., (Creative Lines). These assets were being sold
on an as-is-where-is basis.Petitioner and respondent entered into
an absolute deed of sale over certain machinery and refrigeration
equipment wherein respondent paid the full amount as evidenced
by petitioner’s receipt. After two (2) days, respondent demanded
the delivery of the machinery it had purchased. Petitioner issued a
Gate Pass to respondent to enable them to pull out from the
compound the properties designated ; however, during the hauling
of Lot No. 2 consisting of sixteen (16) items, only nine (9) items
were pulled out by respondent. Respondent filed a complaint for
specific performance and damages against petitioner and Creative
Lines. Upon inspection of the remaining items, they found the
machinery and equipment damaged and had missing parts.
Petitioner claimed that there was already a constructive delivery of
the machinery and equipment upon the execution of the deed of
sale it had complied with its obligation to deliver the object of the
sale since there was no stipulation to the contrary and it was the
duty of respondent to take possession of the property. The RTC
ruled that petitioner is liable for breach of contract and should pay
for the actual damages suffered by respondent. It found that at the
time of the sale, petitioner did not have control over the machinery
and equipment and, thus, could not have transferred ownership by
constructive delivery. The Court of Appeals affirmed the judgment;
hence, this petition.
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Issue: Whether or not the petitioner had complied with its
obligations to make delivery of the properties and failure to make
actual delivery of the properties was not attributable was beyond
the control of petitioner?
Held:No. There was no constructive delivery of the machinery and
equipment upon the execution of the deed of absolute sale or upon
the issuance of the gate pass since it was not the petitioner but
Creative Lines which had actual possession of the property. The
presumption of constructive delivery is not applicable as it has to
yield to the reality that the purchaser was not placed in possession
and control of the property. Petitioner also claims that its failure to
make actual delivery was beyond its control. It posits that the
refusal of Creative Lines to allow the hauling of the machinery and
equipment was unforeseen and constituted a fortuitous event. The
matter of fortuitous events is governed by Art. 1174 of the Civil
Code which provides that except in cases expressly specified by the
law, or when it is otherwise declared by stipulation, or when the
nature of the obligation requires assumption of risk, no person shall
be responsible for those events which could not be foreseen, or
which though foreseen, were inevitable. A fortuitous event may
either be an act of God, or natural occurrences such as floods or
typhoons, or an act of man such as riots, strikes or wars. However,
when the loss is found to be partly the result of a person’s
participation whether by active intervention, neglect or failure to
act, the whole occurrence is humanized and removed from the rules
applicable to a fortuitous event. Thus, the risk of loss or
deterioration of property is borne by petitioner. Thus, it should be
liable for the damages that may arise from the delay.
Board of liquidators v. Exequiel Floro
FACTS: Melecio Malabanan entered into an agreement with the
Board of Liquidators for the salvage of surplus properties sunk in
territorial waters off the provinces of Mindoro, La Union, and
Batangas. Malabanan submitted a recovery report dated July 26,
1954, wherein it is stated that he had recovered a total of 13,107
pieces of steel mattings from the opreations. Four months
previously, Malabanan had entered into an agreement with
Exequiel Floro, agreeing that Floro would advance to Malabanan
certain sums of money, not to exceed P25,000.00, repayment,
thereof being secured by quantities of steel mattings which
Malabanan would consign to Floro. Pursuant thereto, Floro claims
to have made total advances to the sum of P24,224.50. It appears
that as Malabanan was not able to repay Floro's advances, the
latter, sold 11,047 pieces of steel mattings to Eulalio Legaspi for the
sum of P24,803.40. Seventeen days later, on August 21, 1954,
Malabanan filed in the Court of First Instance of Manila a petition
for voluntary insolvency, attaching thereto a Schedule of Accounts,
in which the Board was listed as one of the creditors for P10,874.46,
and Exequiel Floro for P24,220.50. The controversy of the case
arose when Malabanan listed the steel mattings as its properties,
which was opposed by the Board claiming ownership over the steel
mattings recovered from the salvaging operations.
ISSUE: WON Malabanan has title to the steel mattings.
HELD: YES. Malabanan has title to the steel mattings. The Court held
that the contract between Malabanan and the Board had effect of
vesting Malabanan with title to, or ownership of the steel mattings
in question as soon as they were brought up from the bottom of the
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sea. This was shown from the agreement between the parties
wherein it is said “that ownership of the goods passed to
Malabanan as soon as they were recovered or salvaged and not only
after payment of the stipulated price.” The contention that there
was no delivery is incorrect. While there was no physical tradition,
there was one by agreement (traditio longa manu) in conformity
with Article 1499 of the Civil Code. Art. 1499 — The delivery of
movable property may likewise be made by the mere consent or
agreement of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time of the sale.
As observed earlier, there is nothing in the terms of the public
instrument in question from which intent to withhold delivery or
transfer of title may be inferred.
San Lorenzo Development Corp v. CA
FACTS: On 20 August 1986, the Spouses Lu purportedly sold the two
parcels of land to respondent Pablo Babasanta. The latter made a
downpayment of fifty thousand pesos (P50,000.00) as evidenced by
a memorandum receipt issued by Pacita Lu of the same date.
Several other payments totaling two hundred thousand pesos
(P200,000.00) were made by Babasanta. He demanded the
execution of a Final Deed of Sale in his favor so he may effect full
payment of the purchase price; however, the spouses declined to
push through with the sale. They claimed that when he requested
for a discount and they refused, he rescinded the agreement. Thus,
Babasanta filed a case for Specific Performance. On the other hand,
San Lorenzo Development Corporation (SLDC) alleged that on 3 May
1989, the two parcels of land involved, namely Lot 1764-A and
1764-B, had been sold to it in a Deed of Absolute Sale with
Mortgage. It alleged that it was a buyer in good faith and for value
and therefore it had a better right over the property in litigation.
Issue: Whether or not the registration of the sale after the
annotation of the notice of lis pendens obliterate the effects of
delivery and possession in good faith which admittedly had
occurred prior to SLDC’s knowledge of the transaction in favor of
Babasanta?
Held: No. It must be stressed that as early as 11 February 1989, the
Spouses Lu executed the Option to Buy in favor of SLDC upon
receiving P316,160.00 as option money from SLDC. After SLDC had
paid more than one half of the agreed purchase price, the Spouses
Lu subsequently executed on 3 May 1989 a Deed of Absolute Sale in
favor or SLDC. At the time both deeds were executed, SLDC had no
knowledge of the prior transaction of the Spouses Lu with
Babasanta. Simply stated, from the time of execution of the first
deed up to the moment of transfer and delivery of possession of the
lands to SLDC, it had acted in good faith and the subsequent
annotation of lis pendens has no effect at all on the consummated
sale between SLDC and the Spouses Lu.
Perpetua Abuan v. Eustaguio Garcia
Facts : Acquired by Laureano Abuan the homestead passed after
his death, to his legal heirs, the plaintiff herein. Consequently,
the original certificate of title in his name was cancelled, and
in lieu thereof, Transfer Certificate of Title No T-5486 was
issued in their names. On August 7, 1953, plaintiffs sold the
parcel of land to defendants, the sale being evidenced by a
public instrument entitled "Deed of Absolute Sale"; and by
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virtue thereof, Transfer Certificate of Title No. T-5906 was
issued to defendants. Later, plaintiffs filed an action to recover
the land, alleging that the deed of absolute sale had been
executed through fraud, without consideration. However, the
case was subsequently settled amicably, when the parties
entered into an "Agreement" dated February 28, 1955, under
the terms of which defendants paid P500.00 on that day as
partial payment of the purchase price of the land, and
promised to pay the balance of P1500.00 on or before April 30,
1955, with a grace period of thirty days. Claiming that full
payment had been effected only sometime in May, 1955,
plaintiffs instituted the present action on March 4, 1960.
Defendants moved to dismiss, on the ground that plaintiffs'
right of action was already barred, because the five-year
redemption period had already expired.
Issue Whether or not the five year period began to run May, 1955,
upon full payment of the purchase price
Held: The law speaks of "five years from date of conveyance".
Conveyance means transfer of ownership; it means the date
when the title to the land is transferred from one person to
another. The five-year should, therefore, be reckoned from the
date that defendants acquired ownership of the land. Art. 1477
of the New Civil Code provides that ownership of the thing
sold shall be transferred to the vendee upon the actual or
constructive delivery thereof; and Art 1496 points out that
ownership of the thing sold is acquired by the vendee from
the moment it is delivered to him in any of the ways specified
in articles 1497 to 1501. Under Art. 1498, when the sale is
made through a public instrument, — as in this case — the
execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the
contrary does not appear or cannot be clearly inferred. It is
clear, therefore, that defendants acquired ownership to the
land in question upon the execution of the deed of sale. The
deed of sale was executed on August 7, 1953, which was
"superseded" by the Agreement of February 28, 1955, as to the
terms and conditions of payment of the purchase price. The
latter agreement did not entirely abrogate the sale since it did
not operate to revest the ownership of the land in the
plaintiffs.
Perfecto Dy v. CA
Facts: Wilfredo Dy bought a truck and tractor from Libra Finance
Corporation. Both truck and tractor was also mortgage to Libra as
security for a loan and as such, they took possession of it. Brother of
Wilfredo, Perfecto Dy and sister Carol Dy-Seno requested Libra that
they be allowed to buy the property and assume the mortgage
debt. Libra agreed to the request.Meanwhile, a collection suit was
filed against Wilfredo Dy by Gelac Trading Inc. On the strength of a
writ of execution, the sheriff was able to obtain the tractor on the
premises of Libra. It was sold in a public auction in which Gelac
Trading was the lone bidder. Gelac subsequently sold it to one of
their stockholders. The respondents claim that at the time of the
execution of the deed of sale, no constructive delivery was effected
since the consummation of the sale depended upon the clearance
and encashment of the check which was issued in payment of the
subject tractor
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Issue:WON the William Dy is still the owner of the tractor when it
was obtained through the writ of execution.
Held:The tractor was not anymore in possession of William Dy when
it was obtained by the sheriff because he already sold it to his
brother. William Dy has the right to sell his property even though it
was mortgage because in a mortgage, the mortgagor doesn’t part
with the ownership over the property. He is allowed to sell the
property as long as there is consent from the mortgagee such as in
this case. But even if there is no consent given, the sale would still
be valid without prejudice to the criminal action against the
mortgagor. When William Dy sold the tractor, he already
transferred the ownership of it because NCC states that the
ownership of the thing sold is acquired by the vendee from the
moment it is delivered to him or in any other manner signing an
agreement that the possession is transferred from the vendor to the
vendee. In the instant case, actual delivery of the subject tractor
could not be made but there was constructive delivery already upon
the execution of a public instrument which in this case is a deed of
sale. The payment of the check was actually intended to extinguish
the mortgage obligation.
2. Special rules on:
i. Contract of sale or return
1502 When goods are delivered to the buyer
"on sale or return" to give the buyer an
option to return the goods instead of
paying the price, the ownership passes
to the buyer of delivery, but he may
revest the ownership in the seller by
returning or tendering the goods within
the time fixed in the contract, or, if no
time has been fixed, within a
reasonable time.
ii. Contract of sale on trial or approval
1502 When goods are delivered to the buyer
on approval or on trial or on
satisfaction, or other similar terms, the
ownership therein passes to the buyer:
(1) When he signifies his approval or
acceptance to the seller or does any
other act adopting the transaction;
(2) If he does not signify his approval or
acceptance to the seller, but retains the
goods without giving notice of
rejection, then if a time has been fixed
for the return of the goods, on the
expiration of such time, and, if no time
has been fixed, on the expiration of a
reasonable time. What is a reasonable
time is a question of fact.
Industrial Textile Manufacturing Company vs LPJ Enterprises Inc
Facts: Sometime in October, 1970, Cesar Campos, a Vice-
President of petitioner Industrial Textile Manufacturing Company
of the Philippines (or Itemcop, for brevity), asked Lauro
Panganiban, Jr., President of respondent corporation, if he
would like to cooperate in an experiment to develop plastic
cement bags. Panganiban acquiesced, principally because
Itemcop is a sister corporation of Atlas, respondent's major
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client. A few weeks later, Panganiban accompanied Paulino
Ugarte, another Vice-President of Itemcop, to the factory of
respondent's supplier, Luzon Cement Corporation in Norzagaray,
Bulacan, to test fifty (50) pieces of plastic cement bags. The
experiment, however, was unsuccessful. The second batch of
plastic bags subjected to trial was likewise a failure.. Finally,
with three hundred (300) "improved bags", the seepage was
substantially reduced. Ugarte then asked Panganiban to send
180 bags of cement to Atlas via commercial shipping. etitioner
delivered the above orders consecutively on January 12,
February 27, March 19, and April 17, 1971 (p. 74, Rollo).
Respondent, on the other hand, remitted the amounts of
P1,640.00, P2,480.00, and P13,230.00 on March 31, April 31,
and May 3, 1971 respectively, thereby leaving a balance of
P84,123.80 (p. 58, Ibid.). No other payments were made, thus
prompting A. Soriano y Cia of petitioner's Legal Department to
send demand letters to respondent corporation Thereafter,
petitioner was asked to take back the unused plastic bags.
Considering however, that the bags were in the cement factory
of respondent's supplier, petitioner maintained that it was
respondent's obligation to return the bags to them. Apparently,
this was not done and so petitioner demanded payment for
the said bags.
Issue: whether or not respondent may be held liable for the
47,000 plastic bags which were not actually used for packing
cement as originally intended
Held: SC hold that the transaction between respondent and
petitioner constituted an absolute sale. Accordingly, respondent
is liable for the plastic bags delivered to it by petitioner. The
provision in the Uniform Sales Act and the Uniform Commercial
Code from which Article 1502 was taken, clearly requires an
express written agreement to make a sales contract either a
"sale or return" or a "sale on approval". Parol or extrinsic
testimony could not be admitted for the purpose of showing
that an invoice or bill of sale that was complete in every
aspect and purporting to embody a sale without condition or
restriction constituted a contract of sale or return. If the
purchaser desired to incorporate a stipulation securing to him
the right of return, he should have done so at the time the
contract was made. On the other hand, the buyer cannot accept
part and reject the rest of the goods since this falls outside
the normal intent of the parties in the "on approval" situation
iii. Sale of specific goods with reserved title
1503 When there is a contract of sale of
specific goods, the seller may, by the
terms of the contract, reserve the right
of possession or ownership in the
goods until certain conditions have
been fulfilled. The right of possession or
ownership may be thus reserved
notwithstanding the delivery of the
goods to the buyer or to a carrier or
other bailee for the purpose of
transmission to the buyer.
iv. Delivery to carrier on behalf of the buyer
1503 Where goods are shipped, and by the
bill of lading the goods are deliverable
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to the seller or his agent, or to the
order of the seller or of his agent, the
seller thereby reserves the ownership
in the goods. But, if except for the form
of the bill of lading, the ownership
would have passed to the buyer on
shipment of the goods, the seller's
property in the goods shall be deemed
to be only for the purpose of securing
performance by the buyer of his
obligations under the contract.
Where goods are shipped, and by the
bill of lading the goods are deliverable
to order of the buyer or of his agent,
but possession of the bill of lading is
retained by the seller or his agent, the
seller thereby reserves a right to the
possession of the goods as against the
buyer.
v. Shipping terms
COD – Cash on delivery (COD) is a type of transaction in which the
recipient makes payment for a good at the time of delivery. If the
purchaser does not make payment when the good is delivered, then
the good is returned to the seller. The recipient can make payment
by cash, certified check or money order, depending on what is the
shipping contract stipulates.
FOB – "Free On Board", is a term in international commercial law
specifying at what point respective obligations, costs, and risk
involved in the delivery of goods shift from the seller to the buyer
under the Incoterms 2010 standard published by the International
Chamber of Commerce. FOB is only used in non-containerized sea
freight or inland waterway transport. FOB terms do not define
transfer of ownership of the goods. The term FOB is also used in
modern domestic shipping within the USA to describe the point at
which a seller is no longer responsible for shipping cost.
CIF – Cost, insurance and freight (CIF) is a trade term requiring the
seller to arrange for the carriage of goods by sea to a port of
destination, and provide the buyer with the documents necessary to
obtain the goods from the carrier.
vi. When person selling is not the owner
1505 Subject to the provisions of this Title,
where goods are sold by a person who
is not the owner thereof, and who does
not sell them under authority or with
the consent of the owner, the buyer
acquires no better title to the goods
than the seller had, unless the owner of
the goods is by his conduct precluded
from denying the seller's authority to
sell.
Nothing in this Title, however, shall
affect:
(1) The provisions of any factors' act,
recording laws, or any other provision
of law enabling the apparent owner of
goods to dispose of them as if he were
the true owner thereof;
(2) The validity of any contract of sale
under statutory power of sale or under
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the order of a court of competent
jurisdiction;
(3) Purchases made in a merchant's
store, or in fairs, or markets, in
accordance with the Code of
Commerce and special laws
vii. Seller’s title is voidable
1506 Where the seller of goods has a
voidable title thereto, but his title has
not been avoided at the time of the
sale, the buyer acquires a good title to
the goods, provided he buys them in
good faith, for value, and without
notice of the seller's defect of title.
a. When obligation to deliver arises
1524 The vendor shall not be bound to
Upon payment deliver the thing sold, if the vendee has
not paid him the price, or if no period
for the payment has been fixed in the
contract.
b. Other rules on delivery
1. Sale of real property by unit of measure of number
1539 The obligation to deliver the thing sold
includes that of placing in the control of
the vendee all that is mentioned in the
contract, in conformity with the
following rules:
If the sale of real estate should be
made with a statement of its area, at
the rate of a certain price for a unit of
measure or number, the vendor shall
be obliged to deliver to the vendee, if
the latter should demand it, all that
may have been stated in the contract;
but, should this be not possible, the
vendee may choose between a
proportional reduction of the price and
the rescission of the contract, provided
that, in the latter case, the lack in the
area be not less than one-tenth of that
stated.
The same shall be done, even when the
area is the same, if any part of the
immovable is not of the quality
specified in the contract.
The rescission, in this case, shall only
take place at the will of the vendee,
when the inferior value of the thing
sold exceeds one-tenth of the price
agreed upon.
Nevertheless, if the vendee would not
have bought the immovable had he
known of its smaller area of inferior
quality, he may rescind the sale.
1540 If, in the case of the preceding article,
there is a greater area or number in the
immovable than that stated in the
contract, the vendee may accept the
area included in the contract and reject
the rest. If he accepts the whole area,
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he must pay for the same at the
contract rate.
1541 The provisions of the two preceding
articles shall apply to judicial sales.
2. Sale of real estate made for a lump sum
1542 In the sale of real estate, made for a
lump sum and not at the rate of a
certain sum for a unit of measure or
number, there shall be no increase or
decrease of the price, although there
be a greater or less area or number
than that stated in the contract.
The same rule shall be applied when
two or more immovables as sold for a
single price; but if, besides mentioning
the boundaries, which is indispensable
in every conveyance of real estate, its
area or number should be designated
in the contract, the vendor shall be
bound to deliver all that is included
within said boundaries, even when it
exceeds the area or number specified
in the contract; and, should he not be
able to do so, he shall suffer a
reduction in the price, in proportion to
what is lacking in the area or number,
unless the contract is rescinded
because the vendee does not accede
to the failure to deliver what has been
stipulated.
Teran v. Villanueva Viuda de Riosa
Facts: On October 6, 1928, the parties in this case executed
the deed of sale Exhibit A, whereby the defendants sold to the
plaintiff for P4,000 the parcel of land therein described as
containing an area of 34 hectares, 52 ares, and 43 centares.
The plaintiff brought this action for rescission of the contract,
with damages, upon discovering that the parcel of land
contained only about ten hectares. This land, with the same
area stated in the contract, was inherited by the defendants
from their late father, Mariano Villanueva; and the same area
appears in the tax declaration given to the plaintiff by an
agent of the defendants, named Rafael Villanueva. The latter,
accompanied by the plaintiff, inspected the land. Villanueva
pointed out some of the boundaries, as they did not go over
all of them. Without further investigating the area of the land,
the plaintiff agreed to purchase it for the sum of four
thousand pesos, paying the amount and taking possession
thereof. The plaintiff alleges that after the 1928 harvest he
discovered that the boundaries pointed out to him by Rafael
Villanueva were not the real ones, In view of these facts, the
plaintiff now seeks to rescind the contract on the ground that
the property contains a smaller area than that stated in the
deed of sale. Evidently this is a sale of real estate with area
and boundaries given, for a lump sum and not so much per
unit of measure, provided for in article 1471 of the Civil Code.
Issue: Whether or not plaintiff can rescind the deed of sale on the
ground that the land he bought has a smaller area than that
stated therein.
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LDCS | SALES
Held: Manresa expresses himself in similar terms, saying that,
"if the sale was made for a lump sum, the cause of the
contract is the thing sold, irrespective of area or quantity, the
real estate as dened by the stipulated boundaries, known in
law as the cuerpo cierto. . . If all that is included within the
stipulated boundaries is not delivered, then the object of the
contract, its cause so far as the vendee is concerned, is not
delivered: hence, he is entitled to rescind it. He may however
think (and of this there can be no judge but himself), that
although he did not receive the land within the stipulated
boundaries, he would like to have it: hence, his right to
enforce the contract with the corresponding decrease in price
as provided an article 1471.
3. Rules in case of double sale
1544 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.
Consolidated Rural Bank of Cagayan Valley v. CA
Facts: The Madrid brothers were the registered owners of Lot A
situated in Isabela. Said lot was subdivided into several lots. Rizal
Madrid sold part of his share identified lot A-7 to Gamiao and Dayag
by virtue of a Deed of Sale, to which his brothers offered no
objection as evidenced by their Joint Affidavit .The deed of sale was
not registered with the ORD of Isabela. However, Gamiao and Dayag
declared the property in their names on a Tax Declaration. Gamiao
and Dayag sold the subject southern half of lot to Teodoro dela
Cruz, and the northern half to Hernandez.Thereupon, Teodoro dela
Cruz and Hernandez took possession of and cultivated the portions
of the property respectively sold to them (Later Restituto
Hernandez donated the northern half to his daughter. The children
of Teodoro dela Cruz continued possession of the southern half
after their father’s death. In a Deed of Sale the Madrid brothers
conveyed all their rights and interests over lot A-7 to Marquez
which the former confirmed. The deed of sale was registered with
the ORD of Isabela. Subsequentltly, Marquez subdivided lot A-7 into
eight (8) lots. On the same date, Marquez and his spouse, Mercedita
Mariana, mortgaged 4 lots to the Consolidated Rural Bank, Inc. of
Cagayan Valley (hereafter, CRB) to secure a loan. These deeds of
real estate mortgage were registered with the ORD. As Marquez
defaulted in the payment of his loan, CRB caused the foreclosure of
the mortgages in its favor and the lots were sold to it as the highest
bidder.The Heirs-now respondents filed a case for reconveyance
and damages for the southern portion of Lot No. 7036-A (hereafter,
the subject property) against Marquez and CRB. The RTC handed
down a decision in favor of Marquez. The Heirs interposed an
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appeal with the CA, which upheld the claim of the Heirs. Hence, the
instant CRB petition.
Issue: WON Art. 1544 of the Civil Code (double sale) applicable in
this case
Held: The provision is not applicable in the present case. It
contemplates a case of double or multiple sales by a single vendor.
It cannot be invoked where the two different contracts of sale are
made by two different persons, one of them not being the owner of
the property sold. And even if the sale was made by the same
person, if the second sale was made when such person was no
longer the owner of the property, because it had been acquired by
the first purchaser in full dominion, the second purchaser cannot
acquire any right. In the case at bar, the subject property was not
transferred to several purchasers by a single vendor. In the first
deed of sale, the vendors were Gamiao and Dayag whose right to
the subject property originated from their acquisition thereof from
Rizal Madrid with the conformity of all the other Madrid brothers.
On the other hand, the vendors in the other or later deed were the
Madrid brothers but at that time they were no longer the owners
since they had long before disposed of the property in favor of
Gamiao and Dayag. In a situation where not all the requisites are
present which would warrant the application of Art. 1544, the
principle of prior tempore, potior jure or simply “he who is first in
time is preferred in right, should apply.” The only essential requisite
of this rule is priority in time; in other words, the only one who can
invoke this is the first vendee. Undisputedly, he is a purchaser in
good faith because at the time he bought the real property, there
was still no sale to a second vendee. In the instant case, the sale to
the Heirs by Gamiao and Dayag, who first bought it from Rizal
Madrid, was anterior to the sale by the Madrid brothers to
Marquez. The Heirs also had possessed the subject property first in
time. Thus, applying the principle, the Heirs, without a scintilla of
doubt, have a superior right to the subject property.
Fudot v Catleya Land
Facts: In Jul 1992 respondents asked someone to check on the titles
of 9 lots which includes the subject land which they intend to buy
from spouses tecson. Finding no defect respondent purchase the
lots through a conditional sale and executed an absolute deed of
sale in Aug 30, 1993 for the same lots. Both deeds were registered
on Nov 6, 1992 and Oct 4, 1993. The register of deeds however
refused to annotate the deed of sale on the titles because of an
existing notice of attachment pending before a RTC in bohol. The
said attachment were canceled by virtue of compromise agreement
between tecson and their creditor. Thus, titles to 6 out of the 9 lots
were issued and title to the 3 remaining lots were refused to be
issued. Jan 23, 1995 petitioner presented for registration before the
register of deeds the owners copy of the title to the subject
property together with the deed of sale executed by the tecsons in
favor of petitioner. Respondent oppose the application. However,
the register of deeds had already registered the deed of sale in
favor of petitioner and issued a new title in her name. May 5, 1995
respondent filed a complaint for quieting of title and/or recovery of
ownership, cancellation of title with damages before the RTC. The
court ruled in favor of respondent. According to the court the
respondent had recorded in good faith the deed of sale in its favor
ahead of petitioner. Petitioner appealed. CA dismissed the appeal.
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Issue: Whether or not there is a double sale
Held: In the first place, there is no double sale to speak of. Art. 1544
of the Civil Code, Which provides the rule on double sale, applies
only to a situation where the same property is validly sold to
different Vendees. In this case, there is only one valid sale to advert
to, that between the spouses Tecson and respondent. The trial
court declared that the sale between the spouses Tecson and
petitioner is invalid, as it bears the forged signature of Asuncion.
Said finding is based on the unrebutted testimony of Asuncion and
the trial courts visual analysis and comparison of the signatures in
her Complaint-in-Intervention and the purported deed of sale. This
finding was upheld by the Court of Appeals, as it ruled that the
purported sale in petitioners favor is null and void, taking into
account Asuncions deposition. In particular, the Court of Appeals
noted petitioners failure to attend the taking of the oral deposition
and to give written interrogatories. In short, she did not take the
necessary steps to rebut Asuncions definitive assertion. Even
assuming that there was double sale in this case, petitioner would
still not prevail. In interpreting this provision, the Court declared
that the governing principle is primus tempore, potior jure (first in
time, stronger in right). Knowledge gained by the first buyer of the
second sale cannot defeat the first buyers rights, except where the
second buyer registers in good faith the second sale ahead of the
first as provided by the aforequoted provision of the Civil Code.
Such knowledge of the first buyer does not bar him from availing of
his rights under the law, among them to register first his purchase
as against the second buyer. However, 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. It is thus essential, to merit the
protection of Art. 1544, second paragraph, that the second realty
buyer must act in good faith in registering his deed of sale.
Amancio et.al v. CA
Facts: A parcel of land in Marikina is registered in the name of
Rodeanna Realty Corporation. This was previously owned by the
Sarmiento spouses through a deed of absolute sale executed in July
1972. Pedro Ogsiner was their overseer. In August 1972, the land
was mortgaged by the Sarmientos to Carlos Sison as a security for a
loan obtained by them from him. When the Sarmientos failed to pay
the loan, Sison initiated the extra-judicial foreclosure sale of the
mortgaged property. When it was foreclosed, a certificate of sale
was issued in favor of Sison. This was annotated on the title of the
Sarmientos in January 1978. In August 1982, Jose Puzon bought the
same property in an auction sale by the Municipal Treasurer in
Marikina for non-payment of taxes. He was issued a certificate of
sale and had it registered in the Registry of Deeds. Since there was
no redemption made by the Sarmientos, a final bill of sale was
issued in Puzon’s favor. A new title was issued to him. In August
1986, he sold the property to RRC and a transfer certificate of title
was issued to the latter. Puzon also promised to file an ejectment
case against the squatters in the property but failed to do so. RRC
filed a complaint for recovery of possession with damages against
the Sarmientos who refused to vacate the premises. The Sarmientos
filed a third-party complaint against Sison, which was dismissed by
the RTC. The RTC and the CA ruled in favor of Rodeanna.
Issue: Whether RRC has the right to possess the property
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Held: Notice of sale to delinquent land owners in tax cases is an
essential and indispensable requirement of the law, the non-
fulfillment of which vitiates the sale. Evidence does not support the
conclusion that notice of the tax sale was sent to the Sarmientos’
last known address. What is clear from the evidence is that they
were notified after the property was sold. The tax sale of Puzon is
then considered null and void, making his title null and void as well.
Even with the void tax sale, RRC’s title may still be valid if it
purchased in good faith. Generally, a purchaser may be considered
in good faith when he has examined the latest certificate of title,
but an exception is when there are important facts that would
create suspicion in an otherwise reasonable man to go beyond the
present title. The fact that RRC did not investigate the Sarmientos
claim over the land despite its knowledge that Ogsiner was in actual
possession of such means that it was not an innocent purchaser of
said land. It was gross negligence for RRC to merely rely on Puzon’s
assurance that the occupants were mere squatters considering that
it acquired information from Ogsiner that he was an overseer and
that it was a corporation engaged in real estate with the means and
opportunity to investigate further. Therefore, the RRC has no right
to possess such property.
Mercado v. Allied Bank
Facts: Lillian Mercado, Cynthia Fekaris, and Julian Mercado, Jr. are
heirs of Perla Mercado. During her lifetime, Perla owned several
pieces of real property in different provinces of the Philippines. In
May 1992, she executed a Special Power of Attorney in favor of her
husband, Julian Mercado, over several pieces of real property
registered under her name, authorizing him to sell, alienate,
mortgage, lease, and deal with such lands. In December 1996, Julian
obtained a loan from Allied Banking Corporation, secured by real
estate mortgage on a parcel of land in Quezon City. He then
obtained an additional loan evidenced by a promissory note
executed as another real estate mortgage. What appeared to be
registered in the SPA however was a land not from Quexon City but
from Pasig City. Julian then defaulted from paying the loans and
ABC initiated extra-judicial foreclosure proceedings over the
property which was then sold at a public auction to ABC in 1998. In
March 1999, petitioners initiated an action to annul the mortgage
on the ground that it was not covered by the SPA and that said SPA
no longer had force and effect since it was revoked by Perla in
March 1993. The revocation of the SPA notified the Registry of
deeds of Quezon City that any attempt to mortgage or sell such
property must be with Perla’s full consent. Allied Bank answered
that the discrepancy in the designation of the Registry of Deeds in
the SPA was merely an error that must not prevail over Perla’s clear
intention to include the land in Quezon City. The property in Pasig
and Quezon City were actually the same. The RTC declared the REM
null and void, as well as the foreclosure proceedings and auction
sale. The CA reversed said decision, stating that Perla’s revocation
of the SPA, not being in a public instrument, could not bind third
persons.
Issue: Whether Allied Bank has a right to the property
Held: A special power of attorney is necessary in cases where real
rights over immovable property are created. This was present in the
case, giving Julian the power to mortgage the pieces of property in
the SPA. However, the property in Quezon City is not included
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among those in the SPA. Neither is there anything in the language
that states that Perla intended to include such property. Julian’s
authority then does not extend to said property. It is also a rule that
a power of attorney must be strictly construed and pursued. The
real estate mortgages that Julian executed over the property are
considered unenforceable. Furthermore, even if such property was
included in the SPA, Perla revoked such successfully in 1993 and
informed the Registry of Deeds of Quezon City about it. Though the
revocation was not annotated, the Registry of Deeds did not deny
that it was received and filed with them. Therefore, ABC does not
have a right to the property.
Gabriel v Mabanta
FACTS: On October 25, 1975 spouses Mabanta mortgaged 2 parcels
of land with the DBP as collateral for a P14,000 loan. In 1980, they
sold the lots to Susana Soriano with the right to repurchase the
property within 2 years. They failed to do repurchase. In 1984, they
convinced petitioner Alejandro Gabriel to purchase the lot from
Soriano as a result, DBP had to restructure the loan making Gabriel
as the mortgagor. In 1982 however, one lot was sold to Zenaida
Tan-Reyes by the spouses Mabanta who in turn filed an intervention
to the case after not being a party in the instant case. As a result,
the petitioners filed for damages, and specific performance which
the trial court ruled in their favor holding that the sale between the
spouses Mabanta and Tan-Reyes null and void. On appeal, the CA
modified the trial court’s decision holding that the second sale was
indeed valid.
ISSUE: Whether or not the second sale in 1982 to Tan-Reyes is valid.
HELD: Article 1544 of the Civil Code provides that should immovable
property be sold to different vendees, the ownership shall belong to
the first person in good faith to record it in the registry of property.
Unfortunately, the registration made by Zenaida Tan-Reyes of her
deed of sale was not in good faith, and for this reason in accordance
with the same Article 1544, the land shall pertain to the person who
in good faith was first in possession. There is no question that it is
the Gabriels who are in possession of the land.
Sanchez v. Ramos
Facts: Ciriaco Fernandez owned a piece of land. On July 1, 1910
Fernandez sold it to the spouses Marcelino Gomez and Narcisa
Sanchez under a pacto de retro for the period of one year. This sale
was executed in a public instrument. The spouses never took
material possession of it. Period of repurchase lapsed without
Fernandez using it. On July 3, 1912, Fernandez again sold the same
land, by means of a private document to Roque Ramos who
immediately took material possession thereof. The trial court
applied Art. 1473 of the Civil Code and declared preferable the sale
executed to Roque Ramos and absolved him from the complaint.
Issue: Whether or not the sale executed to Roque Ramos is indeed
preferable.
Held: No, the sale executed to Roque Ramos is not preferable. The
Court held that preference must be made in favor of the vendee
who first took possession (par. 3 of Art 1473). The Court first
explained that “execution of a public instrument is equivalent to
delivery of the realty sold and its possession by the vendee. Under
these conditions the sale is considered consummated and
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completely transfers to the vendee all of the vendor’s rights of
ownership including his real right over the things. The vendee by
virtue of this sale has acquired everything and nothing, absolutely
nothing, is left to the vendor. From this moment the vendor is a
stranger to the thing sold like any other who has never been its
owner. xxx this means that after the sale of a realty by means of a
public instrument, the vendor, who resells it to another, does not
transmit anything to the second vendee and if the latter, by virtue
of this second sale, takes material possession of the thing, he does it
as mere detainer, and it would be unjust to protect this detention
against the rights to the thing lawfully acquired by the first vendee.
It does not matter that the spouses never took material possession
of the said land for the possession mentioned in Art. 1473 (for
determining who has a better right when the same piece of land has
been sold several times by the same vendor) includes not only the
material but also the symbolic possession, which is acquired by the
execution of a public instrument. In the instant case, the sale to the
spouses was executed in a public instrument. Plaintiff was the first
to take possession of the land, and consequently the sale execute to
him is preferable.
Ten Forty Realty Corp v Cruz
Facts: Petitioner filed an ejectment complaint against Marina
Cruz(respondent) before the MTC. Petitioner alleges that the land
indispute was purchased from Barbara Galino on December 1996,
andthat said land was again sold to respondent on April 1998; On
the other hand, respondent answer with counterclaim that never
was there an occasion when petitioner occupied a portion of the
premises. In addition, respondent alleges that said land was a public
land (respondent filed a miscellaneous sales application with the
Community Environment and Natural Resources Office) and the
action for ejectment cannot succeed where it appears that
respondent had been in possession of the property prior to the
petitioner; On October 2000, MTC ordered respondent to vacate
the land and surrender to petitioner possession thereof. On appeal,
the RTC reversed the decision. CA sustained the trial court’s
decision.
ISSUE/S: Whether or not petitioner should be declared the rightful
owner of the property.
HELD: No. Respondent is the true owner of the land. The subject
property had not been delivered to petitioner; hence, it did not
acquire possession either materially or symbolically. As between the
two buyers, therefore, respondent was first in actual possession of
the property. As regards the question of whether there was good
faith in the second buyer. Petitioner has not proven that respondent
was aware that her mode of acquiring the property was defective at
the time she acquired it from Galino. At the time, the property —
which was public land –had not been registered in the name of
Galino; thus, respondent relied on the tax declarations thereon. As
shown, the former’s name appeared on the tax declarations for the
property until its sale to the latter in 1998. Galino was in fact
occupying the realty when respondent took over possession. Thus,
there was no circumstance that could have placed the latter upon
inquiry or required her to further investigate petitioner’s right of
ownership.
Lichauco v. Berenguer
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FACTS: Crisanto Lichauco, on his own behalf, and his brothers,
Faustino, Zacarias, Galo, and his sister, Timotea Lichauco, his co-
heirs, applied for the registration, in the new property registry, of
two rural estates situated in the pueblo of Arayat, Province of
Pampanga, one of which, in the barrio of Batasan, has an area of
204 hectares, 33 ares, and 38.795 centares, and the other, in the
sitio of Panantaglay, barrio of Calumpang, 120 hectares, 69 ares,
and 58 centares. The boundaries and other particulars relating to
these lands are specified in the application, which for the purpose
of this opinion, are taken to be true. virtual law library. With respect
to both the said properties, the applicants allege that they obtained
them by inheritance from their grandmother, Cornelia Laochangco,
and that the latter, in turn, had acquired them from Macario
Berenguer, through purchase with an agreement that the vendor
should have the right to redeem them. Jose Berenguer, the son of
Macario Berenguer and the administrator of his estate, opposed the
registration of the first of the aforementioned properties, and
acquiesced in that of the second. The trial was had with respect to
the first tract of land above referred to, documentary and oral
evidence was adduced by the parties. The applicants appealed from
this judgment in so far as it denied the registration of the first parcel
of land, and their bill of exception having been filed with this court,
with right to a review of the evidence, they allege against the said
judgment the following assignments of error: The evidence to be
considered with respect to the three preceding assignments of
error, are: First, on the part of the applicants, the public instrument
executed by Macario Berenguer in favor of Cornelia Laochangco
(Exhibit C); second, on the part of the opponent, the account
current between Cornelia Laochangco and Macario Berenguer
(Exhibit 5); and, third, the oral testimony produced concerning this
documentary evidence.
ISSUE: Whether or not there is a valid contract of purchase and sale
under pacto de retracto?
RULING: But in the present case, unlike others heard by this court,
there is no proof that the sale with right of repurchase, made by
Berenguer in favor of Laochangco is rather a mortgage to secure a
loan. The account current between Berenguer and Laochangco
appears to be nothing but the beginning of some business
transaction in sugar, which gave rise to the contract of purchase and
sale under pacto de retracto, and the continuation of the same
transactions which maintained the contract beyond the period fixed
for the redemption. It is sufficient for the purposes of the appeal to
find, as we hereby do find, that the right of redemption has not
lapsed-lapse which was the ground for the application for
registration that was based on the consolidation of the ownership
of the two parcels of land, in the vendee, from whom the applicants
derive their right. Nor had that right lapsed, with respect to the
Panantaglay land; but as this land was, with the assent of the
opponent, adjudicated in the judgment appealed from , the
adjudication by such assent is effective.
Paragas v. Heirs of Dominador Balacano
FACTS: Gregorio Balacano, married to Lorenza, owned 2 parcels of
land. He was already 81 years old, very weak, could barely talk, and
had been battling w/ liver disease for over a month. On his
deathbed, barely a week before he died, he allegedly signed a Deed
of Absolute Sale over the lots in favor of the Paragas Spouses,
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accompanied by Atty. De Guzman who proceeded to notarize the
same, alleging that it was a mere confirmation of a previous sale
and that Gregorio had already paid a P 50,000.00 deposit. The
Paragas’ driver was also there to take a picture of Gregorio signing
the said deed, w/ a ballpen in his hand. There was nothing to show
that the contents of the deed were explained to Gregorio. Paragas
then sold a portion of the disputed lot to Catalino. The grandson of
Gregorio, Domingo, sought to annul the sale and partition. There
was no sufficient evidence to support any prior agreement or partial
execution thereof.
ISSUE: W/N Balacano is incapacitated to enter into a contract of sale
HELD: A person is not rendered incompetent merely because of old
age; however, when such age has impaired the mental faculties as
to prevent a person from protecting his rights, then he is undeniably
incapacitated. He is clearly at a disadvantage, and the courts must
be vigilant for his protection. In this case,
Gregorio’s consent was clearly absent – hence the sale was null and
void. The dubious circumstances raise serious doubts on his capacity
to render consent. Considering that the Paragas Spouses are not
owners of the said properties, it only follows that the subsequent
sale thereof to Catalino – who was not in good faith –is likewise
void. Further, the lots pertained to the conjugal partnership –
having been inherited by Gregorio during his marriage to Lorenza. It
cannot thus be sold w/o the latter’s consent.
San Lorenzo Devt Corp v. CA
FACTS: On 20 August 1986, the Spouses Lu purportedly sold the two
parcels of land to respondent Pablo Babasanta. The latter made a
downpayment of fifty thousand pesos (P50,000.00) as evidenced by
a memorandum receipt issued by Pacita Lu of the same date.
Several other payments totaling two hundred thousand pesos
(P200,000.00) were made by Babasanta. He demanded the
execution of a Final Deed of Sale in his favor so he may effect full
payment of the purchase price; however, the spouses declined to
push through with the sale. They claimed that when he requested
for a discount and they refused, he rescinded the agreement. Thus,
Babasanta filed a case for Specific Performance. On the other hand,
San Lorenzo Development Corporation (SLDC) alleged that on 3 May
1989, the two parcels of land involved, namely Lot 1764-A and
1764-B, had been sold to it in a Deed of Absolute Sale with
Mortgage. It alleged that it was a buyer in good faith and for value
and therefore it had a better right over the property in litigation.
ISSUE: Who between SLDC and Babasanta has a better right over
the two parcels of land?
RULING: There was no double sale in this case because the contract
in favor of Babasanta was a mere contract to sell; hence, Art. 1544
is not applicable. There was neither actual nor constructive delivery
as his title is based on a mere receipt. Based on this alone, the right
of SLDC must be preferred. An analysis of the facts obtaining in this
case, as well as the evidence presented by the parties, irresistibly
leads to the conclusion that the agreement between Babasanta and
the Spouses Lu is a contract to sell and not a contract of sale. The
receipt signed by Pacita Lu merely states that she accepted the sum
of fifty thousand pesos (P50,000.00) from Babasanta as partial
payment of 3.6 hectares of farm lot. While there is no stipulation
that the seller reserves the ownership of the property until full
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payment of the price which is a distinguishing feature of a contract
to sell, the subsequent acts of the parties convince us that the
Spouses Lu never intended to transfer ownership to Babasanta
except upon full payment of the purchase price. Babasanta’s letter
dated 22 May 1989 was quite telling. He stated therein that despite
his repeated requests for the execution of the final deed of sale in
his favor so that he could effect full payment of the price, Pacita Lu
allegedly refused to do so. In effect, Babasanta himself recognized
that ownership of the property would not be transferred to him
until such time as he shall have effected full payment of the price.
Doubtlessly, the receipt signed by Pacita Lu should legally be
considered as a perfected contract to sell. The perfected contract to
sell imposed upon Babasanta the obligation to pay the balance of
the purchase price. There being an obligation to pay the price,
Babasanta should have made the proper tender of payment and
consignation of the price in court as required by law. Glaringly
absent from the records is any indication that Babasanta even
attempted to make the proper consignation of the amounts due,
thus, the obligation on the part of the sellers to convey title never
acquired obligatory force.
Macarandang v. Martinez
FACTS: The Macadangdang spouses offered to buy the subject
property from Omalin forP380,000 on installment basis.The
Macadangdang spouses made a downpayment of P5,000 and made
another P 175,000. Macadangdang took possession of the house
and when a total of 270,000 was paid, the parties agreed that the
balance of P110,000 was to be paid upon delivery of the TCT.
Omalin executed a deed of absolute sale in favor of the
Macadangdang spouses. However, the latter did not pay the
P110,000 balance because Omalin failed to deliver the TCT. It
turned out that the property was mortgaged to private respondent
spouses Ramon and Gloria Martinez (Martinez spouses). It appears
that a certain Atty. Paterno Santos, a broker, offered to mortgage
the subject property to the Martinez spouses for P200,000. Atty.
Santos was in possession of a "clean" TCT No. 146553
ISSUE: W/N the Martinez owns the subject property
HELD: YES. On this note, being innocent registered mortgagees for
value, the Martinez spouses acquired a superior right over the
property. The subject matter of the instant petition involves
registered land. Unlike the case of unregistered land, in which an
earlier instrument, be it sale or mortgage, prevails over a latter one,
and the registration of any one of them is immaterial, with respect
to registered land, the rule is different. Between two transactions
concerning the same parcel of land, the registered transaction
prevails over the earlier unregistered right. The act of registration
operates to convey and affect the registered land so that a bonafide
purchaser of such land acquires good title as against a prior
transferee, if such prior transfer was unrecorded. It is clear from the
foregoing that the registration of the deed is the effectual act which
binds the land insofar as third persons are concerned. Prior
registration of a lien creates a preference as the act of registration is
the operative act that conveys and affects the land. Considering that
the prior sale of the subject property to the Macadangdang spouses
was not registered, it was the registered mortgage to the spouses
Martinez that was valid and effective. The rule on prior registration
is subject only to one exception, that is, when a party has
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knowledge of a prior existing interest which is unregistered at the Rodriquez would later sell a portion of their undivided interests on
time he acquires a right to the same land, his knowledge of that the land to Jesus D. Morales. Then came the June 11, 1988 fire that
prior unregistered interest has the effect of registration as to him. gutted a portion of the Quezon City hall and destroyed in the
The Martinez spouses claimed they had never met the process the original copy of TCT No. 9780 (693) on file with the
Macadangdang spouses and were unaware that Omalin had already Registry of Deeds of Quezon City. Barely a month later, a certain
sold the property to them Engr. Hobre filed an application, signed by Garaygay of Cebu, for the
reconstitution of the burned original on the basis of the latter’s
Premiere Devt Bank v. CA owner’s duplicate certificate. One Engr. Felino Cortez of the Land
Registration Authority (LRA) did the follow-up on the application.
Facts: Two (2) different persons with exactly the same name, i.e.,
After due proceedings, the LRA issued an order of reconstitution, by
Vicente T. Garaygay, each claimed exclusive ownership of Lot 23 by
virtue of which Garaygay of Cebu acquired reconstituted TCT No.
virtue of an owner’s duplicate certificate each had possession of
RT-1764 (9780) (693). Meanwhile, or on May 26, 1989, the deed of
during the period material covering said lot. One held TCT No. 9780,
sale executed by Garaygay of Cebu in favor of his nephew Joselito
supra, and the other, TCT No. 9780 (693), supra. The technical
was registered, paving the issuance in the latter’s name of TCT No.
description of the land appearing in one copy corresponds exactly
12183.9 Thereafter, thru the efforts of same Engr. Cortez,10 Lot 23
with that in the other. The date "June 14, 1944" appears on the face
was subdivided into three (3) lots, namely: Lot 23-A, Lot 23-B and
of both copies as a common date of entry. One, however, contained
Lot 23-C for which TCT Nos. 14414, 14415 and 14416,
certain features, markings, and/or entries not found in the other
respectively,11 were issued. Joselito posthaste sold Lot 23-A to
and vice versa. On April 17, 1979, one of the two Vicente T.
Lilian Toundjis who, pursuant to a Contract to Sell executed on
Garaygays, a resident of Cebu City (hereinafter referred to as
March 23, 1990,12 undertook to pay Joselito the P.5 Million balance
Garaygay of Cebu), executed a deed of sale over the lot described in
of the P2.5 Million purchase price once she is placed in possession
and covered by his TCT No. 9780 (693) in favor of his nephew,
of a fenced-off property. And, for shares of stock, Joselito assigned
Joselito P. Garaygay ("Joselito", hereinafter). The sale
on February 26, 1991, the other two (2) lots, i.e., Lot 23-B and Lot
notwithstanding, the owner’s duplicate certificate remained for
23-C to Century Realty and Development Corporation ("Century
some time in the seller’s possession. In another transaction, the
Realty") which, after securing TCT Nos. 34390 and 34391 therefor,
other Vicente T. Garaygay, a resident of Rizal (hereinafter referred
mortgaged13 the same to Premiere Development Bank, Inc.
to as Garaygay of Rizal), sold to Liberto G. Yambao and Jesus B.
("Premiere Bank") to secure a P2.5 Million loan. Clashing claims of
Rodriguez the same property described in TCT 9780. "YCM
ownership first came to a head when, sometime in May 1990,
Compound, Angono, Rizal" is set out in the February 11, 1986
Liberato G. Yambao and his agents forcibly prevented Joselito’s
conveying deed as the seller’s residence. Buyers Yambao and
hired hands from concrete-fencing the subject property. The police

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and eventually the National Bureau of Investigation (NBI) entered
into the picture. In the meantime, Yambao, Rodriquez and Morales
as pro indiviso buyers of Lot No. 23, caused the annotation on
December 17, 1990, January 16, 1991 and February 15, 1991 of
their respective adverse claims on Joselito’s TCT Nos. 14414, 14415
and 14416. They then filed with the Regional Trial Court at Quezon
City suit against Joselito, Century Realty and Premiere Bank for
quieting of title and annulment of said defendants’ fake titles with
prayer for damages.
Issue: whether or not Toundjis be considered, as she has claimed,
an innocent purchaser for value, meaning one who buys or acquires,
for valuable consideration, a piece of land of another without notice
that some other person has a right to, or interest in, such property
at the time of purchase, or before he has notice of the claim or
interest of some other persons in the property.
Held: The rule that a subsequent declaration of a title as null and
void is not a ground for nullifying the contractual right of a
purchaser, mortgagee or other transferees in good faith, with the
exceptions thereto, is well-settled. Where the certificate of title is in
the name of the seller or mortgagor, the innocent purchaser or
mortgagee for value has the right to rely on what appears on the
certificate without inquiring further. In the absence of anything to
excite or arouse suspicion, or except when the party concerned had
actual knowledge of facts or circumstances that should impel a
reasonably cautious person to make such further inquiry, said
purchaser or mortgagee is without obligation to look beyond the
certificate and investigate the title of the seller or mortgagor. Thus,
where innocent third persons, relying on the correctness of the
certificate, acquire rights over the property as buyer or mortgagee,
the subsequent declaration of nullity of title is not a ground for
nullifying the right of such buyer or mortgagee. A study of the
record shows that TCT 14414 covering Lot. 23-A that Toundjis
contracted to buy from Joselito carried an annotation that it was
administratively reconstituted. Records also indicate that Toundjis
knew at the time of the sale that Joselito did not have possession of
the lot inasmuch as she agreed to pay the balance of the purchase
price as soon as the seller can fence off the property and surrender
physical possession thereof to her. Even for these two (2) reasons
alone, which should have placed Toundjis on guard respecting
Joselito’s title, her claim of being a bona fide purchaser for value
must fail. The rejection, therefore, by the Court of Appeals of such
claim is correct. Likewise acceptable is the appellate court’s holding,
citing Republic vs. Court of Appeals, that a purchaser of a property
cannot be in good faith where the title thereof shows that it was
reconstituted. Noted with approval, too, is the appellate court’s
observation that the "contract to sell (Exh. "44") which is
unregistered and not annotated at the back of the title of the
property [cannot adversely affect appellees]" for the reason that
under "Sec. 51 of PD 1529 (Property Registration Act), ‘the act of
registration shall be the operative act to convey or affect the land in
so far (sic) as third parties are concerned.’" Premiere Bank cannot
also be accorded the status of an innocent mortgagee for value vis-
à-vis the mortgage of the lots covered by TCT Nos. 34390 and 34391
constituted in its favor by Century Realty.
Sigaya v. Mayuga
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FACTS: Dionisia Alorsabes owned a three hectare land in Dao, Capiz.
In 1934, she sold a portion of the lot to Juanito Fuentes while the
remainder was inherited by her children Paz Dela Cruz, Rosela Dela
Cruz, and Consorcia Arroja (an adopted child), and a grandson,
Francisco Abas, in representation of his deceased mother
Margarita Dela Cruz. These four heirs executed an Extra-Judicial
Settlement with Sale dated February 4, 1964 wherein Consorcia sold
her share with an area of 6,694 square meters to spouses Balleriano
Mayuga. On April 1, 1977, Paz also sold her share to Honorato de
los Santos. Later, another document entitled Extra-Judicial
Partition with Deed of Sale dated November 2, 1972 was uncovered
wherein the heirs of Dionisia purportedly adjudicated Lot 3603
among themselves and sold their shares to Francisco. On January 9,
1978, Francisco executed a Deed of Sale over Lot 3603 in favor of
Teodulfo Sigaya. Thus, the title over Lot 3603 was cancelled and a
new one was issued in the name of Teodulfo, predecessor-in-
interest of the petitioners herein.1 On October 14, 1986, the
petitioners, who are the widow and children of Teodulfo, filed Civil
Case for recovery of possession and praying that respondents be
ordered to vacate Lot 3603, and turn over the same to petitioners;
Petitioners argue that: Teodulfo, their predecessor-in-interest,
purchased the subject property from Francisco, who was in
possession of the Original Certificate of Title (OCT) No. RO-5841
(17205), in the name of Dionisia and of the Extra-Judicial Partition
with Deed of Sale, relying on these instruments and after
inspecting the land and seeing that nobody occupied the same,
Teodulfo bought the land and had the title subsequently issued in
his name Petitioners, in their Memorandum, further aver that:
Teodulfo is a purchaser in good faith having relied on OCT No. RO-
5841 (17205) in the name of Dionisia and the Extra-Judicial Partition
with Deed of Sale which shows that Francisco is the absolute owner
of the lot; four years had elapsed from the date that the OCT
was reconstituted and the time Teodulfo bought the property
from Francisco and yet none of the respondents had registered
their right in the property; the Extra-Judicial Settlement of Lot
3603 of the Cadastral Survey of Dao, Capiz with Sale, on which
respondents base their claims, was never registered with the
Registry of Deeds; not having been registered, this will not affect
the right of third persons who had no knowledge thereof;
ISSUE: Whether a person dealing with a registered land can
safely rely on the correctness of the Certificate of Title issued
therefor.
HELD: This Court has held that the burden of proving the status of a
purchaser in good faith lies upon one who asserts that status and
this onus probandi cannot be discharged my mere invocation of
the legal presumption of good faith. In this case, the Court finds
that petitioners have failed to discharge such burden. A purchaser
in good faith is one who buys property without notice that some
other person has a right to or interest in such property and pays
its fair price before he has notice of the adverse claims and
interest of another person in the same property. The honesty of
intention which constitutes good faith implies a freedom from
knowledge of circumstances which ought to put a person on inquiry.
Where there is nothing in the certificate of title to indicate any
cloud or vice in the ownership of the property, or any
encumbrance thereon, the purchaser is not required to explore
further than what the Torrens Title upon its face indicates in quest
for any hidden defects or inchoate right that may subsequently
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defeat his right thereto.34 However, this rule shall not apply
when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge of a defect
or the lack of title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title
of the property in litigation.35 In this case, preponderance of
evidence shows that respondents had been in actual possession of
their respective portions even prior to 1960. Rolly Daniel, which the
trial court considered as a credible witness, testified that not only
were respondents in actual possession of their respective portions
prior to 1960, he even accompanied Francisco and Teodulfo to the
different houses of respondents sometime between 1976 to
1978 as Teodulfo was going to buy the portion of Francisco.
This Court cannot give credence therefore to the claim of
petitioners that Teodulfo found no occupants in the property. A
purchaser cannot simply close his eyes to facts which should put a
reasonable man on his guard and then claim that he acted in good
faith under the belief that there was no defect in the title of his
vendor. His mere refusal to believe that such defect exists or his
willful closing of his eyes to the possibility of the existence of a
defect in his vendor’s title will not make him an innocent
purchaser for value if it later develops that the title was in fact
defective, and it appears that he would have notice of the defect
had he acted with that measure of precaution which may
reasonably be required of a prudent man in a similar situation.
(2)Petitioners also argue that the rule on double sale of real
property should apply in this case, and since they are the first
to register the sale in good faith, they are entitled to be
awarded ownership thereof. The Court disagrees. Apart from the
fact that Teodulfo is not a purchaser in good faith, the law on
double sales as provided in Art. 1544 of the Civil Code38
contemplates a situation where a single vendor sold one and the
same immovable property to two or more buyers. For the rule to
apply, it is necessary that the conveyance must have been made by
a party who has an existing right in the thing and the power to
dispose it. The rule cannot be invoked where the two different
contracts of sale are made by two different persons, one of them
not being the owner of the property sold.39 In this case,
respondents derive their right over their respective portions either
through inheritance or sale from Dionisia while petitioners’ invoke
their right from the sale of the land from Francisco. Clearly, the law
on double sales does not apply here.
Ulep v. CA
FACTS: Principal petitioners SAMUEL ULEP, now deceased and
substituted by his heirs, and VALENTINA ULEP are brother-and-
sister. Together with their siblings, namely, Atinedoro Ulep and
Rosita Ulep, they are children of the late Valentin Ulep. During
his lifetime, the father Valentin Ulep owned a parcel of land,
identified as Lot 840 with an area of 3,270 square meters, located at
Asingan, Pangasinan. Sometime in 1950, the older Ulep sold the
one-half (1/2) eastern portion of Lot 840, comprising an area of
1,635 square meters, to respondent Maxima Rodico, while the
remaining one-half (1/2) western portion with the same area, to his
son Atinedoro Ulep married to Beatriz Ulep, and to his other
daughter Valentina Ulep. On June 5, 1952, all the transferees of Lot
840, namely, Maxima Rodico (for the eastern portion) and
Atinedoro Ulep and Valentina Ulep (for the western portion), were
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jointly issued in their names Transfer Certificate of Title No. 12525.
On June 18, 1971, Atinedoro Ulep, his wife Beatriz and sister
Valentina Ulep sold the one-half (1/2) portion of the area sold to
them by their father to their brother Samuel Ulep and the latter’s
wife, Susana Repogia-Ulep. The document of sale was registered
with the Office of the Registry of Deeds of Pangasinan on February
20, 1973. Later, an area of 507.5 square meters of the western
portion of Lot 840 was sold by the spouses Atinedoro Ulep and
Beatriz Ulep to respondent Warlito Paringit and the latter’s
spouse Encarnacion Gante, who were then issued TCT No. 12688 on
September 23, 1975. Evidently, all the foregoing transactions
were done and effected without an actual ground partition or
formal subdivision of Lot 840. In June 1977, respondent Iglesia ni
Cristo (INC) begun constructing its chapel on Lot 840. In the
process, INC encroached portions thereof allegedly pertaining to
petitioners and blocked their pathways. This prompted Samuel Ulep
and sister Rosita Ulep to make inquiries with the Office of the
Register of Deeds and they discovered from the records of said
office that a deed of sale bearing date December 21, 1954, was
purportedly executed by their brother Atinedoro Ulep his, wife
Beatriz and their sister Valentina Ulep in favor of INC over a portion
of 620 square meters, more or less, of Lot 840, and that on the basis
of said deed, INC was issued TCT No. 12689 on September 23, 1975
over the portion allegedly sold to it by the three. Samuel was
further shocked to find out that on July 9, 1975, an affidavit
of subdivision was executed by respondents INC, Maxima Rodico
and the spouses Warlito Paringit and Encarnation Gante, on the
basis of which affidavit Lot 840 was subdivided into four (4) lots.
Such was the state of things when, on March 29, 1983, in the
Regional Trial Court at Pangasinan, the spouses Samuel Ulep and
Susana Repogia-Ulep, the spouses Atinedoro Ulep and Beatriz Ulep
and their sister Valentina Ulep, filed their complaint for Quieting
of Title, Reconveyance and Declaration of Nullity of Title and
Subdivision Plan with Damages against respondents INC, Maxima
Rodico and the spouses Warlito Paringit and Encarnacion Gante.
In the same complaint, the spouses Atinedoro Ulep and Beatriz
Ulep and their sister Valentina Ulep denied having executed a
deed of sale in favor of INC over a portion of 620 square
meters of Lot 840, claiming that their signatures appearing on the
deed were forged. At the most, so they claimed, what they sold to
INC was only 100 square meters and not 620 square meters.
Petitioners Samuel Ulep and Valentina Ulep, along with the spouses
Atinedoro Ulep and Beatriz Ulep, likewise averred that the subject
lot was subdivided without their knowledge and consent.
Eventually, RTC ruled against INC. Dissatisfied, INC interposed an
appeal to CA. In so ruling, the Court of Appeals explained: There
is no adequate evidentiary demonstration in the record that the
deed of sale (dated December 21, 1954 executed by Atinedoro
Ulep, his wife . Beatriz and sister Valentina Ulep in favor of INC over
the 620 square-meter area of the western portion of Lot 840) is void
and inefficacious on account of forgery.
ISSUE: WON there was a double sale
HELD: YES. As the Court sees it, the present controversy is a classic
case of double sale. On December 21, 1954, Atinedoro Ulep, his
wife Beatriz Ulep and sister Valentina Ulep sold the disputed area
(620 square-meter) of Lot 840 to INC. Subsequently, on January 18,
1971, a second sale was executed by the same vendors in favor of
spouses Samuel Ulep and Susana Ulep. The Court is, therefore,
called upon to determine which of the two groups of buyers has a
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better right to the area in question. The law provides that a
double sale of immovable transfers ownership to (1) the first
registrant in good faith; (2) then, the first possessor in good faith;
and (3) finally, the buyer who in good faith presents the oldest title.
Jurisprudence teaches that the governing principle is primus
tempore, potior jure (first in time, stronger in right). Knowledge
gained by the first buyer of the second sale cannot defeat the first
buyer’s rights except where the second buyer registers in good faith
the second sale ahead of the first, as provided by the aforequoted
provision of the Civil Code. Such knowledge of the first buyer does
not bar him from availing of his rights under the law, among them
to register first his purchase as against the second buyer. In
converso, 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 Per
records, the sale of the disputed 620 square-meter portion of Lot
840 to respondent INC was made on December 21, 1954 and
registered with the Registry of Deeds of Pangasinan on January 5,
1955. In fact, INC was issued a title over the same portion on
September 23, 1975. On the other hand, the conveyance to the
spouses Samuel Ulep and Susana Repogia-Ulep happened on
January 18, 1971 and the spouses registered their document of
conveyance only on February 22, 1973. Clearly, not only was
respondent INC the first buyer of the disputed area. It was also the
first to register the sale in its favor long before petitioners
Samuel’s and Susana’s intrusion as second buyers. Although Samuel
and Susana thereafter registered the sale made to them, they did so
only after 18 years from the time INC caused the registration of its
own document of sale.
“Registration” means any entry made in the books of the
Registry which records solemnly and permanently the right of
ownership and other real rights. However, mere registration is
not sufficient. Good faith must concur with registration, else
registration becomes an exercise in futility. In the instant case, the
registration made by respondent INC of its deed of sale more than
satisfies this requirement. The same thing cannot be said of
petitioners Samuel Ulep and Susana Ulep. Said petitioners, by their
own admission, were aware that there existed an agreement
between INC and vendors Atinedoro Ulep, his wife Beatriz and sister
Valentina Ulep involving a portion of 100 square meters of Lot 840.
Hence, proof of such knowledge overcomes the presumption of
good faith. Petitioners’ allegation of forgery relative to the deed of
sale executed on December 21, 1954 by the spouses Atinedoro
Ulep, his wife Beatriz and sister Valentina Ulep over the 620
square-meter portion of Lot 840 cannot be sustained. 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. Here, petitioners’ claim of
forgery is unsupported by any substantial evidence other than
their own self-serving testimonies. Petitioners insist that the
conveyance of only 100 square meters to INC was in fact evidenced
by a deed of sale notarized by a certain Atty. Benjamin
Fernandez. However, they sorely failed to produce in court the said
alleged deed of sale. They could have, at the very least, presented
Atty. Fernandez to prove the existence of that deed, but they did
not. The only plausible conclusion is that no such deed exists.
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In a last-ditch but futile attempt to persuade the Court,
petitioners alternatively pray that INC’s portion of 620 square
meters of Lot 840, assuming that INC is entitled to it, should
be taken from the western portion of the same lot sold to
respondent spouses Warlito Paringit and Encarnacion Gante, and
not from them. To petitioners, the share of the spouses
Warlito and Encarnacion should accordingly be reduced from 507.5
square meters to only 197 square meters. We note, however, that
petitioners never raised before the trial court nor before the
appellate court the issue of Warlito’s and Encarnacion’s entitlement
to 507.5 square meters. This issue was only posed by petitioners in
the instant petition before this Court. It is certainly too late for
them to raise said issue for the first time at this late stage of
the proceedings. Basic considerations of fair play, justice and due
process underlie the rule. It would be unfair to the adverse party
who would have no opportunity to present evidence in contra
to the new theory, which it could have done had it been aware of
it at the time of the hearing before the trial court.
WHEREFORE, the petition is DENIED and the assailed decision
and resolution of the Court of Appeals AFFIRMED in toto. SO
ORDERED
Leoncio and Barrera v. CA
FACTS: Azalia Salome (Salome) owned a house and lot located
at No. 2641 Bonifacio St., Bangkal, Makati City. Salome
mortgaged the property to Country Bankers Insurance and Surety
Company to secure a P10,000.00 loan. On July 1, 1966, Salome sold
the property to Rosendo C. Palabasan. On April 19, 1989, Leoncio
and Enriqueta Barrera (spouses Barrera) filed with the Regional Trial
Court, Makati City, Branch 138, a complaint against Palabasan for
reconveyance with damages. They alleged that they had been in
possession of the property since 1962 by virtue of a Deed of Sale
with Assumption of Mortgage which was not notarized; that
Salome executed a notarized Deed of Sale with Assumption of
Mortgage in their favor on March 31, 1966; that, pursuant to this
notarized deed, they settled Salome's obligations with the
Country Bankers Insurance and Surety Company; that they tried
to redeem the property but were not able to do so because
Palabasan had done so and the title to the property was released to
Palabasan; that in 1970, they signed a blank document which was
supposed to become Palabasan's authority to sell the land for them;
that in 1975, they were surprised to learn that the blank document
which they had signed turned out to be a contract of lease wherein
they were the lessees and Palabasan was the lessor of the property;
and that Palabasan registered the property in his name and
was able to secure Transfer Certificate Palabasan asserted that he
bought the property from Salome on June 30, 1966, after he had
paid the obligation of Salome with Country Bankers Insurance and
Surety Company; that he had been issued Transfer Certificate of
Title No. 167387 in his name after he had the deed of sale
registered; that the spouses Barrera were in possession of the
property as lessees of Salome; and that a contract of lease was
executed by and between the spouses Barrera and Palabasan in
1970. On February 23, 1993, after trial, the lower court rendered a
decision declaring Palabasan to have validly acquired title to the
property in question. The trial court, ruling that the case is
one of double sale of an immovable, applied the second paragraph
of Article 1544 of the Civil Code. The spouses appealed. On
October 25, 1995, the Court of Appeals promulgated a decision
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affirming in toto the decision of the trial court. The appellate court,
however, found Article 1544 of the Civil Code inapplicable to the
case as there was no sale between the spouses Barrera and Salome
because Salome's testimony given in a previous case12 to this effect
was stricken off the record since she died prior to cross-
examination; the testimony of Cenon Mateo, the common-law
husband of Salome showed that he was not aware of the
transaction entered into on March 31, 1966; and counsel for
spouses Barrera admitted that the sale transaction in 1962 did
not materialize as the property was mortgaged to Country Bankers
Insurance and Surety Company.
ISSUE: Whether there was double sale of an immovable property
covered by Article 1544 of the Civil Code.
HELD: NO. The Court held that there is no sufficient proof on the sal
e between Salome and petitioners. There is no double sale that wou
ld warrant the application of Article 1544 of the Civil Code. the evid
ence petitioners adduced to prove the sale was the notarized deed
executed on March 31, 1966. However, a perusal of the deed would
show that the sale is conditioned on the payment by the petitioners
of Salome's obligation with the Country Bankers Insurance and Sure
ty Company under the contract of mortgage.Petitioners submitted n
o evidence to show that they complied with the condition given. He
nce, there was no consummation of the contract which would transf
er ownership of the property to the petitioners. Likewise, there is n
o sufficient evidence to show that the earlier transaction in 1962 ev
er materialized. The only sale that materialized in this case was the s
ale by Salome to respondent Palabasan that was evidenced by a dee
d of absolute sale that enabled respondent Palabasan to redeem th
e property from Country Bankers Insurance and Surety Company an
d consequently to secure Transfer Certificate of Title No. 167387 in
his favor over the same property.
Aitken v. Lao
Facts: Chinaman (To Jan Co) erected a store bldg on a parcel of land
belonging to Apolonia Remigio, whereby agreement that half of ren
ts were to go to her half to Jan Co. Owner of land did not receive re
nts agreed upon, thus instituted action aganst Jan Co to recover ren
ts. Judgment rendered in favor of Remigio, execution issued and the
reafter house purchased by judgment creditor (remigio) at the sheri
ff's sale as such now in possession of house and land. Defendant is a
dministrator of estate of Remigio. Jan Co later executed unregisted
deed of sale to another Chinaman (To Cun), reserving right to repurc
hase but did no exrcise such. Cun never took possession, later Cun e
xecuted unregistered deed of sale to Aitken, who later instituted act
ion for possession of house.
Issue: WON purchaser or claimant under prior unrecorded deed of s
ale has better right
Held: Purchaser in GF at a sheriff's sale of all right, tite, intersest of a
judgment dbtor in a house is entitled to prop under Art 1473 of Civil
Code as against one who claims property by virtue of unrecorded de
ed of sale executed in his favor by judgment debtor prior to date of
sheriff's sale, it appearing that purchaser at the sheriff's sale secure
d possession and that claimany under undrecorded deed of sale nev
er went into possession.
Fabian v. Smith Bell & Co
Facts: Emilio Boncan owner of real estate, titlr recorded in registry o
f prop. Sold and conveyed same by public doc to plaintiffs, deed was
never recorded with registry of property. Later, Smith Bell & Co obta
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LDCS | SALES

ined judgment against Boncan thus levied an execution issued on sai

d judgment upon real estate in question which was recorded in regi
stry as that of Boncan's. Fabian brought action to restrain judgment
creditors from selling property.

Issue: WON levy of an execution against a judgment debtor upon re

al estate which stands in his name in registry of prop takes preceden
ce on an unrecorded deed of same property made by judgment deb
tor prior to levy in execution.

Held: Levy of an execution against a judgment debtor upon real esta

te which stands in his name in registry of property does not take pre
cedence over an unrecorded deed of same property executed by ju
dgment debtor prior to levy of attachment. Attachment does not ch
ange character of a debt and does not convert claim of creditor into
a right to the thing itslef, nor does it give him any preference over e
xisting claims against attached property that have not been recorde
d. Art 1473 ov Civil Code which gives preference to that one of the t
wo deeds which is first recorded does not extend to attachments or
executions

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