Andaya et. al vs.

Manasala
G.R. No. L-14714; April 30, 1960
Intentional waiver of warranty against eviction by the buyer/vendee
FACTS:
Isidro Fenis sold the land in question to Eustaquia Llanes, with right of repurchase within a
period of five years. After the expiry of said period, and without repurchasing the said property,
Isidro Fenis sold it again to Maria Viloria. Maria Viloria sold by way of sale with right to repurchase
within a period of one year, the said property together with another parcel of land to the herein
defendant Melencio Manansala. Upon the expiry of the said period, Manansala registered with the
Register of Deeds an affidavit consolidating his title on the property. Thereafter, Maria Viloria sold
by way of absolute sale the same property to Ciriaco Casio, Fidela Valdez, and the plaintif
spouses Ariston Andaya and Micaela Cabrito.
Because of subsequent sales, Eustaquia Llanes instituted a civil case to quiet title and to
recover possession of said parcel from Ciriaco Casio. Defendant Melencio Manansala sold by
way of absolute sale, the property in question to the spouses Ciriaco Casio and Fidela Valdez,
and the plaintifs for P1,500.00. The deed contained the stipulation, that from and after this
date, the vendee herein named are the lawful owners of the land herein sold which I warrant to
be free from all kinds of liens and encumbrances whatever and in case of eviction, I promise,
agree and covenant to answer to and for the vendee in the form and manner provided by law.
In the meantime, Eustaquia Llanes included as co-defendants Melencio Manansala. Fidela
Valdez and the spouses Andaya and Micaela Cabrito. The civil case filed by Llanes ruled in favor
of her. The judgment became final and a writ of execution was issued against Casino, Valdez,
Andaya and Cabrito.
Aggrieved, spouses Andaya and Cabrito filed a case against Manansala to recover
damages sufered by reason of the latters breach of warranty of title or against eviction
embodied in his sale of the land in question to plaintifs.
Defendant Manansala denied liability for the damages claimed, and alleged that it was
plaintifs and their co-purchasers who pleaded with him to sell said land to them at a low price
after they had been sued by Eustaquia Llanes, considering that Manansala had registered the
land in his name with the office of the Register of Deeds.
ISSUE:
1. Whether or not there was an intentional waiver of warranty of eviction made by
spouses Andaya and Cibrato (buyers/ vendees).
2. Whether or not Manasala (vendor) is liable for payment of the price of the land at the
time of eviction.
RULING:
1. On the issue of waiver of warranty of eviction
SC ruled that spouses Andaya and Cabrito had waived the warranty against eviction. At
the time that they purchased the land in question, they knew of the danger of eviction.
The vendor's liability for warranty against eviction in a contract of sale is waivable and
may be renounced by the vendee (last par., Art. 1475, Old Code; last par., Art. 1548, New). The
contract of sale between Manansala and spouses Andaya and Cabrito included a stipulation as to
the warranty. The lower court found that the parties understood that such stipulation was merely
pro forma and that the Manasala was not to be bound thereby, in view of the fact that the same
land had been previously bought by petitioners from Maria Viloria and that their only purpose in
buying the same again from Manansala was to enable them to register their prior deed of sale;
and the further fact that when the sale between the parties, the property was already the subject
of a pending litigation between petitioners and one Eustaquia Llanes, who claimed its title and
possession by virtue of an earlier sale from the original owner. It was by final judgment in this
litigation that petitioners were evicted from the land. Not having appealed from the decision of
the court below, petitioners are bound by these findings, the implication of which is that they not
only renounced or waived the warranty against eviction, but that they knew of the danger of
eviction and assumed its consequences.

2. On vendors liability for payment of the price of the land at the time of eviction.
As already stated, petitioners knew of the danger of eviction at the time they purchased
the land in question from defendant, and assumed its consequences. Therefore, Manansala is not
even obliged to restore to them the price of the land at the time of eviction, but is completely
exempt from liability whatsoever.

Asset Privitization Trust vs. T.J. Enterprises

G.R. No. 167195; May 8, 2009
FACTS:
Petitioner Asset Privitization Trust (APT) was a government entity created for the purpose
to conserve, to provisionally manage and to dispose assets of government institutions. Petitioner
had acquired from the Development Bank of the Philippines (DBP) assets consisting of machinery
and refrigeration equipment which were then stored at Golden City compound, Pasay City. The
compound was then leased to and in the physical possession of Creative Lines, Inc. These assets
were being sold on an as-is-where-is basis.
Petitioner and respondent entered into an absolute sale over certain machinery and
refrigeration equipment. Respondent paid the full amount and demanded the delivery of the
machinery it had purchased. APT in turn issued a gate pass. Respondent was able to pull out from
the compound the properties. During the hauling of Lot No.2 consisting of 16 items, only 9 items
were pulled out by respondent. This prompted the respondent to file a complaint for specific
performance and damages against petitioner and Creative Lines. During the pendency of the
case, respondent was able to pull out the remaining machinery and equipment. However, upon
inspection it was discovered that the machinery and equipment were damaged and had missing
parts.
APT argued that there has already been constructive delivery by virtue of the deed of sale
executed and being a sale of as-is-where-is basis, it was the duty of TJ Enterprises to take care of
the property.
RTC ruled that there was no constructive delivery at the time of the sale, APT did not have
control over the machinery and equipment. Thus, it could not transfer ownership. CA affirmed the
decision of the trial court.
ISSUE:
Whether or not the presence of the disclaimer or warranty in the deed of absolute sale
absolves it from all warranties.
RULING:
SC held that APTs position is untenable.
The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing
which is the object of the sale. 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, or in any
other manner signifying an agreement that the possession is transferred from the vendor to the
vendee.
A perusal of the deed of absolute sale shows that both the vendor and the vendee
represented and warranted to each other that each had all the requisite power and authority to
enter into the deed of absolute sale and that they shall perform each of their respective
obligations under the deed of absolute in accordance with the terms thereof. There was no actual
or constructive delivery of the things sold. Thus, petitioner has not performed its obligation to
transfer ownership and possession of the things sold to respondent.

Butuan Sawmill, Inc. vs. Court of Tax Appeals

G.R. No. L-20601; February 28, 1966
Expenses of delivery are borne by the seller: In sales F.O.B (free on board) or F.A.S (free
alongside ship)

FACTS:
During the period of January 31, 1951 to June 8, 1953, Butuan Sawmill Inc. sold logs to
Japanese firms at prices FOB Vessel Magallanes, Agusan. The FOB prices included costs of
loading, wharfage stevedoring and other costs in the Philippines. The freight was paid by the
Japanese buyers and the payments of the logs were efected by means of letters of credit in favor
of petitioner and payable through the Philippine National Bank or any other bank named by it.
Upon investigation by the Bureau of Internal Revenue, it was ascertained that no sales tax was
filed by petitioner and neither did it pay the corresponding tax on sales. Petitioner contends that
the disputed sales were consummated in Japan, and, therefore, not subject to the taxing
jurisdiction of our Government.
The lower court upheld the legality and correctness of the amended assessment of the
sales tax and surcharge, ruling that the sales in question were domestic or local sales, and
therefore subject to sales tax under the provisions of the Tax Code.
ISSUE:
Who shall bear the expenses of delivery?
RULING:
SC ruled that the export sales have been consummated in the Philippines and were,
accordingly, subject to sales tax therein. Expenses of and incidental to putting the goods into a
deliverable state must be borne by the seller unless otherwise agreed by the parties.
That the specification in the bill of lading to the efect that goods are deliverable to the
order of the seller or his agent does not necessarily negate the passing of title to the goods upon
delivery to the carrier is clear from the 2nd paragraph of Article 1503 of the Civil Code.

Cebu Winland Development Corporation vs. Ong Siao Hua

G.R. No. 173215; May 21, 2009
Completeness of Delivery; Real Estate: where it is sold per unit or number; prescription of the
action
FACTS:
Cebu Winland Development Corporation is the owner and developer of a condominium
project called the Cebu Winland Tower Condominium. Ong Siao Hua is a buyer of two
condominium units and four parking slots from petitioner.
Respondent bought two condominium units as well as four parking slots. The area per
condominium unit as indicated in petitioners price list is 155 square meters and the
price per square meter is P22,378.95. The price for the parking lot is P240,000 each.
Respondent, therefore, paid P2,298,655.08 as down payment and issued 24 postdated checks in
the amount of P223,430.70 per check for the balance of the purchase price in the total amount of
P5,362,385.
On October 10, 1996, possession of the subject properties was turned over to
respondent. The deeds of absolute sale have yet to be signed by Ong Siao Hua.

In the deed of absolute sale of Units, respondent was distressed to find that the
stated floor area is only 127 square meters contrary to the area indicated in the price list
which was 155 square meters. Respondent caused a verification survey of the said
condominium units and discovered that the actual area is only 110 square meters per unit.
Respondent demanded from petitioner to refund the amount of P2,014,105.50 representing
excess payments for the diference in the area.
However, petitioner refused to refund the said amount to respondent. On August 7,
1998, respondent filed a complaint before House and Land Regulatory Board (HLURB) to refund
the amount representing excess payments for the diference in the area.
HLURB Arbiter dismissed the complaint. It ruled that Cebu Winland is not guilty of
misrepresentation and the action of Ong Siao Hua has already prescribed pursuant to Art. 1543 of
the Civil Code. The subject properties have been delivered on October 10, 1996 and respondent
filed his complaint only on August 7, 1998.
Aggrieved, Ong Siao Hua appealed to the Board of HLURB. It affirmed the decision of the
Arbiter with modifications. It ruled that the contract is subject to rescission based on Arts. 1330
and 1331 of the Civil Code. It said that there was a mistake in the object of sale.
Not satisfied with the decision of the Board, petitioner appealed to the Office of the
President. It rendered a decision that the action of the respondent has already prescribed.
Ong Siao Hua appealed before the Court of Appeals. It rendered a decision that the action
of respondent has not prescribed.
Hence, Cebu Winland Corporation made an appeal before the Supreme Court.

ISSUE:
1. Whether or not there has been complete delivery;
2. Whether or not Ong Sia Huas action has already prescribed;
3. Whether the sale is sold per unit or lump sum.
4. Applicable rules in the sale sold per unit or lump sum.

RULING:
1. On the issue of delivery
SC ruled that there has been no complete delivery yet.
Delivery as used in the Law on sales refers to the concurrent transfer of 2
things: possession and ownership. This is the rationale behind the jurisprudential doctrine that
presumptive delivery via execution of a public instrument is negated by the reality that the
vendee actually failed to obtain material possession of the land subject of the sale. In the same
vein, if the vendee is placed in actual possession of the property, but by agreement of the parties
ownership of the same is retained by the vendor until the vendee has fully paid the price, the
mere transfer of the possession of the property subject of the sale is not the delivery
contemplated in the Law on Sales or as used in Article 1543 of the Civil Code.
In the case at bar, it appears that respondent was already placed in possession of
the subject properties. However, it is crystal clear that the deeds of absolute sale were still to be
executed by the parties upon payment of the last installment. This fact shows that ownership of
the said properties was withheld by petitioner. Following case law, it is evident that the parties
did not intend to immediately transfer ownership of the subject properties until full payment and
the execution of the deeds of absolute sale. Consequently, there is no delivery to speak of in

this case since what was transferred was possession only and not ownership of the subject
properties.
2. On the issue of prescription
SC ruled that the action of the respondent has not yet prescribed.
Under Article 1543, the actions arising from Articles 1539 and 1542 shall prescribe
in six months, counted from the date of delivery.
In the case at bar, it has already been ruled that there has been no delivery yet.
There has been no transfer of ownership of the subject properties since the deeds of absolute
sale have not yet been executed by the parties. What has been transferred was possession only
and not of the subject properties.

3. Is the sale sold per unit or lump sum?

The sale entered into is a sale sold per unit.
In the case at bar, it is undisputed by the parties that the purchase price of the subject
properties was computed based on the price list prepared by petitioner, or P22,378.95 per square
meter. Clearly, the parties agreed on a sale at a rate of a certain price per unit of measure and
not one for a lump sum. Hence, it is Article 1539 and not Article 1542 which is the applicable
law. Accordingly, respondent is entitled to the relief aforded to him under Article 1539, that is,
either a proportional reduction of the price or the rescission of the contract, at his option.
Respondent chose the former remedy since he prayed in his Complaint for the refund of the
amount of P2,014,105.50 representing the proportional reduction of the price paid to petitioner.

4. Rules applicable in sale sold per unit or number and lump sum.
Sold per unit
--- vendor shall be obliged to deliver to the vendee all that may been stated in
contract.
---IF NOT POSSIBLE, the vendee has two options:
(a) proportional reduction of the price or
(b) rescission of the contract.

Lump sum
---no increase or decrease of the price, although there be a greater or lesser area
or number than that stated in the contract.

Gabriel vs. Mabanta et. al

G.R. No. 142403. March 26, 2003
Double sale: ownership of immovable subject of a double sale; what constitutes good faith
FACTS:
Spouses Pablo and Escolastica Mabanta were the registered owners of two lots located in
Patul and Capaltitan, Santiago, Isabela. On October 25, 1975, they mortgaged both lots with the

Development Bank of the Philippines (DBP) as collateral for a loan. Five years thereafter
(September 1980), spouses Mabanta sold the lots to Susana Soriano by way of a Deed of Sale of
Parcels of Land With Assumption of Mortgage. Included in the Deed is an agreement that they
could repurchase the lots within a period of two (2) years.
Spouses Mabanta failed to repurchase the lots. But sometime in 1984, they were able to
convince Alejandro Gabriel to purchase the lots from Susana Soriano. As consideration, Alejandro
delivered to Susana a 500-square meter residential lot with an actual value of P40,000.00 and
paid spouses Mabanta the sum of P5,000.00. Spouses Mabanta executed a Deed of Sale with
Assumption of Mortgage in favor of Alejandro. For her part, Susana executed a document
entitled Cancellation of Contract whereby she transferred to Alejandro all her rights over the
two lots.
Alejandro and his son Alfredo cultivated the lots. They also caused the restructuring of
spouses Mabantas loan with the DBP. However, when they were ready to pay the entire loan,
they found that spouses Benito and Pura Tan had paid it and that the mortgage was already
cancelled.
Benito Tan, father of Zenaida Tan-Reyes, approached the Gabriels to refund the sum of P5,
000 which they paid to the Spouses Mabanta. Alejandro refused because Tan was unwilling to
return the formers 500-square meter lot delivered to Susana as purchase price for the lots.
Thereafter, spouses Tan tried to eject Alejandro.
Alejandro and Alfredo filed a complaint against spouses Mabanta, spouses Tan, the DBP
and barangay officials Dominador Maylem and Alejandro Tridanio. During the proceedings, it
turned out that it was spouses Tans daughter, Zenaida Tan-Reyes who bought one of the lots
from spouses Mabanta on August 21, 1985. Not having been impleaded as party-defendant, she
filed an answer-in-intervention alleging that she is the registered owner of the lot and that she is
an innocent purchaser in good faith and for value.
Trial Court ruled in favor of Alejandro and Alfredo Gabriel. It ratiocinated that Zenaida Tan
was not an innocent purchaser for value. Her registration was not made in good faith. Unsatisfied,
spouses Mabanta and Zenaida Tan-Reyes appealed before the CA.
CA reversed the decision of the Trial Court and held that the second sale between spouses
Mabanta and Zenaida was valid. Its basis is the principle that a person dealing with registered
land may simply rely on the correctness of the certificate of title and, in the absence of anything
to engender suspicion, he is under no obligation to look beyond it.
Aggrieved, the Gabriels filed a petition before the Supreme Court.
ISSUE:
1. Whether or not the registration of the second sale confers better right to Zenaida ReyesTan over the disputed property;
2. Whether or not Zenaida Tan is an innocent purchaser for value and good faith.
RULING:
1. On the issue of the registration of the second sale by Zenaida Reyes-Tan
The registration made by Zenaida Tan was made in bad faith. Hence, she does not have a
better right over the Gabriels.
The requirement under the law is two-fold: acquisition in good faith and registration in
good faith.
The prior registration of the disputed property by the second buyer does not by itself
confer ownership or a better right over the property. Article 1544 requires that such
registration must be coupled with good faith. Jurisprudence teaches us 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 right except where the second buyer
registers in good faith the second sale ahead of the first, as provided by the Civil Code. Such
knowledge of the first buyer does not bar her from availing of her rights under the law, among
them, to register first her purchase as against the second buyer. But in converso, knowledge
gained by the second buyer of the first sale defeats his right even if he is first to register the

second sale, since such knowledge taints his prior registration with bad faith. This is the price
exacted by Article 1544 of the Civil Code for the second buyer being able to displace
the first buyer, that before the second buyer can obtain priority over the first, he must
show that he acted in good faith throughout (i.e. in ignorance of the first sale and of
the first buyers right) from the time of acquisition until the title is transferred to
him by registration or failing registration, by delivery of possession.
In the case at bar, certain pieces of evidence, put together, would prove that respondent
Reyes is not a buyer in good faith. The records show that on August 18, 1985, spouses Mabanta
ofered to her for sale the disputed lot. They told her it was mortgaged with respondent DBP and
that she had to pay the loan if she wanted to buy it. She readily agreed to such a condition. The
following day, her father Benito Tan, accompanied by barangay official Tridanio, went to petitioner
Alejandros house ofering to return to him the P5,000.00 he had paid to spouses Mabanta. Tan
did not suggest to return the 500-square meter lot petitioner delivered to Susana Soriano. For this
reason, petitioner refused Tans ofer and even prohibited him from going to respondent DBP.
2. On the issue of innocent purchaser for value and good faith
Zenaida Tan is not an innocent purchaser in good faith.
Good faith is something internal. Actually, it is a question of intention. In ascertaining
ones intention, this Court must rely on the evidence of ones conduct and outward acts. From
her actuations as specified above, respondent Reyes cannot be considered to be in good faith
when she bought the lot.
Moreover, it bears noting that on September 16, 1985, both petitioners filed with the
trial court their complaint involving the lot in question against respondents. After a month, or on
October 17, 1985, respondent Reyes had the Deed of Absolute Sale registered with the
Registry of Property. Evidently, she wanted to be the first one to efect its registration to the
prejudice of petitioners who, although in possession, have not registered the same. This is
another indicum of bad faith.
We have consistently held that in cases of double sale of immovables, what finds
relevance and materiality is not whether or not the second buyer was a buyer in good
faith but whether or not said second buyer registers such second sale in good faith,
that is, without knowledge of any defect in the title of the property sold.

Leung Yee vs. Strong Machinery and Williamson

37 Phil. 644
Good faith in the buyer: what good faith consists
FACTS:
The "Compaia Agricola Filipina" bought a considerable quantity of rice-cleaning
machinery company from Strong Machinery Company, and executed a chattel mortgage thereon
to secure payment of the purchase price. It included in the mortgage deed the building of strong
materials in which the machinery was installed, without any reference to the land on which it
stood. The indebtedness secured by this instrument not having been paid when it fell due, the
mortgaged property was sold by the sherif, in pursuance of the terms of the mortgage
instrument, and was bought in by the machinery company. The mortgage was registered in the
chattel mortgage registry, and the sale of the property to the machinery company in satisfaction
of the mortgage was annotated in the same registry.
The "Compaia Agricola Filipina" executed another deed of sale of the land upon which
the building stood to the machinery company, but this deed of sale, although executed in a public
document, was not registered. This deed makes no reference to the building erected on the land
and would appear to have been executed for the purpose of curing any defects which might be
found to exist in the machinery company's title to the building under the sherif's certificate of
sale. The machinery company went into possession of the building at or about the time when this
sale took place and it has continued in possession ever since.

At or about the time when the chattel mortgage was executed in favor of the machinery
company, the mortgagor, the "Compaia Agricola Filipina" executed another mortgage to Leung
Yee upon the building, separate and apart from the land on which it stood, to secure payment of
the balance of its indebtedness to the plaintif under a contract for the construction of the
building. Upon the failure of the mortgagor to pay the amount of the indebtedness secured by the
mortgage, the plaintif secured judgment for that amount, levied execution upon the building,
bought it in at the sherif's sale and had the sherif's certificate of the sale duly registered in the
land registry of the Province of Cavite.
Petitioner instituted an action to recover possession of the building from the machinery
company.
ISSUE:
Whether or not Leung Yee is a purchaser in good faith.
RULING:
Leung Yee is not a purchaser in good faith as contemplated in Art. 1544 of the Civil Code.
It is "the honesty of intention," "the honest lawful intent," which constitutes good faith
implies a "freedom from knowledge and circumstances which ought to put a person on inquiry,"
and so it is that proof of such knowledge overcomes the presumption of good faith in which the
courts always indulge in the absence of proof to the contrary. "Good faith, or the want of it, is not
a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which
can only be judged of by actual or fancied tokens or signs."
One who purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith as against the true owner of the land
or of an interest therein; and the same rule must be applied to one who has knowledge of facts
which should have put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts
which should put a reasonable man upon his guard, and then claim that he acted in good faith
under the belief that there was no defect in the title of the 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 afterwards
develops that the title was in fact defective, and it appears that he had such notice of the defects
as would have led to its discovery had he acted with that measure of precaution which may
reasonably be acquired of a prudent man in a like situation. Good faith, or lack of it, is in its
analysis a question of intention; but in ascertaining the intention by which one is actuated on a
given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts
by which alone the inward motive may, with safety, be determined.
The agreed statement of facts clearly discloses that the plaintif, when he bought the
building at the sherif's sale and inscribed his title in the land registry, was duly notified that the
machinery company had bought the building from plaintif's judgment debtor; that it had gone
into possession long prior to the sherif's sale; and that it was in possession at the time when the
sherif executed his levy. The execution of an indemnity bond by the plaintif in favor of the
sherif, after the machinery company had filed its sworn claim of ownership, leaves no room for
doubt in this regard. Having bought in the building at the sherif's sale with full knowledge that at
the time of the levy and sale the building had already been sold to the machinery company by
the judgment debtor, the plaintif cannot be said to have been a purchaser in good faith; and of
course, the subsequent inscription of the sherif's certificate of title must be held to have been
tainted with the same defect.

Lorenzo Shipping Corp. vs. BJ Marthel, Inc.

G.R. No. 145483; November 19, 2004
Delivery: when time is of the essence
FACTS:

Petitioner Lorenzo Shipping Corporation is a domestic corporation engaged in coastwise

shipping. It used to own the cargo vessel M/V Dadiangas Express. Upon the other hand,
respondent BJ Marthel International, Inc. is a business entity engaged in trading, marketing, and
selling of various industrial commodities. It is also an importer and distributor of diferent brands
of engines and spare parts.
Respondent was a supplier of spare parts petitioners marine engines. Sometime in May
1989, petitioner asked respondent for a quotation for various machine parts. Acceding to this
request, respondent furnished petitioner with a formal quotation. In the said quotation, it was
stipulated that delivery is within 2 months after receipt of firm order and the terms is 25% upon
delivery, balance payable in 5 bi-monthly equal installments not to exceed 90 days. It was made
known to the petitioner that in order that delivery be made within 2 months (per advice of the
Japanese supplier of the respondent), purchase orders must be made within June 1989.
Respondent issued their 1st purchase order sometime in November 1989 and the 2 nd purchase
order sometime in January 1990.
Respondent thereafter placed the order for the two cylinder liners with its principal in
Japan, Daiei Sangyo Co. Ltd. Respondent sent a Statement of Account to petitioner. While the
other items listed in said statement of account were fully paid by petitioner, the two cylinder
liners delivered to petitioner remained unsettled. Consequently, Mr. Alejandro Kanaan, Jr.,
respondent's vice-president, sent a demand letter to petitioner requiring the latter to pay the
value of the cylinder liners subjects of this case. Instead of heeding the demand of respondent for
the full payment of the value of the cylinder liners, petitioner sent the former a letter ofering to
pay only P150,000 for the cylinder liners. In said letter, petitioner claimed that as the cylinder
liners were delivered late and due to the scrapping of the M/V Dadiangas Express, petitioner
would have to sell the cylinder liners in Singapore and pay the balance from the proceeds of said
sale.
Due to failure of the parties to settle the matter, BJ Marthel Inc. filed an action for sum of
money and damages against Lorenzo Shipping. Trial Court ruled in favor of respondent stating
that respondent is bound to the quotation it submitted to petitioner particularly with respect to
the terms of payment and delivery of the cylinder liners.
Aggrieved, respondent filed an appeal before the Court of Appeals. CA ruled that time was
not of the essence in the contract of sale between the parties. It is shown in the significant period
of time which had lapsed between the respondents ofer and the issuance by petitioner of their
purchase orders.
ISSUE:
Whether or not time was of the essence in the contract of sale entered into by Lorenzo
Shipping Corp. and BJ Marthel Inc.
RULING:
SC ruled that time was not of the essence in the contract entered into by the parties.
In determining whether time is of the essence in a contract, the ultimate criterion is the
actual or apparent intention of the parties and before time may be so regarded by a court, there
must be a sufficient manifestation, either in the contract itself or the surrounding circumstances
of that intention. The law implies, however, that if no time is fixed, delivery shall be made within
a reasonable time, in the absence of anything to show that an immediate delivery intended.
It is a cardinal rule in interpretation of contracts that if the terms thereof are clear and
leave no doubt as to the intention of the contracting parties, the literal meaning shall control.
However, in order to ascertain the intention of the parties, their contemporaneous and
subsequent acts should be considered. While this Court recognizes the principle that contracts
are respected as the law between the contracting parties, this principle is tempered by the rule
that the intention of the parties is primordial and "once the intention of the parties has been
ascertained, that element is deemed as an integral part of the contract as though it has been
originally expressed in unequivocal terms."
In the present case, we cannot subscribe to the position of petitioner that the documents,
by themselves, embody the terms of the sale of the cylinder liners. One can easily glean the
significant diferences in the terms as stated in the formal quotation and the 1 st Purchase Order
with regard to the due date of the down payment for the first cylinder liner and the date of its
delivery as well as the 2nd Purchase Order with respect to the date of delivery of the second
cylinder liner. While the quotation provided by respondent evidently stated that the cylinder
liners were supposed to be delivered within two months from receipt of the firm order of

petitioner and that the 25% down payment was due upon the cylinder liners' delivery, the
purchase orders prepared by petitioner clearly omitted these significant items. The petitioner's 1 st
Purchase Order made no mention at all of the due dates of delivery of the first cylinder liner and
of the payment of 25% down payment. Its 2nd Purchase Order likewise did not indicate the due
date of delivery of the second cylinder liner.
SC finds significant the fact that while petitioner alleges that the cylinder liners were to be
used for dry dock repair and maintenance of its M/V Dadiangas Express between the later part of
December 1989 to early January 1990, the record is bereft of any indication that respondent was
aware of such fact. The failure of petitioner to notify respondent of said date is fatal to its claim
that time was of the essence in the subject contracts of sale.
Thus, SC holds that in the subject contracts, time was not of the essence. The delivery of
the cylinder liners on 20 April 1990 was made within a reasonable period of time considering that
respondent had to place the order for the cylinder liners with its principal in Japan and that the
latter was, at that time, beset by heavy volume of work.
Melencion et. al. vs. CA and Aznar Brothers Realty Co.
G.R. No. 148846; September 25, 2007
Rule on Double Sale: to the one who registers the sale in good faith
FACTS:
The subject property is a 30,351 square meter parcel of land located at Suba-basbas,
Marigondon, Lapu-Lapu City, Cebu in the name of the late petitioner Go Kim Chuan.
The entire property was originally owned by Esteban Bonghanoy who had only one child,
Juana Bonghanoy-Amodia, mother of the late Leoncia Amodia and petitioners Cecilia Amodia Vda.
de Melencion, Veneranda Amodia, Felipe Amodia, and Eutiquio Amodia (the Amodias). The entire
property was brought under the operation of the Torrens System. However, the title thereto was
lost during the Second World War.
The Amodias allegedly executed an Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale whereby they extra-judicially settled the estate of Esteban Bonghanoy and
conveyed the subject property to respondent Aznar Brothers Realty Company. The said ExtraJudicial Partition of Real Estate with Deed of Absolute Sale was registered under Act 3344 as
there was no title on file at the Register of Deeds of Lapu-Lapu City (Register of Deeds).
Thereafter, AZNAR made some improvements and constructed a beach house thereon.
Melencion and the Amodias executed a Deed of Extra-Judicial Settlement with Absolute
Sale, conveying the subject property in favor of Go Kim Chuan. The lost title covering the subject
property was reconstituted pursuant to Republic Act No. 26. A reconstituted title designated as
Original Certificate of Title was issued in the name of Esteban Bonghanoy and, subsequently, a
derivative title was issued in the name of Go Kim Chuan. Thereafter, Go Kim Chuan exercised
control and dominion over the subject property in an adverse and continuous manner and in the
concept of an owner.
Aznar wrote a letter to petitioners Amodias asking the latter to withdraw and/or nullify the
sale entered into between them and Go Kim Chuan. Because petitioners did not heed to Aznars
demand, Aznar filed a case against petitioners Amodias and Go Kim Chuan for Annulment of Sale
and Cancellation of the TCT alleging that the sale to Go Kim Chuan was an invalid second sale of
the subject property which had earlier been sold to it. Petitioners Amodias denied that they
executed the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR,
claiming that their purported signatures thereon were forged.
RTC declared Go Kim Chuan as the real owner of the subject property. It stated that the
deed of sale in favor of Aznar has been forged and that the subject property has been registered
already. Aggrieved, Aznar appealed before CA
CA ruled in favor of Aznar holding that the Extra-Judicial Partition of Real Estate with Deed
of Absolute Sale executed by the Amodias in favor of AZNAR was registered ahead of the Deed of
Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan, thus, pursuant to Article
1544 of the New Civil Code, the former deed should be given preference over the latter.
ISSUE:

Who between Go Kin Chuan and Aznar has a better right over the subject property?
RULING:
Go Kim Chuan has the better right over the subject property.
The registration contemplated under Article 1544 refers to the registration under the
Torrens System, which considers the act of registration as the operative act that gives validity to
the transfer or creates a lien upon the land. This rule precisely applies to cases involving
conflicting rights over registered property and those of innocent transferees who relied on the
clean title of the properties. Thus, we held that registration must be done in the proper registry
in order to bind the same.
In the case at bench, it is uncontroverted that the subject property was under the operation
of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were
made. AZNAR knew of this, and admits this as fact. Yet, despite this knowledge, AZNAR
registered the sale in its favor under Act 3344 on the contention that at the time of sale, there
was no title on file. We are not persuaded by such a lame excuse.
Act 3344 provides for the system of recording of transactions or claims over unregistered
real estate without prejudice to a third party with a better right. But if the land is registered
under the Land Registration Act (and therefore has a Torrens Title), and it is sold and the sale is
registered not under the Land Registration Act but under Act 3344, as amended, such sale is not
considered registered, as the term is used under Art. 1544 of the New Civil Code.
Although it is obvious that Go Kim Chuan registered the sale in his favor under Act 496
while AZNAR did not, we still cannot make an outright award of the subject property to the
petitioners solely on that basis. For the law is clear: mere registration of title is not enough.
Good faith must accompany the registration.
Thus, to be able to enjoy priority status, the second purchaser must be in good faith, i.e., he
must have no knowledge of the previous alienation of the property by the vendor to another.
Notably, what is important for this purpose is not whether the second buyer is a buyer in good
faith, but whether he registers the second sale in good faith, meaning, he does so without
knowledge of any defect in the title over the property sold.
Go Kim Chuan registered the property in good faith. Before buying the subject property,
Go Kim Chuan made verifications with the Office of the City Assessor of Lapu-Lapu City and the
Register of Deeds. He likewise visited the premises of the subject property and found that nobody
interposed any adverse claim against the Amodias. After he decided to buy the subject property,
he paid all taxes in arrears, caused the publication of the Deed of Extra-Judicial Settlement with
Absolute Sale in a newspaper of general circulation, caused the reconstitution of the lost
certificate of title and caused the issuance of the assailed TCT in his name. Given these
antecedents, good faith on the part of Go Kim Chuan cannot be doubted.

Olsen vs. Yearsley

G.R. No. 4385; August 31, 1908
When rules on double sale not applicable

FACTS:
Myer Harris is the owner of a cash register. He sold it for P330 to Louis Heymann.
Heymann paid a down of P140, leaving a balance of P190. It was orally agreed that title to the
property should not pass until the final payment of the purchase price. Thereafter, Harris being
about to depart for Iloilo, demanded the balance of the money. Heymann, being unable to pay it,
made an ofer to return the register, which was accepted. The machine was left in the place of
business of Heymann, who was then selling out to one Mrs. Booth. Thereupon, Harris sold the
register P195 to Carl Hess. Heyman certified that Harris was the owner. Hess thereafter sold it to
the plaintif, Olsen.
In the meantime, the register remained in the place of business which Heymann had sold
out to Mrs. Booth. Mrs. Booth in turn sold the business to George M. Lack who transferred it to
this defendant.

ISSUE:
Whether or not the rule on double sale is applicable in this case.
RULING:
SC held that the rule on double sale is not applicable.
It ratiocinated that of the previous history of the register, and of the claims thereto of
Harris, Hess and Olsen, these owners of the business all had knowledge, with the exception of
Yearsley. He was a buyer in good faith, and if he had bought from the true owner, would have
brought himself under the protection of the Article 1473 (now Art. 1544) of the Civil Code,
providing that, when a thing is sold to diferent buyers, the property goes to him who first obtain
possession. He bought it, however, from a person who was not the owner and who had the
knowledge of the true ownership. Therefore, his defense can not prevail. The plaintif is entitled
to judgment for the possession of this machine, without any qualification obliging him to make
further payment therefore, or to surrender the machine upon payment to be made by the
defendant.
Soler vs. Chesley
G.R. No. L-17150; June 20, 1922
Warranties: Efect of non-fulfillment of express representation

FACTS:
Andres Soler agreed with H. Anderson and Co. for the purchase of a coconut oil
machinery. It is stated in their agreement that we can therefore make no guarantee as to prices
and delivery, it being understood that prices charged will be those shown on the invoices of the
manufacturers, and shipment will be made by first possible opportunity.
Subsequently, Soler (petitioner) sold to Edward Chesley (defendant) all his rights and
interest in the contract (dated November 1918) entered into between Soler and Anderson. In the
contract between the parties herein, it was stipulated that a part of the aforesaid machinery is
at this time on the way, the other part being already in this city of Manila, the price of which has
not yet been paid by Mr. Soler to Wm. H. Anderson and Co. Since Chesley is interested in
acquiring the said machinery, parties herein further agreed that Chesley will assume the
obligation to pay Anderson and Co. for the amount unpaid in the invoices. The purchase price of
the machinery was P100, 000.
Of the parts of the machinery covered by these contracts, only the "filter press," the
"cooker" and the "chains" were in Manila on November 1918 but the most important parts, such
as the "oil expellers" and the "grinding mills" were not then yet in the city. The important parts
arrived only on August 1919. These efects were received and paid for by the defendant under
protest, on account of the fact that they were not delivered within the period stipulated in the
contract.
Sometime in April 1919, Mr. Chesley sent a letter to Mr. Soler asking that their contract be
rescinded and repayment of the sums advanced to Anderson & Co.
Soler brought an action before the Court asking the defendant to pay him the remaining
balance of the purchase price of the said machinery. As a defense, Mr. Chesley claimed that he
entered into the contract based on the representation of the plaintif that the other parts of the
machinery were on the way while in fact the machinery did not arrive but long thereafter.
Otherwise, he would not have signed the contract.
ISSUE:
What is the efect of the non-fulfillment of the express representation?
RULING:
Mr. Chesley is discharged from all the obligations contracted by him with Anderson and
Co., relative to the payment of the price of the machinery. SC find that the Mr. Soler has failed to

carry out his obligation and, therefore, has no right to compel the defendant to comply with his
obligation to pay the plaintif the sum claimed in the complaint. With regard to the counterclaim
set up by the defendant, it appears from the record that he sold the aforesaid machinery to a
third person, the Philippine Refining Co. In cases like this, the rescission of the contract does not
lie (art. 1295, Civil Code).
It appears sufficiently established in the record that if Mr. Chesley gave his consent to this
contract, it was because he expected that said machinery would arrive within a short time, the
time reasonably necessary for such machinery to reach Manila from America, as Mr. Soler
asserted in the document itself that said machinery was then on the way. The act of the
defendant in insisting that this guaranty as to the arrival of the machinery be stated in the
contract, his repeated complaints and protests when he afterwards made payments as the parts
arrived, and his letter of April 1919, leave no room for doubt that the arrival of said machinery
within a reasonably short time was one of the determining elements of his consent. These acts of
the defendant disclose the fact that he intented the arrival of the machinery to be an essential
element of the contract (art. 1282, Civil Code).
We hold that in the case at bar the arrival of the machinery within a reasonable time was
an essential element of the contract, such time to be determined by taking into account the fact
that is was then on the way to Manila.
The fact that the plaintif had no control of the prompt transportation of the said
machinery to Manila, does not relieve the plaintif from making good the guaranty inserted in the
contract that said machinery was already on the way to Manila. The plaintif elected to bind
himself in that way, although he knew, as he ought to have known that, had his rights not been
transferred to the defendant, he could not have charged Messrs. Anderson and Co. so much, who
in their contract did not guarantee the delivery nor the amount of the price. The plaintif having
bound himself in favor of the defendant for more than what Anderson and Co. had bound
themselves for in his favor, we entertain no doubt that he acted in good faith, encouraged by the
information of Anderson and Co., but it was he, not Anderson and Co., who contracted the
obligation, and, therefore, he is the only one to be responsible for the obligation arising from the
contract. He who contracts and assumes an obligation is presumed to know the
circumstances under which said obligation can be complied with.

Uy vs. Ariza
G.R. No. 158370; August 17, 2006
Warranty in case of eviction

FACTS:
Spouses Michael and Bonita Uy, petitioners, purchased 200 square meters of the parcel of
land. The said parcels form part of a bigger parcel of land owned by the Arizas. The contract
stipulated that petitioners had the right of choice to designate which portion of the bigger parcel
of land would be the subject of the sale. Petitioners exercised their right to choose, selected and
in fact occupied around 200 square meters of a portion of land. Petitioners purchased another
200 square meters from the same with the same option to choose which portion. They selected
and occupied an adjoining portion to the lot in their first sale. It appears that the parcels of land
petitioners had chosen and occupied were already titled in the names of the Delgados. Thus, at
the time of the first sale by the respondents to petitioners, the two parcels of land had been
cancelled and were already part of the claimed lot by the Delgados.
Petitioners were sued for unlawful detainer by the Delgados. Petitioners entered into a
compromise agreement with the Delgados and surrendered possession of the subject parcels of
land. Petitioners compromised the case without giving notice to respondents.
Thereafter, petitioners demanded from respondents that they be allowed to choose again.
When respondents refused, petitioners filed a case for specific performance with delivery of
possession of real property and damages.

Petitioners anchored their claim for specific performance on the averment that they
"could not exercise their right to choose the portion bought from the parcel of land aforedescribed because the portion pointed out by the petitioners were already sold and claimed by
third persons.
On the other hand, respondents alleged that they had already complied with their
obligation to deliver, as petitioners had already chosen and been in possession of the parcels of
land they chose. Respondents also faulted petitioners for losing possession of the parcels of land
by entering into a compromise agreement with the Delgados on two grounds: first, because
respondents have allegedly initiated the necessary legal steps to defend their possessory rights
to the disputed land by filing a case for the declaration of nullity of the title of the Delgados, and
second, because petitioners failed to interpose a third-party complaint to implead respondents in
the unlawful detainer case.
Trial Court denied the Arizas motion to dismiss. This prompted herein respondent to file
before the Court of Appeals on certiorari and prohibition. The Court of Appeals held that
petitioners had no cause of action to file a case of specific performance against respondents. It
ruled that the proper remedy of the petitioners is an action for enforcement of warranty against
eviction.
ISSUE:
1. Whether or not spouses Uy can still exercise their right to choose again from the bigger
parcel of land;
2. Whether or not an action for warranty in case of eviction against the Arizas would prosper.
RULING:
1. On petitioners right to choose again.
SC ruled that spouses Uy can no longer exercise their right to choose having entered into
a compromise agreement with the Delgados.
The case for specific performance which was filed by petitioners against respondents is
not the proper remedy in this case. Rather, said action was purely an afterthought on the part of
petitioners when they were eventually evicted from the lots they bought from respondents. If
petitioners have a cause of action against respondents, it would be one for the enforcement of
warranty against eviction and not one for specific performance.
It is clear that respondents were able to deliver the said parcels of land to petitioners. It
could not be said that petitioners were deprived of their choice on which parcel of land they were
to buy and occupy. The fact that they even decided to buy the lot adjacent to the first lot they
bought would clearly indicate that the said lots were their choice. Moreover, petitioners had been
enjoying possession of the same until an unlawful detainer case was filed against them by third
persons. After having enjoyed the property for sometime, petitioners cannot now come before the
court claiming that respondents failed to deliver the property subject of the sale.
2. On the action for warranty in case of eviction
SC ruled that even if the petitioners filed an action for warranty in case of eviction. The
same will not prosper.
In order that a vendors liability for eviction may be enforced, the following requisites
must concur
a) there must be a final judgment;
b) the purchaser has been deprived of the whole or part of the thing sold;
c) said deprivation was by virtue of a right prior to the sale made by the vendor;
and
d) the vendor has been summoned and made co-defendant in the suit for
eviction at the instance of the vendee.

In the case at bar, the fourth requisite that of being summoned in the suit for eviction at
the instance of the vendee is not present. The records of the case reveal that the unlawful
detainer case filed by third persons against petitioners, which led to the ouster of the latter from
the subject lots, was decided by compromise agreement without impleading respondents as
third-party defendants. It should be stressed that in order for the case to prosper, it is a
precondition that the seller must have been summoned in the suit for the eviction of the buyer.