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Pasagui vs.

Villablanca
Facts: Petitioner-appellants Pasagui and Mosar filed a complaint with the CFI of Tacloban, alleging that in
consideration of P2,800 they bought from appellees, the Bocars, a parcel of agricultural land Leyte; that the
corresponding document of sale was executed, notarized on the same date, and recorded in the Registry of Deeds;
that during February, 1963, defendant spouses Villablanca, "illegally and without any right, whatsoever, took
possession of the property harvesting coconuts from the coconut plantation thereon, thus depriving plaintiffs of its
possession”; that despite demands made by the plaintiffs upon the Villablancas "to surrender to them the above-
described property and its possession" the latter failed or refused to return said parcel of land to the former,
causing them damage; and that the Bocars, vendors of the property, are included defendants in the complaint by
virtue of the warranty clause contained in the document of sale. The trial court issued an order dismissing the
complaint for lack of jurisdiction, it appearing from the allegations in the complaint that the case is one for forcible
entry which belongs to the exclusive jurisdiction of the Justice of the Peace (now Municipal Court) of Pastrana,
Leyte.

Issue: WON petitioner was illegally deprived of his possession of the subject land.

Held: The Court ruled that the complaint does not allege that the plaintiffs were in physical possession of the land
and have been deprived of that possession through force, intimidation, threat, strategy, or stealth. It is true that
the execution of the deed of absolute sale in a public instrument is equivalent to delivery of the land subject of the
sale. This presumptive delivery only holds true when there is no impediment that may prevent the passing of the
property from the hands of the vendor into those of the vendee. It can be negated by the reality that the vendees
actually failed to obtain material possession of the land subject of the sale. It appears from the records of the case
at bar that plaintiffs-appellants had not acquired physical possession of the land since its purchase on November
12, 1962. As a matter of fact, their purpose in filing the complaint in Civil Case No. 3285 is precisely to "get the
possession of the property."

In the case at bar, no such inference could be made as plaintiffs-appellants had not claimed that they were in
actual physical possession of the property prior to the entry of the Villablancas. Moreover, it is evident that
plaintiffs appellants are not only seeking to get the possession of the property, but as an alternative cause of
action, they seek the return of the price and payment of damages by the vendors "in case of eviction or loss of
ownership" of the said property. It is, therefore, not the summary action of forcible entry within the context of the
Rules.

Banzon vs. Cruz


Facts: Sometime in 1952, Sta. Maria obtained crop loans from the PNB (hereinafter referred as the bank).
Respondent Associated Insurance & Surety Co., Inc. (hereinafter referred to as Associated) acted as surety of Sta.
Maria, filing surety bonds in favor of the bank to answer for prompt repayment of the loans. Petitioner Banzon and
Naval in turn acted as indemnitors of Associated and were obligated to indemnify and hold harmless Associated
from any liability thus acting as surety of the loan. Sta. Maria failed to pay his obligations to the bank, which
accordingly demanded payment from Associated as surety. Instead of paying the bank, Associated filed a
complaint with the CFI of Manila against debtor Sta. Maria and indemnitors Banzon and Naval. The CFI rendered
judgment ordering Sta. Maria, Banzon and Naval "to pay jointly and severally unto plaintiff for the benefit of the
PNB".

According to the Banzons' petition at bar, sometime in 1965, even before ownership over the 2 parcels of land
belonging to the Banzons could be consolidated in the name of Associated "in clear collusion and confederation
with (respondent) Cardenas, allowed and permitted the latter to execute and levy one of the 2 parcels of land for a
judgment debt of P5,100.00 (of Associated in favor of Cardenas) notwithstanding that the property in question was
worth P130,000.00 more or less, and further notwithstanding the fact that said Associated knew the property was
merely being held in trust by it for the benefit of the PNB and therefore, not being the legal owner thereof, it
cannot validly dispose of it in any manner."
The Cardenas spouses thereafter filed with the CFI of Rizal a case to secure possession from the Banzons of the lot.
The CA rendered judgment dismissing the petition because it found the same to be allegedly "merely a device to
prevent the execution of a final judgment by the filing of a new suit based upon the same grounds which have
already been interposed and passed upon in the case where the final judgment had already been rendered".

Issue: WON the petitioners are entitled to the possession of the property.

Held: The Court ruled that the petitioners are entitled to a writ restoring the status quo ante. A mandatory writ
shall therefore issue commanding respondent court to forthwith restore petitioners to their possession of the lot
from which they have been removed by enforcement of said respondent court's enjoined order of demolition and
writ of possession. When Associated nevertheless prematurely and contrary to the intent and condition of the
basic 1957 judgment levied in execution on the 2 Caloocan City lots of Banzon the interest it acquired was clearly
impressed with a trust character.

Such acquisition of Banzon's properties by Associated was effected, if not through fraud on Associated's part,
certainly through mistake and there Associated was "by force of law, considered a trustee of implied trust for the
benefit of the person from whom the property comes" by virtue of Article 1456 of the Code — since Associated
not having paid nor having been compelled to pay the bank had no right in law or equity to so execute the
judgment against Banzon as indemnitor. Had there been no fraudulent concealment or suppression of the fact of
such non-payment by Associated or a mistaken notion just assumed without factual basis that Associted had paid
the bank and was thus entitled to enforce its judgement against Banzon as indemnitor, the writ for execution of
the judgment against Banzon's properties would not been issued.

Furthermore, Associated's conduct, upon being sued by the PNB directly with the principal debtor Sta. Maria for
collection of the debt and sentenced by the Pampanga CFI in 1963 (which it did not appeal) to pay the debt in the
much lesser amount of only P15,446.44, excluding interests, in not so discharging its liability notwithstanding that
it had already executed its 1957 judgment against Banzon as indemnitor and taken in execution Banzon's 2
properties, was indeed rank fraud. Associated therefore stands legally bound by force of law to now discharge its
implied trust and return Banzon's properties to him as their true and rightful owner.

EDCA Publishing & Distributing Corp. vs. Santos


Facts: On October 5, 1981, a person identifying himself as Professor Cruz placed an order by telephone with the
petitioner company for 406 books, payable on delivery. EDCA prepared the corresponding invoice and delivered
the books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65.

Cruz sold 120 of the books to Santos who, after verifying the seller's ownership from the invoice he showed her,
paid him P1,700.00. Meanwhile, EDCA having become suspicious over a 2nd order placed by Cruz even before
clearing of his 1st check, made inquiries with the De la Salle College where he had claimed to be a dean and was
informed that there was no such person in its employ. Further verification revealed that Cruz had no more account
or deposit with the Philippine Amanah Bank, against which he had drawn the payment check. EDCA then went to
the police, which set a trap and arrested Cruz. On the night of the same date, EDCA sought the assistance of the
police which forced their way into the store of the private respondents and threatened Santos with prosecution for
buying stolen property. It is the contention of EDCA that the Santoses have not established their ownership of the
disputed books because they have not even produced a receipt to prove they had bought the stock.

Issue: WON the petitioner was unlawfully deprived of its movable property.

Held: The Court ruled against EDCA. The argument that the Santoses did not acquire the books in good faith has
been dismissed by the lower courts, and the Court agrees. Santos first ascertained the ownership of the books
from the EDCA invoice showing that they had been sold to Cruz, who said he was selling them for a discount
because he was in financial need. The Santoses are in the business of buying and selling books and often deal with
hard-up sellers who urgently have to part with their books at reduced prices. To Santos, Cruz must have been only
one of the many such sellers she was accustomed to dealing with. It is hardly bad faith for anyone in the business
of buying and selling books to buy them at a discount and resell them for a profit. EDCA argues that it was, because
the impostor acquired no title to the books that he could have validly transferred to the private respondents. Its
reason is that as the payment check bounced for lack of funds, there was a failure of consideration that nullified
the contract of sale between it and Cruz.

The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject
matter and the consideration.

According to the Civil Code:


Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price. From that moment, the parties may reciprocally demand performance,
subject to the provisions of the law governing the form of contracts.

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive
delivery thereof.

Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully
paid the price.

It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not
pass to the buyer until full payment of the purchase only if there is a stipulation to that effect. Otherwise, the rule
is that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the
thing sold even if the purchase price has not yet been paid.

Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the
case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer
ownership to the buyer who can in turn transfer it to another. Actual delivery of the books having been made,
Cruz acquired ownership over the books which he could then validly transfer to the private respondents. The
fact that he had not yet paid for them to EDCA was a matter between him and EDCA and did not impair the title
acquired by the private respondents to the books.

One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to be interpreted in the
manner suggested by EDCA. A person relying on the seller's title who buys a movable property from him would
have to surrender it to another person claiming to be the original owner who had not yet been paid the purchase
price therefore. The buyer in the 2nd sale would be left holding the bag, so to speak, and would be compelled to
return the thing bought by him in good faith without even the right to reimbursement of the amount he had paid
for it. It would certainly be unfair now to make the Santoses bear the prejudice sustained by EDCA as a result of its
own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses who had acted in good faith,
and with proper care, when they bought the books from Cruz. It is clear that its remedy is not against the Santoses
but against de la Peña, who has apparently caused all this trouble. The Santoses have themselves been unduly
inconvenienced, and for merely transacting a customary deal not really unusual in their kind of business. It is they
and not EDCA who have a right to complain.

Alliance Tobacco Corporation vs. Philippine Virginia Tobacco


Facts: In June 1963, PVTA entered into a merchandising loan agreement with ATC in the amount of P25,500.00 for
the purchase of flue-cured Virginia tobacco from bona fide Virginia tobacco former-producers. The following
month, ATC shipped to the Farmers’ Virginia Tobacco Redrying (FVTR) 96 bales of tobacco covered by Guia No. 1
and 167 bales covered by Guia No. 2. After several days, the grading of the plaintiffs tobacco took place but only
89 bales from Guia No. 2 were graded, weighed and accepted. The remaining bales of tobacco in Guia No. 2 and
the whole of Guia No. 1 were not graded and weighed because after grading and weighing 89 bales of Guia No. 2,
some officers and employees in the premises of defendant FVTR asked money for the separate grading and
weighed of the un-graded and un-weighed tobacco bales.
Unfortunately, the remaining un-graded and un-weighed 174 bales with a total value of P28,382 were lost while
they were in the possession of the FVTR. Having learned of such loss, ATC demanded for its value and the
application of the same to its merchandising loan with PVTA but both the latter and the FVTR refused to heed said
demands.

Consequently, ATC filed in the then CFI of La Union a complaint against PVTA and FVTR praying that the 2
defendants be ordered to pay it P4,443 representing the value of the 89 bales which were weighed, graded and
accepted by the defendants, P28,382.00 representing the value of the lost bales of tobacco and/or that the said
amount be applied to its loan with PVTA. The CFI ruled that the PVTA should not be held responsible for the lost
bales of tobacco because they were not yet properly graded and weighed and the IAC affirmed.

Issue: WON there is delivery of the goods to the vendee which will result in a perfected contract of sale.

Held: The Court ruled that since PVTA had virtual control over the lost tobacco bales, delivery thereof to the FVTR
should also be considered effective delivery to the PVTA. The Civil Code provides that ownership of the thing sold
shall be transferred to the vendee upon the actual or constructive delivery thereof. There is delivery when the
thing sold is placed in the control and possession of the vendee.

Indeed, in tobacco trading, actual delivery plays a pivotal role. The Court would have found merit in respondent
PVTA's contention that the contract of sale could not have been perfected pursuant to Article 1475 of the Civil
Code because to determine the price of the tobacco traded, the shipment should first be inspected, graded and
weighed, we find said contention misplaced herein. A strict interpretation of the provision of Article 1475 may
result in adverse effects to small planters who would not be paid for the lost products of their toil. Such situation
was what the ruling in PVTA vs. De los Angeles sought to avoid.

Sale of real property by unit of measure or number


Sta. Ana, Jr. vs. Hernandez
Facts: The petitioners herein, spouses Santa Ana and Sto. Domingo, owned a parcel of land. They sold 2 separate
portions of the land for P11,000.00 to Hernandez. After the sale, the petitioners-spouses caused the preparation of
a subdivision plan which was approved by the Director of Lands. Hernandez, however, unlike the previous
vendees, did not conform to the plan and refused to execute an agreement of subdivision and partition for
registration with the Register of Deeds of Bulacan and she, likewise, refused to vacate the areas that she had
occupied. Instead, she caused the preparation of a different subdivision plan, which was approved by the Director
of Lands.

Petitioners-spouses filed suit against respondent Hernandez in the CFI of Bulacan claiming that said defendant was
occupying an excess of 17,000 square meters in area of what she had bought from them. Hernandez, on the other
hand, claimed that the alleged excess was part of the areas that she bought. The CFI ordered Hernandez to vacate
the excess portions. On appeal, the CA dismissed petitioner’s complaint and ruled that Hernandez owned the
excess portions. It based its decision on the description of the land on the contract as well as to the lump sum price
indicated.

Issue: WON the defendant owns the excess portion when the description of the land in the contract was not
specific and definite.

Held: The Court ruled that the sale was made by unit of measure at a definite price for each unit. The ruling of the
Supreme Court of Spain, in construing Article 1471 of the Spanish Civil Code is highly persuasive that as between
the absence of a recital of a given price per unit of measurement, and the specification of the total area sold, the
former must prevail and determines the applicability of the norms concerning sales for a lump sum.
Sale of real estate made for a lump sum
Balantakbo vs. CA
Facts: The land in question had been purchased by the Sumaya spouses (predecessor of private respondent Laguna
Agro-Industrial Coconut Cooperative, Inc./LAGUNA) from Consuelo Balantakbo (mother of petitioner Luis
Balantakbo and Sancho Balantakbo), the sale being evidenced by a deed and that some 20 years later , the seller's
heirs, intruded into the land and harvested the coconuts found therein.

In their answer, the Balantakbos denied knowledge of the sale and alleged that the land claimed sued for was
different from that owned and held by them. The RTC rendered judgment in favor of the Balantakbos and
dismissed LAGUNA's complaint, upholding the former's theory of the case and ruling that what was contemplated
in the descriptive words "more or less" immediately following the stated area of 2,000 sq. m. in the description of
the land was construable as referring only to a "slight difference" in said area, not to a difference as large as 4,870
square meters, or more than double the 2,000 square meters actually stated and intended to be sold. The CA,
however, declared LAGUNA the owner of the entire land.

Issue: Whether the area described or the actual boundaries of the land prevail in case of conflict.

Held: The Court ruled, citing the case of Dichoso, that in a contract of sale of land in mass, it is well established that
the specific boundaries stated in the contract must control over any statement with respect to the area contained
within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area
with mathematical accuracy. It is sufficient that its extent is objectively indicated with sufficient precision to enable
one to identify it. An error as to the superficial area is immaterial.

Rules in case of double sale


Paylago vs. Jarabe
Facts: The entire lot involved in this suit was originally covered by Homestead Patent issued on June 7, 1920 under
Act No. 926 and later under OCT No. 251 of the Registry of Deeds of Mindoro, issued on June 22, 1920 in the name
of Anselmo Lacatan. After the death of Lacatan, TCT No. T-728 (which cancelled OCT No. 251) was issued in the
name his 2 sons and heirs, Vidal and Florentino Lacatan. Vidal Lacatan died on August 27, 1950. Vidal Lacatan's
heirs, namely, Maximo, Tomas and Lucia Lacatan, executed a deed of sale in favor of the spouses Paylago and
Dimaandal, plaintiffs-petitioners herein, over a portion of the entire lot under TCT No. T-728. When Florentino
Lacatan also died, leaving as his heirs his widow and 3 children, the said children of Florentino Lacatan likewise
executed a deed of sale in favor of the same vendees over another portion of the same lot. By virtue of the
registration of the 2 deeds of sale, a new TCT No. T-4208 covering the total area of 6.7908 hectares was issued in
favor of plaintiffs-petitioners, the Paylago spouses.

A subsequent subdivision survey for the purpose of segregating the 2 aforementioned portions of land described in
the deeds as well as in the new TCT No. T-4208, however, disclosed that a portion of the total area purchased by
plaintiffs-petitioners and indicated in the sketch at a point marked was being occupied by defendant-respondent.
Hence, the action to recover possession and ownership of the said portion. The lower court held that plaintiffs-
petitioners were not purchasers in good faith and, accordingly, rendered judgment in favor of defendant-
respondent, declaring the latter as owner of the land in question with the right to retain possession of the same.
The decision was affirmed in toto by the CA.

Issue: Whether the registered buyer or the prior but unregistered purchaser has the better right over the real
property.

Held: The Court ruled that as between 2 purchasers, the one who has registered the sale in his favor, in good faith,
has a preferred right over the other who has not registered his title, even if the latter is in the actual possession of
the immovable property. Indeed, the foregoing principle finds concrete bases in the pertinent provisions of the
New Civil Code, Article 1544, providing that if the same immovable property should have been sold to different
vendees, "the ownership shall belong to the person acquiring it who in good faith first recorded it in the registry of
property."
There is no question that the sales made in favor of plaintiffs-petitioners were registered while the alleged sale
executed in favor of defendant-respondent was not. Applying the foregoing principle of law to the instant case, it
is now contended by plaintiffs-petitioners that their certificate of title must prevail over defendant-respondent,
and that the courts below correspondingly committed error in deciding the case to the contrary.

But there is more than meets the eye in the case at bar. While plaintiffs-petitioners have a registered title, it
cannot be denied that their acquisition and subsequent registration were tainted with the vitiating element of bad
faith. It was so found by both the CFI and the CA, and their finding is conclusive upon us.

Hanopol vs. Pilapil


(Art. 1544 do not apply to unregistered lands)
Facts: Hanopol claims ownership of the unregistered land by virtue of a series of purchases by means of private
instruments, executed by the former owners the Siapos. Additionally, he invokes in his favor a decision rendered
by the CFI of Leyte on a complaint he filed against the same vendors, who, according to his own averments, took
possession of the said property through fraud, threat and intimidation, pretending falsely to be the owners thereof
and ejecting the tenants of Hanopol thereon, and since then had continued to possess the land.

On the other hand, Pilapil asserts title to the property on the strength of a duly notarized deed of sale executed in
his favor by the same owners which deed of sale was registered in the Registry of Deeds of Leyte under the
provisions of Act No. 3344.

Issue: WON the right of the first buyer who did not register the sale cannot be prejudiced by the registration of the
2nd sale.

Held: The Court ruled that the proviso in Act No. 3344 does not seem to justify Hanopol’s contention. If his theory
is correct, then the 2nd paragraph of Article 1544 of the NCC (formerly Article 1473 of the old Code) would have no
application at all except to lands or real estate registered under the Spanish Mortgage Law or the Land Registration
Act. Such a theory would thus limit the scope of that codal provision. But even if the Court adopt this latter view,
that is, that Article 1544 (formerly Article 1473) only applies to registered land, the Court still do not agree with the
appellant that by the mere fact of his having a previous title or deed of sale, he has acquired thereby what is
referred to in Act No. 3344 as the "better right" that would be unaffected by the registration of a second deed of
sale under the same law. Under such theory, there would never be a case of double sale of the same unregistered
property.

Balatbat vs. CA
Facts: Aurelio Roque filed a complaint for partition against Corazon Roque, Alberto de los Santos, Feliciano Roque,
Severa Roque and Osmundo Roque before the then CFI of Manila where the said court rendered a decision in favor
of plaintiff Aurelio A. Roque. Aurelio A. Roque sold his 6/10 share in T.C.T. No. 135671 to spouses Repuyan as
evidenced by "Deed of Absolute Sale" where the latter caused the annotation of her affidavit of adverse claim on
the TCT No. 135671. On August 20, 1980, Aurelio A. Roque filed a complaint for "Rescission of Contract" against
spouses Repuyan grounded on spouses Repuyan's failure to pay the balance of P45,000.00 of the purchase price.
Meanwhile, a deed of absolute sale was executed between Aurelio S. Roque, Corazon Roque, Feliciano Roque,
Severa Roque and Osmundo Roque and Clara Balatbat, married to Alejandro Balatbat. Clara Balatbat filed a motion
for the issuance of a writ of possession which was granted by the trial court "subject, however, to valid rights and
interest of third persons over the same portion thereof, other than vendor or any other person or persons privy to
or claiming any rights or interests under it".

Petitioner Clara Balatbat and her husband, Alejandro filed the instant complaint for delivery of the owners
duplicate copy of T.C.T. No. 135671 against the Repuyans. The RTC rendered a decision dismissing the complaint
and the CA affirmed the decision appealed from but with modifications.

Issue: WON there is a double sale.


Held: The Court ruled that this is a case of double sale contemplated under Article 1544 of the New Civil Code.
This is an instance of a double sale of an immovable property hence, the ownership shall vests in the person
acquiring it who in good faith first recorded it in the Registry of Property. Evidently, the Repuyans caused the
annotation of an adverse claim on the title of the subject property denominated as Entry No. 5627/T-135671 on
July 21, 1980 in the Registry of Property which is sufficient compliance as mandated by law and serves notice to
the whole world. Petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, the Repuyans who
first caused the annotation of the adverse claim in good faith shall have a better right over herein petitioner.
Moreover, the physical possession of herein petitioners by virtue of a writ of possession issued by the trial court on
September 20, 1982 is "subject to the valid rights and interest of third persons over the same portion thereof,
other than vendor or any other person or persons privy to or claiming any rights to interest under it." As between
two purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not
registered his title even if the latter is in actual possession of the immovable property. Further, even in default of
the first registrant or first in possession, private respondents have presented the oldest title. Thus, private
respondents who acquired the subject property in good faith and for valuable consideration established a superior
right as against the petitioner.

Caram vs. Lauret


FACTS: On June 10, 1945, Mata conveyed a large tract of agricultural land covered by OCT No. 3019 in favor of
Laureta, plaintiff, the respondent herein. The deed of absolute sale in favor of the plaintiff was not registered
because it was not acknowledged before a notary public or any other authorized officer. Since June 10,1945, the
plaintiff Laureta had been and is in continuous, adverse and notorious occupation of said land, without being
molested, disturbed or stopped by any of the defendants or their representatives. In fact, Laureta had been paying
realty taxes due thereon and had introduced improvements worth not less than P20,000.00 at the time of the filing
of the complaint.

On May 5, 1947, the same land covered by OCT No. 3019 was sold by Mata to defendant Caram, Jr., petitioner
herein. The deed of sale in favor of Caram was acknowledged before Atty. Aportadera. On December 9, 1947, the
2nd sale between Mata and Caram, Jr. was registered with the Register of Deeds. On the same date, TCT No.140
was issued in favor of Caram Jr. Caram Jr. claimed that he has no knowledge or information about the previous
encumbrances, transactions, and alienations in favor of plaintiff until the filing of the complaints.

ISSUE: Whether or not the knowledge petitioner of a prior unregistered sale of a titled property attributable to
petitioner and equivalent in law of registration of sale.

HELD: Yes. There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased the property
of Mata in bad faith. Applying the principle of agency, Caram as principal, should also be deemed to have acted in
bad faith. Since Caram was a registrant in bad faith, the situation is as if there was no registration at all. A
possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw which
invalidates it. Laureta was first in possession of the property. He is also a possessor in good faith. It is true that
Mata had alleged that the deed of sale in favor of Laureta was procured by force. Such defect, however, was cured
when, after the lapse of 4 years from the time the intimidation ceased, Mata lost both his rights to file an action
for annulment or to set up nullity of the contract as a defense in an action to enforce the same

Tañedo vs. CA
FACTS: Tañedo executed a deed of absolute sale in favor of Ricardo Tañedo and Teresita Barrera in which he
conveyed a parcel of land which he will inherit. Upon the death of his father he executed an affidavit of conformity
to reaffirm the said sale. He also executed another deed of sale in favor of the spouses covering the parcel of land
he already inherited. Ricardo registered the last deed of sale in the registry of deeds in their favor. Ricardo later
learned that Tañedo sold the same property to his children through a deed of sale.

ISSUE: WON the Tañedo spouses have a better right over the property against the children of Lazaro Tañedo.
HELD: Since a future inheritance generally cannot be a subject of a contract, the deed of sale and the affidavit of
conformity made by Lazaro has no effect. The subject of dispute therefore is the deed of sale made by him in favor
of spouses Tañedo and another to his children after he already legally acquired the property. Thus, although the
deed of sale in favor of private respondents was later than the one in favor of petitioners, ownership would vest
in the former because of the undisputed fact of registration. On the other hand, petitioners have not registered
the sale to them at all. Petitioners contend that they were in possession of the property and that private
respondents never took possession thereof. As between two purchasers, the one who registered the sale in his
favor has a preferred right over the other who has not registered his title, even if the latter is in actual
possession of the immovable property.

Tanongon vs. Samson


FACTS: Samson, Osin, Belbes and Venus were employees of CAYCO Marine Service, which is engaged in the
business of hauling oil, owned and operated by Iluminada Cayco OLIZEN. They filed a complaint against CAYCO and
OLIZON for illegal dismissal, underpayment of wages, non-payment of holiday pay, rest day pay and leave pay. The
labor arbiter dismissed the complaint for lack of merit, but was reversed by the NLRC on appeal. CAYCO and
OLIZON sought reconsideration of the NLRC’s decision but it was denied. Likewise, on appeal to the Supreme Court
through a petition for certiorari was likewise denied for failure to establish grave abuse of discretion on the part of
NLRC. The decision of the NLRC became final and executory on April 29, 1997.

A writ of execution was issued directing the NLRC sheriff to collect from CAYCO and OLIZON the amount computed
by the NLRC Research and Investigation Unit to be awarded to the complainants. A notice of levy/sale on execution
of personal property was issued and thereafter, on August 8, 1997 the motor tanker of CAYCO and OLIZEN was
seized to be sold at public auction. However, TANONGON filed a 3rd-party claim before the labor arbiter alleging
that she was the owner of the subject motor tanker for having acquired the same from OLIZEN on July 29, 1997 for
a consideration of 1,100,000. The labor arbiter dismissed such claim for lack of merit. It was found that the Deed of
Absolute Sale was executed on July 29 after the decision became final and executor on April 29. The sale had been
entered into to defraud them.

But on appeal to NLRC, such decision was reversed because on two grounds: (1) the power of the NLRC sheriff to
execute judgments extended only to properties unquestionably belonging to the judgment debtor. In this case, the
ownership of the property was in the name of TANONGAN. Hence, the vessel was questionably the property of
CAYCO; (2) Under Article 1387 of the Civil Code, alienations of property in the fraud of creditors would give rise
only to rescissible contracts. Thus, a judicial rescission was required to disregard such third-party complaint. The
decision of the NLRC was reversed by the CA ruling that judicial recission was not necessary. It is evident that such
sale was done to defraud, to overcome the enforcement of the Writ of Execution, such sale was simulated or a
fictitious transfer, in which no independent judicial action was necessary to invalidate the sale. TANONGAN is not a
buyer in good faith for the sale was hastily concluded and the tanker and the necessary documents were
immediately delivered to the new owner. Such circumstances should put a reasonable person on guard. Also, such
power of the NLRC to enforce its final judgment, order or award and to take such measures under extant laws as
may be necessary to ensure compliance with its decision was authorized under the provisions of Article 224 (a & b)

ISSUES:
(1) Whether or not TANONGAN is a buyer in good faith and for value
(2) Whether or not the CA acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in
deciding against TANONGAN.

RULINGS:
(1) No. Tanongan is a buyer in bad faith. It is evident that the judgment favoring the complainants as affirmed by
the Supreme Court and the issuance of the Writ of Execution was done before the sale of the motor tanker on July
29, 1997. The CA correctly ruled that the act of OLIZON was an attempt to evade payment and that TANONGAN
obviously got word of the Writ. Despite such knowledge, she still bought the tanker 10 days before it was levied. It
is also more that coincidental that the purchase price for the tanker was P1.1M and the debt to be awarded
amounted to P1,192,422.55.
“A purchaser in good faith or an innocent purchaser for value is one who buys property and pays a full and fair
price for it at the time of the purchase or before any notice of some other person's claim on or interest in it.” We
emphasize that one cannot close one's eyes to facts that should put a reasonable person on guard and still claim to
have acted in good faith. Petitioner should have inquired whether Olizon had other unsettled obligations and
encumbrances that could burden the subject property. Any person engaged in business would be wary of buying
from a company that is closing shop, because it may be dissipating its assets to defraud its creditors.”

(2) No. The CA is correct. “The CA held, in overruling the NLRC, that the Commission possessed, under Article224 (a
and b), powers necessary to implement and enforce the latter's final judgments, decisions, orders and awards. The
appellate court ruled further that the disputed contract was not merely rescissible; it was simulated or fictitious
and, thus, void ab initio.

We agree with the CA. A third-party claim on a levied property does not automatically prevent execution. Under
Rule 39 of the Revised Rules of Court, execution is a remedy afforded by law for the enforcement of a judgment,
its object being to obtain satisfaction of the decision on which the writ is issued. In executing a money judgment
against the property of the obligor, the sheriff shall levy on all properties belonging to the judgment debtor as is
amply sufficient to satisfy the decision and the costs; and shall sell the same, paying to the judgment creditor as
much of the proceeds as will satisfy the amount of the debt and costs. Sheriffs who levy upon properties other
than those of the judgment debtors are acting beyond the limits of their authority. When a 3rd-party claim is filed,
the sheriff is not bound to proceed with the levy of the property unless the judgment creditor or the latter's agent
posts an indemnity bond against the claim. Where the bond is filed, the remedy of the 3rd-party claimant is to file
an independent reivindicatory action against the judgment creditor or the purchaser of the property at public
auction.

The NLRC should not have automatically lifted the levy and restrained execution, just because a 3rd-party claim had
been filed. Further, judicial rescission is not necessary in the case at bar. The NLRC lifted the levy on the subject
property, ruling that its sheriff could execute its judgments only on properties "unquestionably belonging to the
judgment debtor." It observed that the Certificate of Ownership over the disputed vessel was in the name of the
third-party claimant, herein petitioner. Petitioner's claim of ownership over the disputed tanker is not supported
by the evidence on record. The Maritime Industry Authority (Marina) administrator wrote the parties in 2 separate
letters, which said that the registration of the disputed vessel under petitioner's name had not been effected, and
that the Certificates of Ownership and Vessel Registry covering the motor tanker M/T Petron 7-C had not been
released. The reasons were Marina's receipt of the Entry of Judgment issued by the Supreme Court on April 29,
1997, and the Notice of Levy/Sale on Execution of Personal Property covering the subject vessel.22 Under Article
573 of the Code of Commerce, the acquisition of a vessel must appear on a written instrument, which shall not
produce any effect with respect to third persons if not inscribed in the Registry of Vessels. Insofar as third persons
like herein respondents were concerned, the ownership of the disputed vessel remained with Olizon and CAYCO;
thus, the CA correctly held that the NLRC could proceed with the levy and the sale on execution.

Consolidated Rural Bank vs. 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 dela Cruz, and the northern half to Hernandez.
Thereupon, dela Cruz and Hernandez took possession of and cultivated the portions of the property respectively
sold to them (Later Hernandez donated the northern half to his daughter. The children of 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. Subsequently, Marquez subdivided lot
A-7 into 8 lots. On the same date, Marquez and his spouse, 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 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: NO. The petition is denied, and the decision as modified is affirmed. Like the lower court, the appellate court
resolved the present controversy by applying the rule on double sale provided in Article 1544 of the Civil Code.

ART. 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 possession;
and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

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 2 different contracts of sale are made by 2 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 2nd 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 2nd 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.
Moreover, it is an established principle that no one can give what one does not have “nemo dat quod non habet.”

Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what
the seller can transfer legally. In this case, since the Madrid brothers were no longer the owners of the subject
property at the time of the sale to Marquez, the latter did not acquire any right to it.

Dela Merced vs. GSIS


FACTS: This case involves 5 registered parcels of land located within the Antonio Subdivision, Pasig City Lots 6, 7, 8,
and 10 of Block 2 and Lot 8 of Block 8 (subject properties). These lots were originally owned by, and titled in the
name of, Zulueta, as evidenced by a TCT No. 26105 which contains several lots other than the subject properties
within the Antonio Subdivision. Later, the Zulueta spouses mortgaged several lots to the GSIS, which eventually
foreclosed on the mortgaged properties, including the subject properties.

Upon consolidation of GSISs ownership, TCT No. 26105 in Zuluetas’ name was cancelled, and TCT No. 23554 was
issued in GSISs name. Upon learning of the foreclosure, petitioners predecessor, Dela Merced, later on substituted
by his heirs, filed a complaint praying for the nullity of the GSIS foreclosure on the subject properties on the
ground that he, not the Zuluetas, was the owner of these lots at the time of the foreclosure. Dela Merced also
impleaded Spouses Manlongat, who were claiming Lot 6, Block 2 by virtue of a sale executed by the GSIS in their
daughters (Elizabeth Manlongat) favor. Dela Merced argued that, due to the nullity of GSIS’s foreclosure over the
subject properties, it had no ownership right that could be transferred to Elizabeth Manlongat. After a protracted
litigation, the SC rendered a Decision in the petitioners favor and nullified GSIS’s foreclosure of the subject
properties because these lots were never part of its mortgage agreement with the Zulueta spouses. Pursuant to
the finality of the Decision, petitioners filed a Motion for Execution which GSIS opposed on the basis of Sec. 39 of
the GSIS Act of 1997 (RA 8291 which allegedly exempts GSIS funds and properties from attachment, garnishment,
execution, levy and other court processes. A writ of execution was finally issued, however, first by the RTC and
then by the CA. The GSIS filed a petition for review before the SC which was denied by the latter. After the
resolution of the issue of GSISs exemption, petitioners encountered more problems with the execution of the
Decision. According to the RD of Pasig City, Espenesin, he could not cancel the titles of GSIS over Lots 7 and 8
because it no longer had title over these 2 lots and had already conveyed the same to 2 other persons. Hence, the
RD claimed that the writ of execution must first be modified to include the cancellation of derivative titles of the
GSIS title.

ISSUES:
I. Whether the GSIS can still raise the issue of exemption
II. Whether a final and executory judgment against GSIS and Manlongat can be enforced against their successors-
in-interest or holders of derivative titles
III. Whether an order to cancel title to a particular property includes an order to provide technical descriptions and
segregate it from its mother title

HELD:
(1) The issue of GSIS’s alleged exemption under RA 8291 had been finally decided against when this Court denied
GSISs petition for review. GSISs attempt to resurrect the same issue by interjecting the same in this proceeding is
barred by the principle of "law of the case," which states that "determinations of questions of law will generally be
held to govern a case throughout all its subsequent stages where such determination has already been made on a
prior appeal to a court of last resort."

(2) A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation,
serving as a warning that one who acquires an interest over said property does so at his own risk, or that he
gambles on the result of the litigation over the said property. It is not disputed that petitioners caused the
annotation of lis pendens on TCT No. 23554 of the lots in question. The current holders of the derivative titles to
these lots were aware of such annotation when the individual titles were issued to them. Ineluctably, both were
bound by the outcome of the litigation.

(3) The order contained in the Decision in G.R. No. 140398 is for the RD to cancel GSISs titles over Lot 10, Block 2
and Lot 8, Block 8, inter alia. Whether these titles are individual or contained in a mother title is of no
consequence. The RD has to cause their cancellation. If the cancellation can only be carried out by requiring GSIS
or the Bureau of Lands to provide the necessary information, then they can be compelled to do so. Otherwise, the
Courts decision would be rendered inefficacious, and GSIS would retain ostensible ownership over the lots by the
simple expedience that they are included in a mother title, instead of individual titles. That result is manifestly
contrary to the Courts ruling and would subvert the very purpose of bringing this case for a complete resolution.
San Lorenzo Development Corp. vs. CA
FACTS: Enrique Salvatierra died intestate and without any issue. He was survived by his legitimate brothers:
Tomas, Bartolome, Venancio and Macario, and sister Marcela. His estate consisted of 3 parcels of land. An
Extrajudicial Partition with Confirmation of Sale was executed by and among the surviving legal heirs and
descendants of Enrique Salvatierra, which consisted of Lot No. 25, 26 and 27. By virtue of the sale executed by
Marcela in favor of Venancio, the latter now owns 2/5 shares of the estate. By virtue of the sale by Bartolome’s
heirs Catalina and Ignacia, of his undivided shares to Tomas, now deceased, represented by his widow, Catalina
Azarcon, the latter now owns 2/5 shares in the said estate. Anselmo Salvatierra represented his father Macario,
who had already died. Thereafter, Venancio sold the whole of Lot No. 27 and a 149-sq. m. portion of Lot 26 to
herein respondent spouses Longalongs. The Longalongs took possession of the said lots. It was discovered in 1982
(through a relocation survey) that the 149 sq. m. portion of Lot No. 26 was outside their fence. It turned out that
Anselmo Salvatierra was able to obtain a title, OCT No. 0-4221 in his name, the title covering the whole of Lot. No.
26 which has an area of 749 sq. m. Private respondents Longalong then filed a case with the RTC for the
reconveyance of the said portion of Lot 26.

ISSUES:
1. Whether or not there was a double sale.
2. Which prescriptive period for actions for annulment should prevail, Art. 1391 of the New Civil Code which limits
the filing of actions to four (4) years or Art. 1144 of the same Code which limits the period of the filing of actions
on certain grounds to ten years?

RULING:
Petitioners rely on the theory that this is a case of double sale case of Lot No. 26 to both petitioners and
respondents Longalong, et. al. A perusal of the records and evidence, reveals otherwise.

Both parties did not dispute the existence and contents of the Extrajudicial Partition with Confirmation of Sale, as
both presented them as their respective exhibits. The parties may not have realized it, but the deciding factor of
this dispute is this very document itself. It is very clear therein that Macario Salvatierra’s share in the estate of the
deceased Enrique Salvatierra is only 405 sq. m. out of the 749 sq. m. comprising Lot No. 26. Since Venancio
Salvatierra, under this document, is to get a portion of Lot No. 26 in addition to Lot No. 27, then it follows that
Venancio is entitled to the remaining 344 sq. m. of Lot No. 26, after deducting the 405 sq. m. share of Macario.

The applicable provision in the case at bar is Art. 1144 of the New Civil. Art. 1391 of the same code, referred to by
petitioners is not in point. This article must be read in conjunction with Art. 1390 which refers to voidable
contracts. This case at hand involves fraud committed by petitioner Anselmo Salvatierra in registering the whole of
Lot No. 26 in his name, with evident bad faith. In effect, an implied trust was created by virtue of Art. 1456.

In this connection, we hold that an action for reconveyance of registered land based on an implied trust may be
barred by laches. The prescriptive period for such actions is 10 years from the date the right of action accrued. The
complaint for reconveyance was filed by the Longalong spouses on November 22, 1985, only five (5) years after
the issuance of the O.C.T. No. 0-4221 over Lot No. 26 in the name of Anselmo Salvatierra. Hence prescription has
not yet set in.

Carumba vs. CA
Facts: In 1955, the spouses Canuto, by virtue of a “Deed of Sale of Unregistered Land with Covenants of Warranty”
sold a parcel of land located in Camarines Sur, to the spouses Carumba. The referred deed of sale was never
registered in the Office of the RD of Camarines Sur, and the Notary was not then an authorized notary public in the
place. In 1957, a complaint for a sum or money was filed by Balbuena against the Canutos before the Justice of the
Peace Court. A decision was rendered in favor of Balbuena and against the defendants. In 1968, the ex-officio
Sheriff issued a “Definite Deed of Sale of the property now in question in favor of Balbuena, which instrument of
sale was registered before the Office of the RD. The CFI, finding that after execution of the document Carumba had
taken possession of the land, and planted thereon:
1. Declared him to be the owner of the property under a consummated sale; 2. Held void the execution levy made
by the sheriff, pursuant to a judgment against Carumba’s vendor, Canuto; 3. And nullified the sale in favor of the
judgment creditor, Balbuena.

The CA, without altering the findings of fact made by the court of origin, declared that there having been a double
sale of the land subject of the suit Balbuena’s title was superior to that of his adversary under Article 1544 of the
Civil Code of the Philippines since the execution sale had been properly registered in good faith and the sale to
Carumba was not recorded.

Issue: WON the petitioner has a superior title over the land and rule on double sale applies.

Held: The Court ruled that while under the invoked Article 1544 registration in good faith prevails over possession
in the event of a double sale by the vendor of the same piece of land to different vendees, said article is of no
application to the case at bar, even if Balbuena, the later vendee, was ignorant of the prior sale made by his
judgment debtor in favor of petitioner Carumba.

The reason is that the purchaser of unregistered land at a sheriff’s execution sale only steps into the shoes of the
judgment debtor, and merely acquires the latter’s interest in the property sold as of the time the property was
levied upon. This is specifically provided by section 35 of Rule 39 of the Revised Rules of Court, the 2nd paragraph
of said section specifically providing that:

Upon the execution and delivery of said (final) deed the purchaser, redemptioner, or his assignee shall be
substituted to and acquire all the right, title, interest, and claim of the judgment debtor to the property as of the
time of the levy, except as against the judgment debtor in possession, in which case the substitution shall be
effective as of the time of the deed … (Emphasis supplied)

While the time of the levy does not clearly appear, it could not have been made prior to 1957, when the decision
against the former owners of the land was rendered in favor of Balbuena. But the deed of sale in favor of Canuto
had been executed 2 years before, in 1955, and while only embodied in a private document, the same, coupled
with the fact that Carumba had taken possession of the unregistered land sold, sufficed to vest ownership on the
said buyer. When the levy was made by the Sheriff, therefore, the judgment debtor no longer had dominical
interest nor any real right over the land that could pass to the purchaser at the execution sale. Hence, the latter
must yield the land to petitioner Carumba.

Said rule is different in case of lands covered by Torrens titles, where the prior sale is neither recorded nor known
to the execution purchaser prior to the levy; but the land here in question is admittedly not registered under Act
No. 496.

Warranty on Seller’s title


J.M. Tuason & Co., Inc. vs. CA
Facts: Petitioner executed, in favor of de Leon, a contract to sell a lot with the agreed price of P24.60 per square
meter. At the execution of the contract, de Leon paid the down-payment of P4,190.86 and agreed to pay the
balance in the monthly installment of P498.63 including the agreed annual interest of 10%. Meanwhile, on April
10, 1953, petitioner signed a compromise agreement with the Deudors. On July 19, 1965 with the consent of the
petitioner, de Leon transferred all his rights to the lot in favor of his parents, herein private respondents Alfonso
and Rosario de Leon. On the same date, private respondents paid the outstanding balance of the purchase price.
At the time of the execution of the contract to sell, the contracting parties knew that a portion of the lot in
question was actually occupied by Rivera. However, it was their understanding that the latter will be ejected by the
petitioner from the premises. Petitioner filed a complaint of ejectment against Rivera before the CFI and later
petitioner de Leon and respondents Alfonso and Rosario de Leon as necessary parties and they were evicted from
the premises in the question which was affirmed by the CA. Private respondents filed the proper action before the
CFI of Manila action against J.M. Tuason & Co., Inc. to enforce the vendor's warranty against eviction or to recover
the value of the land plus damages. The CFI decided the case against herein petitioner J.M. & Co., Inc. which was
affirmed by the CA.

Issue: WON the respondents are entitled to the vendor’s warranty eviction.

Held: The Court ruled that without being shown to be vendees in good faith, herein respondents are not entitled
to the warranty against eviction nor are they entitled to recover damages (Article 1555 of the Civil Code). The prior
right of Rivera to purchase the lot in litigation was based more on his prior occupancy to the same since 1949,
about which fact respondents De Leon were informed by petitioner at the time of the execution of the contract to
sell. The execution of the compromise agreement merely recognized this prior right, under the condition as
stipulated in said agreement, that it was possible to do so.

The Court did not have the hesitation to give to petitioner the benefit of the doubt of its having acted in good faith,
which is always presumed, without any intention of taking advantage of the other party dealing with it. "Good faith
consists in an honest intention to abstain from taking any unconscientious advantage of another. Good faith is an
opposite of fraud and of bad faith and its non-existence must be established by competent proof." Moreover, at
the time of the execution of the contract to sell it is an admitted fact that de Leon knew that a 3rd party was
occupying a part of the lot subject of the sale. De Leon ought to have known that he was buying a property with
the distinct possibility of not being able to possess and own the land due to the occupancy of another person on
the same. So there had to be an understanding between him and the petitioner for the latter to eject the
occupant, something which, by the facts then obtaining and the law relevant thereto, would make the ejectment
more speculative than certain. Nonetheless, de Leon knowingly assumed the risk when he bought the, land, and
was even called a vendee in bad faith by the CA in doing so, clearly not an innocent purchaser in good faith. If
petitioner that it would eject Rivera, he did so, not knowing that the compromise agreement would stand on the
way, as it had thought, in all good faith, that par. 7 of the compromise agreement excluded the lot in question,
having been already sold to de Leon before the agreement was executed in court.

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.

Escaler vs. CA
Facts: Spouses Reynoso sold to petitioners several others, a parcel of land which Deed of Sale contained a
covenant against eviction. On April 21, 1961, the Register of Deeds of Rizal and A. Doronilla Resources
Development, Inc. filed a case before the CFI of Rizal for the cancellation of the OCT issued in the name of Angelina
Reynoso (predecessor-in-interest of private respondents-vendors) on the ground that the property covered by said
title is already previously registered under a TCT issued in the name of A. Doronilla Development, Inc. In that case,
an order was issued declaring the OCT null and void. Petitioners, spouses Escaler and spouses Roxas, filed a civil
case before the CFI of Rizal against their vendors, herein private respondents, spouses Reynoso for the recovery of
the value of the property sold to them plus damages on the ground that the latter have violated the vendors'
warranty against eviction. The CFI rendered a judgment ordering the return to the plaintiffs the value of the
property sold to them at the time of eviction. The CA reversed this decision and ruled that petitioners as vendees
had not given private respondents-vendors, formal notice of the eviction case as mandated by Arts. 1558 and 1559
of the New Civil Code.

Issue: WON a vendor’s liability for eviction may be enforced in the case at bar.

Held: The Court ruled that the petition is devoid of merit. Consequently, it must be dismissed. Article 1548, in
relation to Articles 1558. and 1559 of the New Civil Code reads as follows:
Art. 1548, Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act
imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased.

The vendor shall answer for the eviction even though nothing has been said in the contract on the subject.

The contracting parties, however, may increase, diminish, or suppress this legal obligation of the vendor.

Art. 1558. The vendor shall not be obliged to make good the proper warranty, unless he is summoned in the suit
for eviction at the instance of the vendee.

Art. 1559. The defendant vendee shall ask, within the time fixed in the Rules of Court for answering the complaint
that the vendor be made as co-defendant.

In order that a vendor's 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. All that the petitioners did, per their very admission, was to furnish respondents, by
registered mail, with a copy of the opposition they (petitioners filed in the eviction suit. Decidedly, this is not the
kind of notice prescribed by the aforequoted Articles 1558 and 1559 of the New Civil Code. The term "unless he is
summoned in the suit for eviction at the instance of the vendee" means that the respondents as vendor/s should
be made parties to the suit at the instance of petitioners-vendees, either by way of asking that the former be made
a co- defendant or by the filing of a third-party complaint against said vendors. Nothing of that sort appeared to
have been done by the petitioners in the instant case.

DEFFECT MUST BE HIDDEN


If the defect is patent and the buyer nonetheless bought the thing then he can no longer hold the seller liable.

If the seller is not aware of the hidden defects, he can be held liable. If he was aware, his liability will be greater
because that makes him a bad faith seller.

Q: Even if there is such a hidden defect, is it possible that the vendee cannot hold the vendor liable despite the fact
that there was hidden defect even if he was not informed because maybe the seller was not aware?

A: Yes, he may not be able to hold the seller liable if he is an expert on the thing. He is expected to know the
defect.

The defect must result in the thing being unfit for the purpose of the buyer or at least it diminish the fitness of the
thing such that the buyer would not have bought it at the price had he known of such defect.

Q: If the thing which has a hidden defect was lost or destroyed, can the vendee hold the vendor liable for this
breach of warranty? Does it matter if the loss was due to a fortuitous event or maybe the loss was due to the fault
of the buyer himself, nonetheless, can he hold the vendor liable?

A: Yes. The vendee can hold the vendor liable for breach of warranty against hidden defects even if the thing was
lost due to fortuitous event or due to the fault of the vendee himself because of the hidden defects. But of
course, if the cause of the loss was the defect itself, the liability is greater than if the cause of the loss was a
fortuitous event or fault of the buyer.
If there would be a problem here as to the extent of the liability of the vendor, he should first consider the cause
of the loss, maybe it was lost due to the defect itself or lost through fortuitous event or lost through the fault of
the vendee. After that, he should determine whether the vendor was aware of the defects or he was not aware.

Again, if he was aware, damages may be recovered. If he was not aware, he may not be held liable for damages
unless he can only be held liable for interest.

If the defect was the cause of the loss, the vendor would be liable for the return of the price, not only the price
less value but also to refund the expenses and damages because the vendor was aware of the defects.

If the vendor was not aware of the defects, he cannot be held liable for damages but he would only be held liable
for the price.

If the cause of the loss of the thing was a fortuitous event, he can only be held liable for the price less value. If
vendor is in bad faith, plus damages.

ANY CHARGE OR NON – APPARENT ENCUMBRANCE NOT DECLARED OR KNOWN TO THE


BUYER
Q: Would there be an encumbrance over an immovable which is a form of easement or servitude?

A: An example of this is a road right of way.

Q: If the buyer bought the land which turned out to have a road right of way in favor of a 3rd person, can he claim
breach of warranty against any charge or non – apparent encumbrance?

A: Of course there are requisites:


(1) The encumbrance or easement or burden or the road right of way has to be non – apparent.

Q: If there is an encumbrance, what are the remedies of the buyer?


A: (a) He can seek for the reduction of the price.
(b) Rescission - the law requires that the action for rescission must be filed within 1 year from the date of the
contract. If after 1 year, no more rescission.

Neither right can be exercised if the non-apparent burden or servitude is recorded in the Registry of Property,
unless there is an express warranty that the thing is free from all burdens and encumbrances.

(c) If he became aware more than a year, he may file an action for damages. But the law requires that the action
for damages has to be filed within 1 year also but from the time of the discovery of encumbrance. If he filed it for
example, after 2 years from discovery – no recovery of damages.

Warranty against hidden defects


Moles vs. IAC
Facts: Moles needed a linotype printing machine for his printing business, The LM Press at Bacolod City, and
applied for an industrial loan with the DBP for the purchase thereof. An agent of Smith, Bell and Co. who is a friend
of Moles introduced the latter to private respondent, owner of the Diolosa Publishing House in Iloilo City, who had
2 available machines. Thereafter, Moles went to Iloilo City to inspect the 2 machines offered for sale and was
informed that the same were secondhand but functional. On his 2nd visit to the Diolosa Publishing House, Moles
decided to buy the linotype machine. The transaction was basically verbal in nature but to facilitate the loan
application with the DBP, a pro forma invoice was signed by Moles with an addendum that payment had not yet
been made but that he promised to pay the full amount upon the release of his loan from the aforementioned
bank on or before the end of the month. The machine was delivered to petitioner's publishing house where it was
installed by an employee of respondent Diolosa. Prior to the release of the loan, a representative from the DBP,
Bacolod, supposedly inspected the machine but he merely looked at it to see that it was there where later on
received the DBP check for P50,000.00.

On November 29, 1977, Moles wrote private respondent that the machine was not functioning properly as it
needed a new distributor bar. In the same letter, petitioner unburdened himself of his grievances and sentiments
in this wise. After their requests to check the machine went unheeded, Moles thus finally decided to indorse the
matter to his lawyer. An expert witness found several defects. Having found defects in said machine, the witness
informed Sy Brother about his findings, hence the purchase was aborted. In his opinion, major repairs were
needed to put the machine back in good running condition.

On 17 May 1978, Moles commenced a suit against private respondent Diolosa in the RTC of Bacolod, for rescission
of contract with damages. Diolosa moved to dismiss on the ground of improper venue. This was opposed by Moles
who averred that there is no formal document evidencing the sale which is substantially verbal in character. The
RTC denied the motion to dismiss, holding that the question of venue could not be resolved at said stage of the
case. The subsequent motion for reconsideration was likewise denied.

Issues:
1. WON there is an implied warranty of its quality or fitness on a 2nd hand item;
2. WON the hidden defects in the machine is sufficient to warrant a rescission of the contract between the parties.

Held: As to the first issue, the Court ruled that there is no implied warranty as to the condition, adaptation, fitness,
or suitability for the purpose for which made, or the quality, of an article sold as and for a secondhand article.

The respondent court cited the ruling in Sison vs. Ago, et al. to the effect that unless goods are sold as to raise an
implied warranty, as a general rule there is no implied warranty in the sale of secondhand articles.

Said general rule, however, is not without exceptions. Article 1562 of our Civil Code, which was taken from the
Uniform Sales Act, provides:

Art. 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the goods, as
follows:
1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the
goods are acquired, and it appears that the buyer relies on the seller's skill or judgment (whether he be the grower
or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose;

In the present case, a certification to the effect that the linotype machine bought by petitioner was in A-1
condition was issued by private respondent in favor of the former. This cannot but be considered as an express
warranty. However, it is private respondent's submission that the same is not binding on him, not being a part of
the contract of sale between them. This contention is bereft of substance.

It must be remembered that the certification was a condition sine qua non for the release of petitioner's loan
which was to be used as payment for the purchase price of the machine. Private respondent failed to refute this
material fact. Neither does he explain why he made that express warranty on the condition of the machine if he
had not intended to be bound by it. In fact, the respondent court, in declaring that petitioner should have availed
of the remedy of requiring repairs as provided for in said certification, thereby considered the same as part and
parcel of the verbal contract between the parties.

On the basis of the foregoing circumstances, the inescapable conclusion is that private respondent is indeed bound
by the express warranty he executed in favor of herein petitioner.

As to the second issue, the Court considered the rule on redhibitory defects contemplated in Article 1561 of the
Civil Code. A redhibitory defect must be an imperfection or defect of such nature as to engender a certain degree
of importance. An imperfection or defect of little consequence does not come within the category of being
redhibitory.

Nutrimix Feeds Corporation vs. CA


FACTS: Evangelista spouses purchased feeds from Nutrimix. They refused to pay their unsettled debt claiming that
thousands of their livestock were poisoned by the Nutrimix feeds. Nutrimix sued them for collection of money. The
spouses countered with a suit for damages. Various expert witnesses were presented during the trial.

ISSUE: W/N Nutrimix should be held liable for the death of the livestock

HELD: NO. In alleging that there was a violation of warranty against hidden defects, the spouses assumed the
burden of proof. However, this they failed to overcome. Under the law, the defect must exist at the time the sale
was made and at the time the product left the hands of the seller, which the spouses failed to prove. The feeds
were belatedly tested—3 months after the death of the broilers and hogs. This means that at that time, they may
have already been contaminated.

They failed to prove that the feeds delivered to be tested were the same feeds that allegedly poisoned the
animals. It is also common practice for them to mix different kinds of feeds. The mere death of the animals does
not raise a prima facie case of breach of warranty. In this case, the evidence presented by the spouses are only
circumstantial. The remedies of breach of warranty against hidden defects are either withdrawal from the contract
or to demand a proportionate reduction of the price plus damages in either case. In this case, though the spouses
failed to make out their case, hence they should be liable for their debt.

Q: In sale by authority of law or in execution sale, can there be breach of warranty against eviction?

A: Yes. The judgment debtor and not the sheriff shall be liable. The law would specifically exempt certain persons
from liability for breach of warranty like sheriff, auctioneer, mortgagee, pledge and other persons who sell by
virtues of an authority of law like notary public because they are not really selling for themselves, they are selling
on behalf of another person.

Q: If one of the animals has redhibitory defect, can the buyer rescind the entire contract pertaining to all the
animals?

A: G.R.: No. He can only rescind the contract pertaining to the animal with redhibitory defect. He cannot rescind
the entire contract pertaining to all animals.

Exception: If he can prove that he would not have bought the others had he known the defect of one then he can
rescind the entire contract.

Q: Who has the burden of proof that he would not have bought the others had he known of the defect of one?

A: Normally, it would be the buyer. But the law under certain circumstances would provide for this presumption
that it is presumed that he would have bought the others had he known of the defect of one.

Examples : He bought the animals in teams or in pairs then the presumption arises. - Love birds (Ang mga love
birds, kapag namatay yung isa later on mamatay din yung isa. Minsan nga mgsuicide pa sya pag mag isa na lang
sya. Iuuntog nya ulo nya sa cage nya.
☺)