sales cases.doc

7/29/2019 Sales Cases.doc

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Adelfa Properties vs. CA

Facts:

The private respondents, Rosario Jimenez Castaneda and Salud Jimenez, and their brothers were theregistered co-owners of a parcel of land in Las Pinas.

Therir brothers sold their share consisting of one-half of said parcel of land, specifically the easternportion thereof, to the petitioner, Adelfa Properties. They then executed a "Confirmatory ExtrajudicialPartition Agreement" where the eastern portion of the lot, was adjudicated to the brothers and thewestern portion was allocated to the sisters.

Thereafter, petitioner expressed interest in buying the western portion. An "Exclusive Option toPurchase"was executed between petitioner and private respondents. It was agreed by them that theselling price is P2,856,150 and that the sum of P50T received from petitioner as an option money shallbe credited as partial payment upon consummation of the sale and the balance to be paid on Nov.1989. They also agreed that in case of default on the part of the petitioner to pay the balance, theoption shall be cancelled and 50% of the option money be forfeited in the favor of the respondents,and that they would refund the remaining 50% upon the sale of said property to a third party.

Before petitioner could make payment, the respondents nephews and nieces filed a complaint againstthe petitioner for the annulment of the deed of sale. As a consequence, the petitioner informed privaterespondents that it would hold payment of the full purchase price and suggested that privaterespondents settle the case adding that ". . . if possible, although November 30, 1989 is a holiday, wewill be waiting for you and said plaintiffs at our office up to 7:00 p.m."However, Respondent SaludJimenez refused to heed the suggestion of petitioner and attributed the suspension of payment of thepurchase price to "lack of word of honor."

Thereafter, the private respondents informed petitioner through its counsel, that they were canccellingthe transaction. The counsel then offered to pay the purchase price provided that P500,000.00 bededucted therefrom for the settlement of the civil case. This was rejected by private respondents.

The private respondents then executed a Deed of Conditional Sale in favor of Emylene Chua over thesame parcel.

The petitioners counsel then informed the private respondents informing the latter that in view of thedismissal of the case against them, petitioner was willing to pay the purchase price, and he requestedthat the corresponding deed of absolute sale be executed. This was ignored by private respondents.

The private respondents then sent a check for P25,000.00 representing the refund of 50% of theoption money paid under the exclusive option to purchase. Private respondents then requestedpetitioner to return the owner's duplicate copy of the certificate of title of respondent SaludJimenez. Petitioner failed to surrender the certificate of title, hence they filed for annulment of contractwith damages, praying, among others, that the exclusive option to purchase be declared null and void.

The trial court held that the agreement entered into by the parties was merely an option contract, anddeclaring that the suspension of payment by herein petitioner constituted a counter-offer which,therefore, was tantamount to a rejection of the option. The trial court then directed the cancellation of

the exclusive option to purchase, declared the sale to intervenor Emylene Chua as valid and binding,and ordered petitioner to pay damages and attorney's fees to private respondents, with costs. Thiswas affirmed in toto by the Court of Appeals.

Issue:

WON the "Exclusive Option to Purchase" executed between petitioner Adelfa Properties, Inc. andprivate respondents is an option contract

Held:


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Yes. The parties never intended to transfer ownership to petitioner except upon the full payment of thepurchase price. Firstly, the exclusive option to purchase, although it provided for automatic rescissionof the contract and partial forfeiture of the amount already paid in case of default, does not mentionthat petitioner is obliged to return possession or ownership of the property as a consequence of non-payment. There is no stipulation anent reversion or reconveyance of the property to herein privaterespondents in the event that petitioner does not comply with its obligation. With the absence of sucha stipulation, although there is a provision on the remedies available to the parties in case of breach, it

may legally be inferred that the parties never intended to transfer ownership to the petitioner tocompletion of payment of the purchase price.

In effect, there was an implied agreement that ownership shall not pass to the purchaser until he hadfully paid the price. Consequently, an implied stipulation to that effect is considered valid and,therefore, binding and enforceable between the parties. It should be noted that under the law andjurisprudence, a contract which contains this kind of stipulation is considered a contract to sell.

Moreover, that the parties really intended to execute a contract to sell, and not a contract of sale, isbolstered by the fact that the deed of absolute sale would have been issued only upon the payment ofthe balance of the purchase price, as may be gleaned from petitioner's letter dated April 16,1990 16 wherein it informed private respondents that it "is now ready and willing to pay yousimultaneously with the execution of the corresponding deed of absolute sale."

Secondly, it has not been shown there was delivery of the property, actual or constructive, made toherein petitioner. The exclusive option to purchase is not contained in a public instrument theexecution of which would have been considered equivalent to delivery. Neither did petitioner takeactual, physical possession of the property at any given time.

The distinction between an "option" and a contract of sale is that an option is an unaccepted offer. Itstates the terms and conditions on which the owner is willing to sell his land, if the holder elects toaccept them within the time limited. If the holder does so elect, he must give notice to the other party,and the accepted offer thereupon becomes a valid and binding contract. If an acceptance is not madewithin the time fixed, the owner is no longer bound by his offer, and the option is at an end. A contractof sale, on the other hand, fixes definitely the relative rights and obligations of both parties at the timeof its execution. The offer and the acceptance are concurrent, since the minds of the contractingparties meet in the terms of the agreement.

A perusal of the contract in this case readily shows that there is indeed a concurrence of petitioner'soffer to buy and private respondents' acceptance thereof. The rule is that except where a formalacceptance is so required, although the acceptance must be affirmatively and clearly made and mustbe evidenced by some acts or conduct communicated to the offeror, it may be made either in a formalor an informal manner, and may be shown by acts, conduct, or words of theaccepting party that clearly manifest a present intention or determination to accept the offer to buy orsell. Thus, acceptance may be shown by the acts, conduct, or words of a party recognizing theexistence of the contract of sale.

- The records also show that private respondents accepted the offer of petitioner to buy their propertyunder the terms of their contract. At the time petitioner made its offer, private respondents suggestedthat their transfer certificate of title be first reconstituted, to which petitioner agreed. After the titlewas reconstituted, the parties agreed that petitioner would pay either in cash or manager's check the

amount of P2,856,150 for the lot. Petitioner was supposed to pay the same on November 25, 1989,but, it later offered to make a down payment of P50,000, with the balance of P2,806,150to be paid on or before November 30, 1989. Private respondents agreed to the counter-offer made bypetitioner. As a result, the so-called exclusive option to purchase was prepared by petitioner and wassubsequently signed by privaterespondents, thereby creating a perfected contract to sell between them.

Atkins, Kroll & Co. Vs. Cua Hian Tek

Facts:


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In 1951, the petitioner sent to respondent a letter, where a firm offer was made, describing thequantity and commodity of goods it had (sardines), as well as the price, shipment and supplier.

The respondent accepted the offer unconditionally and delivered a letter of acceptance. However, dueto shortage of catch of sardines by the packers in California, AtkinsKroll & Co., failed to deliver thecommodities it had offered for sale. Because of this, the petitioner was sued and subsequently orderedto pay damages.

Issue:

WON the acceptance only created an option, which, lacking consideration, had no obligatory force.

Held:

The argument, maifestly assumes that only a unilateral promise arose when the offeree accepted.Such assumption is a mistake, because a bilateral cotract to sell and to buy was created uponacceptance. So much so that B. CuaHianTekcould be sued, he had backed out after accepting, byrefusing to get the sardines and/or to pay for their price. Indeed, the word "option" is found neither inthe offer nor in the acceptance.

Petitioner, however, insists the offer was a mere offer of option, because the "firm offer" Exh. A. was acontinuing offer to sell until September 23, "an option is nothing more than a continuing offer" for aspecified time. In our opinion implies more than that: it implies the legal obligation to keep open forthe time specified. Yet the letter Exh. A did not by itself produce the legal obligation of keeping theoffer open up ot Septmber 23. It could be withdrawn before acceptance, because it is admitted, therewas no consideration for it.

Furthermore, an option is unilateral: a promise to sell3 at the price fixed whenever the offeree shoulddecide to exercise his option within the specified time. After accepting the promise and before heexercises his option, the holder of the option is not bound to buy. He is free either to buy or not tolater. In this case, however, upon accepeting herein petitioner's offer a bilateral promise to sell and tobuy ensued, and the respondent ipso facto assumed the obligations of a purchaser. He did not just getthe right subsequently to buy or not to buy. It was not a mere option then; it was bilalteral contract ofsale.

Sanchez vs Rigos

Facts:

In an instrument entitled "Option to Purchase," executed by Severina Rigos, she "agreed, promisedand committed ... to sell" to Nicolas Sanchez for the sum of P1,510.00 within two years from said date,a parcel of land in Nueva Ecija. It was agreed that said option shall be deemed "terminated andelapsed," if Sanchez shall fail to exercise his right to buy the property" within the stipulated period.Two years later, Sanchez deposited the sum of Pl,510.00 with the trial court and filed an action forspecific performance and damages against Rigos for the latters refusal to accept several tenders ofpayment that Sanchez made to purchase the subject land.

Rigos contended that the contract between them was only a unilateral promise to sell, and the samebeing unsupported by any valuable consideration, is null and void." Sanchez, on the other hand,alleged in his compliant that, by virtue of the option under consideration, "defendant agreed andcommitted to sell" and "the plaintiff agreed and committed to buy" the land described in the option.

The lower court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum Sanchezjudicially consigned, and to execute in his favor the requisite deed of conveyance. The Court ofAppeals certified the case at bar to the Supreme Court for it involves a question purely of law.

Issue:


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Was there a contract to buy and sell between the parties or only a unilateral promise to sell?

Held:

The Supreme Court affirmed the lower courts decision. The instrument executed in 1961 is not a"contract to buy and sell," but merely granted plaintiff an "option" to buy, as indicated by its own title"Option to Purchase." The option did not impose upon plaintiff Sanchez the obligation to purchase

defendant Rigos' property. Rigos "agreed, promised and committed" herself to sell the land to Sanchezfor P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement,promise and undertaking is supported by a consideration "distinct from the price" stipulated for thesale of the land. The lower court relied upon Article 1354 of the Civil Code when it presumed theexistence of said consideration, but the said Article only applies to contracts in general.

However, it is not Article 1354 but the Article 1479 of the same Code which is controlling in the case atbar because the latters 2nd paragraph refers to "sales" in particular, and, more specifically, to "anaccepted unilateral promise to buy or to sell." Since there may be no valid contract without a cause orconsideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pendingnotice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sellwhich, if accepted, results in a perfected contract of sale. Upon mature deliberation, the Courtreiterates the doctrine laid down in the Atkins case and deemed abandoned or modified the viewadhered to in the Southwestern Company case.

Ang Yu Asuncion vs CA

Facts:

A Second Amended Complaint for Specific Performance was filed by herein petitioners against BobbyCu Unjieng, Rose Cu Unjieng and Jose Tan who are tenants of the residential and commercial spacesowned by the former. It was alleged that in 1986, the petitioners informed respondents that they areoffering to sell the premises and are giving them priority to acquire the same. Bobby Cu Unjiengoffered a price of P6-million while the petitioners made a counter offer of P5-million.

The tenants then asked the petitioners to put their offer in writing, to which request petitionersacceded. The respondents then asked that they specify the terms and conditions of the offer to sell.However, the petitioner failed to specify the terms and conditions of the offer to sell and because of

information received that respondents were about to sell the property, respondents filed a complaintto compell the petitioners to sell the property to them.

Ang Yu, et al. denied the material allegations of the complaint and interposed a special defense of lackof cause of action.

Trial Court rendered a decision in favor of herein petitioner; offer to sell was never accepted by theplaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposedsale, hence, there was no contract of sale at all.

Court of Appeals affirmed the decision; In resume, there was no meeting of the minds between theparties concerning the sale of the property.

While the case was pending in court, Cu Unjieng (tenants) executed a Deed of Safe in favor of BUEN

REALTY DEVELOPMENT CORPORATION.

Issue:

WON there was a contract to sell between the parties

Held:

In the law on sales, the so-called "right of first refusal" is an innovative juridical relation. Needless topoint out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.


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Neither can the right of first refusal, understood in its normal concept, per se be brought within thepurview of an option.

An option or an offer would require, among other things, 10a clear certainty on both the object and thecause or consideration of the envisioned contract. In a right of first refusal, while the object might bemade determinate, the exercise of the right, however, would be dependent not only on the grantor'seventual intention to enter into a binding juridical relation with another but also on terms, including

the price, that obviously are yet to be later firmed up. Prior thereto, it can at best be so described asmerely belonging to a class of preparatory juridical relations governed not by contracts (since theessential elements to establish the vinculum juris would still be indefinite and inconclusive) but by,among other laws of general application, the pertinent scattered provisions of the Civil Code on humanconduct.

Even on the premise that such right of first refusal has been decreed under a final judgment, like here,its breach cannot justify correspondingly an issuance of a writ of execution under a judgment thatmerely recognizes its existence, nor would it sanction an action for specific performance withoutthereby negating the indispensable element of consensuality in the perfection of contracts. 11It is notto say, however, that the right of first refusal would be inconsequential for, such as already intimatedabove, an unjustified disregard thereof, given, for instance, the circumstances expressed in Article19 12of the Civil Code, can warrant a recovery for damages.

The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a "right offirst refusal" in favor of petitioners. The consequence of such a declaration entails no more than whathas heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by thefailure of private respondents to honor the right of first refusal, the remedy is not a writ of executionon the judgment, since there is none to execute, but an action for damages in a proper forum for thepurpose.

Earnest Money

Limson vs CA

Facts:

Petitioner Lourdes Ong Limson, alleged that in July 1978 respondent spouses de Vera, throughtheir agent, offered to sell to her a parcel of land in Paraaque. She agreed to buy the property at theprice of P34.00 per square meter and gave the sum of P20,000.00 to respondent spouses as "earnestmoney;". The spouses signed a receipt therefor and gave her a 10-day option period to purchase theproperty; that respondent Lorenzo de Vera then informed her that the subject property was mortgagedto the spouses Ramos and that the respondent Lorenzo de Vera asked her to pay the balance of thepurchase price to enable him and his wife to settle their obligation with the Ramoses.

They then agreed to consummate the transaction but due to the failure of the respondents andthe spouses Ramos no transaction was formalized. In a second meetingshe claimed that she waswilling and ready to pay the balance of the purchase price but the transaction again did not materializeas respondent spouses failed to pay the back taxes of subject property. Subsequently, petitionerallegedly gave respondent Lorenzo de Vera three (3) checks in the total amount of P36,170.00 for thesettlement of the back taxes of the property and for the payment of the quitclaims of the three (3)tenants of subject land. The amount was purportedly considered part of the purchase price and

respondent Lorenzo de Vera signed the receipts therefor.

She then learnedn from the agent of respondent spouses that the property was the subject of anegotiation for the sale to respondent Sunvar Realty Development Corporation (SUNVAR). The Deed ofSale between respondent spouses and SUNVAR was executed.

The petitioner then filed an action, claiming that the deed of sale should be annuled and TCTin thename of respondent SUNVAR canceled. She also insisted that a Deed of Sale between her andrespondent spouses be now executed upon her payment of the balance of the purchase price agreedupon.


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The trial court held in favor of thepetitioner but this was completely reversed by the Court ofAppeals.

Issue:

WON what was perfected between the petitioner and respondent spouses was a contract of option orcontract to sell

Held:

In the interpretation of contracts, the ascertainment of the intention of the contracting parties isto be discharged by looking to the words they used to project that intention in their contract, all thewords, not just a particular word or two, and words in context, not words standing alone. [17]Theabove Receiptreadily shows that respondent spouses and petitioner only entered into a contract ofoption; a contract by which respondent spouses agreed with petitioner that the latter shall have theright to buy the formers property at a fixed price of P34.00 per square meter within ten (10) days from31 July 1978. Respondent spouses did not sell their property; they did not also agree to sell it; but theysold something, i.e., the privilege to buy at the election or option of petitioner. The agreementimposed no binding obligation on petitioner, aside from the consideration for the offer.

The consideration of P20,000.00 paid by petitioner to respondent spouses was referred to as"earnest money." However, a careful examination of the words used indicates that the money is notearnest money but option money. "Earnest money" and "option money" are not the same but

distinguished thus: (a) earnest money is part of the purchase price, while option money is the moneygiven as a distinct consideration for an option contract; (b) earnest money is given only where there isalready a sale, while option money applies to a sale not yet perfected; and, (c) when earnest money isgiven, the buyer is bound to pay the balance, while when the would-be buyer gives option money, heis not required to buy,[18] but may even forfeit it depending on the terms of the option.

There is nothing in the Receiptwhich indicates that the P20,000.00 was part of the purchaseprice. Moreover, it was not shown that there was a perfected sale between the parties where earnestmoney was given. Finally, when petitioner gave the "earnest money," the Receiptdid not reveal thatshe was bound to pay the balance of the purchase price. In fact, she could even forfeit the moneygiven if the terms of the option were not met. Thus, the P20,000.00 could only be money given asconsideration for the option contract. That the contract between the parties is one of option isbuttressed by the provision therein that should the transaction of the property not materialize withoutfault of petitioner as buyer, respondent Lorenzo de Vera obligates himself to return the full amountof P20,000.00 "earnest money" with option to buy or forfeit the same on the fault of petitioner. It is

further bolstered by the provision therein that guarantees petitioner that she or her representativewould be notified in case the subject property was sold or encumbered to a third person. Finally,the Receiptprovided for a period within which the option to buy was to be exercised, i.e., "within ten(10) days" from 31 July 1978.

Doubtless, the agreement between respondent spouses and petitioner was an "option contract" orwhat is sometimes called an "unaccepted offer." During the option period the agreement was notconverted into a bilateral promise to sell and to buy where both respondent spouses and petitionerwere then reciprocally bound to comply with their respective undertakings as petitioner did not timely,affirmatively and clearly accept the offer of respondent spouses.

Hence the petition was denied.

San Miguel Properties vs. Huang

Facts:

Petitioner SanMiguelProperties Philippines, Inc. is a domestic corporation engaged in the purchaseand sale of real properties. Part of its inventory are two parcels of landin Pasig City.

On February 21, 1994, the properties were offered for sale for P52,140,000.00 in cash. The offer wasmade to Atty. Helena M. Dauz who was acting for respondent spouses as undisclosed principals. In aletter, Atty. Dauz signified her clients interest in purchasing the properties for the amount for whichthey were offered by petitioner, under the following terms: That they would enclose the sum of P1Mrepresenting e earnest-deposit money, subject to the following conditions.
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1. They will be given the exclusive option to purchase the property within the 30 days from date ofacceptance of the offer.

2. During said period, they will negotiate on the terms and conditions of the purchase

3. In the event that they do not come to an agreement on the transaction, the said amount of P1Mshall be refundable to them in full upon demand. . . .

Isidro A. Sobrecarey, petitioners vice-president and operations manager for corporate real estate,indicated his conformity to the offer by affixing his signature to the letter and accepted the "earnest-deposit" of P1 million. Upon request of respondent spouses, Sobrecarey ordered the removal of the"FOR SALE" sign from the properties.

Atty. Dauz and Sobrecarey then commenced negotiations. On April 25, 1994, Atty. Dauz asked for anextension of 45 days from April 29, 1994 to June 13, 1994 within which to exercise her option topurchase the property, adding that within that period, "[we] hope to finalize [our] agreement on thematter."[4] Her request was granted.

However, the petitioner informed Atty. Dauz that because the parties failed to agree on the terms andconditions of the sale despite the extension granted by petitioner, the latter was returning the amount

of P1 million given as "earnest-deposit."

On July 20, 1994, respondent spouses, through counsel, wrote petitioner demanding the executionwithin five days of a deed of sale covering the properties. Respondents attempted to return the"earnest-deposit" but petitioner refused on the ground that respondents option to purchase hadalready expired.

On August 16, 1994, respondent spouses filed a complaint for specific performance against petitioner.Upon a motion to dismiss by the petitioner alleging that (1) the alleged "exclusive option" ofrespondent spouses lacked a consideration separate and distinct from the purchase price and was thusunenforceable and (2) the complaint did not allege a cause of action because there was no "meeting ofthe minds" between the parties and, therefore, no perfected contract of sale...the trial court dismissedthe action. This however was reversed by the Court of Appeals.

In holding that there is a perfected contract of sale, the Court of Appeals relied on the followingfindings: (1) earnest money was allegedly given by respondents and accepted by petitioner through itsvice-president and operations manager, Isidro A. Sobrecarey; and (2) the documentary evidence in therecords show that there was a perfected contract of sale.

Issue:

WON

Held:

With regard to the alleged payment and acceptance of earnest money, the Court holds thatrespondents did not give the P1 million as "earnest money" as provided by Art. 1482 of the Civil Code.

They presented the amount merely as a deposit of what would eventually become the earnest moneyor downpayment should a contract of sale be made by them. The amount was thus given not as a partof the purchase price and as proof of the perfection of the contract of sale but only as a guarantee thatrespondents would not back out of the sale. Respondents in fact described the amount as an "earnest-deposit."

In the present case, the P1 million "earnest-deposit" could not have been given as earnest money ascontemplated in Art. 1482 because, at the time when petitioner accepted the terms of respondentsoffer of March 29, 1994, their contract had not yet been perfected. This is evident from the followingconditions attached by respondents to their letter.
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The first condition for an option period of 30 days sufficiently shows that a sale was never perfected.As petitioner correctly points out, acceptance of this condition did not give rise to a perfected sale butmerely to an option or an accepted unilateral promise on the part of respondents to buy thesubject properties within 30 days from the date of acceptance of the offer. Such option givingrespondents the exclusive right to buy the properties within the period agreed upon is separate anddistinct from the contract of sale which the parties may enter.[11]All that respondents had was just theoption to buy the properties which privilege was not, however, exercised by them because there was

a failure to agree on the terms of payment. No contract of sale may thus be enforced by respondents.

Furthermore, even the option secured by respondents from petitioner was fatally defective. Under thesecond paragraph of Art. 1479, an accepted unilateral promise to buy or sell a determinate thing for aprice certain is binding upon the promisor only if the promise is supported by a distinct consideration.Consideration in an option contract may be anything of value, unlike in sale where it must be the pricecertain in money or its equivalent. There is no showing here of any consideration for the option.Lacking any proof of such consideration, the option is unenforceable.

Equally compelling as proof of the absence of a perfected sale is the second condition that, during theoption period, the parties would negotiate the terms and conditions of the purchase.

Thus, it is not the giving of earnest money, but the proof of the concurrence of all the essentialelements of the contract of sale which establishes the existence of a perfected sale.

In the absence of a perfected contract of sale, it is immaterial whether Isidro A. Sobrecarey had theauthority to enter into a contract of sale in behalf of petitioner. This issue, therefore, needs no furtherdiscussion.

WHEREFORE, the decision of the Court of Appeals is REVERSED and respondents complaint isDISMISSED.

SELLERS TITLE IS VOIDABLE

Edu vs Gomez

Facts:

In June 1970, The Office of the Commission on Land Transportation received a report that a1968 model Volkswagen car allegedly owned by Lt. Walter Bala of Clarck Airbase was stolen from hisresidence. Agents of the Anti-Carnapping Unit (ANCAR) recognized the car in the possession of LucilaAbello and immediately seized and impounded the car as stolen property. Romeo F. Edu, thenCommissioner of Land Transportation, then seized the car.

Lucila Abello filed a complaint for replevin with damages. The court found that the car inquestion was acquired by Abello by purchase from its registered owner, Marcelino Guansing, forP9,000.00, under a notarial deed of absolute sale. She had been in possession of it since 1971. Thecourt ruled in favor of Abella.

Issue:WON Abella had a better right to the vehicle in question.

Held: The court held that there is no merit in the petition considering that the acquirer or thepurchaser in good faith of a chattel of movable property is entitled to be respected and protected inhis possession as if he were the true owner thereof until a competent court rules otherwise.

In the meantime, as the true owner, the possessor in good faith cannot be compelled tosurrender possession nor to be required to institute an action for the recovery of the chattel, whetheror not an indemnity bond is issued in his favor. The filing of an information charging that the chattelwas illegally obtained through estafa from its true owner by the transferor of the bona fide possessordoes not warrant disturbing the possession of the chattel against the will of the possessor.
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Duran vs IAC

Facts:Circe Duran owned 2 parcels of land in Caloocan City. She left the Philippines in June 1854. In

1963, a Deed of Sale of the two lots was made in favor of Circes mother, Fe, who afterwardsmortgaged the same property to Erlinda Marcelo-Tiangco.

When Circe came to know about the mortgage, she wrote to the Register of Deeds of Caloocaninforming that she had not given her mother any authority to sell or mortgage any of her properties.Since she failed to get an answer from the RD. So she returned to the Philippines in May 1966.

Meanwhile, when Fe failed to redeem the mortgaged properties and foreclosure proceedingswere initiated by Marcelo- Tiangco.

Circe claims that the sale in favor of her mother is a forgery saying that at the time of itsexecution in 1963, she was in the US. Fe alleges that the signatures of Circe in the Deed are genuineand the mortgage made by Fe is valid.

Issue:. WON Tiangco was a buyer in good faith and for value

Held:

Yes. Good faith consists in the possessors belief that the person from who he received thething was the owner of the same and could convey his title.

Good faith, while it is always to be presumed in the absence of proof to the contrary, requires awell-founded belief that the person from whom title was received was himself the owner of the land,with the right to convey it.

WHEN OBLIGATION TO DELIVER ARISESAddison vs. Felix

Facts:Maciana Felix and Balbino Tioco purchased from Addison four parcels of land to which Felix

paid, at the time of the execution of the deed, the sum of P3,000.

She likewise bound herself to the remainder in installments, the first of P,2000 on July 15,1914, the second of P5,000 thirty days after the issuance to her of a certificate of title under the LandRegistration Act, and further, within 10 years from the date of such title, P10 for each coconut tree inbearing and P5 for each such tree not in bearing that might be growing on said parcels of land on thedate of the issuance of title to her, with the condition that the total price should not exceed P85,000.

It was further stipulated that Felix was to deliver to the Addison 25% of the value of theproducts that she might obtain from the four parcels "from the moment she takes possession of themuntil the Torrens certificate of title be issued in her favor," and that within 1 year from the date of thecertificate of title in her favor, Marciana Felix may rescind the contract of purchase and sale.

In January 1915, Addison , sued to compel Felix to pay the first installment of P2,000,demandable, in accordance with the terms of the contract of sale. The defendants Felix and herhusband Tioco contended that Addison had absolutely failed to deliver the lands that were the subjectmatter of the sale, notwithstanding the demands they made upon him for this purpose.

The evidence adduced shows Addison was able to designate only 2 of the 4 parcels, and morethan 2/3 of these two were found to be in the possession of one Juan Villafuerte, who claimed to be theowner of the parts he so occupied.

The trial court held the contract of sale to be rescinded and ordered Addison to return to Felixthe P3,000 paid on account of the price, together with interest thereon at the rate of 10% per annum.

IssueWas there a delivery made and, therefore, a transfer of ownership of the thing sold?


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Held:SC affirmed the decision of the lower court.

The thing is considered to be delivered when it is placed "in the hands and possession of the vendee."

It is true that the same article declares that the execution of a public instrument is equivalentto the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery

may produce the effect of tradition, it is necessary that the vendor shall have had such control overthe thing sold that, at the moment of the sale, its material delivery could have been made.

Symbolic delivery through the execution of a public instrument is sufficient when there is noimpediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the solewill of the vendor.

But if, notwithstanding the execution of the instrument, the purchaser cannot have theenjoyment and material tenancy of the thing and make use of it himself or through another in hisname, because such are opposed by a third persons will, then the delivery has not been effected.

In the case at bar, therefore, it is evident, that the mere execution of the instrument was not afulfillment of the vendor's obligation to deliver the thing sold, and that from such non-fulfillment arisesthe purchaser's right to demand, as she has demanded, the rescission of the sale and the return of theprice.

Pasagui vs Villablanca

Facts:Calixto Pasagui and Fausta Mosar brought a parcel of agricultural land in Leyte from the

Eustaquia and Catalina Bocar. A document of sale was executed, notarized and registered.

However, the defendant spouses Ester and Zosimo Villablanca, "illegally and without anyright, whatsoever, took possession of the property harvesting from the coconut plantation thereon,thus depriving plaintiffs" of its possession. Despite demands for surrender, the defendants or refusedto return said parcel of land to the former. Thus, Pasagui and Mosar filed a complaint, but this wasdismissed for lack of jurisdiction, stating that the case was one for forcible entry. An appeal on a purequestion of law was interposed to the SC.

Issue:WON the action is one of forcible entry, within the exclusive jurisdiction of the municipal court.

Held: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 noimpediment that may prevent the passing of the property from the hands of the vendor into those ofthe vendee.

It can be negated by the reality that the vendees actually failed to obtain material possessionof the land subject of the sale. The plaintiffs-appellants had not acquired physical possession of theland since its purchase on. As a matter of fact, their purpose in filing the complaint is precisely to "getthe possession of the property."

In order that an action may be considered as one for forcible entry, it is not only necessarythat the plaintiff should allege his prior physical possession of the property but also that he wasdeprived of his possession by any of the means provided in section 1, Rule 70 of the Revised Rules ofCourt, namely: force, intimidation, threats, strategy and stealth.

In the case at bar, no such inference could be made as plaintiffs-appellants had not claimed that theywere in actual physical possession of the property prior to the entry of the Villablancas.

Banzon vs Cruz


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Facts:In 1952, Maximo Sta. Maria obtained a crop loan from the PhilippineNational Bank (PNB), with

Associated Insurance & Surety Co., Inc., acting as surety for Sta. Maria, Antonio Banzon (Banzon) andEmilio Naval (Naval) as inseminators for Associated.

When Sta. Maria failed to pay PNB the amount of the loan , PNB demanded payment from

Associated who, instead of paying PNB, filed a complaint against the three. In 1957, the the CFIgranted the petition of Associated, and ordered thereindefendants to pay Associated jointy andseverally.

Associated then levied Banzons two lots inCaloocan to satisfy the judgment. Since it was thehighest bidder at the execution sale, a certificate of sale was issued in its favor. Associated laterdemanded from Banzon the delivery of the latters owners duplicate of certificate of title, to whichBanzon refused. This prompted Associated to file a complaint for an order directing him to present thecertificate and for another order to cancel the certificatedand to issue a new one in the name ofAssociated. The trial court ruled in favor of Associated.

However, it was then discovered that Associated never discharged its liability with PNB.PNBthen filed a complaint against Sta. Maria, his siblings and Associated. After thetrial court ruled in favorof PNB, Sta. Maria began paying his outstanding loan with the former, which amounted to only ofthe amount earlier awarded to Associated to be paid to PNB. After collecting from Sta. Maria, PNB

released Associated from itsobligation as surety. This should have put an end to the matter andBanzons two lots thereforerestored fully to his ownership, but it was then discovered that Associatedhas allowed and permitted the execution and levy of one Pedro Cardenas of one of Banzons twoparcels of land being held byAssociated as trustee, which then resulted to the issuance of a new title inthe name of Cardenas. Thereafter, Banzon, having learned of PNBs release of Associated, filedacomplaint for reconveyance of the two parcels of land, one of which is under Cadenass name and theother in Banzon's name.

Issue: WON Banzon has the right to ask for reconveyance of his two lots in question.

Held:Yes, he has. When Associated nevertheless prematurely and contary to the intent

andcondition of the basic 1957 judgment levied in execution on the two Caloocan City lots of Banzontheinterest it acquired was clearly impressed with a trust character. Such acquisition of

Banzon'sproperties by Associated was effected, if not through fraud on Associated's part, certainlythroughmistake and there Associated was "by force of law, considered a trustee of implied trust for thebenefitof the person from whom the property comes" by virtue of Article 1456 of the Code sinceAssociatednot having paid nor having been compelled to pay the bank had no right in law or equity toso executethe judgment against Banzon as indemnitor.

Had there been no fraudulent concealment or suppressionof the fact of such non-payment byAssociated or a mistaken notion just assumed without factual basisthat Associted had paid the bankand was thus entitled to enforce its judgement against Banzon asindemnitor, the writ for execution ofthe judgment against Banzon's properties would not been issued.Associated therefore stands legallybound by force of law to now discharge its implied trust and return

EDCA Publishing vs Santos

Facts:A person who identified himself as Professor Jose Cruz placed an order through telephone with

Edca Publishing. He ordered 406 books, payable on delivery. Cruz issued a personal check as payment.Then he sold some of the books to Leonor Santos who, after verifying the sellers ownership from theinvoice shown, paid Cruz.

Meanwhile, Edca being suspicious over the second order placed by Cruz verified with De LaSalle College where he had claimed to be dean and was informed that no such person was under itsemploy. It was also found out that there was no account with the bank against which he had drawn hischeck. It was later found out that his real name was Tomas de la Pena. Edca reported this to the police,which set a trap and arrested de la Pena.


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Edca also sought the assistance of the police and forced their way into the store of the privaterespondents and threatened Santos for buying stolen property. They seized the books without warrantand then turned them over to the petitioner.

Issue:WON EDCA was unlawfully deprived of movable property (books) in the hands of another

because the check issued by Cruz in payment was dishonored

Held:First, the contention of petitioner that Santos has not established ownership over the disputed

books because they have not even shown the receipt evidencing the purchase, is without merit. Thepossession of movable property acquired in good faith is equivalent to title.

Second, Santos acquired the books in good faith as found by the lower courts. She firstascertained the ownership and relied on the invoice shown to her by de la Pena. Santos was in thebusiness of buying and selling books and often deal with hard-up sellers who urgently have to partwith their books at reduced prices.

Third, and on the real issue, on whether Edca had been unlawfully deprived of the books, Edcaargued that the impostor acquired no title to the books because of the lack of funds in the checkissued and want of consideration.

This is without merit. Nonpayment of purchase price only gives rise to the right to demandpayment or rescission of the contract. Actual delivery was made to the impostor and thus, ownershipwas acquired by him. Non-payment was a matter privy to him and Edca and doesn't involve Santoswho later acquired the books.

Alliance Tobacco Corporation vsPhilippine Virgina Tobbaco

Facts:The PVTA, entered into a contract of procuring, redrying and servicing with the FVTR for

the1963 tobacco trading operation. The PVTA also entered into a merchandising loan agreement withATC where PVTA agreed to lend it P25K for the purchase of flue-cured Virginia. The next month, ATCshipped to FVTR bales of tobacco, out of which only 89 were graded and weighed.

Since the grading and weighing was not resumed, ATC informed PVTA that some tobacco ofthe plaintiff were not graded and weighed and were no longer in the premises FVTR's Redrying Plant.PVTA then replied that the tobacco in question were considered accepted.chanro

The operations of FVTR in Bauang stopped. ATC then asked that its ungraded and un-weighedtobacco be withdrawn from the Redrying Plant. The defendants PVTA and FVTR refused to allow theplaintiffs request because according to them the tobacco sought to be withdrawn were subject of amerchandising loan and owned by defendant, PVTA. Unfortunately, the remaining un-graded and un-weighed 174 bales were lost while they were in the possession of the FVTR. Having learned of suchloss in 1965, ATC demanded for its value and the application of the same to its merchandising loanwith PVTA but both the latter and the FVTR refused to heed said demands.chanrobles virtual lawlibrary

ATC then filed a complaint against the defendants, for them to pay the value of the balesaccepted by them. The trial court held that the PVTAshould not be held responsible for the lost balesof tobacco because they were not yet properly graded and weighed and that petitioner failed topresent the weigher's tally sheets and warehouse receipts or quedans. An appeal was also denied.

Issue:WON there is a perfected contract of sale between ATC and PVTA with respect to the

remaining bales of tobacco, so as to hold the latter liable for the loss of such while in the possession ofthe FVTR


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Held:The Civil Code provides that ownerhip 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 thecontrol and possession of the vendee. Indeed, in tobacco trading, actual delivery plays a pivotal role,as was pointed out by the procedure formulated by the PVTA, which is followed by others in theindustry. Delivery seals the contract of sale because the trader loses not only possession but alsocontrol over the shipment.

Under an Ideal situation, the contract of sale could not have been perfected pursuant to Art.1475 of the Civil Code because to determine the price of the tobacco traded, the shipment should firstbe inspected, graded and weighed. Strict application of this may result in adverse effects to smallplanters who would not be paid for the lost products of their toil.

Applying principles of equity and fair dealing, since PVTA had virtual control over the losttobacco bales, delivery thereof to the FVTR should also be considered effective delivery to the PVTA.Thus, the PVTA was directed to pay the amount of the bales of tobacco.

SALE ON REAL PROPERTY BY UNIT OF MEASURE/NO.

Sta. Ana Jr. vs. Hernandez

Facts:

The spouses Santa Ana owned a parcel of land in Bulacan. They they sold two (2) separateportions of the land for P11,000.00 to Rosa Hernandez.

After the sale (there were two other previous sales to different vendees of other portions of theland), the spouses caused the preparation of a subdivision plan.

Hernandez however, unlike the previous vendees, did not conform to the plan. She refused tovacate the areas that she had occupied. Instead, she caused the preparation of a different subdivisionplan, which was approved by the Director of Lands. This plan tallied with the areas that she hadactually occupied.

The spouses sued her claiming that she was occupying an excess of 17,000 square meters inarea of what she had bought from them. Hernandez claimed that the alleged excess, was part of the

areas that she bought.

The trial court ruled for the spouses and ordered Hernandez to vacate the excess portions. Anappeal was made to the CA which declared Hernandez the owner of the whole of the twolots of herown subdivision Plan notwithstanding their increased area as compared to that specified in the deed ofsale.

Issue:WON the deed of sale was for a lump sum, despite the fact that the boundaries given were not

sufficiently certain and did not clearly identify the land.

Held:The sale made was of a definite and identified tract, , that obligated the vendors to deliver to

the buyer all the land within the boundaries, irrespective of whether its real area should be greater or

smaller than what is recited in the deed. And this is particularly true where, the area given is qualifiedto be approximate only. "humigit kumulang", i.e., more or less).

To hold the buyer to no more than the area recited on the deed, it must be made clear thereinthat the sale was made by unit of measure at a definite price for each unit.

In the absence of a recital of a given price per unit of measurement, and the specification ofthe total area sold, the former must prevail and determines the applicability of the norms concerningsales for a lump sum. Thus the decision of the CA was affirmed.


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SALE OF REAL ESTATE MADE FOR A LUMP SUM

Semira vs CAFacts:

Gutierrez was the owner of a parcel of land in Batangas which she sold to Buenaventura in adocument which stated the area of the land and its boundaries. Buenaventura An entered thepremises based on the boundaries stated in the deed of sale. He then bought two additional parcels of

land, located on the eastern boundary of the lot first sold to him.

Buenaventura An sold the first parcel to his nephew, Cipriano Ramirez who also entered thepremises based on the boundaries stated in the deed. The deed also stated the same boundaries andarea of the lot, which was larger in actuality. This nephew then sold the land to Miguel Semira, thepetitioner. The deed this time reflected a different area, the actual area of the land. The land wasfound to be larger than what was stated in the previous documents.

Semira entered then the premises based on the boundaries and began construction of a ricemill. Buenaventura An then filed an action for forcible entry against Semira, alleging that latter illegallyencroached on the other parcel of land previously bought by the former and that the land that wassupposed to be occupied by the latter was smaller than the land he was actually occupying. The MTCruled in favor of the petitioner but this was reversed by the RTC, whose decision was upheld by theCA.

Issue:WON the petitioner owns the entire parcel of land following its established coundaries (making

it larger).

Held:The court sustained the petitioner. Where land is sold for a lump sum and not so much per unit

of measure or number, the boundaries of the land stated in the contract determine the effects andscope of the sale, not the area thereof. Hence, the vendors are obligated to deliver all the landincluded within the boundaries, regardless of whether the real area should be greater or smaller thanthat recited in the deed. This is particularly true where the area is described as "humigit kumulang,"that is, more or less.

The same rule shall be applied when two or more immovables are sold for a single price; but if,besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area

or number should be designated in the contract, the vendor shall be bound to deliver all that isincluded within said boundaries, even when it exceeds the area or number specified in the contract;and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what islacking in the area or number, unless the contract is rescinded because the vendee does not accede tothe failure to deliver what has been stipulated.

Hence, when private respondent Buenaventura An sold the lot to his his nephewby means of a"Kasulatan ng Bilihan ng Lupa" which incorporated both the area and the definite boundaries of the lot,the former transferred not merely the 822.5 square meters stated in their document of sale but theentire area circumscribed within its boundaries.

The fact that the area turned out to be 2,200 square meters; instead of only 822.5 squaremeters, is of no moment and does not entitle private respondent to the difference because the definiteobject sold was the lot in its entirety and not just any unit of measure or number. That the saleresulted in a disadvantage to private respondent does not confer on him any cause of action against

petitioner.

Balantakbo vs CA

Facts:Laguna Agro-Industrial Coconut Cooperative, Inc. (LAGUNA) , filed an action to quiet title over a

parcel of unregistered coconut land. They alleged that the land in question had been purchased bytheir predecessors from Balantakbos mother, the sale being evidenced by a deed, the seller's heirs,intruded into the land and harvested the coconuts found therein. Balantakbos denied knowledge of thesale and alleged that the land claimed sued for was different from that owned and held by them.


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During the trial, LAGUNA claimed that the land which had been sold to its predecessors, wasthe land within the identified boundaries, regardless of the area. On the other hand, the Balantakbosstated that the land within said boundaries had an area of 6,870 square meters, more or less, only aportion thereof measuring 2,000 square meters, having been sold by their mother to the Sumayas: andthey are therefore the owners of the remaining area of 4,870 square meters which they had in factlong possessed.

The trial court ruled in favor of the Balantakbos, ruling that what was contemplated in thedescriptive words "more or less" immediately following the stated area of 2,000 square meters in thedescription of the land was construable as referring only to a "slight difference" in said area, not to adifference as large as 4,870 square meters, or more than double the 2,000 square meters actuallystated and intended to be sold.

This decision was reversed by the CA, which declared LAGUNA the owner of the entire land,not only of a 2,000-square meter portion thereof, ruling that the area embraced within the statedboundaries prevails over the area set forth in the descriptions which must have been based on mereestimates, and that the buyer was entitled to receive all that was included within the boundaries thusstated in the deed of sale.

Issue:WON between area described; or the actual boundaries of the land should prevail in case of

conflict

Held:It is quite well-settled that what really defines a piece of land is not the area, calculated with

more or less certainty mentioned in the description, but the boundaries therein laid down, as enclosingthe land and indicating its limits.

In the present case, it is clear that the disputed parcel of unregistered land was sufficientlyidentified and described. Uniform descriptions of the subject lot were made in the Deed of Saleexecuted by Balantakbos mother in favor of LAGUNA, wherein the parcel of land was said to be fencedwith madre-cacao trees and bounded on all sides by properties with identified owners or holders.

Moreover, it was only in 1970 that the true area of the disputed property was determined aftera survey, Balantakbos mother could not have sold in 1955 only a portion of the lot which then wasknown (or believed) to have an area of only 2,000 square meters, more or less, as mentioned in all thedocuments covering the land.

This is a case where the land was sold a cuerpo cierto for a lump sum and not at the rate of acertain sum per unit of measure or number, with boundaries clearly delimited, hence the areaembraced within said boundaries must be held to prevail over the area indicated in the documents.Thus, the petition was denied.

Roble vs Arbasa

Facts:The spouses Dominador Arbasa and Adelaida Roble purchased from Fidela Roble an

unregistered parcel of land in Leyte. As reflected on the deed of sale, the property had a total landarea of 240 square meters. Due to their diligent efforts in reclaiming a portion of the sea, thisincreased to 884 square meters.

Adelaida Roble tolerated Fidelas continued stay, as well as their neices, Veronica and Lilibeth,at the house located on the parcel of land.

Shortly after Fidelas death Veronica and Lilibeth claimed ownership of the house and thesouthern portion of the land. Arbasa then filed an action for quieting of title with damages. The trialcourt held that the deed of absolute sale executed by Fidela Roble covered only a total area of 240smin favor of respondents and not the entire 884 sm claimed by respondents. Moreover, the house of


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Fidela was not found on the 240 sms parcel subject of the deed of sale, and such improvement was notincluded in the sale.

Upon appeal to the CA, it was observed rom the wording of the deed ofsale, Fidela Roble sold to respondents the whole parcel of residential land bounded on the southby the seashore. The Court of Appeals opined that this technical description, as contained in thedeed of sale, lent credence to the claim of respondents that they were responsible for reclaiming the

644 square meters claimed by petitioners.

Issue:WON subject matter determinate as to its metes and bounds?

Held:YES, it was determinate upon the sale of the property (described as 240sq.m. more or less) but

since it had acquired area due to reclamation, there is a need to remand the case to the RTC todetermine whether the land is a foreshore land or not.

The sale that transpired on January 2, 1976 between vendor Fidela and vendee Adelaida wasa sale for lump sum. In the sale of real estate, made for a lump sum and not at the rate of a certainsum for a unit of measure or number, there shall be no increase or decrease of the price althoughthere be a greater or lesser area or number than that stated in the contract.

Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch asit is the entirety thereof that distinguishes the determinate object.

However, this rule admits of an exception. A vendee of land, when sold in gross or with thedescription more or less with reference to its area, does not thereby ipso facto take all risk ofquantity in the land. The use of more or less or similar words in designating quantity covers only areasonable excess or deficiency. An area of 644 square meters more is not reasonable excess ordeficiency, to be deemed included in the deed of sale.

RULES IN CASE OF DOUBLE SALE

Paylago vs Jarabe

Facts: The entire lot involved in this suit was originally covered by Homestead Patent issued in thename of Anselmo Lacatan. On his death, a certificate of title was was issued in the name his two sonsand heirs, Vidal and Florentino Lacatan. Vidal Lacatan died sometime later.

Vidal Lacatan's heirs, namely, Maximo, Tomas and Lucia executed a deed of sale in favor of thespouses Paylago, over the eastern portion of the entire lot.

Upon Florentino Lacatans death, his children also executed a deed of salein favor of the samevendees over another portion of the same lot, whose western portion was allocated to the heirs ofVidal Lacatan.

The two deeds of sale were excecuted and the portions of land described were segregated.However, it was disclosed that a portion (one half hectare) of the total area was being occupied by

Jarabe. Hence, the action to recover possession and ownership of the said portion.

The trial court found that the said area had been purchased by the defendants husband,evidenced by an unregistered deed of sale . The defendant was said to have been in continuouspossession of the land and the plaintidds had known this fact, as evidenced by a deed of lease. Thisthe plaintiffs were considered as not purchasers in good faith. It ruled in favor of Jarabe. This decisionwas affirmed in toto by the Court of Appeals.

Issue:


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Who has a better right in case of double sale of real property, the registered buyer or the priorbut unregistered purchaser?

Held: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. Both Courts found thatpetitioners knew beforehand that the parcel of land in question was owned by Jarabe.

Considering that the boundaries of the lands were well defined, the spouses Paylago musthave known that the portion occupied by Jarabe under claim of ownership and leased to them by thelatter was included in the description. Coupled with their knowledge that Jarabe purchased the samefrom Apolonio Lacatan, they should have inquired and made an investigation as to the possible defectsof the title of the Lacatan heirs over the entire lot sold to them, granting that the latter's certificate oftitle was clear. This, they failed to do. They cannot now claim complete ignorance of defendant-respondent's claim over the property.

As was well stated in one case, "a purchaser who has knowledge of facts which should put himupon inquiry and investigation as to possible defects of the title of the vendor and fails to make suchinquiry and investigation, cannot claim that he is a purchaser in good faith and has acquired a validtitle thereto".

To be entitled to the priority, the second vendee must not only show prior recording of hisdeed of conveyance or possession of the property sold, but must, above all, have acted in good faith,that is to say, without knowledge of the existence of another alienation by his vendor to a stranger.Hence, the court affirmed the decision of the CA and trial court.

Hanopol vs Pilapil

Facts:Hanopol claimed ownership of a parcel land by virtue of a series of purchases effected by

means of private instruments, executed by the former owners Siapo. He complained that the vendorstook possession of the said property through fraud, threat and intimidation, pretending falsely to bethe owners thereof and ejecting the Hanopols tenants thereon, and since then had continued topossess the land. Hanopol was declared exclusive owner of the land in question.

However, Pilapil asserted title to the property on the strength of a duly notarized deed of saleexecuted in his favor by the same owners. This was duly registered.

Issue:WON the registration of the second deed of sale in favor of appellee Pilapil affects his right as

the first vendee.

Held:It thus appears that the "better right" referred to in Act No. 3344 is much more than the mere

prior deed of sale in favor of the first vendee. In the Lichauco case just mentioned, it was theprescriptive right that had supervened. Or, as also suggested in that case, other facts andcircumstances exist which, in addition to his deed of sale, the first vendee can be said to have betterright than the second purchaser.

In the case at bar, there appears to be no clear evidence of Hanopol's possession of the land incontroversy. In fact, in his complaint against the vendors, Hanopol alleged that the Siapos tookpossession of the same land under claim of ownership in 1945 and continued and were in suchpossession at the time of the filing of the complaint against them in 1948.

Consequently, since the Siapos were in actual occupancy of the property under claim ofownership, when they sold the said land to Pilapil, such possession was transmitted to the latter, atleast constructively, with the execution of the notarial deed of sale, if not actually and physically asclaimed by Pilapil. Hanopol cannot have a better right than Pilapilwho, "was not shown to be apurchaser in bad faith".


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Agricultural and Home Extension Development Group vs CA

Facts:In 1972, the spouses Diaz sold to Bruno Gundran a parcel of land in Las Pinas. The owner's

duplicate copy was turned over to Gudran. However, he did not register the sale because he wasadvised by the Reg of Deeds of the existence of notices of lis pendens on the title.

In 1972, Gundran and the petitioner entered into a Joint Venture Agreement for theimprovement and subdivision of the land. This agreement was not annotated on the title.

In 1976, the spouses Diaz entered into another contracts of sale of the same property withLibrado Cabautan, the private respondent. By virtue of a court order, the spouses obtained a newowner's copy of the certificate of title and the notices of lis pendens were cancelled and the Deed ofSale in favor of Cabautan was recorded. A new TCT was then issued in the name of Cabautan.

Gundran and the petitioner then filed separate actions for reconveyance, seeking thecancellation of the certificate. The complaints however were dismissed. This was affirmed by the CA

Issue: WON the Cabautan is an innocent purchaser for value and so entitled to the priority grantedunder Art. 1544 of the Civil Code.

Held: It is not disputed that the first sale to Gudran was not registered while the second sale toCabautan was registered. The courts were justified in according preferential rights to the privaterespondent who had registered the sale in his favor, as against the petitioner's co-venturer whose rightto the same property had not been recorder.

The petitioner claims that Cabautan was a purchaser in bad faith because he was fully awareof the notices of lis pendens and of the earlier sale of the land to Gundran.

A purchaser in good faith is defined as "one who buys the property of another without noticethat some other person has a right to or interest in such property and pays a full and fair price for thesame time of such purchase or before he has notice of claim or interest of some other person in theproperty.

Also, an examinatio of the TCT showed no annotation of any sale, lien, encumbrance oradverse claim in favor of Gundran or the petitioner. It is a welll-settled rule that when the property soldis registered under the Torrens system, registration is the operative act to convey or affect the landinsofar as third persons are concerned. Thus, a person dealing with registered land is only chargedwith notice of the burdens on the property which are noted on the register.

Balatbat v. CA

Facts:A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal

union. Maria died in 1966. Ten years later, Aurelio filed a case for partition. The trial court held thatAurelio is entitled to the portion at his share in the conjugal property, and 1/5 of the other half whichformed part of Marias estate, divided equally among him at his 4 children. A transfer certificate wasthen issued by the Register of Deeds of Manila.

On April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and JoseRepuyan, as evidenced by a deed of absolute sale. Aurora then caused the annotation of her affidavitof adverse claim.

However, since the buyers failed to pay the balance of the purchase price, Aurelio filed acomplaint for rescission of contract. In 1982, another deed of absolute sale was executed betweenAurelio and his children, and Clara Balatbat, involving the entire lot. Balatbat filed a motion for theissuance of writ of possession, which was granted by the court, subject to valid rights and interests ofthird persons. Balatbat then filed a motion to intervene in the rescission case, but did not file her


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complaint in intervention. However, the court ruled that the sale between Aurelio and Aurora wasvalid. This was affirmed by the CA hence this petition.

Issue:WON there was a double sale.

Held:

In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share to private respondentsRepuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10)and his children (4/10), represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rulesof Court, on February 4, 1982. Undoubtedly, this is a case of double sale contemplated under Article1544 of the New Civil Code.

Evidently, private respondents Repuyan's caused the annotation of an adverse claim on thetitle of the subject property on July 21, 1980.The annotation of the adverse claim in the Registry ofProperty is sufficient compliance as mandated by law and serves notice to the whole world.

Accordingly, private respondents who first caused the annotation of the adverse claim in goodfaith shall have a better right over herein petitioner. As between two purchasers, the one who hasregistered the sale in his favor, has a preferred right over the other who has not registered his titleeven 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 havepresented the oldest title. Thus, private respondents who acquired the subject property in good faithand for valuable consideration established a superior right as against the petitioner. Hence the petitionwas dismissed.

Caram vs Laureta

Facts:In 1945, Marcos Mata conveyed a large tract of agricultural land in favor of Claro Laureta. The

deed of absolute sale was not registered because it was not acknowledged before any authorizedofficer, since the civil government in Tagum, Davao was not as yet organized.

However, Mata delivered to Laureta possession of the premises of the land together with thepertinent papers such as the Owner's Duplicate Original Certificate of Title, tax declaration, tax

receipts and other papers related thereto. Since then Laureta occupied the land.y

In 1947, the same land was sold by Mata to Fermin Z. Caram, Jr. The deed of sale wasacknowledged. A transfer certificate of title afterwards was issued in favor of Caram.

Laureta then filed an action for nullity, recovery of ownership and/or reconveyance withdamages against Mata and Caram. Mata then answered that the privated deed between them existedbut theis was acquired through duress, threat and intimidation. Mata also denied that he signed adeed of sale in favor of Caram, alleging that his consent was obtained through fraud andmisrepresentation since he was illiterate and that he did not recieve a consideration for the sale. Thetrial court however, ruled in favor of Laureta. This decision was affirmed by the Court of Appeals,hence this petition.

Issue:WON the sale to Laureta prevails over that made in favor of Laureta

Held:The question to be determined now is, who was first in possession in good faith? A possessor in

good faith is one who is not aware that there exists in his title or mode of acquisition any flaw whichinvalidates 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 byforce. Such defect, however, was cured when, after the lapse of four years from the time the


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intimidation ceased, Marcos Mata lost both his rights to file an action for annulment or to set up nullityof the contract as a defense in an action to enforce the same.

The principle that a person dealing with the owner of the registered land is not bound to gobehind the certificate and inquire into transactions the existence of which is not there intimated shouldnot apply in this case. It was known to Carams agents that there were no officials to ratify contracts ofsale and make them registerable. Even if Mata disputed it, such sale could not have been registered.

Applying the principle of agency, Caram as principal, should also be deemed to have acted in badfaith. Hence the first sale over Lauret prevailed over Caram

Taneda vs CA

Facts:Lazaro Taedo executed a deed of absolute sale in favor of his elder brother, Ricardo Taedo

and the latters wife, Teresita Barrera in which he conveyed a parcel of land which he will inherit. Uponthe death of his father, Lazaro executed an affidavit of conformity to reaffirm the said sale. He alsoexecuted 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 discovered that Lazaro sold the same property to his children through a deed ofsale which was recorded in the Register of Deeds. The trial court ruled in favor of of the private

respondents, and this was affirmed by the CA, ruling that the second deed of sale was valid and thatits registration in good faith vested title in said respondents.

Issue:WON the Tanedo spouses acted in good faith in registering the deed of sale, thus passing on to

them the land in question.

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 ofsale made by him in favor of spouses Taedo and another to his children after he already legallyacquired the property.

Thus, although the deed of sale in favor of private respondents was later than the one in favorof petitioners, ownership would vest in the former because of the undisputed fact of registration. Onthe 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 respondentsnever took possession thereof. As between two purchasers, the one who registered the sale in hisfavor has a preferred right over the other who has not registered his title, even if the latter is in actualpossession of the immovable property.

Tanongon vs Samson

Facts:Cayco Marine Service (CAYCO) is engaged in the business of hauling oil. The respondents in

this case were among the employees of CAYCO. They had filed a complaint against CAYCO and Olixzonfor 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. On appeal, it was reversed by the NLRC.

The NLRC then issued a writ of execution directing the collection from CAYCO the award due for eachrespondent.A notice of levy/sale on execution of personal property was afterwards issued, and CAYCOs motortanker was seized, to be sold at public auction.

Doretea Tanongon then filed a third party claim, alleging that she was the owner of the subjectmotor tanker, having acquired the same from the owner of CAYCO. This was dismissed by the Laborarbirter but was reversed by the NLRC. On appeal, the CA then ruled that Tanongon was not a buyer ingood faith, the sale having veen hastily conducted, confirming the respondents suspicion that Olizonhad intended to overcome the enforcement of the Writ of Execution. Hence this Petition.


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Issue:Whether or not petitioner Dorotea Tanongon is a buyer in good faith and for value.

Held:Tanongon is not a purchaser in good faith and for value. It was observed that she, having

known the issuance of the levy, she bought the tanker barely ten days before it was levied upon.

Purchaser in good faith or an innocent purchaser for value is one who buys properly and pays a fulland fair price for it at the time of the purchase or before any notice of some other persons claim on orinterest in it.

Petitioner should have inquired whether Olizon had other unsettled obligations and encumbrances thatcould burden the subject property. Any person engaged in business would be wary of buying from acompany that is closing shop, because it may be dissipating its assets to defraud its creditors.

Consolidated Rural Bank of Cagayan Valley vs CA

Facts:The Madrid brothers were the registered owners of a parcel of land, which was subdivided into

several lots, one of which was sold to Aleja Gamiao and Felisa Dayag. The deed of sale was notregistered. Gamiao and Dayag declared the property for taxation purposes in their names.

Gamiao and Dayag sold the southern half of the lot to Teodoro dela Cruz, and the northern half, toRestituto Hernandez. Later, Hernandez donated the northern half to his daughter, Evangeline delRosario and the children of dela Cruz continued possession of the southern half after their fathersdeath.

Subsequently, in a registered deed of sale, the Madrid brothers conveyed all their rights andinterests over the lot to Pacifico Marquez. Marquez then subdivided the lot into eight and thenmortgaged four of them to the CRB and the Rural Bank of Cagayan to separate loans. These deeds ofreal estate mortgage were registered.

As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of the mortgages inits favor and the lots were sold to it as the highest bidder. Marquez also sold one of the lots to RomeoCalixto.

The Heirds of dela Cruz then filed a case for reconveyance and damages with regards to the

southern part of the land (sold by Gamiao and Dayag), claiming to be null and void the the foreclosuresales; the mortgage to RBC; and the sale to Calixto; against Marquez, Calixto, RBC and CRB.Evangeline del Rosario, the successor-in-interest of Restituto Hernandez, also filed a Complaint inIntervention wherein she claimed the northern portion of the lot.

The trial court then upheld Marquez ownership over the land subject matter, him being thevendee who first registered his sale. This ruling was reversed by the CA, which held that althoughMarquez was the first registrant, there was no showing that the registration of the deed of sale in hisfavor was coupled with good faith. Marquez admitted having knowledge that the subject property wasbeing taken by the Heirs at the time of the sale.

Also, the mortgagees RBC and CRB, merely relied on the certificates of title of the mortgagedproperties. They did not ascertain the status and condition thereof according to standard bankingpractice. For failure to observe the ordinary banking procedure, the CA considered them to have actedin bad faith and on that basis declared null and void the mortgages made by Marquez in their favor.

Issue:WON the rule on double sale is applicable in the case at bar.

Held:

In a situation where not all the requisites are present which would warrant the application of Art.1544, the principle ofprior 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 onewho can invoke this is the first vendee. Undisputedly, he is a purchaser in good faith because at thetime he bought the real property, there was still no sale to a second vendee. In the instant case, thesale to the Heirs by Gamiao and Dayag, who first bought it from Rizal Madrid, was anterior to the sale


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by the Madrid brothers to Marquez. The Heirs also had possessed the subject property first in time.Thus, applying the principle, the Heirs, 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 datquod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyercan acquire no more than what the seller can transfer legally. In this case, since the Madrid brotherswere no longer the owners of the subject property at the time of the sale to Marquez, the latter did notacquire any right to it.

Also, the claim of Marquez still cannot prevail over the right of the Heirs since according to theevidence he was not a purchaser and registrant in good faith. Marquez knew at the time of the salethat the subject property was being claimed or taken by the Heirs. This was a detail which couldindicate a defect in the vendors title which he failed to inquire into. The rule also equally applies tomortgagees of real property. Hence, the petition was denied.

Dela Merced vs GSIS

Facts:

Governor Jose C. Zulueta and his wife were the owners of parcels of land in Antonio Village, PasigCity. They made several loans, as security for which they mortgaged the said lands covered bydifferent TCTs. It was expressly stipulated in the mortgage deed that certain lots within TCT No. 26105shall be excluded from the mortgage because they have been either previously sold to third parties or

donated to the government.The Zulueta spouses then sold to Francisco dela Merced and Evarista Mendoza, several lots

covered by TCT No. 26105 where, a Deed of Absolute Sale was executed.

The Zuluetas defaulted in the payment of their loans. Thus, GSIS extrajudicially foreclosed themortgages and, at the foreclosure sale GSIS was awarded the mortgaged properties as the highestbidder. Since the Zuluetas did not redeem the properties within the reglementary period, title to theproperties was consolidated to GSIS. GSIS then held a sale at public auction of its acquiredassets. Elizabeth D. Manlongat and Ma. Therese D. Manlongat, purchased one of the lots.

A complaint for declaratory relief, injunction and damages, was filed by Victor Lemonsito andseveral others, against Benjamin Cabusao, an officer of the Municipal Task Force on Squatters of theMunicipal Engineers Office of Pasig. They averred that they were owners of houses in various lots inAntonio Village, having constructed the same with the permission of the late Jose C. Zulueta before thesame was foreclosed by GSIS; and that Cabusao was threatening to demolish plaintiffs houses on the

alleged ground that they were squatters on the lots.

Col. dela Merced also instituted an action against GSIS and the spouses Zulueta, praying, amongothers, that the foreclosure sale, insofar as his lots were concerned, be declared null and void. The trialcourt granted his prayer. It also declared as null and void the certificates of title issued to GSIScovering the said lots, as well as sold to the Manlongat spouses. This decision however,was reversedby the CA.

Issue:WON the petitioners have a better right over the properities than GSIS

Held:It was held that the registered right of GSIS as mortgagee of the property is inferior to the

unregistered right of Francisco dela Merced. The unrecorded sale is preferred for the reason that if theoriginal owner had parted with his ownership of the thing sold then he no longer had ownership and

free disposal of that thing so as to be able to mortgage it again. Registration of the mortgage is of nomoment since it is understood to be without prejudice to the better right of third parties.

Also, GSIS admitted it received a letter from dela Merced, stating that he had acquired the subjectlots by virtue of a deed of absolute sale. They also admitted the fact that they replied that Mercedsclaim of ownership over Block 8, Lot 8, of TCT No. 26105 had no problem; but his claim to Lots 6, 7,10 and 11 of Block 2, of the same title, was not very clear. Therefore, GSIS had full knowledge of theclaim of ownership of dela Merced over the aforementioned lots even before their sale at publicauction to Elizabeth Manlongat.


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Also, GSIS had at its disposal vast resources with which it could adequately protect its loan activities,and therefore is presumed to have conducted the usual due diligence checking the actual status,condition, utilization and occupancy of the property offered as collateral. It could not have beenunaware that the property had been built on by small lot buyers.

As to the title of Manlongat, this was derived through sale or transfer from GSIS, whose acquisitionover the property proceeded from a foreclosure sale that was null and void. Since no one can transfer

a greater right to another than he himself has, the subsequent certificates of title of GSIS and ofManlongat over the property are both void, because of the legal truism that the spring cannot risehigher than the source. Hence, the petition was granted.

San Lorenzo Development Corporation vs. CA

Facts:

The Spouses Lu sold two parcelsof land in Laguna to respondent Pablo Babasanta, for the priceof fifteenpesos (P15.00) per square meter. Babasanta made a downpayment of P50,000.00 asevidenced by a memorandumreceipt issued by Pacita Lu on August 1986.

Babasanta wrote a letter to Pacita Lu to demand the execution ofa final deed of sale in his favorso that he could effect fullpayment of the purchase price. He also notified the spouses about havingreceived information that the spouses sold the same property to another without his knowledge andconsent. He demanded that the second sale be cancelled and that a final deed of sale be issued in hisfavor.

Pacita Lu replied that when the balance of the purchase price became due, he requested for areduction of the price and when she refused, Babasanta backed out of the sale. Babasanta then filed acomplaint for specific performance and damages against them.

Thereafter, SLDC filed a Motion for Intervention, alleging that the parcels of land had been sold toit in May1989, in aDeed of Absolute Sale with Mortgage. It alleged that it was abuyer in good faith andfor value and therefore it had a betterright over the property in litigation. SLDC also argued that it hadno obligation to look beyond the titles submitted to it by the Spouses Lu particularly becauseBabasantas claims were not annotated on the certificates of title at the time the lands were sold to it.

The trial court ruled that since both Babasanta and SLDC did not register the respective sales intheir favor, ownership of the property should pertain to the buyer who first acquired possession of theproperty. The trial court equated the execution of a public instrument in favor of SLDC as sufficientdelivery of the property to the latter. It concluded that symbolic possession could be considered tohave been first transferred to SLDC and consequently ownership of the property pertained to SLDCwho purchased the property in good faith. Upon appeal, the CA set aside the judgement of the trialcourt, and declared the first sale as valid and subsisting. Hence, this petition.

Issue:

Who between SLDC and Babasanta has a better right over the two parcels of land subject of the

instant case in view of the successive transactions executed by the Spouses Lu.

Held:The court held that the agreement between Babasanta and the Spouses Lu is a contract to sell

and not a contract of sale. The perfected contract to sell imposed upon Babasanta the obligation topay the balance of the purchase price. Babasanta should have made the proper tender of paymentand consignation of the price in court as required by law, which he failed to do. Mere sending of aletter by the vendee expressing the intention to pay without the accompanying payment is notconsidered a valid tender of payment.


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