Art. 1535.

Subject to the provisions of this Title, the unpaid sellers right of lien or stoppage in transitu is not affected by any
sale, or other disposition of the goods which the buyer may have made, unless the seller has assented thereto.
If, however, a negotiable document of title has been issued for goods, no sellers lien or right of stoppage in transitu shall
defeat the right of any purchaser for value in good faith to whom such document has been negotiated, whether such negotiation
be prior or subsequent to the notification to the carrier, or other bailee who issued such document, of the sellers claim to a lien
or right of stoppage in transitu.
Effect if Buyer Has Already Sold the Goods
Generally, the unpaid sellers right of LIEN or STOPPAGE IN TRANSITU remains even if the buyer has sold or otherwise disposed of
the goods.
Exceptions:
1)

When the seller has given his consent thereto.

2)

When the purchaser or the buyer is a purchaser for value in good faith of a negotiable document of title.

Art. 1536. The vendor is not bound to deliver the thing sold in case the vendee should lose the right to make use of the
term as provided in article 1198.
When Seller is Not Bound to Deliver Because Buyer has Lost the Benefit of the Term
Under Art. 1198, the debtor shall lose every right to make use of the period:
(a)

When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the
debts;

(b)

When he does not furnish to the creditor the guaranties which he has promised;

(c)

When by his own acts he has impaired said guaranties or securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;

(d)

When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;

(e)

When the debtor attempts to abscond.

In the cases enumerated, the vendor is not bound to deliver.

Example
A purchased goods from B. A promised to give certain securities, as a result of which, A was given one year within which to pay. A
failed to give the securities. Can B be compelled to deliver?
ANS.: No. (Of course, if B so desires, he may voluntarily deliver.)

Art. 1537. The vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they
were upon the perfection of the contract.
All the fruits shall pertain to the vendee from the day on when the contract was perfected.
Accessions and accessories
Example of accession: Fruits
Example of accessories: In the sale of a car, the jack is considered an accessory.
Duty to Preserve
This article implicitly reiterates the duty of the seller to PRESERVE. Naturally, a fortuitous event excuses the seller. But since a
fortuitous event is never presumed, the loss of the property because of such event is naturally to be proved by the seller.
Right to the Fruits
Although under the second paragraph fruits shall pertain to the buyer from the date of perfection, it is evident that a contrary
stipulation may be agreed upon, or a later date may be set. The term fruits here includes natural, industrial and civil fruits.

Art. 1538. In case of loss, deterioration or improvement of the thing before its delivery, the rules in article 1189 shall be
observed, the vendor being considered the debtor.
Effect of Loss, Deterioration or Improvement Before Delivery
This reiterates the rule that from time of perfection to delivery, risk is borne by the buyer.
Article 1189
When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give, the following rules
shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when
it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be recovered;
(3)

When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;

(4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and its
fulfillment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.

Art. 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned
in the contract, in conformity with the following rules.
If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or
number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the
contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the
rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the immovable is not of the quality specified in the
contract.
The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing sold exceeds
one-tenth of the price agreed upon.
Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area or inferior quality, he
may rescind the sale.
Sale of Real Estate By the Unit
(a) This refers to the sale of real estate by the unit. Hence, if A buys from B a piece of land supposed to contain 1,000 square meters
at the rate of P10,000 per square meter, but the land has only 800 sq.m., the additional 200 must be given to A should A demand
them. If this cannot be done, A may pay only P8 million (for the 800 sq.m.) or rescind the contract.
(b) If in the above example, there are only 950 square me-ters, can A ask for rescission?
ANS.: As a rule no, because the lack is only 50 square meters. (The lack must be at least 1/10 of the area stated.) However, if A would
not have bought the land had he known of its smaller area, he may rescind the sale.
NOTE: The one-tenth part referred to in the article applies to 1/10 of the area stated in the contract, not to 1/10 of the true or actual
area. This is evident because of the wording of the law area stated.
Unit Price Contract
Virgilio Dionisio v. Hon. Vicente Paterno
L-49654, Feb. 26, 1981
If a contract is a unit price contract (as distinguished from a lump sum contract) payment will be made only on the basis of
contractual items actually performed, in accordance with the given plans and specifications.
In such a unit price contract, the amount agreed upon is generally merely an estimate, and may be reduced or increased
depending upon the quantities performed multiplied by the unit prices previously agreed upon. For a unit price formula to be
applied, there must be a stipulation to such effect. Incidentally, a contractor may not be awarded a compensation for his services,
arising from a price adjustment due to inflation.

Art. 1540. If, in the came of the preceding article, there is a greater area or number in the immovable than that stated in the
contract, the vendee may accept the area included in the contract and reject the rest. If he accepts the whole area, he must pay
for the same at the contract rate.
Rule When Actually the Area or Number is Greater
Example
A buys from B a piece of land supposed to contain 1,000 square meters at the rate of P10,000 a square meter. But the land really
contains 1,500 square meters. What can A do?
ANS.: A may accept 1,000 square meters and reject the extra 500, in which case he will pay only P10 million. However, A is also
allowed to accept all of the 1,500 square meters, but he must pay P15 million. A is in no case allowed to rescind the contract, for
such a remedy is not allowed him under this article.

Art. 1541. The provisions of the two preceding articles shall apply to judicial sales.
The Rule in Judicial Sales
Note that Arts. 1540 and 1541 apply to judicial sales.

Art. 1542. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or
number, there shall be no increase or decrease of the price, although there be a greater or less area or number than that stated in
the contract.
The same rule shall be applied when two or more immovables 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 is included within said boundaries, even when it exceeds the area or number
specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is
lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what
has been stipulated.

Sale for a Lump Sum (A Cuerpo Cierto)

Here, the sale is made for a lump sum (a cuerpo cierto or por precio alzado) not at the rate per unit.
Example
A buys a piece of land from B at the lump sum of P10 million. In the contract, the area is stated to be 1,000 square meters. The
boundaries are of course mentioned in the contract. Now then it was discovered that the land within the boundaries really contains
1,500 square meters. Is B bound to deliver the extra 500?
ANS.: Yes. Furthermore, the price should not be increased. This is so because B should deliver all which are included in the
boundaries. If B does not deliver the remaining 600, A has the right
(a) either to rescind the contract for the sellers failure to deliver what has been stipulated, or
(b)

to pay a reduced proportional price, namely 2/3 of the original price. This is so because he really gets only 2/3 of the
land included within the boundaries (1,000 sq.m. out of 1,500 sq.m.).

Another Example
A buys a piece of land a cuerpo cierto (for a lump sum). The contract states a certain number of square meters but the land included
in the boundaries happen to be LESS.
(a) Is A entitled to rescind?
ANS.: No.
(b) Is A entitled to pay a reduced price?
ANS.: No.
The Civil Code presumes that the purchaser had in mind a determinate piece of land and that he ascertained its area and quality
before the contract was perfected. If he did not do so, or if having done so, he made no objection and consented to the transaction,
he can blame no one but himself.
Delivery of All the Land Included in the Boundaries
What is important is the delivery of all the land included in the boundaries:
(a) If this is done, there is compliance with the contract and the greater or lesser area is immaterial. So apply paragraph 1 of this
article.
(b) If this is not done, there is really no faithful compliance with the contract and so paragraph 2 should be applied. (Azarraga v.
Gay, 52 Phil. 599).
Effect of Gross Mistake
Regarding paragraph 1, although ordinarily there can be no rescission or reduction or increase whether the area be greater or lesser,
still there are instances in which equitable relief may be granted to the purchaser as where the deficiency is very great, for under
such circumstances, GROSS MISTAKE may be inferred. (Asiain v. Jalandoni, 45 Phil. 296 and Garcia v. Velasco, 40 O.G. No. 2, p. 268).

Effect if Buyer Took the Risk as to Quantity

In one case, the Court was satisfied that although the shortage amounts to practically one-fourth of the total area, the purchaser
clearly intended to take risk of quantity, and that the area has been mentioned in the contract merely for the purpose of description.
From the circumstances that the defendant, before her purchase of the fishpond, had been in possession and control thereof for
two years as a lessee, she can rightly be presumed to have acquired a good estimate of its value and area, and her subsequent
purchase thereof must have been premised on the knowledge of such value and area. Accordingly, she cannot now be heard to
claim a equitable re-auction in the purchase price on the pretext that the property is much less than she thought it was.
Meaning of More or Less
The phrase more or less or others of like import added to a statement of the quantity, can only be considered as covering
inconsiderable or small differences one way or the other. The use of such phrases in designating the quantity covers only a
reasonable excess or deficiency.

Art. 1543. The actions arising from Articles 1639 and 1642 shall prescribe in six months, counted from the day of delivery.
Prescriptive Period
Note that 6 months is the period of prescription.

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 the possession; and
in the absence thereof, to the person who presents the oldest title, provided there is good faith.
COMMENT:
Rules of Preference in Case of Double Sale
(a) Personal property possessor in good faith.
(b) Real property
1) registrant in good faith;
2) possessor in good faith;
3) person with the oldest title in good faith.
NOTE:
(a) Registration here requires actual recording: hence, if the property was never really registered as when the registrar forgot to do
so although he has been handed the document, there is no registration. (Po Sun Tun v. Price, 54 Phil. 192). The rule as to
registration covers all kinds of immovables, including land, and makes no distinction as to whether the immovable is registered
under the Land Registration Law (with therefore a Torrens Title) or not so registered. But insofar as said registered lands are
concerned, Art. 1544 is in perfect accord with the Land Registration Act, Sec. 50 of which provides that no deed, mortgage,
lease, or other voluntary instrument except a will, purporting to convey or to affect registered land shall take effect as a conveyance or bind the land until the registration of such deed or instrument. (Revilla, et al. v. Galindez, L-9940, Mar. 30, 1960). Thus,
as to lands, covered by a Torrens Certificate of Title, a deed of sale is considered registered from the moment it is entered or
recorded in the entry or day book of the Register of Deeds.
(Levin v. Bass, L-4340, May 25, 1952, reversing Bass v. De la Rama, 1 O.G. 889). If the land is registered under the Land Registration
Act (and has therefore a Torrens Title), and it is sold but the subsequent sale is registered not under the Land Registration Act but
under Act 3344, as amended, such sale is not considered REGISTERED, as the term is used under Art. 1544. A mere anotacion
preventiva (preventive precautionary notice) is not equivalent to registration, unless within 30 days thereafter there is made an
actual recording. Such a preventive notice is good only against subsequent (not prior) transferees, and even here for only 30 days.
(Mendoza v. Kalaw, 42 Phil. 236). The registration of a forged deed of sale cannot of course grant the preference adverted to in this
Article inasmuch as among other things, there was no good faith. (See Espiritu v. Valerio, L-18018, Dec. 26, 1963).
(b) Possession here is either actual or constructive since the law makes no distinction. (Sanchez v. Ramos, 40 Phil. 614).
(c) Title in this Article means title because of the sale, and not any other title or mode of acquiring property. Hence, as between a
buyer-possessor whose possession has ripened to ownership because of prescription, and a registrant in good faith, the
possessor-owner is naturally preferred. (Lichauco v. Berenguer, 39 Phil. 642).
(d) Note that in all the rules there must be good faith; otherwise, the order of preference does not apply. (Romeo Paylago and
Rosario Dinaan-dal v. Ines Pastrana Jorabe and the Court of Appeals, L-20046, Mar. 27, 1968). A purchaser in good faith is one
who buys the property of another without notice that some other person has a right to, or interest in such property, and pays a
full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other
person in the property. (Cui and Joven v. Henson, 51 Phil. 612; Inquimboy v. Paez Vda. de la Cruz, L-13953, May 26, 1960).
A person for example who buys land which he knows has already been promised to another is a purchaser in bad faith. (Ramos v.
Dueno, 50 Phil. 786).
Good faith, however, is presumed. (Emus v. De Zuzuarregui, 53 Phil. 197). In order that a purchaser of land with a Torrens Title may
be considered as a purchaser in good faith, it is enough that he examines the latest certificate of title which, in this case, is that
issued in the name of the immediate transferor. (Hern-andez v. Katigbak Vda. de Salas, 69 Phil. 744; Flores, et al. v. Plasina, et al., L5727, Feb. 12, 1954; Revilla, et al. v. Galindez, L-9940, Mar. 30, 1960). The purchaser is not bound by the original certificate of title

but only by the certificate of title of the person from whom he has purchased the property. (Caas, et al. v. Tan Chuan Leong, et al.,
L-14594, Nov. 29, 1960).
However, where two certificates of title are issued to different persons covering the same land in whole or in part, the earlier in date
must prevail as between original parties, and in case of successive registrations, where more than one certificate is issued over the
land, the person holding under the prior certificate is entitled to the land as against the person who relies on the second certificate.
The purchaser from the owner of the later certificate and his successors should resort to his vendor for redress, rather than molest
the holder of the first certificate and his successors, who should be permitted to rest secure in their title. (Felix de Villa v. Anacleto
Trinidad, et al., L-24918, Mar. 20, 1968, citing Legarda v. Saleeby, 31 Phil. 590).
Remalate v. Tibe
GR 59514, Feb. 25, 1988
Where the same parcel of land was allegedly sold to two different persons, Art. 1544 will not apply, despite the fact that one deed of
sale was registered ahead of the other, if the deed first registered is found to be a forgery and, thus, the sale to the other vendee
should prevail.
This Article does not apply to subsequent judicial attachments, or executions which should not prevail over prior unregistered sales
where possession had already been conveyed by the execution of a public instrument (See Fabian v. Smith, Bell and Co., 8 Phil. 496;
see also Aitken v. Lao, 36 Phil. 510), nor to instances where the double sale was not made by the same person or his authorized
agent (Carpio v. Exevea, 38 O.G. No. 65, p. 1336), nor to one where one sale was an absolute one but the other was a pacto de retro
transaction where the period to redeem has not yet expired (See Teodosio v. Sabala, et al., L-11522, Jan. 31, 1957), nor to one where
one of the sales was one subject to a suspensive condition which condition was not complied with. (Mendoza v. Kalaw, 42 Phil. 236).
(e) The Article, however, applies to a double donation (Cagaoan v. Cagaoan, 43 Phil. 554) and to sales made by a principal and his
agent of the same property.
[NOTE: In a Court of Appeals case, however, it was held that the article does not apply where property is first donated, then sold.
(Se-mana, et al. v. Goyena, {C.A.} 49 O.G. 2897).]
(f) Reason for the rule on preference:
True, no one can sell what he does not own, but this is merely the general rule. Is Art. 1544 then an exception to the general rule? In
a sense, yes, by reason of public convenience (See Aitken v. Lao, 36 Phil. 510); in still another sense, it really reiterates the general
rule in that insofar as innocent third persons are concerned, the registered owner (in the case of real property) is still the owner,
with power of disposition.
Caram, Jr. v. Laureta
L-28740, Feb. 24, 1981
The second buyer of a parcel of land alleged that his purchase had been made in good faith, because he did not know it had been
previously bought by another. Is this enough to prove good faith in the purchase? No, because he had knowledge of circumstances
which ought to have put him on inquiry. For instance, the first buyer was already on the land when the second buyer came along.
The second buyer should have investigated the nature of the first buyers possession. Since he failed to exercise the ordinary care
expected of a buyer of real estate, he must suffer the consequences.

Illustration of Rules as to Personal Property

In the case of Tomasi v. Villa-Abrille, L-7404, Aug. 21, 1958, the Surplus Property Commission sold to a buyer all the movable goods
in a base area in Guiuan, Samar. The buyer then immediately took possession of all the movable properties located within the area.
Subsequently, however, the Commission also sold to another the same properties in the same area.
The second buyer then led suit to have himself declared the owner of the properties entitled to the possession of the same. The
Supreme Court ruled in favor of the first buyer because it was he who had first taken possession in good faith of the properties.
Illustration of Rules as to Real Property
A sold land to B. Subsequently, A sold the same land to C who in good faith registered it in his name. Who should be considered the
owner?

ANS.: C in view of the registration in good faith.

Cases
DBP v. Mangawan, et al.
L-18861, Jun. 30, 1964
FACTS: A sold his land to two different parties at different times, selling it first to X under Original Torrens Certificate of Title 100. X
had this title cancelled and a transfer Certificate of Title was issued in his name. Subsequently, A sold the same land under a
different Certificate of Title to Y. Which of the two buyers is to be preferred?
HELD: This is a case of double sale, and clearly, X the first buyer who registered the land in his name, ought to be preferred.
Astorga v. Court of Appeals
L-58530, Dec. 26, 1984
The second buyer of property (real estate) is preferred over the first buyer if the second buyer was the first to register the property
in good faith in the Registry of Deeds.
Po Sun Tun v. Price
54 Phil. 192
FACTS: A sold land to X who then went to the Registry of Property. X gave the deed of sale for registration, was given a receipt
therefor, but unfortunately, the Registrar for one reason or another was not able to actually record the deed. Subsequently, A sold
the same land to Y, a purchaser in good faith. Y had the land registered in his name. Issue: Who is now the owner?
HELD: Y, in view of the registration in good faith.
The sale in favor of X was never actually registered. The Court held: Where a piece of real property is first sold to a person who only
secures a receipt for the document evidencing the sale from the office of the register of deeds, and where the piece of property is
later sold to another person who records his documents in the Registry of Deeds as provided by law, and secures a Torrens Title the
property belongs to the latter.
NOTE: The mere presentation to the Office of the Registry of a document on which acknowledgment of receipt is written is not
equivalent to recording the property. Escriche says that registration in its juridical aspect must be understood as the entry made in
the book or public registry of deeds.
Soler and Castillo say:
Registration in general as the law uses the word means any entry made in the books of the Registry, including both registration in
its ordinary and strict sense, and cancellation, annotation, and even the marginal notes. In its strict ac-ceptation, it is the entry made
in the Registry which records solemnly and permanently the right of ownership and other real rights. (Diccionario de Legislacion
Hipotecaria y Notarial, Vol. II, p. 185).
Victoriano Hernandez v. Macaria Katigbak Viuda de Salas
69 Phil. 744
FACTS: Leuterio sold in 1922 a parcel of registered land (with a Torrens Title) to Villanueva. The deed of sale was however never
registered. In 1926, a creditor of Leuterio named Salas Rodriguez sued Leuterio for recovery of the debt, and a writ of execution was
levied on Leuterios land (the same lot that had been sold to Villanueva). Salas Rodriguez did not know of this sale. Upon the other
hand, the levy on execution was duly registered. One month after this registration of the levy, Villanueva led a third-party claim. The
very next day, the execution sale was made and Salas Rodriguez was the highest bidder. Issue: Who should be considered the owner
of the land Salas or Villanueva?
HELD: Salas Rodriguez should be considered as the owner because of the following reasons:
(a) It is a well-settled rule that, when the property sold on execution is registered under the Torrens system, registration is the
operative act that gives validity to the transfer or creates a lien on the land, and a pur-chaser on execution sale, is not required
to go behind the registry to determine the conditions of the property. Such purchaser acquires such right, title, and interest as
appearing on the certificate of title issued on the property, subject to no liens, encumbrances or burdens that are noted

thereon. Be it observed that Villanuevas right was never registered nor annotated on the Torrens Certificate.
(b) The doctrine in Lanci v. Yangco (62 Phil. 563), which purports to give effect to all liens and encumbrances existing prior to the
execution sale of a property registered under the Torrens System even if such liens and encumbrances are not noted in the
certificate of title (on the theory that if, for example, a previous sale had been made by the registered owner, he can no longer
convey what he does not have) has been ABANDONED by the Supreme Court. (See Philippine National Bank v. Camus, L-46870,
Jun. 27, 1940).
(c) The only exception to the rule enunciated in (a) is where the purchaser had knowledge, prior to or at the time of the levy, of
such previous lien or encumbrance. In such case, his knowledge is equivalent to registration, and taints his purchase with bad
faith. (Gustilo v. Ma-ravilla, 48 Phil. 442; La Urbana v. Bernardo, 62 Phil. 790; 23 C.J. Sec. 812; Parsons Hardware Co. v. Court of
Appeals, L-46141). But if knowledge of any lien or encumbrance upon the property is acquired after the levy, the purchaser
cannot be said to have acted in bad faith in making the purchase, and, therefore, such lien or encumbrance cannot affect his
title.
(d) In the present case, the third-party claim was filed one month after the levy was recorded. The validity of the levy as recorded.
The validity of the levy is thus unaffected by any subsequent knowledge which the judgment creditor might have derived from
the third-party claim. The fact that this third-party claim was presented one day before the execution sale, is immaterial. If the
levy is valid, as it was, the execution sale made in pursu-ance thereof is also valid, just as a mortgage lien validly constituted may
validly be foreclosed regardless of any equities that may have arisen after its constitution.
Query
A sold a parcel of land with a Torrens Title to B on Jan. 5. A week later, A sold the same land to C. Neither sale was registered. As
soon as B learned of the sale in favor of C, he (B) registered an adverse claim stating that he was making the claim because the
second sale was in fraud of his rights as first buyer. Later, C registered the deed of sale that had been made in his favor. Who is now
the owner B or C?
ANS.: C is clearly the owner, although he was the second buyer. This is so, not because of the registration of the sale itself but
because of the AUTOMATIC registration in his favor caused by Bs knowledge of the _rst sale (actual knowledge be-ing equivalent to
registration). The purpose of registration is to notify. This noti_ cation was done because of Bs knowledge. It is wrong to assert that
B was only trying to protect his right for there was no more right to be protected. He should have registered the sale BEFORE
knowledge came to him. It is now too late. It is clear from this that with respect to the principle actual knowledge is equivalent to
registration of the sale about which knowledge has been obtained the knowledge may be that of either the FIRST or the SECOND
buyer.
Problem
X orally appointed Y as his agent to sell a parcel of land. On Sept. 30, 2004, Y sold the land to A who forthwith took possession
thereof. It turned out, however, that on Sept. 25, 2004, X without informing Y, had already sold the same land to B who up to now
has not yet taken possession thereof. Neither A nor B has registered his purchase. Whose contract should prevail? Reason.
ANS.: The contract of X with B will prevail, for he has title while A has no title. It is true that A first took possession, but it should be
noted that the sale to A was null and void, inasmuch as Ys authority to sell the land was not in writing. (Art. 1874, Civil Code).
Cases
Manuel Buason, et al. v. Mariano Panuyas
L-11415, May 25, 1959
FACTS: Mr. and Mrs. Dayao authorized, by a special power of attorney, Mr. Bayuga to sell some parcels of land. Four years later, Mr.
Dayao died and his children sold said parcels to Mr. and Mrs. Buason in a public instrument which was not recorded in the Registry
of Property. Several years later, Mr. Bayuga, by virtue of the power of attorney in his favor, sold the same parcels in favor of Mr. and
Mrs. Panuyas.
Mr. Bayuga did not know that Mr. Dayao had already died. The power of attorney executed by Mr. Dayao authorizing Mr. Bayuga
had been annotated on the back of the Torrens Certificate of Title of the lands.
The sale in favor of Mr. and Mrs. Panuyas was similarly registered and annotated. Issue: Who should be considered the owner of the
parcels of land?

HELD: Mr. and Mrs. Panuyas are the owners of the parcels of land for while their purchase thereof came later, still they have in their
favor registration of the sale in good faith. While it is true that at the time of the sale to them by the agent, the principal, Dayao, was
already dead; and while it is true that generally, the death of the principal extinguishes the agency; still under the law of agency
anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is
valid and shall be fully effective with respect to third persons who may have contracted with him in good faith. (Art. 1738, old Civil
Code; Art. 1931, new Civil Code).
Sanchez v. Ramos
40 Phil. 614
FACTS: A sold land to B and C with the right to re-purchase. The sale was in a public instrument which was not registered, and B and
C never took physical or material possession of said land. The period for repurchase elapsed without A repurchasing the property.
Later, A sold the same land to D in a private instrument. D was in good faith, and he immediately entered into the material
possession of the land. Who should be preferred, B and C on the one hand, or D on the other hand?
HELD: B and C should be preferred. The question should be resolved by inquiring as to who had prior possession. B and C had this
possession, although merely symbolical or constructive, for the possession referred to in this article includes not only material
possession but also symbolic or constructive possession, which can be acquired by the execution of a public document.
NOTE: Where there is no double sale of real property because one is an absolute sale while the other is one con pacto de retro
with the stipulation that upon the expiration of the period to redeem, the buyer will not become the owner, but instead another
document of pacto de retro will be ex-ecuted, Art. 1644 does not apply. (Teodosio v. Sabala, et al., L-11522, Jan. 31, 1957). It should
be observed that in the case of Sanchez v. Ramos, supra, the sale a retro had already become an absolute one, with the expiration of
the period of repurchase.
Aviles v. Arcega
44 Phil. 924
FACTS: Land was sold to A in a public instrument which stated that delivery would be after 4 months. Same land was sold to C who
took actual material possession. Who should be preferred?
HELD: C should be preferred because A did not even have symbolic or constructive possession since the contract itself stated
implicitly that possession was NOT at that time being transferred.
Soriano, et al. v. Heirs of Magali
L-15133, Jul. 31, 1963
FACTS: A parcel of land was registered under the Land Registration Law in the name of A who therefore had a Torrens Title thereto.
In 1939, he sold the land to B, which sale was never registered. In 1941, B sold the land to C, which sale was also not registered. In
1944, C sold the land to A, but instead of executing a formal deed of sale, he merely delivered to A the muniments of the title over
the land. In accordance with said oral sale, A took possession of the land, continuing to do so up to the present, and paying the real
tax thereon. In the meantime, C died. In 1946, Cs widow sold the land to D, the plaintiff in this case. This sale to D was registered
under the provisions of Act 3344 (dealing with transactions over unregistered lands).
This is now an action led by D against the heirs of A for the recovery of the said parcel of land.
Issue: Who should get the land?
HELD: The heirs of A get the land, A having obtained possession of the land in good faith in 1944. D never did. Moreover, the
registration by D of the sale in his favor was made under Act 3344, as amended and not under the Land Registration Act.
Bautista v. Sioson
39 Phil. 615
FACTS: S sold land to B. Then S became Bs tenant. Subsequently, S sold the same property to C. Neither sale was registered. Who
should be the owner, B or C?

HELD: B is the owner. Art. 1544 does not apply because it applies only when one owner sold to two or more persons. Here, S had
long ceased to be the owner for B had already acquired full dominion over the property. (See also Lichauco v. Berenguer, 39 Phil.
643).
Cruzado v. Bustos and Escobar
34 Phil. 17
FACTS: A sold his land to B who began to possess it. Later, C, a stranger, sold the same land to D who in good faith registered the
sale. Who should be considered as the owner?
HELD: B should be considered the owner even if he did not register the land because D who registered the sale did not buy the land
from A. Art. 1544 does not apply for here, in this case, we have two (not one) sellers.
(NOTE: Had C been the authorized agent of A, Art. 1544 would have applied, for then C would have been representing his principal,
A.)
Carpio v. Exevea (C.A.)
38 O.G. 1356
FACTS: A sold his land to B. Later, A sold the same land to C. B in turn sold the same land to D, who took pos-session of the land in
good faith. C, a purchaser in good faith, registered the sale of the land in his favor. Issue: Who is now the owner of the land?
HELD: D is the owner. The rule in the Civil Code (Art. 1544) should be applied only when two buyers (or more) (C and D) bought the
same property from the same person. In this case, there were two (2) different sellers (A and B), one of whom (A) had long before
disposed of his rights as owner of the land.

Section 3
CONDITIONS AND WARRANTIES
Art. 1545. Where the obligation of either party to a contract of sale is subject to any condition which is not performed, such
party may refuse to proceed with the contract or he may waive performance of the condition. If the other party has promised
that the condition should happen or be performed, such first mentioned party may also treat the non-performance of the
condition as a breach of warranty.
Where the ownership in the thing has not passed, the buyer, may treat the fulfillment by the seller of his obligation to
deliver the same as described and as warranted expressly or by implication in the contract of sale as a condition of the obligation
of the buyer to perform his promise to accept and pay for the thing.

COMMENT:
Presence of Conditions and Warranties
(a) Conditions may be waived.
(b) Conditions may be considered as warranties.

Art. 1546. Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the naturel
tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchases the thing relying
thereon. No affirmation of the value of the thing, nor any statement purporting to be a statement of the sellers opinion only,
shall be construed as a warranty, unless the seller made such affirmation or statement as an expert and it was relied upon by the
buyer.
COMMENT.
When is There a Warranty?
A good test:
(a) If buyer is ignorant, there is a warranty.
(b) If the buyer is expected to have an opinion AND the seller has no special opinion, there is no warranty. (Spencer Heater Co. v.
Abbot, 91 N.J.L-594, 104 Atl. 91).

[NOTE: Express warranty defined It is any affirmation of fact, or any promise by the seller relating to the thing if the natural
tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer purchases the thing relying
thereon. (Art. 1546, 1st sentence). It includes all warranties de-rived from the language of the contract, so long as the language is
express. Thus, the warranty may take the form of an affirmation, a promise or a representation. (Parish v. Kotthoff, 128 Ore. 523).]
[NOTE: If a purchaser has ample opportunity to investigate the land before purchase, and the seller did not prevent such an
investigation, and the purchaser really investigates, then the purchaser is not allowed afterwards to say that the vendor made false
represen-tations to him. (Azarraga v. Gay, 5 Phil. 599).]
Effect of Dealers Talk
Dealers talk like excellent, cannot be considered as an express warranty. A little exaggeration is apparently allowed by the law as a
concession to human nature. This is in accordance with the civil law maxim simplex commendatio non-obligat or the principle
caveat emptor (let the buyer beware).
Rule When There Is No Deliberate Lie
Where it does not appear that the seller deliberately violated the truth when he stated his belief that there were a certain number
of coconut trees on the land, no action will lie against him. (Gochangco v. Dean, 47 Phil. 687).

Art. 1547. In a contract of sale, unless a contrary inten-tion appears, there is:
(1) An implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to
pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing;
(2) An implied warranty that the thing shall be free from any hidden faults or defects, or any charge or encum-brance not
declared or known to the buyer.
This article shall not, however, be held to render liable a sheriff, auctioneer, mortgagee, pledgee or other person professing
to sell by virtue of authority in fact or law, for the sale of a thing in which a third person has a legal or equitable interest.
COMMENT:
Implied Warranties Against Eviction and Against Hidden Defect
(a) This Article is fundamentally important.
(b) A buyer at a tax sale is supposed to take all the chances because there is no warranty on the part of the State
(Govt v. Adriano, 41 Phil. 1121) and a sheriff does not guarantee title to the property he sells. (Mun. of Albay v. Benito, et al., 43
Phil. 576).
(c) In general, the actions based on the implied warranties prescribe in 10 years since these obligations are imposed by law. (See
Phil. Nat. Bank v. Lasos, [C.A.] 40 O.G. [Supp. 5], p. 10). Special provisions, of course, found in the succeeding articles will naturally
prevail.
Republic of the Phils. v. Hon. Umali
GR 80687, Apr. 10, 1989
If a person purchases a piece of land on the assurance that the sellers title thereto is valid, he should not run the risk of being told
later that his acquisition was ineffectual after all. The further consequence would be that land conflicts could be even more
numerous and complex than they are now and possibly also more abrasive if not even violent.

Subsection 1
WARRANTY IN CASE OF EVICTION
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, dimin-ish, or suppress this legal obligation of the vendor.
COMMENT:
Warranty in Case of Eviction
(a) The warranty in case of eviction is a natural element in the contract of sale; hence, the vendor answers for eviction even if the
contract be silent on this point.
(b) The buyer and the seller are, of course, allowed to add to, subtract from, or suppress this legal obligation on the part of the
seller. Thus, it has been held that the vendors liability for warranty against eviction in a con-tract of sale is generally waivable
and may be renounced by the vendee. (See Arts. 1533-1634, Civil Code; see also Andaya v. Manansala, L-14714, Apr. 30, 1960).
(c) Although it is true that the government is not liable for the eviction of the purchaser at a tax sale (Govt. v. Adriano, supra), still
the owner of the property sold under execution at the instance of the judgment credi-tor is liable for eviction, unless otherwise
decreed in the judgment. (Art. 1662, Civil Code).
(d) The buyer is allowed to enforce the warranty against the seller or against the sellers of his own immediate seller. (De la Riva v.
Escobar, 5 Phil. 243).
(e) Even if the buyer does not appeal from a judgment order-ing his eviction and the judgment subsequently becomes _nal, the
seller is still liable for the eviction. (Canizares v. Torrejon, 21 Phil. 127).
(f) Even if it was the buyer who instituted the suit against the third person, still the seller would be liable, if the buyer is defeated.
What is important is that the buyer was defeated. (Manresa).
Sellers Fault
Generally, all rights acquired prior to the sale by oth-ers can be imputed to the seller. But imputability or fault is really important:
hence, seller is still liable even if the act be made after the sale.
Example: B bought land from S. B did not register. C then bought same land from S. C registers. B is defeated. Can B hold S liable for
the eviction although Cs right came after the sale to him?
ANS.: Yes, because although it came after the sale yet it was attributable to Ss own fault and bad faith. (Manresa).
Responsibility of Seller
The seller is responsible for:
(a) his own acts;
(b) those of his predecessors-in-interest. (Manresa). He is not responsible for dispossession due to:
(a) acts imputable to the buyer himself;
(b) fortuitous events.
Essential Elements for Eviction
(a) There is a final judgment;

(b) The purchaser has been deprived in whole or in part of the thing sold;
(c) The deprivation was by virtue of a right prior to the sale (or one imputable to the seller) effected by the seller;
(d) The vendor has been previously noti_ ed of the complaint for eviction at the instance of the purchaser. (Bautista, et al. v. Lasam,
et al., 40 O.G. No. 9, p. 1825 and Canizares Tiana v. Torrejon, 21 Phil. 127).
Plaintiff in Suit
In general, it is only the buyer in good faith who may sue for the breach of warranty against eviction. If he knew of possible dangers,
chances are that he assumed the risk of eviction. (Aspiras v. Galuan, [C.A.] 53 O.G. 8854).
Defendant in Suit
In a proper case, the suit for the breach can be directed only against the immediate seller, not sellers of the seller unless such sellers
had promised to warrant in favor of later buyers (TS, Dec. 26, 1896) or unless the immediate seller has expressly assigned to the
buyer his own right to sue his own seller. (De la Riva v. Escobar, 51 Phil. 243).

Art. 1549. The vendee need not appeal from the decision in order that the vendor may become liable for eviction.
COMMENT:
Vendee Need Not Appeal
If the lower court evicts the buyer, he does not need to appeal to the appellate courts before he can sue for damages. However, the
decision must of course be final.