Transfer of ownership and delivery of the object; constructive delivery

1. Philippine Suburban Development Corporation v. The Auditor General (L-19545, April 18, 1975)

Facts:

The President approved the acquisition by the People's Homesite and Housing Corporation (PHHC) of the
unoccupied portion of the Sapang Palay Estate in Bulacan for relocating illegal settlers who desire to settle
north of Manila. The project was to be financed through the flotation of bonds under the charter of the
PHHC, as authorized by the President.

Petitioner, as owner of the unoccupied portion of the Sapang Palay Estate, entered into a contract through
a public instrument entitled "Deed of Absolute Sale” but the same was not registered in the Register of
Deeds because PHHC could not at once advance the money for registration expenses.

Meanwhile, the Auditor General, requested a re-examination of the contract, because the entire hacienda
was assessed at P131,590, and reassessed at the greatly increased amount of P4,898,110. Thereafter, the
Deed of Sale was then registered with the Register of Deeds. Petitioner, through the PHHC, paid under
protest the real property tax computed on the latter amount and requested the Secretary of Finance to
order a refund of the amount so paid.

Petitioner claims that it ceased to be the owner of the land in question upon the execution of the Deed of
Absolute Sale. The request was denied on the contention that petitioner is still the owner of the property
until the Deed of Sale covering the same has been actually registered, the vendor is still liable to the
payment of real property tax for the calendar year 1961.

Issue:

Whether or not there was already a valid transfer between the parties on the execution of the deed

Held:

Yes, the transfer was valid on the execution of the deed. Delivery as a mode of transmission of ownership
maybe actual or constructive. When the sale of real property is made in a public instrument, the execution
thereof is equivalent to the delivery of the thing object of the contract, if from the deed the contrary does
not appear or cannot clearly be inferred.

In this case, petitioner had actually placed the vendee in possession and control over the thing sold, even
before the date of the sale. The condition that petitioner should first register the deed of sale and secure
a new title in the name of the vendee before the latter shall pay the balance of the purchase price, did
not preclude the transmission of ownership. In the absence of an express stipulation to the contrary, the
payment of the purchase price of the good is not a condition precedent to the transfer of title to the
buyer, but title passes by the delivery of the goods.
Ways of effecting delivery;

2. Edu v. Gomez (L-33397, June 22, 1984)

Facts:

The 1968 model Volkswagen, bantam car, registered under the name of Walter Bala, was reported to the
Office of the Land Transportation Commission as stolen from his residence. The agents of Anti-Carnapping
Unit of the Philippine Constabulary, on detail with the Land Transportation Commission recognized
subject car in the possession of Lucila Abello.

Romeo Edu, then Commissioner of Land Transportation, immediately seized the car pursuant R.A. No.
4136 which empowers him to seize motor vehicles not properly registered. Abello filed a complaint for
replevin with damages. The CFI found that the car was acquired by Abello through purchase from its
registered owner Marcelino Guansing and that she has been in possession thereof since until the car was
seized from her by the Philippine Constabulary who acted in belief that the car was stolen.

Issue:

Whether or not the seizure of the car is valid

Held:

No, the seizure was invalid in this case. The purchaser in good faith of a chattel of movable property is
entitled to be respected and protected in his possession as if he were the true owner thereof until a
competent court rules otherwise.

In this case, Abello is a possessor in good faith and as the true owner, she cannot be compelled to
surrender possession nor to be required to institute an action for the recovery of the chattel, whether or
not an indemnity bond is issued in his favor. The filing of an information charging that the chattel was
illegally obtained through estafa from its true owner by the transferor of the bona fide possessor does not
warrant disturbing thee possession of the chattel against the will of the possessor.
 3. Duran v. Intermediate Appellate Court (L-64159, September 10, 1985)

Facts:

Circe Duran owned two parcels of land she bought from the Moja Estate. She left the Philippines in 1954
but in 1963, a Deed of Sale of both lots was made in favor of her mother who mortgaged the property to
Erlinda Tiangco. Upon learning of the mortgage, petitioner contacted the Register of Deeds and informed
them that she did not give her mother any authority to mortgage or sell any of her properties. She went
back to the Philippines in 1966 when the Register of Deeds failed to reply.

Meanwhile, Tiangco initiated foreclosure proceedings after Fe failed to redeem the mortgage properties.
Petitioner claims that the Deed of Sale is a forgery. However, the other party alleges that the signatures
on it were genuine; hence, the mortgage was valid.

Issue:

Whether or not Tiangco was a buyer in good faith

Held:

Yes, Tiangco was a buyer in good faith which consists of the possessor's belief that the person from whom
he received the thing was the owner of the same and could convey his title. Good faith requires a well-
founded belief that the person from whom title was received was the owner of the land, with the right to
convey it. There is good faith where there is an honest intention to abstain from taking any
unconscientious advantage from another.

In this case, Tiangco relied on the certificate of title that was in the name of Fe Duran. A fraudulent or
forged document of sale may become the root of a valid title if the certificate of title has already been
transferred from the name of the true owner to the name of the forger or the name indicated by the
forger.

Hence, the rights of innocent persons who relied on the correctness of the certificate of title and acquired
rights over the property cannot be disregarded. A mortgagee has no obligation to look beyond the
certificate and investigate the title of the mortgagor. He has the right to rely on the certificate of title.
Concept of delivery/tradition; when obligation to deliver arises

4. Addison v. Felix (L-12342, August 3, 1918)

Facts:

Maciana Felix and Balbino Tioco purchased from A. Addison four parcels of land through a public
instrument to which Felix paid the sum of P3,000 as down payment. She also bound herself to deliver the
remainder in two installments, and further, within ten years, P10 for each cocoanut tree in bearing and
P5 for each such tree not in bearing that might be growing thereon, with the condition that the total price
should not exceed P85,000. It was further stipulated that respondent was to deliver 25% of the value of
the products obtained therefrom until the certificate of title be issued in her favor. Finally, it was agreed
that within a year from the date of the certificate of title in her favor, Felix may rescind the contract.

Petitioner filed suit to compel respondent to pay the first installment of P2,000, demandable, in
accordance with the terms of the contract of sale. Respondents contended that petitioner absolutely
failed to deliver the parcels of land, notwithstanding their demands.

Issue:

Whether or not there was a valid delivery of the parcels of land sold when executed through a public
instrument

Held:

No, petitioner has not delivered the parcels of land sold. The execution of a public instruments is
equivalent to the delivery of the thing which is the object of the contract, but, in order to produce the
effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that, at
the moment of the sale, its material delivery could have been made. It is not enough to confer upon the
purchaser the ownership and the right of possession. The thing sold must be placed in his control.

In this case, petitioner was able to designate only two of the four parcels, and more than two-thirds of
these were in the possession of Juan Villafuerte, who claimed to be the owner of the parts he so occupied.
There was impediment to the title, hence, delivery cannot be deemed effected.
 5. Pasagui v. Villablanca (L-21998, November 10, 1975)

Facts:

Calixto Pasagui and Fausta Mosar bought a parcel of agricultural land from Eustaquia and Catalina Bocar.
A Deed of Absolute Sale was executed and the land was registered in the Registry of Deeds. However,
Ester and Zosimo Villablanca allegedly took possession of the property harvesting coconuts from the
plantation thereon, thus depriving petitioners of its possession. Despite demands made by the petitioners
to surrender the property, respondents refused to return the land. The Bocars were included as
defendants in the complaint by virtue of the warranty clause in the agreement.

Issue:

Whether or not petitioners are unlawfully deprived of the land they purchased

Held:

No, there was no delivery in this case, hence, they cannot be said to be deprived. Generally, the execution
of the deed of absolute sale in a public instrument is equivalent to delivery of the land subject of the sale.
However, this is true only when there is no impediment that may prevent the passing of the property. It
can be negated by failure to obtain material possession of the land subject of the sale.

In this case, petitioners had not acquired physical possession of the land since its purchase. In order that
an action may be considered as one for forcible entry, it is not only necessary that petitioner should allege
his prior physical possession of the property but also that he was deprived of his possession by force,
intimidation, threats, strategy or stealth. The allegation that petitioner has been "deprived" of the land of
which he has been the owner is insufficient. Petitioner had not claimed that they were in actual physical
possession of the property prior to the entry of the respondents.
 6. Banzon v. Cruz (L-31789, June 29, 1972)

Facts:

Maximo Sta. Maria obtained several crop loans from Philippine National Bank (PNB). For these loans,
Associated Insurance & Surety Co., Inc. (AISCI) acted as surety by filing surety bonds in favor of PNB to
guarantee the repayment of the loans. In turn, Antonio Banzon and Emilio Naval acted as indemnitors of
AISCI, obligating themselves to indemnify and hold it harmless from any liabilities.

Sta. Maria failed to pay his crop loan obligations in favor of PNB when the same fell due, and accordingly,
PNB demanded payment from AISCI as surety. Instead of paying the bank, the latter filed a complaint
against Sta. Maria and indemnitors petitioner and Naval. A writ of execution was issued and two lots of
petitioner were levied and later on sold in execution. As it was the highest bidder at the execution sale, a
certificate of sale was issued in favor of AISCI which filed an action to direct the Register of Deeds to cancel
the certificated and to issue new transfer certificates in the name of Associated.

It was then discovered that AISCI never discharged its liability with PNB which then filed a complaint
against Sta. Maria, his six brothers and sisters, and AISCI. After the order from the court, Sta. Maria paid
PNB the amounts he owed to it. After collecting, PNB released AISCI from its obligation. This should have
restored petitioner’s two lots to his ownership, but it was then discovered that AISCI has allowed Pedro
Cardenas to execute and levy one of petitioner’s two parcels of land, which then resulted to the issuance
of a new title in the name of Cardenas.

Issue:

Whether or not petitioner has the right to reconveyance of the lots

Held:

Yes, petitioner’s two lots wrongfully taken from them by AISCI’s premature actions should be reconveyed
to them. It would be an iniquitous unjust enrichment if a surety, after taking title in execution to the
indemnitor's properties in order to protect or reimburse itself from liability to the creditor for the debt
guaranteed by it, were to be allowed to retain ownership of the properties even though it did not incur
or discharge its liability at all, since it succeeded in evading payment to the creditor who thereafter
collected the debt directly from the debtor.

Thus, Article 1456, Civil Code impresses properties thus acquired with a trust character and constitutes
the erring surety as trustee of an implied trust for the benefit of the person from whom the property
comes, in this case, petitioner as the true and rightful owner of the properties.
 7. EDCA Publishing and Distributing Corp. v. Santos (80298, April 26, 1990)

Facts:

A person identifying himself as Professor Jose Cruz placed an order by telephone with petitioner for 406
books, payable on delivery. The latter prepared the corresponding invoice and delivered the books as
ordered. Cruz issued a personal check covering the purchase price. Cruz then sold 120 of the books to
Leonor Santos who, after verifying the seller's ownership from the invoice he showed her, paid him.

Meanwhile, petitioner became suspicious over a second order placed by Cruz even before clearing of his
first check, made inquiries with the De la Salle College where the latter claimed to be a dean and was
informed that there was no such person in its employ. Further verification revealed that Cruz had no more
account or deposit with the Philippine Amanah Bank, against which he had drawn the payment check.

Petitioner then went to the police, which set a trap and arrested Cruz. Investigation disclosed his real
name as Tomas de la Peña and his sale of 120 of the books he had ordered for respondents. Petitioner
now argues that because the impostor acquired no title to the books that he could have validly transferred
to the private respondents.

Issue:

Whether or not respondents have established their ownership of the books

Held:

Yes, respondents now own the books.

Ownership in the thing sold shall not pass to the buyer until full payment of the purchase only if there is
a stipulation to that effect. Otherwise, the ownership shall pass from the vendor to the vendee upon the
actual or constructive delivery of the thing sold even if the purchase price has not yet been paid. Non-
payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in
the case of bouncing checks.

In this case, there was actual delivery, hence, Cruz acquired ownership over the books which he could
then validly transfer to the respondents. The fact that he had not yet paid for them was a matter between
him and petitioner and did not impair the title acquired by the respondents to the books.
 8. Alliance Tobacco Corporation, Inc. v. Philippine Virginia Tobacco Administration (L-66944,
November 13, 1989)

Facts:

Respondent entered into a contract of procuring, redrying and servicing with Farmer's Virginia Tobacco
Redrying Company, Inc. (FVTR) for the 1963 tobacco trading operation. On the same year, respondent
entered into a merchandising loan agreement with petitioner, whereby the former agreed to lend P25,500
to petitioner.

Petitioner shipped to FVTR 96 bales of tobacco weighing 4,800 kilos and 167 bales weighing 8,350 kilos.
Unfortunately, the remaining ungraded and unweighed 174 bales were lost while they were in possession
of FVTR. Having learned of the loss, petitioner demanded for its value and to apply the same to its loan
with respondent which refused, arguing that the delivery was not valid and binding on it considering that,
not having been weighed and graded by its agents; it had not duly accepted the shipments so as to perfect
the contract of sale.

Issue:

Whether or not there was delivery with regard to the lost bales of tobacco

Held:

Yes, the delivery was already effected. Ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof. There is delivery when the thing sold is placed in the
control and possession of the vendee. In this case, since respondent had virtual control over the lost
tobacco bales, delivery thereof to FVTR should also be considered effective delivery to it.
Other rules on delivery; Sale of real property by unit of measure or number

9. Sta. Ana, Jr. v. Hernandez (L-16394, December 17, 1966)

Facts:

Jose Sta. Ana, Jr. and his wife, Lourdes owned a piece of land in Bulacan. They sold two separate portions
of the land for P11,000 to Rosa Hernandez. There have also been other sales of different portions to other
vendors. Petitioners prepared a subdivision plan on which respondent did not conform to. Instead, she
prepared her own subdivision plan, which was approved by the Director of Lands.

Petitioners filed a suit against respondent arguing that the latter was occupying more land than she
actually bought, an excess of 17,000 sqm. Respondent claims otherwise. The RTC ruled against respondent
but the CA reversed the decision.

Issue:

Whether or not the excess land occupied by respondent is part of the land sold to her

Held:

Yes, the land belongs to respondent. Article 1452 of the Civil Code provides that 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 greater or less area or number than that stated in
the contract.

In this case, the land did have definite boundaries, that is, a continuous wall. Therefore, it is
unquestionable that 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.

As registered owners and possessors of the entire land since 1949 petitioners can rightly be presumed to
have acquired a good estimate of the value and areas of the portions they subsequently sold. To hold the
buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made
by unit of measure at a definite price for each unit, contrary to this case.
Other rules on delivery; sale of real estate made for a lump sum

10. Balantakbo v. Court of Appeals (108515, October 16, 1995)

Facts:

An action to quiet title over a parcel of unregistered coconut land located in Laguna was filed by the heirs
of spouses Sumaya against Laguna Agro-Industrial Coconut Cooperative Inc. It was alleged that the land
in question has been purchased by Sumayas from Mrs. Balantakbo, the mother of petitioners, and is
evidenced by a deed.

After 20 years, brothers Luis and Sancho Balantakbo intruded on the land and harvested the coconuts
found therein. They denied knowledge of the sale and alleged that the land subject of the quieting of title
was different from that owned and held by them. Moreover, Laguna Agro-Industrial Coconut Cooperative
Inc. contends that the deed contemplates the words “more or less” follow the portion of the land area as
a slightly different with the said land, therefore the corporation owned the whole coconut land.

Issue:

Whether or not the area stated in the Contract of Sale prevails over the area embraced within the
boundaries of the land if such was paid for lump sum

Held:

No, the real boundaries of the land being sold prevails over the area stated in a contract of sale. Under
Article 1542 of the Civil Code, if the sale of real estate was made for a lump sum and not at a rate of a
certain sum per unit or measure, and whenever the area or number is 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.

In this case, the Deed of Sale entered into by Mrs. Balantakbo and Spouses Sumaya which only contains a
specified area accompanied by the words more or less and is paid for the lump sum does not render that
the property sold is limited to the area contained in the deed. Therefore, the whole area of the
unregistered coconut land must be under the ownership of the heirs of spouses Sumaya for the area
embraced within the boundaries of said land prevails the area indicated in the documents.
Other rules on delivery; rules in case of double sale

11. Paylago v. Jarabe (L-20046, March 27, 1968)

Facts:

After the death of Anselmo Lacatan, a TCT was issued in the name of his two sons, Vidal and Florentino
Lacatan. As Vidal died, his heirs, executed a Deed of Sale in favor of the spouses Romeo and Rosario
Paylago over a portion of the entire lot. When Florentino also died, his widow and three children, likewise
executed a deed of sale in favor of the same vendees over another portion of the same lot.

By virtue of the registration of the two Deeds of Sale, a new TCT covering the total area was issued in
favor of petitioners. However, a portion of the total area was being occupied by Ines Jarabe by virtue of a
subdivision plan which her late husband bought from one Apolonio Lacatan, which the latter bought from
Anselmo.

The unregistered Deed of Sale, executed by Anselmo in favor of Apolonio was lost during the Japanese
occupation. Respondent has been in possession of the said portion continuously, publicly, peacefully and
adversely as owner up to the present; and, she alleges that the petitioners knew that respondent has been
in possession of the premises since 1945.

Issue:

Whether or not ownership should be vested in the prior unregistered sale

Held:

Yes, the ownership shall be considered vested. A purchaser who has knowledge of facts which should put
him upon inquiry and investigation as to possible defects of the title of the vendor and fails to make such
inquiry and investigation, cannot claim that he is a purchaser in good faith and had acquired a valid title
thereto. Knowledge of a prior transfer of by a subsequent purchaser makes him a purchaser in bad faith
and his knowledge of such transfer vitiates his title acquired by virtue of the later instrument of
conveyance which was registered in the Registry of Deeds.

In this case, petitioners’ acquisition and subsequent registration were tainted with the vitiating element
of bad faith. The boundaries of the lands that petitioners purchased were well defined, they must have
known that the portion occupied by respondent under claim of ownership and leased to them by the
latter was included in the description. Petitioners should have made an investigation as to the possible
defects of the title over the lot sold to them. They cannot now claim ignorance of respondent's claim over
the property.
 12. Hanopol v. Pilapil (L-19248, February 28, 1963)

Facts:

Iluminado Hanopol claims ownership of the land by virtue of a series of purchases by means of private
instruments executed by the Siapos. He also invokes in his favor a decision rendered by the CFI, against
the same vendors, who took possession of the said property through fraud, threat and intimidation,
pretending falsely to be the owners thereof and ejecting petitioner thereon, and since then had continued
to possess the land.

For his defense, Perfecto Pilapil asserts title to the property on the strength of a duly notarized Deed of
Sale executed in his favor by the same owners, which Deed was registered in the Registry of Deeds.

Issue:

Whether or not petitioner has better title over respondent

Held:

No, petitioner cannot have a better right than respondent who was not shown to be a purchaser in bad
faith. In this case, there is no clear evidence of petitioner’s possession of the land. In fact, in his complaint
against the vendors, it was alleged that the Siapos took possession of the same land under claim of
ownership which continued.

Consequently, since the Siapos were in actual occupancy of the property under claim of ownership, when
they sold the said land to respondent, such possession was transmitted to the latter, at least
constructively, with the execution of the notarial Deed of Sale, if not actually and physically.
 13. Balatbat v. Court of Appeals (109410, August 28, 1996)

Facts:

Aurelio Roque and Maria Mesina bought a piece of land during their conjugal union and the house thereon
was likewise built during this period. They had four children, but Mesina died afterwards. The only
conjugal properties left are the house and lot of which the legal spouse, is entitled to half the share. With
respect to the half forming the estate of Mesina, the surviving spouse and the children, are each entitled
to one fifth share.

Roque then contracted an Absolute Sale of the land with the Aurora and Jose Repuyan. However, the
former filed for rescission for the Repuyans’ failure to pay the balance. A deed of absolute sale was then
executed on between the heirs and spouses Clara and Alejandro Balatbat.

Issue:

Whether or not there was a double sale

Held:

Yes, vendor Aurelio Roque sold 6/10 portion of his share to the Repuyans. Subsequently, the same lot was
sold again by vendor Aurelio Roque (6/10) and his children (4/10). This is the double sale contemplated
under Article 1544 of the New Civil Code.

The Repuyan’s caused the annotation of an adverse claim on the title of the property. This annotation in
the Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world.
Accordingly, the Repuyans who first caused the annotation of the adverse claim in good faith shall have a
better right over herein petitioner. As between two purchasers, the one who has registered the sale in his
favor, has a preferred right over the other who has not registered his title even if the latter is in actual
possession of the immovable property. Further, even in default of the first registrant or first in possession,
private respondents have presented the oldest title. Thus, private respondents who acquired the subject
property in good faith and for valuable consideration established a superior right as against the petitioner.
 14. Caram, Jr. v. Laureta (L-28740, February 24, 1981)

Facts:

Marcos Mata conveyed an agricultural land in favor of Claro Laureta. The Deed of Absolute Sale in favor
of the respondent was not registered as it was not acknowledged before a notary public or an authorized
officer. However, Mata delivered the land together with the Duplicate Original Certificate of Title and
other papers related thereto. Respondent had been in continuous occupation ever since.

The same land was sold by Mata to Fermin Caram, Jr. The Deed of Sale was acknowledged before Atty.
Abelardo Aportadera. The CFI directed the Register of Deeds to issue a new Owner's Duplicate Certificate
of Title in favor of Mata who alleged the physical loss of such title.

Petitioner alleged that he has no knowledge or information about the previous encumbrances,
transactions, and alienations in favor of plaintiff until the filing of the complaints.

Issue:

Whether or not petitioner’s registration of the land makes him the owner

Held:

No, the first sale in favor of respondent prevails over the sale in favor of petitioner. One who purchases
real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title
in good faith, as against the true owner of the land or of an interest therein. The rule of caveat emptor
requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking
the vendor's title takes all the risks and losses consequent to such failure.

In the instant case, Irespe and Aportadera, the attorneys-in-fact, had knowledge of circumstances which
ought to have put them an inquiry as on the defects of title. Both of them knew that Mata's certificate of
title together with other papers pertaining to the land was taken by soldiers under the command of
respondent. Also, at the time of the second sale, respondent was already in possession of the land. Irespe
and Aportadera should have investigated the nature of such possession. Applying the principle of agency,
petitioner as principal, should also be deemed to have acted in bad faith.
 15. Tañedo v. Court of Appeals (104482, January 22, 1996)

Facts:

Lazaro Tañedo executed a notarized deed of absolute sale in favor of his brother, Ricardo and the latter’s
wife, Teresita Barera, private respondents, for a price of P1,500, one hectare of whatever share the former
has over Lot No. 191 of the cadastral survey, which property being his future inheritance. He executed
another notarized deed of sale in favor of private respondents covering his undivided 1/12 of a parcel of
the same land. He acknowledged therein his receipt of P 10,000.00 as consideration. Ricardo later learned
that Lazaro sold the same property to his children, petitioners herein, through a deed of sale who
registered the same with the Registry of Deeds.

Petitioners then filed for rescission of the deeds of sale executed in favor of private respondents. Claiming
that their father, Lazaro, executed an Absolute Deed of Sale, conveying to his children his allotted portion
under the extrajudicial partition. Respondents, however presented in evidence a Deed of Revocation of a
Deed of Sale, wherein Lazaro revoked the sale in favor of petitioners for the reason that it was simulated
for having no consideration.

Issue:

Whether or not private respondents have become the owners of the disputed property

Held:

Yes, the deed which should be given effect is the sale in favor of private respondents with the registration
with the register of deeds. Article 1544 of the Civil Code provides that 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 and 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.

In this case, the property is land, an immovable, and following the above-quoted law, ownership shall
belong to the buyer who in good faith registers it first in the registry of property. Thus, although the deed
of sale in favor of private respondents was later than the one in favor of petitioners, ownership would
vest in the former because of the undisputed fact of registration. On the other hand, petitioners have not
registered the sale to them at all.
 16. Tanongon v. Samson (140889, May 9, 2002)

Facts:

Respondents were employees of Cayco Marine Service, which was engaged in hauling oil, owned and
operated by Iluminada Olizon. They filed a complaint against Cayco Marine Serice and Olizon for illegal
dismissal, underpayment of wages, non-payment of holiday pay, rest day and leave pay. The NLRC favored
respondents, and a writ of execution was issued to satisfy the judgment award. A notice of sale on
execution of personal property was issued and thereafter, the motor tanker of defendants was seized to
be sold at public auction.

Dorotea Tanongon filed a third-party claim alleging that she was the owner of subject motor tanker for
having acquired the same from Olizen for a consideration. However, the claim was dismissed because the
Deed of Absolute Sale had been executed only after the NLRC Decision became final and executory.

Issue:

Whether or not petitioner is a buyer in good faith and for value

Held:

No, petitioner is a buyer in bad faith. It is evident that the judgment favoring the complainants and the
issuance of the writ of Execution were done before the sale of the motor tanker.

The act of Olizon was an attempt to evade payment and that Tanongan obviously got word of this decision.
Despite such knowledge, she still bought the tanker ten days before it was levied.

A purchaser in good faith or an innocent purchaser for value is one who buys property and pays a full and
fair price for it at the time of the purchase or before any notice of some other persons’ claim on or interest
in it. Petitioner should have inquired whether there are unsettled obligations and encumbrances that
could burden the subject property. Any person engaged in business would be wary of buying from a
company that is a closing shop, because it may be dissipating its assets to defraud its creditors.
 17. Consolidated Rural Bank (Cagayan Valley), Inc. v. Court of Appeals (132161, January 17, 2005)

Facts:

The Madrid brothers were the registered owners of Lot No. 7036-A. The lot was subdivided into several
lots. One of the resulting subdivisions was Lot No. 7036-A-7. Rizal Madrid sold part of his share identified
as Lot No. 7036-A-7, to Aleja Gamiao and Felisa Dayag by virtue of a Deed of Sale, to which his brothers
offered no objection. The deed of sale was not registered with the Office of the Register of Deeds of
Isabela, but Gamiao and Dayag declared the property for taxation purposes. They sold the southern half
to Teodoro dela Cruz, and the northern half to Restituto Hernandez.

In a Deed of Sale, the Madrid brothers conveyed all their rights and interests over Lot No. 7036-A-7 to
Pacifico Marquez. The deed of sale was registered with the Office of the Register of Deeds. Subsequently,
Marquez subdivided Lot No. 7036-A-7 into eight lots. He and his spouse, Mercedita Mariana, mortgaged
4 parts of the lot to the Consolidated Rural Bank to secure a loan. These deeds of real estate mortgage
were registered with the Office of the Register of Deeds. As Marquez defaulted in the payment of his loan,
petitioner caused the foreclosure of the mortgages and they were sold to it as the highest bidder.

Issue:

Whether or not the provisions of Article 1544 of the Civil Code are applicable in this case

Held:

No, the provisions of Article 1544 cannot be applied in this case. The provision contemplates double or
multiple sales by a single vendor. It is necessary that the conveyance must have been made by a party
who has an existing right in the thing and the power to dispose of it. It cannot be invoked where the two
different contracts of sale are made by two different persons, one of them not being the owner.

In this case, the property was not transferred to several purchasers by a single vendor. In the first deed of
sale, the vendors were Gamiao and Dayag whose right to the subject property originated from their
acquisition thereof from Rizal Madrid. On the other hand, the vendors in the later deed were the Madrid
brothers but at that time they were no longer the owners since they had long before disposed of the
property in favor of Gamiao and Dayag.

In a situation where Article 1544 cannot be applied, he who is first in time is preferred in right. The only
one who can invoke this is the first vendee. Undisputedly, he is a purchaser in good faith because at the
time he bought the real property, there was still no sale to a second vendee. Therefore, the true owner
are the heirs of dela Cruz.
 18. Dela Merced v. Government Security Insurance System (167140, November 23, 2011)

Facts:

This case involves five registered parcels of land, Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8, located
within the Antonio Subdivision, Pasig City. These lots were originally owned by Jose Zulueta, as evidenced
by a TCT which contains several lots other than the subject properties within the Antonio Subdivision.
Later, the spouses Zuluetas mortgaged several lots to the GSIS, which eventually foreclosed on the
mortgaged properties, including the subject properties.

Upon consolidation of GSIS’s ownership, the TCT in Zulueta’s name was cancelled, and another title was
issued in GSIS’s name. Upon learning of the foreclosure, petitioners’ predecessor, Francisco Dela Merced,
later on substituted by his heirs, filed a complaint praying for the nullity of the foreclosure on the subject
properties on the ground that he, not the Zuluetas, was the owner of these lots at the time of the
foreclosure. Petitioner argued that, due to the nullity of GSIS’s foreclosure over the subject properties, it
had no ownership right that could be transferred to Elizabeth Manlongat.

Issue:

Whether or not the foreclosure sale of respondent is void

Held:

Yes, such foreclosure sales are void. When the Zuluetas mortgaged their properties to GSIS, they were no
longer the owners of the lots subject of this litigation, the same having been sold to Francisco dela Merced
by virtue of the contract to sell. Hence, the mortgage was void from its inception and GSIS, as mortgagee,
acquired no better right notwithstanding the registration of the mortgage.

Also, GSIS was a mortgagee in bad faith as it had been negligent in ascertaining and investigating the
condition of the subject lots mortgaged to it as well as the rights of petitioners who were already in
possession thereof at the time of mortgage. Furthermore, it had a judicial admission when it recognized
the rights of petitioner over the subject lots. Thus, this is indicative of bath faith on its part.
 19. San Lorenzo Development Corporation v. Court of Appeals (124242, January 21, 2005)

Facts:

Miguel and Pacita Lu owned two parcels of land in St. Rosa, Laguna. They sold the two parcels of land to
Pablo Babansata who made a down payment of P50,000. Several other payments totaling to P200,000
were thereafter made. The latter then sent a demand for the execution of a Deed of Sale so that he could
make full payment. He also notified them that he received information that the spouses sold the same
property to another without his knowledge and consent.

In response, Pacita acknowledged having agreed to sell the property to him. However, she reminded
Babasanta that when the balance became due, he requested for a reduction of the price and when she
refused, Babasanta backed out of the sale. She added that she returned the P50,000 through an agent.

Babasanta filed before RTC a complaint for specific performance and damages. San Lorenzo Development
Corp filed a motion for intervention alleging among others that it had a legal interest in the subject matter
contending that the two parcels of land had been sold to it in a Deed of Absolute Sale with Mortgage and
was a buyer in good faith and for value and therefore it had a better right over the property in litigation.

Issue:

Whether or not petitioner has a better right over the parcels of land

Held:

Yes, petitioner has a better right over the parcels of land. The principle of primus tempore, potior jure
(first in time, stronger in right) gains greater significance in case of double sale of immovable property.
When the thing sold twice is an immovable, the one who acquires it and first records it in the Registry of
Property, both made in good faith, shall be deemed the owner.

Verily, the act of registration must be coupled with good faith – that is, the registrant must have no
knowledge of the defect or lack of title of his vendor or must not have been aware of facts which should
have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects
in the title of his vendor.

In this case, the Spouses Lu executed the Option to Buy in favor of petitioner upon receiving a sum as
option money. After petitioner had paid more than 1⁄2 of the agreed purchase price, the former executed
a Deed of Absolute Sale in favor of petitioner. From the time of the execution of the first deep up to the
moment of transfer and delivery of possession of the lands to petitioner, it has acted in good faith.
 20. Carumba v. Court of Appeals (L-27587, February 18, 1970)

Facts:

Amado Canuto and Nemesia Ibasco sold a parcel of land, which is part residential and part plantation, to
Spouses Amado Carumba and Benita Canuto, as evidenced by Deed of Sale of Unregistered Land with
Covenants of Warranty. The deed was not registered in the Register of Deeds and the Notary Public was
not an authorized notary public.

Santiago Balbuena filed a case against the sellers for sum of money, to which the former won. The Sheriff
issued a Definite Deed of Sale of the land in favor of Balbuena. The same was registered and the property
was declared for taxation purposes in his name.

Petitioners filed a case with CFI which ruled in their favor and declared void the execution levy by the
Sheriff. The CA declared that there is double sale and the title of Balbuena is superior due to registration.

Issue:

Whether or not Article 1544 regarding the double sale of land will apply in this case

Held:

No, while under the invoked Article 1544 registration in good faith prevails over possession in the event
of a double sale by the vendor of the same piece of land to different vendees, it is of no application to the
case at bar. The purchaser of unregistered land only steps into the shoes of the debtor, and merely
acquires the latter's interest in the property sold as of the time the property was levied upon. In this case,
even if Balbuena was ignorant of the prior sale made by his judgment debtor in favor of petitioner.

The time of the levy of the first sale could not have been made prior to when the decision against the
former owners of the land was rendered in favor of Balbuena. But the deed of sale in favor of Canuto had
been executed two years before, and while only embodied in a private document, the same sufficed to
vest ownership. When the levy was made, therefore, the judgment debtor no longer had dominical
interest nor any real right over the land that could pass to the purchaser at the execution sale. Hence, the
land shall pertain to petitioner.
Warranty on seller’s title; liability in case of eviction

21. JM Tuason & Co., Inc. v. Court of Appeals (L-41233, November 21, 1979)

Facts:

Petitioner executed a contract to sell Lot No. 15, Block 460 of the Sta. Mesa Heights Subdivision in favor
of Ricardo de Leon. The contracting parties knew that a portion of the lot in question was actually occupied
by Ramon Rivera. However, it was their understanding that the latter will be ejected by the petitioner
from the premises.

Meanwhile, petitioner signed a compromise agreement with the Florencio Deudor. With the consent of
petitioner, Ricardo de Leon transferred all his rights to the lot in favor of his parents, Alfonso and Rosario
de Leon who paid for the outstanding balance of the purchase price. Consequently, petitioner executed
in favor of his parents a Deed of Sale over the lot. Upon its registration, a certificate of title was issued by
the Register of Deeds.

Petitioner filed a complaint of ejectment against Ramon Rivera. The complaint was dismissed based on a
compromise agreement entered by petitioner with Deudor. In a civil case filed by Deudor, petitioner was
ordered to allow Rivera to purchase a portion of the subject lot.

Issue:

Whether or not Ricardo de Leon’s parents are entitled to the vendor’s warranty against eviction

Held:

No, petitioner has acted in good faith and consequently will not be liable for breach of the implied
warranty. It was not petitioner's fault that it executed the compromise agreement with Deudor as it was
sanctioned by the court after the civil action filed against petitioner.

A stipulation in the compromise agreement discloses that an understanding between petitioner and
Deudor that the buyers of lots, like Rivera, may acquire lots from the subdivision being sold by petitioner
and sign new contracts of purchase whenever possible, but only when said lots have not already been
sold to third parties. Relying on such provision, petitioner believed in good faith that said lot sold to the
de Leons would not be adversely affected.

Moreover, at the time of the execution of the contract to sell, Ricardo de Leon knew that a third party
was occupying a part of the lot subject of the sale. Clearly, De Leon is not an innocent purchaser in good
faith. Without being shown to be vendees in good faith, his parents are not entitled to the warranty
against eviction nor are they entitled to recover damages.
 22. Escaler v Court of Appeals (L-42636, August 1, 1985)

Facts:

Africa and Jose Reynoso sold to petitioners parcels of land in Antipolo, Rizal. The Deed of maintained that
they are absolute owners of parcel of land evinced by absolute deed of sale executed in their favor by
Angelina Reynoso. The Reynosos warrant valid ownership of said parcel of land and warrant to defend the
property herein sold and conveyed, unto the petitioners.

The Register of Deeds of Rizal and A. Doronilla Resources Development, Inc. filed a case for the
cancellation of OCT No. 1526 issued in the name of Angelina Reynoso as it is already previously registered
under TCT No. 42999 issued in the name of A. Doronilla Development, Inc. The petition was granted.

Petitioners, spouses Escaler and spouses Roxas filed a case against vendors, spouses Reynoso for the
recovery of the value of the property plus damages on the ground that the latter violated the warranty
against eviction.

Issue:

Whether or not the Reynosos may be held liable for breach of warranty against eviction

Held:

No, the Reynosos are not liable for breach of implied warranty against eviction. In order for vendor’s
liability for eviction may be enforced, the following requisites must concur: (a) must be a final judgment;
(b) purchaser deprived of the whole or part of the thing sold; (c) deprivation was by virtue of a right prior
to the sale made by vendor; and, (d) vendor been summoned and made co-defendant in the suit for
eviction at the instance of the vendee.

In this case, the last requisite is not satisfied. All petitioners did was to furnish respondents, by registered
mail with a copy of the opposition they filed in the eviction suit. The Reynosos, as vendors, should be
made parties to the suit at the instance of petitioners as vendees, either by way of asking that the former
be made a co-defendant or by filing of a third-party complaint against them. Hence, the claim against the
breach cannot be awarded to petitioners.
Warranty against hidden defects of, or encumbrances upon the thing sold; vendor’s responsibility in
case of breach

23. Moles v. Intermediate Appellate Court (73913, January 31, 1989)

Facts:

Jerry Moles needed a linotype printing machine for his printing business, the LM Press in Bacolod City. He
applied for an industrial loan with Development Bank of the Philippines. An agent of Smith, Bell, and Co.,
introduced him to Mariano Diolosa, owner of Diolosa Publishing House in Iloilo, who had two available
machines. Petitioner went to Iloilo to check on two machines. They are secondhand but functional. He
returned to buy the machine, Model 14. The transaction was verbal, but an invoice was signed by
petitioner, showing the value of the transaction is yet to be paid.

The machine was delivered at petitioner’s publishing house, where it was installed by Diolosa’s employee.
Another employee stayed to teach petitioner’s cousin to operate the machine. A certification was issued
warranting that the machine was in A-1 condition. Before the loan was released, an inspector inspected
the machine but he only looked at it to see that it was there. The loan was granted.

In November, petitioner informed Diolosa that the machine was not functioning properly and needed a
new distributor bar. Diolosa did not reply. Petitioner, after contacting many technicians, was never able
to use the machine again. Diolosa then sent the new distributor bar insisting petitioner should share the
cost of the bar with him.

Petitioner sought legal remedies. A witness declared that the machine was the same machine he
inspected for another firm that cancelled the purchase after finding that it was not in good condition.

Issue:

Whether or not the hidden defect in the machine is sufficient to warrant breach of warranty

Held:

Yes, the machine is not reasonably fit for the particular purpose for which it was intended. In the sale of
a specific article sold as secondhand, there is no implied warranty as to its quality or fitness for the purpose
intended, at least where it is subject to inspection at the time of the sale. On the other hand, there may
be, under some circumstances, an implied warranty of fitness for the ordinary purpose of the article sold
or for the particular purpose of the buyer.

A redhibitory defect must be an imperfection or defect of such nature as to engender a certain degree of
importance. An imperfection or defect of little consequence does not come within the category of being
redhibitory. In this case, an expert witness for the petitioner categorically established that the machine
required major repairs before it could be used. This, plus the fact that petitioner never made appropriate
use of the machine from the time of purchase until an action was filed, attest to the major defects in said
machine, by reason of which the rescission of the contract of sale is sought.
 24. Nutrimix Feeds Corporation v. Court of Appeals (152219, October 25, 2004)

Facts:

Efren and Maura Evangelista, started to procure various animal feeds from petitioner. Initially, the
spouses were good paying customers. However, there were instances when they failed to issue checks
despite the delivery of goods. Consequently, respondents incurred an aggregate unpaid obligation of
P766,151. The checks were subsequently dishonored because it was found that the account it was drawn
against is already closed. Despite several demands from petitioner, the spouses refused to pay the
remaining balance. Thereafter, petitioner filed a complaint for collection of money with damages.

Respondents admitted their unpaid obligation but impugned their liability contending that the checks
issued were made to guarantee the payment, previously determined to come from the expected proceeds
in the sale of the broilers and hogs they were supposed to feed. They argued that the sudden and massive
death of their animals was caused by the contaminated products of petitioner, and the nonpayment of
their obligation was justified. They also filed a complaint for damages against petitioner for the untimely
death of their animals supposedly effected by the adulterated animal feeds petitioner sold to them.

Petitioner alleged that the death of the animals was due to the widespread pestilence in their farm. In
addition, it theorized that it was respondents who mixed poison to its feeds to make it appear that the
feeds were contaminated.

Issue:

Whether or not petitioner is guilty of breach of warranty against hidden defects

Held:

No, petitioner is not liable for breach of the warranty. In essence, respondents failed to prove that
petitioner is guilty of breach of warranty due to hidden defects. In the sale of animal feeds, there is an
implied warranty that it is reasonably fit and suitable to be used for the purpose which both parties
contemplated. Three things must be established by the respondents: (a) they sustained injury because of
the product; (b) the injury occurred because the product was defective or unreasonably unsafe; and, (c)
the defect existed when the product left the hands of the petitioner. A manufacturer or seller of a product
cannot be held liable for any damage allegedly caused by the product in the absence of any proof that the
product was defective.

Respondents case of breach of implied warranty was fundamentally based upon the circumstantial
evidence that the animals sickened, stunted, and died after eating the feeds; but this was not enough to
raise a reasonable supposition that the unwholesome feeds were the proximate cause of the death with
that degree of certainty and probability required. If there be no evidence, or if evidence be so slight as
not reasonably to warrant inference of the fact in issue or furnish more than materials for a mere
conjecture, the court will not hesitate to strike down the evidence and rule in favor of the other party.