Law 203- Sales: By: Mithi Evasco Villarmea

Sale by one having a voidable title

it from the person in possession of it. There was a valid transmission of ownership from Tagatac to Feist by virtue of the sale and delivery of the car to the swindler. The fraud and deceit practiced on her earmarked the sale as a voidable contract. As long as no action was taken for annulment, the contract remained binding. As the car was again sold to another, the title acquired by the subsequent purchaser was an indefeasible one, even as against the original owner Alcantara-Daus v. de Leon, 404 SCRA 74 FACTS: Hermoso de Leon inherited from his father a certain piece of land by virtue of a deed of extra-judicial partition. To arrange the documents for the properties of his parents, Hermoso engaged the services of Atty. Juan. After the death of Atty. Juan, documents surfaced revealing that the properties has been conveyed to Hermosos brothers and sisters and, Juan and his sisters though Hermoso did not intend such. A deed of extrajudicial partition with quitclaim in favour of Rodolfo de Leon surfaced with Hermosos signature in it (which was actually forged). Rodolfo sold the land to Aurora Alcantara. Hermoso questions the sale. RTC ruled that Hermosos claim on the land is barred by laches since 18 years has passed since the land was sold. It also ruled that the deed of extra-judicial partition, being a notarial document, is presumed authentic. CA reversed. ISSUE: Was the sale of the land to Alcantara valid? RULING: No. There was no valid delivery as Rodolfo is not the rightful owner of the land. A contract of sale is perfected by mere consent, upon meeting of the minds, on the offer and acceptance thereof based on subject matter, price and terms of payment. At this stage, sellers ownership of the land is not an element in the perfection of the contract. However, this contract creates an obligation on the part of the seller to transfer ownership and to deliver the subject matter of the contract. It is during delivery that the law requires the seller to have the right to transfer ownership of the thing sold. It is through delivery or tradition that the buyer acquires the real rights of ownership over the thing sold. At the time of delivery, Rodolfo was not the owner of the land, thus the consummation of the contract and the consequent transfer would, then, depend on whether he subsequently acquired ownership of the land in accordance with Art 1434 of the Civil Code. But the extra-judicial partition was found to be forged hence there was no valid transfer of ownership Rodolfo never became the owner of the land. Possession in good faith and acquisition by virtue of prescription cannot be sustained if it is in derogation of the rights of the registered owner. Lundberg v. Gancayco, 50 O.G. 169 FACTS: On July 10, 1948, Surplus Property Commission sold to one Jose Montilla three cranes for the amount of

Article 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent. In the old Code, the obligation is merely to deliver the thing, so that even if the seller is not the owner, he may validly sell, subject to the warranty to maintain the buyer in legal and peaceful possession of the thing sold.

Thus, under the new Civil Code, the contract of sale has been divided into two stages: 1. Perfection of the contract the subject or the determinate thing need not yet be owned by the seller;

2. Article 1459. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. This stems from the principle: nemo dat quad non habet (no one gives what he doesn't have).

The question that is still debated is whether a seller can sell a property not owned by him. If so, when should ownership be transferred to a buyer? There are two views regarding this matter. Philippine view. The view in our jurisdiction is that a seller need not be the owner of the property subject of sale at the time of sale or perfection of sale, but he must be the owner at the time when said property is to be delivered to the buyer. Views from other jurisdictions. Manresa, a famous Spanish Civil Law commentator which reflects the view in Spain, argued that such sale of property belonging to another and not the vendor is not valid for the simple reason that he cannot transmit what he does not own. This implies that sale is basically a transaction involving the transfer of ownership. Tagatac v. Jimenez, 53 O.G. 3798 FACTS: The plaintiff sold her car to Feist, who sold it to Sanchez, who sold it to Jimenez. When the payment check issued to Tagatac by Feist was dishonored, the plaintiff sued to recover the vehicle from Jimenez on the ground that she had been unlawfully deprived of it by reason of Feist's deception. RULING According to Article 559, although possession of movable property acquired in good faith is equivalent to a title, one who has lost any movable or has been unlawfully deprived thereof, may nevertheless recover

Law 203- Sales: By: Mithi Evasco Villarmea

Sale by one having a voidable title

P300,000 shall be fulfilled by Dominador two months from the date of the execution of sale, which is August 1993. Three months after, Dominador filed a complaint with the trial court a motion to deliver the owners copy of TCT, and admitted that he did not pay the P300,000 for the reason that the petitioner failed to adduce proof of ownership. In time, petitioners opposed stressing the condition in the Kasunduan. The trial court and CA both ruled in favor of the respondent. ISSUE: Whether or not Dominador, et al. may be compelled to pay the P300,000 as agreed upon in the kasunduan. RULING: No. In contracts of sale, the vendor need not possess the title to the thing sold at the perfection of the contract. However, the vendor must possess the title and must be able to transfer title at the time of delivery. In a contract of sale, title only passes to the vendee upon full payment of the stipulated consideration, or upon delivery of the thing sold. Under the facts of the case, Severinas heirs are not in a position to transfer title. Therefore, to insist that Dominador, et al. pay the price under such circumstances would result in Severinas heirs unjust enrichment. The essence of the sale is the transfer of title or an agreement to transfer it for a price actually paid or promised.

P937.13. On July 15, 1948, before the cranes were withdrawn from the stockyard of the Surplus Property Commision, Jose Montilla sold one of them for the amount of P1,500 to the plaintiff, V.K. Lundberg. Before Montilla or plaintiff was able to withdraw the cranes, a complaint was received that the sale of said cranes to Montilla was irregular. Thereupon, the Surplus Property Commission ordered the cranes be recovered and created a committee to investigate which later found out that the cranes delivered to Montilla were not those described in the invoice, thus, the sale to Montilla was cancelled. On August 29, 1949, Surplus Property Commission advertised all of their surplus properties which were subsequently bought by the defendant in this case, Santiago Gancayco. Plaintiff filed present action to seize the crane that was sold to him. ISSUE: Who is the rightful owner of the said crane? RULING: We agree with counsel that ownership and other real rights re not transmitted by mere agreement, but by delivery. This principle of civil law is well-settled. But the delivery contemplated in the law is the delivery of the very thing sold. Where the things delivered were not the things sold, but others not involved in the transaction, the title to the thing sold remains in the vendor, and the vendee acquires no right to the articles wrongly delivered to him. Jose Montilla, therefore, acquired no title to the crane in question, and when he sold it to plaintiff on July 5, 1948, he transmitted nothing to the latter, for in sales, which is a derivative mode of acquiring ownership, a buyer acquires no better title than the seller has. It is however, claimed that as both Montilla and plaintiff acted in good faith in the sale of the crane in question, the latter acquired a valid title thereto. We are not impressed with this contention. We are of the opinion that, under the facts of the record, Montilla cannot be held to be a vendor in good faith, nor the plaintiff, a purchaser for value in good faith.

Esguerra v. People, 108 Phil. 1078 FACTS: Dionisio Esguerra was charged of Estafa, that on or about January 12, 1952 to March 26, 1952, accused, upon representations made with Yu Yek Huy & Co, a business firm duly organized and existing under and by virtue of the laws of the Philippines, thru the Manager of said company, Yu Yek Bio, that the said accused had copras ready for delivery to it, took and received the sum of P4,000 under the express obligation on the part of the said accused to deliver to the said company the equivalent worth of copras at its bodega. Despite repeated demands made upon him to deliver said copras, accused never complied with the obligation. RULING: There is reason to believe that the responsibility of herein appellant is only civil in nature. The language of the receipt, together with the finding of the Court of Appeals that Factually, the appellant used to supply copra not only to complainant, but also to other copra exporters in Siain, clearly indicate, in our opinion, that the transaction was that of sale of copra for future delivery. Obviously, an advance payment is subject to the disposal of the vendor. If the transaction fails, the liability arising therefrom is of a civil and not of a criminal nature.

Hrs. of Severina San Miguel v. CA, 364 SCRA 523 FACTS: In 1974, Respondent, Dominador San Miguel, filed a petition with the CFI to issue title over lots in dispute. However, it was declared null and void upon petition of Severina San Miguel (petitioner). In 1987, the TCT for the land was issued in the names of petitioner. From 1990-1991, several writs were returned unsatisfied. Hence, the heirs of Severina did not pursue the writs of possession and demolition, and instead entered into a compromise with Dominador. According to the compromise, the heirs were to sell the land for P1.5M with the TCT conditioned upon the purchase of another lot, which was not yet titled, at an additional sum of P300,000. It was agreed that the

Law 203- Sales: By: Mithi Evasco Villarmea

Mananzala v. CA, 286 SCRA 722

Sale by one having a voidable title

of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, the plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses Anacleto Nool and Emilia Nebre (defendants) failed to pay, and the same day the said arrangement was made; another covenant was entered into by the parties, whereby the defendants agreed to return to plaintiffs the lands in question, at anytime the latter have the necessary amount; that latter asked the defendants to return the same but despite the intervention of the Barangay Captain of their place, defendants refused to return the said parcels of land to plaintiffs; thereby impelling the plaintiffs to come to court for relief. On the other hand, defendants theorized that they acquired the lands in question from the DBP, through negotiated sale, and were misled by plaintiffs when defendant Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to redeem the same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had the right to redeem the said properties. ISSUE: Whether or not the two contracts, contract of sale and right to repurchase, are valid. RULING: The contract of sale was void. While the civil code allows a sale of future goods, this is not applicable to the case at bar. The sellers can no longer deliver the object of the sale to the buyers as the buyers themselves have already acquired title and delivery thereof from the rightful owner. The contract may be deemed inoperative since it contemplated of an impossible service. Since the contract of sale was inoperative, so is the right of repurchase. A void contract cannot give rise to a valid contract. Conchita cannot redeem the lands from Anacleto base on the 2 contracts.

FACTS: Petitioner Fidela Mananzala is the registered owner of a parcel of land located at Bagong Pagasa, Quezon City under TCT 323314 and had been in actual possession of said land by virtue of a conditional sale made in her favor by the National Housing Authority. On December 14, 1984, petitioner paid in full the price of the land under the deed of conditional sale and on January 14, 1985, the NHA executed a deed of sale in her favor. On January 31, 1985, private respondent Corazon Aranez brought this action below for specific performance against petitioner to enforce a deed of sale convering the same lot allegedly entered into between her and petitioner on March 22, 1960. Petitoner denied selling the land and alleged that her signature was secured through fraud and that the deed of sale was void. ISSUE: Whether or not the deed of sale entered into between Fidela Mananzala and Corazon Aranez is void. RULING: It was held that there was a meeting of the minds between parties as evidenced by the signature of the petitioner on the deed of sale which the National Bureau of Investigation found to be genuine. The notarization of the deed gave rise to the presumption of its regularity. Petitioner can validly sell land even before the actual award to her pursuant to Article 1461 of the Civil Code, which provides that things having a potential existence may be the object of a contract of sale.

Nool v. CA, 276 SCRA 149 FACTS: One lot formerly owned by Victorio Nool (TCT T-74950) has an area of 1 hectare. Another lot previously owned by Francisco Nool (TCT T-100945) has an area of 3.0880 hectares. Both parcels are situated in San Manuel, Isabela. Spouses Conchita Nool and Gaudencio Almojera (plaintiffs) alleged that they are the owners of the subject land as they bought the same from Victorio and Francisco Nool, and that as they are in dire need of money, they obtained a loan from the Ilagan Branch of the DBP (Ilagan, Isabela), secured by a real estate mortgage on said parcels of land, which were still registered in the names of Victorino and Francisco Nool, at the time, and for the failure of the plaintiffs to pay the said loan, including interest and surcharges, totaling P56,000.00, the mortgage was foreclosed; that within the period of redemption, the plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the 2 parcels of land in question were transferred to Anacleto; that as part of their arrangement or understanding, Anacleto agreed to buy from Conchita the 2 parcels of land under controversy, for a total price

Noel v. CA, 240 SCRA 78 FACTS: Gregorio and Hilaria Nanaman have a number of properties. One of which is a 34.7 ha land. Virgilio, son of Gregorio by another woman, lived with them. When Gregorio died, Virgilio and Hilaria managed the properties. The 34.7 hectare land was later sold to Celeste. This sale was duly registered. When Hilaria died, intestate proceedings concerning the spouses estate were instituted. Juan Nanaman, brother of Gregorio, was appointed as special administrator, and was later replaced by Edilberto Noel. Celeste and heirs of spouses executed an amicable settlement where the former agreed to relinquish his rights over one half of the subject land. But this was later declared void when some of the heirs, who did not sign, questioned the agreement. Noel was then ordered to recover the land from Celeste. An action for reversion for title was made. Trial court declared that action has prescribed. CA

Law 203- Sales: By: Mithi Evasco Villarmea

Sale by one having a voidable title

to the possibility of reversion of ownership arising from the non-fulfillment of the resolutory condition. Sale, being a consensual contract, is perfected by mere consent, which is manifested the moment there is a meeting of the minds as to the offer and acceptance thereof on three (3) elements: subject matter, price and terms of payment of the price. Ownership by the seller on the thing sold at the time of the perfection of the contract of sale is not an element for its perfection. What the law requires is that the seller has the right to transfer ownership at the time the thing sold is delivered. Perfection per se does not transfer ownership which occurs upon the actual or constructive delivery of the thing sold. A perfected contract of sale cannot be challenged on the ground of non-ownership on the part of the seller at the time of its perfection; hence, the sale is still valid. The consummation, however, of the perfected contract is another matter. It occurs upon the constructive or actual delivery of the subject matter to the buyer when the seller or her successors-in-interest subsequently acquires ownership thereof. Such circumstance happened in this case when petitioners who are Trinidad Quijada's heirs and successors-in-interest became the owners of the subject property upon the reversion of the ownership of the land to them. Consequently, ownership is transferred to respondent Mondejar and those who claim their right from him. Article 1434 of the New Civil Code supports the ruling that the seller's "title passes by operation of law to the buyer." This rule applies not only when the subject matter of the contract of sale is goods, but also to other kinds of property, including real property.

ordered Celeste to return one half of the land to the heirs plus rentals. MR-affirmed trial court decision based on laches. ISSUE: Can the property be recovered from Celeste? RULING: Only one half. The transaction between Celeste and Hilaria (with Virgilio) was indeed a sale and not just a mortgage. However, Hilaria can only alienate one half of the landthis being her undivided share of the land. As for the other half, Hilaria was just a trustee for the benefit of who may be legally entitled to it. In sale, it is essential that the seller is the owner of the property he is selling. As to Virgilio, he is not qualified as an heir of Gregorio since he is an illegitimate child (the Civil Code then). The acts of Virgilio can just be considered as acts that helped Hilaria manage the conjugal property. Laches does not apply as the administrator immediately filed an action to recover possession and ownership of the property. The ten-year prescriptive period has not lapse either. Celeste is ordered to return one-half of the land and pay rentals for the occupation of the same portion from the year he occupied such until it is returned.

Quijada v. CA, 299 SCRA 695 FACTS: On April 5, 1956, Trinidad Quijada and her sisters executed a deed of conditional donation in favor of the Municipality of Talacogon, the condition being that the land shall be used exclusively for the construction of a provincial high school. Trinidad remained in possession of the land. On July 29, 1962, Trinidad sold the land to respondent Regalado Mondejar. In 1980, the heirs of Trinidad, herein petitioners, filed a complaint for forcible entry against the respondent. In 1987, the proposed campus did not materialize, and the Sangguniang Bayan enacted a resolution donating back the land to the donor. In the meantime, respondent Mondejar conveyed portions of the land to the other respondents. On July 5, 1988, petitioners filed a complaint for quieting of title, recovery of possession and ownership of the land. ISSUE: Whether the sale between Trinidad and Regalado is valid considering the capacity of the vendor to execute the contract in view of the conditional deed of donation RULING: The donor may have an inchoate interest in the donated property during the time that ownership of the land has not reverted to her. Such inchoate interest may be the subject of contracts including a contract of sale. In this case, however, what the donor sold was the land itself which she no longer owns. It would have been different if the donor-seller sold her interests over the property under the deed of donation which is subject

Azcona v. Reyes, 59 Phil. 446 FACTS: On 11 October 1920, Florentina Cordero, now deceased, executed a power of attorney authorizing her only daughter, Alberta L. Reyes, to mortgage in her name and representation all her land situated in the municipality of Pola, Mindoro. On 22 October 1920, Reyes, personally and as attorney in fact of her mother, in consideration of the sum of P6,500 received from Enrique Azcona, now deceased, sold to the latter, with the right of repurchase within the period of 4 years, 5 parcels of land with certificates of title belonging to her and Cordero. On 23 October 1920, Reyes, as attorney in fact of Cordero, in consideration of the sum of P5,000 received from Azcona, sold to the latter, with the right of repurchase within the period of 4 years, a parcel of land with certificate of title 58 of the registry of deeds of Mindoro, belonging to Cordero. On 1 October 1925, Reyes and Cordero jointly executed a power of attorney authorizing Gregorio Venturanza to sell and encumber all their real and personal including their cattle.

Law 203- Sales: By: Mithi Evasco Villarmea

Sale by one having a voidable title

Cavite Development Bank v. Spouses Lim, 324 SCRA 346 FACTS: A certain Rodolfo Guansing applied for a loan of P90,000 with a bank and mortgaged as collateral a small parcel of land situated in Quezon City with improvements thereon; he failed to pay the amortization and the bank foreclosed the mortgage on the lot. Subsequently, the bank was also the highest bidder in the Sheriff Sale. After a year, the bank consolidated title or was issued a new title in its name. The bank offered this property for sale to plaintiff spouses. Then one of the plaintiff spouses paid P30,000 deposit representing 10% of the price. Thereafter, she discovered that the property was previously registered in the name of the loan applicant who tricked his father into effecting the transfer of the title of this property in his name. The father had previously sued this son and the court ordered the cancellation of said title and accordingly reinstated the title of the father. RULING: The decision reaffirms the settled rule that ownership of the property subject of the sale is not necessary for the perfection of the contract. It is only when the subject-matter is to be delivered that the vendor must have the title or must be the owner thereof. In this case, the loan applicants title to the lot in question was previously cancelled which naturally rendered spurious the title of the bank which was derived from this cancelled mother title. The High Court still allowed the fiction that there was perfection of the contract when the property offered for sale and accepted by plaintiffs spouses through the wife. Thus, under Art 1434 of the Civil Code, when a person sells or alienates a thing which, at that time, was not his, but later acquires title thereto, such title passes by operation of law to the buyer or grantee. This is the same principle behind the sale of future goods under Art 1462. However, Art 1459, at the time of delivery or consummation stage of the sale, it is required that the seller be the owner of the thing sold. Otherwise, he will not be able to comply with his obligation to transfer ownership to the buyer. It is at the consummation stage where the principle of nemo dat quod non habet applies.

Respondents failed to exercise right of redemption, they then executed a deed whereby the deeds of sale with the right of repurchase were cancelled and a mortgage was constituted therein. ISSUE: Whether or not the deed of resale and mortgage dated November 29, 1926 is legal and valid. RULING: It is necessary that the vendor be the owner of the thing sold, inasmuch as it is a principle of law that nobody can dispose of that which does not belong to him. However, as has been noted, the sales with pacto de retro were fictitious for the reason that the contracts entered into by Alberta L. Reyes and the deceased Enrique Azcona were really mortgage in their nature. Therefore, the resale was a mere formality resorted to for the purpose of obtaining the lawful cancellation of the registration thereof in the registry of deeds and the notation of the mortgage deed. Coronel v. Ona 33 Phil. 456 FACTS: That on November 5, 1912, Cenon Ona and the other defendants formed a conspiracy, with intent to gain for themselves, to the fraud and injury of the plaintiff administration, and drew up and signed an alleged instrument of sale, whereby Cenon Ona sold to the spouses Benigno Nadres and Victoria Villa the said land, which instrument they falsely dated as prior to the death of his wife Isidra Coronel and forged and imitated her signature. That on same date, same defendants, executed another instrument of sale of the same land, wherein they appear as vendors thereof Benigno Nadres and Victoria Villa and as vendees the spouses Crispin Castillo and Maria Recto. ISSUE: Whether or not the instrument of purchase and sale is valid. RULING: There is no contract says Article 1261 unless there exists the essential requisites of consent of the contracting parties, a definite object which may be the subject of a contract, and the consideration for the obligation may be established. From the plainly proven facts that the record discloses it is evident that Isidra Coronel was not present to give her consent to the alleged contract of sale, because she was dead when said contract was simulated, nor is any consideration for the obligation stated therein, and consequently the contract set forth in said instrument is flagrantly null and void. A contract of sale afterwards entered into by the purchaser in a void instrument executed in favour of a third person to the fraud and prejudice of the rights of the heirs of the deceased owner, although the said purchaser acted in good faith, is null and void, inasmuch as the vendor was not seized of the property and had no right to make the sale; he was unable to transmit any right to the purchaser by means of the former void contract.