Delivery of the Thing

with Fruits and Accessions

Principal obligations of the vendor:
1. transfer
ownership
the determinate
sold in
Article 1537. The vendor is bound to deliver the thing sold and
its accessions
andofaccessories
in thething
condition
2. Art 1537
which they were upon the perfection of the contract.
3. To warrant against eviction and hidden defects
1547)was perfected. (1468a)
All the fruits shall pertain to the vendee from the day on which (1495,
the contract
4. Art 1163
5. pay tofortake
thecare
expenses
of the proper
deed ofdiligence
sale, unless
Article 1163. Every person obliged to give something is also obliged
of it with
of a
there isrequires
a stipulation
to the
contrary
(Art 1487)
good father of a family, unless the law or the stipulation of the parties
another
standard
of care.
(1094a)
Place
of delivery
theobligation
goods sold,to deliver it arises.
Article 1164. The creditor has a right to the fruits of the thing
from
the timeofthe
Rules
However, he shall acquire no real right over it until the same has
been delivered to him. (1095)
1. agreement, express or implied, the place of
delivery
upon upon the actual or constructive
Article 1477. The ownership of the thing sold shall be transferred
to agreed
the vendee
2. no agreement, the place of delivery is determined
delivery thereof. (n)
by usage of trade
nodeliver,
agreement,
no prevalent
of trade,
place
of
Article 1495. The vendor is bound to transfer the ownership of3.and
as well
as warrantusage
the thing
which
is the
delivery is the sellers place of business
object of the sale. (1461a)
4. any other case, the place of delivery is the sellers
residence
Article 1521. Whether it is for the buyer to take possession of the
goods or of the seller to send them to the buyer is
in case of
specificthegoods,
which
to from
the knowledge
a question depending in each case on the contract, express or5.implied,
between
parties.
Apart
any such
of the
parties
at theistime
of the place
contract
was made
contract, express or implied, or usage of trade to the contrary, the
place
of delivery
the seller's
of business
if
were
in
some
other
place,
that
place
is
the
place
of
he has one, and if not his residence; but in case of a contract of sale of specific goods, which to the knowledge of the
delivery,
the that
absence
agreement
or usage of
parties when the contract or the sale was made were in some other
place,inthen
placeofisany
the place
of delivery.
trade to the contrary.
Accessions: fruits of a thing; or additions to, or
improvements upon, a thing such as the young of
Presumption that the buyer must take the goods from
animals, house or trees on land, etc.
the sellers place of business or residence.
Accessories: anything attached to a principal thing
for its completion, ornament, or better use such as
picture frames, keys of a houseetc.

Sellers duty to deliver the thing sold in a

condition suitable for its enjoyment by the
buyer for the purposes contemplated.
Vendee is entitled:
o 1164 and
o Obligation to deliver arises upon
perfection of the contract (1475)
Vendee is not entitled:
o Rule provided in 1537, par 2, is
modified by the agreement of the
parties
o Vendee rescinds contract of sale
instead of exacting specific
performance; he is entitled only to
damages but not the fruits.
o Contract of promise to sell

Time of delivery of goods:

1. if no time is fixed by the contract, then the seller is
bound to send the goods to the buyer within a
reasonable time.
What is a reasonable time is a question of fact
dependent upon circumstances attending the
particular transaction, such as
the character of the goods,
the purpose for which they are intended,
ability of the seller to produce the goods if
they are to be manufactured,
the facilities available for transportation and
distance the goods must be carried and
the usual course of business in a particular
trade. (Smith Bell v Sotello Matti)

Place, time and manner of delivery

Article 1524. The vendor shall not be bound to

deliver the thing sold, if the vendee has not paid him
the price, or if no period for the payment has been
fixed in the contract. (1466)
Article 1169. Those obliged to deliver or to do
something incur in delay from the time the obligee
judicially or extrajudicially demands from them the
fulfillment of their obligation. However, the demand
by the creditor shall not be necessary in order that
delay may exist: (1) When the obligation or the law
expressly so declare; or (2) When from the nature and
the circumstances of the obligation it appears that the
designation of the time when the thing is to be
delivered or the service is to be rendered was a
controlling motive for the establishment of the
contract; or (3) When demand would be useless, as
when the obligor has rendered it beyond his power to
perform. In reciprocal obligations, neither party
incurs in delay if the other does not comply or is not
ready to comply in a proper manner with what is
incumbent upon him. From the moment one of the
parties fulfills his obligation, delay by the other
begins. (1100a)
Article 1521. Whether it is for the buyer to take
possession of the goods or of the seller to send them
to the buyer is a question depending in each case on
the contract, express or implied, between the parties.
Apart from any such contract, express or implied, or
usage of trade to the contrary, the place of delivery is
the seller's place of business if he has one, and if not
his residence; but in case of a contract of sale of
specific goods, which to the knowledge of the parties
when the contract or the sale was made were in some
other place, then that place is the place of delivery.
Article 1523. Where, in pursuance of a contract of
sale, the seller is authorized or required to send the
goods to the buyer, delivery of the goods to a carrier,
whether named by the buyer or not, for the purpose
of transmission to the buyer is deemed to be a
delivery of the goods to the buyer, except in the cases
provided for in article 1503, first, second and third
paragraphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller
must make such contract with the carrier on behalf of
the buyer as may be reasonable, having regard to the
nature of the goods and the other circumstances of
the case. If the seller omit so to do, and the goods are

lost or damaged in course of transit, the buyer may

decline to treat the delivery to the carrier as a
delivery to himself, or may hold the seller
responsible in damages. Unless otherwise agreed,
where goods are sent by the seller to the buyer under
circumstances in which the seller knows or ought to
know that it is usual to insure, the seller must give
such notice to the buyer as may enable him to insure
them during their transit, and, if the seller fails to do
so, the goods shall be deemed to be at his risk during
such transit. (n)
Article 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 which the contract was perfected.
(1468a)
Article 1164. The creditor has a right to the fruits of
the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right over it
until the same has been delivered to him. (1095)
Article 443. He who receives the fruits has the
obligation to pay the expenses made by a third person
in their production, gathering, and preservation. (356)

a. Reasonable Time
Smith Bell v. Sotelo Matti
March 9, 1922 || Romualdez, J.

August 1918, Smith Bell Corp. (Petitioner)

entered into contracts with Mr. Vicente
Sotelo (Respondent) where the former
agreed to sell and the latter agreed to
purchase 2 steel tanks (3-4 months), 2
expellers (September or ASAP), and 2
electric motors (approx. 90d but not
guaranteed), all to be shipped from New
York to Manila.
The tanks arrived at Manila on the 27th of
April, 1919; the expellers on the 26th of
October, 1918; and the motors on the 27th of
February, 1919. Petitioner then notified
respondent of the arrival of the goods but
respondent refused to receive them and pay.
Petitioner then filed a case against

respondent.
Petitioner said that it immediately notified
the respondent of the arrival of the goods,
and asked instructions from him as to the
delivery thereof, and that the respondent
refused to receive any of them and to pay
their price.
Respondent denied petitioners allegations
as to the shipment of these goods, their
arrival, the notification to respondent, his
refusal to receive them and to pay their price
and respondent also said that the motors and
the expellers arrived incomplete and long
after the date stipulated.
The court below absolved the respondent
from the complaint insofar as the tanks and
the electric motors were concerned, but
rendered judgment against them, ordering
them to "receive the aforesaid expellers and
pay the petitioner the sum of P50,000
representing the price of the goods.

Whether under the contracts entered into and the

circumstances established in the record, the
petitioner has fulfilled, in due time, its obligation
to bring the goods in question to Manila YES.

Under the stipulations of the contracts

presented, it cannot be said that any
definite date was fixed for the delivery of
the goods. (See notes for the contract
stipulations)
o As to the tanks, the agreement was
that the delivery was to be made
"within 3 or 4 months," but that
period was subject to the
contingencies referred to in a
subsequent clause.
o With regard to the expellers, the
contract says "within the month of
September, 1918," but to this is
added "or as soon as possible."
o And with reference to the motors,
the
contract
contains
this
expression, "Approximate delivery
within ninety days," but right after
this, it is noted that "this is not
guaranteed."
From the record it appears that these
contracts were executed at the time of the
world war when there existed rigid
restrictions on the export from the United
States of articles like the machinery in

question, and maritime, as well as railroad,

transportation was difficult, which fact was
known to the parties.
We conclude that the term which the
parties attempted to fix is so uncertain
that one cannot tell just whether, as a matter
of fact, those articles could be brought to
Manila or not. If that is the case, as we think
it is, the obligation must be regarded as
conditional.
More specifically, the delivery was subject
to a condition where its fulfillment was
dependent not only on petitioner but also
upon the will of third persons (US
Government who may or may not allow the
delivery due to the war) who could in now
way be compelled to fulfill the condition.
When the fulfillment of the condition does
not depend on the will of the obligor, but on
that of a third person, who can in no way be
compelled to carry it out, the obligor's part
of the contract is complied with if he does
all that is in his power, and has the right to
demand performance of the contract by the
other party.
It is sufficiently proven in the record that
the petitioner has made all the efforts it
could possibly be expected to make under
the circumstances, to bring the goods in
question to Manila, as soon as possible.
And, as a matter of fact, through such
efforts, it succeeded in importing them and
placing them at the disposal of the
respondent, Mr. Sotelo, in April, 1919. Thus,
petitioner has complied with its
obligations.
When the time of delivery is not fixed or
is stated in general and indefinite terms,
time is not of the essence of the contract.
In such cases, the delivery must be made
within a reasonable time.
Reasonable time does not mean immediately
or that the seller must stop all his other work
and devote himself to that particular order.
But the seller must nevertheless act with all
reasonable
diligence
or
without
unreasonable delay.
The record shows, as we have stated, that
the petitioner did all within its power to have
the machinery arrive at Manila as soon as
possible, and immediately upon its arrival it
notified the purchaser of the fact and offered
to deliver it to him. Taking these
circumstances into account, we hold that the
said machinery was brought to Manila by

the petitioner within a reasonable time.

Petitioner is not guilty of delay.
Decision:

Petition granted. Respondent ordered to

accept delivery and pay with interest.

Notes:

As regards the tanks, the contract stipulated:

o "To be delivered within 3 or 4
months - The promise or indication
of shipment carries with it
absolutely no obligation on our part
- Government regulations, railroad
embargoes, lack of vessel space,
the exigencies of the requirements
of the United States Government,
or a number of causes may act to
entirely vitiate the indication of
shipment as stated. In other words,
the order is accepted on the basis of
shipment at Mill's convenience,
time of shipment being merely an
indication of what we hope to
accomplish."
As regards the expellers, the contract
stipulated:
o "The following articles, herein
below more particularly described,
to be shipped at San Francisco
within the month of September
1918, or as soon as possible - Two
Anderson oil expellers
As regards the motors, the contract
stipulated:
o "Approximate delivery within
ninety days. - This is not
guaranteed. This sale is subject to
our being able to obtain Priority
Certificate, subject to the United
States Government requirements
and also subject to confirmation of
manufacturers."
In all these contracts, there is a final clause:
o "The sellers are not responsible for
delays caused by fires, riots on land
or on the sea, strikes or other
causes known as 'Force Majeure'
entirely beyond the control of the
sellers or their representatives."

b. When Time is of the Essence

Soler v Chesley (1922)
Petitioners: Andres Soler
Respondents: Edward Chesley
Place, Time and Manner of Delivery When Time is
of the Essence
Romualdez, J.

Andres Soler agreed with Wm. H. Anderson

and Co. for the purchase of certain
machinery. Anderson and Co. was to deliver
to Soler the coconut oil machinery which
was ordered by cable. The machinery
consisted of oil expellers, rotary pumps,
cookers, filter press, and chain elevators
among others.
The machinery was to be invoiced at
manufacturers price plus all charges
(freight, insurance, interest etc.) Half of the
payment through deposit was to be made
upon arrival of the machinery and the
balance to be paid 90 days after delivery of
the machinery.
If Soler would fail to comply with the terms,
it would be sufficient cause to terminate the
contract and all payments made by him
would remain with Anderson and Co.
The title of the machinery was to remain in
the name of Anderson and Co. until full
payment had been made after which time
transfer of all right and title would be made
to Soler.
On Nov. 16, 1918, Soler sold to Edward
Chesley all his rights and interest in the
contract of sale. Soler stated in their contract
that a part of the aforesaid machinery was
at that time on the way with the other
part already in Manila.
With this transfer of rights and interest,
Soler was to be relieved from his contract
with Anderson and Co. since Chesley was
subrogated in his place. The sale for the
machinery for P100k by Chesley to
Anderson and Co. was accompanied by
Soler paying the difference between the
amount of the invoices and the 100k.
However, of the machinery to be delivered,
only the filter press, cooker, and the chains
were in Manila on Nov. 16, 1918 but the
most important parts such as the oil

expellers and the grinding mills were not yet

there.
The expellers arrived on Feb 13, the motors
on Mar 8, the machinery on Apr 27, and the
grinding mills on Aug 23, 1919 respectively.
Chesley received and paid for them under
protest since they were not delivered within
the period stipulated in the contract. Soler
was informed through letter that the contract
between him and Chesley was rescinded
since parts of the machinery that the former
had stated were on the way were actually
not.
Soler filed suit praying that Chesley be
ordered to pay him P30,546 and the price of
the machinery paid by the latter. Chesley
alleged that he accepted and signed the
contract on the assertion of Soler that the
machinery was either in Manila already or
on the way. He signed the contract because
he was desirous of having the machinery.
CFI: ruled in favor of Chesley

ISSUE/S:

WoN time was an essential element of the

contract: YES
o The act of Chesley in insisting that
the guaranty of Soler (that part of
the machinery to be delivered was
on its way), his repeated complaints
and protests when he made
payments as the parts arrived, and
his letter to Soler leave no room for
doubt that the arrival of the
machinery within a reasonably
short time was one of the
determining elements of his
consent.
o These acts disclose the fact that he
intended the arrival of the
machinery to be an essential
element of the contract.
o Chesley had no reason to doubt the
veracity of Solers assertion that the
machinery was on its way and the
latter even testified that he showed
the letters stating that according to
information he received, the

expellers had already been sent out.

The fact that Soler had no control
of the prompt transportation of the
machinery to Manila does not
relieve him from making good his
guaranty inserted in the contract.
He who contracts and assumed an
obligation is presumed to know the
circumstances under which said
obligation can be complied with.
Since Soler had failed to carry out
his obligation in the contract, he
has no right to compel Chesley to
comply with his obligation to pay
him.

HELD: Judgment appealed from is REVERSED.

Chesley absolved from the complaint.

Republic of the Phils v. Litton & Co. et al (1953)

FACTS:
There were 2 contracts/causes of action:
o [First cause of action] On Dec 22,
1945, Litton & Co agreed to supply
and deliver to the plaintiff on or
before Mar 1, 1946, 96000
padlocks at P1.87 each. On or
about April 8, 1946, seller
delivered padlocks which is much
less than the quantity agreed upon.
They only just delivered 34200
padlocks. The seller then failed to
deliver the remaining number of
padlocks which were to be used
during the elections of April 23,
1946.
o The buyer alleges that because of
such failure, he was compelled to
make open market purchases of
25613 padlocks, thereby causing
him losses and damages of
P176243.41
(which
is
the
difference between the price
actually paid for said open market
purchases and the price which the
government would have paid to the
seller).
o [Second cause of action] Plaintiff
alleges that on December 26, 1945,
a contract was entered into between
the plaintiff and the defendants

Litton & Co. and George Litton,

whereby said defendants undertook
to deliver to the plaintiff on or
before March 1, 1946, quantities of
indelible pencils, lead pencils,
bottles of ink, pen points, chalks,
clips, etc., with a total value of
P25,979.55, and that the defendant
Litton & Co., in violation of the
terms and conditions of said
contract failed to deliver the
articles called for on or before the
stipulated date, said articles to be
used during the elections of April
23, 1945.
o The plaintiff further alleges that for
such default and failure of the
defendants, the plaintiff was
compelled to make open market
purchases of said articles, thereby
having suffered damages and losses
in the sum of P20,164.17,
representing the difference between
the price of said articles purchased
in the open market and the price
stipulated in the contract;
o Now, the buyer wants payment
from the seller for the damages and
losses.
Litton answered that the contracts
mentioned are not the real contracts and do
not express the real agreement. That it was
agreed that the seller would deliver the
goods provided, the buyer should obtain
shipping priority and the export license to
bring the good from the US to the
Philippines and that the purchases made in
the open market were made at exorbitant
prices. That the seller is not liable for the
alleged losses and damages resulting from
those purchases, as the delay or was due to
buyers fault and to circumstances beyond
their control.
o By way of counterclaim, the seller
alleges that after the elections, it
delivered padlocks and office
supplies and that the buyer,
notwithstanding repeated demands
by the seller, the buyer refused to
pay.
TC allowed the buyers claim as to both
causes of action, but granted the sellers
counterclaims for the unpaid price of
padlocks and office supplies (minus the
penalty as stated in the penalty clause with is

1/10 of oen percent per day late)

ISSUE: W/N
Litton unconditionally bound
himself to supply and deliver to the plaintiff
96,000 padlocks and a quantity of stationery and
office supplies on or before March 1, 1946 YES
In the Circular Proposal No. 13 issued on
Nov 27, 1945, to local dealers, calling for
bids, it was expressly stated that the goods
were for election purposes, and the bidder
was required to state the shortest time of
delivery, which should not be later than
March 1, 1946. It is then preposterous to
suppose that delivery after the elections
would ever be contemplated.
Also, the seller wrote a note to the buyer
saying:
o Sir: We have the honor to inform
you that the Padlocks, 1 5/8 x 1
5/8", rustless, Eagle brand, are
manufactured in the United States.
For immediate shipment our
principals have 30,000 pieces for
the first delivery arriving in Manila
about the middle of February, and
the balance of 66,000 not later than
March 1, 1946. It is, however,
understood that your Office will
give us a letter certifying that the
padlocks are urgently needed by the
Philippine Government so that the
export license can be secured
without delay, thus making the first
shipment of 30,000 arriving in
Manila about the middle of
February, 1946. Please let us know
immediately so we can notify our
principals for immediate shipment
as above stated.
The foregoing letter shows that Litton
merely expected the plaintiff to give a
certification that the padlocks were urgently
needed by the Philippine Government so as
to warrant the early issuance of the license.
Moreover, Litton subsequently filed two
performance bonds, executed by him as
principal and the Central Surety Co. as
surety. With reference to the padlocks, the
bond recited in part as follows:
o WHEREAS, the above bounden
principal, on 22nd day of
December, 1945, entered into a
Contract with the Division of
Purchase and Supply, Department
of Finance, Manila, to fully and

faithfully guarantee the delivery of

96,000 padlocks, . . . No. 13, Order
No. 1896, said delivery to be made
not later than March 1, 1946.
Although the Philippine Government did
exert some efforts to the granting by the US
of the necessary papers, this does not mean
that it was buyers obligation to do so or that
the sellers duty to deliver the was
conditional. The effort by the Phil Govt was
only in furtherance of the sellers letterrequest.
Littons argument that there was mutual
mistake by both parties because both did not
foresee the impossibility of compliance for
causes beyond their control cannot prosper.
The SC does not sustain this argument
because the seller, an experienced
businessman and aware of the difficulties in
bringing US goods to the Philippines, chose
to bind himself to deliver the goods.

c. When the Vendor not bound to deliver

Article 1524. The vendor shall not be bound to
deliver the thing sold, if the vendee has not paid him
the price, or if no period for the payment has been
fixed in the contract. (1466)

d. Acceptance not a condition to delivery

La Fuerza v. CA (1968)
Petitioner: La Fuerza, Inc.
Respondents: The Hon. Court of Appeals and
Associated Engineering Co., Inc.
Place, Time, and Manner of Delivery Acceptance
not a condition to delivery

Article 1536. The vendor is not bound to deliver the

thing sold in case the vendee should lose the right to
make use of the terms as provided in article 1198.
(1467a)
Article 1198. The debtor shall lose every right to
make use of the period:
(1) When after the obligation has been contracted, he
becomes insolvent, unless he gives a guaranty or
security for the debt;
(2) When he does not furnish to the creditor the
guaranties or securities which he has promised; (3)
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;
(4) When the debtor violates any undertaking, in
consideration of which the creditor agreed to the
period;
(5) When the debtor attempts to abscond. (1129a)

Associated Engineering, Co., Inc. is a

corporation engaged in the manufacture and
installation of flat belt conveyors. La Fuerza,
Inc. is also a corporation engaged in the
manufacture of wines.
Associated Engineering believed that La
Fuerza needed a conveyor system to convey
empty bottles from the storage room in the
plant to the bottle washers in the production
room, and therefore offered its services,
which La Fuerza accepted. Thereafter, La
Fuerza paid P5,000 as downpayment for the
total amount of P13,250 for two conveyors,
leaving a balance of P8,250.
The installation of the conveyor belts was
completed in May, 1960. However, after
some trial runs, it was discovered that the
conveyor system did not function to La
Fuerzas satisfaction since when it was
operated, several bottles collided with each
other, some jumping off the conveyor belt
and were broken. Furthermore, the flow of
the system was so sluggish that in the
opinion of La Fuerzas general manager,
their old system of hand carrying the bottles
from the storage room to the washers was
even more efficient and faster.
The defects had not been remedied despite
the fact that Associated Engineering was
advised of them several times, so that when
La Fuerza was billed for the balance of the
contract price, La Fuerza refused to pay for
the reason that the conveyor system did not
serve the purpose for which it was
manufactured and installed at such a heavy
expense.
Associated Engineering thus commenced
this action for the recovery of the P8,250

balance. La Fuerza, in its answer, alleged

that the "conveyors furnished and installed
by the plaintiff do not meet the conditions
and warranties" of the latter, and set up a
counterclaim for the P5,000, which prayed
that the complaint be dismissed and that its
contract with the Associated Engineering be
rescinded.
The CFI held in favor of La Fuerza and
rescinded the contract.
The CA reversed, holding that La Fuerza's
right of action for rescission had prescribed,
pursuant to Art. 1571 of the Civil Code
which provides that an action to rescind
'shall be barred after six months from
delivery of the thing sold. La Fuerza did not
avail of the right to demand rescission until
the filing of its answer in the CFI, on April
17, 1961, or over 10 months after the
installation of the conveyors in question had
been completed on May 30, 1960.
La Fuerza assails the CA ruling, upon the
ground that:
o Associated Engineering is not
deemed to have delivered the
conveyors within the purview of
Art. 1571 until the conveyors shall
meet La Fuerza's "need of a
conveyor system that would
mechanically transport
empty
bottles from the storage room to the
bottle workers in the production
room
thus
increasing
the
production and efficiency, and La
Fuerza
had
accepted
said
conveyors.
o Assuming that there has been such
delivery, the period of 6 months
prescribed in Art. 1571 refers to the
period within which La Fuerza may
bring an action to demand
compliance of the warranty against
hidden defects, not the action for
rescission of the contract.

ISSUE/S:

WoN there was delivery as contemplated in

law

YES. Art. 1571 provides that an

action to rescind 'shall be barred
after six months, from delivery of
the thing sold". This article is made
applicable to the case at bar by
Article 1714 which provides that
"the pertinent provisions on
warranty of title against hidden
defect in a contract of sale" shall be
applicable to a contract for a piece
of work. Considering that Article
1571 is a provision on sales, the
delivery mentioned therein should
be construed in the light of the
provisions on sales. Article 1497
provides that the thing sold shall be
understood as delivered when it is
placed in the control and
possession
of
the
vendee.
Therefore, when the thing subject
of the sale is placed in the control
and possession of the vendee,
delivery is complete. On the other
hand, acceptance is an obligation
on the part of the vendee. Delivery
and acceptance are two distinct and
separate acts of different parties.
Consequently, acceptance cannot
be regarded as a condition to
complete delivery.
o The failure of La Fuerza to express
categorically whether they accepted
or rejected the conveyors does not
detract from the fact that the same
were actually in its possession and
control; that, accordingly, the
conveyors had already been
delivered; and that, the period
prescribed in said Art. 1571 had
begun to run.
WoN the action has prescribed
o YES. Art. 1571 of the Civil Code
provides that actions arising from
the provisions of the preceding ten
articles shall be barred after six
months, from the delivery of the
thing sold. Among the ten articles
referred to are Arts. 1566 and 1567,
which provide that if the thing sold
o

has hidden faults or defects, the

vendor shall be responsible therefor
and the vendee "may elect
between withdrawing from
the
contract
and demanding
a
proportional reduction of the price,
with damages in either case." La
Fuerza had chosen to withdraw
from the contract by praying for its
rescission. However, according to
Art. 1571, the action shall be barred
after six months, from the delivery
of the thing sold. The period of 4
years, provided in Art. 1389 of said
Code, for "the action to claim
rescission," applies to contracts, in
general, and must yield, in the
instant case, to said Art. 1571,
which refers to sales in particular.
Public interest demands that the
status of the relations between the
vendor and the vendee be not left in
a condition of uncertainty for an
unreasonable length of time, which
would be the case, if the lifetime of
the vendee's right of rescission
were 4 years.

2. Sale of Goods
Article 1522. Where the seller delivers to the buyer a
quantity of goods less than he contracted to sell, the
buyer may reject them, but if the buyer accepts or
retains the goods so delivered, knowing that the seller
is not going to perform the contract in full, he must
pay for them at the contract rate. If, however, the
buyer has used or disposed of the goods delivered
before he knows that the seller is not going to
perform his contract in full, the buyer shall not be
liable for more than the fair value to him of the goods
so received.
Where the seller delivers to the buyer a quantity of
goods larger than he contracted to sell, the buyer may
accept the goods included in the contract and reject
the rest. If the buyer accepts the whole of the goods
so delivered he must pay for them at the
contract rate.
Where the seller delivers to the buyer the goods he

contracted to sell mixed with goods of a different

description not included in the contract, the buyer
may accept the goods which are in accordance with
the contract and reject the rest.
In the preceding two paragraphs, if the subject matter
is indivisible, the buyer may reject the whole of the
goods.
The provisions of this article are subject to any usage
of trade, special agreement, or course of dealing
between the parties. (n)
Article 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 which the contract was perfected.
(1468a)
Article 1480. Any injury to or benefit from the thing
sold, after the contract has been perfected, from the
moment of the perfection of the contract to the time
of delivery, shall be governed by articles 1163 to
1165, and 1262.
This rule shall apply to the sale of fungible things,
made independently and for a single price, or without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed
according to weight, number, or measure, the risk
shall not be imputed to the vendee until they have
been weighed, counted, or measured and delivered,
unless the latter has incurred in delay. (1452a)

4 Rules on Risk of Loss

1. lost before perfection, the seller and not the one
who intends to purchase it bears the loss.
2. entirely lost at the time of perfection, the contract
is without any effect
3. lost after perfection but before delivery the risk
of loss is shifted to the buyer as an exception to the
rule of res perit domino.

In the following cases, it is the

seller who bears the risk

o
o

Lost through fault of the

seller or when obligor
delats
What is lost is a generic
thing
Thing lost falls under the
definition of goods

4. thing is lost after delivery, the buyer bears the risk

following res perit domino
Theories of Risk
Principle of Tradition
risk of lost is allocated to
the seller based on the theory
that the property sold is not
transferred until delivery of
the thing
System followed by 1480 is
Perfection

Principle of Perfection
risk of loss is
transmitted to the buyer
from the moment the
contract is perfected
that of Principle of

Cf Art 1164 and Art 1537

o If the buyer is entitled to
fruits fro the perfection of
the contract, then it is
logical that the huyer also
bears the risk of loss from
the moment of perfection
Cf 1165
o Implication is that if the
seller was not at fault, the
buyer is responsible for
the fortuitous event even
prior to the delivery

SCOPE of 1480
First rule: Thing is lost after perfection but before its
delivery applicable if the thing is determinate; also
applies to fungible things
Second rule: relates to fungible things sold for a price
fixed in realtion to weight, umber or measure. Par 3
is an exception to the rule that the vendee bears the
loss after perfection of the contract and before
delivery. But vendee assumes risk if he has incurred
in delay in receiving the goods sold
Avoiding conflict between 1480 and 1504:
Art 1504: restricted to sale of goods as defined in

Art 1636
Art 1480: things which cannot be called goods.
1480 is the general rule and 1504, the exception.

a. Delivery of the Wrong Quantity

Article 1522. Where the seller delivers to the buyer a
quantity of goods less than he contracted to sell, the
buyer may reject them, but if the buyer accepts or
retains the goods so delivered, knowing that the seller
is not going to perform the contract in full, he must
pay for them at the contract rate. If, however, the
buyer has used or disposed of the goods delivered
before he knows that the seller
is not going to perform his contract in full, the buyer
shall not be liable for more than the fair value to him
of the goods so received.
Where the seller delivers to the buyer a quantity of
goods larger than he contracted to sell, the buyer may
accept the goods included in the contract and reject
the rest. If the buyer accepts the whole of the goods
so delivered he must pay for them at the
contract rate.
Where the seller delivers to the buyer the goods he
contracted to sell mixed with goods of a different
description not included in the contract, the buyer
may accept the goods which are in accordance with
the contract and reject the rest.
In the preceding two paragraphs, if the subject matter
is indivisible, the buyer may reject the whole of the
goods.
The provisions of this article are subject to any usage
of trade, special agreement, or course of dealing
between the parties. (n)
Seller is under contract to deliver a specific quantity
of goods and he delivers a smaller quantity as full
performance buyer may reject goods so delivered
He may accept

Pay for their price at the contract rate if he

knew that no more were to be delivered
o Fair value to him of the goods, if he
did not know that the seller is going

to be guilty of a breach of contract

fair value to
him benefit
which the buyer
may
have
received from the
goods.
Not
necessarily the
market
value.
Since seller is at
default, buyer is
not required to
pay the contract
price if such
price is more
than fair
value to him

deliveries in respect of one or more instalments, or

the buyer neglects or refuses without just cause to
take delivery of or pay for one or more instalments, it
depends in each case on the terms of the contract and
the circumstances of the case, whether the breach of
contract is so material as to justify the injured party
in refusing to proceed further and suing for damages
for breach of the entire contract, or whether the
breach is severable, giving rise to a claim for
compensation but not to a
right to treat the whole contract as broken. (n)

Delivery of goods more than quantity contracted

Buyer may accept quantity
contracted for, but if he accepts all
the goods then he makes himself
liable for the price of all of them
Delivery of goods mixed with others
Analogous to the preceding rules
Effect of indivisibility of subject matter
Buyer may reject the whole of
goods

Separate price has been fixed for each instalment:

depends on the terms of the contract and the
circumstances of the case

Usage of trade: any practice or method of dealing

having such regularity of observance in a place,
vocation or trade as to justify a expectation that will
be observed with respect to the transaction. Existence
and scope needs to be proved as facts
Course of dealing: sequence of previous conduct
between the two parties to a particular transaction
which is fairly to be regarded as establishing a
common basis of understanding for interpreting their
expectations and other conduct.
b. Delivery by Installments
Article 1583. Unless otherwise agreed, the buyer of
goods is not bound to accept delivery thereof by
installments.
Where there is a contract of sale of goods to be
delivered by stated instalments, which are to be
separately paid for, and the seller makes defective

General Rule: Buyer is not bound to receive delivery

of the goods in instalments. He is entitled to delivery
of all goods at the same time and is bound to receive
delivery of all at the same time

Breach affects whole contract:

injured party may sue for damages
Breach severable: merely a claim
for compensation for the particular
breach but not a right to treat the
whole contract as broken

Separate price was not fixed for each instalment:

seller fails to deliver, the buyer should be able to
choose between fulfilment and rescission of the
obligation, with the payment of damages in either
case.
3. Sale of Immovables
Article 1471. If the price is simulated, the sale is
void, but the act may be shown to have been in
reality a donation, or some other act or contract. (n)
Article 1543. The actions arising from articles 1539
and 1542 shall prescribe in six months, counted from
the day of delivery. (1472a)
Azarraga v Gay; J. Villamor; Sale of a determinate
piece of land, Rules.
-

Leodegario Azarraga sold 2 parcels of land

to Maria Gay for P47k in a public document,
with the ff. conditions of payment:

P10k upon signing contract, P20k

upon delivery of 1st Torrens title,
P10k upon delivery of the 2nd
Torrens title, and P12k one year
after delivery of the 2nd title.
Gay failed to pay the 3 rd (P10k) and 4th
(P12k) amounts. Leo sued to collect the
P22k, with interest from the time they
became due.
In defense, Gay claims Leo misrepresented
the size of the 2nd lot as 98 ha, but it was
only 60 ha, and thus, the price should be
reduced to P38k, the balance of which (P8k)
she was ready to pay but Leo refused to
accept. Also, Gay claims she had paid ~P4k
since then. Gay countersues for P15k in
damages.
In response, Leo claims the sale was for a
lump sum of P47k, and that the price was
not to be reduced since was not selling by
ha, and that Gays claim had prescribed.
TC ruled for Leo, finding that neither Leo
nor Gay gave importance to the area of the
land being sold, and found no fraud as to the
parties agreement re: the lump sum of P47k
for the 2 lots, and ordered Gay to pay
P19.3k with interest. Hence petition via bill
of exceptions.
o

Issues:
1

Was there fraud by Leo? NO. The sale is

valid.
a No reason to overturn the finding
of fact by the TC, and upon close
inspection:
i Gay herself went to the
land and made her own
calculations.
ii Leo gave Gay the
documents showing the
size of the 2nd lot before
the contract was executed.
The fact that she may have
disregarded/overlooked it
is unimportant she
should have known.
b Even if there was fraud, as held in
[Songco v Sellner], when the
purchaser
makes
her
own
investigations and the vendor does
not prevent such, the former cannot
later allege that the latter made
false representations to her.

Should the price of the sale be reduced given

the smaller size of the lot? NO.
a The contract between the parties
shows that they agreed to the sale
of 2 lots, the first ~102 ha and the
second ~98 ha, for P47k. The lots
were defined by the boundaries
given in the instrument.
b Because of this, the applicable law
is A1471:
i Paragraph 1: In case of
the sale of real estate for a
lump sum and not at the
rate of a specified price
for each unit of measure,
there shall be no increase
or decrease in the price
even if the area be found
to be more or less than
that stated in the
contract.
ii Paragraph 2: This same
rule shall apply when 2 or
more estates are sold for a
single price; but, if in
addition to a statement of
boundaries the area of
the estate shall be
designated in the contract,
the vendor shall be
obliged to deliver all that
is included within such
boundaries, even should
it
exceed
the
area
specified and should
he not be able to do so,
he
shall
suffer
a
reduction of the price in
proportion to what is
lacking of the area,
unless the contract be
annulled by reason of the
vendees refusal to accept
anything other than what
was stipulated.
c So long as the Leo can deliver all
the land included within the
boundaries (which he did)
assigned to the property, there can
be no claim either on his part (if
the area is greater than what was
expressed), nor on the part of Gay
(if the area is in reality much

smaller).
However, if Leo sold everything
within
the
boundaries
but
afterwards cannot deliver all
(maybe part of the property does
not belong to him), then A1471(2)
provides the solution: either a
reduction in price, or a nullification
of the contract.

Held: TC affirmed.
a. Where price is at certain rate per unit measure
Article 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 onetenth of the price agreed upon.

Entire area stated in contract must be delivered:

Sale of a real estate should be made with a statement
of its area, at the rate of a certain price per unit of
measure or number, the cause of the contract with
respect to the vendee is the number of such units, or,
if you wish, the thing purchased as determined by the
stipulated number of units. The vendor must deliver
the entire property agreed upon.
When entire area could not be delivered:
If all that is included within the stipulated boundaries
is not delivered, then the object of the contract, its
case as far as the vendee is concerned is not
delivered. Hence, he is entitled to rescind it. He may,
however, enforce the contract with the corresponding
decrease in price.
When vendee entitled to rescind sale or real
property:
1) lack in area is at least 1/10 th than that stated or
stipulated. The 1/10th mentioned must be based on the
area stipulated in the contract, and not on the real
area which the
2) deficiency in the quality specified in the contract
exceeds 1/10th of the price agreed upon
3) if the vendee would not have brought the
immovable had he known of its smaller area or
inferior quality irrespective of the lack in area or
quality

Nevertheless, if the vendee would not have bought

the immovable had he known of its smaller area of
inferior quality, he may
rescind the sale. (1469a)

b. Sale for Lump Sum

Article 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.

Article 1540. If, in the case 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. (1470a)

The same rule shall be applied when two or more

immovables as 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. (1471)

Article 1471. If the price is simulated, the sale is

void, but the act may be shown to have been in
reality a donation, or some other act or contract. (n)
Sta. Ana v Hernandez
1.
Sps Jose Santa Ana, Jr. and Lourdes Sto.
Domingo, owned a 115,850-square meter parcel of
land in barrio Balasing, Sta. Maria. Bulacan.
2.
28 May 1954: They sold 2 separate portions
of the land for P11k to respondent Rosa Hernandez.
The Deed of Sale described the land as mayroong
(26,500) metros cuadrados, humigit kumulang."
3.
The Sps caused the preparation of a
subdivision plan, which was approved by the
Director of Lands.
4.
Rosa Hernandez did not conform to the plan
and refused to execute an agreement of subdivision
and partition for registration with the Register of
Deeds of Bulacan. She also refused to vacate the
areas she occupied. She caused the preparation of a
different subdivision plan, which was approved by
the Director of Lands, tallied with the areas that she
had actually occupied.
5.
The Sps filed suit against Hernandez in the
CFI Bulacan claiming that Hernandez was occupying
an excess of 17,000 square meters in area of what she
had bought from them.
6.
Hernandez claimed that the alleged excess
was part of the areas that she bought.
7.
Trial Court: ruled in favor of the Sps;
Hernandez was ordered to vacate the excess portions
actually occupied by her and to confine her
occupation only to Lots 4-a and 4-b as shown in the
plan.

8.
CA: dismissed the complaint and declared
Hernandez as the owner of Lots 4-a and 4-b in her
plan.
a.
The contract between the parties provided
for the sale of 2 separate portions of the same land for
the single consideration of P11k.
b.
Jose Santa Ana, Jr. said the transaction was
by a unit of measure or per square meter, and that
although the actual total purchase price of the two
parcels of land was P11,300 at P0.29 per square
meter, the parties agreed to the sale at the reduced
price of P11,000.
c.
Gonzalo V. Ignacio, the notarial officer
before the contract of sale was executed, failed to
corroborate Sta. Ana upon this point. Ignacio testified
that appellant complained to him and the appellees to
the effect that the areas stated in the contract were
less than the actual areas of the parcels of land being
sold.
i.
That the area stated in the document will not
be the one to prevail but the one to prevail is the
boundary of the land which you already know.
ii.
The difference in area of 17,000 square
meters is about one-half of the total area of the two
parcels of land stated in the document, but not for this
alone may we infer gross mistake on the part of
appellees. The appellees admit the lands in question
were separated from the rest of their property by a
long and continuous 'pilapil' or dike, and there is
convincing proof to show that the bigger lot (Lot 4-a)
was wholly tenanted by Ciriaco Nicolas and Santiago
Castillo and the smaller lot (Lot 4-b) was wholly
tenanted by Gregorio Gatchalian.
iii.
These facts support the theory that the two
parcels of land sold to the appellant were identified
by the conspicuous boundaries and the extent or area
each tenant used to till for the vendors.
d.

Art 1542 NCC applies.

9.
Sps arguments: Art 1542 does not apply
sinice the boundaries given in the deed are indefinite.
a.
They point out that the southern boundary of
the small parcel is merely given as "lupang kasanib"

and that the same occurs with the western boundary

of the bigger lot, which is recited as "lupang
kasanib.

TRINIDAD, et al.
518 SCRA 186 (2007), SECOND DIVISION
(Carpio Morales, J.)

ISSUE: WON Art 1542 NCC is applicable - YES

RATIO:
1.
It is unquestionable that the sale made was
of a definite and identified tract, a corpus certum, 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.
2.
As applied in this case, the area given is
qualified to be approximate only ("humigit
kumulang", i.e., more or less).
3.
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.
4.
The ruling of the Supreme Court of Spain, in
construing Article 1471 of the Spanish Civil Code
(copied verbatim in Article 1542) is highly persuasive
that as between the absence of a recital of a given
price per unit of measurement, and the specification
of the total area sold, the former must prevail and
determines the applicability of the norms concerning
sales for a lump sum.
5.
The Civil Code's rule as to sales "a cuerpo
cierto" was not modified by Act 496, section 58,
prohibiting the issuance of a certificate of title to a
grantee of part of a registered tract until a subdivision
plan and technical description are duly approved by
the Director of Lands, and authorizing only the entry
of a memorandum on the grantor's certificate of title
in default of such plan. The latter provision is purely
a procedural directive to Registers of Deeds that does
not attempt to govern the rights of vendor and vendee
inter se, that remain controlled by the Civil Code of
the Philippines. It does not even bar the registration
of the contract itself to bind the land.
Esguerra v Trinidad
ESGUERRA vs TRINIDAD Case Digest
FELICIANO ESGUERRA, et al. v. VIRGINIA

What really defines a piece of ground is not the

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

FACTS: Felipe Esguerra and Praxedes de Vera

(Esguerra spouses) owned several parcels of land half
of which they sold to their grandchildren Feliciano,
Canuto, Justa, Angel, Fidela, Clara and Pedro,
all surnamed Esguerra. The spouses sold half the
remaining land were sold their other grandchildren,
the brothers
Eulalio
and
Julian
Trinidad..
Subsequentlly, the Esguerra spouses executed the
necessary Deeds of Sale before a notary public. They
also executed a deed of partitioning of the lots , all
were about 5,000 square meteres each.
Eulalio Trinidad (Trinidad) later sold his share of the
land to his daughters. During a cadastral survey
conducted in the late 1960s, it was discovered that
the 5,000-square meter portion of Esguerras parcel
of land sold to Trinidad actually measured 6,268
square meters.
Feliciano Esguerra (Feliciano), who inhabits the lot
bordering Trinidad, subsequently filed a motion for
nullification of sale between the Esguerra spouses
and Trinidad on the ground that they were procured
through fraud or misrepresentation. Feliciano
contended that the stipulations in the deed of sale was
that Trinidad was sold a 5,000 square meter lot. The
boundaries stipulated in the contract of sale which
extend the lots area.
Both cases were consolidated and tried before the
RTC which, after trial, dismissed the cases. On
appeal, the appellate court also dismissed the cases;
and subsequently, the motion for reconsideration was
also denied.
ISSUES: Whether or not the Appellate Court erred in

holding that the description and boundaries of the lot

override the stated area of the lot in the deed of sale

rescinded because the vendee does not accede to the

failure to deliver what has been stipulated.

HELD: Where both the area and the boundaries of

the immovable are declared, the area covered within
the boundaries of the immovable prevails over the
stated area. In cases of conflict between areas and
boundaries, it is the latter which should prevail.

In fine, under Article 1542, what is controlling is the

entire land included within the boundaries, regardless
of whether the real area should be greater or smaller
than that recited in the deed. This is particularly true
since the area of the land in OCT No. 0-6498 was
described in the deed as "humigit kumulang," that is,
more or less.

What really defines a piece of ground is not the area,

calculated with more or less certainty, mentioned in
its description, but the boundaries therein laid down,
as enclosing the land and indicating its limits. In a
contract of sale of land in a mass, it is well
established that the specific boundaries stated in the
contract must control over any statement with respect
to the area contained within its boundaries. It is not of
vital consequence that a deed or contract of sale of
land should disclose the area with mathematical
accuracy. It is sufficient if its extent is objectively
indicated with sufficient precision to enable one to
identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to
deliver everything within the boundaries, inasmuch
as it is the entirety thereof that distinguishes the
determinate object.

Under the Torrens System, an OCT enjoys a

presumption of validity, which correlatively carries a
strong presumption that the provisions of the law
governing the registration of land which led to its
issuance have been duly followed. Fraud being a
serious charge, it must be supported by clear and
convincing proof. Petitioners failed to discharge the
burden of proof, however.
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

A caveat is in order, however. The use of "more or

less" or similar words in designating quantity covers
only a reasonable excess or deficiency. A vendee of
land sold in gross or with the description "more or
less" with reference to its area does not thereby ipso
facto take all risk of quantity in the land.
4. Inspection and Acceptance
a. Right of Inspection
Article 1584. Where goods are delivered to the buyer,
which he has not previously examined, he is not
deemed to have accepted
them unless and until he has had a reasonable
opportunity of examining them for the purpose of
ascertaining whether they are in
conformity with the contract if there is no stipulation
to the contrary.
Unless otherwise agreed, when the seller tenders
delivery of goods to the buyer, he is bound, on
request, to afford the buyer a reasonable opportunity
of examining the goods for the purpose of
ascertaining whether they are in conformity with the
contract.
Where goods are delivered to a carrier by the seller,
in accordance with an order from or agreement with
the buyer, upon the terms
that the goods shall not be delivered by the carrier to
the buyer until he has paid the price, whether such
terms are indicated by
marking the goods with the words "collect on
delivery," or otherwise, the buyer is not entitled to
examine the goods before the
payment of the price, in the absence of agreement or
usage of trade permitting such examination. (n)
Acceptance: assent to become the owner of specific
goods when delivery of them is offered to the buyer

1. Right of Inspection: if article dos not correspond in

kind, quality, condition or amount, buyer may reject
2. Actual Delivery Contemplated: the right of
examination or inspection is thus a condition
precedent to the transfer of ownership unless there is
a stipulation to the contrary
No distinction between a buyer who has
previously examined the goods prior to delivery and
a buyer who has not previoussly examined
b. Manifestation of Acceptance
Article 1585. The buyer is deemed to have accepted
the goods when he intimates to the seller that he has
accepted them, or when
the goods have been delivered to him, and he does
any act in relation to them which is inconsistent with
the ownership of the seller,
or when, after the lapse of a reasonable time, he
retains the goods without intimating to the seller that
he has rejected them. (n)

c. Breach of Warranty
Article 1586. In the absence of express or implied
agreement of the parties, acceptance of the goods by
the buyer shall not
discharge the seller from liability in damages or other
legal remedy for breach of any promise or warranty
in the contract of sale.
But, if, after acceptance of the goods, the buyer fails
to give notice to the seller of the breach in any
promise of warranty within a
reasonable time after the buyer knows, or ought to
know of such breach, the seller shall not be liable
therefor. (n)

d. Refusal to Accept
Article 1587. Unless otherwise agreed, where goods
are delivered to the buyer, and he refuses to accept
them, having the right so
to do, he is not bound to return them to the seller, but
it is sufficient if he notifies the seller that he refuses
to accept them. If he
voluntarily constitutes himself a depositary thereof,
he shall be liable as such. (n)

Article 1588. If there is no stipulation as specified in

the first paragraph of article 1523, when the buyer's
refusal to accept the
goods is without just cause, the title thereto passes to
him from the moment they are placed at his disposal.
(n)
Article 1589. The vendee shall owe interest for the
period between the delivery of the thing and the
payment of the price, in the
following three cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits
or income;
(3) Should he be in default, from the time of judicial
or extrajudicial demand for the payment of the price.
(1501a)
5. Kinds of Delivery
a. Real or Actual Delivery
Article 1497. The thing sold shall be understood as
delivered, when it is placed in the control and
possession of the vendee. (1462a)
Alfredo v Borras
SUMMARY: Sps. Alfredo mortgaged their land to
DBP. To pay the debt, Sps. Alfredo sold the land to
Sps. Borras. Sps. Borras fulfilled their obligations to
pay for the loan and for the land. The owner's
duplicate copy of the original certificate of title and
other pertinent legal documents were then delivered
to Sps. Borras and they were introduced as the new
owners of the land to the former tenants of the land of
the Sps. Alfredo. Sps. Borras then took possession of
the land. Later, they found out that hired men were
cutting the trees on their land and found out that the
Sps. Alfredo got an owner's duplicate of the orig.
cert. of title. Sps. Borras then filed a case for specific
performance against Sps. Alfredo. SC ruled that there
was a valid and enforceable contract of sale between
Sps. Alfredo and Sps. Borras. Since the Sps. Alfredo
delivered the land to Sps. Borras, placing the Sps.
Borras in actual physical possession of the land. This
physical delivery of the land also constituted a
transfer of ownership of the land to Sps. Borras.
DOCTRINE: Ownership of the thing sold is
transferred to the vendee upon its actual or
constructive delivery.| In a contract of sale, the seller

obligates himself to transfer ownership of the

determinate thing sold, and to deliver the same, to the
buyer who obligates himself to pay a price certain to
the seller.
FACTS:
1. Petitioners Sps. Alfredo were the registered
owners of a parcel of land in Bataan. It was covered
by an Original Certificate of Title and was issued to
Sps. Alfredo under a Homestead Patent.
2. Private respondents Sps. Borras filed a complaint
for specific performance against Sps. Alfredo at the
RTC Bataan, alleging that Sps. Alfredo mortgage the
land for P7k to DBP. To pay the debt, Sps. Alfredo
sold the land to Sps. Borras for P15k, with the
condition that the Sps. Borras will pay the DBP loan
and its accumulated interest, plus the balance will be
paid in cash to the Sps. Alfredo.
3. Sps. Borras gave Sps. Alfredo the money to pay
the DBP loan. DBP signed the release of mortgage
and returned the Orig. Cert. of Title to Sps. Alfredo.
Sps. Borras paid the balance of the purchase price of
the land, and were issued a receipt by Sps. Alfredo.
4. Sps. Alfredo then delivered the owner's duplicate
copy of the Orig. Cert. of Title with the document of
the cancellation of mortgage, official receipts of
realty tax payments, and tax declarations in the name
of Sps. Alfredo.
5. Sps. Borras were introduced as the new owners of
the land to the Natanawans, who were the old tenants
of the land.
6. Sps. Borras then took possession of the land.

action is unenforceable under the Statute of Frauds.

Sps. Borras pointed out that there was no written
instrument evidencing the alleged contract of sale
over the land in favor of Sps. Borras. Sps. Alfredo
assert that the subsequent buyers of the land were
buyers in good faith and for value.
10. RTC: Ruled for Sps. Borras. There was a
perfected contract of sale between the Sps. Alfredo
and the Sps. Borras. The object of the sale was
specifically identified, the purchase price was fixed at
P15k, and the balance was to be paid in cash. RTC
found the ff. as proof of a perfected sale:

Sps. Alfredo delivered to Sps. Borras the

subject land
Sps. Borras treated the tenants of Sps.
Alfredo as their own
Sps. Alfredo turned over documents to Sps.
Borras
DBP cancelled the mortgage of the property
upon payment of the loan of Sps. Alfredo
Receipt of payment issued by Sps. Alfredo
served as an acknowledgment/ratification of
the verbal sale between sellers and buyers.
Statue of Frauds N/A in this case, because
the sale was perfected
Subsequent buyers Sps. Savellano not
innocent purchasers and totally depended
on their broker's testimony in the trial.
11. CA affirmed RTC and denied MR and ruled that
the handwritten receipt was profo that Sps. Alfredo
sold land to Sps. Borras upon payment of purchase
price. This was sufficient to serve as the
memorandum as a writing under the Statute of
Frauds, which doesn't even apply in this case. Hence
this case.

7. In 1994, Sps. Borras learned that hired persons had

entered their land and were cutting trees. They then
found out that Sps. Alfredo secured an owner's
duplicate copy of the Orig. Cert of Title after filing a
petition in court for the issuance of a new copy,
claiming they lost their own copy.

ISSUE: WON the sale in favor of Sps. Borras is

valid
and
enforceable?
YES.
RULING: PETITION DENIED. CA decision
AFFIRMED.

8. Sps. Borras wrote to Sps. Alfredo complaining

about their acts, but they were not replied to. Hence
they filed a complaint for specific performance
against Sps. Alfredo.

1. The sale was a perfected contract. A contract is

perfected once there is consent of the contracting
parties of the object certain and on the cause of the
obligation. IN THIS CASE: The object of the sale
was the land, and the price certain was P15k. RTC
and CA both found that there was a meeting of the

9. Sps. Alfredo contended in their answer that the

RATIO:

minds, which is a finding of fact supported by

substantial evidence.
2. Contract of Sale of the land was consummated
because the sellers and buyers performed their
respective obligations under the contract.
3. In a contract of sale, the seller obligates himself to
transfer ownership of the determinate thing sold, and
to deliver the same, to the buyer who obligates
himself to pay a price certain to the seller.
AS APPLIED IN THIS CASE: Sps. Alfredo
delivered the land to Sps. Borras, placing the Sps.
Borras in actual physical possession of the land. This
physical delivery of the land also constituted a
transfer of ownership of the land to Sps. Borras.
Ownership of the thing sold is transferred to the
vendee upon its actual or constructive delivery. Sps.
Alfredo also turned over to Sps. Borras the
documents of ownership of the land, namely the
owner's duplicate of the Orig. Cert. of Title, the tax
declaration, and the receipts of realty tax payments.
On the part of Sps. Borras, they had paid the full
purchase price as evidenced by the receipt issued by
Sps. Alfredo, and fulfilled their obligation to provide
the payment of the DBP loan of Sps. Alfredo and paid
the balance as well.
4. The fact that Sps. Alfredo contend that they did
NOT deliver the title of the land as shown in their
testimony cannot be admitted because it does not
convincingly prove that they did not deliver the land.
It is not necessary that the seller himself deliver the
title of the property to the buyer because the thing
sold is understood as delivered when it is placed in
the control and possession of the vendee. To repeat,
Godofredo and Carmen themselves introduced the
Natanawans, their tenants, to Armando and Adelia as
the new owners of the Subject Land. From then on,
Armando and Adelia acted as the landlords of the
Natanawans. Obviously, Godofredo and Carmen
themselves placed control and possession of the
Subject Land in the hands of Armando and Adelia.
RE: SALE OF SUBSEQUENT PORTIONS OF
LAND VALID: Sps. Alfredo had already sold the
Subject Land to Sps. Borras The settled rule is when
ownership or title passes to the buyer, the seller
ceases to have any title to transfer to any third person.

If the seller sells the same land to another, the second

buyer who has actual or constructive knowledge of
the prior sale cannot be a registrant in good faith.
Such second buyer cannot defeat the first buyers title.
In case a title is issued to the second buyer, the first
buyer may seek reconveyance of the property subject
of the sale.
Thus, to merit protection under the second paragraph
of Article 1544 of the Civil Code, the second buyer
must act in good faith in registering the deed. In this
case, the Subsequent Buyers good faith hinges on
whether they had knowledge of the previous sale.
RE: STATUTE OF FRAUDS: Statute of Frauds
N/A in this case, because it applies only to executory
contracts and NOT to contracts totally or partially
performed. IN THIS CASE: The parties have already
consummated the sale of the land and performed their
respective obligations. In addition, a contract that
violates the Statute of Frauds is ratified by the
acceptance of the benefits under the contract.
b. Constructive Delivery
1. Symbolic Delivery/ Delivery by Public Instrument
Article 1498. When the sale is made through a public
instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not
appear or cannot clearly be inferred. With regard to
movable property, its delivery may also be made by
the delivery of the keys of the place or depository
where it is stored or kept. (1463a)
Phil Suburban Dev Corp v The Auditor General

June 8, 1960: President of the Ph approved

in principle the acquisition by the People's
Homesite and Housing Corporation of the
unoccupied portion of the Sapang Palay
Estate in Sta. Maria, Bulacan for relocating
the squatters who desire to settle north of
Manila, and of another area either in Las
Pias or Paraaque, Rizal, or Bacoor, Cavite
for those who desire to settle south of
Manila.
o Financed thorugh flotation of bonds
under the charter of PHHC in the

amount of P4.5M.
The President informed PHHC of
such approval by letter bearing the
same date
Board of Directors of PHHC passed Res No
700 authorizing the purchase of the
unoccupied portion of Sapang Palay
o Conditions:
Confirmation by the OEC
and President
Portion of the estate to be
acquired shall first be
defined and delineated
President
shall
first
provide funds to effect the
purchase and devt
Contract shall first be
approved by the Auditor
General
President authorized the floating of bonds
under RA 1000 and 1322 in the amount of
P7.5M
Dec 29, 1960: PET, owner of the
unoccupied portion, and the PHHC entered
into a contract embodied in public document
entitled Deed of Absolute Sale whereby it
conveyed into the latter the two parcels of
land.
o This was not registered in the
Office of the Register of Deeds due
to the fact, as PET claims, that the
PHHC could not at once advance
the money needed for the
registration expense.
Auditor General requested a re-examination
of the contract because from 1948 to Dec
1960 the assessed value was at P131,590.
On Dec 21, 1960 it was at P4,898,110.00
o Despite the objection, the President
signed the Deed of Sale
Turns out that as early as the first week of
June, 1960, prior to the signing of the deed
by the parties, the PHHC acquired
possession of the property, with the consent
of petitioner, to enable the said PHHC to
proceed immediately with the construction
of roads in the new settlement and to resettle
the squatters and flood victims in Manila
who were rendered homeless by the floods
o

or ejected from the lots which they were

then occupying.
Provincial Treasurer of Bulacan requested
the PHHC to withhold the amount of
P30,099.79 from the purchase price to be
paid by it to PET because this was the realty
tax that was due on 1961
PET paid under protest and requested Sec of
finance to order refund because PET alleged
that it was not the owner of the land
anymore since the execution of the Deed of
Absolute Sale.
o Alleged that there was presumptive
delivery and the possession was
transferred to the vendee even prior
to the sale
RESP: presumptive delivery does not apply
because the sale needs to be approved by the
Auditor General first and the PET must first
register the deed and secure a new title.
Until the deed of sale has actually been
registered, PET is still the owner and should
be the one to pay the tax.

WN ownership was transferred to PHHC and Phil

Suburban should not be the one paying taxes?
YES.

Delivery (tradition) as a mode of

transmission of ownership maybe actual
(real tradition) or constructive (constructive
tradition). 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.
There is symbolic delivery of the property
subject of the sale by the execution of the
public instrument, unless from the express
terms of the instrument, or by clear
inference therefrom, this was not the
intention of the parties.
o ie: when a certain date is fixed for
the purchaser to take possession of
the property subject of the
conveyance, or where, in case of
sale by installments, it is stipulated

that until the last installment is

made, the title to the property
should remain with the vendor, or
when the vendor reserves the right
to use and enjoy the properties until
the gathering of the pending
crops
Case at bar: there is no question that the
vendor 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.
In a long line of cases already decided by
this Court, the constant doctrine has been
that, as between the parties to a contract of
sale, registration is not necessary to make
it valid and effective, for actual notice is
equivalent to registration
o Section 50 of the Land Registration
Act provides that, even without
the act of registration, a deed
purporting to convey or affect
registered land shall operate as a
contract between the parties. The
registration is intended to protect
the buyer against claims of third
persons arising from subsequent
alienations by the vendor, and is
certainly not necessary to give
effect to the deed of sale, as
between the parties to the contract.

Sarmiento v Lesaca

Plaintiff Sarmiento bought a land from

defendant Lesaca for P5,000 and thereafter
tried to take possession of it
However, Sarmiento was prevented from
doing so by one Martin Deloso who claims

claims to be the owner

o An action was fled before the
Tenancy Enforcement Division to
oust Martin Deloso from the
possession of such lands
Sarmiento wrote to Lesaca asking the latter
to either exchange the lands sold with
another with the same kind and class OR to
return the purchase price paid
o Lesaca did not agree
o Hence this action by Lesaca
Lesaca claims that the execution of the deed
of sale in a public document is equaivalent
to delivery. And that she should be absolved
from the obligation to place Sarmiento in
actual possession thereof.
WoN the execution of a deed of sale in a public
document is equivalent to delivery- YES

When a contract of sale is executed the

vendor is bound to deliver to the vendee the
thing sold by placing the vendee in
the control and possession of the subjectmatter of the contract.
However, if the sale is executed by means of
a public instrument, the mere execution of
the
instrument
is
equivalent
to
deliveryunless the contrary appears or is
clearly to be inferred from such instrument.
In the case at bar, the vendee was never
placed in control and possession of the
land because from the execution of the
sale up to the present, vendee was never
able to take possession of the land due to

1 ART. 1461. The vendor is bound to deliver and

warrant the thing which is the subject-matter of the
sale.ART. 1462. The thing sold shall be deemed
delivered when the vendee is placed in the control
and possession thereof.
If the sale should be made by means of a public
instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the subjectmatter of the contract unless the contrary appears or
is clearly to be inferred from such instrument.

the refusal of Martin Deloso

The article only holds true when there is no

impediment that may prevent the passing of
the property from the hands of the vendor
into those of the vendee.

WoN plaintiff can rescind the contract due to

defendants failure to deliver the possession of the
lands- YES

symbolic/by public instrument

Quisumbing, J.
FACTS:

In a contract of purchase and sale the

obligation of the parties is reciprocal, and, as
provided by the law, in case one of the
parties fails to comply with what is
incumbent upon him to do , the person
prejudiced may either exact the
fulfillment of the obligation or rescind the
sale

What is the effect of the execution of the public

document?
What is the rule when it comes to delivery by
public document? It is only a prima facie evidence
of delivery. It becomes conclusive if it was actually
delivered.

**Santos v Santos (2001)

Petitioners: Zenaida Santos
Respondents: Calixto Santos, Alberto Santos, Rosa
Santos-Carreon, Antonio Santos
Kinds of Delivery Constructive Delivery:

2 Art 1124. The right to resolve reciprocal

obligations, in case one of the obligors should fail to

comply with that which is incumbent upon him, is
deemed to be implied.The person prejudiced may
choose between exacting the fulfillment of the
obligation or its resolution with indemnity for losses
and payment of interest in either case. He may also
demand the resolution of the obligation even after
having elected its fulfillment, should the latter be
found impossible.

Zenaida Santos was the widow of Salvador

Santos. Salvador was the brother of Calixto,
Alberto, Antonio. Their parents were Jesus
and Rosalia Santos.
Jesus and Rosalia owned a parcel of land
with a four-door apartment administered by
Rosalia who rented them out. They executed
a deed of sale of the properties in favor of
Salvador and Rosa.
Rosa sold her share to Salvador but despite
the transfer of the property to him, Rosalia
continued to lease and receive rentals from
the apartment units.
On Nov 1, 1979, Jesus died. Salvador died
six years later and was followed by Rosalia
the following month. Zenaida, as heir of
Salvador, demanded the rent from Antonio
Hobrebueno who was a tenant of Rosalia.
Antonio failed to pay so Zenaida filed an
ejectment suit against him in the MTC
which she won. The respondents then
instituted an action for recovenyance of the
property against Zenaida alleged that the
two deeds of sale were simulated for lack of
consideration; executed to accommodate
Salvador in generating funds for his business
ventures.
Zenaida: Salvador was the registered owner
of the property which could only be
subjected to encumbrances or liens
annotated on the title
RTC: ruled for respondents; deeds of sale
null and void for being fictitious/simulated.
o Notwithstanding the deeds of sale
transferring the property to
Slavador, Rosalia and Jesus
continued to possess such by
receiving monthly rentals but also
by paying realty taxes.
o Rosalia kept the owners duplicate
copy of the title even after it was
already in the name of Salvador.
CA: affirmed RTC
o In order for the execution of a
public instrument to effect tradition

under Art. 1498 of the CC< the

vendor shall have had control over
the thing sold at the moment of
sale. The subject deeds did not
confer ownership upon Salvador
because this parents remained in
control and possession thereof.
ISSUE/S:

WoN payment of realty taxes and retention

of possession indicate continued ownership
by Rosalia and Jesus: NO
o While either do not constitute
sufficient proof of ownership, they
were supported by other proofs in
the case at bar. Jesus and Rosalia
continued to possess and administer
the property and enjoy its fruits by
leasing it to third persons.
o Rosa and Salvador did not exercise
any right of ownership over it.
Also, before Rosa sold it to her
brother, Salvador sill sought the
permission of Rosalia.
o Salvador also surrendered the title
to Rosalia after registering the
property in his name.
WoN a sale through a public instrument is
tantamount to delivery of the thing sold: NO
o Nowhere in the Code does it
provide that execution of a deed of
sale is a conclusive presumption of
delivery of possession. It merely
stated that the execution shall be
equivalent to delivery. This
presumption can be rebutted by
clear and convincing evidence.
o Presumptive delivery can be
negated by the failure of the vendee
to take actual possession of the land
sold. As found by the RTC and CA,
Salvador was never placed in
control of the property so Rosalia
and Jesus retained ownership.
WoN respondents cause of action has
prescribed: NO
o Right to file an action for
reconveyance on the ground that
the certificate of title was obtained

by means of a fictitious deed of

sale is virtually an action for the
declaration of its nullity does not
prescribe.
WoN action barred by laches: NO
o Laches is not concerned with the
lapse of time but only with the
effect of unreasonable lapse.
Respondents inaction for 16 years
had no adverse effect on Zenaida to
make the former guilty.

HELD: Petition DENIED. CA decision AFFIRMED.

If there is no delivery, then there is no transfer of
ownership.

2. Traditio Longa Manu

Article 1498. When the sale is made through a public
instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not
appear or cannot clearly be inferred.
With regard to movable property, its delivery may
also be made by the delivery of the keys of the place
or depository where it is stored or kept. (1463a)
Article 1499. The delivery of movable property may
likewise be made by the mere consent or agreement
of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time
of the sale, or if the latter already had it in his
possession for any other reason. (1463a)
Article 1513. A person to whom a negotiable
document of title has been duly negotiated acquires
thereby:
(1) Such title to the goods as the person negotiating
the document to him had or had ability to convey to a
purchaser in good faith for value and also such title to
the goods as the person to whose order the goods
were to be delivered by the
terms of the document had or had ability to convey to
a purchaser in good faith for value; and
(2) The direct obligation of the bailee issuing the
document to hold possession of the goods for him

according to the terms of the document as fully as if

such bailee had contracted directly with him. (n)

Article 1514. A person to whom a document of title

has been transferred, but not negotiated, acquires
thereby, as against the transferor, the title to the
goods, subject to the terms of any agreement with the
transferor.
If the document is non-negotiable, such person also
acquires the right to notify the bailee who issued the
document of the transfer thereof, and thereby to
acquire the direct obligation of such bailee to hold
possession of the goods for him according to the
terms of the document.

ISSUE: W/N Malabanan has title to the steel

mattings. - YES

Prior to the notification to such bailee by the

transferor or transferee of a non-negotiable document
of title, the title of the transferee to the goods and the
right to acquire the obligation of such bailee may be
defeated by the levy of an attachment of execution
upon the goods by a creditor of the transferor, or by a
notification to such bailee by the transferor or a
subsequent purchaser from the transferor of a
subsequent sale of the goods by the transferor. (n)

Board of Liquidators v Floro

FACTS:

Melecio Malabanan entered into an

agreement with the Board of Liquidators for
the salvage of surplus properties sunk in
territorial waters off the provinces of
Mindoro, La Union, and Batangas.
Malabanan submitted a recovery report
dated July 26, 1954, wherein it is stated that
he had recovered a total of 13,107 pieces of
steel mattings from the operations.
Four months before this, Malabanan had
entered into an agreement with Exequiel
Floro, agreeing that Floro would advance to
Malabanan certain sums of money, not to
exceed P25,000.00, repayment, thereof
being secured by quantities of steel mattings
which Malabanan would consign to Floro.
Pursuant thereto, Floro claims to have made
total advances to the sum of P24,224.50. It
appears that as Malabanan was not able to
repay Floro's advances, the latter, sold
11,047 pieces of steel mattings to Eulalio

Legaspi for the sum of P24,803.40.

Seventeen days later, on August 21, 1954,
Malabanan filed in the Court of First
Instance of Manila a petition for voluntary
insolvency, attaching thereto a Schedule of
Accounts, in which the Board was listed as
one of the creditors for P10,874.46, and
Exequiel Floro for P24,220.50. The
controversy of the case arose when
Malabanan listed the steel mattings as its
properties, which was opposed by the Board
claiming ownership over the steel mattings
recovered from the salvaging operations.

The Court held that the contract between

Malabanan and the Board had effect of
vesting Malabanan with title to, or
ownership of the steel mattings in question
as soon as they were brought up from the
bottom of the sea.
This was shown from the agreement
between the parties wherein it is said that
ownership of the goods passed to
Malabanan as soon as they were recovered
or salvaged and not only after payment of
the stipulated price.
The contention that there was no delivery is
incorrect. While there was no physical
tradition, there was one by agreement
(traditio longa manu) in conformity with
Article 1499 of the Civil Code. Art. 1499
The delivery of movable property may
likewise be made by the mere consent or
agreement of the contracting parties, if the
thing sold cannot be transferred to the
possession of the vendee at the time of the
sale. As observed earlier, there is nothing in
the terms of the public instrument in
question from which an intent to withhold
delivery or transfer of title may be inferred.
The Board also contends that as no renewal
of the bond required was filed for the
extension of the contract, it ceased to have
any force and effect; and, as the steel
mattings were recovered during the
extended period of the contract, Malabanan
did not acquire any rights thereto.
o Malabanan filed a bond dated June
10, 1952, effective for one (1) year,
or up to June 10, 1953. The
principal contract, executed on

June 14, 1952, was first extended to

November 30, 1953, and finally, to
August 31, 1954. As can be seen,
there was no longer any bond from
June 11, 1953 to August 31, 1954.
o The Court held that the lapse of the
bond did not extinguish the
contract between Malabanan and
the Board. The requirement that a
bond be posted was already
complied with when Malabanan
filed the bond dated June 10, 1952.
A bond merely stands as guaranty
for a principal obligation which
exist independently of said bond,
the latter being an accessory
contract (Valencia vs. RFC & C.A.,
103 Phil., 444). Significantly, its
purpose, as per the terms of the
contract, was "to guarantee his
(Malabanan's) faithful compliance
with the terms and conditions
herein" and, for violation of the
contract, the Board may declare
"the bond forfeited. Being for its
benefit, the Board could legally
waive the bond requirement, and it
did so when, the bond already
having expired, it extended the
contract not only once, but twice.
There is no merit to the suggestion that there
being a novation, Article 1299 of the Civil
Code should govern. Novation is never
presumed, it being required that the intent to
novate
be
expressed
clearly
and
unequivocally, or that the terms of the new
agreement be incompatible with the old
contract. Here there was neither express
novation nor incompatibility from which it
could be implied. Moreover, a mere
extension of the term (period) for payment
or performance is not novation and, while
the extension covered only some of the areas
originally agreed upon, this change did not
alter the essence of the contract.

How did he acquire title to the steel mattings?

Agreement

3. Traditio Brevi Manu

Article 1499. The delivery of movable property may

likewise be made by the mere consent or agreement

of the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time
of the sale, or if the latter already had it in his
possession for any other reason. (1463a)
Abuan v. Garcia (1965)
After his death, the homestead acquired by Laureano
Abuan passed to his legal heirs, the plaintiffs. The
plaintiffs sold the parcel of land to defendants on
August 7, 1953.

Later, plaintiffs filed an action to recover the

land, alleging that the deed of absolute sale had been
executed through fraud. However, the case was
subsequently settled amicably, when the parties
entered into an "Agreement" dated February 28,
1955, under the terms of which defendants paid
P500.00 on that day as partial payment of the
purchase price, and promised to pay the balance of
P1,500.00 on or before April 30, 1955, with a grace
period of thirty days.

Claiming that full payment had been

effected only sometime in May 1955, plaintiffs
instituted an action for legal redemption on March 4,
1960 under Section 119 of the Public Land Law
which provides that:
o
Every conveyance of land acquired under
the free patent or homestead provisions, when proper,
shall be subject to re-purchase by the applicant, his
widow, or legal heirs, for a period of five years from
the date of conveyance.

Defendants moved to dismiss, on the ground

that five-year redemption period had already expired.
ISSUE/S:

When did the five-year period begin to run?

Should it be August 7, 1953, when the Deed of
Absolute Sale was executed, or February 28, 1955,
when the compromise "Agreement" was entered into;
or should it be in May, 1955, upon full payment of
the purchase price? If counted from either of the first
two dates, the action will be barred, whereas it would
not be if counted from the third date.

o
FROM THE EXECUTION OF THE DEED
OF ABSOLUTE SALE. HENCE, ACTION
BARRED.
o
The law speaks of "five years from date of
conveyance." Conveyance means transfer of
ownership. The five-year period should, therefore, be
reckoned with from the date that defendants acquired
ownership of the land.
o
Art. 1477 of the Civil Code provides that
ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery
thereof, and Art. 1496 points out that ownership of
the thing sold is acquired by the vendee from the
moment it is delivered to him in any of the ways
specified in articles 1497 to 1501. Under Art. 1498,
When the sale is made through a public instrument,
the execution thereof shall be equivalent to the
delivery of the thing which is the object of the
contract, if from the deed the contrary does not
appear or cannot be clearly inferred.

their reivindicatory action. This was delivery brevi

manu permissible under Articles 1499 and 1501.
o
That full payment was made only in May,
1955, does not alter the fact that ownership of the
land passed to defendants upon the execution of the
agreement. In the absence of an express stipulation to
the contrary, the payment of the price is not a
condition precedent to the transfer of ownership,
which passes by delivery of the thing to the buyer.

Heirs of Pedro Escanlar v CA; J. Romero; Traditio

Brevi Manu acquiring ownership while one has
possession.
-

o
Defendants acquired ownership to the land
upon the execution of the deed of sale on August 7,
1953, which was "superseded" by the Agreement of
February 28, 1955, but only as to the terms and
conditions of payment of the purchase price. The
Agreement did not operate to revest the ownership of
the land in the plaintiffs.
o
Assuming however that the Deed of
Absolute sale is null and void, the date of the
Agreement can be considered as the time within
which ownership is vested in the defendants. True, it
is a private instrument the execution of which could
not be construed as constructive delivery under Art.
1498. But Art. 1496 explicitly provides that
ownership of the thing sold is acquired by the vendee
from the moment it is delivered to him "in any other
manner signifying an agreement that the possession is
transferred from the vendor to the vendee." The
intention to give possession is manifest in the
agreement entered into by the parties, specially
considering the following circumstances: (1) the
payment of part of the purchase price, there being no
stipulation in the agreement that ownership will not
vest in the vendees until full payment of the price;
and (2) the fact that the agreement was entered into in
consideration of plaintiffs' desistance in prosecuting

Sps Guillermo Nombre and Victoriana Carian died in 24 and 38, respectively.
Nombres heirs are his nephews &
grandnephews, Cari-ans her nephew
Gregorio.
After Gregorio died, his heirs sold their
interest in the pro-indiviso portion of Lot
1616 and 1617 of Sps Nombre-Carians
estate to their lessees, Pedro Escanlar and
Francisco Holgado for P275k.
o P50k was paid upon signing the
deed of agreement, and P225k was
payable on or before May 79.
o Escanlar & Holgado were unable to
pay the entire P225k by May 79.
Individual receipts from the heirs
showed that E&H eventually paid
off the entire thing by Sept 7 82.
o Being the lessees, E&H continued
to possess the lots, and even paid
rent based on their lease contract.
However, on Sept 16 82, the probate court
approved the motion filed by the heirs to sell
their respective shares. Thus, in addition to
Nombres heirs, Gregorios heirs sold their
shares in 8 lots (including Lot 1616 & 1617)
to Sps Ney & Paquito Chua for P1.85m.
Thus, heirs of Gregorio instituted a case to
cancel the sale of their share in Lot 1616 &
1617 to E&H on Nov 3 82, alleging a
failure to pay by May 31 79, as they
received only P132k total by then.
E&H reply that Chuas are buyers in bad
faith, and that at this point, the heirs were
fully paid and had no right to resell the
subject lots. Subsequently, E&H sold their

interest and turned over possession to Edwin

Jayme for P735k. He was included as a
fourth-party defendant.
The probate court closed the matter instead
of resolving the issue of ownership, as it
found that all of the property of the NombreCarian estate had been validly disposed of.
Ultimately, in 91, the RTC ruled for the
heirs and cancelled the sale to E&H for lack
of approval by the probate court and since
the price was not fully paid. As a result, the
sale to Jayme was also nullified. CA
affirmed.

Issue:
1

Was the sale a contract of sale or a contract

to sell? CONTRACT OF SALE. E&H
owned the property.
a There was no express reservation
of ownership until full payment,
and the vendor was not unilaterally
empowered to rescind the sale.
b Prior to the sale, E&H possessed as
lessees. Upon sale of the rights,
they possessed the property no
longer as lessees but in concept of
owner via symbolic delivery
known as traditio brevi manu
(Latin for delivery with the short
hand). This principle prevents the
need for a double delivery for a
party to take ownership, as they
already have the property within
their possession. It is a form of
constructive delivery for persons
who already have possession of the
property prior
to
acquiring
ownership over it.
Was the approval of the probate court
necessary? NO.
a Firstly, it was stipulated in the
contract that it would become
effective upon approval. Effectivity
is not the same as validity thus,
even without approval, the sale was
valid.
b Secondly, approval is only required
when specific properties of the
estate are sold, not when ideal or
indivisible shares are disposed of
this is because as co-owners, they
have full ownership over their ideal
shares. This substantive right

cannot be adversely affected by

judicial approval.
c Thirdly, the subsequent acts show
the intent to give effect to the
contract regardless of approval the
acceptance of payment and that the
heirs left E&H in possession,
seeking relief only 3 years after
such.
d Lastly, it would not be fair for the
heirs to impose approval as a
standard for validity considering it
was the opposition of the heirs that
prevented E&H from getting the
approval.
Was the late payment valid? YES.
a A1592 provides that in the sale of
immovables, even though it may be
stipulated that failure to pay the
price at the time agreed upon shall
cause rescission, the vendee may
pay even after the period, as long
as no demand for rescission of
the contract has been made
either by judicial or notarial act.
b The acceptance of payment after
the period constitutes a waiver of
the period.
Was there full payment? YES. Matter of fact
not to be overturned, and receipts show
proof of the same.

Held: CA reversed.

4. Traditio Constitutum Possessorium

Article 1500. There may also be tradition constitutum
possessorium. (n)
Amigo v Teves
1

Sps Macario Amigo and Anacleto Cagalitan

executed in favor of their son, Marcelino, a
power of attorney granting to the latter,
among others, the power "to lease, let,
bargain, transfer, convey and sell, remise,
release, mortgage and hypothecate, part or
any of the properties upon such terms and
conditions, and under such covenants as he

shall think fit."

affidavit was registered and a TCT was

Marcelino, in his capacity as attorney-in-

issued to Serafin over the land in question.

fact, executed a deed of sale of a parcel of

land for P3,000 in favor of Serafin Teves

land from Serafin by tendering to him the

stipulating that the vendors could repurchase

payment of the redemption price. Serafin

the land within 18 months from the date of

refused since ownership had already been

the sale. It was also stipulated that the

consolidated in him as purchaser a retro.

vendors would remain in possession of the

land as lessees for 18 months subject to the

a

b
c

While

the

attorney-in-fact,

the lessees shall pay P180 as rent

Marcelino Amigo, had the power to

every 6 months from the date of the

execute a deed of sale with right to

agreement;

repurchase under the power of

the period of the lease shall

attorney granted to him, however,

terminate on April 30, 1940;

the covenant of lease contained in

in case of litigation, the lessees

said deed whereby the vendors

shall pay P100 as attorney's fees;

agreed to remain in possession of

and

the land as lessees is not germane

in case of failure to pay any rental

to said power of attorney and,

as agreed upon, the lease shall

therefore, Marcelino Amigo acted

automatically terminate and the

in excess of his powers as such

right of ownership of vendee shall

attorney-in-fact.

become absolute.

Justino and Pastor instituted the present

action.

following terms and conditions:

Justino and Pastor offered to repurchase the

CA: Marcelinos powers are broad enough

The Sps donated to their sons Justino and

to justify the execution of any contract

Pastor several parcels of land including their

concerning the lands covered by the

right to repurchase the land in litigation. The

authority even if this be a contract of lease.

deed of donation was made in a public

Even if the power to take the land under

instrument and it was duly accepted by the

lease is not included within the authority

donees, and was registered in the Office of

granted, petitioners cannot now impugn the

the Register of Deeds.

validity of the lease covenant because such

The

vendors-lessees

paid

the

rental

right devolves upon the principals, who are

corresponding to the first 6 months, but

the only one who can claim that their agent

failed to make the rest of the payments.

has exceeded the authority granted to him,

Serafin Teves executed an "Affidavit of

and because said principals had tacitly

Consolidation of Title" since the Sps failed

ratified the act done by said agent.

to pay the rentals as agreed upon. The

WON the lease covenant contained in the deed of

of his principals can be inferred

sale with pacto de retro executed by Marcelino

from their attitude in donating to

Amigo as attorney-in-fact in favor of Serafin Teves is

the herein petitioners the right to

valid YES

redeem the land under the terms

and conditions appearing in the

WON the penal clause stipulated in the lease

deed of sale executed by their

covenant referring to the automatic termination of the

period of redemption is valid YES

agent.
2

There is nothing unusual in the lease

covenant embodied in the deed of sale for

WON the Sps should be allowed to repurchase the

such is common in contracts involving sales

land on equitable grounds considering the great

of land with pacto de retro. The lease that a

disproportion between the redemption price and the

vendor executes on the property may be

market value of the land on the date the period of

considered as a means of delivery or

redemption is supposed to expire NO

tradition
RATIO:

by

constitutum

possessorium.

Where the vendor a retro continues to

occupy the land as lessee, by fiction of law,

The Court stated that the power granted to

the possession is deemed to be constituted in

Marcelino includes: "to bargain, contract,

the vendee by virtue of this mode of

agree for, purchase, receive, and keep lands,

tradition. The covenant regarding the lease

tenements, hereditaments, and accept the

of the land sold is germane to the contract of

seizing and possession of all lands," or "to

lease, let, bargain, transfer, convey and sell,

sale with pacto de retro.

3

remise, release, mortgage and hypothecate *

may work hardship on the vendor because of

* * upon such terms and conditions, and

its clause providing for the automatic

under such covenants as he shall think fit.

a

termination of the period of redemption,

When the power of attorney says

however, the same is not contrary to law,

that the agent can enter into any

morals, or public order, which may serve as

contract concerning the land, or can

basis for its nullification. It is a clause

sell the land under any term or

condition and covenant he may
think fit, it undoubtedly means that
he can act in the same manner and
with the same breath and latitude as
the principal could concerning the
property. The fact that the agent has
acted in accordance with the wish

While the lease covenant may be onerous or

common in a sale with pacto de retro.

4

Petitioners: the assessed value of the land in

1938, when the contract was celebrated, was
P4,280, the selling price of P3,000 agreed
upon is unconscionable and, therefore, the
penal clause should be considered as not
written, and petitioners should be allowed to
exercise the right to repurchase on equitable

considerations.
a

Counsel presented evidence to

show that the market price of the
land in 1940, the year the period of
redemption was supposed to expire,
was fourteen times more than the
money paid for it by re spondent

decline to treat the delivery to the carrier as a

delivery to himself, or may hold the seller
responsible in damages. Unless otherwise agreed,
where goods are sent by the seller to the buyer under
circumstances in which the seller knows or ought to
know that it is usual to insure, the seller must give
such notice to the buyer as may enable him to insure
them during their transit, and, if the seller fails to do
so, the goods shall be deemed to be at his risk during
such transit. (n)

such that, if that should be taken as

basis, the value of the land would
be P43,004.50.
5

SC: In a contract of sale, with pacto de

retro, the price is usually less than in
absolute sale for the reason that in a sale
with pacto de retro, the vendor expects to
re-acquire or redeem the property sold. All
the evidence presented refers to sales which
were executed in 1940 and 1941 and none
was presented pertaining to 1938, or its
neighborhood, when the contract in question
was entered into. This a question of fact.
The Court of Appeals has found that the
price paid for the land is not unreasonable as
to justify the nullification of the sale, such
finding, is final and conclusive.

5. Delivery to a Common Carrier

Article 1523. Where, in pursuance of a contract of
sale, the seller is authorized or required to send the
goods to the buyer, delivery of the goods to a carrier,
whether named by the buyer or not, for the purpose
of transmission to the buyer is deemed to be a
delivery of the goods to the buyer, except in the cases
provided for in article 1503, first, second and third
paragraphs, or unless a contrary intent appears.
Unless otherwise authorized by the buyer, the seller
must make such contract with the carrier on behalf of
the buyer as may be reasonable, having regard to the
nature of the goods and the other circumstances of
the case. If the seller omit so to do, and the goods are
lost or damaged in course of transit, the buyer may

Article 1503. When there is a contract of sale of

specific goods, the seller may, by the terms of the
contract, reserve the right of possession or ownership
in the goods until certain conditions have been
fulfilled. The right of possession or ownership may
be thus reserved notwithstanding the delivery of the
goods to the buyer or to a carrier or other bailee for
the purpose of transmission to the buyer.
Where goods are shipped, and by the bill of lading
the goods are deliverable to the seller or his agent, or
to the order of the seller or of his agent, the seller
thereby reserves the ownership in the goods. But, if
except for the form of the bill of lading, the
ownership would have passed to the buyer on
shipment of the goods, the seller's property in the
goods shall be deemed to be only for the purpose of
securing performance by the buyer of his obligations
under the contract.
Where goods are shipped, and by the bill of lading
the goods are deliverable to order of the buyer or of
his agent, but possession of the bill of lading is
retained by the seller or his agent, the seller thereby
reserves a right to the possession of the goods as
against the buyer.
Where the seller of goods draws on the buyer for the
price and transmits the bill of exchange and bill of
lading together to the buyer to secure acceptance or
payment of the bill of exchange, the buyer is bound
to return the bill of lading if he does not honor the
bill of exchange, and if he wrongfully retains the bill
of lading he acquires no added right thereby. If,
however, the bill of lading provides that the goods are
deliverable to the buyer or to the order of the buyer,
or is indorsed in blank, or to the buyer by the
consignee named therein, one who purchases in good

faith, for value, the bill of lading, or goods from the

buyer will obtain the ownership in the goods,
although the bill of exchange has not been honored,
provided that such purchaser has received delivery of
the bill of
lading indorsed by the consignee named therein, or of
the goods, without notice of the facts making the
transfer wrongful. (n)

C. Double Sale

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.
Art. 526. He is deemed a possessor in good
faith who is not aware that there exists in his
title or mode of acquisition any flaw which
invalidates it.
He is deemed a possessor in bad faith who
possesses in any case contrary to the
foregoing.
Mistake upon a doubtful or difficult question
of law may be the basis of good faith. (433a)
Art. 527. Good faith is always presumed, and
upon him who alleges bad faith on the part of
a possessor rests the burden of proof. (434)

POSSESSION:

Includes actual and constructive delivery.

Thus in determining who has a better right,
possession includes not only material but
symbolic possession.

REGISTRATION:

Requisites:
1. two or more sales transactions must constitute
valid sales
2. must pertain to the same subject matter
3. buyers are at odds over the rightful ownership of
the subject matter must each represent conflicting
interests
4. must each have bought from the same seller
Art 1544 cannot be invoked where 2
different contracts of sale are made by 2
different persons, one of them not being the
owner of the property sold.

No double sale when the vendoer did not

anymore execute another sale over the same
property
Voidable sale: if the previous sale is
fraudulent or when one deed is a product of
forgery, there is only one valid sale.
BUT a forged deed of sale maybe a product
of a valid title when an innocent purchaser
for value intervenes. A DoS executed by an
impostor without authority of the owner of
the land sold is a nullity and registration will
not validate what is otherwise an invalid
document
Donations made to different donees are
covered by Art 1544
Contracts to sell: Art 1544 cannot be
applied. But conditional sales are covered by
Art 1455
Sale and Assignment: Art 1455 does not
apply where one case is the sale of the
property itself and the other is a mere
promise to assign

Means any entry made in the book of the

Registry of Property. It includes registration
in ordinary and strict sense and cancellation,
annotation and even marginal notes
More credit is given to registration than to
actual possession
Parcels brought under the Torrens system
are registered lands
Without registration of the first sale, the sale
between the first buyer and seller does not
affect the land insofar as the second buyer is
concerned
However, mere registration is not enough;
good faith must concur with registration
o Defense of indefeasibility of the
Torrens title does not extend to a
transferee who takes the certificate
of title in bad faith with notice of

its flaw
Note however that the
defense refers to a sale of
lands and not to sale of the
properties situated therein
If a vendee in a double sale registers the sale
after he has acquired knowledge of a
previous sale, the registration constitutes bad
faith and does not confer him any right.

Plaintiff: Express credit Financing Corporation

Defendant: Spouses Morton and Juanita Velasco
Object: house and lot in Quezon City

GOOD FAITH: 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 claim or interest
of some other person.
Should subsist from sale to registration

Presumption of good faith

But actual notice is equivalent to and more
binding than presumed notice by registration
Prius tempore, patior jure first in time,
stronger in right
o The good faith of the first uyer
remains all throughout despite his
subsequent
acquisition
of
knowledge of the subsequent sale
Burden of proof: as a rule, goodfaith is
presumed. So he who alleges has the burden
of proving bad faith on the part of the
possessor. However, the burden of proving
the status of one as a purchaser in good faith
and for value lies upon him who asserts that
status where the seller had none to transmit
to the purchaser and the other claimant is
himself a purchaser in good faith from a
successor-in-interest of the original title
holder.
Purchase must also be for calculable
consideration

When does double sale happen? What makes it

possible? Is the fact that we separate the concept of
perfection of sale and delivery.
Were talking about two perfected sales and not
delivery.
EXPRESS CREDIT VS VELASCO (2005)

On May 25, 1988, spouses Velasco purchased on

installment a house and lot located in QC from
spouses Jesus and Lorelei Garcia.
On July 1988, a Deed of Absolute Sale was
executed whereby the spouses Garcia bound
themselves to deliver the title of the property
purchased, free from all liens and encumbrances
within 15 days from full payment. They were
informed by Garcia spouses that the house on the
property was still under construction and
therefore, the lot was still covered by the mother
title and had no separate title yet. They promised
to give the title after the construction was
completed.
In August 1988, the delivered the keys to the
property to respondents. Spouses Velasco moved
in, applied for a telephone connection, and
insured the house. When they followed up on the
title, spouses Garcia reasoned that the QC City
Hall was razed by fire in June and the title still
had to be reconstituted.
Spouses Velasco decided to go to the Register of
Deeds in QC and discovered that the spouses
Garcia mortgaged the property to Expresscredit
Financing Corp. for P250k on June 15, 1989,
more than a year the property was sold to them
On October 23, 1990, respondents filed a case
for Quieting of Title and Specific Performance
against the Garcia Spouses whereby they caused
registration of a notice of lis pendens on the title,
stating that they have been the owners of the said
property since May 25, 1988
On October 7, 1992, petitioner foreclosed on the
property in defiance of the notice of lis
pendens and the Writ of Preliminary Injunction
issued by the lower court. Petitioner sold the
property in a public auction where petitioner was
the highest bidder. Due to the failure of the
Garcia spouses to redeem the property, petitioner
thereafter executed an Affidavit of Consolidation
and secured Certificate of Title in its name

TC: Ruled in favor of Petitioner. There is no need for

Expresscredit to go beyond the title because the same
was in the name of Garcia. Had petitioner known that
there is an encumbrance in the property, they
wouldnt have accepted it as collateral. Petitioner is a
purchaser in good faith but is, however, ordered to

reimburse to spouses Velasco whatever they have

paid for the value of the property.
CA: reversed decision of TC.
ISSUE: Who has a preferential right over the
property?
Ratio:
The Spouses Velasco have a preferential right over
the property
Petitioner alleges that this is a case of double sale.
The first sale is the unregistered sale of the property
to Spouses Velasco while the second sale is during
the foreclosure proceedings where petitioner was the
winning bidder.

Art. 1544: 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.
Innocent purchaser for value also includes
innocent lessee, mortgagee, and other
encumbrancer for value
Bautista v CA: where the thing sold twice is an
immovable, the one who acquires it and first
registers it in the Registry of Property, in good
faith, shall be the owner
Petitioner claims the when the property was
mortgaged, the previous sale of the land was not
annotate on the title so its purchase was in good
faith. To fulfill the requirement of good faith, it
is imperative for a mortgagee of the land, in the
possession of persons not the mortgagor, to
inquire and investigate into the rights or title of
those in possession.
It is true that a person dealing with the owner of
registered land is not bound to go beyond the
certificate of title. He may rely on the notices of
the encumbrances on the property annotated on
the certificate of title or absence of any
annotation.
However, Garcia spouses are in the business of
constructing and selling townhouses and are past
masters in real estate transactions. Further,

petitioner is in the business of extending credit to

the public, including real estate loans. In both
these businesses, it devolves upon both, greater
charge than ordinary buyers or encumbrancers
for value, who are not in such venture. It is
standard in their business, as a matter of due
diligence required of banks and financing
companies, to ascertain whether the property
being offered as security for the debt has already
been sold to another to prevent injury to prior
innocent buyers.
Also, it was shown that 2 credit investigators of
petitioner visited the premises and were
informed by the caretaker of the property that the
same had been sold to respondents. Petitioner,
through its agents, had been informed of the
earlier sale. Petitioner is a purchaser in bad
faith.
As shown by the evidence, the property had
already been sold by the Garcia spouses to the
respondents on May 25, 1988. The respondents
immediately took possession, applied for a
telephone line, and insured the property with
Pioneer Insurance in September 1988. When the
same land was mortgaged by the Garcia spouses,
respondents have been, since May 25, 1988 in
actual, physical, continuous and uninterrupted
possession.
Since Garcia spouses no longer had the right to
alienate the property, no valid mortgage was ever
constituted. Since the mortgage was void, the
foreclosure of the property was ineffectual.

1. General Rule prior tempore, prior jure

CARBONELL V CA
Plaintiff: Rosario Carbonell
Defendant: Jose Poncio, Emma Infante, and Ramon
Infante
Object: 195 sq. m. parcel of land with improvements
situated at 179 V. Agan St., San Juan, Rizal
Jose Poncio, a native of Batanes Islands, is the
owner of a 195 sq. m. parcel of land with
improvements, subject to a mortgage in favor of
the Republic Savings Bank for P1,500
Rosario Carbonell and Emma Infante both want
to buy the said property
Poncio, unable to keep up with the installments
due on the mortgage, offered to sell to Carbonell,
his cousin, the said lot excluding the house

where he lived. Carbonell accepted the offer and

proposed to pay P9.50/sq. m. Poncio agreed, on
the condition that she would continue to pay the
installments due on the mortgage and also to pay
the arrears. They went to the Republic Savings
Bank and with the consent of the President,
Carbonell assumed the said responsibilities. Paid
a total of P247 for the amount in arrears
On January 27, 1955, Carbonell and Poncio
executed a document in the Batanes dialect
which, when translated to English reads:
Contract for one half lot which I bought from
Jose Poncio (EXHIBIT A). They agreed that
Poncio can continue to live in the lot for one
year. If after such period he cannot find any
place to move his house, he may remain in the
lot but shall start paying rent.
Carbonell then asked Atty. Reyes to prepare a
formal Deed of Sale which he brought to Poncio
together with P400 representing the balance she
had to pay for the mortgage. When she arrived at
Poncios house, the latter told her that he
couldnt proceed with the sale anymore because
he had already given the lot to respondent Emma
Infante. Infante offered to buy the property for
P3,535 which is a better deal than he had with
Carbonell. Carbonell sought to contact Infante
but the latter refused to see her. Infante began to
build a wall around the lot with a gate.
On February 2, 1955 Pncio executed a Deed of
Sale in favor of Infante in the total sum of
P3,554. On the same date, the latter paid the
bank P1,500 for the mortgage which was
thereafter discharged.
When Atty. Reyes was informed that the sale in
favor of Infante was not yet registered, he
prepared an adverse claim for petitioner who
registered such claim on Feb 8, 1995.
Four days after the registration of the adverse
claim (Feb. 12), the Deed of Sale in favor of
Infante was registered. She immediately took
possession of the lot and built improvements
thereon (house, walls, gate), but such
constructions started only in 1959, during the
pendency of the litigation.
On June 1, 1955, Carbonell filed a second
amended complaint, praying that she be declared
the lawful owner of the land; that the sale to
Infante be declared null and void; and the Poncio
be ordered to execute the corresponding Deed of
Conveyance in her favor
Respondents moved to dismiss the complaint on

the ground that the claim is unenforceable under

the Statute of Frauds because the sale in her
favor is not evidenced by a written document
TC: sustained the objection and dismissed the
complaint on the ground that the memorandum
presented by Carbonell (Exhibit A) does not
satisfy the requirements of the law because it
lacks the essential elements
SC: Statute of Frauds applies only to executory
contracts and doesnt not apply in this case
because Carbonell had partially performed her
obligation and is therefore entitled to establish
her claim by parol evidence. Ordered for the case
to be remanded. TC then held that the sale
between Poncio and Infante is null and void.
Infante asked for a new trial, introduced
additional evidence consisting of the cost of
improveentsgranted. TC reversed its earlier
decision and held that the claim of Infante is
superior to the claim of Carbonell. Carbonell
appealed
CA: reversed TC, declared Carbonell to have a
superior right to the land.
However, upon Infantes MFR, CA reversed
itself and held that Infante has a superior claim.

ISSUE: Who has a better claim over the property?

Carbonell has a superior claim to the property
because her prior purchase was made in good
faith.

Under Art. 1544 of the Civil Code: 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.
It is essential that the buyer of realty must act in
good faith in registering the Deed of Sale to be
covered by the protection of the 2 nd par of Art.
1544.
Carbonell was the first to purchase the property,
and such purchase was made in good faith. There
was no sale to Infante at that time yet. Her good
faith continued to exist when she registered her
adverse claim 4 days prior to Infantes
registration of the Deed of Sale.
The existence of the prior sale to Carbonell is

duly established by EXHIBIT A.

o Trial judge: the memorandum merely
states the Poncio is allowed to stay in
the property. No mention of the
consideration, description of the
property, and other essential elements.
Cannot be an evidence of a contract of
sale.
o SC: from the terms of the
memorandum, it tends to show that the
sale of the property is already an
accomplished act. CA found that there
had been a true contract of sale,
consummated by delivery constitutum
possessorium. The vendors (Poncio)
possession was converted to a mere
tenant thereof with the special privilege
of not paying rental for one year.
Although it is true that the sale
evidenced by EXHIBIT A could not
have been registered at all, it was still a
valid contract because sale is perfected
by mere consent.
o There was adequate consideration for
the sale in favor of Carbonell: to
forestall the foreclosure of the mortage,
Poncio agreed to sell it to Carbonell at
P9.50 per sq. m. on the condition that
she would (1) pay them amount of P400
to Poncio (2) the arrears in the amount
of P247.26 to the bank (3) she would
assume the mortgage indebtedness. The
sale didnt include the house on the lot
and Poncio was given the right to
continue staying on the land without
paying rent for one yearall these are
part of the consideration of the sale to
Carbonell
o The lot was properly identified. The
note refers only to one half of the lot
because the original description carried
in the title states that it was formerly
part of a bigger lot and only segregated
later. Moreover, it isnt shown that
Poncio owns another parcel with the
same area adjacent to the lot of
Carbonell

Exhibit A is a valid contract of sale. Even an oral

contract of realty is valid between the parties. It
effectively transferred possession of the lot to
Carbonell by constitutum possessorium.

It was Infante who was in bad faith as shown by

the following facts:
o Infante refused to see Carbonell who
wanted to see her after she was
informed the Poncio sold the lot to the
former. Ordinarily, one will not refuse
to see a neighbor. Her refusal to talk to
Carbonell could only mean that she
didnt want to listen to the latters story
the she had previously bought the lot
from Poncio
o Carbonell was already in the possession
of the mortgage passbook and Poncios
copy of the mortgage contract when he
sold the lot to Infante. This shows that
the lot was already sold to Carbonell
who assumed the balance of the
mortgage in the bank. Before or upon
paying
in
full
the
mortgage
indebtedness of poncio, Infante
naturally must have demanded from
Poncio that he deliver the mortgage
passbook and the mortgage contract to
her. Poncio and the bank must have
informed her that it couldnt be
delivered because it was in Carbonells
possession
o The fact that Poncio was no longer in
possession of such passbook must have
compelled her to inquire why he was no
longer in possession of the passbook.
o Carbonell registered her adverse claim
four days before Infante registered the
Deed of Sale. She was notified of the
prior sale to Carbonel
o Poncio admitted that both Carbonell and
infant offered to but the lot at P15 per
sq. m. It is logical to presume that
Infante was told by Poncio and
consequently knoew of the offer of
Carbonell which likewise should have
put her on guard and compelled her to
inquire whether or not he had already
sold the property
Being in bad faith, Infantes cannot recover the
value of the improvements introduced in the lot.
By virtue of Arts. 546 and 547 of the Civil Code,
possessor in bad faith has neither the right of
retention of useful improvements nor the right to
a refund for useful expenses. However, a
possessor in bad faith should be allowed to
remove the improvements, unless Carbonell
chooses to pay for their value at the time Infantes

introduced said useful improvements, and not at

their current value

However, Carbonell must refund P1,500 to the

respondents which they paid to the Republic
Savings Bank to redeem the mortgage

Munoz-Palma, dissenting:

Infante is a buyer in good faith. TC found that

the title which she relied on when she
consummated the sale revealed no annotation of
any encumbrance or lien other than the mortgage
in favor of Republic Savings Bank.
What the majority did was to undertake a factfinding process on its own, which resulted to
conclusions which are unsupported by evidence
and directly contrary to the findings of the lower
court
Since both of them are in good faith, the
determination of who has a superior right
depends on who registered her purchase first?
The registration of adverse claim is not the one
required by law and even if we were to concede
that it was, such registration was not made in
good faith because she was already aware that
there is a defect in her title. A registration made
in bad faith is equivalent to no registration at all
The contention that Infante was in bad faith
when she registered the sale because of the
presence of the adverse claim is of no moment.
The registration was just but a formality to what
has already been accomplished earlier which is
the registration of Infantes purchase against
Carbonel when the latter acquired knowledge of
the second sale. Knowledge is equivalent to
registration.

TANGLAO V PARUNGAO

Spouses Parungao purchased from Spring

Homes Subdv Lot Nos 1, 2, 3 and 4 with a
total of 486 sqm at 1,350/sq m or a total
price of P656,100.00 and Lot Nos 7,8 and 9
with a total area of 457 sqm at P1,550 or a
total price of P708,360.3 in Calamba,
Laguna.
Made a downpayment of P536,000 leaving a
balance of P828,450.
Nov 1992: they introduced improvements on

lots consisting a concrete perimeter fence

with cyclone wires on top, heavy steel gate
and two fish breeding buildings all
amounting to P945,000. They also elevated
the ground level of the lots by filling them
with earth and adobe.
Terms of Contract to Sell
o balance was to be paid within one
year from its execution
o they should apply for a loan as
payment for the balance
o continue to pay the monthly
instalments until full paid
Respondents failed to pay instalments and
they also failed to secure a loan because
Spring Home refused to deliver the TCTs
covering the lots required in their
application for a loan.
o Instead of giving them copies of
TCTs, receipts of real estate taxes
paid, survey and vicinity plans, the
representative only gave them
copies of the Contract to Sell.
These were returned to
Spring
Homes
for
correction of lot numbers
April 11, 1997: Spring Homes executed two
separate Deeds of Absolute Sale in favour of
PETs Mariano and Corazon Tanglao and
TCTs were issued in their names. However,
the lots sold to them were among those
which have been sold to respondent already.
Sept 15, 1997: RESPs demanded that the
corrected Contracts and the TCTs be
delivered to them
PET took possession of the lots that they
bought and forcibly opened the steel gate as
well as the doors of the buildings.
Because Spring Homes could not validly
explain why this was so, RESPs filed with
the Housing and Land Use Regulatory
Board (HLURB) for annulment of Deed of
Sale
HLRUB Arbiter: dismissed complaint
against RESPs but ordered Spring Homes to
pay complainants.
HLRUB Board reversed the decision.
Contracts to Sell between RESPs and Spring
Homes were valid and subsisting and that

SH was to accept the payment of the RESPs.

The Board also said that the fence and the
existing structures erected on the premises
should have forewarned PETs that there
were adverse claimants over the lot
Office of the President dismissed the appeal
and affirmed the Boards decision.
CA: there was a perfected contract already
thus RESPs have a superior right

WN the RESPs have the right of ownership?

YES

Governing principle: Prius tempore,

prius jure (first in time, stronger in
right)
Payongyang v CA: preferential rights to
1. Person acquiring it who in
good faith first recorded it in
the Registry of Property
2. default thereof, to the person
who in good faith was first in
possession
3. default thereof, to the person
who presents older title
In all cases good faith is
essential
Occena v Esponilla
(1) Knowledge by the first buyer of
the second sale cannot defeat the
first buyers rights except when the
second buyer first registers in good
faith the second sale; and
(2) Knowledge gained by the
second buyer of the first sale
defeats his rights even if he is first
to register, since such knowledge
taints his registration with bad
faith.
Thus it becomes essential to determine
whether second buyers are possessors in
good faith
there were already occupants and
improvements on the two lots in question.
These facts should have put petitioners on
their guard. Settled is the rule that a buyer of
real property in possession of persons other
than the seller must be wary and should
investigate the rights of those in possession,
for without such inquiry the buyer can

hardly be regarded as a buyer in good faith

and cannot have any right over the property.
PETs cannot be considered buyers in good
faith, they cannot rely upon the
indefeasibility of their TCTs in view of the
doctrine that the defense of indefeasibility of
a torrens title does not extend to transferees
who take the certificate of title in bad faith.
RESPs were in good faith and first took
possession

Good faith purchaser is defined in this case.

He who alleges good faith must prove.

2. Requisites
CHENG V GANATO (1998)
Petitioners: Ricardo Cheng
Respondents: Ramon Genato
Double Sale Requisites
Martinez, J.

Ramon Genato is the owner of two parcels

of land in Bulacan. On Sept. 6, 1989, Genato
entered into an agreement with Ernesto Da
Jose and Socorro Da Jose over the parcels of
land. It culminated in the execution of a
contract to sell with a purchase price of P80
per sq/m. The contract was in a public
instrument and was duly annotated at the
back.
o Clause 1: P50k partial down
payment to the vendor at the time
of execution of the contract
o Clause 3: Vendees, 30 days after
execution of the contract and only
after having satisfactorily verified
the authenticity of the documents,
to pay the vendor P950k
representing full payment after
which complete possession of the
property shall be given to the
vendee
On Oct 4, 1989, the Da Jose spouses, not
having finished verifying the titles
mentioned in Clause 3, was granted by
Genato an extension of 30 days. The

extension was granted on condition that a

new set of documents is made 7 days from
Oct 4, 1989.
Pending the effectivity of the period and
without due notice to the spouses, Genato
executed an Affidavit to Annul the Contract
to Sell on Oct 13, 1989. No annotation of
the affidavit was made at the back of his
titles right away.
Oct 24, 1989: Ricardo Cheng went to
Genatos residence and expressed his
interest in buying the properties. Genato
showed Cheng the TCTs and annotations at
the back as well as the affidavit to annul.
Despite these, Cheng went ahead and issued
a check for P50k upon assurance by Genato
that the contract he had with the spiuses will
be annulled for which he used a handwritten
receipt.
Genato then deposited the check. The
following day, he caused the registration of
the Affidavit to Annul in the Registry of
Deeds. He met the spouses there by
coincidence and it was only then that they
discovered about the affidavit to annul the
contract. They reminded him that he gave
them the extension period so decided to
continue the contract with them.
Genato then advised Cheng of his decision
and returned the check of P50k. Chengs
lawyer sent a letter to Genato demanding
compliance with their agreement to sell the
property contract to sell was already
perfected.
Cheng executed an affidavit of adverse
claim and had it annotated on the subject
TCTs. On the same day, the spouses paid the
complete down payment to Genato of P950k
and delivered to him three postdated checks
in the total amount of P1,865,680 to cover
full payment of the balance of the agreed
purchase price.
On Dec. 8, 1989, Cheng instituted a
complaint for specific performance to
compel Genato execute a deed of sale to him
of the subject properties. He alleged that the
check he gave was considered as earnest
money to which Genato acceded so the
contract was deemed perfected.

Genato alleged that the agreement was only

a simple receipt of an option-bid deposit and
never stated it was a partial payment or
earnest money. The spouses meanwhile
asserted that they have a superior right to the
property as first buyers and added that
Cheng was a buyer in bad faith.
RTC: receipt issued by Genato to Cheng
meant a sale and just a priority or an option
to buy; valid rescission of the contract to sell
by virtue of the affidavit to annul. The right
to rescind fell under Art 1191 of the CC.
CA: reversed RTC prior contract to sell in
favor of the spouses was not validly
rescinded and the subsequent contract
between Genato and Cheng in the
handwritten receipt was without force and
effect.

ISSUE/S:

WoN there was a valid rescission of the

spouses Contract to Sell: NO
o The breach contemplated in Art
1191 of the CC is the obligors
failure to comply with an
obligation already extant, not a
failure of a condition to render
binding that obligation.
o In the case at bar, no default had
ascribed to the spouses since the
30-day extension period has not yet
expired.
o Even assuming that the spouses
defaulted, the execution by Genato
of the affidavit to annul the contract
is not even needed. Their nonpayment to complete the full down
payment of the purchase price
avoids the contract itself since it is
subject to the suspensive condition.
o Nevertheless, Genato is not
relieved from the giving of a
notice, verbal or written, to the
spouses for his decision to rescind
their contract. Such act is always
provisional.
WoN the Cheng has a better right to the
parcels of land over the spouses Da Jose:

NO
o

The RTC and CA correctly held

that it was a contract to sell.
However, Art. 1544 of the Civil
Code does not apply to the instant
case. The provision connotes the
following circumstances that must
concur:
Two (or more) sales
transactions in issue must
pertain to exactly the same
subject matter, and must
be
valid
sales
transactions
The two (or more) buyers
at odds over the rightful
ownership of the subject
matter must each represent
conflicting interests
The two (or more) buyers
at odds over the rightful
ownership of the subject
matter must each have
bought from the very
same seller
These situations are lacking in a
contract to sell for neither a transfer
of ownership nor a sales transaction
has been consummated. The
governing principle of Art 1544
should apply in this situation:
Primus Tempore, Portior Jure
(first in time, stronger in right).
Not only was the contract between
the respondents first in time but it
was also registered long before
Chengs intrusion as a second
buyer.
In order to displace the first buyer,
the second buyer must show:
o That he acted in good faith
from the time of the
acquisition until title is
transferred to him by
registration or by delivery
of possession
o Continuing good faith and
innocence or lack of
knowledge of the first sale

until his contract ripens

into
full
ownership
through prior registration
as provided by law
The knowledge of the spouses as
first buyers of the new agreement
involving Cheng will not defeat
their rights as first buyers. In
contrast, knowledge of Cheng of
the first transaction between the
spouses and Genato defeats his
rights even if he is the first to
register the transaction.
It was Cheng himself who sought
Genato to inquire about the
property and offered to buy the
same. And after Genato showed to
him the titles and annotations,
Cheng was aware of the rights of
the spouses over the lands.

HELD: Petition DENIED. Judgement appealed from

AFFIRMED.

3. PURCHASER IN GOOD FAITH

Art. 526. He is deemed a possessor in good faith who
is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses
in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law
may be the basis of good faith. (433a)
Art. 527. Good faith is always presumed, and upon
him who alleges bad faith on the part of a possessor
rests the burden of proof. (434)
Art. 528. Possession acquired in good faith does not
lose this character except in the case and from the
moment facts exist which show that the possessor is
not unaware that he possesses the thing improperly or
wrongfully. (435a)

PAYLAGO V JARABE

The entire lot involved in this suit was

originally covered by Homestead Patent issued
on June 7, 1920 under Act No. 926 and later
under OCT No. 251 of the Registry of Deeds of
Mindoro, issued on June 22, 1920 in the name
of Anselmo Lacatan and upon his death was
issued in the name of his 2 sons and heirs, Vidal
and Florentino Lacatan. Vidal Lacatan died on
August 27, 1950.
March 1953: Vidals heirs (Maximo, Tomas, and
Lucia) executed a deed of sale in favor of Sps.
Paylago over a portion of the entire lot.
The heirs of Florention also executed a deed of
sale in favor of Sps. Paylago on October 1953.
On March 2, 1954, by virtue of the registration
of the two deeds of sale (Exhs. C and D), a new
TCT No. T-4208 covering the total area
of6.7908 hectares was issued in favor of the
Paylago spouses.
A subsequent subdivision survey disclosed that
a portion (one half hectare) of the total area
purchased by plaintiffs-petitioners was being
occupied by defendant-respondent.
Hence, the action to recover possession and
ownership of the said portion.
TC and CA found that a portion of the land was
purchased by Hilario Jarabe, late husband of
defendant-respondent, from one Apolonio
Lacatan, which sale is evidenced by an
unregistered
deed
of
sale.
Apolonio
Lacatanbought the same in 1936 from Anselmo
Lacatan, the original registered owner in whose
favor OCT No. 251 and later TCT No. T-4208
were issued.
The found that the first deed of sale, also
unregistered, executed by Anselmo Lacatan in
favor of Apolonio Lacatan was lost during the
Japanese occupation; that the herein defendantrespondent has been in possession of the said
portion continuously, publicly, peacefully and
adversely as owner thereof from 1938 up to the
present; and, that the herein plaintiffspetitioners knew, nay, admitted in a deed of
lease, that defendant-respondent has been in
possession of the premises since 1945.
TC held that the Spouses were not purchasers in
good faith and declared Jarabe the owner of the
land in question. CA affirmed.

ISSUE: Who has the better right, Sps. Paylago or

Jarabe? JARABE
The general principle governing the matter: as
between two purchasers, the one who has
registered the sale in his favor, in good faith, has

a preferred right over the other who has not

registered his title, even if the latter is in the
actual possession of the immovable property.
There is no question that the sales made in favor
of plaintiffs-petitioners were registered while
the alleged sale executed in favor of defendantrespondent was not. However, their acquisition
and subsequent registration were tainted with
bad faith. Both Courts below found that
petitioners knew beforehand that the parcel of
land in question was owned by defendantrespondent admitted by the Spouses in a deed
of lease.
Considering that the boundaries of the lands that
the petitioners Paylago purchased in 1953 and
1954 were well defined, they must have known
that the portion occupied by the defendantrespondent under claim of ownership and leased
to them by the latter was included in the
description.
Spouses Paylago should have inquired and
made an investigation as to the possible defects
of the title of the Lacatan heirs over the entire
lot sold to them, granting that the latter's
certificate of title was clear. This, they failed to
do.
The fundamental premise of the preferential
rights established by Article 1544 of the New
Civil Code is good faith. To be entitled to the
priority, the second vendee must not only show
prior recording of his deed of conveyance or
possession of the property sold, but must, above
all, have acted in good faith, that is to say,
without knowledge of the existence of another
alienation by his vendor to a stranger.
The Sps. Paylago cited the case of BacolodMurcia Milling Co., Inc. v. De la Rama, et al., to
disprove bad faith ascribed to them. But the
citation does not fit with the facts of the present
case because the second purchaser in the De la
Rama case had no knowledge of the previous
sale and possession of the first purchaser at the
time he (second purchaser) acquired the
property involved therein. Plaintiffs-petitioners
in the instant case, however, had knowledge of
defendant-respondent's claim of ownership over
the land in question long before they purchased
the same from the Lacatan heirs. They were
even told, as previously intimated, that
defendant-respondent bought the land from
Apolonio Lacatan.
Spouses also contend the identity of the land in
question has not been established but evidence
of record, both oral and documentary,
unequivocally show that the said portion of land

can be identified and segregated, and has been

in fact identified and segregated, from the entire
lot covered by TCT No. T-4208. The boundaries
of the same have been clearly indicated as that
planted by madre cacao trees.
The Spouses also questioned the admission by
the courts a quo of secondary evidence to
establish the contents of the first unregistered
deed of sale executed by Anselmo Lacatan in
favor of Apolonio Lacatan when the loss or
destruction of the original document, according
to them, has not been established. Again, the
findings of the Court of Appeals destroy this
assertion of petitioners:
o Undeniably the alleged unregistered
document could no longer be examined by
the parties in court, because it was lost
but its original, however, upon, the trial
court's findings which we have no reason
to question has been sufficiently proved
as having existed.
o The destruction of the instrument may be
proved by any person knowing the fact.
The loss may be shown by any person who
knew the fact of its loss, or by anyone who
has made, in the judgment of the court, a
sufficient examination of the place or
places where the document or papers of
similar character are kept by the person in
whose custody the document lost was, and
has been unable to find it; or has made any
other investigation which is sufficient to
satisfy the court that the instrument is
indeed lost."

ISSUE/S:

AGRICULTURAL & HOME EXTENSION V. CA

(1992)
Double Sale Purchaser in Good Faith

The spouses Diaz sold to Bruno Gundran a

parcel of land. The owners duplicate copy
of the title was turned over to Gundran.
However, he did not register the Deed of
Absolute Sale because he was advised in the
Office of the Register of Deeds of the
existence of notices of lis pendens on the
title.
Gundran and Agricultural and Home
Development Group entered into a Joint
Venture Agreement for the improvement and
subdivision of the land. This agreement was

also not annotated on the title.

The spouses Diaz again entered into another
contract of sale of the same property with
Librado Cabautan. A new owners copy of
the certificate of title was issued to the Diaz
spouses, who had alleged the loss of their
copy. On that same date, the notices of lis
pendens were canceled and the Deed of Sale
in favor of Cabautan was recorded. The
original TCT was cancelled and a new
TCT was issued in Cabautans name.
Gundran
instituted
an
action
for
reconveyance against Cabautan and Josefa
Mia seeking the cancellation of the TCT in
Cabautans name and the issuance of a new
certificate of title in his name. Agricultural
& Home Extension filed a complaint in
intervention with substantially the same
allegations and prayers as that in Gundrans
complaint.
The CFI dismissed the complaint. On
appeal, the CA affirmed.
Agricultural & Home Extension argues that
Cabautan was a purchaser in bad faith
because he was fully aware of the notices of
lis pendens at the back of the original TCT
and of the earlier sale of the land to
Gundran.

WoN Gundran should be recognized as

owner of the parcel of land, and not
Cabautan
o NO. Under Art. 1544 of the Civil
Code,
Cabautan,
who
had
registered the sale, had the
preferential right as against
Gundran whose right to the same
property had not been recorded.
o Cabautan registered the property in
good faith. A purchaser in good
faith is defined as "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.
The original TCT discloses no
annotation of any sale, lien,
encumbrance or adverse claim in
favor of Gundran or Agricultural &
Home Extension. When the
property sold is registered under
the Torrens system, registration is
the operative act to convey or affect
the land insofar as third persons are
concerned. Thus, a person dealing
with registered land is only charged
with notice of the burdens on the
property which are noted on the
register or certificate of title. While
it is true that notices of lis pendens
in favor of other persons were
earlier inscribed on the title, these
did not have the effect of
establishing a lien or encumbrance
on the property affected. Their only
purpose was to give notice to third
persons and to the whole world that
any interest they might acquire in
the property pending litigation
would be subject to the result of the
suit.
Cabautan took this risk. Three days
after the execution of the deed of
sale in his favor, the notices of lis
pendens were canceled. Cabautan
therefore acquired the land free of
any liens or encumbrances and so
could claim to be a purchaser in
good faith and for value.
Although no one can sell what he
does not own, this is merely the
general rule. Art. 1544 is an
exception to the general rule by
reason of public convenience. It
also 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.

4. SALE OF MOVABLES
Art. 1497. The thing sold shall be understood as
delivered, when it is placed in the control and
possession of the vendee. (1462a)
Art. 1498. When the sale is made through a public
instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear
or cannot clearly be inferred.
With regard to movable property, its delivery may also
be made by the delivery of the keys of the place or
depository where it is stored or kept. (1463a)
Art. 1499. The delivery of movable property may
likewise be made by the mere consent or agreement of
the contracting parties, if the thing sold cannot be
transferred to the possession of the vendee at the time
of the sale, or if the latter already had it in his
possession for any other reason. (1463a)
Art. 1500. There may also be tradition constitutum
possessorium. (n)
Art. 1501. With respect to incorporeal property, the
provisions of the first paragraph of article 1498 shall
govern. In any other case wherein said provisions are
not applicable, the placing of the titles of ownership in
the possession of the vendee or the use by the vendee
of his rights, with the vendor's consent, shall be
understood as a delivery. (1464)
RIVERA V ONG
Rivera v Ong Che; J. Street
-

Jan 8 1912, an agent of the Lichauco

Brothers sold assorted old machinery (2
complete steam-boilers with chimneys, 1
complete steam motor, a complete ricehuller, and a feeding pump) to Marciano
Rivera for P5.5k.
o The machines were exposed, on
display in a yard in Tanduay,
Manila.
o Rivera did not take immediate
possession of the property, which
remained on display.
Feb 9 1912, another agent of the Lichauco
Brothers sold some old iron to Ong Che for

P1.1k. He took immediate possession of it.

When Rivera subsequently took possession
of the machines, he noticed many of its
auxiliary and accessory parts were missing.
Upon investigation, it seems Ong claimed
the parts.
Thus, he filed suit to recover the parts. The
CFI ruled for Ong, hence appeal.

Issue:
1

Can Rivera recover the parts? NO.

a According to OCC A1473 (now
A1544), Ong Che, a purchaser in
good faith, had a better title to the
parts than Rivera, even though he
was the first purchaser, because he
acquired possession over the
items, whereas Rivera never had
possession at all.
b It seems that two different agents of
the same owner successively
negotiated sales to two different
purchasers. The second purchaser,
having acquired possession first,
must be declared the true owner.
c The minor quibble raised by Rivera
the fact that the property was
owned by Galo Lichauco but sold
to Ong Che by Crisanto Lichauco
is irrelevant, as Crisanto was
authorized to sell it.

Held: CFI affirmed.

5. SALE OF IMMOVABLES
CONSOLIDATED VS CA (2005)
Facts Petitioner: Consolidated Rural Bank (Cagayan
Valley) Inc.
Respondents: Heirs of Teodoro Dela Cruz and CA
Object: parcels of land
The Madrid brothers owned a parcel of land in
Isabela. This lot, Lot No. 7036-A, was
subdivided into several lots including Lot No.
7036-A-7.
Rizal Madrid sold part of his share identified as
Lot No. 7036-A-7 to Gamiao and Dayag. The
deed of sale was NOT registered in the Register
of Deeds, but was declared for taxation purposes.
Gamiao and Dayag sold the southern half of the

Lot 7036-A-7 to Teodoro dela Cruz, and the

northern half to Restituto Hernandez. The two
took possession and cultivated the portions of the
properties sold to them.
Hernandez donated the property he bought to his
daughter Evangeline, while the children of dela
Cruz continued possession of the property their
father bought when he died.
In 1976, the Madrid brothers conveyed all their
rights and interests over Lot No. 7036-A-7 to
Marquez. The sale was registered in the RD of
Isabela. Marquez subdivided the lot into eight
(Lots A to H).
o Four parcels (Lots A to D) were mortgaged
to petitioner CRB. When Marquez
defaulted in the payment of his loan, CRB
caused the foreclosure of the mortgages in
its favour and the lots were sold to it as the
highest bidder.
o Lot E was mortgaged to Rural Bank of
Cauayan (RBC).
o Marquez sold Lot G to Calixto.
Heirs of dela Cruz filed a case for reconveyance
and damages of the southern portion of Lot No.
7036-A against Marquez, Calixto, RBC and
CRB.
Marquez alleged that aside from being the first
registrant, he was a buyer in good faith and for
value. He also said that sale between Rizal
Madrid, and Gamiao and Dayag was not binding
upon him since the sale was not registered.
CRB alleged that it was a mortgagee in good
faith, and that it relied on the titles of Marquez
which were free from any lien or encumbrance.

RTC: dismissed the complaint

declared Marquez as the lawful owner of the

subject property; mortgages in favour of CRB
and RBC by Marquez are valid.
The sale to Gamiao and Dayag and the
subsequent conveyances to the plaintiffs are all
valid.
Marquez and Calixto were buyers in good
faith.Good faith is always presumed and he who
imputes bad faith ahs the burden of proving the
same. Nothing was shown to prove that Marquez
was aware of the plaintiffs claim of ownership
over the property.
There were two sales over the same property.
Thus Art. 1544 applies such that the ownership
shall belong to the person acquiring the property

in good faith who first recorded it in the Registry

of Property. In the absence of proof that Marquez
has actual or constructive knowledge of
plaintiffs claim, since he is the first vendee to
register the sale, his ownership must be upheld.

CA: reversed RTCs judgement.

Marquez failed to prove that he was a purchaser

in good faith and for value. There was no
showing that the registration of the deed of sale
in his favour was coupled with good faith. The
Heirs were also in possession of the land at the
time.
Also, since the property was situated along the
national highway (an attractive location) it
should have put Marquez into inquiry as to its
status. He failed to exercise the ordinary care
expected of a buyer of real estate.
Mortgagees RBC and CRB did not ascertain the
status and condition of the property according to
standard banking practice. Thus they have acted
in bad faith. The mortgages were null and void.

*Marquez and RBC did not challenge the decision of

CA.
1
2

checking the vendors title takes all the risks and

losses consequent to such failure. Also, Marquez
did not fight for the possession of the property if
it were true that he had a better right to it.
2. A purchaser or mortgagee cannot close his eyes
to facts which should put a reasonable man upon
his guard, and then claim that he acted in good
faith under the belief that there was no defect in
the title of the vendor or mortgagor.

3. Art. 1544 is not applicable since it contemplates

a case of double or multiple sales where a single
vendor sold one and the same immovable property
to two or more buyers. It cannot be invoked where
two different contracts of sale are made by two
different persons, one of them not being the owner
of the property sold.

WON Marquez is a buyer in good faith. NO

WON CRB is a mortgagee in good faith.
NO
WON Art. 1544 is applicable. NO
WON CA erred in awarding the subject
property to the Heirs absent proof of good
faith in their possession of the subject
property and without any showing
possession thereof by Gamiao and Dayag.
NO

1. Marquez knew at the time of the sale that the

subject property was being claimed or taken by
the Heirs. He failed to inquire into such detail
which may constitute a defect in his title.

3
4

One who purchases real property which is in

actual possession of others should, at least, make
some inquiry concerning the rights of those in
possession.
The rule of caveat emptor requires that the
purchaser should be aware of the supposed title
of the vendor and one who buys without

Banks, their business being impressed with

public interest, are expected to exercise more
care and prudence than private individuals in
their dealings.
CRB failed to ascertain the status of the
mortgaged properties as is the standard operating
procedure, thus it is a mortgagee in bad faith.

The subject property was not transferred to

several purchasers by a single vendor. In the first
deed of sale, the vendors were Gamiao and
Dayag, whose right came from their acquisition
of the property from Rizal Madrid with the
conformity of the other brothers, followed by the
tax declaration.
In the second sale, the Madrid brothers were no
longer the owner of the property when they sold
the property to Marquez. To apply Art. 1544, the
conveyor must have the right and the will to
convey the property.
In a situation where not all the requisites are
present which would warrant the application of
Art. 1544, the principle of prior tempore, potior
jure (he who is first in time is preferred in right),
should apply. The only essential requisite is
priority in time; and the only one who can
invoke this is the first vendee, since 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.
Following Art. 1544, in the double sale of an
immovable, the rules of preference are:

o
o
o

The first registrant in good faith;

Should there be no entry, the first in
possession in good faith; and
In the absence thereof, the buyer who
presents the oldest title in good faith.

4. Requirement of good faith in the possession of

the property is not applied in cases where there is
no second sale.

Dela Cruz took possession of the property long

before the sale to Marquez transpired, and 18
years passed before the Heirs had knowledge of
the registration of the sale. In Art. 526: He is
deemed a possessor in good faith who is not
aware that there exists in his title or mode of
acquisition any flaw which invalidates it.
There was no need for CA to consider the issue
of good or bad faith with regard to Dela Cruzs
possession of the property.
Also, it is not necessary that there should be any
finding of possession by Gamiao and Dayag. The
regularity of the sale to Gamiao and Dayag was
never contested by Marquez.

6. SALE BY VIRTUE OF EXECUTION OR

ATTACHMENT

CARUMBA VS CA (1970)
Facts Seller: Sps. Amado and Nemesia Canuto
Buyer: Sps. Amado and Benita Carumba
Object: parcel of land
On April 12, 1956, Sps. Canuto sold a parcel of
land to Sps. Carumba. The sale was not
registered.
On January 21, 1957, a complaint for sum of
money was filed by Balbuena against Canuto.
The decision was rendered in favour of Balbuena
on April 15, 1957.
On October 1, 1958 the sheriff issued a Definite
Deed of Sale of the property now in question in
favour of Balbuena. The instrument was
registered and the property was declared for
taxation purposes in the name of Balbuena.
The CFI, finding that after the execution of the
document Carumba had taken possession of the
property, declared him to be the owner of the
property under a consummated sale. It also
declared the execution levy void, and also
nullified the sale to judgment creditor Balbuena.

It declared Carumba the owner of the litigated

property.
The CA declared that there having been a double
sale of the land subject of the suit, Balbuenas
title was superior to that of Carumba under Art.
1544 CC, since the execution sale had been
properly registered in good faith and the sale to
Carumba was not recorded.

ISSUE: WON Balbuena has a title superior to that

of Carumba. NO.
RATIO: When the levy was made, the debtor no
longer had dominical interest or real right over
the land that could pass to the purchaser at the
execution sale. Thus Balbuena must yield the land
to Carumba.

The purchaser of unregistered land at a sheriffs

execution sale only steps into the shoes of the
judgment debtor. Judgment creditor only
acquires debtors interest in the property sold as
of the time the property was levied upon.
The levy could not have been made prior to April
15, 1957 when the decision against the former
owners of the land was rendered in favour of
Balbuena. The deed of sale in favour of Canuto
had been executed two years before the decision,
and while only embodied in a private document,
the same, coupled with the fact that Carumba had
taken possession of the unregistered land sold,
sufficed to vest ownership on the latter.

DAGUPAN V MACAM
Dagupan Trading Company v Rustico Macam

1955: Sammy Maron and his 7 brothers and

sisters were pro-indiviso owners of a parcel
of unregistered land in Pangasinan. While
their application for registration of land
under Act 496 was pending, they executed
on June 19 and Sep 21 1955 two deeds of
sale conveying property to Macam
Macam thereafter took possession and
introduced substantial improvements.
Oct 1955: land was issues to the Marons,
free from all liens and encumbrances
Aug 4, 1956: Municipal Court of Manila
rendered final judgement in Civil Case

44215 against Maron and in favour of

Manila Trading and Supply Company.
Property of Maron was levied and thereafter
sold in a public auction to Manila Trading.
o The corresponding notice of levy,
certificate of sale and Sheriffs final
certificate of sale (because nobody
exercised the right of redemption)
were duly registered
Mar 1, 1958: Manila trading sold all its
rights to Dagupan
Oct 4, 1958: Dagupan Trading commenced
action against Macam that it be declared
owner of 1/8 portion of the land
Macam: when the levy was made, Maron no
longer had a share in the property and that
since the sale he has enjoyed uninterrupted
possession of the property and introduced
considerable improvements.
CFI: dismissed complaint
CA: affirmed CFI

WN

Macam

has

the

better

right?

sale, such purchaser "shall be

substituted to and acquire all the right,
title, interest and claim of the judgment
debtor to the property as of the time of
the levy."
o But at the time of the levy,
Maron no longer had an
interest in the property
o his interest had already been
conveyed to Macam, "fully
and retrievably
o subsequent levy was void and
of no effect

YES

If the property had been unregistered

land: Macam would have the better
right. His claim is based on a prior sale
coupled with public, exclusive and
continuous possession thereof as owner
If registered land: Dagupan Trading
would have the better right. Registration
of the Deed of Sale is the operative act
which gives validity to the transfer.
(Macams deed of sale were not
registered)
But the present case does not fall within
either situation.
the sale in favor of Macam was
executed before the land subject-matter
thereof was registered, while the
conflicting sale in favor of Dagupan
was executed after the same property
had been registered
last paragraph of Section 35, Rule 39 of
the Rules of Court: that upon the
execution and delivery of the final
certificate of sale in favor of the
purchaser of land sold in an execution

7. UNREGISTERED LAND

Section 113. Recording of instruments relating to unregistered

lands. No deed, conveyance, mortgage, lease, or other
voluntary instrument affecting land not registered under the
Torrens system shall be valid, except as between the parties
thereto, unless such instrument shall have been recorded in the
manner herein prescribed in the office of the Register of
Deeds for the province or city where the land lies.
(a) The Register of Deeds for each province or city shall keep
a Primary Entry Book and a Registration Book. The Primary
Entry Book shall contain, among other particulars, the entry
number, the names of the parties, the nature of the document,
the date, hour and minute it was presented and received. The
recording of the deed and other instruments relating to
unregistered lands shall be effected by any of annotation on
the space provided therefor in the Registration Book, after the
same shall have been entered in the Primary Entry Book.
(b) If, on the face of the instrument, it appears that it is
sufficient in law, the Register of Deeds shall forthwith record
the instrument in the manner provided herein. In case the
Register of Deeds refuses its administration to record, said
official shall advise the party in interest in writing of the
ground or grounds for his refusal, and the latter may appeal
the matter to the Commissioner of Land Registration in
accordance with the provisions of Section 117 of this Decree.
It shall be understood that any recording made under this
section shall be without prejudice to a third party with a better
right.
(c) After recording on the Record Book, the Register of Deeds
shall endorse among other things, upon the original of the
recorded instruments, the file number and the date as well as
the hour and minute when the document was received for
recording as shown in the Primary Entry Book, returning to
the registrant or person in interest the duplicate of the
instrument, with appropriate annotation, certifying that he has
recorded the instrument after reserving one copy thereof to be
furnished the provincial or city assessor as required by
existing law.
(d) Tax sale, attachment and levy, notice of lis pendens,
adverse claim and other instruments in the nature of
involuntary dealings with respect to unregistered lands, if
made in the form sufficient in law, shall likewise be
admissible to record under this section.
(e) For the services to be rendered by the Register of Deeds
under this section, he shall collect the same amount of fees
prescribed for similar services for the registration of deeds or
instruments concerning registered lands.

HANOPOL V PILAPIL (1963)

Petitioners: Iluminado Hanopol
Respondents: Perfecto Pilapil

Double Sale Unregistered Land

Barrera, J.

Petitioner Iluminado Hanopol claims

ownership of the land by virtue of a series of
purchases in 1938 by means of private
instruments executed by the former owners
all surnamed Siapo.
He also invokes a decision rendered by the
CFI Leyte against the same vendors wherein
he alleged that they took possession of the
land through means of fraud, threat and
intimidation. They had pretended to be the
owners and ejected Hanopols tenants and
subsequently continued to possess the land.
Perfecto Pilapil asserts title to the property
on the strength of a duly notarized deed of
sale executed in his favor by the Siapos on
Dec. 3, 1945 and which was registered in the
Registry of Deeds on Aug. 20, 1948.
CFI: rendered for Pilapil based on Art.
1544(2) of the Civil Code. Hence this appeal
by Hanopol.

ISSUE/S:

WoN the judgment in the CFI Leyte

decision is binding upon Pilapil as the
successor-in-interest of the Siapos: NO
o It appears from the documentary
evidence that Pilapil derived his
right to the land from the sale to
him of the property on Dec. 3, 1945
or long before the filing of the
complaint against the Siapnos in
1948.
o He was not a party in the case
against the Siapos and there was
not even a claim that he had
knowledge of the litigation and
therefore he cannot be bound by
such judgment under Rule 39 Sec
44 of the Rules of Court.
WoN the registration of the second deed of
sale in favor of Pilapil affects his right as the
first vendee:
o Hanopol: the registration of
Pilapils deed of sale shall be
understood to be without prejudice
to a third party with a better right

under Act 3344. Since the Siapos

sold the land to Hanopol in 1938,
they were no longer the owners
when they sold it to Pilapil in 1945.
Act 3344 does not justify
Hanopols contention because to do
so would limit the scope of Art.
1544 of the Civil Code. But even if
Art 1544 only applies to registered
land, Hanopols claim that he has
acquired a better right by his
having a previous title or deed of
sale cannot be countenanced.
An example of what could be a
better right that is protected against
the inscription of a subsequent sale
is given in Lichauco v Berenguer
B sold to S a piece of land
but
continued
in
possession as lessee. B
sold again the land to L
who leased it to B. Both
sales were executed in a
public
instrument.
Because L had to receive
his possession from B who
was a mere lessee of S, it
follows that L never
possessed the land.
The better right referred to in Act
3344 is much more than the mere
prior deed of sale in favor of the
first vendee but also other facts and
circumstances.
In the case at bar, there appears to
be no clear evidence of Hanopols
possession of the land. In his
complaint, he alleged that Siapos
took possession of the same land
under claim of ownership and
continued to do so until the filing
of the complaint.
Since the Siapos were in actual
occupancy of the property when
they sold the land to Pilapil, the
possession was then transferred to
Pilapil at least constructively with
the execution of the notarial deed
of sale. Pilapil, who the trial court

declared as a purchaser in good

faith, then has a better right to the
land over Hanopol.
HELD: Judgement appealed from AFFIRMED.

8. FIRST POSSESSION IN GOOD FAITH

SANCHEZ V RAMOS
FACTS:
The land sought to be recovered is in the
possession of Ramos and formerly belonged
to Ciriaco Fernandez.
July 1, 1910, Ciriaco Fernandez sold it to the
spouses Marcelino Gomez and Narcisa
Sanchez under pacto de retro for the period
of one year. This also was executed in a
public instrument.
o Marcelino Gomez and Narcisa
Sanchez never took material
possession of the land.
o The period for repurchase elapsed
without the vendor making use of
it.
On July 3, 1912, Ciriaco Fernandez again
sold the same land, by means of a private
document, to Roque Ramos who
immediately took material possession
thereof.
TC applied article 1473 of the Civil Code
and declared preferable the sale executed to
the defendant and absolved him from the
complaint.
ISSUE: W/N Sanchez has the better right to the
land YES
ART. 1473. (OCC, 1504 NCC) 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 personal property.
Should it be real property, it shall belong to
the purchaser who first recorded it in the
registry of deeds.
Should it not be recorded, the property shall
belong to the person who first took
possession of it in good faith, or, in default
of possession, to the person who presents
the oldest title, provided there is good faith.
Not one of the documents of sale in this case
having been recorded, preference must be
decided in favor of the vendee who first took
possession.

Possession is acquired by the material

occupancy of the thing or right possessed, or
by the fact that the latter is subjected to the
action of our will, or by the appropriate acts
and legal formalities established for
acquiring possession (art. 438, Civil Code.).
By a simple reasoning, it appears that,
because the law does not mention to
which of these kinds of possession the
article refers, it must be understood that
it refers to all of these kinds.
o The proposition that this article,
according to its letter, refers to the
material possession and excludes
the symbolic does not seem to be
founded upon a solid ground.
The execution of a public instrument is
equivalent to the delivery of the realty sold
(art. 1462, Civil Code) and its possession by
the vendee (art. 438). Under these conditions
the sale is considered consummated and
completely transfers to the vendee all of the
vendor's rights of ownership including his
real right over the thing. The vendee by
virtue of this sale has acquired everything
and nothing, absolutely nothing, is left to the
vendor. From this moment the vendor is a
stranger to the thing sold like any other who
has never been its owner. As the thing is
considered delivered, the vendor has no
longer the obligation of even delivering it. If
he continues taking material possession of it,
it is simply on account of vendee's tolerance
and, in this sense, his possession is vendor's
possession.
This means that after the sale of a realty by
means of a public instrument, the vendor,
who resells it to another, does not transmit
anything to the second vendee and if the
latter, by virtue of this second sale, takes
material possession of the thing, he does it
as mere detainer, and it would be unjust to
protect this detention against the rights to
the thing lawfully acquired by the first
vendee.

QUIMSON V ROSETE (1950)

Double Sale First Possession in Good Faith

Dissent of Justice Street:

The possession referred to in article 1473 of
the Civil Code is the actual, material and
physical possession of the thing sold; and in
applying that provision no account should
ever be taken of the symbolic possession
which is supposed to be acquired by the
purchaser, under article 1463 of the Civil
Code, when the sale is proved by a public

document.
The authors of the Civil Code have stated
three distinct criteria for determining who
has the better right when the same piece of
real property is sold by the same vendor, to
two different persons, which are: First,
priority of registration; secondly, in default
of registration, the taking of possession in
good faith by the purchaser, and thirdly, in
default of both the preceding factors, mere
priority of title.
The only possible purpose which the
codifiers could have had in mind in inserting
this article in the Code was to prevent what
in many cases amounts to a fraud upon the
innocent second purchaser. The first
purchaser needs no protection, for in the
absence of special provisions, he would
always have the superior right by virtue of
the priority of his title.
In order, then, to protect the second
purchaser, the authors of the Civil Code saw
fit to state two conditions either of which,
when fulfilled, gives the second purchaser
the better right, namely, priority of
registration and priority in the acquisition of
possession. These tests must both be
understood to relate to acts extrinsic to the
contracts, or documents of sale, under which
the rival purchasers pretend to have acquired
title. Otherwise the whole purpose of the
article is defeated.

The land subject of the case at bar originally

belonged to the late Dionisio Quimson. He
executed a deed transferring the same in
favor of his daughter Tomasa Quimson.
However, he still remained to be in
possession and enjoyment of the property.
Later, the property was sold to the spouses
Magno Agustin and Paulina Manzano with
right to repurchase within the term of six
years. Two years later, the same property
was again sold to Francisco Rosete, also
with pacto de retro within five years.
Thereafter, Dionisio Quimson repurchased
the property from Agustin and Manzano
with money furnished to him by Rosete.

Since then, Rosete possessed the property in

a peaceful manner even after the death of
Dionisio Quimson.
Tomasa Quimson registered the property
and Deed of Sale, having arrived one hour
earlier (9:30am) than Francisco Rosete
(10:30am) of the same day.
The CFI of Zambales ruled in favor of
Tomasa Quimson. The CA reversed.

conveyance was made by Dionisio

Quimson in favor of his daughter
could have no other meaning, in the
absence
of
any
qualifying
statement, that the land was sold by
the
father
to
his
daughter. Furthermore, this was the
trial court's explicit finding which
was not reversed by the Court of
Appeals and stand as the fact of the
case. In fact, tthe deed of
conveyance shows that the vendor
received from the vendee the
consideration
of
P250,
acknowledged before the notary
public.

ISSUE/S:

WoN Quimson is the owner of the land

o YES, SHE WAS PRIOR IN
POSSESSION. Under Art. 1473
(now Art. 1544), in case the same
immovable property should have
been sold to different vendees the
ownership shall belong to the
person acquiring it who first
recorded it in the registry. Should
there be no inscription, the
ownership shall belong to the
person who in good faith was first
in the possession; and, in the
absence of this, to the person who
represents the oldest title, provided
there is good faith.
o The case of Sanchez v. Ramos is
almost on all fours with and is
decisive of the case at bar. In that
case, Fernandez sold a piece of
land to Marcelino Gomez and
Narcisa Sanchez under pacto de
retro in a public instrument. The
purchasers neither recorded the
deed in the registry of property nor
ever took material possession of the
land. Later, Fernandez sold the
same property by means of a
private document to Ramos who
immediately entered upon the
possession of it. It was held that
Gomez and Sanchez were the first
in possession, since the possession
referred to in Art. 1473 refers to
both material and symbolic
possession.
o The findings that a deed of

BEATINGO V GASIS
Beatingo v Gasis; J. Nachura
-

Dolorita Beatingo alleged that on May 19

1998, she bought Lot. 7219 from Flora
Gasis, evidenced by a notarized DoAS.
However, upon trying to register the lot on
Oct 18 99, she was rejected for being
unable to produce the owners duplicate
certificate of title. Thus, she filed a petition
for the issuance of such title.
Lilia Gasis opposed this, claiming she
bought the same lot from Flora on Jan 27
99 and had the OCT, evidenced her own
DoAS, prompting Dolorita to file suit for
Annulment & Cancellation of Sale, and
Reconveyance of Title.
o Dolorita claims Lilia induced Flora
to violate her initial contract of
sale, causing damages.
o Lilia claims she is an innocent
purchaser for value and that she
immediately took possession.
The RTC ruled for Lilia, resolving the
controversy as one of double sale. Since
Lilia took possession first and the lot had not
yet been registered, the RTC ruled, on the
basis of A1544, that whoever possessed first
had the better right.
Her appeal to the CA was denied for not
being able to file the appellants brief in time
(despite the CA granting her 1 time
extension) due to her law firm being
allegedly swamped with cases. Hence this

appeal to the SC.

Clearly she did not take

actual possession.
iii Lilia, on the other hand,
has not been shown to
have had any reason to
believe there was defect in
her title since the OCT
was delivered to her upon
her full payment. She took
immediate possession and
has the better right.

Issues:
1

Did the CA err in denying her motion to

extend? NO. The CA has discretion to deny
such.
a Rule 50 S1(e) provides that failure
to file briefs within the time
specified is grounds for dismissal.
That the law firm was swamped
is no excuse attorneys are bound
to protect their clients interest to
the best of his ability, and his
negligence in this instance binds
Dolorita.
b Appeal is not a natural right but a
statutory privilege which must be
exercised in accordance to law.
Regardless, does Dolorita have a right to the
property? NO. The RTC applied A1544
correctly.
a Regarding real property, A1544
provides that ownership shall
belong to:
i The person acquiring it
who first registered it in
good faith in the Registry
of Property; if none,
ii The person who in good
faith
was
first
in
possession; if none,
iii The person who in good
faith presents the oldest
title.
b Doloritas argument, that the
notarized
DoAS
conferred
possession on her ahead of Lilias
actual possession of the property,
has no merit.
i The execution of a public
document only gives rise
to
a
prima
facie
presumption of delivery,
deemed
negated
by
Doloritas failure to take
actual possession of the
lot.
ii Dolorita admits she did
not take possession of the
same (or make full
payment for the matter)
due to the presence of
tenants on the property.

Held: Petition dismissed.

The Title on Sales of the New Civil Code has

retained the
Roman law rule that ownership is transferred only by
delivery, whether actual or constructive; but has
adopted the common law principle of res perit
domino, i.e., it is the owner of the thing (the seller
before delivery) who bears the consequences of its
loss.

On one hand, the civil law principle that ownership

of the
thing sold shall be transferred to the buyer only upon
actual or constructive delivery thereof is now clearly
expressed in Article 1477 of the New Civil Code.
On the other hand, although the Supreme Court has
held that the general rule under Philippine
jurisdiction is that after perfection but before
delivery, the risk of loss is borne by the seller under
the rule of res perit domino, the statutory bases for
such doctrine are not clear-cut and sometimes
conflicting.

9. OLDEST TITLE 1544(3)

D. RISK OF LOSS
1. GENERAL RULE

Art. 1263. In an obligation to deliver a generic

thing, the loss or destruction of anything of the
same kind does not extinguish the obligation. (n)
2. LOSS BEFORE PERFECTION
ROMAN V GRIMALT

Short version: Seller offered to sell a boat to buyer.

There were 2 versions of the story.
Accdg to seller, they were able to agree on a price,
mode of payment, consent, and delivery. After the
perfection of the contract, the boat sank.
Accdg to buyer, they were not able to perfect the
contract of sale because the seller was not able to
present the proper papers and titles of ownership of
the boat. Then the boat sank. Issue: who should
bear the loss of the boat?
SC says: the owner. If no contract of sale was
actually executed, the loss of the boat must be
borne by its owner and not someone who only
intended to buy it and who was unable to buy it
because of failure of the owner to show proper
title.
There was a seller (Roman) and buyer (Grimalt)
of a boat.
Sellers version of what happened:
Through a certain Fernando (lets call him the
middleman), a buyer and seller verbally agreed to a
sale of a schooner (boat).
Buyer agreed to buy the boat and offered to pay
in 3 instalments of P500 each. If seller agrees to
this payment plan, the sale becomes effective.
Seller agreed on the plan and notified the buyer
through the middleman, that from this day forward
the boat was the buyers, and seller even offered to
deliver the boat at once to the buyer.
And so, the contract has been closed (I assume
this means perfected). Unfortunately, the boat sank
in Manila Harbor because of a storm.
Seller is demanding payment. Buyer fails to pay.
Seller files a complaint with CFI. Buyers
version of the story:

Both of them met in a public establishment and

seller personally proposed the sale of the boat,
saying that it was sea worthy
That he, as the buyer, accepted the offer with the
condition that the title and papers are satisfactory
and that the boat is sea worthy
Both parties called a notary public. The notary
examined the papers and said that these were
insufficient to show the ownership of the boat
The seller then tells him that he would perfect the
titles. After a while, the seller calls him to close the
sale. (I guess this means to perfect the sale)
Buyer then writes to seller to set up a meeting
but buyer finds out that seller did nothing to fix his
titles.
Buyer denies that the contract was completed,
and that the price and method of payment have
been agreed upon.
Buyer also denies that an attempt to deliver was
made.
Issue: Who should bear the loss of the boat?
Held: The owner (the seller).
Ratio: A sale shall be considered perfected and
binding as between vendor and vendee when they
have agreed as to the thing which is the object of
the contract and as to the price, even though
neither has been actually delivered. (CC 1450)
Ownership is not considered transmitted until the
property is actually delivered and the buyer has
taken possession of the value and paid the price, in
which case the sale is considered perfected.
When the sale is made by means of a public
instrument the execution thereof shall be
equivalent to the delivery of the thing which is the
object of the contract. (CC 1462)
Both parties have negotiated the sale of the boat
for several days. They agreed to its sale, its price,
and to its manner of payment, with the condition
that the papers are in order. This was stated in the
letter written by the buyer.
The sale of the boat was not perfected because
the buyer did not consent to the deed of transfer

because the title of the boat was not in the sellers

name, but in anothers.
If no contract of sale was actually executed, the
loss of the boat must be borne by its owner and not
someone who only intended to buy it and who was
unable to buy it because of failure of the owner to
show proper title.
The boat sank before the seller complied with the
condition of showing the buyer the proper papers.
The buyer did not have an obligation to pay the
price, the purchase had not been concluded. Re:
Applicability of CC articles
CC 1452, relative to the injury or benefit of the
thing sold after a contract has been perfected, and
CC 1096 and 1182, relative to the obligation to
deliver a specified thing and the extinction of such
obligation when the thing is either lost or
destroyed, are not applicable.
The 1st par of CC 1460 (and Sec 335 of the Code
of Civil Procedure) is not applicable. o These
provisions contemplate the existence of a perfected
contract which cannot be enforced because of
entire loss of the thing or made the basis of an
action in court through failure to conform to the
requisites provided by law.
Complaint dismissed. (buyer won)
3. LOSS AT THE TIME OF PERFECTION

Art. 1493. If at the time the contract of sale is

perfected, the thing which is the object of the
contract has been entirely lost, the contract shall be
without any effect.
But if the thing should have been lost in part only,
the vendee may choose between withdrawing from
the contract and demanding the remaining part,
paying its price in proportion to the total sum
agreed upon. (1460a)
Art. 1494. Where the parties purport a sale of
specific goods, and the goods without the
knowledge of the seller have perished in part or
have wholly or in a material part so deteriorated in
quality as to be substantially changed in character,
the buyer may at his option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so
much thereof as have not deteriorated, and as
binding the buyer to pay the agreed price for the
goods in which the ownership will pass, if the sale
was divisible. (n)
NORKIS V CA

1. Petitioner Norkis is the distributor of Yamaha

motorcycles in Negros Occidental Bacolod with
Avelino Labajo as its Branch Manager. Private
respondent Alberto Nepales bought from the
Norkis-Bacolod branch a brand new Yamaha
Wonderbike motorcycle.

2. The price of P7,500.00 was payable by means of

a Letter of Guaranty from the Development Bank
of the Philippines (DBP). Norkis' Branch Manager
Labajo agreed to accept. Credit was extended to
Nepales for the price of the motorcycle payable by
DBP upon release of his motorcycle loan. As
security for the loan, Nepales would execute a
chattel mortgage on the motorcycle in favor of
DBP. Branch Manager Labajo issued Norkis Sales
Invoice No. 0120 showing that the contract of sale
of the motorcycle had been perfected. Nepales
signed the sales invoice to signify his conformity
with the terms of the sale. In the meantime,
however, the motorcycle remained in Norkis'

possession.

RATIO:

3. On January 22, 1980, the motorcycle was

delivered to a certain Julian Nepales who claimed
to be an agent of Alberto Nepales. The motorcycle
met an accident on February 3, 1980 at
Binalbagan, Negros Occidental. An investigation
conducted by the DBP revealed that the unit was
being driven by a certain Zacarias Payba at the
time of the accident. It was a total wreck, and so it
was returned to Norkis.

The Civil Code provides (1946 sabi sa case pero

baka lumang version na ito kasi hindi na ito ang
1496 ngayon) "in the absence of an express
assumption of risk by the buyer, the things sold
remain at seller's risk until the ownership thereof is
transferred to the buyer." This is applicable to this
case, for there was neither an actual nor
constructive delivery of the thing sold by the seller
to the buyer. Hence, the risk of loss should be
borne by the seller, Norkis, which was still the
owner and possessor of the motorcycle when it
was wrecked. This is in accordance with the wellknown doctrine of res perit domino.

5. DBP released the proceeds of private

respondent's motorcycle loan to Norkis. As the
price of the motorcycle later increased Nepales
paid the difference and demanded the delivery of
the motorcycle. When Norkis could not deliver, he
filed an action for specific performance with
damages against Norkis in RTC.

6. RTC ruled in favor of Norkis stating that the

motorcycle had been delivered to Nepales before
accident, hence the risk of loss was borne by the
buyer already. However, CA reversed the ruling.
Hence this petition for review

ISSUE:
WON private respondent (buyer Alberto Nepales)
bears the risk of loss

HELD:
No. The decision of the CA was affirmed.

Moreover, as stated by De Leon, in all forms of

delivery, it is necessary that the act of delivery
whether constructive or actual, be coupled with the
intention of delivering the thing. The act, without
the intention, is insufficient.

When the motorcycle was registered by Norkis in

the name of private respondent, Norkis did not
intend yet to transfer the title or ownership to
Nepales, but only to facilitate the execution of a
chattel mortgage in favor of the DBP for the
release of the buyer's motorcycle loan. The Letter
of Guarantee (Exh. 5) issued by the DBP, reveals
that the execution in its favor of a chattel mortgage
over the purchased vehicle is a pre-requisite for the
approval of the buyer's loan. If Norkis would not
accede to that arrangement, DBP would not
approve private respondent's loan application and,
consequently, there would be no sale.
4. LOSS AFTER PERFECTION BUT BEFORE
DELIVERY
Art. 1480. Any injury to or Art. 1163. Every person
benefit from the thing sold, after obliged to give something is
the contract has been perfected, also obliged to take care of it
from the moment of the with the proper diligence of a

perfection of the contract to the

time of delivery, shall be
governed by Articles 1163 to
1165, and 1262.
This rule shall apply to the sale of
fungible
things,
made
independently and for a single
price, or without consideration of
their weight, number, or measure.
Should fungible things be sold for
a price fixed according to weight,
number, or measure, the risk shall
not be imputed to the vendee until
they have been weighed, counted,
or measured and delivered, unless
the latter has incurred in delay.
(1452a)

good father of a family,

condition:
unless
the law or the stipulation of
the parties requires
(1) Ifanother
the thing is lost without
standard of care. (1094a)
the fault of the debtor, the
obligation
shall
be
Art. 1164. The creditor
extinguished;
has a
right to the fruits of the thing
from the time the obligation
(2) If the thing
to is lost through
deliver it arises. However,
the fault heof the debtor, he
shall acquire no real
shall
right be
over obliged to pay
it until the samedamages;
has beenit is understood
delivered to him. (1095)
that the thing is lost when it
perishes, or goes out of
Art. 1165. When what
commerce,
is to be or disappears in
delivered is a such
determinate
a way that its existence
thing, the creditor, isin unknown
addition or it cannot be
to the right granted
recovered;
him by
Article 1170, may compel the
debtor to make the (3)
delivery.
When
the
thing
deteriorates without the fault
of the debtor, the impairment
is to be borne by the creditor;

liable even for fortuitous

events, the loss of the thing
does not extinguish the
obligation, and he shall be
responsible for damages.
The same rule applies
when the nature of the
obligation requires the
assumption of risk. (1182a)

(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;

Art.
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

Art. 1262. An obligation

which consists in the
delivery of a determinate
thing shall be extinguished
if it should be lost or
destroyed without the fault
of the debtor, and before he
has incurred in delay.
When
by
law
or
stipulation, the obligor is

(6) If it is improved at the

expense of the debtor, he
shall have no other right than
that
granted
to
the
usufructuary. (1122)

A. GENERAL RULE RES PERIT DOMINO

Thing perishes with the owner

B. LOSS BY FAULT OF A PARTY

Art. 1480. Any injury to or benefit from the thing
sold, after the contract has been perfected, from the
moment of the perfection of the contract to the time
of delivery, shall be governed by Articles 1163 to
1165, and 1262.
This rule shall apply to the sale of fungible things,
made independently and for a single price, or without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed
according to weight, number, or measure, the risk
shall not be imputed to the vendee until they have
been weighed, counted, or measured and delivered,
unless the latter has incurred in delay. (1452a)
Art. 1504. Unless otherwise agreed, the goods remain
at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership
therein is transferred to the buyer the goods are at the
buyer's risk whether actual delivery has been made or
not, except that:
(1) Where delivery of the goods has been made to the
buyer or to a bailee for the buyer, in pursuance of the
contract and the ownership in the goods has been
retained by the seller merely to secure performance
by the buyer of his obligations under the contract, the
goods are at the buyer's risk from the time of such
delivery;
(2) Where actual delivery has been delayed through
the fault of either the buyer or seller the goods are at
the risk of the party in fault. (n)
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. (n)
Art. 1636. In the preceding articles in this Title
governing the sale of goods, unless the context or
subject matter otherwise requires:
(1) "Document of title to goods" includes any bill of
lading, dock warrant, "quedan," or warehouse receipt
or order for the delivery of goods, or any other
document used in the ordinary course of business in
the sale or transfer of goods, as proof of the

possession or control of the goods, or authorizing or

purporting to authorize the possessor of the document
to transfer or receive, either by endorsement or by
delivery, goods represented by such document.
"Goods" includes all chattels personal but not things
in action or money of legal tender in the Philippines.
The term includes growing fruits or crops.
"Order" relating to documents of title means an order
by endorsement on the documents.
"Quality of goods" includes their state or condition.
"Specific goods" means goods identified and agreed
upon at the time a contract of sale is made.
An antecedent or pre-existing claim, whether for
money or not, constitutes "value" where goods or
documents of title are taken either in satisfaction
thereof or as security therefor.
(2) A person is insolvent within the meaning of this
Title who either has ceased to pay his debts in the
ordinary course of business or cannot pay his debts as
they become due, whether insolvency proceedings
have been commenced or not.
(3) Goods are in a "deliverable state" within the
meaning of this Title when they are in such a state
that the buyer would, under the contract, be bound to
take delivery of them. (n)
RULES ON RISK OF LOSS
1. thing is lost BEFORE PERFECTION, seller and
not one who intends to purchase bears the loss
2. thing is entirely lost AT THE TIME OF
PERFECTION, contract is without any effect
Legal effect is the same as when the object
is lost before the perfection of the contract
of sale
3. thing is lost AFTER PERFECTION BUT
BEFORE ITS DELIVERY, that is even before the
ownership is transferred to the buyer, the risk of loss
is transferred to the buyer as an exception to the rule

of res perit domino

However, in the following cases, the seller bears the
risk if the thing is lost after perfection but before
delivery
(a) lost thru the fault of the seller (1538 in rel to
1189(2)) or when obligor delays (1165 3rd par; 1262)
(b) thing lost is a generic thing (1263)
(c) things lost are fungible things sold for a price
fixed according to weight, number or measure (1480,
3rd par)
(d) thing lost falls under the definition of goods
(1504 in rel to 1636)
4. thing is lost AFTER DELIVERY, buyer bears the
loss following the general rule

The Title on Sales of the New Civil Code has

retained the
Roman law rule that ownership is transferred only by
delivery, whether actual or constructive; but has
adopted the common law principle of res perit
domino, i.e., it is the owner of the thing (the seller
before delivery) who bears the consequences of its
loss.
On one hand, the civil law principle that ownership
of the
thing sold shall be transferred to the buyer only upon
actual or constructive delivery thereof is now clearly
expressed in Article 1477 of the New Civil Code.
On the other hand, although the Supreme Court has
held that the general rule under Philippine
jurisdiction is that after perfection but before
delivery, the risk of loss is borne by the seller under
the rule of res perit domino, the statutory bases for
such doctrine are not clear-cut and sometimes
conflicting.
1480 cf 1504
Art 1504 should be limited to the sale of goods as
this is defined in Art 1636 and

Art 1480 to sales of things which cannot be called

goods ie: sales of real estate
This would make Art 1480 the general rule on risk of
loss and 1504 the exception
C. LOSS BY FORTUITOUS EVENTS
Art. 1480. Any injury to or benefit from the thing
sold, after the contract has been perfected, from the
moment of the perfection of the contract to the time
of delivery, shall be governed by Articles 1163 to
1165, and 1262.
This rule shall apply to the sale of fungible things,
made independently and for a single price, or without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed
according to weight, number, or measure, the risk
shall not be imputed to the vendee until they have
been weighed, counted, or measured and delivered,
unless the latter has incurred in delay. (1452a)
Art. 1163. Every person obliged to give something is
also obliged to take care of it with the proper
diligence of a good father of a family, unless the law
or the stipulation of the parties requires another
standard of care.
Art. 1165. When what is to be delivered is a
determinate thing, the creditor, in addition to the right
granted him by Article 1170, may compel the debtor
to make the delivery.
If the thing is indeterminate or generic, he may ask
that the obligation be complied with at the expense of
the debtor.
If the obligor delays, or has promised to deliver the
same thing to two or more persons who do not have
the same interest, he shall be responsible for any
fortuitous event until he has effected the delivery.
(1096)
Art. 1504. Unless otherwise agreed, the goods remain
at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership
therein is transferred to the buyer the goods are at the
buyer's risk whether actual delivery has been made or

not, except that:

(1) Where delivery of the goods has been made to the
buyer or to a bailee for the buyer, in pursuance of the
contract and the ownership in the goods has been
retained by the seller merely to secure performance
by the buyer of his obligations under the contract, the
goods are at the buyer's risk from the time of such
delivery;
(2) Where actual delivery has been delayed through
the fault of either the buyer or seller the goods are at
the risk of the party in fault. (n)
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. (n)
Art. 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. (1122)
D. FRUITS OR IMPROVEMENTS
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 which the contract was perfected. (1468a)
Unlike in the principle of res perit domino where it is
the owner of the thing who bears the risk of loss and
benefits from the fruits of the thing owned, in a sale
involving a determinate subject matter, even prior to
delivery and transfer of ownership thereof to the
buyer, the buyer already has certain rights
enforceable against the seller, pertaining to the
subject matter. This is in accordance with the
principle that the accessories always follow the
principal; and since the subject matter is intended for
delivery to the buyer from the point of perfection of
the sale, then necessarily the accessories and fruits
must from then on be held for the account of the
buyer.
5. AFTER DELIVERY
Art. 1504. Unless otherwise agreed, the goods remain
at the seller's risk until the ownership therein is
transferred to the buyer, but when the ownership
therein is transferred to the buyer the goods are at the
buyer's risk whether actual delivery has been made or
not, except that:
(1) Where delivery of the goods has been made to the
buyer or to a bailee for the buyer, in pursuance of the
contract and the ownership in the goods has been
retained by the seller merely to secure performance
by the buyer of his obligations under the contract, the
goods are at the buyer's risk from the time of such
delivery;
(2) Where actual delivery has been delayed through
the fault of either the buyer or seller the goods are at
the risk of the party in fault. (n)

SUN BROS V PEREZ

SUN BROTHERS APPLIANCES V PEREZ 7

SCRA 977 LABRADOR;
April 30, 1963
FACTS - Sun Brothers brought this action to
recover from defendant, Damaso Perez the sum of
P1,404, the price of one Admiral Air Conditioner,
Slim Style, plus stipulated interest of 12% until the
same is fully paid, together with P200 as
Attorney's fees, and costs. Sun Brothers contend
that Perez, after making a down payment of P274,
did not pay any of the monthly installments of P78
thereafter, leaving a balance of P1,404.
Perez answered that the air-conditioner in question
was delivered to him and installed in his office at
Gardiner St., Lucena, Quezon on December 14,
1959 but it was totally destroyed by fire on
December 28, 1968 at 2am. Perez further claimed
that the machine was destroyed by force majeure,
not by his fault and/or negligence and, therefore,
he is not liable under the conditional sale which
the parties had executed.
- The conditional sale contained the following
stipulation:
"2. Title to said property shall vest in the Buyer
only upon full payment of the entire account, as
herein provided, and only upon complete
performance of all the other conditions herein
specified;
"3. The Buyer shall keep said property in good
condition and properly protected against the
elements, at his/its address above stated, and
undertakes that if said property or any part thereof
be lost, damaged, or destroyed for any cause, he
shall suffer such loss, or repair such damage, it
being distinctly understood and agreed that said
property remains at Buyer's risk after delivery;"
- CFI ruled for Sun Brothers. Perez appealed to the
SC as involving only a question of law. He argued
that inasmuch as the title to the property sold shall
vest in the buyer only upon full payment of the
price, the loss of the air conditioner should be for

the exclusive account of the vendor.

Also, the phrase "for any cause" may not be
interpreted to include a fortuitous event absolutely
beyond the control of the appellant; and that
although Article 1174 of the new Civil Code
recognizes the exception on fortuitous event when
the parties to a contract expressly so stipulate, the
phrase "for any cause" used in the contract did not
indicate any intention of the parties that the loss of
the unit due to fortuitous event is to be included
within the responsibility of the vendor.
ISSUE
WON the phrase "for any cause" used in the
agreement may be interpreted to include a
fortuitous event absolutely beyond the control of
the appellant Perez
HELD YES
Ratio The agreement making the buyer responsible
for any loss whatsoever, fortuitous or otherwise,
even if the title to the property remains in the
vendor is neither contrary to law, morals or public
policy. Reasoning
- Where goods are sold and delivered to the vendee
under an agreement that the title is to remain in the
vendor until payment, the loss or destruction of the
property while in the possession of the vendee
before payment, without his fault, does not relieve
him from the obligation to pay the price, and he,
therefore, suffers the loss. In accord with this rule
are the provisions of the Uniform Sales Act and the
Uniform Conditional Sales Act.
There are several bases for this rule.
First is the absolute and unconditional nature of the
vendee's promise to pay for the goods. The
promise is nowise dependent upon the transfer of
the absolute title.
Second is the fact that the
performed his contract and has
do except receive payment,
received what he bargained for

vendor has fully

nothing further to
and the vendee
when he obtained

the right of possession And use of the goods and

the right to acquire title upon making full-payment
of the price.
A third basis advanced for the rule is the policy of
providing an incentive to care properly for the
goods, they being exclusively under the control
and dominion of the vendee.
Disposition Decision of the CFI is AFFIRMED.
LAWYERS COOP V TABORA
Lawyers Cooperative Publishing Co. v Tabora
(1965)
Petitioners: Lawyers Cooperative Publishing
Company
Respondents: Perfecto Tabora
Risk of Loss After Delivery
Bautista Angelo, J.

On May 3, 1965, Perfecto Tabora bought

from the Lawyers Cooperative Publishing
Company (LCPC) one complete set of
American Jurisprudence with 48 volumes
plus one set, General Index, with 4 volumes
for a total price of P1,682 with freight cost.
Tabora made a partial payment of P300
leaving a balance of P1382. The books were
delivered and receipted for by Tabora on
May 15, 1955 in his law office. A big fire
broke out that same night however which
destroyed and burned all the buildings
within the block of Taboras law office.
He reported this event to the company by
letter five days later. As a sign of goodwill,
the company sent three volumes of the
Philippine Reports free of charge.
As Tabora failed to pay the monthly
installments agreed upon on the balance of
the purchase price, the company demanded
payment of the same. He failed to pay and
so the present action was filed for the
recovery of the balance.
Tabora claimed force majeure and since the
books were burned during the fire which he
had no control of, then he must not be
responsible for the loss.
CFI: rendered for LCPC

ISSUE/S:

WoN Tabora is released from his obligation

to pay the balance: NO
o It was stated in the contract that
title to and ownership of the books
shall remain with the seller until the
purchase price shall have been fully
paid. Loss or damage to the books
after delivery to the buyer shall be
borne by the buyer.
o Taboras contention that the
contract stipulation and force
majeure (assuming that ownership
of the books passed on to him)
should release him from liability
cannot be sustained.
o It is true that in the contract the
seller agreed that ownership of the
books shall remain with it until
payment of the purchase price.
However, such stipulation cannot
make the seller liable in case of
loss not only because such was
agreed merely to secure the
performance by the buyer of his
obligation but in the very contract it
was expressly agreed that the loss
or damage to the books after
delivery to the buyer shall be borne
by the buyer.
o Art. 1504(1) of the Civil Code
states:
Where delivery of the
goods has been made to
the buyer or to a bailee for
the buyer, in pursuance of
the contract and the
ownership in the goods
has been retained by the
seller merely to secure
performance by the buyer
of his obligations under
the contract, the goods are
at the buyer's risk from the
time of such delivery
o Tabora cannot be exempted due to
fortuitous event because it only
holds true when the obligation

consists in the delivery of a

determinate thing and there is no
stipulation holding him liable even
in case of fortuitous event.
In the present case, the obligation
does not refer to a determinate
thing but is pecuniary in nature and
Tabora bound himself to assume
the loss after delivery.

neglected to do so, they themselves should

suffer the loss resulting from the
shipwreck of the launch without
insurance.
o

HELD: Judgement appealed from AFFIRMED.

SONG FO V ORIA

Song Fo v Oria
FACTS:

Song Fo & Co. sold a launch to Oria, , for

P16,500, payable in quarterly installments
of P1,000, together with interest at the rate
of ten per centum per annum.

The launch was delivered to Oria in

Manila, but was shipwrecked and became
a total loss while en route to Oria's place
of business in Samar.

No part of the purchase price has ever

been paid thus, the filing of this case for
the recovery of the total amount of the
purchase price with interest thereon until
paid.

TC gave judgment in favor of the plaintiff

for P6,000 and interest but declined to
enter judgment for the balance of the
indebtedness on the ground that, under the
express terms of the contract, it was not
due and payable when the complaint was
filed.

Oria claims that under the terms of the

deed of sale of the launch, Song Fo & Co.
had obligated themselves to insure the
launch, and since they had failed and

It cannot be denied that if the

contract of sale did in fact impose
on Song Fo & Co. an imperative
obligation to insure the launch
and if Song Fo & Co. did in fact
fail and neglect to insure the
launch in compliance with the
terms of the contract, Oria would
be entitled to have the amount of
his indebtedness reduced by the
amount of the insurance which he
would have been entitled to have
applied to the payment of the
purchase price had Song Fo &
Co. faithfully complied with the
terms of the contract.

ISSUE: W/N Song Fo is liable for the loss of the

goods - NO

An examination of the terms of the deed

of sale of the launch discloses that Song
Fo & Co. did not expressly obligated
themselves to insure and keep the launch
insured, although it is true that the
contract expressly authorized them to
insure it in their own name.
o

Counsel for Oria contend,

however, that although the
language of the contract did not
in express terms obligate Song Fo
& Co. to insure the launch, it was
their duty so to do under all the
circumstances, and it is insisted
that they should not be permitted
to evade the loss resulting from
their
negligence
in
the
performance of that duty.

The contract expressly authorized Song Fo

& Co. to insure the launch in their own
name and to charge the estimated cost of
the premiums with interest at the rate of
ten per centum to Oria, and there is much
force in the contention of counsel for Oria
at least to extent that under all the
circumstances, it was the duty of Song Fo
& Co. to insure the vessel if they could.
But there is nothing in the record which
would justify a holding that Song Fo &
Co. obligated themselves to insure the
launch at all events.

On the contrary, the language of the

contract, which authorized Song Fo & Co.
to take out insurance in their own name
and to charge the amount of the premium
to Oria, when read in the light of the
transaction of which it was a part,
imposed at most, a duty upon Song Fo &
Co. to take such reasonable measures
looking to the insurance of the vessel as
might be required of a prudent man in
connection with the insurance of his own
property.

The undisputed evidence of record shows

that Song Fo & Co. did in fact make a
bona fide attempt to insure the launch, and
to that end did all in their power and
adopted all available means which could
reasonably be required of them.

However, the local agents of the

marine insurance companies
declined to accept the risk
without previous communication
within their foreign principals:
and the launch was lost before
they could ascertain the wishes of
these principals as to the
execution of an insurance
contract.

TC erred in declining to render judgment

in their favor for the total amount of the
purchase price of the launch. He appears
to have relied upon the provisions of
article 1125 of the Civil Code but to have
overlooked the co-related provisions of
article 1129 of the same code. The
security for the payment of the purchase
price of the launch itself having
disappeared as a result of an unforeseen
event (vis major), and no other security
having been substituted therefor, the
plaintiffs were clearly entitled to recover
judgment not only for the installments of
the indebtedness due under the terms of
the contract at the time when the instituted
their action, but also for all installments
which, but for the loss of the vessel had
not matured at that time.