CARBONELL VS CA
recognized in favor of one "who in good faith first recorded" his right. Under
FACTS:
On January 27, 1955, Jose Poncio executed a private memorandum of sale
of his proeperty 195 square meters in rizal in favor of Rosario Carbonell.
Four days latter, or an January 31, 1955, Poncio in a private memorandum
bound himself to sell the property for an improved price to one Emma
Infante, and on February 2, 1955, he executed a formal registerable deed of
sale in her (Infante's) favor. So, when the first buyer Carbonell saw the seller
Poncio a few days
afterwards, bringing the formal deed of sale for the latter's signature and
the balance of the agreed cash payment, she was told that he could no
longer proceed with formalizing the contract with her (Carbonell) because
he had already formalized a sales contract in favor of Infante. Since
Carbonell (the first buyer) did not have a formal registerable deed of sale,
she did the next best thing to protect her legal rights and registered on
February 8, 1955 with the Register of Deeds her adverse claim as first buyer
entitled to the property. The second buyer registered the sale in her favor
with the Register of Deeds only on February 12, 1955, so that the transfer
certificate of title issued in her favor carried the duly annotated adverse
claim of Carbonell as the first buyer. The trial court declared the claim of the
second buyer Infante to be superior to that of the first buyer Carbonell. The
Court of Appeals (Fifth Division) reversed the decision of the trial court,
declaring the first buyer Carbonell to have a superior right to the land in
question, and condemning the second buyer Infante to reconvey to the
former, after reimbursement of expenses, the land in question and all its
improvements. On motion for reconsideration, a special division of five of
the said appeals court annulled and set aside the decision of the regular
division and entered another judgment affirming in toto the decision of the
court a quo.
ISSUE:
Who has the superior right over the subject property?
HELD:
The Supreme Court reversed the lower court’s decision and declared the
first buyer Carbonell to have the superior right over the subject property,
relying on Article 1544 of the Civil Code. Unlike the first and third
paragraphs of said Article 1544, which accord preference to the one who
first takes possession in good faith of personal or real property, the second
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paragraph directs that ownership of immovable property should be
the first and third paragraphs, good faith must characterize the prior
possession, while under the second paragraph, good faith must characterize
the act of anterior registration.
When Carbonell bought the lot from Poncio on January 27, 1955, she was
the only buyer thereof and the title of Poncio was still in his name solely
encumbered by bank mortgage duly annotated thereon. Carbonell was not
aware - and she could not have been aware - of any sale to Infante as there
was no such sale to Infante then. Hence, Carbonell's prior purchase of the
land was made in good faith which did not cease after Poncio told her on
January 31, 1955 of his second sale of the same lot to Infante. Carbonell
wanted to meet Infante but the latter refused, so to protect her legal rights,
Carbonell registered her adverse claim on February 8, 1955. Under the
circumstances, this recording of Carbonell’s adverse claim should be
deemed to have been done in good faith and should emphasize Infante's
bad faith when the latter registered her deed of sale 4 days later.
DAGUPAN TRADING VS. MACAM
FACTS:
Sammy Maron and his seven brothers and sisters were pro-indiviso owners
of a parcel of unregistered land located in Pangasinan. In 1955, while their
application for registration of said land was pending, they executed, on June
19 and on September 21, two deeds of sale conveying the property to
respondent Rustico Macam who thereafter took possession of the property
and made substantial improvements upon it. Subsequently on October 14,
1955, OCT No. 6942 covering the land was issued in the name of the
Marons, free from all liens and encumbrances.
On August 4, 1956, however, by virtue of a final judgment of the Municipal
Court of Manila in a civil case in favor of Manila Trading and Supply Co.
(Manila Trading) against Sammy Maron, levy was made upon whatever
interest he had in their property in Pangasinan. Thereafter, said interest was
sold at public auction to the judgment creditor who is also the highest
bidder, Manila Trading. The corresponding notice of levy, certificate of sale
and the sheriff's certificate of final sale in favor of Manila Trading(because
nobody exercised the right of redemption)were duly registered, and on
March 1, 1958, the latter sold all its rights and title in the property to herein
petitioner Dagupan Trading.
On September 4, 1958, Dagupan Trading filed an action against Macam,
praying that it be declared owner of one-eighth portion of the subject
property. The CFI of Pangasinan dismissed the said complaint, and the Court
of Appeals affirmed its decision. Hence this case.
ISSUE:
Who has the superior right over the one-eight portion of the subject
property?
HELD:
The Supreme Court affirmed both decisions of the lower courts. At the time
of the levy, Sammy Maron already had no interest on the one-eight portion
of the property he and his siblings have inherited because they have long
before transferred said interest to Macam "fully and irretrievably" .
Consequently, the subsequent levy made on the property for the purpose of
satisfying the judgment rendered against Sammy Maron in favor of the
Manila Trading Company was void and of no effect.
The unregistered sale and the consequent conveyance of title and
ownership in favor Macam could not have been cancelled and rendered of
no effect upon the subsequent issuance of the Torrens title over the entire
parcel of land. Moreover, upon the execution of the deed of sale in his favor
by Sammy Maron, Macam had immediately taken possession of the land in
an open continuous, notorious conveyed as its new owner and introduced
considerable improvements upon it himself. To deprive him, therefore, of
the same by sheer force of technicality would be against both justice and
equity.
OLIVAREZ VS GONZALES
FACTS:
In 1955, Jacinto Tuvilla and Ceferino Tuvilla, Tuvillas for brevity, executed a
"Deed of Sale with Right to Repurchase" in favor of respondent-appellee
Juan Tumabini, over the Disputed Property in consideration of the sum of
P1,350.00. The document was duly acknowledged before a Notary Public
but was not recorded in the Registry of Property. Sometime in 1959, the
Tuvillas then again, executed a "Deed of Sale with Pacto de Retro" over the
disputedpProperty in favor of petitioners-appellants, Moises Olivares and
Juanito Olivares (the Olivareses, for short). This document was
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acknowledged before a Notary Public and registered with the Registry of
Deeds. In 1966, the Tuvillas also executed in favor of the Olivareses a "Deed
of Absolute Sale" covering the disputed Property which then they have been
in possession since the execution and registration of title. On October 11,
1967, Juan Tumabini, filed Civil Case before CFI of IloIlo against the Tuvillas
for the consolidation of ownership over the Disputed Property by reason of
the alleged failure of the Tuvillas to redeem the property from Tumabini
The Olivareses, however, were not included as parties to the said
case. A judgment in favor of Tumabini in the amount of P1,350.00, pursuant
to which, the Court subsequently issued a Writ of Execution on October 23,
1968. On November 23, 1968, the Olivareses instituted a civil case befire the
CFI of Iloilo, for Quieting of Title, against the Tuvillas & Juan Tumabini. The
said Court issued a Restraining Order to stop the sale in the Consolidation
Case pending in Branch I, but the said Order was lifted on February 6, 1969.
Subsequently, the Consolidation Case (No. 7410), the Disputed Property was
sold at public auction and a Writ of Possession was issued in Tumabini's
favor. However, the Olivareses refused to surrender possession, prompting
a citation for contempt. However the quieting of title was dismissed by the
lower court, hence this case.
ISSUE:
Who has the superior right over the subject property?
HELD:
The first sale with pacto de retro by the Tuvillas to Tumabini was
unregistered; in contrast, the sale in favor of the Olivareses was duly
recorded. The Consolidation Case (Case No. 7410) instituted by Tumabini
against the Tuvillas for consolidation of his ownership did not include the
Olivareses as parties defendants even though they were then in possession
of the Disputed Property. Justice and equity demand, therefore, that their
side be heard in the Refiled Case (No.
8698). Then, too, the contempt incident and the matter of the Writ of
Possession in the Consolidation Case (No. 7410) were left unresolved
pending the outcome of the Quieting of Title Case (No. 7777).
In other words, it would be more in keeping with substantial justice if the
controversy between the parties to be resolved on the merits rather than
on a procedural technicality in the light of the express mandate of the Rules
that they be "liberally construed in order topromote their object and to
assist the parties in obtaining just, speedy and inexpensive determination of
every action and proceeding."

CARAM VS LAURETA
FACTS:
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land
covered by Original Certificate of Title No. 3019 in favor of Claro Laureta. A
deed of absolute sale in favor of the Laureta was not registered because it
was not acknowledged before a notary public or any other authorized
officer. At the time the sale was executed, there was no authorized officer
before whom the sale could be acknowledged inasmuch as the civil
government in Tagum, Davao was not as yet organized. However, the
defendant Marcos Mata delivered to Laureta the peaceful and lawful
possession of the premises of the land together with the pertinent papers
thereof such as the Owner's Duplicate Original Certificate of Title, sketch
plan, tax declaration, tax receipts and other papers related thereto. Since
June 10, 1945, the plaintiff Laureta had been and is still in continuous,
adverse and notorious occupation of said land, without being disturbed or
stopped by any of the defendants or their representatives. In fact, Laureta
had been paying realty taxes due thereon and had introduced
improvements worth not less than P20,000.00 at the time of the filing of the
complaint. On May 5, 1947, the same land covered by Original Certificate of
Title was sold by Marcos Mata to defendant Fermin Z. Caram Jr., The deed
of sale in favor of Caram was acknowledged before Atty. Abelardo
Aportadera. On May 22, 1947, Marcos filed with the Court of First Instance
of Davao a petition for the issuance of a new Owner's Duplicate of Original
Certificate of Title No. 3019, alleging as ground therefor the loss of said title
in the evacuation place of defendant Marcos Mata in Magugpo, Tagum,
Davao. On June 5, 1947, the Court of First Instance of Davao issued an order
directing the Register of Deeds of Davao to issue a new Owner's Duplicate
Certificate of Title No. 3019 in favor of Marcos Mata and declaring the lost
title as null and void. On December 9, 1947, the second sale between
Marcos Mata and Fermin Caram Jr. was registered with the Register of
Deeds. Onthe same date, Transfer Certificate of Title No. 140 was issued in
favor of Fermin Caram. Subsequently, on August 29, 1959, Marcos Mata
filed their answer with counterclaim admitting the existence of a private
absolute deed of sale of his only property in favor of Claro Laureta but
alleging that he signed the same as he was subjected to duress, threat and
intimidation for the plaintiff was the commanding officer of the 10th
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division USFIP, operating in the unoccupied areas of Northern that Laureta's
words and requests were laws; that although the defendant Mata did not
like to sell his property or sign the document without even understanding
the same, he was ordered to accept P650.00 Mindanao Emergency Notes;
and that due to his fear of harm or danger that will happen to him or to his
family, if he refused, he had no other alternative but to sign the document.
The defendants Marcos Mata and Codidi Mata also admit the existence of a
record in the Registry of Deeds regarding a document allegedly signed by
him in favor of his codefendant Fermin Caram Jr. but denies that he ever
signed the document for he knew before hand that he had signed a deed of
sale in favor of the plaintiff and that the plaintiff was in possession of the
certificate of title; that if ever his thumb mark appeared in the document
purportedly alienating the property to Fermin Caram Jr., his consent was
obtained through fraud and misrepresentation for the defendant Mata is
illiterate and ignorant and did not know what he was signing; and that he
did not receive a consideration for the said sale. The trial court ruled that
the 1st sale will prevail, declaring as null and void the deed of sale in favor of
Fermin, directing Marcos Mata to acknowledge the deed of sale, Exhibit A,
in favor of Claro L. Laureta, directing Claro L. Laureta to surrender to the
Register of Deeds for the City and Province of Davao the Owner's Duplicate
of Original Certificate of Title No. 3019 and the latter to cancel the same,
Ordering the Register of Deeds for the City and Province of Davao to cancel
Transfer Certificate of Title No. T-140 in the name of Fermin Caram. The
petitioners assails that his agents did not know about the prior sale
however, the Court of Appealed affirmed decision of the trial court.
ISSUE:
Who was in the first possession in good faith?
MOLES VS IAC
Sometime in 1977, Moles needed a linotype printing machine for his
printing business, The LM Press at Bacolod City. He applied for an industrial
loan with the Development Bank of the Philippines, (hereinafter, DBP) for
the purchase thereof. A friend of Moles introduced the latter to the Diolosa
Publishing House in Iloilo City, who had two available machines. Thereafter,
petitioner went to Iloilo City to inspect the two machines offered for sale
and was informed that the same were secondhand but functional. On his
second visit to the Diolosa Publishing House, petitioner together with
Rogelio Yusay, a letterpress machine operator, decided to buy the linotype
machine, Model 14. The transaction was basically verbal in nature but to
facilitate the loan application with the DBP, a pro forma invoice, dated April
23, 1977 and reflecting the amount of P50,000.00 as the consideration of
the sale, was signed by petitioner with an addendum that payment had not
yet been made but that he promised to pay the full amount upon the
release of his loan from the DBP on or before the end of the month.
Although the agreed selling price was only P40,000.00, the amount on the
invoice was increased by P10,000.00, said increase being intended for the
purchase of new matrices for said machine. Sometime between April and
May, 1977, the machine was delivered to petitioner's publishing house at
Tangub, Bacolod City where it was installed by one Crispino Escurido, an
employee of respondent Diolosa. Another employee of the Diolosa
Publishing House, Tomas Plondaya, stayed at petitioner's house for almost a
month to train the latter's cousin in operating the machine. Under date of
August 29, 1977, private respondent issued a certification wherein he
warranted that the machine sold was in "A-1 condition", together with
other express warranties. An agent from DBP went to Moles and inspected
the machine thereafter the P50,000 loan was released, An official receipt
was issued to Moles and payment was made to Diolosa on September 30,
1977. On Nov 29, 1977 Molosa wrote to Diolosa saying that the machine
they bought was not working but the latter did not reply. As a consequence,
Molosa seeked the help of other technicians, but then Diolosa thereafter
sent his technicians to repair said machine but they were not successful in
making it work. Moles decided to buy a distributor bar for the machine and
asked diolosa to pay for the same but the latter asked Moles to share the
price with him so he then talked to his lawyer. An expert inspected the
machine and found several defects thus the RTC decreed the rescission of
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the contract and thereby ordering Moles to return said machine to Diolosa
along with all the accessories when it was delivered to him and Diolosa
should retun the P40000, pay damages / unearned income and attorney’s
fees. Diolosa appealed and the CA reversed the rulong hence this case.
ISSUE/S:
1. Whether there is an implied warranty of its quality or fitness.
2. Whether the hidden defects in the machine is sufficient to warrant a
rescission of the contract between the parties.
Held:
1. It is generally held that in the sale of a designated and specific article
sold as secondhand, there is no implied warranty as to its quality or fitness
for the purpose intended, at least where it is subject to inspection at the
time of the sale. On the other hand, there is also authority to the effect that
in a sale of secondhand articles there may be, under some circumstances,
an implied warranty of fitness for the ordinary purpose of the article sold or
for the particular purpose of the buyer. Said general rule, however, is not
without exceptions. Article 1562 of our Civil Code, which was taken from
the Uniform Sales Act, provides: "Art. 1562. In a sale of goods, there is an
implied warranty or condition as to the quality or fitness of the goods, as
follows: (1) Where the buyer, expressly or by implication, makes known to
the seller the particular purpose for which the goods are acquired, and it
appears that the buyer relies on the seller's skill or judgment (whether he
be the grower or manufacturer or not), there is an implied warranty that the
goods shall be reasonably fit for such purpose;"
2. We have to consider the rule on redhibitory defects contemplated in
Article 1561 of the Civil Code. A redhibitory defect must be an imperfection
or defect of such nature as to engender a certain degree of importance. An
imperfection or defect of little consequence does not come within the
category of being redhibitory.
As already narrated, an expert witness for the petitioner categorically
established that the machine required major repairs before it could be used.
This, plus the fact that petitioner never made appropriate use of the
machine from the time of purchase until an action was filed, attest to the
major defects in said machine, by reason of which the rescission of the
contract of sale is sought. The factual finding, therefore, of the trial court
that the machine is not reasonably fit for the particular purpose for which it
was intended must be upheld, there being ample evidence to sustain the
same.
At a belated stage of this appeal, private respondent came up for the first
time with the contention that the action for rescission is barred by
prescription. While it is true that Article 1571 of the Civil Code provides for
a prescriptive period of six months for a redhibitory action, a cursory
reading of the ten preceding articles to which it refers will reveal that said
rule may be applied only in case of implied warranties. The present case
involves one with an express warranty. Consequently, the general rule on
rescission of contract, which is four years shall apply. Considering that the
original case for rescission was filed only one year after the delivery of the
subject machine, the same is well within the prescriptive period. This is
aside from the doctrinal rule that the defense of prescription is waived and
cannot be considered on appeal if not raised in the trial court, and this case
does not have the features for an exception to said rule.
ENGINEERING AND MACHINERY CORP. VS. COURT OF APPEALS
Facts:
Almeda and Engineering signed a contract, wherein Engineering undertook
to fabricate, furnish and install the air-conditioning system in the latter’s
building along Buendia Avenue, Makati in consideration of P210,000.00.
Petitioner was to furnish the materials, labor, tools and all services required
in order to so fabricate and install said system. The system was completed
in 1963 and accepted by private respondent, who paid in full the contract
price. Almeda learned from the employees of NIDC of the defects of the air-
conditioning system of the building. Almeda spent for the repair of the air-
conditioning system. He now sues Engineering for the refund of the repair.
Engineering contends that the contract was of sale and the claim is barred
by prescription since the responsibility of a vendor for any hidden faults or
defects in the thing sold runs only for 6 months (Arts 1566, 1567, 1571).
Almeda contends that since it was a contract for a piece of work, hence the
prescription period was ten years (Hence Art 1144 should apply on written
contracts). RTC found that Engineering failed to install certain parts and
accessories called for by the contract, and deviated from the plans of the
system, thus reducing its operational effectiveness to achieve a fairly
desirable room temperature.
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Issue:
1) Whether the contract for the fabrication and installation of a central air-
conditioning system in a building, one of “sale” or “for a piece of work”?
CONTRACT FOR PIECE OF WORK.
2) Corrollarily whether the claim for refund was extinguished by
prescription? NO.
Held:
1) A contract for a piece of work, labor and materials may be distinguished
from a contract of sale by the inquiry as to whether the thing transferred is
one not in existence and which would never have existed but for the order,
of the person desiring it. In such case, the contract is one for a piece of
work, not a sale. On the other hand, if the thing subject of the contract
would have existed and been the subject of a sale to some other person
even if the order had not been given, then the contract is one of sale.
A contract for the delivery at a certain price of an article which the vendor in
the ordinary course of his business manufactures or procures for the
general market, whether the same is on hand at the time or not is a
contract of sale, but if the goods are to be manufactured specially for the
customer and upon his special order, and not for the general market, it is a
contract for a piece of work .
The contract in question is one for a piece of work. It is not petitioner’s line
of business to manufacture air-conditioning systems to be sold “off-the-
shelf.” Its business and particular field of expertise is the fabrication and
installation of such systems as ordered by customers and in accordance with
the particular plans and specifications provided by the customers. Naturally,
the price or compensation for the system manufactured and installed will
depend greatly on the particular plans and specifications agreed upon with
the customers.
2)The original complaint is one for damages arising from breach of a written
contract – and not a suit to enforce warranties against hidden defects – we
here – with declare that the governing law is Article 1715 (supra). However,
inasmuch as this provision does not contain a specific prescriptive period,
the general law on prescription, which is Article 1144 of the Civil Code, will
apply. Said provision states, inter alia, that actions “upon a written contract”
prescribe in ten (10) years. Since the governing contract was executed on
September 10, 1962 and the complaint was filed on May 8, 1971, it is clear
that the action has not prescribed.
NUGUID VS CA
FACTS:
The deceased spouses Victorino and Crisanta dela Rosa (spouses dela Rosa)
were registered owners of a parcel of land in Orani, Bataan, and covered by
OCT No. 3778. On or about May 4, 1931, Victorino dela Rosa (widowed by
then) sold one-half of the said property to Juliana Salazar for P95.00. This
sale between him and Salazar, though evidenced by a document, was not
registered. Nevertheless, Juliana Salazar constructed a house on the lot she
purchased immediately after the sale. On March 10, 1964, petitioner
spouses Diosdado Nuguid and Marqiueta Venegas (spouses Nuguid) caused
the registration of a document entitled "Kasulatan ng Partihan at Bilihan"
(Kasulatan) dated June 6, 1961. In this document, Marciana dela Rosa,
together with the heirs of Victorino and Crisanta dela Rosa, sold to spouses
Nuguid the entire area of the property for the sum of P300.00.
Subsequently, OCT No. 3778 was cancelled by the Register of Deeds of
Bataan, and TCT No. T-12782 was issued in the spouses Nuguid’s names.
Private respondents claimed that the presented by spouses Nuguid was
forged. They also allegedly discovered the forged deed as well as the
certificate of title in the name of the petitioners much later, that is, on
February 28, 1978, when respondents Amorita Guevarra and Teresita
Guevarra thought of having the title of their grandmother Juliana Salazar,
registered. On the other hand, spouse Nuguid assert that in the latter part
of 1960, Nicolas dela Rosa, uncle of respondent Marciana dela Rosa and
grandfather of the other heirs-signatories, offered to sell the subject land to
them. Apparently, Nicolas dela Rosa claimed that he had already purchased
the shares of the heirs over the subject property as evidenced by a private
document entitled "Kasunduan" (Kasunduan) dated August 31, 1955, and as
a matter of fact, he had in his possession the original certificate of title
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covering the property in the name of the deceased Victorino and Crisanta
dela Rosa.
The CFI of Bataan dismissed the complaint filed by private respondents, but
the Court of Appeals reversed said decision and ordered the spouses Nuguid
to execute a deed of reconveyance in favor of herein respondents.
ISSUE:
Who is the rightful owner of the subject property?
COURT RULING:
The Supreme Court reinstated the decision of the CFI of Bataan. The basis
for the Court of Appeals' conclusion that petitioners were buyers in bad
faith is ambiguous because said court relied on the singular circumstance
that the petitioners are from Orani, Bataan, and should have personally
known that the private respondents were the persons in actual possession.
However, at the time of the purchase, the spouses Nuguid dealt with Pedro
Guevarra and Pascuala Tolentino, the latter being the actual occupants. The
respondents Guevarras, children of the said Pedro and Pascuala Guevarra,
came into the picture only after their parents died. As for the respondent
heirs of Victorino dela Rosa, their being in actual possession of any portion
of the property was, likewise, simply presumed or taken for granted by the
Court of Appeals.
The private respondents cannot also honestly claim that they became aware
of the spouses Nuguid’s title only in 1978, because ever since the latter
bought the property in 1961, the spouse Nuguid have occupied the same
openly, publicly, and continuously in the concept of owners, even building
their house thereon. For seventeen years they were in peaceful possession,
with the respondents Guevarras occupying less than one-half of the same
property