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Philippine Suburban Dev Corp vs Auditor General


G.R. No. L-19545

Subject: Sales
Doctrine: Constructive or legal delivery

Facts:
On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on the reports of the Committee created to
survey suitable lots for relocating squatters in Manila and suburbs, 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 and of another area either in
Las Piñas or Parañaque, Rizal, or Bacoor, Cavite for those who desire to settle south of Manila. On June 10, 1960, the Board of
Directors of the PHHC passed Resolution No. 700 (Annex “C”) authorizing the purchase of the unoccupied portion of the Sapang
Palay Estate at P0.45 per square meter “subject to the following conditions precedent:

3. That the President of the Philippines shall first provide the PHHC with the necessary funds to effect the purchase and
development of this property from the proposed P4.5 million bond issue to be absorbed by the GSIS.
4. That the contract of sale shall first be approved by the Auditor General pursuant to Executive Order dated February 3, 1959.

On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos. 1000 and 1322 in the amount of
P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at a
price not to exceed P0.45 per sq. meter.

On December 29,1960, Petitioner Philippine Suburban Development Corporation, as owner of the unoccupied portion of the
Sapang Palay Estate and the People’s Homesite and Housing Corporation, entered into a contract embodied in a public instrument
entitled “Deed of Absolute Sale” whereby the former conveyed unto the latter the two parcels of land abovementioned. This was
not registered in the Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that the PHHC could
not at once advance the money needed for registration expenses.

In the meantime, the Auditor General, to whom a copy of the contract had been submitted for approval in conformity with Executive
Order No. 290, expressed objections thereto and requested a re-examination of the contract, in view of the fact that from 1948 to
December 20, 1960, the entire hacienda was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly
increased amount of P4,898,110.00.

It appears 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 or ejected
from the lots which they were then occupying.
On April 12, 1961, the 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 the Philippine Suburban Development Corporation. Said amount represented the realty tax due
on the property involved for the calendar year 1961. Petitioner, through the PHHC, paid under protest the abovementioned amount
to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance Dominador
Aytona to order a refund of the amount so paid. Upon recommendation of the Provincial Treasurer of Bulacan, said request was
denied by the Secretary of Finance in a letter-decision dated August 22, 1961.
**Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the Deed of Absolute Sale on
December 29, 1960. It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax
in the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on
December 29, 1960, the possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the
transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and, consequently, under
no obligation to pay the real property tax for the year 1961.
**Respondent, however, argues that the presumptive delivery of the property under Article 1498 of the Civil Code does not apply
because of the requirement in the contract that the sale shall first be approved by the Auditor General, pursuant to the Executive
Order.

ISSUE: WON there was already a valid transfer of ownership between the parties.

HELD:
Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in
question, the prior approval by the Auditor General envisioned by Administrative Order would therefore, not be necessary.
Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe actual (real tradition) or constructive
(constructive tradition). 2 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. 3
In other words, 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. Such would be the
case, for instance, 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, or
where the vendor has no control over the thing sold at the moment of the sale, and, therefore, its material delivery could not have
been made.
In the 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.
WHEREFORE, the appealed decision is hereby reversed, and the real property tax paid under protest to the Provincial Treasurer
of Bulacan by petitioner Philippine Suburban Development Corporation, in the amount of P30,460,90, is hereby ordered refunded.
Without any pronouncement as to costs.

Edu vs Gomez

A 1968 model Volkswagen, bantam car, was allegedly owned by Lt. Walter A. Bala
The Commission on Land Transportation received a report on August 25, 1970 that the abovementioned car was stolen on June
29, 1970 from the residence of Lt. Bala at Angeles City. Petitioners who are agents of Philippine Constabulary, on February 2,
1971, recognized subject car in the possession of herein private respondent Lucila Abello and immediately seized and
impounded the car as stolen property. Likewise, herein petitioner Romeo F. Edu, then Commissioner of Land Transportation,
seized the car pursuant to Section 60 of Republic Act 4136.

Respondent court found that the car in question was acquired by Lucila Abello by purchase from its registered owner, Marcelino
Guansing, for the valuable consideration of P9,000.00, under the notarial deed of absolute sale, dated August 11, 1970; that she
has been in possession thereof since then until February 3, 1971 when the car was seized from her by the petitioners.

Issue: Whether or not petitioner can lawfully seize the car.

No.

There is no merit in the petition considering that the acquirer or the purchaser in good faith of a chattel of movable property
is entitled to be respected and protected in his possession as if he were the true owner thereof until a competent court rules
otherwise. In the meantime, as the true owner, the possessor in good faith cannot be compelled to surrender possession nor
to be required to institute an action for the recovery of the chattel, whether or not an indemnity bond is issued in his favor.
The filing of an information charging that the chattel was illegally obtained through estafa from its true owner by the transferor
of the bona fide possessor does not warrant disturbing the possession of the chattel against the will of the possessor.

Finally, the claim of petitioners that the Commission has the right to seize and impound the car under Section 60 of Republic
Act 4136 which reads:

Sec. 60. The lien upon motor vehicles. Any balance of fees for registration, re-registration or delinquent registration
of a motor vehicle, remaining unpaid and all fines imposed upon any vehicle owner, shall constitute a first lien upon the
motor vehicle concerned.

is untenable. it is clear from the provision of said Section 60 of Republic Act 4136 that the Commissioner's right to seize and
impound subject property is only good for the proper enforcement of lien upon motor vehicles. The Land Transportation
Commission may issue a warrant of constructive or actual distraint against motor vehicle for collection of unpaid fees for
registration, re-registration or delinquent registration of vehicles.

Duran vs IAC

Petitioner Circe S. Duran owned two (2) parcels of land registered in the Register of Deeds of Caloocan City which she had
purchased from the Moja Estate. She left the Philippines in June 1954 and returned in May 1966.

On May 13, 1963, a Deed of Sale of the two lots mentioned above was made in favor of Circe's mother, Fe S. Duran who, on
mortgaged the same property to private respondent Erlinda B. Marcelo-Tiangco. When petitioner Circe S. Duran came to know
about the mortgage made by her mother, she wrote the Register of Deeds of Caloocan City informing the latter that she had not
given her mother any authority to sell or mortgage any of her properties in the Philippines. Failing to get an answer from the
registrar, she returned to the Philippines. Meanwhile, when her mother, Fe S. Duran, failed to redeem the mortgage properties,
foreclosure proceedings were initiated by private respondent Erlinda B. Marcelo Tiangco and, ultimately, the sale by the sheriff
and the issuance of Certificate of Sale in favor of the latter.

Petitioner Circe S. Duran claims that the Deed of Sale in favor of her mother Fe S. Duran is a forgery, saying that at the time
of its execution in 1963 she was in the United States. On the other hand, the adverse party alleges that the signatures of Circe
S. Duran in the said Deed are genuine and, consequently, the mortgage made by Fe S. Duran in favor of private respondent is
valid.
Issue: Whether private respondent Erlinda B. Marcelo-Tiangco was a buyer in good faith and for value.

Yes.

Respondent is in good faith.

Good faith consists in the possessor's belief that the person from whom he received the thing was the owner of the same and
could convey his title (Arriola vs. Gomez dela Serna, 14 Phil. 627). Good faith, while it is always to be presumed in the
absence of proof to the contrary, requires a well-founded belief that the person from whom title was received was himself the
owner of the land, with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith where there is an honest
intention to abstain from taking any unconscientious advantage from another (Fule vs. Legare, 7 SCRA 351). Otherwise
stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual
concerned.

In the case at bar, private respondents, in good faith relied on the certificate of title in the name of Fe S. Duran and as aptly
stated by respondent appellate court "[e]ven on the supposition that the sale was void, the general rule that the direct result
of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply
here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple
enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has
already been transferred from the name of the true owner to the name of the forger or the name indicated by the
forger."

Thus, where innocent third persons relying on the correctness of the certificate of title issued, acquire rights over the property,
the court cannot disregard such rights and order the total cancellation of the certificate for that would impair public confidence
in the certificate of title; otherwise everyone dealing with property registered under the torrens system would have to inquire
in every instance as to whether the title had been regularly or irregularly issued by the court. Indeed, this is contrary to the
evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of
title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the
property. Stated differently, an innocent purchaser for value relying on a torrens title issued is protected. A mortgagee has
the right to rely on what appears in the certificate of title and, in the absence of anything to excite suspicion, he is under no
obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate.

Petitioner is guilty of laches.

Likewise, We take note of the finding and observation of respondent appellate court in that petitioners were guilty of estoppel
by laches "in not bringing the case to court within a reasonable period. Antero Gaspar, husband of Circe, was in the
Philippines in 1964 to construct the apartment on the disputed lots. This was testified to by Circe herself. In the process of
construction, specifically in the matter of obtaining a building permit, he could have discovered that the deed of sale sought
to be set aside had been executed on May 13, 1963 (the building permit needed an application by the apparent owner of the
land, namely, Circe's mother, Fe S. Duran). And then again both plaintiffs could have intervened in the foreclosure suit but
they did not. They kept silent until almost the last moment when they finally decided, shortly before the sheriff's sale, to file
a third-party claim. Clearly, the plaintiffs can be faulted for their estoppel by laches."
Addison vs Felix

By a public instrument dated June 11, 1914, the plaintiff sold to the defendant Marciana Felix, four parcels of land, described
in the instrument. The defendant Felix paid, P3,000 on account of the purchase price, and bound herself to pay the remainder
in installments, with the condition that the total price should not exceed P85,000. It was further stipulated that the purchaser
was to deliver to the vendor 25 per centum of the value of the products that she might obtain from the four parcels "from the
moment she takes possession of them until the Torrens certificate of title be issued in her favor."

It was also covenanted that "within one year from the date of the certificate of title in favor of Marciana Felix, this latter may
rescind the present contract of purchase and sale.
In January, 1915, the vendor, filed suit in CFI of Manila to compel Marciana Felix to make payment of the first installment of
P2,000, and of the interests. The defendant, answered the complaint and asked that she be absolved from the complaint, and
that, after a declaration of the recsission be made.

The evidence adduced shows that plaintiff was able to designate only two of the four parcels, and more than two-thirds of these
two were found to be in the possession of one Juan Villafuerte, who claimed to be the owner of the parts so occupied by him.
The plaintiff admitted that the purchaser would have to bring suit to obtain possession of the land.

Issue: Whether or not plaintiff was able to deliver the subject lots.

No.

The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to be delivered when it is
placed "in the hands and possession of the vendee." It is true that the same article declares that the execution of a public
instruments is equivalent to the delivery of the thing which is the object of the contract, but, in order that this symbolic
delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold
that, at the moment of the sale, its material delivery could have been made. It is not enough to confer upon the purchaser the
ownership and the right of possession. The thing sold must be placed in his control. When there is no impediment whatever
to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through
the execution of a public instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot
have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because such
tenancy and enjoyment are opposed by the interposition of another will, then fiction yields to reality — the delivery has not
been effected.

As Dalloz rightly says in his commentaries on article 1604 of the French Civil code, "the word "delivery" expresses a complex
idea . . . the abandonment of the thing by the person who makes the delivery and the taking control of it by the person to
whom the delivery is made."

The execution of a public instrument is sufficient for the purposes of the abandonment made by the vendor; but it is not
always sufficient to permit of the apprehension of the thing by the purchaser.

The supreme court of Spain, interpreting article 1462 of the Civil Code, held in its decision of November 10, 1903, that this
article "merely declares that when the sale is made through the means of a public instrument, the execution of this latter is
equivalent to the delivery of the thing sold: which does not and cannot mean that this fictitious tradition necessarily implies
the real tradition of the thing sold, for it is incontrovertible that, while its ownership still pertains to the vendor (and with
greater reason if it does not), a third person may be in possession of the same thing; wherefore, though, as a general rule, he
who purchases by means of a public instrument should be deemed . . . to be the possessor in fact, yet this presumption gives
way before proof to the contrary."

It is evident, then, in the case at bar, that the mere execution of the instrument was not a fulfillment of the vendors' obligation
to deliver the thing sold, and that from such non-fulfillment arises the purchaser's right to demand, as she has demanded, the
rescission of the sale and the return of the price.

Of course if the sale had been made under the express agreement of imposing upon the purchaser the obligation to take the
necessary steps to obtain the material possession of the thing sold, and it were proven that she knew that the thing was in the
possession of a third person claiming to have property rights therein, such agreement would be perfectly valid. But there is
nothing in the instrument which would indicate, even implicitly, that such was the agreement.

Inasmuch as the rescission is made by virtue of the provisions of law and not by contractual agreement, it is not the
conventional but the legal interest that is demandable.

It is therefore held that the contract of purchase and sale entered into by and between the plaintiff and the defendant on June
11, 1914, is rescinded.
Pasagui vs Villablanca Issue: Whether or not the petitioners had acquired possession of the land, as such the
complaint is one of forcible entry.
On February 4, 1963,
appellants Calixto Pasagui No.
and Fausta Mosar filed a
complaint with the Court of It is true that the execution of the deed of absolute sale in a public instrument is equivalent
First Instance at Tacloban to delivery of the land subject of the sale. This presumptive delivery only holds true when
City, alleging that there is no impediment that may prevent the passing of the property from the hands of the
onNovember 15, 1962, for vendor into those of the vendee. It can be negated by the reality that the vendees actually
and in consideration of Two failed to obtain material possession of the land subject of the sale..
Thousand Eight Hundred
Pesos (P2,800.00), they It appears from the records of the case at bar that plaintiffs-appellants had not acquired
bought from appellees physical possession of the land since its purchase on November 12, 1962. As a matter of
Eustaquia Bocar and Catalina fact, their purpose in filing the complaint in Civil Case No. 3285 is precisely to "get
Bocar a parcel of agricultural the possession of the property.
land with an area of 2.6814
hectares, situated in Pastrana, In order that an action may be considered as one for forcible entry, it is not only necessary
Leyte; that the corresponding that the plaintiff should allege his prior physical possession of the property but also that he
document of sale was was deprived of his possession by any of the means provided in section 1, Rule 70 of the
executed, notarized on the Revised Rules of Court, namely: force, intimidation, threats, strategy and stealth. For, if the
same date, and recorded in dispossession did not take place by any of these means, the courts of first instance, not the
the Registry of Deeds of municipal courts, have jurisdictions.. The bare allegation in the complaint that the plaintiff
Tacloban, Leyte on has been "deprived" of the land of which he is and has been the legal owner for a long
November 16, 1962; that period has been held to be insufficient. It is true that the mere act of a trespasser in
during the first week of unlawfully entering the land, planting himself on the ground and excluding therefrom the
February, 1963, defendant prior possessor would imply the use of force. In the case at bar, no such inference could be
spouses Ester T. Villablanca made as plaintiffs-appellants had not claimed that they were in actual physical possession
and Zosimo Villablanca, of the property prior to the entry of the Villablancas. Moreover, it is evident that plaintiffs-
"illegally and without any appellants are not only seeking to get the possession of the property, but as an alternative
right, whatsoever, took cause of action, they seek the return of the price and payment of damages by the vendors
possession of the above "in case of eviction or loss of ownership" of the said property. It is, therefore, not the
property harvesting coconuts summary action of forcible entry within the context of the Rules. .
from the coconut plantation
thereon, thus depriving
plaintiffs" of its possession;
that despite demands made
by the plaintiffs they failed or
refused to return said parcel
of land.

Eustaquia and Catalina


Bocar, vendors of the
property, are included
defendants in the complaint
by virtue of the warranty
clause contained in the
document of sale.
EDCA vs CA Issues: Whether or not respondent was in good faith.
Whether or not respondent acquired title over the books.
On October 5, 1981, a person
identifying himself as Yes.
Professor Jose Cruz placed an
order by telephone with the Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing
petitioner company for 406 that they had been sold to Cruz, who said he was selling them for a discount because he
books. EDCA prepared the was in financial need. Private respondents are in the business of buying and selling books
corresponding invoice and and often deal with hard-up sellers who urgently have to part with their books at reduced
delivered the books as prices. To Leonor Santos, Cruz must have been only one of the many such sellers she was
ordered, for which Cruz accustomed to dealing with. It is hardly bad faith for any one in the business of buying and
issued a personal check selling books to buy them at a discount and resell them for a profit.
covering the purchase price
of P8,995.65. On October 7, Yes.
1981, Cruz sold 120 of the
books to private respondent Actual delivery of the books having been made, Cruz acquired ownership over the books
Leonor Santos who, after which he could then validly transfer to the private respondents. The fact that he had not yet
verifying the seller's paid for them to EDCA was a matter between him and EDCA and did not impair the title
ownership from the invoice acquired by the private respondents to the books.
he showed her, paid him
P1,700.00. One may well imagine the adverse consequences if the phrase "unlawfully deprived" were
to be interpreted in the manner suggested by the petitioner. A person relying on the seller's
EDCA having become title who buys a movable property from him would have to surrender it to another person
suspicious over a second claiming to be the original owner who had not yet been paid the purchase price therefor.
order placed by Cruz even The buyer in the second sale would be left holding the bag, so to speak, and would be
before clearing of his first compelled to return the thing bought by him in good faith without even the right to
check, made inquiries with reimbursement of the amount he had paid for it.
the De la Salle College where
he had claimed to be a dean It bears repeating that in the case before us, Leonor Santos took care to ascertain first that
and was informed that there the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz
was no such person in its showed her assured her that the books had been paid for on delivery. By contrast, EDCA
employ. Further verification was less than cautious — in fact, too trusting in dealing with the impostor. Although it had
revealed that Cruz had no never transacted with him before, it readily delivered the books he had ordered (by
more account or deposit with telephone) and as readily accepted his personal check in payment. It did not verify his
the Philippine Amanah Bank, identity although it was easy enough to do this. It did not wait to clear the check of this
against which he had drawn unknown drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms
the payment check. 7 EDCA thereon, that the books had been paid for on delivery, thereby vesting ownership in the
then went to the police, which buyer.
set a trap and arrested Cruz
on October 7, 1981. Surely, the private respondent did not have to go beyond that invoice to satisfy herself that
Investigation disclosed his the books being offered for sale by Cruz belonged to him; yet she did. Although the title of
real name as Tomas de la Cruz was presumed under Article 559 by his mere possession of the books, these being
Peña and his sale of 120 of movable property, Leonor Santos nevertheless demanded more proof before deciding to
the books he had ordered buy them.
from EDCA to the private
respondents. It would certainly be unfair now to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence.1âwphi1 We cannot see the justice in
On the night of the same date, transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care,
EDCA sought the assistance when they bought the books from Cruz.
of the police in Precinct 5 at
the UN Avenue, which Note:
forced their way into the store Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual
of the private respondents or constructive delivery thereof.
and threatened Leonor Santos
with prosecution for buying Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
stolen property. They seized purchaser until he has fully paid the price.
the 120 books without
warrant, loading them in a Art. 559.
van belonging to EDCA, and
thereafter turned them over to
the petitioner.
Alliance Tobacco vs PVTA Issue: Whether or not petitioner’s delivery of bales of tobacco to FVTR perfected the
contract of sale between petitioner and PVTA, so as to make the latter liable for the loss
PVTA, a government said bales while in FVTR’s possession.
corporation entered into a
contract of procuring, Yes.
redrying and servicing with
FVTR for the 1963 tobacco The Civil Code provides that ownerhip of the thing sold shall be transferred to the vendee
trading operation. In June of upon the actual or constructive delivery thereof. There is delivery when the thing sold is
the same year, PVTA also placed in the control and possession of the vendee. Indeed, in tobacco trading, actual
entered into a merchandising delivery plays a pivotal role. The peculiar procedure undergone in trading, which procedure
loan agreement with the was set out at length in both the Santiago and the PVTA vs. De los Angeles cases, reveals
petitioner, a duly that delivery seals the contract of sale because the trader loses not only possession but also
incorporated and authorized control over the shipment. Outlined by the PVTA pursuant to its power "to take over and
tobacco trading entity, assume, and therefore exclusively direct, supervise and control, all functions and operations
whereby PVTA agreed to with respect to the processing, warehousing, and trading of Virginia tobacco, the provisions
lend P25,500 to petitioner for of ally existing law to the contrary notwithstanding," the procedure is observed by everyone
purchase of fluecured involved in the trade.
Virgina tobacco from bona
fide Virginia tobacco farmer- Verily, the tobacco trading procedure conceived and formulated by the PVTA is akin to a
producers. contract of adhesion wherein only one party has a hand in the determination of the terms.
But observance of the procedure more often than not renders a trader at a disadvantage. The
Following month, petitioner moment the shipment is placed in the hands of the PVTA or its representative and it is lost,
shipped to FVTR 96 bales of the trader is left empty-handed. While the flaw may not really be in the procedure itself, the
tobacco (4,800 kilos) covered same may be found in the persons charged with the implementation of the procedure. Some
by Guia No. 1 and 167 bales personnel mishandle the shipment to the detriment of the trader. Some demand grease
(8,350 kilos) covered by Guia money to facilitate the trading process. Sadly, this is what happened in this case.
No. 2 to the Redrying plant.
Only 89 bales from Guia No. Hence, while under an Ideal situation, we would have found merit in respondent PVTA's
2 were graded, weighed and contention that the contract of sale could not have been perfected pursuant to Article 1475
accepted by FVTR, the of the Civil Code because to determine the price of the tobacco traded, the shipment should
remaining 174 bales were not first be inspected, graded and weighed, we find said contention misplaced herein. A strict
graded and weighed because interpretation of the provision of Article 1475 may result in adverse effects to small planters
some officer and employee of who would not be paid for the lost products of their toil. Such situation was what the ruling
FVTR asked money for in PVTA vs. De los Angeles sought to avoid.
separate weighing and
grading of the remaining Equity and fair dealing, the anchor of said case, must once more prevail. Since PVTA had
bales. virtual control over the lost tobacco bales, delivery thereof to the FVTR should also be
considered effective delivery to the PVTA.
The operations of FVTR in
Bauang stopped in October
1963. Plaintiff asked that its
ungraded and unweighed
tobacco be withdrawn from
Redrying plant. PVTA and
FVTR refused because
according to the, those
tobacco were subject to
merchandising loaned and
owned by PVTA.

Unfortunately, the remaining


174 bales with total value of
P28,382 were lost while in
the possession of FVTR.
Having learned of such loss,
petitioner demanded for its
value and application of the
same to its merchandising
loan with PVTA but both the
latter and the FVTR refused
to heed said demands.
The petitioners spouses Jose
Santa Ana, Jr. and Lourdes Sto.
Domingo, owned a 115,850-
square meter parcel of land
situated in barrio Balasing, Sta.
Maria, Bulacan. On 28 May
1954, they sold two (2) separate
portions of the land for
P11,000.00 to the herein
respondent Rosa Hernandez.

After the sale (there were two


other previous sales to different
vendees of other portions of the
land), the petitioners-spouses
caused the preparation of a
subdivision plan, Psd-43187, was
approved on 13 January 1955 by
the Director of Lands. Rosa
Hernandez, however, unlike the
previous vendees, 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; and she,
likewise, refused to vacate the
areas that she had occupied.
Instead, she caused the
preparation of a different
subdivision plan, which was
approved by the Director of
Lands on 24 February 1955. This
plan, Psd-42844, tallied with the
areas that the defendant, Rosa
Hernandez, had actually
occupied.
On 28 February 1955, herein
petitioners-spouses filed suit
against respondent Rosa
Hernandez in the Court of First
Instance of Bulacan, claiming
that said defendant was
occupying an excess of 17,000
square meters in area of what
she had bought from them.
Defendant Rosa Hernandez, on
the other hand, claimed that the
alleged excess, was part of the
areas that she bought.

Facts:

The entire lot involved in this suit was originally covered by Homestead Patent issued on

1920... and later under OCT... of the Registry of Deeds of Mindoro,... in the name of Anselmo Lacatan.

On
1948, after the death of Anselmo Lacatan, TCT... was issued in the name of his two sons and heirs, Vidal and Florentino Lacatan.
Vidal Lacatan died on

1953, Vidal Lacatan's heirs... in favor of the spouses Romeo Paylago and Rosario Dimaandal, plaintiffs... over a portion of the
entire lot

1953, Florentino Lacatan also died, leaving as his heirs, his widow and three children,... the said children of Florentino Lacatan
likewise executed a deed of sale... in... favor of the same vendees over another portion of the same lot

1954, by virtue of the registration of the two deeds of sale... a new TCT... covering the total area... hectares was issued in favor of...
the Paylago spouses.

A... subsequent subdivision survey... disclosed that... one half hectare... of the total area purchased by... plaintiffs... was being
occupied by defendant-respondent.

Hence, the action to recover possession and ownership of the said portion.

said portion of land was purchased by Hilario Jarabe, late husband of defendant... from one Apolonio Lacatan, which... sale is
evidenced by an unregistered deed of sale... that Apolonio Lacatan, in turn, bought the same in 1936 from Anselmo Lacatan, the
original registered owner

After trial, the lower court held that plaintiffs... were not purchasers in good faith... and... rendered judgment in favor of defendant

Issues:

Who has a better right in case of double sale of real property, the registered buyer or the prior but unregistered purchaser?

Ruling:

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

Article 1544, providing that if the same innovable property should have been sold to different vendees, "the ownership shall belong
to the person acquiring it who in good faith first recorded it in the registry of property."

There is no question that the sales made in favor of plaintiffs-petitioners were registered while the alleged sale executed in favor
of defendant-respondent was not. Applying the foregoing principle of law to the instant case, it is now contended by... plaintiffs-
peti-tioners that their certificate of title must prevail over defendant-respondent

Both Courts below found that petitioners knew beforehand that the parcel of land in question was owned by defendant-respondent.

coupled with their knowledge that defendant-respon-dent purchased the same from Apolonio Lacatan, plaintiffs-petitioners 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. They cannot now claim complete ignorance of
defendant-respondent's claim over the property.

"a purchaser... who has knowledge of facts which should put him upon inquiry and investigation as to possible defects of the title
of the vendor and fails to make such inquiry and investigation, cannot claim that he is a purchaser in good faith and had acquired a
valid title thereto." (Sampilo... v. Court of Appeals

To be entitled to the priority, the second vendee must not only show prior recording of his deed... of conveyance or posses-sion 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

Short of this qualify-ing circumstance, the mantle of legal protection and the consequential guarantee of indefeasibility of title to
the registered property will not in any... way shelter the recording purchaser against known and just claims of a prior though
unregistered buyer. Verily, it is now settled jurisprudence that knowledge of a prior transfer of a regis-tered property by a
subsequent purchaser makes him a purchaser in bad... faith and his knowledge of such transfer vitiates his title acquired by virtue
of the later instrument of conveyance which was registered in the Registry of Deeds

The registration of the later instrument creates no right as against the first purchaser.
Principles:

ILUMINADO HANOPOL vs. PERFECTO PILAPIL


G.R. No. L-19248
February 28, 1963

Facts:

Ilumindao Hanopol claims ownership of the land by virtue of a series of purchases effected in 1938 by means of private instruments,
executed by the former owners Teodora, Lucia, Generosa, Sinforosa and Isabelo, all surnamed Siapo. Perfecto Pilapil. asserts title
to the property on the strength of a duly notarized deed of sale executed in his favor by the same owners on December 3, 1945,
which deed of sale was registered in the Registry of Deeds.

Issue:

Is the registration of the second sale in favor of Pilapil affects Hanopol’s rights as the first vendee?

Held:

Yes. The better right referred to in Act No. 3344 is more than a mere prior deed. It involves facts and circumstances which
combined, would make it clear that the first buyer has a better right than the second purchaser. However, there seems to be no clear
evidence of Hanopol’s possession of the land. Hanopol cannot have a better right than Pilapil who, according to the Trial Court
was not a purchaser in bad faith.

Balatbat v. CA
Facts:

A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal union. Maria died on August 28,
1966. On June 15, 1977, Aurelio filed a case for partition. The trial court held that Aurelio is entitled to the ½ portion at his share
in the conjugal property, and 1/5 of the other half which formed part of Maria’s estate, divided equally among him at his 4 children.
The decision having become final and executory, the Register of Deeds of Manila issued a transfer certificate of title on October 5,
1979 according to the ruling of the court. On April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan and
Jose Repuyan, as evidenced by a deed of absolute sale. On June 21, 1980, Aurora caused the annotation of her affidavit of adverse
claim. On August 20, 1980, Aurelio filed a complaint for rescission of contract grounded on the buyers’ failure to pay the balance
of the purchase price. On February 4, 1982, another deed of absolute sale was executed between Aurelio and his children, and
herein petitioner Clara Balatbat, involving the entire lot. Balatbat filed a motion for the issuance of writ of possession, which was
granted by the court on September 20, 1982, subject to valid rights and interests of third persons. Balatbat filed a motion to intervene
in the rescission case, but did not file her complaint in intervention. The court ruled that the sale between Aurelio and Aurora is
valid.

Issues:

(1) Whether the alleged sale to private respondents was merely executory

(2) Whether there was double sale

(3) Whether petitioner is a buyer in good faith and for value

Held:

(1) Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of private respondents Repuyan was merely
executory for the reason that there was no delivery of the subject property and that consideration/price was not fully paid, we find
the sale as consummated, hence, valid and enforceable. The Court dismissed vendor's Aurelio Roque complaint for rescission of
the deed of sale and declared that the Sale dated April 1, 1980, as valid and enforceable. No appeal having been made, the decision
became final and executory.

The execution of the public instrument, without actual delivery of the thing, transfers the ownership from the vendor to the vendee,
who may thereafter exercise the rights of an owner over the same. In the instant case, vendor Roque delivered the owner's certificate
of title to herein private respondent. The provision of Article 1358 on the necessity of a public document is only for convenience,
not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied
in a public instrument. A contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of the thing
bought or payment of the price is not necessary for the perfection of the contract; and failure of the vendee to pay the price after
the execution of the contract does not make the sale null and void for lack of consideration but results at most in default on the part
of the vendee, for which the vendor may exercise his legal remedies.

(2) Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be transferred
(1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who
in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good
faith. In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share to private respondents Repuyan on April 1, 1980.
Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10), represented by the Clerk of
Court pursuant to Section 10, Rule 39 of the Rules of Court, on February 4, 1982. Undoubtedly, this is a case of double sale
contemplated under Article 1544 of the New Civil Code.

Evidently, private respondents Repuyan's caused the annotation of an adverse claim on the title of the subject property on July 21,
1980. The annotation of the adverse claim in the Registry of Property is sufficient compliance as mandated by law and serves notice
to the whole world. On the other hand, petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly, private
respondents who first caused the annotation of the adverse claim in good faith shall have a better right over herein petitioner. As
between two purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not registered
his title even if the latter is in actual possession of the immovable property. Further, even in default of the first registrant or first in
possession, private respondents have presented the oldest title. Thus, private respondents who acquired the subject property in good
faith and for valuable consideration established a superior right as against the petitioner.

(3) Petitioner cannot be considered as a buyer in good faith. If petitioner did investigate before buying the land on February 4,
1982, she should have known that there was a pending case and an annotation of adverse claim was made in the title of the property
before the Register of Deeds and she could have discovered that the subject property was already sold to the private respondents.
It is incumbent upon the vendee of the property to ask for the delivery of the owner's duplicate copy of the title from the vendor.
One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto
in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the
defects in the title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be seen or touched, but rather a
state or condition of mind which can only be judged of by actual or fancied tokens or signs.

TAÑEDO V. CA (January 22, 1996)

FACTS:
Lazaro Tañedo executed a deed of absolute sale in favor of Ricardo Tañedo and Teresita Barrera in which he conveyed a parcel of
land which he will inherit. Upon the death of his father he executed an affidavit of conformity to reaffirm the said sale. He also
executed another deed of sale in favor of the spouses covering the parcel of land he already inherited. Ricardo registered the last
deed of sale in the registry of deeds in their favor.

Ricardo later learned that Lazaro sold the same property to his children through a deed of sale.

ISSUE:
WON the Tañedo spouses have a better right over the property against the children of Lazaro Tañedo.

HELD:
Since a future inheritance generally cannot be a subject of a contract, the deed of sale and the affidavit of conformity made by
Lazaro has no effect. The subject of dispute therefore is the deed of sale made by him in favor of spouses Tañedo and another to
his children after he already legally acquired the property.

Thus, although the deed of sale in favor of private respondents was later than the one in favor of petitioners, ownership would vest
in the former because of the undisputed fact of registration. On the other hand, petitioners have not registered the sale to them at
all.

Petitioners contend that they were in possession of the property and that private respondents never took possession thereof. As
between two purchasers, the one who registered the sale in his favor has a preferred right over the other who has not registered his
title, even if the latter is in actual possession of the immovable property.
CRB vs. CA and HEIRS OF DELA CRUZ

G.R. No. 132161

January 17, 2005

FACTS: The Madrid brothers were the registered owners of Lot A situated in Isabela.

Said lot was subdivided into several lots. Rizal Madrid sold part of his share identified lot A-7 to Gamiao and Dayag by virtue of
a Deed of Sale, to which his brothers offered no objection as evidenced by their Joint Affidavit .The deed of sale was not registered
with the ORD of Isabela. However, Gamiao and Dayag declared the property in their names on a Tax Declaration.

Gamiao and Dayag sold the subject southern half of lot to Teodoro dela Cruz, and the northern half to Hernandez. Thereupon,
Teodoro dela Cruz and Hernandez took possession of and cultivated the portions of the property respectively sold to them (Later
Restituto Hernandez donated the northern half to his daughter. The children of Teodoro dela Cruz continued possession of the
southern half after their father’s death.)

In a Deed of Sale the Madrid brothers conveyed all their rights and interests over lot A-7 to Marquez which the former confirmed.
The deed of sale was registered with the ORD of Isabela.

Subsequently, Marquez subdivided lot A-7 into eight (8) lots. On the same date, Marquez and his spouse, Mercedita Mariana,
mortgaged 4 lots to the Consolidated Rural Bank, Inc. of Cagayan Valley (hereafter, CRB) to secure a loan. These deeds of real
estate mortgage were registered with the ORD.

As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of the mortgages in its favor and the lots were sold
to it as the highest bidder.

The Heirs-now respondents filed a case for reconveyance and damages for the southern portion of Lot No. 7036-A (hereafter, the
subject property) against Marquez and CRB.

The RTC handed down a decision in favor of Marquez. The Heirs interposed an appeal with the CA, which upheld the claim of the
Heirs. Hence, the instant CRB petition.

ISSUE: WON Art. 1544 of the Civil Code (double sale) applicable in this case

HELD: NO.

The petition is denied, and the decision as modified is affirmed. Like the lower court, the appellate court resolved the present
controversy by applying the rule on double sale provided in Article 1544 of the Civil Code. They, however, arrived at different
conclusions. The RTC made CRB and the other defendants win, while the Court of Appeals decided the case in favor of the Heirs.

Article 1544 of the Civil Code reads, thus:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may
have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the
Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the
absence thereof, to the person who presents the oldest title, provided there is good faith.
The provision is not applicable in the present case. It contemplates a case of double or multiple sales by a single vendor. It cannot
be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the
property sold. And even if the sale was made by the same person, if the second sale was made when such person was no longer the
owner of the property, because it had been acquired by the first purchaser in full dominion, the second purchaser cannot acquire
any right.

In the case at bar, 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 to the subject property originated from their acquisition thereof from Rizal Madrid
with the conformity of all the other Madrid brothers. On the other hand, the vendors in the other or later deed were the Madrid
brothers but at that time they were no longer the owners since they had long before disposed of the property in favor of Gamiao
and Dayag.

In a situation where not all the requisites are present which would warrant the application of Art. 1544, the principle of prior
tempore, potior jure or simply “he who is first in time is preferred in right, should apply.” The only essential requisite of this rule
is priority in time; in other words, the only one who can invoke this is the first vendee. Undisputedly, he is a purchaser in good
faith because at the time he bought the real property, there was still no sale to a second vendee. In the instant case, the sale to the
Heirs by Gamiao and Dayag, who first bought it from Rizal Madrid, was anterior to the sale by the Madrid brothers to Marquez.
The Heirs also had possessed the subject property first in time. Thus, applying the principle, the Heirs, without a scintilla of doubt,
have a superior right to the subject property.

Moreover, it is an established principle that no one can give what one does not have¾nemo dat quod non habet. Accordingly, one
can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.53
In this case, since the Madrid brothers were no longer the owners of the subject property at the time of the sale to Marquez, the
latter did not acquire any right to it.

NOTES:

In any event, assuming arguendo that Article 1544 applies to the present case, the claim of Marquez still cannot prevail over the
right of the Heirs since according to the evidence he was not a purchaser and registrant in good faith.

In the instant case, the actions of Marquez have not satisfied the requirement of good faith from the time of the purchase of the
subject property to the time of registration. Found by the Court of Appeals, Marquez knew at the time of the sale that the subject
property was being claimed or “taken” by the Heirs. This was a detail which could indicate a defect in the vendor’s title which he
failed to inquire into. Marquez also admitted that he did not take possession of the property and at the time he testified he did not
even know who was in possession.
San Lorenzo vs CA

FACTS:
On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo Babasanta. The latter made a
downpayment of fifty thousand pesos (P50,000.00) as evidenced by a memorandum receipt issued by Pacita Lu of the same date.
Several other payments totaling two hundred thousand pesos (P200,000.00) were made by Babasanta. He demanded the execution
of a Final Deed of Sale in his favor so he may effect full payment of the purchase price; however, the spouses declined to push
through with the sale. They claimed that when he requested for a discount and they refused, he rescinded the agreement. Thus,
Babasanta filed a case for Specific Performance.
On the other hand, San Lorenzo Development Corporation (SLDC) alleged that on 3 May 1989, the two parcels of land involved,
namely Lot 1764-A and 1764-B, had been sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in
good faith and for value and therefore it had a better right over the property in litigation.
ISSUE:
Who between SLDC and Babasanta has a better right over the two parcels of land?
RULING:
An analysis of the facts obtaining in this case, as well as the evidence presented by the parties, irresistibly leads to the conclusion
that the agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale.
The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos (P50,000.00) from Babasanta as
partial payment of 3.6 hectares of farm lot. While there is no stipulation that the seller reserves the ownership of the property until
full payment of the price which is a distinguishing feature of a contract to sell, the subsequent acts of the parties convince us that
the Spouses Lu never intended to transfer ownership to Babasanta except upon full payment of the purchase price.
Babasanta’s letter dated 22 May 1989 was quite telling. He stated therein that despite his repeated requests for the execution of the
final deed of sale in his favor so that he could effect full payment of the price, Pacita Lu allegedly refused to do so. In effect,
Babasanta himself recognized that ownership of the property would not be transferred to him until such time as he shall have
effected full payment of the price. Doubtlessly, the receipt signed by Pacita Lu should legally be considered as a perfected contract
to sell.
The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of the purchase price. There being an
obligation to pay the price, Babasanta should have made the proper tender of payment and consignation of the price in court as
required by law. Glaringly absent from the records is any indication that Babasanta even attempted to make the proper consignation
of the amounts due, thus, the obligation on the part of the sellers to convey title never acquired obligatory force.
There was no double sale in this case because the contract in favor of Babasanta was a mere contract to sell; hence, Art. 1544 is
not applicable. There was neither actual nor constructive delivery as his title is based on a mere receipt. Based on this alone, the
right of SLDC must be preferred.

CARUMBA vs. CA

G.R. No. L-27587

February 18, 1970

FACTS: In 1955, the spouses Amado Canuto and Nemesia Ibasco, by virtue of a “Deed of Sale of Unregistered Land with
Covenants of Warranty” sold a parcel of land located in Camarines Sur, to the spouses Amado Carumba and Benita Canuto, The
referred deed of sale was never registered in the Office of the RD of Camarines Sur, and the Notary was not then an authorized
notary public in the place.

In 1957, a complaint for a sum or money was filed by Balbuena against Amado Canuto and Nemesia Ibasco before the Justice of
the Peace Court. A decision was rendered in favor of Balbuena and against the defendants.

In 1968, the ex-officio Sheriff issued a “Definite Deed of Sale of the property now in question in favor of Balbuena, which
instrument of sale was registered before the Office of the RD.

The CFI, finding that after execution of the document Carumba had taken possession of the land, and planted thereon:

declared him to be the owner of the property under a consummated sale;


held void the execution levy made by the sheriff, pursuant to a judgment against Carumba’s vendor, Amado Canuto;
and nullified the sale in favor of the judgment creditor, Balbuena.
The CA, without altering the findings of fact made by the court of origin, declared that there having been a double sale of the land
subject of the suit Balbuena’s title was superior to that of his adversary under Article 1544 of the Civil Code of the Philippines,
since the execution sale had been properly registered in good faith and the sale to Carumba was not recorded.

ISSUE: Who has the superior title to the land

HELD: CARUMBA

CA reversed. CFI affirmed.

The SC disagrees with the CA. While under the invoked Article 1544 registration in good faith prevails over possession in the
event of a double sale by the vendor of the same piece of land to different vendees, said article is of no application to the case at
bar, even if Balbuena, the later vendee, was ignorant of the prior sale made by his judgment debtor in favor of petitioner Carumba.
The reason is that the purchaser of unregistered land at a sheriff’s execution sale only steps into the shoes of the judgment debtor,
and merely acquires the latter’s interest in the property sold as of the time the property was levied upon. This is specifically provided
by section 35 of Rule 39 of the Revised Rules of Court, the second paragraph of said section specifically providing that:

Upon the execution and delivery of said (final) deed the purchaser, redemptioner, or his assignee 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, except as against the judgment
debtor in possession, in which case the substitution shall be effective as of the time of the deed … (Emphasis supplied)

While the time of the levy does not clearly appear, it could not have been made prior to 1957, when the decision against the former
owners of the land was rendered in favor of Balbuena. But the deed of sale in favor of Canuto had been executed two years before,
in 1955, and while only embodied in a private document, the same, coupled with the fact that the buyer (petitioner Carumba) had
taken possession of the unregistered land sold, sufficed to vest ownership on the said buyer. When the levy was made by the Sheriff,
therefore, the judgment debtor no longer had dominical interest nor any real right over the land that could pass to the purchaser at
the execution sale. Hence, the latter must yield the land to petitioner Carumba.

Said rule is different in case of lands covered by Torrens titles, where the prior sale is neither recorded nor known to the execution
purchaser prior to the levy; but the land here in question is admittedly not registered under Act No. 496.
Cases Doctrine
Phil. Suburban vs Auditor
General
EDCA vs CA Issues: Whether or not respondent was in good faith.
Whether or not respondent acquired title over the books.
On October 5, 1981, a person
identifying himself as Yes.
Professor Jose Cruz placed an
order by telephone with the Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing
petitioner company for 406 that they had been sold to Cruz, who said he was selling them for a discount because he
books. EDCA prepared the was in financial need. Private respondents are in the business of buying and selling books
corresponding invoice and and often deal with hard-up sellers who urgently have to part with their books at reduced
delivered the books as prices. To Leonor Santos, Cruz must have been only one of the many such sellers she was
ordered, for which Cruz accustomed to dealing with. It is hardly bad faith for any one in the business of buying and
issued a personal check selling books to buy them at a discount and resell them for a profit.
covering the purchase price
of P8,995.65. On October 7, Yes.
1981, Cruz sold 120 of the
books to private respondent Actual delivery of the books having been made, Cruz acquired ownership over the books
Leonor Santos who, after which he could then validly transfer to the private respondents. The fact that he had not yet
verifying the seller's paid for them to EDCA was a matter between him and EDCA and did not impair the title
ownership from the invoice acquired by the private respondents to the books.
he showed her, paid him
P1,700.00. One may well imagine the adverse consequences if the phrase "unlawfully deprived" were
to be interpreted in the manner suggested by the petitioner. A person relying on the seller's
EDCA having become title who buys a movable property from him would have to surrender it to another person
suspicious over a second claiming to be the original owner who had not yet been paid the purchase price therefor.
order placed by Cruz even The buyer in the second sale would be left holding the bag, so to speak, and would be
before clearing of his first compelled to return the thing bought by him in good faith without even the right to
check, made inquiries with reimbursement of the amount he had paid for it.
the De la Salle College where
he had claimed to be a dean It bears repeating that in the case before us, Leonor Santos took care to ascertain first that
and was informed that there the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz
was no such person in its showed her assured her that the books had been paid for on delivery. By contrast, EDCA
employ. Further verification was less than cautious — in fact, too trusting in dealing with the impostor. Although it had
revealed that Cruz had no never transacted with him before, it readily delivered the books he had ordered (by
more account or deposit with telephone) and as readily accepted his personal check in payment. It did not verify his
the Philippine Amanah Bank, identity although it was easy enough to do this. It did not wait to clear the check of this
against which he had drawn unknown drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms
the payment check. 7 EDCA thereon, that the books had been paid for on delivery, thereby vesting ownership in the
then went to the police, which buyer.
set a trap and arrested Cruz
on October 7, 1981. Surely, the private respondent did not have to go beyond that invoice to satisfy herself that
Investigation disclosed his the books being offered for sale by Cruz belonged to him; yet she did. Although the title of
real name as Tomas de la Cruz was presumed under Article 559 by his mere possession of the books, these being
Peña and his sale of 120 of movable property, Leonor Santos nevertheless demanded more proof before deciding to
the books he had ordered buy them.
from EDCA to the private
respondents. It would certainly be unfair now to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence.1âwphi1 We cannot see the justice in
On the night of the same date, transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care,
EDCA sought the assistance when they bought the books from Cruz.
of the police in Precinct 5 at
the UN Avenue, which Note:
forced their way into the store Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual
of the private respondents or constructive delivery thereof.
and threatened Leonor Santos
with prosecution for buying Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the
stolen property. They seized purchaser until he has fully paid the price.
the 120 books without
warrant, loading them in a Art. 559.
van belonging to EDCA, and
thereafter turned them over to
the petitioner.
Alliance Tobacco vs PVTA Issue: Whether or not petitioner’s delivery of bales of tobacco to FVTR perfected the
contract of sale between petitioner and PVTA, so as to make the latter liable for the loss
PVTA, a government said bales while in FVTR’s possession.
corporation entered into a
contract of procuring, Yes.
redrying and servicing with
FVTR for the 1963 tobacco The Civil Code provides that ownerhip of the thing sold shall be transferred to the vendee
trading operation. In June of upon the actual or constructive delivery thereof. There is delivery when the thing sold is
the same year, PVTA also placed in the control and possession of the vendee. Indeed, in tobacco trading, actual
entered into a merchandising delivery plays a pivotal role. The peculiar procedure undergone in trading, which procedure
loan agreement with the was set out at length in both the Santiago and the PVTA vs. De los Angeles cases, reveals
petitioner, a duly that delivery seals the contract of sale because the trader loses not only possession but also
incorporated and authorized control over the shipment. Outlined by the PVTA pursuant to its power "to take over and
tobacco trading entity, assume, and therefore exclusively direct, supervise and control, all functions and operations
whereby PVTA agreed to with respect to the processing, warehousing, and trading of Virginia tobacco, the provisions
lend P25,500 to petitioner for of ally existing law to the contrary notwithstanding," the procedure is observed by everyone
purchase of fluecured involved in the trade.
Virgina tobacco from bona
fide Virginia tobacco farmer- Verily, the tobacco trading procedure conceived and formulated by the PVTA is akin to a
producers. contract of adhesion wherein only one party has a hand in the determination of the terms.
But observance of the procedure more often than not renders a trader at a disadvantage. The
Following month, petitioner moment the shipment is placed in the hands of the PVTA or its representative and it is lost,
shipped to FVTR 96 bales of the trader is left empty-handed. While the flaw may not really be in the procedure itself, the
tobacco (4,800 kilos) covered same may be found in the persons charged with the implementation of the procedure. Some
by Guia No. 1 and 167 bales personnel mishandle the shipment to the detriment of the trader. Some demand grease
(8,350 kilos) covered by Guia money to facilitate the trading process. Sadly, this is what happened in this case.
No. 2 to the Redrying plant.
Only 89 bales from Guia No. Hence, while under an Ideal situation, we would have found merit in respondent PVTA's
2 were graded, weighed and contention that the contract of sale could not have been perfected pursuant to Article 1475
accepted by FVTR, the of the Civil Code because to determine the price of the tobacco traded, the shipment should
remaining 174 bales were not first be inspected, graded and weighed, we find said contention misplaced herein. A strict
graded and weighed because interpretation of the provision of Article 1475 may result in adverse effects to small planters
some officer and employee of who would not be paid for the lost products of their toil. Such situation was what the ruling
FVTR asked money for in PVTA vs. De los Angeles sought to avoid.
separate weighing and
grading of the remaining Equity and fair dealing, the anchor of said case, must once more prevail. Since PVTA had
bales. virtual control over the lost tobacco bales, delivery thereof to the FVTR should also be
considered effective delivery to the PVTA.
The operations of FVTR in
Bauang stopped in October
1963. Plaintiff asked that its
ungraded and unweighed
tobacco be withdrawn from
Redrying plant. PVTA and
FVTR refused because
according to the, those
tobacco were subject to
merchandising loaned and
owned by PVTA.

Unfortunately, the remaining


174 bales with total value of
P28,382 were lost while in
the possession of FVTR.
Having learned of such loss,
petitioner demanded for its
value and application of the
same to its merchandising
loan with PVTA but both the
latter and the FVTR refused
to heed said demands.
The petitioners spouses Jose
Santa Ana, Jr. and Lourdes Sto.
Domingo, owned a 115,850-
square meter parcel of land
situated in barrio Balasing, Sta.
Maria, Bulacan. On 28 May
1954, they sold two (2) separate
portions of the land for
P11,000.00 to the herein
respondent Rosa Hernandez.

After the sale (there were two


other previous sales to different
vendees of other portions of the
land), the petitioners-spouses
caused the preparation of a
subdivision plan, Psd-43187, was
approved on 13 January 1955 by
the Director of Lands. Rosa
Hernandez, however, unlike the
previous vendees, 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; and she,
likewise, refused to vacate the
areas that she had occupied.
Instead, she caused the
preparation of a different
subdivision plan, which was
approved by the Director of
Lands on 24 February 1955. This
plan, Psd-42844, tallied with the
areas that the defendant, Rosa
Hernandez, had actually
occupied.
On 28 February 1955, herein
petitioners-spouses filed suit
against respondent Rosa
Hernandez in the Court of First
Instance of Bulacan, claiming
that said defendant was
occupying an excess of 17,000
square meters in area of what
she had bought from them.
Defendant Rosa Hernandez, on
the other hand, claimed that the
alleged excess, was part of the
areas that she bought.

The first assignment of error must, therefore, be overruled. We now turn to the second.

Despite the incontestable fact that the deed of sale in favor of Rosa Hernandez recites a price in a lump sum (P11,000.00) for both
lots (Annex "C", Complaint, Rec. on App., p. 21), appellants insist that the recited area should be taken as controlling. They combat
the application of Article 1542 of the Civil Code, on the ground that the boundaries given in the deed are indefinite. 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 (Jose Sta. Ana, Jr.)". The Court of Appeals, however, found as a
fact that —

the two parcels of land sold to appellant (i.e., appellee herein, Rosa Hernandez) were identified by the conspicuous boundaries.
(Emphasis supplied)

consisting in a long and continuous pilapil or dike that separated the lands in question from the rest of the property. On the basis of
such findings, that can not be questioned at this stage, for reasons already shown, 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 (Goyena vs. Tambunting, 1 Phil.
490; Teran vs. Villanueva, 56 Phil. 677; Azarraga vs. Gay, 52 Phil. 599; Mondragon vs. Santos, 87 Phil. 471). And this is
particularly true where, as in the case now before this Court, the area given is qualified to be approximate only ("humigit kumulang",
i.e., more or less Rec. on App., p. 22).

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.

If the defendant intended to buy by the meter be should have so stated in the contract (Goyena vs. Tambunting, supra).

The ruling of the Supreme Court of Spain, in construing Article 1471 of the Spanish Civil Code (copied verbatim in our 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.

La venta a cuerpo cierto indudablemente se verifica cuando en el contrato no solo no es precisado el precio singular por unidad de
medida, sino que tampoco son indicadas los dimensiones globales bales del inmueble, pero tambien se verifica cuando aun ng
habiendo sido indicado un precio singular por unidad de medida, sin embargo es especificada la dimension total del inmueble, en
cuyo ultimo caso entre los dos indices en contraste, constituido uno por la falta de un precio singular por unidad de medida, y otro
por la concrecion de las dimensiones globales del unmueble, la Ley da prevalencia al mero y presume que aquella individualizacion
no habia tenido para las partes valor esencial, que solo constituia una superabundancia, y no significa que las partes hayan
convenido aquel precio global solo en cuanto el inmueble tuviese efectivamente aquellas dimensiones totales, siendo de estimar
que esta es una presuncion absoluta, contra la cual ni el comprador ni el vendedor pueden articular prueba contraria.

Por tanto, ni el comprador ni el vendedor pueden pretender una disminucicion o, respectivamente un suplemento de precio, cuando
las dimensiones globales del unmueble resulten despues mayores o menores de las indicadas en el contrato, aunque aduzcan que
solo en tanto han convenido el aquel precio en cuanto creian que las dimensiones de la cosa fueran las precisadas en el contrato.
(Tribunal Supreme de España, Sent. de 26 Junio 1956; Rep. Jurisp. Aranzadi, 2.729) (Emphasis supplied)

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.