1.

Chart distinguishing rules on double sale of registered land and unregistered land

Rules On Double Sale Of Immovables

Registered Lands (Civil Code, Art. 1544)
Ownership shall be transferred to the party
who shall:
1. First record to in the Registry of
Property in good faith; or
2. First to have possession in good faith;
3. Person who present the oldest title in
good faith.
Unregistered Lands(Act No. 3344)
Ownership shall be transferred to the party
who shall have a better right.
Registration of instruments affecting
unregistered lands is without prejudice to a
third party with a better right. Mere
registration of a sale in one’s favor does not
give him any right over the land if the vendor
was not the owner anymore even if the earlier
sale was unrecorded

One who purchases real property which is in actual possession of others should, at least, make
some inquiry concerning the rights of those in possession. The actual possession by people
other than the vendor should, at least, put the purchaser upon inquiry. He can scarcely, in the
absence of such inquiry, be regarded as a bona fide purchaser as against such possessions.
(Rep. vs. CA, 102 SCRA 331; Conspecto vs. Fuerto, 31 Phil. 144). The rule of caveat emptor
requires the purchaser to be aware of the supposed title of the vendor and one who buys
without checking the vendor’s title takes all the risks and losses consequent to such failure.
(Caram vs. Laureta, 103 SCRA 16 [1981]; Consolidated Rural Bank (Cagayan Valley) Inc. vs. CA,
et al, G.R. No. 132161, January 17, 2005; see also Sps. Mathay vs. Court of Appeals, 356 Phil.
870 [1998]).

Registration of the second buyer under Act 3344, providing for the registration of all
instruments on land neither covered by the Spanish Mortgage Law nor the Torrens System (Act
496), cannot improve the standing of a party since Act 3344 itself expresses that registration
thereunder would not prejudice prior rights in good faith (see Carumba vs. Court of Appeals, 31
SCRA 558). Registration, however, by the first buyer under Act 3344 can have the effect of
constructive notice to the second buyer that can defeat his right as such buyer in good faith
(see Arts. 708-709, Civil Code; see also Revilla vs. Galindez, 107 Phil. 480; Taguba vs. Peralta,
132 SCRA 700). Art. 1544 has been held to be inapplicable to execution sales of unregistered
land, since the purchaser merely steps into the shoes of the debtor and acquires the latter’s
interest as of the time the property is sold. (Carumba vs. Court of Appeals, 31 SCRA 558; see
also Fabian vs. Smith, Bell & Co., 8 Phil. 496), (Remalante vs. Tibe, 158 SCRA 138; Sps. Noel &
Julie Abrigo vs. De Vera, G. R. No. 154409, June 21, 2004).

2. Express Trust v. Implied Trust

A trust is a fiduciary relationship with respect to property which involves the existence of
equitable duties imposed upon the holder of the title to the property to deal with it for the
benefit of another
A person who establishes a trust is called the trustor while the one whose confidence is
reposed is the trustee, and the person for whose benefits the trust has been created is
referred to as the beneficiary
It is the right to the beneficial enjoyment of property, the legal title to which is vested in
another
A trust is defined as a right enforceable solely in equity, to the beneficial enjoyment of property, the
legal title of which is vested in another

Express trusts are created by the intention of the trust or of the parties, while implied trust is
deducible from the nature of the transaction (resulting trust), or when the law induces the
intent in the transaction and hence, the trust is established by operation of law (constructive
trust). The former requires no particular words for the creation of an express trust, it being
sufficient that a trust is clearly intended. The latter may be proved by oral evidence.

Express trusts are imprescriptible such that a property held in trust can be recorded at any
time, except if there is repudiation of the trust, in such case an action for reconveyance shall be
10 years. Reconveyance on implied trust prescribes in 10 years from the time the trust is
created if plaintiff is not in possession thereof. If there is possession, the action does not
prescribe.

Prescription

1. Sunga v. De Guzman
2. Ledesma v.CA

Obligations: Interest

3. Lara’s Gifts and Decors Inc. v. Midtown Industrial Sales

Obligations: Quasi Delict

4. Singson v. BPI
5. Barredo v. Garcia
6. Calalas v. CA
7. Ramos v. CA – Res Ipsa Loquitur
8. Gotesco v. Chatto – Fortuitous Event
9. Afialda v. Hisole – Assumption of Risk
10. MVRS v. Islamic – Torts with independent Civil Action
11. Dulay v. CA – Torts with independent Civil Action
12. Villegas v. CA – Civil and Criminal Liability

Civil Obligations

13. Catungal v. Rodriguez – Kinds of Conditions

14. Radiowealth Finance v. Sps. Del Rosario - Delay
15. Tible v. Aquino – Mutuality/Consensuality Art. 1182
16. CPU v. CA – Art 1180 – Art. 1197
17. Florentino v. Supervalue – Obligation w/ a penal clause
18. Dagohoy Enterprises v. Ponce – Loss of period granted to a debtor (1198)
19. Inchausti v. Yulo – Solidary Debtors Art. 1222
20. Reparations Commissions v. Universal Deep Sea Fishing Corp. – Extinguishment
21. La Tondena v. Alto Surety – Novation
22. Magdalena Estates v. Rodriguez – Novation
23. Cochingyan v. R&B Estates – Novation
24. Heirs of Franco v. Sps. Gonzales – Novation

Contracts

25. Bagaso v. CA – Art. 1350

26. Francisco Realty v. CA – Invalid stipulations
27. Dilag v. IAC – Simulated sales
28. United General Industries v. Paler – Void contracts
29. Marin v. Adel – Void contracts
30. Sps. Angel v. Aledo – Void contracts

Trust

31. Nakpil v IAC

32. Yared v. Tiongco
Sales

33. Radiowealth v Palileo - Double Sale

34. Balatbat v. CA - Double Sale
35. Rosaroso v. Soria - Double Sale
36. Geromo et at v. La Paz Housing and Development – Warranty v. Hidden Defects
37. Martires v. Chua – Equitable Mortgage

Respondent borrowed from petitioners a sum of money, secured by a real estate mortgage over a
property. Respondents failed to pay and, without foreclosure of the mortgage, the ownership of the
subject lots were transferred in the name of petitioners through a Deed of Transfer. Thereafter,
respondents filed a complaint, praying for the annulment of the contract of mortgage on the ground
that the interest rates imposed are unjust and exorbitant. 

Issue: W/N the Deed of Transfer is defective

Held: Yes. An equitable mortgage is that which, although lacking in some formality, or form or words, or
other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real
property as security for a debt, there being no impossibility nor anything contrary to law in this intent.
Article 1602 provides that a contract shall be presumed to be an equitable mortgage where it may be
fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a
debt or the performance of any other obligation.

Here, it has been established that the intent of both petitioners and respondent is that the subject
property shall serve as security for the latter's obligation to the former. The circumstances surrounding
the execution of the Deed of Transfer would show that the said document was executed to circumvent
the terms of the original agreement and deprive respondent of her mortgaged property without the
requisite foreclosure. Hence, the Deed of Transfer is defective.

38. Barcellano v. Baas – Legal Redemption

Medina offered his lot for sale to the respondents. However, Medina sold the property to herein
petitioner. Barangay conciliation failed. Respondents filed an action for Legal Redemption. Petitioner
opposed contending that respondent failed to exercise her right within the period provided by law, and
that the notice required under Art. 1623 is no longer required because there was an actual notice to the
petitioner.

Issue: W/N there has been a valid notice to the petitioners

Held: No. The right of legal pre-emption or redemption shall not be exercised except within thirty
days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The
purpose is to remove all uncertainty as to the sale, its terms and its validity, and to quiet any doubts that
the alienation is not definitive.
Here, nothing in the records and pleadings submitted by the parties shows that there was a written
notice sent to the respondents. Without a written notice, the period of thirty days within which the right
of legal pre-emption may be exercised, does not start.

39. Malayan Insurance v. Alberto – Subrogation

The respondent was held liable in a car accident. The petitioner, an insurance company, paid the victims
based on their contract and thereafter sent demand letters to the respondent. Respondent refused to
pay alleging that there was no proper subrogation.

Issue: W/N there was a valid subrogation.

Subrogation is the substitution of one person by another with reference to a lawful claim or right, so
that he who is substituted succeeds to the rights of the other in relation to a debt or claim, including its
remedies or securities. The principle covers a situation wherein an insurer has paid a loss under an
insurance policy is entitled to all the rights and remedies belonging to the insured against a third party
with respect to any loss covered by the policy. Payment to the insured operates as an equitable
assignment to the insurer of all the remedies that the insured may have against those liable. Basing its
roots from equity, the right of subrogation is not one based on any privity of contract.

Here, since the claim check voucher and the Release of Claim and Subrogation Receipt are undisputed
evidence on record, there is a valid subrogation.

Partnerships

40. Angeles v. Sec. of Justice

Facts: Angeles filed a case for estafa against respondent Mercado. Angeles claimed that Mercado
convinced them to enter into a contract of antichresis, covering parcels of land lanzones trees; Mercado
would administer the lands and complete the documentation.

Thereafter, Angeles claim that they discover that Mercado had put the contract of sanglaang-
perde  over the subject land under the names of both parties. Mercado claimed that there exists an
industrial partnership, but Angeles denied it. It has been admitted that there was a written agreement
wherein Angeles would provide capital and the profit would be divided evenly.

Issue: W/N a partnership existed even without proper registration;

Held: Yes. Art. 1771 provides that a partnership may be constituted in any form, except where
immovable property or real rights are contributed thereto, in which case a public instrument shall be
necessary. However, it must be noted that mere failure to register the contract of partnership with the
SEC does not invalidate a contract that has the essential requisites of a partnership. The purpose of
registration of the contract of partnership is to give notice to third parties. Failure to register the
contract of partnership does not affect the liability of the partnership and of the partners to third
persons. Neither does such failure to register affect the partnership’s juridical personality. A partnership
may exist even if the partners do not use the words "partner" or "partnership."
Here, Angeles admit to facts that prove the existence of a partnership: a contract showing a sosyo
industrial or industrial partnership, contribution of money and industry to a common fund, and division
of profits between the Angeles spouses and Mercado.

The Angeles spouses’ position that there is no partnership because of the lack of a public instrument
indicating the same and a lack of registration with the Securities and Exchange Commission ("SEC") holds
no water.

Agency

41. BPI v. Laingo

Facts: The son of respondent Laingo opened an account with petitioner BPI with an automatic insurance
policy against disability or death issued by petitioner FGU. The son died in an accident. Laingo's was
accommodated by BPI while withdrawing P995,000 from the account of his son,

Years later, Laingo requested for the processing of the insurance claim. However, FGU denied it on the
ground that the notice of claim should have filed within 3 calendar months from the death

Issue: W/N the respondent is bound by the 3 calendar month deadline for filing a written notice of claim

Held: No. The basis of an agency is representation. It may be established in the same way as any other
fact, either by direct or circumstantial evidence. Agency may even be implied from the words and
conduct of the parties and the circumstances of the particular case. For an agency to arise, it is not
necessary that the principal personally encounter the third person with whom the agent interacts. The
law in fact contemplates impersonal dealings where the principal need not personally know or meet the
third person with whom the agent transacts: precisely, the purpose of agency is to extend the
personality of the principal through the facility of the agent.

Here, when the account was opened with BPI, the son directly communicated with BPI, BPI is the agent
of FGU. BPI facilitated the processing of the insurance coverage without any other action on the sons’s
part. Moreover, the son did not interact with FGU directly and everything was coursed through BPI.

The son’s death was properly communicated with BPI. As an agent of FGU, it has the duty of advising the
respondent of the insurance benefit. Such failure cannot be attributed to the respondent. Hence, the
respondent cannot be made liable for missing the period of filing claims

Guaranty

42. Buenaventura v. Metropolitan Bank

Petitioner executed a Promissory Note in favor of the respondent. Despite demands, there remained
unpaid. Consequently, respondent filed an action for recovery. Petioner alleged that she is a mere
guarantor and cannot be compelled to pay unless and until the respondent shall have exhausted all the
properties of the guarantee.

Issue: W/N the promissory notes are intended as mere guaranty.

Held: No. A contract of guaranty is one where a person, the guarantor, binds himself or herself to the
creditor, to fulfill the obligation of the principal debtor in case of latter’s failure. It cannot be presumed,
but must be express and in writing to be enforceable, especially as it is considered a special promise to
answer for the debt, default or miscarriage of another.

Here, the PNs provide, in clear language, that the petitioner is primarily liable thereunder. Moreover,
said PNs do not state that the third party, who is not even privy thereto, is the one primarily liable and
that the petitioner is merely a guarantor. In other words, it does not appear that the PNs were executed
as guaranty for the payment of the subject checks.

Moreover, a guarantor may bind himself for less, but not for more than the principal debtor, both as
regards the amount and the onerous nature of the conditions. Here, the amounts of the PNs are more
than those of the subject checks (totaling P2,897,000.00). And unlike the subject checks, the PNs
provide for interest, CESF and penalty.

Suretyship

43. Stronghold Insurance v Tokyu Construction

Respondent entered into a subcontract agreement with Gabriel to construct STP and SDS. Gabriel
advanced payments from petitioner’s surety bonds, to guarantee its repayment to the respondent.
Gabriel failed to deliver which prompted the respondent and Gabriel to modify their agreement –
reducing the contract price. Gabriel still continued to failed to comply.

Issue: W/N the surety agreement were of no force and effect because of the modification.

Held: No. In a contract of surety, a surety is released from its obligation when there is a material
alteration of the principal contract in connection with which the bond is given, such as a change which
imposes a new obligation on the promising party, or which takes away some obligation already imposed,
or one which changes the legal effect of the original contract and not merely its form. However, a surety
is not released by a change in the contract, which does not have the effect of making its obligation more
onerous.

Here, the revision did not make the obligations of both the principal and the surety more onerous.
Petitioner never assumed addeditional obligations, nor were there any additional obligations imposed,
due to the modification of the terms of the contract. Failure to receive any notice of such change did
not, therefore, exonerate petitioner from its liabilities as surety.

A contract of suretyship is an agreement whereby a party, called the surety, guarantees the
performance by another party, called the principal or obligor, of an obligation or undertaking in favor of
another party, called the obligee. By its very nature, under the laws regulating suretyship, the liability of
the surety is joint and several but is limited to the amount of the bond, and its terms are determined
strictly by the terms of the contract of suretyship in relation to the principal contract between the
obligor and the obligee.

Here, the bonds issued by petitioner guaranteed the full and faithful compliance by Gabriel of its
obligations in subcontract agreement. These guarantees made by petitioner gave respondent the right
to proceed against the former following Gabriel's non-compliance with her obligation.

In a contract of surety, the creditor accepts the surety's solidary undertaking to pay if the debtor does
not pay. Such acceptance, however, does not change the creditor's relationship with the principal
debtor nor does it make the surety an active party to the principal creditor-debtor relationship. In other
words, the acceptance does not give the surety the right to intervene in the principal contract. The
surety's role arises only upon the debtor's default, at which time, it can be directly held liable by the
creditor for payment as a solidary obligor.

The surety is considered in law as possessed of the identity of the debtor in relation to whatever is
adjudged touching upon the obligation of the latter. Their liabilities are so interwoven as to be
inseparable. Although the contract of a surety is, in essence, secondary only to a valid principal
obligation, the surety's liability to the creditor is direct, primary, and absolute; he becomes liable for the
debt and duty of another although he possesses no direct or personal interest over the obligations nor
does he receive any benefit therefrom.39