• Sales

Case Ruling/ Doctrine

Carbonell v CA • The buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of Article 1544 of the New Civil Code
• The second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith recorded
• Under the second paragraph, good faith must characterize the act of anterior registration.
• If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, prior registration in good faith is a pre-condition to support title.
• Where the first buyer was not aware any sale to another person as there was no such sale, the buyer's prior purchase of the land was made in good faith
• Her good faith subsisted and continued to exist when she recorded her adverse claim four days prior to the registration of the
• By reason thereof, she has superior right to the land in question.
Dagupan • Where one of two conflicting sales of a piece of land was executed before the land was registered
Trading v • While the other was an execution sale in favor of the judgment creditor of the owner made after the same property had been registered
Macam • Section 35, Rule 39 of the Rules of Court to the effect that, upon the execution and delivery of the final certificate of sale in favor of the purchaser of land sold in an execution sale, such
purchaser "shall be substituted to and acquire all the rights, title, interest and claim of the judgment debtor to the property as of the time of the levy"
David v Bandin • The defense of having purchased the property in good faith may be availed of only where registered land is involved and the buyer had relied in good faith on the clear title of the registered
owner
• One who purchases an unregistered land does so at his peril.
• His claim of having bought the land in good faith, i.e. without notice that some other person has a right to, or interest in, the property, would not protect him if it turns out that the seller does
not actually own the property
Olivares v • It would be more in keeping with substantial justice if the controversy between the parties be resolved on the merits rather than on a procedural technicality in the light of the express
Gonzales mandate of the Rules that they be "liberally construed in order to promote their object and to assist the parties in obtaining just, speedy and inexpensive determination of every action and
proceeding."
Caram v • 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
Laureta consequent to such failure.
Cruz v Caban • The governing principle here is prius tempore, potior jure (first in time, stronger in right)
• Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's right except only as provided by the Civil Code and that is where the second buyer first registers in good
faith the second sale ahead of the first.
• The second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by
law."
• KNOWLEDGE OF PRIOR SALE TAINTS SECOND PURCHASER'S PRIOR REGISTRATION WITH BAD FAITH
Valdez v Ca • The rule is clear that a prior right is accorded to the vendee who first recorded his right in good faith over an immovable property
Nuguid v Ca • An innocent purchaser for value is protected such that when land has already passed into the hands of an innocent purchaser for value, reconveyance of the same can no longer be made.
• SALE OF IMMOVABLE PROPERTY TO DIFFERENT VENDEES; OWNERSHIP BELONGS TO VENDEE WHO FIRST RECORDED THE SALE.
Radiowealth • A person dealing with registered land is not required to go behind the register to determine the condition of the property
Finance v • He is only charged with notice of the burdens on the property which are noted on the face of the register or certificate of title.
Palileo • Under Act No. 3344, registration of instruments affecting unregistered lands is "without prejudice to a third party with a better right".
Tanedo v CA • 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
Occena v • What is material is whether the second buyer first registers the second sale in good faith, i.e. without knowledge of any defect in the title of the property sold
Esponilla • The defense of indefeasibility of a Torrens title does not extend to a transferee who takes the certificate of title in bad faith, without notice of a flaw.
Moles v IAC • It is generally held that in the sale of a designated and specific article sold as secondhand, there is no implied warranty as to its quality or fitness for the purpose intended, at least where it is
subject to inspection at the time of the sale.
• The general rule, however, is not without exceptionsArt. 1562. In a sale of goods, there is an implied warranty or condition as to the quality or fitness of the goods, as follows:
• (1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are acquired
• And it appears that the buyer relies on the seller's skill or judgment
Engineering • The remedy against violations of the warranty against hidden defects is either to withdraw from the contract (redhibitory action) or to demand a proportionate reduction of the price (accion
and Machinery quanti minoris), with damages in either case
Corp v CA
Sonny Lo v CA • The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale,
• Unless it should have been sold as doubtful; but not for the solvency of the debtor,
• Unless it has been so expressly stipulated or
• Unless the insolvency was prior to the sale and of common knowledge rom the above provision, petitioner, as vendor or assignor, is bound to warrant the existence and legality of the credit at
the time of the sale or assignment
• When Jomero claimed that it was no longer indebted to petitioner since the latter also had an unpaid obligation to it, it essentially meant that its obligation to petitioner has been extinguished
by compensation. In other words, respondent alleged the non-existence of the credit and asserted its claim to petitioner's warranty under the assignment. Therefore, it behooved on petitioner
to make good its warranty and paid the obligation.
Catungal v • Paragraph 1 (b) of the Conditional Deed of Sale, stating that respondent shall pay the balance of the purchase price when he has successfully negotiated and secured a road right of way, is
Rodriguez not a condition on the perfection of the contract nor on the validity of the entire contract or its compliance as contemplated in Article 1308.
• It is a condition imposed only on respondent's obligation to pay the remainder of the purchase price. In our view and applying Article 1182, such a condition is not purely potestative as
petitioners contend.
• It is not dependent on the sole will of the debtor but also on the will of third persons who own the adjacent land and from whom the road right of way shall be negotiated.
Ramos v CA • REGARDED AS EQUITABLE MORTGAGE WHEN GIVEN AS SECURITY FOR A LOAN. — The contracts purport to be sales with pacto de retro; however, since the same were actually executed in
consideration of the aforesaid loans said contracts are indubitably equitable mortgages
• The rule is firmly settled that whenever it is clearly shown that a deed of sale with pacto de retro, regular on its face, is given as security for a loan, it must be regarded as an equitable
mortgage.
De Leon v • However, while in ordinary sales for reasons of equity a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks one's conscience as to justify
Salvador the courts to interfere, such does not follow when the law gives to the owner the right to redeem, as when a sale is made at public auction, upon the theory that the lesser the price the easier
it is for the owner to effect the redemption.
• When there is the right to redeem, inadequacy of price should not be material, because the judgment debtor may reacquire the property or also sell his right to redeem and thus recover the
loss he claims to have suffered by reason of the price obtained at the auction sale.
Flores v So • The pacto de retro sale between Gallano and Flores was executed when the Civil Code of Spain was still in effect. It is provided in Art 1509 thereof that if the vendor does not comply with the
provisions of Art 1518 (i.e. to return the price, plus expenses) the vendee shall acquire irrevocably the ownership of the thing sold.
Alonzo v IAC • The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them
• And there is no doubt either that the 30-day period began and ended during the 14 years between the sales in question and the filing of the complaint for redemption in 1977, without the
co-heirs exercising their right of redemption
• These are the justifications for this exception
Lao v CA • CASE AT BAR. — Applying the preceding principles to the factual milieu of this case, we find the agreement between the private respondent and N. Domingo Realty & Housing Corporation, as
represented by petitioner, manifestly one of equitable mortgage.
• First, possession of the property in the controversy remained with Petitioner Manuel Lao who was the beneficial owner of the property, before, during and after the alleged sale
• Second, the option given to Manuel Lao to purchase the property in controversy had been extended twice through documents executed by Mr. Tan Bun Uy, President and Chairman of the
Board of Better Homes Realty & Housing Corporation
• Third, unquestionably, Manuel Lao, and his brother were in such "dire need of money" that they mortgaged their townhouse units registered under the name of N. Domingo Realty
Corporation, the family corporation put up by their parents, to Private Respondent Better Homes Realty & Housing Corporation.
• Based on the conduct of the petitioner and private respondent and even the terminology of the second option to purchase, we rule that the intent and agreement between them was
undoubtedly one of equitable mortgage and not of sale
Lanuza v De • Between the unrecorded deed of Reyes and Navarro which we hold to be an equitable mortgage, and the registered mortgage of De Leon, the latter must be preferred. Preference of
Leon mortgage credits is determined by the priority of registration of the mortgages, following the maxim "Prior tempore potior jure"
Capulong v Ca • Where any of the circumstances defined in Article 1602 of the Civil Code is present, a contract of sale with right to repurchase is presumed to be an equitable mortgage
Solid Homes v • In a contract of sale with pacto de retro, the vendee has a right to the immediate possession of the property sold, unless otherwise agreed upon. It is basic that in pacto de retro sale, the title
CA and ownership of the property sold are immediately vested in the vendee a retro, subject only to the resolutory condition of repurchase by the vendor a retro within the stipulated period.
Primary • Whenever a piece of rural land not exceeding one hectare is alienated, the law grants to the adjoining owners a right of redemption except when the grantee or buyer does not own any other
Structures Corp rural land. I
v Valencia • In order that the right may arise, the land sought to be redeemed and the adjacent property belonging to the person exercising the right of redemption must both be rural lands. If one or
both are urban lands, the right cannot be invoked. Here, the one or both are urban lands, the right cannot be invoked.
• EXCEPTION; WHEN BUYER DOES NOT OWN ANY OTHER RURAL LAND. — Article 1621 of the Civil Code expresses that the right of redemption it grants to an adjoining owner of the property
conveyed may be defeated if it can be shown that the buyer or grantee does not own any other rural land. The appellate court, sustaining the trial court, has said that there has been no
evidence proffered to show that respondents are not themselves owners of rural lands for the exclusionary clause of the law to apply
Etcuban v CA • So long, therefore, as the latter is informed in writing of the sale and the particulars thereof, the 30 days for redemption start running, and the redemptioner has no real cause to complain.
• “A sworn statement or clause in a deed of sale to the effect that a written notice of sale was given to possible redemptioners or co-owners might be used to determine whether an offer to
redeem was made on or out of time, or whether there was substantial compliance with the requirement of said Art 1623.”
Guzman, • It was not necessary to secure the approval by the probate court of the Contract of Lease because it did not involve an alienation of real property of the estate nor did the term of the lease
Bocalin & Co. v exceed one year so as to make it fall under Art 1878(8) of the Civil Code
Bonnevie • Only if par 20 of the Contract of Lease was activated and the said property was intended to be sold would it be required of the administratrix to secure the approval of the probate court
pursuant to rule 89 of the rules of court
Yak Seng Co. v • The mere occupancy of the premises for a number of years, by itself is not sufficient
CA • The circumstance that the petitioner has paid its rentals religiously during the past twenty years is also not sufficient to justify the extension it demands
• Neither are the substantial improvements it allegedly made on the leased premises nor the difficulty of finding another place of business, on which it has not submitted any evidence at all.
• As the rental was paid monthly and the term had not been expressly agreed upon, the lease was understood under Article 1687 to be terminable from month to month. At the time the
petitioner was asked to vacate the leased premises, the lease contract had already expired and therefore, could no longer be extended.
• If the contract of lease had not yet expired, its extension would still be subject to the sound discretion of the court and was by no means obligatory upon it as a merely ministerial duty.
Clutario v CA • The acceptance by the lessor of the payment by the lessee of the rentals in arrears does not constitute a waiver of the default in the payment of rentals as a valid cause of action for
ejectment
• Proof of any one of the factors enumerated in Section 5 of B.P. Blg. 25 (1979) is sufficient cause for judicial ejectment of a lessee.
• Having proved one of such grounds, private respondents may legally eject petitioners without having to prove the other grounds for ejectment
Yap v Cruz • There is no question that private respondent has not effectively relinquished his leasehold rights over the premises in question in view of the failure of negotiations for the sale of the goodwill.
Clearly, the transfer of the leasehold rights is conditional in nature and has no force and effect if the condition is not complied with
• The lack of proper notice or demand to vacate upon the private respondent is clearly evident
• In the absence of such notice, the lease of private respondent continues to be in force and can not be deemed to have expired as of the end of the month automatically
United Realty • Since the lease agreement in question is for a definite period it follows that petitioner has a right to judicially eject private respondent from the premises as an exception to the general rule
Corp v CA provided for in Section 4 of P.D. No. 20
• Because of the failure of the private respondent to pay the increased rental demanded by petitioner, petitioner elected to terminate the contract and asked the private respondent to vacate
the premises
• A lease contract may be terminated at the end of any month, which shall be deemed terminated upon the refusal to pay the increased monthly rental demanded by the petitioner, provided the
same is not exhorbitant.
Legar • The lease over the subject property was on a month-to-month basis, and that there was proper notice of non-renewal of contract and demand for vacation of premises made by petitioners on
Management & private respondent. Unquestionably, therefore, the verbal lease agreement entered into by private respondent and petitioners' father and predecessor-in-interest has been validly terminated,
Realty Corp v in which case there is sufficient cause for ejectment under Section 5(f) of Batas Pambansa Blg. 877
CA • The determination of the period of a lease agreement can still be made in accordance with said Article 1687, and that in a month to month lease situation, when petitioners (lessor) gave
private respondent (lessee) notice to vacate the premises in question, the contract of lease is deemed to have expired as of the end of the month.