THE
LAW ON SALES
Outline 1: Delivery in Sale Contracts, Contract to Sell or of Sale
and Double Sales
Outline 2: (See Older Posts) Redemption and Warranties in
Sales Contracts
OUTLINE/ LECTURE ON
ISSUES ON DELIVERY IN SALES CONTRACTS
By: Atty. Eduardo
T. Reyes, III
(Prepared for Law
4-A,
University of San
Agustin Law School,
Civil Law
Review II, SY 2017-2018)
I. Foundational Considerations in Sales Transactions
|
DIMENSION
1
|
DIMENSION
2
|
DIMENSION
3
|
|
Negotiation
|
Perfection;
Meeting of the Minds
|
Consummation
|
|
Contract
to Sell
|
Conditional
Sale/ Absolute Sale
|
Delivery
|
|
Positive
Suspensive Condition
|
Rescission
(Arts. 1191 & 1592, New Civil Code)
|
|
|
Effect
of Maceda Law
|
-Contract to Sell, Conditional Sale & Absolute Sale;
Distinguished
- Rescission (Check discussion on Art 1191 on need for
Judicial Rescission and exception thereto in the lecture hand-out in
Obligations & Contracts).
- Effect of Maceda Law
Article 1478. The parties may stipulate that ownership in
the thing shall not pass to the purchaser until he has fully paid the price.
Article 1479. A promise to buy and sell a determinate
thing for a price certain is reciprocally demandable.
An accepted unilateral promise to buy or to sell a
determinate thing for a price certain is binding upon the promissory if the
promise is supported by a consideration distinct from the price.
In Ong v. Court of Appeals[1], these different
kinds of sales transactions were distinguished in this fashion, viz:
“In a contract of sale, the title to
the property passes to the vendee upon the delivery of the thing sold; while in
a contract to sell, ownership is, by agreement, reserved in the vendor and is
not to pass to the vendee until full payment of the purchase price. In a
contract to sell, the payment of the purchase price is a positive suspensive
condition, the failure of which is not a breach, casual or serious, but a
situation that prevents the obligation of the vendor to convey title from
acquiring an obligatory force. The non-fulfillment of the condition of full
payment rendered the contract to sell ineffective and without force and effect.
It must be stressed that the breach contemplated in Article 1191 of the New
Civil Code is the obligor’s failure to comply with an obligation already
extant, not a failure of a condition to render binding that obligation. Failure
to pay, in this instance, is not even a breach but merely an event which
prevents the vendor’s obligation to convey title from acquiring binding force.”
“A contract to sell may not even be considered as a conditional
contract of sale where the seller likewise reserves title to the property
subject of the sale until the fulfillment of a suspensive condition, because in
a conditional contract of sale, the first element of consent is present,
although it is conditioned upon the happening of a contingent event which may
or may not occur. If the suspensive condition is not fulfilled, the perfection
of the contract of sale is completely abated. However, if the suspensive
condition is fulfilled, the contract of sale is thereby perfected, such that if
there had already been previous delivery of the property subject of the sale to
the buyer, ownership thereto automatically transfers to
the buyer by operation of law without any further act of having to be performed
by the seller.
In contract to sell, upon the fulfillment of the suspensive condition which is
the full payment of the purchase price, ownership will not automatically
transfer to the buyer although the property may have been previously deliverd
to him. The prospective buyer has to convey title to the prospective buyer by
entering into a contract of absolute sale.[2]”
Art.1537. the vendor is bound to deliver the thing sold and its accessions and
accessories in the conditions in which they were upon the perfection of the
contract.
All the fruits shall pertain to the vendee from the day on which the contract
was perfected.
II. TRADITION OR DELIVERY – Art. 1497 When the thing sold “
placed in the contract and possession of the vendee.
1497 to 1501
Actual vs. Constructive delivery
Art. 1498 – Were the execution of the
deed of conveyance in a public instrument is equivalent to the delivery of the
property. (Sabio v. International Corporate Bank, 364SCRA 365
[2001])
Exceptions: 1. “when there is a stipulation
in the instrument to the contrary”.
2. Doctrine in Addison V. Felix (38 Phil. 404 (1918). “ It
is the duty of the seller to deliver the thing sold, and that symbolic delivery
by the execution by the execution of public instrument is equivalent to actual
delivery only when the thing sold is subject to the control of the seller,
so that “at the moment of sale, its material delivery could have been
made.”
- Doctrine reiterated in Power Commercial and
Industrial Corp. v. CA, 274 SCRA 597, (1997).
Exception to Exception: If the sale had been made under the
express agreement of imposing upon buyer the obligation of
recovering possession from third part possessors.
I. Performance or Consummation
Art. 1458, By the Contract of Sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver the determinate thing, and
the other to pay therefore a price certain in money or its equivalent.
Art. 1495, The vendor is bound to transfer the ownership of and deliver, as
well as warrant the thing which is the object of the sale.
Art. 1163, every person obliged to give a determinate thing is also obliged to
take care of it with the proper diligence of a good father , of a family,
unless the law on the stipulation of the parties requires anther standard of
care.
(Buyer and Sale)
Art. 1164, The creditors has the
right to the fruit of the thing from the time n the obligation to deliver
arises. However, he shall acquire no real right over it until the same has been
delivered to him.
(Doctrine of Self – Help)
Consequence of Delivery: Art. 429 the owner or lawful possessor
of a thing has the right to exclude any person from the enjoyment and disposal
thereof. For this purpose, he may use such force as may be reasonably necessary
to repel or prevent an actual or threatened unlawful physical invasion or
usurpation of his property.
III. Symbolic Delivery, Constitution
Possessorium, Tradition Brevi Manu, Tradition Longa Manu.
IV. Delivery by Negotiable Document
of Title
V. Delivery through Courier
5.1
Art. 1523 – Delivery is allowed for the contract to be made to a carrier –
equivalent to delivery to buyer.
Exception:
Art.
1503 (1) (2) (3)
(1) Sale with Reservation
of Title.
(2) Goods are shipped
and Bill of Lading is Deliverable to seller or his agent (Implies that the
title is reserved by seller.)
(3) Goods are Shipped
and Bill of Lading is deliverable to buyer or his agent BUT possess of bill of
lading is retained by seller.
5.2 F. A. S. Sales – seller
pays all charges and is subject to risk until the goods are placed
“alongside the vessel.”
F. O.
B. – Free or Board – seller shall bear all expenses
FOB at the point of Shipment
FOB at the point of destination
Then ownership is deemed transferred
to owner.
C.I. F. Cost
Insurance Freight
- Buyer pays CIF – Delivery and Carrier is enough.
VI. Completeness of Delivery
Art. 1522 –
Quantity Issues of Sale and Goods (Personal Property)
(a) Seller delivers quantity
less than promised
a.1 buyer may reject
a.2 if buyer accept or retains he must pay the full price.
(b) if however buyer has used or
disposed of goods delivered before he knows that seller is not going to perform
(c) seller delivers larger Quantity
- buyer may accept goods covered by contract and reject the
rest
- if buyer accepts whole goods, he must pay based on
contracts rates.
- if indivisible, buyer may reject whole of goods.
(d) if Mixed: those covered by contracts and those not described.
- buyer may accept and reject those not described
- if indivisible, buyer may reject the goods altogether.
VII. Sale of Immovable
Art. 1539
- Sale with statement
of area per unit or measure
- Seller is obliged
to deliver that area stated in contract
- If not possible
buyer may choose: proportional reduction of price
Rescission
At least 1/10th for rescission:
(provided that lack of area is NOT LESS than 1/10 of area stated)
(Quantity Test)
In
an August 2016 case, it was ruled that:
“What defines land; Land sold in LUMP SUM
At any rate, we have consistently held that what really defines a piece of land
is not the area, calculated with more or less certainty , mentioned
in the description, but its boundaries laid down, as enclosing the
land and indicating its limits. Where land is sold for a lump sum and not so
much per unit or measure, number, the boundaries of the land stated in the
contract determine the effects and scope of the sale, and not its area. This is
consistent with Article 1542 of the Civil Code which provides:
However, in a subsequent case, jurisprudence created a
circumscription of the extent of the meaning of the words “more or less”, to
mean “slight or inconsequential differences”, thus:
Sale on Lump Sum
Judicial admissions
made by the parties in the pleadings, or in the course of the trial or other
proceedings in the same case, are conclusive and do not require further
evidence to prove them. These admissions cannot be contradicted unless
previously shown to have been made through palpable mistake or that no such
admission was made.40 Petitioners do not deny their previous admission, much
less allege that they had made a palpable mistake. Thus, they are bound by it.
We now resolve the main issue in this case and hold that Lot No. 3230 was sold
for a lump sum. In sales involving real estate, the parties may choose between
two types of pricing agreement: a unit price contract wherein the purchase
price is determined by way of reference to a stated rate per unit area (e.g,
Pl,000.00 per sq. m.) or a lump sum contract which states a full purchase price
for an immovable the area of which may be declared based on an estimate or
where both the area and boundaries are stated (e.g., Pl million for 1,000 sq.
m., etc.).41 Here, the Deed of Sale executed by Banta on March 21, 200542 and
the Deed of Sale executed by Arcaina on April 13, 200543 both show that the
property was conveyed to Ingram at the predetermined price of Pl,860,000.00.
There was no indication that it was bought on a per-square-meter basis. Thus,
Article 1542 of the Civil Code governs the sale, viz.: 37 Id. at 86. 38 Id at
70-71. 39 Id. at 14. 40 Philippine Long Distance Telephone Company (PLDT) v.
Pingol, G.R. No. 182622, September 8, 2010, 630 SCRA 413, 421; citing Damasco
v. National Labor Relations Commission, G.R. No. I 15755, December 4, 2000, 346
SCRA 714, 725, also citing Philippine American General Insurance Co., Inc. v.
Sweet Lines, Inc., G.R. No. 87434, August 5, 1992, 212 SCRA 194, 204. 41
Esguerra v. Trinidad, G.R. No. 169890, March 12, 2007, 518 SCRA 186, 196-197.
42 Rollo, p. w 43 Id. at 68-z; Decision 8 G.R. No. 196444 Art. 1542. In the
sale of real estate, made for a lump sum and not at the rate of a certain sum
for a unit of measure or number, there shall be no increase or decrease of the
price, although there be a greater or less area or number than that stated in
the contract. The same rule shall be applied when two or more immovables are
sold for a single price; but if, besides mentioning the boundaries, which is
indispensable in every conveyance of real estate, its area or number should be
designated in the contract, the vendor shall be bound to deliver all that is
included within said boundaries, even when it exceeds the area or number
specified in the contract; and, should he not be able to do so, he shall suffer
a reduction in the price, in proportion to what is lacking in the area or
number, unless the contract is rescinded because the vendee does not accede to
the failure to deliver what has been stipulated. The provision teaches that
where both the area and the boundaries of the immovable are declared in a sale
of real estate for a lump sum, the area covered within the boundaries of the
immovable prevails over the stated area. 44 The vendor is obliged to deliver
all that is included within the boundaries regardless of whether the actual
area is more than what was specified in the contract of sale; and he/she shall
do ·so without a corresponding increase in the contract price. This
is particularly true when the stated area is qualified to be approximate only,
such as when the words "more or less" were used. 45 The deeds of sale
in this case provide both the boundaries and the estimated area of the
property. The land is bounded on the North East by Lot No. 3184, on the South
East by seashore, on the South West by Lot No. 3914 and on the North West by a
road. 46 It has an area of more or less 6,200 sq. m. The unifonn
allegations of petitioners and Ingram, however, reveal that the actual area
within the boundaries of the property amounts to more or less 12,000 sq. m.,
with a difference of 5,800 sq. m. from what was stated in the deeds of sale.
With Article 1542 in mind, the RTC and the CA ordered petitioners to deliver
the excess area to Ingram. They are mistaken. In Del Prado v. Spouses
Caballero,47 we were confronted with facts analogous to the present petition.
Pending the issuance of the Original Certificate of Title (OCT) in their name,
Spouses Caballero sold a parcel of land to Del Prado. The contract of sale
stated both the property's boundaries and estimated area of more or less 4,000
sq. m. Later, when the OCT was issued, the technical description of the
property appeared to be 14,457 sq. 44 See Rudolf Lietz, Inc. v. Court of
Appeals, supra note 26 at 459. 45 Santa Ana, Jr. v. Hernandez, G.R. No.
L-16394, Dfcem er 17, 1966, 18 SCRA 973, 979. 46 Rollo, pp. 67-68. 47 G.R. No.
148225, March 3, 2010, 614 SCRA 102. Decision 9 G.R. No. 196444 m., more or
less. Del Prado alleged that Spouses Caballero were bound to deliver all that
was included in the boundaries of the land since the sale was made for a lump
sum. Although, we agreed with Del Prado that the sale partakes of the nature of
a lump sum contract, we did not apply Article 1542. In holding that Del Prado
is entitled only to the area stated in the contract of sale, we explained: The
Court, however, clarified that the rule laid down in Article 1542 is not hard
and fast and admits of an exception. It held: "A caveat is in order,
however. The use of "more or less" or similar words in designating
quantity covers only a reasonable excess or deficiency. A vendee of land sold
in gross or with the description "more or less" with reference to its
area does not thereby ipso facto take all risk of quantity in the land. xxx In
the instant case, the deed of sale is not one of a unit price contract. The
parties agreed on the purchase price of P40,000.00 for a predetermined area of
4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the East by
Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by
Lot No. 11910. In a contract of sale of land in a mass, the specific boundaries
stated in the contract must control over any other statement, with respect to
the area contained within its boundaries. Black's Law Dictionary defines the
phrase "more or less" to mean: "About; substantially; or
approximately; implying that both parties assume the risk of any ordinary
discrepancy. The words are intended to cover slight or unimportant inaccuracies
in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d 408; and are ordinarily
to be interpreted as taking care of unsubstantial differences or differences of
small importance compared to the whole number of items transferred." Clearly,
the discrepancy of 10,475 sq m cannot be considered a slight difference in
quantity. The difference in the area is obviously sizeable and too substantial
to be overlooked. It is not a reasonable excess or deficiency that should be
deemed included in the deed of sale.48 (Emphasis supplied; citations omitted.)
In a lump sum contract, a vendor is generally obligated to deliver all the land
covered within the boundaries, regardless of whether the real area '" Id
atl!0-111, L Decision 10 G.R. No. 196444 should be greater or smaller than that
recited in the deed. 49 However, in case there is conflict between the area
actually covered by the boundaries and the estimated area stated in the
contract of sale, he/she shall do so· only when the excess or deficiency
between the fonner and the latter is reasonable. 50 Applying Del Prado to the
case before us, we find that the difference of 5,800 sq. m. is too substantial
to be considered reasonable. We note that only 6,200 sq. m. was agreed upon
between petitioners and Ingram. Declaring Ingram as the owner of the whole
12,000 sq. m. on the premise that this is the actual area included in the
boundaries would be ordering the delivery of almost twice the area stated in
the deeds of sale. Surely, Article 1542 does not contemplate such an unfair
situation to befall a vendor-that he/she would be compelled to deliver double
the amount that he/she originally sold without a corresponding increase in
price. In Asiain v. Jalandoni, 51 we explained that "[a] vendee of a land
when it is sold in gross or with the description 'more or less' does not
thereby ipso facto take all risk of quantity in the land. The use of 'more or
less' or similar words in designating quantity covers only a reasonable excess
or deficiency." 52 Therefore, we rule that Ingram is entitled only to
6,200 sq. m. of the property. An area of 5,800 sq. m. more than the area
intended to be sold is not a reasonable excess that can be deemed included in
the sale. 53 Further, at the time of the sale, Ingram and petitioners did not
have knowledge of the actual area of the land within the boundaries of the
property. It is undisputed that before the survey, the parties relied on the
tax declaration covering the lot, which merely stated that it measures more or
less 6,200 sq. m. Thus, when petitioners offered the property for sale and when
Ingram accepted the offer, the object of their consent or meeting of the minds
is only a 6,200 sq. m. property. The deeds of sale merely put into writing what
was agreed upon by the parties. In this regard, we quote with approval the
ruling of the MCTC: In this case, the Deed of Absolute Sale (Exhibit
"M") dated April 13, 2005 is clear and unequivocal as to the area
sold being up to only 6,200 square meters. The agreement of the parties were
clear and unambiguous, hence, the inconsistent and impossible testimonies of N[
e ]nette [ Archinue] and the Spouses Ingram. No amount of extrinsic aids are
required and no further extraneous sources are necessary in order to ascertain
the parties' intent, determinable as it is, from the document itself. The court
is thus convinced that the deed expresses truly the parties' intent as against
the oral testimonies of Nenette, and the Spouses Ingram. 54 49 Balantakbo v.
Court of Appeals, G.R. No. 108515, October 16, 1995, 249 SCRA 323, 327 citing
Pacia v. Lagman, 63 Phil. 361 (1936). 50 Del Prado v. Spouses Caballero, supra
note 47. 51 45 Phil. 296 (1923). 52 Id. at 309-31,. / 53 See Roble v. A b sa,
G.R. No. 130707, July 31, 200 I, 362 SCRA 69, 81. 54 Rollo, p. 27. Decision 11 G.R.
No. 196444 The contract of sale is the law between Ingram and petitioners; it
must be complied with in good faith. Petitioners have already performed their
obligation by delivering the 6,200 sq. m. property. Since Ingram has yet to
fulfill her end of the bargain,55 she must pay petitioners the remaining
balance of the contract price amounting to Pl45,000.00. WHEREFORE, premises
considered, the petition is GRANTED. The October 26, 2010 Decision and March 1
7, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 107997 are hereby
REVERSED and SET ASIDE. The July 31, 2008 Order of the 3rd Municipal Circuit
Trial Court of Sto. Domingo-Manito, dismissing Civil Case No. S-241 for
insufficiency of evidence, and ordering Ingram to pay Pl45,000.00 to petitioners,
is hereby REINSTATED with MODIFICATION. Ingram is ordered to pay petitioners
the amount of Pl45,000.00 to earn interest at the rate of six percent ( 6%) per
annum from July 31, 200856 until the finality of this Decision.[1] X
x x”.
Art. 1543-
Actions arising from Articles 1539 & 1542 prescribe in 6 months from the
day of delivery.
QUANTITY TEST
- If Subject Matter
delivered is NOT OF THE SAME QUALITY as agreed upon
- Proportional
reduction of price
Rescission (provided that inferior value of thing sold exceeds
one tenth of the price agreed upon.
- More than 1/10.
VIII. Time and Place of Delivery
Gen. Rule: Stipulation in Contract
In case of silence:
Time: Reasonable Time
Place: Art. 1521 in rel. to Art. 1251
Place of Business or if none
Domicile of Seller/Debtor
IX. Condition and Warranties
(Subject and another outline)
X. Extinguishment of Sales
- Conventional
Redemption – latest case law Cebu State College of Science and Technology
(CSCST) etc. v Luis & Misterio, G.R. No. 179025, June 17, 2015.
-
[1] 310 SCRA 1, 108 SCAD 706 (1999)
[2] See Homesite and Housing Corp. v. Court
of Appeals, 133 SCRA 77 [1984]) and Coronel et al v. Court of Appeals, et al.,
G.R. No. 103577, October 7, 1996
[3] Anita U. Lorensana v. Rodolfo Lelina,
G.R. No. 187850, August 17, 2016
CONTRACTS TO SELL OR
OF SALE versus REAL ESTATE MORTGAGE
By: E.T. Reyes III
With
the upsurge in real estate dealings involving land development for mixed-use purposes
in the Philippines that had started and eventually saturated the Metropolis,
and now had spread its tentacles to the countryside, sales and mortgages of
vast tracts of land had become banal.
Assuredly,
bigger acquisitions of lands are in the horizon hence it is necessary to be
mindful of the implications of transactions involving lands in order to avoid
legal pitfalls.
In
the normal run of things, a single piece of land could become the subject of a
contract to sell or of a contract of sale on one hand; and likewise of a
mortgage, one after the other, either in that order or otherwise. Should theis
string of transactions take place, what would be the legal repercussions?
To
answer the question, here are some hypotheticals:
1) Land
owner X, with a titled property enters into a CONTRACT TO SELL with A, who does
not register it with the register of deeds. Then, X, subsequently loans money
from B and mortgages the same land as security. The mortgage is registered with
the register of deeds.
2) Land
owner X, with a titled property, enters into a CONTRACT OF SALE with A, who
does not register it with the register of deeds. Then, X, subsequently loans
money from B and mortgages the same land as security. The mortgage is registered
with the register of deeds.
3) Land
owner X, with a titled property, loans money from B and mortgages the same land
as security. The mortgage is registered with the register of deeds. Then, X
subsequently enters into either a CONTRACT TO SELL or a CONTRACT OF SALE in
favor of A.
Apparently,
X is the seller/ mortgagor while A is the buyer and B is the mortgagee. In this
clash of rights, which between the sale and the mortgage will prevail?
The
Supreme Court in a January 2016 ruling in the case of Fabio
Cahayag and Conrado Rivera v. Commercial Credit Corporation etc. and Dulos
Realty and Development Corporation etc. v. Commercial Credit Corp., G.R. Nos.
168078 & 168357, January 13, 2016, by re-affirming long standing
doctrines in Civil law, un-tangled seemingly convoluted facts, as follows:
· Pursuant
to Article 2085 (2) of the New Civil Code, the mortgagor must be the absolute
owner of the thing mortgaged. Necessarily, if he had previously sold the land,
he could not validly mortgage it anymore.
· This
is based on the Nemo dat quod non habet principle which means
– a person cannot give what he does not have. But this Latin precept has been
jurisprudentially held to apply to a contract of sale at its consummation
stage and not at the perfection stage.
· A contract
to sell on one hand should therefore be distinguished from a contract
of sale. The former does not carry with it the obligation to deliver
or transfer the ownership of the thing sold, because of the existence
of a positive suspensive condition which is usually the full
payment of the price. Thus the seller remains as owner pending delivery. In
a contract of sale, the obligation to deliver and transfer
ownership is a necessary consequence of the sale.
· Thus,
in hypothetical No. 1 above, the prior Contract to Sell entered by X in favor
of A, would not affect in any way the subsequent mortgage to B. The mortgage in
favor of B prevails because X was still the owner of the land at the time when
he mortgaged the same to B. And there was no delivery or transfer of ownership
yet from X to A because the positive suspensive condition of full payment of
the price in the contract to sell had not yet been fulfilled hence it is as if
there is no previous sale transaction at all, at the time when the mortgage was
constituted in favor of B.
· In
hypothetical No. 2 above, since what X entered into was a Contract of Sale in
favor of A, then as a rule, he could not validly mortgage it anymore to B.
There is one exception: that is if B, the mortgagee, qualifies as an innocent
mortgagee for value as when he claims that he relied on a clean title
because the previous sale to A was not registered. The exception however, only
applies when the mortgagee is NOT a banking or financing institution. Notably,
in the case of De la Merced v. GSIS, G.R. No. 167140, September 11, 2001, the
Supreme Court applied more stringent requirements on banking and financing
institutions whose business are extending loans upon mortgaging of lands on a
daily basis hence presumed to be experienced in background checking lands
before approving a mortgage. They cannot therefore just rely on a clean title
but they must investigate whether the land was subject of a previous sale.
Failure to do so, the previous sale albeit un-registered, would prevail over
the registered mortgage.
· In
hypothetical No. 3, given that the registered mortgage was ahead of either the
contract to sell or the contract of sale, then the legal maxim, “first in time,
priority in right” applies. This is because registration of the mortgage with
the register of deeds constitutes as a constructive notice to the whole world
that a previous mortgage was constituted over the land. If, notwithstanding,
buyer A still buys the land despite the previous mortgage to B, then here, the
mortgage prevails over the sale. This is true even if A buys the land without
knowing about the previous mortgage.
The
moral here is that before engaging in the cumbersome process of land sales or
mortgages, always check the title and make a background investigation. Or
better yet, consult an attorney to guide you in the maze of legal nuances and
niceties lest your stable equilibrium be upended by importunings of court
litigation you would get ensnared in because of ignorantia legis –
ignorance of the law or due to an incomplete understanding thereof.
______________________________________________________________________________________________
Double Sales
Outline in “Double Sales”
Article 1544, New Civil Code
By: Atty. Ed Reyes III
I.Main Rule
Primus tempore, potior jure
(First in time, priority in right).
Corollary to Legal truism that:
“You cannot give what you do not have”.
II. Article 1544;
Rules only apply when the
following requisites concur:
a) The two (or more) sales
transactions must constitute valid sales
b) The two (or more) sales transactions
must pertain to exactly the same subject matter
c) The two (or more) buyers at odds
over the rightful ownership of the subject matter must each represent
conflicting interests; and
d) The two (or more) buyers at odds
over the rightful ownership of the subject matter must each have bought from
the very same seller[1]
III. Two Sales Must be Valid
Transactions
3.1. Espiritu v. Valerio,
9 SCRA 761 (1963)- Where one sale involved a forged signature of the
seller, Art. 1544 does not apply.
- Art 1544 applies to Conditional
Deeds of Sale (Because fulfillment of condition retroacts)
BUT NOT TO Contracts to Sell
- Remedy when a property was
subject of contract to sell but sold via absolute sale is for damages
IV. Same Subject matter
4.1. Sale v. Right of Redemption
V. Same seller
- Buyer 1 bought the thing from Mr.
X who in turn bought it from Mr. Seller, while Buyer 2 bought the same subject
matter from Mr. Seller, Art. 1544 DOES NOT APPLY- Rule on
successors-in-interest and predecessors-in-interest have no place in Art. 1544[4]
VI. Registration v. Actual
Possession
- “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”.[5]
6.1. Registration; Meaning
- Tolentino: Deed of sale must be inscribed in
the registry of property, and the register of deeds made a memorandum upon said
document to the effect that “the foregoing instrument annotated, etc.” and
another note to the same effect was made thereon about five months later, a
marginal memorandum of the said annotations being made on the original document
itself, it was held that what was done with respect to said entries or
annotations and marginal notes amounted to a registration of the sale”.[6]
- Villanueva- “Registration” means any entry
made in the books of the registry, including both registration in its ordinary
and strict sense, and cancellation, annotation, and even marginal notes. It is
the entry made in the registry which records solemnly and permanently the right
of ownership and other real rights”.[7]
VII. Purchaser in Good Faith;
Concept
6.1. Burden of proof or onus is
on person asserting that he is a purchaser in good faith. Mere reliance on
presumption of good faith is not enough. [8]
6.2. Requisite of Full payment –
“payment of FULL and FAIR PRICE for the same at the time of such purchase or
before he has notice of the claim or interest of some other person in the
property”.[9]
6.3. Obligation to Investigate
Known Facts.
- Mirror principle circumscribed
6.4. Length of time required for
buyer to keep good faith pristine
-“ This is the price exacted by
Article 1544 of the Civil Code for the second buyer being able to displace the
first buyer: That before the second buyer can obtain priority over the
first, he must show that he acted in good faith throughout (i.e.
ignorance of the first sale and of the first buyer’s rights)- from the time of
acquisition until the tile is transferred to him by registration or failing
registration, by delivery of possession). 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”.[10]
VIII. Does Art. 1544 contemplate
of a race to the ROD between 1st and 2nd buyers?
7.1. Does “bad faith” on the part
of the first buyer foreclose his right to register the first sale?
-“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
rights except only as provided the Civil Code and that is where the second
buyer first registers in good faith the second sale ahead of first buyer. Such
knowledge of the first buyer does not bar her from availing of her rights under
the law, among them, to register first her purchase as against the second
buyer. But in CONVERSO, knowledge gained by the second buyer of the first sale
defeats his rights even if he is first to register the second sale, since such
knowledge taints his prior registration with bad faith”[11].
IX. First buyer is winner of the
race without doing anything but only by the fact that he is the first buyer.
Reasons:
a) First in time, priority in right
b) Knowledge by second buyer of the
first sale is equivalent to registration in favor of first buyer
c) Knowledge of the first sale makes
the second buyer one in bad faith, and only good faith second buyer is
qualified to run the race[12]
X. First buyer can practically
watch the second buyer: 1. Transact, haggle with same seller; 2. make
installment payments; 3. Same seller to execute deed of sale; and 4. Second
buyer to bring the deed of sale to Register of Deeds. AND YET STILL, second
buyer cannot dislodge the first buyer. Until and unless, the second buyer goes
through the entire process of REGISTRATION and maintains innocence or good
faith all throughout. Then and only then is the first buyer defeated. -END of
Story.
[1] Cesar
Villanueva, Law on Sales p. 277, Cheng v. Genato, 300 SCRA 722 (1988)
[2] 69
SCRA 99 (1976)
[3] 263
SCRA 15 (1996)
[4] Cesar
Villanueva, p. 282, ibid.
[5] Tolentino,
Civil Code of the Philippines, Volume V p. 97 citing Mendiola v. Pacalda, 10
Phil. 705
[6] P.
98 Tolentino, Id.
[7] P.
295 Villanueva, Id. Citing Cheng v. Genato, 300 SCRA 722
(1998)
[8] Mathay
v. Court of Appeals, 295 SCRA 556 (1998)
[9] Ibid.
[10] Carbonel
v. Court of Appeals, Ibid
[11] Id.
[12] Villanueva, Ibid.
and NOEMI L. INGRAM,
represented by MA. NENETTE L. ARCHINUE, Respondent. February 15, 2017
No comments:
Post a Comment