FINALS CASE DOCTRINES (SALES)

1. CARBONELL VS CA (double sale)

- 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. Where the
first buyer was not aware - and could not have been aware - of any sale to another
person as there was no such sale, the buyer's prior purchase of the land was made in
good faith. The annotation of the adverse claim by the first buyer in good faith is
deemed to have been equivalent to the registration required under Article 1544. What
is registered is not the document but the right of ownership over the property.

2. DAGUPAN TRADING VS MACAM (double sale)

- Where one of two conflicting sales of a piece of land was executed before the land
was registered, while the other was an execution sale in favor of the judgment
creditor of the owner made after the same property had been registered, 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". Where for a considerable time prior to the levy on execution the interest of
the owner of the land levied upon had already been conveyed to another who took
possession thereof and introduced improvements therein, the aforesaid levy is void.
The prior sale, albeit unregistered, cannot be deemed automatically cancelled upon
the subsequent issuance of the Torrens title over the land.

3. DAVID VS BANDIN (XXX sale)

- 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. However, the purchaser
who relies on the clean title of the registered owner is protected if he is a purchaser in
good faith for value. In the absence of a showing that he had actual notice of the
defect in the title of the vendors or that he is a buyer in bad faith, the deed of sale in
his favor and the corresponding certificate of title issued in his name cannot be
nullified and cancelled.

4. OLIVARES VS GONZALES (double sale)

- In a consolidation case where the property was subjected to two different sales, one,
with pacto de retro which was unregistered and an absolute sale which was registered,
and the possession of the property is with the vendee of the latter sale, who were not
 included as party-defendant in the case. Justice and equity demand that said vendees
in possession of property should be heard first before adjudication of the ownership
of the property. In double sale, the principle of prius tempore, patior jure enunciates
that the good faith of the first buyer remains all throughout despite his subsequent
acquisition of knowledge of the subsequent sale. Knowledge by the first buyer of the
second sale cannot defeat the first buyers right except when the second buyer
registers first in good faith the second sale.

5. CARAM VS LAURETA (double sale)

- 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. Article 1544 does not declare void a deed of sale registered in bad faith; it
does not mean, however, that the said contract is not void. The law on double sale
applies only to immovable properties sold by the owner himself. The status of the 2
contracts must be determined and clarified-one must be declared valid so that one
vendee may exercise all rights of an owner while the other contract must be declared
void to cut off all rights which may arise from the said contract.

6. CRUZ VS CABANA (double sale)

- In order that the provisions of Article 1544 of the new Civil Code may be invoked, it
is necessary that the conveyance must have been made by a party who has an existing
right in the thing and the power to dispose of it. It cannot be set up by a second
purchaser who comes into possession of the property that has already been acquired
by the first purchaser in full dominion, this notwithstanding that the second purchaser
records his title in the public registry, if the registration be done in bad faith, the
philosophy underlying this rule being that the public records cannot be covered into
instruments of fraud and oppression by one who secures an inscription therein in bad
faith. A purchaser who has knowledge of fact which would 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.
Knowledge of a prior transfer of registered 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 latter instrument of conveyance which creates no right as
against the first purchaser.
7. VALDEZ VS CA (double sale)
- In a case where a notice of adverse claim was registered previous to the sale by the
possessor, a prior right is accorded to the vendee who first recorded his right in good
faith over an immovable property. An annotation of an adverse claim made prior to a
deed of assignment, establishes a superior right over the property and it was
effectively a notice to the whole world. This is equivalent to registration in good faith
which Article 1544 provides.

8. NUGUID VS CA (double sale)

- Although the second sale was made by the heirs of the deceased the said heirs are
deemed the judicial continuation of the personality of the decedent. Essentially,
therefore, the first and second sales were made by the same person, as envisioned
under Article 1544 of the Civil Code. The disputed property being immovable
property, the ownership should belong to the vendee who in good faith first recorded
it in the Registry of Property, pursuant to the same article. Good faith is deemed to be
present (a) when the original certificate of title was clean and free from any
annotation or encumbrance and (b) when there is lack of knowledge of the prior sale.
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.

9. RADIOWEALTH FINANCE VS PALILEO (double sale)

- A person dealing with registered land is not required to go behind the register to
determine the condition of the property. 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.
However, Article 1544 does not apply where the second buyer acquires the
unregistered land at an execution sale, even if he was ignorant of the prior sale made
by his judgment debtor in favour of the first buyer. The purchaser of an unregistered
land at a sheriffs execution sale only steps in the shoes of the judgment debtor and
merely acquires the latters interest in the property sold as of the time the property
was levied upon.

10. TANEDO VS CA (double sale)

- Ownership shall belong to the buyer who in good faith registers it first in the registry
of property. 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. When two deeds of sale for an
inherited property which were executed after the death of the decedent and after a
deed of extra-judicial settlement. And which said deeds of sale where made on
different dates, the ownership would vest in the deed which was registered, even if
 the other deed is executed earlier. The same rule applies even if actual possession is
in the vendee of the deed executed earlier.

11. OCCENA VS ESPONILLA (double sale)

- Mere registration is not enough; good faith must concur with registration. To be
entitled to priority, the second purchaser must also have acted in good faith-one
without knowledge of the previous alienation by the vendor to another or must not
have been aware of the facts which should put him upon inquiry to acquaint him with
the defect or lack of title of his vendor. Should he find out such circumstances, it
would be incumbent upon him to verify the extent of the occupants possessory
rights. Failure to take precautionary steps would mean negligence on his part and
would preclude him from claiming or invoking the rights of a purchaser in good faith.

12. MOLES VS IAC (implied warranty)

- In the sale of a designated and specific article sold as secondhand, there is no implied
warranty as to its quality or fitness for the purpose intended, at least where it is
subject to inspection at the time of the sale. On the other hand, there is also authority
to the effect that in a sale of a secondhand articles there may be, under some
circumstances, an implied warranty of fitness for the ordinary purpose of the article
sold or for the particular purpose of the buyer. An exception to the general rule is that
an express warranty can be made by and also be binding on the seller even in the sale
of a secondhand article. A redhibitory effect must be an imperfection or defect of
such nature as to engender a certain degree of importance in order to warrant the
rescission of the contract.

13. ENGINEERING MACHINERY CORP VS CA (prescription of warranty)

- 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 quanti minoris), with damages in either case. Actions
"upon a written contract" prescribe in ten (10) years. The mere fact that the employer
accepted the work does not, ipso facto, relieve the petitioner from liability for
deviations from and violations of the written contract, as the law gives him ten (10)
years within which to file an action based on breach thereof.

14. CATUNGAL VS RODRIGUEZ (conditions and warranties)

- From the moment the contract is perfected, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law. In
accordance with Article 1545 of the Civil Code, one must distinguish: failure to
comply with a condition imposed on the perfection of a contract results in the failure
 of the contract while failure to comply with a condition imposed merely on the
performance of an obligation merely gives the other party the option to either refuse
to proceed with the sale or to waive the condition. Moreover, where the so-called
'potestative condition' is imposed not on the birth of the obligation but on its
fulfillment, only the condition is avoided, leaving unaffected the obligation itself.

15. TUAZON INC VS CA (warranty against eviction and damages)

- It is a requisite that the vendee himself must not be guilty of bad faith in the execution
of the sake. If he knew of the defect in the title at the time of the sale, or had known
of the facts which should have put him in inquiry and investigation as may be
necessary to acquaint him with the defects in the title of the vendor, he cannot claim
that the vendor has warranted his legal and peaceful possession of the property sold
on the theory that he proceeded with the sale with the assumption of the danger of
eviction. He is not entitled to the warranty against eviction nor entitle to the recovery
of damages.

16. SONNY LO VS CA (warranty-assignment of credit)

- An assignment of credit, which is in the nature of a sale of personal property,
produces the effects of dacion en pago which may extinguish the obligation. Article
1628 opines that 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.
The vendor/assignor is bound to warrant the existence and legality of the credit of the
time of the sale or assignment. By warranting the existence of the credit, the vendor
should be deemed to have ensured the performance in case the credit is later found to
be inexistent. He should be liable to pay the vendee the amount of his indebtedness.

17. RAMOS VS CA (conventional redemption-equitable mortgage)

- Since sales with right to repurchase are not favoured, such are instead construed to be
equitable mortgages. To create the presumption enunciated by Article 1602, the
existence of one circumstance is enough. Where contracts purporting to be pacto de
retros 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. More so, an order
granting the vendee's petition for consolidation of ownership, without the vendor a
retro being named as respondent, summoned and heard, is a patent nullity for want of
jurisdiction of the court over the person of the latter.
18. DE LEON VS SALVADOR (equitable mortage)
- 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 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.

19. FLORES VS SO (effectivity of NCC- conventional redem provision)

- The new Civil Code shall not be applicable to a pacto de retro sale executed before it
was enacted, hence the old civil code governs. It is provided in Article 1509 thereof
that if the vendor does not comply with the provisions of Article 1518, (i.e. to return
the price, plus expenses) the vendee shall acquire irrevocably the ownership of the
thing sold. Under the old Civil Code, the ownership was consolidated in the vendee a
retro by operation of law. Articles 1606 and 1607 of the new Civil Code which
require registration of the consolidation of ownership in the vendee a retro only by
judicial order, do not apply.

20. ALONZO VS IAC (written notice-legal redem)

- Under Article 1623, 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 vendors, as the case may be. The deed of sale shall not be recorded
in the Registry of Property, unless accompanied by an affidavit of the vendor that he
has given written notice thereof to all possible redemptioners. An exception to the
mandatory written rule is when the co-heirs only brought an action for redemption of
hereditary right sold by another co-heir only after so many years, after having actual
knowledge thereof, by their actuations, with other circumstances such as being
neighbors with the purchaser. While the general rule is, that to charge a party with
laches in the assertion of an alleged right it is essential that he should have knowledge
of the facts upon which he bases his claim, yet if the circumstances were such as
should have induced inquiry, and the means of ascertaining the truth were readily
available upon inquiry, but the party neglects to make it, he will be chargeable with
laches, the same as if he had known the facts.

21. LAO VS CA (equitable mortgage)

- Existence of one of the circumstances under Article 1602 is enough to purport a pacto
de retro sale to be one of equitable mortgage. In the case at bar, the vendor remained
in possession of the property as a beneficial owner before, during and after the
 alleged sale; there was extension of the period of redemption (in fact, this was done
twice); and that the vendors were in dire need of money which led them to mortgage
their property. Given such circumstances, the contract was held to be one of equitable
mortgage.

22. LANUZA VS DE LEON (equitable mortgage)

- The stipulation in deed denominated by the parties as a "Deed of Sale With Right to
Repurchase" to the effect that if the vendor fails to pay the amount agreed upon
within the stipulated period, his right to repurchase the property shall be forfeited and
the ownership over the same would automatically pass to the vendee without need of
court intervention, is contrary to the nature of a true pacto de retro sale, under which a
vendee acquires ownership of the thing sold immediately upon execution of the sale,
subject only to the vendor's right of redemption. Since pacto commissorium is
contrary to law, such contract is deemed to be an equitable mortgage. Also,
preference of mortgage credits is determined by the priority of registration of the
mortgages, following the maxim prior tempore potior jure".

23. CAPULONG VS CA (equitable mortgage)

- In practically all of the so-called contracts of sale with right of repurchase, the real
intention of the parties is that the pretended purchase price is money loaned and in
order to secure the payment of the loan, a contract purporting to be a sale with pacts
de retro is drawn up. If the transaction is an absolute sale of property, particularly
land, the vendee would ordinarily assume immediate possession after the execution of
the deed of sale.

24. SOLID HOMES VS CA

- 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 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. When the vendor remains in actual
physical possession of the land and enjoys the fruits thereof, circumstances reveal the
real intention of the parties to secure the payment of the loans with the land as
security. Moreover, Article 1616 is not restrictive- the interest and penalty in the
redemption price may be considered as other expenses.

25. PRIMARY STRUCTURES VS VALENCIA (legal redemption-rural land)

- 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 rural land. 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. 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 statement in the deed of sale to the
effect that the vendors have complied with mandatory written notice as being the
written affirmation under oath, as well as the evidence, that the required written
notice to petitioner under Article 1623 has been met.

26. GUZMAN BOCALING AND CO VS BONNEVIE (lease- right of first

priority/refusal)
- In the right of first priority, there should be identity of the terms and conditions to be
offered to the lessees and all other prospective buyers. It is only when the lessees fail
to exercise the right that the property could be lawfully sold to others. Furthermore, it
is only if the right of first priority would be effected and the said property is to be sold
that the administrator be required to secure the approval of the probate court pursuant
to Rule 89 of the Rules of Court.

27. YEK SENG CO VS CA (extension of lease)

- The mere occupancy of the premises for a number of years, by itself is not sufficient.
Since the contract of lease is for a definite term, the lessee cannot avail of the benefits
under Article 1687 which applies only if there is no definite term. The power of the
Courts to fix a longer term for lease is protestative or discretionary, 'may' is the word
to be exercised or not in accordance with the particular circumstances of the case;
a longer term to be granted where equities come into play demanding extension, to be
denied where none appears, always with due deference to the parties freedom to
contract.

28. CLUTARIO VS CA (waiver of ejectment-lease)

- 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. For the lessor to be able to validly eject the lessee on the ground
of need for the leased property, it must be shown that there is no other available
residential unit to satisfy that need. The non-availability must exist at the time of the
demand by the lessor on the lessee to vacate the property.

29. YAP VS CRUZ (transfer of leasehold rights)

- The transfer of the leasehold rights is conditional in nature and has no force and effect
if a service of notice of demand to pay and to vacate is not complied with. In the
 absence of such notice, the lease continues to be in force and cannot be deemed to
have expired as of the end of the month automatically. Neither can the non-payment
of the monthly rent be a ground for termination of the lease without a demand to pay
and to vacate.

30. UNITED REALTY CORP VS CA (termination of lease; definite time)

- A lease on a month-to-month basis expires after the last day of the 30th day period
repeating the same cycle of the 30-day period until either party express their
prerogative under their agreement to terminate the same. 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 lessor, provided the
same is not exorbitant. Furthermore, when the lease agreement refers to a dwelling
unit or land is for a definite period, the lessor has a right to judicially eject the lessee
from the leased premises, as exception to Section 4 of Presidential Decree No. 20
which suspends the application of Article 1673(1) of the Civil Code, providing for the
fixed period for the termination of leases.

31. LEGAR MGT AND REALTY VS CA (ejectment of lessee under the Rent Control
Law)
- Lease agreements with no specified period, but in which rentals are paid monthly, are
considered to be on a month-to-month basis. They are for a definite period and expire
after the last day of any given thirty-day period, upon proper demand and notice by
the lessor to vacate even if the lease agreement was verbal in nature.