May 2009 Philippine Supreme Court Decisions on Civil Law

Here are selected May 2009 decisions of the Supreme Court on civil law.

Contracts;  force majeure.  The matter of fortuitous events is governed by Art. 1174 of the Civil Code which provides that except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable. The elements of a fortuitous event are: (a) the cause of the unforeseen and unexpected occurrence, must have been independent of human will; (b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal manner, and; (d) the obligor must have been free from any participation in the aggravation of the resulting injury to the creditor.

A fortuitous event may either be an act of God, or natural occurrences such as floods or typhoons, or an act of man such as riots, strikes or wars. However, when the loss is found to be partly the result of a person’s participation–whether by active intervention, neglect or failure to act—the whole occurrence is humanized and removed from the rules applicable to a fortuitous event. Asset Privitization Trust vs. T.J. EnterprisesG.R. No. 167195,  May 8, 2009.

Contracts; voidable contract. In order that mistake may invalidate consent and constitute a ground for annulment of contract based on Article 1331, the mistake must be material as to go to the essence of the contract; that without such mistake, the agreement would not have been made. The effect of error must be determined largely by its influence upon the party. If the party would have entered into the contract even if he had knowledge of the true fact, then the error does not vitiate consent.

In the case at bar, the relief sought by respondent was for a refund and he continued to occupy the subject properties after he found out that the same were smaller in area. All these show that respondent did not consider the error in size significant enough to vitiate the contract. Hence, the Court of Appeals erred in affirming the Board’s decision to grant rescission based on Articles 1330 and 1331 of the Civil Code.  Cebu Windland Development Corporation  vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009.

Contracts;  novation.  Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor.  In order for novation to take place, the concurrence of the following requisites are indispensable:

1.      There must be a previous valid obligation;

2.      There must be an agreement of the parties concerned to a new contract;

3.      There must be the extinguishment of the old contract; and

4.      There must be the validity of the new contract.

Novation is never presumed, and the animus novandi, whether totally or partially, must appear by express agreement of the parties, or by their acts that are too clear and unmistakable. The extinguishment of the old obligation by the new one is a necessary element of novation, which may be effected either expressly or impliedly. The contracting parties must incontrovertibly disclose that their object in executing the new contract is to extinguish the old one. Upon the other hand, no specific form is required for an implied novation, and all that is prescribed by law would be an incompatibility between the two contracts.

The test of incompatibility is whether the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first. Corollarily, changes that breed incompatibility must be essential in nature and not merely accidental. The incompatibility must take place in any of the essential elements of the obligation, such as its object, cause or principal conditions thereof; otherwise, the change would be merely modificatory in nature and insufficient to extinguish the original obligation. Transpacific Battery Corp., et al. vs. Security Bank and Trust Company / Melchor G. Say and Josephine G. Say vs. Security Bank and Trust Company, G.R. No. 173565/G.R. No. 173607.  May 8, 2009

Contracts; obligatory force. An agreement entered into between the Republic of the Philippines and the Kingdom of Kuwait does not have the effect of terminating an agreement between Philippine Airlines and Kuwaiti Airlines. Philippine Airlines is no longer a government owned and controlled corporation.  An agreement executed by the executive branch of government cannot ipso facto render legal rights of private persons obviated. Kuwait Airways Corporation vs. Philippine Airlines, Inc., G.R. No. 156087,  May 8, 2009.

Contracts; rescission. Rescission creates the obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore. Rescission abrogates the contract from its inception and requires a mutual restitution of the benefits received. Thus, respondents Casal, Salvador and CRS Realty must return the benefits received from the contract to sell if they cannot comply with their obligation to deliver the corresponding certificates of title to petitioners.

In the event that respondents Casal, Salvador and CRS Realty cannot deliver clean certificates of title to petitioners, the latter must be reimbursed not only of the purchase price of the subdivision lots sold to them but also of the incremental value arising from the appreciation of the lots. Thus, petitioners are entitled to actual damages equivalent to the current market value of the subdivision lots.

In Solid Homes, Inc. v. Spouses Tan, the Court ordered instead the payment of the current market value of the subdivision lot after it was established that the subdivision owner could no longer comply with its obligation to develop the subdivision property in accordance with the approved plans and advertisements.  Vicenta Cantemprate vs. CRS Realty Development Corp., et al., G.R. No. 171399, May 8, 2009.

Damages; attorney’s fees.The award of attorney’s fees is the exception rather than the general rule, and “counsel’s fees are not to be awarded every time a party wins a suit. The discretion of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal, and equitable justification, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must state the reason for the award of attorney’s fees.” None of the circumstances justifying an award of attorney’s fees enumerated under Art. 2008 of the Civil Code are present, or have been proven in this case.  Zacarias Delos Santos vs. Consuelo B. Papa and Maria C. Mate, G.R. No. 154427, May 8, 2009.

Damages; death and physical injuries caused by quasi-delict. Civil indemnity for death caused by a quasi-delict is pegged at P50,000. Moral damages in the amount of P50,000 is also awarded to the heirs of the deceased taking into consideration the pain and anguish they suffered. As to funeral and burial expenses, the court can only award such amount as are supported by proper receipts. As to hospitalization expenses, only substantiated and proven expenses, or those that appear to have been genuinely incurred in connection with the hospitalization of the victims will be recognized in court.

Moral damages may be recovered in quasi-delicts causing physical injuries. However, in accordance with prevailing jurisprudence, the Supreme Court reduced the award of moral damages from P50,000 to P30,000 each since they only suffered physical injuries brought about by the collision.

In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. While the amount of exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded.

Under Article 2208 of the Civil Code, attorney’s fees may be recovered when, as in this case, exemplary damages are awarded.  Sofia Guillang represented by Susan Guillang-Cabatbat, et al. vs. Rodolfo Bedania, et al.G.R. No. 162987, May 21, 2009.

Damages; delay in approval or disapproval of credit card purchase. Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in bad faith, and the court should find that under the circumstances, such damages are due. The findings of the trial court are ample in establishing the bad faith and unjustified neglect of respondent, attributable in particular to the “dilly-dallying” of respondent’s Manila credit authorizer, Edgardo Jaurique.

It should be emphasized that the reason why petitioner is entitled to damages is not simply because respondent incurred delay, but because the delay, for which culpability lies under Article 1170, led to the particular injuries under Article 2217 of the Civil Code for which moral damages are remunerative. Moral damages do not avail to soothe the plaints of the simply impatient, so this decision should not be cause for relief for those who time the length of their credit card transactions with a stopwatch. There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, since each case must be governed by its own peculiar facts, however, it must be commensurate to the loss or injury suffered. Polo S. Pantaleon vs. American Express International, Inc.G.R. No. 174269, May 8, 2009.

Damages;  exemplary damages. The award of moral damages is proper when the following circumstances concur: (1) there is an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there is a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219.

Here, the Supreme Court ruled that it cannot be concluded that the suit for annulment of sale that the petitioner filed was completely without basis and one that was filed simply to vex or harass the respondents. On the contrary, from the surrounding factual and legal circumstances, it appears that the petitioner was at the point of losing his home and was motivated by the desire to prevent the loss, rather than by any intent to vex or harass the respondents; he had a legal basis, although a disputable one, to back up his claim. If he failed at all to pursue his case, it was not due to lack of merit; the case was lost because nobody pursued the case after his son and attorney-in-fact, who was handling the case for him, died.  Zacarias Delos Santos vs. Consuelo B. Papa and Maria C. MateG.R. No. 154427, May 8, 2009.

Damages;  moral damages. Moral damages are only awarded if the basis therefor is duly established. In the present case, the ground the respondents invoked and failed to establish is malicious prosecution. Crystal v. Bank of the Philippine Islands is instructive on this point, as it tells us that the law never intended to impose a penalty on the right to litigate so that the filing of an unfounded suit does not automatically entitle the defendant to moral damages. Zacarias Delos Santos vs. Consuelo B. Papa and Maria C. MateG.R. No. 154427, May 8, 2009.

Damages; quasi-delict. Article 2176 of the Civil Code provides that whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relations between the parties, is called a quasi-delict. To sustain a claim based on quasi-delict, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of defendant; and (c) connection of cause and effect between the fault or negligence of defendant and the damage incurred by the plaintiff. Sofia Guillang represented by Susan Guillang-Cabatbat, et al. vs. Rodolfo Bedania, et al., G.R. No. 162987, May 21, 2009.

Diligence;  standard. Article 1173 of the Civil Code is very clear that if the law or contract does not state the degree of diligence which is to be observed in the performance of an obligation then that which is expected of a good father of a family or ordinary diligence shall be required.

Mindanao Terminal, a stevedoring company which was charged with the loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely as a labor provider in the case at bar. There is no specific provision of law that imposes a higher degree of diligence than ordinary diligence for a stevedoring company or one who is charged only with the loading and stowing of cargoes. It was neither alleged nor proven by Phoenix and McGee that Mindanao Terminal was bound by contractual stipulation to observe a higher degree of diligence than that required of a good father of a family. Hence, the Supreme Court concluded that following Article 1173, Mindanao Terminal was required to observe ordinary diligence only in loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau.  Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/MCGEE & Co., Inc., G.R. No. 162467,  May 8, 2009.

Due diligence; stevedore. There is a distinction between an arrastre and a stevedore. Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. The responsibility of the arrastre operator lasts until the delivery of the cargo to the consignee. The service is usually performed by longshoremen. On the other hand, stevedoring refers to the handling of the cargo in the holds of the vessel or between the ship’s tackle and the holds of the vessel. The responsibility of the stevedore ends upon the loading and stowing of the cargo in the vessel.  It is not disputed that Mindanao Terminal was performing purely stevedoring function while the private respondent in theSumma case was performing arrastre function. Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/MCGEE & Co., Inc., G.R. No. 162467,  May 8, 2009.

Persons; adoption. As a rule, the husband and the wife must jointly adopt. Mere consent of the husband to the wife’s petition to adopt it not sufficient.

Petitioner, being married at the time the petitions for adoption were filed, should have jointly filed the petitions with her husband.   The filing of a case for dissolution of the marriage between petitioner and her husband is of no moment. It is not equivalent to a decree of dissolution of marriage. Until and unless there is a judicial decree for the dissolution of the marriage between petitioner and her husband, the marriage still subsists. That being the case, joint adoption by the husband and the wife is required. The Supreme Court reiterated its ruling that since, at the time the petitions for adoption were filed, petitioner was married, joint adoption is mandatory.  In Re: Petition for adoption of Michelle P. Lim, Monina P. Lim / In Re: Petition for adoption of Michael Jude P. Lim, Monina P. LimG.R. Nos. 168992-93,  May 21, 2009.

Persons; effects of adoption. Adoption has the following effects: (1) sever all legal ties between the biological parent(s) and the adoptee, except when the biological parent is the spouse of the adopter; (2) deem the adoptee as a legitimate child of the adopter; and (3) give adopter and adoptee reciprocal rights and obligations arising from the relationship of parent and child, including but not limited to: (i) the right of the adopter to choose the name the child is to be known; and (ii) the right of the adopter and adoptee to be legal and compulsory heirs of each other. Therefore, even if emancipation terminates parental authority, the adoptee is still considered a legitimate child of the adopter with all the rights of a legitimate child such as: (1) to bear the surname of the father and the mother; (2) to receive support from their parents; and (3) to be entitled to the legitime and other successional rights. Conversely, the adoptive parents shall, with respect to the adopted child, enjoy all the benefits to which biological parents are entitled such as support and successional rights.  In Re: Petition for adoption of Michelle P. Lim, Monina P. Lim / In Re: Petition for adoption of Michael Jude P. Lim, Monina P. LimG.R. Nos. 168992-93,  May 21, 2009.

Persons; psychological incapacity. The Supreme Court laid down in Republic of the Philippines v. Court of Appeals and Molina stringent guidelines in the interpretation and application of Article 36 of the Family Code, to wit:

(1)      The burden of proof to show the nullity of the marriage belongs to the plaintiff. Any doubt should be resolved in favor of the existence and continuation of the marriage and against its dissolution and nullity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family. Thus, our Constitution devotes an entire Article on the Family, recognizing it “as the foundation of the nation.” It decrees marriage as legally “inviolable,” thereby protecting it from dissolution at the whim of the parties. Both the family and marriage are to be “protected” by the state.

The Family Code echoes this constitutional edict on marriage and the family and emphasizes their permanence, inviolability and solidarity.

(2)      The root cause of the psychological incapacity must be: (a) medically or clinically identified, (b) alleged in the complaint, (c) sufficiently proven by experts and (d) clearly explained in the decision. Article 36 of the Family Code requires that the incapacity must be psychological – not physical, although its manifestations and/or symptoms may be physical. The evidence must convince the court that the parties, or one of them, was mentally or psychically ill to such an extent that the person could not have known the obligations he was assuming, or knowing them, could not have given valid assumption thereof. Although no example of such incapacity need be given here so as not to limit the application of the provision under the principle of ejusdem generis (Salita v. Magtolis, 233 SCRA 100, 108), nevertheless such root cause must be identified as a psychological illness and its incapacitating nature fully explained. Expert evidence may be given by qualified psychiatrists and clinical psychologists.

(3)      The incapacity must be proven to be existing at “the time of the celebration” of the marriage. The evidence must show that the illness was existing when the parties exchanged their “I do’s.” The manifestation of the illness need not be perceivable at such time, but the illness itself must have attached at such moment, or prior thereto.

(4)     Such incapacity must also be shown to be medically or clinically permanent or incurable. Such incurability may be absolute or even relative only in regard to the other spouse, not necessarily absolutely against everyone of the same sex. Furthermore, such incapacity must be relevant to the assumption of marriage obligations, not necessarily to those not related to marriage, like the exercise of a profession or employment in a job. Hence, a pediatrician may be effective in diagnosing illnesses of children and prescribing medicine to cure them but may not be psychologically capacitated to procreate, bear and raise his/her own children as an essential obligation of marriage.

(5)     Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. Thus, “mild characteriological peculiarities, mood changes, occasional emotional outbursts” cannot be accepted as root causes. The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other words, there is a natal or supervening disabling factor in the person, an adverse integral element in the personality structure that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to marriage.

(6)      The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221 and 225 of the same Code in regard to parents and their children. Such non-complied marital obligation(s) must also be stated in the petition, proven by evidence and included in the text of the decision.

(7)     Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not controlling or decisive, should be given great respect by our courts.

In Santos v. Court of Appeals, the Court declared that psychological incapacity must be characterized by (a) gravity, (b) juridical antecedence, and (c) incurability. It should refer to “no less than a mental, not physical, incapacity that causes a party to be truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage.” The intendment of the law has been to confine the meaning of “psychological incapacity” to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage.

However, in more recent jurisprudence, the Supreme Court observed that notwithstanding the guidelines laid down in Molina, there is a need to emphasize other perspectives as well which should govern the disposition of petitions for declaration of nullity under Article 36. Each case must be judged, not on the basis of a priori assumptions, predilections or generalizations but according to its own facts. In regard to psychological incapacity as a ground for annulment of marriage, it is trite to say that no case is on “all fours” with another case. The trial judge must take pains in examining the factual milieu and the appellate court must, as much as possible, avoid substituting its own judgment for that of the trial court. With the advent of Te v. Te, the Supreme Court encourages a reexamination of jurisprudential trends on the interpretation of Article 36 although there has been no major deviation or paradigm shift from the Molina doctrine. Marietta C. Azcueta vs. Republic of the Philippines and the CAG.R. No. 180668, May 26, 2009.

Prescription; express trust. Prescription and laches will run only from the time the express trust is repudiated. The Supreme Court has held that for acquisitive prescription to bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust it must be shown that: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive.

Respondents cannot rely on the fact that the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration. The rule requires a clear repudiation of the trust duly communicated to the beneficiary. The only act that can be construed as repudiation was when respondents filed the petition for reconstitution in October 1993. And since petitioners filed their complaint in January 1995, their cause of action has not yet prescribed, laches cannot be attributed to them.

It is hornbook doctrine that laches is a creation of equity and its application is controlled by equitable considerations. Lachescannot be used to defeat justice or perpetrate fraud and injustice. Neither should its application be used to prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of another. The equitable remedy of laches is, therefore, unavailing in this case.  Heirs of Tranquilino Labiste, et al.  vs. Heirs of Jose Labiste, et al., G.R. No. 162033,  May 8, 2009.

Quasi-delict; negligence. Negligence is defined as the failure to observe for the protection of the interest of another person that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury. In Picart v. Smith, we held that the test of negligence is whether the defendant in doing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation. Sofia Guillang represented by Susan Guillang-Cabatbat, et al. vs. Rodolfo Bedania, et al., G.R. No. 162987, May 21, 2009.

Quasi-delict; presumption of negligence. Under Article 2185 of the Civil Code, unless there is proof to the contrary, a person driving a vehicle is presumed negligent if at the time of the mishap, he was violating any traffic regulation.

In this case, the report showed that the truck, while making the U-turn, failed to signal, a violation of traffic rules. The police records also stated that, after the collision, Bedania escaped and abandoned the petitioners and his truck. This is another violation of a traffic regulation. Therefore, the presumption arises that Bedania was negligent at the time of the mishap.  Sofia Guillang represented by Susan Guillang-Cabatbat, et al. vs. Rodolfo Bedania, et al.G.R. No. 162987, May 21, 2009.

Quasi-delict;  proximate cause.  Proximate cause is that which, in the natural and continuous sequence, unbroken by any efficient, intervening cause, produces the injury, and without which the result would not have occurred. The cause of the collision is traceable to the negligent act of Bedania for if the U-turn was executed with the proper precaution, the mishap in all probability would not have happened. The sudden U-turn of the truck without signal lights posed a serious risk to oncoming motorists. Bedania failed to prevent or minimize that risk. The truck’s sudden U-turn triggered a series of events that led to the collision and, ultimately, to the death of Antero and the injuries of petitioners.  Sofia Guillang represented by Susan Guillang-Cabatbat, et al. vs. Rodolfo Bedania, et al.G.R. No. 162987, May 21, 2009.

Sales;  as is where is.  The phrase as-is where-is basis pertains solely to the physical condition of the thing sold, not to its legal situation. It is merely descriptive of the state of the thing sold. Thus, the as-is where-is basis merely describes the actual state and location of the machinery and equipment sold by petitioner to respondent. The depiction does not alter petitioner’s responsibility to deliver the property to respondent. Asset Privatization Trust vs. T.J. EnterprisesG.R. No. 167195,  May 8, 2009.

Sales; contracts to sell. The only requisite for a contract of sale or contract to sell to exist in law is the meeting of minds upon the thing which is the object of the contract and the price, including the manner the price is to be paid by the vendee. Under Article 1458 of the New Civil Code, in a contract of sale, whether absolute or conditional, one of the contracting parties obliges himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.

In the instant case, the failure by respondent CRS Realty to obtain a license to sell the subdivision lots does not render the sales void on that ground alone especially that the parties have impliedly admitted that there was already a meeting of the minds as to the subject of the sale and price of the contract. The absence of the license to sell only subjects respondent CRS Realty and its officers civilly and criminally liable for the said violation under Presidential Decree (P.D.) No. 957 and related rules and regulations. The absence of the license to sell does not affect the validity of the already perfected contract of sale between petitioners and respondent CRS Realty. Vicenta Cantemprate vs. CRS Realty Development Corp., et al., G.R. No. 171399, May 8, 2009.

Sales; constructive delivery. The ownership of a thing sold is transferred to the vendee upon the actual or constructive delivery thereof. The thing sold shall be understood as delivered when it is placed in the control and possession of the vendee.

As a general rule, when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept. In order for the execution of a public instrument to effect tradition, the purchaser must be placed in control of the thing sold.

However, the execution of a public instrument only gives rise to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is not effected because of a legal impediment. It is necessary that the vendor shall have control over the thing sold that, at the moment of sale, its material delivery could have been made. Thus, a person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument.

In this case, there was no constructive delivery of the machinery and equipment upon the execution of the deed of absolute sale or upon the issuance of the gate pass since it was not petitioner but Creative Lines which had actual possession of the property. The presumption of constructive delivery is not applicable as it has to yield to the reality that the purchaser was not placed in possession and control of the property. Asset Privatization Trust vs. T.J. EnterprisesG.R. No. 167195,  May 8, 2009.

Sales; delivery. “Delivery” as used in the Law on Sales refers to the concurrent transfer of two things: (1) possession and (2) ownership. This is the rationale behind the jurisprudential doctrine that presumptive delivery via execution of a public instrument is negated by the reality that the vendee actually failed to obtain material possession of the land subject of the sale. In the same vein, if the vendee is placed in actual possession of the property, but by agreement of the parties ownership of the same is retained by the vendor until the vendee has fully paid the price, the mere transfer of the possession of the property subject of the sale is not the “delivery” contemplated in the Law on Sales or as used in Article 1543 of the Civil Code.

In the case at bar, it appears that respondent was already placed in possession of the subject properties. However, it is crystal clear that the deeds of absolute sale were still to be executed by the parties upon payment of the last installment. This fact shows that ownership of the said properties was withheld by petitioner. Following case law, it is evident that the parties did not intend to immediately transfer ownership of the subject properties until full payment and the execution of the deeds of absolute sale. Consequently, there is no “delivery” to speak of in this case since what was transferred was possession only and not ownership of the subject properties.  Cebu Windland Development Corporation  vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009.

Sales; prescription. The transfer of possession of the subject properties on October 10, 1996 to respondent cannot be considered as “delivery” within the purview of Article 1543 of the Civil Code. It follows that since there has been no transfer of ownership of the subject properties since the deeds of absolute sale have not yet been executed by the parties, the action filed by respondent has not prescribed. Cebu Windland Development Corporation vs. Ong Siao HuaG.R. No. 173215, May 21, 2009.

Sales; double sale.  Where it is an immovable property that is the subject of a double sale, ownership shall be transferred: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith.The requirement of the law then is two-fold: acquisition in good faith and registration in good faith.

In this case there was a first sale by Eugenia Reyes to Agaton Pagaduan and a second sale by Eugenia Reyes to the respondents. For a second buyer like the respondents to successfully invoke the second paragraph, Article 1544 of the Civil Code, it must possess good faith from the time of the sale in its favor until the registration of the same. Respondents sorely failed to meet this requirement of good faith since they had actual knowledge of Eugenia’s prior sale of the southern portion property to the petitioners, a fact antithetical to good faith. This cannot be denied by respondents since in the same deed of sale that Eugenia sold them the northern portion to the respondents for P1,500.00, Eugenia also sold the southern portion of the land to Agaton Pagaduan for P500.00. Angel M. Pagaduan vs. Spouses Estanislao & Fe Posadas Ocuma, G.R. No. 176308, May 8, 2009.

Sales; immovable. Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.

In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties agree on a stated 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.

In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, 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 lesser area or number than that stated in the contract. However, the discrepancy must not be substantial. A vendee of land, when 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. The use of “more or less” or similar words in designating quantity covers only a reasonable excess or deficiency.

Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.  Cebu Windland Development Corporation  vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009.

Sales;  warranty.  The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. Ownership of the thing sold is acquired by the vendee from the moment it its delivered to him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. A perusal of the deed of absolute sale shows that both the vendor and the vendee represented and warranted to each other that each had all the requisite power and authority to enter into the deed of absolute sale and that they shall perform each of their respective obligations under the deed of absolute in accordance with the terms thereof. Asset Privatization Trust vs. T.J. EnterprisesG.R. No. 167195,  May 8, 2009.

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