Anda di halaman 1dari 6

1

XIII. Special Problems in Sales way that he cannot without damage withdraw from the
A. Sale by non-owner (Arts. 559, 1505, 1434) transaction.
Article 559. The possession of movable property acquired in b) recording laws
good faith is equivalent to a title. Nevertheless, one who has - Where the law enables the apparent owner to dispose
lost any movable or has been unlawfully deprived thereof, may of the goods as if he were the true owner thereof
recover it from the person in possession of the same. - Philippines has no law such as the FACTOR’S ACT unlike
If the possessor of a movable lost or which the owner has been
England and US.
unlawfully deprived, has acquired it in good faith at a public - Such law is found in the provisions re:agency in the Civil
sale, the owner cannot obtain its return without reimbursing Code.
the price paid therefor. (464a) - FACTOR’S ACT
- Designed to protect 3rd persons who (under
Article 1505. Subject to the provisions of this Title, where specified conditions) deal with an agent
goods are sold by a person who is not the owner thereof, and believing him to be the owner of goods.
who does not sell them under authority or with the consent of - Examples of recording laws which may have a bearing
the owner, the buyer acquires no better title to the goods than on the validity of a sale made by a person who is not the
the seller had, unless the owner of the goods is by his conduct owner
precluded from denying the seller's authority to sell. - Property Registration Decree (PD1529)
Nothing in this Title, however, shall affect: - Land Transportation and Traffic Code
(1) The provisions of any factors' act, recording laws, or any (RA4136)
other provision of law enabling the apparent owner of goods - Rev. Administrative Code w/ regard to the sale
to dispose of them as if he were the true owner thereof; of large cattle (Sec. 529) and sale of vessels
(2) The validity of any contract of sale under statutory power (Sec. 1171)
of sale or under the order of a court of competent jurisdiction; - Examples of “any other provisions of law” referred to in
(3) Purchases made in a merchant's store, or in fairs, or No. 1
markets, in accordance with the Code of Commerce and special - Warehouse Receipts Law (Act No. 2137; Art.
laws. (n) 1507-1520)
Article 1434. When a person who is not the owner of a thing c) judicial power and statutory sale
sells or alienates and delivers it, and later the seller or grantor - Where the sale is sanctioned by statutory and judicial
acquires title thereto, such title passes by operation of law to authority
the buyer or grantee. - Different laws apply to different types of forced or
involuntary sales under our jurisdiction:
i. when ownership required - Ordinary execution sale: Rule 39 of the Rules
- No one can give what he has not or transfer a greater of Court on Execution, Satisfaction, and Effect
right to another that he himself has. of Judgements
- Person can sell only what he owns or is authorized to - Extrajudicial foreclosure sales of real estate
sell. mortgages: Act No. 3135, as amended by Act
- Sale is a derivative mode of acquiring ownership and No. 4118 (An Act to regulate the sale of
the buyer gets only such rights as the seller had or could property under special powers inserted in or
legally sell. annexed to real estate mortgages)
- A derivative right cannot exist higher than its source. - The rule that the sale must be made by the owner does
a) perfection not apply when the sale takes place by virtue of an
b) consummation order of a court of competent jurisdiction.
- Sale by sheriff pursuant to court order is valid
ii. rule on acquisition of ownership by the buyer in case of - Government, however, does not warrant the
sale by non-owner; principle behind the rule (nemo dat quod title to properties sold by the sheriff at a public
non habet) auction.
- GR: One who has no title at all can transfer none, and
that a buyer pays him value in good faith without notice d) merchant store
makes no difference.
- ****Google search of the latin maxim: the purchase of a **De Leon: p. 255
possession from someone who has no ownership right **e) Where the seller has a voidable title which has not been
to it also denies the purchaser any ownership title. avoided at the time of the sale. (Art. 1506)

iii. exceptions to the rule **f) Where seller subsequently acquires title
a) estoppel - When a person conveys property to another of which at
- Where the owner of the goods is, by his conduct, the time he is not the owner, his subsequent acquisition
precluded from denying the seller’s authority to sell of title validates his previous conveyance.
- If the owner is by his conduct precluded from denying - Such doctrine is applicable to conveyance of usufructs
the seller’s authority to sell, the buyer may acquire a as well as to transfers of full ownership.
valid title although the seller had neither title nor
authority to transfer title. iv. subsequent acquisition of title (Art. 1434);
- It is essential that the party estopped shall have made a Article 1434. When a person who is not the owner of a thing
representation by words or acts and that someone shall sells or alienates and delivers it, and later the seller or grantor
have acted on the faith of this representation in such a acquires title thereto, such title passes by operation of law to
2
Basis of Rule
the buyer or grantee. ● Where the loss has happened which must fall on one of
the 2 innocent persons, it shall be borne by him who is
iv. rule with respect to immovable property caused the loss
- Generally, Art. 1505 applies to sale of goods, not ● Similar to Innocent Purchaser for Value (Property
immovable. Registration Decree) → Innocent purchaser for value in
- However, the principle in Art. 1505 that a person can good faith
sell only what he owns or is authorized to sell applies to ● Similar to a holder in due course to whom a negotiable
the sale of immovable. instrument is negotiated for value and in GF (Negotiable
- Exceptions: instruments Law)
(1) Estoppel
- Owner of the land may be estopped from ii. Art. 559 in relation to Arts. 1505 and 1506
claiming that the sale of land was not Article 559. The possession of movable property acquired in
authorized. good faith is equivalent to a title. Nevertheless, one who has
(2) Sale of land registered under the Torrens lost any movable or has been unlawfully deprived thereof, may
system recover it from the person in possession of the same.
- a fraudulent and forged document of sale may If the possessor of a movable lost or which the owner has been
become the root of a valid title if the certificate unlawfully deprived, has acquired it in good faith at a public
of title has already been transferred from the sale, the owner cannot obtain its return without reimbursing
name of the true owner to the name indicated the price paid therefor. (464a)
by the forger
- Every person dealing in good faith and for Article 1505. Subject to the provisions of this Title, where
valuable consideration with registered land goods are sold by a person who is not the owner thereof, and
may safely rely upon what appears in the who does not sell them under authority or with the consent of
certificate of title and does not have to inquire the owner, the buyer acquires no better title to the goods than
further. the seller had, unless the owner of the goods is by his conduct
- Remedy of person prejudiced: action for precluded from denying the seller's authority to sell.
damages against the one who employed fraud Nothing in this Title, however, shall affect:
within 4 years from discovery of deception (1) The provisions of any factors' act, recording laws, or any
- Issue of good faith or bad faith essential only other provision of law enabling the apparent owner of goods
when it is registered land to dispose of them as if he were the true owner thereof;
(3) Where the sale is sanctioned by statutory or (2) The validity of any contract of sale under statutory power
judicial authority of sale or under the order of a court of competent jurisdiction;
- Title can transfer to buyer in such sale (3) Purchases made in a merchant's store, or in fairs, or
markets, in accordance with the Code of Commerce and special
v. status of contract laws. (n)
B. Sale by owner with voidable title non-owner (Arts. 559, Article 1506. Where the seller of goods has a voidable title
1506) thereto, but his title has not been avoided at the time of the
Article 559. The possession of movable property acquired in sale, the buyer acquires a good title to the goods, provided he
good faith is equivalent to a title. Nevertheless, one who has buys them in good faith, for value, and without notice of the
lost any movable or has been unlawfully deprived thereof, may seller's defect of title. (n)
recover it from the person in possession of the same. - Accdg. to Art. 559, one who has lost any movable, or has
If the possessor of a movable lost or which the owner has been been unlawfully deprived therefor, may recover it from
unlawfully deprived, has acquired it in good faith at a public the person in possession of the same.
sale, the owner cannot obtain its return without reimbursing - If possessor of movable lost has acquired it in a public
the price paid therefor. (464a) sale, owner cannot obtain its return without
reimbursing the price paid therefor.
Article 1506. Where the seller of goods has a voidable title - Owner of lost movable may recover it from the person
thereto, but his title has not been avoided at the time of the in possession of the property even if the latter acquired
sale, the buyer acquires a good title to the goods, provided he it in good faith.
buys them in good faith, for value, and without notice of the
seller's defect of title. (n) C. Double sales (Art. 1544)
Article 1544. If the same thing should have been sold to
i. rule on acquisition by ownership by the buyer; principle different vendees, the ownership shall be transferred to the
behind the rule person who may have first taken possession thereof in good
faith, if it should be movable property.
Requisites for Acquisition of Good title by Buyer Should it be immovable property, the ownership shall belong
1. He buys them before the title of the seller has been to the person acquiring it who in good faith first recorded it in
avoided the Registry of Property.
2. In Good Faith for value Should there be no inscription, the ownership shall pertain to
3. Without notice of the seller’s defect of title the person who in good faith was first in the possession; and,
in the absence thereof, to the person who presents the oldest
title, provided there is good faith. (1473)
3
i. requisites for applicability of Article 1544 3. Contract of sale FICTITIOUS or FORGED, or Seller
WITHOUT RIGHT TO SELL
Article 1544 applicable when requisites occur: a. It does NOT apply if the contract of sale first
1. The 2 (or more) sales transactions must constitute valid sales; registered is fictitious or forged or If the
2. The 2 (or more) sales transactions must pertain to exactly the vendor is not the owner of the property sold
same subject matter and had no right to sell the same
3. The 2 (or more) buyers at odds over the rightful ownership of b. EXCEPTION: A forged deed of sale of
the subject matter must each represent conflicting interests; and registered land can legally be the root of a
4. The 2 (or more) buyers at odds over the rightful ownership of valid title when an IPV intervenes and the
the subject matter must each have bought from the very same certificate of title has already been transferred
seller from the name of the true owner to the forger
c. The remedy of the true owner if to bring an
NOTE: Art. 1544 CANNOT be invoked where 2 different contracts action for damages against the one who cause
of sale are made by 2 different persons, one of them not being the or employed the fraud and if the latter is
owner of the property sold insolvent, an action against the Treasurer of
the Philippines may be filed for recovery of
Rules as to preference of ownership in case of a double sale damages against the Assurance Fund.
• It applies only to purchasers in Good Faith 4. DONATION
• If the SAME property is VALIDLY sold by the SAME vendor (who a. Art 1544 APPLIES to donations made to
has an existing right in the property sold and the power to different donees
dispose it), to DIFFERENT vendees, each representing conflicting b. A deed of donation executed with all the
rights of said vendees shall be resolved in accordance with the formalities of law is on the same footing as a
following rules: deed of sale in the form of a public instrument
• MOVABLE: Ownership belongs to the Vendee who first takes c. Art. 1544 applies only if the same thing has
possession in Good Faith been “sold” to different vendees. Therefore, it
• IMMOVABLE: Ownership belongs in the ff order: does NOT apply if one transaction is a sale and
1. Vendee who first registers the sale in Good Faith in the the other is a donation.
Registry of Deeds 5. Contracts TO SELL and CONDITIONAL Sales
2. In the absence of registration, the vendee who first a. Does NOT apply to contract to sell
takes possession in Good Faith - Art. 1544 does not apply where the 1st transaction is a
3. In the absence of both registration and possession, the contract to sell for neither a transfer of ownership nor a
vendee who presents the oldest title (who first bought sales transaction has been consummated.
the property) in Good Faith - Similarly, art. 1544 does not apply to a case where there
was a sale to one party of the land itself while the other
Purchaser in Good Faith contract was a mere promise to sell the land.
• One who buys the property of another without notice that some - SC applied governing principles of Art. 1544 in a
other person has a right to or interest in, such property and pays situation where the first contract was a contract was a
full and fair price for the same contract to sell.
- Knowledge gained by the first buyers under a contract
Sales by Single Vendor to sell of the new agreement between the seller and the
• Art. 1544 contemplated a case of double or multiple sales by a second buyer will not defeat their rights as first buyers
single vendor to 2 or more buyers except where the second buyer registers or annotates
• Conveyance must have been made by a party who has an his transaction or agreement on the title of the subject
existing right in the thing and the power to dispose of it properties in good faith ahead of the first buyers.
• It cannot be invoked where the 2 different contracts of sale are b. Applies to conditional sales
made by 2 different persons, one of them not being the owner of - SC applied Art. 1544 to a conditional contract of sale in
the property sold one case
• Even if the sale was made by the same person, if the second sale - In such case, they distinguished contract of sale from
was made when such person was no longer the owner of the contract to sell (p. 362-363)
property because it has been acquired by the first purchaser in - In contract to sell, there being no previous sale of the
full dominion, the second purchaser cannot acquire any right property, third person buying such property despite the
fulfillment of the suspensive condition such as the full
Two or more sales payment of the purchase price, for instance, cannot be
1. Sale to DIFFERENT vendees deemed a buyer in bad faith and the prospective buyer
a. There must be at least 2 deeds of sale over the cannot seek the relief of reconveyance of the property.
same property - In conditional contract of sale, upon the fulfillment of
b. There is no double sale where after the sale of suspensive condition, sale becomes absolute and this
the property in favor of a person, the vendor will definitely affect the seller’s title thereto.
did not anymore execute another sale over the - Applying Art. 1544, such second buyer of the
same property in favor of another property who may have had actual or
2. VOIDABLE sale constructive knowledge of such defect in the
a. 1544 is NOT applicable where there is only seller’s title, or at least was charged with the
one valid sale, the previous sale having been obligation to discover such defect, cannot be a
found fraudulent or where one deed of sale registrant in good faith
was registered ahead of the other but said - In case a title is issued to the second buyer, the
deed if found to a forgery, the right of the first buyer may seek reconveyance of the
other vendee should prevail property subject of the sale.
4
6. Sale of property to ONE PARTY and Assignment of right - Jurisprudence--a buyer was not an innocent purchaser
of property for value when it ignored the lis pendens annotation on
a. Par. 3 1544 does NOT apply to a case where the title
the sale in favor of one party was the property - It another case, it was also held that a buyer cannot be
itself, while the transaction in favor of another considered aware of the flaw that invalidates his claim
was a mere promise to assign, or at most, an when the same annotation is ordered to cancelled at the
actual assignment of the right to repurchase time of the purchase
the same property. - A recorded conveyance is constructive notice to the
whole world of its contents, interests, and everything
- There must be at least 2 deeds of sale over the same included therein
property - Thus, one who deals w/ property covered by a
- Not applicable where there is only one valid sale and title with an annotation of levy or attachment
the other is voidable (i.e. fraudulent, fictitious or forged) CANNOT invoke the rights of a purchaser in
or if the vendor is not the owner of the property sold good faith
and had no right to sell the same
- Art. 1544 applies to donations made to different donees Purchaser examined only the latest certificate of title
- Does not apply to contracts to sell but applies to - SUFFICIENT/ENOUGH that he examines the latest
conditional sales certificate of title
- NOT bound by the original, but by the title of the person
Possession of property sold who conveyed the property to him
Possession means both actual physical delivery and constructive - Presumption: the transferee of registered land is not
delivery aware of any defect in the title of the property he
● Actual delivery – when the thing is placed under the purchased
control and possession of the vendee
● Constructive delivery – when the sale is made through a ii. rules under Article 1544
public instrument, the execution thereof shall be a) movables
equivalent to delivery if from the deed the contrary – “possession”; how acquired (see Art. 559)
does not appear or cannot be clearly inferred
• After the sale of realty by means of a public instrument, the b) immovables (Registration of Immovable Sold)
vendor who resells it to another, does not transmit anything to meaning of “registration”
the second vendee, and if the latter, by virtue of the second sale, - Any entry made in the books of the Registry of Property
takes material possession of the thing, he does it as mere which records solemnly and permanently the right of
detainer, and it would be unjust to protect this detention against ownership and other real rights
the rights of the thing lawfully acquired by the first vendee - Includes both registration in its ordinary and strict
• The fact that the first sale was notarized does NOT mean that sense and cancellation, annotation, and even marginal
the second sale cannot be given effect ! if the land is registered notes
under the TS, the mere execution of a sale by means of a public - Under PD 1529, land bought under Torrens system are
instrument will not bind 3rd persons (including the second registered lands; land not registered under the Torrens
buyer). system are unregistered lands
• If the first sale (albeit notarized) was not registered with the - Art. 1544 does NOT apply to unregistered land
Register of Deeds, and the second buyer acquired the same - Registration in Registry of Property is the operative act
property in GF and registers the sale in GF with the RD ! the to convey or affect the land insofar as third persons are
second buyer should prevail concerned
- Sale of registered land that was not registered w/
Purchaser with notice of right of repurchase which as Register of Deeds will NOT prevail over subsequent sale
already elapsed registered in good faith by the 2nd buyer
- Situation: a purchaser buys a property with notice that - Register of deeds is required to keep a primary entry
there is a right of redemption that has already elapsed. book in which he shall enter in the order of their
There is no annotation of repurchase by the vendor a reception, all instruments relating to registered land
retro, but the title has NOT been cleared of the (instrument is registered from the time so noted by the
encumbrance register)
- NOT a purchaser in good faith because he has notice - Mere registration is not enough, GOOD FAITH must
that some other person has a right/interest in the concur w/ registration (i.e. w/o knowledge of the
property previous alienation by the vendor to another)
- Registration in bad faith = no registration at all
Adverse claim or lis pendens previously annotated on title of
property sold Requirement of “Good Faith”
- Subsequent sale of land CANNOT prevail over an - Good or bad faith is only relevant where ​the subject of
annotated adverse claim which was previously the sale is ​registered land ​and the purchase was made
annotated in the title of the property from the registered owner whose title to the land is
- Prior judicial determination of adverse claim is NOT clean
required before it can flaw the title - Presumption is that the transferee of the registered land
- The annotation of an adverse claim is to protect the is not aware of any defect in the title of the property he
interest of a person over a piece of real property, and bought
serves as a notice to third parties 1. Good faith of the first buyer
- Prius tempore, patior jure ​(First in
time, stronger in right)
5
- Good faith of the first buyer subsists - Banking and financial institutions
despite subsequent discovery of the are expected to exercise a higher
second sale degree of care in ascertaining the
- Knowledge of the first buyer of status of the seller’s/mortgagor’s
second sale does not defeat his right title or the condition of the property
- X: when second buyer - Business is ​affected with
registers first in GF public interest
2. Good faith of the second buyer - Once banking/financial
- Clean title of the second buyer is institutions have shown
premised on the ​ignorance of the that they have satisfactorily
rights of the first buyer exercised the diligence
- An action to quiet title must required of them, they can
be instituted to determine be considered as ​innocent
which has the better right purchasers for value
over the land in question 7. Property purchased already peaceably
- Second buyer must show that he possessed by another
acted in good faith when he acquired - Failure of a prospective buyer to take
and registered the land such precautions in purchasing
- From the time the second buyer property = negligence → precludes
learns of the cloud on his title, he is him from invoking the rights of an
thereafter construed in bad faith IPFV
- That is, if he continues to - Absence of such inquiry
possess of thereafter would remove him from the
alienates the land despite realm of ​bona fide
knowing that there exists a acquisition
cloud on his title
3. Burden of proof – meaning of “possession”
- One who alleges that one is an - Includes both actual and constructive delivery
innocent purchaser for value (IPFV) - Art. 1498 - sale made thru public instrument equivalent
must prove the same to delivery
- Not enough to invoke the – meaning of “oldest title”
ordinary/legal presumption of good
faith → must be proven iii. applicability of Art. 1544 to unregistered lands
4. Purchase must be for valuable GR: 1544 does NOT apply to sales involving unregistered
consideration lands
- “Purchaser in good faith” = one who - Issue of good faith or bad faith of the buyer is only
buys property of another, without relevant in sales involving registered lands with a clean
notice that another person has a title
right/interest in the same and thus - The purchaser who relies on the clean title of the
pays a full and fair price therefor registered owner is a purchaser in good faith for value
5. Actual knowledge - Act No. 3344 applies to sales of unregistered lands--the
- Subsequent knowledge of the second registration of documents affecting unregistered land is
buyer of the existence of the rights of w/o prejudice to a third party with a better right
the first buyer defeats the former’s - The mere registration of a sale in one’s favor
rights even if he is the first to register does not give him any right over the land if the
- Such knowledge thereafter vendor was not anymore the owner of the land
taints his - Sec. 113 (Act No. 3344)--“no deed, conveyance,
registration/possession mortgage, lease, or other voluntary instrument affecting
with bad faith land not registered under the Torrens System shall be
6. Duty of purchaser to look beyond the valid, except as between the parties thereto, unless such
certificate instrument shall have been recorded in the Register of
- GR: A buyer ​may just rely on the Deeds for the province or city where the land lies...It
Torrens title ​and is ​not required to shall be understood that any recording made under this
inquire any further into the title if it section shall ​be without prejudice to a third party with a
seems that the same is clean/not better right.”
suspicious - Registration is given SOME priority, provided
- X: If there exist facts that that no other party has a better right
would make any reasonable
man wary, the prospective Sale of unregistered land
buyer should first - GR: The first buyer would have the better right
investigate - The vendor does NOT have the right to sell the property
- A purchaser in good faith of anymore because he is no longer the owner (once he
registered land ​acquires a good title sells it to the first buyer), so even if the second buyer
against all transferees whose rights has the conveyance (deed) notarized, this is null and
are ​not recorded ​in the ROD at the void
time of sale - Nemo dat quod non habet--one cannot give what one
does not have
6
iv. Article 1544 and execution sales
Unregistered land subsequently registered Registered Land
- Situation: the land was unregistered at the first sale but - Registration under the Torrens system is the operative
was already registered at the time of the second sale act that gives validity to the transfer, or creates a lien
- GR: Second buyer prevails if he registered the sale in - A purchaser is NOT required to go beyond the registry
good faith with the Register of Deeds, notwithstanding to determine the conditions of the property; and he
the fact that the first buyer may have recorded the sale acquires the rights, title, and interest as stated in the
under Act No. 3344 certificate of title, subject to the liens, encumbrances
and burdens annotated thereon
Preference of levy of execution or attachment over prior
unregistered land Unregistered Land
- Levy on execution or attachment duly registered takes - Art. 1544 does not apply where the second buyer
preference over a prior unregistered sale acquires the unregistered parcel of land at an execution
- Even if the prior unregistered sale is subsequently sale.
registered before the sale on execution is made, the - Reason: purchaser of unregistered land at a sheriff’s
validity of the execution sale should be maintained execution sale only steps into the shoes of the
because it retroacted to the date of the levy judgement debtor, and merely acquires the latter’s
interest in the property sold as of the time the property
Other Rulings On Applications of Rules was levied upon. (specifically provided by Sec. 33 of
1. Subsequent mortgage registered under Act. 334 Rule 39 of ROC).
- Unrecorded sale of a house of a prior date is preferred
to a recorded mortgage of the same house of a later date Unregistered Land subsequently registered
- Reason: If the original owner had parted with his - If sale in favor of first buyer was executed before land
ownership of the thing sold, then he no longer had the was registered, while the conflicting sale in favor of
ownership and full disposal of that thing so as to be able second buyer was executed after the same property had
to mortgage it. been registered → what should determine the issue are
- Registration of mortgage under Act 334 is WITHOUT the provisions of the last paragraph of Sec. 33, Rule 39
prejudice to the better right of 3rd parties of the ROC
2. Pacto de retro sale - Second buyer who purchased the land when it was
- Not applicable to a case which involves an earlier pacto already registered and who registered the sale in good
de retro sale of an unregistered land and subsequent faith will prevail over the first buyer who purchased the
donation by the vendor a retro to another who sold it to land when it was still unregistered.
a 3rd party while the property was still in the
possession of the vendee a retro who has already
acquired title before the donation because of a failure of
the vendor a retro to repurchase the same
- There being no title to the property which the vendor a
retro could convey to the supposed donee (because no
longer owner thereof), no title could be conveyed by the
donee by the sale of the property.
3. Subsequent mortgage of land registered under the torrens
system, registered by mortgagee
- The registered right of GSIS as mortgagee of the
property was held inferior to the unregistered right of
M, the previous buyer, the unrecorded sale between M
as the vendee and Z, the original owner, is preferred
- Reason: If Z had parted with his ownership of the land
sold, then he no longer had ownership and free disposal
of the same as to be able to mortgage it
4. Sale to financial institution qualified as innocent
purchaser for value
- When financial institutions exercise ​extraordinary
diligence in determining the validity of the certificates
of title to properties being sold or mortgaged to them
and still fail to find any defect or encumbrance upon
the subject properties after said inquiries​​, such
financial institution ​should be protected like any
other Innocent Purchaser for Value if they paid full
and fair price at the time of the purchase or before
having notice of some other person’s claim in the
property
- A financial institution is not expected to check the
technical description of each and every title in the RD
in order to determine whether there is another title to
the property.