Bar Q and A #28

1.) Distinguish the following: a. Contract of sale and contract to sell. b. Interruption and tolling of prescription of actions.

a. A contract of sale may be absolute or conditional. A contract to sell is a kind of conditional sale. In an absolute sale, title to the property passes to the vendee upon the delivery of the thing sold. In both contracts to sell and contracts of conditional sale, title to the property remains with the seller despite delivery. Both contracts are subject to the positive suspensive condition of the buyer’s full payment of the purchase price or the fulfillment of the condition.

b. The interruption of the prescriptive period by written extrajudicial demand means that the said period would commence anew from the receipt of the demand.

Article 1155 of the Civil Code provides that the “prescription of actions is interrupted” inter alia, “when there is any written acknowledgment of the debt by the debtor.” This simply means that the period of prescription, when interrupted by such a written acknowledgment, begins to run anew; and whatever time of limitation might have already elapsed from the accrual of the cause of action is thereby negated and rendered inefficacious. The effect of the interruption spoken of in Article 1155 is to renew the obligation, to make prescription run again from the date of the interruption.

2.) D sold a second-hand car to E for P150,000.00. The agreement between D and E was that half of the purchase price, or P75,000.00 shall be paid in five equal monthly instalments of P15,000.00 each. That car was delivered to E, and E paid the amount of P75,000.00 to D. Less than one month thereafter, the car was stolen from E’s garage with no fault on E’s part and was never recovered. Is E legally bound to pay the said unpaid balance of P75,000.00? Explain your answer.

Yes, E is legally bound to pay the balance of P75,000.00. The ownership of the car sold was acquired by E from the moment it was delivered to him. Having acquired ownership. E bears the risk of the loss under the doctrine of res perit domino. (Articles 1496, 1497, Civil Code)

3.) Pablo sold his car to Alfonso who issued a postdated check in full payment therefore. Before the maturity of the check, Alfonso sold the car to Gregorio who later sold it to Gabriel. When presented for payment, the check issued by Alfonso was dishonored by the drawee bank for the reason that he, Alfonso, had already closed his account even before he issued his check. Pablo sued to recover the car from Gabriel alleging that he (Pablo) had been unlawfully deprived of it by reason of Alfonso’s deception. Will the suit prosper?

No. The suit will not prosper because Pablo was not unlawfully deprived of the car although he was unlawfully deprived of the price. The perfection of the sale and the delivery of the car was enough to allow Alfonso to have a right of ownership over the car, which can be lawfully transferred to Gregorio. Art. 559 applies only to a person who is in possession in good faith of the property, and not to the owner thereof. Alfonso, in the problem, was the owner, and, hence, Gabriel acquired the title to the car.

Non-payment of the price in a contract of sale does not render ineffective the obligation to deliver.

The obligation to deliver a thing is different from the obligation to pay its price. [EDCA Publishing Co. v. Santos (1990)]

4.) A granted B the exclusive right to sell his brand of Maong pants in Isabela, the price for his merchandise payable within 60 days from delivery, and promising B a commission of 20% on all sales. After the delivery of the merchandise to B but beforehecouldsell any of them, B’s store in Isabela was completely burned without his fault, together will all of A’s pants. Must B pay A for his lost pants? Why?

The contract between A and B is a sale not an agency to sell because the price is payable by B upon 60 days from delivery even if B is unable to resell it. If B were an agent, he is not bound to pay the price if he is unable to resell it.

As a buyer, ownership passed to B upon delivery and, under Art. 1504 of the Civil Code, the thing perishes for the owner. Hence, B must still pay the price.

5.) On June 15, 1995, Jesus sold a parcel of registered land to Jaime. On June 30, 1995, he sold the same land to Jose. Who has a better right if: a) The first sale is registered ahead of the second sale, with knowledge of the latter. Why? b) The second sale is registered ahead of the first sale, with knowledge of the latter? Why?

The first buyer has the better right if his sale was first to be registered, even though the first buyer knew of the second The fact that he knew of the second sale at the time of his registration does not make him as acting in bad faith because the sale to him was ahead in time, hence, has a priority in right. What creates bad faith in the case of double sale of land is knowledge of a previous sale.
The first buyer is still to be preferred, where the second sale is registered ahead of the first sale but with knowledge of the This is because the second buyer, who at the time he registered his sale knew that the property had already been sold to someone else, acted in bad faith (Article 1544).

6.) JV, owner of a parcel of land, sold it to PP. But the deed of sale was not registered. One year later, JV sold the parcel again to RR, who succeeded to register the deed and to obtain a transfer certificate of title over the property in his own name. Who has a better right over the parcel of land, RR or PP? Why? Explain the legal basis for your answer.

It depends on whether or not RR is an innocent purchaser for value. Under the Torrens System, a deed or instrument operated only as a contract between the parties and as evidence of authority to the Register of Deeds to make the registration. It is the registration of the deed or the instrument that is the operative act that conveys or affects the land (Sec. 51, P.D.No. 1529).

In cases of double sale of titled land, it is a well-settled rule that the buyer who first registers the sale in good faith acquires a better right to the land (Art. 1544).

Persons dealing with property covered by Torrens title are not required to go beyond what appears on its face (Orquiola v. CA 386, G.R. No. 141463, August 6, 2002; Spouses Domingo v. Races, G.R. No. 147468, April 9, 2003). Thus, absent any showing that RR knew about, or ought to have known the prior sale of the land to PP or that he acted in bad faith, and being first to register the sale, RR acquired a good and a clean title to the property as against PP.

7.) Juliet offered to sell her house and lot, together with all the furniture and appliances therein to Dehlma. Before agreeing to purchase the property, Dehlma went to the Register of Deeds to verify Juliet's title. She discovered that while the property was registered in Juliet's name under the Land Registration Act, as amended by the Property Registration Decree, it property, Dehlma told Juliet to redeem the property from Elaine, and gave her an advance payment to be used for purposes of releasing the mortgage on the property. When the mortgage was released, Juliet executed a Deed of Absolute Sale over the property which was duly registered with the Registry of Deeds, and a new TCT was issued in Dehlma's name. Dehlma immediately took possession over the house and lot and the movables therein. Thereafter, Dehlma went to the Assessor's Office to get a new tax declaration under her name. She was surprised to find out that the property was already declared for tax purposes in the name of XYZ Bank which had foreclosed the mortgage on the property before it was sold to her. XYZ Bank was also the purchaser in the foreclosure sale of the property. At that time, the property was still unregistered but XYZ Bank registered the Sheriff's Deed of Conveyance in the day book of the Register of Deeds under Act. 3344 and obtained a tax declaration in its name. a) Was Dehlma a purchaser in good faith? b) Who as between Dehlma and XYZ Bank has a better right to the house and lot?

a) Yes, Dehlma is a purchaser in good faith. She learned about the XYZ tax declaration and foreclosure sale only after the sale to her was registered. She relied on the certificate of title of her predecessor-in-interest. Under the Torrens system, a buyer of registered lands is not required by law to inquire further than what the Torrens certificated indicates on its face. If a person proceeds to buy it relying on the title, that person is considered a buyer in good faith. The “priority in time” rule could not be invoked by XYZ Bank because the foreclosure sale of the land in favor of the bank was recorded under Act No. 3344, the law governing transactions affecting unregistered land, and thus, does not bind the land.

b) Between Dehlma and the bank, the former has a better right to the house and lot.

8.) In December 1985, Salvador and the Star Semiconductor Company (SSC) executed a Deed of Conditional Sale wherein the former agreed to sell his 2,000 square meter lot in Cainta, Rizal, to the latter for the price of P1,000,000.00, payable P100,000.00 down, and the balance 60 days after the squatters in the property have been removed. If the squatters are not removed within six months, the P100,000.00 down payment shall be returned by the vendor to the vendee. Salvador filed ejectment suits against the squatters, but in spite of the decisions in his favor, the squatters still would not leave. In August, 1986, Salvador offered to return the P100,000.00 down payment to the vendee, on the ground that he is unable to remove the squatters on the property. SSC refused to accept the money and demands that Salvador executed a deed of absolute sale of the property in its favor at which time it will pay the balance of the price. Incidentally, the value of the land had doubled by that time. Salvador consigned the P100,000.00 in court, and filed an action for rescission of the deed of conditional sale, plus damages. Will the action prosper? Explain.

No, the action will not prosper. The action for rescission may be brought only by the aggrieved party to the contract. Since it was Salvador who failed to comply with his conditional obligation, he is not the aggrieved party who may file the action for rescission buy the Star Semiconductor Company. The company, however, is not opting to rescind the contract but has chosen to waive Salvador’s compliance with the condition which it can do under Art. 1545, NCC.

9.) Danny and Elsa were married in 2002. In 2012, Elsa left the conjugal home and her two minor children with Danny to live with her paramour. In 2015, Danny sold without Elsa's consent a parcel of land registered in his name that he had purchased prior to the marriage. Danny used the proceeds of the sale to pay for his children's tuition fees. Is the sale valid, void or voidable? Explain your answer. (3%)

The sale of the parcel of land is void. There is no indication in the facts that Danny and Elsa executed a marriage settlement prior to their marriage. As the marriage was celebrated during the effectivity of the Family Code, absent a marriage settlement, the property regime between the spouses is the Absolute Community of Property. Under the Absolute Community of Property regime, the parcel of land belongs to the community property as the property he had brought into the marriage even if said property were registered in the name of Danny. Therefore, the sale of the property is void, because it was executed without the authority of the court or the written consent of the other spouse.

10.) LT applied with BPI to purchase a house and lot in Quezon City, one of its acquired assets. The amount offered was P1,000,000.00 payable, as follows: P200,000.00 down payment, the balance of P800,000.00 payable within 90 days from June 1, 1985. BPI accepted the offer, whereupon LT drew a check for P200,000.00 in favor of BPI which the latter thereafter deposited in its account. On September 5, 1985, LT wrote BPI requesting extension until October 10, 1985, within which to pay the balance, to which BPI agreed. On October 5, 1985, due to the expected delay in the remittance of the needed amount by his financier from the United States, LT wrote BPI requesting a last extension until October 30, 1985, within which to pay the balance. BPI denied LT’s request because another had offered to buy the same property for P1,500,000.00, cancelled its agreement with LT and offered to return to him the amount of P200,000.00 that LT had paid to it. On October 20, 1985, upon receipt of the amount of P800,000.00 from his US financier, LT offered to pay the amount by tendering a cashier’s check therefor, but which BPI refused to accept. LT then filed a complaint against BPI in the RTC for specific performance and deposited in court the amount of P800,000.00. Is BPI legally correct in cancelling its contract with LT?

BPI is not correct in canceling the contract with LT. In Lina Topacio v. Court of Appeals and BPI Investment (G.R. No. 102606, July 3, 1993, 211 SCRA 291), the Supreme Court held that the earnest money is part of the purchase price and is proof of the perfection of the contract. Secondly, notarial or judicial rescission under Art. 1592 and 1991 of the Civil Code is necessary (Taguba v. De Leon, 132 SCRA 722).

b. The interruption of the prescriptive period by written extrajudicial demand means that the said period would commence anew from the receipt of the demand.

Yes, E is legally bound to pay the balance of P75,000.00. The ownership of the car sold was acquired by E from the moment it was delivered to him. Having acquired ownership. E bears the risk of the loss under the doctrine of res perit domino. (Articles 1496, 1497, Civil Code)

Non-payment of the price in a contract of sale does not render ineffective the obligation to deliver.

The obligation to deliver a thing is different from the obligation to pay its price. [EDCA Publishing Co. v. Santos (1990)]

The contract between A and B is a sale not an agency to sell because the price is payable by B upon 60 days from delivery even if B is unable to resell it. If B were an agent, he is not bound to pay the price if he is unable to resell it.

As a buyer, ownership passed to B upon delivery and, under Art. 1504 of the Civil Code, the thing perishes for the owner. Hence, B must still pay the price.

The first buyer is still to be preferred, where the second sale is registered ahead of the first sale but with knowledge of the This is because the second buyer, who at the time he registered his sale knew that the property had already been sold to someone else, acted in bad faith (Article 1544).

In cases of double sale of titled land, it is a well-settled rule that the buyer who first registers the sale in good faith acquires a better right to the land (Art. 1544).

b) Between Dehlma and the bank, the former has a better right to the house and lot.