Quirong vs DBP, Orosa vs Migrino, Bryan vs Handkins

B. On Warranty Against Eviction (Articles 1548-1560)

HEIRS OF SOFIA QUIRONG, Petitioners, vs. DEVELOPMENT BANK OF THE PHILIPPINES, Respondent. G.R. No. 173441, December 3, 2009

FACTS: When the late Emilio Dalope died, he left a 589-square meter untitled lot in Sta. Barbara, Pangasinan, to his wife, Felisa Dalope and their nine children, one of whom was Rosa Dalope-Funcion. To enable Rosa and her husband Antonio Funcion get a loan from respondent Development Bank of the Philippines (DBP), Felisa sold the whole lot to the Funcions. With the deed of sale in their favor and the tax declaration transferred in their names, the Funcions mortgaged the lot with the DBP. On February 12, 1979, after the Funcions failed to pay their loan, the DBP foreclosed the mortgage on the lot and consolidated ownership in its name on June 17, 1981. Four years later, DBP conditionally sold the lot to Sofia Quirong. In their contract of sale, Sofia Quirong waived any warranty against eviction. The contract provided that the DBP did not guarantee possession of the property and that it would not be liable for any lien or encumbrance on the same. Two months after that sale or on November 28, 1983 Felisa and her eight children filed an action for partition and declaration of nullity of documents with damages against the DBP and the Funcions before the Regional Trial Court. Notwithstanding the suit, the DBP executed a deed of absolute sale of the subject lot in Sofia Quirong’s favor. The deed of sale carried substantially the same waiver of warranty against eviction and of any adverse lien or encumbrance. On May 11, 1985, Sofia Quirong having since died, her heirs filed an answer in intervention in which they asked the RTC to award the lot to them and, should it instead be given to the Dalopes, to allow the Quirong heirs to recover the lot’s value from the DBP. On December 16, 1992 the RTC rendered a decision, declaring the DBP’s sale to Sofia Quirong valid only with respect to the shares of Felisa and Rosa Funcion in the property. It declared Felisa’s sale to the Funcions, the latter’s mortgage to the DBP, and the latter’s sale to Sofia Quirong void insofar as they prejudiced the shares of the eight other children of Emilio and Felisa who were each entitled to a tenth share in the subject lot.

On June 10, 1998 the Quirong heirs filed the present action against the DBP for rescission of the contract of sale between Sofia Quirong, their predecessor, and the DBP and praying for the reimbursement of the price of P78,000.00 that she paid the bank plus damages. ISSUE: Whether or not the heirs of Quirong were entitled to the rescission of the DBP’s sale of the subject lot to the late Sofia Quirong as a consequence of her heirs having been evicted from it.

HELD: No. The cause of action of the Quirong heirs stems from their having been ousted by final judgment from the ownership of the lot that the DBP sold to Sofia Quirong, their predecessor, in violation of the warranty against eviction that comes with every sale of property or thing. Article 1548 of the Civil Code provides: Article 1548. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of thing purchased. With the loss of 80% of the subject lot to the Dalopes by reason of the judgment of the RTC in Civil Case D-7159, the Quirong heirs had the right to file an action for rescission against the DBP pursuant to the provision of Article 1556 of the Civil Code which provides: Article 1556. Should the vendee lose, by reason of the eviction, a part of the thing sold of such importance, in relation to the whole, that he would not have bought it without said part, he may demand the rescission of the contract; but with the obligation to return the thing without other encumbrances than those which it had when he acquired it. x x x And that action for rescission, which is based on a subsequent economic loss suffered by the buyer, was precisely the action that the Quirong heirs took against the DBP. Consequently, it prescribed as Article 1389 provides in four years from the time the action accrued. Since it accrued on January 28, 1993 when the decision in Civil Case D-7159 became final and executory and ousted the heirs from a substantial portion of the lot, the latter had only until January 28, 1997 within which to file their action for rescission. Given that they filed their action on June 10, 1998, they did so beyond the four-year period. With the conclusion that the Court has reached respecting the first issue presented in this case, it would serve no useful purpose for it to further consider the issue of whether or not the heirs of Quirong would have been entitled to the rescission of the DBP’s sale of the subject lot to Sofia Quirong as a consequence of her heirs having been evicted from it. As the Court has ruled above, their action was barred by prescription.

HEIRS OF NICOLAS Y. OROSA, petitioners, vs. THE HON. EUTROPIO MIGRINO, and GOLDENROD, INC., respondents. G.R. Nos. 99338-40 February 1, 1993

FACTS: In Maria Mayug Vda. de Cailles v. Dominador Mayuga, et. al., the Court affirmed the decision of the Court of Appeals, confirming ownership over a fifty-three (53) hectare parcel of land located in Las Piñas, Rizal, more particularly referred to as Lot 9 Psu-11411 Amd-2, in favor of one Dominador Mayuga. The Court also extended the benefit of such confirmation to the latter's successor-in-interest, the late Nicolas Orosa. After the case was remanded to Branch 151 of theRegional Trial Court, Pasig, where it was originally docketed in 1958 as Land Registration Case No. 2839, the heirs of Nicolas Orosa (petitioners herein) moved for execution of judgment. This motion was granted by the lower court in its Order dated 25 October 1989, directing the Land Registration Authority to submit the property's amended technical description for approval. However, the LRA did not comply with said order because, among others, its records indicated that the property had previously been decreed in favor of one Jose T. Velasquez, to whom was issued Original Certificate of Title No. 6122. On 10 September 1990, Goldenrod, Inc. filed a motion for leave to intervene in the execution proceeding, alleging an interest in the property which is the subject matter of LRC No. 2839. Petitioners opposed Goldenrod's motion, without success. The lower court permitted Goldenrod to file its pleading in intervention through its Order dated 7 December 1990. Petitioners' motion for reconsideration therefrom was likewise denied in an Order dated 11 April 1991. 5 Hence this Petition for Certiorari and Prohibition. ISSUE: Whether Goldenrod has shown in its pleadings in intervention a sufficient legal interest in the land which is the subject matter of LRC No. 2839.

HELD:

No. The Court must observe that the lower court had evaded resolving this matter before permitting Goldenrod's intervention: The Orosa heirs also contend that the purported intervenor failed to establish its alleged legal interest in these proceedings to the subject parcel of land. Precisely, this case has to be set for hearing to enable Goldenrod to prove its claim to the land in question. Goldenrod claims that in 1977, during the pendency of this case, Delta Motors Corporation acquired for value the contingent rights of Nicolas Orosa over the property, as well as the conflicting claims thereto of one Jose Velasquez. In 1980, the land registration court trying Jose Velasquez' claims in LRC No. N-5416 excluded therefrom the land referred to as Lot 9 Psu-11411 Amd-2. Meanwhile, Delta somehow managed to obtain transfer certificates of titles over the land and sold this acquisition to Goldenrod in 1987. The latter then succeeded in obtaining issuance in its favor of Transfer Certificates of Title Nos. 4893 and 4901, whose technical descriptions overlapped "big portions" of the land referred to as Lot 9 Psu-11411 Amd-2. In February 1989, Goldenrod sold the land covered by said transfer certificates of title to a consortium composed of Fil Estate Management Inc., Arturo Y. Dy, Megatop Realty Development Inc., Peaksun Enterprises and Export Corporation, and Elena D. Jao ("Consortium"). The contract of sale contained an undertaking on Goldenrod's part to "defend the title of the VENDEES to the property against claims of any third person whatsoever." It is on the basis of this stipulation that Goldenrod seeks to intervene in the execution Proceedings of LRC No. 2839. Taking Goldenrod's own admissions at their face value, it is quite apparent that whatever direct and actual legal interest it may have had over the land had been disposed of by it for value in favor of the consortium in 1989 and that whatever residual legal interest in the property can be premised on Goldenrod's contractual undertaking, actually an express warranty against eviction, is expectant or contingent in nature. Presently, Goldenrod has no legal interest in the property and its warranty can only be enforced by the consortium if the latter is dispossessed of the land by virtue of a proper action instituted by the Orosa heirs as registered owners thereof. But, the legal interest which entitles a person to intervene in a suit must be actual and material, direct and immediate. A party seeking to intervene in a pending case must show that he will either gain or lose by the direct legal operation and effect of a judgment. 14 In the present case, Goldenrod has failed to meet this criteria and the lower court gravely abused its discretion in permitting intervention after having overlooked this matter.

C. On Warranty Against Hidden Defects/Encumbrances (Articles 1561-1581) ALBERT BRYAN, plaintiff-appellant, vs. THOMAS HANKINS and J. BIALOGLOWSKI, defendants-appellants. G.R. No. L-18999, November 24, 1922 FACTS: October 20, 1920, in Manila, the defendants made a bill of sale to the plaintiff of the motor schooner Sultan for the agreed purchase price of P55,000 and the possession of the schooner was delivered to the plaintiff. It was at once taken to Iloilo where it was for the first time inspected March 11, 1921, by the inspector of hulls and boilers of Iloilo. As a result of the inspection, it was found to be unseaworthy, and was ordered to be placed on the slipways for immediately repairs. On March 16, 1921, the plaintiff commenced this action in which he alleged that: 

said defects in the vessel existed at the time of the delivery to plaintiff



said defects rendered said vessel unfit for the use of plaintiff



if plaintiff had had knowledge of such defects he would not have bought said vessel



said defects were hidden and plaintiff could not perceive them;



defendants warranted said vessel to be in seaworthy condition and said vessel was not in such condition when delivered to plaintiff



that said contract of sale be rescinded;

The trial court rendered judgment for the plaintiff for P10,000 without costs, from which both parties appeal.

ISSUE: Whether or not the vendor is liable based on warranty against hidden defects.

HELD:

Yes. The instant case comes under the provisions of Article 1484 of the Old Civil Code, which provides: The vendor is liable for any hidden defects which the thing sold may have should they render it unfit for the use for which it was intended, or if they should diminish its adaptability to such use to such an extent that had the vendee had knowledge thereof he would not have bought it or would have given a lower price for it; but such vendor shall not be liable for patent or visible defects, or for those which are not visible, if the vendee should be an expert who by reason of his trade or profession should easily perceive them. And article 1485, which provides: The vendor is liable to the vendee for any latent faults or defects in the thing sold, even if they were unknown to him. This provision shall not apply if the contrary has been stipulated and the vendor was not aware of such latent faults or defects. The plaintiff purchased the vessel for his own personal use, and it involved an investment of P55,000. The testimony is conclusive that at the time of its inspection at Iloilo, it was unseaworthy and it had but little, if any, commercial value. The defects of its construction were hidden and concealed and were unknown to the plaintiff until the official inspection was made, when he promptly brought this action. The proof is conclusive that such hidden defects rendered the vessel unfit for the use for which it was intended, and that the plaintiff did not have any knowledge of such defects, and that no sane man would ever have purchased it with such knowledge. Article 1485 expressly provides that the vendor is liable to the vendee for any latent faults or defects of the thing sold, even if they were unknown to him.