Title
Andaya vs. Masala
Case
G.R. No. L-14714
Decision Date
Apr 30, 1960
A series of land sales with repurchase rights led to conflicting claims, eviction, and litigation. Plaintiffs, aware of pending litigation, waived warranty against eviction, barring rescission and additional damages.
liability
damages
plaintiffs
A

Case Summary (G.R. No. L-14714)

Factual Background and Development of Ownership and Litigation

After Manansala consolidated his title, Viloria later executed an absolute sale on September 28, 1947 to the plaintiffs and their co-purchasers. The subsequent history of the land included litigation initiated by Eustaquia Llanes. On October 18, 1947, Llanes instituted Civil Case No. 399 to quiet title and recover possession from Ciriaco Casino. That action resulted in the inclusion, by subsequent amendments and impleading orders, of additional parties, including Manansala and, as additional defendants, Fidela Valdez and the plaintiffs. Judgment was rendered in favor of Llanes, and a writ of execution issued after the decision became final. Pursuant to the enforcement of that writ, properties of Valdez were attached and sold at public auction to cover damages and costs.

In the meantime, on June 9, 1949, Manansala sold by absolute sale the property to the spouses Ciriaco Casino and Fidela Valdez, and to the plaintiffs, for P1,500.00. The deed of sale included a stipulation that the purchasers were the lawful owners and that the vendor warranted the land to be free from all kinds of liens and encumbrances, with a covenant to answer in case of eviction. The deed was recorded on June 9, 1948 under Act No. 3344 (as recounted in the trial court’s factual findings, though the sequence in the narrative reflected the overall contested timeline). Manansala’s consolidation and later conveyance became the factual basis upon which the plaintiffs sought recovery for breach of warranty when eviction was ultimately effected under the judgment in Civil Case No. 399.

Trial Court Proceedings and Ruling

On March 23, 1956, the plaintiffs spouses Ariston Andaya and Micaela Cabrito commenced the present case in the Court of First Instance of Ilocos Sur against Manansala. They sought to recover damages they claimed to have suffered because of his breach of his warranty of title or because of the eviction that occurred after their purchase.

After the parties submitted the case for summary judgment and agreed on a statement of facts, the trial court ruled in a manner that treated the transaction as equitable to modify rather than to enforce the warranty stipulated in the deed. The lower court found it “obvious” that since the same land had already been sold to the plaintiffs and their co-vendees by Viloria, the plaintiffs’ purpose in purchasing the land again from Manansala at the low price of P1,500.00 was to enable registration of the prior deed. The trial court further reasoned that Manansala’s title had already consolidated under Article 1509 of the Spanish Civil Code, supported by the affidavit Manansala had registered with the Register of Deeds. It concluded that the warranty stipulation was “made pro forma” and could not have been intended to bind Manansala, given that the property was then subject to pending litigation and that the warranty was, in substance, directed to an actual dispute over title and possession that later resulted in final eviction of the purchasers.

On that basis, the trial court held that it would be inequitable to hold Manansala liable under Article 1555 of the New Civil Code or under Act 1478 of the Spanish Civil Code. Instead, it applied what it considered the law applicable for a vendor in cases of rescission of a contract. It then ordered Manansala to return to the plaintiffs the amount of P750.00, which represented one-half of the purchase price, with interest at 6% from June 9, 1948 until fully paid, and to pay the costs of suit.

Issues on Appeal and the Defendant-Appellant’s Position

Manansala appealed from the trial court’s decision. He contended that the lower court erred in holding him liable “as in rescission of sale” and in ordering him to return the price, because the trial court itself had earlier found that he was not liable to the plaintiffs for breach of warranty against eviction.

The Supreme Court treated the appeal as presenting legal questions within its competence given the Court of Appeals’ forwarding rationale, and it focused on the waiver and effect of waiver of warranty against eviction, and on the availability of rescission as a remedy given the findings regarding assumed risk of eviction and the plaintiffs’ failure to appeal the factual determinations adopted by the trial court.

Appellate Court’s Legal Reasoning on Waiver of Warranty Against Eviction

The Court held that the vendor’s liability for warranty against eviction in a contract of sale was waivable and could be renounced by the vendee. It cited the rule as appearing in the decision through references to last par., Art. 1475 (Old Code) and last par., Art. 1548 (New). While the deed executed between Manansala and the plaintiffs contained an express warranty stipulation, the trial court’s findings, which remained unchallenged on appeal by the plaintiffs, were treated as binding.

The Supreme Court identified the trial court’s key factual determinations as: first, that the warranty stipulation was pro forma; second, that the parties understood that Manansala would not be bound by the warranty in view of the plaintiffs’ prior purchase from Viloria and their purpose in buying again from Manansala to enable registration; and third, that at the time of sale the property was already subject to pending litigation involving the plaintiffs and Llanes, and that eviction resulted from the final judgment in that litigation. Because the plaintiffs did not appeal from the trial court’s judgment, the Supreme Court treated the plaintiffs as bound by those findings and their implications, including that they renounced or waived the warranty against eviction and assumed the danger of eviction.

Applying Art. 1477 of the Old Code (as stated in the decision), which carried the same rule as Art. 1554 of the New Code, the Court explained that when a vendee had waived the right to warranty in case of eviction and eviction occurred, the vendor would only pay the price that the thing sold had at the time of eviction, unless the waiver was made with knowledge of the danger of eviction and the vendee assumed its consequences. Since the plaintiffs knew of the danger of eviction at the time they purchased from Manansala and assumed its consequences, the Court held that Manansala was not even obliged to restore the price at the time of eviction. It further held that he was completely exempt from liability whatsoever.

Rejection of Rescission-Based Restitution and Limitations on Appellate Modifications

The Supreme Court also rejected the trial court’s approach of granting restitution based on rescission. It first invoked the principle that rescission contemplates that the party demanding it can return whatever it has received under the contract; where that cannot be done, rescission cannot be carried out, citing Art. 1295 (Old Code) and Art. 1385 (New). It emphasized that sales law does not make rescission the remedy in the event of total eviction, because the vendee can no longer restore the thing to the vendor. The Court noted that rescission would be relevant only when the vendee loses “a part of the thing sold of such importance” that the vendee would not have purchased the whole, and it would be governed by the obligation to return the thing without other encumbrances than those existing at acquisition, citing Art. 1479 (Old Code) and Art. 1356 (New).

Second, the Court reiterated that because the plaintiffs had assumed the risk of eviction, they were barred from seeking rescission even if it were otherwise possible to restore what they had received. Thus, restitution ordered by the trial court on a rescission rationale could not be sustained.

The plaintiffs attempted to justify additional recovery. They claimed that eviction entitled th

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