Angelo v. Pacheco
REITERATIONFacts
The Antecedents: On July 14, 1920 the plaintiff executed a deed of sale (Exhibit 3) conveying approximately 659 hectares and five carabaos to the defendant for P13,500, of which P5,500 was paid and P8,000 remained payable. The deed contained a formal clause whereby "the vendee waives warranty in case of eviction from the property sold, to which he has a right by virtue of this sale, against the vendor Leocadia Angelo." On June 18, 1924 the parties executed a second deed (Exhibit 4) which reiterated the waiver clause and contained the language that the vendee "waives warranty in case of eviction from the property sold, to which he has a right by virtue of this sale, against the vendor Leocadia Angelo and undertakes to recognize any lien on said property." The defendant also executed a promissory note (Exhibit A) for P8,000 secured by a real estate mortgage (Exhibit B. ) Prior to and at the time of the sale the land was the subject of registration proceedings instituted by the plaintiff on July 2, 1920; the defendant knew of those proceedings. A judgment for registration in the plaintiff's name was rendered September 20, 1923 and the proper decree issued July 18, 1924. A motion for review was filed October 6, 1924; following subsequent proceedings, the decree and transfer certificate were set aside on June 23, 1925 and that setting aside was affirmed by this Court on December 31, 1926 (Exhibit 1), which nonetheless declared that a purchaser (Lucia F. de Valle Cruz) should have a lien of P15,000 with interest and a right to foreclose. Lucia F. de Valle Cruz later obtained a judgment against Cipriano Pacheco for that mortgage credit on January 31, 1928 (Civil Case No. 2459). Procedural History: The trial court rendered judgment holding the defendant liable to pay the balance of the purchase price (P8,000) with legal interest from August 15, 1927, and denying him P68,000 in claimed damages for lack of warranty. The defendant appealed. The appellate court's judgment, insofar as it is assailed, is the subject of the present appeal. The Petition: The defendant-appellant contends that he did not knowingly and intelligently waive his right to warranty against eviction and argues that the waiver is void under Article 1476 of the Civil Code due to alleged bad faith on the vendor's part; he also challenges factual findings regarding the state of registration at the time of the sale and claims damages.
Issue(s)
Whether the defendant validly waived his right to warranty against eviction. Whether the waiver of warranty is void under Article 1476 of the Civil Code due to alleged bad faith by the vendor. Whether the appellate court erred in factual findings regarding the state of registration at the time of the sale and whether that inaccuracy affected the judgment. Whether the vendor is precluded from liability for warranty because the vendee failed to notify the vendor or have her summoned for the reopening of the decree in accordance with Article 1481 of the Civil Code. Whether the defendant is entitled to P68,000 in damages for lack of warranty.
Ruling
The judgment appealed from is affirmed in its entirety. The defendant is ordered to pay the balance of the purchase price, P8,000, with legal interest from August 15, 1927, and costs; the defendant's claim for P68,000 in damages is denied.
Ratio Decidendi
On Whether the defendant validly waived his right to warranty against eviction: The Court found that the defendant made a formal and express waiver in Exhibit 3 which was reiterated in Exhibit 4, and such written waiver meets the requirements of Article 1475 of the Civil Code for the waiver of warranty in case of eviction. The decision emphasizes that the waiver was "complete and absolute" and that the parties voluntarily agreed to it, which binds the vendee. The Court rejected the appellant's contention that the waiver was not made with full knowledge, noting that the defendant knew of the registration proceedings and even participated in the reopening process; this knowledge undercuts a claim of ignorance sufficient to void the waiver. The Court also observed that the defendant's own sworn statement indicated that the vendor had acquired the land in good faith, thus removing grounds to question the validity of the waiver. Consequently, the waiver remained operative and relieved the vendor from the warranty obligation. On Whether the waiver is void under Article 1476 due to vendor's bad faith: The Court applied the construction of Article 1476 that bad faith must relate to the facts that give rise to eviction and their consequences. The Court quoted and relied upon the commentary of Manresa: "What does the vendor's bad faith consist in? In our opinion, it consists in his knowing beforehand at the time of the sale of the presence of the fact giving rise to eviction and its possible consequences." Applying that standard, the record did not show that Leocadia Angelo knew of any defect or impending eviction at the time of sale; indeed, the defendant himself swore that the vendor believed her vendor (Pedro Eugenio) was owner in fee simple. The Court further explained that passages in the prior Supreme Court decision (Exhibit 1) speaking of fraud or misrepresentation reflected findings of the trial court in a different context and did not establish that the vendor sold in bad faith as to eviction. The Court therefore held that Article 1476 did not invalidate the waiver because there was no proof that the vendor knew of facts likely to cause eviction at the time of sale. On Whether factual inaccuracy about registration timing affected the judgment: The Court acknowledged an inaccuracy in the lower court's finding regarding whether registration had already been issued at the time Exhibit 3 was executed, but it held that this error was immaterial. The dispositive basis of the lower court's decision was the defendant's express waiver and the absence of proof of vendor bad faith, not the erroneous factual statement. The Court therefore found no sufficient reason to disturb the judgment on that ground. On Whether failure to notify the vendor under Article 1481 precludes warranty: The Court held that the vendee's failure to notify the vendor or have her summoned for the reopening of the decree when the vendee was in danger of losing the property constituted a separate ground for denying warranty under Article 1481 of the Civil Code. The Court noted that the defendant, having waived the warranty perhaps believing it had been wholly relinquished, nevertheless bore the duty to notify; his failure to do so meant the plaintiff was not bound to warranty. This independent reason supports affirming the judgment. On Whether the defendant is entitled to P68,000 in damages: Given the binding waiver, absence of vendor bad faith related to eviction, and the vendee's failure to notify under Article 1481, the Court denied the defendant's claim for damages. The combination of the valid express waiver and procedural default by the vendee removed the basis for awarding the claimed damages.
Main Doctrine
An express, formal waiver of the vendor's warranty against eviction is binding on the vendee unless the vendor acted in bad faith with respect to the facts giving rise to eviction; additionally, failure of the vendee to notify the vendor (Article 1481, Civil Code) precludes the vendor's liability for warranty.