Flashcards Studio

Facts: A owns Parcel 1 and enters into a sale with B for PHP 3,800,000. They execute a deed of sale prepared by A’s attorney, in which A represents that the subject property is Parcel 1 and that there are no encumbrances and that title is marketable. Unknown to B, A does not own Parcel 1 but actually owns Parcel 2, adjacent to Parcel 1, and the deed conveys Parcel 1 by mistake. Parcel 1 has an unrecorded mortgage in favor of Bank C and a long-standing occupant whose lease is not disclosed. B pays the price and the deed is delivered with the intention that title passes. After discovery of the misdescription and the encumbrances, B seeks rescission and damages. (a) Identify the essential contract element defective in these facts and name the doctrine governing it. (b) Is the contract voidable or void? Explain the applicable remedy. (c) How do third-party encumbrances (the mortgage to Bank C and the occupant’s lease) affect the remedies and the outcome if B rescinds?