"#$%"& ' #()*) ' +,-.

/ 01,234351 +163 77
Chapter 5: PERFECTION OF THE CONTRACT:
DE LA CAVADA V DlAZ
37 PHIL 982
|OHNSON; Apr 1, 1918
NATURE
Appea from a |udgment of a ower court (no menton of
partcuar court n eectronc copy)
FACTS
- On the 15th day of November, 1912, Antono Daz
(defendant/pettoner) granted an opton to Antono Enrquez
(pantff/respondent), to purchase hs hacenda at Ptogo
consstng of 100 and odd hectares, wthn the perod necessary
for the approva and ssuance of a Torrens tte thereto by the
Government, for whch he may pay ether the sum of thrty
thousand pesos (P30,000), Phppne currency, n cash, or wthn
the perod of sx (6) years, begnnng wth the date of the
purchase, the sum of forty thousand pesos (P40,000), Phppne
currency, at sx per cent nterest per annum, wth due securty
for the payment of the sad P40,000 n consderaton of the sae.
- Antono Enrquez accepted the grant of opton, wth a condton
that a surveyor w be sent to survey the sad property, and to
appy to the Government for a Torrens tte, and that he sha
pay the purchase prce n conformty wth the etter of opton
after the Torrens tte sha have been offcay approved.
- Soon after the executon of sad contract, and n parta
compance wth the terms thereof, the defendant presented two
pettons n the Court of Land Regstraton, each for the purpose
of obtanng the regstraton of a part of the "Hacenda de
Ptogo."
- Sad pettons were granted; the parces were regstered, and
certfcates of tte under the Torrens system were ssued to the
defendant.
- The defendant offered to transfer to the pantff one of sad
parces only, whch was a part of sad "hacenda."
- The pantff refused to accept sad certfcate for a part ony of
sad "hacenda" upon the ground (a) that t was ony a part of
the "Hacenda de Ptogo," and (b) under the contract, he was
entted to a sad "hacenda."
Petitioner's Claim
The contract of sae of sad "Hacenda de Ptogo" ncuded ony
100 hectares, more or ess, of sad "hacenda," and that by
offerng to convey to the pantff a porton of sad "hacenda"
composed of "100 hectares, more or ess," he thereby comped
wth the terms of the contract
Respondent's Comment
He had purchased all of sad "hacenda," and that the same
contaned, at east, 100 hectares, more or ess.
- Lower court sustaned the contenton of the pantff, to wt,
that the sae was a sae of the "Hacenda de Ptogo" and not a
sae of a part of t, and rendered a |udgment requrng the
defendant to compy wth the terms of the contract by
transferrng to the pantff, by proper deeds of conveyance, a
sad "hacenda," or to pay n eu thereof the sum of P20,000
damages, together wth 6 per cent nterest from the date upon
whch sad conveyance shoud have been made.
- From that |udgment the defendant appeaed
lSSUE
WON the defendant was obged to convey to the pantff all of
sad "hacenda"
HELD
YES
- Appeant assgns a number of errors to the ower court, to
wt:1. (a) that the ower court commtted an error n decarng
the contract a vad obgaton, for the reason that the same was
nu for a faure of consderaton; 2. n not decarng that the
acton was premature, for the reason that the pantff had not
pad nor offered to pay the prce agreed upon, under the
condtons named, for the and n queston; 3. n not decarng
that the defendant was not obgated to se the "Hacenda de
Ptogo" to the pantff for nonfufment, renuncaton,
abandonment and neggence of pantff hmsef, etc.; 4. n not
decarng that the contract of sae was not n effect a contract of
sae (he aeges that the contract was, n fact, a contract by vrtue
of whch the pantff promsed to fnd a buyer for the parce of
and n queston).
- To a these, the Court |ust sad that t was not rased n the ower
court and t s mpropery presented for the frst tme. It
recognzed that the ony dspute between the partes n the ower
court was whether or not the defendant was obged to convey to
the pantff all of sad "hacenda."
***Unfortunatey, the SC dd not nterpret the contract to fnd out
whether the pantff was rght n nsstng that the contract
entted hm to a conveyance of a of sad "hacenda," or f the
defendant, as contended, comped wth the terms of hs contract
by offerng to convey to the pantff a part of the sad "hacenda"
ony. But because t affrmed the decson of the ower court, t
agreed wth the pantff that t ncuded a.
***Obter n dscusson as regards the frst assgnment of error
(because t dsposed of t by sayng that t wasnt rased n the
ower court)
- A promse made by one party, f made n accordance wth the
forms requred by the aw, may be a good consderaton (causa)
for a promse made by another party. (Art. 1274, Cv Code.) In
other words, the consderaton (causa) need not pass from one to
the other at the tme the contract s entered nto. For exampe, A
promses to se a certan parce of and to B for the sum of
P70,000. A, by vrtue of the promse of B to pay P70,000, promses
to se sad parce of and to B for sad sum, then the contract s
compete, provded they have comped wth the forms requred
by the aw. The consderaton need not be pad at the tme of the
promse. The one promse s a consderaton for the other.
- In the present case, the defendant promsed to convey the and
n queston to the pantff as soon as the same coud be
regstered. The pantff promsed to pay to the defendant P70,000
therefor n accordance wth the terms of ther contract. The
pantff stood ready to compy wth hs part of the contract. The
defendant, even though he had obtaned a regstered tte to sad
parce of and, refused to compy wth hs promse. A of the
condtons of the contract on the part of the defendant had been
concuded, except deverng the deeds of transfer.
- The said contract (Exhibits A and B) was not, in fact, an
"optional contract" as that phrase is generally used.
Reading the said contract from its four corners it is clearly
an absolute promise to sell a definite parcel of land for a
fixed price upon definite conditions. The defendant promsed
to convey to the pantff the and n queston as soon as the same
was regstered under the Torrens system, and the pantff
promsed to pay to the defendant the sum of P70,000, under the
condtons named, upon the happenng of that event. The contract
was not, n fact, what s generay known as a "contract of opton."
It dffers very essentay from a contract of opton.
- An optona contract s a prvege exstng n one person, for
whch he had pad a consderaton, whch gves hm the rght to
buy, for exampe, certan merchandse of certan specfed
property, from another person, f he chooses, at any tme wthn
the agreed perod, at a fxed prce. A contract of opton s a
contract by vrtue of the terms of whch the partes thereto
promse and obgate themseves to enter nto contract at a future
tme, upon the happenng of certan events, or the fufment of
certan condtons.
SANCHEZ V RlGOS
45 SCRA 368
CONCEPCION; |une 14, 1972
NATURE
Appea from a decson of the Court of Frst Instance of Nueva
Ec|a to the Court of Appeas
FACTS
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- Apr 3, 1961 - Sanchez and Rgos executed an nstrument
caed "Opton to Purchase"
- Rgos commtted to se to Sanchez a parce of and n Nueva
Ec|a for the sum of P1,510.00.
- Wthn two years from the sad date, f Sanchez sha not
exercse hs rght to buy the property, the opton sha be
termnated
- Wthn the sad perod, Sanchez made severa attempts to pay
P1,510.00 to Rgos but Rgos re|ected these payments
- March 12, 1963 - Sanchez deposted the amount n the Court
of Frst Instance n Nueva Ec|a
- Feb. 28, 1964 - Rgos ordered by the ower court to accept the
payments of Sanchez and to execute n Sanchezs favor the
deed of conveyance for the property.
Petitioners' Claim
- By vrtue of the document executed, Rgos had agreed and
commtted to se the property and he, n turn, agreed and
commtted to buy.
- Thus the promse contaned n the contract s recprocay
demandabe.
Respondents' Comments
- The contract s a unatera promse to se.
- The contract was unsupported by any vauabe consderaton
and s thus nu and vod when vewed n the ght of the Cv
Code.
lSSUE
WON a promse to buy and se exsted between the partes
nvoved
HELD
YES
Ratio An accepted unatera promse' can ony have a bndng
effect f supported by a consderaton, whch means that the
opton can st be wthdrawn, even f accepted, f the same s
not supported by any consderaton. Snce there may be no
vad contract wthout a cause or consderaton, the promsor s
not bound by hs promse and may, accordngy, wthdraw t.
Pendng notce of ts wthdrawa, hs accepted promse partakes,
however, of the nature of an offer to se whch, f accepted,
resuts n a perfected contract of sae.
Reasoning
- The case s dependent on A1479 of the Cv Code whch states
that: "An accepted unatera promse to buy or to se a
determnate thng for a prce certan s bndng upon the
promsor f the promse s supported by a consderaton dstnct
from the prce."
- The document drawn between Rgos and Sanchez does not
requre Sanchez to purchase the property. It s not a contract to
buy and se.
- Rgos commtted to se the property to Sanchez but the
document does not state that the promse or undertakng s
supported by consderaton dstnct from the prce stpuated.
- The ower court reed on A1354. The Supreme Court however
makes the foowng notes wth regard to the use of that
provson vs--vs A1479:
- A1354 appes to contracts n genera whereas A1479 refers to
saes n partcuar (specfcay to a unatera promse to buy and
se), makng A1479 the controng provson.
- For the unatera promse to be bndng, there must be a
concurrence of a condton, that t be supported by a
consderaton dstnct from prce. The promse cannot compe
the promsor to compy wth the promse uness there s the
exstence of that dstnct consderaton. In ths case, ths was
not aeged by Sanchez.
- Rgos stated that there was ndeed the absence of that
consderaton whch Sanchez dd not oppose
- Despte ths dfferences, ater |ursprudence states that A1354
and A1479 have no dfferences and can actuay be harmonzed.
LlMSON V CA (DE VERA)
375 SCRA 209
BELLOSILLO; Apr 20, 2001
NATURE
Petton for Revew on Certorar of CA decson
FACTS
- Lourdes LIMSON aeged that spouses DE VERA, through ther
agent, offered to se to her a parce of and stuated n Barro San
Donso, Paraaque. She agreed to buy t at the prce of P34/sq.m.
and she gave the sum of P20T as "earnest money."
- The coupe sgned a recept and gave her a 10-day option
period to purchase t. They nformed her that t was mortgaged to
Emo and Isdro RAMOS. Mr. de Vera then asked her to pay the
baance of the purchase prce to enabe hm and hs wfe to sette
ther obgaton.
- They were supposed to meet at the Offce of the Regstry of
Deeds of Makat to consummate the transacton but the coupe
dd not appear. In the next schedued mtg, she camed that she
was wng and ready to pay the baance but the transacton
agan dd not materaze as the spouses faed to pay the back
taxes of the property.
- A month ater, she was surprsed to earn from the spouses
agent that the same property was the subject of a
negotiation for sale to Sunvar Realty Development
Corporation (SUNVAR). She dscovered that athough
respondent spouses purchased the property from the Ramoses
about 8 years ago, t was ony now that a TCT was ssued to the
spouses.
- She fed an Affidavit of Adverse Claim wth the Offce of the
Regstry of Deeds of Makat. On ths same date, the Deed of 5ale
between spouses and SUNVAR was aso executed wth Lmsons
Adverse Claim annotated thereon.
- She claimed that this Deed of Sale should be annulled and
that a new one be executed between her and the spouses upon
her payment of the baance. When spouses sod the property to
SUNVAR, her vad and ega rght to purchase t was gnored f not
voated. Aso, SUNVAR was n bad fath as t knew of her
"contract" to purchase the property. The spouses agent nformed
a member of the BOD of SUNVAR that property was aready sod
to her.
- DE VERAS camed that the opton to buy the property had ong
expred and that there was no perfected contract to sell
between them.
- RTC rued n favor of pettoner. Deed of 5ale was ordered to be
executed n her favor. CA competey reversed RTC decson.
lSSUE
1. WON t was ony a contract of opton (not a contract to se)
2. WON pettoner accepted the offer wthn the 10-day opton
perod
3. WON SUNVAR was aware of the perfected sae between Lmson
and the De Veras, thus makng respondent SUNVAR a buyer n
bad fath
HELD
1. YES
Ratio An opton s a contnung offer or contract by whch the
owner stpuates wth another that the atter sha have the rght
to buy the property at a fxed prce wthn a tme certan, or under,
or n compance wth, certan terms and condtons, or whch
gves to the owner of the property the rght to se or demand a
sae.
- Unt acceptance, t s not, propery speakng, a contract, and
does not vest, transfer, or agree to transfer, any tte to, or any
nterest or rght n the sub|ect matter.
Reasoning
- The Receipt that contans the contract between pettoner and
respondent spouses shows that they ony entered nto a contract
of opton. The agreement mposed no bndng obgaton on
pettoner, asde from the consderaton for the offer.
- Proof: (1) P20T was referred to as "earnest money" but after a
carefu examnaton of the words used, ths actuay meant opton
money snce there was nothng n the Receipt whch ndcated
that ths was part of the purchase prce. (2) It was stated n the
contract that shoud the transacton of the property not
"#$%"& ' #()*) ' +,-./ 01,234351 +163 79
materaze wthout faut of pettoner as buyer, respondent de
Vera obgates hmsef to return the fu amount of P20T "earnest
money" wth opton to buy or forfet the same on the faut of
pettoner. (3) There was a guarantee that pettoner or her
representatve woud be notfed n case the property was sod
or encumbered to a thrd person. (4) The Receipt provded for a
perod wthn whch the opton to buy was to be exercsed.
Obiter
Dfference between Earnest money and Opton money
(a) Earnest money s part of the purchase prce, whe opton
money s the money gven as a dstnct consderaton for an
opton contract;
(b) Earnest money s gven ony where there s aready a sae,
whe opton money appes to a sae not yet perfected; and,
(c) When earnest money s gven, the buyer s bound to pay the
baance, whe when the woud-be buyer gves opton money, he
s not requred to buy, but may even forfet t dependng on the
terms of the opton.
2. NO
Ratio Except where a forma acceptance s not requred,
athough acceptance must be affrmatvey and ceary made
and evdenced by some acts or conduct communcated to the
offeror, t may be made ether n a forma or an nforma
manner, and may be shown by acts, conduct or words by the
acceptng party that ceary manfest a present ntenton or
determnaton to accept the offer to buy or se.
Reasoning
- There s nothng that ceary manfested a present ntenton on
Lmsons part to accept the offer to buy the property. The ony
occason wthn the opton perod when she coud have
demonstrated her acceptance was when she aegedy agreed to
meet the spouses at the Regster of Deeds. But ths s not
concusve of acceptance.
- After expraton of the perod, the subsequent meetngs and
negotatons between the partes ony showed the desre of
respondent spouses to se ther property to her. Aso, when
spouses sent her a teegram demandng fu payment of the
purchase prce, ths smpy demonstrated an ncnaton to gve
her preference to buy. Coectvey, these dd not ndcate that
pettoner st had the excusve rght to purchase sub|ect
property. Extension must not be implied but categorical and
must show the clear intention of the parties.
3. NO
- The opton perod havng expred and acceptance was not
effectvey made by pettoner, the purchase of sub|ect property
by respondent SUNVAR was perfecty vad and entered nto n
good fath. There s no evdence of bad fath.
Disposition Petton DENIED. CA decson orderng Regster of
Deeds of Makat Cty to ft the adverse cam and such other
encumbrances pettoner Lmson may have fed or caused to be
annotated on TCT s AFFIRMED, wth the MODIFICATION that the
award of nomna and exempary damages as we as attys fees
s DELETED.
BAUTlSTA V SORlANO
6 SCRA 946
MAKALINTAL; December 29, 1962
NATURE
APPEAL from a |udgment of the Court of Frst Instance of Rza
(Pasg)
FACTS
- Sps. BAUTISTA are the absoute and regstered owners of a
parce of and n Teresa Rza. The sad spouses sgned the
"KASUNDUAN NG SANGLAAN" on May 1956 n favor of RUPERTO
SORIANO and OLIMPIA DE |ESUS, where one of the paragraphs
(paragraph5) provded, as transated: "That t has kewse been
agreed that f the fnanca condton of the mortgagees w
permt, they may purchase sad and absoutey on any date
wthn the two-year term of ths mortgage at the agreed prce of
P3,900.00." Wth the sgnng of the deed, the SPS. transferred
the possesson of the and to SORIANO and DE |ESUS, and the
atter have been n possesson and en|oyment of the produce of
the sad and.
- Sometmes after the sgnng of the deed, SORIANO and DE |ESUS
gave the sum of P450 pursuant to the condtons agreed upon n
the deed (porton of the amount oaned?) to the SPS, whch the
SPS returned after 2 years. However, before payng the P450,
SORIANO and DE |ESUS, through ther awyer, sent the SPS a
etter nformng them that they have decded to buy the and
pursuant to paragraph5.
- SPS refused to compy wth the demand so SORIANO and DE
|ESUS fed cv case prayng that they be aowed to consgn or
depost the sum of P1650 as the baance of the purchase prce of
the parce of and n queston (P1650 =P3000 purchase prce -
P1800 nta amount oaned - P450 pad sometme after the
executon of the deed), that |udgment be rendered orderng the
SPS to execute an absoute deed of sae, pus damages.
- SPS fed a compant aganst SORIANO and DE |ESUS, whch was
ntay dsmssed for ack of |ursdcton, then fed agan, prayng
that the appeants woud accept the payment of the prncpa
obgaton and they be reeased from the mortgage.
CFI: SPS to execute deed of sae + pay attys fees
lSSUE
WON SORIANO and DE |ESUS are entted to specfc performance
consstng of the executon by the SPS of the deed of sae, havng
seasonaby advsed the SPS that they had decded to buy the and
n queston
HELD
YES
- The mortgagors' promse to se s supported by the same
consderaton as that of the mortgage tsef, whch s dstnct from
that whch woud support the sae, an addtona amount havng
been agreed upon, to make up the entre prce of P3,900.00,
shoud the opton be exer. csed. The mortgagors' promse was n
the nature of a contnung offer, non-wthdrawabe durng a perod
of two years, whch upon acceptance by the mortgagees, gave
rse to a perfected contract of purchase and sae.
- ON RIGHT TO REDEEM: Whe the transacton s undoubtedy a
mortgage and contans the customary stpuaton concernng
redempton, t carres the added speca provson aforequoted,
whch renders the mortgagors' rght to redeem defeasbe at the
eecton of the mortgagees. It s smpy an opton to buy,
sanctoned by Artce 1479
1
of the Cv Code.
Disposition The |udgment appeaed from s affrmed, wth costs.
EUATORlAL REALTY DEV'T lNC V MAYFAlR
THEATER lNC
264 SCRA 483
HERMOSISIMA |R; November 21, 1996
NATURE
Petton for revew of the decson of the Court of Appeas.
FACTS
- Carmeo owned a parce of and, together wth two 2-storey
budngs constructed thereon ocated at Caro M. Recto Avenue,
Mana.
- On |une 1, 1967 Carmeo entered nto a contract of ease wth
Mayfar for the atters ease of a porton of the second foor and
mezzanne of the two-storey budng, for use by Mayfar as a
moton pcture theater and for a term of twenty (20) years.
Mayfar thereafter constructed on the eased property a move
house known as Maxm Theatre.
- On March 31, 1969, Mayfar entered nto a second contract of
ease wth Carmeo for the ease of another porton of Carmeos
property, to wt: a porton of the second foor of the two-storey
budng, the 2 store spaces at the ground foor and mezzanne,
for smar use as a move theater and for a smar term of twenty
!
Art. 1479, NCC - A promse to buy and se a determnate thng for a prce certan s recprocay demandabe. An accepted unatera promse to buy or
to se a determnate thng for a prce certan s bndng upon the promsor f the promse s supported by a consderaton dstnct from the prce.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 7:
(20) years. Mayfar put up another move house known as
Mramar Theatre on ths eased property.
- Both contracts of ease provdes (sc) dentcay worded
paragraph 8, whch reads:
That if the LE55OR should desire to sell the leased premises,
the LE55EE shall be given 30-days exclusive option to purchase
the same.
ln the event, however, that the leased premises is sold to
someone other than the LE55EE, the LE55OR is bound and
obligated, as it hereby binds and obligates itself, to stipulate in
the Deed of 5ale thereof that the purchaser shall recognize this
lease and be bound by all the terms and conditions thereof.
- In August 1974, Mr. Henry Pasca of Carmeo nformed Mr.
Henry Yang, Presdent of Mayfar, that Carmeo was desrous of
seng the entre Caro M. Recto property. Mr. Pasca tod Mr.
Yang that a certan |ose Araneta was offerng to buy the whoe
property for $1,200,000, and Mr. Pasca asked Mr. Yang f the
atter was wng to buy the property for P6-7 M.
- On August 23, 1974, Mayfar reped through a etter remndng
them the 30-days excusve opton to purchase granted to
Mayfar under the contract of ease. Carmeo dd not repy to ths
etter.
- On September 18, 1974, Mayfar sent another etter to
Carmeo purportng to express nterest n acqurng not ony the
eased premses but the entre budng and other
mprovements f the prce s reasonabe. However, both Carmeo
and Equatora questoned the authentcty of the second etter.
- On |uy 30, 1978, Carmeo sod ts entre C.M. Recto Avenue
and and budng, whch ncuded the eased premses housng
the Maxm and Mramar theatres, to Equatora by vrtue of a
Deed of Absoute Sae, for the tota sum of P11,300,000.00.
- In September 1978, Mayfar nsttuted the acton for specfc
performance and annument of the sae of the eased premses
to Equatora. In ts Answer, Carmeo aeged as speca and
affrmatve defense (a) that t had nformed Mayfar of ts desre
to se the entre C.M. Recto Avenue property and offered the
same to Mayfar, but the atter answered that t was nterested
ony n buyng the areas under ease, whch was mpossbe
snce the property was not a condomnum; and (b) that the
opton to purchase nvoked by Mayfar s nu and vod for ack of
consderaton.
- Equatora peaded as speca and affrmatve defense that the
opton s vod for ack of consderaton and s unenforceabe by
reason of ts mpossbty of performance because the eased
premses coud not be sod separatey from the other portons of
the and and budng. It countercamed for canceaton of the
contracts of ease, and for ncrease of rentas n vew of aeged
supervenng extraordnary devauaton of the currency.
- The tra court ad|udged the dentcay worded paragraph 8
found n both aforected ease contracts to be an opton cause
whch however cannot be deemed to be bndng on Carmeo
because of ack of dstnct consderaton therefor.
Upon appea, the CA reversed the court a quo.
lSSUE
WON the opton cause n the contracts of ease s actuay a
rght of frst refusa provson
HELD
YES
- Contractua stpuaton provdes for a rght of frst refusa n
favor of Mayfar. It s not an opton cause or an opton contract.
- An opton contract s one necessary nvovng the choce
granted to another for a dstnct and separate consderaton as
to whether or not to purchase a determnate thng at a
predetermned fxed prce.
- Bouver: OPTION CONTRACT- A contract by vrtue of whch A,
n consderaton of the payment of a certan sum to B, acqures
the prvege of buyng from, or seng to B, certan securtes or
propertes wthn a mted tme at a specfed prce.
- An agreement n wrtng to gve a person the opton to
purchase ands wthn a gven tme at a named prce s nether a
sae nor an agreement to se. It s smpy a contract by whch
the owner of property agrees wth another person that he sha
have the rght to buy hs property at a fxed prce wthn a certan
tme. He does not se hs and; he does not then agree to se t;
but he does se somethng; that s, the rght or prvege to buy at
the eecton or opton of the other party. The second party gets n
praesent, not ands, nor an agreement that he sha have ands,
but he does get somethng of vaue; that s, the rght to ca for
and receve ands f he eects. The owner parts wth hs rght to
se hs ands, except to the second party, for a mted perod. The
second party receves ths rght, or, rather, from hs pont of vew,
he receves the rght to eect to buy.
- The two defntons above cted refer to the contract of opton,
or, what amounts to the same thng, to the case where there was
cause or consderaton for the obgaton, the sub|ect of the
agreement made by the partes; whe n the case at bar there
was no such cause or consderaton.
- The rue so eary estabshed n ths |ursdcton s that the deed
of opton or the opton cause n a contract, n order to be vad
and enforceabe, must ndcate the defnte prce at whch the
person grantng the opton, s wng to se.
- Artce 1458 of the Cv Code provdes:
Art. 1458. By the contract of sae one of the contractng partes
obgates hmsef to transfer the ownershp of and to dever a
determnate thng, and the other to pay therefor a prce certan n
money or ts equvaent.
A contract of sae may be absoute or condtona.
- When the sae s not absoute but condtona, such as n a
Contract to Se where nvaraby the ownershp of the thng sod
s retaned unt the fufment of a postve suspensve condton
(normay, the fu payment of the purchase prce), the breach of
the condton w prevent the obgaton to convey tte from
acqurng an obgatory force.
- An uncondtona mutua promse to buy and se, as ong as the
ob|ect s made determnate and the prce s fxed, can be
obgatory on the partes, and compance therewth may
accordngy be exacted.
- An accepted unatera promse whch specfes the thng to be
sod and the prce to be pad, when couped wth a vauabe
consderaton dstnct and separate from the prce, s what may
propery be termed a perfected contract of opton. Ths contract s
egay bndng, and n saes, t conforms wth the second
paragraph of Artce 1479 of the Cv Code:
An accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissor if the
promise is supported by a consideration distinct from the price.
- However, the opton s not the contract of sae tsef. The
optonee has the rght, but not the obgaton, to buy. Once the
opton s exercsed tmey, .e., the offer s accepted before a
breach of the opton, a batera promse to se and to buy ensues
and both partes are then recprocay bound to compy wth ther
respectve undertakngs.
- To eucdate: A negotaton s formay ntated by an offer. An
mperfect promse (poctacon) s merey an offer. Pubc
advertsements or soctatons and the ke are ordnary
construed as mere nvtatons to make offers or ony as proposas.
These reatons, unt a contract s perfected, are not consdered
bndng commtments. Thus, at any tme pror to the perfecton of
the contract, ether negotatng party may stop the negotaton.
The offer, at ths stage, may be wthdrawn; the wthdrawa s
effectve mmedatey after ts manfestaton, such as by ts
mang and not necessary when the offeree earns of the
wthdrawa. Where a perod s gven to the offeree wthn whch to
accept the offer, the foowng rues generay govern:
(1) If the perod s not tsef founded upon or supported by a
consderaton, the offeror s st free and has the rght to wthdraw
the offer before ts acceptance, or, f an acceptance has been
made, before the offerors comng to know of such fact, by
communcatng that wthdrawa to the offeree. The rght to
wthdraw, however, must not be exercsed whmscay or
arbtrary; otherwse, t coud gve rse to a damage cam under
Artce 19 of the Cv Code whch ordans that every person must,
n the exercse of hs rghts and n the performance of hs dutes,
act wth |ustce, gve everyone hs due, and observe honesty and
good fath.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 7;
(2) If the perod has a separate consderaton, a contract of
opton s deemed perfected, and t woud be a breach of that
contract to wthdraw the offer durng the agreed perod. The
opton, however, s an ndependent contract by tsef, and t s to
be dstngushed from the pro|ected man agreement (sub|ect
matter of the opton) whch s obvousy yet to be concuded. If,
n fact, the optoner-offeror wthdraws the offer before ts
acceptance (exercse of the opton) by the optonee-offeree, the
atter may not sue for specfc performance on the proposed
contract (ob|ect of the opton) snce t has faed to reach ts
own stage of perfecton. The optoner-offeror, however, renders
hmsef abe for damages for breach of the opton. x x x."
- In the ght of the foregong dsquston and n vew of the
wordng of the questoned provson n the two ease contracts
nvoved n the nstant case, t s hed that no opton to purchase
n contempaton of the second paragraph of Artce 1479 of the
Cv Code, has been granted to Mayfar under the sad ease
contracts.
- An opton s a contract grantng a prvege to buy or se
wthn an agreed tme and at a determned prce. It s a separate
and dstnct contract from that whch the partes may enter nto
upon the consummaton of the opton. It must be supported by
consderaton.
|22|
In the nstant case, the rght of frst refusa s
an ntegra part of the contracts of ease. The consderaton s
but nto the recproca obgatons of the partes.
- To rue that a contractua stpuaton such as that found n
paragraph 8 of the contracts s governed by Artce 1324 on
wthdrawa of the offer or Artce 1479 on promse to buy and
se woud render neffectua or "nute" the provsons on rght
of frst refusa so commony nserted n eases of rea estate
nowadays. Paragraph 8 was ncorporated nto the contracts of
ease for the beneft of Mayfar whch wanted to be assured that
t sha be gven the frst crack or the frst opton to buy the
property at the prce whch Carmeo s wng to accept. It s not
aso correct to say that there s no consderaton n an
agreement of rght of frst refusa. The stpuaton s part and
parce of the entre contract of ease. The consderaton for the
ease ncudes the consderaton for the rght of frst refusa.
Thus, Mayfar s n effect statng that t consents to ease the
premses and to pay the prce agreed upon provded the essor
aso consents that, shoud t se the eased property, then,
Mayfar sha be gven the rght to match the offered purchase
prce and to buy the property at that prce. In recproca
contract, the obgaton or promse of each party s the
consderaton for that of the other.
- Both Carmeo and Equatora acted n bad fath. Carmeo
knowngy and deberatey broke a contract entered nto wth
Mayfar. It sod the property to Equatora wth purpose and
ntend to wthhod any notce or knowedge of the sae comng
to the attenton of Mayfar. A the crcumstances pont to a
cacuated and contrved pan of non-compance wth the
agreement of frst refusa. On the part of Equatora, t cannot be
a buyer n good fath because t bought the property wth notce
and fu knowedge that Mayfar had a rght to or nterest n the
property superor to ts own. Carmeo and Equatora took
unconscentous advantage of Mayfar.
Disposition PETITION s DENIED. The Deed of Absoute Sae
between pettoners Equatora Reaty Deveopment, Inc. and
Carmeo & Bauermann, Inc. s deemed rescnded; pettoner
Carmeo & Bauermann s ordered to return to pettoner
Equatora Reaty Deveopment the purchase prce. The atter s
drected to execute the deeds and documents necessary to
return ownershp to Carmeo & Bauermann of the dsputed ots.
Carmeo & Bauermann s ordered to aow Mayfar Theater, Inc.
to buy the aforesad ots for P11,300,000.

PARA AUE KlNGS ENTERPRlSES lNC V CA
(SANTOS, PROTAClO and RAYMUNDO)
268 SCRA 722
PANGANIBAN; Feb. 26, 1997
FACTS
- Defendant Catana Santos s the owner of 8 parces of and n
Paranaque. On Nov. 28, 1977, Frederck Chua eased the sad
property from Santos; the ease was regstered n the Regster of
Deeds. On Feb. 12, 1979, Chua assgned a hs rghts, nterest
and partcpaton n the eased property to Lee Chng Bng, by
vrtue of a deed of assgnment. In turn, Lee Chng Bng assgned
a hs rghts to Paranaque Kngs Enterprses, Inc. agan by vrtue
of a duy regstered deed of assgnment.
- Par. 9 of the contract provdes among other thngs that n case
the propertes are sod or encumbered, the buyer or mortagee
sha be bound to the terms of the ease agreement as f they are
the essors and n case of sae, the essee sha have frst opton to
buy the propertes.
- Santos ater sod the propertes to defendant Raymundo for P5M.
The sad sae was n contraventon of the contract of ease as the
pantff was not offered frst opton to buy. Santos wrote a etter
nformng the pantff of the sae. Upon readng t, pantffs
representatve wrote to Santos, requestng her to rectfy ths and
she ater had t reconveyed for P5M. Santos then offered the
property for sae to pantff by the defendant for P15M and to
make good on ther offer wthn 10 days. The offer expred and
new offer wth the same tenor was sent. Before t expred,
pantffs counse wrote to Santos counse offerng to buy at the
orgna P5M prce. Before they reped, another deed of sae was
executed n favor of Raymundo for P9M, agan voatng the
contract. Santos camed that the perod had apsed and that
pantff was no onger prvy to the contract.
- Pantff aeges that the fact that defendants had the same
counse who represented both of them n ther exchanges wth
pantffs counse and the same rent coector (Santos brother-n-
aw) ead to the concuson that a couson exsted between
respondents; that the coaton was meant to msead pantff nto
thnkng the propertys prce was hgher than t was and that
pantff suffered P3M n osses n the form of mprovements on the
property as we as mora damages of P5M. Pantff prayed for
reef but nstead of fng answers, respondents fed motons to
dsmss on the grounds of ack of cause of acton, camng the
ssue rased was purey factua. They aso stated estoppe and
aches as grounds for dsmssa, camng that pettoners
payment of rentas to Raymundo from 1988-89 was an
acknowedgment of Raymundo as the new owner-essor.
- The TC dsmssed the compant for ack of cause of acton,
argung that Santos had comped wth Par. 9 of the contract but
that pantff had refused the 2 offers. An appea wth the CA
yeded the same resuts, the Court addng that pantff coud not
force ts desred prce on Santos. Pettoner moved for
reconsderaton but was dened, hence ths petton.
lSSUES
Procedural
1. WON the petton shoud be dsmssed for faure to fe copes
of bref
Substantive
2. WON the aeged breach of the contractua rght of frst opton
was a vad cause of acton
3. WON there was fu compance wth the contractua rght
grantng pettoner the frst opton to purchase
HELD
Procedural
1. NO
- If non-compance wth the Rues of Court (n ths case, the
furnshng of 12 copes of pantffs bref) s not ntended for deay
or doesnt resut n pre|udce to the adverse party, dsmssa of the
appea on mere techncates may be stayed.
Substantive
2. YES
- The queston of the vadty of a cause of acton assumes the
facts aeged n the compant are true, thus the determnaton s
one of aw and not purey factua as defendants aeged. In
determnng whether aegatons of a compant are suffcent to
support a cause of acton, the compant need not aege facts
provng exstence of a cause outrght. To prove otherwse requres
one to show that the cam for reef does not exst, rather than
"#$%"& ' #()*) ' +,-./ 01,234351 +163 7<
that a cam s ambguous or ndefnte. Aso, a defendant
movng to dsmss a compant on the ground of ack of cause of
acton s regarded as havng hypothetcay admtted a the
averments thereof.
- A cause of acton exsts f the foowng eements are present:
(1) a rght n favor of the pantff by whatever means and under
whatever aw t arses or s created; (2) an obgaton on the part
of the named defendant to respect or not to voate such rght,
and (3) an act or omsson on the part of such defendant
voatve of the rght of pantff or consttutng a breach of the
obgaton of defendant to the pantff for whch the atter may
mantan an acton for recovery of damages.
- An examnaton of the compant shows that these
requrements are present n the nstant case.
3. NO
- The TC and CA argue that Santos had made an offer to
pettoner before the fna sae to Raymundo and that wth ths,
Santos had comped wth her obgaton to grant the rght of
frst refusa to pettoner. However, ths Court hods that there
shoud be dentty of terms and condtons offered to a
prospectve buyers n so that rght of frst refusa (or frst opton)
s not rendered usory. Ony after the optonee fas to exercse
ts rght under the same terms wthn the gven tme, can the
owner vady offer to se to a 3
rd
person under the same terms.
- Havng come to the concuson that the compant states a
vad cause of acton, further matters requre the
presentaton/determnaton of facts and must be remanded to
the tra court to aow respondents to have ther day n court.
Disposition Petton s GRANTED. The assaed decsons of the
TC and CA are REVERSED and SET ASIDE. The case s
REMANDED to the RTC of Makat.
ANG YU V CA
238 SCRA 602
VITUG; December 2, 1994
FACTS
- Ann Yu fed a Compant for Specfc Performance aganst Cu
Un|eng aegng, among others, that pantffs are tenants or
essees of resdenta and commerca spaces owned by
defendants n Bnondo, Mana; that they have occuped sad
spaces snce 1935 and have been regousy payng the renta
and compyng wth a the condtons of the ease contract; that
on severa occasons before October 9, 1986, defendants
nformed pantffs that they are offerng to se the premses and
are gvng them prorty to acqure the same; that durng the
negotatons, Bobby Cu Un|eng offered a prce of P6-mon
whe pantffs made a counter offer of P5-mon; that pantffs
thereafter asked the defendants to put ther offer n wrtng to
whch request defendants acceded; that n repy to defendant's
etter, pantffs wrote them on October 24, 1986 askng that
they specfy the terms and condtons of the offer to se; that
when pantffs dd not receve any repy, they sent another
etter dated |anuary 28, 1987 wth the same request; that snce
defendants faed to specfy the terms and condtons of the
offer to se and because of nformaton receved that
defendants were about to se the property, pantffs were
compeed to fe the compant to compe defendants to se the
property to them.
- Whe the case was pendng, the Cu Un|eng spouses executed
a Deed of Sae transferrng the property n queston to heren
pettoner Buen Reaty and Deveopment Corporaton.
lSSUE
WON a prevous transactons nvovng the property
notwthstandng the ssuance of another tte to Buen Reaty
Corporaton shoud be set asde because pantffs rght of frst
refusa has been breached
HELD
NO
Ratio In fne, pettoners are aggreved by the faure of prvate
respondents to honor the rght of frst refusa. However, breach
of rght of frst refusa cannot |ustfy correspondngy an ssuance
of a wrt of executon under a |udgment that merey recognzes ts
exstence, nor woud t sancton an acton for specfc performance
wthout thereby negatng the ndspensabe eement of
consensuaty n the perfecton of contracts. The remedy s not a
wrt of executon on the |udgment, snce there s none to execute,
but an acton for damages n a proper forum for the purpose.
Reasoning
- |ustce Vtug ponted out some fundamenta precepts that may
fnd some reevance to the dscusson of the case. Here s the
outne:
1 Definition of obligation
- |urdca necessty to gve, to do, or not to do
(Art 1165)
2 Contract - one source of obligation
a. Definition - meetng of the mnds between two
persons whereby one bnds hmsef, wth respect to the
other, to gve somethng or to render some servce (Art.
1305, Cv Code).
b. Stages
(1) Negotaton - covers the perod from the tme the
prospectve contractng partes ndcate nterest n the
contract to the tme the
contract s concuded (perfected).
(2) Perfecton of the contract - takes pace upon the
concurrence of the essenta eements thereof.
(3) Consummaton - begns when the partes
perform ther respectve undertakngs under the contract
cumnatng n the
extngushment thereof.
- Unt the contract s perfected, t cannot, as an ndependent
source of obgaton, serve as a bndng |urdca reaton. In saes,
the contract s perfected when a person, caed the seer,
obgates hmsef, for a prce certan, to dever and to transfer
ownershp of a thng or rght to another, caed the buyer, over
whch the atter agrees.
3 contract of sale
a. absoute
- where the contract s devod of any provso that tte s
reserved or the rght to unateray rescnd s stpuated,
e.g., unt or uness the prce s pad. Ownershp w then
be transferred to the buyer upon actua or constructve
devery (e.g., by the executon of a pubc document) of
the property sod. Where the condton s mposed upon
the perfecton of the contract tsef, the faure of the
condton woud prevent such perfecton. 3 If the
condton s mposed on the obgaton of a party whch s
not fufed, the other party may ether wave the
condton or refuse to proceed wth the sae (Art. 1545,
Cv Code).
b. condtona.
- the ownershp of the thng sod s retaned unt the
fufment of a postve suspensve condton (normay,
the fu payment of the purchase prce)
- the breach of the condton w prevent the obgaton to
convey tte from acqurng an obgatory force.
- a sae s st absoute
4 An unconditional mutual promise to buy and sell,
as ong as the ob|ect s made determnate and the prce
s fxed, can be obgatory on the partes, and compance
therewth may accordngy be exacted.
5 contract of option
- an accepted unatera promse whch specfes the
thng to be sod and the prce to be pad, when couped
wth a vauabe consderaton dstnct and separate
from the prce. Ths contract s egay bndng.
- But the opton s not the contract of sae tsef. The
optonee has the rght, but not the obgaton, to buy.
Once the opton s exercsed tmey, .e., the offer s
accepted before a breach of the opton, a batera
promse to se and to buy ensues and both partes are
then recprocay bound to compy wth ther respectve
undertakngs.
- If wth perod, the foowng rues w appy:
"#$%"& ' #()*) ' +,-./ 01,234351 +163 7=
(1) If the perod s not tsef founded upon or supported
by a consderaton, the offeror s st free and has the
rght to wthdrawa the offer before ts acceptance,
or, f an acceptance has been made, before the
offeror's comng to know of such fact, by
communcatng that wthdrawa to the offeree.
(2) If the perod has a separate consderaton, a
contract of "opton" s deemed perfected, and t
woud be a breach of that contract to wthdraw the
offer durng the agreed perod. The opton, however,
s an ndependent contract by tsef, and t s to be
dstngushed from the pro|ected man agreement
(sub|ect matter of the opton) whch s obvousy yet
to be concuded. If, n fact, the optoner-offeror
wthdraws the offer before ts acceptance (exercse
of the opton) by the optonee-offeree, the atter may
not sue for specfc performance on the proposed
contract ("ob|ect" of the opton) snce t has faed to
reach ts own stage of perfecton. The optoner-
offeror, however, renders hmsef abe for damages
for breach of the opton. In these cases, care shoud
be taken of the rea nature of the consderaton
gven, for f, n fact, t has been ntended to be part of
the consderaton for the man contract wth a rght of
wthdrawa on the part of the optonee, the man
contract coud be deemed perfected; a smar
nstance woud be an "earnest money" n a contract
of sae that can evdence ts perfecton (Art. 1482,
Cv Code).
6 Right of first refusal
- t cannot be deemed a perfected contract of sae under
Artce 1458 of the Cv Code. Nether can the rght of
frst refusa, understood n ts norma concept, per se be
brought wthn the purvew of an opton under the second
paragraph of Artce 1479, aforequoted, or possby of an
offer under Artce 1319 9 of the same Code. An opton or
an offer woud requre, among other thngs, a cear
certanty on both the ob|ect and the cause or
consderaton of the envsoned contract. In a rght of frst
refusa, whe the ob|ect mght be made determnate, the
exercse of the rght, however, woud be dependent not
ony on the grantor's eventua ntenton to enter nto a
bndng |urdca reaton wth another but aso on terms,
ncudng the prce, that obvousy are yet to be ater
frmed up. Pror thereto, t can at best be so descrbed as
merey beongng to a cass of preparatory |urdca
reatons governed not by contracts (snce the essenta
eements to estabsh the vncuum |urs woud st be
ndefnte and nconcusve) but by, among other aws of
genera appcaton, the pertnent scattered provsons of
the Cv Code on human conduct.
TANAY RECREATlON CENTER AND DEV'T CORP
V FAUSTO
455 SCRA 436
AUSTRIA-MARTINEZ; Apr 12, 2005
NATURE
An appea from a |udgment of the Court of Frst Instance
dsaowng the cam of the pantff for P1,000 aganst the
estate of the deceased |ames P. McEroy.
FACTS
- TRCDCV s a essee of a property owned by Catana Matenzo
Fuasto under a contract of ease of 20 years. On the property
stands the Tanay Coeseum Cockpt operated by the pettoner.
The contract s sub|ect to renewa wthn 60 days pror ts
expraton. The contract aso provded for pettoners prorty
rght to purchase shoud Fuasto decde to se the property
- When the pettoner was about to renew the contract,
Anuncacon Pacunayen, daughter of Fausto, asked the
pettoner to remove the mprovements on the sad property. It
appears that Fausto sod to Pacunayen the sad property
Respondent's Claim:
The pettoner s estopped from assang the vadty of the deed
of sae as the respondent aready recognzed her as owner of the
property when t merey asked for the renewa of the ease and
even a grace perod to vacate the premses when the pettoner
dd not agree n the renewa.
- RTC extended the ease for another 7 years
- CA affrmed RTCs |udgment wth modfcatons orderng TRCDC
to vacate the eased premses mmedatey. CA acknowedged
the rght of TRCDC to purchase the property, however to ony
apped to strangers and not to Faustos reatves.
lSSUE
WON the CA commtted serous error n hodng that the
contractua stpuaton gvng the pettoner the prorty rght to
purchase the eased premses sha ony appy to strangers
HELD
YES
Ratio A sae made n voaton of a rght of frst refusa s vad.
However, t may be rescnded or may be a sub|ect of an acton for
specfc performance.
Reasoning
- When a ease contract contans a rght to frst refusa, the essor
s under a ega duty to the essee not to se to anybody at any
prce unt after he has made an offer to se to the atter at a
certan prce and the essee has faed to accept t. It s an ntegra
and ndvsbe part of the contract of ease and s nseparabe
form the whoe contract. Snce t s part of the consderaton fro
the ease, t s but nto the recproca obgaton of the partes.
- When terms of an agreement have been reduced to wrtng, t s
consdered as contanng a the terms agreed upon. The
stpuaton does not quafcaton that such rght may be exercsed
ony when the sae s made to strangers or persons other than
Fuastos kn.
- CA aso made an error when t rued that t woud be useess to
annu the sae between Fausto and the respondent because the
property woud st reman wth the respondent after the death of
her mother by vrtue of successon, as n fact, Fausto ded Mar
1996, and the property now beongs to the respondent, beng
Fausto;s her.
- Wth the death of Fausto, the rghts and obgatons over the
property, ncudng those n the ease contract were transmtted to
the hers by way of successon. The ease contract s not
essentay persona n character; therefore the rghts and
obgatons are transmssbe to the hers. The hers are bound by
contracts entered nto by predecessors-n-nterest except when
the rghts and obgatons arsng therefrom are not transmssbe
by (1) ther nature, (2) stpuaton or (3) by provson of aw.
2
In
ths case, the nature of the rghts and obgatons are, by nature,
transmssbe.
- The contract of ease contnues even after Faustos death. The
respondent, as her, s bound to fuf a ts terms and condtons.
- Essenta eements of estoppe are: (1) conduct of a party
amountng to fase representaton or conceament of matera
facts or at east cacuated to convey the mpresson that the facts
are otherwse than, and nconsstent wth, those whch the party
subsequenty attempts to assert; (2) ntent, or at east
expectaton, that ths conduct sha be acted upon by, or at east
nfuence, the other party; and (3) knowedge, actua or
constructve, of the rea facts. There was nothng n the records
that the pettoner waved hs rght of frst refusa. When the
pettoner asked for the renewa of the terms of ease, he was
workng on the assumpton that the tte of the property st
beonged to Fausto. In a meetng of the stockhoders of the
pettoner, the possbty of sae was consdered, but the
respondent refused to se the and. After the respondent refused
!
Art 1311 CC Contracts take effect ony between the partes, ther
assgns and hers, except n case where the rghts and obgatons arsng
from the contract are not transmssbe by ther nature, or by stpuaton or
by provson of aw. The her s not abe beyond the vaue of the property
he receved from the decedent.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 8)
to se the and, t was then that pettoner fed for the compant
for the annument of sae, specfc performance and damages.
- The Contract of sae of the sad property between Fausto and
the pettoner must be rescnded. However, due to Faustos
death, her hers now substtute her as respondent. The Court
cannot decare Pacunayen as the soe her. The rght of
pettoner may ony be enforced aganst the hers of the
deceased Fausto, represented by respondent Pacunayen.
Disposition Petton for Revew s PARTIALLY GRANTED. CA s
MODIFIED as foows:
(1) the lasulatan ng 8ilihan Patuluyan ng Lupa" dated August
8, 1990 between Catana Matenzo Fausto and respondent
Anuncacon Fausto Pacunayen s hereby deemed rescnded;
(2) The Hers of the deceased Catana Matenzo Fausto who are
hereby deemed substtuted as respondents, represented by
respondent Anuncacon Fausto Pacunayen, are ORDERED to
recognze the obgaton of Catana Matenzo Fausto under the
Contract of Lease wth respect to the prorty rght of pettoner
Tanay Recreaton Center and Deveopment Corp. to purchase
the sub|ect property under reasonabe terms and condtons;
(3) Transfer Certfcate of Tte No. M-35468 sha reman n the
name of respondent Anuncacon Fausto Pacunayen, whch sha
be canceed n the event pettoner successfuy purchases the
sub|ect property;
(4) Respondent s ORDERED to pay pettoner Tanay
Recreaton Center and Deveopment Corporaton the amount of
Twenty Thousand Pesos (P20,000.00) as actua damages, pus
nterest thereon at the ega rate of sx percent (6%) per annum
from the fng of the Compant unt the fnaty of ths Decson.
After ths Decson becomes fna and executory, the appcabe
rate sha be tweve percent (12%) per annum unt ts
satsfacton; and,
(5) Respondent s ORDERED to pay pettoner the amount of
Ten Thousand Pesos (P10,000.00) as attorneys fees, and to pay
the costs of sut.
(6) Let the case be remanded to the Regona Tra Court,
Morong, Rza (Branch 78) for further proceedngs on the
determnaton of the "reasonabe terms and condtons" of the
offer to se by respondents to pettoner, wthout pre|udce to
possbe medaton between the partes.
The rest of the unaffected dspostve porton of the CA Decson
s AFFlRMED.
Chapter 6: TRANSFER OF OWNERSHIP
KUENZLE V MACKE
14 PHIL 610
MORELAND; December 16, 1909
FACTS
- On or about |anuary, 1907, Staney & Krppendorf (SK) was the
owner of the Oregon Saoon n Cavte consstng of bar,
furnture, furnshngs, and fxtures, of the vaue of 1,000 pesos.
|ose Desdero, as sherff, eved upon such property by vrtue of
an executon ssued upon a |udgment secured by the defendant
Macke & Chander (MC), aganst (SK). (SK) notfed the sherff,
n the manner provded by aw, that t was the owner of sad
goods and forbade the sae thereof under sad executon.
However, the sherff st sod the goods. It was purchased by
(MC) and Bachrach, Eser, and Gae (BEG), were the suretes.
BEG aege that the property was not the property of MC but was
the property of SK who was n possesson of the same at the
tme of such evy. And durng ths same month of |anuary, SK
beng deepy ndebted to MC attempted to se to t by an
nstrument n wrtng the property n queston. The wrtten
nstrument was not recorded and was a prvate document. The
property was aso not devered under ths sad sae but
remaned n the possesson of SK.
lSSUE
WON the sad nstrument of sae had any effect n transferrng
the property n queston from SK to MC
HELD
NO
- The case of the Fdety and Depost Company aganst Wson
ays down a doctrne whch s decsve of ths case. In that case t
was hed that the ownershp of persona property can not be
transferred to the pre|udce of thrd persons except by devery of
the property tsef; and that a sae wthout devery gves the
woud-be purchaser no rghts n sad property except those of a
credtor. The b of sae n the case at bar, under the
crcumstances of ths case, coud have no effect aganst a person
deang wth the property upon the fath of appearances.
- The defendant Macke & Chandre, havng purchased the
property at an executon sae, property conducted, obtaned a
good tte to the property n queston as aganst the pantff n ths
case.
Disposition The |udgment of the court beow s, therefore,
affrmed, wth costs aganst the appeant.
LUZON BROKERAGE CO lNC V MARlTlME
BUlLDlNG CO lNC
43 SCRA 93
REYES; August 18, 1972
FACTS
- On 24 March 1961, Martme had requested a "suspenson" or
"moratorum" n ts monthy payments unt the cose of 1961,
aegedy because "we are encounterng some unusua expenses
wth the warehouses", but ths request was turned down on 29
March 1961 by the Myers Corporaton advsng George Scheder,
the son of Edmund Scheder, man stockhoder of Martme, that
hs request "can not be granted as I have specfc nstructons
from the Board (of Myers Co.) not to agree to any suspenson of
payments under any condton".
- Scheder, on behaf of Martme, nssted on suspendng ts
payments aegng for the first time that the ate F. H. Myers had
"agreed to ndemnfy and hod me harmess from the Luzon Labor
Unon cams whch are n tgaton" and gvng notce that "my
wfe and I intend to withhold any further payments to the Myers
Budng Co. or Estate ...". Ths ntenton was reterated n a etter
wheren t was added that "if the Myers people will deposit in trust
wth Mr. C. Parsons 25,000 pesos to cover my costs to date, I w
then depost wth Mr. Parsons in trust 15,000 pesos for March,
Apr and May ...".
lSSUES
1. WON Martmes obgaton had been substantay performed n
good fath
2. WON Art1191 can be apped to the case
3. WON the stpuated forfeture of the monthy payments aready
made s a penaty, and the same shoud be equtaby reduced
4. WON rescsson of the contract of sae s proper
HELD
1. NO
- Martme was obgated to make monthy payments to Myers
Budng Co. under ts contract, unt the prce of the budng was
pad n fu and yet t repeatedy refused to do so, on the pretext
that the ate F. H. Myers had obgated hmsef to ndemnfy
Edmund Scheder from the abor cams aganst the Luzon
Stevedorng Co., that Myers had sod to Scheder n a totay
separate contract.
- F. H. Myers was not the vendor Myers Budng corporaton;
moreover, he had aready ded and hs estate had been cosed
wthout Scheder or Martme havng fed any contngent cam
before cosure of the estate proceedngs, as requred by Revsed
Rue 88, The cams of Scheder or Martme were, therefore,
aready barred, even assumng that there was any truth to the
aeged promse of the ate Myers, whch s not supported by any
reabe evdence. And even then, the cam was at the most
payabe by the hers of F. H. Myers, but not by the Myers
corporaton, whch had no duty to assume the guarantee.
- The non-payment for March, Apr and May, 1961, due to the
corporaton, was ntentona and deberate non-performance,
"#$%"& ' #()*) ' +,-./ 01,234351 +163 8*
desgned to extra|udcay force Myers corporaton to grant the
moratorum orgnay socted and re|ected, thus consttutng,
as hed n the man decson, dolo (n the performance, in
solvendo) and not mere culpa or neggence.
- Nor s t admssbe that there had been substanta
performance by t or that the offer to depost n trust the mssng
amounts were equvaent to payment. When Martme
suspended ts payments for March-May, 1961, there was a
baance of P319,300.65 on the prncpa of ts obgaton, pus
nterest, .e., neary 1/3 of the orgna ndebtedness. And as to
the offer to depost the payments due n trust or n escrow, t
can not be consdered payment snce t was a condtona
tender, and woud have eft the credtor (Myers corporaton)
unabe to make use of the money rghtfuy due to t.
- A tender to be vad must be uncondtona; and even then, a
tender aone s not a mode of extngushng obgatons, uness
foowed by consgnaton.
- For Myers to accept the proposed depost of the monthy
payments in trust or escrow woud be equvaent to an
admsson on ts part of the vadty or truthfuness of Martme's
cam and of Myers Corporaton's abty for an obgaton of an
ndvdua stockhoder. Nor s there any |ustfcaton on record to
warrant the dsregard of the corporate personaty of Myers
Budng Corporaton n the present case.
2. NO
- Myers obgaton to convey the property was expressy made
sub|ect to a suspensive (precedent) condton of the punctua
and fu payment of the baance of the purchase prce.

Ths s
apparent from causes (d) and () of the contract of sae whch
make t crysta cear that the fu payment of the prce (through
the punctua performance of the monthy payments) was a
condton precedent to the executon of the fna sae and to the
transfer of the property from Myers to Martme; so that there
was to be no actua sae unt and uness fu payment was
made.

- The upshot of a these stpuatons s that n seekng the ouster
of Martme for faure to pay the prce as agreed upon, Myers
was not rescinding (or more propery, resolving) the contract,
but precsey enforcing t accordng to ts express terms. In ts
sut Myers was not seekng resttuton to t of the ownershp of
the thng sod (snce t was never dsposed of), such restoraton
beng the ogca consequence of the fufment of a resolutory
condton, express or mped (artce 1190); nether was t
seekng a decaraton that ts obgaton to se was extngushed.
What t sought was a |udca decaraton that because the
suspensive condton (fu and punctua payment) had not been
fufed, ts obgaton to se to Martme never arose or never
became effectve and, therefore, t (Myers) was entted to
repossess the property ob|ect of the contract, possesson beng
a mere ncdent to ts rght of ownershp.
3. NO
- Martme ntentonay rsked the penaty by deberatey
refusng to make the monthy payments for March to May 1961,
and tryng to n|ect nto ts contract wth Myers corporaton the
totay unconnected persona promse of F. H. Myers to
ndemnfy t for eventua abty to the Luzon Labor Unon,
aegedy made on the occason of the sae of the Luzon
Brokerage to E. Scheder by F. H. Myers, and tryng to
extrajudicially force Myers corporaton to assume responsbty
for such abty;
- Under Artce 1234 of the present Cv Code, an obgaton
must be substantially performed in good faith, for such
performance to stand n eu of payment; Martme, on the
contrary, acted wth dolo or bad fath, and s not n a poston to
nvoke the benefts of the artce.
- Martme's oss of the forfeted payments was more than
baanced by the rentas t receved from the Luzon Brokerage as
essee of the budng for the correspondng perods, at a rate
doube the monthy payments requred of Martme under ts
contract wth Myers.
4. YES
- Even grantng that the contract s a pan sae of rea property
wth deferred payment of the prce, as contended by Martme,
ts poston w not be mposed. By Artce 1592 of the Cv Code
of the Phppnes, though t may have been stpuated that upon
the faure to pay the prce at the tme agreed upon, the rescsson
of the contract sha of rght take pace, the vendee may pay,
even after the expraton of the perod, as ong as no demand for
rescsson of the contract has been made upon hm ether
|udcay or by a notara act. After the demand, the Court may not
grant hm a new term.
- The answer fed by Myers n the court beow to the Luzon
Brokerage's compant for nterpeader consttuted n effect a
|udca demand for rescsson of the contract of sae, and for
repossesson of the rea estate sod. Hence, Martme can not
demand further tme to pay, and must conform to the rescsson
of the contract and the surrender of the premses, wth a the
consequences stpuated n the orgna contract.
Beng an artce specfcay appcabe to saes of rea property,
ths Artce 1592 contros the genera prncpes expressed by
Artce 1198 on recproca obgatons.
SEPARATE OPlNlON

BARREDO ] dissent|
- Martme's faure to pay the March, Apr and May, 1961
nstaments dd not consttute defaut n the absence of a demand
n accordance wth Artce 1100 of the Od Cv Code. (found n
modfed form n Art. 1169 of the New Cv Code)
- The soe and ony demand made upon Martme by Myers for the
payment of the March, Apr and May, 1961 nstaments was
contaned n the atter's etter of May 16, 1961, Myers, and
mportanty, for reasons whch Myers evdenty consdered
rreevant because t has not shown n the record any that may
adversey affect Martme's poston, ths communcaton was not
receved by Martme or returned uncamed. The subsequent
etter of Myers to Martme of |une 5, 1961, Myers, was no onger a
demand; t was aready a notfcaton that Myers had unateray
canceed the Deed n controversy.
- Assumng there was no need for demand, Martme's faure to
actuay pay the nstaments n queston cannot be consdered
asa breach n bad fath (doo).
- From the pont of vew of Myers, Scheder's and Senator Pada's
etters to Parsons were not addressed to Myers, snce t does not
appear that Parsons was not authorzed to act for and on ts
behaf. Worse, they referred to matters wth whch Myers
professed not to have anythng to do. Consequenty, on the other
hand, whatever Parsons sad n them for Myers shoud aso not
have any coor of authorty. In ths sense, t woud appear that
Myers had no knowedge whatsoever why Martme dd not pay.
How coud t charge Martme wth bad fath?
- There has been substanta compance and Artce 1234 may be
apped.
- There s no cear bass n the evdence for comparng how much
Martme had pad as rentas wth how much t had pad as
nstaments as of |une, 1961. In any event, for purposes of equty,
I do not beeve We shoud dsregard the property tsef n ths
comparson, hence We shoud not overook that Martme stands
to ose not ony the P973,000 t had pad, but the property tsef
and the future rentas t s supposed to earn therefrom, whch
after a, consttuted part of ts consderaton n enterng nto the
contract and acqurng the property n queston.
- Assumng otherwse than as above dscussed, Artce 1504 of the
Od Cv Code s appcabe to ths case.
- When Myers fed ts cross-cam aganst Martme n ts answer
to Luzon's nterpeader compant, that n a sense Myers made a
|udca demand, Martme's offers of payment thru Scheder made
to Parsons shoud be consdered as a substanta compance wth
ts obgaton to pay the nstaments for March, Apr and May,
under Artce 1504 of the Od Cv Code; hence t cannot be hed
to have ost ts rght to pay subsequent nstaments whch reason,
the canceaton of the contract by Myers on |une 8, 1961 was
uncaed for, un|ustfed and wthout ega bass.
- The "Deed" n queston s not a promse to se - t s a sae.
- Accordng to |ustce Laure, n as much as the partes n such
sae on nstament of rea proper or mmovabe had provded n
ther agreement for an opton n favor of the vendor that n case
"#$%"& ' #()*) ' +,-./ 01,234351 +163 8(
the vendee shoud fa to pay any nstament, the former may
ether recover n acton at aw the whoe baance unpad whch
sha be consdered mmedatey due and demandabe or
recover possesson of the sub|ect property and consderng a
nstaments aready pad as rentas, these stpuatons may
egay be enforced accordng to ther terms, consderng that
such stpuatons are not contrary to aw, moras or pubc pocy.
Stated dfferenty the Court hed that such stpuatons are
comprehended wthn the freedom of contract.
- |ustce Laure's opnon s at varance wth Spansh authortes
who appear to be more ogca.
- We a know that automatc canceaton of a contract of sae
resutng n the forfeture of a moneys aready pad |ust
because of one defaut n the payment of the baance s a harsh
and oppressve condton, precsey because t s tantamount to
the obnoxous pactum commssorum. For ths reason, the aw
expcty gves the buyer n Artce 1504 an opportunty to pay
even after defaut so ong as the seer has not made a forma
demand for canceaton thru a notary pubc or n court. The
very wordng of the provson negates the freedom of the partes
to stpuate otherwse, snce t aready ceary says, "even
though t may have been stpuated that defaut of the payment
of the prce wthn the tme agreed upon etc." It s to me absurd
to contend that not wthstandng ths express mandate of the
aw, the partes are st free to stpuate otherwse. Indeed, from
ths pont of vew, and ndependent of my dscusson above of
the appcabty to the case of the Baya rung by |ustce
Ozaeta, t s my poston that the ntended waver of forma
demand, f any such ntenton can be nferred, n the provson of
Paragraph (d) of the "Deed" n queston that "ths deed ... sha
automatcay and without any further formality, become nu
and vod," s contrary to the etter and ntent of Artce 1504 as
we as pubc pocy. It beng obvous as aready shown above
that no demand of whatever knd for resouton had been made
upon Martme before the etter of canceaton of |une 5, 1961,
t foows necessary that sad canceaton was unwarranted
and contrary to rather than an mpementaton of the terms of
the "Deed" n controversy.
- The stpuaton provdng for transfer of tte ony after fu
payment dd not stamp the transacton wth the character of a
mere promse to se - fu payment was a suspensve condton
for the executon of the fna deed as the form of tradton of tte
t whe non-payment was a resoutory condton wth
confscaton as to
penaty cause.
- What renders the dea of a promse to se wth reservaton
more perpexng to me s that n the Spansh aw on saes, as
contradstngushed from the concept of saes Amercan aw, a
contract of sae s purey consensua and does not necessary
nvove the transfer of tte except when t s so stpuated or
when the sae s made n a pubc nstrument, snce the atter s
n tsef a form of devery or tradton of tte over mmovabe
property.
- It was ony n Manue v Rodrguez, 109 Ph. 1, that ths Court
"created" the concept of a "a contract to se or promse to se",
where tte remans wth the vendor unt fufment to a postve
suspensve condton, such as fu payment of the prce.
- I nsst that the so-caed suspensve condton affectng the
transfer of tte ony after fu payment of the prce, an
admttedy ct one, does not detract from the character of the
contract here n queston as a perfected contract of sae ndeed,
partay consummated by the devery of possesson of "the
thng" (per Manresa). For that matter, nether does the condton
that upon faure of Martme to pay any nstament, the
contract woud be canceed, a past payments forfeted and
Myers woud be entted to recover possesson - vary a bt the
rea nature of the contract.
- I woud, therefore, separate the so-caed suspensve condton
regardng the devery of tte as affectng soey the obgaton
to dever tte whch s not of mmedate |urdca essence n a
perfected contract of sae from the breach, aegedy commtted
by Martme, of the terms of payment whch s the one that
woud |ustfy the canceaton made by Myers, f such breach dd
occur n ega contempaton.
- The promse to se has a dstnct connotaton n Spansh, aw
whch I fee cannot square
wth the contract here n controversy.
- At the rsk of statng the obvous, the concept of a sae or
purchase and sae n Spansh aw s defned n Artce 1445 and
the moment of the perfecton of such a contract s fxed n Artce
1450. On the other hand, precsey to avod confuson of concepts,
snce commerca usages resort to vared forms of transactons
revovng around the |urdca dea of exchangng thngs for
money, and t s not unusua for merchants to enter nto
preparatory agreements for busness and other reasons before
fnazng ther deas, Artce 1451 ays down specfc rues
regardng promses n regard to saes.
- For the purposes of Artce 1504, and under the crcumstances of
ths case, may the cross-cam nterposed by Myers n ts answer
to the nterpeader compant of Luzon be deemed as the |udca
demand that shoud forecose any rght on the part of Martme to
contnue payng under the "Deed n queston?" My answer s no.
- I reterate that the provso of Artce 1504 (1592) aowng
payment by the vendee even after he has undsputaby defauted
n hs obgaton stpuated n the terms of the agreement s a
egsatve remedy ntended to temper a la Portia the harshness of
the enforcement of the condton of the partes amount to a
pactum commssorum whch s generay frowned upon.
Accordngy, t s my understandng that n the appcaton of ths
provso, We shoud not be restrcted to a tera nterpretaton
thereof.
OCE]O, PEREZ CO V lNTL BANKlNG CORP
37 PHIL 631
FISHER; 1918
NATURE
Appea from a decson of the Mana CFI
FACTS
- Chua Teng Chong on March 7, 1914 executed and devered to
the defendant a promssory note payabe one month from the sad
date. As securty Chong deposted wth the bank 5,000 pcus of
sugar whch were hed n a warehouse ocated at 1008 Cae
Toneeros, Bnondo, Mana. It woud appear that the bank dd not
take possesson of the sugar and that Chong contnued to retan
the sugar n hs possesson and contro unt the 16
th
Apr. It was
aso noted that the aeged pedge was not recorded n a pubc
document. The money represented by the promssory does not
appear to have been devered.
- Pantffs, on the other hand, entered nto a contract wth Chong
for the sae of a ot of sugar on March 24, 1914. The agreement
cas for devery durng the month of Apr wth the sugar to be
weghed at the buyers warehouse. In compance wth the
agreement, 5,000 pcus of sugar was devered to Chongs
warehouse at 119 Muee dea Industra on Apr 16, 1914. The
foowng day, the pantff presented for coecton ts account but
the buyer at ths pont refused to make payment.
- On the day the sugar was devered by Oce|o, a representatve of
the bank went to the other warehouse at 1008 Cae Toneeros
and dscovered that the sugar theren dd not exceed 1,800 pcus.
The representatve, together wth a awyer from the bank, went to
Chong to nqure as to the shortfa. Chong ponted them to the
warehouse at 119 Muee dea Industra. The bank representatve
went to the sad warehouse and found the sugar. He thereafter
cosed the warehouse wth the banks padock effectvey takng
possesson of the sugar as per the agreement earer mentoned.
- The sae contract between pantff and Chong apparenty dd not
ncude the tme and the pace when payment for the sugar was to
be effected. The tra court however found that the payment was
to be made upon the competon of the devery. The pantff
proved to the Court that n saes of ths knd t s customary for the
seer to dever the merchandse to buyers warehouse for
nspecton and verfcaton of weghts. The payment s due on
demand thereafter.
- Oce|o tred to recover possesson of the sugar but the Bank
whch then had possesson refused to dever the same to Oce|o.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 87
On the same day that Oce|o made the demand to the bank,
Chong was |udcay decared nsovent. Francsco Chua Seco
was apponted as assgnee of the nsovency (recever or
qudator n todays parance).
- Aso on Apr 24, 1914, Oce|o fed a repevn case aganst the
bank aegng that the bank was unawfuy hodng the sugar
whch was devered to chong and whch has not been pad. The
sugar was sod by agreement of the partes wth the proceed
deposted n the bank, sub|ect to the order of the court upon
fnay dsposton. Interestngy enough, Seco fed a compant
n nterventon assertng preferenta rghts over the sugar
contendng that the sugar s the property of Chong by vrtue of
the devery of the same by Oce|o. Intervenor cams that sugar
s the property of Chong and therefore of the nsovent estate
now represented by hm. The ower court rendered |udgment n
favor of the pantff. Hence the Appea.
lSSUES
1. WON the tte to the sugar passed to the buyer upon devery
2. WON the faure to pay by Chong authorze the seer to
rescnd the sae
3. WON the commencement of the repevn sut was equvaent
to the rescsson of the sae
4. WON the pedge to the bank can be sustaned
HELD
1. YES
- Artce 1450 (now Art 1496 and 1497) provdes that the buyer
acqures ownershp of the thng once the same has been
devered to hm or paced under hs contro and possesson. The
contenton of Oce|o that tte to the sugar dd not pass to the
buyer due Chongs non payment cannot hod. Rung otherwse
w cause havoc to the entre busness communty In the
absence of any stpuaton n the contract that tte w ony pass
upon payment, then t was hed that the tte, n the case at bar,
had t fact passed to the buyer
2. NO
- Chapter 7 of tte V1 of the Cv Code (partcuary Artce 1600)
provdes that contracts of sae may be rescnded for the same
causes as a other obgatons. However, the rght to rescnd the
sae for non performance on the part of the buyer s not
absoute. The aw subordnates t to the rghts of thrd partes to
whom bad fath s not mputabe.
3. NO
- The acton for rescsson s a |udca matter. Hence, unt after
the ownershp ssue has been determned, the acton for
repevn cannot be mantaned.
4. NO
- It was shown by evdence that the sugar sub|ect of the
agreement between the bank and Chong was at the warehouse
at 1088 Cae Tneeros and not at the Muee dea Industra
warehouse.
Disposition The ower court decson s reversed. The Assgnee
of the bankruptcy of Chong s entted to the product of the sae
of the sugar. The rght of the seer to fe hs cam n the
nsovency proceedngs s reversed.
BEAN V CADWALLADER
10 PHIL 606
|OHNSON; March 26, 1908
FACTS
- |une 4, 1906 > Bean, admnstrator of the estate of George
Case, brought an acton n CFI Mana to recover from
Cadwaader Company the foowng sums:
(a) P7,356.80, wth 6% per annum nterest, from the December
6, 1905, as baance for tmber sod and devered by the CASE
(BEAN) to CADWALLADER
(b) P2,782.75, baance for tmber sod and devered by CASE to
CADWALLADER
(c) P810 as actua damage suffered by CASE by reason of the
voaton of sad agreements (a) and (b)
- 5eptember 6, J905 by CADWALLADER TO CA5E (A)
> to confrm our acceptance of your verba offer to furnsh us a
cargo of p and moave (the moave to consst of 10 ogs, more
or ess), sad cargo to comprse from eght thousand to ten
thousand cubc feet, Engsh measurement, and the same to be
devered aongsde our vesse at Basan, for the sum of sxty
cents (60 cents), Phppne currency, per Engsh cubc foot.
> to pay the forestry dues at Mana to be charged aganst you
> devery s to be made wthn three months from date of ths
etter
> notfy by teegraph when devery can be made.
- january 3, J906 CA5E TO CADWALLADER (8)
> propose to furnsh natve tmber at the prces and under the
condtons heren expressed
+ Caantas, at twenty-fve (25) cents per Engsh cubc foot, a
forestry charges to be pad by me.
+ Caantas, short and crooked, at ten (10) cents per Engsh
cubc foot, a forestry charges to be pad by you.
+ Ip, at sxty (60) cents per Engsh cubc foot, a forestry
charges to be pad by me.
+ Ip, short peces, at ffteen (15) cents per Engsh cubc foot,
a forestry charges to be pad by you.
+ Mangachupay, No. 1, at twenty-fve (25) cents per Engsh
cubc foot, a forestry charges to be pad by me.
> These prces include delivery alongside ship or barge at
8asilan,
> l will furnish the necessary men to load same, and you to
furnish steam gear to assist in loading
> the cargo to be mxed and consstng of approxmatey ffteen
thousand cubc feet
> Devery to be made wthn three months from ths date.
Plaintiff Claims
> wthn three months from September 6, 1905 (A), dever at the
port of Basan, a cargo of natve ogs, consstng of 16,428 Engsh
cubc feet of p, and duy notfed the defendant by teegram of
such devery; that the vaue of sad ogs so devered at the prce
stpuated was P9,856.50; that on the December 29, 1905, the
defendant pad to the pantff the sum of P2,500 to appy on the
sad account, and that there was st due from the defendant to
the pantff, upon sad contract as represented by Exhbt A, the
sum of P7,356.80, wth nterest at the rate of 6% from the
December 6, 1905.
> wthn three months from |anuary 3, 1906 (B), dever at the
port of Basan, 15,131 Engsh cubc feet of mangachupay and
caantas, and dd notfy the defendant of such devery; that the
vaue of sad tmber so devered at the prce agreed upon was
P3,782.75; that on the February 6, 1906, the defendant pad to
the pantff, to appy on sad account, the sum of P1,000, and that
there s st due and owng to the pantff by the defendant the
sum of P2,782.75, wth nterest at the rate of 6 per cent from the
3d day of Apr, 1906.
> by reason of the voaton on the part of the defendant of sad
contracts as represented by A and B, he was obged to borrow
money from thrd persons and ncur expenses n traveng,
amountng to the sum of P810, and that, by reason of the
voaton of the sad contracts on the part of the defendant, ths
sum was due and payabe as damages by the defendant to the
pantff.
Defendant Claims
> the pantff had made certan msrepresentatons concernng
the character of the costs of the Isand of Basan; that the pantff
had represented that the harbor of sad Isand of Basan, where
sad ogs were to be devered, was a safe harbor, and that t was
easy practcabe for a vesse to come aongsde the and,
whereas, n fact, sad harbor was unsafe, and that t was
mpossbe for the defendant to enter sad harbor wth the boats
and to oad sad ogs (anchor chan broke two tmes and waters
were unsetted)
> the pantff had not, as a matter of fact, devered to t the ogs
or tmber, nor any part of the same, as represented by sad
contracts, and asked for a |udgment aganst the pantff for the
sum of P3,500, the money pad by the defendant to the pantff,
and nterest on the sum of P2,500 from the 29th of December,
1905, and nterest on P1,000 from the 6th of February, 1906, at
the rate of 10 per cent.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 88
- CFl: n favor of the pantff and aganst the defendant for the
sum of P10,033.39, wth nterest at 6 per cent from the 3rd day
of Apr, 1906, and costs.
- ceary estabshed by the testmony:
(a) That the pantff cut the ogs requred by the contract.
(b) That pantff transported sad ogs to the beach.
(c) That pantff had sad ogs measured by the representatve
of the Forestry Bureau of Government of the Phppne Isands.
(d) That pantff paced sad ogs n rafts to be foated aongsde
a vesse to be sent to the pont of devery by the defendant.
(e) That pantff dd actuay pace the sad ogs aong-sde the
vesse known as the juanita n the month of Apr, 1906.
(f) That the crew of the juanita dd n fact actuay proceed to
pace sad ogs on board sad vesse, but faed because the
anchor chan was not strong enough to sustan a 1 ton skd,
whch the crew were tryng to pu n pace.
lSSUE
WON there s rea devery
HELD
YES
Reasoning
- The evdence shows beyond peradventure of doubt that at the
tme the sad juanita, the vesse of the defendant, was at
Basan, some of the ogs were paced aongsde of the vesse, n
accordance wth the terms of the contract. It s dened that a of
the ogs to be furnshed by the pantff under the terms of the
contract were paced n rafts n the water at or near the pont of
devery. Certanty the pantff can not be requred to show that
he paced each og aongsde the vesse, after he has shown that
he had a the ogs rafted n the water at the pont of devery
and had paced some of them aongsde the vesse n
accordance wth the terms of the contract. He coud not be
requred to pace others aongsde the vesse unt after the frst
had been oaded. (Whtcomb vs. Whtney) The fact s not
dsputed that the pantff duy notfed the defendant, wthn the
perod prescrbed n the contract, that the sad ogs were ready
for devery.
- Actua manua devery of an artce sod s not essenta to the
passng of the tte thereto (A1450, Cv Code) uness made so
by the terms of the contract or by an understandng of the
partes. The partes to the contract may agree when and on
what condtons the property n the sub|ect of the contract was
passed to the prospectve owner. (Andrews vs. Durant) In the
present case the partes agreed that the devery of the ogs
shoud be made aongsde a vesse of the defendant. That was
done by the pantff. The vesse of the defendant was sent to
the pont of devery and the sad defendant attempted to oad
on sad vesse the ogs devered aong ts sde by the pantff. It
s a rue we estabshed that a mere contract for the sae of
goods, where nothng remans to be done by the seer before
makng devery, transfers the rght of property, athough the
prce has not been pad, nor the thng sod actuay devered to
the purchaser. (Oyphant vs. Baker; A1450, Cv Code.)
- The evdence shows that, when the juanita arrved at the pont
of devery, the partes n charge of sad boat paced or
attempted to pace skds on sad boat for the purpose of oadng
the ogs. Certany they beeved that the ogs had been
devered, or ese why woud they have actuay made
preparaton for the oadng of the same? The ogs were fuy at
the dsposa of the defendant, and the atter thereby became
abe for the prce of the same under the contract. (A339, Code
of Commerce; Noyes vs. Marott)
- Nicholas vs . Morse
> n an acton for goods sod and devered, f the pantff
proves devery at the pace agreed and that there remaned
nothng further for hm to do, he need not show actual
acceptance by the defendant. The mere fact that the defendant,
by reason of the mproper equpment of the vesse, was unabe
to take sad ogs aboard such vesse, can not reeve the atter
from responsbty under the contract. No burden rested upon
the pantff to furnsh proper equpment for the vesse of the
defendant wth whch to put on board sad ogs. That was the
responsbty of the defendant. The responsbty of the pantff
ceased when he paced the ogs aongsde the vesse of the
defendant.
- Condition of the Port of Basilan:
> t was perfecty feasbe of the defendant, wth proper
apparatus, to take on board the ogs n queston at the pont of
devery. We presume that at amost every pont upon the coast of
the Phppne Archpeago there are days when condtons are
such as to prevent the oadng of cargo upon vesses. Ths s true
even n the Bay of Mana. However, t woud not be |ust to
concude that, because on certan days t s mpossbe to oad and
unoad shps mght be oaded and unoaded n sad bay had made
msrepresentatons, because of the fact that on a partcuar day
shps coud not be oaded or unoaded by reason of the condtons
of the sea resutng from wnd or storm.
Obiter
- Suppose, for exampe, that after the vesse of the defendant had
arrved at the pont where the ogs were devered aong ts sde,
and the ogs had actuay been devered at the sde, as s camed
by the pantff n the present case, the pantff had thereafter
sod the sad ogs to thrd persons. Coud the defendant have
mantaned repevn for the same? If the tte had not passed, he
coud not. If t had, he coud. If the tte had not passed at that
moment the pantff mght have sod sad ogs to a thrd person n
the very presence of the defendant, even after defendant's vesse
had arrved to take the ogs away. If the tte had not passed, the
pantff woud thus have sub|ected hmsef to an acton for
damages upon hs contract upon a faure to perform t. We are of
the opnon, however, that, f the pantff had sod sad ogs to a
thrd person after the arrva of the vesse of the defendant, the
defendant mght have camed and recovered sad ogs upon the
theory that have propery sad to another purchaser of sad ogs:
"These ogs are mne; they have been devered to me under a
contract; everythng has been done under sad contract whch the
crcumstances w permt of for the passng of the tte of the
same to me, and whoever buys sad ogs buys somethng whch
has not ony been prevousy bought by me but whch has been
set apart for me ands paced at my dsposa by the most
unequvoca acts, and I am, therefore, vested wth the tte to the
same whch I have a rght to mantan and enforce." And we
beeve that the aw woud have sustaned the defendant n ths
contenton. (Whtcomb vs. Whtney; Hatch vs. O Company; A339,
Code of Commerce; Noyes vs. Marott,)
Disposition pantff s entted to a confrmaton of the |udgment
of the ower court. It s therefore, hereby ordered that a |udgment
be entered n favor of the pantff and aganst the defendant for
the sum of P10,033.39, wth nterest at the rate of 6 per cent per
annum from the 3rd day of Apr, 1906, and costs.
SANTOS V SANTOS
366 SCRA 395 (2001)
OUISUMBING; October 2, 2001
NATURE
Petton for revew seeks to annu and set asde the decson dated
March 10, 1998 of the Court of Appeas that affrmed the decson
of the Regona Tra Court of Mana, Branch 48, dated March 17,
1993, decarng the deed of saes nu and vod.
FACTS
- Pettoner Zenada M. Santos s the wdow of Savador Santos, a
brother of prvate respondents Caxto, Aberto, Antono, a
surnamed Santos and Rosa Santos-Carreon.
- The spouses |esus and Rosaa Santos owned a parce of and
regstered under TCT No. 27571 wth an area of 154 square
meters, ocated at Sta. Cruz Mana. On t was a four-door
apartment admnstered by Rosaa who rented them out. The
spouses had fve chdren, Savador, Caxto, Aberto, Antono and
Rosa.
- On |anuary 19, 1959, |esus and Rosaa executed a deed of sae
of the propertes n favor of ther chdren Savador and Rosa. TCT
No. 27571 became TCT No. 60819. Rosa n turn sod her share to
Savador on November 20, 1973 whch resuted n the ssuance of
"#$%"& ' #()*) ' +,-./ 01,234351 +163 89
a new TCT No. 113221. Despte the transfer of the property to
Savador, Rosaa contnued to ease and receve rentas from
the apartment unts.
- On November 1, 1979, |esus ded. Sx years after or on
|anuary 9, 1985, Savador ded, foowed by Rosaa who ded the
foowng month. Shorty after, pettoner Zenada, camng to
be Savadors her, demanded the rent from Antono
Hombrebueno, a tenant of Rosaa. When the atter refused to
pay, Zenada fed an e|ectment sut aganst hm wth the
Metropotan Tra Court of Mana, Branch 24, whch eventuay
decded n Zenadas favor.
- On |anuary 5, 1989, prvate respondents nsttuted an acton
for reconveyance of property wth premnary n|uncton aganst
pettoner n the Regona Tra Court of Mana, where they
aeged that the two deeds of sae executed on |anuary 19, 1959
and November 20, 1973 were smuated for ack of
consderaton. They were executed to accommodate Savador
n generatng funds for hs busness ventures and provdng hm
wth greater busness fexbty.
- In her Answer, Zenada dened the matera aegatons n the
compant and as speca and affrmatve defenses, argued that
Savador was the regstered owner of the property, whch coud
ony be sub|ected to encumbrances or ens annotated on the
tte; that the respondents rght to reconveyance was aready
barred by prescrpton and aches; and that the compant stated
no cause of acton.
- On March 17, 1993, the tra court decded n prvate
respondents favor. Upon appea, the Court of Appeas affrmed
the tra courts decson dated March 10, 1998. It hed that n
order for the executon of a pubc nstrument to effect tradton,
as provded n Artce 1498 of the Cv Code, the vendor sha
have had contro over the thng sod, at the moment of sae. It
was not enough to confer upon the purchaser the ownershp and
the rght of possesson. The thng sod must be paced n hs
contro. The sub|ect deeds of sae dd not confer upon Savador
the ownershp over the sub|ect property, because even after the
sae, the orgna vendors remaned n domnon, contro, and
possesson thereof.
Petitioner's Arguments
- She argues that tax decaratons are not concusve evdence
of ownershp when not supported by evdence. She avers that
Savador aowed hs mother to possess the property out of
respect to her n accordance wth Fpno vaues.
Pettoner n her memorandum nvokes Artce 1477 of the Cv
Code whch provdes that ownershp of the thng sod s
transferred to the vendee upon ts actua or constructve
devery. Artce 1498, n turn, provdes that when the sae s
made through a pubc nstrument, ts executon s equvaent to
the devery of the thng sub|ect of the contract. Pettoner avers
that appyng sad provsons to the case, Savador became the
owner of the sub|ect property by vrtue of the two deeds of sae
executed n hs favor.
lSSUES
1. WON payments of reaty taxes and retenton of possesson
ndcate contnued ownershp by the orgna owners
2. WON a sae through a pubc nstrument s tantamount to
devery of the thng sod
HELD
1. NO
- It s true that nether tax recepts nor decaratons of ownershp
for taxaton purposes consttute suffcent proof of ownershp.
They must be supported by other effectve proofs. These
requste proofs we fnd present n ths case. As admtted by
pettoner, despte the sae, |esus and Rosaa contnued to
possess and admnster the property and en|oy ts fruts by
easng t to thrd persons. Both Rosa and Savador dd not
exercse any rght of ownershp over t. Before the second deed
of sae to transfer her 1/2 share over the property was executed
by Rosa, Savador st sought the permsson of hs mother.
Further, after Savador regstered the property n hs name, he
surrendered the tte to hs mother. These are cear ndcatons
that ownershp st remaned wth the orgna owners. In
5errano vs. CA, 139 SCRA 179, 189 (1985), we hed that the
contnued coecton of rentas from the tenants by the seer of
reaty after executon of aeged deed of sae s contrary to the
noton of ownershp.
2. NO
- Nowhere n the Cv Code, however, does t provde that
executon of a deed of sae s a concusve presumpton of devery
of possesson. The Code merey sad that the executon sha be
equvaent to devery. The presumpton can be rebutted by cear
and convncng evdence.
|16|
Presumptve devery can be negated
by the faure of the vendee to take actua possesson of the and
sod.
- In Danguilan vs. lAC, 168 SCRA 22, 32 (1988), we hed that for
the executon of a pubc nstrument to effect tradton, the
purchaser must be paced n contro of the thng sod. When there
s no mpedment to prevent the thng sod from convertng to
tenancy of the purchaser by the soe w of the vendor, symboc
devery through the executon of a pubc nstrument s suffcent.
But f, notwthstandng the executon of the nstrument, the
purchaser cannot have the en|oyment and matera tenancy nor
make use of t hmsef or through another n hs name, then
devery has not been effected.
- As found by both the tra and appeate courts and ampy
supported by the evdence on record, Savador was never paced
n contro of the property. The orgna seers retaned ther
contro and possesson. Therefore, there was no rea transfer of
ownershp.
Disposition Petton s DENIED. The assaed decson dated
March 10, 1998 of the Court of Appeas, whch sustaned the
|udgment of the Regona Tra Court dated March 17, 1993, n
favor of heren prvate respondents, s AFFIRMED.
FLORENDO V FOZ
20 PHIL 388
ARELLANO; October 24, 1911
NATURE
Appea from |udgment of CFI Iocos Sur
FACTS
- Foz (seer) executed a contract, ratfed before a notary, wheren
he ses, cedes, and conveys to Forendo (buyer) hs house and
camarn, together wth the ots on whch they are erected, for
P6000. Of ths prce, Foz had aready receved P2000, and (as
ndcated n the contract) Forendo w pay the remanng P4000
when he (Foz) goes to Vgan "durng ths or the next month."
- The contract aso provdes:
"In case of my beng unabe to go to Vgan, I authorze Forendo to
pay my debt to the church at that pace, as we aso (that s, I
authorze hm) to obtan the tte papers of the house that s the
sub|ect matter of ths sae, and the sad Forendo sha send the
remander to me here n Mana."
"Record s aso made n ths nstrument that the rents of the sad
propertes may be coected by me ony up to and ncudng the
month of |une; after such perod, I sha have no further rght to
sad rents and Seor Forendo may then begn to coect them."
- When Foz went to Vgan, Forendo pad the remanng P4000, but
payment was refused by Foz. Forendo nstead deposted the
P4000 wth the Muncpa Treasurer as payment. Foz contended
that the true prce was P10,000, and that he was made to beeve
that the prce ndcated n the contract was P10,000 and not
P6000. He aeged that the contract was |ust read out to hm.
- Forendo sued. CFI rued n hs favor, orderng Foz to compy wth
the contract, pay the rents due to Forendo, accept the remander
of the P4000 (after payng debt to the church). Foz appeaed.
lSSUE
WON contract of sae was vad, thereby requrng Foz to dever
possesson to Forendo
HELD
YES
"#$%"& ' #()*) ' +,-./ 01,234351 +163 8:
Ratio Absent any decet n obtanng consent to the contract,
the same s hed to be vad and effectve.
Reasoning
- It was not proved, nor was t attempted to be proved, that the
nstrument, before beng sgned by Foz, was read to hm by
another person; nor that such other person was Forendo
hmsef; nor that any person read one thng for another, as
beng what was stpuated n the nstrument. For these reasons
t was the concuson of the tra court that nether the decet
aeged by the defendant to have been empoyed by the pantff
n the executon of the contract, nor the fasty of the nstrument
executed, was proved.
- Consequenty, the nstrument of contract s vad and effectve.
From the vadty and force of the contract s derved the
obgaton on the part of the vendor to dever the thng sod.
Art. 1466 CC: the vendor sha not be bound to dever the thng
sod, f the vendee shoud not have pad the prce, or f a perod
for the payment has not been fxed n the contract. If n, the
contract a perod has been fxed for the payment, the vendor
must dever the thng sod.
- The provson above contan a rue and an excepton: the rue
s that the thng sha not be devered, uness the prce be pad;
and the excepton s that the thng must be devered, though
the prce be not frst pad, f a tme for such payment has been
fxed n the contract.
In the contract n queston, a perod was fxed for the payment,
thus makng the contract fa under the excepton.
- It s the matera devery of the property sod whch Foz must
make n compance wth the contract, nasmuch as the forma
devery de jure was made, accordng to the provsons of artce
1462, 2
nd
par:
"When the sae shoud be made by means of a pubc
nstrument, the executon thereof sha be equvaent to the
devery of the thng whch s the ob|ect of the contract, f n
sad nstrument the contrary does not appear or may be
ceary nferred."
- As the contrary does not appear nor s to be nferred from the
contract, ts executon was reay a forma or symboca devery
of the property sod and authorzed the pantff (Forendo) to
use the tte of ownershp as proof that he was thenceforth the
owner of the property.
Disposition Petton dened. Decson of CFI AFFIRMED.
AVlLES V ARCEGA
44 PHIL 924
ROMUALDEZ; September 18, 1922
FACTS
- The house n dspute n ths case was sod by the spouses
Venanco Acantara and Vcenta Capuong to Generosa Aves for
the sum of P497, t havng been stpuated that durng four
months from the 10th of October, 1917, the vendors woud
contnue n possesson of the house, the expenses for repars,
and and other tax to be for ther account, as we as the
payment of the rent for the ot on whch t s erected.
-In a document dated March 13, 1918 the same property was
sod by the same spouses Venanco Acantara and Vcente
Capuong for P500 to the spouses Fortunato de Leon and
Segunda Arcega, who took possesson of the property, Generosa
Aves never took possesson thereof.
lSSUE
WON tte to the house n dspute was transferred to Arcega
HELD
YES
- Snce none of the two saes appears to have been regstered;
therefore the queston at ssue s, whch of these purchasers
was the frst to take possesson (art. 1473, Cv Code).
- We have aready seen that the frst purchaser, the pantff,
never took possesson of the house, whe the second
purchasers, the defendant spouses, dd. Under the Cv Code,
the concuson s nevtabe that the ttes to the house was
transmtted not to the pantff but to the defendants.
- The pantff cannot nvoke symboc devery by the executon of
the pubc document of sae, nasmuch as there was not, nor coud
there have been, such devery, the same beng prevented by the
express stpuaton contaned n the deed of sae, to the effect
that the vendors dd not part wth the possesson of the house but
woud contnue theren for four months. It cannot be sad that
after the apse of the four months foowng, durng whch the
vendors were to contnue n possesson of the house, accordng to
the stpuaton, any symboc devery subssted. Nothng can
subsst that dd not exst before.
- Artce 1462 of the Cv Code says:
lf the sale should be made by means of a public instrument, the
execution thereof shall be equivalent to the delivery of the thing
which is the subject-matter of the contract unless the contrary
appears or may be clearly inferred from such instrument.
- As we understand the aw, there s symboc devery when the
sae s made n a pubc document, and nothng appears theren to
the contrary ether expressy or mpedy; and no such symboc
devery can be hed to take pace when, as n the nstant case,
there s n the document a stpuaton to the contrary.
- We do not hestate to term symboc such devery of the thng
as s supposed to be made by the executon of the document, as
provded n artce 1462, athough n that case t must be
consdered to take pace party by operaton of aw. Ths knd of
tradton fnds ts precedent n aw whch provdes that "when one
grants another any property or thng, the atter acqures
possesson thereof, f the grantor devers to hm the etters
whereby the same s made, or makes a new one and hands t to
hm, athough he s not gven physca possesson of the thng."
- Ths knd of tradton, however, s, as to ts effcacousness,
sub|ect to the terms of the document, for f t appears theren, or
can be nferred therefrom, that t was not the ntenton of the
partes to make devery, no tradton can be deemed to have
taken pace. Such woud be the case, for nstance, where a certan
date s fxed when the purchaser shoud take possesson of the
thng, or where n the case of a sae by nstaments, t s
stpuated that unt payment of the ast nstament s made, the
tte to the property shoud not be deemed to have been
transmtted, or where the vendor reserves the rght to use and
en|oy the property unt the gatherng of the pendng crops. (10
Manresa, Codgo Cv, p. 129.)
- The nstant case s one of those above mentoned by the
emnent commentator Mr. Manresa. To use the phraseoogy of the
above quoted passage, a certan date was fxed (namey, at the
end of four months, because d certum est quod certum redd
potest), when the purchaser shoud take possesson of the thng.
- Nether can t be sad that the house must be presumed to have
been devered to the frst purchaser after the apse of the four
months aforesad, for such a presumpton s overthrown by the
fact stpuated by the partes that ths frst purchaser never took
possesson of the house.
- The defendants therefore has rghts to the house n queston,
wth absoute excuson of the pantffs.
SEPARATE OPlNlON
ARAULLO ]dissent|
- Artce 1473 of the Cv Code provdes:
lf the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first
taken possession thereof in good faith if it should be personal
property.
5hould it be real property, it shall belong to the purchaser who
first recorded it in the registry of deeds.
5hould it not be recorded, the property shall belong to the person
who first took possession of it in good faith, or, in default of
possession, to the person who present the oldest title, provided
there is good faith.
- Appyng ths provson to the nstant case, there s no doubt that
the ownershp was transferred to the purchaser who frst ganed
"#$%"& ' #()*) ' +,-./ 01,234351 +163 8;
possesson n good fath. But who was the frst to gan
possesson? The defendants, accordng to the opnon of the
ma|orty. But wth a the respect due to the authortatve
opnon of the ma|orty, the undersgned thnk that t was the
pantffs.
PHlL SUBURBAN DEV'T CORP V AUDlTOR
GENERAL
63 SCRA 397
ANTONIO; Apr 18, 1975
NATURE
Appea by certorar from the decson dated December 11,
1961, of then Audtor Genera Pedro M. Gmenez, dsaowng the
request of pettoner for the refund of rea estate tax n the
amount of P30,460.90 pad to the Provnca Treasurer of
Buacan.
FACTS
- On |une 8, 1960, at a meetng wth the Cabnet, the Presdent
of the Phppnes, actng on the reports of the Commttee
created to survey sutabe ots for reocatng squatters n Mana
and suburbs, and of the Soca Wefare Admnstrator together
wth the recommendaton of the Manager of the Government
Servce Insurance System, approved n prncpe the acquston
by the Peope's Homeste and Housng Corporaton of the
unoccuped porton of the Sapang Paay Estate n Sta. Mara,
Buacan for reocatng the squatters who desre to sette north of
Mana, and of another area ether n Las Pas or Paraaque,
Rza, or Bacoor, Cavte for those who desre to sette south of
Mana. The pro|ect was to be fnanced through the fotaton of
bonds under the charter of the PHHC n the amount of P4.5
mon, the same to be absorbed by the Government Servce
Insurance System. The Presdent, through the Executve
Secretary, nformed the PHHC of such approva by etter bearng
the same datE.
- On |une 10, 1960, the Board of Drectors of the PHHC passed
Resouton No. 700 authorzng the purchase of the unoccuped
porton of the Sapang Paay Estate at P0.45 per square meter.
PHHC entered nto a contract wth the owner of the estate
Phppne denomnated "deed of absoute sae" whch however
was not regstered mmedatey. Nevertheess, PHHC wth the
consent of the owner acqured possesson of the property, to
enabe the sad PHHC to proceed mmedatey wth the
constructon of roads n the new settement and to resette the
squatters and food vctms n Mana who were rendered
homeess by the foods or e|ected from the ots whch they were
then occupyng.
- On Apr 12, 1961, the Provnca Treasurer of Buacan
requested the PHHC to wthhod the amount of P30,099.79 from
the purchase prce to be pad by t to the Phppne Suburban
Deveopment Corporaton. Sad amount represented the reaty
tax due on the property nvoved for the calendar year 1961
(Annex "G"). Pettoner, through the PHHC, pad under protest
the abovementoned amount to the Provnca Treasurer of
Buacan and thereafter, or on |une 13, 1961, by etter,
requested then Secretary of Fnance Domnador Aytona to order
a refund of the amount so pad. Pettoner camed that t ceased
to be the owner of the and n queston upon the executon of
the Deed of Absoute Sae on December 29, 1960. The
Fnance Sec refused the request of pettoner. Hence, ths case.
lSSUE
WON Phppne Suburban s st abe for taxes for the year
1961 despte the executon of the deed of sae n 1960 because
the same was not regstered and that therefore ownershp was
not transferred to PHHC
HELD
NO
Ratio It s not the fact of regstraton whch transmts
ownershp of rea property but that of devery. From the tme
that that Phppne Suburban devered possesson to PHHC, t
was no onger the owner and therefore not abe for taxes eved
thereafter.
Reasoning
- Under the cv aw, devery (tradton) as a mode of transmsson
of ownershp maybe actua (rea tradton) or constructve
(constructve tradton). When the sae of rea property s made n
a pubc nstrument, the executon thereof s equvaent to the
devery of the thng ob|ect of the contract, f from the deed the
contrary does not appear or cannot ceary be nferred.
- In other words, there s symboc devery of the property sub|ect
of the sae by the executon of the pubc nstrument, uness from
the express terms of the nstrument, or by cear nference
therefrom, ths was not the ntenton of the partes. Such woud be
the case, for nstance, when a certan date s fxed for the
purchaser to take possesson of the property sub|ect of the
conveyance, or where, n case of sae by nstaments, t s
stpuated that unt the ast nstament s made, the tte to the
property shoud reman wth the vendor, or when the vendor
reserves the rght to use and en|oy the propertes unt the
gatherng of the pendng crops,

or where the vendor has no
contro over the thng sod at the moment of the sae, and,
therefore, ts matera devery coud not have been made.
- In the case at bar, there s no queston that the vendor had
actuay paced the vendee n possesson and contro over the
thng sod, even before the date of the sae. The condton that
pettoner shoud frst regster the deed of sae and secure a new
tte n the name of the vendee before the atter sha pay the
baance of the purchase prce, dd not precude the transmsson
of ownershp. In the absence of an express stpuaton to the
contrary, the payment of the purchase prce of the good s not a
condton, precedent to the transfer of tte to the buyer, but tte
passes by the devery of the goods.
- The Court faed to see the mert n respondent's nsstence that,
athough possesson was transferred to the vendee and the deed
of sae was executed n a pubc nstrument on December 29,
960, the vendor st remans as owner of the property unt the
deed of sae s actuay regstered wth the Offce of the Regster
of Deeds, because the and sod s regstered under the Torrens
System. In a ong ne of cases aready decded by ths Court, the
constant doctrne has been that, as between the partes to a
contract of sae, regstraton s not necessary to make t vad and
effectve, for actua notce s equvaent to regstraton.
7
Indeed,
Secton 50 of the Land Regstraton Act provdes that, even
wthout the act of regstraton, a deed purportng to convey or
affect regstered and sha operate as a contract between the
partes. The regstraton s ntended to protect the buyer aganst
cams of thrd persons arsng from subsequent aenatons by the
vendor, and s certany not necessary to gve effect to the deed of
sae, as between the partes to the contract.
Disposition Appeaed decson s hereby reversed, and the rea
property tax pad under protest to the Provnca Treasurer of
Buacan by pettoner Phppne Suburban Deveopment
Corporaton, n the amount of P30,460,90, s hereby ordered
refunded.
MASALLO V CESAR
GR 12449
FISHER; November 13 1918
NATURE
Acton for forcbe entry and detaner
FACTS
- It was aeged n the compant that on |une 12 1915, the
defendant Mara Cesar by force and ntmdaton deprved pantff
of the possesson of the and n sut and snce that tme wthhed t
from hm to hs damage n the sum of P25. The defendant dened
ths aegaton statng that the and n queston s her property and
has been n her possesson wthout nterrupton for more than 20
years. TC gave |udgment n favor of pantff
- From the evdence taken at the tra t appears that the
defendant had been n possesson of the and n queston for a
ong perod pror to the occurrence of the ncdents out of whch
"#$%"& ' #()*) ' +,-./ 01,234351 +163 8<
ths tgaton arose. ON March 8 1915, whe the defendant was
n possesson of the and n queston, one Matea Crspno
executed a deed to the pantff whereby she undertook to se
and transfer to hm the and n queston. Crspno admtted that
she has not been n possesson of the and snce the cessaton of
the Spansh soveregnty n these sands. She stated however
that the and n queston had been mortgaged by her to one
Eugena Perez, who testfed on behaf of pantff that she, Perez
had been n possesson of the and from 1889 unt 1914. After
MAtea Crspno executed her deed to the pantff, the atter
went upon the and wth hs aborers and commenced to pow t.
Not ong after, the defendant approached accompaned by her
daughter, and nsstng that the and was hers and n her
possesson, ordered the pantff and hs men away (the
defendant, who s a woman 80 years of age, took a boo and cut
the rope traces by whch hs carabao was attached to the pow.
The resut of the dspute was that the pantff and hs men
wthdrew and that an acton was shorty after commenced n the
court of |ustce of the peace aganst the defendant pantff for
the possesson of the and. The evdence shows concusvey
that unt he went upon the and for the purpose of powng t,
actng on the strength of hs deed from Matea Crspno, pantff
had never been n possesson of ths property
lSSUE
WON pantff can cam ownershp over the and n queston by
vrtue the deed of sae between her and a thrd party (Matea
Crspno)
HELD
NO
Ratio As Mateo Crspno admts that she dd not have
possesson of the and when she executed and devered her
deed to pantff, the mere executon and devery of the deed dd
not consttute a devery of possesson
Reasoning
- The pantff n an acton of ths character must prove a pror
possesson n hmsef, whch means that as between the two
contendng partes the rght of acton s conceded to be n the
party whose actua and peacefu possesson antedates that of
the other. In ths case the defendant Mara Cesar s shown to
have had the pror peacefu possesson of the dsputed parce of
ground for an ndefnte perod of tme n the past. Therefore,
when the pantff, after acqurng a deed to the and from a thrd
person, entered upon the premses wth hs aborers and began
pwng the and, t was he who was guty of the wrongfu
serzure of the property; and the defendant undoubtedy then
had a perfect rght to mantan an acton of unawfu detaner
aganst the pantff to regan possesson. Instead of nsttutng
such an acton, as the defendant was we entted to do, she
warned the pantff off, or as he woud have us beeve, e|ected
hm by force, ntmdaton and voence. Avang hmsef of the
stuaton thus created, the pantff now seeks to turn the tabes
upon the orgna possessor , and foundng hs rght upon the
transtory possesson whch he had wrongfuy acqured, he
woud now empoy aganst the defendant the same remedy
whch mght propery have been used aganst hmsef f he had
not vacated the premses
- Accordng to Secton 80 of the Code of Cv Pro, where a dspute
over possesson arses between 2 persons, the person frst
havng actua possesson, as between them, s the one who s
entted to mantan the acton.
Disposition The decson of the tra court s reversed and the
acton dsmssed, pantff to pay the costs of both nstances
SARMlENTO V LESACA
108 PHIL 900
BAUTISTA ANGELO; |une 30, 1960
NATURE
Appea from the decson of the tra court
FACTS
- |anuary 18, 1949, pantff bought from defendant two parces of
and for P5,000; that after the sae, pantff tred to take actua
physca possesson of the ands but was prevented from dong so
by one Martn Deoso who cams to be the owner thereof; pantff
nsttuted an acton before the Tenancy Enforcement Dvson of
the DO| to oust Martn Deoso from the possesson of the ands,
whch acton she ater abandoned for reasons known ony to her;
pantff wrote defendant askng the atter ether to change the
ands sod wth another of the same knd and cass or to return the
purchase prce together wth the expenses she had ncurred n the
executon of the sae, pus 6 per cent nterest;
- Apr 11, 1957, the tra court rendered |udgment decarng the
deed of sae rescnded, and orderng the atter to pay the former
the sum of P5,000, representng the purchase prce of the ands,
pus the amount of P50.25 whch pantff spent for the executon
and regstraton of the deed of sae, wth ega nterest on both
sums
- pantff thus fed a compant n the CFI of Zambaes prayng for
the rescsson of the contract of sae executed between her and
defendant for faure of the atter to pace the former n the actua
physca possesson of the ands she bought.
lSSUES
1. WON the executon of the deed of sae n a pubc document s
equvaent to devery of possesson of the ands sod to appeee
thus reevng her of the obgaton to pace appeee n actua
possesson thereof
2. WON pantff can rescnd the contract of sae n vew of
defendant's faure to dever the possesson of the ands
HELD
1. NO
Ratio When there s no mpedment whatever to prevent the
thng sod passng nto the tenancy of the purchaser by the soe
w of the vendor, symboc devery through the executon of a
pubc nstrument s suffcent. But f, notwthstandng the
executon of the nstrument, the purchaser cannot have the
en|oyment and matera tenancy of the thng and make use of t
hmsef or through another n hs name, because such tenancy
and en|oyment are opposed by the nterposton of another w,
then fcton yeds to reaty - the devery has not been effected.
Reasoning
- t can be ceary seen n the stpuaton n the sae that the
vendor ntended to pace the vendee n actua possesson of the
ands mmedatey as can be nferred from the stpuaton that the
vendee "takes actua possesson thereof ... wth fu rghts to
dspose, en|oy and make use thereof n such manner and form as
woud be most advantageous to hersef." The possesson referred
to n the contract evdenty refers to actua possesson and not
merey symboca nferabe from the mere executon of the
document. There was, however, no such possesson by the
vendee.
- the thng sod sha be deemed devered when the vendee s
paced n the contro and possesson thereof, whch stuaton does
not here obtan because from the executon of the sae up to the
present the vendee was never abe to take possesson of the
ands. And athough t s postuated n the same artce
3
that the
executon of a pubc document s equvaent to devery, ths ega
fcton ony hods true when there s no mpedment that may
"
ART. 1461. The vendor s bound to dever and warrant the thng whch s the sub|ect-
matter of the sae.
ART. 1462. The thng sod sha be deemed devered when the vendee s paced n the
contro and possesson thereof.
If the sae shoud be made by means of a pubc nstrument, the executon thereof sha
be equvaent to the devery of the thng whch s the sub|ect-matter of the contract
uness the contrary appears or s ceary to be nferred from such nstrument.
From the above t s cear that when a contract of sae s executed the vendor s bound
to dever to the vendee the thng sod by pacng the vendee n the contro and
possesson of the sub|ect-matter of the contract. However, f the sae s executed by
means of a pubc nstrument, the mere executon of the nstrument s equvaent to
devery uness the contrary appears or s ceary to be nferred from such nstrument.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 8=
prevent the passng of the property from the hands of the
vendor nto those of the vendee
- It s not enough to confer upon the purchaser the ownershp
and rght of possesson. The thng sod must be paced n hs
contro.
2. YES
Ratio Undoubtedy n a contract of purchase and sae the
obgaton of the partes s recproca, and, as provded by the
aw, n case one of the partes fas to compy wth what s
ncumbent upon hm to do, the person pre|udced may ether
exact the fufment of the obgaton or rescnd the sae. Snce
pantff chose the atter aternatve, t cannot be dsputed that
her acton s n accordance wth aw.
Reasoning
- Ths acton s based on Art.1124 whch provdes that "the rght
to resove recproca obgatons, n case one of the obgors
shoud fa to compy wth that whch s ncumbent upon hm, s
deemed to be mped. The person pre|udced may choose
between exactng the fufment of the obgaton or ts
resouton wth ndemnty for osses and payment of nterest n
ether case. He may aso demand the resouton of the obgaton
even after havng eected ts fufment, shoud the atter be
found mpossbe."
Disposition Wherefore the decson appeaed from s affrmed
BOARD OF LlUlDATOS V FLORO
110 PHIL 482
REYES |BL; December 29, 1960
NATURE
Appea from an order of the CFI of Mana
FACTS
- On |une 14, 1952 Meeco Maabanan ("M") and the Board of
Lqudators |"the Board," a government agency whch took over
the functons of the defunct Surpus Property Lqudatng
Commttee| entered nto an agreement for the savage of
surpus propertes sunk n terrtora waters off the provnces of
Mndoro, La Unon, and Batangas. By ts terms, M was to
commence operatons wthn 30 days from executon of sad
contract, whch was to be effectve for a perod of 1 year from
the start of operatons, extendbe for a tota perod of not more
than 6 months. On |une 10, 1953, M requested for an extenson
of 1 year for the savage n waters of Mndoro and Batangas
whch was approved by the Board, extendng hs contract up to
Nov. 30, 1953. He ater requested a 2
nd
extenson for 1 more
year for the waters of Occdenta Mndoro, whch the Board
agan approved, hence extendng hs contract up to Aug. 31,
1954. On |uy 26, 1954, M submtted a recovery report statng
that he had recovered a tota of 13, 107 peces of stee
mattngs.
- 4 months prevousy or on March 31, 1954: M entered nto an
agreement wth Exeque Foro, wheren the atter woud
advance to M certan sums of money, not to exceed P25,000,
repayment thereof beng secured by quanttes of stee mattngs
whch M woud consgn to Foro; that sad advances were to be
pad wthn a certan perod, and upon defaut, Foro was
authorzed to se whatever stee mattngs were n hs
possesson under sad contract, n an amount suffcent to
satsfy the advances, whch Foro cams to have amounted to
P24, 224.50. Because M was not abe to repay the advances,
Foro, through a document dated Aug. 4, 1954, sod 11, 047
peces of stee mattngs to a certan Euao Legasp for
P24,303.40
- Aug. 21, 1954: M fed n the CFI of Mana a petton for
vountary nsovency. Attached thereto was a Schedue of
Accounts, n whch the Board and Foro were sted as credtors,
as we as an Inventory of Propertes, a st n whch were
ncuded 11, 167 peces stee mattngs wth an aeged
estmated vaue of P33,501.
- Soon after, the Board, camng to be the owner of the sted
stee mattngs, fed a petton to excude the mattngs from the
nventory; and to make the nsovent account for 1,940
addtona peces of stee mattng |the dfference between the
number stated n the recovery report (13,107) and the number n
the nventory (11,167)|. Foro opposed the Boards petton and
camed that the stee mattngs sted had become the property of
Legasp by vrtue of a deed of sae executed by Foro pursuant to
the atters contract wth M. The CFI dened the Boards petton,
decarng that M had acqured ownershp over the stee mattngs
under hs contract wth the Board; that Foro was propery
authorzed to dspose of the stee mattngs under hs contract wth
M; and that the sae to Euao Legasp was vad and not contrary
to the Insovency Law.
- The Board appeaed to the CA whch certfed the case to the SC,
there beng ony questons of aw nvoved.
lSSUES
1. WON the contract between M and the Board had vested M wth
tte to and ownershp of the stee mattngs
2. WON the contract ceased to have any force and effect after
non-renewa of the bond requred for the extenson of the contract
3. WON there was a novaton
4. WON the sae to Foro by Legasp was vod as a frauduent
transfer under Sec. 70 of the Insovency Law
HELD
1. YES
Ratio Art.1498 CC: When a sae s made through a pubc
nstrument, the executon thereof sha be equvaent to the
devery of the thng whch s the ob|ect of the contract, f from the
deed the contrary does not appear or cannot ceary be nferred.
Reasoning
- The contract between M and the Board had the effect of vestng
M wth tte to, or ownershp of, the stee mattngs n queston as
soon as they were brought up from the bottom of the sea. Ths s
shown by the foowng provsons of the contract:
J0. For and in consideration of the assignment by the 8OARD OF
LlOUlDATOR5 to the CONTRACTOR (M) of all right, title and interest in
and to all surplus properties salvaged by the CONTRACTOR under this
contract, the CONTRACTOR shall pay to the Covernment NlNETY PE5O5
(P90.00) per long ton (2,240 lbs.) of surplus properties recovered.
JJ. Payment of the agreed price shall be made monthly during the first
ten (J0) days of every month on the basis of recovery reports of sunken
surplus properties salvaged during the preceding month, duly verified
and audited by the authorized representative of the 8OARD OF
LlOUlDATOR5.
- Whe there can be reservaton of tte n the seer unt fu
payment of the prce (Art.1478), or, unt fufment of a condton
(Art.1505) and whe executon of a pubc nstrument amounts to
devery ony when from the deed the contrary does not appear or
cannot ceary be nferred (Art. 1498), there s nothng n the sad
contract whch may be deemed a reservaton of tte, or from
whch t may ceary be nferred that devery was not ntended.
Thus, the contenton that there was no devery s ncorrect. Whe
there was no physca tradton, there was one by agreement
(traditio longa manu) n conformty wth Art.1499 of the Cv
Code.
2. NO
- M fed a bond on |une 10, 1952 effectve for 1 year. The
prncpa contract, executed on |une 14, 1952 was frst extended
to Nov. 30, 1953, and fnay to Aug.31, 1954. As can be seen,
there was no onger any bond from |une 11, 1953 to Aug. 31,
1954. The apse of the bond dd not extngush the contract. The
requrement that a bond be posted was aready comped wth
when M fed the bond dated |une 10th. A bond merey stands as a
guaranty for a prncpa obgaton whch may exst ndependenty
of sad bond whch s merey an accessory contract. In none of the
resoutons extendng the contract was there a requrement that
the bond be renewed.
3. NO
- Novaton s never presumed, the ntent to novate must be
expressed ceary and unequvocay, or that the terms of the new
agreement be ncompatbe wth the od contract. Here there was
nether express novaton nor ncompatbty. A mere extenson of
the term (perod) for payment or performance s not novaton.
4. The court beow hed that the sae to Legasp was vad; but
there havng been no proceedngs to determne whether the sae
"#$%"& ' #()*) ' +,-./ 01,234351 +163 9)
was frauduent, we thnk t was premature for the court beow to
decde ths pont, especay because under sec.36 No. 8 of the
Insovency Act, a proceedngs to set asde frauduent transfers
shoud be brought and prosecuted by the assgnee, who can
egay represent a the credtors of the nsovent. To aow a
snge credtor to brng such a proceedng woud nvte a
mutpcty of suts, snce the resouton of hs case woud not
bnd the other credtors, who may refe the same cam
ndependenty, wth dverse proofs, and possby gve rse to
contradctory rungs by the courts.
Disposition The order appeaed from s affrmed n so far as t
decares the dsputed goods to be the property of the nsovent;
but wthout pre|udce to the rght of the assgnee n nsovency
to take whatever acton may be proper to attack the aeged
frauduent transfer of the stee mattng to Euao Legasp, and
to make the proper partes account for the dfference between
the number of peces of stee mattng stated n the nsovent's
recovery report (18,107) and that stated n hs nventory
(11,167)
ABUAN V GARClA
14 SCRA 759
BENGZON; |uy 30, 1965
NATURE
Acton for ega redempton
FACTS
- Secton 119 of the Pubc Land Law provdes that:
"Every conveyance of and acqured under the free
patent or homestead provsons, when proper, sha be
sub|ect to repurchase by the appcant, hs wdow, or
ega hers, for a perod of fve year's from the date of
conveyance."
- Laureano Abuan acqured a homestead and was passed after
hs death to hs ega hers, the pantff heren. Consequenty,
the orgna certfcate of tte n hs name was canceed, and
another was ssued n pantffs names.
- On August 7, 1953, pantffs sod the parce of and to
defendants, evdenced by Deed of Absoute Sae. Transfer
Certfcate of Tte No. T-5906 was ssued to defendants.
- Later, pantffs fed an acton to recover the and, aegng
that the deed of absoute sae had been executed through fraud,
wthout consderaton. However, the case was subsequenty
setted amcaby, when the partes entered nto an "Agreement"
dated February 28, 1955, under the terms of whch defendants
pad P500.00 on that day as parta payment of the purchase
prce of the and, and promsed to pay the baance of P1500.00
on or before Apr 30, 1955, wth a grace perod of thrty days.
The partes aso stpuated n sad Agreement that t "sha
supersede a prevous agreements or contracts heretofore
entered nto and executed by and between pantffs and
defendants, nvovng the same parce of rceand . . ."
- Camng that fu payment had been effected ony sometme n
May, 1955, pantffs nsttuted the present acton on March 4,
1960.
- Defendants moved to dsmss, on the ground that pantffs'
rght of acton was aready barred, because the fve-year
redempton perod had aready expred.
- It s pantffs' contenton that the prescrptve perod shoud be
counted from the fu payment of the purchase prce, that s,
from May, 1955, snce t was on ths date that the contract was
consummated.
- Nueva Vzcaya court dsmssed the compant. Pantffs
appeaed to CA, whch certfed the case to ths Court because
ony a ega ssue remans to be determned.
lSSUE
When w the fve-year perod wthn whch pantffs may exercse
ther rght of repurchase shoud begn to run - on August 7, 1953,
when the Deed of Absoute Sae was executed, OR February 28,
1955, when the compromse "Agreement" was entered nto OR
May, 1955, upon fu payment of the purchase prce
HELD
August 7, 1953
- The aw speaks of "fve years from date of conveyance".
Conveyance means transfer of ownershp; t means the date when
the tte to the and s transferred from one person to another.
The fve-year shoud be reckoned from the date that defendants
acqured ownershp of the and.
- Art. 1477 of the New Civil Code provdes that ownershp of
the thng sod sha be transferred to the vendee upon the actua
or constructve devery thereof; and Art 1496 ponts out that
ownershp of the thng sod s acqured by the vendee from the
moment t s devered to hm n any of the ways specfed n
artces 1497 to 1501. Under Art. 1498, when the sae s made
through a pubc nstrument, - as n ths case - the executon
thereof sha be equvaent to the devery of the thng whch s the
ob|ect of the contract, f from the deed the contrary does not
appear or cannot be ceary nferred. Ths manner of devery of
the thng through the executon of a pubc document s common
to persona as we as rea property.
- defendants acqured ownershp to the and n queston upon the
executon of the deed of sae on August 7, 1953. The
"Agreement" of February 28, 1955 dd not entrey abrogate the
sae snce t dd not operate to revest the ownershp of the and n
the pantffs.
- Even assumng that the Deed of Sae was nu and vod as
pantffs cam, and dd not serve to effectuate devery of the
property, the date of the Agreement, at the atest, may be
consdered as the tme wthn whch ownershp vested n the
defendants. Art. 1496 expcty provdes that ownershp of the
thng sod s acqured by the vendee from the moment t s
devered to hm "n any other manner sgnfyng an agreement
that the possesson s transferred from the vendor to the vendee."
The ntenton to gve possesson (and ownershp) s manfest n
the agreement (Annex "B") entered nto by the partes specay
consderng the foowng crcumstances: (1) the payment of part
of the purchase prce, there beng no stpuaton n the agreement
that ownershp w not vest n the vendees unt fu payment of
the prce; and (2) the fact that the agreement was entered nto n
consderaton of pantffs' desstance, as n fact they dd desst, n
prosecutng ther revndcatory acton, thereby eavng the
property n the hands of the then and now defendants - as
owners thereof, necessary. Ths was devery brev manu
permssbe under Artces 1499 and 1501 of the New Cv Code.
The crcumstance that fu payment was made ony, as pantffs
aege, n May, 1955, does not ater the fact that ownershp of the
and passed to defendants upon the executon of the agreement
wth the ntenton of ettng them hod t as owners. In the absence
of an express stpuaton to the contrary, the payment of the prce
s not a condton precedent to the transfer of ownershp, whch
passes by devery of the thng to the buyer.
Disposition Petton dsmssed
BAUTlSTA V SlOSON
39 PHIL 615
TORRES; Feb 11, 1919
NATURE
Appea from a |udgment of the CFI Rza
FACTS
- On Sept 4, 1912, the defendant Francsco Soson and hs wfe
Lorenza through a notara nstrument, sod to the pantff Rosao
Bautsta a camarn or warehouse under the rght of repurchase. It
was stpuated that f w/n 2 yrs from the date of the contract the
vendors or ther successors n nterest shoud not repurchase sad
"#$%"& ' #()*) ' +,-./ 01,234351 +163 9*
propertes, such sae shoud become absoute and the
ownershp n the propertes sod shoud be consodated.
- On the same date, Bautsta, through a notara nstrument,
eased the propertes sod to hm to the vendors (Soson), for the
prce of P100 per annum, for the perod of 2 yrs.
- On August 5, 1914, Soson executed before a notary a
document by w/c he sod under rght of repurchase to the
defendant Raymundo de a Cruz, the same camarn. And that f
wthn the perod of 6 months Soson shoud not make the
redempton stpuated, sad sae shoud become absoute.
- The two sad aenatons were both set forth n notara
nstruments, and not recorded n the regstry of property
- Bautsta cams that Soson has not repurchased the camarn
from hm nor pad the prce of the ease.
- At the tme of the compant, de a Cruz was n possesson of
the camarn
- CFI hed (1) that Rosao Bautsta, the pantff, was by merger
the owner of the propertes; (2) ordered Raymundo de a Cruz to
dever to the pantff Bautsta the camarn or warehouse; (3)
ordered Francsco Soson to pay to sad pantff Bautsta the
sum of P200, the amount of the rent due; and ordered each of
the defendants Francsco Soson and Raymundo de a Cruz to
pay one-haf of the costs.
lSSUE
Who s the awfu owner - Bautsta or de a Cruz
HELD
Rosalio 8autista
- It has been shown that Raymundo de a Cruz coud not have
acqured any rght n the camarn nvoved n ths sut; for
Francsco Soson, who sod to Cruz, occuped t as a mere tenant
and not as owner, and, consequenty, was unabe to transmt to
the purchaser any property rght whatever nor awfu possesson
under tte of owner.
- Where the vendor on the same date on whch the deed of sae
s executed by means of a constitutum possessorium
agreement converts hmsef nto a tenant or essee of the
property that he sod, and contnues n possesson thereof as
such tenant, the purchaser who acqured the property through
devery or symboc tradton wth a the consequent effects of
a deed of conveyance s deemed to be n possesson thereof by
the express w of the contractng partes, and, therefore, t
must be recognzed that through such constitutum
possessorium agreement, the purchaser who by that covenant
became the essor s n awfu possesson of the eased property,
and that the vendor by the same covenant, converted hmsef
nto the essee and s n matera possesson of the eased
property n the name and representaton of the purchaser, ts
awfu owner.
- It ogcay foows that the second purchaser who acqured the
property from the essee or tenant and who through the acts of
the atter entered nto the matera possesson of the property
by vrtue of the second sae coud not have acqured any rght of
ownershp theren, nasmuch as he receved the property not
from ts awfu owner, but from a mere tenant or essee who had
no rght whatever to dspose of t; therefore, the second
purchaser's possesson s merey precarous and was taken after
the frst purchaser had exercsed hs rght of possesson, and the
possesson of the second purchaser cannot preva over that
prevousy obtaned by the frst purchaser.
Disposition |udgment affrmed
SEPARATE OPlNlON
CARSON ]dissent|
- Manresa, n hs commentares, on Artce 1473 of the Cv
Code, ceary ndcates that the possesson referred to n that
artce s the rea, the physca possesson of the property; and
certan t s that to hod that the possesson contempated n ths
artce may be secured wthout the performance of some act
whch w gve notce to nnocent subsequent purchasers, or of
whch subsequent purchasers may nform themseves by due
dgence tends to defeat the |ust and equtabe provsons of the
aw.
BEHN, MEYER & CO V YANGCO
38 PHIL 602
MALCOLM; September 18, 1918
NATURE
Appea from a |udgment of the Court of Frst Instance of Mana
FACTS
- A memorandum of agreement was executed between Behn,
Meyer & Co. and Yangco. The contract of sae conssted of three
components:
1. Sub|ect matter and consderaton - The contract provded for
80 drums Caustc Soda 76% Carabao brand a preco de Doar
God Nne and 75/100 per 100-bs.
2. The contract provded for c..f. Mana, pagadero aganst
devery of documents.
3. Tme of devery - The contract provded for "Embarque:
March 1916." The merchandse was n fact shpped from New
York on the Steamshp Chinese Prince on Apr 12, 1916.
- Payment woud be effected upon devery of the documents.
- The steamshp was detaned by Brtsh authortes at Penang and
part of the cargo, ncudng 71 drums of caustc soda, was
removed. Defendant refused to accept devery of the remanng
nne drums of soda on the ground that the goods were n bad
order.
- Defendant aso refused the optona offer of the pantff of
watng for the remander of the shpment unt ts arrva or of
acceptng the substtuton of 71 drums of caustc soda of smar
grade from pantffs stock.
- The pantff sod, for the account of the defendant, 80 drums of
caustc soda from whch there was reazed the sum of P6,352.89.
Deductng ths sum from the seng prce of P10,063.86 eaves the
amount camed as damages for the breach of contract.
lSSUE
WON the warranty (the matera promse) of the seer to the
buyer has been comped wth
HELD
YES
Ratio The buyer may rescnd the contract of sae because of a
breach n the substanta partcuars gong to the essence of the
contract. The vendee can demand the fufment f the contract
and ths beng shown to be mpossbe, s reeved of hs
obgaton.
Reasoning
- The foowng were the noted breaches:
1. Sub|ect matter and consderaton:
> The specfc merchandse was not tendered. The soda offered
by pantff to defendant was not the "Carabao" brand.
> The offer of drums of soda of another knd was not made wthn
the tme that a March shpment woud normay have been
avaabe.
2. Pace of devery:
> Determnaton of the pace of devery aways resoves tsef
nto a queston of fact. If the contract s sent as to the
person or mode by whch the goods are to be sent, devery
by the vendor to a common carrer, n the usua and ordnary
course of busness, transfers the property to the vendee.
> The etters "c..f." n Brtsh contracts stand for costs, nsurance
and freght. They sgnfy that the prce fxed covers not ony
the cost of the goods but the expense of freght and
nsurance to be pad by the seer.
> The etters "F.O.B." stand for the words "Free on Board." It
means that the seer sha bear a expenses unt the goods
are devered where they are to be "F.O.B."
> Both terms make rues of presumpton. The word "Mana" n
con|uncton wth the etters "c..f" must mean that the
contract prce, coverng costs, nsurance, and freght sgnfes
devery was to be made n Mana.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 9(
> The b of adng was for goods receved from Neuss Hessen
and Co. as evdenced by the documents, not from New
York.
Disposition |udgment affrmed.
GENERAL FOODS CORP V NAT'L COCONUT
CORP
100 PHIL 637
REYES; November 20, 1956
FACTS
- Genera Foods Corporaton s a foregn corporaton organzed
under the aws of the State of Deaware, U. S. A., and censed to
do busness n the Phppnes
- Appeee sod to appeant 1,500 (ater reduced to 1,000) ong
tons of copra, at $164 (ater reduced to $163) per ton of 2,000
pounds
- Appeee shpped 1054.6278 short tons of copra to appeant
on board the S. S. "Mndoro".
- The weghng of the cargo was done by the Luzon Brokerage
Co., n ts capacty as agent of the Genera Superntendence Co.,
Ltd., of Geneva, Swtzerand.
- On the strength of the net wegh thus found, appeee prepared
and remtted to appeant the correspondng bs of adng and
other documents, and wthdrew from the atter's etter of credt
95 per cent of the nvoce vaue of the shpment, or a tota of
$136,686.95.
- Upon arrva n New York, the net cargo was reweghed by
appeant and was found to wegh ony 898.792 short tons.
- Deductng from the vaue of the shortage the sum of $8,092.02
receved by appeant from the nsurer for 58.25 ong tons ost or
destroyed even before the copra was oaded on board the
vesse, appeant demanded from appeee the refund of the
amount of $24,154.59.
- Sometme after the recept of appeant's demand, the
appeee, through ts offcers-n-charge |ose Neva, Sr.,
acknowedged n a etter abty for the defcency n the outturn
weghts of the copra and promsed payment thereof as soon as
funds were avaabe .
- Then appeee was aready aboshed and went nto
qudaton.
- Appeant submtted ts cam to the Board of Lqudators, whch
refused to pay the same; wherefore, t fed an acton n the CFI
of Mana.
- The Court a quo found for the defendant and dsmssed the
compant; hence, ths appea by pantff.
Appellant's Claim
Athough the sae between the partes quoted a CIF New York
prce, the agreement contempated the payment of the prce
accordng to the weght and quaty of the cargo upon arrva n
New York, the port of destnaton, and that therefore, the rsk of
the shpment was upon the seer.
Appellee's Comment
The contract n queston was an ordnary C. 1. F. agreement
wheren devery to the carrer s devery to the buyer, and that
the shpment havng been devered to the buyer and the atter
havng pad ts prce, the sae was consummated.
lSSUE
WON the appeee s abe to pay the appeant the amount of
$24,154.59, whch t had overdrawn from appeant's etter of
credt
HELD
YES
- There s no queston that under an ordnary C.l.F. agreement,
devery to the buyer s compete upon devery of the goods to
the carrer and tender of the shppng and other documents
requred by the contract and the nsurance pocy taken n the
buyer's behaf. There s equay no queston that the partes
may, by express stpuaton or mpedy (by makng the buyer's
obgaton depend on arrva and nspecton of the goods),
modfy a CIF contract and throw the rsk upon the seer unt
arrva n the port of destnaton.
- In the transacton now n queston, despte the quoted prce of
CIF New York, and the rght of the seer to wthdraw 95 per cent
of the nvoce prce from the buyer's etter of credt upon tender of
the shppng and other documents requred by the contract, the
express agreement that the "Net Landed Weghts" were to
govern, and the provson that the baance of the prce was to be
ascertaned on the bass of outturn weghts and quaty of the
cargo at the port of dscharge, ndcate an ntenton that the
precse amount to be pad by the buyer depended upon the
ascertanment of the exact net weght of the cargo at the port of
destnaton. That s furthermore shown by the provson that the
seer coud dever 5 per cent more or ess than the contracted
quantty, such surpus or defcency to be pad "on the bass of the
devered weght".
- Whe the rsk of oss was apparenty paced on the appeant
after devery of the cargo to the carrer, t was nevertheess
agreed that the payment of the prce was to be accordng to the
"net anded weght'. The net anded or outturn weght of the
cargo, upon arrva n New York, was 898.692 short tons. Athough
the evdence shows that the estmated weght of the shpment
when t eft Mana was 1,054.6278 tons, the appeee had the
burden of proof to show that the shortage n weght upon arrva
n New York was due to rsks of the voyage and not the natura
dryng up of the copra whe n transt, or to reasonabe
aowances for errors n the weghng of the gross cargo and the
empty bags n Mana. In the absence of such proof on the part of
the shpper-appeee, the net anded weght of the shpment n
New York shoud contro, as stpuated n the agreement, and that
therefore, the appeee shoud be hed abe for the amount of
$24,154.59 whch t had overdrawn from appeant's etter of
credt.
- The provson regardng the ascertanment of the baance due
based upon outturn weght and quaty of the shpment at the port
of dscharge, shoud not be construed separatey from the
stpuaton that the "net anded weght" was to contro.
- The manfest ntenton of the partes was for the tota prce to be
fnay ascertaned ony upon determnng the net weght and
quaty of the goods upon arrva n New York, most key because
the cargo n queston, beng copra, by nature dres up and
dmnshes n weght durng the voyage; that no buk wegher was
avaabe n Mana so that the best that coud be done was to get
the gross weght of the shpment and deduct the average tare of
the empty bags; and that the buyer n New York had no agent n
Mana to represent t and protect ts nterest durng the weghng
of the cargo.
- The ntenton of the partes to be bound by the outturn or net
anded weght n New York s ceary shown n the etter of
appeee's then offcer-n-charge |ose Neva, Sr., acknowedgng
abty for the defcency n the outturn weght of the copra.
Athough ths etter may not be consdered an admsson of
abty on the part of appeee n the absence of a showng that
Neva was authorzed to admt abty for the corporaton, t s
nevertheess competent evdence of the ntenton of the partes,
partcuary the NACOCO, to be bound by the net anded weght or
outturn weght of the copra at the port of dscharge.
Dispostion The |udgment appeaed from WAS reversed and the
appeee Natona Coconut Corporaton WAS ordered to pay the
appeant Genera Foods Corporaton the equvaent n Phppne
currency of the amount of $24,154.59, wth ega nterest from the
tme of the fng of the compant. No pronouncement as to costs.
EXPRESS CREDlT V VELASCO
473 SCRA 590
RlVERA V ONG CHE
37 PHIL 355
STREET; December 21, 1917
FACTS
- For some tme pror to the events whch gave orgn to the
awsut, the house of Lchauco, or Lchauco Brothers, had offered
for sae certan od machnery and boers whch were deposted
and exposed for sae n a yard at Tanduay, n the cty of Mana.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 97
- Marcano Rvera, aeges that upon |anuary 8, 1912, he
purchased some of ths od matera |two compete steam-
boers, wth chmneys; one steam motor (15 by 30 nches)
compete; one par of twn rce huers compete, and a feedng
pump (donkey) for boers| for the prce of P5,500, and receved
a recept from Crsanto Lchauco showng that he had become
such purchaser. The pantff, however, dd not take possesson
of the property, whch remaned n the same pace.
- Upon February 9, 1912, Ong Che bought from Lchauco
Brothers a ot of od ron, machnery, and |unk for the sum of
P1,100. Ths purchaser took mmedate possesson of the
materas purchased by hm.
- Later, when Marcano Rvera appeared to take possesson of
the thngs of whch he supposed hmsef to be the purchaser,
under the recept gven by Crsanto Lchauco, he found that
many of the accessory and auxary parts of the boers, motor,
and rce m were wantng; and upon nvestgaton t deveoped
that these artces were hed by the defendant, Ong Che, and
were camed by hm as owner by vrtue of the purchase
effected by hm upon February 9. The pantff Rvera thereupon
nsttuted the present acton to recover the artces n queston
aegng that he was the true owner thereof.
- CFI Mana rendered |udgment n favor of the defendant and
the pantff has appeaed.
lSSUE
WON Ong Che was a purchaser n good fath (thus gvng hm a
better tte the frst purchaser who never had possesson of the
property sub|ect of the sae)
HELD
-The defendant Ong Che was a purchaser of the artces n good
fath. Under artce 1473 of the Cv Code, where two dfferent
agents of the same owner successvey negotated saes to two
dfferent purchasers, the buyer who acqured possesson by
vrtue of hs purchase has a better tte than the frst purchaser,
who has never had possesson at a.
In ths vew the case presented s that and t s obvous that,
under the artce of the Cv Code cted above, the second
purchaser havng acqured possesson frst must be decared the
true owner. In our vew of the facts
- Probem: there s some confct n the testmony upon the
queston as to who was the orgna owner of the tems sub|ect
of the sae. From the testmony, t can be nferred that the
house of Lchauco conssts of Faustno Lchauco and Gao
Lchauco, and t woud seem that Crsanto Lchauco, who
effected the sae to Rvera, s not a member of that
estabshment. Crsanto testfed that the property sod by hm
to the pantff Rvera, ncudng the artces whch are now n
dspute, was the property of Gao Lchauco. But the same
wtness admts that the machnery sod by hm to Rvera had
been taken out of an od m owned by Lchauco Brothers n
Dagupan; and t s not made cear that Gao Lchauco had ever
become ts excusve owner.
- Furthermore, the evdence submtted by the defendant tends
to show that the thngs acqured by hm, ncudng the artces n
dspute, were bought from Faustno Lchauco as property of the
house. At any rate we fnd that, under the circumstances
disclosed in this case, and even conceding that the property
belong to Calo Lichauco, the house of Lichauco had authority to
sell it. It was merey a case where a mstake was made by the
house of Lchauco n seng somethng that had aready been
sod.
- It was ncumbent upon the pantff to prove tte n hmsef, as
aganst the defendant, by a preponderance of the evdence; and
he coud not recover merey upon the weakness of the
defendant's tte (Been vs. Been). The pantff had faed to
prove tte n hmsef. The defendant had, n hs favor, the fact
that he was a purchaser n good fath and had acqured awfu
possesson. There s a presumpton arsng from such possesson
that he was the owner (sec. 334 |10|, Code of Cv Procedure);
and the mere fact, f such t be, that the property orgnay
beonged to Gao Lchauco was not suffcent, wthout more, to
defeat a tte acqured by the defendant through the house of
Lchauco.
- Aso, at the hearng the pantff hmsef dd not appear as a
wtness. And no steps were taken, pror to the tra to secure the
attendance of ether Gao Lchauco or Faustno Lchauco, both of
whom woud have been most matera wtnesses for the pantff f
hs contenton s correct.
- The pantff was apprased from the nature of the ssue rased
that the queston to be tred was that of ownershp and he shoud
have been ready wth the wtnesses to prove t. He was not
entted to a contnuance on the ground of the absence of those
mportant wtnesses uness he showed that he had used
reasonabe dgence to secure ther attendance. An appcaton for
a contnuance of a cause s addressed to the sound ega
dscreton of the tra court, and ts rung thereon w not be
dsturbed, uness t ceary appears that such dscreton has been
abused, and that by the refusa of the contnuance a party has
been wthout hs faut deprved of an opportunty of makng hs
case or defense.
Disposition |udgment of the ower court affrmed, costs aganst
the appeant.
CARBONELL V CA
69 SCRA 99
MAKASIAR; |anuary 26, 1976
FACTS
- Pror to |anuary 27, 1955, respondent |ose Ponco, a natve of the
Batanes Isands, was the owner of the parce of and heren
nvoved wth mprovements stuated at San |uan Rza, and
sub|ect to a mortgage n favor of the Repubc Savngs Bank for
the sum of P1,500.00. Pettoner Rosaro Carbone, a cousn and
ad|acent neghbor of respondent Ponco.
- On |anuary 27, 1955, |ose Ponco executed a prvate
memorandum of sae of the property n queston n favor of
Rosaro Carbone, a cousn and ad|acent neghbor of respondent
Ponco. Four days atter, or an |anuary 31, 1955, Ponco n a
prvate memorandum bound hmsef to se the property for an
mproved prce to one Emma Infante, and on February 2, 1955, he
executed a forma regsterabe deed of sae n her (Infante's)
favor. So, when the frst buyer Carbone saw the seer Ponco a
few days afterwards, brngng the forma deed of sae for the
atter's sgnature and the baance of the agreed cash payment,
she was tod that he coud no onger proceed wth formazng the
contract wth her (Carbone) because he had aready formazed a
saes contract n favor of Infante.
- Snce Carbone (the frst buyer) dd not have a forma
regsterabe deed of sae, she dd the next best thng to protect
her ega rghts and regstered on February 8, 1955 wth the
Regster of Deeds her adverse cam as frst buyer entted to the
property. The second buyer regstered the sae n her favor wth
the Regster of Deeds ony on February 12, 1955, so that the
transfer certfcate of tte ssued n her favor carred the duy
annotated adverse cam of Carbone as the frst buyer.
- The tra court decared the cam of the second buyer Infante to
be superor to that of the frst buyer Carbone. The Court of
Appeas (Ffth Dvson) reversed the decson of the tra court,
decarng the frst buyer Carbone to have a superor rght to the
and n queston, and condemnng the second buyer Infante to
reconvey to the former, after rembursement of expenses, the
and n queston and a ts mprovements. On moton for
reconsderaton, a speca dvson of fve of the sad appeas court
annued and set asde the decson of the reguar dvson and
entered another |udgment affrmng n toto the decson of the
court a quo.
lSSUE
WON the Carbone s entted to the property
HELD
YES
- The Supreme Court reversed the decson of the Speca Dvson
of Fve of the Court of Appeas and decared the frst buyer
Rosaro Carbone to have the superor rght to the and n
"#$%"& ' #()*) ' +,-./ 01,234351 +163 98
queston. Artce 1544, New Cv Code, whch s decsve of ths
case, rectes:
"If the same thng shoud have been sod to dfferent vendees,
the ownershp sha be transferred to the person who may
have frst taken possesson thereof n good fath, f t shoud
be movabe property.
"Shoud t be mmovabe property, the ownershp sha beong
to the person acqurng t who n good fath frst recorded t n
the Regstry of Property.
"Shoud there be no nscrpton, the ownershp sha pertan to
the person who n good fath was frst n the possesson; and,
n the absence thereof, to the person who presents the odest
tte, provded there s good fath"
- It s essenta that the buyer of reaty must act n good fath n
regsterng hs deed of sae to mert the protecton of the second
paragraph of sad Artce 1544.
- Unke the frst and thrd paragraphs of sad Artce 1544, whch
accord preference to the one who frst takes possesson n good
fath of persona or rea property, the second paragraph drects
that ownershp of mmovabe property shoud be recognzed n
favor of one "who n good fath frst recorded" hs rght. Under
the frst and thrd paragraphs, good fath must characterze the
pror possesson. Under the second paragraph, good fath must
characterze the act of anteror regstraton.
- If there s no nscrpton, what s decsve s pror possesson n
good fath. lf there is inscription, as in the case at bar,
prior registration in good faith is a pre-condition to
superior title. When Carbone bought the ot from Ponco on
|anuary 27, 1955, she was the ony buyer thereof and the tte of
Ponco was st n hs name soey encumbered by bank
mortgage duy annotated thereon. Carbone was not aware -
and she coud not have been aware - of any sae to Infante as
there was no such sae to Infante then. Hence, Carbone's pror
purchase of the and was made n good fath. Her good fath
subssted and contnued to exst when she recorded her adverse
cam four (4) days pror to the regstraton of Infante's deed of
sae. Carbone's good fath dd not cease after Ponco tod her
on |anuary 31, 1955 of hs second sae of the same ot to
Infante, Because of that nformaton, Carbone wanted an
audence wth Infante, whch desre underscores Carbone's
good fath. Wth an arstocratc dsdan unworthy of the good
breedng of a good Chrstan and good neghbor, Infante
snubbed Carbone ke a eper and refused to see her. So
Carbone dd the next best thng to protect her rght - she
regstered her adverse cam on February 8, 1955.
- Bad fath arsng from prevous knowedge by Infante of the
pror sae to Carbone s shown by the foowng facts: (1) Mrs.
Infante refused to see Carbone, who wanted to see Infante
after she was nformed by Ponco that he sod the ot to Infante
but severa days before Infante regstered her deed of sae. (2)
Carbone was aready n possesson of the mortgage passbook
|not Ponco's savngs depost passbook - Exhbt "1"- Infantes|
and Ponco's copy of the mortgage contract, when Ponco sod
the ot to Infante. (3) The fact that Ponco was no onger n
possesson of hs mortgage passbook and that the sad
mortgage passbook was aready n possesson of Carbone,
shoud have compeed Infante to nqure from Ponco why he
was no onger n possesson of the mortgage passbook and from
Carbone why she was n possesson of the same. (4) Carbone
regstered on February 8, 1955 her adverse cam, whch was
accordngy annotated on Ponco's tte four |4| days before
Infante regstered on February 12, 1955 her deed of sae
executed on February 2, 1955. (5) In hs answer to the
compant fed by Ponco, as defendant n the Court of Frst
Instance, he aeged that both Mrs. Infante and Mrs. Carbone
offered to buy the ot at P15.00 per square meter, whch offers
he re|ected as he beeved that hs ot s worth at east P20.00
per square meter. It s therefore ogca to presume that Infante
was tod by Ponco and consequenty knew of the offer of
Carbone whch fact kewse shoud have put her on her guard
and shoud have compeed her to nqure from Ponco whether
or not he had aready sod the property to Carbone.
Disposition The decson of CA s REVERSED.
SEPARATE OPlNlON
TEEHANKEE ]concur|
- Hs concurrence proceeds from the same premse as the
dssentng opnon of |ustce Muoz Pama that both the confctng
buyers of the rea property n queston, namey, pettoner Rosaro
Carbone as the frst buyer and respondent Emma Infante as the
second buyer may be deemed purchasers n good fath at the
respectve dates of ther purchase.The answer to the queston of
who between the two buyers n good fath shoud preva s
provded n the second paragraph of Artce 1544 of the Cv Code
1 (formery Artce 1473 of the od Cv Code) whch ordans that
"the ownershp of the mmovabe property sha beong to the
person acqurng t who n good fath frst recorded t n the
Regstry of Property." In the case at bar, the seer executed on
|anuary 27, 1955 the prvate memorandum of sae of the property
n favor of the frst buyer Carbone. However, sx days ater on
February 2, 1955, the seer sod the property for a second tme
for an mproved prce, ths tme executng a forma regstrabe
deed of sae n favor of the second buyer Infante. So t was that
when the frst buyer Carbone saw the seer a few days
afterwards brngng the forma deed of sae for the seer's
sgnature and the baance of the agreed cash payment, the seer
tod her that he coud not proceed anymore wth formazng the
frst sae because he had aready formazed the second sae n
favor of the second buyer Infante. Snce Carbone (the frst buyer)
dd not have a forma regstrabe deed of sae, she dd the next
best thng to protect her ega rghts and regstered on February 8,
1955 wth the Rza Regster of Deeds her adverse cam as frst
buyer entted to the property.
MUOZ PALMA ]dissent|
- We are here confronted wth a doube sae made by |ose Ponco
of hs 195-square meter ot ocated at V. Agan St., San |uan, Rza,
covered by Transfer Certfcate of Tte No. 5040, the souton to
whch s found n Art. 1544 of the Cv Code, more partcuary the
second paragraph thereof whch provdes that shoud the thng
sod be mmovabe property, the ownershp sha beong to the
person acqurng t who n good fath frst recorded t n the
Regstry of Property.
- The two purchasers, namey, pettoner Rosaro Carbone and
respondent Emma Infante, are both purchasers n good fath.
- That Rosaro Carbone s a buyer n good fath cannot be
dsputed for at the tme negotatons for the purchase of the ot
were beng made between her and the vendor, |ose Ponco, as of
|anuary 27, 1955, there was no ndcaton at a from the atter
that another sae was beng contempated.
- That Emma Infante s kewse a buyer n good fath s supported
by: (a) an express fndng of the tra court n ts decson of
|anuary 20, 1965, to the effect that when the vendor and
purchaser Infante consummated the sae on or about |anuary 29,
1955, an examnaton of the orgna T.C.T. 5040 on fe wth the
Regster of Deeds of Rza as we as the owner's dupcate
reveaed no annotaton of any encumbrance or en other than the
mortgage n favor of the Repubc Savngs Bank (p. 92, Record on
Appea); (b) the fndngs of fact of the Court of Appeas gven n
the decson penned by then |ustce Savador V. Esguerra as we
as n the frst decson wrtten by |ustce Magno Gatmatan whch
subsequenty became the bass of the dssentng opnon to the
ma|orty
- Inasmuch as the two purchasers are undoubtedy n good fath,
the next queston to be resoved s who of the two frst regstered
her purchase or tte n good fath.
- In appyng Art. 1544 of the Cv Code, t s not enough that the
buyer bought the property n good fath, but that the regstraton
of her tte must aso be accompshed n good fath. Ths
requrement of good fath s not ony appcabe to the second or
subsequent purchaser but to the frst as we. Good fath means
"freedom from knowedge and crcumstances whch ought to put a
person on nqury"; 3* t conssts of an honest ntenton to abstan
from takng any unconscentous advantage of another. On top of
a these, equty s on the sde of Emma Infante. Under the
Ma|orty Opnon, Emma Infante stands to ose the ot she bought
"#$%"& ' #()*) ' +,-./ 01,234351 +163 99
n good fath whch was fuy pad for pus the budng she
erected thereon for whch she spent the tota sum of a tte ess
than P14,000.00, or equvaent to about P40,000.00 at the tme
the case was decded by the Appeate Court, consderng that
Rosaro Carbone s beng gven the opton ether to order the
remova of the house or to acqure t at P13,429.00.
CONSOLlDATED RURAL BANK (CAGAYAN
VALLEY) lNC V CA (HElRS OF TEODORO DELA
CRUZ)
448 SCRA 347
TINGA; |anuary 17, 2005
NATURE
Petton for Certorar.
FACTS
- The Madrd brothers, were the regstered owners of Lot No.
7036-A of pan Psd-10188, Cadastra Survey 211, stuated n San
Mateo, Isabea. Lot No. 7036-A was subdvded nto severa ots
under subdvson pan Psd- 50390. One of the resutng
subdvson ots was Lot No. 7036-A-7 wth an area of 5,958
square meters.
- August 15, 1957: Rza Madrd sod part of hs share dentfed
as Lot No. 7036-A-7, to Gamao and Dayag, by vrtue of a Deed
of Sae, to whch hs brothers Ansemo, Gregoro, Fomeno and
Domngo offered no ob|ecton as evdenced by ther |ont
Affdavt dated 14 August 1957.
- May 28, 1964: Gamao and Dayag sod the southern haf of
Lot No. 7036-A-7, denomnated as Lot No. 7036-A-7-B, to
Teodoro dea Cruz, and the northern haf, dentfed as Lot No.
7036-A-7-A, to Resttuto Hernandez. Thereupon, Dea Cruz and
Hernandez took possesson of and cutvated the portons of the
property respectvey sod to them.
- Hernandez donated the northern haf to hs daughter,
Evangene Hernandez-de Rosaro, whe the chdren of Dea
Cruz contnued possesson of the southern haf.
- In a Deed of Sae the Madrd brothers conveyed a ther rghts
and nterests over Lot No. 7036-A-7 to Pacfco Marquez
(hereafter, Marquez). The deed of sae was regstered wth the
Offce of the Regster of Deeds of Isabea on 2 March 1982.
- Subsequenty, Marquez subdvded Lot No. 7036-A-7 nto eght
(8) ots, (Lot Nos. 7036-A-7-A to 7036-A-7-H). On the same date,
Marquez and hs spouse, Mercedta Marana, mortgaged Lots
Nos. 7036-A-7-A to 7036-A-7-D to the Consodated Rura Bank,
Inc. of Cagayan Vaey to secure a oan of P100K. February 6,
1985, Marquez mortgaged Lot No. 7036-A-7-E kewse to the
Rura Bank of Cauayan (RBC) to secure a oan of P10K.
- Marquez defauted and the CRB caused the forecosure of the
mortgages to ts favor, and bought t as the hghest bdder.
- On October 31, 1985, Marquez sod Lot No. 7036-A-7-G to
Caxto
- Edrone dea Cruz, fed a case for reconveyance and damages
the southern porton of Lot No. 7036-A aganst Marquez, Caxto,
RBC and CRB n December 1986.
- CRB, as defendant, and co-defendant RBC nssted that they
were mortgagees n good fath and that they had the rght to
rey on the ttes of Marquez whch were free from any en or
encumbrance.
lSSUE
WON V. Marquez and Romeo B. Caxto buyers n good fath and
for vaue of Lot 7036-A-7 (therefore determnng who owns the
tte to the Land)
HELD
Ratio Good fath s aways presumed and he who mputes bad
fath has the burden of provng the same.
- In a stuaton where not a the requstes are present whch
woud warrant the appcaton of Art. 1544, the prncpe of "he
who s frst n tme s preferred n rght," shoud appy. The ony
essenta requste of ths rue s prorty the ony one who can
nvoke ths s the frst vendee.
- No one can gve what one does not have.
- One who purchases rea property whch s n actua possesson of
others shoud, at east, make some nqury concernng the rghts
of those n possesson.
Reasoning
- ART. 1544. lf the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it should
be movable property. 5hould it be immovable property, the
ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property. x x x "
- The provson s not appcabe n the present case. It
contempates a case of doube or mutpe saes by a snge
vendor. More specfcay, t covers a stuaton where a snge
vendor sod one and the same mmovabe property to two or more
buyers. It s necessary that the conveyance must have been made
by a party who has an exstng rght n the thng and the power to
dspose of t. The conveyor must have the rght and the w to
convey the thng. The ntenton to transfer s not suffcent; t ony
consttutes the w.
- The sub|ect property was not transferred to severa purchasers
by a snge vendor. In the frst deed of sae, the vendors were
Gamao and Dayag whose rght to the sub|ect property orgnated
from ther acquston thereof from Rza Madrd wth the
conformty of a the other Madrd brothers n 1957, foowed by
ther decaraton of the property n ts entrety for taxaton
purposes n ther names. On the other hand, the vendors n the
other or ater deed were the Madrd brothers but at that tme they
were no onger the owners snce they had ong before dsposed of
the property n favor of Gamao and Dayag.
- Court of Appeas hed that Marquez faed to prove that he was a
purchaser n good fath and for vaue. Marquez admtted havng
knowedge that the sub|ect property was "beng taken" by the
Hers at the tme of the sae. The Hers were aso n possesson of
the and at the tme. Accordng to the Decson, these
crcumstances aong wth the sub|ect propertys attractve
ocaton-t was stuated aong the Natona Hghway and was
across a gasone staton-shoud have put Marquez on nqury as
to ts status. Instead, Marquez cosed hs eyes to these matters
and faed to exercse the ordnary care expected of a buyer of
rea estate.
- The Court of Appeas found that RBC and CRB merey reed on
the certfcates of tte of the mortgaged propertes. They dd not
ascertan the status and condton thereof accordng to standard
bankng practce. For faure to observe the ordnary bankng
procedure, the Court of Appeas consdered them to have acted n
bad fath and on that bass decared nu and vod the mortgages
made by Marquez n ther favor.
- Person s deemed a possessor n good fath who s not aware
that there exsts n hs tte or mode of acquston any faw whch
nvadates t. Thus, there was no need for the appeate court to
consder the ssue of good fath or bad fath wth regard to
Teodoro dea Cruzs possesson of the sub|ect property.
Disposition Petton s dened.
PAYLAGO V ]ARABE
22 SCRA 1147
REYES |.B.L.; March 27, 1968
NATURE
Appea by certiorari from the decson of the CA affrmng the
ower court's decson
FACTS
- The entre ot nvoved n ths sut was orgnay covered by
Homestead Patent n the name of Ansemo Lacatan. After the
death of Ansemo Lacatan, TCT No. T-728 was ssued n the name
hs two sons and hers, Vda and Forentno. Vda Lacatan ded on
August 27, 1950. On March 23, 1953, Vda Lacatan's hers,
namey, Maxmo, Tomas and Luca, executed a deed of sae n
favor of the spouses Romeo Payago and Rosaro Dmaanda,
pantffs-pettoners heren, over a porton of the entre ot. On
October 6, 1953, Forentno Lacatan aso ded, eavng as hs hers
"#$%"& ' #()*) ' +,-./ 01,234351 +163 9:
hs wdow and three chdren, Fepe, Rosta and Forenca. On
December 31, 1953, the sad chdren of Forentno Lacatan
kewse executed a deed of sae n favor of the same vendees
over another porton of the ot.
- On March 2, 1954, by vrtue of the regstraton of the two
deeds of sae, a new TCT was ssued n favor of pantffs-
pettoners, the Payago spouses. A subsequent subdvson
survey dscosed that a porton of the tota area purchased by
pantffs-pettoners was beng occuped by defendant-
respondent. Hence, the acton to recover possesson and
ownershp of the sad porton.
- The tra court and the CA found that a porton of and n
queston was purchased by Haro |arabe, ate husband of
defendant-respondent, from one Apoono Lacatan who, n turn,
bought the same n 1936 from Ansemo Lacatan, the orgna
regstered owner; that the frst deed of sae executed by
Ansemo Lacatan n favor of Apoono Lacatan was ost durng
the |apanese occupaton; that the heren defendant-respondent
has been n possesson of the sad porton contnuousy, pubcy,
peacefuy and adversey as owner thereof from 1938 up to the
present; and, that the heren pantffs-pettoners admtted n a
deed of ease that defendant-respondent has been n possesson
of the premses snce 1945. After tra, the ower court hed that
pantffs-pettoners were not purchasers n good fath and
rendered |udgment n favor of defendant-respondent, decarng
the atter as owner of the and n queston wth the rght to
retan possesson of the same. The decson was affrmed in toto
by the Court of Appeas.
lSSUE
WON pettoner has a better rght over the property sub|ect of
the doube sae
HELD
NO
Ratio As between two purchasers, the one who has regstered
the sae n hs favor, n good fath, has a preferred rght over the
other who has not regstered hs tte, even f the atter s n the
actua possesson of the mmovabe property. The New Cv
Code, Artce 1544, provdes that f the same mmovabe
property shoud have been sod to dfferent vendees, "the
ownershp sha beong to the person acqurng t who n good
fath frst recorded t n the regstry of property." One who
purchases rea estate wth knowedge of a defect or ack of tte
n hs vendor cannot cam that he has acqured tte thereto n
good fath, as aganst the true owner of the and or of an
nterest theren; and the same rue must be apped to one who
has knowedge of facts whch shoud have put hm upon such
nqury and nvestgaton as mght be necessary to acquant hm
wth the defects of the tte of hs vendor. It s now setted
|ursprudence that knowedge of a pror transfer of a regstered
property by a subsequent purchaser makes hm a purchaser n
bad fath and hs knowedge of such transfer vtates hs tte
acqured by vrtue of the ater nstrument of conveyance.
Disposition The appeaed decson s AFFIRMED.
CARUMBA V CA (BALBUENA)
31 SCRA 558
REYES; February 18, 1970
NATURE
Petton for certorar on the decson of the Court of Appeas
FACTS
- On Apr 12, 1955, spouses Amado Canuto and Nemesa Ibasco
sod a parce of and, party resdenta and party coconut and,
to the spouses Amado Carumba and Benta Canuto. The deed of
sae was never regstered n the Offce of the Regster of Deeds
of Camarnes Sur, and the Notary, Mr. Vcente Maaya, was not
then an authorzed notary pubc n the pace. Besdes, t has
been expressy admtted by appeee that he s the brother-n-
aw of Amado Canuto, the aeged vendor of the property sod to
hm. Amado Canuto s the oder brother of the wfe of the heren
appeee, Amado Carumba.
- On |anuary 21, 1957, a compant for a sum or money was fed
by Santago Babuena aganst Amado Canuto and Nemesa Ibasco.
On Apr 15, 1967, a decson was rendered n favor of Babuena.
On October 1, 1968, the ex-officio Sherff ssued a "Defnte Deed
of Sae" of the property now n queston n favor of Santago
Babuena, whch nstrument of sae was regstered before the
Offce of the Regster of Deeds of Camarnes Sur, on October 3,
1958.
- The CFI, fndng that after executon of the document Carumba
had taken possesson of the and, decared hm to be the owner of
the property under a consummated sae and hed vod the
executon evy made by the sherff
- The CA decared that there havng been a doube sae of the and
sub|ect of the sut Babuena's tte was superor to that of hs
adversary under Artce 1544 of the Cv Code of the Phppnes,
snce the executon sae had been propery regstered n good
fath and the sae to Carumba was not recorded.
lSSUE
WON the CA erred n decarng that Babuena s the owner of the
and
HELD
YES
- Whe under the nvoked Artce 1544 regstraton n good fath
prevas over possesson n the event of a doube sae by the
vendor of the same pece of and to dfferent vendees, sad artce
s of no appcaton to the case at bar, even f Babuena, the ater
vendee, was gnorant of the pror sae made by hs |udgment
debtor n favor of pettoner Carumba. The reason s that the
purchaser of unregstered and at a sherff's executon sae ony
steps nto the shoes of the |udgment debtor, and merey acqures
the atter's nterest n the property sod as of the tme the
property was eved upon.
When the evy was made by the Sherff, therefore, the |udgment
debtor no onger had domnca nterest nor any rea rght over the
and that coud pass to the purchaser at the executon sae.
1
Hence, the atter must yed the and to pettoner Carumba. The
rue s dfferent n case of ands covered by Torrens ttes, where
the pror sae s nether recorded nor known to the executon
purchaser pror to the evy, but the and here n queston s
admttedy not regstered under Act No. 496.
Dlsposition Decson reversed
HANOPOL V PlLAPlL
7 SCRA 452
Barrera; 28 February 1963
FACTS
- Hanopo cams ownershp of the and by vrtue of a seres of
purchases effected n 1938 by means of prvate nstruments,
executed by the former owners Teodora, Luca, Generosa,
Snforosa and Isabeo, a surnamed Sapo. Addtonay, he
nvokes n hs favor a decson rendered by the Court of Frst
Instance of Leyte, aganst the same vendors, who, accordng to
hs own averments, took possesson of the sad property n
December, 1945 through fraud, threat and ntmdaton,
pretendng fasey to be the owners thereof and e|ectng the
tenants of Hanopo thereon, and snce then had contnued to
possess the and. Decson decarng hm the excusve owner of
the and n queston and orderng theren defendants to dever
possesson thereof was rendered on September 21, 1958.
- On the other hand, Pap asserts tte to the property on the
strength of a duy notarzed deed of sae executed n hs favor by
the same owners on December 3, 1945, whch deed of sae was
regstered n the Regstry of Deeds of Leyte on August 20, 1948
under the provsons of Act No. 3344.
- No testmona evdence was gven, ony documentary evdence
consstng, on the part of Hanopo, of the prvate nstruments
auded to and a copy of the decson n the revndcatory case,
and on the part of Pap, the notarzed deed of sae n hs favor
"#$%"& ' #()*) ' +,-./ 01,234351 +163 9;
bearng annotaton of ts regstraton under Act No. 3344. As
thus submtted, the tra court rendered the decson adverted to
at the begnnng of ths opnon, many upon the authorty of the
second paragraph of Artce 1544 of the New Cv Code, whch s
a reproducton of Artce 1473 of the od Cv Code, the aw n
force at the tme the transacton n ths case took pace.
lSSUES
1. WON the |udgment n the former case No. 412 aganst the
vendors Sapos s bndng upon the defendant-appeee as ther
successor-n-nterest
2. WON the regstraton of the second deed of sae n favor of
appeee Pap affects hs rght as the frst vendee
HELD
1. NO
- From the documentary evdence that appeee Pap derved
hs rght to the and from the sae to hm of the sad property on
December 3, 1945, ong before the fng of the compant
aganst the vendors n 1948. He was not made a party n the
case aganst the Sapos, and there was not even a cam that he
had knowedge of sad tgaton. He cannot, therefore, be bound
by such |udgment n vew of the provson of paragraph (b),
Secton 44 of Rue 39 of the Rues of Court whch speaks of the
effect of |udgment as foows:
... the |udgment so ordered s, n respect to the matter
drecty ad|udged, concusve between the partes and ther
successors n nterest by title subsequent to commencement
of the action or speca proceedng, tgatng for the same
thng and under the same tte and n the same capacty.
- Snce Pap was not a party to the acton and s not a
successor-n-nterest by tte subsequent to the commencement
of the acton, havng acqured hs tte n 1945 and the acton
fed n 1948, the decson n sad case cannot be bndng on hm.
2. NO
- No cear evdence of Hanopo's possesson of the and n
controversy, hs compant aganst the vendors, Hanopo aeged
that the Sapos took possesson of the same and under cam of
ownershp n 1945 and contnued and were n such possesson
at the tme of the fng of the compant aganst them n 1948.
Consequenty, snce the Sapos were n actua occupancy of the
property under cam of ownershp, when they sod the sad and
to Pap on December 3, 1945, such possesson was
transmtted to the atter, at east constructvey, wth the
executon of the notara deed of sae, f not actuay and
physcay as camed by Pap n hs answer fed n the present
case. Thus, even on ths score, Hanopol cannot have a better
right than appellee Pilapil who, according to the trial
court, "was not shown to be a purchaser in bad faith".
- The regstraton of Pap's notarzed deed of sae n 1948
under Act No. 3344 "sha be understood to be wthout pre|udce
to a thrd party wth a better rght". He contends that snce at
the tme the Sapos sod the and n queston n 1945 to Pap,
the former were no onger the owners as they had aready sod
the same to appeant snce 1938, the frst sae to hm s a
better rght whch cannot be pre|udced by the regstraton of
the second sae. The quoted provso n Act No. 3344 |ustfes
appeant's contenton. If hs theory s correct, then the second
paragraph of Artce 1544 of the New Cv Code (formery Artce
1473 of the od Code) woud have no appcaton at a except to
ands or rea estate regstered under the Spansh Mortgage Law
or the Land Regstraton Act. Such a theory woud thus mt the
scope of that coda provson. But even f we adopt ths atter
vew, that s, that Artce 1544 (formery Artce 1473) ony
appes to regstered and, st we cannot agree wth the
appeant that by the mere fact of hs havng a prevous tte or
deed of sae, he has acqured thereby what s referred to n Act
No. 3344 as the "better rght" that woud be unaffected by the
regstraton of a second deed of sae under the same aw. Under
such theory, there woud never be a case of doube sae of the
same unregstered property.
An exampe of what coud be a better rght that s protected
aganst the nscrpton of a subsequent sae s gven n the case
of Lichauco v. 8erenguer (39 Ph. 643). The facts n that case are
succncty stated n the syabus thereof as foows:
....- In 1882 B sod to S a pece of and. After the sae B
contnued n the possesson of the and n the capacty of essee
of S through payment of rent, and contnued as such unt hs
death when he was substtuted by the admnstrator of hs
property. In 1889 B sod agan the same pece of and to L who
eased t to B hmsef under certan condtons. Both saes were
executed n a pubc nstrument, the one executed n favor of L
beng regstered ony n 1907. Thus, S and L acqured
possesson of the and through the same vendor upon the
atter's ceasng to be the owner and becomng the essee of
sad S and L, respectvey. HELD: (1) That, wth reference to the
tme pror to 1907, the preference shoud be n favor of the
purchaser who frst took possesson of the and, because ths
possesson, accordng to the aw n force pror to the
promugaton of the Cv Code, consttuted the consummaton
of the contract, and aso because afterwards the Cv Code
expressy estabshes that possesson n such cases transfers
the ownershp of the thng sod. (2) That, when a person buys a
pece of and and, nstead of takng possesson of t, eases t to
the vendor, possesson by the atter after the sae s possesson
by the vendee, and such possesson, n case of a doube sae,
determnes the preference n favor of the one who frst took
possesson of t, n the absence of nscrpton, n accordance
wth the provson of artce 1473 of the Cv Code,
notwthstandng the matera and persona possesson by the
second vendee. (Bautsta vs. Soson, 39 Ph. Rep., 615)
.... Because L had to receve hs possesson from B who was a
mere essee of S and as such had no possesson to gve,
nasmuch as hs possesson was not for hmsef but n
representaton of S, t foows that L never possessed the and..
.... The effect whch the aw gves to the nscrpton of a sae
aganst the effcacy of the sae whch was not regstered s not
extended to other ttes whch the other vendee was abe to
acqure ndependenty as, n ths case, the tte by prescrpton.
- It thus appears that the "better rght" referred to n Act No. 3344
s much more than the mere pror deed of sae n favor of the frst
vendee. In the Lchauco case |ust mentoned, t was the
prescrptve rght that had supervened. Or, as aso suggested n
that case, other facts and crcumstances exst whch, n addton
to hs deed of sae, the frst vendee can be sad to have better
rght than the second purchaser.
Disposition WHEREFORE, fndng no error n the decson
appeaed from, the same s hereby affrmed, wth costs aganst
the appeant. So ordered.
DAGUPAN TRADlNG CO V MACAM
14 SCRA 179
DIZON; May 31, 1965
NATURE
Appea from a decson of the CA
FACTS
- Sammy Maron and hs seven sbngs owbed a parce of
unregstered and ocated n Bnmaey, Pangasnan. Whe ther
appcaton for regstraton of sad and under Act No. 496 was
pendng, they executed, on |une 19 and September 21, 1955, two
deeds of sae conveyng the property to appeee, Rustco Macam.
He took possesson and made substanta mprovements theren.
A month ater, certfcate of regstraton of the and was ssued n
the name of the Maron's, free from a ens and encumbrances.
- On August 4, 1956, by vrtue of a cv case of fna |udgment n
favor of the Muncpa Court of Mana aganst Sammy Maron, evy
was made upon whatever nterest he had n the property n
queston, and thereafter sad nterest was sod at pubc aucton to
the |udgment credtor. The correspondng notce of evy,
certfcate of sae and the Sherff's certfcate of fna sae n favor
of the Mana Tradng and Suppy Co. - because nobody exercsed
the rght of redemptons - were duy regstered. On March 1,
1958, the atter sod a ts rghts and tte to the property to
appeant, Dagupan Tradng.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 9<
- Actons were fed as to who had the better rght over the
property.
lSSUE
WON the sae of the and n queston, unregstered at that tme,
to appeee Macam, shoud preva over a confctng sae,
executed after the and was regstered, to Mana Tradng whch
was acqured therefrom by appeant Dagupan Tradng
HELD
YES
Ratio Where for a consderabe tme pror to the evy on
executon nterest of the owner of the and eved upon had
aready been conveyed to another who took possesson thereof
and ntroduced mprovements thereon, the sad evy s vod. The
pror sae, athough, unregstered, cannot be defeated by
subsequent executon sae and regstraton of or ssuance of
Tte over the and.
Reasoning
[J] In ths case, what shoud determne the ssue are the
provsons of the ast paragraph of Secton 35, Rue 39 of the
Rues of Court, to the effect that upon the executon and
devery of the fna certfcate of sae n favor of the purchaser
of and sod n an executon sae, such purchaser "sha be
substtuted to and acqure a the rght, tte, nterest and cam
of the |udgment debtor to the property as of the tme of the
evy."
[Z] At the tme of the evy, Sammy Maron had no more nterest
and cam over the sad and n queston because for a
consderabe tme pror to the evy, hs nterest had aready
been conveyed to appeee Macam, fuy and retrevaby, as the
CA hed. So, subsequent evy made on the property to satsfy
the |udgment aganst Sammy Maron n favor of the Mana
Tradng Company was vod and of no effect
[3] The unregstered sae and the consequent conveyance of
tte and ownershp n favor of appeee coud not have been
canceed and rendered of no effect upon the subsequent
ssuance of the Torrens tte over the entre parce of and; and
[4] Upon the executon of the deed of sae n hs favor by
Sammy Maron, appeee took possesson of the and conveyed
as owner thereof, and ntroduced consderabe mprovements
thereon. To deprve hm now of the same by sheer force of
techncaty woud be aganst both |ustce and equty.
Disposition Decson appeaed s affrmed.
SANCHEZ V RAMOS
40 PHIL 614
AVANCENA; December 20, 1919
FACTS
- On |uy 1, 1910, Craco Fernandez sod a pece of and to the
spouses Marceno Gomez and Narcsa Sanchez under pacto de
retro for the perod of one year. Ths was executed n a pubc
nstrument. Marceno Gomez and Narcsa Sanchez never took
matera possesson of the and. The perod for repurchase
eapsed wthout the vendor makng use of t. On |uy 3, 1912,
Craco Fernandez agan sod the same and, by means of a
prvate document, to Roque Ramos who mmedatey took
matera possesson thereof
- Sanchez sought to recover and whch was n possesson of
Ramos
- By appyng artce 1473 of the Cv Code, the tra court
decared preferabe the sae executed to the defendant and
absoved hm from the compant
lSSUE
WON and shoud be n the possesson of Sanchez
HELD
YES
- ART. 1473. If the same thng shoud have been sod to dfferent
vendees, the ownershp sha be transferred to
(1) the person who may have frst taken possesson thereof n
good fath, f t shoud be persona property.
(2) Shoud t be rea property, t sha beong to the purchaser who
frst recorded t n the regstry of deeds.
(3)Shoud t not be recorded, the property sha beong to the
person who frst took possesson of t n good fath, or, n defaut
of possesson, to the person who presents the odest tte,
provded there s good fath.
- By the same artce apped by the ower court, We are of the
opnon that the sae executed to the pantff must be decared
preferabe
- Possesson s acqured by the matera occupancy of the thng or
rght possessed (matera), or by the fact that the atter s
sub|ected to the acton of our w (symboc), or by the
approprate acts and ega formates estabshed for acqurng
possesson (art. 438, Cv Code.)
- t appears that, because the aw (Art.1437) does not menton to
whch of these knds of possesson the artce refers, t must be
understood that t refers to a of these knds
- The proposton (by the TC) that ths artce refers to the matera
possesson and excudes the symboc does not seem to be
founded upon a sod ground.
- In the gradaton of the causes of preference between severa
saes, fxes, frst, possesson and then the date of the tte. As a
pubc nstrument s a tte, t s camed that the nference s that
the aw (Art. 1473) has deberatey ntended to pace the
symboc possesson, whch the executon of the pubc document
mpes after the matera possesson
-Ths argument, however, woud ony be forcefu f the tte,
mentoned by ths artce, ncudes pubc nstruments, and ths
woud ony be true f pubc nstruments are not ncuded n the
dea of possesson spoken of n sad artce:
"Shoud t not be recorded, the property sha beong to the
person who frst took possesson of t n good fath, or, n defaut
of possesson, to the person who presents the odest tte,
provded there s good fath:
- Consequenty, the argument s defcent for t s beggng the
same queston, because f ths possesson ncudes the symboc,
whch s acqured by the executon of a pubc nstrument, t
shoud be understood that the tte, mentoned by the aw as the
next cause of preference, does not ncude pubc nstruments.
- MEANING: POSSESSION=TITLE based on the argument that
matera possesson comes frst than symboc possesson (whch
the Court does adhere to)
- Our nterpretaton of ths artce 1473 s more n consonance wth
the prncpes of |ustce
- The executon of a pubc nstrument s equvaent to the devery
of the reaty sod (art. 1462, Cv Code) and ts possesson by the
vendee (art. 438).
- Sae s consdered consummated and competey transfers to the
vendee a of the vendor's rghts of ownershp ncudng hs rea
rght over the thng
- As the thng s consdered devered, the vendor has no onger
the obgaton of even deverng t. If he contnues takng matera
possesson of t, t s smpy on account of vendee's toerance and,
n ths sense, hs possesson s vendor's possesson
- Ths means that after the sae of a reaty by means of a pubc
nstrument, the vendor, who reses t to another, does not
transmt anythng to the second vendee and f the atter, by vrtue
of ths second sae, takes matera possesson of the thng, he
does t as mere detaner, and t woud be un|ust to protect ths
detenton aganst the rghts to the thng awfuy acqured by the
frst vendee
SEPARATE OPlNlON
STREET ]dissent|
- In my |udgment the possesson referred to n artce 1473 of the
Cv Code s the actua, matera and physca possesson of the
thng sod; and n appyng that provson no account shoud ever
be taken of the symboc possesson whch s supposed to be
acqured by the purchaser, under artce 1463 of the Cv Code,
when the sae s proved by a pubc document.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 9=
-The queston as to who has the matera possesson of a parce
of rea property can usuay be ascertaned by nspecton or
nqury among person vng n the neghborhood, and athough
the nformaton thus obtaned s ess certan and absoute than
that whch woud be reveaed by the regstraton of tte;
nevertheess there s a presumpton of ownershp from the fact
of possesson, and a purchaser who, reyng on the evdence
supped by hs eyes, pays hs money to one who s beeved to
be the true owner and takes the matera possesson from hm,
shoud be protected as aganst any pror purchaser except the
one who may have regstered hs tte. Ths was wthout doubt
the ntenton of the codfers. Otherwse the thrd paragraph of
artce 1473 woud have been so drawn as to read as foows:
-Shoud t not be recorded, the property sha beong to the
person whose purchase is proved by a public instrument, and if
neither sale be thus proved , to the person who frst took
possesson of t n good fath, or, n defaut of possesson, to the
person who presents the odest tte, provded there s good
fath.
UlMSON V ROSETE
87 PHIL 159
TUASON; August 9, 1950
NATURE
Appea by certorar from a decson of the Court of Appeas
reversng the |udgment of the Court of Frst Instance of
Zambaes. The case nvoves a dspute over a parce of and sod
to two dfferent persons.
FACTS
- On |une 7, 1932, Donso Oumson executed a deed of
conveyance of the and to hs daughter Tomasa.
- On Apr 5, 1937, orgna vendors (spouses Manzano) sod
same and to defendant Rosete wth the condton of pacto de
retro.
- Rosete mmedatey took possesson of the and. Before he can
regster the deed of sae, pantff nsttuted her acton.
- The tra court found for the pantff. CA reversed the decson.
lSSUE
WON the defendant had frst possesson of the and n queston
HELD
Ratio The executon of the pubc nstrument s equvaent to
the devery of the reaty sod (art. 1462, Cv Code ) and ts
possesson by the vendee (art. 438).
Reasoning
- Under these condtons the sae s consdered consummated
and competey transfers to the vendee a of the thng. The
vendee by vrtue of ths sae has acqured everythng and
nothng, absoutey nothng, s eft to the vendor. From ths
moment the vendor s a stranger to the thng sod ke any other
who has never been ts owner. As the obgaton of even
deverng t, f he contnues takng possesson of t, s smpy on
account of the vendee's toerance and, n ths sense, hs
possesson s vendor's possesson. And f the atter shoud have
to ask hm for the devery of ths materas possesson t woud
not be by vrtue of the sae, because ths has been aready
consummated and has produced a ts effects, but by vrtue of
the vendee's ownershp n the same, and not the vendor. Ths
means that after the sae of the reaty by means of pubc
nstruments, the vendor, who reses t to another, does not
transmt anythng n the second sae. If he takes possesson of
the thng, he does t as mere detaner, and t woud be un|ust to
protect ths detenton aganst the rghts to the thng awfuy
acqured by the frst vendee.
- The fndngs that a deed of conveyance was made by Donso
Oumson n favor of hs daughter coud have no other meanng,
n the absence of any quafyng statement, than that the and
was sod by the father to hs daughter. Furthermore, ths was
the tra court's expct fndng whch was not reversed by the
Court of Appeas and stand as the fact of the case.
- The expresson n the court's decson n the case of Cruzado vs.
Escaer (34 Ph., 17), cted by the CA, to the effect that physca
possesson by the purchaser s essenta to the consummaton of a
sae of rea of estate, s at best obter dctum; for the court
dstncty found that the sae to pantff's Cruzado's father was a
sham, executon wth the soe purpose of enabng the senor
Cruzado to mortgage the property and become procurador. And
wth reference to the faure of the second vendee, Escaer, to
regster hs purchase, the court dsregarded the omsson as we
as the entry of the frst sae n the regstry because that entry was
made by the pantff, son and her of the frst supposed vendee,
more than a score years after the aeged transacton, when the
pantff was no onger or had any rght theren (n the and).
Because t aready beonged to the defendant Escaer, ts awfu
owner." When Escaer, the second purchase was sued he had
become the owner of the and by prescrpton. The defendant's
possesson n the present case fe far short of havng rpened nto
tte by prescrpton when the pantff commenced her acton.
Disposition For the reasons above stated, we are constraned to
set asde the decson of the Court of Appeas. Because the
Appeate Court found for the defendant, t made no fndngs on
damages for the atter's used of the property n controversy. Not
beng authorzed n ths appea to examne the evdence we have
to accept the tras court's apprasa of the damages. |udge Lanes
assessed the damages of P 180 for the occupaton of the
agrcutura years 143-44,1944-45 and 1945-46, and P 60 a year
thereafter unt the possesson of the property was resttuted to
the pantffs.
Let |udgment be entered n accordance wth the tenor of ths
decson, wth costs aganst the defendant.
Chapter 7: RISK OF LOSS OR DETERIORATION
ROMAN V GRlMALT
6 PHIL 96
TORRES; Apr 11, 1906

NATURE
Appea from |udgment

FACTS
Plaintiff alleges
- between |une 13 and 23, 1904, he and defendant verbay
agreed upon the sae of the schooner Santa Marna
- that the defendant had agreed to purchase the schooner, and to
pay n 3 nstaments of P500, on |uy 15, September 15, and
November 15, and that f the pantff accepted the pan, the sae
woud become effectve on the foowng day
- that the next day, the pantff notfed the defendant of hs
acceptance, and that from that day, the vesse was at hs
dsposa, and offered to dever the schooner to the defendant f
so desred
- that the contract havng been cosed and the vesse beng ready
for devery to the purchaser, t was sunk about 3 pm, |une 25, n
the harbor of Mana, because of a severe storm
- That on |une 30, demand was made upon the defendant for
payment of the purchase prce n the manner stpuated
- That defendant faed to pay
Defendant claims
- Pantff stated that the vesse beonged to hm
- Defendant accepted the offer of sae on condton that the tte
papers were found to be satsfactory, and that the vesse was n
seaworthy condton
- That they caed Reyes, a notary pubc, who sad the documents
provded were nsuffcent to show the ownershp of the vesse
and to transfer the tte
- That pantff then promsed to perfect hs tte, and on |une 23
he caed on the defendant to cose the sae, and the defendant
beevng that the pantff had perfected hs tte, wrote to set the
24
th
for the executon of the contract, but upon fndng that the
pantff had done nothng to perfect hs tte, he nssted he woud
buy the vesse ony when the tte papers were perfected and the
vesse duy nspected.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :)
*The court beow found that the partes had no arrved at a
defnte understandng.
lSSUE
WON the sae had been perfected, makng the defendant abe
for the purchase prce of the schooner
HELD
NO
- A sae sha be consdered perfected and bndng as between
vendor and vendee when they have agreed as to the thng
whch s the ob|ect of the contract and as to the prce, even
though nether has been actuay devered. (Art. 1450 of the
Cv Code.)
- Ownershp s not consdered transmtted unt the property s
actuay devered and the purchaser has taken possesson of
the vaue and pad the prce agreed upon, n whch case the sae
s consdered perfected.
- When the sae s made by means of a pubc nstrument the
executon thereof sha be equvaent to the devery of the thng
whch s the ob|ect of the contract. (Art. 1462 of the Cv Code.)
- Pedro Roman, the owner, and Andres Grmat, the purchaser,
had agreed upon the sae of the vesse for the sum of 1,500
pesos, payabe n three nstaments, provded the tte papers to
the vesse were n proper form. It s so stated n the etter
wrtten by the purchaser to the owner on the 23rd of |une.
- The sae of the schooner was not perfected and the purchaser
dd not consent to the executon of the deed of transfer for the
reason that the tte of the vesse was n the name of one
Pauna Gron and not n the name of Pedro Roman, the aeged
owner. Roman promsed, however, to perfect hs tte to the
vesse, but he faed to do so. The papers presented by hm dd
not show that he was the owner of the vesse.
- If no contract of sae was actuay executed by the partes the
oss of the vesse must be borne by ts owner and not by a party
who ony ntended to purchase t and who was unabe to do so
on account of faure on the part of the owner to show proper
tte to the vesse and thus enabe them to draw up the contract
of sae.
- The vesse was sunk n the bay on the afternoon of the 25th of
|une, 1904, durng a severe storm and before the owner had
comped wth the condton exacted by the proposed purchaser,
to wt, the producton of the proper papers showng that the
pantff was n fact the owner of the vesse n queston.
- The defendant was under no obgaton to pay the prce of the
vesse, the purchase of whch had not been concuded. The
conversatons had between the partes and the etter wrtten by
defendant to pantff dd not estabsh a contract suffcent n
tsef to create recproca rghts between the partes.
- It foows, therefore, that artce 1452 of the Cv Code reatve
to the n|ury or beneft of the thng sod after a contract has
been perfected and artces 1096 and 1182 of the same code
reatve to the obgaton to dever a specfed thng and the
extncton of such obgaton when the thng s ether ost or
destroyed, are not appcabe to the case at bar.
Disposition The |udgment of the court beow s affrmed and
the compant s dsmssed wth costs aganst the pantff. After
the expraton of twenty days from the date hereof et |udgment
be entered n accordance herewth and ten days thereafter et
the case be remanded to the Court of Frst Instance for proper
acton.
NORKlS DlSTRlBUTORS, lNC V CA (ALBERTO
NEPALES)
193 SCRA 694
GRINO-AOUINO; February 7, 1991
NATURE
PETITION for revew of the decson of the Court of Appeas.
FACTS
" Aberto Nepaes bought from the Norks-Bacood branch
a brand new Yamaha Wonderbke motorcyce.
" The prce of P7,500.00 was payabe by means of a Letter
of Guaranty from the DBP, whch Norks'Branch Manager
Laba|o agreed to accept. It was extended to Nepaes for
the prce of the motorcyce payabe by DBP upon reease
of hs motorcyce oan.
" As securty for the oan, Nepaes woud execute a chatte
mortgage on the motor cyce n favor of DBP. Laba|o
ssued a saes nvoce showng that the contract of sae of
the motorcyce had been perfected. Nepaes sgned the
saes nvoce to sgnfy hs conformty wth the terms of
the sae. In the meantme, however, the motorcyce
remaned n Norks' possesson.
" The motorcyce was regstered n the Land
Transportaton Commsson n the name of Aberto
Nepaes. Nepaes pad for the regstraton.
" On |anuary 22, 1980, the motorcyce was devered to a
certan |uan Nepaes who was aegedy the agent of
Aberto Nepaes but the atter denes t. The record shows
that Aberto and |uan Nepaes presented the unt to
DBP's Appraser-Investgator Ernesto Arresta at the DBP
offces.
" The motorcyce met an accdent on February 3,1980. An
nvestgaton conducted by the DBP reveaed that the
unt was beng drven by a certan Zacaras Payba at the
tme of the accdent. The unt was a tota wreck, was
returned, and stored nsde Norks' warehouse.
" DBP reeased the proceeds of prvate respondent's
motorcyce oan to Norks n the tota sum of P7,500. As
the prce of the motorcyce ater ncreased, Nepaes pad
the dfference of P328 and demanded the devery of the
motorcyce. When Norks coud not dever, he fed an
acton for specfc performance wth damages aganst
Norks n the RTC. He aeged that Norks faed to dever
the motorcyce whch he purchased, threby causng hm
damages.
" Norks answered that the motorcyce had aready been
devered to prvate respondent before the accdent,
hence, the rsk of oss or damage had to be borne by hm
as owner of the unt.
" RTC rendered a decson n favor of prvate respondent.
CA affrmed the decson but deeted award for damages.
Norks MOR was dened, hence ths petton.
lSSUE
WON there had aready been a transfer of ownershp of the
motorcyce to Nepaes at the tme t was destroyed
HELD
NO
Ratio In a forms of devery, t s necessary that the act of
devery whether constructve or actua, be couped wth the
ntenton of deverng the thng. The act, wthout the ntenton, s
nsuffcent.
Reasoning
- The ssuance of a saes nvoce does not prove transfer of
ownershp of the thng sod to the buyer. An nvoce s nothng
more than a detaed statement of the nature, quantty and cost of
the thng sod and has been consdered not a b of sae
- When the motorcyce was regstered by Norks n the name of
prvate respondent, Norks dd not ntend yet to transfer the tte
or ownershp to Nepaes, but ony to factate the executon of a
chatte mortgage n favor of the DBP for the reease of the buyer's
motorcyce oan. The executon n DBPs favor of a chatte
mortgage over the purchased vehce s a pre-requste for the
approva of the buyer's oan. If Norks woud not accede to that
arrangement, DBP woud not approve prvate respondent's oan
appcaton and, consequenty, there woud be no sae.
- In other words, the critical factor in the different modes of
effecting delivery, which gives legal effect to the act, is
the actual intention of the vendor to deliver, and its
acceptance by the vendee. Wthout that ntenton, there s no
tradton (Abuan vs. Garca, 14 SCRA 759).
- The thng s consdered to be devered when t s'paced n the
hands and possesson of the vendee.'(Cv Code, Art. 1462). It s
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :*
true that the same artce decares that the executon of a pubc
nstrument s equvaent to the devery of the thng whch s the
ob|ect of the contract, but, in order that this symbolic
delivery may produce the effect of tradition, it is
necessary that the vendor shall have had such control
over the thing sold that, at the moment of the sale, its
material delivery could have been made. It s not enough to
confer upon the purchaser the ownershp and the rght of
possesson. The thng sod must be paced n hs contro. When
there s no mpedment whatever to prevent the thng sod
passng nto the tenancy of the purchaser by the soe w of the
vendor, symboc devery through the executon of a pubc
nstrument s suffcent. But f, notwthstandng the executon of
the nstrument, the purchaser cannot have the en|oyment and
matera tenancy of the thng and make use of t hmsef or
through another n hs name, because such tenancy and
en|oyment are opposed by the nterposton of another w, then
fcton yeds to reaty-the devery has not been effected.
The Court of Appeas correcty rued that the purpose of the
executon of the saes nvoce and the regstraton of the vehce
n the name of pantff-appeee was not to transfer to Nepaes
the ownershp and domnon over the motorcyce, but ony to
compy wth the requrements of the DBP for processng prvate
respondent's motorcyce oan.
Article 1496 of the Civil Code - "n the absence of an express
assumpton of rsk by the buyer, the thngs sod reman at
seer's rsk unt the ownershp thereof s transferred to the
buyer."
- The rsk of oss shoud be borne by the seer, Norks, whch
was st the owner and possessor of the motorcyce when t was
wrecked.
Disposition Decson of the CA AFFIRMED.
SUN BROTHERS APPLlANCES V PEREZ
7 SCRA 977
LABRADOR; Apr 30, 1963
FACTS
- Sun Brothers brought ths acton to recover from defendant,
Damaso Perez the sum of P1,404, the prce of one Admra Ar
Condtoner, Sm Stye, pus stpuated nterest of 12% unt the
same s fuy pad, together wth P200 as Attorney's fees, and
costs. Sun Brothers contend that Perez, after makng a down
payment of P274, dd not pay any of the monthy nstaments of
P78 thereafter, eavng a baance of P1,404. Perez answered
that the ar-condtoner n queston was devered to hm and
nstaed n hs offce at Gardner St., Lucena, Ouezon on
December 14, 1959 but t was totay destroyed by fre on
December 28, 1968 at 2am. Perez further camed that the
machne was destroyed by force ma|eure, not by hs faut and/or
neggence and, therefore, he s not abe under the condtona
sae whch the partes had executed.
- The condtona sae contaned the foowng stpuaton:
"2. Tte to sad property sha vest n the Buyer ony upon fu
payment of the entre account, as heren provded, and ony
upon compete performance of a the other condtons heren
specfed;
"3. The Buyer sha keep sad property n good condton and
propery protected aganst the eements, at hs/ts address
above stated, and undertakes that f sad property or any part
thereof be ost, damaged, or destroyed for any cause, he sha
suffer such oss, or repar such damage, t beng dstncty
understood and agreed that sad property remans at Buyer's
rsk after devery;"
- CFI rued for Sun Brothers. Perez appeaed to the SC as
nvovng ony a queston of aw. He argued that nasmuch as the
tte to the property sod sha vest n the buyer ony upon fu
payment of the prce, the oss of the ar condtoner shoud be
for the excusve account of the vendor. Aso, the phrase "for
any cause" may not be nterpreted to ncude a fortutous event
absoutey beyond the contro of the appeant; and that
athough Artce 1174 of the new Cv Code recognzes the
excepton on fortutous event when the partes to a contract
expressy so stpuate, the phrase "for any cause" used n the
contract dd not ndcate any ntenton of the partes that the oss
of the unt due to fortutous event s to be ncuded wthn the
responsbty of the vendor.
lSSUE
WON the phrase "for any cause" used n the agreement may be
nterpreted to ncude a fortutous event absoutey beyond the
contro of the appeant Perez
HELD
YES
Ratio The agreement makng the buyer responsbe for any oss
whatsoever, fortutous or otherwse, even f the tte to the
property remans n the vendor s nether contrary to aw, moras
or pubc pocy.
Reasoning
- Where goods are sod and devered to the vendee under an
agreement that the tte s to reman n the vendor unt payment,
the oss or destructon of the property whe n the possesson of
the vendee before payment, wthout hs faut, does not reeve
hm from the obgaton to pay the prce, and he, therefore, suffers
the oss. In accord wth ths rue are the provsons of the Unform
Saes Act and the Unform Condtona Saes Act. There are severa
bases for ths rue. Frst s the absoute and uncondtona nature
of the vendee's promse to pay for the goods. The promse s
nowse dependent upon the transfer of the absoute tte. Second
s the fact that the vendor has fuy performed hs contract and
has nothng further to do except receve payment, and the
vendee receved what he barganed for when he obtaned the
rght of possesson And use of the goods and the rght to acqure
tte upon makng fu-payment of the prce. A thrd bass
advanced for the rue s the pocy of provdng an ncentve to
care propery for the goods, they beng excusvey under the
contro and domnon of the vendee.
Disposition Decson of the CFI s AFFIRMED.
LAWYERS COOPERATlVE V TABORA
121 PHIL 737
BAUTISTA, ANGELO; Apr 30, 1965
NATURE
Appea from CFI decson
FACTS
- May 3, 1955, Perfecto A. Tabora bought from the Lawyers
Cooperatve Pubshng Company one compete set of Amercan
|ursprudence consstng of 48 voumes wth 1954 pocket parts,
pus one set of Amercan |ursprudence, Genera Index, consstng
of 4 voumes, for a tota prce of P1,675.50 whch, n addton to
the cost of freght of P6.90, makes a tota of P1,682.40. Tabora
made a parta payment of P300, eavng a baance of P1,382.40,
payabe on nstament bass. The books were duy devered and
recepted for by Tabora on May 15, 1955 n hs aw offce Ignaco
Budng, Naga Cty.
- It was provded n the contract that "tte to and ownershp of the
books sha reman wth the seer unt the purchase prce sha
have been fuy pad. Loss or damage to the books after devery
to the buyer sha be borne by the buyer."
- In the mdnght of the same date, the aw offce and brary of
Tabora was burned aong wth other budngs.
- Ths unfortunate event was mmedatey reported by Tabora to
the company n a etter he sent on May 20, 1955. On May 23, the
company reped and as a token of goodw t sent to Tabora free
of charge voumes 75, 76, 77 and 78 of the Phppne Reports. As
Tabora faed to pay he monthy nstaments agreed upon on the
baance of the purchase prce notwthstandng the ong tme that
had eapsed, the company demanded payment of the nstaments
due, and havng faed, to pay the same, t commenced the
present acton before the Court of Frst Instance of Mana for the
recovery of the baance of the obgaton. Pantff aso prayed that
defendant be ordered to pay 25% of the amount due as qudated
damages, and the cost of acton.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :(
- CFI ordered the defendant to pay the sum of P1,382.40, wth
ega nterest thereon from the fng of the compant, pus a
sum equvaent to 25% of the tota amount due as qudated
damages, and the cost of acton.
Respondent's Comments
He contends that snce t was agreed that the tte to and the
ownershp of the books sha reman wth the seer unt the
purchase prce sha have been fuy pad, and the books were
burned or destroyed mmedatey after the transacton, appeee
shoud be the one to bear the oss for, as a resut, the oss s
aways borne by the owner. Moreover, even assumng that the
ownershp of the books were transferred to the buyer after the
perfecton of the contract the atter shoud not answer for the
oss snce the same occurred through force majeure.
lSSUE
WON Tabora shoud bear the oss of the books
HELD
YES
- As a rue the oss of the ob|ect of the contract of sae s borne
by the owner or n case of force majeure the one under
obgaton to dever the ob|ect s exempt from abty. However,
the aw on the contract entered nto on the matter argues
aganst t. It s true that n the contract entered nto between the
partes the seer agreed that the ownershp of the books sha
reman wth t unt the purchase prce sha have been fuy
pad, but such stpuaton cannot make the seer abe n case
of oss not ony because such was agreed merey to secure the
performance by the buyer of hs obgaton but n the very
contract t was expressy agreed that the "oss or damage to the
books after devery to the buyer sha be borne by the buyer."
Any such stpuaton s sanctoned by Artce 1504 of our Cv
Code.
- Nether can appeant fnd comfort n the cam that snce the
books were destroyed by fre wthout any faut on hs part he
shoud be reeved from the resutant obgaton under the rue
that an obgor shoud be hed exempt from abty when the
oss occurs thru a fortutous event. Ths rue ony hods true
when the obgaton conssts n the devery of a determnate
thng and there s no stpuaton hodng hm abe even n case
of fortutous event. The obgaton heren does not refer to a
determnate thng, but s pecunary n nature, and the obgor
bound hmsef to assume the oss after the devery of the goods
to hm. In other words, the obgor agreed to assume any rsk
concernng the goods from the tme of ther devery, whch s an
excepton to the rue provded for n Artce 1262 of our Cv
Code.
- The appeant shoud not be made to pay any damages
because hs dena to pay the baance of the account s not due
to bad fath.
Disposition Decson appeaed from s modfed by emnatng
qudated damages
Chapter 9: REMEDIES OF AN UNPAID SELLER
KATlGBAK V CA (EVANGELlSTA AND
LUNDBERG)
4 SCRA 243
PAREDES; |anuary 31, 1962
NATURE
Appea by certorar
FACTS
- Katgbak, thru Lundberg, entered nto agreement wth
Evangesta to purchase wnch for P12,000.00, payabe at
P5,000.00 upon devery and the P7,000.00 w/n 60 days. As
wnch needed some repars, whch coud be done n shop of
Lundberg, t was stpuated that amt necessary for repars w
be advanced by Katgbak, deductbe fr nta payment. Repars
were undertaken, P2,029.85 for spare parts was advanced by
Katgbak. For one reason, sae wasnt consummated, Katgbak
sued Evangesta, Lundberg and the atter's company, for refund.
The defendants fed separate answers, Lundberg aegng non-
abty for the refund snce the same was purey a persona
account between Katgbak and Evangesta. Evangesta camed
that whe there was an agreement and that Katgbak advanced
the payment for the spare parts, Katgbak refused to compy wth
hs contract to purchase; that as a resut, he was forced to se the
wnch to a thrd person for ony P10,000.00, thus ncurrng a oss
of P2,000.00, whch amount Katgbak shoud be ordered to pay,
pus damages.
lSSUE
WON vendee shoud be abe
HELD
YES
- The heren pettoner faed to take devery of the wnch, sub|ect
matter of the contract and such faure or breach was, accordng
to the Court of Appeas, attrbutabe to hm, a fact whch s bndng
upon ths Court. The rght to rese the equpment, therefore,
cannot be dsputed. It was aso found by the appeate court that
n the subsequent sae of the wnch to a thrd party, the vendor
thereof ost P2,000.00, sad dfference to be borne by the
supposed vendee who faed to take devery and/or pay the prce.
Chapter 10: PERFORMANCE OF CONTRACT
SMlTH, BELL & CO. V SOTELO MATTl
44 PHIL 874
ROMUALDEZ; 1922
NATURE
APPEAL from a |udgement of the CFI of Mana

FACTS
- August, 1918: Pantff Corporaton Smth, Be & Co., and
defendant Soteo entered nto contract:
- Pantff obgated tsef to se (and the defendant to purchase)
1) 2 stee tanks, to be shpped from New York and devered at
Mana "wthn 3 or 4 months"; 2) 2 expeers to be shpped from
San Francsco n the month of September, 1918, or as soon as
possbe; 3) 2 eectrc motors to be devered "Approxmate
devery wthn nnety days. - Ths s not guaranteed."
- tanks arrved at Mana Apr 27, 1919
- expeers arrved October 26, 1918
- motors arrved Feb. 27, 1919.
-The pantff corporaton notfed Soteo of the arrva of these
goods, but Soteo refused to receve them and to pay the prces
stpuated.
- The court beow absoved the defendants from the compant
nsofar as the tanks and eectrc motors were concerned, but
rendered |udgment aganst them for the expeers, orderng them
to "receve the aforesad expeers and pay the pantff the prce
of the sad goods"
- both partes appea
Petitioners' Claim
- pettoner mmedatey notfed the defendant of the arrva of
the goods
- defendant refused to receve and pay the prce
- expeers and motors n good condtons
Respondents' Comments
- dened the aegatons as to the shpment and arrva of the
goods
- dened the notfcaton and the refusa and the good condtons
of the goods
- aeged as speca defense: Soteo made the contracts n
queston as manager of the ntervenor, the Mana O Refnng and
ByProducts Co.
- t was ony n May, 1919, that t notfed the ntervenor that
goods had arrved, ncompete and ong after the date stpuated
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :7
- as a consequence of the deay, the ntervenor suffered
damages n the sum of P116,783.91 for the nondevery fo the
tanks, and P21,250 for the expeers and motors arrvng ate.
lSSUES
1. WON, under the contracts entered nto and the crcumstances
estabshed n the record, the pantff has fufed, n due tme,
ts obgaton to brng the goods n queston to Mana
2. WON the ntervenor has rght of acton

HELD
1. YES
- The pantff has not been guty of any deay n the fufment
of ts obgaton, and t coud not have ncurred any of the
abtes mentoned by the ntervenor n ts countercam.
Ratio When no defnte date has been fxed for the devery of
goods, the obgor sha not be hed guty of deay n the
fufment of ts obgaton f t devers the goods wthn a
reasonabe tme.
Reasoning
- The obgaton s regarded as conditional: the term whch the
partes attempted to fx s so uncertan that one cannot te |ust
whether those artces coud be brought to Mana or not. *They
were executed at the tme of the word war when there exsted
rgd restrctons on the export from the US of artces ke the
machnery n queston, and transportaton was dffcut.
- When the devery s sub|ect to the fufment of a condton
dependent on the w of thrd persons who coud n no way be
compeed to fuf the condton (ke n ths case), the obgor
w be deemed to have suffcenty performed hs part of the
obgaton, f he has done a that was n hs power, even f the
condton has not been fufed n reaty- and he has the rght to
demand performance of the contract by the other party.
- In such cases, devery must be made wthn reasonabe tme.
- What s reasonabe tme? - to be determned by the
crcumstances attendng the partcuar transacton, such as the
character of the goods, the purpose for whch they are ntended,
the abty of the seer to produce the goods f they are to be
manufactured, the factes avaabe for transportaton, and the
dstance the goods must be carred, and the usua course of
busness n the partcuar trade.
2. NO
Ratio When an agent acts n hs own name, the prncpa sha
have no rght of acton aganst the persons wth whom the agent
has contracted.
Reasoning
- When the agent transacts busness n hs own name, t sha
not be necessary to state who s the prncpa and he sha be
drecty abe, as f the busness were for hs own account. (Code
of Com., art 246)
Disposition the |udgment appeaed from s modfed, and the
defendant sentenced to accept and receve from the pantff the
tanks, expeers, motors, and to pay the pantff the sum of
P96,000, wth ega nterest, and the costs of both nstances.
SOLER V CHESLEY
43 PHIL 529
ROMUALDEZ; |une 20, 1922
NATURE
Appea
FACTS
- Soer had agreed wth Wm. H. Anderson and Co., for the
purchase of certan machnery agreement.
- Terms and conditions of their agreement: The foregong
machnery s to be nvoced at manufacturers' prce, pus a
charges such as freght, nsurance, nterest and exchange,
arrastre, andng charges, devery, nterna revenue, etc., pus a
buyng commsson of 5 per cent.
- Ther terms of payment:
- 50% depost to be made upon arrva of the machnery,
and the baance 90 days after devery of the machnery.
-And n he event that Soer sha fa to ve up to the terms of
ths agreement, such faure by hm w be suffcent cause to
termnate the contract, and any payments made by hm under
and by vrtue of the contract sha be and reman the excusve
property of
Wm. H. Anderson and Co.
-The tte of the machnery n queston s to reman n the
name of Wm. H. Anderson and Co. unt payment n fu has
been made, at whch tme transfer of a rght and tte to the
above mentoned machnery w be made to the Soer.
-Ther agreement s contngent upon strkes, fre, accdents,
extraordnary shppng and other condtons mposed on
account of war and other causes unavodabe or beyond the
contro of the party of the frst part.
- It s strcty understood that the quotatons made to Mr. Andres
Soer under date of February 27, 1919, were approxmated and
were sub|ect to change wthout notce TF there s no guarantee as
to prces and devery, t beng understood that prces charged w
be those shown on the nvoces of the manufacturers, and
shpment w be made by frst possbe opportunty.
- Nov 16, 1918: Soer sod to the Chesey a hs rghts and nterest
n a contract of sae.
- At that tme, a part of the aforesad machnery was on the way,
the other part beng aready n the cty of Mana, the prce of
whch has not as yet been pad by Mr. Soer to Messrs. Wm. H.
Anderson and Co.
- It was sad too n the contract that Chesey made Mr. Soer a
proposton whereby the atter shoud transfer t(the machneres)
to hm, and he woud assume the obgaton to pay Messrs. Wm.
H. Anderson and Co. the amount of the nvoces thereof, and that
Mr. Soer was to be reeved from hs contract wth Messrs. Wm. H.
Anderson and Co. (and that the Co. has actua knowedge of ths
sae of the machnery, as we as of Mr. Chesey beng subrogated
to the rghts and obgatons created by the agreement)
- Aso, t was stated that Mr. Chesey sha pay Mr. Soer the
dfference whch may be found to exst between the amount of
the nvoces of the machnery and the sum of 100 php
mmedatey upon the arrva of sad machnery at ths cty of
Mana; provded that f any part of the machnery not affectng
the expeers s found ackng, a proportona deducton sha be
made from the amount whch Mr. Soer may have receved from
Mr. Chesey.
- Of the parts of the machnery covered by these contracts, ony
the "fter press," the "cooker" and the "chans" were n Mana on
November 16, 1918, but the most mportant parts, such as the "o
expeers" and the "grndng ms" were not then yet n ths cty.
- These "o expeers" were shpped for Mana on the 12th of
December, 1918, the motors on the 8th of |anuary, 1919, the
machnery on the 16th of |anuary 1919 and the grndng ms on
the 21st of February, 1919, a of whch arrved at Mana on
February 13, March 8, Apr 27, and August 23, 1919, respectvey.
- These effects were receved and pad for by Chesey under
protest, on account of the fact that they were not devered wthn
the perod stpuates n the contract.
- Soer was then advsed by Chesey s awyer that ther contract
to was rescnded, t appearng that the parts of the machnery,
whch the Soer asserted n sad contract were on the way, were
not at the tme and t was ony severa days ater that they were
shpped for Mana.
- Soder commenced ths acton askng that Chesey be sentenced
to pay hm the sum of P30,546.03 wth nterest thereon, whch
sum was the dfference between the P100,000, the consderaton
of the contract, and the prce of the aforesad machnery whch
had been pad by the Chesey, pus the ncdenta expenses, as
stpuated n the sad contract.
- The defendant answered, denyng generay and specfcay the
aegatons of the compant and settng up a speca defense and
a countercam.
- In hs speca defense, Chesey aeges that he had accepted and
sgned the contract on the asserton theren contaned that of the
machnery, whch was the sub|ect matter of the sad contract, a
part was aready n Mana, and the other part on the way, and
aso on the promses, assertons, and contemporary and prevous
acts of the pantff to the same effect, by means of whch the
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :8
atter succeeded n nducng the defendant to make and sgn the
aforesad contract; that the parts of the machnery whch, on the
date of the contract, were sad to be on the way , were not n
fact n, and dd not arrve at, Mana but ong thereafter; that f
he sgned the contract, t was because he was desrous of
havng the machnery, and the defendant assured hm that t
woud be devered to hm, mmedatey or wthn a short tme
- TC sentenced Chesey to pay the Soer P30,546.03, wth ega
nterest thereon from October 16, 1919, and the costs, and
absoved the pantff from the set-off and the countercam.
lSSUES
1. WON TC erred n not hodng that tme was an essenta
eement of the contract
2. WON TC erred n gvng |udgment n favor of the pantff
3. WON TC erred n dsmssng the countercam of the
defendant
HELD
1. YES
- The arrva of the machnery wthn a reasonabe tme was an
essenta eement of the contract, such tme to be determned
by takng nto account the fact that s was then on the way to
Mana.
- It appears suffcenty estabshed n the record that f the Soer
gave hs consent to ths contract, t was because he expected
that sad machnery woud arrve wthn a short tme, - the tme
reasonaby necessary for such machnery to reach Mana from
Amerca, - as the pantff asserted n the document tsef that
sad machnery was then on the way. The act of the defendant
n nsstng that ths guaranty as to the arrva of the machnery
be stated n the contract, hs repeated compants and protests
when he afterwards made payments as the parts arrved, and
hs etter of Apr 25, 1919, eave no room for doubt that the
arrva of sad machnery wthn a reasonaby short tme was one
of the determnng eements of hs consent.
- These acts of the defendant dscose the fact that he ntented
the arrva of the machnery to be an essenta eement of the
contract (art. 1282, Cv Code).
- The fact that the pantff had no contro of the prompt
transportaton of the sad machnery to Mana, does not reeve
the pantff from makng good the guaranty nserted n the
contract that sad machnery was aready on the way to Mana.
- The pantff eected to bnd hmsef n that way, athough he
knew, as he ought to have known that, had hs rghts not been
transferred to the defendant, he coud not have charged Messrs.
Anderson and Co. so much, who n the (frst) contract dd not
guarantee the devery nor the amount of the prce.
- The pantff havng bound hmsef n favor of the defendant for
more than what Messrs. Anderson and Co. had bound
themseves for n favor, we entertan no doubt that he acted n
good fath, encouraged by the nformaton of Messrs. Anderson
and Co. (athough the most that the expeers, - ony the
expeers, - had been sent out by the factory), but t was he,
not Messrs. Anderson and Co., who contracted the obgaton,
and, therefore, he s the ony one to be responsbe for the
obgaton arsng from the contract. He who contracts and
assumes an obgaton s presumed to know the crcumstances
under whch sad obgaton can be comped wth (Ferrer vs.
Ignaco, 39 Ph., 446).
- True, the pantff d not specfy the date or tme of the arrva
of sad mechanca devces; but he dd assert that they were on
the way on the date of the contract. But t dd not happen as
asserted
2. YES
- The pantff has faed to carry out hs obgaton ncurred
under the contract and has, therefore, no rght to compe the
defendant to compy wth hs obgaton to pay the pantff the
sum camed n the compant (art. 1124, Cv Code).
3. NO
- It appears from the record that he sod the aforesad
machnery to a thrd person, the Phppne Refnng Co. In cases
ke ths, the rescsson of the contract does not e (art. 1295,
Cv Code).
- As to the damages camed by the defendant: Evdence adduced
s nsuffcent to fx the true amount thereof.
Disposition |udgment Reversed, and the defendant absoved
from the compant, and the pantff from the countercam and
other cams of the defendant
REPUBLlC V LlTTON
94 Ph 52
PARAS; November 28, 1953
NATURE
Appea from a decson of the CFI hodng Ltton abe
FACTS
- The Government sent out a proposa for bds for the devery of
padocks and statoneres for eecton purposes to be devered
not ater than March 1, 1946.
- Ltton Co. bound tsef to dever the sad artces on or before
March 1
- It s stpuated that shoud Ltton fa to dever, the Government
s aowed to mpose a penaty, and to make open-market
purchases as needed.
- Ltton ony made parta devery. As a resut, the Government
needed to make open-market purchases, much hgher than the
rates stpuated wth Ltton, thereby the Government ncurred
osses equvaent to the dfference.
- Ltton argues that on-tme devery s contngent on the reease
of the export permt from the U.S., the reease of whch s a
condton to be fufed by the Government
lSSUE
WON Ltton can be hed abe for not beng abe to dever n tme
for the eectons, consderng the contngency of reease of the
export permt
HELD
YES
Ratio lt is clear that Litton undertook to deliver the articles not
later than March J
- The purpose of devery (for eectons) and the atest tme of
devery (March 1) appear unequvocay n the Governments
proposa for bds. It s then preposterous to suppose that devery
after the eectons woud ever be contempated or accepted.
- Ltton's contract wth the pantff was uncondtona.
- Ltton fed 2 performance bonds warrantng that the artces
woud be devered on tme.
Disposition |udgment appeaed from s affrmed
ASlAN V ]ALANDONl
|PAGE 9|
AZARRAGA V GAY
52 PHIL 599
VILLAMOR; December 29, 1928
FACTS
- |anuary 17, 1921, the pantff sod two parces of ands to the
defendant for the ump sum of P47,000, payabe n nstaments.
- The condtons of the payment were: P5,000 at the tme of
sgnng the contract Exhbt A; P20,000 upon devery by the
vendor to the purchaser of the Torrens tte to the frst parce
descrbed n the deed of sae, P10,000 upon devery by the
vendor to the purchaser of Torrens tte to the second parce; and
asty the sum of P12,000 one year after the devery of the
Torrens tte to the second parce.
- The vendee pad P5,000 to the vendor when the contract was
sgned. The vendor devered the Torrens tte to the frst parce to
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :9
the vendee who, pursuant to the agreement, pad hm P20,000.
In the month of March 1921, Torrens tte to the second parce
was ssued and forthwth devered by the vendor to the vendee
who, however, faed to pay the P10,000 as agreed, nether dd
she pay the remanng P12,000 one year after havng receved
the Torrens tte to the second parce.
- The pantff here cams the sum of P22,000, wth ega nterest
from the month of Apr 1921 on the sum of P10,000, and from
Apr 1922 on the sum of P12,000, unt fu payment of the
amounts camed.
- Defendant admts that she purchased the two parces of and
referred to by pantff, but aeges n defense: (a) That the
pantff knowng that the second parces of and he sod had an
area of 60 hectares, by msrepresentaton ead the defendant to
beeve that sad second parce contaned 98 hectares, and thus
made t appear n the deed of sae and nduced the vendee to
bnd hersef to pay the prce of P47,000 for the two parces of
and, whch he represented contaned an area of no ess than
200 hectares, to whch prce the defendant woud not have
bound hersef had she known that the rea area of the second
parce was 60 hectares, and, consequenty, she s entted to a
reducton n the prce of the two parces n proporton to the
area ackng whch ought to be reduced to P38,000
- The ower court, havng found no fraud when the partes
agreed to the ump sum for the two parces of and descrbed n
the deed Exhbt A, foowng artce 1471 of the Cv Code,
ordered the defendant to pay the pantff the sum of P19,300
wth ega nterest at 8 per cent per annum from Apr 30, 1921
on the sum of P7,300, and from Apr 30, 1922, on the sum of
P12,000.
lSSUE
WON there was fraud n the crcumstances eadng to the
agreement n the contract
HELD
NO
- There s no evdence of record that the pantff made
representaton to the defendant as to the area of sad second
parce, and even f he dd make such fase representatons as
are now mputed to hm by the defendant, the atter accepted
such representatons at her own rsk and she s the ony one
responsbe for the consqunces of her nexcusabe
creduousness. In the case of Songco vs. Sener (37 Ph., 254),
the court sad:
The law allows considerable latitude to seller's statements, or
dealer's talk; and experience teaches that it as exceedingly
risky to accept it at its face value.
Assertions concerning the property which is the subject of a
contract of sale, or in regard to its qualities and
characteristics, are the usual and ordinary means used by
sellers to obtain a high price and are always understood as
affording to buyers no grund from omitting to make inquires.
A man who relies upon such an affirmation made by a person
whose interest might so readily prompt him to exaggerate the
value of his property does so at his peril, and must take the
consequences of his own imprudence.
- The defendant had ampe opportunty to apprase hersef of
the condton of the and whch she purchased, and the pantff
dd nothng to prevent her from makng such nvestgaton as
she deemed ft, and as was sad n Songco vs. Sener, supra,
when the purchaser proceeds to make nvestgatons by hmsef,
and the vendor does nothng to prevent such nvestgaton from
beng as compete as the former mght wsh, the purchaser
cannot ater aege that the vendor made fase representatons
to hm.
- "One who contracts for the purchase of rea estate n reance
on the representatons and statements of the vendor as to ts
character and vaue, but after he has vsted and examned t for
hmsef, and has had the means and opportunty of verfyng
such statements, cannot avod the contract on the ground that
they were fase or exaggerated."- She dd not compan of the
dfference n the area of sad second parce unt the year 1926.
- More so, t appears that by the contract Exhbt A, the partes
agreed to the sae of two parces of and, the frst one contanng
102 hectares, 67 ares and 32 centares, and the second one
contanng about 98 hectares, for the ump sum of P47,000
payabe party n cash and party n nstaments. Sad two parces
are defnd by means of the boundares gven n the nstrument.
Therefore, the case fas wthn the provson of artce 1471 of the
Cv Code, whch reads as foows:
ART. J47J. ln case of the sale of real estate for a lump sum and
not at the rate of a specified price for each unit of measure,
there shall be no increase or decrease of the price even if the
area be found to be more or less than that stated in the
contract.
- As the hectares were pad due to a ump sum and not based of a
defned unt of measure - f the sae was made for a prce per unt
of measure or number, the consderaton of the contract wth
respect to the vendee, s the number of such unts, or, f you wsh,
the thng purchased as determned by the stpuated number of
unts. But f, on the other hand, the sae was made for a ump
sum, the consderaton of the contract s the ob|ect sod,
ndependenty of ts number or measure, the thng as determned
by the stpuated boundares, whch has been caed n aw a
determinate object.
- From a ths, t foows that the provsons of artce 1471
concernng the devery of determinate objects had to be
materay dfferent from those governng the devery of thngs
sod a prce per unt of measure or number.
- The reason for the reguaton s cear and no doubts can arse
from ts appcaton. It s concerned wth determinate objects. The
consderaton of the contract, and the thng to be devered s a
determinate object, and not the number of unts t contans. The
prce s determned wth reaton to t; hence, ts greater or esser
area cannot nfuence the ncrease or decrease of the prce
agreed upon. We have |ust earned the reason for the reguaton,
bearng n mnd that the Code has rghty consdered an ob|ect as
determnate for the purposes now treated, when t s a snge
reaty as when t s two or more, so ong as they are sod for a
snge prce consttutng a ump sum and not for a specfed
amount per unt of measure or number.
STA. ANA V HERNANDEZ
18 SCRA 173
REYES, |BL; December 17, 1966
NATURE
Appea from the decson of the CA, reversng the decson of the
CFI of Buacan
FACTS
- The Sta. Ana spouses owned 115,850 sqm parce of and. They
sod two portons of the and to Hernandez for a snge prce of
P11k. The portons of and were descrbed as foows:
"8ahaguing nasa gawing Hilagaan. Humahanga sa Hilaga, kina
Maria Perez, at Aurelio Perez; sa Timugan, sa lupang kasanib; sa
5ilanganan, kay Mariano Flores at Emilio lgnacio; sa lanluran, kay
Cornelio lgnacio; Mayroong (J2,500), m.c. humigit kumulang."
"8ahaguing nasa gawing 5ilanganan. Humahanga sa Hilagaan, sa
kay Rosa Hernandez; sa 5ilanganan, kay Domingo Hernandez at
Antonio Hernandez; sa Timugan, sa 5ta. Maria-Tigbi Road; at sa
lanluran, sa lupang kasanib (josa 5ta. Ana, jr.), mayroong
(26,500) metros cuadrados, humigit kumulang."
- The spouses sod two more portons to other buyers. Then they
had a subdvson pan prepared by a surveyor. The other vendees
agreed to the pan; but Hernandez dd not, and refused to vacate
the and. Instead, she had a dfferent subdvson pan prepared.
The spouses fed sut aganst Hernandez for occupyng 17,000
sqm more than what she bought.
- The CFI found that the and sod was wthout cear boundares
but wth exact areas and sod at P0.29 per sqm. The CA found that
the area n the document s not the one to preva but the area
that Hernandez knew was hers because they were separated from
the rest of the property by a ong and contnuous pap (dke);
the sae was for a ump sum.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ::
lSSUE
WON the sae was for a ump sum
HELD
YES
- Art. 1542 of the CC states:
"ln the sale of real estate, made for a lump sum and not at
the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although
there be greater or less area or number than that stated in
the contract.
"The same rule shall be applied when two or more
immovables are sold for a single price; but if, besides
mentioning the boundaries, which is indispensable in every
conveyance of real estate, its area or number should be
designated in the contract, the vendor shall be bound to
deliver all that is included within said boundaries, even when
it exceeds the area or number specified in the contract; and,
should he not be able to do so, he shall suffer a reduction in
the price, in proportion to what is lacking in the area or
number, unless the contract is rescinded because the vendee
does not accede to the failure to deliver what has been
stipulated."
- The two parces of and sod to Rosa Hernandez were dentfed
by the conspcuous boundares consstng n a ong and
contnuous pap or dke that separated the ands n queston
from the rest of the property. On the bass of such fndngs, that
cannot be questoned at ths stage (SC wont dsturb factua
fndngs of CA uness they are garngy erroneous as to
consttute grave abuse of dscreton), t s unquestonabe that
the sae made was of a defnte and dentfed tract, a corpus
certum, that obgated the vendors to dever to the buyer a the
and wthn the boundares, rrespectve of whether ts rea area
shoud be greater or smaer than what s rected n the deed.
And ths s partcuary true where, as n the case now before
ths court, the area gven s quafed to be approxmate ony
"humgt kumuang", .e., more or ess.
- To hod the buyer to no more than the area rected on the
deed, t must be made cear theren that the sae was made by
unt of measure at a defnte prce for each unt. The rung of
the Supreme Court of Span, n construng Artce 1471 of the
Spansh Cv Code (coped verbatm n our Artce 1542) s hghy
persuasve that as between the absence of a recta of a gven
prce per unt of measurement, and the specfcaton of the tota
area sod, the former must preva and determnes the
appcabty of the norms concernng saes for a ump sum.
Disposition Petton dened. CA affrmed.
TOCUATOR V BERNABE
459 SCRA 439.
TINGA; |une 8, 2005
FACTS
- The sub|ect of ths acton s a ot of the Ayaa Aabang Vage,
Muntnupa, Metro-Mana. The ower court found that the above
parce of and was purchased by the spouses Dosdado and
Lourdes Savador (Savadors, for short) from the deveopers of
Ayaa Aabang sub|ect, among others, to the foowng
condtons: -
"It s part of the condton of buyng a ot n Ayaa Aabang
Vage (a) that the lot buyer shall deposit with Ayala
Corporation a cash bond (about P17,000.00 for the
Salvadors) which shall be refunded to him if he builds
a residence thereon within two (2) years of purchase,
otherwise the deposit shall be forfeited, (b)
architectural plans for any improvement shall be
approved by Ayala Corporation, and (c) no lot may be
resold by the buyer unless a residential house has
been constructed thereon.
- Evdences on record further revea that on December 18, 1980,
the Savadors sod the parce of and to the spouses Remgo and
Gora Bernabe (Bernabes, for expedency). Gven the above
restrctons, the Savadors concomtanty executed a speca
power of attorney authorzng the Bernabes to construct a
resdenta house on the ot and to transfer the tte of the
property n ther names.
- The Bernabes, on the other hand, wthout makng any
mprovement, contracted to se the parce of and to the spouses
Maro and Ezabeth Torcuator (Torcuators, for brevty) sometme
n September of 1986. Then agan, confronted by the Ayaa
Aabang restrctons, the partes agreed to cause the sae between
the Savadors and the Bernabes canceed, n favor of (a) a new
deed of sae from the Savadors drecty to the Torcuators; (b) a
new Irrevocabe Speca Power of Attorney executed by the
Savadors to the Torcuators n order for the atter to bud a house
on the and n queston; and (c) an Irrevocabe Speca Power of
Attorney from the Savadors to the Bernabes authorzng the atter
to se, transfer and convey, wth power of substtuton, the
sub|ect ot.
- The Torcuators thereafter had the pans of ther house prepared
and offered to pay the Bernabes for the and upon devery of the
sae contract. For one reason or another, the deed of sae was
never consummated nor was payment on the sad sae ever
effected. Subseuqenty, the Bernabes sod the sub|ect and to
Leonardo Angees, a brother-n-aw. The document however s not
notarzed. As a resut, the Torcuators commenced the nstant
acton aganst the Bernabes and Savadors for Specfc
Performance or Rescsson wth Damages.
- The tra court dsmssed petton of Tocuators sayng that they
(Tocuators) dd not suffer any rea damage n that they coud have
purchased another ot n Ayaa Aabang, and use the archtectura
pans they commssoned Arch. Sega to prepare . CA affrmed.
Tocuators fed before the SC.
lSSUES
1. WON the agreement s a contract to se as the tra court rued,
or a contract of sae as pettoners nsst
2. WON the transacton voated the Unform Currency Act,
Repubc Act No. 529
3. WON the agreement s vod for beng contrary to good customs
and moras
4. WON the agreement voated the aw as t deprved the
government of capta gans tax
HELD
1. Contract to se
- The dfferences between a contract to se and a contract of sae
are we-setted n |ursprudence. As eary as 1951, we hed that n
a contract of sae, tte passes to the buyer upon devery of the
thng sod, whe n a contract to se, ownershp s reserved n the
seer and s not to pass unt the fu payment of the purchase
prce s made. In the frst case, non-payment of the prce s a
negatve resoutory condton; n the second case, fu payment s
a postve suspensve condton. Beng contrares, ther effect n
aw cannot be dentca. In the frst case, the vendor has ost and
cannot recover the ownershp of the and sod unt and uness the
contract of sae s tsef resoved and set asde. In the second
case, however, the tte remans n the vendor f the vendee does
not compy wth the condton precedent of makng payment at
the tme specfed n the contract. In other words, n a contract to
se, ownershp s retaned by the seer and s not to pass to the
buyer unt fu payment of the prce or the fufment of some
other condtons ether of whch s a future and uncertan event
the non-happenng of whch s not a breach, casua or serous, but
smpy an event that prevents the obgaton of the vendor to
convey tte from acqurng bndng force. We have carefuy
examned the agreement between the partes and are far from
persuaded that t was a contract of sae.
- Frsty, the agreement mposed upon pettoners the obgaton to
fuy pay the agreed purchase prce for the property. That
ownershp sha not pass to pettoners unt they have fuy pad
the prce s mpct n the agreement. Notaby, respondent
Remgo Bernabe testfed, wthout ob|ecton on the part of
pettoners, that he specfcay nformed pettoners that the
transacton shoud be competed, .e., that he shoud receve the
fu payment for the property, before he eft for the Unted States.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :;
Moreover, the deed of sae woud have been ssued ony upon
fu payment of the purchase prce, among other thngs.
Pettoner Maro Torcuator acknowedged ths fact when he
testfed that the deed of sae and orgna speca power of
attorney were ony to be devered upon fu payment of the
purchase prce. As correcty observed by the tra court, the
Savadors dd not execute a deed of sae n favor of pettoners,
and nstead executed a speca power of attorney authorzng
the Bernabes to se the property on ther behaf, n order to
afford the atter a measure of protecton that woud guarantee
fu payment of the purchase prce before any deed of sae n
favor of pettoners was executed. Remarkaby, the records are
bereft of any ndcaton that pettoners ever attempted to
tender payment or consgn the purchase prce as requred by
aw. On ths score, even assumng that the agreement was a
contract of sae, respondents may not be compeed to dever
the property and execute the deed of absoute sae. In cases
such as the one before us, whch nvove the performance of an
obgaton and not merey the exercse of a prvege or rght,
payment may be effected not by mere tender aone but by both
tender and consgnaton. The rue s dfferent n cases whch
nvove an exercse of a rght or prvege, such as n an opton
contract, ega redempton or sae wth rght to repurchase,
wheren mere tender of payment woud be suffcent to preserve
the rght or prvege. Hence, absent a vad tender of payment
and consgnaton, pettoners are deemed to have faed to
dscharge ther obgaton to pay.
- Secondy, the partes ceary ntended the constructon of a
resdenta house on the property as another suspensve
condton whch had to be fufed. The partes undoubtedy
understood that they had to contend wth the Ayaa stpuaton
whch s why they resorted to the executon of a speca power
of attorney authorzng pettoners to construct a resdenta
budng on the property n the name of the Savadors.
- Thrdy, there was nether actua nor constructve devery of
the property to pettoners. Apart from the fact that no pubc
document evdencng the sae was executed, whch woud have
been consdered equvaent to devery, pettoners dd not take
actua, physca possesson of the property
- The speca power of attorney does not contan the essenta
eements of the purported contract and, more tengy, does not
even refer to any agreement for the sae of the property.
Consderng the rung that the agreement was a contract to se,
respondents were not obged to convey tte to the property
before the happenng of 2 suspensve condtons, namey: fu
payment of the purchase prce and constructon of a resdence
on the property. They were actng perfecty wthn ther rght
when they consdered the agreement canceed after
unsuccessfuy demandng payment from pettoners.
2. NO
- The argument s Moot. The contract havng been canceed,
any resouton regardng the vadty of the stpuaton requrng
payment of the purchase prce n foregn currency woud not
serve any further purpose.
3. NO
- It shoud be emphaszed that the proscrpton mposed by
Ayaa Corporaton was on the resae of the property wthout a
resdenta house havng been constructed thereon. The
condton dd not requre that the orgna ot buyer shoud
hmsef construct a resdenta house on the property, ony that
the orgna buyer may not rese a vacant ot. In vew of our
fndng that the agreement between the partes was a mere
contract to se, no voaton of the condton may be nferred
from the transacton as no transfer of ownershp was made. In
fact, the agreement n ths case that pettoners w construct a
resdenta house on the property n the name of the Savadors
(who retaned ownershp of the property unt the fufment of
the twn condtons of payment and constructon of a resdence)
was actuay n compance wth or obesance to the condton.
4. NO
- Whoy rreevant. Havng decared that the contract to se n
ths case was aborted by pettoners' faure to compy wth the
twn suspensve condtons of fu payment and constructon of a
resdence, the obgaton to pay taxes never arose.
Disposition The petton s DENIED.
BARENG V CA (ALEGRlA & RUlZ)
107 PHIL 641
REYES; Apr 25, 1960
NATURE
Appea by certorar from a decson of the CA
FACTS
- On November 29, 1951, Bareng purchased from respondent
Aegra cnematographc equpment for the sum of P15,000.
- P10,000 was pad, and for the baance, Bareng sgned four
promssory notes fang due on separate dates.
- The frst promssory note was duy pad but shorty before the
second note fe due, the other respondent, Agustn Ruz nformed
pettoner that he was a co-owner of the equpment
- Severa days after, Ruz nstructed pettoner to suspend
payments to Aegra as he was not agreeabe to the sae.
- Aegra sought to coect upon the second note, but pettoner
refused to pay on account of Ruz's cams.
- Ony P400 was pad on the second note and thereafter,
pettoner refused to make any more payments to Aegra unt the
atter had setted hs dspute wth Ruz.
- On March 31, 1952, Ruz fed sut aganst Aegra and pettoner
Bareng for hs share n the prce of the cnema equpment. (Cv
Case No. 1527)
- On May 21, 1952, Aegra and Ruz reached a compromse,
wheren the former recognzed the atter as co-owner of the
equpment, and promsed to pay hm 2/3 of whatever amount he
coud recover
- On May 28, 1952. Aegra sued Bareng for the amount of
P13,500 representng the unpad baance of the prce of sad
equpment. (Cv Case No. 1554)
- Bareng answered the compant, aegng that ony P3,600 had
not been pad, and prayng for the rescsson of the sae for
supposed voaton by Aegra of certan express warrantes, and
asked for payment of damages.
- The ower court, rendered |udgment decarng Aegra and Ruz
co-owners of the cnema equpment, and dsmssng the compant
aganst Bareng wthout pre|udce to the co-owners' fng another
acton for the baance of the prce of sad equpment.
- On appea to the CA by both partes, the decson n Cv Case
No. 1554 was reversed n and nstead, Bareng was ordered to pay
Aegra the sum of P3,600 pus ega nterest from the fng of the
compant; and n Cv Case No. 1527, Aegra was ordered to pay
Ruz 2/3 of the tota amount he woud recover from Bareng n Cv
Case No. 1554.
- Pettoner appeas that part of the decson makng hm abe for
ega nterests on the prncpa amount due to Aegra
lSSUE
WON pettoner s abe for ega nterests
HELD
YES
- Pettoner Bareng cams he s not abe to pay nterests to
Aegra because he was |ustfed n suspendng payment from the
tme he earned of Ruz' adverse cams over sad equpment
- The rght of a vendee to suspend payment of the prce of the
thng sod n the face of any danger that he mght be dsturbed n
ts possesson of ownershp s conferred by Artce 1590
4
- Petitioner Bareng had the right to suspend payment of
the balance to his vendor, respondent Alegria, from the
time he was informed by Ruiz of the latter's claims of co-
ownership thereof, especially upon his receipt of Ruiz'
telegram wherein the latter asserted that he was not
agreeable to the sale.
$
ART. 1590. Shoud the vendee he dsturbed n the possesson or ownershp of the thng
acqured, or shoud he have reasonabe grounds to fear such dsturbance, by a
vndcatory acton or a forecosure of mortgage, he may suspend the payment of the
prce unt the vendor has caused the dsturbance or danger to cease xxx
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :<
- Nevertheless, said right of Bareng ended as soon as
"the vendor has caused the disturbance or danger to
cease".
- In ths case, respondent Aegra had caused the dsturbance or
danger to pettoner's ownershp or possesson to cease when he
(Aegra) reached a compromse wth Ruz n Cv Case No. 1527
whereby Ruz expressed hs conformty to the sae to Bareng,
sub|ect to the payment of hs share n the prce by Aegra.
- From the tme Aegra and Ruz reached ths settement, there
was no onger any danger of threat to Bareng's ownershp and
fu en|oyment of the equpment he bought from Aegra.
- Pettoner admtted hs ndebtedness to Aegra n the amount
of P3,600, yet he dd not tender payment of sad amount nor dd
he depost the same n court, but nstead sought to have the
sae rescnded upon cams of voatons of warrantes by Aegra,
that the Court of Appeas found not to have been proved or
estabshed.
- Pettoner Bareng was n defaut on the unpad baance of the
prce of the equpment n queston from the date of the fng of
the compant by Aegra, and under Artce 2209 of the Cv
Code, he must pay ega nterests thereon from sad date.
- If pettoner had wanted to free hmsef from any responsbty
for nterests on the amount he had aways acknowedged he st
owed hs vendor, he shoud have deposted the same n Court at
the very start of the acton.
Disposition The decson appeaed from s affrmed n toto.
DELA CRUZ V LEGASPl
98 SCRA 43
BENGZON; November 29, 1955
NATURE
Petton for revew of CFI Antque decson
FACTS
- Eusebo DELA CRUZ sued Apoono LEGASPI and hs wfe to
compe devery of the parce of and they had sod to hm. It
was aeged that defendants refused to accept the payment of
the P450 agreed purchase prce whch DELA CRUZ tendered.
Therefore, the spouses had no excuse to retan the property.
- LEGASPI spouses admtted the sae and the prce but they
aeged that before the document was made, the pantff agreed
to pay the defendants the amount of P450 right after the
document is executed. Instead, pantff refused to do so. They
camed that document of sae shoud be annued for ack of
consderaton and for decet.
- CFI ordered DELA CRUZ to pay P450 and the LEGASPI spouses
to receve such prce and dever possesson of property.
lSSUE
WON the contract became nu and vod for ack of consderaton
HELD
NO
Ratio Subsequent non-payment of the prce at the tme agreed
upon dd not convert the contract nto one wthout cause or
consderaton: a nudum pactum. The stuaton was rather one n
whch there s failure to pay the consideration, wth ts resutant
consequences.
Reasoning
- It cannot be dened that when the document was sgned the
cause or consderaton exsted, and ths was P450. The
document specfcay sad so, and ths was undoubtedy the
agreement. At most, there was defaut on hs part for fang to
pay the sad amount. Defendants rght was to demand nterest
(ega nterest) for ths deay OR to demand rescsson n court.
- NO stpuaton that faure to pay pso facto resoves contract.
- NO agreement or aegaton that payment on tme was
essenta.
- Even f contract expressy provded for automatc rescsson
upon faure to pay the prce, contract s st enforceabe
because defendants had not made a prevous demand (for
rescsson) on hm, by sut or notara act.
Disposition Appeaed |udgment s AFFIRMED.
LAFORTEZA V MACHUCA
333 SCRA 643
GONZAGA-REYES; |une 16, 2000
NATURE
Petton for Revew on Certorar seekng the reversa of the
Decson of the Court of Appeas
FACTS
- The hers of the ate Francsco Laforteza executed a Speca
Power of Attorney n favor of Roberto Laforteza and Gonzao
Laforteza, appontng both as ther Attorney-n-fact and
authorzng them to |OINTLY se the sub|ect house and ot n
Paraaque and sgn any document for the settement of the
estate of the ate Francsco Laforteza. In a the agency
nstruments, there was a provson wheren the sgnature of BOTH
attorneys-n-fact must be affxed n any document or paper to
exercse the speca power of attorney granted.
- The hers entered nto a Memorandum of Agreement (Contract to
Se) wth Aonzo Machuca over the sub|ect property for P630,000,
wth P30k payabe as earnest money (forfeted f sae s not
effected due to the faut of Machuca) and P600k payabe upon the
ssuance of the new certfcate of tte n the name of the ate
Francsco Laforteza and upon executon of an extra-|udca
settement of the decedents estate wth sae n favor of the
Machuca. The MOA aso contaned a provson wheren upon the
ssuance of the new tte, the Lafortezas woud nform Machuca
and the atter woud have 30 days to produce the P600k whch
sha be pad to the Lafortezas upon executon of Extra|udca
Settement wth sae. Durng the perod of the extra|udca
settement, Machuca woud be easng the sub|ect property for 6
months at P3500 per month. If the extra|udca settement woud
be through before 6 months, Machuca woud ony pay for the rent
from the executon of the MOA to the date of the executon of the
extra|udca settement. If settement woud st not be done after
6 months, Machuca woud occupy the property wthout rent.
- Machuca pad the earnest money. In September 1993 (amost 8
months after MOA executon), the Lafortezas wrote a etter to
Machuca furnshng a copy of the reconsttuted tte to the sub|ect
property, remndng hm that he had 30 days to produce P600k.
After 30 days, Machuca sent to the Lafortezas a etter requestng
the extenson of the 30-day deadne to another 27 days wthn
whch to produce the baance. ONLY ROBERTO LAFORTEZA sgned
hs conformty to the pantffs etter, Gonzao dd not appear to
have approved the etter.
- after 27 days, Machuca nformed the Lafortezas that he aready
had the P600k. The Lafortezas however refused to accept the
baance, sayng that property s no onger for sae. They ater
canceed the MOA athough Machuca requested to tender
payment of the baance. The Lafortezas nssted on the rescsson
of the MOA.
- TC: n favor of Machuca
- CA: n favor of Machuca
- MFR dened, CA dec modfed to absove Gonzao Laforteza from
abty
Pettoners arguments: (1) The MOA s merey a ease agreement
wth an "opton to purchase"; (2) CA erred n rung out rescsson;
(3) the MOA s a contract to se, wth a suspensve condton that
Machuca woud pay the prce n fu n order for transfer of
ownershp and possesson to happen; (4) CA erred n hodng that
the nonpayment of P600k was ony a sght/casua breach whch
woud not aow for a rescsson; (5) CA erred n rung that they
are not ready to compy wth ther obgaton to transfer the
property to Machuca when the power of attorney to execute a
deed of sae was suffcent and necessary ncuded the power to
execute an extra|udca settement, whch the atter recognzed
by requestng for an extenson to pay; and (5) the aegaton that
they dd not want to se the property because someone ese
wants to buy t at a hgher prce s hearsay and shoud not be
gven evdentary weght.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 :=
lSSUES
1. WON the MOA was a ease agreement wth an opton to
purchase
2. WON the faure of the respondent to pay the baance of the
purchase prce wthn the perod aowed s fata to hs rght to
enforce the agreement
3. WON the Lafortezas were guty of bad fath, and therefore
the award for mora damages was |ustfed
HELD
1. NO
- The MOA was a perfected contract of sae and ease. The 6-
month perod durng whch Machuca would be in possession
of the property as lessee, was clearly not a period within
which to exercise an option
Ratio A contract of sae s a consensua contract and s
perfected at the moment there s a meetng of the mnds upon
the thng whch s the ob|ect of the contract and upon the prce.
From that moment the partes may recprocay demand
performance sub|ect to the provsons of the aw governng the
form of contracts. The eements of a vad contract of sae under
Artce 1458 of the Cv Code are (1) consent or meetng of the
mnds; (2) determnate sub|ect matter and (3) prce certan n
money or ts equvaent.
- An option s a contract grantng a prvege to buy or se
wthn an agreed tme and at a determned prce. An opton
contract s a separate and dstnct contract from that whch the
partes may enter nto upon the consummaton of the opton. An
opton must be supported by consderaton.
Reasoning
- WHY PERFECTED CONTRACT OF SALE AND LEASE? The Lafortezas obligated
themselves to transfer the ownership of and deliver the house
and lot and Machuca would pay the price amounting to P600k.
All the elements of a contract of sale were thus present.
However, the baance of the purchase prce was to be pad ony
upon the ssuance of the new certfcate of tte n eu of the one
n the name of the ate Francsco Laforteza and upon the
executon of an extra|udca settement of hs estate. Ths
condton (ssuance of new certfcate of tte and executon of
extra|udca settement) was mposed ony on the performance
of the obgaton (that the Lafortezas woud dever and transfer
ownershp of house and ot). Consderng however that the
condton aready happened, Machuca aready had a rght to
demand fufment of the obgaton of the Lafortezas.
- aso, Machuca aready pad P30k as EARNEST MONEY. Earnest
money s somethng of vaue to show that the buyer was reay
n earnest, and gven to the seer to bnd the bargan. Whenever
earnest money s gven n a contract of sae, t s consdered as
part of the purchase prce and proof of the perfecton of the
contract. |Artce 1482, Cv Code.|
- WHY NO OPTION TO PURCHASE? The 6-month perod merey deayed
the demandabty of the contract of sae and dd not determne
ts perfecton for after the expraton of the 6-month perod;
there was an absoute obgaton on the part of the pettoners
and the respondent to compy wth the terms of the sae. The
partes made a "reasonabe estmate" that the reconsttuton of
the ost tte of the house and ot woud take approxmatey sx
months and thus presumed that after sx months, both partes
woud be abe to compy wth what was recprocay ncumbent
upon them. The fact that after the expraton of the sx-month
perod, the respondent woud retan possesson of the house and
ot wthout need of payng rentas for the use therefor, ceary
ndcated that the partes contempated that ownershp over the
property woud aready be transferred by that tme.
- THE MOA WAS NOT A CONTRACT TO SELL: A contract to sell is where
the prospectve seer woud expcty reserve the transfer of
tte to the prospectve buyer, meanng, the prospectve seer
does not as yet agree or consent to transfer ownershp of the
property sub|ect of the contract to se unt the fu payment of
the prce, such payment beng a postve suspensve condton,
the faure of whch s not consdered a breach, casua or
serous, but smpy an event whch prevented the obgaton
from acqurng any obgatory force. There s ceary no express
reservaton of tte made by the pettoners over the property, or
any provson whch woud mpose non-payment of the prce as a
condton for the contract's enterng nto force. A deed of sale is
absolute in nature although denominated a conditional sale in the
absence of a stipulation reserving title in the petitioners until full
payment of the purchase price. ln such cases, ownership of the
thing sold passes to the vendee upon actual or constructive
delivery thereof. The mere fact that the obligation of the
respondent to pay the balance of the purchase price was made
subject to the condition that the petitioners first deliver the
reconstituted title of the house and lot does not make the
contract a contract to sell for such condition is not inconsistent
with a contract of sale.
2. NO
- The Lafortezas were aso not yet ready to compy wth ther
obgaton, and f ever they were, they dd not make a |udca or
notLara demand for rescsson for Machuca to be n deay.
Ratio In recproca obgatons, nether party ncurs n deay f the
other party does not compy or s not ready to compy n a proper
manner wth what was ncumbent upon hm. Rescission of a
contract will not be permitted for a slight or casual breach, but
only such substantial and fundamental breach as would defeat
the very object of the parties in making the agreement.
Reasoning
- The faure of Machuca to pay wthn the perod aotted was a
breach and the extenson whch he requested was neffectve
snce t was ony granted by 1 attorney-n-fact. However, the
Lafortezas were aso not ready to compy wth ther obgaton to
dever the reconsttuted tte of the house and ot wthn the
perod they aotted (amost 8 months have passed before they
nformed Machuca of the reconsttuted tte and demanded
payment). Therefore, snce both of the partes were not yet ready
to compy wth ther obgatons, there s no deay.
- granted that the Lafortezas were ndeed ready to compy wth
ther obgaton, they st coud not rescnd the contract because
they dd not make a |udca or notara demand n accordance
wth Artce 1592, NCC, whch governs the rescsson of sae of
mmovabe property. Machuca aready offered to pay the baance
when they demanded for rescsson so under the same Artce,
ther demand for rescsson woud not prosper. There was aso no
stpuaton n the MOA expressy authorzng the Lafortezas to
automatcay cance the contract wthout court nterventon.
- snce the contract was not yet rescnded when Machuca frst
faed to pay and the 27 days deay n hs payment was aso due
to the mstaken beef that the Lafortezas granted hm an
extenson, there s no substanta breach as woud defeat the very
ob|ect of the partes n makng the agreement.
3. YES
Ratio Mora damages may be awarded n case of a breach of
contract where the defendant acted n bad fath.
Reasoning
- CA found that the Lafortezas refused to compy wth ther
obgaton because they were offered a hgher prce for the house
and ot. It was even found that ther awyer offered Machuca
P100k to renqush hs rghts over the property.
Disposition Decson of the Court of Appeas n CA G.R. CV No.
47457 s AFFIRMED and the nstant petton s hereby DENIED.
VALARAO V CA (ARELLANO)
394 SCRA 155
PANGANIBAN, |.; March 3, 1999
NATURE
Petton for revew assang the decson of the CA
FACTS
- On September 4, 1987, spouses Abeardo and Gorosa Vaarao,
thru ther son Caros Vaarao as ther attorney-n-fact, sod to
Meden Areano under a Deed of Condtona Sae a parce of and
stuated n Dman, OC wth an area of 1,504 sq.m, for the sum of
P3,225,000 payabe under a schedue payment stated theren.
- In the same Deed of Condtona Sae, the vendee obgated
hersef to encumber by way of rea estate mortgage n favor of
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;)
vendors her separate pece of property wth the condton that
upon fu payment of the baance of P2,225,000.00, the sad
mortgage sha become nu and vod and wthout further force
and effect. It was further stpuated upon that shoud the vendee
fa to pay 3 successve monthy nstaments or any 1 year-end
ump sum payment wthn the perod stpuated, the sae sha
be consdered automatcay rescnded wthout the necessty of
|udca acton and a payments made by the vendee sha be
forfeted n favor of the vendors by way of renta for the use and
occupancy of the property and as qudated damages. A
mprovements ntroduced by the vendee to the property sha
beong to the vendors wthout any rght of rembursement.
- Areano aeged that as of September 1990, she had aready
pad the amount of P2,028,000, athough she admtted havng
faed to pay the nstaments due n October and November
1990. Areano, however, tred to pay the nstaments due n the
sad months, ncudng the amount due n the month of
December 1990 on December 30&31, 1990, but was turned
down by the pettoners thru ther mad, Mary Gonzaes, who
refused to accept the payment offered. Areano mantans that
on prevous occasons, the same mad was the one who receved
payments tendered by her. It appears that Gonzaes refused to
receve payment aegedy on orders of her empoyers who were
not at home.
- Areano then reported the matter to, and sought the hep of,
the oca barangay offcas. Efforts to sette the controversy
before the barangay proved unavang as pettoners never
appeared n the meetngs arranged by the barangay upon.
Areano tred to get n touch wth pettoners over the phone
and was abe to tak wth Gorosa Vaarao who tod her that she
woud no onger accept the payments beng offered and that
Areano shoud nstead confer wth her awyer, a certan Atty.
Tuazon. When a her efforts to make payment were
unsuccessfu, Areano sought |udca acton by fng ths
petton for consgnaton on |anuary 4, 1991.
- On the other hand, pettoners, thru counse, sent Areano a
etter on |anuary 4, 1991 notfyng her that they were enforcng
the provson on automatc rescsson as a consequence of whch
the Deed of Condtona Sae was deemed nu and vod, and a
payments made, as we as the mprovements ntroduced on the
property, were thereby forfeted. The etter aso made a forma
demand on Areano to vacate the property, and to sgn a
contract of ease for her contnued stay n the property, shoud
she not heed the demand of pettoners.
- In repy, Areano dened that she refused to pay the
nstaments due n the months of October, November and
December, and countered that t was pettoners who refused to
accept payment, thus constranng her to fe a petton for
consgnaton before the RTC of OC.
- Notwthstandng ther knowedge of the consgnaton case
aganst them, pettoners, through counse, sent the Areano
another etter denyng the aegatons of her attempts to tender
payment on December 30 and 31, 1990, and demandng that
Areanovacate and turnover the property and pay a monthy
compensaton for her contnued occupaton of the of the sub|ect
property rate of P20,000.00, unt she sha have vacated the
same.
- The RTC rued n favor of pettoners. Upon appea, the CA
reversed the RTC, rung that: The refusa of pettoners "to
accept the tender of payment was un|ustfed." The CA ordered:
(1) Areano to pay the amount of P1.197M n favor of
pettoners, wth ega nterest thereon from December 31, 1992;
(2) and pettoners to execute n favor of Areano, upon recept
of the aforesad amount, the fna and absoute deed of sae of
the sub|ect property wth a the mprovements.
lSSUES
1. WON the automatc forfeture cause s vad and bndng
between the partes
2. WON rescsson can be effected
HELD
1. YES
- We concede the vadty of the automatc forfeture cause,
whch deems any prevous payments forfeted and the contract
automatcay rescnded upon the faure of the vendee to pay
three successve monthy nstaments or any one yearend ump
sum payment. However, petitioners failed to prove the
conditions that would warrant the implementation of this
clause.
- Both the CA and the RTC agree that the facts are as stated by
Areano. It s cear from sad facts that pettoners were not
|ustfed n refusng to accept the tender of payment made by
Areano on December 30 and 31, 1990. Had they accepted t on
ether of sad dates, she woud have pad a three monthy
nstaments due. In other words, there was no deberate faure
on her part to meet her responsbty to pay. The Court takes
notes of her wngness and persstence to do so, and, pettoners
cannot now say otherwse. The fact s: they refused to accept her
payment and thus have no reason to demand the enforcement of
the automatc forfeture cause. They cannot be rewarded for ther
own msdeed.
- Because ther mad had receved monthy payments n the past,
t s fute for pettoners to nsst now that she coud have
accepted the aforementoned tender of payment, on the ground
that she dd not have a speca power of attorney to do so. Ceary,
they are estopped from denyng that she had such authorty.
Under Artce 1241 of the Cv Code, payment through a thrd
person s vad "If by the credtor's conduct, the debtor has been
ed to beeve that the thrd person had authorty to receve the
payment."
2. NO
- It woud be nequtabe to aow the forfeture of the amount of
more than P2M aready pad by prvate respondent, a sum whch
consttutes two thrds of the tota consderaton. Because she dd
make a tender of payment whch was un|ustfaby refused,
pettoners cannot enforce the automatc forfeture cause of the
contract.
Application of the Maceda Law
- The rescsson of the contract and the forfeture of the payments
aready made coud not be effected, because the case fas
squarey under Republic Act No. 6552, otherwse known as the
"Maceda Law." Secton 3 of sad aw provdes:
"SEC. 3. In a transactons or contracts nvovng the sae or
fnancng of rea estate on nstament payments, ncudng
resdenta condomnum apartments but excudng ndustra
ots, commerca budngs and saes to tenants under Repubc
Act Numbered Thrty-eght hundred Forty-four as amended by
Repubc Act Numbered Sxty-three hundred eghty-nne, where
the buyer has pad at east two years of nstaments, the buyer
s entted to the foowng rghts n case he defauts n the
payments of succeedng nstaments:
"(a) To pay, wthout addtona nterest, the unpad nstaments
due wthn the tota grace perod earned by hm, whch s
hereby fxed at the rate of one month grace perod for every
year of nstament payments made: Provded, That ths rght
sha be exercsed by the buyer ony once n every fve years of
the fe of the contract and ts extensons, f any.
"(b) If the contract s canceed, the seer sha refund to the
buyer the cash surrender vaue of the payments on the
property equvaent to ffty percent of the tota payments made
and, after fve years of nstaments, an addtona fve percent
every year but not to exceed nnety percent of the tota
payments made: Provded, That the actua canceaton of the
contract sha take pace after thrty days from recept by the
buyer of the notce of canceaton or the demand for rescsson
of the contract by a notara act and upon fu payment of the
cash surrender vaue to the buyer.
"Down payments, deposts or optons on the contract sha be
ncuded n the computaton of the tota number of nstaments
made."
- Hence, the prvate respondent was entted to a one-month
grace perod for every year of nstaments pad, whch means that
she had a tota grace perod of three months from December 31,
1990. Indeed, to rue n favor of pettoner woud resut n patent
n|ustce and un|ust enrchment. Ths trbuna s not merey a court
of aw, but aso a court of |ustce.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;*
Disposition Petton s DENIED and the dspostve porton of
the appeaed decson of the CA s AFFIRMED.
ACTlVE REALTY & DEV'T CORP V DAROYA
382 SCRA 152
PUNO; May 9, 2002
NATURE
Petton for revew on certorar
FACTS
- Pettoner, Actve Reaty, s the owner and deveoper of Town &
Country Hs Executve Vage n Antpoo, Rza. On |an. 2,
1985, t entered nto a Contract to Se wth respondent Daroya,
a contract worker n the Mdde East, whereby the atter agreed
to buy a 515 sq.m. ot for P224,025 n pettoners subdvson
- The contract to se stpuated that the respondent sha pay
the nta amount of P53,766 upon executon of the contract and
the baance of P170,259 n 60 monthy nstaments of
P4,893.35, addng up to P346,367, an amount hgher than the
stated prce.
- After a few months, respondent was n defaut of 3 monthy
amortzatons, promptng pettoner to send a notce of
canceaton of ther contract to se. When respondent offered to
pay the baance, pettoner refused as t aegedy sod the ot to
another buyer.
- Respondent then fed a compant for specfc performance
and for damages aganst pettoner before the Arbtraton
Branch of thebHousng and Land Use Reguatory Board
(HLURB), seekng the executon of a fna Deed of Absoute Sae
after offerng to pay the baance, consderng she had aready
pad most of the tota sum whch was aready more than the
stated contract prce. The HLURB arbter rued that snce the
sub|ect ot was aready sod to a thrd party and the respondent
agreed nstead to a fu refund, pettoner was ordered to refund
a of respondents payments wth 12% nterest per annum from
the date of the fng of the compant pus attorneys fees.
- On appea, the HLURB Board of Commssoners set asde the
decson, nstead fndng that snce both partes were at faut
(.e. respondent ncurred deay n nstaments, pettoner faed
to send notarzed notce of canceaton), pettoner was ordered
to pay ony haf of the tota amount aready pad to her, akn to
the remedy provded under the Maceda Law (RA 6552)
- On appea wth the Offce of the Presdent, the decson was
modfed as t was found that pettoner dd not compy wth the
ega requstes for a vad contract and was ordered to dever
the ot upon payment of respondents baance. However, as the
ot had been sod to a thrd person, pettoner was ordered to
refund respondent P875,000, the true and actua vaue of the ot
as of the date of the contract pus 12% p.a. or a substtute of the
respondents choce. Both ts petton for revew and MFR were
dened, the former for nsuffcency of fomr and substance, and
the atter for untmey fng. Hence ths petton, mpugnng the
CAs decson on the ff procedura ssues:
lSSUE
WON the pettoner can be compeed to refund to the
respondent the vaue of the ot or dever a substtute ot at the
respondents opton
HELD
YES
- The contract to se n ths case s governed by RA 6552 (Reaty
Instament Buyer Protecton Act), better known as the Maceda
Law. Its decared pubc pocy s to protect buyers of rea estate
on nstament bass aganst onerous and oppressve condtons.
Most of these contracts of adheson (take t or eave t bass),
drawn excusvey by the deveopers, entrap nnocent buyers by
requrng cash deposts for reservaton agreements whch often
ncude, n fne prnt, onerous defaut causes where a the
nstament payment aready made w be forfeted upon faure
to pay any nstament, even though severa, f not most
payments have aready been made, thus gvng rea estate
deveopers an unfar advantage over these expoted buyers.
- More specfcay, Secton 3 of R.A. No. 6552 provdes for the
rghts of the buyer n case of defaut n the payment of succeedng
nstaments, where he has aready pad at east two (2) years of
nstaments, thus:
"(a) To pay, wthout addtona nterest, the unpad nstaments
due wthn the tota grace perod earned by hm, whch s
hereby fxed at the rate of one month grace perod for every
one year of nstament payments made; x x x
(b) If the contract s canceed, the seer sha refund to the
buyer the cash surrender vaue of the payments on the
property equvaent to ffty per cent of the tota payments
made; provded, that the actua canceaton of the contract
sha take pace after thrty days from recept by the buyer of
the notce of canceaton or the demand for rescsson of the
contract by a notara act and upon fu payment of the cash
surrender vaue to the buyer."
- n the case at bar, respondent had aready pad 4 years worth of
nstaments, whch added up to P90,000 more than the prce
stated n the contract. Pettoner refused to accept respondents
subsequent payment as t had aready sod the ot to a thrd party;
however, records show that pettoner faed to compy wth the
mandatory twn requrements of a vad canceaton, (1) fang to
send a notarzed notce of canceaton (2) refund the cash
surrender vaue.
- Thus, for faure to cance the contract n accordance wth the
aw, the contract remaned subsstng. Foowng RA 6552,
respondent has the rght to offer to pay the baance wthout
nterest. However, snce the ot had been sod to a thrd party, t s
ony |ust and equtabe that pettoner be ordered to refund to
respondent the actua vaue of the ot resod at P875,000 +12%
nterest p.a. from the fng of the compant or to dever a
substtute ot at the respondents opton.
- On a fna note, the HLURBs decson to grant respondent ony
haf of the amount pad woud not be equtabe as t punshed
respondents denquent payments but dsregarded pettoners
faure to compy wth the requstes of canceaton. The decson
to refund the orgna prce woud aso be nequtabe snce
respondent s entted to the ot purchased, deprvng her of what
was rghtfuy hers.
Disposition Decson of the Offce of the Presdent s AFFIRMED
Chapter 11: WARRANTIES
SONGCO V SELLNER
37 PHIL 254
STREET; December 4, 1917
FACTS
- In Dec. 1915, the defendant George Sener, was the owner of a
sugar farm at FordaBanca, Pampanga ad|acent to another sugar
farm owned by pantff Lamberto Songco. Sener wshed to m
hs cane at a sugar centra n nearby Dnaup|an but the owners of
the m woud not promse to take t. Sener found out that the
centra was gong to m Songcos cane and decded to buy t and
run hs own cane at the same tme the atters cane was to be
med. Sener aso desred to get a rght of way over Songcos
and for convertng hs own cane to the centra. He bought the
cane for an agreed sum of P12,000 and executed 3 promssory
notes of P4,000, payng for two; an acton was nsttuted to
recover the 3
rd
for whch a |udgment was rendered n favor of the
pantff and to whch defendant has appeaed.
- The defendant dened a aegatons of the compant, further
assertng by way of speca defense that the defendant obtaned
the note by means of frauduent representatons. The note, on
whch the acton was brought, was admtted n court as evdence.
lSSUES
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;(
1. WON the court erred n admttng the note as evdence even
though ts genuneness and due executon were not proven
2. WON pantff s guty of fase representaton
HELD
1. NO
- Under Sec 103 of the Code of Cv Procedure, t s necessary
that the genuneness and due executon of a wrtten nstrument
be specfcay dened by the defendant under oath before such
an ssue s rased. The answer to the effect that the note was
procured by frauduent representaton s actuay an admsson
of ts genuneness and due executon snce t seeks to avod the
nstrument on a ground not affectng ether. Furthermore, the
defendant admts the notes executon n hs answer.
2. NO
- Songco estmated that hs cane woud produce 3,000 pcus of
sugar but nstead produced 2,017. Athough Songco had grossy
exaggerated hs estmate, the court fnds that Sener s st
bound to pay the prce stpuated. Matters of opnon, |udgment,
probabty or expectaton are not actonabe decets and cannot
vod a contract. |ursprudence dctates that one may not rey on
a vendors msrepresentatons as to the vaue of hs goods f
that person s gven an ampe opportunty to
nvestgate/examne the goods. Usng expert knowedge to take
advantage of the gnorance of another may be grounds for
reef; however, the court fnds Seners reatve nexperence
ackng.
- An ncdent to the acton was that the pantffs sued out an
attachment aganst the defendant on the ground that he was
dsposng of hs property n fraud of hs credtors. Ths was
refuted upon a showng that defendant had not attempted to
convey away hs property, and thus damages were awarded to
hm equa to the cost of procurng the dssouton of the
attachment. The defendant assgns error to the courts refusa
to award further damages, camng that the attachment caused
a credtor to wthhod credt, forcng hm to se sugar at ower
prces and osng money. The damages were remote and
specuatve; the pantff cannot be hed accountabe for such
compcatons eadng to sad damages.
Disposition From what has been sad t foows that the
|udgment of the court beow must be affrmed, wth costs
aganst the appeant.
PHlLlPPlNE MANUFACTURlNG CO V GO ]OCCO
48 PHIL 621
OSTRAND; |anuary 21, 1926
FACTS
- The pantff and the defendant entered nto the contract of
sae of 500 tons of o coconut o for 27 centavos per ko ex
tanque. However, before the payment was gven by the PMC, t
ordered the takng of sampes of o from the tanks for anayss.
The tests yeded satsfactory resuts, thus the fu amount of
P137,500.00 was pad by PMC.
- On the foowng month, PMC sod the o by contract n wrtng
to the Portsmouth Cotton O Refnng Corporaton at the prce of
$7.50, Unted States currency, per 100 pounds, C. I. F., Norfok,
Vrgna, the contract contanng the foowng provson as to the
quaty of the o:
- "Coconut O bases 5 per cent free fatty acd, Maxmum 7 per
cent free fatty acd sha be far average of the season of the
country n whch t s pressed, and sha be sod on bass 5 per
cent free fatty acd, one per cent mosture and mpurtes;
provded, however, that any o whch exceeds 5 per cent free
fatty acd but does not exceed 7 per cent free fatty acd, sha
not be re|ected but sha be reduced n prce one haf of one per
cent for each one per cent excess acdty over 5 per cent,
fractons n proporton."
- The o was drawn from the tanks by the pantff and brought
aboard the tank steamer Acme for shpment to the Portsmouth
Cotton O Refnng Corporaton at Norfok, Vrgna. Mr.
Ercksen, marne and cargo surveyors, surveyed the shp's tank
No. 2 n whch the shpment n queston was carred. Sampes
were taken and submtted to Bureau of Scence for anayss.
- On the arrva of the Acme at Norfok, the Portsmouth Cotton O
Refnng Corporaton refused to accept the o on the ground that
t was contamnated wth cottonseed o and, n accordance wth
the contract between the Partes the matter was submtted to the
New York Produce Exchange Arbtraton Commttee for arbtraton.
Sampes aeged to have been taken from the shpment were
tested by the Bureau of Chemstry of the New York Produce
Exchange through the so-caed Haphen test, and were found to
be contamnated wth cottonseed o.
- Because of ths, the Commttee, wth the knowedge of Go |ucco,
paced the o n the hands of Zmmermann Aderson Carr
Company for sae and sae was effected two days ater to Messrs.
Proctor & Gambe Company.
- Though the prce at whch the o was sod to Proctor & Gambe
Co. was consderaby hgher than the prce agreed upon wth the
Portsmouth Cotton O Refnng Corporaton, the expenses for rent
of cars, transportaton, brokerage, etc., greaty exceeded the
dfference and the pantff mantans that t suffered a oss of
P21,263.04. Thus, PMC nsttuted a Cv Acton aganst Go |ucco
to recover damages.
lSSUE
WON Go |ucco s abe to pay damages
HELD
NO
- There are three possbe causes of acton aganst Go |ucco,
namey; (1) acton on an express warranty; (2) acton on an
mped warranty; (3) acton on fraud under artce 344 of the
Code of Commerce. However, the Court Go |ucco not abe n any
of the three actons.
- On action on an express warranty
Assumng that such contamnaton exsted, we woud st be of
the opnon that the pantff has estabshed no cause of acton.
The comparatvey sma quantty of kapok o aeged to have
been mxed wth the coconut o can ony be regarded as an
mpurty and dd not change the essenta character of the
merchandse; In contradstncton to the contract between the
pantff and the Portsmouth Cotton O Refnng Corporaton, the
contract of sae between the pantff and the defendant contans
no express warranty aganst mpurtes asde from the stpuaton
that not more than 5 per cent of free fatty acd woud be aowed.
Ths s, therefore, not an acton on an express warranty.
Besdes, PMC examned the o at the tme of ts devery and t
conceded wthout admttng that the o was defectve n quaty.
- On action on an implied warranty
Ratio In the absence of an examnaton of the o by the pantff,
the atter mght have had a rght of acton on an mped warranty
under artce 336 of the Code of Commerce, whch n part reads as
foows:
"A purchaser who, at the tme of recevng the merchandse,
fuy examnes the same, sha not have a rght of acton aganst
the vendor, aegng a defect n the quantty or quaty of the
merchandse."
- As t appears that the pantff examned the o to hs
satsfacton, t s evdent that he cannot now rey on ths artce for
hs cause of acton.
- The resut w be the same f we regard the mpurty companed
of as a atent defect whch coud not be dscovered by an ordnary
examnaton. The case woud then come under artce 342 of the
Code of Commerce, but the rght of acton mentoned n that
artce was extngushed by the faure of the pantff to present
hs cam wthn thrty days from the devery of the merchandse
- On action on fraud
Go |ucco s not guty of fraud.
Ratio Artce 344 of the Code of Commerce provdes that,
"Commerca saes sha not be rescnded by reason of eson; but
the contractng party who acted wth mace or fraud, n the
contract or n ts fufment, sha ndemnfy for oss and damage,
wthout pre|udce to the crmna acton whch may be proper."
- Fraud s defned as "a fase representaton of fact, made wth a
knowedge of ts fasehood, or reckessy, wthout beef n ts
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;7
truth, wth the ntenton that t shoud be acted upon by the
companng party, and actuay nducng hm to act upon t."
- Conceament of the truth s sometmes equvaent to fase
representatons, and t s here argued that the defendant n not
dscosng the exstence of kapok o n the o sod to the
pantff, was guty of fraud. In regard to such conceaments or
nondscosures, Mechem, ctng authortes, says:
"The conceament whch sha amount to a fase representon
s that ony whch may propery be desgnated as actve. Mere
passve non-dscosure whch, as has been seen, may suffce
to vtate a contract uberrmae fde, w not be suffcent
here; 'there must be an actve attempt to deceve, ether by a
statement whch s fase or whch s true so far as t goes, but
s accompaned wth such a suppresson of facts as to convey
a mseadng mpresson.' 'There must be some actve
msstatement of fact, or, at a events, such a parta and
fragmentary statement of fact as that the wthhodng of that
whch s not stated makes that whch s stated absoutey
fase.' . .
Reasoning
- There s nothng from whch we can presume that the
defendant ntended to msead the pantff to hs pre|udce. It s
not dsputed that at the tme the sae was made, kapok o
commanded a hgher prce n the market than dd coconut o
and the defendant may we have been under the mpresson
that a sght admxture of kapok o dd not substantay mpar
the genera market vaue of the o purchased. Indeed, there s
nothng n the evdence to show that for ordnary purposes, the
coconut o suffered any matera mparment n vaue from the
mxture and t s to be observed that the defendant was not
advsed of the fact that the o was sod to the Portsmouth
Cotton O Refnng Corporaton under an express warranty
aganst mpurtes and possby for a speca purpose. That t was
st of good merchantabe quaty ceary appears from the fact
that t was bought by Proctor & Gambe Co. at current market
prces. And when t s further consdered that the pantff, before
purchasng, was gven fu opportunty to examne the o and
actuay dd so, t seems obvous that the evdence s not
suffcent to overcome the presumpton of good fath and to
estabsh fraud on the part of the vendor. In commerca saes,
the fact that the vendor does not vounteer detaed statements
of a he knows, whether mportant or not, n regard to the goods
sod by hm, s not fraud per se.
GOCHANGCO V DEAN
47 Ph 687
ROMUALDEZ; March 20, 1925
NATURE
A petton to recover a sum of 17,655 for coconut trees and
attys fees. Countercam for P1,914 pad by the defendants and
whch must be pad by the pantffs
FACTS
- The pantffs had purchased a and of the Pasay Estate by
nstaments. The defendant was the owner of two parces of
and stuated n Masbate. Both partes agreed to exchange ther
respectve propertes, but before the fna executon of the
contract of exchange, the pantff Gochangco went to Masbate
to make an examnaton of the parces of and offered for
exchange by the defendant.
- The contract of exchange was ater executed. In the deed, the
defendant stated, among other thngs:
"It s aso decared that the sad descrbed property s sod wth
a coconut trees growng on t, and I decared that I beeve
there are more than 6,000 coconut trees so growng, together
wth any and a mprovements of any knd whatsoever exstng
on the sad and ncudng a movabe goods, chatte, etc., found
thereof."
- The pantffs aege that defendant made them fase and
frauduent representatons as to the exstence of 6,000 coconut
trees on hs ands.
lSSUE
WON the pantff may recover the vaue of the coconut trees
stpuated n the contract
HELD
- Msrepresentaton of the number of the trees on the sad ot was
not proven. It does not appear n the record that the defendant
deberatey voated the truth n statng hs beef that there were
such a number of coconut trees on sad ands. Furthermore, t was
shown that the pantff vewed the ands and he estmated that
there were there more than sx thousand coconut trees.
- The facts consdered n the ght of the provsons contaned n
Art 1484 CC, made appcabe to ths case by Art1541 CC, prevent
us from hodng the acton brought by the pantffs to be of any
mert. They have not estabshed ther aeged rght to the
|udgment prayed for n ther compant.
- As to the cross-compant and countercam of the defendant, we
fnd that n the deed executed by the pantffs n favor of the
defendant, the former agreed to remburse the atter what he
mght pay n connecton wth perfectng hs tte to the property n
Pasay, exchanged for that of the defendant n Masbate, provded
that the sum thus spent shoud exceed P1,500.The pantffs aso
admtted the fact that for perfectng hs tte to the property, the
defendant had spent the tota sum of P1,914; there beng,
therefore, an excess of P414 whch the pantffs are under
obgaton to pay unto the defendant.
Disposition Wherefore the |udgment appeaed from s affrmed
so far as t absoves the defendant from the compant, but
reversed so far as t dsmsses the cross-compant and
countercam, and t s ordered that the pantffs pay the
defendant the sum of P414, wthout speca fndng as to costs.
MENDOZA V CAPARROS
94 PHIL 317
PABLO; |anuary 30, 1954
FACTS
- On |une 11, 1921, Agapto Ferrera sod to Pauno Pee|o 2
parces of and ocated n Camagon, Ouezon for P3, 650. On Feb.
15, 1932, Pee|o sod the same and to spouses Vctoran Mendoza
and Bernabea Toentno. The spouses passed away and ther
hers Pedro, Leandro, and |ustnano (a Mendozas) dd an extra-
|udca partton.
- In 1935, Ferreras obtaned th orgna certfcate tte. When he
ded, hs hers trasferred the tte and had an extra-|udca
partton.
lSSUE
WON Mendozas are the rea owners of the and and not Ferrerass
wodw Caparros and ther daughters
HELD
YES
The court sustaned the decson of the ower court to cance the
certfcate of transfer and regster t under the Mendozas. It was
sad that nether suts for annument of sae, or tte, or document
affectng property operate to abate e|ectment actons respectng
the same property.
Disposition |udgment affrmed.
RODRlGUEZ V FlNDLAY
14 Ph 294
MORELAND; October 19, 1909
FACTS
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;8
- Pantff was the owner of a freght shp caed the Constancia,
then n course of constructon n pantff's shops n the cty of
Mana.
- Wam Swann was the consutng engneer of the defendant,
n charge of ts machnery department.
- The pantff was acquanted wth Swann and knew hm to be
an engneer and nava archtect of ong experence. On the date
referred to Rogacano Rodrguez, actng for and on behaf of the
pantff and as hs agent, made a wrtten contract wth Swann,
actng for and on behaf of the defendant and as ts agent,
wheren and whereby the pantff agreed to purchase of the
defendant, and the defendant agreed to se and dever to the
pantff, certan machnery, compete, for the shp Constancia.
- Durng the negotatons, Swann, the agent of the defendant,
vsted the shpyard of the pantff and nspected the steamshp
Constancia, then beng constructed. Ths he dd severa dfferent
tmes. The nspectons were made for the purpose of
determnng the knd and nature of the machnery whch woud
be sutabe to the shp referred to. Nether the pantff nor hs
agent, Rogacano Rodrguez, was a marne or other engneer
and they knew tte or nothng about the knd of machnery
whch shoud be paced n the shp they were budng. They
reed entrey upon the recommendatons, knowedge, and
experence of the engneer Swann.
- Before the contract was entered nto, the pantff devered to
Swann, as the defendant's agent, a pan of the hu of sad
vesse. Thereafter Swann devered to the pantff a pan of the
entre vesse, showng the machnery paced theren. The pans
n queston showed ength and breadth of the hu, ts genera
outne and the number of feet of water whch t drew. These
plans also showed location and outline of the sternpost and
rudderpost of said ship.
- In the process of manufacturng the propeer the defendant
thought t dscovered that the propeer descrbed n the
contract woud not gve the speed requred by the contract and
notfed the pantff to that effect, and at the same tme asked
permsson to put n ts pace a propeer 10 feet n dameter.
Ths the pantff decned to permt.
- The machnery was devered. Certan other artces of sma
vaue, necessary for the competon of the machnery, seem not
to have been devered, but concernng these there s very tte
dspute between the partes.
- The machnery was duy nstaed n the vesse upon ts
devery. Upon the tra of the shp, after the nstaaton of ts
machnery, t was found that a of the machnery worked we
except the propeer. Ths, nstead of gvng the shp a speed of
about 9 knots an hour, gave a speed of ess than 7 knots an
hour.
- Pantff: the defendant was obged to furnsh a propeer 8 feet
n dameter whch woud gve the Constancia a speed of 9
knots an hour, and that, fang n that, the contract was broken
and the defendant shoud be hed abe for a damages
resutng.
- Defendant: the machnery was to be accordng to the
specfcatons n the contract and that, f these specfcatons
were comped wth, t does not matter what may be the actua
speed of the vesse. It had nothng to do wth the constructon of
the steamshp or the pacng theren of the machnery. There
was no guaranty of speed, and that, f the propeer was 8 feet n
dameter and of brass, t woud fuf the terms of the contract
even though the speed of the vesse shoud not exceed a knot
an hour.
lSSUE
WON the defendant faed to compy wth the terms of the
contract n respect to the propeer theren descrbe, and the
pantff, n consequence, s entted to recover approprate
damages by reason thereof

HELD
YES
- The contract, by ts words, expressy requres that the
defendant must furnsh a propeer whch sha gve to the
steamshp Constancia a speed of about 9 knots per hour.
- The anguage of the contract s so pan, and the negotatons
eadng up to the executon of the contract pont n one drecton
so ceary, that there ought to be tte need of dscusson. But the
partes have nssted so strongy upon the |ustce of ther severa
contentons that a detaed dscusson s consdered advsabe.
- Swann was a nava archtect and marne engneer of ong
experence, whch fact was known to the pantff and hs agent,
and the genera detas reatve to the knd and character of the
machnery were eft to the defendant. The thng many nssted
upon by the pantff was the resut that shoud be produced. The
pantff hmsef testfes, and ths s undsputed by the defendant,
that he reed upon Swann n these partcuars, especay n
reference to the propeer and the ptch whch t shoud have; and,
by reason of the reance, the ptch n feet and nches whch the
propeer shoud have when paced n the shp was not stated n
the contract. Instead, the pantff paced n the contract what the
propeer shoud do, rather than what t shoud be.
- The contenton of the defendant that the propeer was so
constructed as to have a speed of 11 knots an hour s absurd. In
other words, the contenton of the defendant s that a guaranty n
a contract to gve a shp a speed of 20 knots an hour s comped
wth f there s furnshed to that shp a propeer wth a ptch,
whch, mutped by certan fgures and dvded by others, woud
produce twenty somethngs at the concusons of the cacuaton,
and ths absoutey regardess of whether the shp on whch the
propeer s to be paced s a war shp or a peasure yacht, whether
t s 100 or 1,000 feet ong, 10 feet or 100 feet wde, whether t
draws 5 feet or 60 feet of water and whoy regardess of the form
of the vesse's hu. It s recognzed by a authortes upon the
constructon of steamshps that "the most mportant pont to be
consdered n propusve effcency s the shape of the vesse's
hu." In respect of speed ths s one of the greatest probems and
one of the most perpexng wth whch marne engneers have to
dea. The defendant, by ts contenton, avods a the troube of
fgurng out ths dffcut probem by smpy gvng a speed to ts
propeller.
- Before the contract was sgned, the defendant, and t agent,
Swann, were furnshed wth a pan or pans of the bu of the
vesse, showng the sternpost and the rudderpost fuy and fary;
that Swann had hmsef nspected the vesse severa tmes at the
yard where t was beng but and knew a about the sad
sternpost and rudderpost and ther reatve ocatons. Yet, wth
that pan n hs hand and wth that knowedge n hs head, he
nevertheess, made a contract n whch he agreed to furnsh a
propeer whch woud gve a speed of 9 knots an hour to that
very shp.
- The events proved the contentons of the expert Swann to be
whoy unfounded when he camed that the reason why the
propeer woud not work was because of ts poston between the
sternpost and the rudderpost. The tra of the propeer furnshed
by the defendant havng demonstrated that t was neffectve and
that ts ptch was too coarse and t area too great for the purposes
specfed n the contract, the pantff paced n the steamshp
another propeer n exacty the same poston n the vesse as the
other, wth a dameter ony 6 nches more than the dameter of
the propeer furnshed by the defendant, and the vesse
mmedatey attaned a speed of 9 knots, or thereabouts, per
hour. It s thus apparent that the expert Swann agan made a
serous mstake n camng that the faure of speed was due
soey to the pace n whch the propeer worked.
- The damages recoverabe of a manufacturer or deaer for the
breach of warranty of machnery whch he contracts to furnsh or
pace n operaton for a vaue of the machnery as warranted and
as t proves to be, but ncude such consequenta damages as are
the drect, mmedate, and probabe resut of the breach (30 Am.
and Eng. Ency. of Law, p. 217, and cases there cted.)
- The oss of the buyer's tme and of that of hs aborers resutng
from he breach s recoverabe where the crcumstances of the
sae were such as to have put the seer upon notce that such a
oss woud probaby resut from a breach.
- Indemnty for osses and damages ncudes not ony the amount
of the oss whch may have been suffered, but aso that of the
proft whch the credtor may have faed to reaze. (Art. 1106,
Cv Code.)
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;9
- The osses and damages for whch a credtor n good fath s
abe are those foreseen, or whch may have been foreseen, at
the tme of consttutng the obgaton, and whch may be a
necessary consequence of ts non-fufment. (Art. 1107, Cv
Code.)
- In an acton aganst a manufacturer or deaer for a breach of
warranty upon a sae of goods, whch he knew at the tme of the
sae were ntended to be used for a partcuar purpose, the
measure damages s not mted to the dfference n vaue of the
goods as warranted, and as they prove to be, as n cases where
ke artces are sod as merchandse for genera purposes; but
profts ost and expenses ncurred, because of the breach, may
be recovered.
- Pantff s entted to recover P375, the vaue of 30 tons of coa
consumed n the tras necessary made to determne whether
or not the propeer had the quates specfed n the contract;
aso the sum of P707, the wages of empoyees and other
necessary expenses ncurred durng sad tras.
- The pantff not havng presented competent proof as to the
oss he sustaned by reason of hs shp beng out of commsson
durng the tme ntervenng between the tra of the frst
propeer and the nstaaton of the second, nothng can be
awarded hm as damages n reaton thereto. He s, however,
entted to be aowed as damages the sum of P2,770.36, the
amount pad by hm for the frst propeer, as ts purchase prce,
the same beng worthess to hm for the purpose of whch he
bought t - sad propeer to be and reman the property of the
defendant, wth the rght to retake the same f t has not aready
done so.
Chapter 12: BREACH OF CONTRACT
SONGCO V SELLNER
37 PHIL 254
STREET; December 4, 1917
FACTS
- In Dec. 1915, the defendant George Sener, was the owner of
a sugar farm at FordaBanca, Pampanga ad|acent to another
sugar farm owned by pantff Lamberto Songco. Sener wshed
to m hs cane at a sugar centra n nearby Dnaup|an but the
owners of the m woud not promse to take t. Sener found
out that the centra was gong to m Songcos cane and decded
to buy t and run hs own cane at the same tme the atters
cane was to be med. Sener aso desred to get a rght of way
over Songcos and for convertng hs own cane to the centra.
He bought the cane for an agreed sum of P12,000 and executed
3 promssory notes of P4,000, payng for two; an acton was
nsttuted to recover the 3
rd
for whch a |udgment was rendered
n favor of the pantff and to whch defendant has appeaed.
- The defendant dened a aegatons of the compant, further
assertng by way of speca defense that the defendant obtaned
the note by means of frauduent representatons. The note, on
whch the acton was brought, was admtted n court as
evdence.
lSSUES
1. WON the court erred n admttng the note as evdence even
though ts genuneness and due executon were not proven
2. WON pantff s guty of fase representaton
HELD
1. NO
- Under Sec 103 of the Code of Cv Procedure, t s necessary
that the genuneness and due executon of a wrtten nstrument
be specfcay dened by the defendant under oath before such
an ssue s rased. The answer to the effect that the note was
procured by frauduent representaton s actuay an admsson
of ts genuneness and due executon snce t seeks to avod the
nstrument on a ground not affectng ether. Furthermore, the
defendant admts the notes executon n hs answer.
2. NO
- Songco estmated that hs cane woud produce 3,000 pcus of
sugar but nstead produced 2,017. Athough Songco had grossy
exaggerated hs estmate, the court fnds that Sener s st
bound to pay the prce stpuated. Matters of opnon, |udgment,
probabty or expectaton are not actonabe decets and cannot
vod a contract. |ursprudence dctates that one may not rey on a
vendors msrepresentatons as to the vaue of hs goods f that
person s gven an ampe opportunty to nvestgate/examne the
goods. Usng expert knowedge to take advantage of the
gnorance of another may be grounds for reef; however, the
court fnds Seners reatve nexperence ackng.
- An ncdent to the acton was that the pantffs sued out an
attachment aganst the defendant on the ground that he was
dsposng of hs property n fraud of hs credtors. Ths was refuted
upon a showng that defendant had not attempted to convey
away hs property, and thus damages were awarded to hm equa
to the cost of procurng the dssouton of the attachment. The
defendant assgns error to the courts refusa to award further
damages, camng that the attachment caused a credtor to
wthhod credt, forcng hm to se sugar at ower prces and osng
money. The damages were remote and specuatve; the pantff
cannot be hed accountabe for such compcatons eadng to sad
damages.
Disposition From what has been sad t foows that the |udgment
of the court beow must be affrmed, wth costs aganst the
appeant.
LEVY HERMANOS V GERVAClO
69 Ph 52
MORAN; 1939
NATURE
Appea from a decson of the Mana CFI
FACTS
- On March 15, 1937, appeant sod to defendant a Packard car.
The defendant, after makng an nta payment, executed a
promssory note for the baance of P2,400 payabe on or before
|une 15, 1937. As securty for the PN, defendant mortgaged the
car to the appeant. Defendant faed to pay the note on maturty
snd the pantff forecosed the mortgage and the car was sod at a
pubc aucton for P800.00. The present acton s for coecton of
the baance of P1,600 pus nterest thereon. The ower court rued
n favor of the defendant appyng the provson whch stated that
n the contract for the sae of persona property payabe n
nstaments, faure to pay two or more nstaments sha confer
upon the seer the rght to cance the sae or forecose the
mortgage f one has been gven on the property, wthout
rembursng the buyer for any amounts aready pad. It was
akewse state n the provson that shoud the mortgaged
property be forecosed , the buyer sha have no more recourse to
the buyer for recovery of any unpad baance.
lSSUE
WON the appeant s st entted to recover baance of the note
HELD
YES
- From the terms of the agreement, the SC hed that the sae s
not on nstament but rather on straght term. The baance after
the nta payment shoud be pad n ts totaty at the tme
specfed n the PN. The prohbton on recovery of the baance
after forecosure s not appcabe.
Disposition The ower court decson s reversed.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;:
BORBON V SERVlCEWlDE SPEClALlSTS, lNC
258 SCRA 634
VITUG; |uy 11, 1996
NATURE
Appea from decson of CA whch affrmed RTC Mana decson
whch confrmed the dsputed possesson of a motor vehce n
favor of respondent and ordered payment of qudated damages
FACTS
- December 7, 1984, Dane L. Borbon and Francsco Borbon
sgned a promssory note statng
> I/We |onty and severay promsed to pay Pangasnan Auto
Mart, Inc. P122,856.00 wthout need or notce or demand, n
nstaments of P10,238.00 monthy for 12 months due and
payabe on the 7th day of each month startng |anuary 1985,
wth ate payment charge of 3% per month to be added,
defaut charge entang attorney's servces s 25% of the tota
sum due and qudated damages amountng to 25% of the
tota sum due. Acceptance of payment of any nstament
after due date sha not be consdered as extendng the tme
for the payment nor sha faure to exercse any rght
consttute a waver of such rghts
- to secure the Promssory Note, the Borbons executed a Chatte
mortgage on a brand new Isuzu Crew Cab
- December 10, 1984 - rghts of Pangasnan Auto Mart, Inc. was
assgned to Fnvest Credt Corporaton wth notce to the
Borbons
- March 21, 1985 - Fnvest Credt Corporaton assgned a ts
rghts, nterest and tte over the Promssory Note and the
chatte mortgage to Servcewde Specasts
- Borbons faed to compy wth ther obgaton thus Servcewde
Specasts demanded from Borbons the payment of ther
nstaments due n |anuary 29, 1985 by teegram
- Servcewde Specasts sent a demand etter to Borbons for
them to pay ther entre obgaton whch, as of March 12, 1985,
totaed P185,257.80
- For ther defense, Borbpns cam that what they ntended to
buy from Pangasnan Auto mart was a |eepney type Isuzu Cab
but through msnterpretaton and machnaton Pangasnan
Motor Inc. devered an Isuzu crew cabthe ony avaabe unt
Borbons claim:
> they are not n defaut of ther obgaton because Pangasnan
Auto Mart was the frst guty party by not fufng ts obgaton
n the contract
> nether party ncurs deay f the other does not compy wth
hs obgaton |A1169 CC|
- In ther appea to ths Court, pettoners merey seek a
modfcaton of the decson of the appeate court nsofar as t
has uphed the award of qudated damages and attorney's fees
n favor of Servcewde Specasts. Borbons nvoke A1484 CC
whch reads:
Art. J484. In a contract of sae of persona property the prce
of whch s payabe n nstaments, the vendor may exercse
any of the foowng remedes:
(1) Exact fufment of the obgaton, shoud the vendee fa
to pay;
(2) Cance the sae, shoud the vendee's faure to pay cover
two or more nstaments;
(3) Forecose the chatte mortgage or the thng sod, f one
has been consttuted, shoud the vendee's faure to pay cover
two or more nstaments. In ths case, he sha have no further
acton aganst the purchaser to recover any unpad baance of
the prce. Any agreement to the contrary sha be vod.
lSSUE
WON A1484 CC appes to attorneys fees and qudated
damages
HELD
YES
- remedes under Artce 1484 of the Cv Code are not
cumuatve but aternatve and excusve
> Nonato vs. lntermediate Appellate Court and
lnvestor's Finance Corporation
. . . Shoud the vendee or purchaser of a persona property
defaut n the payment of two or more of the agreed
nstaments, the vendor or seer has the opton to ava of any
of these three remedes - ether to exact fufment by the
purchaser of the obgaton, or to cance the sae, or to forecose
the mortgage on the purchased persona property, f one was
consttuted. These remedes have been recognzed as
aternatve, not cumuatve, that the exercse of on e woud bar
the exercse of the others.

- The credtor may not thereafter exercse any other opton,
uness the chosen aternatve proves to be nnefectua or
unavang due to no faut on hs part. For nstance, n A1484 CC, t
s ony when there has been a forecosure of the chatte mortgage
that the vendee-mortgagor woud be permtted to escape from a
defcency abty.
- A1484 CC: the vendor-mortgagee or ts assgnees oses any
rght "to recover any unpad baance of the prce" and any
"agreement to the contrary (woud be) vod.
> Macondray & Co. vs. Eustaquio: ,

we have sad that the
phrase "any unpad baance" can ony mean the defcency
|udgment to whch the mortgagee may be entted to when the
proceeds from the aucton sae are nsuffcent to cover the "fu
amount of the secured obgatons whch ncude nterest on the
prncpa, attorney's fees, expenses of coecton, and the costs."
> Luneta Motor Co. vs. Salvador : egsatve ntent s not to
merey mt the proscrpton of any further acton to the "unpad
baance of the principal" but to a other cams that may be
kewse be caed n for n the accompanyng promssory note
aganst the buyer-mortgagor or hs guarantor, ncudng costs
and attorney's fees.
> Filipinas lnvestment & Finance Corporation vs. Ridad:
mortgagor un|ustfaby refused to surrender the chatte sub|ect
of the mortgage upon faure of two or more nstaments, or f
he conceaed the chatte to pace t beyond the reach of the
mortgagee, that thereby constraned the atter to seek court
reef, the expenses ncurred for the prosecuton of the case,
such as attorney's fees, coud rghty be awarded.
- Gven the crcumstances, we must strke down the award for
qudated damages made by the court a quo but we uphod the
grant of attorney's fees whch we, ke the appeate court, fnd t
to be reasonabe.
Disposition Appeaed decson s MODIFIED by deetng the
award for qudated damages; n a other respects, the |udgment
of the appeate court s AFFIRMED
MANlLA TRADlNG AND SUPPLY CO V SANTOS
62 Ph 461
IMPERIAL; September 26, 1938
NATURE
The defendants appeaed from the decson of the court
sentencng them to pay the pantff the sum of P1,897.55 for the
defcency between the amount of the actua debt and the
proceeds from the aucton.
FACTS
- On October 3, 1933, the pantff sod to the defendants a "Ford
Truck chasss, Mode BB, 157-WB, L. S. Dua Whees standard
equpment." For the unpad baance of the prce amountng to
P2,200, the defendants executed twenty promssory notes, the
frst three for P150 each and the others for P100 each, payabe
successvey on the 16th of every month begnnng November 16,
1933. The defendants aso bound themseves to pay nterest at 12
per cent per annum. To secure these promssory notes, the
defendants mortgaged to the pantff the "Ford Truck chasss"
and accordngy executed on the same date the correspondng
nstrument whch was acknowedged before a notary pubc on the
9th of the same month and ater regstered n the offce of the
regstrar of deeds. As the defendants faed to pay any of the
promssory notes, the pantff attached the chatte mortgaged,
whch was sod by the sherff at pubc aucton on February 24,
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;;
1934, n accordance wth Act No. 1508, for the sum of P700 n
favor of sad pantff who was the hghest bdder. The pantff
credted the defendants wth sad amount, as a resut of whch
the atter st owed P1,897.55. The pan-tff nsttuted the
present acton for the purpose of coectng ths baance wth ts
nterest. In ther answer the defendants set up the speca
defense that pantff's acton cannot prosper because t s
contrary to Act No. 4122.
lSSUES
1. WON 4122 has a retroactve effect
2. WON the pantff s entted to a defcency |udgment n
accordance wth Act No. 1508
HELD
1. NO
- It s a ega prncpe emboded n artce 3 of the Cv Code
that aws have no retroactve effect uness t s otherwse
provded theren. It s conceded that there s nothng n Act No.
4122 whch states that ts provsons have retroactve effect. In
crmna aw the prncpe of rretroactvty equay appes,
except when the pena provsons are favorabe to the accused
(artce 22, Revsed Pena Code). As a coroary prncpe, rghts
and obgatons are governed by the aw by whch they are
created (artce 1090, Cv Code). Rghts and obgatons arsng
from contracts have the force of aw between the contractng
partes and are governed by ther stpuatons (artce 1091, Cv
Code), and consensua agreements are bndng provded they
are not contrary to aw, moras or pubc order (artce 1255,
Cv Code). In accordance wth the rue of rretroactvty, Act No.
4122 s not appcabe to ths case, for the reason that the
mortgage whch gave rse to the pantff's rghts was executed
on October 3, 1933 and the aforesad Act took effect ony on
December 9, 1933. The contenton that sad Act must be apped
because the present acton was nsttuted when t was aready
effectve, cannot be sustaned. The acton s the correatve of a
rght and s nothng more than a remedy conceded by aw to
protect that rght. If the pantff was entted to a defcency
|udgment under Act No. 1508, ths rght aready exsted when
Act No. 4122 was approved and cannot be affected by the
prohbton contaned n the atter Act.
2. Secton 14 of Act No. 1508 provdes, wth regard to the
appcaton of the proceeds of the sae of the chattes
mortgaged, as foows:
. . . The proceeds of such sale shall be applied to the
payment, first, of the costs and expenses of keeping and sale,
and then to the payment of the demand or obligation secured
by such mortgage, and the residue shall be paid to persons
holding subsequent mortgages in their order, and the
balance, after paying the mortgages, shall be paid to the
mortgagor or person holding under him on demand.
- Whch smpy shows that the contenton of the appeant s
untenabe.
- But where the same queston now rased by the appeant was
drecty soved s n 8ank of the Philippine lslands vs. Olutanga
Lumber Co. (47 Ph., 20). In that case there was rased the
queston whether or not a credtor, hodng a chatte mortgage
as securty for the payment of the debt, may mantan an acton
for the recovery of the baance remanng unpad after the
forecosure of the mortgage. Ths court decded ths queston n
the affrmatve. In the body of the decson the court sad:
"The theory of the court a quo evdenty s, that a chatte
mortgage s a condtona sae of the property, and, n case of
a faure of the condton, to wt: to pay the debt, the sae
becomes absoute and the credtor s obged to resort to the
mortgaged property for a payment of ths debt, and the
forecosure of the mortgage s hs soe recourse.
"Whe t s true that secton 3 of Act No. 1508 provdes that "a
chatte mortgage s a condtona sae," t further provdes that
t "s a condtona sae of persona property as securty for the
payment of a debt, or for the performance of some other
obgaton specfed theren." The ower court overooked the
fact that the chattes ncuded n the chatte mortgage are
ony gven as a securty and not as a payment of the debt, n
case of a faure of payment. . . .
"The theory of the ower court woud ead to the absurd
concuson that f the chattes mentoned n the mortgage, gven
as securty, shoud se for more than the amount of the
ndebtedness secured, that the credtor woud be entted to the
fu amount for whch t mght be sod, even though that amount
was greaty n excess of the ndebtedness. Such a resut
certany was not contempated by the egsature when t
adopted Act No. 1508. There seems to be no reason supportng
that theory under the provson of the aw. The vaue of chattes
changes greaty from tme to tme, and sometmes very rapdy.
If, for exampe, the chattes shoud greaty ncrease n vaue and
a sae under that condton shoud resut n argey overpayng
the ndebtedness, and f the credtor s not permtted to retan
the excess, then the same token woud requre the debtor to
pay the defcency n case of a reducton n the prce of the
chattes between the date of the contract and a breach of the
condton.
"Mr. |ustce Kent, n the 12th edton of hs commentares, as
we as other authors on the queston of chatte mortgages,
have sad, that "n case of a sae under a forecosure of a
chatte mortgage, there s no queston that the mortgagee or
credtor may mantan an acton for the defcency, f any shoud
occur." And the fact that Act No. 1508 permts a prvate sae,
such sae s not, n fact, a satsfacton of the debt, to any
greater extent than the vaue of the property at the tme of the
sae. The amount receved at the tme of the sae, of course,
aways requrng good fath and honesty n the sae, s ony a
payment, pro tanto, and an acton may be mantaned for a
defcency n the debt."
Disposition We hod, n concuson, that the court dd not err n
decarng Act No. 4122 to be nappcabe and n rung that the
pantff s entted to a defcency |udgment n accordance wth
Act No. 1508.
CRUZ V FlLlPlNAS lNVESTMENT
23 SCRA 791
REYES |BL; May 27, 1968
NATURE
Appea from |udgment of CFI Ouezon Cty
FACTS
- Cruz and Reyes purchased from Far East Motor Corp (FEMC) an
Isuzu Dese Bus for P44,616.24, payabe on nstament for 30
months (P1,487.20/mo.), wth 12% p.a. nterest. As evdence, a
promssory note was executed. To secure payment, Cruz
executed a chatte mortgage over the bus, n favor of FEMC. As no
down payment was made, FEMC requred an addtona securty,
as compance of whch Reyes executed a second mortgage on
her parce of and n Buacan.
- Some tme after, FEMC assgned a ts rghts and nterest to the
chatte and rea estate mortgages to Fpnas Investment Corp,
wth notce to Cruz and Reyes.
- Cruz defauted n payment of the promssory note. In fact, the
ony sum ever pad was P500, whch was apped to the parta
payment of nterest. Despte demands by Fpnas, Cruz made no
payment. Thus, Fpnas took steps to forecose the chatte
mortgage on the bus, whch was sod at a forecosure sae for
P15,000. As the proceeds of the sae were nsuffcent to cover the
prncpa obgaton, Fpnas took steps n forecosng the and (n
the 2
nd
mortgage). Frst, t pad the mortgage ndebtedness of the
and to DBP (t was mortgaged to FEMC wth an outstandng
mortgage to DBP) to free the sad property from any attachment.
Fpnas then requested the sherff to se the and.
- Reyes fed an acton to prevent the sae of her and, basng her
contentons on:
ART. 1484. In a contract of sae of persona property the prce of
whch s payabe n nstaments, the vendor may exercse any of
the ff. remedes:
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;<
(1) Exact fufment of the obgaton, shoud the vendee fa to
pay;
(2) Cance the sae, shoud vendee's faure to pay cover 2 or
more nstaments;
(3) Forecose the chatte mortgage on the thng sod, f one has
been consttuted, shoud the vendee's faure to pay cover 2 or
more nstaments. In ths case, he sha have no further acton
aganst the purchaser to recover any unpad baance of the
prce. Any agreement to the contrary sha be vod.
- The sherff hed n abeyance the sad sae on the mortgaged
rea property pendng the resut of ths acton.
lSSUE
WON Fpnas may forecose the rea estate mortgage, athough
t aready forecosed the chatte mortgage to satsfy the baance
of the obgaton of Cruz
HELD
NO
Ratio The remedes provded have been recognzed as
aternatve, not cumuatve, that the exercse of one woud bar
the exercse of the others.
Reasoning
- The aforequoted provson s cear and smpe: shoud the
vendee or purchaser of a persona property defaut n the
payment of two or more of the agreed nstaments, the vendor
or seer has the opton to ava of any one of these three
remedes: ether to exact fufment by the purchaser of the
obgaton, or to cance the sae, or to forecose the mortgage on
the purchased persona property, f one was consttuted.
- The rue s to the effect that the forecosure and actua sae of
a mortgage chatte bars further recovery by the vendor of any
baance on the purchaser's outstandng obgaton not so
satsfed by the sae.
- 8achrach Motor v Milian: ob|ect of the provson s to remedy
abuses connected wth the forecosure of chatte mortgages. It
prevents mortgagees from sezng mortgaged property, buyng
t at a forecosure sae at a very ow prce, and then brngng sut
for a defcency |udgment. Otherwse, the nvarabe resut woud
be that the mortgagor found hmsef mnus the property and st
owng practcay the fu amount of hs orgna ndebtedness.
Thus, f the vendor avas hmsef of the rght to forecose the
mortgage, ths amendment prohbts hm from brngng an
acton aganst the purchaser for the unpad baance.
- However, Reyes must remburse Fpnas for the payment
made to DBP n order to free the and from any encumbrance.
Obiter
- Re: the contenton that the word "acton" refers to |udca
proceedngs ony, the court sad the contenton s untenabe.
The word actuay refers to any |udca or extra|udca
proceedng by vrtue of whch the vendor may awfuy be
enabed to exact recovery of the supposed unsatsfed baance
of the debt.
Disposition Decson appeaed from s modfed, orderng Reyes
to remburse Fpnas for payment made to DBP. In other
aspects, decson AFFIRMED.
TA]ANLANGlT V SOUTHERN MOTORS
101 Ph 606
BENGZON; May 28, 1957
NATURE
Appeants seek to reverse the order of Hon. Pantaeon Peayo,
|udge of the Ioo court of frst nstance refusng to nterfere wth
the aas wrt of executon ssued n Cv Case No. 2942 pendng
n another saa of the same court.
FACTS
- Spouses Ta|anangt bought, from the Southern Motors Inc. two
tractors and a thresher. In payment for the same, they executed a
promssory note whereby they undertook to satsfy the tota
purchase prce of P24,755.75 n severa nstaments (wth
nterest) payabe on stated dates from May 18, 1953 December
10, 1955. The note stpuated that f defaut be made n the
payment of nterest or of any nstament, then the tota prncpa
sum st unpad wth nterest sha at once become demandabe
etc.
- The spouse faed to meet any nstament. They were sued for
the amount of the promssory note. The spouses defauted, and
the court entered |udgment for t n the sum of P24,755.75
together wth nterest. Carryng out the order of executon, the
sherff eved on the same machneres and farm mpements
whch had been bought by the spouses; and ater sod them the
Southern Motors (hghest bdder) for P10,000.
- Snce the amount was not suffcent, Southern Motors asked and
obtaned for an aas wrt of executon. The provnca sherff then
eved attachment on the Ta|anangts' rghts and nterests n
certan rea propertes - wth a vew to another sae on executon.
- To prevent such sae, the Ta|anangts nsttuted ths acton n
the Ioo court of frst nstance for the purpose of annung the
aas wrt of executon and a proceedngs subsequent thereto.
"What s beng sought n ths present acton" say appeants "s
to prohbt and forbd the appeee Sherff of Ioo from
attachng and seng at pubc aucton sae the rea propertes
of appeants because that s now forbdden by our aw after the
chattes that have been purchased and duy mortgagee had
aready been repossessed by the same vendor-mortgagee and
ater on sod at pubc aucton sae and purchased by the same
at such meager sum of P10,000."
lSSUES
1. WON there was a forecosure of the chatte mortgage (remedy
#3 on Art 1484) or a forecosure sae whch shoud bar Southern
Motors from further coectng the unpad baance (whch was not
covered by the proceeds of the sae)
2. WON upon the return of the same chattes and due acceptance
of the same by the vendor-mortgagee, the condtona sae s pso
facto canceed
HELD
1. NO
- There has been no forecosure of the chatte mortgage nor a
forecosure sae therefore the prohbton aganst further coecton
|Art 1484 (3) |does not appy.
-"Our aw" provdes,
ART. 1484. In a contract of sae of persona property the prce of
whch s payabe n nstaments, the vendor may exercse of the
foowng remedes:
(1) Exact fufment of the obgaton, shoud the vendee fa to
pay;
(2) Cance the sae, shoud the vendee's faure to pay cover two
or more nstaments;
(3) Forecose the chatte mortgage on the thng sod, f one has
been consttuted, shoud the vendee's faure to pay cover two or
more nstaments. In ths case, he sha have no further acton
aganst the purchaser to recover any unpad baance of the prce.
Any agreement to the contrary sha be vod. (New Cv Code.)
- Southern Motors elected to sue on the note exclusively,
i.e. to exact fulfillment of the obligation to pay]Art 1484
(1)|. It had a rght to seect among the three remedes
estabshed n Artce 1484. In choosng to sue on the note, t was
not thereby mted to the proceeds of the sae, on executon, of
the mortgaged good.
- As the pantff has chosen to exact the fufment of the
defendant's obgaton, the former may enforce executon of the
|udgement rendered n ts favor on the persona and rea
propertes of the atter not exempt from executon suffcent to
satsfy the |udgment.
2. NO
- The troube wth the argument s that t assumes that
acceptance of the goods by the Southern Motors Co, wth a vew
to "canceaton" of the sae. The company denes such
"#$%"& ' #()*) ' +,-./ 01,234351 +163 ;=
acceptance and canceaton, assertng the goods, were
deposted n ts shop when the sherff attached them n
pursuance of the executon. Its asserton s backed up by the
sherff, of whose credbty there s no reason to doubt. Anyway
ths canceaton or settement theory may not be heeded now,
because t woud contravene the decson n Cv Case No. 2942
- t woud show the Ta|anangts owned nothng to Southern
Motors Inc. Such decson s bndng upon them, uness and unt
they manage to set t asde n a proper proceedng.
SPOUSES NONATO V lAC (lNVESTOR'S
FlNANCE CORP)
ESCOLIN; 1985
FACTS
- On |une 28, 1976, defendant spouses Resttuto Nonato and
Ester Nonato purchased one (1) unt of Vokswagen Sakbayan
from the Peope's Car, Inc., on nstament bass. To secure
compete payment, the defendants executed a promssory note
and a chatte mortgage n favor of Peope's Car, Inc. Peope's
Car, Inc., assgned ts rghts and nterests over the note and
mortgage n favor of pantff Investor's Fnance Corporaton
(FNCB) Fnance). For faure of defendants to pay two or more
nstaments, despte demands, the car was repossessed by
pantff on March 20, 1978.
- Despte repossesson, pantff demanded from defendants that
they pay the baance of the prce of the car. Fnay, on |une 9,
1978, pantff fed before the Court of Frst Instance of Negros
Occdenta the present compant aganst defendants for the
atter to pay the baance of the prce of the car, wth damages
and attorney's fees.
- In ther answer, the spouses Nonato aeged by way of defense
that when the company repossessed the vehce, t had, by that
act, effectvey canceed the sae of the vehce. It s therefore
barred from exactng recovery of the unpad baance of the
purchase prce, as mandated by the provsons of Artce 1484 of
the Cv Code.
- The tra court as we as the appeate court rued aganst the
Nonatos.
lSSUE
WON the vendor, or hs assgnee, who had canceed the sae of
a motor vehce for faure of the buyer to pay two or more of the
stpuated nstaments, may aso demand payment of the
baance of the purchase prce
HELD
NO
Ratio A vendor or hs assgnee who has avaed of one of the
remedes under Artce 1484 of the Cv Code s barred from
avang of the other remedes mentoned theren. The choce of
the vendor n the sad aw s aternatve, not cumuatve.
Reasoning
- The appcabe aw n the case at bar, nvovng as t does a
sae of persona property on nstament, s Artce 1484 of the
Cv Code whch provdes:
"ln a contract of sale of personal property the price of
which is payable in installments, the vendor may
exercise any of the following remedies:
(J) Exact fulfillment of the obligation, should the
vendee fail to pay;
(Z) Cancel the sale, should the vendee's failure to pay
cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold,
if one has been constituted, should the vendee's failure
to pay cover two or more installments. ln this case, he
shall have no further action against the purchaser to
recover any unpaid balance of the price. Any agreement
to the contrary shall be void."
- The meanng of the aforequoted provson has been repeatedy
enuncated n a ong ne of cases. Thus; "Shoud the vendee or
purchaser of a persona property defaut n the payment of two or
more of the agreed nstaments, the vendor or seer has the
opton to ava of any of these three remedes - ether to exact
fufment by the purchaser of the obgaton, or to cance the
sae, or to forecose the mortgage on the purchased persona
property, f one was consttuted. These remedes have been
recognzed as aternatve, not cumuatve, that the exercse of one
woud bar the exercse of the others."
- It s not dsputed that the respondent company had taken
possesson of the car purchased by the Nonatos on nstaments.
But whe the Nonatos mantan that the company had, by that
act, exercsed ts opton to cance the contract of sae, the
company contends that the repossesson of the vehce was ony
for the purpose of apprasng ts vaue and for storage and
safekeepng pendng fu payment by the Nonatos of the
purchasng prce. The company thus denes havng exercsed ts
rght to cance the sae of the repossessed car. The records show
otherwse.
- The recept ssued by the respondent company to the Nonatos
when t took possesson of the vehce states that the vehce
coud be redeemed wthn ffteen |15| days. Ths coud ony mean
that shoud pettoners fa to redeem the car wthn the aforesad
perod by payng the baance of the purchase prce, the company
woud retan permanent possesson of the vehce, as t dd n fact.
- Indeed, the acts performed by the corporaton are whoy
consstent wth the concuson that t had opted to cance the
contract of sae of the vehce. It s thus barred from exactng
payment from pettoners of the baance of the prce of the vehce
whch t had aready repossessed. It cannot have ts cake and eat
t too.
Disposition Decson of IAC reversed
DELTA MOTOR SALES CORP V NlU KlM DUAN
NOCON; September 2 1992
NATURE
Appea by defendants-appeants assang the tra courts
decson
FACTS
- On |uy 5, 1975, the defendants purchased from the pantff 3
unts of Dakn ar condtoner a vaued at P 19,350 as evdenced
by the deed of condtona sae. The Deed of sae had the foowng
terms and condtons: a.) defendants sha pay a down payment of
P774 and the baance of P18,576 sha be pad by them n 24
nstaments; b.) the tte to the propertes purchased sha reman
wth the pantff unt the purchase prce thereof s fuy pad; c.) f
any 2 nstaments are not pad by the defendants on ther due
dates, the whoe of the prncpa sum remanng unpad sha
become due, wth nterest at the rate of 14% per annum: and d.)
n case of a sut, the defendants sha pay an amount equvaent
to 25% of the remanng unpad obgaton as damages, penaty
and attorneys fees; that to secure the payment of the baance of
P18,576 the defendants |onty and severay executed n favor of
the pantff a promssory note; that the 3 ar condtoners were
devered to and receved by the defendants as shown by the
devery recept; that after payng the amount of P6966, the
defendants faed to pay at east 2 monthy nstaments; that as of
|anuary 6 1977, the remanng unpad obgaton of the defendants
amounted to P12,920.08; that statements of accounts were sent
to the defendants and the pantffs coectors personay went to
the former to effect coectons but they faed to do so; that
because of the un|ustfed refusa of the defendants to pay ther
outstandng account and ther wrongfu detenton of the
propertes n queston, pantff tred to recover the sad propertes
extra-|udcay but t faed to do so.
- the matter was ater referred by the pantff to ts ega counse
for ega acton. In ts verfed compant dated |anuary 28 1977,
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <)
the pantff prayed for the ssuance of a wrt of repecvn, whch
the Court granted n ts order dated February 28 1977. The
pantff, by vrtue of the aforesad wrt, succeeded n retrevng
the propertes n queston. As of Octover 3 1988, the
outstandng account of the defendants s ony n the amount of
P6,188.29 as shown by the computaton. In vew of the faure of
the defendants to pay ther obgatons, the amount of P6966
whch had been pad by way of nstaments were treated as
rentas for the unts n queston for 2 years pursuant to the
provsons of par 5 of the Deed of Condtona Sae. The tra
court rued n favor of pantff-appeee.
- Defendants assa the Deed of Condtona Sae as beng
contrary to aw, moras, good custom, pubc order or pubc
pocy. IN partcuar, they pont to the contracts par 5 & 7 as
nqutous whch paragraphs state that:
5. shoud buyer fa to pay any of the monthy nstaments when
due, or otherwse fa to compy wth any of the terms and
condtons heren stpuated, ths contract sha automatcay
become nu and vod and a sums so pad by buyer by reason
thereof sha be consdered as renta and the seer sha then
and there be free to take possesson thereof wthout abty for
trespass or responsbty for any artce eft n or attached to the
property.
7. Shoud seer rescnd ths contract for any of the reasons
stpuated n the precedng paragraph, the buyer, by these
presents obgates hmsef to peacefuy dever the property to
the seer n case of rescsson and shoud a sut be brought n
court by seer to seek |udca decaraton of rescsson and take
possesson of the property, the buyer hereby obgates hmsef
to pay a the expenses to be ncurred by reason of such sut and
n addton to pay the sum equvaent to 25% of the remanng
unpad obgaton as damages, penaty and attorneys fees.
- Defendants cam that for the use of the pantff-appeees 2
ar condtoners, from |uy 5 1975 to Apr 4 1977, or for a perod
of about 22 months, they, n effect, pad rentas n the amount
of P6,429.92 or roughy one-thrd of the entre prce of sad ar-
condtoners whch was P19,350. They aso compan that for the
sad perod the tra court s orderng them to pay P6188.29 as
the baance due for the 3 ar condtoners repossessed. They
satrcay ponted out that by puttng a few touches here and
there, the same unts can be sod agan to the next mprudent
customer by pantff appeee (thus un|usty enrchng them)
lSSUES
1. WON the terms and condtons of the Deed of Condtona Sae
s unconsconabe
2. WON Deta Motor s barred from exactng payment from
defendants of the baance of the prce of the 3 ar-condtoners
whch t had aready repossessed
HELD
1. NO
- A stpuaton n a contract that the nstaments pad sha not
be returned to the vendee s vad nsofar as the same may not
be unconsconabe under the crcumstances as sanctoned by
Art 1486 of the New Cv Code. The monthy nstament payabe
by defendants-appeants was P774. the P5,655.92 nstament
payments correspond ony to 7 monthy nstaments. Snce they
admt havng used the ar-condtoners for 22 months, ths
means that they dd not pay 15 monthy nstaments on the sad
ar-condtoners and were thus usng the same free for sad
perod - to the pre|udce of pantff-appeee. Under the
crcumstances, the treatment of the nstament payments as
rentas cannot be sad to be unconsconabe.
2. YES
- The vendor n a sae of persona property payabe n
nstaments may exercse one of 3 remedes, namey
a.) exact the fufment of the obgaton, shoud the vendee fa
to pay
b.) cance the sae upon the vendees faure to pay two or more
nstaments
c.) forecose the chatte mortgage, f one has been consttuted
on the property sod, upon the vendees faure to pay two or
more nstaments. The thrd opton of remedy, however s sub|ect
to the mtaton that the vendor cannot recover any unpad
baance of the prce and any agreement to the contrary s vod.
The 3 remedes are aternatve and not cumuatve. If the credtor
chooses one remedy, he cannot ava hmsef of the other two. It s
not dsputed that the pantff-appeee had taken possesson of
the 3 ar condtoners through a wrt of repevn when defendants-
appeants refused to extra0|udcay surrender the same. Ths
was done pursuant to par 5 and 7 of ts deed of condtona sae
when defendants appeants faed t pay at east 2 monthy
nstaments, so much so that as of |anuary 6 1977, the tota
amount they owed pantff-appeee, ncusve of nterest, was
P12,920.08. The case pantff-appeee fed was to seek a |udca
decaraton that t had vady rescnded the Deed of Condtona
Sae. Ceary, pantff-appeee chose the second remedy of Art
1484 n seekng enforcement of ts contract wth defendants-
appeants. Ths s shown from the fact that t showed the
computaton of the outstandng account of defendants-appeants
as of Oct 3 1977 took nto account the vaue of the unts
repossessed. Havng done so, t s barred from exactng payment
from defendants-appeants of the baance of the prce of the 3
ar-condtonng unts whch t had aready repossessed.
Disposition The |udgment of the tra court s set asde and the
compant fed by Deta Motor s dsmssed
NORTHERN MOTORS lNC V SAPlNOSO
33 SCRA 356
VILLAMOR; May 29, 1970
NATURE
Drect appea on questons of aw from the porton of the
|udgment of the CFI of Mana
FACTS
- Casano Sapnoso purchased from Northern Motors, Inc. an Ope
Kadett car for the prce of P12,171.00, makng a down payment
and executng a promssory note for the baance of P10,540.00
payabe n nstaments wth nterest at 12% pa, as foows:
P361.00 on |uy 5, 1965, and P351.00 on the 5th day of each
month begnnng August, 1965, up to and ncudng December,
1967. To secure the payment of the promssory note, Sapnoso
executed n favor of Northern Motors, Inc. a chatte mortgage on
the car. The mortgage contract provded, among others, that
upon defaut by the mortgagor n the payment of any part of the
prncpa or nterest due, the mortgagee may eect any of the
foowng remedes: (a) sae of the car by the mortgagee; (b)
canceaton of the contract of sae; (c) extra|udca forecosure;
(d) |udca forecosure; (e) ordnary cv acton to exact fufment
of the mortgage contract. It was further stpuated that
"whchever remedy s eected by the mortgagee, the mortgagor
expressy waves hs rght to rembursement by the mortgagee of
any and a amounts on the prncpa and nterest aready pad by
hm."
- Sapnoso faed to pay the frst to ffth nstaments. Severa
payments were, however, made reducng the baance unpad to
P10,218.10.
- The vendee-mortgagor havng faed to make further payments,
Northern Motors fed the present compant aganst Sapnoso and
a certan "|ohn Doe."
- Northern Motors stated that t was avang tsef of the opton
gven t under the mortgage contract of extra|udcay forecosng
the mortgage, and prayed that a wrt of repevn be ssued upon
ts fng of a bond for the sezure of the car and for ts devery to
t
- Subsequent to the commencement of the acton, but before the
fng of hs answer, defendant Sapnoso made two payments on
the promssory note, the frst for P500.00, and the second for
P750.00 (1,250 tota).
- upon the pantff's fng of a bond, a wrt of repevn was ssued
by the court; the sherff executed the sezure warrant by sezng
the car from defendant Sapnoso and turnng over ts possesson
to the pantff
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <*
- defendant Sapnoso fed an answer admttng the aegatons.
He aeged, however, that he had pad the tota sum of
P4,230.52, eavng a baance of ony P5,987.58; that upon
demand he mmedatey surrendered the possesson of the car
to the pantff's representatve; and that the vaue of the car
was ony about P5,000.00, and not P10,000.00 as aeged n the
compant. As speca defenses the sad defendant aeged that
he faed to pay the nstaments due because the car was
defectve, and the pantff faed to have t fxed athough he
had repeatedy caed the pantff's attenton
- CFI hed that defendant Sapnoso havng faed to pay more
than 2 nstaments, Northern Motors acqured the rght to
forecose the chatte mortgage by fng an acton of repevn to
secure possesson of the mortgaged car as a premnary step to
the forecosure sae; and that the forecosure of the chatte
mortgage and the recovery of the unpad baance of the prce
are aternatve remedes whch may not be pursued
con|unctvey, so that n avang tsef of ts rght to forecose the
chatte mortgage Northern Motors thereby renounced whatever
cam t may have had on the promssory note, and, therefore,...
shoud return to defendant Sapnoso the sum of P1,250.00
whch the pantff had receved from the atter after havng fed
the present case on, and eected to forecose the chatte
mortgage.
- In ths appea Northern Motors cams that the court a quo
erred n orderng t to remburse to Sapnoso the P1,250.00
whch the atter had pad; that under Art.1484 of the Cv Code
t s the exercse, not the mere eecton, of the remedy of
forecosure that bars the credtor from recoverng the unpad
baance of the debt; that what sad artce prohbts s "further
acton" to coect payment of the defcency after the credtor
has forecosed the mortgage
lSSUE
WON t s the exercse, not the mere eecton, of the remedy of
forecosure that bars the credtor from recoverng the unpad
baance of the debt
HELD
YES
Ratio That the utmate ob|ect of the acton s the forecosure of
the chatte mortgage, s of no moment, for t s the fact of
forecosure and actua sae of the mortgaged chatte that bar
further recovery by the vendor of any baance on the
purchaser's outstandng obgaton not satsfed by the sae.
Reasoning
- In ssung a wrt of repevn, and, after tra, n uphodng NMs
rght to the possesson of the car, and ratfyng and confrmng
ts devery to the sad pantff-appeant, the court beow
correcty consdered the acton as one of repevn to secure
possesson of the mortgaged vehce as a premnary step to
ths forecosure sae.
- The sad court however erred n concudng that the ega
effect of the fng of the acton was to bar pantff-appeant
from acceptng further payments on the promssory note. What
Art.1484(3) prohbts s "further acton aganst the purchaser to
recover any unpad baance of the prce"
- there has not yet been a forecosure sae resutng n a
defcency. The payment of the sum of P1,250.00 by defendant-
appeee Sapnoso was a vountary act on hs part and dd not
resut from a "further acton" nsttuted by pantff-appeant.
- there s no reason why a mortgage credtor shoud be barred
from acceptng, before a forecosure sae, payments vountary
tendered by the debtor-mortgagor who admts a subsstng
ndebtedness.
Disposition The |udgment appeaed from s modfed by settng
asde the porton thereof whch orders pantff-appeant to pay
defendant-appeee Sapnoso the sum of P1,250.00.
FlLlPlNAS lNVESTMENT V RlDAD
30 SCRA 546
CASTRO; November 28, 1969
NATURE
Appea by Spouses Rdad from decson of CFI (a repevn sut),
awardng Fpnas Investment (appeee) the amount of P163.65
as actua expenses and P300 as attys fees.
FACTS
- Spouses Rdad (appeants) bought a Ford sedan for P13, 371.40
from the Supreme Saes and Devt Corp, the appeees assgnor-
n-nterest. The sum of P1,160 was pad on devery, the baance
of P12, 211.50 beng payabe n 24 equa monthy nstaments
wth nterest at 12% per annum, secured by a promssory note
and a chatte mortgage on the car. The spouses faed to pay 5
consecutve nstaments on a remanng baance of P5, 274.53.
The appeee nsttuted a repevn sut for the sezure of the car, or
the recovery of the unpad baance n case devery coud not be
effected. The car was then sezed by the sherff of Mana and
possesson thereof was awarded to the appeee. Durng the
progress of the case, the appeee nsttuted extra|udca
forecosure proceedngs, as a resut of whch, the car was sod at a
pubc aucton wth the appeee as the hghest bdder and
purchaser.
- In vew of the faure of appeant spouses to appear at the
schedued hearng, aegedy due to non-recept of the summons,
they were decared n defaut, wth |udgment orderng them to
pay appeee P500 as attys fees and P163.65 as actua expenses
reatve to the sezure of the car.
- The Spouses then moved to set asde the order of defaut. After
ths was dened, they appeaed to the CFI but the same merey
owered the attys fees to P300. They now appea to the SC
contendng that the CFI erred n condemnng the appeants to pay
P300 for attys fees and P163.65 for expenses ncurred n the
sezure of the car
lSSUE
WON the ower court was correct n grantng the award for actua
expenses and attys fees ncurred by appeee n ths repevn sut
despte havng the chatte mortgage forecosed
HELD
YES
Ratio The mortgagor who has un|ustfaby faed and refused to
surrender the chatte mortgage sha bear the necessary expenses
ncurred by the mortgagee n the prosecuton of the acton for
repevn to regan possesson of the chatte. Such expenses woud
ncude those propery ncurred n effectng sezure of the chatte
and reasonabe attys fees n prosecutng the acton for repevn.
Reasoning
(The Court examined jurisprudence on the interpretation of the
Recto Law or Art.J484 specifically Par.3 and also gave reasons
why it overturned the previous decisions)
- Macondray v. Eustaquio, hed that n "a proceedngs for the
forecosure of a chatte mortgage, executed on chattes whch
have been sod on an nstament pan, the mortgagee s mted to
the property mortgaged and s not entted to attys fees and costs
of sut."
- In Luneta Motor Co. v. 5alvador et al, the court hed that "the
pantff renounced whatever cam t may have had under the
promssory note by sezng the truck and forecosng the mortgage
at the progress of the sut. Consequenty, he has no more cause of
acton aganst the promssor and the guarantor and has no more
rght ether to the costs and the attys fees that woud go wth the
sut."
- Scrutny of the doctrne enuncated n the cted cases w revea
that ts utmate and sautary purpose s to prevent the vendor
from crcumventng the Recto Law. Congress sought to protect the
buyers on nstament who have been vctmzed by seers who
succeeded n un|usty enrchng themseves at the expense of the
buyers, because asde from recoverng the goods sod, upon
defaut of the buyer n the payment of 2 nstaments, st retaned
for themseves a amounts aready pad and n addton, were
ad|udged entted to damages, such as attys fees, expenses of
tgaton and costs. It woud appear from the decsons adverted
to that n no nstance whatsoever may the mortgagee recover
from the mortgagor any amount or sum after the forecosure of
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <(
the mortgage, for, as we understand t, the phosophy of the
Recto Law s that the underprveged mortgagors must be
afforded fu protecton aganst the rapacty of the mortgagees.
- But whe we uncondtonay concur n, and gve our approva
to the basc phosophy of the Recto Law, we vew wth no sma
amount of crcumspecton the mpcaton necessary drawn
from the above dscusson, that the mortgagee s not entted to
protecton aganst perverse mortgagors. Where the mortgagor
pany refuses to dever the chatte sub|ect of the mortgage
upon hs faure to pay 2 or more nstaments, or f he conceas
the chatte to pace t beyond the reach of the mortgagee, what
then s the mortgagee expected to do? No man can take the aw
nto hs own hands; so t s not to be supposed that the
egsature ntended that the mortgagee shoud wrest or seze
the chatte forcby from the contro and possesson of the
mortgagor, even to the extent of usng voence whch s
unwarranted by aw. Snce the mortgagee woud enforce hs
rghts through the means and wthn the mts deneated by
aw, the next step n such stuatons beng the fng of an acton
for repevn to the end that he may recover mmedate
possesson of the chatte and, thereafter, enforce hs rghts n
accordance wth the contractua reatonshp between hm and
the mortgagor as emboded n ther agreement, then t ogcay
foows, as a matter of common sense, that the necessary
expenses ncurred n the prosecuton by the mortgagee of the
acton for repevn so that he can regan possesson of the
chatte, shoud be borne by the mortgagor. Recoverabe
expenses woud, n our vew, ncude expenses propery ncurred
n effectng sezure of the chatte and reasonabe attorney's fees
n prosecutng the acton for repevn. And we decare that n
ths case before us, the amounts awarded by the court a quo to
the mortgagee (appeee) are reasonabe.
- To the extent that our pronouncement here confcts wth the
rung announced and foowed n the cases heren dscussed,
the atter must be consdered pro tanto (to a certan extent)
quafed.
Disposition |udgment a quo s affrmed
LEGARDA V SALDANA
55 SCRA 324
TEEHANKEE; |anuary 28, 1974
NATURE
Petton to revew decson of CA
FACTS
- The acton orgnated as a compant for devery of two parces
of and n Sampaoc, Mana and for executon of the
correspondng deed of conveyance after payment of the baance
st due on ther purchase prce.
- Sadana entered nto two wrtten contracts wth pettoner
Legarda Hermanos as subdvson owner, whereby the atter
agreed to se to hm Lots Nos. 7 and 8 of bock No. 5N of the
subdvson wth an area of 150 square meters each, for the sum
of P1, 500.00 per ot, payabe over the span of ten years dvded
nto 120 equa monthy nstaments of P19.83 wth 10% nterest
per annum, to commence on May 26, 1948, date of executon of
the contracts.
- Subsequenty, Legarda Hermanos parttoned the subdvson
among the brothers and ssters, and the two ots were among
those aotted to co-pettoner |ose Legarda who was then
ncuded as co-defendant n the acton.
- Sadana fathfuy pad for eght contnuous years about 95 (of
the stpuated 120) monthy nstaments totang P3,582.06 up
to the month of February, 1956, whch as per pettoners' own
statement of account, was apped to respondent's account
(wthout dstngushng the two ots), as foows:
"To nterests P1,889.78
"To prncpa P1,682.28
----
Tota P3,582.06"
after February, 1956 up to the fng of respondent's compant n
the Mana court of frst nstance n 1961, Sadana dd not make
further payments. The account thus shows that he owed
pettoners the sum of P1, 311.72 on account of the baance of the
purchase prce (prncpa) of the two ots (n the tota sum of
P3,000.00), athough he had pad more than the stpuated
purchase prce of P1,500.00 for one ot.
- Amost fve years ater, on February 2, 1961 |ust before the fng
of the acton, respondent wrote pettoners statng that hs desre
to bud a house on the ots was prevented by ther faure to
ntroduce mprovements on the subdvson as "there s st no
road to these ots," and requestng nformaton of the amount
owng to update hs account as "I ntend to contnue payng the
baance due on sad ots."
- Pettoners reped n ther etter of February 11, 1961 that as
respondent had faed to compete tota payment of the 120
nstaments by May, 1958 as stpuated n the contracts to se,
"pursuant to the provsons of both contracts a the amounts pad
n accordance wth the agreement together wth the
mprovements on the premses have been consdered as rents
pad and as payment for damages suffered by your faure," 2
and "Sad canceaton beng n order, s hereby confrmed."
- TC sustaned pettoners canceaton of the contracts and
dsmssed respondents compant. CA reversed the ower court's
|udgment and ordered pettoners "to dever to the pantff
possesson of one of the two ots, at the choce of defendants, and
to execute the correspondng deed of conveyance to the pantff
for the sad ot"
Respondent's comments:
- he suspended payments because the ots were not actuay
devered to hm, or coud not be, due to the fact that they were
competey under water; and aso because the defendants-owners
faed to make mprovements on the premses, such as roads,
fng of the submerged areas, etc., despte repeated promses of
ther representatve, the sad Mr. Cenon.
- no demand has been made upon hm regardng the unpad
nstaments, and for ths reason he coud not be decared n
defaut so as to entte the defendants to cance the sad
contracts.
lSSUE
WON CA commtted error n renderng |udgment
HELD
NO
- the appeate court's |udgment fndng that of the tota sum of
P3,582.06 (ncudng nterests of P1,889.78) aready pad by
respondent (whch was more than the vaue of two ots), the sum
apped by pettoners to the prncpa aone n the amount of P1,
682.28 was aready more than the vaue of one ot of P1,500.00
and hence one of the two ots as chosen by respondent woud be
consdered as fuy pad, s far and |ust and n accordance wth
aw and equty.
- |.M. Tuason & Co. Inc. vs. |aver: ths s appcabe to the present
case, wth the respondent at bar beng granted esser benefts,
snce no rescsson of contract was theren permtted. There,
where the theren buyer-appeee dentcay stuated as heren
respondent buyer had kewse defauted n competng the
payments after havng regousy pad the stpuated monthy
nstaments for amost eght years and notwthstandng that the
seer-appeant had duy notfed the buyer of the rescsson of the
contract to se, the Court uphed the ower court's |udgment
denyng |udca confrmaton of the rescsson and nstead
grantng the buyer an addtona grace perod of sxty days from
notce of |udgment to pay a the nstament payments n arrears
together wth the stpuated 10% nterest per annum from the
date of defaut, apart from reasonabe attorney's fees and costs,
whch payments, the Court observed, woud have the pantff-
seer "recover everythng due thereto, pursuant to ts contract
wth the defendant, ncudng such damages as the former may
have suffered n consequence of the atter's defaut." Court hed
that "Regardess, however, of the proprety of appyng sad Art.
1592 thereto, We fnd that pantff heren has not been dened
substanta |ustce, for, accordng to Art. 1234 of sad Code: 'If the
obgaton has been substantay performed n good fath, the
obgor may recover as though there had been a strct and
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <7
compete fufment, ess damages suffered by the obgee,'"
and "that n the nterest of |ustce and equty, the decson
appeaed from may be uphed upon the authorty of Artce 1234
of the Cv Code."
Disposition Decson of CA affrmed
CASA FlLlPlNA REALTY V OFFlCE OF THE PRES
(SEVlLLA)
241 SCRA 165
ROMERO; Feb 1995
FACTS
- The Seva spouses agreed to purchase a parce of and from
Casa Fpna Reaty Corp (CFRC). The partes agreed n a
contract to se that the purchase prce w be pad n
nstaments for the perod of 5 years, w/ 28% amortzaton
nterest per annum.
- The spouses faed to pay the amortzatons on tme. They pad
penates.
- Amost a year ater, Denns Seva wrote to CFRC cang ts
attenton to the absence of any mprovement n the subdvson
and hs dscovery that, upon checkng wth the Regster of
Deeds, the mother tte of the subdvson was under s pendens
and mortgaged to ComSavngs Bank.
- Seva requested a refund of a nstament payments made on
account of the contract.
- The Seva spouses fed a compant vs. CFRC wth the Offce
of Appeas, Ad|udcaton and Lega Affars (OAALA) of the Human
Settements Reguatory Commsson. They prayed for the refund
of P70,431.12 w/c was the tota amount they had pad CFRC.
- The OAALA found CFRC to be w/o cense to se the subdvson
nvoved. OAALA hed that, even assumng that CFRC had a
cense to se, t was st abe for voaton of Sec. 20 of PD No.
957 as t had faed to deveop the subdvson. The OAALA
ordered CFRC to refund the Seva coupe the sad amount and
P3,000.00 as admnstratve fne for voaton of Sec. 20 of P.D.
No. 957.
- Sad decson was affrmed by the Housng and Land Use
Reguatory Board (HLURB) .
- CFRC appeaed. The Offce of the Presdent dsmssed t for ack
of mert and affrmed the decson of the HLURB. CFRC fed a
MFR of the decson of the OP but t was dened.
CFRC's claim:
1) petton shoud not have been dsmssed as t nvoves the
nterpretaton and/or appcaton of provsons of aw as the
Court has to determne whether t s Sec. 23 or 24 of P.D. No.
957 w/c shoud be apped n the nstant case.
2) snce prvate respondents dessted from payng the agreed
nstaments, they shoud have notfed the CFRC of such
desstance n accordance wth Sec. 23
5
.
3) snce prvate respondent's desstance from further payng the
amortzaton was due to ts pendenta and the mortgage of the
mother tte of the subdvson, Sec. 24
6
shoud have been
apped n the case.
4) when the Sevas demanded a refund of nstaments pad,
they were aready n defaut, and that ther sad demand had
%
"SEC. 23. Non-Forfeture of Payments. - No nstament payment made by a buyer
n a subdvson or condomnum pro|ect for a ot or unt he contracted to buy sha be
forfeted n favor of the owner or deveoper when the buyer, after due notce to the
owner or deveoper, dessts from further payment due to the faure of the owner or
deveoper to deveop the subdvson or condomnum pro|ect accordng to the
approved pans and wthn the tme mt for compyng wth the same. Such buyer
may, at hs opton, be rembursed the tota amount pad ncudng amortzaton
nterests but excudng denquency nterests, wth nterest thereon at the ega rate.
&
SEC. 24. Faure to pay nstaments. - The rghts of the buyer n the event of hs
faure to pay the nstaments due for reasons other than faure of the owner or
deveoper to deveop the pro|ect sha be governed by Repubc Act No. 6552."
'the sound of beated and hndsght attempt to cover up the
defaut for whch contract canceaton woud be the necessary
consequence.'
lSSUES
1. WON Secs 23 and 24 of PD 957 appy n ths case
2. WON the notce requrement of Sec 23 has been comped wth
3. WON the prvate appeees were n defaut
HELD
1. YES
- The case fas squarey wthn the purvew of both Secs. 23 and
24 of P.D. No. 957.
- Prvate respondent's refusa to contnue payng the amortzaton
s thus based on two prncpa grounds: nondeveopment of the
subdvson and encumbrance of the property sub|ect of the sae
whch became apparent to the buyer ony after conductng hs
own nvestgaton.
2. YES
- OP: pettoners cam that appeees had faed to gve the
requred notce before demandng for refund, s not borne out by
the evdence. Records show that .Denns Seva aready gave
notce to appeant regardng, among other thngs, the
nondeveopment of the subdvson, and theren demanded for
refund. To our mnd, Secton 23 does not requre that a notce be
gven frst before a demand for refund can be made. The notce
and the demand can be made n the same etter or
communcaton, and ths s what the appeees dd.
- SC: Pubc respondent's concusons are hereby affrmed. Ths
decree.was ssued n the wake of numerous reports that many
rea estate subdvson owners, deveopers, operators and/or
seers "have reneged on ther representatons and obgatons to
provde and mantan propery subdvson roads, dranage,
sewerage, water systems, ghtng systems and other basc
requrements" for the heath and safety of home and ot buyers. It
was desgned to stem the tde of "frauduent manpuatons
perpetrated by unscrupuous subdvson and condomnum seers
and operators, such as faure to dever ttes to buyers or ttes
free from ens and encumbrances." Shoud the notce
requrement provded for n Sec. 23 be construed as requred to
be gven before a buyer dessts from further payng amortzatons
as n ths case, the ntent of the aw to protect subdvson ot
buyers, such as prvate respondents, w tend to be defeated.
3. NO
- The genera rue s that an obgor ncurs n deay (defaut) ony
after a demand, |udca or extra|udca, has been made from hm
for the fufment of hs obgaton.
- Artce 1169 CC: 'Those obged to dever or to do somethng
ncur n deay from the tme the obgee |udcay or extra|udcay
demands from them the fufment of ther obgaton.'
- Here, there was no such demand by the appeant. The etters t
sent to appeees were the usua remnd etters that are ordnary
sent by credtors to ate-payng debtors. They are not the demand
contempated by aw."
MCLAUGHLlN V CA
144 SCRA 693
FERIA; October 10, 1986
NATURE
Appea by certorar from the decson of the Court of Appeas
FACTS
- On Feb 28, 1977, pettoner Lusa F. McLaughn and prvate
respondent Ramon Fores entered nto a contract of condtona
sae of rea property. Paragraph 1 of the deed of condtona sae
fxed the tota purchase prce of P140,000.00 payabe as foows:
a) P26,550.00 upon the executon of the deed; and b) the baance
of P113,450.00 to be pad not ater than May 31, 1977. The
partes aso agreed that the baance sha bear nterest at the rate
of 1% per month to commence from Dec 1, 1976, unt the fu
purchase prce was pad.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <8
- On |une 19, 1979, pettoner fed a compant for the rescsson
of the deed of condtona sae due to the faure of Fores to pay
the baance due on May 31, 1977.
- On Dec 27, 1979, the partes submtted a Compromse
Agreement on the bass of whch the court rendered a decson
on |an 22, 1980. In sad compromse agreement, Fores
acknowedged hs ndebtedness to pettoner under the deed of
condtona sae n the amount of P119,050.71, and the partes
agreed that sad amount woud be payabe as foows: a)
P50,000.00 upon sgnng of the agreement; and b) the baance
of P69,059.71 n two equa nstaments on |une 30, 1980 and
Dec 31, 1980.
- As agreed upon, Fores pad P50,000.00 upon the sgnng of
the agreement and he aso pad an "escaaton cost" of
P25,000.00.
- Under paragraph 3 of the Compromse Agreement, prvate
respondent agreed to pay P1,000 pesos monthy renta
begnnng Dec 5, 1979 unt the obgaton s duy pad, for the
use of the sad property
- Paragraphs 6 and 7 of the Compromse Agreement further
state:
"That the partes are agreed that n the event the defendant
(Fores) fas to compy wth hs obgatons heren provded,
the pantff (Mcaughn) w be entted to the ssuance of a
wrt of executon rescndng the Deed of Condtona Sae of
Rea Property. In such eventuaty, defendant (Fores) hereby
waves hs rght to appea to (from) the Order of Rescsson
and the Wrt of Executon whch the Court sha render n
accordance wth the stpuatons heren provded for.
"That n the event of executon a payments made by
defendant (prvate respondent) w be forfeted n favor of the
pantff (pettoner) as qudated damages."
- On Oct 15, 1980, McLaughn wrote to prvate respondent
demandng that he pay the baance of P69,059.71 on or before
Oct 31, 1980. Ths demand ncuded not ony the nstament
due on |une 30, 1980 but aso the nstament due on Dec 31,
1980.
- On Oct 30, 1980, Fores sent a etter to pettoner sgnfyng hs
wngness and ntenton to pay the fu baance of P69,059.71
- On Nov 7, 1980, pettoner fed a Moton for Wrt of Executon
aegng that Fores faed to pay the nstament due on |une
1980 and that snce |une 1980 he had faed to pay the monthy
renta of P1,000.00. Pettoner prayed that a) the deed of
condtona sae of rea property be decared rescnded wth
forfeture of a payments as qudated damages; and b) the
court order the payment of P1,000.00 back rentas snce |une
1980 and the evcton of prvate respondent.
- TC granted the moton for wrt of executon.
- CA hed that the Song Fo v Hawaan Rung s appcabe n the
case at bar - Recsson w not be permtted for sght breach of
contract.
lSSUES
1. WON contract shoud be rescnded
2. WON respondent s abe for the P76,059.71 he attempted to
pay to the pettoner but the pettoner dd not accept (even
though the 30-day perod provded by R.A. 6552 has not yet
expred)
HELD
1. NO
- SC agrees wth the CA that t woud be nequtabe to cance
the contract of condtona sae and to have the amount of
P101,550.00 (P148,126.97 accordng to prvate respondent n
hs bref) aready pad by hm under sad contract, excudng the
monthy rentas pad, forfeted n favor of pettoner, partcuary
after prvate respondent had tendered the amount of
P76,059.71 n fu payment of hs obgaton.
- Prvate respondent had substantay comped wth the terms
and condtons of the compromse agreement.
- Secton 4 of RA No. 6552 whch took effect on Sept14, 1972
provdes as foows:
"In case where ess than two years of nstaments were pad,
the seer sha gve the buyer a grace perod of not ess than sxty
days from the date the nstament became due. If the buyer fas
to pay the nstaments due at the expraton of the grace perod,
the seer may cance the contract after thrty days from recept
by the buyer of the notce of the canceaton or the demand for
rescsson of the contract by a notara act."
- Pettoner demanded payment of the baance of P69,059.71
on or before October 31, 1980, pettoner coud cance the
contract after 30 days from recept by prvate respondent of the
notce of canceaton. Consderng pettoner's moton for
executon fed on November 7, 1980 as a notce of canceaton,
pettoner coud cance the contract of condtona sae after 30
days from recept by prvate respondent of sad moton. Prvate
respondent's tender of payment of the amount of P76,059.71
together wth hs moton for reconsderaton on November 17,
1980 was, therefore, wthn the thrty-day perod granted by
R.A.6552.
2. YES
- The tender made by prvate respondent of a certfed bank
manager's check payabe to pettoner was a vad tender of
payment. The certfed check covered not ony the baance of the
purchase prce n the amount of P69,059.71, but aso the arrears
n the renta payments from |une to December, 1980 (P7,000.00)
or a tota of P76,059.71.
Secton 49, Rue 130 of the Revsed Rues of Court provdes
that: "An offer n wrtng to pay a partcuar sum of money or to
dever a wrtten nstrument or specfc property s, f re|ected,
equvaent to the actua producton and tender of the money,
nstrument, or property."
- However, athough prvate respondent had made a vad tender
of payment whch preserved hs rghts as a vendee n the contract
of condtona sae of rea property, respondent dd not foow t
wth a consgnaton or depost of the sum due wth the court. The
Manager's Check tendered by prvate respondent on November
17, 1980 was subsequenty canceed and converted nto cash,
but the cash was not deposted wth the court.
- Accordng to Artce 1256 (Cv Code), f the credtor to whom
tender of payment has been made refuses wthout |ust cause to
accept t, the debtor sha be reeased from responsbty by the
consgnaton of the thng or sum due, and that consgnaton aone
sha produce the same effect n the fve cases enumerated
theren; Artce 1257 provdes that n order that the consgnaton
of the thng (or sum) due may reease the obgor, t must frst be
announced to the persons nterested n the fufment of the
obgaton; and Artce 1258 provdes that consgnaton sha be
made by depostng the thng (or sum) due at the dsposa of the
|udca authorty and that the nterested partes sha aso be
notfed thereof.
- Soco vs. Mtante: "Tender of payment must be dstngushed
from consgnaton. Tender s the antecedent of consgnaton, that
s, an act preparatory to the consgnaton, whch s the prncpa,
and from whch are derved the mmedate consequences whch
the debtor desres or seeks to obtan. Tender of payment may be
extra|udca, whe consgnaton s necessary |udca, and the
prorty of the frst s the attempt to make a prvate settement
before proceedng to the soemntes of consgnaton.
- Athough prvate respondent had preserved hs rghts as a
vendee n the contract of condtona sae of rea property by a
tmey vad tender of payment of the baance of hs obgaton
whch was not accepted by pettoner, he remans abe for the
payment of hs obgaton because of hs faure to depost the
amount due wth the court.
- Inasmuch as pettoner dd not accept the aforesad amount, t
was ncumbent on prvate respondent to depost the same wth
the court n order to be reeased from responsbty. Snce prvate
respondent dd not depost sad amount wth the court, hs
obgaton was not pad and he s abe n addton for the
payment of the monthy renta of P1,000.00 from |anuary 1, 1981
unt sad obgaton s duy pad, n accordance wth paragraph 3
of the Compromse Agreement. Upon fu payment of the amount
of P76,059.71 and the rentas n arrears, prvate respondent sha
be entted to a deed of absoute sae n hs favor of the rea
property n queston.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <9
Disposition Decson of the CA AFFIRMED w/ the modfcatons:
(a) Pettoner ordered to accept from prvate respondent the
Metrobank Casher's Check n the amount of P76,059.71
(b) Prvate respondent ordered to pay pettoner the rentas n
arrears of P1,000.00 a month from |an 1, 1981 unt fu
payment; and
(c) Pettoner ordered to execute a deed of absoute sae n favor
of prvate respondent over the rea property upon fu payment
of the amounts .
Chapter 13: EXTINGUISHMENT OF THE SALE
ARROFO V UlO
449 SCRA 284
CARPIO; |anuary 26, 2005
NATURE
Petton for revew on certorar of a decson of the Court of
Appeas
FACTS
- Pedro Ouo owned a parce of and (Lot 1916-D-3) under TCT
28905 n Mandaue, Cebu.
- Apr 11, 1990 - Ouo executed a Deed of Absoute Sae of the
sad property n favor of Renato Mencas who was marred to
Myrna, the formers nece. The sad deed of sae excuded the
house standng on the and.
- March 11, 1991 - another Deed of Absoute Sae was ssued by
Ouo n favor of Mencas and ths tme, there was no provson
excudng the house from the sae. TCT 28905 was repaced by
TCT 30248 whch was ssued n Renatos name.
- March 30, 1993 - Renato executed a Deed of Absoute Sae of
the abovementoned property n favor of Lourdes Arrofo. TCT
30248 was canceed and repaced wth TCT 33304 under the
name of Arrofo.
- |uy 6, 1994 - Ouo fed an acton for Reconveyance of
Property wth Annument of Deeds of Sae and Damages aganst
the spouses Mencas and Arrofo.
- The tra court rued aganst Ouo and uphed the vadty of
the abovementoned deeds but the Court of Appeas reversed
the decson.
Petitioners' Claim:
- Arrofo contents tat the amount pad to Ouo s adequate
consderng the market and the assessed vaues of the and.
Respondents' Comments:
- Ouo camed that hs transacton wth Renato was a
mortgage and not an absoute sae.
- He aegedy borrowed P15,000 from Renato and the property
served as securty for the oan.
- The agreement was that the Deed of Absoute Sae he sgned
shoud ony be regstered wth the Regster of Deeds shoud he
fa to pay hs P15,000 oan pus nterest of 7% every month
wthn 5 years from Apr 11, 1990.
lSSUES
1. WON respondent Court of Appeas correcty rued that the
Deed of Sae of Apr 11, 1990 was one of equtabe mortgage
2. WON Arrofo was a buyer n good fath
HELD
1. YES
- The contract was an equtabe mortgage.
Ratio The decsve factor n evauatng such agreement s the
ntenton of the partes, as shown not necessary by the
termnoogy used n the contract but by a the surroundng
crcumstances.
Reasoning
- A1602,CC n reaton to A1604,CC states that a contract
purportng to be an absoute sae s deemed an equtabe
mortgage n any of the foowng cases:
a. when the prce of the sae wth a rght to repurchase s
unusuay nadequate
b. when the vendor remans n possesson as essee or
otherwse
c. when upon or after the expraton of the rght to repurchase
another nstrument extendng the perod of redempton or
grantng a new perod s executed
d. when the purchaser retans for hmsef a part of the purchase
prce
e. when the vendor bnds hmsef to pay the taxes on the thng
sod
- The foowng crcumstances ead to ths concuson:
a. Renato and Myrna dd not take possesson of the property as
evdenced by a testmony from Morade, a tenant of Ouo who
testfed that he was tod to pay the rent to Myrna but he was
nformed of such ony after the property had been sod to
Arrofo.
b. Nether the frst nor second Deed of Absoute Sae refects
the rea ntenton of the partes based on the testmony og
Fsca Mabanto, a sgnatory to the frst deed of sae. He
testfed that even f a deed of absoute sae was executed, t
was the agreement of the partes that regstry of the property n
the Regstry of Deeds woud occur ony f Ouo faed to pay hs
oan.
c. The consderaton pad to Ouo s unusuay nadequate.
Arrofo testfed that the market vaue of the and was pagged at
P8,300 whe the assessed market vaue s P2,400.
> Myrna aegedy pad her unce Ouo P160,000 .
> The frst and second deeds of sae state that prce s P50,000.
If Ouo sod the property for P160,000, t woud seem
mpossbe that Renato woud rese the same property for ess
than haf the amount he pad for.
d. Myrnas cam that the frst deed of Absoute Sae s
erroneous.
2. NO
- Arrofo was not a buyer n good fath.
Reasoning
- Arrofo faed to buy as a buyer n good fath. She asked her
daughter to verfy n the Regster of Deeds.
- She conducted an ocuar nspecton of the property and ved n
the same town as Arrofo so t s mpossbe for her not to have
known.
Disposition Petton dened.
TAN V VALDEHUEZA
66 SCRA 61
CASTRO; August 6, 1975
FACTS
- The parce of and descrbed n the frst cause of acton was the
sub|ect matter of the pubc aucton sae wheren the pantff
LUCIA TAN was the hghest bdder .
- Due to the faure of defendant Arador Vadehueza to redeem the
sad and wthn the perod of one year as beng provded by aw,
MR. VICENTE D. ROA who was then the Ex-Offco Provnca Sherff
executed an ABSOLUTE DEED OF SALE n favor of the pantff
LUCIA TAN.
- That defendants ARADOR VALDEHUEZA and REDICULO
VALDEHUEZA have executed two documents of DEED OF PACTO
DE RETRO SALE n favor of the pantff heren, LUCIA TAN of two
portons of a parce of and whch s descrbed n the second cause
of acton wth the tota amount of P1,500.00.
- On the bass of the stpuaton of facts and the annexes, the tra
court rendered |udgment, decarng Luca Tan the absoute owner
of the property descrbed n the frst cause of acton and as
regards the and covered by deed of pacto de retro the
defendants Arador Vadehueza and Redcuo Vadehueza were
ordered to pay the pantff the amount of P300 wth ega nterest
of 6% from August 15, 1966, the sad and servng as guaranty of
the sad amount of payment;
- The Vadehuezas appeaed.
lSSUE
WON the ower court erred n makng a fndng on the second
cause of acton that the transactons between the partes were
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <:
smpe oan, nstead, t shoud be decared as equtabe
mortgage
HELD
YES
- The tra court treated the regstered deed of pacto de retro as
an equtabe mortgage but consdered the unregstered deed of
pacto de retro "as a mere case of smpe oan, secured by the
property thus sod under pacto de retro," on the ground that no
sut es to forecose an unregstered mortgage. It woud appear
that the tra |udge had not updated hmsef on aw and
|ursprudence; he cted, n support of hs rung, artce 1875 of
the od Cv Code and decsons of ths Court crca 1910 and
1912.
- Under artce 1875 of the Cv Code of 1889, regstraton was a
necessary requste for the vadty of a mortgage even as
between the partes, but under artce 2125 of the new Cv
Code (n effect snce August 30,1950), ths s no onger so.


If the nstrument s not recorded, the mortgage s
nonetheess bndng between the partes. (Artce 2125, 2nd
sentence).
- The Vadehuezas havng remaned n possesson of the and
and the reaty taxes havng been pad by them, the contracts
whch purported to be pacto de retro transactons are presumed
to be equtabe mortgages,

whether regstered or not, there
beng no thrd partes nvoved.
Disposition The |udgment was modfed.
ADlARTE V TUMANENG
88 PHIL 333
PADILLA; March 15, 1951
NATURE
Appea from a |udgment of the CFI Iocos Norte.
FACTS
- Amanda Madamba Vda. de Adarte was the owner of two
parces of and stuated n Bo. Tabtabagan, Banna, Iocos Norte
|3,296 sq. m. (P220) and 6,592 sq. m. (P350)|.
- 25 February 1929: for and n consderaton of P1,100, the
owner sod the two parces of and to the spouses Cro Agudong
and Emana Tumaneng, reservng for her the rght to
repurchase them wthn ten years.
- 25 February 1939: apse of the ten year rght to repurchase.
- 29 February 1944: the vendee spouses presented for
regstraton under and pursuant to the provsons of Act 3344
the deed of sate wth the rght to repurchase n the offce of the
Regstrar of Deeds n and for the Provnce of Iocos Norte.
- 6 Apr 1944: the vendor Adarte caed on the vendee spouses
at ther resdence n Sarrat, Iocos Norte, offerng to repurchase
the two parces of and. At frst Cro Agudong refused to rese,
but ater on, at about noon of that day, he caed on Adarte,
who was takng unch n the house of Lorenzo Pason, and tod
her that he had changed hs mnd and that he was then decded
to rese the parces of and on condton that he woud have
them n hs possesson for the foowng two years. To show hs
good fath he wrote (n Iocano daect) a etter whch the
ponenca nterpreted to evdence a promse to rese to the
vendor the property sod a retro.
- In October 1944, Cro Agudong ded. On or after 6 Apr 1946,
the vendor Adarte offered to repurchase the two parces of and
from one of the vendees, the wdow of the ate Cro Agudong,
as promsed by the atter durng hs fetme n the above-
mentoned etter, but Tumaneng (wdow of the deceased)
refused to receve the sum of P1,100 tendered to her by the
vendor Adarte and to rese the two parces of and.
- Hence, ths acton was brought to compe Emana Tumeneng,
wdow of the ate Cro Agudong, to accept the sum of P1,100
tendered by the pantff Adarte and to execute n favor of the
atter a deed of sae of the two parces of and. Adarte prays
aso for damages and for costs.
- Tumaneng denes knowedge of any agreement entered nto
by and between her ate husband and Adarte. TC rendered
|udgment n favor of the Adarte and dened MFR. Hence, ths
appea.
lSSUES
1. WON the promse to se sgned by the ate Cro Agudong n hs
fetme s awfu and vad
2. WON the order to the appeant to accept the sum of P1,100
tendered by the appeee s vad wthout the three hers of the
deceased Cro Agudong havng been made party defendants
HELD
1. YES
- The promse to se made by Cro Agudong, not beng contrary
to aw, moras, or pubc order or pubc pocy, s awfu, vad and
enforceabe. It not ony bnds hm and hs estate, now that he s
dead, but aso hs wfe because of the presumpton that the
property, havng been acqured durng the marrage, s con|uga
property; and the prncpe that contracts made by the husband as
regards con|uga property bnds the wfe.
- After the apse of the ten-year perod agreed upon n the deed of
sae wth the rght to repurchase executed by Adarte, the
appeant Tumaneg and her husband Cro Agudong became the
absoute owners of the two parces of and sod to them. The
promse to se and convey the same parces of and made by
Cro Agudong, after he and hs wfe had become absoute
owners thereof, cannot be regarded as a promse to rese by
vrtue of the rght to repurchase reserved by the vendor. That
rght was ost to the atter after her faure to repurchase durng
the ten years agreed upon. There s therefore no room for the
appcaton of the provsons of artce 1508 of the Cv Code
whch prohbt an agreement or stpuaton for redempton of the
property sod beyond ten years from the date of the contract.
- The term "recomprar" (repurchase) s usuay and ordnary
used to refer to a sae or conveyance of rea or persona property
f the vendee had been the former owner thereof.
- The promse to se, upon whch Adarte rests her rght to
demand the specfc performance thereof, cannot be deemed a
novaton. Novaton s brought about when there s an exstng
contract, substtuted or repaced by another, ether by the change
of the sub|ect matter, or by substanta ateratons of the terms, or
by substtuton of another for the debtor, or by subrogaton of
another to the rghts of the credtor. In ths case, the orgna
contract of sae wth the rght to repurchase reserved by the
vendor no onger exsted at the tme the promse to rese was
made by the purchaser who had aready become the absoute
owner of the property.
2. YES
- But ony because the ponente beeves there seems to be no
defense whch may be peaded or set up by the chdren and hers
of the ate Cro Agudong except the one set up by the Agudongs
wdow, Emana Tumaneng.
- Adarte s drected to amend her compant by mpeadng the
chdren and hers of the ate Cro Agudong; to serve them or
ther guardans wth copes of the compant; and f wthn 15 days
from servce of a copes of the amended compant, no answer be
fed, or f an answer be fed settng up no other defense than the
one aready set up by ther mother, then the |udgment appeaed
from s affrmed, wth costs aganst the appeant. If the answer/s
fed by the hers or ther guardan/s set up a new vad defense,
then the |udgment appeaed from s set asde, wthout costs, and
the tra court s drected to hear such evdence as the new party
defendants may desre to present, and after hearng to render
|udgment n the case.
SEPARATE OPlNlON
PABLO and MONTEMAYOR ]dissent|
- Consderng the crcumstances that surrounded the executon of
Agudongs etter, t appears that the partes, gnorant of the
pertnent provsons of the aw, extended or attempted to extend
the perod of redempton or repurchase by at east two years,
Cro agreeng to the extenson reuctanty and because of fear of
beng denounced to the |apanese and beng accused of non-
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <;
cooperaton and refusa to accept the |apanese mtary
currency.
- The agreement evdenced by the etter sgned by Cro
Agudong shoud be decared vod and of no effect for two
reasons:
A. The consent of Agudong was obtaned through threat and
ntmdaton, and consequenty, there was no rea consent.
-The Court shoud take |udca notce of the tragedes brought
about by the Pacfc war and the |apanese occupaton when,
under threats, and fear of punshment and ncarceraton,
nnocent vendees of rea propertes were nduced and
compeed to rese them to the vendors n the cheap and
greaty deprecated |apanese mtary currency, even ong after
the expraton of the agreed perod of repurchase, because
refusa woud be nterpreted by the |apanese nvaders as
re|ecton and non-acceptance of the paper money prnted and
ssued by them wthout any backng.
-The 10-year perod for repurchase agreed upon by the partes
n the year 1929 (when Adarte sod the and to Cro Agudong
and hs wfe Emana Tumaneng) had ong expred n Apr
1944, when Adarte conceved the dea and had the effrontery
to demand that despte the expraton of the ten-year perod,
she be aowed to repurchase the and. Apr 1944 was a tme
n hstory when the |apanese mtary notes had aready
deprecated n vaue (that tme, accdg to the Baantyne
schedue, one Phppne peso was equvaent to nne pesos,
|apanese mtary notes). It was but natura for Agudong to
faty re|ect Adartes proposton to redeem the and. It
appears that what made Agudong change hs mnd was the
threat made by Adarte: lf you do not like to let me redeem
this land, it is up to you, l will report the matter to the
japanese."
B. It s n voaton of artce 1508 of the Cv Code whch
prohbts any agreement to repurchase beyond ten years as
the partes here dd or attempted to do.
- Manresa: f the extenson s made after the expraton of the
perod, then t s vod and of no effect because there s nothng
to extend.
- In no part of Agudongs etter do we see any word or
expresson of ntenton to se on the part of Agudong, or desre
to buy on the part of Adarte. Agudong does not say n that
document that he woud se the and but rather that he was
permttng or he woud permt Amanda to repurchase the and.
- In the very compant of Adarte, she speaks of her desre and
her van attempts to repurchase the and. She was referrng to a
supposed rght to repurchase, born and contaned n the orgna
deed of sae executed n 1929, the perod for whose exercse
was sad to have been extended by Agudongs etter, and not to
a new rght based on a new and ndependent agreement,
contanng a supposed promse to se or an opton to buy.
- Agudongs etter s not an opton to buy or a promse to se.
Such a contract must necessary contan a descrpton of the
property to be sod or purchased, the condton or condtons of
the sae, and the prce, ndependent of any other agreement, so
that t coud stand aone. In ths case, Agudongs etter to
descrbe the and has to refer to the parce that Cro had
bought, and, nstead of fxng and statng the prce n pesos, t
has to refer to the prce at whch t was sod to hm. Agudongs
etter wthout reference to the orgna contract of sae wth rght
to repurchase executed n 1929, cannot stand aone and woud
be unntegbe.
- A promse to se |an agreement wheren the owner of rea
estate promses to se t to another party| s a short term
contract popuary caed "opton to buy." It must necessary be
of short duraton for otherwse t w unduy te up and freeze
the parce to the pre|udce of the owner who may mss other
opportuntes to se, or who may suffer oss caused by an
unearned ncrease n the vaue of the property. Wth these
consderatons, Agudongs etter can not be regarded as a
promse to se:
a.) there s no consderaton (no earnest money);
b.) the contract contans no descrpton of and promsed to be
sod, or ts saes prce, except by reference to another contract,
that of 1929;
c.) the term or perod s very ong, nay, even endess.
- Decson appeaed from shoud be reversed and the compant
dsmssed.
PASCUAL V CRlSOSTOMO
HElRS OF ARCHES V DlAZ
50 SCRA 440
MAKALINTAL; Apr 30, 1973
NATURE
Appea from the order of the CFI of Capz dsmssng the compant
and from the order denyng the moton for reconsderaton
FACTS
- Mara B. Vda. de Daz executed n favor of the ate |ose A. Arches
a deed of sae wth pacto de retro over a parce of and for and n
consderaton of P12,500.00. Arches durng hs fetme fed a
pettonto consodate ownershp over the ot. The defendant
opposed the petton aegng among other thngs that the sad
deed of sae wth pacto de retro dd not express the true ntenton
of the partes, whch was merey to consttute a mortgage on the
proper securty for a oan. After hearng the case on the merts
tra court dened the petton hodng n effect that the contract
was an equtabe mortgage. Arches appeaed to the Court of
Appeas, whch on December 29, 1964 rendered |udgment
affrmng the order of the tra court. Arches fed n ths Court a
petton for certorar to revew the decson of the appeate court
but ths Court dsmssed the petton on the ground that the ssues
nvoved were factua
- In addton to the consderaton mentoned n the deed of sae a
retro, |ose A. Arches spent P1,543.70 n connecton wth the
reconsttuton of the tte n the name of the vendor and n payng
the rea estate taxes on sad ot for the years 1951 to 1960. |ose
A. Arches ded before he coud fe an acton n court for the
coecton of the aforestated sums.
- The pettoners, as forced hers of the deceased |ose A. Arches,
demanded from defendant the payment of the sum of P12,500.00
and rembursement of the sum of P1,543.70. The defendant faed
and refused to pay. Pettoners pray among thngs that the
defendant be ordered to pay the aforementoned sums, pus
damages.
lSSUES
1. WON petton s barred by res judicata
2. WON pettoners cause of acton has prescrbed
3. WON pettoners may coect from defendant the
aforementoned sums, pus damages
HELD
1. NO
Ratio Res judicata as a ground to dsmss was waved by the
appeee when she faed to ncude t n her moton for that
purpose. Rue 15, Secton 8, of the Rues of Court provdes that
"(A) moton attackng a peadng or proceedng sha ncude a
ob|ectons then avaabe, and a ob|ectons not so ncuded sha
be deemed waved."
2. NO
Ratio The 10-year prescrptve perod commenced on August 29,
1965, when the resouton of ths Court dsmssng the petton for
certorar fed by the ate |ose A. Arches became fna and
executory, and not from |anuary 21, 1955, the date the one-year
perod of repurchase expred, as camed by the defendant.
3. YES
Ratio Ths Court recognzes the rght of the pantff to enforce hs
en n a separate proceedng notwthstandng the fact that he had
faed to obtan |udgment decarng hm the soe and absoute
owner of the parces of and n queston.
Reasoning
- Pantff has the rght "wthn sxty days after fna |udgment, for
a faure to pay the amount due and owng hm, to forecose hs
mortgage n a proper proceedng . to satsfy hs debt."
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <<
Disposition Orders appeaed from are REVERSED and the case
REMANDED to the tra court for further proceedngs.
GARGOLLO V DUERO
1 SCRA 1311
BARRERA; Apr 19, 1961
NATURE
Petton for revew of the decson of the CFI of Ioo
FACTS
- On May 20, 1953, the pantff sod to the defendants wth
pacto de recto a parce of and for P400, whch was
subsequenty ncreased to P750. Accordng to the deed, the
pantff can redeem the oton or before 1962.
- On September 1958, she verbay notfed that she woud
redeem the property on October. On October 18, 1958, she, thru
her attorney, gave the defendants wrtten notce to accept the
redempton amount of P750.00, but the atter refused to accept.
Later that month, she deposted the sad amount wth the cerk
of court.
- The reason the defendants refused s because of the promse
of the pantff to defntey se the and to them for the sum of
P1,000.00, whch promse was not carred out, they made
mprovements on the and by pantng bananas and other frut
trees and convertng a porton of the and nto rce paddes,
thereby ncurrng expenses n the amount of not ess than
P200.00, asde from pantng seasona crops of rce, corn, etc.,
whch were not yet ready for harvest, and payng denquent
taxes n the amount of P25.00.
- Upon pre-tra, the defendants agreed to turn over the
property, sub|ect to payment of the purchase prce pus the
mprovements and other expenses. For one reason or another,
the pantff and the defendants faed to agree as to the person
to undertake sad assessment, much ess, as to the vaue of the
sad mprovements. Hearng was set, however, the partes
manfested that they want to enter nto a amcabe settement.
No settement was reached.
- On |une 8, 1959, the pantff fed a moton and manfested
her ntenton not to exercse the opton to refund the
defendants' expenses or pay the ncrease n vaue of the and n
queston as provded n paragraph 2 of Artce 546 of the Cv
Code, thereby camng the rght gven her by Artce 547 of the
same code. the defendants fed a wrtten repy to the aforesad
moton statng among other thngs, that accordng to the
provsons of Artce 1616 of the Cv Code, "the vendor cannot
ava hmsef of the rght of repurchase wthout returnng to the
vendee the prce of the sae and n addton: (1) the expenses of
the contract, and any other egtmate payments made by
reason of the sae; (2) the necessary and usefu expenses made
on the thng sod." The CFI rued n favor of the pantff.
lSSUE
WON the defendants can be compeed to vacate and return the
and to the pantff
HELD
- The |udgment of the tra court s predcated on the ground
that, accordng to Artce 547 n reaton to Artce 5462 of the
Cv Code, defendants "are not entted to retan the and, but
ony to remove the sad mprovements therefrom, f the same
can be done wthout damage thereto."
- But the provson appcabe s not A547 but A1616, whch
deas specfcay wth conventional redempton. It s cear n ths
provson that for a vendor a retro to be entted to exercse hs
rght of redempton, he must remburse the vendee a retro, not
ony (1) the prce of the sae, but aso (2) the expenses of the
contract and any other egtmate payments made by reason of
the sae, and (3) the necessary and usefu expenses made on
the thng sod. The vendor a retro s not gven an opton to
requre the vendee a retro to remove the usefu mprovements
on the and sub|ect to sae a retro.
- Snce the pantff does not want to remburse the defendants
for the vaue of mprovements, the atter may not awfuy be
ordered compeed to vacate and dever sad and to pantff.
Disposition Decson reversed
CONE]ERO V CA
16 SCRA 775
REYES |BL; Apr 29, 1966
NATURE
Petton for Revew
FACTS
- Paz Torres and Enrque Torres were co-owners pro ndvso of a
ot and budng n Cebu Cty that both had nherted from ther
deceased parents. Enrque Torres sod hs haf nterest to the
Raffnan spouses for P13,000, wth rght to repurchase wthn one
year. Subsequent advances by the vendees a retro ncreased ther
cams aganst Enrque Torres and fnay, on Apr 3, 1951 (sx
months after the expraton of the rght to repurchase), sad
Enrque executed a deed of absoute sae of the same haf nterest
n the property n favor of the Raffnans for P28,00. Ths deed of
absoute sae had not been brought to the attenton of Enrque's
sster and co- owner, Paz Torres de Cone|ero, nor of her husband,
unt August 19, 1952, when Enrque Torres showed hs brother-n-
aw, Enrque Cone|ero, a copy of the deed of absoute sae of hs
share of the property n favor of the Raffnans. Cone|ero forthwth
went to the buyers, offerng to redeem hs brother-n-aw's share,
whch offer he ater rase to P29,000.00 and afterwards to
P34,000. Amcabe settement not havng been attaned, the
Cone|eros fed a compant n the Court of Frst Instance of Cebu,
seekng to be decare entted to redeem the haf nterest of
Enrque Torres; Raffnan camed absoute tte to the property n
dspute and peadng that pantffs ost ther rght of redempton
because they faed to exercse t wthn the statutory perod. The
court of frst nstance decared the pantffs Cone|ero entted to
redeem Enrque's haf nterest for P34,000. Court of Appeas
reversed the decson of the court of frst nstance statng that the
rght of ega pre-empton or redempton sha not be exercsed
except wthn thrty days from the notce n wrtng by the
prospectve vendor, or by the vendor, as the case may be ( part of
Art. 1623).
lSSUES
1. WON there a vad and effectve offer to redeem
2. WON no wrtten notce of the sae has been gven by Enrque
Torres to hs sster and co-owner, Paz T. de Cone|ero
3. WON pettoners effectuate a the steps requred for the
redempton
4. WON under the provsons of the Cv Code of the Phppnes, a
vad tender of the redempton (or repurchase) prce s not
requred
5. WON the tender of the prce s excused because Artce 1620 of
the New Cv Code aows the redemptoner to pay ony a
reasonabe prce f the prce of aenaton s grossy excessve, and
that the reasonabeness of the prce to be pad can ony be
determned by the courts
HELD
1. NO
- The evdence shows that the appeees had offered ony
P10,000.00 n check wth whch to redeem the property wth a
promse to pay the baance by means of a oan whch they woud
appy for and obtan from the bank. SC hed that the offer was not
n pursuance of a ega and effectve exercse of the rght of
redempton as contempated by aw; hence, refusa of the offer on
the part of the appeants s |ustfed. The condtons precedent for
the vad exercse of the rght do not exst.
2. YES
- No wrtten notce of sae was gven drecty to Paz BUT Article
1623 does not prescribe any particular form of notice, nor
any distinctive method for notifying the redemptioner. So
long, therefore, as the latter is informed in writing of the
"#$%"& ' #()*) ' +,-./ 01,234351 +163 <=
sale and the particulars thereof, the 30 days for
redemption start running, and the redemptioner has no
real cause to complain. The redemptoners admt that
Enrque Torres, showed and gave Enrque Cone|ero (who was
actng for and on behaf of hs wfe, Paz Torres) a copy of the
1951 deed of sae n favor of respondents Raffnans. The
furnshng of ths copy was equvaent to the gvng of wrtten
notce requred by aw; t came from the vendor and made
avaabe n wrtng the detas and fnaty of the sae. It served
a the purposes of the wrtten notce, n a more authentc
manner than any other wrtng coud have done. As a necessary
consequence, the 30-day perod for the ega redempton by co-
owner Paz Torres (retracto de comuneros) began to run ts
course from and after August 19, 1952, endng on September
18, of the same year.
3. NO
- They dd not, for they faed to make a vad tender of the prce
of the sae pad by the Raffnans wthn the perod fxed by aw.
Cone|ero merey offered a check of P10,000, whch was not even
ega tender and whch the Raffnans re|ected, n eu of the prce
of P28,000 rected by the deed of sae. The factua fndng of the
Court of Appeas to ths effect s fna and concusve. Nor were
the vendees obgated to accept Cone|ero's promse to pay the
baance by means of a oan to be obtaned n future from a
bank. Bona fde redempton necessary mports a reasonabe
and vad tender of the entre repurchase prce, and ths was not
done. There s no cogent reason for requrng the vendee to
accept payment by nstaments from a redemptoner, as t
woud utmatey resut n an ndefnte extenson of the 30-day
redempton perod, when the purpose of the aw n fxng a short
and defnte term s ceary to avod proonged and ant-
economc uncertanty as to ownershp of the thng sod.
4. NO
- The Supreme Court |ust hed that a |udca demand, by acton
fed wthn the redempton perod and accompaned by
consgnaton n Court of the redempton prce, can take the
place of a personal tender to the vendee of the
redemption money under the Civil Code of 1889, because
the nne-day redempton perod aowed thereunder was so short
as to render t mpractca that n every case the redemptoner
shoud be requred to seek out and offer the redempton prce
personay to the buyer. Under the present Cv Code, the
urgency is greatly lessened by the prolongation of the
repurchase period to 30 days, instead of the 9 previously
allowed; and the petitioners herein have neither filed
suit within the 30-day redemption period nor made
consignation of the price. Whe they receved copy of the
deed of sae on August 19, 1952, compant was ony fed on
October 4, 1952.
5. NO
- The rght of a redemptoner to pay a reasonabe prce under
Artce 1620 does not excuse hm from the duty to make proper
tender of the prce that can be honesty deemed reasonabe
under the crcumstances wthout pre|udce to fna arbtraton by
the courts; nor does t authorze sad redemptoner to demand
that the vendee accept payment by nstaments, as pettoners
have sought to do. At any rate, the pettoner, n makng ther
offer to redeem, never contested the reasonabeness of the
prce rected n the deed of sae. In fact, they even offered more,
and were wng to pay as much as P34,000. It s not dffcut to
dscern why the redempton prce shoud ether be fuy offered
n ega tender or ese vady consgned n court. Ony by such
means can the buyer become certan that the offer to redeem s
one made serousy and n good fath. A buyer can not be
expected to entertan an offer of redempton wthout attendant
evdence that the redemptoner can, and s wng to,
accompsh the repurchase mmedatey. A dfferent rue woud
eave the buyer open to harassment by specuators or
crackpots, as we as to unnecessary proongaton of the
redempton perod, contrary to the pocy of the aw. Whe
consgnaton of the tendered prce s not aways necessary
because ega redempton s not made to dscharge a pre-
exstng debt (Asturas Sugar Centra versus Cane Moasses Co.,
60 Ph. 253), a vad tender s ndspensabe, for the reasons
aready stated. Of course, consgnaton of the prce woud remove
a controversy as to the pettoner's abty to pay at the proper
tme.
Disposition We fnd no substanta error n the decson appeaed
from, and the same s hereby affrmed. Pettoners Cone|ero sha
pay the costs.
BUTTE V MANUEL UY
4 SCRA 526
REYES |BL; February 28, 1962
NATURE
Appea from a decson of CFI Mana
FACTS
- |ose V. Ramrez, durng hs fetme, was a co-owner of a house
and ot ocated at Sta. Cruz, Mana. Other co-owners are: Mare
Garner Vda. de Ramrez, 1/6; 1/6; |ose E. Ramrez, 1/6; Been T.
Ramrez, 1/6; Rta De Ramrez, 1/6; and |ose Ma. Ramrez, 1/6.
- In 1951, |ose V. Ramrez ded. In hs ast w and testament, he
bequeathed hs estate to hs chdren and grandchdren and 1/3
of the free porton to Mrs. Angea M. Butte, pantff-appeant. The
estate proceedngs are st pendng up to the present on account
of the cams of credtors whch exceed the assets of the
deceased. BPI was apponted |udca admnstrator.
- Meanwhe, on Dec. 9,1958, Mrs. Mare Garner Vda. de Ramrez,
one of the co-owners sod her undvded 1/6 share to Manue Uy &
Sons, Inc., defendant-appeant heren, for the sum of P500K. On
the same day Manue Uy & Sons, Inc. sent a etter to BPI as
|udca admnstrator of the estate of the ate |ose V. Ramrez
nformng t of the above- mentoned sae. Mrs. Butte receved ths
on Dec. 11 or 12, 1958. Vendor Mare Garner, thru her attorney-
n-fact wrote BPI on Dec. 11, 1958 confrmng vendee's etter
regardng the sae of her 1/6 share n the Sta. Cruz property for
the sum of P500K. Sad etter was receved by the bank on Dec.
15, 1958 and havng endorsed t to Mrs. Butte's counse, the atter
receved the same on Dec. J6, J958. Appeant receved the etter
on Dec. 19, 1958.
- On jan. J5, J959, Butte sent a etter and a PNB casher's check
n the amount of P500Kto Manue Uy & Sons, Inc. offerng to
redeem the 1/6 share sod by Mrs. Mare Garner Vda. de Ramrez.
Ths tender havng been refused, pantff on the same day
consgned the amount n court and fed the correspondng acton
for ega redempton. Wthout pre|udce to the determnaton by
the court of the reasonabe and far market vaue of the property
sod whch she aeged to be grossy excessve, pantff prayed for
conveyance of the property, and for actua, mora and exempary
damages
lSSUES
1. WON pantff-appeant Butte, havng been bequeathed 1/3 of
the free porton of the estate of |ose V. Ramrez, can exercse the
rght of ega redempton over the 1/6 share sod by Mare Garner
Vda. de Ramrez despte the presence of the |udca admnstrator
and pendng the fna dstrbuton of her share n the testate
proceedng
2. WON Butte exercsed the rght of ega redempton wthn the
perod prescrbed by aw
HELD
1. YES
"#$%"& ' #()*) ' +,-./ 01,234351 +163 =)
- From A1620 and A1623 CC
7
, these appcabe provsons ceary
show that Angea Butte s entted to ega redempton.
[a] As testamentary her of the estate of |.V. Ramrez, she and
her co-hers acqured an nterest n the undvded one-sxth (1/6)
share owned by her predecessor (causante) n the Santa Cruz
property, from the moment of the death of co-owner, |. V.
Ramrez. By aw, the rghts to the successon of a deceased
person are transmtted to hs hers from the moment of hs
death, and the rght of successon ncudes a property rghts
and obgatons that survve the decedent.
[b] The stuaton s n no wse atered wth the exstence of a
|udca admnstrator, snce such rghts of the |udca
admnstrator do not ncude the rght of ega redempton of the
undvded share sod to Uy & Company by Mrs. Garner Ramrez.
[c] Athough t s true that the fna dstrbuton of her share n
the testate proceedng s st pendng, the fact woud reman
that so ong as that undvded share remans n the estate, the
hers of |ose V. Ramrez own t. As co owners, hers of |.V.
Ramrez became personay vested wth rght of ega
redempton when Mare. Garner sod her share. Even f
subsequenty, the undvded share of Ramrez (and of hs hers)
shoud eventuay be sod to satsfy the credtors of the estate, t
woud not destroy ther ownershp of t before the sae, but
woud ony convey or transfer t as of the tme the share that
orgnay beonged to Ramrez s n turn sod (f t actuay s
sod) to pay hs credtors. Hence, the rght of any of the Ramrez
hers to redeem the Garner share w not be retroactvey
affected. A that the aw requres s that the ega redemptoner
shoud be a co-owner at the tme the undvded share of another
co-owner s sod to a thrd person.
2. YES
- In consderng f the offer to redeem was tmey, the notce
gven by the vendee (buyer) shoud not be taken nto account.
The text of A1623 CC ceary and expressy prescrbes that the
thrty days for makng the redempton are to be counted from
notice in writing by the vendor. Ratonae: The seer of an
undvded nterest s n the best poston to know who are hs co-
owners that under the aw must be notfed of the sae. Aso, the
notce by the seer removes a doubts as to fact of the sae, ts
perfecton, and ts vadty, the notce beng a reaffrmaton
thereof; so that the party notfed need not entertan doubt that
the seer may st contest the aenaton. Ths assurance woud
not exst f the notce shoud be gven by the buyer.
- In ths case, the notce whch became operatve s that gven
by Mare Garner attorney-n-fact. Under date of Dec.11, 1958,
she wrote BPI that her prncpa's 1/6 share n the Sta. Cruz
property had been sod to Manue Uy & Sons for P500K. BPI
receved ths notce on Dec. 15, 1958, and on the same day
endorsed t to Mrs. Butte, care of her attorneys, who receved
the same on Dec. J6, J958. Mrs. Butte tendered redempton and
upon ts refusa, |udcay consgned the prce of P500K on jan.
J5, J959. The atter date was the ast one of the 30 days
aowed by the Code for the redempton, counted by excudng
Dec.16, 1958 and ncudng |an. 15, 1959, pursuant to A13 of
CC. Thus, redempton was made n due tme.
- The date of recept of the vendor's notce by BPI (Dec 15) cant
be counted as determnng the start of the 30; for the
Admnstrator Bank of the estate was not a proper redemptoner,
snce, as prevousy shown, the rght to redeem the share of
Mare Garner dd not form part of the estate of |ose V. Ramrez.
Disposition |udgment appeaed s reversed and set asde.
'
ART. 1620. A co-owner of a thng may exercse the rght of redempton n case the
shares of a the other co-owners or of any of them, are sod to a thrd person. If the
prce of the aenaton s grossy excessve, the redemptoner sha pay ony a
reasonabe one.
Shoud two or more co-owners desre to exercse the rght of redempton, they may
ony do so n proporton to the share they may respectvey have n the thng owned n
common.
ART. 1623. The rght of ega preempton or redempton sha not be exercsed except
wthn thrty days from the notce n wrtng by the prospectve vendor, or by the
vendor, as the case may be. The deed of sae sha not be recorded n the Regstry of
Property, uness accompaned by an affdavt of the vendor that he has gven wrtten
notce thereof to a possbe redemptoners.
The rght of redempton of co-owners excudes that of ad|onng owners
CASTlLLO V SAMONTE
106 PHIL 1023
REYES |BL; Apr 30, 1960
FACTS
- n September, 1944, Cemente de Casto ded ntestate n
Pasay Cty. In October, 1944, hs wdow, Lusa Vda. de de Casto,
sod to defendant Isabe S. de Samonte 2,000 shares of stock n
the Ma-ao Sugar Centra Co.
- On December 15, 1945, Lusa A. Vda. de de Casto was
apponted Admnstratrx of the estate
*ths s the mportant part of the case:
-"On September 18, 1951, the buyer Isabe S. de Samonte fed a
petton n the probate court aegng that she had caused to be
served on a the hers of the estate of Cemente de Casto a
copy of the Admnstratrx's petton of October 10, 1950, together
wth hs own petton, wth notce that the same woud be
submtted for consderaton and approva of the Court on
September 29, 1951. Samonte's petton, wth attached copy of
Admnstratrx's petton of October 10, 1950, prayed that ths
atter petton by the Admnstratrx be gven due course.
- On September 29, 1951, the hers of Cemente de Casto dd
not attend, and the probate court, after a hearng conducted,
confrmed and approved the sae of Certfcates of Stock Nos.
1704 and 1706 to defendant-appeee Isabe S. de Sa
- Court of Appeas n C.A.-G.R. No. 9189-R, affrmed the order of
the probate court of September 29, 1951, confrmng the sae of
Certfcates of Stock Nos. 1704 and 1706. A petton for a wrt of
certorar fed n the Supreme Court was dsmssed for ack of
mert .
- after sae of sad stocks, hers of the ate Cemente Casto fed
a case for recovery of nterest of the shares (whch s sub|ect of
present case) .
- On |uy 31, 1957, |udgment was rendered by the tra court
dsmssng pantffs' compant, based many on ts opnon that
the decson of the Court of Appeas n C.A.-G.R. No. 9189-R,
affrmng the order of the probate court of September 29, 1951, s
res |udcata n the present case. Hence, the nstant appea
lSSUE
WON they can recover nterest
HELD
NO
- one of the assgned errors of the pantffs was : "That the
confrmaton of the sae s nu and vod because the
Admnstratrx's Petton of October 10, 1950 and the notce gven
by Samonte n hs moton of September 18, 1951, are not
suffcent compance wth paragraphs (a) and (b), Secton 7, Rue
90 of the Rues of Court"
- regardng ths ssue whch s the pertnent part n our outne
Court sad:
"It s camed further for pantffs-appeants that there s no
dentty of partes n C.A.-G.R. No. 9189-R and the present case.
Ths s untenabe. As to the her Sergo de Casto, snce he was
the one who appeaed the order of the probate court, and the
decson of the Court of Appeas aforementoned s now fna, he s
bound by sad decson and may not rase the queston agan. As
to the other hers |oned as pantffs-appeants n ths case, they
coud have aso appeaed the order of the probate court approvng
the sae of Stock Certfcates 1704 and 1706, because an
nterested party may appea n speca proceedngs from an order
of the court where the order s a fna determnaton of hs rghts.
(Rue 105, sec. 1(e); Tambuntng De Tengco vs. Hon. San |ose, 97
Ph., 491). ). Snce an order of the probate court reatng to sae of
property of the decedent s of fna character and appeaabe (Das
vs. Carduo, 49 Ph., 165), the faure of the other hers to appea
therefrom makes the order fna and concusve as to them aso."
"#$%"& ' #()*) ' +,-./ 01,234351 +163 =*
DOROMAL V CA (]AVELLANA)
66 SCRA 575
BARREDO; September 5, 1975
NATURE
Petton for revew of decson of CA
FACTS
- Lot was n the name of Antono Horeno but before he ded, he
made ast w and testament that t was a co-ownershp bet
hmsef and bros and ssters Lus, Soedad, Fe, Rosta, Caros,
Esperanza. Snce Esperanza ded, she was succeeded by
daughter |aveana.
- Co-owners ed by Caros wanted to se ther shares, or f
possbe f |aveana were agreeabe, to se the entre property.
Doroma Sr. and |r. were nterested.
- Snce the co-owners were scattered n varous parts of Phs,
they executed varous powers of attorney n favor of nece Mary
|menez. They aso caused power of attorney for sgnature by
|aveana. Caros nformed her that prce was P4/sqm. Later,
Caros receved n check as earnest money fr Doroma |r P5000
and prce was P5/sqm. In another etter of Caros to |aveana,
he tod that the Doromas gave the earnest money at P6/sqm.
At any rate, |aveana dd not sgn the power of attorney and the
co-owners went to se ther 6/7 share.
- A new tte was ssued TCT No. 23152, n the name of
Horenos to 6/7 and |aveana to 1/7, ony to be canceed under
TCT No. 23153, n the names of Doromas for 6/7 and to
|aveana, 1/7. Doromas pad unto Caros by check, P97,000,00
but besdes ths amount, Doromas accordng to evdence st
pad addtona cash of P18,250.00 snce agreed prce was P5.00
a square meter.
- |aveana made forma offer to repurchase the 6/7 undvded
share, the Doromas refused and |aveana fed case, sought to
show that as co-owner, she had the rght to redeem at the prce
stated (P30K). Defendants sad |aveana had no more rght to
redeem and that f she shoud have, t shoud be at the true
prce (P115,250). Tra |udge beeved defendants.
- It was found that the consderaton of P30,000.00 ony was
paced n the deed of sae to mnmze the payment of the
regstraton fees, stamps, and saes tax.
- CA reversed, and hed that though |aveana was nformed of
the proposa to se, she was never notfed of the actua
executon and regstraton. The ntermedate court rued that
redempton prce shoud be that n the deed - P30K despte
evdence that actua prce pad was much more.
lSSUE
WON |aveana has rght of redempton, and f yes, WON the
prce shoud be the actua prce of the prce stated n the deed
HELD
YES
- Pettoners do not queston |aveanas rght to redeem. Ther
frst pont s that for purposes of Artce 1623, whch requres
notce n wrtng to possbe redemptoners, the etters by Caros
to |aveana consttuted the requred notce. But to start wth,
there s no showng that the etters were n fact receved by
|aveana. Aso, between the two etters, they dd not pont
whch one s the requred notce. And nether of the etters
referred to a consummated sae. And t beng beyond dspute
that |aveana has never been notfed n wrtng of the executon
of the deed of sae by whch pettoners acqured the property, t
foows that her tender to redeem the same was we wthn the
perod prescrbed by aw.
- The redempton prce shoud be that stated n the deed, even f
amount actuay pad was much more.
- The practce of understatng consderatons of transactons for
evadng taxes must be condemned.
- Frst, ega redempton s the rght to be subrogated, upon the
same terms and condtons stipulated in the contract, n the
pace of the one who acqures a thng by purchase or daton n
payment or by any other transacton where ownershp s
transferred by onerous tte.
- Second, f the prce pad s 'grossy excessve' redemptoner s
requred to pay ony a reasonabe one; not that actuay pad by
the vendee, gong to show that the aw seeks to protect
redemptoner and converts hs poston nto one not that of a
contractuay but of a egay subrogated credtor as to the rght of
redempton, f the prce s not 'grossy excessve'.
Notce must have been ntended to state the truth and f vendor
and vendee shoud have nstead, decded to state an untruth
theren, t s they who shoud bear the consequences.
- A the eements of equtabe estoppe are here snce the
requrement of the aw s to submt the affdavt of notce to a
possbe redemptoners.
- Lasty, f ths woud be enrchment on |aveana, ths s not un|ust
but |ust enrchment, because permtted by aw. What she s
seekng to enforce s not an abuse but a mere exercse of a rght.
SEPARATE OPlNlON
TEEHANKEE ]concur|
- For the tax evaders to nvoke n court ther very act of tax
evason and to ask the courts to sancton the same by decarng
that the understated stpuated prce was ony for purposes of tax
evason but that for the exercse of the ega rght of redempton,
respondent must be ordered by the courts to pay them the arger
amount they had actuay pad but fasey understated n the deed
woud be to put a premum on crmna conduct and frank
cyncsm n gross derogaton of the aw, moras, good customs
and pubc pocy.
- Doromas and the co-owners-seers shoud be crmnay charged
for fasfcaton of pubc documents besdes beng hed abe by
the proper authortes for the fu amount of taxes.
ORTEGA V ORClNE
38 SCRA 276
BARREDO; March 31, 1971
NATURE
Appea from a decson of the Court of Frst Instance of Camarnes
Sur dsmssng an acton fed by heren appeant Ortega, owner
of a parce of and n Irga, Camarnes Sur occuped and used as
schoo ste by the Sant Anthony Academy, aganst heren
appeees Orcne and Espana, for the purpose of enforcng an
aeged right of legal redemption under Art. 1622, CC over an
ad|onng 4,452 sqm parce of and.
FACTS
- Appeant orgnay based hs cam on Art. 1621 (ega
redempton of rura ands) but amended t nto Art. 1622 after
appeees fed for a moton for carfcaton.
- Art. 1622:
"Whenever a pece of urban and whch s so sma and stuated
that a ma|or porton thereof cannot be used for any practca
purpose wthn a reasonabe tme, havng been bought merey
for specuaton, s about to be re-sod, the owner of any
ad|onng and has a rght of pre-empton at a reasonabe prce.
"If the re-sae has been perfected, the owner of the ad|onng
and sha have a rght of redempton, aso at a reasonabe
prce.
"When two or more owners of ad|onng ands wsh to exercse
the rght of pre-empton or redempton, the owner whose
ntended use of the and n queston appears best |ustfed sha
be preferred."
- The CFI found that:
- The and sod to Espana was a rcefed (rura)
- After the same was sod, Espana had t fed wth earth and
"#$%"& ' #()*) ' +,-./ 01,234351 +163 =(
subdvded nto ots for resdenta purposes (became urban)
- Lkewse, Santagos and was formery agrcutura but at the
tme Orcne sod the and n pont to Espana, Santagos and
was aready beng used by a prvate schoo (urban)
- Santago cannot redeem the and under Art. 1622
lSSUE
WON appeant may cam under Art. 1622 on ega redempton
of urban and sad and n queston
HELD
NO
Ratio In appyng Art. 1622, t must be ascertaned that the
and sought to be redeemed s 1) urban and 2) so sma and so
stuated that a ma|or porton thereof cannot be used for any
practca purpose.
Reasoning
- Whereas the ob|ectve of the rght of redempton of ad|onng
rura ands under the Cv Code s to encourage maxmum
deveopment and utzaton of agrcutura ands, t s evdent
that the purpose n aowng the rght of redempton of ad|onng
urban and s to dscourage specuaton n rea estate and the
consequent aggravaton of the housng probems n centers of
popuaton.
- It s cear that the term urban n ths provson does not
necessary refer to the nature of the and tsef nor to the
purpose to whch t s devoted, but to the character of the
communty or vcnty n whch t s found. The facts on record do
not suffcenty show where the and s stuated. But granted
that appeants and s a schoo ste whereas the one n queston
was turned nto a subdvson, t s safe to concude that both
ands are n the popuated secton of the town and are
accordngy urban.
- Consderng that the and sought to be redeemed s 4,452 sqm
n area, t s far from beng "so sma and stuated that a ma|or
porton thereof cannot be used for any practca purpose" for
qute the contrary, t has been turned nto a subdvson. Aso, t
cannot be sad that Espana bought the same for mere
specuaton when n the 8 months snce he bought t, he had
deveoped t nto a subdvson for re-sae, whch shows that he
must have had a defnte purpose n mnd n buyng the same.
Disposition WHEREFORE, the decson appeaed from s
affrmed, wth costs aganst appeant.
Chapter 14: BULK SALES LAW
PEOPLE V WONG SZU TUNG
50 OG 4876
PAREDES; March 26, 1954

NATURE
Appea from a |udgment of the CFI of Mana

FACTS
- Accused Tung (Chnese) was the owner of the Km Tay Seng
Foundry Shop n Caoocan, Rza, but on the and of Ocampo.
- Tung owed Ocampo over P2000 for renta of the ands, whch
he faed to pay, despte demands.
- Ocampo threatened to sue Wong, and ordered the cosng of
the shop so that no one coud anythng from t.
- When someone (Lm Guan) offered to buy the shop, Ocampo
had hs awyer prepare the deed of sae, whch Wong sgned.
Ocampo receved the P2500 from the sae and apped t as
payment for the rentas n arrears.
- Wong was aso ndebted to Shurdut Ms Suppy Co., Inc., for
P1,591.25. A compant was fed to recover that amount, and
|udgment was obtaned aganst Wong. When a representatve of
the Company went to the shop to demand payment, the shop
had aready been sod to Lm Guan.
= Tra Court found Wong guty of voatng Secton 3 of the
Buk Saes Law, decarng that he wfuy and vountary sod
hs shop, and that he receved the purchase prce thereof,
wthout deverng to Guan a wrtten statement contanng the
names and addresses of hs credtors and the amounts of
ndebtedness due and owng them, as requred by aw.
- Buk Saes Law (Act No 3952) Secton 3:
It sha be the duty of every person who sha se, mortgage,
transfer, or assgn any stock of goods, wares, merchandise,
provisions or materials in bulk, for cash or on credt, before
recevng from the vendee, mortgagee, or hs, or ts agent or
representatve any part of the purchase prce thereof, or any
promssory note, memorandum, or other evdence therefore, to
deliver to such vendee, mortgagee, or agent, or f the vendee,
mortgagee, or agent be a corporaton, then to the presdent,
vce-presdent, treasurer, secretary or manager of sad
corporaton, or, f such vendee or mortgagee be a partnershp
frm, then to a member thereafter provded, of the names and
addresses of a credtors to whom sad vendor or mortgagor
may be ndebted, together wth the amount of ndebtedness
due or owng, or to become due or owng by sad vendor or
mortgagor to each of sad credtors, whch statement sha be
verfed by an oath to the
lSSUE
WON Wong voated Secton 3 of the Buk Saes Law
HELD
NO
Reasoning
- Wong was pressed to sgn the deed of sae by hs credtor
Ocampo. Wth threats of cosng the shop and court acton for
evcton, the accused was practcay forced nto sgnng the deed
of sae.
- BUT, even f he hadnt been forced to sgn the deed, he st
woud not be crmnay abe. Act No. 3925 s pena n nature and
shoud be construed strcty aganst the State. The ob|ect of sae
was not covered by the provson. What was sod was the shop
tsef, together wth the goodw, credts, equpments, toos,
machneres, whch are not the stock of merchandse, goods,
wares, provsons or materas n buk contempated n the
provson.
- Meanng of merchandse accordng to a coupe of Amercan
cases: Somethng that s sod everyday, and s constanty gong
out of the store and beng repaced by other goods; must be
construed to mean such thngs as are usuay bought and sod n
trade by merchants
- Meanng of stock: "The common use of the term stock when
apped to goods n a mercante house refers to htose whch are
kept for sae."
A "foundry shop", whch does not se merchandse, s not
ncuded n sad aw.
Disposition We are of the opnon that the gut of the appeant
Wong Szu Tung has not been proven beyond reasonabe doubt;
consequenty, the |udgment appeaed from s reversed, and the
sad appeant acqutted, wth costs de officio.
LlWANAG V MENGHRA]
72 PHIL 410
PEOPLE V MAPOY
73 Ph 678
BOCOBO; September 21, 1942
FACTS
- Fepe Mapoy and R.M. Mapd were charged wth voaton of the
Buk Saes Law n that they mortgaged a of ther stock of goods,
etc., wthout any notce to Dado Boek Kssha, Ltd., one of the
offended partes, to whch they were ndebted n the sum of
P2,568.85.
- They peaded guty and each sentenced by the Court of Frst
Instance of Mana to pay a fne of P100, and the costs, and to
ndemnfy Dado Boek Kasha, Ltd., |onty and severay n the
sum of P2,568.85, wth subsdary mprsonment n case of
nsovency.
"#$%"& ' #()*) ' +,-./ 01,234351 +163 =7
lSSUE
WON the tra court erred n consderng the ndebtedness as a
abty arsng from the crme charged
HELD
YES
Reasoning
- It was an error for the tra court to consder sad ndebtedness
as a abty arsng from the crme charged, and to order
defendants to ndemnfy Dado Boek Kasha, Ltd., n the sum of
P2,568.85, wth subsdary mprsonment n case of nsovency.
- Inasmuch as under secton 4 of the Buk Saes Law, the
mortgage n queston was frauduent and vod, and there beng
no proof that the mortgaged goods have dsappeared, the same
are st sub|ect to attachment for the satsfacton of credtors'
awfu cams aganst the defendants. Dado Boek Kasha, Ltd.
may st brng a separate cv acton aganst Mapoy and Mapd
for the coecton of any ndebtedness that may be due and f
they w not pay the |udgment n such cv case, the goods
nvoved n the nstant case may be sezed and sod.
- Therefore, the obgaton of Mapoy and Mapd to pay Dado
Boek Kasha, Ltd., the sum of P2,568.85, whch was aready
exstng when the mortgage was sgned was not the resut of the
voaton of the Buk Saes Law, nor was t affected by sad
voaton.
Disposition Decson of the CFI s MODIFIED.
KlNG V HERNAEZ
4 SCRA 792
BAUTISTA ANGELO; March 31, 1962
NATURE
Appea from decson of the CFI of Mana
FACTS
- Macaro Kng, a naturazed Fpno ctzen, bought a grocery
whoesae and reta busness from the Phppne Cod Stores,
Inc.
- Kng sought permsson from the Presdent of the Phppnes to
retan the servces of the three Chnese empoyees, one havng
been empoyed as purchaser and the other two as saesmen,
pursuant to Secton 2-A of Commonweath Act 108.
- Kng's request was dsapproved on the ground that aens may
not be apponted to operate or admnster a reta busness
under Secton 1 of RA 1180
8
whch requres that ts capta be
whoy owned by ctzens of the Phppnes, the ony excepton
thereto beng the empoyment of technca personne whch may
be aowed after securng to that effect an authorzaton from
the Presdent. The postons occuped by the three Chnese
empoyees are not technca postons wthn the meanng of
Secton 2-A of CA 108, as amended by RA. 134.
- Kng and hs three Chnese empoyees fed a petton for
decaratory reef, n|uncton and mandamus on aganst the
Secretary of Commerce and Industry and the Executve
(
Repubc Act No. 1180, n reaton to Secton 2-A, Commonweath Act 108, as
amended by Repubc Act No. 134.
"SEC 1. No person who s not a ctzen of the Phppnes, and no assocaton,
partnershp, or corporaton the capta of whch s not whoy owned by ctzens of the
Phppnes, sha engage drecty or ndrecty n the reta busness."
"SEC. 2-A. Any person, corporaton, or assocaton whch, havng n ts name or under
ts contro, a rght, franchse, prvege, property or busness, the exercse or
en|oyment of whch s expressy reserved by the Consttuton or the aws to ctzens of
the Phppnes, or of any other specfc country, or to corporatons or assocatons at
east sxty per centum of the capta of whch s owned by such ctzens, permts or
aows the use, expotaton or en|oyment thereof by a person, corporaton or
assocaton not possessng the requstes prescrbed by the Consttuton or the aws of
the Phppnes; or eases, or n any other way transfers or conveys sad rght,
franchse, prvege, property or busness to a person, corporaton or assocaton not
otherwse quafed under the Consttuton, or the provsons of the exstng aws; or n
any manner permts or aows any person, not possessng the quafcatons requred
by the Consttuton or exstng aws to acqure, use, expot or en|oy a rght, franchse,
prvege, property or busness, the exercse and en|oyment of whch are expressy
reserved by the Consttuton or exstng aws to ctzens of the Phppnes or of any
other specfc country, to ntervene n the management, operaton, admnstraton or
contro thereof, whether as an offcer, empoyee or aborer theren, wth or wthout
remuneraton except technca personne whose empoyment may be specfcay
authorzed by the Presdent of the Phppnes upon recommendaton of the
Department Head concerned . . . ."
Secretary before the CFI of Mana prayng that they be gven
reef.
- Lower court hed that Kng may empoy any person, athough not
a ctzen of the Phppnes or of the Unted States of Amerca,
ncudng the three pettoners heren n any poston n hs reta
busness not nvovng partcpaton, or nterventon n the
management, operaton, admnstraton or contro of sad
busness; that the three Chnese empoyees are entted to
contnue as purchaser and saesmen n the Kngs or n any other
reta estabshment.
Petitioners' Claims
Pettoners contend that ther empoyment s not prohbted ether
by the Reta Trade Law or the Ant-Dummy Law snce they do not
ntervene n the management, operaton, admnstraton or contro
of the reta estabshment.
Respondent's Comments
Respondents hod that the anguage of the Ant-Dummy Law bans
aens' empoyment n both contro and non-contro postons; that
the words management, operaton, admnstraton and contro,
foowed by and bended wth the words "whether as an offcer,
empoyee or aborer theren", sgnfy the egsatve ntent to cover
the entre scae of personne actvty so that even aborers are
excuded from empoyment, the ony exempton beng technca
personne whose empoyment may be aowed wth the prevous
authorzaton of the Presdent. Ths contenton resuts from the
appcaton of the rue known n statutory constructon as redendo
singula singulis. Ths means that the antecedents "management,
operaton, admnstraton an contro" and the consequents
"offcers, empoyee, and aborer" shoud be read dstrbutvey to
the effect that each word s to be apped to the sub|ect to whch t
appears by context most propery reate and to whch t s most
appcabe.
lSSUE
WON the empoyment of aens n non-contro poston n a reta
estabshment or trade prohbted by the Ant-Dummy Law
HELD
YES
- Wth regard to the Reta Trade Law, ths Court has hed that the
same s vad. The purpose of the enactment of the Reta Trade
Law s to transate the genera preoccupaton of the Fpnos
aganst the threat and danger to our natona economy caused by
aen domnance and contro of the reta busness by weedng out
such threat and danger and thus prevent aens from havng a
strange hod upon our economc fe. But n so dong the
egsature dd not ntend to deprve aens of ther means of
vehood.
- The aw seems to be cear on what ts extent and scope seem to
prohbt but aso because the same s n fu accord wth the man
ob|ectve that permeates both the Reta Trade Law and the Ant-
Dummy Law. The one advocates the compete natonazaton of
the reta trade by denyng ts ownershp to any aen, whe the
other mts ts management, operaton, admnstraton and
contro to Fpno ctzens. The prevang dea s to secure both
ownershp and management of the reta busness n Fpno
hands. It s mperatve that the aw be nterpreted n a manner
that woud stave off any attempt at crcumventon of ths
egsatve purpose.
- It s hard to see how the natonazaton of empoyment n the
Phppnes can run counter to any provson of our Consttuton
consderng that ts am s on exacty to deprve ctzen of a rght
that he may exercse under t but rather to promote enhance and
protect those that are expressy accorded to a ctzen such as the
rght to fe, berty and pursut of happness. The natonazaton of
an economc measure when founded on grounds of pubc pocy
cannot be branded as un|ust, arbtrary or oppressve or contrary
to the Consttuton because ts am s merey to further the
matera progress and wefare of the ctzens of a country
- Snce the Ant-Dummy Law s but a mere compement of the
Reta Trade Law n the sense that t s desgned to make effectve
ts ams and purposes and both tend to accompsh the same
ob|ectve ether by excudng aens from ownng any reta trade
or by bannng ther empoyment f the trade s owned by Fpnos,
"#$%"& ' #()*) ' +,-./ 01,234351 +163 =8
and the target of both s "the remova and eradcaton of the
shackes of foregn economc contro and domnaton" thru the
natonazaton of the reta trade both n ownershp and
empoyment, the pronouncement made n one regardng ts
consttutonaty appes equay f not wth greater reason to the
other both beng compementary one to the other.
Disposition Decson appeaed from reversed. Premnary
n|uncton ssued by the tra court s fted. The petton for
mandamus s dsmssed, wth costs aganst appeees.

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