SPOUSES PATRICIO VS.

HEIRS OF SAMBAAN
G.R. NO. 163271
JANUARY 15, 2010
FACTS:
Spouses Julian and Guillerma Sambaan were the registered owner of a property
located in Bulua, Cagayan de oro City. The respondents and the petitioner Myrna Bernales
are the children of Julian and Guillerma. Myrna, who is the eldest of the siblings, is the
present owner and possessor of the property in question.
Julian died in an ambush in 1975. Before he died, he requested that the property in
question be redeemed from Myrna and her husband Patricio Bernales. Thus, in 1982 one of
Julians siblings offered to redeem the property but the petitioners refused because they were
allegedly using the property as tethering place for their cattle.
In January 1991, respondents received an information that the subject property was
already transferred to Myrna Bernales. The Deed of Absolute Sale dated December 7, 1970
bore the forged signatures of their parents, Julian and Guillerma.
On April 1993, the respondents, together with their mother Guillerma, filed a
complaint for Annulment of Deed of Absolute Sale and cancellation of TCT No. T-14204
alleging that their parents signatures were forged. The trial court rendered a decision on
August 2, 2001 cancelling the TCT and ordering another title to be issued in the name of the
late Julian Sambaan.
Petitioners went to the CA and appealed the decision. The CA affirmed the decision
of the lower court. A motion for reconsideration of the decision was, likewise, denied in
2004. Hence, this petition for certiorari.
ISSUE:
Whether or not the Deed of Absolute Sale is authentic as to prove the ownership of
the petitioners over the subject property.
HELD:
It is a question of fact rather than of law. Well-settled is the rule that the Supreme
Court is not a trier of facts. Factual findings of the lower courts are entitled to great weight
and respect on appeal, and in fact accorded finality when supported by substantial evidence
on the record. Substantial evidence is more than a mere scintilla of evidence. It is that
amount of relevant evidence that a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. But
to erase any doubt on the correctness of the assailed ruling, we have carefully perused the
records and, nonetheless, arrived at the same conclusion. We find that there is substantial
evidence on record to support the Court of Appeals and trial courts conclusion that the
signatures of Julian and Guillerma in the Deed of Absolute Sale were forged.
Conclusions and findings of fact by the trial court are entitled to great weight on
appeal and should not be disturbed unless for strong and cogent reasons because the trial
court is in a better position to examine real evidence, as well as to observe the demeanor of
the witnesses while testifying in the case. The fact that the CA adopted the findings of fact of
the trial court makes the same binding upon this court. Thus, we hold that with the
presentation of the forged deed, even if accompanied by the owners duplicate certificate of

title, the registered owner did not thereby lose his title, and neither does the assignee in the
forged deed acquire any right or title to the said property.

Digested by: Taruc, Albert Jericho V.

MENESES VS VENTUROZO
G.R. NO. 172196
OCTOBER 19, 2011
FACTS:
In 1967, defendant Glenda and her father, Melquiades Barraca came to her residence
asking for help. They were borrowing one-half of land donated to her so that defendant
Glenda could obtain a loan from the bank to buy a dental chair. They proposed that she signs
an alleged sale over the said portion of land.
Acceding to their request, she signed on August 12, 1967 a prepared Deed of
Absolute Sale (Exhibit C) which they brought along with them, covering the land in question
without any money involved. There was no monetary consideration in exchange for executing
Exhibit C. She did not also appear before the Notary Public Edilberto Miralles when Exhibit
C was allegedly acknowledged by her on November 9, 1967.
A month thereafter, plaintiff inquired from her uncle, Melquiades Barracca if they
have obtained the loan. The latter informed her that they did not push through with the loan
because the banks interest therefore was high. With her uncles answer, plaintiff inquired
about Exhibit C. Her uncle replied that they crampled (kinumos) the Deed of Absolute Sale
(Exhibit C) and threw it away. Knowing that Exhibit C was already thrown away, plaintiff did
not bother anymore about the document, she thought that there was no more transaction.
Besides, she is also in actual possession of the land and have even mortgaged the same.
In 1974, plaintiff transferred her residence from Nabas, Aklan, to Antipolo City
where she has been residing up to the present time. From the time she signed the Deed of
Absolute Sale (Exhibit C) in August, 1967 up to the present time of her change of residence
to Antipolo City, defendant Glenda never demanded actual possession of the land in question,
except when the latter filed on May 30, 1996 a case for unlawful detainer against her.
Following the filing of the ejectment case, she learned for the first time that the Deed of
Absolute Sale was registered on May 25, 1991 and was not thrown away contrary to what
Melquiades Barraca told her. Moreover, she and Melquiades Barraca did not talk anymore
about Exhibit C. That was also the first time she learned that the land in question is now
declared for taxation purposes in the name of defendant Glenda.
ISSUE:
Whether or not the deed of sale is simulated.
HELD:
The Court believes and so holds that the subject Deed of Sale is indeed simulated, as
it is: (1) totally devoid of consideration; (2) it was executed on August 12, 1967, less than two
months from the time the subject land was donated to petitioner on June 25, 1967 by no less
than the parents of respondent Glenda Ong; (3) on May 18, 1978, petitioner mortgaged the
land to the Aklan Development Bank for a P23,000.00 loan; (4) from the time of the alleged
sale, petitioner has been in actual possession of the subject land; (5) the alleged sale was
registered on May 25, 1991 or about twenty four (24) years after execution; (6) respondent
Glenda Ong never introduced any improvement on the subject land; and (7) petitioners
house stood on a part of the subject land. These are facts and circumstances which may be
considered badges of bad faith that tip the balance in favor of petitioner.

The Court is in accord with the observation and findings of the (RTC,3 Kalibo,
Aklan) thus: The amplitude of foregoing undisputed facts and circumstances clearly shows
that the sale of the land in question was purely simulated. It is void from the very beginning
(Article 1346, New Civil Code). If the sale was legitimate, defendant Glenda should have
immediately taken possession of the land, declared in her name for taxation purposes,
registered the sale, paid realty taxes, introduced improvements therein and should not have
allowed plaintiff to mortgage the land. These omissions properly militated against defendant
Glendas submission that the sale was legitimate and the consideration was paid. While the
Deed of Absolute Sale was notarized, it cannot justify the conclusion that the sale is a true
conveyance to which the parties are irrevocably and undeniably bound. Although the
notarization of Deed of Absolute Sale, vests in its favor the presumption of regularity, it does
not validate nor make binding an instrument never intended, in the first place, to have any
binding legal effect upon the parties thereto (Suntay vs. Court of Appeals, G.R. No. 114950,
December 19, 1995; cited in Ruperto Viloria vs. Court of Appeals, et al., G.R. No. 119974,
June 30, 1999).

Digested by: Taruc, Albert Jericho V.

FORMARAN VS. ONG

G.R. NO. 186264
JULY 8, 2013
FACTS:
On June 8, 1988, plaintiff Rosario G. Venturozo, respondent herein, filed a
Complaint for ownership, possession x x x and damages in the Regional Trial Court (RTC) of
Dagupan City against defendant Adelaida Meneses, petitioner herein, alleging that she
(plaintiff) is the absolute owner of an untitled coconut land, containing an area of 2,109
square meters, situated at Embarcadero, Mangaldan, Pangasinan, and declared under Tax
Declaration No. 239. Plaintiff alleged that she purchased the property from the spouses
Basilio de Guzman and Crescencia Abad on January 31, 1973 as evidenced by a Deed of
Absolute Sale, and that the vendors, in turn, purchased the property from defendant as
evidenced by a Deed of Absolute Sale dated June 20, 1966. Plaintiff alleged that she has been
in possession of the land until May 1983 when defendant with some armed men grabbed
possession of the land and refused to vacate despite repeated demands prompting her to
engage the services of counsel. Plaintiff prayed that after preliminary hearing, a writ of
preliminary mandatory injunction be issued; and that after hearing, a decision be rendered
declaring her as the owner of the property in dispute, ordering defendant to vacate the
property in question and to pay her P5,000.00 as attorneys fees; P1,000.00 as litigation
expenses; P10,000.00 as damages and to pay the costs of suit.
In her Answer, defendant Adelaida Meneses stated that plaintiff is the daughter of
Basilio de Guzman, the vendee in the Deed of Absolute Sale dated June 20, 1966 that was
purportedly executed by her (defendant) covering the subject property. Defendant alleged that
she never signed any Deed of Absolute Sale dated June 20, 1966, and that the said deed is a
forgery. Defendant also alleged that she never appeared before any notary public, and she did
not obtain a residence certificate; hence, her alleged sale of the subject property to Basilio de
Guzman is null and void ab initio. Consequently, the Deed of Absolute Sale dated January 31,
1973, executed by Basilio de Guzman in favor of plaintiff, covering the subject property, is
likewise null and void. Defendant stated that she acquired the subject property from her
deceased father and she has been in possession of the land for more than 30 years in the
concept of owner. Plaintiffs allegation that she (defendant) forcibly took possession of the
land is a falsehood. Defendant stated that this is the fourth case the plaintiff filed against her
concerning the land in question.
ISSUE:
Whether or not the Deed of Absolute Sale is a forgery.
HELD:
The necessity of a public document for contracts which transmit or extinguish real
rights over immovable property, as mandated by Article 1358 of the Civil Code, is only for
convenience; it is not essential for validity or enforceability. As notarized documents, Deeds
of Absolute Sale carry evidentiary weight conferred upon them with respect to their due
execution and enjoy the presumption of regularity which may only be rebutted by evidence so
clear, strong and convincing as to exclude all controversy as to falsity. The presumptions that
attach to notarized documents can be affirmed only so long as it is beyond dispute that the
notarization was regular. A defective notarization will strip the document of its public
character and reduce it to a private instrument. Consequently, when there is a defect in the

notarization of a document, the clear and convincing evidentiary standard normally attached
to a duly-notarized document is dispensed with, and the measure to test the validity of such
document is preponderance of evidence.
In the Deed of Absolute Sale dated June 20, 1966, the Notary Public signed his name
as one of the two witnesses to the execution of the said deed; hence, there was actually only
one witness thereto. Moreover, the residence certificate of petitioner was issued to petitioner
and then it was given to the Notary Public the day after the execution of the deed of sale and
notarization; hence, the number of petitioners residence certificate and the date of issuance
(June 21, 1966) thereof was written on the Deed of Absolute Sale by the Notary Public on
June 21, 1966, after the execution and notarization of the said deed on June 20, 1966.
Considering the defect in the notarization, the Deed of Absolute Sale dated June 20, 1966
cannot be considered a public document, but only a private document, and the evidentiary
standard of its validity shall be based on preponderance of evidence.
Section 20, Rule 132 of the Rules of Court provides that before any private document
offered as authentic is received in evidence, its due execution and authenticity must be proved
either: (a) by anyone who saw the document executed or written; or (b) by evidence of the
genuineness of the signature or handwriting of the maker.
In regard to the genuineness of petitioners signature appearing on the Deed of
Absolute Sale dated June 20, 1966, the Court agrees with the trial court that her signature
therein is very much different from her specimen signatures and those appearing in the
pleadings of other cases filed against her, even considering the difference of 17 years when
the specimen signatures were made. Hence, the Court rules that petitioners signature on the
Deed of Absolute Sale dated June 20, 1966 is a forgery.

Digested by: Taruc, Albert Jericho V.

CALILAP-ASMERON VS DEVELOPMENT BANK OF THE PHILIPPINES

G.R. NO. 157330
NOVEMBER 23, 2011
FACTS:
On March 17, 1975, the petitioner and her brother Celedonio Calilap constituted a
real estate mortgage over two parcels of land covered by Transfer Certificate of Title (TCT)
No. T-164117 and TCT No.T-160929, both of the Registry of Deeds of Bulacan, to secure the
performance of their loan obligation with respondent Development Bank of the Philippines
(DBP). With the principal obligation being ultimately unpaid, DBP foreclosed the mortgage.
The mortgaged parcels of land were then sold to DBP as the highest bidder. The one-year
redemption period expired on September 1, 1981.
As to what thereafter transpired, the petitioner and DBP tendered conflicting versions.
The thrust of the petitioners suit is that DBP accorded to her a preferential right to repurchase
the property covered by TCT No. 164117.DBP insisted that the petitioners real intention had
been to repurchase the two lots on installment basis. She manifested her real intention to that
effect in writing through her letter dated September 14, 198
ISSUE:
Whether or not DBP could validly rescind the Deed of Conditional Sale,
HELD:
Article 1191 of the Civil Code did not prohibit the parties from entering into an
agreement whereby a violation of the terms of the contract would result to its cancellation. In
Pangilinan v. Court of Appeals, the Court upheld the vendors right in a contract to sell to
extrajudicially cancel the contract upon failure of the vendee to pay the installments and even
to retain the sums already paid, holding:
Article 1191 of the Civil Code makes it available to the injured party alternative
remedies such as the power to rescind or enforce fulfillment of the contract, with damages in
either case if the obligor does not comply with what is incumbent upon him. There is nothing
in this law which prohibits the parties from entering into an agreement that a violation of the
terms of the contract would cause its cancellation even without court intervention. The
rationale for the foregoing is that in contracts providing for automatic revocation, judicial
intervention is necessary not for purposes of obtaining a judicial declaration rescinding a
contract already deemed rescinded by virtue of an agreement providing for rescission even
without judicial intervention, but in order to determine whether or not the rescission was
proper. Where such propriety is sustained, the decision of the court will be merely declaratory
of the revocation, but it is not itself the revocatory act. Moreover, the vendors right in
contracts to sell with reserved title to extrajudicially cancel the sale upon failure of the
vendee to pay the stipulated installments and retain the sums and installments already
received has long been recognized by the well-established doctrine of 39 years standing. The
validity of the stipulation in the contract providing for automatic rescission upon nonpayment cannot be doubted. It is in the nature of an agreement granting a party the right to
rescind a contract unilaterally in case of breach without need of going to court. Thus,
rescission under Article 1191 was inevitable due to petitioners failure to pay the stipulated
price within the original period fixed in the agreement.
Digested by: Taruc, Albert Jericho V.

HEIRS OF POLICRONIO URETA VS. HEIRS OF LIBERATO URETA

G.R. NO. 165748
SEPTEMBER 14, 2011
FACTS:
In his lifetime, Alfonso Ureta begot 14 children. Among these 14 belong the
ascendants of the parties in this case Policronio and Liberato. Here, the descendants of
Policronio are up against the rest of Alfonsos children and their descendants.When he was
alive, Alfonso was well-off he owned several fishpens, a fishpond and a sari-sari store,
among others.
On October 1969, four of Alfonsos children (Policronio, Liberato, Prudencia, and
Francisco), together with their father met in Liberatos house. Francisco, who was then a
municipal judge suggested that to reduce the inheritance taxes, their father should make it
appear that he sold some of his lands to his children. As such, Alfonso executed 4 deeds of
sale covering parcels of land in favour of Policronio, Liberato, Prudencia, and his commonlaw wife, Valeriana dela Cruz.
The dispute of this case is centered on the deed of sale in favour of Policronio which
covered six parcels of land. Since the sale was only made to avoid taxes and that no monetary
consideration was received, Alfonso continued to enjoy the lands. When Alfonso died, except
for a portion of parcel 5, the rest of the parcels transferred to Policronio were never turned
over to him. Instead, these were turned over to the administrators of Alfonsos estate
Liberato, succeeded by Prudencia, and then by her daughter Carmencita Perlas.
Subsequently, Alfonsos heirs executed a Deed of Extrajudicial Partition, which
included all the lands covered by the 4 deeds of sale executed by Alfonso for tax purposes.
When the heirs of Policronio learned about the extra- judicial partition involving Alfonsos
estate (Conrado, the Policronio heirs representative avers that he did not understand the
partitions terms when he signed it) which excludes them, they sought to amicably settle
the matter with the rest of the heirs of Alfonso.Given the futility of these talks, the heirs of
Policronio filed a complaint for declaration of ownership, recovery of possession, annulment
of documents, partition, and damages.
ISSUE:
Whether the Court of Appeals is correct in ruling that the Deed of Absolute Sale of
25 October 1969 is void for being absolutely fictitious.
HELD:
The Court finds no cogent reason to deviate from the finding of the CA that the
Deed of Sale is null and void for being absolutely simulated. The Civil Code provides:
Art. 1345. Simulation of a contract may be absolute or relative. The former takes
place when the parties do not intend to be bound at all; the latter, when the parties conceal
their true agreement.
Art. 1346. An absolutely simulated or fictitious contract is void. A relative
simulation, when it does not prejudice a third person and is not intended for any purpose

contrary to law, morals, good customs, public order or public policy binds the parties to their
real agreement.
Valerio v. Refresca is instructive on the matter of simulation of contracts: In absolute
simulation, there is a colorable contract but it has no substance as the parties have no
intention to be bound by it. The main characteristic of an absolute simulation is that the
apparent contract is not really desired or intended to produce legal effect or in any way alter
the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract
is void, and the parties may recover from each other what they may have given under the
contract. However, if the parties state a false cause in the contract to conceal their real
agreement, the contract is relatively simulated and the parties are still bound by their real
agreement. Hence, where the essential requisites of a contract are present and the simulation
refers only to the content or terms of the contract, the agreement is absolutely binding and
enforceable between the parties and their successors in interest.
Lacking, therefore, in an absolutely simulated contract is consent which is essential
to a valid and enforceable contract. Thus, where a person, in order to place his property
beyond the reach of his creditors, simulates a transfer of it to another, he does not really
intend to divest himself of his title and control of the property; hence, the deed of transfer is
but a sham. Similarly, in this case, Alfonso simulated a transfer to Policronio purely for
taxation purposes, without intending to transfer ownership over the subject lands.

Digested by: Taruc, Albert Jericho V.

LALICON VS. NATIONAL HOUSING AUTHORITY

G.R. NO. 185440
JULY 13, 2011
FACTS:
On November 25, 1980 the National Housing Authority (NHA) executed a Deed of
Sale with Mortgage over a Quezon City lot in favor of the spouses Isidro and Flaviana Alfaro
(the Alfaros). The deed of sale provided, among others, that the Alfaros could sell the land
within five years from the date of its release from mortgage without NHA's prior written
consent. Thus:
x x x. 5. Except by hereditary succession, the lot herein sold and conveyed, or any part
thereof, cannot be alienated, transferred or encumbered within five (5) years from the date of
release of herein mortgage without the prior written consent and authority from the
VENDOR-MORTGAGEE (NHA). x x x
The mortgage and the restriction on sale were annotated on the Alfaros' title on April
14, 1981. About nine years later or on November 30, 1990, while the mortgage on the land
subsisted, the Alfaros sold the same to their son, Victor Alfaro. After full payment of the loan
or on March 21, 1991 the NHA released the mortgage. Six days later or on March 27 Victor
transferred ownership of the land to his illegitimate daughters. On December 14, 1995 Victor
mortgaged the land to Marcela Lao Chua, Rosa Sy, Amparo Ong, and Ida See. Subsequently,
on February 14, 1997 Victor sold the property to Chua, one of the mortgagees.
RTC: 1990 sale of the land to their son Victor, and the subsequent sale of the same to
Chua, made in violation of NHA rules and regulations. It ruled that, although the Alfaros
clearly violated the five-year prohibition, the NHA could no longer rescind its sale to them
since it right to do so had already prescribed, applying Article 1389 of the New Civil Code.
The NHA and the Lalicons, who intervened, filed their respective appeals to the Court of
Appeals (CA).
CA: CA reversed the RTC decision and found the NHA entitled to rescission. The
CA declared TCT 277321 in the name of the Alfaros and all subsequent titles and deeds of
sale null and void. It ordered Chua to reconvey the subject land to the NHA but the latter
must pay the Lalicons the full amount of their amortization, plus interest, and the value of the
improvements they constructed on the property.
ISSUE:
Whether or not the subsequent sales constituted breach in the obligation and may
give rise to rescission .
HELD:
Lalicons' request for exemption from the five-year restriction was not granted. Resale
without NHA's consent is a substantial breach. The five-year restriction against resale,
counted from the release of the property from the NHA mortgage, measures out the desired
hold that the government felt it needed to ensure that its objective of providing cheap housing
for the homeless is not defeated by wily entrepreneurs. The restriction clause is more of a
condition on the sale of the property to the Alfaros rather than a condition on the mortgage
constituted on it. The Lalicons claim that the NHA unreasonably ignored their letters that
asked for consent to the resale of the subject property. They also claim that their failure to

get NHA's prior written consent was not such a substantial breach that warranted rescission.
But the NHA had no obligation to grant the Lalicons' request for exemption from the fiveyear restriction as to warrant their proceeding with the sale when such consent was not
immediately forthcoming. And the resale without the NHA's consent is a substantial breach.
The essence of the government's socialized housing program is to preserve the beneficiary's
ownerships for a reasonable length of time, here at least within five years from the time he
acquired it free from any encumbrance.
Action has not prescribed. NHA sought annulment of the Alfaros' sale to Victor
because they violated the five-year restriction against such sale provided in their contract.
Thus, the CA correctly ruled that such violation comes under Article 1191 where the
applicable prescriptive period is that provided in Article 1144 which is 10 years from the time
the right of action accrues. The NHA's right of action accrued on February 18, 1992 when it
learned of the Alfaros' forbidden sale of the property to Victor. Since the NHA filed its action
for annulment of sale on April 10, 1998, it did so well within the 10-year prescriptive period.
Lalicons and Chua were not buyers in good faith. Since the five-year prohibition
against alienation without the NHA's written consent was annotated on the property's title, the
Lalicons very well knew that the Alfaros' sale of the property to their father, Victor, even
before the release of the mortgage violated that prohibition.
Lastly, since mutual restitution is required in cases involving rescission under Article
1191, the NHA must return the full amount of the amortizations it received for the property,
plus the value of the improvements introduced on the same, with 6% interest per annum from
the time of the finality of this judgment.

Digested by: Taruc, Albert Jericho V.

SPOUSES NOYNAY VS. CITIHOMES BUILDER AND DEVELOPMENT, INC.

G.R. NO. 204160
SEPTEMBER 22, 2014
FACTS:
On December 29, 2004, Citihomes and Spouses Noynay executed a contract to sell
covering the sale of a house and lot located in San Jose Del Monte, Bulacan, and covered by
Transfer Certificate of Title (TCT) No. T-43469. Under the terms of the contract, the price of
the property was fixed at P915,895.00, with a downpayment of P183,179.00, and the
remaining balance to be paid in 120 equal monthly installments with an annual interest rate of
21% commencing on February 8, 2005 and every 8th day of the month thereafter.
Subsequently, on May 12, 2005, Citihomes executed the Deed of Assignment of
Claims and Accounts (Assignment) in favor of United Coconut Planters Bank (UCPB) on
May 12, 2005. Under the said agreement, UCPB purchased from Citihomes various
accounts, including the account of Spouses Noynay, for a consideration of P100,000,000.00.
In turn, Citihomes assigned its rights, titles, interests, and participation in various contracts to
sell with its buyers to UCPB.
In February of 2007, Spouses Noynay allegedly started to default in their payments.
Months later, Citihomes decided to declare Spouses Noynay delinquent and to cancel the
contract considering that nine months of agreed amortizations were left unpaid. On December
8, 2007, the notarized Notice of Delinquency and Cancellation of the Contract To Sell, dated
November 21, 2007, was received by Spouses Noynay. They were given 30 days within
which to pay the arrears and failure to do so would authorize Citihomes to consider the
contract as cancelled.
On June 15, 2009, Citihomes sent its final demand letter asking Spouses Noynay to
vacate the premises due to their continued failure to pay the arrears. Spouses Noynay did not
heed the demand, forcing Citihomes to file the complaint for unlawful detainer before the
MTCC on July 29, 2009.
In the said complaint, Citihomes alleged that as per Statement of Account as of
March 18, 2009, Spouses Noynay had a total arrears in the amount of P272,477.00, inclusive
of penalties. Thus, Citihomes prayed that Spouses Noynay be ordered to vacate the subject
property and pay the amount of P8,715.97 a month as a reasonable compensation for the use
and occupancy to commence from January 8, 2007 until Spouses Noynay vacate the same.
ISSUE:
Whether or not Citihomes has a cause of action for ejectment against Spouses
Noynay.
HELD:
In Pagtalunan v. Manzano, the Court stressed the importance of complying with the
provisions of the Maceda Law as to the cancellation of contracts to sell involving realty
installment schemes. There it was held that the cancellation of the contract by the seller must
be in accordance with Section 3 (b) of the Maceda Law, which requires the notarial act of
rescission and the refund to the buyer of the full payment of the cash surrender value of the
payments made on the property. The actual cancellation of the contract takes place after thirty
(30) days from receipt by the buyer of the notice of cancellation or the demand for rescission

of the contract by a notarial act and upon full payment of the cash surrender value to the
buyer, to wit:
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to fifty percent of the total payments made
and, after five years of installments, an additional five percent every year but not to exceed
ninety percent of the total payments made: Provided, That the actual cancellation of the
contract shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.

Digested by: Taruc, Albert Jericho V.

OPTIMUM DEVELOPMENT BANK VS. SPOUSES JOVELLANOS

G.R. NO. 189145
DECEMBER 4, 2013
FACTS:
On April 26, 2005, Sps. Jovellanos entered into a Contract to Sell with Palmera
Homes, Inc. (Palmera Homes) for the purchase of a residential house and lot situated in
Block 3, Lot 14, Villa Alegria Subdivision, Caloocan City (subject property) for a total
consideration of P1,015,000.00. Pursuant to the contract, Sps. Jovellanos took possession of
the subject property upon a down payment of P91,500.00, undertaking to pay the remaining
balance of the contract price in equal monthly installments of P13,107.00 for a period of 10
years starting June 12, 2005.
On August 22, 2006, Palmera Homes assigned all its rights, title and interest in the
Contract to Sell in favor of petitioner Optimum Development Bank (Optimum) through a
Deed of Assignment of even date.
On April 10, 2006, Optimum issued a Notice of Delinquency and Cancellation of
Contract to Sell9 for Sps. Jovellanoss failure to pay their monthly installments despite
several written and verbal notices.
In a final Demand Letter dated May 25, 2006, Optimum required Sps. Jovellanos to
vacate and deliver possession of the subject property within seven (7) days which, however,
remained unheeded. Hence, Optimum filed, on November 3, 2006, a complaint for unlawful
detainer before the MeTC, docketed as Civil Case No. 06-28830. Despite having been served
with summons, together with a copy of the complaint, Sps. Jovellanos failed to file their
answer within the prescribed reglementary period, thus prompting Optimum to move for the
rendition of judgment.
Thereafter, Sps. Jovellanos filed their opposition with motion to admit answer,
questioning the jurisdiction of the court, among others. Further, they filed a Motion to
Reopen and Set the Case for Preliminary Conference, which the MeTC denied.
ISSUE:
Whether or not there was a valid and effective cancellation of the Contract to Sell.
HELD:
Verily, in a contract to sell, the prospective seller binds himself to sell the property
subject of the agreement exclusively to the prospective buyer upon fulfillment of the
condition agreed upon which is the full payment of the purchase price but reserving to
himself the ownership of the subject property despite delivery thereof to the prospective
buyer.
The full payment of the purchase price in a contract to sell is a suspensive condition,
the non-fulfillment of which prevents the prospective sellers obligation to convey title from
becoming effective, as in this case. Further, it is significant to note that given that the
Contract to Sell in this case is one which has for its object real property to be sold on an
installment basis, the said contract is especially governed by and thus, must be examined
under the provisions of RA 6552, or the "Realty Installment Buyer Protection Act", which
provides for the rights of the buyer in case of his default in the payment of succeeding
installments. Breaking down the provisions of the law, the Court, in the case of Rillo v. CA,

explained the mechanics of cancellation under RA 6552 which are based mainly on the
amount of installments already paid by the buyer under the subject contract, to wit:
Given the nature of the contract of the parties, the respondent court correctly applied
Republic Act No. 6552. Known as the Maceda Law, R.A. No. 6552 recognizes in conditional
sales of all kinds of real estate (industrial, commercial, residential) the right of the seller to
cancel the contract upon non-payment of an installment by the buyer, which is simply an
event that prevents the obligation of the vendor to convey title from acquiring binding force.
It also provides the right of the buyer on installments in case he defaults in the payment of
succeeding installments, viz.:
(1) Where he has paid at least two years of installments,
(a) To pay, without additional interest, the unpaid installments due within the total
grace period earned by him, which is hereby fixed at the rate of one month grace period for
every one year of installment payments made:
Provided, That this right shall be exercised by the buyer only once in every five years
of the life of the contract and its extensions, if any. (b) If the contract is cancelled, the seller
shall refund to the buyer the cash surrender value of the payments on the property equivalent
to fifty per cent of the total payments made and, after five years of installments, an additional
five per cent every year but not to exceed ninety per cent of the total payments made.
Provided, That the actual cancellation of the contract shall take place after
cancellation or the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installments made.
(2) Where he has paid less than two years in installments, Sec. 4. x x x the seller shall
give the buyer a grace period of not less than sixty days from the date the installment became
due. If the buyer fails to pay the installments due at the expiration of the grace period, the
seller may cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.Pertinently, since
Sps. Jovellanos failed to pay their stipulated monthly installments as found by the MeTC, the
Court examines Optimums compliance with Section 4 of RA 6552, as above-quoted and
highlighted, which is the provision applicable to buyers who have paid less than two (2)
years-worth of installments. Essentially, the said provision provides for three (3) requisites
before the seller may actually cancel the subject contract: first, the seller shall give the buyer
a 60-day grace period to be reckoned from the date the installment became due; second, the
seller must give the buyer a notice of cancellation/demand for rescission by notarial act if the
buyer fails to pay the installments due at the expiration of the said grace period; and third, the
seller may actually cancel the contract only after thirty (30) days from the buyers receipt of
the said notice of cancellation/demand for rescission by notarial act. In the present case, the
60-day grace period automatically operated42 in favor of the buyers, Sps. Jovellanos, and
took effect from the time that the maturity dates of the installment payments lapsed. With the
said grace period having expired bereft of any installment payment on the part of Sps.
Jovellanos, Optimum then issued a notarized Notice of Delinquency and Cancellation of
Contract on April 10, 2006. Finally, in proceeding with the actual cancellation of the contract
to sell, Optimum gave Sps. Jovellanos an additional thirty (30) days within which to settle
their arrears and reinstate the contract, or sell or assign their rights to another.

It was only after the expiration of the thirty day (30) period did Optimum treat the
contract to sell as effectively cancelled making as it did a final demand upon Sps.
Jovellanos to vacate the subject property only on May 25, 2006. Thus, based on the
foregoing, the Court finds that there was a valid and effective cancellation of the Contract to
Sell in accordance with Section 4 of RA 6552 and since Sps. Jovellanos had already lost their
right to retain possession of the subject property as a consequence of such cancellation, their
refusal to vacate and turn over possession to Optimum makes out a valid case for unlawful
detainer as properly adjudged by the MeTC.

Digested by: Taruc, Albert Jericho V.

SPOUSES PASCUAL VS. SPOUSES BALLESTEROS

G.R. NO. 186269
FEBRUARY 15, 2012
FACTS:
The instant case involves a 1,539 square meter parcel of land (subject property)
situated in Barangay Sta. Maria, Laoag City and covered by Transfer Certificate of Title
(TCT) No. T-30375 of the Laoag City registry. The subject property is owned by the
following persons, with the extent of their respective shares over the same: (1) the spouses
Albino and Margarita Corazon Mariano, 330 square meters; (2) Angela Melchor (Angela),
466.5 square meters; and (3) the spouses Melecio and Victoria Melchor (Spouses Melchor),
796.5 square meters.
Upon the death of the Spouses Melchor, their share in the subject property was
inherited by their daughter Lorenza Melchor Ballesteros (Lorenza). Subsequently, Lorenza
and her husband Antonio Ballesteros (respondents) acquired the share of Angela in the
subject property by virtue of an Affidavit of Extrajudicial Settlement with Absolute Sale
dated October 1, 1986.
On August 11, 2000, Margarita, then already widowed, together with her children,
sold their share in the subject property to Spouses Pascual and Francisco. Subsequently,
Spouses Pascual and Francisco caused the cancellation of TCT No. 30375 and, thus, TCT No.
T-32522 was then issued in their names together with Angela and Spouses Melchor.
Consequently, the respondents, claiming that they did not receive any written notice
of the said sale in favor of Spouses Pascual and Francisco, filed with the Regional Trial Court
(RTC) of Laoag City a Complaint for legal redemption against the petitioners. The
respondents claimed that they are entitled to redeem the portion of the subject property sold
to Spouses Pascual and Francisco being co-owners of the same.
For their part, the petitioners claimed that there was no co-ownership over the subject
property considering that the shares of the registered owners thereof had been particularized,
specified and subdivided and, hence, the respondents has no right to redeem the portion of the
subject property that was sold to them.
On January 31, 2007, the RTC rendered a decision dismissing the complaint for legal
redemption filed by the respondents. In disposing of the said complaint, the RTC summed up
the issues raised therein as follows: (1) whether the respondents herein and the predecessorsin-interest of the petitioners are co-owners of the subject property who have the right of
redemption under Article 1620 of the Civil Code; and (2) if so, whether that right was
seasonably exercised by the respondents within the 30-days.
ISSUE:
Whether or not the respondents failed to seasonably exercise their right of
redemption within the 30-day period.

HELD:
Article 1623 of the Civil Code succinctly provides that:

Article 1623. The right of legal pre-emption or redemption shall not be exercised
except within thirty days from the notice in writing by the prospective vendor, or by the
vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given written notice thereof to
all possible redemptioners. The right of redemption of co-owners excludes that of adjoining
owners.
The indispensability of the written notice requirement for purposes of the exercise of
the right of redemption was explained by this Court in Barcellano v. Baas, thus: Nothing in
the records and pleadings submitted by the parties shows that there was a written notice sent
to the respondents. Without a written notice, the period of thirty days within which the right
of legal pre-emption may be exercised, does not start.
The indispensability of a written notice had long been discussed in the early case of
Conejero v. Court of Appeals, penned by Justice J.B.L. Reyes: With regard to the written
notice, we agree with petitioners that such notice is indispensable, and that, in view of the
terms in which Article of the Philippine Civil Code is couched, mere knowledge of the sale,
acquired in some other manner by the redemptioner, does not satisfy the statute. The written
notice was obviously exacted by the Code to remove all uncertainty as to the sale, its terms
and its validity, and to quiet any doubts that the alienation is not definitive. The statute not
having provided for any alternative, the method of notification prescribed remains exclusive.
This is the same ruling in Verdad v. Court of Appeals: The written notice of sale is
mandatory. This Court has long established the rule that notwithstanding actual knowledge of
a co-owner, the latter is still entitled to a written notice from the selling co-owner in order to
remove all uncertainties about the sale, its terms and conditions, as well as its efficacy and
status.
Lately, in Gosiengfiao Guillen v. The Court of Appeals, this Court again emphasized
the mandatory character of a written notice in legal redemption: From these premises, we
ruled that Petitioner-heirs have not lost their right to redeem, for in the absence of a written
notification of the sale by the vendors, the 30-day period has not even begun to run. These
premises and conclusion leave no doubt about the thrust of Mariano: The right of the
petitioner-heirs to exercise their right of legal redemption exists, and the running of the period
for its exercise has not even been triggered because they have not been notified in writing of
the fact of sale.

Digested by: Taruc, Albert Jericho V.

GOCHAN VS. MANCAO

G.R. NO. 182314
NOVEMBER 13, 2013
FACTS:
Felix Gochan (Gochan), Amparo Alo (Alo), and Jose A. Cabellon were co-owners of
Lot Nos. 1028 and 1030 of Subdivision Plan Psd-21702 located in Cebu City, Cebu.
Petitioners are successors-in-interest of Gochan, while respondent bought Lot Nos. 1028-D-1,
1028-D-3, 1028-D-4, and 1028-E covered by Transfer Certificate of Title (TCT) Nos.
139161-139164 from the children of Angustias Velez and Eduardo Palacios, who, together
with Jose, Jesus, Carmen, and Vicente, all surnamed Velez, acquired Lot Nos. 1028-D and
1028-E from Alo.
Sometime in 1998, petitioners, including Mae Gochan, filed a case for legal
redemption of Lot Nos. 1028-DD, 1028-EE, 1028-FF, 1028-GG, 1028-HH, 1028-II, 1028-JJ,
1028-KK, 1028-LL, 1028-MM, 1028-NN, 1028-OO, 1028-PP, 1028-QQ, 1028-RR, 1028-SS,
1028-TT, 1028-UU, 1028-VV, 1030-I of Subdivision Plan Psd-21702 covered by TCT Nos.
2318 to 2337.
The TCTs are registered under the names of Gochan (married to Tan Nuy), Alo
(married to Patricio Beltran), and Genoveva S. De Villalon (married to Augusto P. Villalon),
who is the successor-in-interest of Cabellon. The case, which was docketed as Civil Case No.
CEB-22825 and raffled before Cebu City RTC Branch 17, was brought against the spouses
Bonifacio Paray, Jr. and Alvira Paray (sister of respondent), who purchased the lots from the
heirs of Alo. On November 20, 1998, the parties executed a Compromise Agreement,
whereby, for and in consideration of the amount of Php650,000.00, the Spouses Paray
conveyed to petitioners and Mae Gochan all their shares, interests, and participation over the
properties. On November 27, 1998, the court approved the agreement and rendered judgment
in accordance with its terms and conditions. The decision was annotated on December 29,
1999 in the subject TCTs as Entry No. 188688.
Claiming that the legal redemption adversely affected Lot Nos. 1028-D-1, 1028-D-3,
1028-D-4, and 1028-E, respondent filed a suit before the CA for "Declaration of Nullity of
Final Decision and Compromise Agreement and the Registration of the Same Documents
with the Register of Deeds."
ISSUE:
Whether or not the CA erred in finding that extrinsic fraud was present when the
respondent was not impleaded in the redemption case and when petitioners entered into a
compromise agreement with Bonifacio Paray.
HELD:
To be clear, the governing law with respect to redemption by co-owners in case the
share of a co-owner is sold to a third person is Article 1620 of the New Civil Code, which
provides:
Art. 1620. A co-owner of a thing may exercise the right of redemption in case the
shares of all the other co-owners or of any of them, are sold to a third person. If the price of
the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should

two or more co-owners desire to exercise the right of redemption, they may only do so in
proportion to the share they may respectively have in the thing owned in common.
Article 1620 contemplates of a situation where a co-owner has alienated his proindiviso shares to a third party or stranger to the co-ownership. Its purpose is to provide a
method for terminating the co-ownership and consolidating the dominion in one sole owner.
In Basa v. Aguilar, the Court stated:
Legal redemption is in the nature of a privilege created by law partly for reasons of
public policy and partly for the benefit and convenience of the redemptioner, to afford him a
way out of what might be a disagreeable or inconvenient association into which he has been
thrust. It is intended to minimize co-ownership. The law grants a co-owner the exercise of the
said right of Decision 12 G.R. No. 182314 redemption when the shares of the other owners
are sold to "a third person." A third person, within the meaning of this Article, is anyone who
is not a co-owner. (Sentencia of February 7, 1944 as cited in Tolentino, Comments on the
Civil Code, Vol. V, p. 160.)
We already held that only the redeeming co-owner and the buyer are the
indispensable parties in an action for legal redemption, to the exclusion of the seller/coowner. Thus, the mere fact that respondent was not impleaded as a party in Civil Case No.
CEB-22825 is not in itself indicative of extrinsic fraud. If a seller/co-owner is not treated as
an indispensable party, how much more is a third person who merely alleged that his lots are
affected thereby? Truly, the exclusion of respondent (or other alleged subdivision lot owners
who are equally affected) from the legal redemption case does not entitle him to the right to
ask for the annulment of the judgment under Rule 47 of the Rules, because he does not even
have any legal standing to participate or intervene therein.
Assuming arguendo that respondent has the personality to be impleaded in Civil Case
No. CEB-22825 since it is settled that a person need not be a party to the judgment sought to
be annulled, still, he failed to prove with sufficient particularity the allegation that petitioners
practiced deceit or employed subterfuge that precluded him to fully and completely present
his case to the trial court. Like in other civil cases, the allegation of extrinsic fraud must be
fully substantiated by a preponderance of evidence in order to serve as basis for annulling a
judgment. Extrinsic fraud has to be definitively established by the claimant as mere allegation
does not instantly warrant the annulment of a final judgment. Ei incumbit probotio qui dicit,
non qui negat. He who asserts, not he who denies, must prove. Unfortunately, respondent
failed to discharge the burden.

Digested by: Taruc, Albert Jericho V.

SPOUSES PLAZA VS. LUSTIVA

G.R. NO. 172909
MARCH 5, 2014
FACTS:
Among her other siblings, Barbara was declared by the CA as the owner of the
subject property in question. Consequently, her successors in interest, herein respondents,
have continued to occupy the property. The son of one of Barbaras siblings filed a complaint
for injunction with prayer for writ of preliminary injunction against the respondents and the
city government of Butuan. They prayed that respondents be enjoined from unlawfully taking
the subject property. According to petitioners, they acquired the property from Virginia
Tuazon who was the sole bidder in a tax delinquency sale conducted by the City of Butuan on
December 1997.
In their answer, respondents contended that they were never delinquent in paying the
land taxes and that Tuazon is a government employee who is disqualified to bid in the public
auction as provided under the Local Government Code and such sale, if ever there was, is
void.
The RTC denied the petition, holding that there was indeed an irregularity in the
auction sale since the highest bidder was a government employee disqualified under the LGC.
Petitioners challenged the RTC decision through a petition for review on certiorari under
Rule 65. While such petition is pending, petitioners filed an action for specific performance
against the City of Butuan. The CA affirmed RTC decision and found petitioners guilty of
forum shopping.
ISSUE:
Whether or not CA erred in dismissing the petition.
HELD:
The petitioners may not invoke Section 18118of the Local Government Code of 1991
to validate their alleged title. The law authorizes the local government unit to purchase the
auctioned property only in instances where there is no bidder or the highest bid is xxx
insufficient. A disqualified bidder is not among the authorized grounds. The local government
also never undertook steps to purchase the property under Section 181 of the Local
Government Code of 1991, presumably because it knew the invoked provision does not
apply. As the lower courts correctly found, Tuazon had no ownership to confer to the
petitioners despite the latters reimbursement of Tuazons purchase expenses. Because they
were never owners of the property, the petitioners failed to establish entitlement to the writ of
preliminary injunction. When the complainants right or title is doubtful or disputed, he does
not have a clear legal right and, therefore, the issuance of injunctive relief is not proper.
Likewise, upon the dismissal of the main case by the RTC on August 8, 2013, the question of
issuance of the writ of preliminary injunction has become moot and academic.
Digested by: Taruc, Albert Jericho V.

ASIATRUST DEVELOPMENT BANK VS. TUBLE

G.R. NO. 183987
JULY 25, 2012
FACTS:
Carmelo Tuble (Tuble), who served as the vice-president of petitioner Asiatrust
Development Bank (Asiatrust), availed of himself of the loan privileges offered by the bank.
The first loan was secured by a real estate mortgage. The Real Estate Mortgage Contract
contained a dragnet clause. The second loan was a consumption loan with an interest at 18%
per annum as evidenced by Promissory Note No. 0143.
After his retirement from Asiatrust, Tuble had outstanding obligations of 421,800
representing the real estate loan and 100,000 as consumption loan. When Tuble refused to
settle his loans, Asiatrust filed a Petition for Extra-judicial Foreclosure of real estate mortgage
over his property. The Petition was based only on his real estate loan, which at that time
amounted to 421,800. Asiatrust emerged as the highest bidder. Subsequently, Tuble timely
redeemed the property for 1,318,401.91.
Despite his payment of the redemption price, Tuble questioned how the foreclosure
basis of 421,800 ballooned to 1,318,401.91 in a matter of one year. Thus, Tuble filed a
Complaint for recovery of sum of money against Asiatrust seeking to recover the excess
charges on the redemption price. He averred that Asiatrust erroneously imposed an 18%
annual interest rate to the real estate loan. Asiatrust countered that the 18% annual interest
was supported by Promissory Note No. 0143. Both the RTC and the CA ruled in favor of
Tuble.
ISSUE:
Whether or not Asiatrust erred in applying the 18% annual interest rate to the
redemption price?
HELD:
The Court of Appeals is affirmed. In foreclosures, the mortgaged property is
subjected to the proceedings for the satisfaction of the obligation. As a result, payment is
effected by abnormal means whereby the debtor is forced by a judicial proceeding to comply
with the presentation or to pay indemnity.
Once the proceeds from the sale of the property are applied to the payment of the
obligation, the obligation is already extinguished. Thus, in Spouses Romero v. Court of
Appeals, we held that the mortgage indebtedness was extinguished with the foreclosure and
sale of the mortgaged property, and that what remained was the right of redemption granted
by law.
Consequently, since the Real Estate Mortgage Contract is already extinguished,
petitioner can no longer rely on it or invoke its provisions, including the dragnet clause
stipulated therein. It follows that the bank cannot refer to the 18% annual interest charged in
Promissory Note No. 0143, an obligation allegedly covered by the terms of the Contract.

Neither can the bank use the consummated contract to collect on the rest of the
obligations, which were not included when it earlier instituted the foreclosure proceedings. It

cannot be allowed to use the same security to collect on the other loans. To do so would be
akin to foreclosing an already foreclosed property.
Despite the extinguishment of the Real Estate Mortgage Contract, Tuble had the right
to redeem the security by paying the redemption price. The right of redemption of foreclosed
properties was a statutory privilege he enjoyed. Redemption is by force of law, and the
purchaser at public auction is bound to accept it. Thus, it is the law that provides the terms of
the right; the mortgagee cannot dictate them.
Thus, we held in Rural Bank of San Mateo, Inc. v. Intermediate Appellate Court that
the power to decide whether or not to foreclose is the prerogative of the mortgagee; however,
once it has made the decision by filing a petition with the sheriff, the acts of the latter shall
thereafter be governed by the provisions of the mortgage laws, and not by the instructions of
the mortgagee. In direct contravention of this ruling, though, the bank included numerous
charges and loans in the redemption price, which inexplicably ballooned to 1,318,401.91.
On this error alone, the claims of petitioner covering all the additional charges should be
denied.

Digested by: Taruc, Albert Jericho V.

SPOUSES SEBASTIAN VS. BPI FAMILY BANK

G.R. NO. 160107
OCTOBER 22, 2014
FACTS:
The petitioners are spouses who used to work for BPI Family. At the time material to
this case, Jaime was the Branch Manager of BPI Familys San Francisco del Monte Branch in
Quezon City and Evangeline was a bank teller at the Blumentritt Branch in Manila. On
October 30, 1987, they availed themselves of a housing loan from BPI Family as one of the
benefits extended to its employees. Their loan amounted to P273,000.00, and was covered by
a Loan Agreement, whereby they agreed that the loan would be payable in 108 equal monthly
amortizations of P3,277.57 starting on January 10, 1988 until December 10, 1996; and that
the monthly amortizations would be deducted from his monthly salary. To secure the payment
of the loan, they executed a real estate mortgage in favor of BPI Family over the property
situated in Bo. Ibayo, Marilao, Bulacan and covered by TCT No. T-30.827 (M) of the
Register of Deeds of Bulacan.
Apart from the loan agreement and the real estate mortgage, Jaime signed an undated
letter-memorandum addressed to BPI Family.
In connection with the loan extended to me by BPI Family Bank, I hereby authorize
you to automatically deduct an amount from my salary or any money due to me to be applied
to my loan, more particularly described as follows:
This authority is irrevocable and shall continue to exist until my loan is fully paid. I
hereby declare that I have signed this authority fully aware of the circumstances leading to
the loan extended to me by BPI Family Bank and with full knowledge of the rights,
obligations, and liabilities of a borrower under the law.
I am an employee of BPI Family Bank and I acknowledge that BPI Family Bank has
granted to me the above-mentioned loan in consideration of this relationship. In the event I
leave, resign or am discharged from the service of BPI Family Bank or my employment with
BPI Family Bank is otherwise terminated, I also authorize you to apply any amount due me
from BPI Family Bank to the payment of the outstanding principal amount of the aforesaid
loan and the interest accrued thereon which shall thereupon become entirely due and
demandable on the effective date of such discharge, resignation or termination without need
of notice of demand, and to do such other acts as may be necessary under the circumstances.
The petitioners monthly loan amortizations were regularly deducted from Jaimes
monthly salary since January 10, 1988.1wphi1 On December 14, 1989, however, Jaime
received a notice of termination from BPI Familys Vice President, Severino P. Coronacion,
informing him that he had been terminated from employment due to loss of trust and
confidence resulting from his wilful non-observance of standard operating procedures and
banking laws. Evangeline also received a notice of termination dated February 23, 1990,
telling her of the cessation of her employment on the ground of abandonment. Both notices
contained a demand for the full payment of their outstanding loans from BPI Family, viz:
Demand is also made upon you to pay in full whatever outstanding obligations by
way of Housing Loans,Salary Loans, etc. that you may have with the bank. You are well
aware that said obligations become due and demandable upon your separation from the
service of the bank.

Immediately, the petitioners filed a complaint for illegal dismissal against BPI
Family in the National Labor Relations Commission (NLRC).
About a year after their termination from employment, the petitioners received a
demand letter dated January 28, 1991 from BPI Familys counsel requiring them to pay their
total outstanding obligation amounting to P221,534.50. The demand letter stated that their
entire outstanding balance had become due and demandable upon their separation from BPI
Family. They replied through their counsel on February 12, 1991.
In the meantime, BPI Family instituted a petition for the foreclosure of the real estate
mortgage.The petitioners received on March 6, 1991 the notice of extrajudicial foreclosure of
mortgage dated February 21, 1991.
To prevent the foreclosure of their property, the petitioners filed against the
respondents their complaint for injunction and damages with application for preliminary
injunction and restraining order in the Regional Trial Court (RTC) in Malolos, Bulacan. They
therein alleged that their obligation was not yet due and demandable considering that the
legality of their dismissal was still pending resolution by the labor court; hence, there was yet
no basis for the foreclosure of the mortgaged property; and that the property sought to be
foreclosed was a family dwelling in which they and their four children resided.
In its answer with counterclaim, BPI Family asserted that the loan extended to the
petitioners was a special privilege granted to its employees; that the privilege was
coterminous with the tenure of the employees with the company; and that the foreclosure of
the mortgaged property was justified by the petitioners failure to pay their past due loan
balance.
ISSUES:
1. Whether or not respondent Court of Appeals gravely erred in declaring the
foreclosure of the real estate mortgage on petitioners family home in order.
2. Whether or not respondent Court of Appeals gravely erred in denying petitioners
motion for reconsideration despite justifiable reasons therefor.
HELD:
The petition for review has no merit. When the petitioners appealed the RTC decision
to the CA, their appellants brief limited the issues to the following:
(a) Whether or not appellee bank wrongfully refused to accept payments by
appellants of their monthly amortizations.
(b) Whether or not the foreclosure of appellants real estate mortgage was premature.
The CA confined its resolution to these issues. Accordingly, the petitioners could not
raise the applicability of Republic Act No. 6552, or the strict construction of the loan
agreement for being a contract of adhesion as issues for the first time either in their motion
for reconsideration or in their petition filed in this Court. To allow them to do so would
violate the adverse parties right to fairness and due process. As the Court held in S.C.
Megaworld Construction and Development Corporation v. Parada:
It is well-settled that no question will be entertained on appeal unless it has been
raised in the proceedings below. Points of law, theories, issues and arguments not brought to
the attention of the lower court, administrative agency or quasi-judicial body, need not be
considered by the viewing court, as they cannot be raised for the first time at that late stage.

Basic considerations of fairness and due process impel this rule. Any issue raised for the first
time on appeal is barred by estoppel.
The procedural misstep of the petitioners notwithstanding, the Court finds no
substantial basis to reverse the judgments of the lower courts.
Republic Act No. 6552 was enacted to protect buyers of real estate on installment
payments against onerous and oppressive conditions. The protections accorded to the buyers
were embodied in Sections 3, 4 and 5 of the law, to wit:
Section 3. In all transactions or contracts, involving the sale or financing of real
estateon installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty-Eight hundred forty-four as amended byRepublic Act Sixty-three hundred eighty-nine,
where the buyer has paid atleast two years of installments, the buyer is entitled to the
following rights in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him which is hereby fixed at that rate of one month grace period for every
one year of installment payments made; provided, That this right shall be exercised by the
Buyer only once in every five years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of
the payments on the property equivalent to fifty percent of the total payments made, and,
after five years of installments, an additional five per cent every year but not to exceed ninety
per cent of the total payments made; Provided, That the actual cancellation or the demand for
rescission of the contract by a notarial act and upon full payment of the cash surrender value
to the buyer.
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installment payments made.
SECTION 4. In case where less than two years of installments were paid, the seller
shall give the buyers a grace period of not less than sixty days from the date the installment
become due.
If the buyer fails to pay the installments due at the expiration of the grace period, the
seller may cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.

SECTION 5. Under Section 3 and 4,the buyer shall have the right to sell his rights or
assign the same to another person or to reinstate the contract by updating the account during
the grace period and before actual cancellation of the contract. The deed of sale or assignment
shall be done by notarial act.
Having paid monthly amortizations for two years and four months, the petitioners
now insist that they were entitled to the grace period within which to settle the unpaid
amortizations without interest provided under Section 3, supra. Otherwise, the foreclosure of
the mortgaged property should be deemed premature inasmuch as their obligation was not yet
due and demandable.
The petitioners insistence would have been correct if the monthly amortizations
being paid to BPI Family arose from a sale or financing of real estate. In their case, however,

the monthly amortizations represented the installment payments of a housing loan that BPI
Family had extended to them as an employees benefit. The monthly amortizations they were
liable for was derived from a loan transaction, not a sale transaction, thereby giving rise to a
lender-borrower relationship between BPI Family and the petitioners. It bears emphasizing
that Republic Act No. 6552 aimed to protect buyers of real estate on installment payments,
not borrowers or mortgagors who obtained a housing loan to pay the costs of their purchase
of real estate and used the real estate assecurity for their loan. The "financing of real estate in
installment payments" referred to in Section 3, supra, should be construed only as a mode of
payment vis--vis the seller of the real estate, and excluded the concept of bank financing that
was a type of loan. Accordingly, Sections 3, 4 and 5, supra, must be read as to grant certain
rights only to defaulting buyers of real estate on installment, which rights are properly
demandable only against the seller of real estate.

Digested by: Taruc, Albert Jericho V.

SPOUSES GARCIA VS. CA

G.R. NO. 172036
APRIL 23, 2010
FACTS:
On May 28, 1993, plaintiffs spouses Faustino and Josefina Garcia and spouses
Meliton and Helen Galvez (herein appellees) and defendant Emerlita dela Cruz (herein
appellant) entered into a Contract to Sell wherein the latter agreed to sell to the former, for
Three Million One Hundred Seventy Thousand Two Hundred Twenty (P3,170,220.00) Pesos,
five (5) parcels of land situated at Tanza, Cavite particularly known as Lot Nos. 47, 2768,
2776, 2767, 2769 and covered by Transfer Certificate of Title Nos. T-340674, T-340673, T29028, T-29026, T-29027, respectively. At the time of the execution of the said contract, three
of the subject lots, namely, Lot Nos. 2776, 2767, and 2769 were registered in the name of one
Angel Abelida from whom defendant allegedly acquired said properties by virtue of a Deed
of Absolute Sale dated March 31, 1989.
As agreed upon, plaintiffs shall make a down payment of Five Hundred Thousand
(P500,000.00) Pesos upon signing of the contract. The balance of Two Million Six Hundred
Seventy Thousand Two Hundred Twenty (P2,670,220.00) Pesos shall be paid in three
installments, viz: Five Hundred Thousand (P500,000.00) Pesos on June 30, 1993; Five
Hundred Thousand (P500,000.00) Pesos on August 30, 1993; One Million Six Hundred
Seventy Thousand Two Hundred Twenty (P1,670,220.00) Pesos on December 31, 1993.
On its due date, December 31, 1993, plaintiffs failed to pay the last installment in the
amount of One Million Six Hundred Seventy Thousand Two Hundred Twenty
(P1,670,220.00) Pesos. Sometime in July 1995, plaintiffs offered to pay the unpaid balance,
which had already been delayed by one and [a] half year, which defendant refused to accept.
On September 23, 1995, defendant sold the same parcels of land to intervenor Diogenes G.
Bartolome for Seven Million Seven Hundred Ninety Three Thousand (P7,793,000.00) Pesos.
In order to compel defendant to accept plaintiffs payment in full satisfaction of the
purchase price and, thereafter, execute the necessary document of transfer in their favor,
plaintiffs filed before the RTC a complaint for specific performance.
In their complaint, plaintiffs alleged that they discovered the infirmity of the Deed of
Absolute Sale covering Lot Nos. 2776, 2767 and 2769, between their former owner Angel
Abelida and defendant, the same being spurious because the signature of Angel Abelida and
his wife were falsified; that at the time of the execution of the said deed, said spouses were in
the United States; that due to their apprehension regarding the authenticity of the document,
they withheld payment of the last installment which was supposedly due on December 31,
1993; that they tendered payment of the unpaid balance sometime in July 1995, after Angel
Abelida ratified the sale made in favor of defendant, but defendant refused to accept their
payment for no jusitifiable reason.
In her answer, defendant denied the allegation that the Deed of Absolute Sale was
spurious and argued that plaintiffs failed to pay in full the agreed purchase price on its due
date despite repeated demands; that the Contract to Sell contains a proviso that failure of
plaintiffs to pay the purchase price in full shall cause the rescission of the contract and
forfeiture of one-half (1/2%) percent of the total amount paid to defendant; that a notarized
letter stating the indended rescission of the contract to sell and forfeiture of payments was

sent to plaintiffs at their last known address but it was returned with a notation insufficient
address.
Intervenor Diogenes G. Bartolome filed a complaint in intervention alleging that the
Contract to Sell dated May 31, 1993 between plaintiffs and defendant was rescinded and
became ineffective due to unwarranted failure of the plaintiffs to pay the unpaid balance of
the purchase price on or before the stipulated date; that he became interested in the subject
parcels of land because of their clean titles; that he purchased the same from defendant by
virtue of an Absolute Deed of Sale executed on September 23, 1995 in consideration of the
sum of Seven Million Seven Hundred Ninety Three Thousand (P7,793,000.00) Pesos.
ISSUE:
Whether or not the Honorable Court of Appeals erred when it failed to consider the
provisions of Republic Act 6552, otherwise known as the Maceda Law.
HELD:
The petition has no merit. Both parties admit the following: (1) the contract between
petitioners and Dela Cruz was a contract to sell; (2) petitioners failed to pay in full the agreed
purchase price of the subject property on the stipulated date; and (3) Dela Cruz did not want
to accept petitioners offer of payment and did not want to execute a document of transfer in
petitioners favor.
The pertinent provisions of the contract, denominated Contract to Sell, between the
parties read:
Failure on the part of the vendees to comply with the herein stipulation as to the
terms of payment shall cause the rescission of this contract and the payments made shall be
returned to the vendees subject however, to forfeiture in favor of the Vendor equivalent to
1/2% of the total amount paid.
It is hereby agreed and covenanted that possession shall be retained by the VENDOR
until a Deed of Absolute Sale shall be executed by her in favor of the Vendees. Violation of
this provision shall authorize/empower the VENDOR to demolish any
construction/improvement without need of judicial action or court order.
Contracts are law between the parties, and they are bound by its stipulations. It is
clear from the above-quoted provisions that the parties intended their agreement to be a
Contract to Sell: Dela Cruz retains ownership of the subject lands and does not have the
obligation to execute a Deed of Absolute Sale until petitioners payment of the full purchase
price. Payment of the price is a positive suspensive condition, failure of which is not a breach
but an event that prevents the obligation of the vendor to convey title from becoming
effective. Strictly speaking, there can be no rescission or resolution of an obligation that is
still non-existent due to the non-happening of the suspensive condition. Dela Cruz is thus not
obliged to execute a Deed of Absolute Sale in petitioners favor because of petitioners failure
to make full payment on the stipulated date.
Petitioners justify the delay in payment by stating that they had notice that Dela Cruz
is not the owner of the subject land, and that they took pains to rectify the alleged defect in
Dela Cruzs title. Be that as it may, Angel Abelidas (Abelida) affidavit confirming the sale to
Dela Cruz only serves to strengthen Dela Cruzs claim that she is the absolute owner of the
subject lands at the time the Contract to Sell between herself and petitioners was executed.
Dela Cruz did not conceal from petitioners that the title to Lot Nos. 2776, 2767 and 2769 still

remained under Abelidas name, and the Contract to Sell even provided that petitioners should
shoulder the attendant expenses for the transfer of ownership from Abelida to Dela Cruz.
It is undeniable that petitioners failed to pay the balance of the purchase price on the
stipulated date of the Contract to Sell. Thus, Dela Cruz is within her rights to sell the subject
lands to Bartolome. Neither Dela Cruz nor Bartolome can be said to be in bad faith.

Digested by: Taruc, Albert Jericho V.

GATCHALIAN REALTY, INC. VS. ANGELES

G.R. NO. 202358
NOVEMBER 27, 2013
FACTS:
On 28 December 1994, Angeles purchased a house (under Contract to Sell No. 2272)
and lot (under Contract to Sell No. 2271) from GRI valued at Seven Hundred Fifty Thousand
Pesos (Php 750,000.00) and Four Hundred Fifty Thousand Pesos (Php 450,000.00),
respectively, with twenty-four percent (24%) interest per annum to be paid by installment
within a period of ten years.
The house and lot were delivered to Angeles in 1995. Nonetheless, under the
contracts to sell executed between the parties, GRI retained ownership of the property until
full payment of the purchase price.
After sometime, Angeles failed to satisfy her monthly installments with GRI.
Angeles was only able to pay thirty-five (35) installments for Contract to Sell No. 2271 and
forty-eight (48) installments for Contract to Sell No. 2272. According to GRI, Angeles was
given at least twelve (12) notices for payment in a span of three (3) years but she still failed
to settle her account despite receipt of said notices and without any valid reason. Angeles was
again given more time to pay her dues and likewise furnished with three (3) notices
reminding her to pay her outstanding balance with warning of impending legal action and/or
rescission of the contracts, but to no avail. After giving a total of fifty-one (51) months grace
period for both contracts and in consideration of the continued disregard of the demands of
GRI, Angeles was served with a notice of notarial rescission dated 11 September 2003 by
registered mail which she allegedly received on 19 September 2003 as evidenced by a
registry return receipt.
Consequently Angeles was furnished by GRI with a demand letter dated 26
September 2003 demanding her to pay the amount of One Hundred Twelve Thousand Three
Hundred Four Pesos and Forty Two Centavos (Php 112,304.42) as outstanding reasonable
rentals for her use and occupation of the house and lot as of August 2003 and to vacate the
same. She was informed in said letter that the fifty percent (50%) refundable amount that she
is entitled to has already been deducted with the reasonable value for the use of the properties
or the reasonable rentals she incurred during such period that she was not able to pay the
installments due her. After deducting the rentals from the refundable amount, she still had a
balance of One Hundred Twelve Thousand Three Hundred Four Pesos and Forty Two
Centavos (Php 112,304.42) which she was required to settle within fifteen (15) days from
receipt of the letter.
Allegedly, Angeles subsequently sent postal money orders through registered mail to
GRI. In a letter dated 27 January 2004 Angeles was notified by GRI of its receipt of a postal
money order sent by Angeles. More so, she was requested to notify GRI of the purpose of the
payment. Angeles was informed that if the postal money order was for her monthly
amortization, the same will not be accepted and she was likewise requested to pick it up from
GRIs office. On 29 January 2004, another mail with a postal money order was sent by
Angeles to GRI. In her 6 February 2004 letter, GRI was informed that the postal money
orders were supposed to be payments for her monthly amortization. Again, in its 8 February
2004 letter, it was reiterated by GRI that the postal money orders will only be accepted if the

same will serve as payment of her outstanding rentals and not as monthly amortization. Four
(4) more postal money orders were sent by Angeles by registered mail to GRI.
For her continued failure to satisfy her obligations with GRI and her refusal to vacate
the house and lot, GRI filed a complaint for unlawful detainer against Angeles on 11
November 2003.
ISSUE:
Whether or not the court a quo erred in holding that the actual cancellation of the
contract between the parties did not take place.
HELD:
There was no actual cancellation of the contracts because of GRIs failure to actually
refund the cash surrender value to Angeles.
Cancellation of the contracts for the house and lot was contained in a notice of
notarial rescission dated 11 September 2003. The registry return receipts show that Angeles
received this notice on 19 September 2003. GRIs demand for rentals on the properties, where
GRI offset Angeles accrued rentals by the refundable cash surrender value, was contained in
another letter dated 26 September 2003. The registry return receipts show that Angeles
received this letter on 29 September 2003. GRI filed a complaint for unlawful detainer
against Angeles on 11 November 2003, 61 days after the date of its notice of notarial
rescission, and 46 days after the date of its demand for rentals. For her part, Angeles sent GRI
postal money orders in the total amount of P120,000.
The MeTC ruled that it was proper for GRI to compensate the rentals due from
Angeles occupation of the property from the cash surrender value due to Angeles from GRI.
The MeTC stated that compensation legally took effect in accordance with Article 1290 of
the Civil Code, which reads: "When all the requisites mentioned in Article 1279 are present,
compensation takes effect by operation of law and extinguishes both debts to the concurrent
amount, even though the creditors and debtors are not aware of the compensation." In turn,
Article 1279 of the Civil Code provides:
In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the same
time a principal creditor of the other;
(2) That both debts consist of a sum of money, or if the things due are consumable,
they be of the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts are due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.

However, it was error for the MeTC to apply Article 1279 as there was nothing in the
contracts which provided for the amount of rentals in case the buyer defaults in her
installment payments.

We cannot subscribe to GRIs view that it merely followed our ruling in Pilar
Development Corporation v. Spouses Villar (Pilar) when it deducted the cash surrender value
from the rentals due. In Pilar, the developer also failed to refund the cash surrender value to
the defaulting buyer when it cancelled the Contract to Sell through a Notice of Cancellation.
It was this Court, and not the developer, that deducted the amount of the cash surrender value
from the accrued rentals. Moreover, the developer in Pilar did not unilaterally impose rentals.
It was the MeTC that decreed the amount of monthly rent. Neither did the developer
unilaterally reduce the accrued rentals by the refundable cash surrender value. The
cancellation of the contract took effect only by virtue of this Courts judgment because of the
developers failure to return the cash surrender value

Digested by: Taruc, Albert Jericho V.

MOLDEX REALTY INC. VS. SABERON

G.R. NO. 176289
APRIL 8, 2013
FACTS:
Interested in acquiring a 180-square meter lot known as Lot 2, Block 1 of Metrogate
Subdivision in Dasmarias, Cavite, respondent Flora A. Saberon (Flora) asked Moldex, the
developer, to reserve the lot for her as shown by a Reservation Application6 dated April 11,
1992. While the cash purchase price for the land is P396,000.00, the price if payment is made
on installment basis is P583,498.20 at monthly amortizations of P8,140.97 payable in five
years with 21% interest per annum based on the balance and an additional 5% surcharge for
every month of delay on the monthly installment due. Flora opted to pay on installment and
began making aperiodical payments from 1992 to 19967 in the total amount of P375,295.49.
In April, August, and October 1996,8 Moldex sent Flora notices reminding her to
update her account. Upon inquiry, however, Flora was shocked to find out that as of July
1996, she owed Moldex P247,969.10. In November 1996, the amount ballooned to
P491,265.91.
Moldex thus suggested to Flora to execute a written authorization for the sale of the
subject lot to a new buyer and a written request for refund so that she can get half of all
payments she made. However, Flora never made a written request for refund.
As of April 1997, Moldex computed Floras unpaid account at P576,569.89. It then
sent Flora a Notarized Notice of Cancellation of Reservation Application and/or Contract to
Sell. Flora, on the other hand, filed before the Housing and Land Use Regulatory Board
(HLURB) Regional Field Office IV a Complaint for the annulment of the contract to sell,
recovery of all her payments with interests, damages, and the cancellation of Moldexs
license to sell.
Aside from imputing bad faith on the part of Moldex in bloating her unpaid balance,
Flora alleged that the contract to sell between her and Moldex is void from its inception.
According to Flora, Moldex violated Section 5 of Presidential Decree (PD) No. 95711 when
it sold the subject lot to her on April 11, 1992 or before it was issued a license to sell on
September 8, 1992. Flora likewise claimed that Moldex violated Section 17 of the same law
because it failed to register the contract to sell in the Registry of Deeds.
In its defense, Moldex averred that Flora was only able to pay P228,201.03 and
thereafter defaulted in her in payment from April 1994 to May 1997. Hence, Floras
subsequent payments were applied to her delinquencies. As regards the alleged bloating,
Moldex explained that the amount reflected in Floras Statement of Account included the
arrears and surcharges incurred due to her non-payment of the monthly installments. And
since Flora was not able to settle her account, Moldex exercised its right under Republic Act
(RA) No. 6552, or the Maceda Law, by cancelling the reservation Agreement/Contract to Sell
and forfeiting all payments made. Finally, Moldex alleged that since Flora was at fault, the
latter cannot be heard to make an issue out of Moldexs lack of license or demand relief from
it.
ISSUE:
Whether or not the Contract to sell remains valid and binding.

HELD:
In Spouses Co Chien v. Sta. Lucia Realty and Development Corporation, Inc. This
Court has already ruled that the lack of a certificate of registration and alicense to sell on the
part of a subdivision developer does not result to the nullification or invalidation of the
contract to sell it entered into with a buyer. The contract to sell remains valid and subsisting.
In said case, the Court upheld the validity of the contract to sell notwithstanding violations by
the developer of the provisions of PD 957. We held that nothing in PD 957 provides for the
nullity of a contract validly entered into in cases of violation of any of its provisions such as
the lack of a license to sell. Thus:
A review of the relevant provisions of P.D. 957 reveals that while the law penalizes
the selling of subdivision lots and condominium units without prior issuance of a Certificate
of Registration and License to Sell by the HLURB, it does not provide that the absence
thereof will automatically render a contract, otherwise validly entered, void. The penalty
imposed by the decree is the general penalty provided for the violation of any of its
provisions. It is well-settled in this jurisdiction that the clear language of the law shall prevail.
This principle particularly enjoins strict compliance with provisions of law which are penal in
nature, or when a penalty is provided for the violation thereof. With regard to P.D. 957,
nothing therein provides for the nullification of a contract to sell in the event that the seller, at
the time the contract was entered into, did not possess a certificate of registration and license
to sell. Absent any specific sanction pertaining to the violation of the questioned provisions
(Secs. 4 and 5), the general penalties provided in the law shall be applied. The general
penalties for the violation of any provisions in P.D. 957 are provided for in Sections 38 and
39. As can clearly be seen in the aforequoted provisions, the same do not include the
nullification of contracts that are otherwise validly entered. The Co Chien ruling has been
reiterated in several cases and remains to be the prevailing jurisprudence on the matter. Thus,
the contract to sell entered into between Flora and Moldex remains valid despite the lack of
license to sell on the part of the latter at the time the contract was entered into.
Moreover, Flora claims that the contract she entered into with Moldex is void
because of the latters failure to register the contract to sell/document of conveyance with the
Register of Deeds, in violation of Section 1730 of PD 957. However, just like in Section 5
which did not penalize the lack of a license to sell with the nullification of the contract,
Section 17 similarly did not mention that the developers or Moldexs failure to register the
contract to sell or deed of conveyance with the Register of Deeds resulted to the nullification
or invalidity of the said contract or deed. Extrapolating the ratio decidendi in Co Chien, thus,
non-registration of an instrument of conveyance will not affect the validity of a contract to
sell. It will remain valid and effective between the parties thereto as under PD 1529 or The
Property Registration Decree, registration merely serves as a constructive notice to the whole
world to bind third parties.
Digested by: Taruc, Albert Jericho V.

SPOUSES FORTALEZA VS. SPOUSES LAPITAN

G.R. NO. 178288
AUGUST 15, 2012
FACTS:
Spouses Charlie and Ofelia Fortaleza (spouses Fortaleza) obtained a loan from
spouses Rolando and Amparo Lapitan (creditors) in the amount of P1.2 million subject to
34% interest per annum. As security, spouses Fortaleza executed on January 28, 1998 a Deed
of Real Estate Mortgage over their residential house and lot situated in Barrio Anos,
Municipality of Los Baos, Laguna (subject property) registered under Transfer Certificate of
Title (TCT) No. T-412512.
When spouses Fortaleza failed to pay the indebtedness including the interests and
penalties, the creditors applied for extrajudicial foreclosure of the Real Estate Mortgage
before the Office of the Clerk of Court and Ex-Officio Sheriff of Calamba City. The public
auction sale was set on May 9, 2001.
At the sale, the creditors son Dr. Raul Lapitan and his wife Rona (spouses Lapitan)
emerged as the highest bidders with the bid amount of P2.5 million. Then, they were issued a
Certificate of Sale which was registered with the Registry of Deeds of Calamba City and
annotated at the back of TCT No. T-412512 under Entry No. 615683 on November 15, 2002.
The one-year redemption period expired without the spouses Fortaleza redeeming the
mortgage. Thus, spouses Lapitan executed an affidavit of consolidation of ownership on
November 20, 2003 and caused the cancellation of TCT No. T-412512 and the registration of
the subject property in their names under TCT No. T-53594510 on February 4, 2004. Despite
the foregoing, the spouses Fortaleza refused spouses Lapitans formal demand to vacate and
surrender possession of the subject property.
ISSUE:
Whether or not the Court should allow them to exercise the right of redemption even
after the expiration of the one-year period.
HELD:
Spouses Fortalezas argument that the subject property is exempt from forced sale
because it is a family home deserves scant consideration. As a rule, the family home is
exempt from execution, forced sale or attachment. However, Article 155(3) of the Family
Code explicitly allows the forced sale of a family home for debts secured by mortgages on
the premises before or after such constitution. In this case, there is no doubt that spouses
Fortaleza voluntarily executed on January 28, 1998 a deed of Real Estate Mortgage over the
subject property which was even notarized by their original counsel of record. And assuming
that the property is exempt from forced sale, spouses Fortaleza did not set up and prove to the
Sheriff such exemption from forced sale before it was sold at the public auction. As
elucidated in Honrado v. Court of Appeals:
While it is true that the family home is constituted on a house and lot from the time it
is occupied as a family residence and is exempt from execution or forced sale under Article
153 of the Family Code, such claim for exemption should be set up and proved to the Sheriff
before the sale of the property at public auction. Failure to do so would estop the party from
later claiming the exemption. As this Court ruled in Gomez v. Gealone:

Although the Rules of Court does not prescribe the period within which to claim the
exemption, the rule is, nevertheless, well- settled that the right of exemption is a personal
privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff,
but by the debtor himself at the time of the levy or within a reasonable period thereafter.
Certainly, reasonable time for purposes of the law on exemption does not mean a
time after the expiration of the one-year period for a judgment debtor to redeem the property.
Equally without merit is spouses Fortalezas reliance on the cases of Tolentino and De Los
Reyes in praying for the exercise of the right of redemption even after the expiration of the
one-year period. In Tolentino, we held that an action to redeem filed within the period of
redemption, with a simultaneous deposit of the redemption money tendered to the sheriff, is
equivalent to an offer to redeem and has the effect of preserving the right to redemption for
future enforcement even beyond the one-year period. And in De Los Reyes, we allowed the
mortgagor to redeem the disputed property after finding that the tender of the redemption
price to the sheriff was made within the one-year period and for a sufficient amount.
The circumstances in the present case are far different. The spouses Fortaleza neither
filed an action nor made a formal offer to redeem the subject property accompanied by an
actual and simultaneous tender of payment. It is also undisputed that they allowed the oneyear period to lapse from the registration of the certificate of sale without redeeming the
mortgage. For all intents and purposes, spouses Fortaleza have waived or abandoned their
right of redemption.
Although the rule on redemption is liberally interpreted in favor of the original owner
or the prope1ty, we cannot apply the privilege of liberality to accommodate the spouses due
to their negligence or omission to exercise the right of redemption within the prescribed
period without justifiable cause.

Digested by: Taruc, Albert Jericho V.

SPOUSES HOJAS VS. PHILIPPINE AMANAH BANK

G.R. NO. 193453
JUNE 5, 2013
FACTS:
The petitioners, Spouses Rubin and Portia Hojas (petitioners), alleged that on April
11, 1980, they secured a loan from respondent Philippine Amanah Bank (PAB) in the amount
of P450,000.00; that this loan was secur~d by a mortgage, covering both personal and real
properties; that from May 14, 1981 to June 27, 1986, they made various payments amounting
to 486,162.13; that PAB, however, did not properly credit their payments; that based on the
summary of payments furnished by PAB to them on February 24, 1989, only 13 payments
were credited, erroneously amounting to 317,048.83; that PAB did not credit the payment
they made totaling 165,623.24; and that, in the statement of their account as of October 17,
1984, PAB listed their total payment as 412,211.54 on the principal, and 138,472.09 as
30% interest, all amounting to 550,683.63, despite the fact that at that time, petitioners had
already paid the total sum of 486,162.13.
Petitioners further averred that for failure to pay the loan, PAB applied for the
extrajudicial foreclosure of the mortgaged real properties of petitioners with the Ex-Officio
Sheriff; that consequently, a Notice of Extrajudicial Foreclosure was issued on January 12,
1987 setting the foreclosure sale on April 21, 1987 and, stating therein the mortgage debt in
the sum of 450,000.00; and that, in the public auction conducted, PAB acquired said real
property.
It was further alleged that on March 9, 1988, through the intervention of then Senator
Aquilino Pimentel, Farouk A. Carpizo (Carpizo), the OIC- President of PAB, wrote Roberto
Hojas (Roberto), petitioners son, informing him that although the one-year redemption
period would expire on April 21, 1988, by virtue of the banks incentive scheme, the
redemption period was extended until December 31, 1988; that despite said letter from the
OIC-President, the OIC of the Project Development Department of PAB wrote Rubin Hojas
that the real properties acquired by PAB would be sold in a public bidding before the end of
August, 1988; that on November 4, 1988, a public bidding was conducted; that in the said
bidding, the mortgaged properties were awarded to respondent Ramon Kue (Kue); that
subsequently, they received a letter from the OIC of the Project Development Department,
dated January 3, 1989, informing them that they had fifteen (15) days from receipt within
which to vacate the premises; that Kue then sent another letter, dated January 31, 1989,
informing them that he had already acquired the said property and that they were requested to
vacate the premises within fifteen (15) days from receipt thereof; and that because of this
development, on May 7, 1991, petitioners filed an action for Determination of True Balance
of Mortgage Debt, Annulment/Setting Aside of Extrajudicial Foreclosure of Mortgage and
Damages, with Prayer for Preliminary Injunction against PAB.On May 27, 1996, the RTC
dismissed petitioners complaint. It ruled, among others, that: 1) PAB was not guilty of bad
faith in conducting the extrajudicial foreclosure as it, at one time, even suspended the conduct
of the foreclosure upon the request of petitioners, who, nevertheless, failed to exert effort to
settle their accounts; 2) because petitioners failed to redeem their properties within the period
allowed, PAB became its absolute owner and, as such, it had the right to sell the same to Kue,
who acquired the property for value and in good faith; and 3) the subsequent foreclosure and
auction sale having been conducted above board and in accordance with the requisite legal
procedure, collusion between PAB and Kue was certainly alien to the issue.

Aggrieved, petitioners filed an appeal assailing the May 27, 1996 RTC Decision. The
CA was not sympathetic with petitioners position. It held that the period of redemption was
never extended.
ISSUE:
Whether or not the CA erred in not holding PAB to have violated the principle of
estoppel when the latter conducted the November 4, 1988 public sale.
HELD:
As correctly held by the RTC and upheld by the CA, the date December 31, 1988
refers to the last day when owners of foreclosed properties, like petitioners, could submit
their payment proposals to the bank. The letter was very clear. It was about the availment of
the liberalized payment scheme of the bank. On the last day for redemption, the letter was
also clear. It was April 21, 1988. It was never extended.
The opportunity given to the petitioners was to avail of the liberalized payment
scheme which program would expire on December 31, 1988. As explained by Abraham
Iribani, the OIC of the Project Development Department of PAB, it was to give a chance to
previous owners to repossess their properties on easy term basis, possibly by condonation of
charges and penalties and payment on instalment. The letter of Carpizo was an invitation to
the petitioners to come to the bank with their proposal. It appears that the petitioners could
not come up with a proposal acceptable to the bank.
For said reason, the mortgaged property was included in the list of mortgaged
properties that would be sold through a scheduled public bidding. Thus, on August 11, 1988,
Iribani wrote the petitioners about the scheduled bidding. In response, the petitioners told
Iribani that they would go Manila to explain their case. They did not, however, return even
after the public bidding. In this regard, the CA was correct when it wrote:
Here, there is no estoppel to speak of. The letter does not show that the Bank had
unqualifiedly represented to the Hojases that it had extended the redemption period to
December 31, 1988. Thus, the Hojases have no basis in positing that the public sale
conducted on November 4, 1988 was null and void for having been prematurely conducted.
Moreover, petitioners allegation that they had signified their intention to avail of the
incentive scheme (which they have equated to their intention to redeem the property), did not
amount to an exercise of redemption precluding the bank from making the public sale. In the
case of China Banking Corporation v. Martir, this Court expounded on what constitutes a
proper exercise of the right of redemption, to wit:The general rule in redemption is that it is
not sufficient that a person offering to redeem manifests his desire to do so. The statement of
intention must be accompanied by an actual and simultaneous tender of payment. This
constitutes the exercise of the right to repurchase.
In several cases decided by the Court where the right to repurchase was held to have
been properly exercised, there was an unequivocal tender of payment for the full amount of
the repurchase price. Otherwise, the offer to redeem is ineffectual. Bona fide redemption
necessarily implies a reasonable and valid tender of the entire repurchase price, otherwise the
rule on the redemption period fixed by law can easily be circumvented.
Moreover, jurisprudence also characterizes a valid tender of payment as one where
the full redemption price is tendered. Consequently, in this case, the offer by respondents on
July 24, 1986 to redeem the foreclosed properties for 1,872,935 and the subsequent

consignation in court of 1,500,000 on August 27, 1986, while made within the period of
redemption, was ineffective since the amount offered and actually consigned not only did not
include the interest but was in fact also way below the 2,782,554.66 paid by the highest
bidder/purchaser of the properties during the auction sale.
In Bodiongan vs. Court of Appeals, we held:
In order to effect a redemption, the judgment debtor must pay the purchaser the
redemption price composed of the following: (1) the price which the purchaser paid for the
property; (2) interest of 1% per month on the purchase price; (3) the amount of any
assessments or taxes which the purchaser may have paid on the property after the purchase;
and (4) interest of 1% per month on such assessments and taxes.

Digested by: Taruc, Albert Jericho V.

SPOUSES PIO DATO AND SONIA SIA VS. BPI

G.R. NO. 181873
NOVEMBER 27, 2013
FACTS:
On May 23, 1990, petitioners Spouses Pio Dato (Pio) and Sonia Y. Sia (Spouses Sia)
applied for a P240,000.00 loan which was granted by the Bank of the Philippine Islands
(BPI) with a term of six months and secured by a real estate mortgage over a parcel of land
owned by Spouses Sia denominated as Lot 1, situated in Labangon, Cebu, covered by
Transfer Certificate of Title (TCT) No. 102434. Subsequently, on August 8, 1990, Spouses
Sia availed of a P4 Million Revolving Promissory Note Line with a term of one year, secured
by the same real estate mortgage over TCT No. 102434.
Spouses Sia alleged that their loan was "precipitated by the representation of the BPI
that the same will be indorsed to Industrial Guarantee and Loan Fund (IGLF) in order for the
spouses to be able to avail of a much lower interest rate and longer payment terms."
Before the P240,000.00 and P4 Million loans matured, Spouses Sia approached BPI
through Mona Padilla (Padilla), account officer of BPI for additional loans. One was for P2
Million, and another was for P2.8 Million. After some discussion with Padilla, Spouses Sia
agreed to obtain a Credit Facility of P5.7 Million using the same collaterals offered in their
previous loans and four additional parcels of land, namely, TCT Nos. 87010, 102435, 102436
and 102437.
On November 23, 1990, Spouses Sia obtained P800,000.00 from their Credit Facility
of P5.7 Million which was credited to their current account with BPI after executing a
Promissory Note for the same amount. While Spouses Sia paid some of the interest on their
loans, the amount was insufficient to cover the principal amount of said loans.
On February 13, 1991, Padilla sent a written reminder to Spouses Sia to settle all
unpaid interest before February 22, 1991. Yet the spouses failed to pay the same. Their
principal loans of P240,000.00 and P4 Million loan also remained unsettled. BPI, through
Padilla and Assistant Vice President, Danilo A. Quinto sent another demand letter to them
requesting payment of the outstanding loan.
Spouses Sia still failed to pay the principal amount of P4,240,000.00 exclusive of
interest, penalties and other charges. But the amount of P800,000.00 from the P5.7 Million
Credit Facility was paid through a Letter of Credit. As the P240,000.00 and P4 Million loans
of Spouses Sia were not yet settled, BPI cancelled the P5.7 Million Credit facility. To
facilitate and assist Spouses Sia in paying off their loans, the four lots which secured the P5.7
Million Credit Line Facility were released. Spouses Sia agreed to sell the lots and use the
proceeds thereof to make partial payments of their loans. Consequently, BPI issued a
cancellation of the real estate mortgage over the four lots which secured the P5.7 Million
Credit Line Facility.
Despite the cancellation of the real estate mortgage, Spouses Sia failed to make good
their promise to sell the lots to pay off their loans. BPI, through Padilla, sent a follow-up
demand letter to Spouses Sia dated July 11, 1991 requesting payment of the principal loan
amounting to P4,240,000.00 as well as all unpaid interests, penalties and charges thereon on
or before July 30, 1991.11 Spouses Sia, through a letter dated July 19, 1991, acknowledged

their account to BPI and stated therein that they are "seriously considering selling some of
their choiced real estate properties to service their debt to BPI."
On August 3, 1993, Spouses Sia filed a complaint with the RTC of Cebu City praying
for the issuance of a temporary restraining order (TRO) to maintain status quo, award of
moral and exemplary damages, attorneys fees and litigation costs. In the said complaint,
Spouses Sia alleged that BPI "deliberately refused to comply with the condition/undertaking
of the loan for IGLF endorsement and approval" until the maturity date of the loan lapsed to
their great prejudice and irreparable damage.
Spouses Sia failed to pay notwithstanding the numerous demands made by BPI,
leading to the extrajudicial foreclosure of the real estate mortgage covered by TCT No.
102434 which secured Spouses Sias loans of P240,000.00 and P4 Million. The lot was sold
at a public auction held on August 9, 1993, with BPI as the sole bidder in the amount of
P10,060,080.20. The certificate of sale was issued on August 10, 1993 upon payment of all
the required registration fees.
In the course of the trial proceedings, Spouses Sia alleged that they discovered that
the document embodying the cancellation of the real estate mortgage presented by BPI (over
the four lots previously released by BPI for the Credit Line Agreement Facility), stated the
following:
The consideration for this cancellation being the full and complete payment made by
the said debtor/s- mortgagor/s to the creditor-mortgagee of the obligation secured thereby in
the principal amount of FIVE MILLION SEVEN HUNDRED THOUSAND ONLY PESOS
([P]5,700,000.00) Philippine Currency, together with the corresponding interest thereon up to
this date.
Spouses Sia thereafter amended their complaint claiming that the bank inserted and
annotated a falsified/illegal Real Estate Mortgage of P5.7 Million, purportedly availed of by
Spouses Sia. They alleged "that TCT No. 102434 was never intended to secure a fabricated
and falsified loan of P5,700,000.00 or for any loan by whomsoever, accommodated by BPI
using Spouses Sias collaterals."
Lastly, the spouses claimed extinguishment of their obligation. They alleged that as
BPI credited the payment of P5.7 Million to their account, which is more than sufficient to
cover their promissory notes of P240,000.00 and P4 Million, their obligation with the BPI
was totally extinguished as of August 5, 1991 and that the foreclosure proceedings on TCT
No. 102343 is illegal and baseless for they have the right as of August 5, 1991 to secure full
release of said lot by such payment of P5.7 Million.
Spouses Sia prayed for P5 Million as moral damages, P2 Million as exemplary
damages, attorneys fees equivalent to 25% of the adjudged amount plus P350.00 per court
appearance but not less than P350,000.00 and for whatever proven damages of not less than
P500,000.00. In their Second Supplemental Complaint, Spouses Sia prayed for additional
P25 Million as moral damages, P6 Million as exemplary damages and 25% attorneys fees
based on the additional damages but not less than P200,000.00.
During the pendency of the instant case, the one-year redemption period had lapsed
without Spouses Sia exercising their right to redeem the subject property. Thus on January
27, 1995, BPI filed a supplemental answer with counterclaim, alleging therein that with the
expiration of the period of redemption, BPI is entitled to a writ of possession over foreclosed
property and the occupancy of Spouses Sia on the foreclosed property entitles BPI to a

reasonable compensation which is conservatively pegged at P10,000.00 per month from the
date of the issuance of the certificate of sale in favor of BPI.
ISSUE:
Whether or not the cancellation of the P5.7 Million credit facility of spouses Sia
raises a legal issue.
HELD:
The petition has no merit. BPI did not commit Breach of Contract. The Court concurs
with the CA and the RTC that BPI did not commit breach of contract against Spouses Sia. In
ruling so, the CA found that petitioner Pio admitted the execution and genuineness of the
notarized contract of real estate mortgage and promissory note, including the signature of
Spouses Sia on the letter of advice to signify their conformity with the terms and conditions
during his oral testimony. Furthermore, the CA ruled that jurisprudence laid down the
consequences of admission:
By the admission of the due execution of a document, it means that the party whose
signature it bears admits that he signed it voluntarily or that it was signed by another for him
and with his authority; and by the admission of the genuineness of the document, it means
that the party whose signature it bears admits that at the time it was signed it was in the words
and figures exactly as set out in the pleading of the party relying upon it.
The Court finds no cause to deviate from the factual findings of both the RTC and the
CA. "The settled rule is that conclusions and findings of fact of the trial court are entitled to
great weight on appeal and should not be disturbed unless for strong and cogent reasons
because the trial court is in a better position to examine real evidence, as well as observe the
demeanor of the witnesses while testifying in the case. The fact that the CA adopted the
findings of fact of the trial court makes the same binding upon this Court."
Since both the RTC and the CA found no evidence on record to support Spouses
Sias bare assertions that the endorsement to IGLF is a condition precedent to their contract
of loan with BPI, the Court is inclined to disregard Spouses Sias contentions on this score.
There is no legal issue as regard to the cancellation of the P5.7 Million Credit Line Facility
Initially, Spouses Sia insisted that the foreclosure of their real estate mortgage was
premature because BPI violated their agreement to have their loan endorsed to IGLF.
Thereafter, Spouses Sia changed their stance and insisted that there was no Credit
Line Facility agreement of P5.7 Million. Spouses Sia further alleged that it was the banking
officers of BPI who borrowed the P5.7 Million and who prepared the Cancellation of the Real
Estate Mortgage. But the cancellation was credited in favor of Spouses Sia. Payment should
be therefore credited in their favor to extinguish the loans of P4 Million and P240,000.00 and
that BPI is obligated to return the excess amount of P1,460,000.00 by way of solutio indebiti.
The Court is hardly convinced with Spouses Sias arguments. Both the RTC and the
CA have profusely examined the evidence on the record, wherein the following observations
were gathered:
The bases of the extrajudicial foreclosure proceeding were the three real estate
mortgage contracts executed by Sps. Sia in favor of BPI, to wit:
1. over TCT No. 102434 and its improvements for P240,000.00 dated August 10, 1990;
2. over TCT No. 102434 and its improvements for P4,000,000.00 dated May 24, 1990; and

3. over TCT No. 102434 and its improvements, and TCT Nos. 87010, 102435, 102436 and
102437 for P5,700,000.00 dated November 22, 1990.
Paragraph 6 of the aforecited real estate mortgage contracts provides that:
"In the event that the Mortgagor/Debtor herein, should fail or refuse to pay any of the
sums of money secured by this mortgage, or any part thereof, in accordance with the terms
and conditions herein set forth or those stipulated in the correlative promissory note(s), or
should he/it fail to perform any of the conditions stipulated herein, or those in the promissory
note(s), then and in any such case the Mortgagee shall have the right at its election, to
foreclose this mortgage, x x x."
It is a settled rule of law that foreclosure is proper when the debtors are in default of
the payment of their obligation.51 As the CA had appositely considered, due to Spouses Sias
failure to pay their loans covered by Promissory Notes (PN) Nos. 90/98 and 90/152, the
extrajudicial foreclosure of the real estate mortgage is valid and binding against them:
Finding for the non-payment of obligations covered by PN Nos. 90/98 and 90/152,
Sps. Sias prayer to declare null and void the extrajudicial foreclosure of the subject real
estate mortgage is now foiled. Therefore, the extrajudicial foreclosure and the corresponding
certificate of sale executed on August 9, 1993 for the subject real estate property covered by
TCT No. 102434 which sought to reach the property and subject it to the payment of Sps.
Sias obligations was valid and binding. We further rule that for failure of Sps. Sia to exercise
the right of redemption, the right to consolidate ownership on the foreclosed property was
validly exercised by BPI.

Digested by: Taruc, Albert Jericho V.

SPOUSES MONTECALVO VS. HEIRS OF PRIMERO

G.R. NO. 165168
July 9, 2010
FACTS:
The property involved in this case is a portion of a parcel of land known as Lot No.
263 located at Sabayle Street, Iligan City. Lot No. 263 has an area of 860 square meters
covered by Original Certificate of Title (OCT) No. 0-2712 registered in the name of Eugenia
Primero (Eugenia), married to Alfredo Primero, Sr. (Alfredo).
In the early 1980s, Eugenia leased the lot to petitioner Irene Montecalvo (Irene) for a
monthly rental of P500.00. On January 13, 1985, Eugenia entered into an un-notarized
Agreement3 with Irene, where the former offered to sell the property to the latter for
P1,000.00 per square meter. They agreed that Irene would deposit the amount of P40,000.00
which shall form part of the down payment equivalent to 50% of the purchase price. They
also stipulated that during the term of negotiation of 30 to 45 days from receipt of said
deposit, Irene would pay the balance of P410,000.00 on the down payment. In case Irene
defaulted in the payment of the down payment, the deposit would be returned within 10 days
from the lapse of said negotiation period and the Agreement deemed terminated. However, if
the negotiations pushed through, the balance of the full value of P860,000.00 or the net
amount of P410,000.00 would be paid in 10 equal monthly installments from receipt of the
down payment, with interest at the prevailing rate.
Irene failed to pay the full down payment within the stipulated 30-45-day negotiation
period. Nonetheless, she continued to stay on the disputed property, and still made several
payments with an aggregate amount of P293,000.00. On the other hand, Eugenia did not
return the P40,000.00 deposit to Irene, and refused to accept further payments only in 1992.
Thereafter, Irene caused a survey of Lot No. 263 and the segregation of a portion
equivalent to 293 square meters in her favor. However, Eugenia opposed her claim and asked
her to vacate the property. Then on May 13, 1996, Eugenia and the heirs of her deceased
husband Alfredo filed a complaint for unlawful detainer against Irene and her husband, herein
petitioner Nonilon Montecalvo (Nonilon) before the Municipal Trial Court (MTC) of Iligan
City. During the preliminary conference, the parties stipulated that the issue to be resolved
was whether their Agreement had been rescinded and novated. Hence, the MTC dismissed
the case for lack of jurisdiction since the issue is not susceptible of pecuniary estimation. The
MTC's Decision dismissing the ejectment case became final as Eugenia and her children did
not appeal therefrom.
On June 18, 1996, Irene and Nonilon retaliated by instituting Civil Case No. II-3588
with the RTC of Lanao del Norte for specific performance, to compel Eugenia to convey the
293-square meter portion of Lot No. 263.
ISSUE:
Whether or not a seller in an oral contract of sale of a portion of a lot can be
compelled to execute the required deed of sale after the agreed consideration was paid and
possession thereof delivered to and enjoyed by the buyer.

HELD:
In Salazar v. Court of Appeals, we distinguished a contract of sale from a contract to
sell in that in a contract of sale the title to the property passes to the buyer upon the delivery
of the thing sold; in a contract to sell, ownership is, by agreement, reserved in the seller and is
not to pass to the buyer until full payment of the purchase price. Otherwise stated, in a
contract of sale, the seller loses ownership over the property and cannot recover it until and
unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by
the seller until full payment of the price. In the latter contract, payment of the price is a
positive suspensive condition, failure of which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming effective.
In the Agreement, Eugenia, as owner, did not convey her title to the disputed
property to Irene since the Agreement was made for the purpose of negotiating the sale of the
860-square meter property.
On this basis, we are more inclined to characterize the agreement as a contract to sell
rather than a contract of sale. Although not by itself controlling, the absence of a provision in
the Agreement transferring title from the owner to the buyer is taken as a strong indication
that the Agreement is a contract to sell.
In a contract to sell, the prospective seller explicitly reserves the transfer of title to
the prospective buyer, meaning, the prospective seller does not as yet agree or consent to
transfer ownership of the property subject of the contract to sell until the happening of an
event, which for present purposes we shall take as the full payment of the purchase price.
What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject
property when the entire amount of the purchase price is delivered to him. In other words, the
full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of
which prevents the obligation to sell from arising and thus, ownership is retained by the
prospective seller without further remedies by the prospective buyer. A contract to sell is
commonly entered into in order to protect the seller against a buyer who intends to buy the
property in installment by withholding ownership over the property until the buyer effects
full payment therefor.
In this case, the Agreement expressly provided that it was "entered into for the
purpose of negotiating the sale of the above referred property between the same parties herein
x x x." The term of the negotiation shall be for a period of 30-45 days from receipt of the
P40,000.00 deposit and the buyer has to pay the balance of the 50% down payment
amounting to P410,000.00 within the said period of negotiation. Thereafter, an Agreement to
Sell shall be executed by the parties and the remainder of the purchase price amounting to
another P410,000.00 shall be paid in 10 equal monthly installments from receipt of the down
payment. The assumption of both parties that the purpose of the Agreement was for
negotiating the sale of Lot No. 263, in its entirety, for a definite price, with a specific period
for payment of a specified down payment, and the execution of a subsequent contract for the
sale of the same on installment payments leads to no other conclusion than that the
predecessor-in-interest of the herein respondents and the herein petitioner Irene entered into a
contract to sell.
As stated in the Agreement, the payment of the purchase price, in installments within
the period stipulated, constituted a positive suspensive condition, the failure of which is not
really a breach but an event that prevents the obligation of the seller to convey title in
accordance with Article 1184 of the Civil Code. Hence, for petitioners' failure to comply with

the terms and conditions laid down in the Agreement, the obligation of the predecessor-ininterest of the respondents to deliver and execute the corresponding deed of sale never arose.
The fact that the predecessor-in-interest of the respondents failed to return the
P40,000.00 deposit subsequent to the expiration of the period of negotiation did not prevent
the respondents from repudiating the Agreement. The obligation of the respondent to convey
the property never came to pass as the petitioners did not comply with the positive suspensive
condition of full payment of the purchase price within the period as stipulated.
The alleged oral contract of sale for the 293-square meter portion of the property was
not proved by preponderant evidence. Hence, petitioners cannot compel the successors-ininterest of the deceased Eugenia to execute a deed of absolute sale in their favor

Digested by: Taruc, Albert Jericho V.