1.

Gabelo vs Court of appeals

Gr no. 11742; 316 scra 386
Facts:
-Philippine Realty Corporation [PRC], owner of a parcel of land, ENTERED A
CONTRACT OF LEASE thereover with herin PRIVATE RESPONDENT, URSULA
MAGLENTE for a period of 3 years of a monthly rental
- In the said contract, it was stipulated that the LESSOR shall have the right to sell the
land, subject to the condition that the lessee shall be notified 60 days in advance and
the lessee shall be given the first priority to buy it, and if lessee cant afford to buy, the
Final buyer shall respect the lease except in case of appropriation. It was also
prohibited to cede, transfer, mortgage, sublease or any manner that encumber the land
without consent of the lessor.
- After the execution of the lease agreement, the respondent started leasing portions of
the area to the Petitioners (14 individuals) who erected their respective houses.
- When the lease contract was about to expire, the PRC sent a letter offering to sell the
land to the respondent. Respondent respond manifesting an intention exercise her right
of first priority
- A memorandum of the offer was prepared offering the price of P 1,216,440.00 with a
down payment of P1000.
-Respondent gave partial downpayment of P50,000, Informing also that there were
other persons who were her co-buyers who are actually occupying the premises
- Respondent paid her back rentals to complete the P100,000.00 downpayment
- PRC received a letter sent by the petitioners expressing their desire to purchase the
properties on which they have been staying for a long time.
- PRC brought a complaint in interpleader against the Petitioners and private
respondent which the lower court rendered judgement in favor of Respondents
Maglante and her group.
- Gabelo appealed to CA which rendered affirming the disposition of Trial Court.
- Petitoners brought the issue to SC contending tht they are tenants of URSULA
MAGLANTE on the Land disputed they are occupying thus they have the preferential
right to purchase the portions of the land.

ISSUE: Whether the Petitioners being actual occupants of said property have the right
of first of priority.
Held: NO.
Petiton is denied and the decision of the CA affirmed.

The freedom of the contract signifies or implies the right to choose with whom to
contract . PRC is thus free to offer its subject property for sale to any interested persons
and PRC is not duty bound to sell the property simply because they have actual
possession.
It is well settled that a contract of sale is perfected the moment there is meeting of
minds of the contracting parties upon the thing which is the object of the contract and
upon the price; from the tie a party accepts the other party offer to sell within the
stipulated period without qualification, a contract is deemd perfeted.
In the case at bar, the contract of sale was already deemed perfect upon the offer of
PRC and the acceptance of Respondent Maglante and he group through a letter. There
was already an offer and acceptance giving rise to a valid contract.
2.
Ker & Co., Ltd. (petitioner) Vs Lingad (Respondent)
38 SCRA 524; G.r. L-20871
Facts:
-A contract of Petitioner with the United states Rubber International, the former being
the Distributor and the latter designated as a company.
-Then came a crucial stipulation
1. That The company shall consign the products and the distributor will receive,
accept and/or hold the products
2. The distributor accepts the responsibility for the final sale of goods delivered

3. All goods consigned shall remain property of the company but once sales is
made by Distributor, it shall be in his name
4. Whether or not such sale price shall have been collected from the purchasers,
shall immediately be paid and remitted by the distributor to the company.
5. It is further agreed that this agreement does not constitute Distributor the agent
or legal representative of the Company for any purpose.
6. Distributor is not granted any right or authority to assume or to create any
obligation in behalf of or in the name of the company binding the company to
whatsoever.

-Petitioner was assessed by the Commissioner of Internal Revenue (CIR) the sum of P
20,273.33 as the commercial brokers percentage tax, surcharge, and compromise
penalty. Which petiotioner requested for cancellation but turned down
-Petitioner filed a petition for review with the Court of Tax Appeals (CTA), which held
petitioner taxable except to the compromise penalty.
-Court of Tax appeals alleges that upon their analysis of the contract, they concluded
that the relationship between them is one of brokerage or agency.
Issue: Whether the relationship created is one of the vendor and vendee or of broker
and principal.
Held:
It is a relationship between broker and principal.
According to the National Internal Revenue Code, a commercial broker incudes all
Person, other than importers, manufactures, producers. Or bona fide employees who,
for compensation or profit, sell or bring about sales or purchases or merchandise for
other person or being proposed buyers and sellers together or negotiable freights or
other business for owners of vessels or other means of transportation, or for the
shippers, or consignors or consignees of freight carried by vessel or other means of
transportation

Jusitice J.B.L. , who penned the opinion since that the company retained ownership f
the goods, even as it delivered possession unto the dealer for resale to customers, the
price and terms of which were subject to the companys control, the relationship
between the company and the dealer is one of agency

An excerpt from Salisbury v. Brooks was cited stating that while the essence of a
agency to sell is the delivery to an agent, not as his property, but as the property of the
principal, who remains the owner and has the right to control the sales, fix the price, and
terms, demand and receiver the proceeds less the agents commission upon sales
made
Mere disclaimer in a contract that an entity like petitioner is not the agent or legal
representative does not suffice to yield the conclusion that it is an independent
merchant if the control over the goods for resale of the goods consigned is pervasive in
character.
3.

Zamora Realty and development (petitioner) vs Office of the President of the

Philippines (respondent)
G.r. No. 165724; 506 Scra 591
Facts:
-Respondent Gallardo entered a contract to sell with AMLAC Devp. Corporation. Under
the contract, Gallardo was required to pay downpayment and blance be paid in
installments.
-Gallardo made a downpayment and made the agreed installments. But later on
informed the owner/developer of his intention to stop further payments dueto the latters
non-compliance with its obligation to complete the development of the subdivision
project. Ignoring the demand of the developer, insisting that he would suspend
payment until completion of the project which subsequently due to repeated demands,
AMLAC/Zamora realty sent Gallardo a notarial notice of cancellation of the contract.
-Gallardo filed a complaint with HLURB, contending that his suspension of amortization
payment is justified by the non-development of the subdivision. Defendants countered
that the subjects was almost substantially completed.
-HLURB arbiter rendered a decision in favor of Gallardo
-defendants appealed to the HLURB board of Commissioners which dismissed the
appeal and affirmed in toto the prior decision. Noting that subject land was registered n
1985, and under the applicable laws, developer must complete the project within 1 yr
from the date of issuance of license.
-Zamora realty elevated the matter to the office of the president which, however
dismissed, also their motion for reconsideration was dismissed.
-Zamora realty filed Before CA, rendering a decision of dismissal. Which Motion or
Reconsideration was also denied
-petitioner reiterated that the contract between it and respondent is contract to sell ans
such ownership is reserved to it until after respondent had fully paid. Respondent insist
that the suspension of the payment is due to petitioners failure to develop the
subdivision.

Issue:
a) Whether the respondent violated the contract to sell by his failure to pay the
monthly amortizations and, if in negative , whether he was justified to suspend
payment due to incomplete development of petetioners project.

b) Whether CA should have directed the petitioner reimburse respondents payment

or to require it to sell a different lot equivalent to the subject property.

Held:
a) No. there is no violation of contract and respondent justly withheld the payment
of amortization.
In a contract to sell, the payment of the purchase price is a positive
suspensive condition, the failure of which is not a breach, causal or serious, but a
situation that prevents the obligation of the vendor to convey title form acquiring
an obligatory force. Thus, for its non-fulfillment, there will be no contract to speak
of, the obligor having failed to perform the suspensive condition which enforces
juridical relation.
P.D. No. 957 has limitation in case of failure of the prospective buyer to
pay the amortization. Section 20 and 23 provides that the developer must
complete the project within 1 year of issuance of license for the subdivision or
condominium project and no forfeiture of payment shall be in favor of the
developer after due notice of desistance .
b) Negative. Section 23 of P.D. No. 957 provides two remedies: (1) reimbursement
of the total amount paid, including amortization interest but excluding
delinquency interest, with interest thereon at the legal rate; or (2) for the buyer to
suspend the amortization payments until the completion of the project

4.
Dignos ( petitioners)
vs
CA And Jabil ( respondnets)
G.R. No. L-59266
Facts:
-Dignos spouses were owners of a parcel of land of the cadastral survey of Opon, LapuLapu city.
-Appellants(petitioners) Dignos spouses sold the said parcel to Plaintiff-appellant
(respondent Atilano J. jabil) for the sum of P 28,000.oo payable in two installments with
an assumtiom of indebtedness with the First Insular Bank of Cebu which was paid and
acknowledge by the vendors in the deed of sale executed in favr of plaintiff-appellant,.

-The Dignos spouses sold the same land I favor of defendants spouses, Luciano
Cabigas and Jovita Cabigas. A deed of absolute sale was exeuted by the Dignos
spouses in favor of the Cabigasspouses and which was registerd in the office of the
Register of Deeds.
- The Dignos spouse refused to accept from Plaintiff-appellant the balance of the
purchase price, and as plaintiff appellant discovered the second sale made by
defendants-appellants to the Cabigas, Plaintiff-appellant brought the present suit
-Trial court declared that the deed of sale executed in favor of Cabigas being null and
void ab initio. And the deed of sale executed by defendants Silivstre Dignos and isabela
lumungsond not rescinded. It was further ruled that defendant spouses sivestre dignos
and isabela lumungsd should return to defendants-spouses Cabigas the sum of
P35,000.oo
-Plaintiff (respondent herein) and Defendants (petitioners herein) appealed to CA
affirming the decision of the lower court except as to the portion ordering Jabil to pay for
the expensesincurred by the Cabgasfor the fence.
- a motion for reconsideration was filed by the Dignos but was denied due to motion for
lack of merit
-petitioners contention is that the transaction between the parties is a mere contract to
sell and not an absolute sale. That it is subject to two suspensive condition and it is
further contended that said contract reserved, ownership of the property was expressly
reserved n the vendor until the condition is met.
Issue:
a) Whteher or not subject contract is a deed of absolute sale or a contract to sell.
b) Whether or not there was a valid recession therof.
Held:
a) It is deed of absolute sale.
All the elements of a valid contract of sale under 1458 of the civil code are
present such as: (1) Consent or meeting of the minds; (2) determinate subject;
and (3) price certain in money or its equivalent. Art. 1477 of the same code
provides thath : The ownership of the thing sold shall be transferred to the
vendee upon actual or constructive delivery therof.

b) There is no valid Recession.

Under article 1358 of the civil code, it is required that acts and contracts which
have for their object the extinguishment of real rghts over immovable property

must appear in public document. It is further ruled that where time is not of the
essence of the agreement, a slight delay of the part of one party I the
performance of his obligation is not sufficient ground for the recession of the
agreement.

5.
Locator: G.R. No. 172733
Title: Sps. Cornelio Joel Orden and Maria Nympha Orden, et.al vs. Sps. Arturo and
Melodia C. Aurea, et. al.
Date Promulgated: March 1, 2010

Statement of Facts

Sps. Orden sold their 2 parcels of land to Sps. Aurea. Simultaneously, Sps. Aurea
executed a Joint Affidavit whereby they declared that the true and real purchasers of the
parcels of land are Sps. Cobile (American citizens). After the signing of the Deed of
Absolute Sale and Joint Affidavit, Sps. Cobile partially paid the Ordens and executed a
promissory note whereby they promised to pay the Ordens the remaining balance.

The Ordens wrote to Sps. Cobile informing their intent to dispose the properties to
other interested parties since the Cobiles failed to pay the promised balance. They were
given 10 days from receipt of the letter to comply with full payment. Otherwise, their
non-payment shall be construed as refusal on their part.

The Cobiles failed to comply and the properties were sold a Fortunata Houthjuijzen.

Respondents filed a complaint before the RTC asking for the delivery of the titles to
the properties in the name of Cobile or in alternative, if the titles could not be delivered
in the Cobiles name, to order the Ordens to pay the whole consideration with 12%
interest, and prohibiting the Register of Deeds from recording, registering and
transferring the titles to other persons except the Ordens.

RTC ruled that the properties could not be given to the Cobiles because the
ownership had passed to Fortunata Houthjuijzen, an innocent purchaser and that they

themselves filed to comply with the terms and conditions in the promissory note. CA
affirmed with the RTC in toto and ordered the Ordens to return the payment made by
Cobile.

Issue(s)

Whether the parties entered into a contract of sale or a contract to sell.

Ruling

There was a contract to sell.

The distinction between a contract of sale and a contract to sell is well-settled. In

acontract of sale, the title to the property passes to the vendee upon the delivery of the
thing sold; in a contract to sell, ownership is, by agreement, reserved to the vendor
and is not to pass to the vendee until full payment of the purchase price. Otherwise
stated, in a contract of sale, the vendor 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 vendor 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.

The real character of the contract is not the title given, but the intention of the
parties.It is only upon payment of the full purchase price that title to the properties shall
be transferred to their names. Circumstances show ownership over the properties was
never transferred to respondents Cobile. It is evident that the true agreement of the
parties is for the petitioners Orden to retain ownership over the properties until
respondents shall have fully paid the purchase price.6.
Locator: G.R. No. L-4402
Title: Canuto Martin vs. Maria Reyes and Pedro Revilla
Date Promulgated: July 28, 1952

Statement of Facts
Respondents Reyes and Revilla obtained a loan of 6,500 and with that loan, they
paid the price of a lot, with improvements. They mortgaged said property to La
Previsora for the purpose of guaranteeing repayment of the debt in installments with
annual interest at 12%.
It turned out later that a judgment was made against Revilla for the sum of 45,000
and had levied execution therefore upon the property and its rentals. La Previsoria
started foreclosure proceedings, alleging non-payment of credit. The conflict of interest
was addressed in an amicable settlement where the property was ceded to La
Previsoria with a right to repurchase within 60 days. La Previsoria, at the same time,
conveyed the property to Canuto Martin where the latter executed a document allowing
the respondents to repurchase the property within 60 days. The CA declared such
document void since Martin never had title over the property.

Issue(s)

Whether the vendor had authority to sell even if he is not the owner of the property
at the time of the execution of the contract.

Ruling

Yes. Property or goods which, at the time of the sale, are not owned by the seller,
but which are thereafter to be acquired by him, cannot be the subject of an executed
sale, but may be the subject of a contract for the future sale and delivery thereof, and it
has been held that even though the contract is in the form of the present sale it will not
pass the title, after the goods have been acquired, until the seller has done some act
appropriating them to the contract. Such a contract of the future sale and delivery of
goods, which the seller has not in possession but which he intends to acquire by
producing, manufacturing, or purchasing before the day of delivery, is valid as an
executory contract to be fulfilled by acquiring and delivering the goods specified in the
contract, even though the acquisition of the goods by the seller depends upon a
contingency which may or may not happen.

8.
Locator: G.R. No. 109355
Title: Serafin Modina vs. Court of Appeals and Ernesto Hontarciego, Paul
Fidueroa, Teodoro Hipalla and Ramon Chiang, Merlinda Chiang
Date Promulgated: October 29, 1999

Statement of Facts

The parcels of land in question are those under the name of Ramon Chiang. He
contended that said properties were sold to him by his wife, Merlinda Chiang, as
evidenced by a Deed of Absolute Sale and were subsequently sold by Ramon to Serafin
Modina.

Modina brought a complaint for Recovery of Possession with Damages against the
private respondents before the RTC of Iloilo City.

Upon learning of the institution of the complaint, Merlinda presented a complaint-inintervention, seeking the declaration of nullity of the Deed of Absolute Sale between her
husband and Modina on the ground that the titles of the parcels of land in dispute were
never legally transferred to her husband.

RTC ruled in favor of Merlinda where it declared the Deed of Sale between Ramon
and Serafin as null and void. The case was then brought to the CA, where it affirmed the
decision of RTC in toto.

Dissatisfied, Modina filed a petition for review to the SC.

Issue(s)

Is a sale of property between husband and wife valid?

Ruling

Article 1490 of the New Civil Code states thatthe husband and the wife cannot sell
property to each other, except:
1) when a separation of property was agreed upon in the marriage settlements; or
2) when there has been a judicial separation of property under Art. 191.
The exception to the rule laid down in Art. 1490 of the New Civil Code not having
existed with respect to the propertyrelations of Ramon Chiang and Merlinda Chiang, the
sale by the latter in favor of the former of the properties inquestion is invalid for being
prohibited by law. Not being the owner of subject properties, Ramon Chiang could not
havevalidly sold the same to plaintiff Serafin Modina. The sale by Ramon Chiang in
favor of Serafin Modina is, likewise, void andinexistent.

9.
Locator: G.R. No. 172674
Title: Jorge Navarra and Carmelita Bernardo Navarra and RRRC Development
Corporation vs. Planters Development Bank and Roberto Gatchalian Realty, Inc.
Date Promulgated: July 12, 2007

Statement of Facts

The Navarras executed a deed of mortgage over their 5 parcels of land.

Unfortunately, the couple failed to pay their loan obligation. Hence, Planters Bank
foreclosed the mortgage and the mortgaged assets were sold. The 1-year period of
redemption expired.

RRRC is a real estate company owned by the parents of Carmelita Navarra and it
obtained a loan with Planters Bank secured by a mortgage over another set of
properties owned by the corporation. Likewise, the loan was unpaid and the mortgage
was foreclosed. By agreement, RRRC were able to sell the properties to third persons
and payments were in excess by 300,000 for the redemption price.
The Jorge Navarra requested, through letter, that the 300,000 be made as down
payment for the repurchase for the 5 lots earlier auctioned. Planters Bank responded
with intent to negotiate for the redemption with a condition that Navarra should submit a
board resolution from RRRC authorizing him to negotiate, to which he did not comply.
Hence, Planters Bank did not proceed with the repurchase. The Navarras then filed a
complaint for Specific Performance with Injunction against Planters Bank.

Trial court ruled in favor of the Navarras and that there was a perfected contract of
sale. CA reversed the trial court's decision.

Issue(s)

Was there a valid or perfected contract of sale?

Ruling

The lack of a definite offer on the part of the spouses could not possibly serve as
the basis of their claimthat thesale/repurchase of their foreclosed properties was
perfected. The reason is obvious: one essential element of a contract of sale is wanting:
the price certain. There can be no contract of sale unless the following elements concur:
(a) consentor meeting of the minds; (b) determinate subject matter; and (c) price certain
in money or its equivalent.

Furthermore, the tenor of Planters Banks letter-reply negates the contention of the
Navarras that the Bank fully acceptedtheir offer. The letter specifically stated that there
is a need to negotiate on the otherdetails of the transaction before the salemay be
formalized. Such statement in the Banks letter clearlymanifests lack of agreement
between the parties as to the terms of the purported contract of sale/repurchase,
particularly the mode of payment of the purchase price and the period for itspayment.

10.
JACOBUS BERNHARD HULST v. PR BUILDERS INC. (G.R. No. 156364)
FACTS:
The Petitioner and his spouse, both Dutch Nationals, entered into a Contract to Sell with
PR Builders, Inc.to purchase a 210-sq m residential unit in the respondent's townhouse
project in Batanagas. When PR Builder's failed to comply with their verbal promise to
complete the project, the spouses Hulst filed a complaint for recession of contract with
interest, damages and attorney's fees before the Housing and Land Regulatory Board
(HLURB), which then was granted. A Writ of Execution was then addressed to the ExOfficio Sheriff of the RTC of Tanauan, Batangas, but upon the complaint of the
respondent, the levy was set aside, leaving only the respondent's personal properties to
be levied first. The Sheriff set a public auction of the said levied properties, however, the
respondent filed a motion to quash Writ of levy. Instead of resolving the objection of the
respondent's regarding the auction, the Sheriff proceeded with the auction since there
was no restraining order from the HLURB. The 15 parcels of land was then awarded to
Holly Properties Realty. On the same day, the Sheriff remitted the legal fees and
submitted to contracts of sale to HLURB, however, he then received orders to suspend
proceedings on the auction for the reason that the market value of the properties was
not fair. There was disparity between the appraised value and the value made by the
petitioner and the Sheriff, which should've been looked into by the Sheriff before making
the sale. While an inadequacy in price is not a ground to annul such sale, the court is
justified to such intervention where the price shocks the conscience.
ISSUE:
1. Whether or not the Sheriff erred in the value that was attached to the properties
during the auction and as well as disregarding the objection made by the respondent's?
2. Whether or not the market value of the said property was inadequate?
3. Whether or not the spouses Hulst's request for damages is actionable?
HELD:
1. No. According to the Rules of Court, the value of the property levied is not required to
be exactly the same as the judgment debt. In the levy of property, the Sheriff does not
determine the exact valuation of the levied property. The Sheriff is left to his own

judgment. He should be allowed a reasonable margin between the value of the property
levied upon and the amount of the execution; the fact that the Sheriff levies upon a little
more than is necessary to satisfy the execution does not render his actions improper. In
the absence of a restraining order, no error can be imputed to the Sheriff in proceeding
with the auction sale despite the pending motion to quash the levy filed by the
respondents with the HLURB. Sheriffs, as officers charged with the task of the
enforcement and/or implementation of judgments, must act with considerable dispatch
so as not to unduly delay the administration of justice. It is not within the jurisdiction of
the Sheriff to consider and resolve respondent's objection to the continuation of the
conduct of the auction sale. The Sheriff has no authority, on his own, to suspend the
auction sale. His duty being ministerial, he has no discretion to postpone the conduct of
the auction sale.
2. No. The HLURB Arbiter and Director had no sufficient factual basis to determine the
value of the levied property. The Appraisal report, that was submitted, was based on the
projected value of the townhouse project after it shall have been fully developed, that is,
on the assumption that the residential units appraised had already been built. Since it is
undisputed that the townhouse project did not push through, the projected value did not
become a reality. Thus, the appraisal value cannot be equated with the fair market
value.
3. No. Under Article 12, Sec.7 of the 1987 Constitution, foreign nationals, the spouses
Hulst, aredisqualified form owning real property. However, under article 1414 of the Civil
Code, one who repudiates the agreement and demands his money before the illegal act
has taken place is entitled to recover. Petitioner is therefore entitled to recover what he
has paid, although the basis of his claim for rescission, which was granted by the
HLURB, was not the fact that he is not allowed to acquire private land under the
Philippine Constitution. But petitioner is entitled to the recovery only of the amount of
the purchase price paid to respondent. No damages may be recovered on the basis of a
void contract; being nonexistent, the agreement produces no juridical tie between the
parties involved. Further, petitioner is not entitled to actual as well as interests thereon,
moral and exemplary damages and attorney's fees.

11.
ANTONIO ENRIQUEZ DE LA CAVADA vs ANTONIO DIAZ
G.R. No. L-11668, April 1, 1918

FACTS:
Parties entered into a contract of option which involves a hacienda at Pitogo consisting
of 100 and odd hectares, owned by respondent. The said contract stipulated how the
price of the property will be paid; for which the petitioner herein may pay him either the
sum of thirty thousand pesos (P30,000), Philippine currency, in cash, or within the

period of six (6) years, beginning with the date of the purchase, the sum of forty
thousand pesos (P40,000), Philippine currency, at six per cent interest per annum.
After the execution of the contract, defendant filed a petition with the Court of Land
Registration in order to obtain the registration of a part of the hacienda, which was
granted.
Later, and pretending to comply with the terms of said contract, the defendant offered to
transfer to the plaintiff one of said parcels only, which was a part of said "hacienda." The
plaintiff refused to accept said certificate for a part only of said "hacienda" upon the
ground (a) that it was only a part of the "Hacienda de Pitogo," and (b) under the contract
(Exhibits A and B) he was entitled to a transfer to him all said "hacienda."
The theory of the defendant is that the contract of sale of said "Hacienda de Pitogo"
included only 100 hectares, more or less, of said "hacienda," and that by offering to
convey to the plaintiff a portion of said "hacienda" composed of "100 hectares, more or
less," he thereby complied with the terms of the contract.
Lower Court ruled in favor of Petitioner.
ISSUE: Whether or not the defendant was obliged to convey to the plaintiff all of said
"hacienda."
HELD:
A promise made by one party, if made in accordance with the forms required by the law,
may be a good consideration (causa) for a promise made by another party. (Art. 1274,
Civil Code.) In other words, the consideration (causa) need not pass from one to the
other at the time the contract is entered into.
The said contract (Exhibits A and B) was not, in fact, an "optional contract" as that
phrase is generally used. Reading the said contract from its four corners it is clearly as
absolute promise to sell a definite parcel of land for a fixed price upon definite
conditions. The defendant promised to convey to the plaintiff the land in question as
soon as the same was registered under the Torrens system, and the plaintiff promised
to pay to the defendant the sum of P70,000, under the conditions named, upon the
happening of that event. The contract was not, in fact, what is generally known as a
"contract of option."
An optional contract is a privilege existing in one person, for which he had paid a
consideration, which gives him the right to buy, for example, certain merchandise of
certain specified property, from another person, if he chooses, at any time within the
agreed period, at a fixed price. The contract of option is a separate and distinct contract
from the contract which the parties may enter into upon the consummation of the option.
A contract of option is a contract by virtue of the terms of which the parties thereto
promise and obligate themselves to enter into contract at a future time, upon the
happening of certain events, or the fulfillment of certain conditions.

12.
SAN MIGUEL PROPERTIES PHILS., INC. v SPOUSES ALFREDO and GRACE
HUANG, G. R. No. 137290, 31 July 2000
Nature of the Case: A petition for review for a decision of the Court of Appeals which
reversed the decision of the RTC dismissing the complaint brought by the Huangs
against San Miguel Properties for enforcement of a contract of sale.
Facts: San Miguel Properties offered two parcels of land for sale and the offer was
made to an agent of the respondents. An earnest-deposit of P1 million was offered by
the respondents and was accepted by the petitioners authorized officer subject to
certain terms.
Petitioner, through its executive officer, wrote the respondents lawyer that because ethe
parties failed to agree on the terms and conditions of the sale despite the extension
granted by the petitioner, the latter was returning the earnest-deposit.
The respondents demanded execution of a deed of sale covering the properties and
attempted to return the earnest-deposit but petitioner refused on the ground that the
option to purchase had already expired.
A complaint for specific performance was filed against the petitioner and the latter filed a
motion to dismiss the complaint because the alleged exclusive option of the
respondents lacked a consideration separate and distinct from the purchase price and
was thus unenforceable; the complaint did not allege a cause of action because there
was no meeting of the mind between the parties and therefore the contact of sale was
not perfected.
The trial court granted the petitioners motion and dismissed the action. The
respondents filed a motion for reconsideration but were denied by the trial court. The
respondents elevated the matter to the Court of Appeals and the latter reversed the
decision of the trial court and held that a valid contract of sale had been complied with.
Petitioner filed a motion for reconsideration but was denied.
Issue: WON there was a perfected contract of sale between the parties
Ruling: The decision of the appellate court was reversed and the respondents
complaint was dismissed.
It is not the giving of earnest money , but the proof of the concurrence of all the
essential elements of the contract of sale which establishes the existence of a perfected
sale.

The P1 million earnest-deposit could not have been given as earnest money because
at the time when petitioner accepted the terms of respondents offer, their contract had
not yet been perfected. This is evident from the following conditions attached by
respondents to their letter.
The first condition for an option period of 30 days sufficiently shows that a sale was
never perfected. As petitioner correctly points out, acceptance of this condition did not
give rise to a perfected sale but merely to an option or an accepted unilateral promise
on the part of respondents to buy the subject properties within 30 days from the date of
acceptance of the offer. Such option giving respondents the exclusive right to buy the
properties within the period agreed upon is separate and distinct from the contract of
sale which the parties may enter. All that respondents had was just the option to buy the
properties which privilege was not, however, exercised by them because there was a
failure to agree on the terms of payment. No contract of sale may thus be enforced by
respondents.
Even the option secured by respondents from petitioner was fatally defective. Under the
second paragraph of Art. 1479, an accepted unilateral promise to buy or sell a
determinate thing for a price certain is binding upon the promisor only if the promise is
supported by a distinct consideration. Consideration in an option contract may be
anything of value, unlike in sale where it must be the price certain in money or its
equivalent. There is no showing here of any consideration for the option. Lacking any
proof of such consideration, the option is unenforceable.
Equally compelling as proof of the absence of a perfected sale is the second condition
that, during the option period, the parties would negotiate the terms and conditions of
the purchase. The stages of a contract of sale are as follows: (1) negotiation, covering
the period from the time the prospective contracting parties indicate interest in the
contract to the time the contract is perfected; (2) perfection, which takes place upon the
concurrence of the essential elements of the sale which are the meeting of the minds of
the parties as to the object of the contract and upon the price; and (3) consummation,
which begins when the parties perform their respective undertakings under the contract
of sale, culminating in the extinguishment thereof.
In the present case, the parties never got past the negotiation stage. The alleged
indubitable evidence of a perfected sale cited by the appellate court was nothing more
than offers and counter-offers which did not amount to any final arrangement containing
the essential elements of a contract of sale. While the parties already agreed on the real
properties which were the objects of the sale and on the purchase price, the fact
remains that they failed to arrive at mutually acceptable terms of payment, despite the
45-day extension given by petitioner.

13.
Sanchez vs. Rigos (45 SCRA 368) June 1972

FACTS:
In an instrument entitled "Option to Purchase," executed on April 3, 1961, defendantappellant SeverinaRigos "agreed, promised and committed ... to sell" to plaintiffappellee Nicolas Sanchez for the sum of P1,510.00 within two (2) years from said date,
a parcel of land situated in the barrios of Abar and Sibot, San Jose, Nueva Ecija. It was
agreed that said option shall be deemed "terminated and elapsed," if Sanchez shall fail
to exercise his right to buy the property" within the stipulated period. On March 12,
1963, Sanchez deposited the sum of Pl,510.00 with the CFI of Nueva Ecija and filed an
action for specific performance and damages against Rigos for the latters refusal to
accept several tenders of payment that Sanchez made to purchase the subject land.
Defendant Rigos contended that the contract between them was only a unilateral
promise to sell, and the same being unsupported by any valuable consideration, by
force of the New Civil Code, is null and void." Plaintiff Sanchez, on the other hand,
alleged in his compliant that, by virtue of the option under consideration, "defendant
agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land
described in the option. The lower court rendered judgment in favor of Sanchez and
ordered Rigos to accept the sum Sanchez judicially consigned, and to execute in his
favor the requisite deed of conveyance. The Court of Appeals certified the case at bar to
the Supreme Court for it involves a question purely of law.
ISSUE:
Was there a contract to buy and sell between the parties or only a unilateral promise to
sell?
RULING:
The Supreme Court affirmed the lower courts decision. The instrument executed in
1961 is not a "contract to buy and sell," but merely granted plaintiff an "option" to buy, as
indicated by its own title "Option to Purchase." The option did not impose upon plaintiff
Sanchez the obligation to purchase defendant Rigos' property. Rigos "agreed, promised
and committed" herself to sell the land to Sanchez for P1,510.00, but there is nothing in
the contract to indicate that her aforementioned agreement, promise and undertaking is
supported by a consideration "distinct from the price" stipulated for the sale of the land.
The lower court relied upon Article 1354 of the Civil Code when it presumed the
existence of said consideration, but the said Article only applies to contracts in general.
However, it is not Article 1354 but the Article 1479 of the same Code which is controlling
in the case at bar because the latters 2nd paragraph refers to "sales" in particular, and,
more specifically, to "an accepted unilateral promise to buy or to sell." Since there may
be no valid contract without a cause or consideration, the promisor is not bound by his
promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his
accepted promise partakes, however, of the nature of an offer to sell which, if accepted,

results in a perfected contract of sale. Upon mature deliberation, the Court reiterates the
doctrine laid down in the Atkins case and deemed abandoned or modified the view
adhered to in the Southwestern Company case.

17.
Regina Dizon et al v. CA and Overland Express Lines, Inc.G.R. No. 122544
January 28, 1999
FACTS: Overland Express Lines, Inc. entered into a Contract of Lease with Option to
Buy with petitioners involving a 1,755.80 square meter parcel of land situated at corner
MacArthur Highway and SouthH Street, Diliman, Quezon City. The term of the lease
was for 1 year commencing from May 16,1974 up to May 15, 1975. During this period,
Overland Express Lines was granted an option to purchase for the amount
of P3,000.00 per square meter. Thereafter, the lease shall be on a permonth basis with
a monthly rental of P3,000.00.
For failure of Overland Express Lines to pay the increased rental of P8,000.00 per
month effective June 1976, petitioners filed an action for ejectment against it. The lower
court rendered judgment ordering Overland Express Lines to vacate the leased
premises and to pay the sum of P624,000.00representing rentals in arrears and/or as
damages in the form of reasonable compensation for the use and occupation of the
premises during the period of illegal detainer from June 1976 to November1982 at the
monthly rental of P8,000.00, less payments made, plus 12% interest per annum from
November 18, 1976, the date of filing of the complaint, until fully paid, the
sum of P8,000.00 a month starting December 1982, until Overland Express Lines fully
vacates the premises, and to payP20,000.00 as and by way of attorneys fees.
ISSUE:
WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, as
representative (agent) of petitioners in consideration of the option
HELD: No. CA opined that the payment by Overland Express Lines of P300,000.00 as
partial payment for the leased property, which petitioners accepted (through Alice
A. Dizon) and for which an official receipt was issued, was the operative act that gave
rise to a perfected contract of sale, and that for failure of petitioners to deny receipt
thereof, Overland Express Lines can therefore assume that Alice A.Dizon, acting as
agent of petitioners, was authorized by them to receive the money in their behalf.CA
went further by stating that in fact, what was entered into was a conditional contract of
sale wherein ownership over the leased property shall not pass to the Overland
Express Lines until it has fully paid the purchase price. Since Overland Express Lines

did not consign to the court the balance of the purchase price and continued to occupy
the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly
rentals until full payment of the purchase price.
In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00
to petitioners(thru Alice A. Dizon) on the erroneous presumption that the said amount
tendered would constitute aperfected contract of sale pursuant to the contract of lease
with option to buy. There was no validconsent by the petitioners (as co-owners of the
leased premises) on the supposed sale entered intoby Alice A. Dizon, as petitioners
alleged agent, and Overland Express Lines. The basis for agency isrepresentation and
a person dealing with an agent is put upon inquiry and must discover upon his peril the
authority of the agent. As provided in Article 1868 of the New Civil Code, there was no
showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act
on their behalf with regard to her transaction with private respondent. The most prudent
thing private respondent should have done was to ascertain the extent of the authority
of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief
on the basis of a supposed agency.
Every person
dealing with an agent is put upon inquiry
and must discover upon his peril the authority of the agent. If he does not make such
inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of
that authority will not be any excuse. Persons dealing with an assumed agency, whether
the assumed agency be a general or special one, are bound at their peril, if they would
hold the principal, to ascertain not only the fact of the agency but also the nature and
extent of the authority, and in case either is controverted, the burden of proof is upon
them to establish it

18 (two cases) (a)

Guzman, Bocaling& Co. v. Bonnevie, G.R. No. 86150 March 2, 1992
FACTS: Africa Valdez de Reynoso leased a parcel of land to Raoul S. Bonnevie and
Christopher Bonnevie for a period of one year beginning August 8, 1976. Reynoso
alleged that on November 3, 1976 she notified respondents by registered mail that she
was selling the leased premises for P600,000 and that she was giving respondents 30
days from receipt of the letter to exercise their right of first priority to purchase the
subject property as stipulated in their Contract of Lease. On January 20, 1977, Reynoso
sent another letter to the respondents informing them that the property had been sold.
Respondents wrote back to Reynoso that they did not receive her first letter and that
they had already signified their interest to purchase the property beforehand to
Reynosos agent and thus were constrained to refuse Reynosos request to terminate
the lease. Reynoso went on with the sale in favor of Guzman, Bocaling& Co. for a
lesser price, and filed an ejectment case against the Bonnevies. Respondents filed an
action for annulment of the sale. The Court of First Instance ruled in favor of the

respondents, declaring the deed of sale executed by Reynoso in favor of Guzman,

Bocaling& Co. null and void. The Court of Appeals affirmed the lower courts decision
but held that the Contract of Sale was not voidable but was instead rescissible.
ISSUE: 1.) Did the Court of Appeals err in holding that the Contract of Sale was not
voidable but was instead rescissible?
2.) Did the Court of Appeals err in considering the petitioner as a buyer in bad
faith?
HELD: 1.) No. Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwise
valid may nonetheless be subsequently rescinded by reason of injury to third persons,
like creditors. The status of creditors could be validly accorded the Bonnevies for they
had substantial interests that were prejudiced by the sale of the subject property to the
petitioner without recognizing their right of first priority under the Contract of Lease.
Rescission is a remedy granted by law to the contracting parties and even to third
persons, to secure reparation for damages caused to them by a contract, even if this
should be valid, by means of the restoration of things to their condition at the moment
prior to the celebration of said contract. It is a relief allowed for the protection of one of
the contracting parties and even third persons from all injury and damage the contract
may cause, or to protect some incompatible and preferent right created by the contract.
Recission implies a contract which, even if initially valid, produces a lesion or pecuniary
damage to someone that justifies its invalidation for reasons of equity.
2.) No. Petitioner cannot be deemed a purchaser in good faith for the record shows that
it categorically admitted it was aware of the lease in favor of the Bonnevies, who were
actually occupying the subject property at the time it was sold to petitioner. A purchaser
in good faith and for value is one who buys the property of another without notice that
some other person has a right to or interest in such property and pays a full and fair
price for the same at the time of such purchase or before he has notice of the claim or
interest of some other person in the property. Good faith connotes an honest intention to
abstain from taking unconscientious advantage of another. Tested by these principles,
the petitioner cannot tenably claim to be a buyer in good faith as it had notice of the
lease of the property by the Bonnevies and such knowledge should have cautioned it to
look deeper into the agreement to determine if it involved stipulations that would
prejudice its own interests.
18.(b)
Riviera Filipina Inc. vs. CA G.R. No. 117355. April 5, 2002
Facts: Respondent Reyes executed a ten year renewable Contract of Lease with
Riviera involving a 1,018 square meter parcel of land which was a subject of a Real
Estate Mortgage executed by Reyes in favor of Prudential Bank. But the loan with
Prudential Bank remained unpaid upon maturity so the bank foreclosed the mortgage
thereon and emerged as the highest bidder at the public auction sale. Reyes decided to

sell the property offered it to Reviera. After seven months, Riviera offered to buy the
property but Reyes denied it and increased the price of the property. Reyes counsel
informed Riviera that he is selling the property for P6,000 per square meter and to
confirm their conversation, Riviera sent a letter stating his interest in buying the property
for the fixed and final price of P5,000 per square meters but Reyes did not accede to
said price.
Then Reyes confided to Traballo and the latter expressed interest in buying the said
property for P5,300 per square meter but he did not have enough amount so he looked
for a partner. Despite of the impending expiration of the redemption period of the
foreclosed mortgaged property and the deal between Reyes and Traballo was not yet
formally concluded, Reyes decided to approach Riviera and requested Atty. Alinea to
approach Angeles and find out if the latter was still interested in buying the subject
property and ask him to raise his offer for the purchase of the said property a little
higher but Riviera said that his offer is P5,000 per square meter so Reyes did not agree.
Cypress and Trading Corporation, were able to come up with the amount sufficient to
cover the redemption money, with which Reyes paid to the Prudential Bank to redeem
the subject property and Reyes executed a Deed of Absolute Sale covering the subject
property. Cypress and Cornhill mortgaged the subject property to Urban Development
Bank. Riviera sought from Reyes, Cypress and Cornhill a resale of the subject property
to it claiming that its right of first refusal under the lease contract was violated but his
attempts were unsuccessful. Riviera filed the suit to compel Reyes, Cypress, Cornhill
and Urban Development Bank to transfer the disputed title to the land in favor of Riviera
upon its payment of the price paid by Cypress and Cornhill.
Issue: Whether or not petitioner can still exercise his right of first refusal.
Held: No. The held that in order to have full compliance with the contractual right
granting petitioner the first option to purchase, the sale of the properties for the price for
which they were finally sold to a third person should have likewise been first offered to
the former. Further, there should be identity of terms and conditions to be offered to the
buyer holding a right of first refusal if such right is not to be rendered illusory. Lastly, the
basis of the right of first refusal must be the current offer to sell of the seller or offer to
purchase of any prospective buyer. Thus, the prevailing doctrine is that a right of first
refusal means identity of terms and conditions to be offered to the lessee and all other
prospective buyers and a contract of sale entered into in violation of a right of first
refusal of another person, while valid, is rescissible.

19.
PARANAQUE KINGS ENTERPRISES INC v CAG.R. No. 111538. February 26, 1997

FACTS: Catalina owned 8 parcels of land leased to Chua,who assigned its rights
thereto to Lee Ching Bing, who,in turn, assigned said rights to Paranaque King
Enterprises, which introduced significant improvements on the premises. Under the
lease agreement, in case of sale, the lessee shall have the option or priority to buy the
said properties. Catalina, in violation of the said stipulation, sold the lot to Raymundo
for P5M.Paranaque King notified her of the said breach, and she immediately had the
lots reconvened. She then offered the lot to Paranaque King for P15M; but the latter
refused claiming that the offer was ridiculous.Catalina thereafter sold it again to
Raymundo for P9M.
ISSUE: W/N there was compliance with the Right of First Refusal assigned to
Paranaque King
HELD: NO. In a Right of First Refusal, the seller cannot offer the property to another for
a lower price or under terms more favorable. It must be offered under the same terms &
conditions to Paranaque King; otherwise ,the right of first refusal becomes illusory. Only
if Paranaque King fails to meet the offer may the property be offered for sale to another
buyerand under the same terms and conditions as well. The Right of First Refusal
may also be validly transferred or assignedas in this case

24.
PHILIPPINE NATIONAL BANK, plaintiff-appellee,
vs.
SEVERO EUGENIO LO, ET AL., defendants.
SEVERIO EUGENIO LO, NG KHEY LING and YEP SENG, appellants.
G.R. No. L-26937
October 5, 1927
Under the New Civil Code, a firm name may or may not include the name of one or
more of the partners (Article 1815).
FACTS:
In September 1916, Severo Eugenio Lo and Ling, together with Ping, Hun, Lam
and Peng formed a commercial partnership under the name of Tai Sing and Co., with
a capital of P40,000 contributed by said partners. The firm name was registered in the
mercantile registrar in the Province of Iloilo.
Ping, in the articles of partnership, was assigned as the general manager.
However, in 1917, he executed a special power of attorney in favor of Lam to act in his
behalf as the manager of the firm.

Subsequently, Lam obtained a loan from PNB the loan was under the firms
name. In the same year, Ping died in China.
From 1918 to 1920, the firm, via GM Lam, incurred other loans from PNB. The
loans were not objected by any of the partners.
Later, PNB sued the firm for non-payment. Lo, in his defense, argued that he
cannot be liable as a partner because the partnership, according to him, is void; that it is
void because the firms name did not comply with the requirement of the Code of
Commerce that a firm name should contain the names of all of the partners, of several
of them, or only one of them. Lo also argued that the acts of Lam after the death of
Ping is not binding upon the other partners because the special power of attorney shall
have already ceased.
ISSUE:
Whether Lo is correct in both arguments.
HELD:
No. The anomalous adoption of the firm name above noted does not affect the
liability of the general partners to third parties under Article 127 of the Code of
Commerce. The object of the Code of Commerce in requiring a general partnership to
transact business under the name of all its members, of several of them, or of one only,
is to protect the public from imposition and fraud; it is for the protection of the creditors
rather than of the partners themselves. It is unenforceable as between the partners and
at the instance of the violating party, but not in the sense of depriving innocent parties of
their rights who may have dealt with the offenders in ignorance of the latter having
violated the law; and that contracts entered into by a partnership firm defectively
organized are valid when voluntarily executed by the parties, and the only question is
whether or not they complied with the agreement.
Therefore, Lo cannot invoke in his defense the anomaly in the firm name which
they themselves adopted.
Lo was not able to prove his second argument. But even assuming arguendo, his
second contention does not deserve merit because (a) Lam, in acting as a GM, is also a
partner and his actions were never objected to by the partners, and (b) it also appeared
from the evidence that Lo, Lam and the other partners authorized some of the loans.

25.
UNIVERSITY OF THE PHILIPPINES
vs.
PHILAB INDUSTRIES, INC.
G.R. No. 152411
September 29, 2004
(1) an enrichment; (2) an impoverishment; (3) some connection between enrichment
and impoverishment; (4) the absence of justification for enrichment and
impoverishment; and (5) the absence of a remedy provided by law.
FACTS:
UP decided to construct a Research Complex. As part of the project, laboratory
equipment and furniture were purchased for the BIOTECH at UP Los Banos. The
Ferdinand E. Marcos Foundation (FEMF) agreed to fund and donate money for the
project.
BIOTECH arranged for PHILAB to fabricate the laboratory furniture and equipment and
deliver the same to BIOTECH, but for the account of FEMF.
BIOTECH requested the issuance of a purchase order and downpayment from
FEMF, assuring it that the contract would be prepared ASAP before their issuance.
However, PHILAB failed to submit the contract. Instead, they submitted an
accomplishment report on the project. Nevertheless, it made partial deliveries to
BIOTECH, and FEMF made 2 remittances to PHILAB, for which the latter issued official
receipts.
Later, when PHILAB submitted the final bill to BIOTECH, FEMF failed to pay for
the same. Despite having reiterated its request for payment, PHILAB did not receive
anything from FEMF. Thus, it wrote BIOTECH appealing for payment.
At this time, Marcos was ousted because of the EDSA revolution. PHILAB then
also requested President Cory Aquino to help secure the payment due from FEMF.
Eventually, the request was forwarded to PCGG, which in turn requested UP to furnish it
with a copy of the relevant contract and the MOA. However, PCGG was told that there
was no contract executed between PHILAB and FEMF.
PHILAB filed a complaint for sum of money against UP. The latter denied
liability,alleging that PHILAB had no cause of action against it because it was merely the
donee/beneficiary of the laboratory furniture, and that the FEMF was the one liable for
the purchase price.

The Trial Court dismissed the complaint without prejudice to any recourse that
PHILAB might have against FEMF. However, the CA reversed and held UP liable
toPHILAB to prevent unjust enrichment. Hence this petition.
ISSUES:
1) Whether the law on contracts between PHILAB and MARCOS FOUNDATION apply.
2) Whether accion in rem verso may prosper.
HELD:
Issue #1:
Yes. Based on the records, an implied-in-fact contract of sale was entered into
between the respondent and FEMF. A contract implied in fact is one implied from facts
and circumstances showing a mutual intention to contract. It arises where the intention
of the parties is not expressed, but an agreement in fact creating an obligation. It is a
contract, the existence and terms of which are manifested by conduct and not by direct
or explicit words between parties but is to be deduced from conduct of the parties,
language used, or things done by them, or other pertinent circumstances attending the
transaction.
In this case, the respondent was aware, from the time Padolina contacted it for
the fabrication and supply of the laboratory furniture until the go-signal was given to it to
fabricate and deliver the furniture to BIOTECH as beneficiary, that the FEMF was to pay
for the same. Indeed, Padolina asked the respondent to prepare the draft of the contract
to be received by the FEMF prior to the execution of the parties (the respondent and
FEMF), but somehow, the respondent failed to prepare one. The respondent knew that
the petitioner was merely the donee-beneficiary of the laboratory furniture and not the
buyer; nor was it liable for the payment of the purchase price thereof. From the
inception, the FEMF paid for the bills and statement of accounts of the respondent, for
which the latter unconditionally issued receipts to and under the name of the FEMF.
Issue #2:
No. In order that accion in rem verso may prosper, the essential elements must
be present: (1) that the defendant has been enriched, (2) that the plaintiff has suffered a
loss, (3) that the enrichment of the defendant is without just or legal ground, and (4) that
the plaintiff has no other action based on contract, quasi-contract, crime or quasi-delict.
An accion in rem verso is considered merely an auxiliary action, available only
when there is no other remedy on contract, quasi-contract, crime, and quasi-delict. If
there is an obtainable action under any other institution of positive law, that action must
be resorted to, and the principle of accion in rem verso will not lie.

The essential requisites for the application of Article 22 of the New Civil Code do
not obtain in this case. The respondent had a remedy against the FEMF via an action
based on an implied-in-fact contract with the FEMF for the payment of its claim. The
petitioner legally acquired the laboratory furniture under the MOA with FEMF; hence, it
is entitled to keep the laboratory furniture.

26.
DOMINGO MERCADO and JOSEFA MERCADO
vs.
JOSE ESPIRITU
G.R. No. L-11872
December 1, 1917
Sales of real estate made by minors are valid when the latter pretend to be twenty-five
years of age and, due to the circumstances that they are nearly of that age, are
married, or have administration of their property, or on account of other special
circumstances affecting them, the other parties to the contract believe them to be of
legal age.
FACTS:
Petitioners Domingo and Josefa Mercado brought suit against Luis Espiritu (but
now directed against the administrator, Jose Espiritu, since Luis died), alleging that they
and their sisters are the sole heirs of Margarita Espiritu, their mother and the sister of
the defendant.
Petitioners claim that in 1910, Luis, by means of cajolery,
induced and fraudulently succeeded in getting the petitioners to sign a deed of the land
left by their mother for P400, notwithstanding the fact that said land, according to its
assessment, was valued at P3,795. They therefore ask that the sale be rendered null &
void and that defendant be ordered to deliver and restore to petitioners the shares of the
land, together with its products.
The defendant answers this by saying that Margarita, with due authorization of
her husband and petitioners father Wenceslao, sold to Luis a portion of the land (15
cavanes of seed) for P2,000. To cover his childrens needs, Wenceslao subsequently
pledged or mortgaged to Luis the remainder of said land (6 cavanes of seed) at P375.
With this amount being insufficient, he additionally borrowed other sums of money
aggregating a total of P600. After their fathers death, the petitioners then declared
themselves to be of legal age and executed, together with their sisters, the notarial
instrument ratifying the previous contracts and selling absolutely and in perpetuity to
Luis Espiritu, for the sum of P400 as an increase of the previous purchase price, the
property that had belonged to their mother.

ISSUE:
Whether the sale can be annulled on the grounds that petitioners were minors
without legal capacity to contract on the date of its execution, and that the defendant
availed himself of deceit and fraud in obtaining petitioners consent.
HELD:
No, the sale cannot be annulled.
First, the evidence adduced at the trial doesnt show, even circumstantially, that
the purchaser Luis Espiritu employed fraud, deceit, violence or intimidation in order to
effect the sale. Second, no evidence appears in the records that petitioners were minors
when they executed and signed the document. No certified copies of their baptismal
certificates were presented, nor did they produce any supplemental evidence to prove
that Domingo was 19 and Josefa 18 when they signed the document. The statement
made by one of the adult parties of said deed, in reference to certain notes made in a
book or copybook of a private nature, which she said their father kept during his lifetime
and until his death, is not sufficient to prove the plaintiffs minority on the date of the
execution of the deed.
Even in the doubt whether they were of legal age on the date referred to, the
courts, in their interpretation of the law, have laid down the rule that the sale of real
estate, effected by minors who pretend to be of legal age, is valid, and they cannot be
permitted afterwards to excuse themselves from compliance with the obligation
assumed by them or to seek their annulment. (Law 6, title 19, 6th partida.1) The
judgment that holds such a sale to be valid and absolves the purchase from the
complaint filed against him doesnt violate the law relative to the sale of minors property
nor the rules laid down in consonance therewith.

27.
NELLIE LOUISE COOK, plaintiff-appellee,
vs.
J. MCMICKING, sheriff of Manila, defendant-appellant.
GUS JOHNSON and AMPARO ESCALANTE DE JOHNSON, interveners-appellants.
G.R. No. L-8913
March 3, 1914

1. HUSBAND AND WIFE; CONVEYANCE TO WIFE; ACTION BY SUBSEQUENT

CREDITOR TO SET ASIDE. A creditor who became such in 1911 has no standing in
an action by him to set aside a transfer of real estate made by his debtor to his wife in
1904.
2. ID.; ID.; ID. Although transfers from husband to wife or from wife to husband are
prohibited, under certain circumstances, by article 1458 of the Civil Code, the
prohibition can be taken advantage of only by persons who bear such a relation to the
parties making the transfer or to the property itself that such transfer interferes with their
rights or interests.
FACTS:
The complaint alleges that the plaintiff is the wife of Edward Cook; that she is the
absolute owner of a piece of square meters in area, and that the same is registered in
her name under the Torrens Law by certificate No. 130; that on the 15th of June 1912, a
judgment was entered against Edward Cook for his debt to Johnson, plaintiff's husband,
for the sum of P10,000 in the Court of First Instance of the Province of Rizal; that by
virtue of said judgment an execution was issued on the 10th of July of that year and
levied upon the land described in the complaint as belonging to the plaintiff and that the
same was advertised for sale on the 8th of August at 9 o' clock in the morning.
It is claimed by the appellants that the so-called transfer from plaintiff's husband
to her was completely void under article 1458 of the Civil Code and that, therefore, the
property still remains the property of Edward Cook and subject to levy under execution
against him.
After other allegations appropriate to an action of this kind, plaintiff prays from an
junction permanently prohibiting the defendants from selling the said land.
ISSUE:
Whether the property in question is owned by the plaintiff and is not subject to
levy and sale under the execution in this case.
HELD:
YES.
The position taken by appellants is untenable. They are not in the position the
challenge the validity of the transfer, if it may be called such. They bore absolutely no
relation to the parties to the transfer at the time it occurred and had no rights or interest
inchoate, present, remote, or otherwise, in the property in question at the time the
transfer occurred.

Although certain transfers from husband to wife or from wife to husband are
prohibited in the article referred to, such prohibition can be taken advantage of only two
person who bear such a relation to the parties making the transfer with their rights or
interest. Unless such a relationship appears the transfer cannot be attacked.
Hence, the judgment appealed from affirmed, with costs against the appellants.

32. Director of Lands vs Ababa

FACTS: The adverse claimant Atty. Fernandez was retained as counsel by petitioner
MaximoAbarquez in a civil case for the annulment of a contract of sale with right of repurchase and for
the recovery of the land which was the subject matter thereof. Unable to compensate his laywer
whom he also retained for his appeal, the petitioner executed a document whereby he obliged himself
to give his lawyer of whatever he might recover from Lots 5600 and 5602 should prosper.
The real property sought to berecoverd was actually the share of petitioner in lots 5600 and 5602
which were part of the estate of his deceased parents and which were partitioned among the heirs,
which included petitioner and his sister.
The case having been resolved and title having been issued to petitioner, adverse claimant
waited for petitioner to comply with his obligation under the document executed by him by delivering
the portion of the said parcels of land. Petitioner refused to comply with his obligation and instead
offered to sell the whole parcels of land to spouses Larrazabal. Then, adverse claimant immediately
took steps to protect his interest by filing a motion to annotate his attorneys lien and by notifying the
prosepective buyer of his claim over the portion of the parcels of land.
The motion was granted. The annotation of adverse claim appeared on the new transfer
certificate of title. This adverse claim became the subject of cancellation proceedings filed by petitionerspouses. The trial court resolved the case in favour of the adverse claimant. On appeal, petitioners
contended that a contract for a contingent fee violates Article 1491 because it involves an assignment
of a property subject of litigaion

ISSUE: WON the contract of contingent fee as basis of the interest of Atty. Fernandez is prohibtited
under Article 1491.

HELD: NO. The contention is unmeritorious. Article 1491 prohibits only the sale of or assignment
between lawyer and his client of property. Further a contract of contingent fee is not covered by Article
1491 because transfer or assignment of property in litigation takes effect only after the finality of
favorable judgement. Hence, the payment of the attorneys fees, that is, the transfer or assignment of
of the property in litigation will take place only if the appeal prospers. Therefore, the transfer actually
takes effect after the finality of a favourable judgement rendered on appeal and not during the

pendency of litigation involving the property in question. Consequently, the contract for a contingent fee
is not covered by Article 1491 of the Civil Code.

33. Fornildavs RTC

FACTS: The Controverted parcels were part of the estate of the late Julio M. Catolos
subject of intestate estate proceeding wherein respondent Amonoy acted as counsel for
some of the heirs from 1959 until 1968 by his own admission. These properties were
adjudicated to Alfonso Fornilda and Asuncion M. Pasamba in the project partition
approved by the court on January 12, 1965.
On January 20, 1965 or only 8 days thereafter, and while he was still intervening
in the case as counsel, these properties were mortgaged by petitioners predecessorsin-interest t respondent Amonoy to secure payment of the latters attorneys fees in the
amount of P27,600. Since the mortgage indebtedness was not paid, respondent
Amonoy instituted an action for judicial foreclosure of mortgage on January 21, and
1970. The mortgage was subsequently ordered foreclosed and auction sale followed
where respondent Amonoy was the sole bidder for P23,600. Being short of the
mortgage indebtedness, he applied for and further obtained a deficiency judgment.
ISSUE: WON the mortgage constituted on the Controverted Parcels in favour of
respondent Amonoy comes within the scope of the prohibition in Article 1491 of the civil
code.
HELD: YES. The pertinent portion of the said Article read:
Article 1491.The following persons cannot acquire by purchase even at a public
or judicial or auction, either in person or through the mediation of another.
(5) Justices, judges, prosecuting attorneys the property and rights in litigation
or levied upon on execution before the court within whose junction or terrotpry they
exercise their respective functions; this prohibition includes the act of acquitting by
assignment and shall apply to lawyers with respect to the property and rights which may
be the object of any litigation on which they may take part by virtue of their profession.
Under the aforequoted provision, a lawyer is prohibited from acquiring either by
purchase or assignment the property or rights involved which are the objects of the
litigation in which they intervene by virtue of their profession. The prohibition on
purchase is all embracing to include not only sales to private individuals but also public
or judicial sales. At the time the mortgage was executed,therefore, the relationship of
lawyer and client still existed, the very relation of trust and confidence sought to be
protected by the prohibition, when a lawyer occupies a vantage position to press upon
or dictate terms to a harassed client. From the time of the execution of the mortgage in
his favour.RespondentAmonoyhad already asserted a title adverse to his clients
interests at a time when the relationship of lawyer and client had not yet been severed.

Considering that the mortgage contract, entered into in contravention of Article 1491 of
the civil code is expressly prohibited by law, the same must be held inexistent and void
ab initio.

34. VICENTE GODINEZ VS FONG PAK LUEN

A property sold to an alien, and then subsequently sold to a Filipino cannot be declared
null and void.
G.R. No. L-36731 January 27, 1983
VICENTE
GODINEZ,
ET
AL., plaintiffs-appellants,
vs.
FONG PAK LUEN ET AL., defendants, TRINIDAD S. NAVATA, defendant-appellee.

FACTS:
Jose Godinez, for valuable consideration, sold a parcel of land to the defendant Fong
Pak Luen, a Chinese citizen, which transaction is contrary to law and in violation of the
Civil Code because the latter being an alien who is inhibited by law to purchase real
property. On January 11, 1963, said defendant Fong Pak Luen executed a power of
attorney in favor of his co-defendant Kwan Pun Ming, also an alien, who conveyed and
sold the above described parcel of land to co-defendant Trinidad S. Navata, who is
aware of and with full knowledge that Fong Pak Luen is a Chinese citizen as well as
Kwan Pun Ming, who under the law are prohibited and disqualified to acquire real
property in this jurisdiction. On September 30, 1966, the plaintiffs filed a complaint in the
Court of First Instance of Sulu alleging among others that they are the heirs of Jose
Godinez, praying that said sale of Jose Godienez to herein defendant be declared null
and void ab initio and the Certificate of Title issued in the name of Trinidad S. Navata be
declared null and void, as well. The trial court dismissed the complaint, hence, this
appeal.

ISSUE:
Whether or not the heirs of a person who sold a parcel of land to an alien in violation of
a constitutional prohibition may recover the property if it had, in the meantime, been
conveyed to a Filipino citizen qualified to own and possess it.

RULING:

No. In the United States the rule is that in a sale of real estate to an alien disqualified to
hold title thereto the vendor divests himself of the title to such real estate and has no
recourse against the vendee despite the latter's disability on account of alienage to hold
title to such real estate and the vendee may hold it against the whole world except as
against the State. It is only the State that is entitled by proceedings in the nature
of office found to have a forfeiture or escheat declared against the vendee who is
incapable of holding title to the real estate sold and conveyed to him. The rule in the
United States that in a sale of real estate to an alien disqualified to hold title thereto, the
vendor divests himself of the title to such real estate and is not permitted to sue for the
annulment of his Contract, is also the rule under the Civil Code. ... Article 1302 of the
old Civil Code provides: ... Persons sui juriscannot, however, avail themselves of the
incapacity of those with whom they contracted. As earlier mentioned, Fong Pak Luen,
the disqualified alien vendee later sold the same property to Trinidad S. Navata, a
Filipino citizen qualified to acquire real property.

35. Tomas Claudio Memorial College vs CA

A sale made by a co-owner of undivided property only affects his share thereto.

G.R. No. 124262 October 12, 1999

TOMAS
CLAUDIO
MEMORIAL
COLLEGE,
INC., petitioner,
vs.
COURT OF APPEALS, HON. ALEJANDRO S. MARQUEZ, CRISANTA DE CASTRO,
ELPIDIA DE CASTRO, EFRINA DE CASTRO, IRENEO DE CASTRO and ARTEMIO
DE CASTRO ADRIANO, respondents.
FACTS:
On December 13, 1993, private respondents filed an action for Partition before the
Regional Trial Court of Morong, Rizal. They alleged that their predecessor-in-interest,
Juan De Castro, died intestate in 1993 and they are his only surviving and legitimate
heirs. They also alleged that their father owned a parcel of land designated as Lot No.
3010 located at Barrio San Juan, Morong, Rizal, with an area of two thousand two
hundred sixty nine (2,269) square meters more or less. They further claim that in 1979,
without their knowledge and consent, said lot was sold by their brother Mariano to
petitioner. The sale was made possible when Mariano represented himself as the sole
heir to the property. It is the contention of private respondents that the sale made by
Mariano affected only his undivided share to the lot in question but not the shares of the
other co-owners equivalent to four fifths (4/5) of the property. The lower court as well as
the Court of Appeals ruled in favor of herein respondents, hence, this present petition.

ISSUE:
Whether or not the sale made by Mariano affected only his undivided share to the lot in
question.
RULING:
Yes. We have ruled that even if a co-owner sells the whole property as his, the sale will
affect only his own share but not those of the other co-owners who did not consent to
the sale. Under Article 493 of the Civil Code, the sale or other disposition affects only
the seller's share pro indiviso, and the transferee gets only what corresponds to his
grantor's share in the partition of the property owned in common. Since a co-owner is
entitled to sell his undivided share, a sale of the entire property by one co-owner without
the consent of the other co-owners is not null and void. However, only the rights of the
co-owner/seller are transferred, thereby making the buyer a co-owner of the property.
The proper action in a case like this, is not for the nullification of the sale, or for the
recovery of possession of the property owned in common from the third person, but for
division or partition of the entire property if it continued to remain in the possession of
the co-owners who possessed and administered it. Such partition should result in
segregating the portion belonging to the seller and its delivery to the buyer.

36.
AURORA ALCANTARA-DAUS, petitioner, vs.
Spouses HERMOSO and SOCORRO DE LEON, respondents.
G.R. No. 149750 June 16, 2003
Sales; Perfection; A contract of sale is perfected by mere consent.
Facts:
Spouses De Leon are the owners of a parcel of land. Respondent Hermoso De
Leon inherited the said lot from his father Marcelino De Leon by virtue of a Deed of
Extra-Judicial Partition. The spouses engaged the services of the late Atty. Florencio
Juan to take care of the documents of their properties. After the death of Atty. Juan,
some documents surfaced and most revealed that their properties had been conveyed
by sale or quitclaim to Hermosos brothers and sisters, to Atty. Juan and his sisters,
when in truth and in fact, no such conveyances were ever intended by them.
Furthermore, respondent found out that his signature in the Deed of Extra-judicial
Partition with Quitclaim made in favor of Rodolfo de Leon was forged. They discovered
that the land in question was sold by Rodolfo de Leon to Aurora Alcantara. They
demanded the annulment of the document and re-conveyance but defendants refused.
Petitioner, Aurora Alcantara-Daus averred that she bought the land in question in good
faith and for value and that she has been in continuous, public, peaceful, open

possession over the same and has been appropriating the produce thereof without
objection from anyone.
The RTC rendered its Decision in favor of herein petitioner. It ruled that
respondents claim was barred by laches, because more than 18 years had passed
since the land was sold. It further ruled that since it was a notarial document, the Deed
of Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.
Issues:
Whether or not the Deed of Absolute executed by Rodolfo De Leon over the land
in question in favor of petitioner was perfected and binding upon the parties therein?
Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with
Quitclaim, executed by respondent Hermoso de Leon, Perlita de Leon and Carlota de
Leon in favor of Rodolfo de Leon was overcome by more than a preponderance of
evidence of respondents?

Court Ruling:
First Issue:
NO. It is during the delivery that the law requires the seller to have the right to
transfer ownership of the thing sold. In general, a perfected contract of sale cannot be
challenged on the ground of the sellers non-ownership of the thing sold at the time of
the perfection of the contract.
Further, even after the contract of sale has been perfected between the parties, its
consummation by delivery is yet another matter. It is through tradition or delivery that
the buyer acquires the real right of ownership over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the owner of
the land he delivered to petitioner. Thus, the consummation of the contract and the
consequent transfer of ownership would depend on whether he subsequently acquired
ownership of the land in accordance with Article 1434 of the Civil Code. Therefore, we
need to resolve the issue of the authenticity and the due execution of the Extrajudicial
Partition and Quitclaim in his favor.
Second Issue:

NO. As a general rule, the due execution and authenticity of a document must be
reasonably established before it may be admitted in evidence. Notarial documents,
however, may be presented in evidence without further proof of their authenticity, since
the certificate of acknowledgment is prima facie evidence of the execution of the
instrument or document involved. To contradict facts in a notarial document and the
presumption of regularity in its favor, the evidence must be clear, convincing and more
than merely preponderant.
The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition and
Quitclaim was forged. However, this factual finding is in conflict with that of the
RTC. While normally this Court does not review factual issues, this rule does not apply
when there is a conflict between the holdings of the CA and those of the trial court, as in
the present case.
After poring over the records, the SC finds no reason to reverse the factual finding of
the appellate court. A comparison of the genuine signatures of Hermoso De Leon with
his purported signature on the Deed of Extrajudicial Partition with Quitclaim will readily
reveal that the latter is a forgery. As aptly held by the CA, such variance cannot be
attributed to the age or the mechanical acts of the person signing.

37.
SAMPAGUITA PICTURES, INC., plaintiff-appellant, vs.
JALWINDOR MANUFACTURERS, INC., defendant-appelle
G.R. No.L-43059. October 11, 1979
Same; Same; Lease Contract, Execution; A stipulation in a lease contract that
improvements shall belong to the lessor effectively transfers ownership of the
same to the lessor and when a levy was made on the improvements by the
unpaid seller thereof, the judgment debtor was no longer the owner thereof.
Facts:
Sampaguita leased to Capitol 300 Inc. the roof deck of its building with the
agreement that all permanent improvements Capitol will make on said property shall
belong to Sampaguita without any part on the latter to reimburse Capitol for the
expenses of said improvements. Shortly, Capitol purchased on credit from Jalwindor
glass and wooden jalousies, which the latter itself delivered and installed in the leased
premises. Thereafter, Jalwindor filed an action for collection of a sum of money with a
petition for preliminary attachment against Capitol for its failure to pay its purchases.
Later, Jalwindor and Capitol submitted to the trial court a Compromised Agreement
wherein Capitol acknowledged its indebtedness payable in monthly installments and
that all the materials that Capitol purchased will be considered as security for such
undertaking. Meanwhile, Sampaguita filed a complaint for ejectment and for collection of

a sum of money against Capitol for the latters failure to pay rentals and the Court
ordered Capitol to vacate the premises and to pay Sampaguita.
On the other hand, Capitol likewise failed to comply with the terms of the
Compromise Agreement. The Sheriff made levy on the glass and wooden jalousies.
Sampaguita filed a third-party claim alleging that it is the owner of said materials and not
Capitol, but Jalwindor filed an idemnity bond in favor of the Sheriff and the items were
sold at public auction. Sampaguita filed with the CFI an action to nullify the Sheriff's sale
and for an injunction to prevent Jalwindor from detaching the glass and wooden
jalousies. Jalwindor was ordered to maintain the status quo pending final determination
of the case and the lower court dismissed the complaint and ordered Sampaguita to pay
Jalwindor.
Issue:
Whether or not there was a delivery made and, therefore, a transfer of ownership
of the thing sold?
Court Ruling:
The Supreme Court reversed the decision of the lower court declaring
Sampaguita as the lawful owner of the disputed glass and wooden jalousies,
permanently enjoining Jalwindor from detaching said items from the roof deck of the
Sampaguita Pictures Building, and ordered Jalwindor to pay Sampaguita. The items in
question were illegally levied upon since they do not belong to the judgment debtor. The
power of the Court in execution of judgment extends only to properties unquestionably
belonging to the judgment debtor. The fact that Capitol failed to pay Jalwindor the
purchase price of the items levied upon did not prevent the transfer of ownership to
Capitol and, later, to Sampaguita by virtue of the agreement in their lease contract.
Therefore, the complaint of Sampaguita to nullify the Sheriff's sale is well founded, and
should prosper.
38.
EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs THE SPOUSES
LEONOR and GERARDO SANTOS, doing business under the name and style of
SANTOS BOOKSTORE, and THE COURT OF APPEALS, respondents.
G.R. No. 80298. April 26, 1990
Property; Sales; Possession of movable property acquired in good faith is
equivalent to a title.
Facts:
The movable property in this case consists of books, which were bought from
EDCA by an impostor who sold it to SANTOS. EDCA Publishing sold to a person

identifying himself as Professor Jose Cruz who placed an order by telephone with the
former for 406 books, payable on delivery. EDCA prepared the corresponding invoice
and delivered the books as ordered, for which Cruz issued a personal check. On
October 7, 1981, Cruz then sold the 120 of the books to Leonor Santos who asked for
verification, and was then showed the invoice for the books. Meanwhile, EDCA having
become suspicious over a second order placed by Cruz even before clearing of his first
check, made inquiries with the De la Salle College where he had claimed to be a dean
and was informed that there was no such person in its employ. Further verification
revealed that Cruz had no more account or deposit with the Philippine Amanah Bank,
against which he had drawn the payment check. EDCA then went to the police, which
set a trap and arrested Cruz. Investigation disclosed his real name as Tomas de la Pea
and his sale of 120 of the books he had ordered from EDCA to the private respondents.
Issue:
Whether or not EDCA Publishing and Distributing Corp. was unlawfully deprived
of the property?
Court Ruling:
NO. Santos was a good faith buyer after taking steps to verify the identity of the
seller. When she was showed the invoice, she reasonably believed that he was a
legitimate seller. With regard to unlawful deprivation, EDCA was not unlawfully deprived
of the property by mere failure of consideration. There was already a perfected contract
of sale. Proof was even substantiated when EDCA gave the invoice as proof of payment
upon delivery of the books. This did not amount to unlawful taking, because by the
delivery of EDCA to Cruz, ownership of the books already transferred to him. It would
certainly be unfair now to make the SANTOSES bare the prejudice sustained by EDCA
as a result of its own negligence. The court cannot see justice in transferring EDCA's
loss to the SANTOSES who had acted in good faith, and with proper care, when they
bought the books from Cruz.
39.
DR. and MRS. MERLIN CONSING, petitioner, vs. THE COURT OF APPEALS and
CARIDAD SANTOS, respondents.
G.R. No. 78272. August 29, 1989
Same; Same; Sales; Duties of Subdivision Lot Sellers; The seller must deliver the thing
sold in a condition suitable for its enjoyment by the buyer for the purposes
contemplated.
Facts:
Petitioners are engaged in the sale of lots registered under their names. Private
respondent and the petitioners entered into a contract of sale whereby the latter agreed

to sell, transfer and convey to the former a house and lot. It is stipulated in the contract
that the buyer will pay the seller on a monthly basis. After a several payments,
respondent defaulted. Respondent manifested her willingness to settle her obligations
on the condition that the Petitioners comply all the laws and regulations on subdivisions
and after payment to her of damages as a consequence of the use of a portion of her lot
as a subdivision road. On a complaint for specific performance filed by the respondent,
the CFI rendered judgment finding that petitioners cannot escape their liability to
respondent for having sold to her portions of the roads or streets denominated as rightof-way. On this ground alone, the CFI believed that respondent was fully justified in
refusing to pay further her monthly amortizations. Furthermore, the court believed that
there shall be a proportionate reduction of the purchase price of the two lots used as a
right of way.
Issue:
Whether or not the respondent is entitled for the reduction of purchase price after
the petitioners acted in bad faith.
Court Ruling:
Following the case of Lim vs De los Santos, the court held that a sellers duty is
to deliver the thing sold in a condition suitable for its enjoyment by the buyer for the
purposes contemplated. In the case at bar, in including as part of respondents
purchase price the value of the subdivision road, petitioners have shifted to her
(respondent) the burden of providing for an access to and from the subdivision. The
petitioners have thus failed in their duty as subdivision lot sellers and for such failure
and consequent unfairness and injustice to respondent, the latter should be entitled to a
proportionate reduction in her purchase price of the two lots.
40.
Norkis Distributor V CA, Napales
GR 91029, February 7, 1991
Facts:
Petitioner Norkis Distributors, Inc. (Norkis for brevity), is the distributor of Yamaha
motorcycles. On September 20, 1979, private respondent Alberto Nepales bought a
brand new Yamaha Wonderbike at the price of P7,500.00, payable by means of a Letter
of Guaranty from the Development Bank of the Philippines (DBP), , Hence, credit was
extended to Nepales for the price of the motorcycle payable by DBP upon release of his
motorcycle loan. As security for the loan, Nepales would execute a chattel mortgage on
the motorcycle in favor of DBP and issued Norkis Sales Invoice No. 0120 (Exh. 1)
showing that the contract of sale of the motorcycle had been perfected which Nepales
signed the sales invoice to signify his conformity with the terms of the sale. In the
meantime, however, the motorcycle remained in Norkis' possession.

On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who
was allegedly the agent of Alberto Nepales but the latter denies it. The record shows
that Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator at
the DBP offices in Kabankalan. The motorcycle met an accident on February 3, 1980 at
Binalbagan, Negros Occidental. An investigation, conducted by the DBP revealed that
the unit was being driven by a certain Zacarias Payba at the time of the accident and
the unit was a total wreck and was subsequently returned and stored inside Norkis'
warehouse.
Meanwhile, as the price of the motorcycle later increased to P7,828 in March, 1980.
Nepales paid the difference of P328 and demanded the delivery of the motorcycle.
When Norkis could not deliver, he filed an action for specific performance with damages
against Norkis in the Regional Trial Court of Himamaylan, Negros Occidental. He
alleged that Norkis failed to deliver the motorcycle which he purchased, thereby causing
him damages. Norkis answered that the motorcycle had already been delivered to
private respondent before the accident, hence, the risk of loss or damage had to be
borne by him as owner of the unit.
RTC ruled in favor of respondent and ordered plaintiff to pay solidarily to respondent
the present value of the motorcycle which was totally destroyed, plus interest equivalent
to what the
or deliver to the plaintiff a brand-new motorcycle of the same brand, kind, and quality as
the one which was totally destroyed. CA affirmed the ruling of RTC.
Issue:
Whether there is actual delivery by vendor if he caused the registration of vehicle in the
name of vendee, and issued a sales invoice?
Whether such delivery transferred ownership and is sufficient to put the vendee to
assume the risk of loss?
Held:
No, the issuance of a sales invoice does not prove transfer of ownership of the thing
sold to the buyer. An invoice is nothing more than a detailed statement of the nature,
quantity and cost of the thing sold and has been considered not bill of sale . In all forms
of delivery, it is necessary that the act of delivery, whether constructive or actual, be
coupled with the intention of delivering the thing. The act without the intention, is
insufficient.
Also, when the motorcycle was registered by Norkis in the name of private respondent.
Norkis did not intend yet to transfer the title or ownership to Nepales, but only to
facilitate the execution of a chattel mortgage in favor of the DBP for the release of
thebuyer's motorcycle loan.

The thing is considered to be delivered when it is placed in the hands and possession
of the
vendee. It is true that the same article declares that the execution of a public instrument
is equivalent to the delivery of the thing which is the object of the contract, but, in order
that this symbolic delivery may produce the effect of tradition, it is necessary that the
vendor shall have had such control over the thing sold that, at the moment of the sale,
its material delivery could have been made. It is not enough to confer upon the
purchaser the ownership and the right of possession. The thing sold must be placed in
his control.
Article 1496 of the Civil Code which provides that in the absence of an express
assumption of risk by the buyer, the things sold remain at seller's risk until the
ownership thereof is transferred to the buyer," is applicable to this case, for there was
neither an actual nor constructive delivery of the thing sold, hence, the risk of loss
should be borne by the seller, Norkis, which was still the owner and possessor of the
motorcycle when it was wrecked. This is in accordance with the well-known doctrine of
res perit domino.
41.
Z. Santos V. C. Santos
G.R. No. 133895, October 02, 2001
Petitioner Zenaida M. Santos is the widow of Salvador Santos, a brother of private
respondents Calixto, Alberto, Antonio, all surnamed Santos and Rosa Santos-Carreon.
The spouses Jesus and Rosalia Santos owned a parcel of land registered under TCT
No. 27571 with an area of 154 square meters, located at Sta. Cruz Manila. On it was a
four-door apartment administered by Rosalia who rented them out. The spouses had
five children, Salvador, Calixto, Alberto, Antonio and Rosa.On 1959, Jesus and Rosalia
executed a deed of sale of the properties in favor of their said property to children
Salvador and Rosa. Rosa in turn sold her share to Salvador on November 20, 1973.
Despite the transfer of the property to Salvador,Rosalia continued to lease and receive
rentals from the apartment units.On November 1, 1979, Jesus died. Six years after or
on January 9, 1985, Salvador died, followed by Rosalia who died the following month.
Shortly after, petitioner Zenaida, claiming to be Salvador's heir, demanded the rent from
Antonio
Hombrebueno, a tenant of Rosalia. When the latter refused to pay, Zenaida filed an
ejectment suit against him with the Metropolitan Trial Court of Manila, Branch 24, which
eventually decided in Zenaida's favor.
On 1989, private respondents instituted an action for reconveyance of property with
preliminary injunction against petitioner in the Regional Trial Court of Manila, where they
alleged that the two deeds of sale executed on January 19, 1959 and November 20,
1973 were simulated for lack of consideration. They were executed to accommodate
Salvador in generating funds for his business ventures and providing him with greater
business flexibility. In her Answer, Zenaida denied the material allegations in the

complaint and as special and affirmative defenses, argued that Salvador was the
registered owner of the property, which could only be subjected to encumbrances or
liens annotated on the title; that the respondents' right to reconveyance was already
barred by prescription and laches; and that the complaint stated no cause of action.
RTC ruled in favor of respondents on the grounds that notwithstanding the deeds of
sale transferring the property to Salvador, the spouses Rosalia and Jesus continued to
possess the property and to exercise rights of ownership not only by receiving the
monthly rentals, but also by paying the realty taxes. Also, Rosalia kept the owner's
duplicate copy of the title even after it was already in the name of Salvador. Further, the
spouses had no compelling reason in 1959 to sell the property and Salvador was not
financially capable to purchase it. The deeds of sale were therefore fictitious. Hence, the
action to assail the same does not prescribe. CA affirmed the trial court's decision.
Issue:
Whether the execution of a public instrument transfers ownership and effects delivery in
a contract of sale?
Held:
No, the Supreme Court held that the critical factor in the different modes of effecting
delivery, which gives legal effect to the act is the actual intention of the vendor to deliver,
and its acceptance by the vendee. Without that intention, there is no tradition. In the
instant case, although the spouses Jesus and Rosalia executed a deed of sale, they did
not deliver the possession and ownership of the property to Salvador and Rosa. They
agreed to execute a deed of sale merely to accommodate Salvador to enable him to
generate funds for his business venture.
As found by both the trial and appellate courts and amply supported by the evidence on
record, Salvador was never placed in control of the property. The original sellers
retained their control and possession. Therefore, there was no real transfer of
ownership. It was not enough to confer upon the purchaser the ownership and the right
of possession. The thing sold must be placed in his control. The subject deeds of sale
did not confer upon Salvador the ownership over the subject property, because even
after the sale, the original vendors remained in dominion, control, and possession
thereof. Further, after Salvador registered the property in his name, he surrendered the
title to his mother. These are clear indications that ownership still remained with the
original owners. The vendor's continued possession of the property makes dubious the
contract of sale between the parties.
42.
Ten Forty Realty V M. Cruz
GR No. 151212, Sept 10, 2003

Facts:
A complaint for ejectment was filed by petitioner against respondent before the
Municipal Trial Court in Cities of Olongapo City, which alleged that petitioner is the true
and absolute owner of a parcel of lot and residential house having acquired the same
on December 5, 1996 from Barbara Galino by virtue of a Deed of Absolute Sale;
petitioner came to know that Barbara Galino sold the same property on April 24, 1998 to
Cruz, who immediately occupied the property. Despite the ejectment suit respondent
refused to vacate the premises. According to Barbara Galino, she did not sell her house
and lot to petitioner but merely obtained a loan from Veronica Lorenzana; evidence will
show that it was Barbara Galino who was in possession at the time of the sale and
vacated the property in favor of respondent; never was there an occasion when
petitioner occupied a portion of the premises, before respondent occupied the lot in April
1998, she caused the cancellation of the tax declaration in the name of Barbara Galino
and a new one issued in respondent's name. Respondent also file a tax declaration
immediately upon his possession of said property. MTCC ruled in favor of plaintiff and
order respondent to surrender the possession of the property, and pay for damages for
its continued unlawful use. On appeal RTC and CA reversed MTC decision citing 1)
respondent's entry into the property was not by mere tolerance of petitioner, but by
virtue of a Waiver and Transfer of Possessory Rights and Deed of Sale in her favor; 2)
the execution of the Deed of Sale without actual transfer of the physical possession did
not have the effect of making petitioner the owner of the property, because there was no
delivery of the object of the sale as provided for in Article 1428 of the Civil Code; and 3)
petitioner had failed to make a case for unlawful detainer, because no contract -express or implied -- had been entered into by the parties with regard to possession of
the property.
Issues:
1. Whether the execution of a public instrument constitutes delivery of property?
2. Whether the RTC and CA correctly held that respondent should be preferred in the
possession of property?
Held:
1. No, the Court held that the execution of a public instrument gives rise only to a prima
facie presumption of delivery. Such presumption is destroyed when the delivery is not
effected because of a legal impediment. Pasagui v. Villablanca had earlier ruled that
such constructive or symbolic delivery, being merely presumptive, was deemed negated
by the failure of the vendee to take actual possession of the land sold. It is undisputed
that petitioner did not occupy the property from the time it was allegedly sold to it on
December 5, 1996 or at any time thereafter. Nonetheless, it maintains that Galino's
continued stay in the premises from the time of the sale up to the time respondent's
occupation of the same on April 24, 1998, was possession held on its behalf and had
the effect of delivery under the law. According to the RTC, petitioner did not gaincontrol
and possession of the property, because Galino had continued to exercise ownership

rights over the realty. That is, she had remained in possession, continued to declare it
as her property for tax purposes and sold it to respondent in 1998.
2. Yes, absent the first requirement of inscription in a double sale, the law gives
preferential right to the buyer who in good faith is first in possession. In determining the
question of who is first in possession, certain basic parameters have been established
by jurisprudence. 1) the possession mentioned in Article 1544 includes not only material
but also symbolic possession. 2) possessors in good faith are those who are not aware
of any flaw in their title or mode of acquisition. 3) buyers of real property that is in the
possession of persons other than the seller must be wary -- they must investigate the
rights of the possessors. Fourth, good faith is always presumed;upon those who allege
bad faith on the part of the possessors rests the burden of proof. The subject property
had not been delivered to petitioner; hence, it did not acquire possession either
materially or symbolically. As between the two buyers, therefore, respondent was first in
actual possession of the property. Petitioner has not proven that respondent was aware
that her mode of acquiring the property was defective at the time she acquired it from
Galino. At the time, the property -- which was public land -- had not been registered in
the name of Galino; thus, respondent relied on the tax declarations thereon. As shown,
the former's name
appeared on the tax declarations for the property until its sale to the latter in 1998.
Galino was in fact occupying the realty when respondent took over possession. Thus,
there was no circumstance that could have placed the latter upon inquiry or required her
to further investigate petitioner's right of ownership.

43.
Addison vs. Felix
38 Phil 404, August 1918
FACTS:
The defendants-appellees spouses Maciana Felix and Balbino Tioco purchased from
plaintiff-appellant A.A. Addison four parcels of land to which Felix paid, at the time of the
execution of the deed, the sum of P3,000 on account of the purchase price. She
likewise bound herself to the remainder in installments, the first of P,2000 on July 15,
1914, the second of P5,000 thirty days after the issuance to her of a certificate of title
under the Land Registration Act, and further, within ten years from the date of such title,
P10 for each coconut tree in bearing and P5 for each such tree not in bearing that might
be growing on said parcels of land on the date of the issuance of title to her, with the
condition that the total price should not exceed P85,000. It was further stipulated that
Felix was to deliver to the Addison 25% of the value of the products that she might
obtain from the four parcels "from the moment she takes possession of them until the
Torrens certificate of title be issued in her favor," and that within 1 year from the date of

the certificate of title in her favor, Marciana Felix may rescind the contract of purchase
and sale. All of the above stipulations were contained in the public instrument executed
by
the
parties.
In January 1915, Addison , filed suit in the CFI of Manila to compel Felix to pay the first
installment of P2,000, demandable, in accordance with the terms of the contract of sale.
The defendants Felix and her husband Tioco contended that Addison had absolutely
failed to deliver the lands that were the subject matter of the sale, notwithstanding the
demands they made upon him for this purpose. The evidence adduced shows Addison
was able to designate only two of the four parcels, and more than two-thirds of these
two were found to be in the possession of one Juan Villafuerte, who claimed to be the
owner of the parts he so occupied. The CFI held the contract of sale to be rescinded
and ordered Addison to return to Felix the P3,000 paid on account of the price, together
with
interest
thereon
at
the
rate
of
10%
per
annum.
ISSUE:
Was there a delivery made and, therefore, a transfer of ownership of the thing sold
considering
that
the
parties
executed
a
public
instrument?
HELD:
The Supreme Court affirmed the decision of the lower court, with modification that the
interest thereon will be at the rate of 6% (instead of 10%) per annum from the date of
the
filing
of
the
complaint
until
payment.
The thing is considered to be delivered when it is placed "in the hands and possession
of the vendee." It is true that the same article declares that the execution of a public
instrument is equivalent to the delivery of the thing which is the object of the contract,
but, in order that this symbolic delivery may produce the effect of tradition, it is
necessary that the vendor shall have had such control over the thing sold that, at the
moment of the sale, its material delivery could have been made. Symbolic delivery
through the execution of a public instrument is sufficient when there is no
impediment whatever to prevent the thing sold passing into the tenancy of the
purchaser by the sole will of the vendor. But if, notwithstanding the execution of
the instrument, the purchaser cannot have the enjoyment and material tenancy of
the thing and make use of it himself or through another in his name, because
such are opposed by a third persons will, then the delivery has not been effected.
In the case at bar, therefore, it is evident, that the mere execution of the instrument was
not a fulfillment of the vendor's obligation to deliver the thing sold, and that from such
non-fulfillment arises the purchaser's right to demand, as she has demanded, the
rescission of the sale and the return of the price.

44.
Vda. De Sarmiento v. Lesaca
G.R. No. L-15385, 30 June 1960
Alejandra Bugarin Vda. De Sarmiento bought a parcel of land from Josefa R. Lesaca.
When Sarmiento failed to take possession after being barred by a certain Martin Deloso
who claimed to be the owner, Sarmiento filed this case for rescission of the sales
contract with Lesaca.
HELD: There was no delivery; hence, rescission was proper. Rescission was proper
since a contract of sale is a reciprocal obligation. Undoubtedly in a contract of purchase
and sale the obligation of the parties is reciprocal, and, as provided by the law, in case
one of the parties fails to comply with what is incumbent upon him to do, the person
prejudiced may either exact the fulfillment of the obligation or rescind the sale.
The vendor did not comply with the express requirement of the law. As provided in
Article 1462, the thing sold shall be deemed delivered when the vendee is placed in the
control and possession thereof, which situation does not here obtain because from the
execution of the sale up to the present the vendee was never able to take possession of
the lands due to the insistent refusal of Martin Deloso to surrender them claiming
ownership thereof. And although it is postulated in the same article that the execution of
a public document is equivalent to delivery, this legal fiction only holds true when there

is no impediment that may prevent the passing of the property from the hands of the
vendor into those of the vendee.
45.
General Foods v. Nacoco GR. L-871714
Facts:
National Coconut Corporatio(NACOCO) sold to General Foods Co. tons of copra
at $163 per ton of 2,000 pounds, under the agreement the Net Landed Weights were
to govern. NACOCO shipped 1054.6278 short tons of copra to Appellant on board the
S. S. Mindoro. However, upon arrival in New York, the net cargo was reweighed by
Appellant and was found to weigh only 898.792 short tons. Appellant demanded from
Appellee the refund of the amount of $24,154.59 which was refused by NACOCO. It is
the contention of the Appellant that although the sale between the parties quoted a CIF
New York price, the agreement contemplated the payment of the price according to the
weight and quality of the cargo upon arrival in New York, the port of destination, and that
therefore, the risk of the shipment was upon the seller. NACOCO, on the other hand,
insists that the contract in question was an ordinary C. I. F. agreement wherein delivery
to the carrier is delivery to the buyer.
Issue:
Whether or not NACOCO should be held liable.
Held:
Yes. NACOCO is liable to pay the refund in favor of the Appellant. There is no
question that under an ordinary C.I.F. agreement, delivery to the buyer is complete upon
delivery of the goods to the carrier. There is equally no question that the parties may, by
express stipulation or impliedly, modify a CIF contract and throw the risk upon the seller
until arrival in the port of destination. In the present case, there is an express agreement
that the Net Landed Weights were to govern, and the price was to be ascertained on
the basis of outturn weights and quality of the cargo at the port of discharge. Therefore,
While the risk of loss was apparently placed on the Appellant after delivery of the cargo
to the carrier, it was nevertheless agreed that the payment of the price was to be
according to the net landed weight, thus, NACOCO is bound to the outturn weight of
the copra at the port of discharge.

46 .
NATIONAL DEVELOPMENT COMPANY vs.MADRIGAL WAN HAI LINES
CORPORATION G.R. No. 148332, September 30, 2003
FACTS:
The National Development Company, petitioner, is a government-owned and
controlled corporation. Petitioners Board of Directors approved the privatization plan
of the NSCP. In May 1993, the Board offered for sale to the public its one hundred

percent
stock
ownership
in NSCP as well as its three ocean-going
vessels (M/V National Honor , M/V National Pride and M/V National Dignity).
Consequently, petitioner released to the public an
Information
Package
containing NSCPs background, assets, operational and financial status. During the
public
bidding
on
May
7,
1993, the
lone bidder was
herein
respondent, MADRIGAL WAN HAI
LINES
Corporation, a domestic private
corporation. Mr. Willie Uy , respondents Consultant, submitted a bid of $15
million through the Proposal Letter Form. The respondents bid was rejected 'y petitioner
and the Commission on Audit.
But since there was no other bidder, petitioner entered into a negotiated sale with
respondent. After several negotiations, respondent increased its offer to $18 million
which was accepted by petitioner. Accordingly, on February 11, 1994, petitioner issued
a Notice of Award to respondent of the sale of the NSCP shares and vessels for $18
million. On March 14, 1994,petitioner and respondent executed the corresponding
Contract of Sale, and the latter acquired NSCP, its assets, personnel, records and its
three (3) vessels.
After a while, respondent was surprised to receive from the US Department
of Treasury, Internal Revenue Service(US IRS), a Notice of Final Assessment against
NSCP for deficiency taxes on gross transportation income derived from &S sources for
the years ending 1990, 1991 and 1992. Anxious that the delay in the payment of the
deficiency
taxes may hamper its shipping operations overseas,
respondent, on October 14, 1994, assumed and paid petitioners tax liabilities, including
the tax due for the year 1993. Eventually, respondent demanded from petitioner
reimbursement for the amounts it paid to the US IRS. But petitioner refused despite
repeated demands. Hence, respondent filed with the Regional Trial Court (RTC
a complaint against petitioner for reimbursement and damages. The RTC rendered a
Decision in favor of respondent and against petitioner. The trial court found, among
others, that even before the sale, petitioner knew that NSCP had tax liabilities with
the US IRS, yet it did not inform respondent about it. Upon appeal, the Court of 5ppeals
rendered a Decision affirming the trial courts judgment with modification. Hence this
petition.
Issue:
Whether, petitioner is legally bound to reimburse respondent for the amounts it
paid corresponding to the formers tax liabilities to the US IRS.
Held:
The case at bar calls to mind the principle of unjust enrichment ; Nemo cu,m
alterius detriment locupletari potest. No person shall be allowed to enrich himself unjustl
y at the expense of the others. This principle of equity has been enshrined in our Civil
Code,
Art.
22
of
which
provides: Art. 22. Every person who through an act or performance by another or by any
other means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him.

Justice and equity

thus oblige that petitioner be held liable
for NSCPs tax
liabilities and reimburse respondent for the amount it paid. It would be unjust enrichment
on the part of petitioner to be relieved of that obligation.

47.
JESUS TERAN, plaintiff-appellee, vs. FRANCISCA VILLANUEVA, VIUDA
DE RIOSA, ET AL.
G.R. No. L-34697 March 26, 1932VILLAMOR, J.:
FACTS:
On October 6, 1928, the parties in this case executed the deed of sale Exhibit A,
whereby the defendants sold to the plaintiff for P4,000 the parcel of land therein
described as containing an area of34 hectares, 52 ares, and 43 centares. The plaintiff
brought this action for rescission of the contract, with damages, upon discovering that
the parcel of land contained only about then hectares. The trial court found no evidence
of bad faith on the part of the defendants, and we agree with this finding. This land, with
the same area stated in the contract, was inherited by the defendants from their late
father, Mariano Villanueva; and the same area appears in the tax declaration given to
the plaintiff by an agent of the defendants, named Rafael Villanueva. The latter,
accompanied by the plaintiff, inspected the land. Villanueva pointed out some of the
boundaries, as they did not go over all of them. Without further investigating the area of
the land, the plaintiff agreed to purchase it for the sum of four thousand pesos, paying
the amount and taking possession thereof. The plaintiff alleges that after the 1928
harvest he discovered that the boundaries pointed out to him by Rafael Villanueva were
not the real ones, and, in order to ascertain the exact area of the land, he went to the
cadastral office in Malinao and got a sketch of the property (Ex h. B), which shows that
the land in question contains only ten hectares, and not thirty-four, as appears in the
deed of sale.
In view of these facts, the plaintiff now seeks to rescind the contract on the
ground that the property contains a smaller area than that stated in the deed of sale.
Evidently this is a sale of real estate with area and boundaries given, for a lump sum
and not so much per unit of measure, provided for in article1471 of the Civil Code.
ISSUE:
Is there a warranty on the said case?
HELD:
No. The law allows considerable latitude to seller's statements, or dealer's talk; and
experience teaches that it is exceedingly risky to accept it at its face value. Assertions
concerning the property which is the subject of a contract of sale, or in regard to its
qualities and characteristics, are the usual and ordinary means used by sellers to obtain
a high price and are always understood as affording to buyers no ground for omitting to
make inquiries. A man who relies upon such an affirmation made by a person whose
interest might so readily prompted him to exaggerate the value of his property does so
at his peril, and must take the consequences of his own imprudence.

The plaintiff had ample opportunity to investigate the conditions of the land he was
purchasing, without the defendant's doing anything to prevent him from making as many
inquiries as he deemed
expedient, for which reason he cannot now allege that the vendors made false represen
tations.(National Cash Register Co. vs. Townsend, 137 N. C., 515.) The same doctrine
is upheld by the courts of the United States, in the following case among others:
"Misrepresentation by a vendor of real property with reference to its area are not
actionable, where a correct description of the property was given in the deed and
recorded chain of title, which the purchaser's agent undertook to investigate and
reportupon, and the vendor made no effort to prevent a full investigation." (Shappirio vs.
Goldberg, 48 Law. ed., 419.)In the present case the parties did not consider the area as
an essential element of the contract. There is no evidence of the negotiation leading up
to the sale of the land, except that the parties executed the deed Exhibit A. There is no
evidence of record that the parties fixed the price at so much per hectare. If the plaintiff
wanted to but the land at so much per unit of measure, he should have so stated in the
contract. The plaintiff testified that one of the defendants, Francisca Villanueva, signified
her willingness to set aside the contract in case there was a considerable difference in
area. But in her letter Exhibit E-1, this defendant stated that she had to wait for the
decision of her sister or the latter's husband before acting upon the plaintiff's claim. The
court believes that he most that can be inferred from such a statement is that she was
disposed to settle the case with a view to avoiding litigation ;but this does not mean
that the parties agreed to fix the price of the land at so much per unit of measure.

48.
FELICIANO ESGUERRA, et al. v. VIRGINIA TRINIDAD, et al. vs. VIRGINIA
TRINIDAD
GR. No. 169890 03/12/2007
FACTS:
Felipe Esguerra and Praxedes de Vera (Esguerra spouses) owned several
parcels of land half of which they sold to their grandchildren Feliciano, Canuto, Justa,
Angel, Fidela, Clara and Pedro, all surnamed Esguerra. The spouses sold half the
remaining land were sold their other grandchildren, the brothers Eulalio and Julian
Trinidad. Subsequentlly, the Esguerra spouses executed the necessary Deeds of Sale
before a notary public. They also executed a deed of partitioning of the lots, all were
about 5,000 square meters each. Eulalio Trinidad later sold his share of the land to his
daughters. During a cadastral survey conducted in the late 1960s, it was discovered
that the 5,000 square meter portion of Esguerras parcel of land sold to Trinidad actually
measured 6,268 square meters.

Feliciano Esguerra, who inhabits the lot bordering Trinidad, subsequently filed a motion
for nullification of sale between the Esguerra spouses and Trinidad on the ground that
they were procured through fraud or misrepresentation. Feliciano contended that the
stipulations in the deed of sale was that Trinidad was sold a 5,000 square meter lot. The
boundaries stipulated in the contract of sale which extend the lots area. Both cases
were consolidated and tried before the RTC which, after trial, dismissed the cases. On
appeal, the appellate court also dismissed the cases; and subsequently, the motion for
reconsideration was also denied.
ISSUES:
Whether or not the Appellate Court erred in holding that the description and boundaries
of the lot override the stated area of the lot in the deed of sale.
HELD:
Where both the area and the boundaries of the immovable are declared, the area
covered within the boundaries of the immovable prevails over the stated area. In cases
of conflict between areas and boundaries, it is the latter which should prevail.
What really defines a piece of ground is not the area, but the boundaries therein laid
down, as enclosing the land and indicating its limits. In a contract of sale of land in a
mass, it is well established that the specific boundaries stated in the contract must
control over any statement with respect to the area contained within its boundaries.
Thus, the obligation of the vendor is to deliver everything within the boundaries,
inasmuch as it is the entirety thereof that distinguishes the determinate object.
Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively
carries a strong presumption that the provisions of the law governing the registration of
land which led to its issuance have been duly followed. Fraud being a serious charge, it
must be supported by clear and convincing proof. Petitioners failed to discharge the
burden of proof, however. In fine, under Article 1542, what is controlling is the entire
land included within the boundaries, regardless of whether the real area should be
greater or smaller than that recited in the deed. This is particularly true since the area of
the land in OCT No. 0-6498 was described in the deed as humigit kumulang, that is,
more or less.
A caveat is in order, however. The use of more or less or similar words in designating
quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross
or with the description more or less with reference to its area does not thereby ipso
facto take all risk of quantity in the land.

49.
CARAM Jr. vs. LAURETA

GR. No. L-28740 02/24/81

FACTS:
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered by
OCT No. 3019 in favor of Claro Laureta, plaintiff, the respondent herein. The deed of
absolute sale in favor of the plaintiff was not registered because it was not
acknowledged before a notary public or any other authorized officer. Since June 10,
1945, the plaintiff Laureta had been and is in continuous, adverse and notorious
occupation of said land, without being molested, disturbed or stopped by any of the
defendants or their representatives. In fact, Laureta had been paying realty taxes due
thereon and had introduced improvements worth not less than P20,000.00 at the time of
the filing of the complaint. On May 5, 1947, the same land covered by OCT No.3019
was sold by Marcos Mata to defendant Fermin Z. Caram, Jr., petitioner herein. The
deed of sale in favor of Caram was acknowledged before Atty. Abelardo Aportadera. On
December 9,1947, the second sale between Marcos Mata and Fermin Caram, Jr. was
registered with the Register of Deeds. On the same date, Transfer Certificate of Title
No. 140 was issued in favor of Fermin Caram Jr. The defendant Fermin Caram Jr.
claimed that he has no knowledge or information about the previous encumbrances,
transactions, and alienations in favor of plaintiff until the filing of the complaints.
ISSUE:
Whether or not the knowledge petitioner of a prior unregistered sale of a titled property
attributable to petitioner and equivalent in law of registration of sale.
HELD:
Yes. There is no doubt then that Irespe and Aportadera, acting as agents of Caram,
purchased the property of Mata in bad faith. Applying the principle of agency, Caram as
principal, should also be deemed to have acted in bad faith. Caram was a registrant in
bad faith, the situation is as if there was no registration at all. A possessor in good faith
is one who is not aware that there exists in his title or mode of acquisition any flaw
which invalidates it. Laureta was first in possession of the property. He is also a
possessor in good faith. It is true that Mata had alleged that the deed of sale in favor of
Laureta was procured by force. Such defect, however, was cured when, after the lapse
of four years from the time the intimidation ceased, Marcos Mata lost both his rights to
file an action for annulment or to set up nullity of the contract as a defense in an action
to enforce the same.

50.
SPOUSES SALERA vs. SPOUSES RODAJE

Gr. No. 135900 8/11/2007

FACTS:
The Petitioner spouses Salera filed with the RTC of Leyte, a complaint for quieting of
title against spouses Rodaje, The Saleras alleged that they are the absolute owners of a
parcel of land situated in Leyte. They acquired the property from the heirs of Brigido
Tonacao as shown by a Deed of Absolute Sale; they had the document registered in the
Registry of Deeds. When they asked the Provincial Assessor to declare the property
under their names for taxation purposes, they found that the Tax Declaration in the
name of Brigido was already cancelled and another one was issued in the names of the
Rodajes. Petitioners further alleged that they have been in possession of the property
and the house they built thereon because they had paid the purchase price even before
the execution of the deed of sale. In their answer to the complaint, respondents Rodajes
claimed that they are the absolute owners of the same property. They acquired it from
Catalino Tonacao, the father of Brigido, in a Deed of Absolute Sale and the sale was
registered in the RD and a Tax Declaration was issued in their names. Since then, they
have been exercising their right of ownership over the property and the building
constructed thereon peacefully, publicly, adversely and continuously. Apart from being
the first registrants, they are buyers in good faith.
The RTC rendered a Decision declaring petitioners the rightful and legal owners of the
property.
On appeal, the CA reversed and set aside the trial courts Decision. Hence, this petition
for Review on Certiorari
ISSUE:
Which of the two contracts of sale is valid.
HELD:
THE ONE IN FAVOR OF PETITIONERS SPOUSES SALERA.
The petition is GRANTED. The assailed Decision of the CA is REVERSED and the
Decision of the trial court is REINSTATED. The Court of Appeals, in upholding the
validity of the sale in favor of respondents, relied on Article 1544 of the Civil Code on
double sale. Since the controversy involves two deeds of sale over the same property,
Article 1544 properly applies thereto.
The Court of Appeals is wrong. Article 1544 of the Civil Code contemplates a case of
double sale or multiple sales by a single vendor. More specifically, it covers a situation
where a single vendor sold one and the same immovable property to two or more
buyers. It cannot be invoked where the two different contracts of sale are made by two
different persons, one of them not being the owner of the property sold. In the instant

case, the property was sold by two different vendors to different purchasers. The first
sale was between Catalino and herein respondents, while the second was between
Brigidos heirs and herein petitioners.
While tax declarations are not conclusive proofs of ownership. Hence, as between
Brigido and Catalino, the former had better right to the property. In other words,
Catalino, not being the owner or possessor, could not validly sell the lot to respondents.
The Court is convinced that respondents had knowledge that the disputed property was
previously sold to petitioners by Brigidos heirs. Obviously, aware that the sale to
petitioners was not registered, they purchased the property and have the sale registered
ahead of petitioners, who although in possession, failed to have their contract of sale
registered immediately in the Registry of Deeds.

51.
CARMELITA FUDOT, (Petitioner), vs. CATTLEYA LAND, INC., VELASCO, JR., JJ.
(Respondent).
Gr. No. 175942 09/13/2007

FACTS:
In July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent) asked someone
to check, on its behalf, the titles of nine (9) lots, the subject land included, which it
intended to buy from the spouses Troadio and Asuncion Tecson. Finding no defect on
the titles, respondent purchased the nine lots through a Deed of Conditional Sale on 6
November 1992. Subsequently, on 30 August 1993, respondent and the Tecsons
executed a Deed of Absolute Sale over the same properties. The Deed of Conditional
Sale and the Deed of Absolute Sale were registered with the Register of Deeds on 06
November 1992 and 04 October 1993, respectively. The Register of Deeds refused to
actually annotate the deed of sale on the titles because of the existing notice of
attachment pending before the Regional Trial Court of Bohol. The attachment was
eventually cancelled by virtue of a compromise agreement between the Tecsons and
their attaching creditor which was brokered by respondent. Titles to six (6) of the nine
(9) lots were issued, but the Register of Deeds refused to issue titles to the remaining
three (3) lots , because the titles covering the same were still unaccounted for.
Later, respondent learned that the Register of Deeds had already registered the deed of
sale in favor of petitioner and issued a new title herein.
The respondent filed its Complaint for Quieting of Title &/Or Recovery Of Ownership,
Cancellation Of Title With Damages before the Regional Trial Court of Tagbilaran City.
ISSUE:

Is the issuance of Deed of Sale valid?

HELD:
Trial Court rendered its decision: (i) quieting the title or ownership of the subject land in
favor of respondent; (ii) declaring the deed of sale between petitioner and spouses
Tecson invalid; (iii) ordering the registration of the subject land in favor of respondent;
(iv) dismissing respondents claim for damages against the Register of Deeds for
insufficiency of evidence; (v) dismissing Asuncions claim for damages against petitioner
for lack of factual basis; and (vi) dismissing petitioners counterclaim for lack of the
required pre
52. MARTINEZ vs CA
G.R. No. 123547. May 21, 2001
Facts:
Private respondents Godofredo De la Paz and his sister Manuela entered into an oral
contract with petitioner Rev. Fr. Dante Martinez for the sale of a parcel of lot. After full
payment, private respondents executed two documents, however, private respondents
never delivered the Deed of Sale. Private respondents sold two lots to Spouses
Veneracion including the lot previously sold to petitioner. Veneracion never took actual
possession of the lots, but all titles were given to him and registered the same in his
name. Petitioner discovered that the lot had been sold to the spouses Veneracion, so he
demanded the execution of the deed of sale from De la Paz and informed Veneracion
that he was the owner of the property as he had previously purchased the same.
Veneracion brought an action for ejectment, while petitioner caused a notice of
lispendens to berecorded on the title. While the ejectment case was pending, petitioner
filed a complaint for annulment of sale with damages against the Veneracions and De la
Pazes.
Issue:
Whether or not private respondents Veneracion are buyers in good faith of the lot in
dispute as to make them the absolute owners thereof in accordance with Art.1544 of the
Civil Code on double sale of immovable property.
Ruling:
NO. This case involves double sale and, on this matter, Art. 1544 of the Civil Code
provides that where immovable property is the subject of a double sale, ownership shall
be transferred (1) to the person acquiring it who in good faith first recorded it to the
Registry of Property; (2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the oldest title. The
requirement ofthe law, where title to the property is recorded is two-fold: acquisition in
good faith and recording in good faith. To be entitled to priority, the second purchaser

must not only prove prior recording of his title but that he acted in good faith, i.e.,
without knowledge or notice of a prior sale to another. The presence of good faith
should be ascertained from the circumstances surrounding the purchase of the land.
This Court in several cases has ruled that a purchaser who is aware of facts which
should put a reasonable man upon his guard cannot turn a blind eye and later claim that
he acted in good faith. Private respondent Veneracion knew that there were already
occupants on the property as early as 1981. The fact that there are persons, other than
the vendors, in actual possession of the disputed lot should have put private
respondents on inquiry as to the nature of petitioners right over the property. But he
never talked to petitioner to verify the nature of his right. He merely relied on the
assurance of private respondent Godofredo De la Paz, who was not even the owner of
the lot in question, that he would take care of the matter. This does not meet the
standard of good faith. The deed of sale executed by private respondents Godofredo
and Manuela De la Paz in favor of private respondents spouses Reynaldo and Susan
Veneracion is null and void.

53. Agricultural and Home Extension Development Group vs. CA

G.R. No. 92310. September 3, 1992.

Facts:
On 29 March 1972, the spouses Andres Diaz and Josefa Mia sold to Bruno Gundran a
19-hectare parcel of land in Las Pias, Rizal, covered by TCT 287416. The owners
duplicate copy of the title was turned over to Gundran. However, he did not register the
Deed of Absolute Sale because he said he was advised in the Office of the Register of
Deeds of Pasig of the existence of notices of lispendens on the title. On November 20,
1972, Gundran and Agricultural and Home Development Group (AHDG) entered into a
Joint Venture Agreement for the improvement and subdivision of the land. This
agreement was also not annotated on the title. On August 30, 1976, the spouses Andres
Diaz and Josefa Mia again entered into another contract of sale of the same property
with LibradoCabautan.
On September 3, 1976, by virtue of an order of the CFI Rizal, a new owners copy of the
certificate of title was issued to the Diaz spouses, who had alleged the loss of their
copy. On that same date, the notices of lispendens annotated on TCT 287416 were
canceled and the Deed of Sale in favor of Cabautan was recorded. A new TCT S33850/T-172 was thereupon issued in his name in lieu of the canceled TCT 287416. On
March14, 1977, Gundran instituted an action for reconveyance before the CFI Pasay
City against LibradoCabautan and Josefa Mia seeking, among others, the cancellation
of TCT 33850/T-172 and the issuance of a new certificate of title in his name. On 31
August 1977, AHDG, represented by Nicasio D. Sanchez, Sr. (later substituted by

Milagros S. Bucu), filed a complaint in intervention with substantially the same

allegations and prayers as that in Gundrans complaint. In a decision dated January 12,
1987, Gundranscomplaint and petitioners complaint in intervention were dismissed for
lack of merit. So was Cabautans counterclaim, for insufficiency of evidence. Upon
appeal, this decision was affirmed by the Court of Appeals, with the modification that
Josefa Mia was ordered to pay Gundran the sum of P90,000.00, with legal interest from
3 September 1976, plus the costs of suit.
ISSUE:
Whether private respondent Cabautan is an innocent purchaser for value and so
entitled to the priority granted under Article 1544 of the Civil Code.
HELD:
Under Article 1544 of the Civil Code of the Philippines, it is provided that If the same
thing should have been sold to different vendees, the ownership shall be transferred to
the person who may have first taken possession thereof in good faith, if it should be
movable property. Should it be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in the Registry of Property. Should
there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith.
Cabautan is a purchaser in good faith and for value. Cabautan took the risk of acquiring
the property even in the light of notice of lispendens inscribed in the title. Significantly,
three days after the execution of the deed of sale in his favor, the notices of lispendens
were canceled by virtue of the orders of the CFI Rizal, Branch 23, dated 1 and 4 April
1974. Cabautan therefore acquired the land free of any liens or encumbrances and so
could claim to be a purchaser in good faith and for value.
Purchaser in good faith A purchaser in good faith is defined as one who buys the
property of another without notice that some other person has a right to or interest in
such property and pays a full and fair price for the same at the time of such purchase or
before he has notice of the claim or interest of some other person in the property. In the
present case, an examination of TCT 287416 discloses no annotation of any sale, lien,
encumbrance or adverse claim in favor of Gundran or AHDC.The Supreme Court
denied the petition and affirmed in toto the questioned decision; with costs against
AHDG.

54. SPS. Mathay vs. CA, SPS. Atangan, SPS. Poblete, SPS Tirona
GR No. 115788
FACTS:

These are three (3) separate cases filed by different parties against the spouses Sonya
Mathay and Ismael Mathay, Jr.
Civil Case o. TM-175, filed by Spouses Teodulfo T. Atangan and Silvia L. Atangan
against the Mathay spouses and the Registrer of Deeds of Cavite, involved two parcels
of lands situated in Tanza, Cavite, covered by TCT No. T-195350 covering Lot No.
2186-A, and TCT No. T-195351, covering Lot No. 2186-C, issued in the name of the
Atangan spouses.
Civil Case No. TM-180, filed by Spouses AgustinaPoblete and Amor Poblete against the
Mathay spouses and the Register of Deeds of Cavite, for annulment of title and
recovery of possession, involved a parcel of land situated in Tanza, Cavite, covered by
TCT Nos. T-192532 registered in the name of Juana Batallones and GaudencioQuimio
per Deed of Conditional Sale dated December 28, 1987.
Civil Case No. TM-206, filed by Spouses Eduardo and FelicisimaTirona, et al. against
the Mathay spouses for quieting of title, annulment of title and recovery of possession
with damages, involved a parcel of land which was subdivided into eight lots.
After trial on the merits, the lower court rendered a decision in favor of the Mathay
spouses against the plaintiffs in the three consolidated cases. On appeal, the Court of
Appeals reversed the decision of the lower court. Hence, the instant petition.
Petitioners, the Mathay spouses, claimed that they were buyers in good faith, as their
title, TCT No. 111070, the derivative title of their TCT T-113047, appeared to be free
from any encumbrances; that a person dealing on a registered land may safely rely on
the correctness of the covering certificate of title and is not required to go beyond the
certificate of title to determine the condition of the property.
ISSUE:
WON Spouses Mathay can be considered buyers in good faith.
HELD:
The Supreme Court held that petitioners cannot be categorizes purchasers in good
faith. Prior to the fencing subject land, neither the Spouses Mathay nor their
predecessors-in-interest ever possessed the land. At the time the property was sold to
petitioners, the private respondents were not in actual possession of the same but also
built their houses thereon, cultivated it and were in full enjoyment of the produce and
fruits gathered therefrom. Not being innocent purchasers for value, petitioners reliance
an Article 1544 of the New Civil Code is misplaced as the documents from which there
title emanated were questionable.
The circumstances surrounding the execution of the Deed of Absolute Sale of the
property in favor of the petitioners spouses by their predecessors-in-interest beclouded

the issuance of the title, TCT N. 113047. The said Deed did not comply with legal
formalities and was not duly notarized. To bolster their submission that their title is
genuine and authentic, private respondents introduced several documentary
evidencesand also presented officials concerned and the care takers of the said
documents. On the other hand, petitioners utterly failed to discharge the burden of
proving the sustainability of their posture. Worse, the title of the predecessors-in-interest
relied upon by petitioners has been shown by preponderance of evidence to be the
product of forgery. Judgment affirmed.
A purchaser in good faith and for value is defined as one who buys property of another,
without notice that some other person has a right to, or interest in, such property and
pays a full and fair price for the same at the time of such purchase, or before he has
notice of the claims or interest of some other person in the property. As a rule, he who
asserts the status of a purchaser in good faith and for value,has the burden of proving
such assertion. This onus probandi cannot be discharge by mere invocation of the legal
presumption of good faith, i. e., that everyone is presumed to act in good faith.
55. LIMKETKAI SONS MILLING, INC., petitioner,
Vs.
COURT OF APPEALS, ET. AL., respondent.
G.R.No 118509
FACTS:
Philippine Remnants Co., Inc. constituted BPI as its trustee to manage, administer, and
sell its real estate property. One such piece of property placed under trust was the
disputed lot, a 33,056-square meter lot at Barrio BagongIlog, Pasig, Metro Manila.
Pedro Revilla, Jr., a licensed real estate broker was given formal authority by BPI to sell
a lot for P1,000.00 per square meter. Broker Revilla contacted Alfonso Lim of Limketkai
Sons Milling, Inc. who agreed to buy the land. On July 9, 1988, Revilla informed BPI
that he had procured a buyer. On July 11, 1988, petitioner's officials, Alfonso Lim and
Albino Limketkai, went to BPI to confirm the sale. Vice-President Merlin Albano and
Asst. Vice-President Aromin entertained them. The parties agreed that the lot would be
sold at P1,000.00 per square meter to be paid in cash. The authority to sell was on a
first come, first served and non-exclusive basis; there is no dispute over petitioner's
being the first comer and the buyer to be first served. Alfonso Lim then asked if it was
possible to pay on terms. The bank officials stated that there was no harm in trying to
ask for payment on terms because in previous transactions, the same had been
allowed. It was the understanding, however, that should the term payment be
disapproved, then the price shall be paid in cash. Two or three days later, petitioner
learned that its offer to pay on terms had been frozen. Alfonso Lim went to BPI on July
18, 1988 and tendered the full payment of P33,056,000.00 to Albano. The payment was
refused because Albano stated that the authority to sell that particular piece of property
in Pasig had been withdrawn from his unit. The same check was tendered to BPI Vice-

President Nelson Bona who also refused to receive payment. An action for specific
performance with damages was filed by petitioner against BPI. In the course of the trial,
BPI informed the trial court that it had sold the property under litigation to National
Bookstore on July 14, 1989.
The RTC ruled that there was a perfected contract of sale between petitioner and BPI. It
stated that there was mutual consent between the parties; the subject matter is definite;
and the consideration was determined. It concluded that all the elements of a
consensual contract are attendant. It ordered the cancellation of a sale effected by BPI
to respondent National Book Store (NBS) while the case was pending and the
nullification of a title issued in favor of said respondent NBS. The CA reversed the
decision of the RTC. Hence, the appeal
ISSUE:
WON there was a perfected contract of sale between Limketkai Co. and BPI.

HELD:
There was already a perfected contract of sale because both parties already agreed to
the sale of P1000/sq.m. Even if Lim tried to negotiate for a payment in terms, it is clear
that if it be disapproved, the payment will be made in cash.
The perfection of the contract took place when Aromin and Albano, acting for BPI,
agreed to sell and Alfonso Lim with Albino Limketkai, acting for petitioner Limketkai,
agreed to buy the disputed lot at P1,000.00 per square meter. Aside from this there was
the earlier agreement between petitioner and the authorized broker. There was a
concurrence of offer and acceptance, on the object, and on the cause thereof.
The phases that a contract goes through may be summarized as follows:
a. preparation, conception or generation, which is the period of negotiation and
bargaining, ending at the moment of agreement of the parties;
b. perfection or birth of the contract, which is the moment when the parties come to
agree on the terms of the contract; and
c. consummation or death, which is the fulfilment or performance of the terms agreed
upon in the contract.

56.

G.R. No. L-29972 January 26, 1976

ROSARIO CARBONELL, petitioner,
vs.
HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA INFANTE and RAMON
INFANTE, respondents.
For double sale of an immovable property, the ownership shall belong to the person
who first acquired it in good faith and recorded it in the Registry of Property
FACTS:
Respondent Jose Poncio was the owner of the land subject to mortgage in favor of the
Republic Savings Bank for the sum of P1,500.00. Poncio, unable to keep up with the
installments due on the mortgage, approached petitioner one day and offered to sell to
the latter the said lot, excluding the house wherein respondent lived. Petitioner accepted
the offer and proposed the price of P9.50 per square meter. Poncio, after having
secured the consent of his wife and parents, accepted the price proposed by petitioner,
on the condition that from the purchase price would come the money to be paid to the
bank. On January 27, 1955, petitioner and respondent Poncio, in the presence of a
witness, made and executed a document.
Poncio, in another private memorandum, bound himself to sell the same property for an
improved price to one Emma Infante for the sum of P2,357.52, with the latter still
assuming the existing mortgage debt in favor of the RSB in the amount of P1,177.48.
Carbonell registered on February 8, 1955 with the Register of Deeds her adverse claim
as first buyer entitled to the property. Meanwhile, Infante, the second buyer, was able to
register the sale in her favor only on February 12, 1955, so that the transfer certificate of
title issued in her name carried the duly annotated adverse claim of Carbonell as the
first buyer. The trial court declared the claim of the second buyer Infante to be superior
to that of the first buyer Carbonell, a decision which the Court of Appeals reversed.
Upon motion for reconsideration, however, Court of Appeals annulled and set aside its
first
decision
and
affirmed
the
trial
courts
decision.
ISSUE:
Who has the superior right over the subject property?
RULING: Article 1544 provides that for double sale of an immovable property, the
ownership shall belong to the person who first acquired it in good faith and recorded it in
the Registry of Property. When Carbonell bought the lot from Poncio on January 27,
1955, she was the only buyer thereof and the title of Poncio was still in his name solely
encumbered by bank mortgage duly annotated thereon. Carbonell was not aware - and

she could not have been aware - of any sale to Infante as there was no such sale to
Infante then. Hence, Carbonell's prior purchase of the land was made in good faith
which did not cease after Poncio told her on January 31, 1955 of his second sale of the
same lot to Infante. Carbonell wanted to meet Infante but the latter refused so to protect
her legal rights, Carbonell registered her adverse claim on February 8, 1955. Under the
circumstances, this recording of Carbonells adverse claim should be deemed to have
been done in good faith and should emphasize Infante's bad faith when the latter
registered her deed of sale 4 days later. Infantes bad faith was also manifested when
she did not inquire why Poncio was no longer in possession of the mortgage passbook
and why it was in Carbonells possession. She should have inquired to Poncio WON he
had already sold the property to Carbonell especially that it can be shown that he was
aware of the offer made by Carbonell.
57.
G.R. No. L-32988 December 29, 1978
EVARISTO SALVORO and GAUDENCIA C. SALVORO, petitioners, (plaintiffsappellants)
vs.
PABLO D. TAEGA and JOSEFA TAEGA, respondents, (defendantsappellees), JUAN TISMO and DOLORES TISMO, petitioners, (defendants-incounterclaim).
The ownership shall belong to the person acquiring it who in good faith first recorded it
in the Registry of Property.

FACTS: The Salvoro spouses, herein referred to as plaintiffs, mortgaged a parcel of

land to the Development Bank of the Philippines and having failed to pay the loan, the
Bank gave notice to foreclose the mortgage. On June 7, 1955, the plaintiffs executed a
deed of absolute sale in favor of the Taega spouses, the first vendees and defendants
herein. The Taega spouses immediately took possession of the said property and
assumed the mortgage executed by the plaintiffs.

On August 9, 1959, another Deed of Absolute Sale was executed by plaintiffs whereby
they conveyed absolutely and unconditionally in favor of the defendants the ownership
of the property. On August 25, 1959, or 16 days after plaintiffs executed the said second
Deed of Absolute Sale, the said Bank foreclosed the mortgage and it was the sole and
highest bidder. On August 26, 1960, the plaintiffs redeemed the property from the

Development Bank. Thereafter, plaintiffs executed a deed of sale in favor of the Tismo
spouses, the second vendees herein, over the same property.

On August 27, 1960, the defendants tendered payment but the plaintiffs refused to
accept the same. On September 5, 1960 the plaintiffs commenced in the Court of First
Instance of Leyte an action principally to annul a deed of sale of land executed by them
in favor of the Taega spouses on the ground that the latter failed to comply with certain
resolutory conditions imposed in the contract.

On September 15, 1960, the defendants filed a notice of lispendens with the Register of
Deeds of Leyte. Notwithstanding said notice, the defendants-in- counterclaim, the Tismo
spouses, were able to register the sale in their favor on December 19, 1960, and to
secure Transfer Certificate of Title.

The trial court dismissed the complaint. Dissatisfied, the plaintiffs appealed from the
said judgment to the Court of Appeals. But the appellate Court affirmed the judgment of
the trial court and ordered the Register of Deeds of the Province of Leyte to cancel the
Transfer Certificate of Title in the name of Juan and Dolores Tismo, and, in lieu thereof,
to issue a new Transfer Certificate of Title in the name of appellees, Pablo and
JosefaTaega.

Hence, this petition for review on certiorari of the decision of the Court of Appeals.

ISSUE: When real property is sold to two different persons by the same vendor, the first
immediately taking possession of the property as owner but neglecting to register the
sale to him while the second vendee had the document in his favor duly registered,
who, as between the two vendees, has the better right over the property under Article
1544 of the Civil Code of the Philippines?
HELD:Article 1544 provides that for double sale of an immovable property, the
ownership shall belong to the person who first acquired it in good faith and recorded it in
the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.

This Court has held in one case that the basic premise of the preferential rights
established by Article 1544 is good faith. To enjoy the preferential right, the second
vendee must not only have a prior recording of his sale but must, above all, have acted
in good faith, that is, without knowledge or notice of the previous and existing alienation
made by his vendor to another. This Court has also ruled that the rights given under this
law do not accrue with the mere inscription of the deed of conveyance unless such
inscription is done in good faith.

The trial court as well as the appellate court has both held that when the Tismo spouses
registered the deed of sale executed in their favor of the property previously sold to the
Taega spouses on December 19, 1960, they could not have failed to know the
existence of the lispendensthen annotated on the title of the property. In short, when
they were about to register the deed of sale in their favor, they acquired knowledge that
the land had been previously sold to the Taega spouses. Indubitably there was bad
faith on the part of the Tismo spouses when they went ahead with the registration
despite such knowledge.
This Court had occasions to rule that if a vendee in a double sale registers the sale after
he has acquired knowledge that there was a previous sale of the same property to a
third party, or that another person claims said property in a previous sale, the
registration will constitute a registration in bad faith and will not confer upon him any
right. It is as if there had been no registration, and the vendee who first took possession
of the real property in good faith shall be preferred.
Applying the foregoing rulings to the present case, this Court held that the defendantsappellees, Spouses Taega, are the owners of the land in question inasmuch as they, in
good faith, were first in possession of said land. Since the Tismo spouses were
registrants in bad faith, the situation is as if there was no registration at all. Therefore,
the vendees who first took possession of the property in good faith shall be preferred.
Hence, the petition is hereby denied and the decision of the Court of Appeals is
affirmed.

59.
LILLIAN N. MERCADO, CYNTHIA M. FEKARIS, and JULIAN MERCADO,
JR.,represented by their Attorney-In-Fact, ALFREDO M. PEREZ,

Petitioners, vs.
ALLIEDBANKING CORPORATION,
Respondent.
G.R. No. 171460 July 24, 2007
Facts:
Perla executed a Special Power of Attorney (SPA) in favor of her husband, JulianD.
Mercado (Julian) over several pieces of real property registered under her name,
authorizingthe latter to perform the following acts: 1. To act in my behalf, to sell,
alienate, mortgage, leaseand deal otherwise over the different parcels of land described
hereinafter x xx 2. To sign for and in my behalf any act of strict dominion or ownership
any sale, disposition, mortgage, leaseor any other transactions including quit-claims,
waiver and relinquishment of rights x xx 3. Toexercise any or all acts of strict dominion
or ownership over the above-mentioned properties,rights and interest therein.On the
strength of the aforesaid SPA, Julian obtained a loan from the respondent. Stillusing the
subject property as security, Julian obtained an additional loan from the respondent.It
appears, however, that there was no property identified in the SPA and registered with
theRegistry of Deeds. What was identified in the SPA instead was the property different
from theone used as security for loan.Julian defaulted on the payment of his loan
obligations. Thus, respondent initiated extra- judicial foreclosure proceedings over the
subject property which was subsequently sold at publicauction wherein the respondent
was declared as the highest bidder. Petitioners initiated an actionfor the annulment of
REM constituted over the subject property on the ground that the same wasnot covered
by the SPA and that the said SPA, at the time the loan obligations were contracted,no
longer had force and effect since it was previously revoked by Perla. In the absence
of authority to do so, the REM constituted by Julian over the subject property was null
and void;thus, petitioners likewise prayed that the subsequent extra-judicial foreclosure
proceedings andthe auction sale of the subject property be also nullified.
Issues:
(1) Whether or not there was a valid mortgage constituted over subject property
Rulings:
(1) In the case at bar, it was Julian who obtained the loan obligations from
respondent which he secured with the mortgage of the subject property. The
property mortgaged was owned by his wife, Perla, considered a third party to the
loan obligations between Julian andrespondent. It was, thus, a situation
recognized by the last paragraph of Article 2085 of the Civil Code that third
persons who are not parties to the principal obligation may secure the latter
by pledging or mortgaging their own property. There is no question therefore that
Julian was vested with the power to mortgage the pieces of property identified in

the
SPA,
however,
the
subject property was not among those enumerated therein. Julian was not confer
red by Perla with the authority to mortgage the subject property under the terms
of the SPA, the real estate mortgages Julian executed over the said property are
therefore unenforceable

60.
Spouses ABRIGO vs. DE VERA
G.R. No. 154409
June 21, 2004
FACTS: Villafania sold a house and lot located Pangasinan and Tigno-Salazar and
Cave-Go covered by a tax declaration. Unknown, however to Tigno-Salazar and a
Cave-Go, Villafania obtained a free patent over the parcel of landinvolved.The said free
patent was later on cancelled by a TCT.
On Oct 16, 1997, Tigno-Salazar and Cave-Go, sold the house and lot to the Spouses
Abrigo.
On Oct 23, 1997, Villafania sold the same house and lot to de Vera. De Vera registered
the sale and as a consequence a TCT was issued in her name.
De Vera filed an action for Forcible Entry and Damages against Spouses Abrigobefore
the MTC.
Spouses Abrigo filed a case with the RTC for the annulment of documents, injunction,
preliminary injunction, restraining order and damages Villafania.
The parties submitted a Motion for Dismissal in view of their agreement in the instant
(RTC) case that neither of them can physically take possession of the property in
question until the instant case is terminated. Hence the ejectment case was dismissed.
The RTC rendered judgment approving the Compromise Agreement submitted by the
parties. In the said Decision, Villafania was given one year from the date of the
Compromise Agreement to buy back the house and lot, and failure to do so would mean
that the previous sale in favor of Tigno-Salazar and Cave-Go shall remain valid and
binding and the plaintiff shall voluntarily vacate the premises without need of any
demand. Villafania failed to buy back the house and lot, so the [vendees] declared the
lot in their name
The RTC rendered the assailed Decision awarding the properties to Spouses Abrigo as
well as damages. Moreover, Villafania was ordered to pay [petitioners and private
respondent] damages and attorneys fees.

Not contented with the assailed Decision, both parties [appealed to the CA].
In its original Decision, the CA held that a void title could not give rise to a valid one and
hence dismissed the appeal of Private Respondent de Vera. Since Villafania had
already transferred ownership to RosendaTigno-Salazar and Rosita Cave-Go, the
subsequent sale to De Vera was deemed void. The CA also dismissed the appeal of
Petitioner-Spouses Abrigo and found no sufficient basis to award them moral and
exemplary damages and attorneys fees.
On reconsideration found Respondent De Vera to be a purchaser in good faith and for
value. The appellate court ruled that she had relied in good faith on the Torrens title of
her vendor and must thus be protected.
Hence, this Petition.9
ISSUE: Who between petitioner-spouses and respondent has a better right to the
property.
HELD: DE VERA
The petition is denied, and the assailed decision affirmed.The present case involves
what in legal contemplation was a double sale. Gloria Villafania first sold the disputed
property to Tigno-Salazar and Cave-Go, from whom petitioners, in turn, derived their
right. Subsequently a second sale was executed by Villafania with Respondent de Vera.
Article 1544 of the Civil Code states the law on double sale thus:
Art. 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
There is no ambiguity in the application of this law with respect to lands registered
under the Torrens system.
In the instant case, both Petitioners Abrigo and respondent registered the sale of the
property. Since neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go)
knew that the property was covered by the Torrens system, they registered their
respective sales under Act 3344 For her part, respondent registered the transaction
under the Torrens system because, during the sale, Villafania had presented the transfer
certificate of title (TCT) covering the property.

Soriano v. Heirs of Magali 23 held that registration must be done in the proper registry in
order to bind the land. Since the property in dispute in the present case was already
registered under the Torrens system, petitioners registration of the sale under Act 3344
was not effective for purposes of Article 1544 of the Civil Code.
More recently, in Naawan Community Rural Bank v. Court of Appeals,24 the Court
upheld the right of a party who had registered the sale of land under the Property
Registration Decree, as opposed to another who had registered a deed of final
conveyance under Act 3344. In that case, the priority in time principle was not
applied, because the land was already covered by the Torrens system at the time the
conveyance was registered under Act 3344. For the same reason, inasmuch as the
registration of the sale to Respondent De Vera under the Torrens system was done in
good faith, this sale must be upheld over the sale registered under Act 3344 to
Petitioner-Spouses Abrigo.

61.
Dagupan Trading v. Macam
DOCTRINE: Where one of two conflicting sales of a piece of land was executed before
the land was registered, while the other was an execution sale in favor of the judgment
creditor of the owner made after the same property had been registered, what should
determine the issue are the provisions of the last paragraph of Section 35, Rule 39 of
the Rules of Court to the effect that, upon the execution and delivery of the
final certificate of sale in favor of the purchaser of land sold in an execution sale, such
purchaser shall be substituted to and acquire all the rights, title, interest and claim of
the judgment debtor to the property as of the time of the levy.
FACTS:
1. Sammy Maron and his seven brothers and sisters were pro indiviso owners of a
parcel of unregistered land in Pangasinan.
2. While their application for registration of said land under Act No. 496 was
pending, they executed two deeds of sale conveying the property to appellee
[Macam] who thereafter took possession thereof and introduced substantial
improvements therein.
3. One month later, OCT was issued in favor of the Marons free from, lien
and encumbrances.
4. By virtue of a final judgment rendered in Civil Case No. 42215 against Sammy Maron
in favor of the Manila Trading and Supply Company, levy was made upon whatever
interest he had in the aforementioned property, and thereafter said interest was
sold at public auction to the judgment creditor.
5. The corresponding notice of levy, certificate of sale and the Sheriffs certificate of final
sale in favor of the Manila Trading and Supply Co.
6. On March 1, 1958, the latter sold all its rights, and title to the property to appellant
[Dagupan Trading].

ISSUE:
Who has the better right as between to the one-eighth share of Sammy Maron in the
property mentioned heretofore?
HELD:
If the property covered by the conflicting sales were unregistered land,
Macam would have the better right in view of the fact that his claim is based on a prior
sale coupled with public,exclusive and continuous possession thereof as owner. On the
other hand, were the land involved in the conflicting
transactions duly registered land, appellant has the better right because, in case of
conveyance of registered real estate, the registration of the deed of sale is the
operative act that gives validity to the transfer.
-The present case, however, does not fall within either situation. Here the
sale in favor of appellee was executed before the land subject matter thereof was
registered, while the conflicting sale in favor of appellant was executed after the same
property had been registered.
-What should determine the issue are the provisions of the last paragraph of Section 35,
Rule 39 of the Rules of Court, to the effect that upon the execution and delivery
of the final certificate of sale in favor of the purchaser of land sold in an execution
sale, such purchaser shall be substituted to and acquire all the right, title, interest
and claim of the judgment debtor to the property as of the time of the levy. Now we ask:
What was the interest and claim of Sammy Maron on the oneeighth portion of the
property inherited by him and his coheirs, at the time of the levy? The answer must
necessarily be that he had none, because for a considerable time prior to the levy, his
interest had already been conveyed to appellee, fully and irretrievably.
-Consequently, subsequent levy made on the property for the purpose of satisfying the
judgment rendered against Sammy Maron in favor of the Manila Trading Company was
void and of no effect. The unregistered sale and the consequent conveyance
of title and ownership in favor of appellee could not have been cancelled and rendered
of no effect upon the subsequent issuance of the Torrens title over the entire parcel of
land.
Dispositive: Macam Won.
62.
CARUMBA vs. CA G.R. No. L-27587 February 18, 1970
FACTS:
In 1955, the spouses Amado Canuto and NemesiaIbasco, by virtue of a Deed of Sale
of Unregistered Land with Covenants of Warranty sold a parcel of land located in
Camarines
Sur, to the spouses Amado Carumba and Benita Canuto, The referred deed of sale was
never

registered in the Office of the RD of Camarines Sur, and the Notary was not then an
authorized
notary public in the place.
In 1957, a complaint for a sum or money was filed by Balbuena against Amado Canuto
and
NemesiaIbasco before the Justice of the Peace Court. A decision was rendered in favor
of
Balbuena and against the defendants.
In 1968, the ex-officio Sheriff issued a Definite Deed of Sale of the property now in
question in
favor of Balbuena, which instrument of sale was registered before the Office of the RD.
The CFI, finding that after execution of the document Carumba had taken possession of
the land,
and planted thereon:
1. declared him to be the owner of the property under a consummated sale;
2. held void the execution levy made by the sheriff, pursuant to a judgment against
Carumbas vendor, Amado Canuto;
3. and nullified the sale in favor of the judgment creditor, Balbuena.
The CA, without altering the findings of fact made by the court of origin, declared that
there having been a double sale of the land subject of the suit Balbuenas title was
superior to that of
his adversary under Article 1544 of the Civil Code of the Philippines, since the execution
sale
had been properly registered in good faith and the sale to Carumba was not recorded.
ISSUE: Who has the superior title to the land?
HELD: CARUMBA
CA reversed. CFI affirmed.
The SC disagrees with the CA. While under the invoked Article 1544 registration in good
faith
prevails over possession in the event of a double sale by the vendor of the same piece
of land to
different vendees, said article is of no application to the case at bar, even if Balbuena,
the later
vendee, was ignorant of the prior sale made by his judgment debtor in favor of petitioner
Carumba. The reason is that the purchaser of unregistered land at a sheriffs execution
sale
only steps into the shoes of the judgment debtor, and merely acquires the latters

interest in
the property sold as of the time the property was levied upon. This is specifically
provided by
section 35 of Rule 39 of the Revised Rules of Court, the second paragraph of said
section
specifically providing that:
Upon the execution and delivery of said (final) deed the purchaser, redemptioner, or his
assignee
shall be substituted to and acquire all the right, title, interest, and claim of the judgment
debtor to
the property as of the time of the levy, except as against the judgment debtor in
possession, in
which case the substitution shall be effective as of the time of the deed (Emphasis
supplied)
While the time of the levy does not clearly appear, it could not have been made prior to
1957,
when the decision against the former owners of the land was rendered in favor of
Balbuena. But
the deed of sale in favor of Canuto had been executed two years before, in 1955, and
while only
embodied in a private document, the same, coupled with the fact that the buyer
(petitioner
Carumba) had taken possession of the unregistered land sold, sufficed to vest
ownership on the
said buyer. When the levy was made by the Sheriff, therefore, the judgment debtor no
longer had
dominical interest nor any real right over the land that could pass to the purchaser at the
execution sale. Hence, the latter must yield the land to petitioner Carumba.
Said rule is different in case of lands covered by Torrens titles, where the prior sale is
neither
recorded nor known to the execution purchaser prior to the levy; but the land here in
question is
admittedly not registered under Act No. 496.
63.
LEONARDO ACABAL and RAMON NICOLAS
vs.
VILLANER ACABAL, EDUARDO ACABAL, SOLOMON ACABAL, GRACE ACABAL,
MELBA ACABAL, EVELYN ACABAL, ARMIN ACABAL, RAMIL ACABAL and
BYRON ACABAL
GR No. 148376
March 31, 2005

FACTS:
Villaners parents, Alejandro Acabal and FelicidadBalasabas, owned a parcel of
land. By a Deed of Absolute Sale, his parents transferred ownership of the said land to
him, who was then married to JustinianaLipajan. After the foregoing transfer, it appears
that Villaner became a widower. He executed a deed conveying the same property in
favor of Leonardo.
Villaner was later claimed that while the document he executed appeared to be a
Deed of Absolute Sale, what he signed was a document captioned Lease Contract
where he leased the property for 3 years to Leonardo.
Villaner filed a complaint against Leonardo and Ramon Nicolas, to whom
Leonardo in turn conveyed the property, for annulment of the deeds of sale.
The trial court dismissed the complaint. Villaner et al. thereupon brought the case
on appeal to the CA which reversed the trial court, it holding that the Deed of Absolute
Sale executed by Villaner in favor of Leonardo was simulated and fictitious.
ISSUE:
WON the Contract of Absolute of Sale was valid?
HELD:
The SC ruled in favor of petitioners.
It is a basic rule in evidence that the burden of proof lies on the party who makes
the allegations. If he claims a right granted by law, he must prove it by competent
evidence, relying on the strength of his own evidence and not upon the weakness of
that of his opponent.
Moreover, allegations of a defect in or lack of valid consent to a contract by
reason of fraud or unde influence are never presumed but must be established by clear
and convincing evidence.
In the case at bar, it was incumbent on Villaner to prove that he was deceived
into executing the Deed of Absolute Sale. His conjectures of mere fraud must fail for
facts decide cases, not conjectures.
Villaner also emphasized the unusual low purchase price of the property
substantiated by Tax Declarations covering the property. However, Villaner failed to
present evidence on the fair market value of the property on the date of execution of the
disputed deed. Absent any evidence of the fair market value of a land as of the time of
its sale means it cannot be concluded that the price was inadequate. Mere inadequacy
of the price will not rule out sale. The price must be grossly inadequate such that a
reasonable man would neither directly nor indirectly be likely to consent to it.

The property was part of the conjugal partnership of Villaner and Justiniana being
acquired during marriage. With respect to the conjugal share of the wife in the property
which was sold by Villaner without the consent of the other co-owners, the sale will
affect only his own share but not those of the other co-owners who did not consent.
SC ruled that sale to Leonardo Acabal was valid and also to Ramon Nicolas
insofar as the share co-owned by Villaner.

65.
RICARDO CHENG, petitioner,
vs.
RAMON B. GENATO and ERNESTO R. DA JOSE & SOCORRO B. DA JOSE,
respondents.
G.R. No. 129760.
December 29, 1998
FACTS:
Respondent Genato entered a contract to sell to spouses Da Jose pertaining to
his property in Bulacan. The contract made in public document states that the spouses
shall pay the down payment and 30 days after verifying the authenticity of the
documents, they shall pay the remaining purchase price.
Da Jose spouses was not able to finish verifying the documents and as such
asked for a 30 day extension. Pending the extension and without notice to the spouses,
Genato made a document for the annulment of the contract.
Petitioner Cheng expressed interest over the property and paid 50K check with
the assurance that the contract between Genato and the spouses Da Jose will be
annulled. Da Jose spouses protested with the annulment and persuaded Genato to
continue the contract. Genato returned the check to Cheng and hence, this petition.
ISSUE:
Was the Contract a Contract to sell or a Contract of Sale?
Was the contract validly rescinded?
HELD:
The contract between Genato and spouses Da Jose was a contract to sell which
is subject to a suspensive condition. Thus, there will be no contract to speak of, if the
obligor failed to perform the suspensive condition which enforces a juridical relation.
Obviously, the foregoing jurisprudence cannot be made to apply to the situation in the
instant case because no default can be ascribed to the Da Jose spouses since the 30day extension period has not yet expired.
Even assuming that the spouses defaulted, the contract also cannot be validly
rescinded because no notice was given to them. Thus, Cheng's contention that the
Contract to Sell between Genato and the Da Jose spouses was rescinded or resolved
due to Genato's unilateral rescission finds no support in this case.
The contract between Genato and Cheng is a contract to sell not a contract of
sale. But even assuming that it should be treated as a conditional contract of sale, it did
not acquire any obligatory force since it was subject to a suspensive condition that the
earlier contract to sell between Genato and the Da Jose spouses should first be
cancelled or rescinded.

Art.1544 should apply because for not only was the contract between herein
respondents first in time; it was also registered long before petitioner's intrusion as a
second buyer (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made annotation on
the title of Genato). Since Cheng was fully aware, or could have been if he had chosen
to inquire, of the rights of the Da Jose spouses under the Contract to Sell duly
annotated on the transfer certificates of titles of Genato, it now becomes unnecessary to
further elaborate in detail the fact that he is indeed in bad faith in entering into such
agreement.
66.
PO SUN TUN, plaintiff-appellant,
vs.
W. S. PRICE and THE PROVINCIAL GOVERNMENT OF LEYTE, defendantsappellees.
G.R. No. L-31346
December 28, 1929
FACTS:
On Nov. 29, 1921, GabinoBarreto P. Po Ejap sold the subject land to Po Tecsi.
Po then mortgaged the property to W.S. Price which was duly noted in the register of
deeds on June 21, 1923 in the amount of P17,000. On Dec. 17, 1924, the subject
property was sold to W.S. Price for the same amount it was mortgaged. Such sale was
recorded in the register of deeds on January 22, 1925.
However, on Nov. 29, 1921, Po Tecsi gave a general power of attorney including
a right to sell to Po Ejap. Acting under the authority, Po Ejap sold the land to Jose
Katigbak where a date of receipt of the register of deeds dated Dec. 15, 1923 was
annotated on the deed of sale. Katigbak later transferred the property to Po Sun Tun on
Oct. 12, 1927 for P8,000.
The property being under the control of W.S. Price and the Provincial
Government of Leyte, Po Sun Tun filed for an action to gain possession of the property
with damages. Lower court ruled in favor of W.S. Price based on the finding that the
deed of sale to Jose Katigbak was not registered being a mere acknowledgement
compared to the deed executed in favor of W.S. Price which was duly registered and
further issued a Torrens Title.
ISSUE:
WON that property was first registered by Jose Katigbak by mere presentation to
the office of the register of deeds?
HELD:
SC affirmed decision of trial court.

The deed made by GabinoBarreto P. Po Ejap in favor of Jose Katigbak was not
first recorded in the register of deeds; moreover, legally recorded. The mere
presentation to the office of the register of deeds of a document on which
acknowledgment of receipt is written is not equivalent to recording or registering the real
property.
Escriche says that registration, in its juridical aspect, must be understood as the
entry made in a book or public registry of deeds.
Soler and Castello in their Diccionario de LegislacionHipotecaria y Notarial, vol.
II, p. 185, state:
Registration in general, as the law uses the word, means any entry
made in the books of the Registry, including both registration in its
ordinary and strict sense, and cancellation, annotation, and even the
marginal notes. In its strick acceptation, it is the entry made in the
Registry which records solemnly and permanently the right of
ownership and other real rights.
67.
SPOUSES AMANCIO and LUISA SARMIENTO and PEDRO OGSINER, Petitioners
v.
THE HON. COURT OF APPEALS (Special Former Fifth Division), RODEANNA
REALTY CORPORATION, THE HEIRS OF CARLOS MORAN SISON, PROVINCIAL
SHERIFF OF PASIG, M.M., MUNICIPAL (CITY) TREASURER OF MARIKINA, JOSE F.
PUZON, THE HON. EFICIO ACOSTA, REGIONAL TRIAL COURT OF PASIG CITY,
BRANCH 155 and REGISTER OF DEEDS OF MARIKINA (CITY), RIZAL,
Respondents.
G.R. No. 152627
Septermber 16, 2005
FACTS:
The Sarmiento spouses mortgaged their parcel of land in Marikina to Carlos
Sision as security for a loan obtained by them. Upon failure to pay the loan, Sision
initiated the extra-judicial foreclosure sale of the mortgaged property and it was
foreclosed through the Office of the Sheriff of Rizal, which issued a certificate of sale in
favor of Sison.
Jose Puzon purchased the same property in an auction sale conducted by the
Municipal Treasurer of Marikina for non-payment of taxes. A Transfer Certificate of Title
was issued in the name of Puzon. Puzon later sold the property in to herein plaintiffappellee Rodeanna Realty Corportion (RRC).
Plaintiff-appellee filed a complaint for recovery of possession with damages
against the Sarmiento spouses and Pedro Ogsiner, the Sarmiento spouses caretaker of

the subject property who refused to vacate the premises. The Sarmiento spouses filed a
motion for leave to file a third-party complaint against Sision, the Provincial Sheriff of
Pasig, Puzon, the Judge of RTC of Branch 155 in LRC Case No. R-3367 and the
Register of Deeds of Marikina.
The trial court issued its assailed decision in favor of the plaintiff-appellee and
ordered defendant Pedro Ogsiner and all persons claiming rights under him to vacate
the premises and surrender peaceful possession to the plaintiff within fifteen (15) days
from receipt of this order. Sarmiento spouses appeal was dismissed by the CA.
ISSUE:
WON RRC has a better right to possess the contested real property.
HELD:
For failure of the purchaser in the tax sale, Puzon, to prove that notice of the tax
sale was sent to the Sarmiento spouses, such sale is null and void. The title of the
buyer therein (Mr. Puzon) was also null and void. The general rule is that a purchaser
may be considered a purchaser in good faith when he has examined the latest
certificate of title. An exception to this rule is when there exist important facts that would
create suspicion in an otherwise reasonable man to go beyond the present title and to
investigate those that preceded it.
The failure of RRC to take the ordinary precautions which a prudent man would
have taken under the circumstances, specially in buying a piece of land in the actual,
visible and public possession of another person, other than the vendor, constitutes
gross negligence amounting to bad faith.The fact that private respondent RRC did not
investigate the Sarmiento spouses claim over the subject land despite its knowledge
that Pedro Ogsiner, as their overseer, was in actual possession thereof means that it
was not an innocent purchaser for value upon said land. Article 524 of the Civil Code
directs that possession may be exercised in ones name or in that of another.
In herein case, Pedro Ogsiner had informed RRC that he was occupying the
subject land on behalf of the Sarmiento spouses. Being a corporation engaged in the
business of buying and selling real estate, it was gross negligence on its part to merely
rely on Mr. Puzons assurance that the occupants of the property were mere squatters
considering the invaluable information it acquired from Pedro Ogsiner and considering
further that it had the means and the opportunity to investigate for itself the accuracy of
such information.
The Court held that the public auction sale conducted was VOID for lack of notice
to the registered owners Amancio and Luisa Sarmiento. Transfer Certificate of Title in
the name of RRC was annulled. The Registry of deeds of Marikina was ordered to
issue, in lieu thereof, a new title in the name of spouses Amancio and Luisa Sarmiento

68.
Sanchez vs. Ramos
Gr no. L- 13442, 20 December 1919

Facts:
Ciriaco Fernandez sold a piece of land to the Spouses Marcelino Gomez and
Narcisa Sanchez under pacto de retro for the period of 1 year. This was executed in
a public instrument. The spouses never took material possession of the land. The
period of repurchasr elapsed. Fernandez again sold the same land, by means of a
private document, to Ramos who immediately took material possession thereof. The
trial court declared preferable the sale executed to defendant, applying Art. 1473.

Issue:
Whether the sale executed to defendant Ramos should be declared preferable.

Ruling:
No.
The execution of a public instrument is equivalent to the delivery of the realty sold
(Art. 1462) and its possession by the vendee (Art. 438). Under these conditions, the
sale is considered consummated and completely transfers to the vendee all of the
vendors rights of ownership including his real right over the thing. The vendee by
virtue of this sale had acquired everything and nothing, absolutely nothing, is left to
the vendor.
As the thing is considered delivered, the vendor has no longet the obligation of even
delivering it.

After the sale of a realty by means of a public instrument, the vendor, who resells it
to another, does not transmit anything to the 2nd vendee and if the latter, by virtue of
this 2nd sale, takes material possession of the thing, he does it as mere detainer,
and it would be unjust to protect this detention against the rights to the thing lawfully
acquired by the 1st vendee.

69.
Gabriel vs. Mabanta, Colobong, DBP and Tan-Reyes
Gr no. 142403, 26 March 2003

Facts:
In 1975, Spouses Mabanta mortgage (2) lots with DBP as collateral loan of
P14,000. 5 years thereafter, they sold the lots to Soriano by way of a Deed of
Sale of Parcels of Land with Assumption of Mortgage with a right of repurchase.
The spouses failed to repurchase but they were able to convince Gabriel to
purchase the lot from Soriano. As consideration, Gabriel delivered to Soriano a
residential lot and paid Sps. Mabanta P5000.
Gabriel and his son cultivated the lots. They also caused the restructuring of
Sps. Mabantas loan with DBP. However, they found out that Sps. Tan had paid it
and that the mortgage was already cancelled.
Tan wanted to refund Gabriel the P5,000 he paid to Sps. Mabanta but he
refused because Tan was unwilling to return the formers lot delivered to Soriano
as purchase price for the lots. Gabriel filed with the RTC a complaint for specific
performance, reconveyance and damages with an application for Preliminary
injunction against the respondents. It turned out that it was Zenaida Tan-Reyes
who bought one of the lots from Sps. Mabanta. RTC sustained the right of
Gabriel over the lot in question and declared Tan-Reyes as purchaser in bad
faith. CA, however, modified RTCs decision, declaring the 2nd sale valid.

Issue:
Whether Respondent Tan-Reyes acted in GF when she purchased the subject
lot and had the sale registered.

Ruling:
No.
Where it is an immovable property that is the subject of a double sale,
ownership shall be transferred (1) to the person acquiring it who in good faith

first recorded it in the Registry of Property; (2) in person who presents the oldest
title, provided there is good faith. The requirement of the law then is two-fold:
acquisition in good faith and registration in good faith. The rationale behind this
is well-expounded in Uraca vs. CA, where the SC held:
Art. 1544 requires that wuch registration must be coupled with good faith.
Juirsprudence teaches us that the governing principle is primus tempore, potior
jure (first in time, stronger in right). Knowledge gained by the first buyer of the
2nd sale cannot defeat the 1st buyers right except where the 2nd buyer
registers in good faith the 2nd sale ahead of the 1st as provided by the Civil
Code.
The Court ruled that Respondent Reyes had knowledge that petitioner
previously bought the disputed lot from respondent Sps. Mabanta. Respondent
Reyes had it registered with the Registry of Property. Evidently, she wanted to
be the 1st one to effect its registration to the prejudice of petitioners who,
although in possession, have not registered the same.
In cases of double sale of immovables, what finds relevance and materiality is
not whether or not the 2nd buyer was a buyer in good faith but whether or not
said 2nd buyer registers such 2nd sale in good faith.

70.
Valdevieso vs. Damalerio
Gr no. 133303, 17 February 2005

Facts:
Petitioner Valdevieso bought from Sps. Uy a parcel of land covered by TCT.
The deed of sale was not registered, nor was the title of the land transferred
to petitioner. In 1995, the said property was immediately declared by
petitioner for tax purposes. In 1996, The RTC issued a writ of preliminary
attachment by virtue of which the property, sold to the petitioner, was levied.
On 06 June 1996, the title of the property was transferred in the name of the
petitioner. This new TCT, however, carried with it the attachment in favor of
respondents. Petitioner then filed a third-party claim to annul the attachment
levied on the subject property on the ground that said property belongs to
him and no longer to Sps. Uy. RTC ruled in favor of petitioner. CA reversed
the resolution declaring that an attachment or levy of execution, though
posterior to the sale, but if registered before the sale is registered, takes
precedence over the sale.

Issue:
Whether a registered writ of attachment on the land is a superior lien over
that of an earlier unregistered deed of sale.

Ruling:
Yes.
The settled rule is that levy on attachment, duly registered, takes preference
over aprior unregistered sale. This result is a necessary consequence of the
fact that theproperty involved was duly covered by the Torrens system which
works under thefundamental principle that registration is the operative act
which gives validity to the
transfer or creates a lien upon the land.
The preference created by the levy on attachment is not diminished even by
thesubsequent registration of the prior sale. This is so because an
attachment is a proceeding in rem.
It is against the particular property, enforceable against the wholeworld. The
attaching creditor acquires a specific lien on the attached property which
nothing can subsequently destroy except the very dissolution of the
attachment or levy itself. Thus, in the registry, the attachment in favor of
respondents appeared in the natureof a real lien when petitioner had his
purchase recorded. The effect of the notation ofsaid lien was to subject and
subordinate the right of petitioner, as purchaser, to the lien.
Petitioner acquired ownership of the land only from the date of the recording
of his title
in the register, and the right of ownership which he inscribed was not
absolute but alimited right, subject to a prior registered lien of respondents, a
right which is preferred
and superior to that of petitioner.

71.
Moles vs. IAC
Gr no. 73913, 31 January 1989

Facts:
Petitioner Moles purchased a linotype printing machine from Respondent
Diolosa. Petitioner inspected first the machines offered for sale by the
respondent. The latter informed the petitioner that the same were
secondhand but functional. The transaction was verbal in nature but to
facilitate the loan application with DBP, a pro forma invoice was signed by
petitioner. Petitioner promised to pay the full amount upon the release of his
loan. Although the agreed selling price was only P40,000, the amount on the
invoice was increased by P10,000, which is intended for the purchase of
new matrices for said machine. The machine was then delivered to petitioner
where it was installed by the employee of respondent.
On 29 August 1977, private respondent issued a certification warranting that
the machine sold was in A-1 condition, together with other express
warranties. DBP granted the P50,000 loan to petitioner; the latter then paid it
to private respondent.
On 29 November 1977, petitioner wrote private respondent that the machine
was not functioning properly as it needed a new distributor bar; the latter
then sent (2) technicians to make the necessary repairs but they failed to put
the machine in running condition. Private respondent then decided to
purchase the said distributor bar but he wanted to share the cost with
petitioner. Petitioner then brought this matter to his lawyer.
After trial, the court decreed the rescission of the contract. IAC, however,
reversed the judgment of the lower court.

Issues:
1. Whether there is an implied warranty of the secondhand items quality and
fitness;
2. Whether the hidden defects in the machine is sufficient to warrant a
rescission of the contract between the parties.

Ruling:
1. Yes.
It must be remembered that the certification was a condition sine qua non for
the release of petitioner's loan which was to be used as payment for the
purchase price of the machine. Private respondent failed to refute this

material fact. Neither does he explain why he made that express warranty on
the condition of the machine if he had not intended to be bound by it. In fact,
the respondent court, in declaring that petitioner should have availed of the
remedy of requiring repairs as provided for in said certification, thereby
considered the same as part and parcel of the verbal contract between the
parties.
Private respondent was not a dealer of printing of linotype machines to
whom could be ascribed the supposed resort to the usual exaggerations of
trade in said items. His certification as to the condition of the machine was
not made to induce petitioner to purchase it but to confirm in writing for
purposes of the financing aspect of the transaction his representationd
thereon. Conversely, what is specifically as true cannot be construed as
mere dealers talk.

2. Yes.
A redhibitory defect must be an imperfection or defect of such nature as to
engender a certain degree of importance. An imperfection or defect of little
consequence does not come within the category of being redhibitory.
An expert witness for the petitioner categorically established that the
machine required major repairs before it could be used. This, plus the fact
that petitioner never made appropriate use of the machine from the time of
purchase until an action was filed, attest to the major defects in said
machine, by reason of which the rescission of the contract of sale is sought.
The factual finding, therefore, of the trial court that the machine is not
reasonably fit for the particular purpose for which it was intended must be
upheld, there being ample evidence to sustain the same.

72.
Perez GR L-10374
facts:
Pedro and others executed a deed whereby they sold a parcel of land to Zulieta, subj. to
their right to repurchase within one year. as the vendors failed to repurchase, defendant
took steps to consolidate his title to the land. hence an action was brought by the
vendors.

issue: won the vendor failed to exercise its right to repurchase

held; no. in the circumstances the rigth was exercise in due time; the deposit of money
being unnecessary particularly because defendat had declared the time of repurchase
had passed, thereby impliedly declining to accept any redemption money.
73.
yapkimchuanvstiaoqui

facts; a list of damage goods was made ou of the presence of the plainti, the defendant
and a notary public; that afterwards the defendant expressly authorized the plaintiff to
sell the damage goods at any price, promising to pay the differents between the selling
price and the regular price of the of the articles in good intention; notwithstanding the
repeated damands, said defendant refused and refuses to pay.

issue; won tiaoqui is liable for the goods

held; alfonsotiaoqui is not liable under the law to pay indemnity for lossess and
damages because of the wetting of the goods and merchandize of kimchuan. the
promise contained in the ffirst of the defendants answer plainly has a condditionatached
to it, and there is no record that the plaintiff accepted it or that they agreed to the
condition mentioned. and therefore it cannot source as an adverse finding.

74.
Bricktown GR 112182
facts;
petitioner entered into a contract to sell with repondent , who failed to pay in full. the
parties continued to negotiate regarding its term but no agreement wa arrived at.
cancellation was brought by petittioner while repondent asked for refund. thertc and ca
ruled that the contracted is rescinded

issue; won the contracted is rescinded

held; yes the cancellation of the contract to sell by petitioner accords with the
contractual covenants of the partie, and such cancellaion must be respected. It may be
noteworhy to add that in a conract to sell, the non payment of the purchase price (which
is normally the conditiono for the final sale) can prevent the obligation to convey itle
from acquiring any obligatory force

75.
valarao vs. ca
facts;
sps. valarao sold to private respondent arellano under a deed of conditional sale parcel
of land payable under a schedule payment. privateresponden alleged that she had
already paid the amount but was turned down by the vendors. vendors thru counsel
send a lettter notifying her that they enforce the automatic recession and forfeiture and
demand to vacate the property.

issue; won the automatic forfeiture clause is valid.

held; the automatic recisson and forfeiture is vald

as a general rule, a contract is a law between the parties, thus from the moment the
contract is perfected, the parties are bound not only to the fulfillment of what has been
expressly stipulated but also the consequences, which according to their nature is inn
keeping with good faith. private respondent-vendee failed to perform her obligation,
thereby giving petitioners-vendors the right to demand the enforcement of the contract.
the automatic forfeifture clause is valid..

76.
THE CARIDAD ESTATES, INC., PLAINTIFF AND APPELLEE,
VS. PABLO SANTERO, DEFENDANT AND APPELLANT
[ G.R. No. 47231, December 19, 1940 ]
A clause in such a contract allowing unilateral automatic rescission by the seller
in the event the buyer fails to pay any installment due is VALID, Art. 1592 not
being applicable.
FACTS:
Caridad Estates, Inc., through its manager, Hammon H. Buck, leased to Pablo Santero

cadastral lots in the municipality of Cavite for one year for P2,200. Said lands were used
for fishpond and salt bed purposes. About three months prior to the expiration of the
contract of lease, the lessor sold the same lots to the lessee . In said contract the
parties stipulated that should the vendee fail to make the payments agreed upon within
sixty days of the date they fall due, the total balance shall become due and payable and
recoverable by an action at law, or the vendor may recover possession of the property
and consider any and all sums paid by the vendee forfeited.
ISSUE:
Whether or not the provisions of the contract of sale, more specifically
paragraphs 3 and 4 thereof, violate those legal principles which condemn
pactocommissorio
HELD:
The course followed by the vendor in cancelling the contract and
demanding the repossession of the property was well supported by, and employed in
consonance with, the covenants embodied in their agreement. As the stipulations in
question do not violate the prohibitive provisions of the land or defeat morals and public
order, they constitute the law between the parties, binding and effectual upon them.
The contract is a sale in installment, in which the parties have laid down the procedure
to be followed in the event the vendee failed to fulfill his obligation. There is,
consequently, no occasion for the application of the requirements of article 1504.
Taking up the argument that the stipulations outlined in paragraphs 3 and 4 of the
contract have resulted in a pactumcommisorium is without legal basis. It becomes
hardly conceivable, although the argument has been employed here rather
extravagantly, that the idea of pactumcommissorium should occur in the present
contract of sale, considering that, it is admitted, the person to whom the property is
forfeited is the real and equitable owner of the same because title would not pass until
the payment of the last installment.At most, the provisions in point, as the parties
themselves have indicated in the contract, is a penal clause which carries the express
waiver of the vendee to any and all sums he had paid when the vendor, upon his
inability to comply with his duty, seeks to recover possession of the property, a
conclusive recognition of the right of the vendor to said sums, and avoids unnecessary
litigation designed to enforce fulfillment of the terms and conditions agreed upon. Said
provisions are not unjust are inequitable and does not, as appellant contends, make the
vendor unduly rich at his costs and expenses.

77.
ROQUE vs LAPUZ
GR ## GR No. L-32811
Petitioner: Felipe C. Roque,
Respondents: NicanorLapuz and Court of Appeals
March 31, 1980
Art. 1592 of the Civil Code, which speaks of the rescission of contracts of sale of real
property, does not apply to contracts to sell real property on installments.
FACTS
Sometime in 1964. plaintiff Roque and defendant Lapuz entered into an agreement of
sale covering Lots 1, 2 and 9, Block 1, of said property, payable in 120 equal monthly
installments at the rate of P16.00, P15.00 per square meter, respectively. In accordance
with said agreement, defendant paid to plaintiff the sum of P150.00 as deposit and the
further sum of P740.56 to complete the payment of four monthly installments covering
the months of July, August, September, and October, 1954.
On January 24, 1955, defendant requested plaintiff that he be allowed to abandon and
substitute Lots 1, 2 and 9, the subject with Lots 4 and 12, Block 2 of the Rockville
Subdivision, which are corner lots, to which request plaintiff graciously acceded. The
evidence discloses that defendant proposed to plaintiff modification of their previous
contract to sell because he found it quite difficult to pay the monthly installments on the
three lots, and besides the two lots he had chosen were better lots, being corner lots. In
addition, it was agreed that the purchase price of these two lots would be at the uniform
rate of P17.00 per square meter payable in 120 equal monthly installments, with interest
at 8% annually on the balance unpaid. Pursuant to this new agreement, defendant
occupied and possessed Lots 4 and 12, and enclosed them, including the portion where
his house now stands, with barbed wires and adobe walls. However, aside from the
deposit of P150.00 and the amount of P740.56, which were paid under their previous
agreement, defendant failed to make any further payment on account of the agreed
monthly installments for the two lots in dispute, under the new contract to sell. Plaintiff
demanded upon defendant not only to pay the stipulated monthly installments in
arrears, but also to make up-to-date his payments, but defendant refused to comply with
plaintiff's
demands.
On or about November 3, 1957, plaintiff demanded upon defendant to vacate the lots in
question and to pay the reasonable rentals thereon at the rate of P60.00 per month from
August, 1955. On January 22, 1960, petitioner Felipe C, Roque filed the complaint
against defendant NicanorLapuz for rescission and cancellation of the agreement of
sale between them involving the two lots in question and prayed that judgment be
rendered ordering the rescission and cancellation of the agreement of sale, the

defendant to vacate the two parcels of land and remove his house therefrom and to pay
to the plaintiff the reasonable rental thereof at the rate of P60.00 a month from August
1955 until such time as he shall have vacated the premises, and to pay the sum of
P2,000.00 as attorney's fees, costs of the suit and award such other relief or remedy as
may
be
deemed
just
and
equitable
in
the
premises.
The Court of Appeals rendered its decision that the defendant NicanorLapuz is granted
a period of ninety (90) days from entry hereof within which to pay the balance. Hence,
this appeal.
ISSUE:
WON Lapuz is entitled to the benefits of the third paragraph of Article 1191 New Civil
Code, for fixing period
HELD:
No. Respondent as obligor is not entitled to the benefits of paragraph 3 of Art.
1191, NCC Having been in default and acted in bad faith, he is not entitled to the new
period of 90 days from entry of judgment within which to pay petitioner the balance of
P11,434.44 with interest due on the purchase price of P12,325.00 for the two lots. To
allow and grant respondent an additional period for him to pay the balance of the
purchase price, which balance is about 92% of the agreed price, would be tantamount
to excusing his bad faith and sanctioning the deliberate infringement of a contractual
obligation that is repugnant and contrary to the stability, security and obligatory force of
contracts. Moreover, respondent's failure to pay the succeeding 116 monthly
installments after paying only 4 monthly installments is a substantial and material
breach on his part, not merely casual, which takes the case out of the application of the
benefits
of
paragraph
3,
Art.
1191,
N.C.C.
Pursuant to Art. 1191, New Civil Code, petitioner is entitled to rescission with payment
of damages which the trial court and the appellate court, in the latter's original decision,
granted in the form of rental at the rate of P60.00 per month from August, 1955 until
respondent shall have actually vacated the premises, plus P2,000.00 as attorney's fees.
The Court affirmed the same to be fair and reasonable. The Court also sustained the
right of the petitioner to the possession of the land, ordering thereby respondent to
vacate the same and remove his house therefrom.
78.
CASE TITLE :
CITATION

LEVY HERMANOS, INC., plaintiff-appellant vs. LAZARO BLAS

GERVACIO, defendant-appellee.
G.R. No. L-46306 (October 27, 1939)

TOPIC

RECTO LAW in relation to Art. 1484 (1454-A)

If the sale is for cash or on straight terms (here after an initial payment, the
balance is paid in its totality at the time specified, say, two months or three
months later this is also considered a cash sale), Art. 1484 does not apply

Facts:
Levy Hermanos, Inc. (Levy for brevity) sold to Lazaro Blas Gervacio, a Packard
car. The latter, after making the initial payment, executed a promissory note for the
balance of P2,400, payable on or before June 15, 1937, with interest at 12% per
annum; to secure the payment of the note, he mortgaged said car to Levy Gervacio
failed to pay the note it its maturity. Levy foreclosed the mortgage and the car was sold
at public auction, at which plaintiff was the highest bidder for P1,800. It brought an
action to collect the balance P1,600 and interest (note that P2,400 was the amount due
from Gervacio).
Issue:
whether or not the cash payment made by Gervacio should be considered as an
installment in order to bring the contract sued upon within the ambit of Art. 1454-A of the
old Civil Code
Held:
No. Article 1454-A of the Civil Code reads as follows:
In a contract for the sale of personal property payable in installments shall
confer upon the vendor the right to cancel the sale or foreclose the
mortgage if one has been given on the property, without reimbursement to
the purchaser of the installments already paid, if there be an agreement to
this effect.
However, if the vendor has chosen to foreclose the mortgage he shall
have no further action against the purchaser for the recovery of any
unpaid balance owing by the same and any agreement to the contrary
shall be null and void.
In order to apply the provisions of article 1454-A of the old Civil Code it must
appear that there was a contract for the sale of personal property payable in
installments and that there has been a failure to pay two or more installments. The
contract in this case, while a sale of personal property, is not, however, one on
installments, but on straight term, in which the balance, after payment of the initial sum,
should be paid in its totality at the time specified in the promissory note. The transaction

is not, therefore, the one contemplated in Article 1454-A and accordingly the mortgagee
is not bound by the prohibition therein contained as to the right to the recovery of the
unpaid balance.
79.
Delta Motors Sales vs. Niu Kim Duan [G.R. No. 61043.September 2, 1992.]
Art. 1484. In a contract of sale of personal property the price of which is payable
in installments, the vendor may exercise any of the three remedies. Moreover, the
3 remedies are alternative and NOT cumulative. If the creditor chooses one
remedy, he cannot avail himself of the other two.

Facts: On 5 July 1975, Niu Kim Duan and Chan FueEng (defendants) purchased from
Delta Motor Sales
Corporation 3 units of DAIKIN air-conditioner all valued at P19,350.00. The deed
of sale stipulates that the defendants shall pay a down payment of P774.00 and the
balance of P18,576.00 shall be paid by them in 24 installments ; that the title to the
properties purchased shall remain with Delta Motors until the purchase price thereof is
fully paid; that if any two installments are not paid by the defendants on their due dates,
the whole of the principal sum remaining unpaid shall become due, with interest
However, after paying the amount of P6,966.00, the defendants failed to pay at
least 2 monthly installments. s of 6 January 1977, the remaining unpaid obligation of the
defendants amounted to P12,920.08. Statements of accounts were sent to the
defendants and the Delta Motors collectors personally went to the former to effect
collections but they failed to do so. Because of the unjustified refusal of the defendants
to pay their outstanding account and their wrongful detention of the properties in
question, Delta Motors tried to recover the said properties extra-judicially but it failed to
do so. The matter was later referred by Delta Motors to its legal counsel for legal action.
In its verified complaint dated 28 January 1977, Delta Motors prayed for the issuance of
a writ of replevin, which the Court granted in its Order dated 28 February 1977, after
Delta Motors posted the requisite bond. On 11 April 1977, Delta Motors, by virtue of the
writ, succeeded in retrieving the properties in question. The trial court promulgated its
decision on 11 October 1977 ordering the defendants to pay Delta Motors the amount of
P6,188.29 with a 14% per annum interest which was due on the 3 Daikin airconditioners the defendants purchased from Delta Motors under a Deed of Conditional
Sale, after the same was declared rescinded by the trial court. They were likewise
ordered to pay Delta Motors P1,000.00 for and as attorneys fees.

Issue:

WON the lower court erred in its decision to order the defendants to pay the unpaid
balance despite the fact that Delta motors already retrieved the subject properties.

Held:
The court held that remedies available to vendor in a sale of personal property
payable in installments The vendor in a sale of personal property payable in
installments may exercise one of three remedies, namely, (1) exact the fulfillment of the
obligation, should the vendee fail to pay; (2) cancel the sale upon the vendees failure to
pay two or more installments; (3) foreclose the chattel mortgage, if one has been
constituted on the property sold, upon the vendees failure to pay two or more
installments. The third option or remedy, however, is subject to the limitation that the
vendor cannot recover any unpaid balance of the price and any agreement to the
contrary is void (Art. 1484).
Moreover, the 3 remedies are alternative and NOT cumulative. If the creditor chooses
one remedy, he cannot avail himself of the other two.
Thus in the case at bar, Air-conditioning units repossessed, bars action to exact
payment for balance of the price Delta Motors had taken possession of the 3 airconditioners, through a writ of replevin when defendants refused to extra-judicially
surrender the same. The case Delta Motors filed was to seek a judicial declaration that
it had validly rescinded the Deed of Conditional Sale. Delta Motors thus chose the
second remedy of Article 1484 in seeking enforcement of its contract with defendants.
Having done so, it is barred from exacting payment from defendants of the balance of
the price of the three air-conditioning units which it had already repossessed. It cannot
have its cake and eat it too.
80) G.R. No. L-17061
December 30, 1961
LUNETA MOTOR COMPANY vs. ANGEL DIMAGIBA, ET AL.
Facts:
The Luneta Motor Company filed several cases in the CFI of Manila against
Angel Dimagiba and NatividadNoriel concerning the purchase of a truck of which was
not able to pay according to their agreement. Due to the failure of Dimagiba to pay
several installments the Luneta Motor Company filed a complaint against Dimagiba and
Noriel for replevin and for recovery of the balance of the latter's obligation praying that a
warrant of seizure be issued directing the sheriff to seize the mortgaged trucks and turn
over them.
After trial, the court a quo rendered decision holding that since plaintiff has
seized the two trucks and chose to foreclose the mortgages executed thereon pursuant
Article to 1484 of the new Civil Code it can no longer recover the balance of the

purchase price against either defendants and, consequently, it affirmed the writ of
manual delivery of the truck belonging to Dimagiba but dismissed the complaint against
Noriel, ordering Dimagiba to pay plaintiff the sum of P1,455.61 representing the value of
the parts found missing in his truck, with legal interest thereon from the filing of the
complaint, and the costs of action.
Issue: Whether or not a creditor can still recover the unpaid balance after it foreclosed
the trucks as security thereof.
Ruling: No.
Rationale: Art. 1484 that when plaintiff chose to foreclose the chattel mortgage, it
submitted itself to the consequences of the law with the result that having seized the
truck of Angel Dimagiba, it could no longer secure any judgment for the balance of the
account of Angel and for the reason that Natividad was only a mortgagor in the chattel
mortgage to guarantee the fulfillment of the first promissory note, and her liability being
only secondary, neither should she be required anymore to pay the balance due unto
plaintiff from Angel Dimagiba, so that the result would be that with respect to the money
liability prayed for in the complaint, the same will have to be a dismissal.
But in the instant case the vendor was not content in choosing any of the three
remedies, but chose to avail it of the first and third remedies. More than that, plaintiff
even went to the extent of suing for replevin, in other words, it filed an action containing
three remedies:(1) exact fulfillment of the obligation; (2) cancel the sale; and (3)
foreclose the mortgage on the thing sold. If he chooses the third remedy, the article
provides that he shall have no further action against the purchaser to recover any
unpaid balance of the purchase price. It even adds that any agreement to the contrary
shall be void. Plaintiff even went to the extent of selling first the property of Noriel, who
is not the vendee, out of court, and after doing so, it asked the court for judgment in the
balance. Such a scheme is not only irregular but is a flagrant circumvention of the
prohibition of the law.

81) G.R. No. L-14475

May 30, 1961
SOUTHERN MOTORS, INC vs. ANGELO MOSCOSO,
Facts: The Southern Motors, Inc. sold to Angel Moscoso one Chevrolet truck, on
installment basis. The defendant executed a promissory noteto secure the payment, a
chattel mortgage was constituted on the truck in favor of the plaintiff .The defendant
failed to pay 3 installments on the balance of the purchase price.
The plaintiff filed a complaint against the Angel Moscoso, to recover the unpaid balance
of the promissory note and a writ of attachment was issued by the lower court on the
properties of the defendant. Pursuant thereto, the said Chevrolet truck, and a house and
lot were attached by the Sheriff, said truck was brought to the plaintiff's compound for
safe keeping and later sold the truck at public auction.
Issue: whether or not the plaintiff is entitled for the unpaid balance?
Ruling: yes.
Manifestly, the appellee had chosen the first remedy. The complaint is an ordinary civil
action for recovery of the remaining unpaid balance due on the promissory note. The
plaintiff had not adopted the procedure of the Chattel Mortgage Law but those
prescribed for ordinary civil actions, under the Rules of Court. Had appellee elected the
foreclosure, it would not have instituted this case in court; it would not have caused the
chattel to be attached under Rule 59, and had it sold at public auction, in the manner
prescribed by Rule 39.
We perceive nothing unlawful or irregular in appellee's act of attaching the
mortgaged truck itself. Since herein appellee has chosen to exact the fulfillment of the
appellant's obligation, it may enforce execution of the judgment that may be favorably
rendered hereon, on all personal and real properties of the latter not exempt from
execution sufficient to satisfy such judgment. It should be noted that a house and lot at
San Jose, Antique were also attached. No one can successfully contest that the
attachment was merely an incident to an ordinary civil action. The mortgage creditor
may recover judgment on the mortgage debt and cause an execution on the mortgaged
property and may cause an attachment to be issued and levied on such property, upon
beginning his civil action.

82) G.R. No. L-43821 May 26, 1977

INDUSTRIAL FINANCE CORP.vs.HON. PEDRO A. RAMIREZ, Judge of the CFI, and
CONSUELO ALCOBA,
Facts:Dizon sold to Consuelo Alcobahis Chevrolet car payable in eighteen monthly
installments, which were secured by a chattel mortgage.On that same date, Dizon
assigned for 10,000 to Industrial Finance Corporation all his rights and interest in the
chattel mortgage. Consuelo Alcoba defaulted in the payment of the first four
installments. Because of that default the whole obligation became due and
demandable.The corporation sued Consuelo. In its complaint they prayed for the
recovery of the mortgaged car by means of a writ of replevin.The lower court granted
the same and rendered judgment in favor of the corporation.
An alias writ of execution was issued. The sheriff was able to levy upon the mortgaged
car which was then in the possession of the Aco Motor Service. In order to take
possession of the car, the corporation had to pay P4,250 to satisfy its lien for the repair
and storage of the car.The corporation contended that it sustained a loss of P250 in the
execution sale. It asked for a third alias writ of execution in order to satisfy the balance
of Consuelo Alcoba'sobligation.But the lower court denied. It treated the execution sale
as a "virtual foreclosure of the chattel mortgage" which, although not beneficial to the
mortgagee, Industrial Finance Corporation, barred it from recovering the deficiency
under article 1484.
Issue: Whether or not by means of that complaint Industrial Finance Corporation sought
to foreclose the chattel mortgage as contemplated in article 1484 of the Civil Code,
otherwise known as the Recto Installment Sale Law.
Ruling:The corporation's action was for specific performance or fulfillment of the
obligation and not for judicial foreclosure Consuelo Alcoba's payment of P2,000 on

account of the money judgment against her signified that she acquiesced in the action
for specific performance. She cannot now be heard to say that the judgment resulting
from that action could not be enforced because the mortgagees had opted for
foreclosure of the mortgage.
ART. 1484. In a contract of sale of personal property the price of which is payable
in installments, the vendor may exercise any of the following remedies:(1) Exact
fulfillment of the obligation,(2) Cancel the sale,(3) Foreclose the chattel mortgage on the
thing sold. In this case, he shall have no further action against the purchaser to recover
any unpaid balance of the price. Any agreement to the contrary shall be void.
Accordingly, it is only when there has been a foreclosure that the mortgagor is not liable
for any deficiency.In this case, there was no foreclosure. The mortgagee evidently
chose the remedy of specific performance. It levied upon the car by virtue of an
execution and not as an incident of a foreclosure proceeding. It is entitled to an alias
writ of execution for the portion of the judgment that has not been satisfied.The rule is
that in installment sales, if the action instituted is for specific performance and the
mortgaged property is subsequently attached and sold, the sale thereof does not
amount to a foreclosure of the mortgage. Hence, the seller-creditor is entitled to a
deficiency judgment.

83) G.R. No. L-9396

August 16, 1956

MANILA MOTOR COMPANY, INC. Vs. MANUEL T. FLORES

Facts:
In May 1954, Manila Motor Company filed a complaint to recover from Manuel T. Flores
the amount of P1,047.98 as chattel mortgage installments which fell due in September
1941. Defendant pleaded prescription: 1941 to 1954. The complaint was dismissed. On
appeal, the CFI saw differently, sustaining plaintiff's contention that the moratorium laws
had interrupted the running of the prescriptive period, and that deducting the time during
which said laws were in operation.Wherefore said court ordered the return of the case
to the municipal judge for trial on the merits.Defendant appealed.
Issue: Whether or not the moratorium laws did not have the effect of suspending the
period of limitations, because they were unconstitutional.

Ruling:
In Montilla vs. Pacific Commercial3 we held that the moratorium laws suspended the
period of prescription. That was rendered after the Rutter-Esteban decision. It should be
stated however, in fairness to appellant, that the Montilla decision came down after he
had submitted his brief. And in answer to his main contention, the following portion is
quoted from a resolution of this Court: Rutter vs. Esteban Itmay be construed to mean
that the decision of Moratorium law could no longer be validly applied because of the
prevailing circumstances. At any rate, although the general rule is that an
unconstitutional statute "confers no right, create no office, affords no protection and
justifies no acts performed under it." there are several instances wherein courts, out of
equity, have relaxed its operation or qualified its effects "since the actual existence of a
statute prior to such declaration is an operative fact, and may have consequences
which cannot justly be ignored and a realistic approach is eroding the general doctrine.

88.
G.R. No. L-28074 May 29, 1970
NORTHERN MOTORS, INC., plaintiff-appellant, vs.
CASIANO SAPINOSO and "JOHN DOE", defendants-appellees.

DOCTRINE: That the ultimate object of the action is the foreclosure of the chattel
mortgage, is of no moment, for it is the fact of foreclosure and actual sale of the
mortgaged chattel that bar further recovery by the vendor of any balance on the
purchaser's outstanding obligation not satisfied by the sale.

FACTS:

Sapinoso purchased form Northern Motors a car for P12,171, making a down payment
and the balance payable on installment. To secure the payment, Sapinoso executed
chattle mortgage on the car.

The mortgage contract provided that upon default, the mortgagee may:
(a) sell the car;
(b) cancel the contract;
(c) foreclose the property extrajudicially;

(d) foreclose the property judicially;

(e) file an ordinary civil action for exact fulfillment
further, whichever is the elected remedy, the mortgagor waives his right to
reimbursement of any amounts paid by him.

Sapinoso failed to pay several installment dues. His other payments were applied
almost all on the interest only. With this, Northern Motors filed this present complaint.

In the complaint, Northern Motors stated that it was availing itself of the remedy of
extrajudicial foreclosure, with a prayer for the issuance of writ of replevin upon filing a
bond. Should the mortgagor failed to deliver the car, then it be ordered to pay the
amount due plus 25% attorneys fees.

Subsequent to the commencement of the action but before filing an answer, Sapinoso
paid P1,250.

A writ of replevin was issued and served to Sapinoso together with the summons. The
next day, the sheriff seized the car and delivered to Northern Motor.

Sapinoso made an answer, stating that he has already paid so much for the car; and
that the value of the car is only P5,000; and that the reason for not being able to pay the
installment dues is because the car is defective, and that Northern failed to have it fixed
even though he had repeatedly called its attention. He also avered that he gave P700
to Northern to have the car fixed, but instead, Northern filed the instant suit. Sapinoso
prayed that the car be returned to him, and that he is willing to pay for it in a
compromise agreement.

The trial court finds that Northern has the right to the possession of the car, and that the
delivery of the car to him is ratified. But Northern has to return the P1,250 to Sapinoso
plus interest.

Northern made an appeal claiming that the court erred in ordering it to return the
P1,250. Under Art 1484 of the Civil Code, it is the exercise and not the election of
remedy of foreclosure that bars the creditor from recovering the unpaid balance of the

debt. Northern states that Sapinoso, in paying him before he files his answer, and by
not filing a counter-claim, effectively renounced any right he has to recover.

ISSUE: Whether Northern has to return the P1,250 paid to him by Sapinoso after
commencement of the present case but before the filing of Sapinosos Answer.

HELD: No obligation to return.

The trial court erred in concluding that the legal effects of the filing of the action was to
bar the plaintiff from accepting further payments on the promissory note.

That the ultimate object of the action is the foreclosure of the chattel mortgage, is of no
moment, for it is the fact of foreclosure and actual sale of the mortgaged chattel that bar
further recovery by the vendor of any balance on the purchaser's outstanding obligation
not satisfied by the sale.

In any event, what Article 1484(3) prohibits is "further action against the purchaser to
recover any unpaid balance of the price;" and although this Court has construed the
word "action" in said Article 1484 to mean "any judicial or extrajudicial proceeding by
virtue of which the vendor may lawfully be enabled to exact recovery of the supposed
unsatisfied balance of the purchase price from the purchaser or his privy", there is no
occasion at this stage to apply the restrictive provision of the said article, because there
has not yet been a foreclosure sale resulting in a deficiency.

The payment of the sum of P1,250.00 by defendant-appellee Sapinoso was a voluntary

act on his part and did not result from a "further action" instituted by plaintiff-appellant.

DISPOSITIVE: The judgment appealed from is modified by setting aside the portion
thereof which orders Northern Motors to pay Sapinoso the sum of P1,250.00.

89.
FILIPINAS INVESTMENT & FINANCE CORPORATION, plaintiff-appellant,
vs.
JULIAN R. VITUG, JR. and SUPREME SALES & DEVELOPMENT
CORPORATION, defendants-appellees
FACTS:

The defendant, Julian R. Vitug, executed and delivered to Supreme Sales and Devt a
promissory note in the amount of P14,605.00 payable in monthly installment; the
payment of the aforesaid amount which was the purchase price of a motor vehicle,
bought by Vitug from Supreme Sales, was secured by a chattel mortgage over such
automobile. On the same day, Supreme Sales negotiated the above-mentioned
promissory note in favor of Filipinas Investment & Finance Corporation, assigning
thereto all its rights, title and interests, the assignment including the right of recourse
against appellee. Defendant Vitug defaulted in the payment of part of the installment,
there being a provision in the aforesaid promissory note and chattel mortgage that
failure to pay the installments due would result in the entire obligation becoming due
and demandable, Filipinas demanded from Supreme Sales the payment of such
outstanding balance; in turn, Supreme Sales "authorized (Filipinas) to take such action
as may be necessary to enable (it) to take possession of the ... motor vehicle." Writ of
replevin duly obtained from the court, preparatory to the foreclosure of the mortgage,
but said writ became unnecessary because upon learning of the same, defendant Vitug
voluntarily surrendered the car to Filipinas.

the said car was sold at public auction, but the proceeds still left a deficiency of
P8,349.35, plus interest of 12% per annum from April 21, 1965. The above foreclosure
and sale notwithstanding, would hold Supreme Sales liable for the payment of such
outstanding balance, plus attorney's fees and costs.

The lower court granted the motion to dismissed filed by Supreme Sales on the ground
of no cause of action. CA aslo denied the motion for reconsideration hence this appeal.

Issue: Whether or not this provision regarding recourse contained in the agreement
between Filipinas and Supreme Sales violates the Recto Law which declares null and
void any agreement in contravention thereof

Held:
No. , The remedy presently being sought is not against the buyer of the car or the
defendant Vitug but against the seller, independent of whether or not such seller may
have a right of recovery against the buyer, which, in this case, he does not have under
the Recto Law. It is clear to Us, on the other hand, that under said law, what Congress
seeks to protect are only the buyers on installment who more often than not have been
victimized by sellers who, before the enactment of this law, succeeded in unjustly
enriching themselves at the expense of the buyers because aside from recovering the
goods sold, upon default of the buyer in the payment of two installments, still retained
for themselves all amounts already paid, in addition, furthermore, to other damages,
such as attorney's fees, and costs

it is precisely stipulated in effect, that the Filipinas Investment & Finance Corporation
had a right of recourse against the seller should the buyer fail to pay the assigned credit
in full.

The very fact that the assignee was given the stipulated right of recourse against the
assignor negates the idea that the parties contemplated to limit the recovery of the
assignee to only the proceeds of the mortgage sale

90.
G.R. No. L-43263

October 31, 1935

MANILA TRADING & SUPPLY CO., plaintiff-appellant,

vs.
E.M. REYES, defendant-appellee.
Facts:

On December 13, 1933 that is, subsequent to the enactment of Act No, 4122 E.M.
Reyes executed in favor of the Manila Trading & Supply Co., a chattel mortgage on an
automobile as security for the payment of the sum of P400, which Reyes agreed to pay
in ten equal monthly installments. As found by the trial judge, Reyes failed to pay some
of the installments due on his obligation. Thereupon the Manila Trading & Supply Co.,
proceeded to foreclose its chattel mortgage. The mortgaged property was sold at public
auction by the sheriff of the City of Manila for the sum of P200, After applying this sum,
with interest, costs, and liquidated damages to Reyes' indebtedness, the latter owed the
company a balance of P275.47, with interest thereon at the rate of 12 percent per
annum from February 19, 1934

When Reyes failed to pay the deficiency on the debt, the company instituted an action
in the Court of First Instance of Manila for the recovery thereof.
Defendant contended that defense that plaintiff, having chosen to foreclose its chattel
mortgage, had no further action against defendant for the recovery of the unpaid
balance owed by him to plaintiff, as provided by Act No. 4122. lower court sustained
defendant's defense and rendered a judgment absolving him from the complaint.
Hence this petition.
From this judgment, the plaintiff has taken an appeal and here contends that the lower
court erred in not declaring Act No. 4122 of the Philippine Legislature unconstitutional
for the following reasons: (1) in that it embraces more than one subject, (2) in that it
unduly restrains the liberty of a person to contract with respect to his property rights, (3)
in that it is class legislation, and (4) in that it denies vendors and lessors of personal
property the equal protection of the laws.

Issue: Wether or not the petitioner can still claim the deficiency of the amount to be paid
to him by Reyes.

Held:
No. Manila Trading can no longer collect the deficiency.

The Chattel Mortgage Law did not expressly provide for a deficiency judgment upon the
foreclosure of a mortgage.
Three remedies are available to the vendor who has sold personal property on the
installment plan. (1) He may elect to exact the fulfillment of the obligation. (Bachrach
Motor Co. vs. Millan, supra.) (2) If the vendee shall have failed to pay two or more
installments, the vendor may cancel the sale. (3) If the vendee shall have failed to pay
two or more installments, the vendor may foreclose the mortgage, if one has been given
on the property. The basis of the first option is the Civil Code. The basis of the last two
options is Act No. 4112, amendatory of the Civil Code. And the proviso to the right to
foreclose is, that if the vendor has chosen this remedy, he shall have no further action
against the purchaser for the recovery of any unpaid balance owing by the same. In
other words, as we see it, the Act does no no more than qualify the remedy.
We rule that Act No. 4122 is valid and enforceable. As a consequence, the errors
assigned by the Manila Trading are overruled, and the judgment affirmed, the costs of
this instance to be taxed against the losing party.

91.
G.R. No. L-24772

May 27, 1968

RUPERTO
G.
CRUZ,
ET
AL., plaintiffs-appellees,
vs.
FILIPINAS INVESTMENT and FINANCE CORPORATION, defendant-appellant.
Facts:
That on July 15, 1963, plaintiff Ruperto G. Cruz purchased on installments, from the Far
East Motor Corporation, one (1) unit of Isuzu Diesel Bus, for P44,616.24, payable in
installments of P1,487.20 per month for thirty (30) months and executed a negotiable
promissory note in the sum of P44,616.24 and the said motor vehicle was mortagaed to
secure payment. Because no DP was made, another mortgaged was executed on a
parcel of land owned by plaintiff Felicidad Vda. de Reyes, together with the building.
on July 15, 1963, the Far East Motor Corporation for value received indorsed the
promissory note and assigned all its rights and interest in the Deeds of Chattel
Mortgage and in the Deed of Real Estate Mortgage to Filipinas Investment & Finance
Corporation, with due notice of such assignment to the plaintiffs.

That by reason of Cruz's default, Filipinas Investments foreclose the chattel mortgage
on the bus; that said vehicle had been damaged in an accident while in the possession
of plaintiff Cruz;
That the proceeds of the sale of the bus were not sufficient to discharge fully the
indebtedness of plaintiff Cruz to the defendant
Preparatory to foreclosing its real estate mortgage on Mrs. Reyes' land, defendant paid
the mortgage indebtedness of Mrs. Reyes to the Development Bank of the Philippines
Reyes through counsel, wrote a letter to the defendant asking for the cancellation of the
real estate mortgage on her land, but defendant did not comply with such demand.
That at the request of the plaintiffs (Reyes and Cruz), the provincial Sheriff of Bulacan
held in abeyance the sale of the mortgaged real estate pending the result of this action.
ISSUE:
Whether defendant, which has already extra judicially foreclosed the chattel mortgage
executed by the buyer, plaintiff Cruz, , may also extra judicially foreclose the real estate
mortgage constituted by plaintiff Mrs. Reyes on her own land, as additional security for
the remaining unpaid balance of Cruz.
HELD:
Yes.
There is no controversy that, involving as it does a sale of personal property on
installments, the pertinent legal provision in this case is Article 1484 of the Civil Code of
the Philippines, 2 which reads:
ART. 1484. In a contract of sale of personal property the price of which is payable
in installments, the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he
shall have no further action against the purchaser to recover any unpaid balance
of the price. Any agreement to the contrary shall be void.

But, the contention that by the proviso of Article 1484 of the Civil Code is only the right
to recover "against the purchaser", and not a recourse to the additional security put up,
not by the purchaser himself, but by a third person is without merit. To sustain
appellant's argument is to overlook the fact that if the guarantor should be compelled to
pay the balance of the purchase price, the guarantor will in turn be entitled to recover
what she has paid from the debtor vendee (Art. 2066, Civil Code) ; so that ultimately, it
will be the vendee who will be made to bear the payment of the balance of the price,
despite the earlier foreclosure of the chattel mortgage given by him. Thus, the protection
given by Article 1484 would be indirectly subverted, and public policy overturned.
Thus, plaintiff-appellee Felicidad Vda. de Reyes to reimburse to defendant-appellant
Filipinas Investment & Finance Corporation the sum of P2,148.07, with legal interest
thereon from the finality of this decision until it is fully paid.

92.) Filipina Investment & Finance Corporation v Vitug

Facts:
The defendant, Julian R. Vitug, executed and delivered to appellee a promissory note in
the amount of P14, 605.00 payable in monthly installments. The payment of the
aforesaid amount was the purchase price of a motor vehicle, a 4-door Consul sedan,
bought by said defendant from Supreme Sales was secured by a chattel mortgage over
such automobile. On the same day, appellee negotiated the above-mentioned
promissory note in favor of appellant Filipinas Investment & Finance Corporation,
assigning thereto all its rights, title and interests to the same, the assignment including
the right of recourse against appellee. Vitug defaulted in the payment of part of the
installment which fell due on January 6, 1965, as well as the subsequent three
consecutive monthly installments.There is a provision in the aforesaid promissory note
and chattel mortgage that failure to pay the installments due would result in the entire
obligation becoming due and demandable. Appellant demanded from appellee the
payment of such outstanding balance. Vitug voluntarily surrendered the car to appellant;
thereafter, the said car was sold at public auction, but the proceeds still left a deficiency
of P8,349.35, plus interest of 12% per annum from April 21, 1965; and appellant, the
above foreclosure and sale notwithstanding, would hold appellee liable for the payment
of such outstanding balance, plus attorney's fees and costs.
Issue:
Whether or not this provision regarding recourse contained in the agreement between
Filipinas Investment and Supreme Sales violates the Recto Law which declares null and
void any agreement in contravention thereof
Ruling:

The transaction between appellant and appellee was purely an ordinary discounting
transaction whereby the promissory note executed by defendant Vitug was negotiated
by appellee in favor of appellant for a valuable consideration at a certain discount,
accompanied by an assignment also of the chattel mortgage executed by said
defendant to secure the payment of his promissory note and with the express stipulation
that should there be any deficiency, recourse could be had against appellee. Stated
otherwise, the remedy presently being sought is not against the buyer of the car or the
defendant Vitug but against the seller, independent of whether or not such seller may
have a right of recovery against the buyer, which, in this case, he does not have under
the Recto Law. On the other hand, that under said law, what Congress seeks to protect
are only the buyers on installment who more often than not have been victimized by
sellers who, before the enactment of this law, succeeded in unjustly enriching
themselves at the expense of the buyers

93.) Macondray& Co v Estaquijo

Facts:
The plaintiff sold the defendant a De Soto car, Sedan, for the price of which, P595, he
executed in its favor the note of May 22, 1934. Under this note, the defendant undertook
to pay the car in twelve monthly installments, with 12 percent interest per annum, and
likewise agreed that, should he fail to pay any monthly installment together with interest,
the remaining installment would become due and payable, and the defendant shall pay
20 per cent upon the principal owning as attorney's fees, expenses of collection which
the plaintiff might incur, and the costs. To guarantee the performance of his obligation
under the note, the defendant on the same date mortgaged the purchased car in favor
of the plaintiff, and bound himself under the same conditions stipulated in the not. The
defendant paid P43.75 upon the first installment, and thereafter failed to pay any of the
remaining installments. In accordance with the terms of the mortgage, the plaintiff called
upon the sheriff to take possession of the car, but the defendant refused to yield
possession thereof, whereupon, the plaintiff brought the replevin sought and thereby
succeeded in getting possession of the car. The car was sold at public auction to the
plaintiff for P250. According to the liquidation filed by the plaintiff, the defendant was still
indebted in the amount of P342.20, interest at 12 per cent.
The plaintiff brought the action against the defendant to obtain the possession of an
automobile mortgaged by the latter, and to recover the balance owing upon a note
executed by him, the interest thereon, attorney's fees, expenses of collection, and the
costs. The defendant was duly summoned, but he failed to appear or file his answer,
wherefore he was declared in default and the appealed judgment was rendered
accordingly. The plaintiff claims that the court erred in dismissing the complaint and
using Act No. 4122 as basis for its judgment.

Issue:
Whether or not Act No. 4122 is invalid because it takes property without due process of
law, denies the equal protection of the laws, and impairs the obligations of contract
Ruling:
No. Three remedies are available to the vendor who has sold personal property on the
installment plan. (1) He may elect to exact the fulfillment of the obligation. (2) If the
vendee shall have failed to pay two or more installments, the vendor may cancel the
sale. (3) If the vendee shall have failed to pay two or more installments, the vendor may
foreclose the mortgage, if one has been given on the property. The basis of the first
option is the Civil Code. The basis of the last two option is Act No. 4122, amendatory of
the Civil Code. And the proviso to the right to foreclose is, that if the vendor has chosen
this remedy, he shall have no further action against the purchaser for the recovery of
any unpaid balance owing by the same. In other words, as we see it, the Act does no
more than qualify the remedy.

94.) Jestra Development and Management Corporation v Pacifico

Facts:
Daniel Ponce Pacifico (Pacifico) signed a Reservation Application with Fil-Estate
Marketing Association for the purchase of a house and lot located at Lot 28, Block 3,
Phase II, Jestra Villas, Barangay La Huerta, Municipality of Paraaque, Metro Manila
(the property), and paid the reservation fee of P20,000. The total purchase price of the
property was P2, 500,000, and the down payment equivalent to 30% of the purchase
price or P750, 000 was to be paid interest-free in six monthly installments. As the P20,
000 reservation fee formed part of the down payment, the monthly installment on the
down payment was fixed at P121, 666.66.
Pacifico had fully paid the 30% down payment, and by December 4, 1997, he had paid
a total of P846, 600, P76, 600 of which Jestra applied as penalty charges for the
belated settlement of the down payment. Due to sudden financial difficulties, Pacifico
informed Jestra that he would like to suspend payments of installments. Jestra denied
the request and thereafter sent Pacifico a notice of cancellation exercising its right to
cancel the contract to sell.
Pacifico filed a complaint before the Housing and Land Use Regulatory Board (HLURB).
the Housing and Land Use Arbiter held Jestra liable for failure to comply with Section 3
of Republic Act (RA) No. 6552 (Realty Installment Buyer Protection Act) requiring

payment by the seller of the cash surrender value of the buyers payments. Hence, this
petition.
Issue:
Whether or not RA 6552 (Maceda Law) correctly applied by the court
Ruling:
No. As respondent failed to pay at least two years of installments, he is not, under
Section 3 of RA No. 6552, entitled to a refund of the cash surrender value of his
payments. What applies to the case instead is Section 4 of the same law. Sec 4. In case
where less than two years of installments were paid, the seller shall give the buyer a
grace period of not less than sixty days from the date the installment became
due.Respondent admits that under the restructured scheme, the first installment on the
70% balance of the purchase price was due on January 5, 1998. While he issued
checks to cover the same, the first two were dishonored due to insufficiency of
funds.While respondent was notified of the dishonor of the checks, he took no action
thereon, hence, the 60 days grace period lapsed. Respondent made no further
payments thereafter. Instead, he requested for suspension of payment and for time to
dispose of the property to recover his investment.

95.) Lagandaon v CA
Facts:
On different dates specified herein below, Pacweld Steel Corporation (Pacweld) a now
defunct domestic corporation executed in favor of present defendants herein a Contract
to Sell pieces of lots payable in installment. Defendant-purchasers deferred/refused in
their payment of the monthly amortization to Pacweld. Lorenzo V. Lagadaon, then
President of Pacweld, decided to undertake the development of the bought areas.
Defendants/Purchasers, together with other lot buyers filed an action for Specific
Performance with the then Court of First Instance of Manila.
In its decision, the trial court held that petitioners "cannot base their acts on [an] alleged
modified contract to sell, which this Court believes to be non-existent not only physically
but also legally. The CA affirmed the decision of the trial court.
Issue:
Whether or not the Honorable Court of Appeals erred in finding that petitioners have no
right to ask for rescission of the various contracts to sell on the basis of the modified
contract (verbal) to sell and erred in not applying RA 6522 (Maceda Law) in the given
case

Ruling:
No. The Maceda Law has no application to the present case. The policy of that law, as
embodied in its title, is "to provide protection to buyers of real estate on installment
payments." As clearly specified in Section 3, the declared public policy espoused by
Republic Act No. 6552 is "to protect buyers of real estate on installment payments
against onerous and oppressive conditions." In this case, petitioners did not buy the
property on installment; private respondents did. And thus, if the Maceda Law has any
relevance at all, it is to protect the said respondents, not the petitioners. Furthermore,
Section 3(b) 27 of the same law does not grant petitioners any legal ground to cancel the
contracts to sell; rather, it prescribes the responsibility of the seller in case the
"contract[s are] cancelled." Clearly, Respondent Court was correct in refusing to apply
the Maceda Law and in not cancelling the contracts to sell.

96.
OLYMPIA HOUSING, INC., petitioner,
vs.
PANASIATIC TRAVEL CORPORATION and MA. NELIDA GALVEZ-YCASIANO,
respondents.

FACTS:
On August 8, 1984, plaintiff and defendant Ma. Nelida Galvez-Ycasiano entered
into a Contract to Sell, whereby the former agreed to sell to the latter a condominium for
the agreed price of P2,340,000.00 payable in installments of P33,657.40 per month.
Pursuant to the Contract to Sell, defendant Ma. Nelida Galvez-Ycasiano made a
reservation/deposit in the amount of P100,000.00 on July 17, 1984 and 50% down
payment in the amount of P1,070,000.00 on July 19, 1984. Defendants made several
payments in cash and thru credit memos issued by plaintiff representing plane tickets
bought by plaintiff from defendant Panasiatic Travel Corp., which is owned by defendant
Ma. Nelida Galvez-Ycasiano, who credited/offset the amount of the said plane tickets to
defendants account due to plaintiff.
Plaintiff alleged that far from complying with the terms and conditions of said
Contract to Sell, defendants failed to pay the corresponding monthly installments which

as of June 2, 1988 amounted to P1,924,345.52. Demand to pay the same was sent to
defendant Ma. Nelida Galvez-Ycasiano, but the latter failed to settle her obligation.
For failure of defendant to pay her obligation plaintiff allegedly rescinded the
contract by a Notarial Act of Rescission and thus asking for recovery of possession
(accion publiciana).
The lower court and CA contended that the respondents should pay the
petitioner, including interests, the amount of P4,007,473.49 and this obligation is due
and demandable.

ISSUE :
Whether or not the contract to Sell was validly rescinded by virtue of
Notarial Act of Rescission.
RULING: No. The action for reconveyance filed by petitioner was predicated on an
assumption that its contract to sell executed in favor of respondent buyer had been
validly cancelled or rescinded. The records would show that, indeed, no such
cancellation took place at any time prior to the institution of the action for reconveyance.
What had been sent by petitioner to respondent was a letter, merely demanding
payment, and in case otherwise, the contract will be rescinded.
A careful study of the evidence presented does not show a notice of cancellation
or the demand for rescission of the contract by a notarial act. The plaintiff appears to be
claiming that the June 2, 1988 letter is a notice of cancellation or a demand for
rescission of the contract by a notarial act. This could not be what the law contemplates.
It should be a notice of cancellation or demand for rescission of the contract by notarial
act.
Further, the law requires also full payment of the cash surrender value to the
buyer but there is no evidence adduced by the plaintiff that they delivered to the
defendant the cash surrender value. Admittedly, no such full payment of the cash
surrender value to the defendant was made. A mere promise to return is not what the
law contemplates.
The governing law is Republic Act No. 6552, otherwise known as the Realty
Installment Buyer Protection Act, which has become effective since 16 September 1972.
Republic Act No. 6552 is a special law governing transactions that involve, subject to
certain exceptions, the sale on installment basis of real property. The law has been
enacted mainly to protect buyers of real estate on installment payments against onerous
and oppressive conditions.

98.

ANGEL VILLARICA and NIEVES PALMA GIL DE VILLARICA, petitioners,

vs.
THE COURT OF APPEALS, JULIANA MONTEVERDE, GAUDENCIO CONSUNJI and
JOVITO S. FRANCISCO, respondents.

FACTS: On May 19, 1951, the spouses Angel Villarica and Nieves Palma Gil de
Villarica sold to the spouses Gaudencio Consunji and Juliana Monteverde a lot situated
in the poblacion of the City of Davao, for the price of P35,000. On the same day, May
25, 1951, the spouses Consunji executed another public instrument, whereby they
granted the spouses Villarica an option to buy the same property within the period of
one year for the price of P37,750.
In February, 1953, the spouses Consunji sold the lot to Jovito S. Francisco for
the price of P47,000 by means of a public instrument of sale.
On April 14, 1953, the spouses Villarica brought an action in the Court of First
Instance of Davao against the spouses Consunji and Jovito S. Francisco for the
reformation of the instrument of absolute sale, into an equitable mortgage as a security
for a usurious loan of P28,000 alleging that such was the real intention of the parties.
Defendants answered that the deed of absolute sale expressed the real intention of the
parties and they also alleged a counterclaim for sums of money borrowed by the
plaintiffs from the Consunjis which were then due and demandable.
The lower court rendered its decision holding that the instrument of absolute
sale, was really intended as an equitable mortgage. However the Court of Appeals
reversed the decision of the lower court and rendered its decision finding that the public
instrument of absolute sale expressed the true intention of the parties.
ISSUE : Whether or not the document executed was a contract of sale or an equitable
mortgage.
RULING: It is a contract of Sale. The contention of the petitioner based on Article 1604
in relation to Articles 1602 and 1603 of the Civil Code lacks merit. The right of
repurchase is not a right granted the vendor by the vendee in a subsequent instrument,
but is a right reserved by the vendor in the same instrument of sale as one of the
stipulations of the contract. Once the instrument of absolute sale is executed, the
vendor can no longer reserve the right to repurchase, and any right thereafter granted
the vendor by the vendee in a separate instrument cannot be a right of repurchase but
some other right like the option to buy in the instant case.

99.
ANTONIA TORRES, assisted by her husband, ANGELO TORRES; and EMETERIA
BARING, petitioners,
vs.
COURT OF APPEALS and MANUEL TORRES, respondents.

FACTS: In 1969, sisters Antonia Torres and Emeteria Baring entered into a joint venture
agreement with Manuel Torres. Under the agreement, the sisters agreed to execute a
deed of sale in favor Manuel over a parcel of land, the sisters received no cash payment
from Manuel but the promise of profits (60% for the sisters and 40% for Manuel) said
parcel of land is to be developed as a subdivision.
Manuel then had the title of the land transferred in his name and he subsequently
mortgaged the property. He used the proceeds from the mortgage to start building
roads, curbs and gutters. Manuel also contracted an engineering firm for the building of
housing units. But due to adverse claims in the land, prospective buyers were scared off
and the subdivision project eventually failed.
The sisters then filed a civil case against Manuel for damages equivalent to 60% of the
value of the property, which according to the sisters, is whats due them as per the
contract.
The lower court ruled in favor of Manuel and the Court of Appeals affirmed the lower
court.
The sisters then appealed before the Supreme Court where they argued that there is no
partnership between them and Manuel because the joint venture agreement is void.
ISSUE: Whether or not there exists a partnership.
HELD: Yes. The joint venture agreement the sisters entered into with Manuel is a
partnership agreement whereby they agreed to contribute property (their land) which
was to be developed as a subdivision. While on the other hand, though Manuel did not
contribute capital, he is an industrial partner for his contribution for general expenses
and other costs. Furthermore, the income from the said project would be divided
according to the stipulated percentage (60-40). Clearly, the contract manifested the
intention of the parties to form a partnership. Further still, the sisters cannot invoke their
right to the 60% value of the property and at the same time deny the same contract
which entitles them to it.

At any rate, the failure of the partnership cannot be blamed on the sisters, nor can it be
blamed to Manuel (the sisters on their appeal did not show evidence as to Manuels
fault in the failure of the partnership). The sisters must then bear their loss (which is
60%). Manuel does not bear the loss of the other 40% because as an industrial partner
he is exempt from losses.

100.
MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA), petitioner,
vs.
THE HON. COURT OF APPEALS and VIRGINIA CHIONGBIAN, respondents.

FACTS: On April 16, 1952, the Republic, represented by the CAA, filed an expropriation
proceeding to the CFI of Cebu on several parcels of land in Lahug, Cebu City, which
included Lot 941, for the expansion and improvement of Lahug Airport.
In 1953, appellee Chiongbian purchased Lot 941 from its original owner, the original
defendant in the expropriation case. Subsequently, a TCT was issued in her name
Then in 1961, judgment was rendered in the expropriation case in favor of the Republic
which was made to pay Chiongbian an amount for Lot 941. Chiongbian did not appeal
therefrom. Thereafter, absolute title to Lot 941 was transferred to the Republic under a
TCT.
Then, in 1990, Republic Act No. 6958 was passed by Congress creating the MactanCebu International Airport Authority (MCIAA) to which the assets of the Lahug Airport
was transferred. Lot 941 was then transferred in the name of MCIAA under a TCT.
In 1995, Chiongbian filed a complaint for reconveyance of Lot 941 with the RTC of
Cebu, alleging, that sometime in 1949, the National Airport Corporation (NAC) ventured
to expand the Cebu Lahug Airport. As a consequence, it sought to acquire by
expropriation or negotiated sale several parcels of lands adjoining the Lahug Airport,
one of which was Lot 941 owned by Chiongbian. Since she and other landowners could
not agree with the NACs offer for the compensation of their lands, a suit for eminent
domain was instituted, before the then CFI of Cebu against 45 landowners, including

Chiongbian, entitled Republic of the Philippine vs. Damian Ouano, et al. It was finally
decided in favor of the Republic of the Philippines.
Some of the defendants-landowners appealed the decision to the CA which rendered a
modified judgment allowing them to repurchase their expropriated properties.
Chiongbian, on the other hand, did not appeal and instead, accepted the
compensation for Lot 941 upon the assurance of the NAC that she or her heirs would be
given the right of reconveyance for the same price once the land would no longer be
used as airport. However, no expansion of the Lahug Airport was undertaken by MCIAA
and its predecessors-in-interest. Thus, the purpose for which Lot 941 was taken
ceased to exist.
The RTC rendered judgment in favor of the respondent Chiongbian and MCIAA was
ordered to restore to plaintiff the possession and ownership of the property
denominated as Lot No. 941 upon reimbursement of the expropriation price paid to
plaintiff. The RD is therefore ordered to effect the Transfer of the Certificate Title from
the defendant to the plaintiff.
MCIAA appealed the decision to the CA which affirmed the RTC decision. MR was
denied hence this petition.
ISSUES:
1. WHETHER OR NOT THE CA ERRED IN UPHOLDING THE TRIAL COURTS
JUDGMENT THAT THERE WAS A REPURCHASE AGREEMENT AND IGNORING
PETITIONERS PROTESTATIONS THAT ADMISSION OF RESPONDENTS ORAL
EVIDENCE IS NOT ALLOWED UNDER THE STATUTE OF FRAUDS.
2. WHETHER OR NOT THE CA ERRED IN HOLDING THAT THE MODIFIED
JUDGMENT SHOULD INURE TO THE BENEFIT OF CHIONGBIAN EVEN IF SHE
WAS NOT A PARTY IN SAID APPEALED CASE, and in RULING THAT THE RIGHT OF
CHIONGBIAN TO REPURCHASE SHOULD BE UNDER THE SAME TERMS AND
CONDITIONS AS THE OTHER LANDOWNERS
3. Whether or not the abandonment of the public use for which Lot No. 941 was
expropriated entitles CHIONGBIAN to reacquire it.
RULING:
The Decision of the CA is hereby REVERSED and SET ASIDE. The complaint of
Chiongbian against the Mactan-Cebu International Airport Authority for reconveyance of
Lot No. 941 is DISMISSED.

1. CHIONGBIAN cannot rely on the ruling in Mactan Cebu International Airport vs. CA
wherein the presentation of parol evidence was allowed to prove the existence of a
written agreement containing the right to repurchase. Said case did not involve
expropriation proceedings but a contract of sale.
Under 1403 of the Civil Code, a contract for the sale of real property shall be
unenforceable unless the same, or some note or memorandum thereof, be in writing,
and subscribed by the party charged, or by his agent; evidence, therefore of the
agreement cannot be received without the writing or a secondary evidence of its
contents.
2. CHIONGBIAN cannot invoke the modified judgment of the Court of Appeals in the
case of Republic of the Philippines vs. Escao, et. al. where her co-defendants entered
into separate and distinct compromise agreements with the Republic of the Philippines
wherein they agreed to sell their land subject of the expropriation proceedings to the
latter subject to the resolutory condition that in the event the Republic of the
Philippines no longer uses said property as an airport, title and ownership of said
property shall revert to its respective owners upon reimbursement of the price paid
therefor without interest. MCIAA correctly points out that since CHIONGBIAN did not
appeal the judgment of expropriation and was not a party to the appeal of her codefendants, the judgment therein cannot redound to her benefit.
And even assuming that CHIONGBIAN was a party to the appeal, she was not a party
to the compromise agreements entered into by her co-defendants. A compromise is a
contract whereby the parties, by making reciprocal concessions, avoid litigation or put
an end to one already commenced. Essentially, it is a contract perfected by mere
consent, the latter being manifested by the meeting of the offer and the acceptance
upon the thing and the cause which are to constitute the contract. A judicial compromise
has the force of law and is conclusive between the parties and it is not valid and
binding on a party who did not sign the same. Since CHIONGBIAN was not a party
to the compromise agreements, she cannot legally invoke the same.
3. The answer to that question depends upon the character of the title acquired by the
expropriator which has the right to acquire property under the power of eminent
domain. If, for example, land is expropriated for a particular purpose, with the condition
that when that purpose is ended or abandoned the property shall return to its former
owner, then, of course, when the purpose is terminated or abandoned the former owner
reacquires the property so expropriated
If, upon the contrary, however, the decree of expropriation gives to the entity a fee
simple title, then, of course, the land becomes the absolute property of the
expropriator, whether it be the State, a province, or municipality, and in that case

the non-user does not have the effect of defeating the title acquired by the
expropriation proceedings.
101.
G.R. No. L-21160
April 30, 1965
FELISA TAYAO vs. PASCUALA DULAY, ET AL
Concept: Period to Exercise Right of Repurchase
Facts: On December 8, 1926, Apolonio Tayao executed in favour of Pascuala Dulay a
deed of sale with option to repurchase covering a parcel of land for a consideration of
P138.79. It was expressly agreed upon that the land object of the sale cannot be
repurchased during the first ten years following the execution of the sale although there
is nothing therein which limits the period within which the repurchase may take place. In
view of this failure to stipulate the time within which the repurchase may be made,
plaintiffs now contend that the said clause should be considered as non-existent being
contrary to law with the result that the contract has now become a mere evidence of
indebtedness.
Defendants argued that the document relied upon by the plaintiffs is not a mortgage but
a pacto de retro sale which, because of Tayao's failure to repurchase the property within
the period agreed upon, ripened into an absolute sale thereby vesting the ownership
and title of the property in Pascuala Dulay. Defendants finally claim that since the
execution of the document on December 8, 1926 the land had been in the possession
respectively of Pascuala Dulay and of spouses Primitivo Reyes and Anatalia Cayetano
continuously, openly, peacefully, adversely and in the concept of owner, having declared
the same in their names for taxation purposes and having paid religiously the taxes due
thereon. They pray that the complaint be dismissed.
After hearing, the court a quo dismissed the complaint. The case is now before us on
appeal taken the plaintiffs.
Issue: Whether the parties in a pacto de retro sale stipulate that the period to exercise
the right to repurchase shall start after 10 years from the execution of the sale.
Ruling: No. We think that the document is what it purports to be; and its character is not
changed by the fact that the stipulation as to the time when repurchase may be effected
contravenes the provisions of article 1508 of the Civil Code. When the stipulation in
question is examined, it will be discovered that the intention of the parties was to
suppress the exercise of the right of repurchase for the full period of ten years from the
date of the contract and, inferentially, to allow the exercise of that right after the
expiration of ten years. In the second paragraph of article 1508 of the Civil Code it is in
effect provided that if there should be an agreement with respect to the time of
repurchase, the period shall not exceed ten years. The stipulation under consideration
offends against this provision in two particulars, namely, (1) in providing that the right to

repurchase may be exercised after ten years shall have elapsed, and (2) in prohibiting
that the exercise of the same right during the whole period when, according to the
statue, it might be lawfully exercised. The stipulation is, therefore, illicit; and the result is
that of the right of repurchase could, in fact, under the second paragraph of article 1508
of the Civil Code, have been exercised in this case at any time after the making of the
contract and prior to the expiration of ten years.

102.
G.R. No. L-29512

January 17, 1929

ONG CHUA vs. EDWARD CARR

Concept: Reformation of Instrument to conform to the intention of parties.

Facts: Sometime prior to June 20, 1923, the spouses Teck sold their property to the
plaintiff, Ong Chua. Ong Chua executed a public document granting the spouses the
right to repurchase within four years from that date.
On July, 1925, Edward Carr came to Zamboanga, wanting to buy coconut lands. Carr
entered into negotiations with Ong Chua and Moore, a practising lawyer, and many
conversation took place in which Moore informed Carr that Teck and his wife had the
right to repurchase the property in question from Ong Chua and that such rights would
expire in June, 1927. Ong Chua stated to Moore that he consented to sell the properties
to Carr on the condition that the sale should be subject to the rights of spouses Teck to
have the property reconveyed to them and that said rights were to be respected by the
vendee. In order to accommodate a loan by Carr, Moore prepared the deed of sale in
such a form that Carr's title to the property purchased would appear to be absolute but
that Carr was to bear in mind that the rights of Teck and Lim still existed. However, Carr
did not respect the rights of Teck. When Teck offered to repurchase the property in
question from Ong Chua who thereupon demanded of Carr the reconveyance of the
property to the spouses, Teck and Lim, but Carr refused to do so, claiming that he had
an absolute title to said property.
Issue: Whether reformation of the deed of sale is justified.
Ruling: Yes. Plaintiff was anxious to protect the rights of redemption held by the parties
who sold the land to him. But the deed was written in the English language, with which
the plaintiff was unfamiliar, and he had to rely on the statements of Moore as to the
contents and effect of the deed and was told that the document was sufficient. He had
confidence in Moore, with whom he had previous business relations, and it was but
natural for him to believe Moore's statement.
Carr, on the other hand, knew the contents of the deed and fully agreed to Moore's plan
to place it in escrow until the expiration of the term for the repurchase or redemption of
the land. He, nevertheless, in violation of his own agreement, harassed Moore, then a

very sick man, into giving him possession of the deed prematurely. He took immediate
advantage of that circumstances and hastened to have the document presented to the
register of deeds for the issuance of certificates of title. It is elementary that such
conduct constitutes fraud and was calculated to obtain an unfair advantage over the
plaintiff.
Reformation will be given "where there is a mistake on one side and fraud or unfair
dealing on the other" (Devlin on Real Estate, 3d ed., par. 1238). That is this case, and it
follows that the suit for reformation may be maintained.

103.
G.R. No. L-26295 July 14,1978
SALVACION A. CATANGCATANG vs. PAULINO LEGAYADA

Concept: Non-payment of price does not affect running of redemption period.

Facts: On May 19, 1952, respondent executed in favor of petitioner a deed of sale
with pacto de retro, with a five-year period of redemption, over a parcel of land for a
consideration of P1400. Only P1200 was paid and the P200 was agreed to be paid on a
later date. Subsequently, petitioner found that the area of the land actually delivered to
her was smaller. Thus, she instituted Civil Case seeking the recovery of the area
allegedly withheld. On May 10, 1957, during the pendency of the aforementioned case,
respondent forcibly took back the possession of the land from petitioner. On May 19,
1957, the period for the repurchase of the land expired. The Court of First Instance of
Iloilo dismissed the complaint and it became final.
On June 29, 1957, petitioner instituted the present petition for consolidation of title and
restoration of possession. In his answer, Paulino Legayada admitted that on May 19,
1952, he, as vendor, executed a Deed of Sale with Right of Repurchase in favor of
petitioner but denied that he failed to repurchase the property on or before May 19,
1957 because on May 10, 1957 he took possession of the property "because the
redemption amount is already deposited in the hands of undersigned counsel to be
paid" to petitioner Salvacion Catangcatang.
The Court of First Instance of Iloilo, finding that respondent was not able to effect the
repurchase within the period stipulated, rendered judgment declaring title over the land
consolidated in the name of petitioner.
From the said decision, respondent appealed to the Court of Appeals, which in turn
reverse the decision of the trial court stating that the failure to pay the full purchase
price suspends the running of the period of redemption. Petitioner-vendee a retro failed
to pay land taxes during his possession of the land.
Issue: Whether failure to pay the remaining consideration suspended the running of the
period for redemption.

Ruling: No. The sale was consummated upon the execution of the document and the
delivery of the land subject matter thereof to the vendee, petitioner herein. It was a
perfectly valid agreement, and the non- payment of the balance of the purchase price
could not have the effect of suspending the efficacy of the provisions thereof. Moreover,
there was nothing whatsoever in the deed of sale to indicate that the agreement of the
parties was to suspend the running of the period of redemption until full payment of the
purchase price. On the contrary, said period was agreed to be five (5) years from the
date of the execution of the deed.
Furthermore, when tender of payment is not possible, consignation should be
made.

104.
G.R. No. 117501, July 8, 1997
SOLID HOMES, INC. vs. HON. COURT OF APPEALS

Concept: Failure to annotate the right of repurchase in the certificates of title is improper
thus null and void but does not amount to bad faith thus no award for damages.
And what constitutes redemption price.

Facts: Solid Homes executed a real estate mortgage in favor of State Financing to
secure the payment of a loan of P13M.
When the loan became due and payable, State Financing made repeated demands
upon Solid Homes for the payment but Solid Homes failed to do so. Thus, State
Financing filed a petition for extrajudicial foreclosure of the mortgages. However, Solid
Homes made representations and induced State Financing to forego with the
foreclosure of the real estate mortgages and a Dacion En Pago Agreement was agreed
upon between them. In the agreement, it was stipulated that Solid Homes has 180 days
to pay the loan and failure to do so shall automatically transfer the property as dacion
en pago without a need of executing any documents and thereafter, Solid Homes has
the right to repurchase within 10 months.
Subsequently, Solid Homes failed to pay within 180 days. In pursuance to the
agreement, State Financing registered the said Agreement with the Register of Deeds
which conveyed the property to State Financing and a new TCT was issued. State
Financing informed Solid Homes of the transfer of the properties and demanded Solid
Homes to turn over the possession but Solid Homes did not comply with the demand.
However, a day before the expiry date of its right to repurchase, Solid Homes filed an
action seeking the annulment of said Agreement and the consequent reinstatement of
the mortgages over the same properties. The trial court held that the Memorandum of
Agreement/Dacion En Pago executed by the parties was valid and binding, that the
failure to annotate the right of repurchase in the certificate without judicial order renders
the title null and void, and ordered the registration of said instrument in the Register of
Deeds in accordance with law and the agreement of the parties.
Issue: Whether failure to annotate the right of repurchase amounts to bad faith thus
granting the award for damages.

What constitutes redemption price.

Ruling: No. The only legal transgression of State Financing was its failure to observe
the proper procedure in effecting the consolidation of the titles in its name. But this does
not automatically entitle the petitioner to damages absent convincing proof of malice
and bad faith[19] on the part of private respondent and actual damages suffered by
petitioner as a direct and probable consequence thereof. In fact, the evidence proffered
by petitioner consist of mere conjectures and speculations with no factual
moorings. Furthermore, such transgression was addressed by the lower courts when
they nullified the consolidation of ownership over the subject properties in the name of
respondent corporation, because it had been effected in contravention of the provisions
of Article 1607 of the Civil Code. Such rulings are consistent with law and jurisprudence.
Neither can moral damages be awarded to petitioner. Time and again, we have held
that a corporation -- being an artificial person which has no feelings, emotions or
senses, and which cannot experience physical suffering or mental anguish -- is not
entitled to moral damages.
On the second issue, Art. 1616 of the Civil Code should be construed together with
Art. 1601 of the same Code which allows other stipulations which may have been
agreed upon. Thus, the redemption price shall include only those expenses relating to
the registration of the dacion en pago, but not the registration and other expenses
incurred in the issuance of new certificates of title in the name of State Financing.

105. PAEZ vs. MAGNO GR. No. L-793 March 27,1949

Facts: - Plaintiff and appellant borrowed from the defendant and appellee 4,000 pesos
in Japanese Military notes, with the promise to pay within a period of 4 years. - As a
security, a parcel of land was mortgaged in favor of the creditor. - On sept. 1944,
payment of this debt was offered and tendered, but was rejected by the creditor. - For
that reason, an action was filed, asking that the obligation be declared as already paid
and the deed of mortgage be cancelled. - Defendant filed a motion to dismiss upon the
ground that plaintiffs have no cause of action, there being no allegation that the thing
due was consigned in the court, as provided by law. - The motion was granted, this
appeal by the plaintiff.
Issue: Whether or not the motion is correct?
Ruling: - The order of dismissal is correct. - Art. 1176 of the CC provides that if a
creditor to whom tender of payment has been made should refuse without reason to
accept it, the debtor may relieve himself of the liability by the depositor of the thing due.
- According to art. 1177 in order that the depositor of the thing due may release the
obligor, previous notice thereof must be given to the persons interested in the

performance of the obligation. And consignation shall be made, according to art 1178,
by delivery to a judicial authority of the thing due, accompanied by proof of tender,
when required, and of notice of the depositor in other cases. - In the complaint, there is
no allegation that the amount of debt was consigned in court after tender of payment
had been made and rejected. Therefore, the debtor is not relieved of his liability.

106. TAPAZ vs. C.A. GR. No. L-22202 February 27, 1976
Facts: - The obstacles that had to be hurdled by petitioners in this certiorari proceeding
was an express finding therein that the transaction in question was one of an absolute
deed of sale. - Petitioners, as plaintiff in the lower court, were unsuccessful in their
action in their action to reform certain contracts so as to give them the character of
equitable mortgages merely. - They fared better in respondent CA, which ruled in their
favor insofar as two parcels of land were concerned. - Their plea was, however, denied
as to a third parcel, the lower court being upheld in its finding that there was an absolute
sale. - Nonetheless, petitioners would claim that an error was committed by such
tribunal in view of the Civil Code provision: However, the vendor may still exercise the
right to repurchase within thirty days from the time final judgment was rendered in a civil
action on the basis that the contract was a true sale with right to repurchase. - It was
noted in the exhaustive opinion that petitioners as plaintiff did not deny that the deed in
question clearly was on the absolute sale.
Issue: Whether or not there being an absolute deed of sale?
Ruling: - The vendor, in the language of Article 1606 of the CC, may still exercise the
right to repurchase within thirty days from the time the final judgment was rendered in a
civil action on the basis that the contract was a true sale with right to repurchase. - The
wording of the above provision is plain and explicit. - The transaction must be one of
pacto de retro. The law cannot be any clearer. That is what it says: the contract was a
true sale with a right to repurchase. - In the case at bar, the transaction is admittedly a
deed of sale and the stipulated period of redemption had expired. - It bears repeating
that here there can be no controversy as to the contract being one of absolute deed of
sale, pure and simple. - There could not even then be a period of redemption. In the
light of such pronouncements from this tribunal, it thus clearly appears that the petition
is without support of law.

107. CACHOLA vs. CA GR. No. 97822 April 7, 1992

Facts: - Respondent spouses mortgaged their property to Benjamin ocampo as security
for loan. - Failure to pay the loan, Ocampo caused the foreclosure and subsequent sale
of property at public auction. - Ocampo being the highest bidder purchase the property.
- The respondents were able to exercise their right of redemption within 1 year. - This
was made possible through loan obtained from petitioner, the late Mauricio Cachola

which was evidence by a kasunduan - The respondent spouses failed to pay six
months after and petitioner filed a complaint - The respondent filed a suit for annulment
of deed of sale and unlawful detainer judgment when property was conveyed by
Cachola to his son - Trial court ordered the cancellation for it found that it was an
equitable mortgage because of gross inadequacy of the price of sale. - On Appeal the
CA affirmed with modifications. Hence this, petition for review. - This court denied the
petition in a minute resolution. The court is convinced that the evidence is wanting to
substantiate the conclusion that a contract which in form and substance is a deed of
sale is actually an equitable mortgage. - However, after carefully reviewing the records
in view of the grounds raised in the motion for reconsideration, we gave due course.
Issue: Whether or not the contract involving the real property is one of sale or equitable
mortgage?
Ruling: - The words of the contract are cleat and leave no doubt as to the desire of the
spouses to transfer the property by way of sale to the petitioner. No other meaning
could be given to the terms and stipulations of the contract but their literal meaning. The
contract was proper in form. It was properly executed and signed by each of the
spouses and by Cachola. It was acknowledged by a notary public. - Considering that
the price of the deed was not extraordinary inadequate, that it was the vendee who paid
the reality taxes due on the property, and that the vendors were not the lawful
possessors thereof prior to their eviction, the court is constrained to uphold the validity
of the contract of sale in favor of petitioner Mauricio Cachola and subsequent donation
to son. That the registration of the deed of donation is valid. - The petition is hereby
granted.

108. ROMULO vs. SPS LAYUG GR. No. 151217 September 8, 2006

Facts: - Respondents herein obtain a loan from petitioner, to secure the payment of the
loan, respondents duped petitioners into signing a contract of lease and a deed of
absolute sale covering petitioners house and lot. - The Deed of absolute sale
purportedly facilitated the cancellation of petitioners title on the house and lot, thus
petitioner prayed for the nullification of the deed of absolute sale, the contract of lease
and the award of moral and exemplary damages. - Respondents denied, in their
answer, they vouched for the validity of the deed of absolute sale for the purpose of
extinguishing petitioners indebtedness to respondents. - Prior to the filing of civil case,
respondent filed an action for ejectment, he allege that petitioner violated the terms of
contract of lease and failed to pay the rental or exercise their option to repurchase the
house. - The trial court rendered judgment in favor of petitioner. - Respondents elevated
the matter to the CA, questioning among others the RTCs finding that the contract was
an equitable mortgage. The CA reversed and set aside the RTC decision, on the ground

that petitioners failed to present sufficient evidence to prove their allegation that their
signature were obtained fraudulently.
Issue: whether or not the transaction between the parties constitutes an equitable
mortgage?
Ruling: - The court has not hesitated to declare a purported contract of sale as an
equitable mortgage even when only one of the enumerated circumstances under article
1602 is prove. In the case at bar, petitioners remained in possession of the house and
lot even after the execution of the deed of absolute sale. Moreover, they remained in
possession of the property for more than the reasonable time that would suggest that
petitioners were mere lessees thereof. For one, it tool respondents more than five years
from the time of the execution of the deed of absolute sale and the contract of lease to
file an action for ejectment. Within this period, petitioners neither paid any rental nor
exercised the option to buy purportedly the leased property from respondents. - These
circumstances only support the conclusion that the parties never really intended to
transfer title to the property. Under parag. 2 of 1602, where the purported vendor
remains in possession of the property subject of the sale and it can be inferred that the
true intention of the parties was to secure an existing debt, the transaction shall be
deemed an equitable mortgage. - Wherefore the petition is granted.

109.
Cabales vs. CA
Facts:
RufinoCabales died on July 4, 1966 and left a 5,714-square meter parcel of land to his
surviving wife Saturnina and children Bonifacio, Albino, Francisco, Leonora, Alberto and
petitioner Rito.
On July 26, 1971, brothers and co-owners Bonifacio, Albino and Alberto sold the subject
property to Dr. CayetanoCorrompido for P2,000.00, with right to repurchase within eight
(8) years. The following month or on August 18, 1971, Alberto secured a note ("vale")
from Dr. Corrompido in the amount ofP300.00.
In 1972, Alberto died leaving his wife and son, petitioner Nelson.

Saturnina and her four (4) children Bonifacio, Albino, Francisco and Leonora sold the
subject parcel of land to respondents-spouses Jesus and AnunciacionFeliano
for P8,000.00. The Deed of Sale provided in its last paragraph, thus:
It is hereby declared and understood that the amount of TWO THOUSAND TWO
HUNDRED EIGHTY SIX PESOS (P2,286.00) corresponding and belonging to the Heirs
of Alberto Cabales and to RitoCabales who are still minors upon the execution of this
instrument are held in trust by the VENDEE and to be paid and delivered only to them
upon reaching the age of 21.
In 1988, Saturnina died. Petitioner Nelson, then residing in Manila, went back to his
fathers hometown in Southern Leyte. That same year, he learned from his uncle,
petitioner Rito, of the sale of subject property. In 1993, he signified his intention to
redeem the subject land.
Petitioners filed before the Regional Trial Court of Maasin, Southern Leyte, a complaint
for redemption of the subject land plus damages.
RTC ruled against petitioner.
CA modified decision of theRTC recognizing Nelson Cabales as co-owner but denied
him the right of redemption.
Issue: W/N petitioners may redeem the subject land from respondents-spouses?
Ruling: No.
The sale as to the undivided share of petitioner Nelson and his mother was not valid
such that they were not divested of their ownership thereto. Necessarily, they may
redeem the subject property from respondents-spouses. But they must do so within
thirty days from notice in writing of the sale by their co-owners vendors.
The Court is satisfied that there was sufficient notice of the sale to petitioner Nelson.
The thirty-day redemption period commenced in 1993, after petitioner Nelson sought
the barangay conciliation process to redeem his property. By January 12, 1995, when
petitioner Nelson filed a complaint for legal redemption and damages, it is clear that the
thirty-day period had already expired.
Petitioner Nelson, as correctly held by the Court of Appeals, can no longer redeem
subject property. But he and his mother remain co-owners thereof with respondentsspouses. Accordingly, title to subject property must include them.
Petition is DENIED.Decision of the CA is AFFIRMED with MODIFICATION.

110.
CASE 110- A case where the sale is absolute and is not one of pacto de retro or
equitable mortgage.
G.R. No. L-55350 March 28, 1983
OLIMPIA FERNANDEZ Vda.de ZULUETA (Substituted by JOSEFINA, LIBERTY and
GREGORIO all surnamed ZULUETA) petitioners,
vs.
ISAURO B. OCTAVIANO and AURELIO B. OCTAVIANO, respondents.
FACTS:
On 25 November 1952, Olimpia Fernandez Vda.deZulueta (Olimpia), the registered
owner of 5.5 hectares of riceland, covered by Transfer Certificate of Title No. T-7428,
sold the lot to private respondent Aurelio B. Octaviano (Aurelio), for P8,600.00 subject
to the following terms and conditions, to wit:
That for and in consideration of the sum of P8,600.00, Philippine currency, the
VENDOR sells, transfers, and conveys as it is hereby SOLD, TRANSFERRED AND
CONVEYED by way of ABSOLUTE AND DEFINITE SALE the aforementioned
described property in favor of the VENDEE;
That upon the execution of this instrument, VENDEE will pay unto the VENDOR the
amount of P2,000.00, Philippine Currency, and the VENDOR, has, by virtue of this
instrument acknowledged receipt of said payment;
That the remaining balance of P6,600.00, Philippine Currency, should be paid by the
VENDOR to a certain MAXIMINO GUMAYEN in the following manner, to wit:
the sum of P5,000.00, Philippine Currency, representing the redemption price of the
land aforementioned by virtue of a DEED OF SALE WITH PACTO DE RETRO the
VENDOR has executed in favor of said MaximinoGumayan on May 21, 1949 and the
sum of Pl,600.00, Philippine Currency, representing the redemption price of the land
aforementioned by virtue of a DEED OF MORTGAGE the VENDOR has executed in
favor of said MaximinoGumayan on May 8, 1950.
Relying on the express consent of Olimpia to sell the land and believing that she had
renounced the option granted her to repurchase the same, Aurelio negotiated with his
own brother, respondent Isauro, for the sale of the property sometime in 1954.
On 4 October 1971, Olimpia commenced suit for recovery of ownership and possession
of the subject land against the Octaviano brothers, both respondents herein. The trial
court ruled in her favor. When the Octaviano brothers appealed with the Court of

Appeals, that Tribunal reversed the findings of the Trial Court that the contract was a
sale with right of repurchase, ruled instead that the transaction between Olimpia and
Aurelio was an absolute sale, and declared Isauro the lawful and absolute owner of the
lot in question, hence, the petition.
ISSUE:
Whether or not the sale of Olimpia to Octavianopartakes the nature of retro de pacto.
RULING:
No. The nature of the transaction between Olimpia and Aurelio, from the context of
Exhibit "E" is not a sale with right to repurchase. Conventional redemption takes place
"when the vendor reserves the right to repurchase the thing sold, with the obligation to
comply with the provisions of Article 1616 and other stipulations which may have been
agreed upon". 5
In this case, there was no reservation made by the vendor, Olimpia, in the document
Exhibit "E". The "option to repurchase" was contained in a subsequent document and
was made by the vendee, Aurelio. Thus, it was more of an option to buy or a mere
promise on the part of the vendee, Aurelio, to resell the property to the vendor,
Olimpia. Neither is the contract between Olimpia and Aurelio one of the equitable
mortgage, which has been defined as "one in which although it lacks some formality,
form of words or other requisites, prescribed by a statute, show the intention of the
parties to charge a real property as security for a debt and contain nothing impossible or
contrary to law".
111.
CASE NO 109- An Instance where a pacto de retro sale is actually an equitable
mortgage.
G.R. No. 144882

February 04, 2005

LUISA BRIONES-VASQUEZ, petitioner,

vs.
COURT OF APPEALS and HEIRS OF MARIA MENDOZA VDA. DE
OCAMPO, respondents.

FACTS:
Under an agreement denominated as a pacto de retro sale, Maria Mendoza Vda. De
Ocampo acquired a parcel of land from Luisa Briones. The latter thereunder reserved

the right to repurchase the parcel of land up to December 31, 1970. Maria Mendoza
Vda. De Ocampo passed away on May 27, 1979. On June 14, 1990,
HipolitaOcampoPaulite and Eusebio Mendoza Ocampo, the heirs of Maria Mendoza
Vda. De Ocampo, filed a petition for consolidation of ownership, alleging that the seller
was not able to exercise her privilege to redeem the property on or before December
31, 1970. The trial court rendered a decision that such sale between De Ocampo and
Brionespartook the nature of pacto de retro. However, The Court of Appeals held that it
was one of equitable mortgage instead, and such decision had already become final
and executory. Petitioner filed a motion for Clarificatory judgment which was also
denied, hence, this petition.

ISSUE:
Whether or not the Court of Appeals acted with grave abuse of discretion amounting to
lack of jurisdiction in refusing to grant petitioners motion for clarificatory judgment.
RULING:
No. It must be noted, as narrated above, that the Decision of the Court of Appeals had
already become final and executory at the time that the motion for clarificatory judgment
was filed. With regards to final judgments, this Court has pronounced that:
nothing is more settled in the law than that when a final judgment becomes
executory, it thereby becomes immutable and unalterable. The judgment may no longer
be modified in any respect, even if the modification is meant to correct what is perceived
to be an erroneous conclusion of fact or law, and regardless of whether the modification
is attempted to be made by the Court rendering it or by the highest Court of the land.
The only recognized exceptions are the correction of clerical errors or the making of socalled nunc pro tunc entries which cause no prejudice to any party, and, of course,
where the judgment is void.
As a general rule, therefore, final and executory judgments are immutable and
unalterable except under the three exceptions named above: a) clerical errors; b) nunc
pro tunc entries which cause no prejudice to any party; and c) void judgments.

112.
Verdad vs. CA
GR. No. 109972

Facts: ZosimaVerdad is the purchase of a 248 sq. meter residential lot in Butuan City.
Socorro Cordero Vda. De Rosales seeks to exercise a Right of Redemption over the
subject property and traces her title to the late MacariaArtega, her mother-in-law who
dies intestate on March 8, 1956.
In an instrument, dated 14 June 1982, the heirs of Ramon Burdeos, namely, his widow
Manuela LegaspiBurdeos and children Felicidad and Ramon, Jr., sold to petitioner
ZosimaVerdad (their interest on) the disputed lot.
Socorro discovered the sale on 30 March 1987 while she was at the City Treasurer's
Office. On 31 March 1987, she sought the intervention of the LupongTagapayapa of for
the redemption of the property. She tendered the sum of P23,000.00 to Zosima. The
latter refused to accept the amount for being much less than the lot's current value of
P80,000.00.
No settlement having been reached before the LupongTagapayapa, private
respondents, on 16 October 1987, initiated against petitioner an action for "Legal
Redemption with Preliminary Injunction" before the Regional Trial Court of Butuan City.
RTC- The private respondents right to redeem the property had already lapsed.
CA Reversed RTCs decision declaring plaintiff-appelant, Socorro Rosales, entitled to
redeem the inheritance right or pro viso of Heirs or Ramon Burdeos Sr.

Issues:
(1) W/N the Right of Redemption arose in favor of Socorro Rosales, private respondent
(2) A written notice of sale to co-owner is mandatory.

Ruling:
(1) Yes. When their interest in the property was sold by the Burdeos heirs
to petitioner, a right of redemption arose in favor of private respondents;
thus: Art. 1619. Legal redemption is the right to be subrogated, upon the
same terms and conditions stipulated in the contract, in the place of one
who acquires a thing by purchase or dation in payment, or by any other
transaction whereby ownership is transmitted by onerous title.
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.

(2) Yes. 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.
All given, we find no error in the appellate court's finding that private respondents are
entitled to the redemption of the subject property.
WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals
is AFFIRMED. Costs against petitioner.
SO ORDERED.
113.
VILLANUEVA V. FLORENDO, G.R. NO. L-23374,9/30/1970

114.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. L-23374 September 30, 1970

TEOFILA FELICES, plaintiff-appellant,
vs.
FRANCISCO COLEGADO defendant-appellee.
Ezekiel S. Grageda for plaintiff-appellant.
Reyes and Dy-Liacco for defendant- appellee.

FACTS:

Felipe Felices died on November 5, 1938. The only property left by him was a
homestead located in Barrio Curry, Pili, Camarines Sur. Soon after his death, five of his
seven surviving children, namely, Marta, Maria, Teofila Silverio, and Pedro, all surnamed
Felices, physically partitioned among themselves the aforementioned homestead. On
February 24, 1949, Maria Felices sold her share to Roman Iriola with right of
repurchase (con pacto de retro).
Upon the insistence of Roman Iriola, the deed of conditional sale was signed by all the
brothers and sisters of Maria and soon after the execution of the deed Iriola took
possession of the above-described property.
Sometime, in 1951, Silverio Felices, Pedro Felices, Marta Felices and Maria Felices
agreed to sell absolutely to Francisco Colegado their respective shares in the
homestead for the total price of P8,500.00. Francisco Colegado advanced the amount
for the repurchase of Marias share from Roman Iriola.
When the repurchase price was offered to Roman Iriola, the latter refused to allow the
repurchase. The Felices brothers and sisters (Silverio, Pedro, Marta and Maria),
therefore, consigned the amount for the repurchase with the court .
On September 11, 1953, Maria, Marta, Silverio and Pedro, all surnamed Felices, and
Francisco Colegado finally executed a deed of absolute sale.
On June 19, 1954, a decision was rendered by the Court of First Instance of Camarines
Sur in Civil Case No. 1991 ordering Roman Iriola to allow Maria Felices to repurchase
the property that she had previously sold conditionally to him.
Upon payment by Francisco Colegado on August 21, 1962, of the sum of P2,053.61 to
the heirs of Roman Iriola, 2 as finally determined by the Court of Appeals, said heirs
surrendered the possession of the land to Colegado.

Shortly thereafter,Teofila Felices, thru her lawyer, addressed a letter to Francisco

Colegado informing him of her desire to redeem the parcel of land sold to him by Maria
Felices.
But this offer to redeem was refused by Francisco Colegado. Teofila Felices
commenced the present action against Francisco Colega, asserting that being a coowner defendant Colegado can be compelled to allow her to exercise the right of legal
redemption over that portion which her sister Maria Felices had conditionally sold to
Roman Iriola.

ISSUES:

Whether or not, under the facts stated in the foregoing paragraphs, plaintiff-appellant
can exercise the right of legal redemption of the land in question from defendantappellee, pursuant to the provisions of Article 1620 and/or Article 1088 of the Civil Code.
HELD:
As correctly held by the trial court, Article 1088 of the Civil Code has no application in
the present case because said article can only be availed of when a co-heir sells his
share before the partition of the hereditary estate. 5 That article refers to the hereditary
right itself, in the abstract sense, without specifying any particular portion, although the
proportionate participation of each co-heir is ascertainable. This article presupposes
that there has as yet been no distribution of the estate among the heirs, for the moment
such distribution has taken place, even in a state of pro-indiviso, the heirs ceased to be
considered simply as co-heirs, but they have thereby become coowners. 6 Consequently, if one of the owners sells his share to a stranger, a co-owner
may claim his right of redemption as a co-owner under Article 1620 of the Civil
Code, 7 not as a co-heir under Article 1088 of the same Code.
But in the instant case, We also find that plaintiff-appellant has no right to redeem the
property as co-owner under Article 1620 of the Civil Code. Co-ownership exists when
the ownership of an undivided thing or right belongs to different persons.
WHEREFORE, the decision appealed from is affirmed, with costs against plaintiffappellant. It is so ordered.

115.
(135 SCRA 270) 1985

116.
Ortega vs. Orcine
DOCTRINE:
It is evident that the purpose of the new Civil Code in allowing redemption of adjoining
urban land is to discourage speculation in real estate and the con sequent
aggravation of the housing problems incenters of population. It is clear that the
term urban in this provision does not necessarily refer to the nature of the land itself
sought to be redeemed nor to the purpose to which it is somehow devoted, but to the
character of the community or vicinity in which it is found. In this sense, even if
the land is somehow dedicated to agriculture, it is still u r b a n , i n
c o n t e m p l a t i o n o f t h i s l a w, i f i t i s l o c a t e d w i t h i n t h e c e n t e r o f
p o p u l a t i o n o r t h e m o r e o r l e s s populated portion of a city or town.
FACTS:
P e t i t i o n e r w a n t s t o r e d e e m t h e l a n d h e s o l d t o O rcine, which the latter
then sold to Esplana. When it was sold to Esplana, it was a mere rice field but
the latter had subdivided it into lots and is actuall y being occupied by a private
school. Petitioner invokes Art. 1622. He conceded that t h e l a n d w a s r u r a l
w h e n h e s o l d i t t o E s p l a n a b u t upon exercise of redemption it was already
urban. Hence, the reckoning point is at the time he seeks to exercise redemption.
ISSUE:
Wether or not petitioner can exercise a right of repurchase?

Held:
No.
The
intent
behind
the
law
is
to
encourage
agglomeration of tracts of land, basicall y to take advan t a g e o f
e c o n o m i e s o f s c a l e . C onsolidating small tracts of land with bigger
ones w a s m e a n t t o i m p r o v e a g r i c u l t u r a l p r o d u c t i v i t y. Since petitioners
land is urban, it is inconsistent with the policy behind the law..
Even
on
the
assumption
that
the
land
in
c o n t r o v e r s y i s u r b a n , s t i l l A r t i c l e 1 6 2 2 o f t h e present Civil Code
which is not invoked by appellant does not support this case. This court has
already emphasized in previous cases, that an owner of urban land may not redeem
an adjoining urban property where he does not allege in his co&plaint,mu c h l e s s
p r o v e a t t h e t r i a l , t h a t t h e l a t t e r i s s o small and so situated that a major
portion thereof cannot be used for any practical purpose within a r e a s o n a b l e
t i m e , h a v i n g b e e n b o u g h t m e r e l y f o r speculation.
In view, however, of the facts that the land of appellant is a school site and the one in
question has been filled with earth, developed and subdivided into small lots for
residential purposes, it is quite safe to conclude that both lands are in the populated
section of the town and are accordingly urban.
117.
FIRST GLOBAL REALTY AND DEVELOPMENT CORPORATION, petitioner, vs.
CHRISTOPHER SAN AGUSTIN
Facts:
The subject matter of the instant controversy is a parcel of land, including the house
built thereon, located at No. 3491 Honda St.,Bo. Pinagkaisahan, MakatiCity(subject
property). The subject property was previously covered by TCT No. 180235, dated
January 27, 1967, which was issued in the name of [herein respondents] mother, Lilian
Sales-San Agustin. [Respondent], together with his parents, brothers and sisters have
been in possession of the subject property since 1967 up to the present.
The records show that spouses Camacho succeeded in convincing petitioner to accept
a partial payment of P100,000.00 pesos upon the execution of a deed of absolute sale
in their favor over the subject property. The balance of P2.4 million pesos would be paid
once the title over the same was transferred in the name of spouses Camacho. The
latter agreement came about because spouses Camacho would use the subject
property to raise the amount of P2.4 million pesos, that is to say, they would secure a
loan from a bank or financial institution with the subject property as collateral.

On May 24, 1994, DBP released the subject property to petitioner upon full payment of
the latters outstanding loan. Thereafter, [respondent] executed a deed of sale in favor of
spouses Camacho, who in turn paid respondent] the amount of P100,000.00 pesos. On
May 26, 1994, TCT No. 194868 was issued in the name spouses Camacho.
It appeared that First Global Realty Development Corporation (FGRDC), [herein
petitioner], granted spouses Camachos loan application with the subject property as
collateral, in the amount of P1.190 million. However, despite receipt of the loan and
petitioners demand to pay the balance of the purchase price of the subject property,
spouses Camacho did not pay the same.
Sensing that [respondents] demand to pay fell on deaf ears, he filed a criminal
complaint for estafa against spouses Camacho. Unfortunately, the case did not prosper.
On June 28, 1996, Branch 143 rendered a decision ordering the foreclosure of the
subject property and the subsequent sale thereof at public auction. Spouses Camacho
did not file a motion for reconsideration of the said decision. Consequently, FGRDC filed
a motion for execution which was granted on February 7, 1997.
The sale of the subject property at public auction was, nevertheless, thrust aside in view
of the dacion en pagowhich spouses Camacho executed in favor of FGRDC. On April
29, 1997, the dacion en pagowas registered before the Register of Deeds of Makati
City, which paved the way for the issuance of TCT No. 209050 in the name of FGRDC.
Accordingly, on September 8, 1997, FGRDC demanded rentals from [respondent],
specifically [from] his mother, for the latters use of the subject property.
Apparently, on November 20, 1997, [respondent] filed a motion for intervention before
Branch 143,wherein he asked for the rescission of the deed of absolute sale/mortgage,
dacion en pagoand cancellation of FGRDCs title over the subject property.
However, finding the motion for intervention to be a futile undertaking, [respondent] filed
a separate complaint for rescission of the deed of absolute sale, annulment of the
dacion en pagoand cancellation of title and issuance of a new title with prayer for the
issuance of a temporary restraining order and/or a writ of injunction against FGRDC,
seeking to enjoin the latter from taking possession of the subject property.
RTC denied the application of respondent for a preliminary injunction to prevent
petitioner from evicting him from the subject property.Court of Appeals reversed the
RTC and granted the injunctive relief prayed for by respondent. It held that petitioner
should not be given possession of the property pendente lite,because it knew of the
agreement between respondent and the Camachos.
Issue:

Whether or not petitioner is a purchaser in good faith and for value; hence, entitled to
the possession of the litigated proper.
Held:
No. the records show that the dacion en pago signed in 1994 was registered only in
1997. It was executed in lieu of the foreclosure of the property when the Camachos
failed to pay their loan obligations. The amount stated in the dacion as consideration
was the P1,190,000 loan that they had obtained from petitioner. It is therefore strange
that the couple would buy a parcel of land for P2,500,000, obtain a loan to help finance
payment for the same, and finally cede the same property for an amount much lower
than that for which they purchased it. Moreover, by executing a dacion,the sellers
effectively waived the redemption period normally given a mortgagor.
In sum, we hold that respondent was able to show a prima facie right to the relief
demanded in his Complaint. The Camachos nonpayment of the purchase price agreed
upon and the irregularities surrounding the dacion en pago are serious enough to allow
him to possess the property pendente lite.
In addition, respondent has shown that to allow petitioner to take immediate possession
of the property would result in grave injustice. As we have stated above, the ownership
of the property, the validity of the sale between respondent and the Camachos and the
legitimacy of the dacion en pago executed by the latter in favor of petitioner are still
subject to determination in the court below. Furthermore, there is no question that
respondent has been in possession of the premises during all this time -- prior to and
during the institution of the Complaint. He and his family have long owned, possessed
and occupied it as their family home since 1967. To dispossess him of it now would
definitely alter the status quo to their detriment.
Indeed, justice and equity dictate that he should remain in possession of the property
pendente lite.

118.
Rural Bank of Davao City vs. CA
Topic: right of redemption in cases if the land is mortgaged to a rural bank
Facts:
Private respondents Gabriel Abellano and Francisca Sequitan obtained a loan in the
amount of 45,000 from petitioner, rural bank. As a security for the loan, private

respondents mortgaged with petitioner bank a parcel of land. Na t i o n a l H o u s i n g

Authority filed with the CFI a complaint for the expropriation
o f several parcels of land to carryout its Slum improvement and Resettlement
Program; said action was directed against private respondents, including the mortgaged
property, and 15 others. As mortgagee, petitioners were allowed to intervene. Failure to pay
their obligations the propert was extra judicially foreclosed and petitioner being the
highest bidder acquired the land.
A certificate of sale was registered in RD. Petitioner failed to redeem the foreclosed
property within the period of 2 years as provided by the Rural Banks Act. C F I i s s u e d
an order requiring NHA to payfor the properties expropriated.
P r i v a t e respondents notified petitioner on its desire to repurchase pursuant
to Public Land Act 141 but as a defense the right to repurchase had become moot
and academic. Private respondent amended the complaint since it is impossible to reacquire the
propertyby reason of expropriation justice demands that the said payment 490,000
must be given to them in lieu of the property expropriated. Trial Court favored plaintif, CA
affirmed. CA in its decision stated that Rural Banks Act did not reduce the period of
redemption of homestead land from 5 years prescribed bCA 141 .
Issue:
Wether or not CA 141 superseded Rural Banks Act.
Held:
The court ruled that when the property was expropriated, the property still belongs to
the plaintiff due to the 2years redemption period. On the basis of CA 141 and Rural
Banks Act in regards to the year of redemption between 5 years or 2 years since the
mortgaged property is a homestead covered by a Torrens title, the 5 year period
should apply. Also sec. 119 prevails over statutes which provide for a shorter
period of redemption in extra judicial foreclosure sales.
Note:
The rules on redemption in the case of an extra judicial foreclosure of land acquired
under free patent or homestead statutes:
If the land is mortgaged to a rural bank under RA. No. 720, as amended, the mortgagor
may redeem the property within 2 years from thed a t e o f f o r e c l o s u r e o r f r o m t h e
r e g i s t r a t i o n o f t h e s h e r i f f s c e r t i f i c a t e o f s a l e a t s u c h foreclosure if the
propert is not covered or is covered, respectively bya Torrens title.
If the mortgagor fails to exercise such right, he or his heirs may still
repurchase the propertywithin 5 years from the expiration of the 2 year redemption

period pursuant to Section 119 of the Public Land Act (C.A. NO. 141). If the land is
mortgaged to parties other than rural banks, the mortgagor may redeem the
propertywithin 1 year from theregistration of the certificate of sale pursuant to Act
No. 3135. If he fails to do so, he or his h e i r s m a y r e p u r c h a s e t h e
property within 5 years from the expiration of the redemption
period also pursuant to Section 119 of the Public Land Act.