51. CHRYSLER PHILIPPINES CORPORATION vs. CA & SAMBOK MOTORS CO.

(BACOLOD)
GR No. 55684, December 19, 1984

Facts: Petitioner is a domestic corporation engaged in the assembling and sale of motor vehicles and
other automotive products. Respondent Sambok Motors Co., a general partnership, during the period
relevant to these proceedings, was its dealer for automotive products with offices at Bacolod (Sambok,
Bacolod) and Iloilo (Sambok, Iloilo).

On October 2, 1970, Sambok, Bacolod, ordered from petitioner various automotive products
worth P30,909.61, payable in 45 days; that on November 25, 1970, petitioner delivered said products to
its forwarding agent, Allied Brokerage Corporation, for shipment; that Allied Brokerage loaded the goods
on board the M/S Doña Florentina, a vessel owned and operated by Negros Navigation Company, for
delivery to Sambok, Bacolod; that when petitioner tried to collect from the latter the amount of
P31,037.56, representing the price of the spare parts plus handling charges, Sambok, Bacolod, refused to
pay claiming that it had not received the merchandise; that petitioner also demanded the return of the
merchandise or their value from Allied Brokerage and Negros Navigation, but both denied any liability.In
its Answer, Sambok, Bacolod, denied having received from petitioner or from any of its co-defendants,
the automotive products referred to in the Complaint, and professed no knowledge of having ordered
from petitioner said articles.

Issue: Whether or not Sambok Bacolod bears the loss of the cargo for which it is liable in damages to
Chrysler.

Held: No, Sambok Bacolod cannot be faulted for not accepting or refusing to accept the shipment from
Negros Navigation four years after shipment.

It was found out that upon receipt of the Bill of Lading, Sambok Bacolod initiated, but did not
pursue steps to take delivery as they were advised by Negros Navigation that because some party were
missing, they would just be informed as soon as the missing parts were located. It was only four years
later that the said parts were found in their off-shore bodega but were already deteriorated and valueless.
The evidence is clear that Negros Navigation could not produce the merchandise nor ascertain its
whereabouts at the time Sambok, Bacolod, was ready to take delivery. Where the seller delivers to the
buyer a quantity of goods less than he contracted to sell, the buyer may reject them.

From the evidentiary record, Negros Navigation was the party negligent in failing to deliver the
complete shipment either to Sambok, Bacolod, or to Sambok, Iloilo, but as the Trial Court found,
petitioner failed to comply with the conditions precedent to the filing of a judicial action. Thus, in the last
analysis, it is petitioner that must shoulder the resulting loss. The general rule that before, delivery, the
risk of loss is home by the seller who is still the owner, under the principle of "res petit domino", is
applicable in petitioner's case.

In sum, the judgment of respondent Appellate Court, will have to be sustained not on the basis
of misdelivery but on non-delivery since the merchandise was never placed in the control and possession
of Sambok, Bacolod, the vendee.
52. KATIGBAK V CA (EVANGELISTA AND LUNDBERG)
4 SCRA 243

Facts: Katigbak, thru Lundberg, entered into agreement with Evangelista to purchase winch for
P12,000.00, payable at P5,000.00 upon delivery and the P7,000.00 w/in 60 days. As winch needed some
repairs, which could be done in shop of Lundberg, it was stipulated that amt necessary for repairs will be
advanced by Katigbak, deductible fr initial payment. Repairs were undertaken, P2,029.85 for spare parts
was advanced by Katigbak. For one reason, sale wasn’t consummated, Katigbak sued Evangelista,
Lundberg and the latter's company, for refund. The defendants filed separate answers, Lundberg
alleging non-liability for the refund since the same was purely a personal account between Katigbak and
Evangelista. Evangelista claimed that while there was an agreement and that Katigbak advanced the
payment for the spare parts, Katigbak refused to comply with his contract to purchase; that as a result,
he was forced to sell the winch to a third person for only P10,000.00, thus incurring a loss of P2,000.00,
which amount Katigbak should be ordered to pay, plus damages.

Issue: Whether or not vendee should be liable.

Held: Yes. The herein petitioner failed to take delivery of the winch, subject matter of the contract and
such failure or breach was, according to the Court of Appeals, attributable to him, a fact which is binding
upon this Court. The right to resell the equipment, therefore, cannot be disputed. It was also found by
the appellate court that in the subsequent sale of the winch to a third party, the vendor thereof lost
P2,000.00, said difference to be borne by the supposed vendee who failed to take delivery and/or pay the
price.
53. BORROMEO VS FRANCO
5 PHIL 49

Facts: On April 19, 1902, the Francos executed a contract to sell their property to Borromeo wherein the
latter was given six months from the execution of the instrument to arrange and complete the
documents and papers relating to the said property. On January 7, 1903, Borromeo filed a complaint
praying that defendants be compelled to sell to him the property in question under the terms of the
contract. He had already taken steps to complete the documents and papers relating to the property but
he was unable to complete it. The Francos answered and asked that the complaint be dismissed for
Borromeo failed to comply with the condition of completing the documents a and papers related to the
property.

Issue: Whether or not petitioner can demand fulfillment from the respondent.

Held: The Court held that the contract in question is a bilateral one containing mutual obligations and
the fulfillment of which may be demanded. The failure of the petitioner to complete the documents and
papers related to the property is not an essential part of the contract and cannot be an obstacle for the
fulfillment thereof. The obligation to buy the property is correlative with the obligation to sell it. The
obligation of Borromeo to perfect the papers of the property is not correlative with the obligation to sell
the property. These obligations do not arise from the same cause. They create no reciprocal rights
between the contracting parties; so that the failure to comply with this stipulation does not give the
defendants the right to cancel the obligation which they imposed upon themselves in accordance with
Article 1191 of the Civil Code, since no real juridical bilaterality or reciprocity existed between the two
obligations. One obligation is entirely independent of the other.
54. Tan Leonco vs Go Inqui
8 PHIL 531

Facts:
The plaintiff had delivered a quantity of hemp into the warehouse of the defendant. The defendant drew
a bill of exchange in the sum of P800, representing the price which had been agreed upon for the hemp
thus delivered. Prior to the presentation of the bill for payment, in said case, the hemp was destroyed.
Whereupon, the defendant suspended payment of the bill.

Issue:

Whether or not the draft or check presented is considered as a bill of exchange.

Held:
It was alleged that the said bill of exchange, after being presented to the drawee in Manila, was
not protested and that there is some question of the right of the p[plaintiff to recover upon said bill of
exchange without the same having been duly protested. The action was not brought upon the bill of
exchange; the bill of exchange was used only as evidence of the indebtedness. We believe, however, that
inasmuch as the defendant had himself ordered the drawee not to pay the said bill of exchange, that
protest and notice of nonpayment under these conditions was unnecessary in order to render the drawer,
or defendant in this case, liable.
55. THE ASIATIC PETROLEUM COMPANY VS. THE INSULAR COLLECTOR OF INTERNAL REVENUE
GR No. 12687, August 27, 1918 38 PHIL 510

Facts:

The defendant, under threat of penalty, compelled the plaintiff to pay the internal revenue tax provided
for under above said section of Act No. 2432 upon all such oils which the plaintiff had on hand on the first
day of January, 1915, whether or not the same had been sold theretofore or not. The tax was paid under
protest.

The plaintiff contends that the tax collected was illegal, for the reason that the law had expressly relieved
him from the necessity of paying the same on all such oils which he had "disposed of to consumers or
persons other than manufacturers or wholesale dealers, prior to January 1, 1915"; that inasmuch as he
had made a valid and legal sale of such oils before January 1, 1915, even though the same had not been
actually delivered, they had been "disposed of," and he was therefore relieved from the necessity of
paying the tax imposed by said Act (No. 2432, section 17). No contention is made that the oils "disposed
of" had been "disposed of" to "manufacturers or wholesale dealers."

Issue:

Whether or not a dealer is required to pay the internal revenue tax, provided for under section 17,
(paragraph 72a) of Act No. 2432, upon mineral oils, composed of kerosene and gasoline which had been
sold, but not delivered, prior to the first day of January, 1915.

Held:

Section 17 (paragraph 72a) of Act No. 2432, among other things, provides that "no tax (imposed by this
law) shall be collected on such articles which, before the taking effect of this Act, shall have been disposed
of to consumers or persons other than manufacturers or wholesale dealers." Said Act took effect upon
the first day of January, 1915.

Considering the provisions of said quoted section, it is clear that the plaintiff could not be compelled to
pay the tax imposed by said Act upon mineral oils which had been disposed of to consumers or persons,
etc., prior to the first day of January, 1915. That being true, the question is presented, were the oils in
question which plaintiff had sold, but which he had not delivered, prior to the first day of January, 1915,
"disposed of" so as to relieve him from the necessity of paying the tax? No question is raised as to oils
sold and delivered prior to January 1, 1915.

This question involves an interpretation of the phrase "disposed of" as used in said section. If it means
that the vendor must "sell and deliver," then the oils in question were not "disposed of." If, upon the other
hand, the phrase means simply that the vendor has "sold," then the oils in question were "disposed of."
If the Legislature had intended that the phrase "disposed of" meant "sold and delivered," it is strange that
it did not use the latter phrase. The Legislature evidently took into consideration the custom of
merchants in their use of the phrase "disposed of." That phrase is used in the law evidently in its
commercial sense and not in a technical sense. Words and phrases, which are in common use among
merchants and are found in a law, should not be given a new and strange interpretation, but should be
given that meaning which generally is given and accepted, in the community where the law applies and
where the word or phrase has been in common use.
56. AUYONG HIAN vs COURT OF TAX APPEALS
GR No. L-28782 November 27, 1981

Facts:

On December 30, 1961, 600 hogsheads of Virginia leaf tobacco arrived in the Port of Manila. As the
Import Control Law was already expired, the Collector of Customs in Manila refused to release the
shipment of the subject goods. The shipment was then, declared illegal upon the ground that the
importation was made long after the expiration of the effectivity of the Import Control Law and that the
importation contravened the government policy as declared in Republic Acts 698 and 1194. The goods
were declared forfeited to the government and its sale was ordered for public auction which the CTIP
took advantage of. The petitioner prayed for several errors by the CTA. One of them is the petitioner’s
contention that the sale to the CTIP was invalid on ground that the amount paid by the CTIP was
insufficient in respect with the petitioner’s claim that the goods’ value was Php 7,000,000 and what CTIP
paid was only Php 1,500,000.

Issue:

Whether the sale of the tobacco from the public auction to STIP was invalid.

Held:

No. The sale of the tobacco from the public auction to CTIP was valid. Even if the consideration paid
forthe forfeited tobacco was inadequate, such inadequate consideration is not a ground for the invalidity
of a contract. Article 1355 of the Civil Code provides the law for this matter. It was not shown that the
instant sale is a case exempted by law from the operation of the aforementioned Article; neither has the
petitioner shown that there was fraud, mistake or undue influence in the sale. Therefore, the SC can only
conclude with the CTA that “In these circumstances, we find no reason to invalidate the sale of said
tobacco to CTIP.”
57. LEOQUINCO VS POSTAL SAVINGS BANK
GR No. 23630, August 25, 1965 47 PHIL 772

Facts:
Leoquinco alleged that he was the highest bidder at a public auction held by the Postal Savings Bank for
the sale of a piece or parcel of land belonging to the Bank, having offered P27,000 for said property. In
Resolution No. 31 of the board of directors of the Bank, authorizing the sale of said property at public
auction, as well as in the public notice announcing said sale, the board of directors has expressly reserved
to themselves the right to reject any and all bids. As such highest bidder at said auction, he wrote a letter
to the PSB, advising that he was ready to tender payment for the land as soon as the deed of sale of the
same in his favor is executed and delivered by the PSB. PSB refused to execute the deed in spite of
requests made therefor by him. PSB alleged that in Resolution No. 31 of the board of directors,
authorizing the sale at public auction of the property in question, as well as in the notice announcing said
sale, they expressly reserved to themselves "the right to reject any and all bids," and that they never
accepted the bid or offer of Leoquinco.

Issue:
Whether or not Leoquinco may compel PSB accept his offer and to execute a deed of sale of the land in
his favor.

Held:
No. In the resolution adopted by the board of directors authorizing the sale at public auction of the land,
as well as in the notice announcing the auction, the PSB had expressly reserved to themselves the right
to reject any and all bids. By taking part in the auction and offering his bid, Leoquinco voluntarily
submitted to the terms and conditions of the auction sale, announced in the notice, and clearly
acknowledged the right so reserved to PSB. PSB, making use of that right, rejected his offer. Clearly, the
Leoquinco has no ground of action to compel them to execute a deed of sale of the land in his favor, nor
to compel them to accept his bid or offer. The owner of property offered for sale at auction has the right
to prescribe the manner, conditions and terms of sale, and where these are reasonable and are made
known to the buyer, they are binding upon him, and he cannot acquire a title in opposition to them, and
against the consent of the owner. Therefore, the sentence appealed from should be and is hereby
affirmed.
58. THE FIDELITY AND DEPOSIT COMPANY OF MARYLAND vs WILLIAM A. WILSON, ET AL.
GR No. 2684, March 15, 1907 8 PHIL 51

Facts:
Wilson, is a disbursing officer in the Philippines, he took money, sureties, and funds, then fled to Canada.
When he was caught, several lawsuits were filed against him intercorrelating each complaint. The
American Company of New York became sureties on the official bond of Wilson for the sum of USD
15,000. Wilson defaulted USD 8,931.80, so the surety companies paid half from each of them to the
Government. His funds were placed in a depositary named by the court to take care of the money. A
little earlier before the complaint was filled, Wilson transferred the funds to Terrell, in payment of his
debt for the professional services already rendered.
Since the funds were under the possession of the Treasurer entrusted with the depository, the transfer
could not have been made since, , it would have been necessary that the delivery of the funds had been
made directly Terrell, which fact has not been proved at any time. But Terrell never claimed that the
delivery was ever made, he only claims that the ownership thereof should be derived to him, not thru the
fact of delivery but thru the very fact of the transfer and of his subsequent notification to Treasurer
Baranagan, although, it is very clear that such notification does not constitute, in any manner, the fact of
delivery as established by articles 1462, 1463, and 1464 of the Civil Code, all of which cover, in full this
subject-matter.

Issue:
Whether or not Terrell and The Fidelity and Deposit Company of Maryland,should claim ownership of the
funds in accordance to Art 609 of the Civil Code.

Held:
" In conformity with said doctrine as established in paragraph 2 of article 609 of said code, that "the
ownership and other property rights are acquired and transmitted by law, by gift, by testate or intestate
succession, and, in consequence of certain contracts, by tradition." And as the logical application of this
disposition article 1095 prescribes the following: "A creditor has the rights to the fruits of a thing from
the time the obligation to deliver it arises. However, he shall not acquire a real right." (and the ownership
is surely such) "until the property has been delivered to him."
In accordance with such disposition and provisions the delivery of a thing constitutes a necessary and
indispensable requisite for the purpose of acquiring the ownership of the same by virtue for a contract.
With this, it can therefore be concluded that: "The transfer of the ownership in the contract of such
transfer, does not produce the effect by the fact of the mere consent, but is acquired by tradition and in
the due observance of general precepts." Therefore, by reason of the non-delivery Terrell did not acquire
the ownership of the property transferred to him by Wilson.
The court therefore finds that neither of the two creditors should enjoy preference with regard to the
other. Preference is determined by the nature of the credit in some cases and by the priority of date in
others. The first, when it deals with privileged credits, which different kinds of privileged credits are
enumerated in articles 1922, 1923, and 1924 of the Civil Code; and the second, when such credits are
without special privilege, but are set forth in a public document or a final judgment. (Par. 3, article 1924.)
In neither of these two classes do we find the credit of the appellant or that of the appellee. The credit of
the appellee is only shown in a private document, and the right, or credit, of the appellant is that derived
by reason of the payment made by appellant to the Government as a surety on the bond of Wilson, and
nothing more than this appears in the allegations and admissions of the parties during the trial of the
case. It does not appear by the bill of exceptions in this case that any document was ever presented in
justification of such payment. Neither does the decision refer to any document as showing, as proven,
said payment. These two credits not coming under any of the articles herein cited, the same pertain to a
general class, and therefore do not enjoy any preference, in accordance with provisions of article 1925 of
the Civil Code. This being so, the two creditors should be paid of pro rata from the funds in question and
without consideration of the dates. (Rule 3, of article 1929.)
59. RUFINA YATCO VS. JESUALDO GANA
GR. No L-3876 March 27, 1909

FACTS:

Rufina Yatco brought these proceedings against Jesualdo Gana for the recovery of two parcels
of arable land and one building lot situated in the municipality of Cabuyao, Province of La Laguna, a
description of which is contained in the complaint. She prayed therein that the said lands be returned to
her, that the defendant be sentenced to pay her P850 for losses and damages, that said defendant lose
he crops existing thereon at the present time as well as the fruits of said lands, and that he pay the costs.
Besides a general denial of all the facts alleged in the complaint, the defendant, on his part set up the
following as special defense: First. That he is the sole and exclusive owner of the building lot and the two
parcels of land referred to in the complaint, he having acquired them from Eugenio Andal by a contract
of purchase and sale on the 16th of October, 1894. Second. That he has been in the quiet and peaceful
possession of the said property as owner for more than 11 years, to wit, since the aforesaid 16th day of
October, 1894; and he asked to be absolved of the complaint.

At the hearing it was stipulated between the parties that the two parcels of unirrigated lands
situated on the east and west side of the road from Calamba to Cabuyao, as well as the building lot
concerning which the defendant had offered evidence, are the same as those claimed by the plaintiff.

ISSUE:

Whether or not who among the purchasers had acquired ownership and dominion over the
subject property.

HELD:

According to the Civil Code, and before its enactment, it was already common doctrine that a
contract of purchase and sale is perfected by the consent of the parties thereto as to the thing and the
price, and is consummated upon the payment of the price and the delivery of the thing. There might be
a question as to which of these acts would authorize intervention in accordance with the principles of
law, and the law has preferred to fix the act of consummation, considering, no doubt, that until this is
realized the property is at the disposition of the court having jurisdiction of the question of dominion,
and which may deliver the property to the proper party, thus avoiding new complications and expenses.
But even outside of the said term, or after the limit fixed by law, when the state of the proceedings in
execution no longer permitted an intervention, and it was therefore the duty of the judge to reject the
same by an order of dismissal, if the action was one for dominion, the right of the third party was reserved
to institute an action against the proper person and as it might be proper, as provided in paragraph 2 of
the said article, in order that there may be no doubt as to his being entitled to bring an action against the
person who acquired the property. (Manresa, Ley de Enjuiciamiento Civil, 641, 642, and 647.)
 Thus the right of action of the third party who was prejudiced by the judicial sale as to his
intervention, could only be exercised while the proceedings in execution were pending and before the
consummation of the judicial sale by any of the acts fixed in article 1515 of the law which was in force at
the time, that is to say, before the execution of the public instrument of sale, or before the delivery of the
thing sold adjudicated in payment; but with respect to an action for recovery, the same may be exercised
at any time so long as the right has not expired by limitation. Hence, the silence of the defendant in the
face of the proceedings in connection with the attachment, adjudication, and possession of the property
claimed, did not prejudice him in any way. Inasmuch as the main point is the legitimacy of the sale made
by Eugenio Andal to Jesualdo Gana, and in view of the fact that this contract was executed even before
the lands that were sold had been judicially attached, the trial court has not committed any error by
declaring that Eugenio Andal could validly sell them to Jesualdo Gana; and the circumstance that they
were subject to the credit of Isidro Yatco against the spouses Andal and Faciolco was not an obstacle to
the validity of the sale because they were not subject to the security of the credit as by a real right
formally attached to the said lands, but by the mere delivery of the title deeds that the debtors made to
the creditors.
60. KUENZLE & SHERIFF vs MACKE & CHANDLER
14 PHIL 610

Facts:
A Sheriff levied on a property based on a case of Chandler v. Krippendorf. Chandler won. Kuenzle says
the property is his while Chandler, who was the one who bought the property from the auction, insists
that the property is Krippendorf’s. Apparently, Krippendorf sold the property to Kuenzle but never
delivered it. SC says Chandler has a good title to the lounge because a bill of sale of personal property,
executed in a private document and unrecorded, which property described there was not delivered and
remained in possession of the vendor, could have no effect against a person dealing with the property
upon the faith of appearances.
(Jan 1907) Kuenzle says that it was the owner of the Oregon Saloon (bar, furniture and fixtures worth P1
000) in Cavite and that the Sheriff levied on it. Sheriff levied based on a judgment won by Macke &
Chandler (heretofore referred to as “Chandler”) against Stanley & Krippendorf (heretofore referred to as
Krippendorf). Kuenzle then notified the Sheriff that it was the owner of the Oregon property but Sheriff
ignored and proceeded to sell the property. Chandler was the purchaser.
In this case, defendant Chandler says:
Property was not Kuenzle’s at the time of the levy and sale. The property was owned by Krippendorf who
was in possession of the property at the time of the levy. That in Jan 1907, Krippendorf was indebted to
Kuenzle. And so, Krippendorf attempted to sell the property to Kuenzle. It was in an instrument in writing
but it was never recorded (it was a private document). That the property was not delivered to Kuenzle so
the possession of the property remained with Krippendorf. Then, Krippendorf and Chandler conducted
the sale after the execution of the transaction between Krippendorf and Kuenzle (terms and conditions
exactly the same), without reference to Kuenzle.

Issue:
Whether or not there is effect of the instrument of sale with regards to transferring property from
Krippendorf to Kuenzle.

Held:
Ownership of personal property cannot be transferred to the prejudice of third persons except by delivery
of the property itself; and that a sale without delivery gives the would-be purchaser no rights in those
property except those of a creditor. A bill of sale of personal property, executed in a private document
and unrecorded, which property described there was not delivered and remained in possession of the
vendor, could have no effect against a person dealing with the property upon the faith of appearances.

Chandler was able to obtain a good title (this was the Court’s answer. So I guess the transaction between
Krippendor & Kuenzle was incomplete. SC cites the case of Fidelity & Deposit Company v. Wilson which
laid down a doctrine that ownership of personal property cannot be transferred to the prejudice of third
persons except by delivery of the property itself; and that a sale without delivery gives the would-be
purchaser no rights in those property except those of a creditor. The bill of sale in this case was a bill of
sale of personal property. A bill of sale of personal property, executed in a private document and
unrecorded, which property described there was not delivered and remained in possession of the vendor,
could have no effect against a person dealing with the property upon the faith of appearances. Kuenzle
cites a case (Kuenzle v. AS Watson) which the SC did not find to be applicable. That was a case of the sale
of property upon the condition that the title should remain in the vendor until the purchase price should
be fully paid. And that in case of non-payment of the debt or any instalment, the vendor would have a
rights to take possession of the property and deal with it as provided for in the contract. That case was
inapplicable because:
In that case, the Court held that such a contract for the conditional sale of goods was valid also as to third
persons, provided possession of the property was taken by the vendor before the rights of third persons
intervened against the same.
In this case, the bill of sale was not a conditional sale of property so the principles in Kuenzle v. AS Watson
are inapplicable. Chandler purchased the property at an execution sale. And so, Chandler obtained a good
title to the property as against Kuenzle. Judgment affirmed.
61. GONZALES vs ROJAS
16 PHIL 51

Facts:

Mariano Gonzalez, in his own behalf and in the name of his brother and sisters, Juan, Silvestra,
Cipriana, and Candida Gonzalez, petitioned for the registration of a parcel of land used for the purposes
of a fishery or vivarium, situated in Pitas, barrio of Taliptip, in the town and Province of Bulacan, the
boundaries and area of which are specified in the application and plan filed, the total area thereof being
16 hectares, 10 ares, 95 centares, and 25 square decimeters, appraised in the last assessment at $1,650,
United States currency.

Alejandro Rojas opposed this petition for registration alleging that he was the owner of the same
fishery that was the subject of the application of Mariano Gonzalez and the co petitioners.

Issue:

Whether or not defendant has acquired ownership over the property.

Held:

Such was the true legal condition of the fishery on the 10th of March, 1900, when Juliana
Samonte died. Her heirs, having no knowledge of this obligation and making the fishery materially a part
of the inheritance left by their mother, conveyed the property that had been held by her and which had
been transferred to her successors in interest, without any complaint from a third party. And in fact, such
was the status of the fishery; in proof of which, Felix Villanueva, the widower of Juliana Samonte, who
appears as a signer of the instrument of sale executed by his wife in favor of Alejandro Rojas, took part in
the sale of the fishery in the name of his minor children Natalia and Feliza, and solicited judicial
authorization for the purpose. And his children, the petitioners, saw all these acts performed by their
father with respect to the property left as an inheritance by their mother, and there is not a word in the
record opposing these acts of Felix Villanueva.

It must be concluded that the sales effected by the heirs of Juliana Samonte to the petitioners
were true, valid, and efficacious. Therefore, the judgment appealed from is reversed in so far as the first
finding is concerned, and the Court of Land Registration shall declare the part of the fishery which
belonged to the deceased Juliana Samonte to be the property of the petitioners and shall decree the
adjudication and registration thereof in the name of the petitioners in the same manner as the other half
of the fishery which it adjudged to them in the second finding.
62. WALTER EASTON vs. E. DIAZ & COMPANY
GR No. L-10012 November 9, 1915

Facts:

On October 25, 1913, the defendant E. Diaz & Co. answered the complaint by a general and
specific denial of all the paragraphs thereof, and as a special defense and counterclaim alleged that, of
the P10,000 awarded the defendant company by the judgment rendered in its behalf in the civil case No.
1737 against Jose Parlade, there remained a balance of P2,000; that in the supplementary proceedings
had in connection with the said case, the said Parlade was examined on the subject of his property and
he stated that the still referred to in the complaint had been conveyed by him to Walter Easton by means
of a private instrument executed on December 15, 1912; that the said statement by Parlade is false, for
the instrument of conveyance in question in favor of the plaintiff Easton was executed long subsequent
to December 15, 1912; that the said instrument was made for the sole purpose of prejudicing the
defendant company and defrauding it as creditor, by preventing the said still from being levied upon and
the defendant company from collecting its credit; that the allegations of the complaint with respect to
the losses and damages suffered by not being able to distil ilang-ilang as a result of the attachment are
false and malicious and were made for the purpose of influencing the court; and that the still, the subject
matter of the complaint, had never been in the plaintiff's possession, but always under the control and in
the ownership of the judgment debtor, Jose Parlade, who, through his henchmen, had kept it hidden in
order that it might not be levied upon by virtue of the attachment issued in the said case No. 1737.

On November 6, 1913, the defendant provincial sheriff answered the complaint by denying all
the allegations therein contained, and, as a special defense, set forth that the attachment referred to in
the complaint was levied by him at the request of the defendant E. Diaz & Co.; that when the plaintiff
filed his third-party claim, the said sheriff notified the other defendant thereof and the latter furnished
bond in the sum of P1,000 in order that the attachment and sale might proceed; that on October 25, 1913,
by reason of the said writ of injunction he suspended all proceedings with respect to the property in
litigation; that the still was now in the possession of the plaintiff Easton; and that, as the defendant sheriff
had no interest in this case, he prayed to be absolved from the complaint, without costs.

Issue:

Whether or not Jose Parlade was still the owner of the ilang-ilang which was still attached to the
property.

Held:

Ownership is not transferred by contract merely but by tradition or delivery. Contracts only
constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the
mode of accomplishing the same.
63. OCEJO, PEREZ & CO. v. THE INTERNATIONAL BANKING CORPORATION
GR No. L-10658 February 14, 1918

Facts:

On March, 1914, Chua Teng Chong gave a promissory note to the International Banking
Corporation in exchange for Php 20k. 5000 piculs of sugar, located in a warehouse in Calle Toneleros, was
out up as security for the note. It seema that at the end of March, Ocejo, Perez and Co. entered into
contract with Chua Teng Chong for the sale of some sugar. The sugar was brought to Manila in the month
of April, and 5000 piculs were delivered by to Chua Teng Chong where upon it was stored in the
warehouse at No.119, Muelle de la Industria. The next day, petitioners attempted to collect the purchase
price of the sugar, but the buyer refused to make payment. In the written contract between them,
nothing was said concerning the time and place for payment.

Issue:

1. Whether or not the title to the sugar pass to the buyer upon its delivery to him

2. Whether or not failure to pay the purchase price authorizes the seller to rescind the sale?

Held:

1. The first paragraph of Article 1498 speaks of delivery through a public instrument. The execution
of this instrument like a duly notarized deed of sale is tantamount to the delivery of the object to
the vendee. In other words, ownership is deemed transferred through the execution of such
document. When there is no stipulation that title shall not pass until the price is paid, and the
thing sold has been delivered, then title passes from the moment the thing sold is placed under
the control and possession of the vendee. One effect of delivery is the conveyance of ownership
without prejudice to the vendor’s right to claim the price. If no term has been stipulated within
which payment should be made, payment is demandable at any time after delivery, and it is the
corresponding duty of the buyer to pay the price immediately upon demand.

2. When the terms of the contract of sale of goods require that payment of the purchase price is to
be made on demand after deliver, in the event of the failure or refusal of the buyer to make
payment on demand, the seller may elect to demand the rescission of the sale, subject to
intervening rights of third persons.
64. PEDRO ROMAN v. ANDRES GRIMALT
GR No. 2412 April 11, 1906

Facts:
Pedro Roman, the owner of the schooner Sta. Maria and Andres Grimalt had been negotiating
for several days for the purchase of the schooner. They agreed upon the sale of the vessel for the sum of
P1500 payable on three installments, provided the title papers to the vessel were in proper form. The sale
was not perfected and the purchaser did not consent to the execution of the deed of transfer for the
reason that the title of the vessel was in the name of one Paulina Giron and not in the name of Pedro
Roman. Roman promised however, to perfect his title to the vessel but he failed to do so. The vessel was
sunk in the bay in the afternoon of June 25, 1904 during a severe storm and before the owner had
complied with the condition exacted by the proposed purchaser. On the 30th of June 1904, plaintiff
demanded for the payment of the purchase price of the vessel in the manner stipulated and defendant
failed to pay

Issue:
Whether or not there was a perfected contract of sale.
Whether or not the owner should bear the loss or deterioration.

Held:
If the sale is subject to a suspensive condition by agreement of the parties, the contract is no
perfected until the fulfillment of the condition.
If the loss or deterioration is incurred before the perfection of the contract of sale, the loss or
deterioration will be suffered by the vendor or seller. The owner of the thing bears the loss or
deterioration because he remains the owner of the thing.
65. PRISCA NAVAL ET AL. v. FRANCISCO ENRIQUEZ ET AL.
GR No. 1318 April 12, 1904

Facts:
Don Jorge Enriquez as heirs of his deceased parents (Don Antonio Enriquez and Dona Ciriaca
Villanueva , whose estates were at that time still undistributed, by public document sold to Don
Victoriano Reyes his interest in both estates. The deed was executed before Don Enrique Barrera, a
notary public. Another instrument was executed before the same notary public where Don Victoriano
Reyes sold to Dona Carmen the interest in the estates which he had acquired from Don Jorge Enriquez.
The purchaser, Dona Carmen was the wife of Don Francisco Enriquez (defendant) who was the executor
and administrator of the testamentary estate of Don Antonio Enriquez at the time the two deeds were
executed.
The plaintiffs demand that these deeds be declared null and void, as well as the contracts
evidenced thereby. Apparently solely so far as they refer to the estate of Don Antonio Enriquez, no
mention being made of the estate of Dona Ciriaca Villanueva in the complaint.
The plaintiffs contended that the deeds in question were consummated and were executed for
the purpose of deceiving and defrauding Don Jorge Enriquez and his family. The conclusion of the
plaintiffs was that as such executor Don Francisco was unable to acquire by his own act or that of any
intermediary the said hereditary portion of Don Jorge under the provisions of Article 1459, paragraph 3
of the Civil Code.

Issue:
Whether or not there was a transfer of ownership.
Whether or not Don Francisco Enriquez as executor and administrator of estate of Don Antonio
is incapacitated to acquire by purchase the hereditary right of Jorge Enriquez.

Held:
The first paragraph of Article 1498 speaks of delivery through a public instrument. The execution
of this instrument like a duly notarized deed of sale is tantamount to the delivery of the object to the
vendee. In other words, ownership is deemed transferred through the execution of such document.
Speaking of the hereditary rights of the heirs (already acquired) the same are not under the
administration of the executor or administrator. Thusly, the execurot or administrator is not prohibited
from purchasing such undivided interests or rights.
66. SERAFIN UY PIAOCO v. JOSE MCMICKING
GR No. L-4237 March 5, 1908

Facts:
Each of the defendants Antonio R. Bayan Ju, Yap Qui Chin and Khy Pack, in the course of certain
proceedings instituted by them against one Uy Chiam Ling, procured the issuance of orders for the
attachments of his property. In pursuance of these orders, attachments were levied by the defendant
Jose McMicking, sheriff of the city of Manila, on or about the 26th, 28th and 29th of January, 1907, on
certain certificates of stock of the "Yuen Sheng Exchange, Trading and Loan Company, of Manila,"
alleged to be the property of Uy Chiam Ling, and which were found in the possession of the manager of
that company, held by him as security for a certain debt due the company by Uy Chiam Liong.
The plaintiff alleges that he is the owner of the stock thus attached, having purchased it of Uy
Chiam Liong on the 17th of March, 1906, and prays that the attachments be dissolved and that the stock
be restored to its legitimate owner. It was found that the sale has not yet been recorded in the books.

Issue:
Whether or not there was a transfer of title.

Held:
If the sale is done in a private instrument without actual physical delivery, title does not pass to
the vendee.
67. JUAN BUENCAMINO, ET AL. v. NICASIA VICEO, ET AL.
GR No. 4929 March 5, 1909

Facts:
On or about the 17th day of April, 1903, in the city of Chicago, in the State of Illinois, in the United
States, the Defendant, through a representative of the Insular Government of the Philippine Islands,
entered into a contract for a period of two years with the Plaintiff, by which the Defendant was to receive
a salary of 1,200 dollars per year as a stenographer in the service of the said Plaintiff, and in addition
thereto was to be paid in advance the expenses incurred in traveling from the said city of Chicago to
Manila, and one-half salary during said period of travel.
Said contract contained a provision that in case of a violation of its terms on the part of the
Defendant, he should become liable to the Plaintiff for the amount expended by the Government by way
of expenses incurred in traveling from Chicago to Manila and the one-half salary paid during such period.
The Defendant entered upon the performance of his contract upon the 30th day of April, 1903,
and was paid half-salary from the date until June 4, 1903, the date of his arrival in the Philippine Islands.
That on the 11th day of February, 1904, the Defendant left the service of the Plaintiff and refused to make
a further compliance with the terms of the contract.
On the 3rd day of December, 1904, the Plaintiff commenced an action in the Court of First
Instance of the city of Manila to recover from the Defendant the sum of 269. 23 dollars, which amount
the Plaintiff claimed had been paid to the Defendant as expenses incurred in traveling from Chicago to
Manila, and as half-salary for the period consumed in travel.
It was expressly agreed between the parties to said contract that Laws No. 80 and No. 224 should
constitute a part of said contract.

Issue:
Whether or not there was a delivery of the object or property.

Held:
The first paragraph of Article 1498 speaks of delivery through a public instrument. The execution
of this instrument like a duly notarized deed of sale is tantamount to the delivery of the object to the
vendee. In other words, ownership is deemed transferred through the execution of such document.
68. YAP UNKI v. CHUA JAMCO
GR No. 5202 December 16, 1909

Facts:
On November 10, 1906, plaintiff and defendant executed a written agreement whereby the
business partnership then existing between them was dissolved, and plaintiff sold and defendant bought
plaintiff’s interest in the partnership for the sum of P1,728.94, payable in three installments, as set out in
the agreement. The amended complaint alleged that the total indebtedness thus contracted by the
defendant had become due and payable and had not been paid in whole or in part at the time when that
complaint was filed. Judgment was rendered in the court below in favor of the plaintiff and against the
defendant for P1,728.94 together with interest upon the various installments from the date when they
fell due. From this judgment defendant appealed, and the case is now before us on his bill of exceptions.

Issue:
Whether or not all of the deferred payments had become due and payable when the original
complaint was filed in this action.

Held:
Appellant having made no assignment of error on this ground we are not called upon to review
the action of the court in this regard. The judgment already rendered will be modified or not in
accordance with defendant’s success or failure in establishing the damages alleged in this counterclaim.
69. JOSE FLORENDO v. EUSTAQUIO P. FOZ
GR No. 6565 October 24, 1911

Facts:
Eustaquio P. Foz executed in Manila a contract, ratified before a notary, obligating himself to
deliver his house and lot for a consideration of P6,000 to Jose Florendo. The latter already paid P2, 000
of the purchase prize. In the contract, plaintiff fixed the period of the payment of the prize wherein
plaintiff has to pay the remainder of the prize when he goes to Vigan or if not to pay to the Church wherein
he has a debt and to obtain the title of the subject matter of the sale. Defendant went to Vigan, plaintiff
tendered payment of the remainder of the prize, however, the former refused, saying that the true prize
of the sale recorded in the other instrument was P10,000. As defendant refused payment, plaintiff filed
a suit to comply with the contract of absolute purchase and sale, by delivering to the plaintiff the property
sold.

Issue:
Whether or not the plaintiff can compel the defendant to deliver his property pursuant to the
notarized contract.

Held:
The first paragraph of Article 1498 speaks of delivery through a public instrument. The execution
of this instrument like a duly notarized deed of sale is tantamount to the delivery of the object to the
vendee. In other words, ownership is deemed transferred through the execution of such document.
Art. 1524. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him
the price, or if no period for the payment has been fixed in the contract. If this period was fixed, the
vendor, notwithstanding that such period has not terminated, nor, consequently that he has not
collected the price, is obliged to deliver the thing sold.
70. DOMICIANO GONZAGA v. ANGEL JAVELLANA
GR No. 6843 September 3, 1912

Facts:
Angel Javellana won a suit against Jose Lim and attached the lot of the latter for the satisfaction
of the judgement. A portion of which containing an area of 449.30 sq.m. is now the subject of the
litigation. This was already sold to one Domiciano Gonzaga in 1905 while the sale to Javellana was on
1910. The sale to Gonzaga was recorded in 1909 in the Property Registry in Iloilo City. In 1910. Gonzaga
brought a suit against Javellana for the ownership of the said parcel of land. The latter contended that
the sale made to Gonzaga was fictitious for lack of consideration as attested by witnesses. The trial court
ruled in favor of the plaintiff. The defendant appealed from that judgment and forwarded his appeal to
this court through the means of a bill of exceptions

Issue:
Whether or not the contract of sale between Lim and Gonzaga a valid one.

Held:
If the same parcel of real estate is sold to two persons, and each such sale is made by means of a
public instrument, the result is that delivery of the property is made to both purchasers, according to the
second paragraph of article 1462 of the Civil Code.
71. Insolvency of YAP CANGCO. E. VIEGELMANN & COMPANY ET AL. v. JOSE PEREZ
GR No. L-10870 February 18, 1918

Facts:
Tan Achiong was the sole and absolute owner of a hat factory. In consideration of the sum of one
thousand pesos (1,000), Philippine currency, he assigned, sold, and conveyed to Don Jose Perez, to his
heirs and assigns, the personal property.
The sale is executed under the covenant or condition that if Achiong should return to the
purchaser within the period of three months from the date of the execution of this instrument the one
thousand pesos(P1,000), Philippine currency, which constitute consideration in this sale, he shall be
entitled to redeem or repurchase the goods hereby sold; but he shall not be entitled so to do, if he should
allow the said period for redemption to elapse without availing himself of the right, in which case this
sale shall become absolute and irrevocable.

Issue:
Whether or not there was a delivery of the property.
Whether or not petitioner has the right to repurchase.

Held:
When the sale should be made by means of a public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the object of the contract, if in said instrument the contrary
does not appear or may be clearly inferred.
The instrument set out in the opinion did not evidence a genuine sale with the right to repurchase
reserved to the vendor, being in truth and in fact no more than a solemn declaration in a public document
acknowledging an indebtedness, the borrower at the same time solemnly obligating himself to hold the
property described in the instrument under the conditions set forth therein as security for the payment
of the amount of the indebtedness.
72. SOSTENES CAMPILLO v. HON. COURT OF APPEALS
GR No. 56483 May 29, 1984

Facts:
Tomas de Vera was the owner of two parcels of land in Tondo, Manila. In 1961, de Vera soldthe
lands to Simplicio Santos. Santos however did not register the sale in the Registry of Deeds,which means
that the land was still under de Vera’s name.On the other hand, de Vera was indebted to Campillo.
Campillo obtained a judgment for sum of money. De Vera’s 3 parcels of land, including those sold to
Santos were levied in 1962 in favor of Campillo. Campillo acquired the land and he was able to have the
lands be registered under his name.

Issue:
Whether or not Campillo has a better right or title to the property.

Held:
On double sale of immovable property, the ownership belongs to the person who first registered
the sale in good faith.
“Caveat Emptor” is not applicable in sales of registered land. The purchaser of a registered land
under the Torrens system is merely charged with notice of the burdens and claims on the property which
are inscribed on the face of certificate of title.
73. OBANA vs. COURT of APPEALS and SANDOVAL
135 SCRA 557 March 29, 1985

Facts:
On November 21, 1964, Anicleto Sandoval (owner of Sandoval’s and Sons Rice Mill) was
approached by Chan Lin who offered to purchase from him 170 cavans of rice at the price of P37.25 per
cavan. The driver attempted to collect the payment from Chan Lin and Petitioner Anacleto Sandoval but
the latter refused, stating that he had already made the payment to Chan Lin. Further demands having
been met with refusal, Sandoval, as plaintiff, filed suit for Replevin against petitioner, before the
Municipal Court of San Fernando, La Union which ordered petitioner- defendant to pay to Sandoval ½ of
the cost of the rice or P2,805. On appeal by the petitioner to the court of First Instance, judgment was
rendered dismissing the complaint. On appeal to respondent Appellate Court, Sandoval obtained a
reversal in his favor. Hence, the present petition seeks for the review of the decision of Court of Appeals
ordering Obaña in action for Replevin to return to Sandoval, Private Respondent herein, 170 cavans of
rice or to pay its value in the amount P37.25 per cavan, with legal interest from the filing of the complaint
until fully paid.

Issue:
Whether or not the petitioner-dependent had unjustly enriched himself at the expense of
another by holding on to property no longer belonging to him.

Held:
The judgment under review is hereby affirmed. Costs against petitioner. No person should be
benefited without a valid basis or justification, shall enrich himself at the expense of another and hold on
to a property no longer belonging to him. The petition- defendant in his own testimony said that he was
repaid the sum of P5,600 by Chan Lin and claimed that he delivered the rice back to them. However, the
driver denied that the rice had ever been returned. The driver’s version is more credible since Sandoval’s
lawyer had manifested in open court that they would have withdrawn the complaint if the return of the
rice had been effected. In law and equity, therefore, Sandoval is entitled to recover the rice, or the value
thereof since he was not paid the price therefor.
74. FELIX DANGUILAN v. INTERMEDIATE APPELLATE COURT
GR No. L-69970 November 28, 1988
Facts:
On January 29, 1962, the Apolonia Melad, assisted by her husband, filed a complaint against the
petitioner in the then Court of First Instance of Cagayan for recovery of a farm lot and a residential lot
which she claimed she had purchased from Domingo Melad in 1943 which is now possessed by Felix
Danguilan. At the trial, the plaintiff presented a deed of sale dated December 4, 1943, purportedly signed
by Domingo Melad and duly notarized, which conveyed the said properties to her for the sum of P80.00.
She claimed to have stayed with Domingo, being an illegitimate child of the latter until his death in 1945.
She moved out of the farm only when in 1946 Felix Danguilan approached her and asked permission to
cultivate the land and to stay therein. She had agreed on condition that he would deliver part of the
harvest from the farm to her, which he did from that year to 1958. For his part, the defendant testified
that he was the husband of Isidra Melad, Domingo’s niece. The latter took them to their home and in
1941 and 1943, two separate documents were executed to effect the conveyance of the farm lot and the
residential lot respectively on condition that they will take care of Domingo until his death.
The Trial Court ruled in favor of Danguilan deciding mainly based on possession. The decision
concluded that where there was doubt as to the ownership of the property, the presumption was in favor
of the one actually occupying the same, which in this case was the defendant. The issue was raised for
review to the IAC who ruled in favor of Apolonia Melad and held that the documents for the conveyance
of the two parcels of land to the petitioner are null and void because it is in substance a donation so they
should have been executed in a public instrument.

Issue:
Whether or not the transfer of land from Domingo to Danguilan is considered sale.

Held:
The conveyance of the two parcels of land is considered sale. It was alleged and not denied that
he died when he was almost one hundred years old, which would mean that the petitioner farmed the
land practically by himself and so provided for the donee (and his wife) during the latter part of Domingo
Melad's life. We may assume that there was a fair exchange between the donor and the donee that made
the transaction an onerous donation. Therefore the transfer was not a donation and Daguilan being the
possessor of the land is considered the owner of the same.
75. ALLIANCE TOBACCO CORPORATION, INC. v. PHILIPPINE VIRGINIA TOBACCO
ADMINISTRATION
GR No. 66944 November 13, 1989
Facts:
The PVTA a government corporation created under Republic Act No. 2265 to promote the
tobacco industry, entered into a contract of procuring, redrying and servicing with the FVTR for the 1963
tobacco trading operation. In June of that year, the PVTA also entered into a merchandising loan
agreement with the petitioner, a duly incorporated and authorized tobacco trading entity, whereby the
PVTA agreed to lend P25,500 to the petitioner for the purchase of flue-cured Virginia tobacco from bona
fide Virginia tobacco former-producers. The following month, petitioner shipped to the FVTR 96 bales of
tobacco weighing 4,800 kilos and 167 bales weighing 8,350 kilos. Unfortunately, the remaining un-graded
and un-weighed 174 bales with a total value of P28,382 were lost while they were in the possession of the
FVTR
Having learned of such loss in 1965, petitioner demanded for its value and the application of the
same to its merchandising loan with PVTA but both the latter and the FVTR refused to heed said
demands. Consequently, petitioner filed in the then Court of First Instance of La Union a complaint
against PVTA and FVTR praying that the two defendants be ordered to pay it P4,443 representing the
value of the 89 bales which were weighed, graded and accepted by the defendants, P28,382.00
representing the value of the lost bales of tobacco and/or that the said amount be applied to its loan with
PVTA and P4,000 as attorney's fees and litigation expenses. The trial court’s decision were order for
payment of the defendant to the plaintiff of P9,323.11 plus interest and 1000 attorney’s fees.
Petitioner appealed to the then Intermediate Appellate Court which, in its decision of March 20, 1984,
affirmed in toto the lower court's decisionThe plaintiff then brought the case to the Supreme Court for
review on certiorari.

Issue:
Whether or not there was a perfected contract of sale between the parties so as to hold the
defendants liable for the loss.

Held:
Since PVTA had virtual control over the lost tobacco bales, delivery thereof to the FVTR (its agent) should
also be considered effective delivery to PVTA. Hence, the latter bears the loss of the tobacco bales.
76. PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION v. THE AUDITOR GENERAL
GR No. L-19545 April 18, 1975

Facts:
On June 8, 1960, the President of the Philippines, approved in principle the acquisition by the
People's Homesite and Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta.
Maria, Bulacan for relocating the squatters who desire to settle north of Manila, and of another area for
those who desire to settle south of Manila. The project was to be financed through the flotation of bonds
under the charter of the PHHC in the amount of P4.5 million, the same to be absorbed by the Government
Service Insurance System.
On June 10, 1960, the Board of Directors of the PHHC passed Resolution No. 700 authorizing the
purchase of the unoccupied portion of the Sapang Palay Estate at P0.45 per square meter. On July 13,
1960, the President authorized the floating of bonds under Republic Act Nos. 1000 and 1322 in the
amount of P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition by the PHHC of
the entire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter.
On December 29,1960, after an exchange of communications, Petitioner Philippine Suburban
Development Corporation, as owner of the unoccupied portion of the Sapang Palay Estate, and the
PHHC, entered into a contract embodied in a public instrument entitled "Deed of Absolute Sale". This
was not registered in the Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner
claims, that the PHHC could not at once advance the money needed for registration expenses.
In the meantime, the Auditor General, to whom a copy of the contract had been submitted for approval
in conformity with Executive Order No. 290, expressed objections thereto and requested a re-
examination of the contract, in view of the fact that from 1948 to December 20, 1960, the entire hacienda
was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly increased
amount of P4,898,110.00.
It appears that as early as the first week of June, 1960, prior to the signing of the deed by the
parties, the PHHC acquired possession of the property, with the consent of petitioner, to enable the said
PHHC to proceed immediately with the construction of roads in the new settlement and to resettle the
squatters and flood victims in Manila.
On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold the
amount of P30,099.79 from the purchase price to be paid by it to the Philippine Suburban Development
Corporation. Said amount represented the realty tax due on the property involved for the calendar year
1961.
Petitioner, through the PHHC, paid under protest the abovementioned amount to the Provincial
Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance
Dominador Aytona to order a refund of the amount so paid.
Petitioner claimed that it ceased to be the owner of the land in question upon the execution of
the Deed of Absolute Sale on December 29, 1960. It is now claimed in this appeal that the Auditor General
erred in disallowing the refund of the real estate tax in the amount of 127 P30,460.90 because aside from
the presumptive delivery of the property by the execution of the deed of sale on December 29, 1960, the
possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the
transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved,
and, consequently, under no obligation to pay the real property tax for the year 1961.
Respondent, however, argues that the presumptive delivery of the property under Article 1498 of the
Civil Code does not apply because of the requirement in the contract that the sale shall first be approved
by the Auditor General, pursuant to the Executive Order.

Issue:
Whether or not there was already a valid transfer of ownership between the parties.

Held:
The first paragraph of Article 1498 speaks of delivery through a public instrument. The execution of this
instrument like a duly notarized deed of sale is tantamount to the delivery of the object to the vendee. In
other words, ownership is deemed transferred through the execution of such document.
The vendor must have actual possession and control over the object of the sale.
77. JOSEPH & SONS ENTERPRISES, INC. v. COURT OF APPEALS
GR No. L-46765 August 29, 1986

Facts:
Respondent Rodolfo T. Lat purchased the lot in question from the Makati Development
Corporation. One condition embodied in the Deed of Absolute Sale was that the lot could not be sold,
transferred, or conveyed, and it could not be registeres and the title would not be released until after the
construction of a house thereon was completed, in spite of his having fully paid for the lot. On July 24,
1965, respondent Lat sold the lot to respondent Paz Banaad Laurel for P38,830.00. Respondent spouses
Laurel constructed a residential house on the lot.
The Laurels advertised the house and lot for sale. Petitioner's President and Secretary, Alfredo
Joseph and his daughter Alegria Neri, went to see the Laurels at the latter's residence and negotiated for
the purchase of the property. Having agreed on the terms and conditions of the sale, the parties executed
a Deed of Conditional Sale on April 23, 1966. Because the house and lot, while already owned by the
Laurels, were still registered in the name of respondent Lat, the deed was signed with the latter as vendor
and the Laurels as witnesses.
The consideration for the conditional sale was P125,000.00, of which P20,000.00 was payable
upon the execution of the deed and the balance payable in six equal installments. Petitioner failed to pay
the second and subsequent installments on time.
Because of its difficulties in paying its obligations and to enable it to pay the Laurels in full, petitioner
through Mrs. Alegria Neri proposed to the Laurels that a loan be secured from a bank using the property
as collateral. The proceeds of the loan would be applied to the unpaid installments already due while
petitioner would assume the payment of the bank loan. Since the title to the property was still in
respondent Lat's name, the bank advised the parties to have the title transferred to respondent Laurel.
A deed of absolute sale was executed and confirmation of the sale was executed by Rodolfo T. Lat and
TCT No. 176760 was issued in Paz Banaad's name.
The Laurels mortgaged the disputed property to the bank to secure a P56,000.00 loan. Out of
the P54,217.47 net proceeds of the bank loan, P48,145.12 was applied to petitioner's unpaid installments
already past due, while the balance of P6,063.35 was turned over to it.
Petitioner failed to pay the P17,500.00 final installment under the deed of conditional sale. It also failed
to pay any of the loan amortizations due to the bank. To stave off foreclosure, the Laurels paid for bank
loan, interests and expenses, including the P6,083.35 earlier given to petitioner, in the total sum of
P63,452.22.
On July 25, 1967 in view of petitioner's refusal to surrender the house and lot to them, the Laurels
filed a complaint for ejectment against the petitioner. The court decided the case in favor of the Laurels.
The record is not clear as to the present status of this case. On December 18, 1967, petitioner filed a
complaint for annulment of title and of contract, with damages and preliminary injunction. The Laurels
filed a counterclaim for the cancellation and termination of the Deed of Conditional Sale; for the recovery
of possession and payment of rentals; and for damages.

Issue:
Whether or not there was delivery to the buyer.
Held:
Ownership passes to the buyer upon delivery of the thing unless the contrary is stipulated.

78. GERONIMO PANIZALES v. VALERIO PALMARES

GR No. L-32143 October 31, 1972

Facts:
The controversy in this appeal from a lower court decision is between plaintiff, now appellee,
Geronimo Panizales, who would base his claim to the disputed lot as purchaser in a private sale on March
19, 1958 and defendant Valerio Palmares, the sole appellant, who bought the same at the public auction
sale on March 16, 1961 by virtue of a writ of execution issued at the instance of defendant Valentin Espino,
the judgment creditor who was the prevailing party in a suit against the original owner thereof, a certain
Amado Panizales. The lower court decision, now on appeal, was in favor of the plaintiff Geronimo
Panizales, by virtue of the private sale antedating the amicable settlement on December 3, 1958 on which
the decision, thereafter resulting in an order of execution, was based.

Issue:
Whether or not such levy is valid.

Held:
From the stipulation of facts, it is undisputed that as far back as March 19, 1958, the lot in
question had been disposed of. It ceased therefore as of that date to form part of the property of the
judgment debtor. There is a strong intimation in the brief of appellant that such a sale could be objected
to as having been made in fraud of creditors. If such indeed were the case, defendants ought to have
introduced evidence to that effect. Good faith is presumed. After the express admission that such a
transaction did take place, although there was no categorical proof that the judgment creditor was aware
of such a sale, it was not unreasonable for the lower court to consider that the property, now the object
of the suit, could not be levied upon.
79. JOSE B. AZNAR v. RAFAEL YAPDIANGCO
GR No. L-18536 March 31, 1965

Facts:
On May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of his FORD
FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to be a nephew of Vicente
Marella, went to the Santos residence to answer the ad. However, Teodoro Santos was out during this
call and only the latter’s son, Irineo Santos received and talked with De Dios. The latter told the young
Santos that he had come in behalf of his uncle, Vicente Marella, who was interested to buy the advertised
car.
On being informed of the above, Teodoro Santos instructed his son to see the said Vicente
Marella. And so, in the morning of May 29, 1959, Irineo Santos went to the above address. At this
meeting, Marella agreed to buy the car for P14,700.00 on the understanding that the price would be paid
only after the car had been registered in his name.
From the Motor Vehicles Office, Teodoro Santos returned to his house. He gave the registration
papers and a copy of the deed of sale to his son, Irineo, and instructed him not to part with them until
Marella shall have given the full payment for the car. Irineo Santos and L. De Dios then proceeded to
Sampaloc, Manila where the former demanded for the payment from Vicente Marella. Marella said that
the amount he had on hand then was short by some P2,000.00 and begged off to be allowed to secure
the shortage from a sister supposedly living somewhere in Azcarraga Street, also in Manila. Thereafter,
he ordered L. De Dios to go to the said sister and suggested that Irineo Santos to go with him. At the
same time, he requested for the registration papers and the deed of sale from Ireneo Santos on the
pretext that he would like to show them to his lawyers. Trusting the good faith of Marella, Ireneo handed
over the same to the latter and thereupon, in the company of L. De Dios and another unidentified person,
proceeded to the alleged house of Marella’s sister.
At a place in Azcarraga, Irineo Santos and L. De Dios alighted from the car and entered a house,
while their unidentified companion remained in the car. Once inside, L. De Dios asked Irineo Santos to
wait at the sala while he went inside a room. That was the last that Ireneo saw of him.

Issue:
Whether or not Jose Aznar has a better right to the possession of the disputed automobile

Held:
A contract of sale of personal property does not serve to transfer ownership where the vendee
took possession of the subject matter thereof by stealing the same while it was in the custody of the
vendor’s agent.
80. LUZON BROKERAGE CO., INC. v. MARITIME BUILDING CO., INC.
GR No. L-25885 January 31, 1972

Facts:
A contract to sell was entered into between Myers (vendor) and Maritime (vendee) expressly
reserving title over the property in the vendor. The contract contained a provision for automatic
cancelation of the contract upon the failure to pay any monthly installments due.
Upon failure of Maritime to comply with its obligations, Myers declared the contract terminated and
cancelled.

Issue:
Whether or not Myers’ action was valid.

Held:
The enactment on September 14, 1972 by Congress of Republic Act No. 6552 entitled “An Act to
Provide Protection to Buyer of Real Estate on Installment Payments” which inter alia compels the seller
of real estate installments (but excluding industrial lots, commercial buildings, among others, from the
Act’s coverage) to grant one month’s period for every one year of installments made before the contract
to sell may be cancelled for non-payment of the installments due foreclose any overturning of this Court’s
long-established jurisprudence. RA 6552 recognizes in conditional sales of all kinds of real estate
(industrial and commercial as well as residential) the non-applicability of Article 1592 Civil Code to such
contracts to sell on installments and the rights of the seller to cancel the contract (in accordance with the
established doctrine of this Court) upon non-payment “which is simply an event that prevents the
obligation of the vendor to convey title from acquiring binding force.”
81. ANTONIO ENRIQUEZ DE LA CAVADA v. ANTONIO DIAZ
GR No. L-11668 April 1, 1918

Facts:
Plaintiff Antonio dela Cavada and defendant Antonio Diaz made a Contract of Option where the
latter promised to sell to the former his Hacienda de Pitogo located in Tayabas together with its coconut
and nipa palm trees for 30 and 70 thousand pesos respectively.
The contract provides that Dela Cavada has the right to purchase the land until after Diaz acquires its
Torrens title.
Diaz applied two land titles for the hacienda dividing it in two parts. After the titles have been
issued, Diaz offers to sell to Dela Cavada only a portion of the entire hacienda.

Issue:
Whether or not Diaz is obliged to sell the entire hacienda.

Held:
An optional contract is a privilege existing in one person, for which he had paid a consideration,
which gives him the right to but, for example, certain merchandise or certain specified property, from
another person at any time within the agreed period at a fixed price. The contract of option is a separate
and distinct contract from the contract where the parties may enter into upon the consummation of the
option. A consideration for an optional contract is just as important as the consideration for any other
kind of contract.
82. NICOLAS SANCHEZ v. SEVERINA RIGOS
GR No. L-25494 June 14, 1972

Facts:
In an instrument entitled "Option to Purchase," executed on April 3, 1961, defendant-appellant
Severina Rigos "agreed, promised and committed ... to sell" to plaintiff-appellee 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 latter’s 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:
Whether or not there was only a contract to buy and sell between the parties.

Held:
The Supreme Court affirmed the lower court’s 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 tocontractsingeneral. However, it is not Article 1354 but
the Article 1479 of the same Code which is controlling in the case at bar because the latter’s 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.
83. EUSEBIO S. MILLAR v. DOROTEO NADRES
GR No. 48679 August 11, 1943

Facts:
A judgment having been secured by plaintiff Millar in the justice of the peace court of Tayabas
against defendant Nadres for the sum of P558.14, the provincial sheriff, pursuant to a writ of execution,
sold at public auction the two parcels of land belonging to said defendant and plaintiff was the highest
bidder for the amount of the judgment. Defendant failed to redeem the property within the time
prescribed by the rules, and on March 8, 1934, a final deed of sale was executed in plaintiff’s favor and
thereafter transfer certificates of title were issued to him.
Subsequently, upon defendant’s request, plaintiff accorded him an option to repurchase the two
parcels of land until December 31, 1934. In November of same year, defendant paid P200 on account but
failed to pay the balance until the period of option expired. On defendant’s second request, plaintiff
renewed the option to repurchase the property, the option to expire on April 30, 1938, but subject to the
condition that the balance would carry an interest of 12 per cent per annum and that upon defendant’s
default, the option would be automatically cancelled and that whatever defendant might have paid
would be treated as rentals of the property to be computed at the rate of P20 per month from September,
1936.
In accordance with this new agreement, defendant made a second payment of P200 in November, 1935,
but having failed to pay the balance within the time stipulated, plaintiff instituted ejectment proceedings
against him in the justice of the peace court of Tayabas. The then defendant was ordered to vacate the
property and to deliver their possession to plaintiff.

Issue:
Whether or not the contract herein was an option to repurchase.

Held:
The consideration for the option to repurchase a property is different from the consideration for
the contract of repurchase itself.
84. J.F. WRIGHT v. LA COMPANIA DE TRANVIAS, ET AL.
GR No. 2296 November 10, 1905

Facts:
On the 11th of April, 1901, Walter A. Fitton, as one of the parties thereto, and Rafael Reyes,
Enrique Brias, Cosme Churruca, and Jose Rosales, who then composed the administrative council of the
partnership called the Street Car Company of the Philippines entered into a contract. A written guaranty
for the security of the stockholders was deposited in the Chartered Bank, in accordance with the
provisions of article 3 of the said agreement. The capital stock of the company was represented by 3,500
shares of 500 pesetas each.
There were also 1,050 cedulas. On the 4th day of June Rafael Reyes, as the representative of the
company, notified Fitton in writing that there were on that day deposited, for the purpose of being turned
over to him under the conditions of the said contract. When Fitton executed a general power of attorney
to T.E. Sansom, the latter wrote a letter to Reyes, demanding him to return the money deposited by
Fitton due to the impossibility of the fulfillment of the contract according to the date stipulated. On the
28th of October Sansom, as the attorney in fact of Fitton, assigned to the plaintiff all his rights in the
30,000 pesos deposited with the company. No consideration is stated in this document to have been paid
by the plaintiff for the transfer.
On the 31st of October, 1901, defendant, by a notary, caused a demand to be made on plaintiff
as attorney in fact for Fitton for the fulfillment of the contract. In answer to this notarial demand plaintiff
stated that he was not the attorney in fact of Fitton. This action was commenced by the plaintiff as the
assignee of Fitton on the 8th of November, 1901.

Issue:
Whether or not the contract is void for having no consideration between the Company and Fitton
and other parties thereof bound to do nothing.

Held:
The Court does not think that this view of the contract can be sustained. Without considering the
fact that the persons signing the contract agreed to do with what they could to get the other stockholders
of the company to transfer their stock to Fitton, it is sufficient to say that by the second paragraph of the
contract the four directors bound themselves to at once deliver to Fitton the stock which they possessed,
at the price named in the contract. It is very clear that upon the day following the contract, or at any time
within two months from the 11th of April, Fitton had the right to demand of these four directors the
delivery to him of all the stock in the company owned by them, and that upon such a demand having
been made it would have been the duty of the directors, under the contract, to have delivered to him
such stock.
During the two months named the directors had no power to sell the stock to anyone else. If the price of
the stock during that time had advanced and they had sold it to third persons, Fitton could
unquestionably have maintained an action against them to recover damages for such sale. In other
words, there was a binding contract on the part of the directors to deliver to Fitton at any time within two
months, at the price named, the stock which they held. This was a sufficient consideration
85. BEHN, MEYER & CO. (LTD.) v. TEODORO R. YANGCO
GR No. 13203 September 18, 1918

Facts:
On March 7, 1916, the parties signed a memorandum or a contract of sale which provides
for“80drums of caustic soda, with 76% of Carabao brand, at the price of $9.75 per one hundred
pounds,cost, insurance, and freight included, to be shipped during March, 1916, to be delivered to Manila
and paid for on delivery of the documents.”Behn, Meyer, and Co. was the vendor while Yanco was the
vendee with the selling price was P10,063.86.
Said goods were shipped onboard the steamship, Chinese Prince, from New York, but before it
reached Manila, the vessel was detained at Penang and 71 drums were confiscated. Only 9 drums reached
its destination and Yanco refused to accept it and rejected plaintiff ’s offer of waiting for the remainder
of the shipment until its arrival, or of accepting the substitution of seventy-one drums of caustic soda of
similar grade from plaintiff's stock.
The plaintiff then sold, for the account of the defendant, eighty drums of caustic soda from whichthere
was realized the sum of P6,352.89. Deducting this sum from the selling price of P10,063.86,we have the
amount claimed as damages for the alleged breach of the contract.

Issue:
Whether or not Behn, Meyer, and Co. committed a breach of the contract of sale.

Held:
A specification in a contract relative to the payment of freight can be taken to indicate the
intention of the parties in regard to the place of delivery. If the buyer is to pay the freight, it is reasonable
to suppose that he does so because the foods become his at the point of shipment. On the other hand, if
the seller is to pay the freight, the inference is equally strong that the duty of the seller is to have the
goods transported to their ultimate destination and that title to property does not pass until the goods
have reached their destination.
86. LOTHAR F. ENGEL, ET AL. v. MARIANO VELASCO & CO.
GR No. 21651-25153 December 29, 1924

Facts:
At the time of the transactions with which we are here concerned the plaintiffs were export
brokers, or jobbers, of textile merchandise in the City of New York, while the defendant was the owner,
as it still is, of a large store in Manila where general merchandise is sold both at wholesale and retail. In
connection with this business the defendant from time to time has occasion to import textile fabrics on
a large scale. In the beginning of the year 1920 commercial relations were established between the
plaintiffs and the defendant, and in the succeeding three months the defendant sent to the plaintiffs
numerous orders for merchandise.

Issue:
Whether or not deviations of the price shall be borne by the person who makes the delivery.

Held:
If deviations were made in the manner of delivery, which were acquiesced to by the purchaser,
the latter is bound by the result of the deviations such as delay attendant thereto. The purchaser cannot
avoid payment.
If failure to deliver on time is occasioned by the fault of the buyer himself, as when he failed to
supply the necessary credit for the transportation of the goods as agreed upon, the delay on the part of
the seller is excused.
87. PACIFIC COMMERCIAL COMPANY v. ERMITA MARKET & COLD STORES, INC.
GR No. 34727 March 9, 1932

Facts:
Plaintiff contracted to sell to defendant an automatic refrigerating machine as per description
stated in the sales contract. The machine was delivered and by mutual agreement the vendor installed
the machine. The machine did not give the results expected from it and the defendant refused to pay the
balance of its purchase price and the cost of the installation of the machine. Plaintiff brought this action
to recover the balance of the price and the cost of installation.

Issue:
Whether or not defendant is liable.

Held:
Yes. The fact that the defendant could not use the machine satisfactorily in the three cold stores
divisions cannot be attributed to plaintiff’s fault; the machine was strictly in accordance with the written
contract between the parties, and the defendant can hardly honestly say that there was any deception
by the plaintiff.
If the buyer purchased a thing by description and there is no discrepancy between the description
and the thing delivered, the sale cannot be rescinded, even if it so happened that the thing did not suit
the purpose/s of the buyer.
88. VILLONCO REALTY COMPANY v. BORMAHECO, INC.
GR No. L-26872 July 25, 1975

Facts:
Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a parcel of land and its
improvements located in Buendia, Makati. Bormaheco made the terms and condition for the sale and
Villonco returned it with some modifications. The sale is for P400 per square meter but it is only to be
consummated after respondent shall have also consummated purchase of a property in Sta. Ana, Manila.
Bormaheco won the bidding for the Sta.Ana land and subsequently bought the property.
The parcels of land were mortgaged to the Development Bank of the Philippines (DPB), which
was fully payed on 10 July1969. Francisco Cervantes is the President of Bormaheco Inc. The said company
used theafore mentioned lots for business purposes. The property are situated adjacent to the property
of herein petitioner company. In 1964, the lots were then negotiated for its sale to the brothersVillongco,
through the intervention of Edith Perez de Tagle, a real estaebroker. In the course of the negotiation,
Cervantes did not inform De Tagle and Villongco that the lots were mortgaged to DBP. After
negotiations, the sale was perfected and Villongco sent a check as earnest moneybeing subject to the
terms and conditions of Bormaheco. Cervantes then returned the earnest money having no interest to
sell the property. Petitioners filed an action for specific performance for the sale of the lots. Respondent
argued that there was no perfected sale because they returned the earnest money, thus there was no
meeting of the minds.

Issue:
Whether or not Bormaheco is bound to perform the contract with Villonco and that there was
contact of Sale.

Held:
Under the Old Civil Code, earnest money or “arras” is in the form of a penalty. Under the New
Civil Code, earnest money or “arra” is considered both a part of the purchase price and a proof of the
perfection of the contract. The old concept of earnest money had been abandoned.
89. LORENZO and SOCORRO J. VELASCO v. HONORABLE COURT OF APPEALS
GR No. L-31018 June 29, 1973

Facts:
November 10, 1965, Alta Farms secured from the GSIS a Three Million Two Hundred Fifty Five
Thousand Pesos (P3,255,000.00) loan and an additional loan of Five Million SixtyTwo Thousand Pesos
(P5,062,000.00) on October 5, 1967, to finance a piggery project. Alta Farms defaulted in the payment
because of this that Alta Farms executed a Deed of Sale With Assumption of Mortgage with Asian
Engineering Corporation on July 10, 1969 but without the previous consent or approval of the GSIS and
in direct violation of the provisions of the mortgage contracts. Even without the approval of the Deed of
Sale With Assumption of Mortgage by the GSIS, Asian Engineering Corporation executed an Exclusive
Sales Agency, Management and Administration Contract in favor of Laigo Realty Corporation, with the
intention of converting the piggery farm into a subdivision. After developing the area, on December 4,
1969, Laigo entered into a contract with Amable Lumanlan, one of the petitioners, to construct for the
home buyers, 20 houses on the subdivision.
Petitioner Lumanlan allegedly constructed 20 houses for the home buyers and for which he
claims a balance of P309,187.76 from the home buyers and Laigo. Out of his claim, petitioner Lumanlan
admits that Mrs. Rhody Laigo paid him in several checks totalling P124,855.00 but which checks were all
dishonoured. On December 29, 1969, Laigo entered into a contract with petitioner Pepito Velasco to
construct houses for the home buyers who agreed with Velasco on the prices and the downpayment.
Petitioner Velasco constructed houses for various home buyers, who individually agreed with Velasco, as
to the prices and the downpayment to be paid by the individual home buyers. When neither Laigo nor
the individual home buyers paid for the home constructed, Velasco wrote the GSIS to intercede for the
unpaid accounts of the home buyers.

Issue:
Whether or not GSIS is liable to the petitioners for the cost of the materials and labor furnished
by them in construction of the 63 houses now owned by the GSIS.

Held:
GSIS should pay the petitioners. GSIS assumed ownership of the houses built by petitioners and
was benefited by the same. Art. 2127, the mortgage extends to the natural accessions, to the
improvements, growing fruits, rents.
90. Spouses RAMON DOROMAL, SR., and ROSARIO SALAS, and Spouses RAMON DOROMAL, JR.,
and GAUDELIA VEGA v. HON. COURT OF APPEALS
GR No. L-36083 September 5, 1975

Facts:
A parcel of land in Iloilo were co-owned by 7 siblings all surnamed Horilleno. 5 of the siblings gave
a SPA to their niece Mary Jimenez, who succeeded her father as a co-owner, for the sale of the land to
father and son Doromal. One of the co-owner, herein petitioner, Filomena Javellana however did not
gave her consent to the sale even though her siblings executed a SPA for her signature. The co-owners
went on with the sale of 6/7 part of the land and a new title for the Doromals were issued.
Respondent offered to repurchase the land for 30K as stated in the deed of sale but petitioners declined
invoking lapse in time for the right of repurchase. Petitioner also contend that the 30K price was only
placed in the deed of sale to minimize payment of fees and taxes and as such, respondent should pay the
real price paid which was P115, 250.

Issue:
Whether or not the period to repurchase of petitioner has already lapsed.

Held:
Period of repurchase has not yet lapsed because the respondent was not notified of the sale. The
30-day period for the right of repurchase starts only after actual notice not only of a perfected sale but of
actual execution and delivery of the deed of sale. The letter sent to the respondent by the other co-
owners cannot be considered as actual notice because the letter was only to inform her of the intention
to sell the property but not its actual sale. As such, the 30-day period has not yet commenced and the
respondent can still exercise his right to repurchase. The respondent should also pay only the 30K
stipulated in the deed of sale because a redemptioner’s right is to be subrogated by the same terms and
conditions stipulated in the contract.
91. ELIAS GALLAR v. HERMENEGILDA HUSAIN, ET AL.
GR No. L-20954 May 29, 1967

Facts:
Husains in this case are the heirs of Teodoro Husain. Teodoro Husain sold the land under dispute
for 30 pesos to Serapio Chichirita with the right to repurchase within 6 years. Teodoro transferred his
right to his sister, Graciana Husain. Graciana paid the redemption price and later sold the land to Elias
Gallar for cattle. Possession of the land, together with the owner's duplicate of the certificate of title of
Teodoro Husain, was delivered on the same occasion to Gallar, who since then has been in possession of
the land. A couple of years after, Gallar filed this suit in the Court of Instance of Iloilo on October 10, 1960
to compel Hermenegilda and Bonifacio Husain, as heirs of Teodoro Husain, to execute a deed of
conveyance in his favor so that he could get a transfer certificate of title. He also asked for damages. The
Husains countered by saying that Graciana already paid the redemption price thus their father had
already reacquired ownership over the same. They also claim that the action of Elias has already
prescribed.

Issue:
Whether or not the action has already prescribed.

Held:
NO. The action is imprescriptible. This action is not for specific performance; all it seeks is to quiet
title, to remove the cloud cast on appellee's ownership as a result of appellant's refusal to recognize the
sale made by their predecessor. And, as plaintiff-appellee is in possession of the land, the action is
imprescriptible. Appellant's argument that the action has prescribed would be correct if they were in
possession as the action to quiet title would then be an action for recovery of real property which must
be brought within the statutory period of limitation governing such actions.
92. LEON and GENOVEVA RODRIGUEZ DE GUZMAN v. FRANCISCA T. GUIEB
GR No. L-28862 November 24, 1972

Facts:
On September 15, 1964 defendant filed Civil Case No. 126601 in the City Court of Manila against
the plaintiffs for specific performance with consignation, which case is now pending trial before Branch
VIII of the City Court of Manila with the agreement that the said case be held in abeyance pending a final
decision in the instant case. As show in Official Receipt No. 048717-I, dated September 15,1965 issued by
the Treasurer of Manila, photosatic copy of which is hereto attached and made part hereof as Exhibit
“23” for the defendants, defendants duly consigned with the City Court of Manila, sum of P4,040.00 the
sum which plaintiff Genoveva Rodriguez refused to accept when it was tendered to her on July 31,1964
by defendants;
On October 22,1964, the plaintiff Leon de Guzman filed an ejectment case against the
defendants herein in the City Court of Manila, Branch II, for non-payment of rentals from August 1964,
Civil Case No. 128123 which case is also pending, awaiting a final decision in the instant case; That
plaintiffs or their predecessor.

Issue:
Whether or not the option to purchase real property, contained in Exhibit 1, was renewed in the
option to purchase real property.

Held:
“Option to Purchase Real Property” dated October 5,1959 cannot be considered as a renewal of
the first “Option dated November 20,1954” as the same is not duly acknowledge before a notary public
and not signed in the presence of witnesses” and because if it were such as renewal,” it should have been
executed on November 29,1959, the date of the expiration: of the first option, and, furthermore, because
there is no statement therein saying that it is a renewal. It is obvious that this posture is without merit.
To be effective is an option, there was no need at all that the document of October 5, 1959 be a renewal
of the first option for there is no why it cannot be considered as another option by itself, in fact, nowhere
in the appealed decision does it appear that the trial court took it as a renewal. And since there is no
dispute that it is genuine, as very well pointed out by His Honor, it constitutes an enforceable agreement
under Article 1403 (2) of the Civil Code, or the Statute of Frauds, the same being at least a note or
memorandum, in writing, of the agreement of the parties and signed by the party charged, in this case,
Teodoro de Guzman, the Predecessor in interest of appellants. Secondly, in effect, the contention of
appellants is that the failure of appellees to pay the stipulated rentals for long periods, particularly, those
for the forty-five months they paid only on July 21, 1964, rendered their option null and void under the
following provision of the option agreement.
93. FELIX AND NICANORA GABAR BUCTON v. ZOSIMO GABAR
GR No. L-36359 January 31, 1974

Facts:
This action for specific performance prays, inter-alia, that defendants-spouses be ordered to
execute in favor of plaintiffs a deed of sale of the western half of a parcel of land having an area of 728 sq.
m. covered by TCT No. II (from OCT No. 6337) of the office of the Register of Deeds. Plaintiffs’ evidence
tends to show that sometime in 1946 defendant Josefina Llamoso Gabar bought the land in question
from the spouses Villarin on installment basis, to wit, P500 down, the balance payable in installments.
Josefina entered into a verbal agreement with her sister-in-law, plaintiff Nicanora Gabar Bucton, that the
latter would pay one-half of the price (P3,000) and would then own one-half of the land. Pursuant to this
understanding Nicanora on January 19, 1946 gave her sister-in-law Josefina the initial amount of P1,000,
for which the latter signed a receipt.
After Josefina had received in January, 1946 the initial amount of P1,000, plaintiffs took
possession of the portion of the land indicated to them by defendants and built a modest nipa house
therein. About two years later plaintiffs built behind the nipa house another house for rent. And,
subsequently, plaintiffs demolished the nipa house and in its place constructed a house of strong
materials, with three apartments in the lower portion for rental purposes. Plaintiffs occupied the upper
portion of this house as their residence, until July, 1969 when they moved to another house, converting
and leasing the upper portion as a dormitory.
In January, 1947 the spouses Villarin executed the deed of sale of the land in favor of defendant
Josefina Llamoso Gabar, to whom was issued on June 20, 1947 TCT No. II, cancelling OCT No. 6337.
Plaintiffs then sought to obtain a separate title for their portion of the land in question. Defendants
repeatedly declined to accommodate plaintiffs. Their excuse: the entire land was still mortgaged with
the Philippine National Bank as guarantee for defendants’ loan of P3,500 contracted on June 16, 1947.
Plaintiffs continued enjoying their portion of the land, planting fruit trees and receiving the rentals of
their buildings In 1953, with the consent of defendants, who were living on their portion, plaintiffs had
the entire land surveyed and subdivided preparatory to obtaining their separate title to their portion.
After the survey and the planting of the concrete monuments defendants erected a fence, which is the
dividing line between the portion pertaining to defendants, and that pertaining to plaintiffs.
In the meantime, plaintiffs continued to insist on obtaining their separate title. Defendants remained
unmoved, giving the same excuse. Frustrated, plaintiffs were compelled to bring suit. Defendants’
evidence, based only on the testimony of defendant Josefina Llamoso Gabar, denies agreement to sell
to plaintiffs one-half of the land in litigation. She declared that the amounts she had received from
plaintiff Nicanora Gabar Bucton, first, P1,000, then P400, were loans, not payment of one-half of the
price of the land, which was P3,000.
The trial court ruled in favor of plaintiffs which was later reversed by the appellate court.
Appellees’ alleged right of action was based on the receipt which was executed way back on January 19,
1946. An action arising from a written contract does not prescribe until after the lapse of ten (10) years
from the date of action accrued. This period of ten (10) years is expressly provided for in Article 1144 of
the Civil Code.
Issue:
Whether or not the contract is enforceable.

Held:
A private contract which contains all the requisite elements is obligatory and enforceable
between the parties. A contract of sale may be validly effected orally. When the vendor sells something
he does not own yet, he is bound by the sale when he acquires it later.
94. ROSARIO CARBONELL v. HONORABLE COURT OF APPEALS
GR No. L-29972 January 26, 1976

Facts:
Poncio, a Batanes native, owned a parcel of land, which he offered to sell to Carbonell and
Infante. The land was mortgaged to Republic Bank. Poncio and Carbonell executed an instrument where
the latter allowed the former to remain in the premises in spite of the sale for a period of 1 year. Later on,
when the Formal Deed of Sale was to be executed, Poncio told Carbonell that he could no longer proceed
with the sale as he had already sold the same to Infante for a better price. Carbonell immediately sought
to register adverse claim; 4 days later, Infante registered the sale with the adverse claim annotated
thereto. Infante thereafter introduced significant improvements on the property. They now dispute
ownership over the said land.

Issue:
Whether or not Carbonell has acquired ownership over the property.

Held:
A contact of sale is a consensual contract which means it can be perfected by mere consent.
Traditio Constitutum Possessorium consists in the owner’s continuous possession of the property he had
already sold to another person but his present possession is no longer that of an owner but under another
capacity like that of a lesse, pledgee, depository etc. when the former owner (vendor) instead of
delivering the property to the vendee so that the latter can effectuate the delivery of the same property
to the vendor who takes it in another capacity, under this kind of tradition, the law considers all these
formalities to have taken place by agreement of the parties.
95. THE BOARD OF LIQUIDATORS AND PANAY DEVELOPMENT CO., INC. v. JOSE ROXAS
GR No. 84419 December 4, 1989

Facts:
On April 12, 1940, PDCI entered into a management contract with the National Food Products
Corporation (NFPC) whereby the latter agreed to finance the construction, maintenance, management
and operation of the fishponds of PDCI and NFPC gave loans and advances necessary therefor. As
security for the payment of said loan, PDCI executed a real estate mortgage on all its properties in favor
of NFPC. Among the properties given as collateral was lot No. 3247, formerly belonging to Maria Roxas
Lisao and covered by TCT No. RO-4331 (17921) of the Register of Deeds of Capiz, which contains an
annotation stating that the same was transferred and assigned in favor of PDCI and mortgaged to NFPC.
Said original certificate of title was later cancelled by TCT No. 12651 in the name of PDCI.
The NFPC was later abolished under Executive Order No. 372, series of 1950, and petitioner Board
of Liquidators (Board for short) was created to liquidate and settle its affairs and dispose of its properties.
On December 13, 1972 petitioner Board executed with the PDCI a contract of amicable settlement
whereby petitioner PDCI agreed to pay the Board the sum of P170, 000.00 in full settlement of its
mortgage obligation. Petitioner Board agreed to assist PDCI in ejecting the squatters in the premises and
to deliver the certificate of title covering the property as well as the records pertinent thereto. Said
contract of amicable settlement was approved by the Office of the President.

Issue:
Whether or not there was a valid conveyance of the subject matter by Maria to her brothers and
sisters.

Held:
Since what appears to have been conveyed by Maria to her brothers and sisters was no longer
her property, the quitclaim, deed and donation that she executed are null and void. As a matter of fact
even prior to said conveyance, the property had been mortgaged by PDCI to the NFPC who is certainly a
mortgagee in good faith. Furthermore, the alleged verbal sale executed by the donees brothers and sister
of Maria Roxas Lisao in favor of respondent Jose Roxas is also null and void not only because they had no
title to convey but also because the sale of the land, which is verbal, and the presentation of which was
timely objected to, are not enforceable under the statue of frauds. It is not a valid sale, and is inadmissible
in evidence.
96. SOSTENES CAMPILLO v. PHILIPPINE NATIONAL BANK
GR No. L-19890 May 21, 1969

Facts:
After receiving the deed of final sale, appellee presented it for registration to the Register of Deeds of
Pasay City on April 18, 1961. As in this connection he was required to comply with the provisions of
Section 78 of Act 496, on April 28, 1961 he filed in the Court of First Instance of Rizal (Pasay City Branch)
"A Petition for Entry of New Certificate of Title Under Section 78, Act 496". After due hearing with
previous notice served upon the Register of Deeds of said city, the Court issued on May 9, 1961 an order
directing the latter to cancel T.C.T. No. 236-A and to issue in lieu thereof another certificate in the name
of appellee. However, said officer refused to comply with said order unless the owner's duplicate of T.C.T.
No. 236-A — which was in the possession of the Bank — which was surrendered to his office. Appellee's
request for the delivery of said owner's duplicate made upon the Bank was, however, denied by the latter.
As set out in par. 6 of the complaint the said mortgage encumbrance of P13,000.00 in favor of defendant
appears annotated in the covering Certificate of Title No. 236-A aforesaid at the time plaintiff attached
said property, and consequently, it was the duty of plaintiff to investigate the status of said property as
well as the aforementioned encumbrance, before purchasing the property and assuming the mortgage.

Issue:
Whether or not plaintiff's pretensions of assumption of the defendant‘s mortgage are not valid.

Held:
It is an admitted fact that the extra-judicial foreclosure sale made in favor of the Bank on
December 17, 1958 was registered in the Office of the Register of Deeds of Pasay City only on April 21,
1960. It is settled in this jurisdiction that a sale of real estate, whether made as a result of a private
transaction or of a foreclosure or execution sale, becomes legally effective against third parties only from
the date of its registration (Section 50, Act 496; Anderson & Co. vs. Garcia 64:506) which, in the case of
the foreclosure sale in favor of the Bank, as stated heretofore, was effected only on April 21, 1960.
Consequently, when the same property subjectmatter thereof was act usually attached and levied upon
on March 16, 1960 and the levy thus made was registered on the same date, the property stood in the
official records of the government still as property of Justiniano D. Quirino and was therefore properly
attached, levied upon and subsequently sold as his property. The net result of this is that the execution
sale made in favor of herein appellee transferred to him all the rights, interest and participation of Quirino
in the aforesaid property at that time, subject only to the lone encumbrance duly registered and
annotated on the back of Certificate of Title No. 236-A issued in the name of Quirino.
97. EULOGIO RODRIGUEZ, SR. v. SOFRONIO FRANCISCO, ETC.
GR No. L-12039 June 30, 1961

Facts:
It appears that Exequiel Ampil, now deceased, was the registered owner of the land in question
under Original Certificate of Title No. 2497 issued way back on May 25, 1918. On March 24, 1924, Exequiel
Ampil executed a deed of sale covering the land in favor of defendant Maximo Francisco for the sum of
P1,500. Sometime thereafter, the defendant took possession of the premises which, upon his death, was
continued by his heirs up to the present, publicly and in the concept of owner. The land taxes thereon
since 1924 was religiously paid by Maximo Francisco up to 1955. Despite the sale, the Torrens title
continued until 1937 in the name of the vendor Exequiel Ampil. At the trial, defendant presented the
owner's duplicate, Exhibit 1, of Original Certificate of Title No. 2497 which was delivered to defendant by
Ampil.
Prior to October 21, 1933, Exequiel Ampil was indebted to various creditors, to wit: (1) China
Banking Corporation — P11,995.00, (2) Philippine National Bank — P9,000.00, (3) Don Wenceslao
Trinidad — P10,000.00, total — P31,395.00. The payment of this indebtedness was guaranteed by the
plaintiff Eulogio Rodriguez, Sr., on the date Exequiel Ampil executed a document entitled "Venta
Condicional".
Upon the foregoing facts, the trial court adjudged plaintiff the rightful owner of the disputed land and
ordered defendant to deliver its possession to him, but found defendant to be a possessor in good faith
and hence free from liability for damages. Both parties appealed from the decision: plaintiff to the Court
of Appeals on this last finding in favor of defendant; and the latter directly to this Court on the issue of
ownership.
By resolution dated November 19, 1957 upon motion of plaintiff, as appellee, this Court agreed
to take cognizance of both appeals. That taken by plaintiff was accordingly forwarded here, docketed
under G.R. No. L-13343 and is now the subject of this decision G.R. No. L-12039, wherein defendant was
the appellant was decided by us on June 30, 1961. The judgment appealed from was affirmed in so far as
it declared plaintiff the owner, and therefore entitled to the possession, of the land in question.

Issue:
Whether or not the court was correct in declaring Maximo Francisco (and now herein defendant
as administrator of his estate after his death on June 20, 1950) as possessor in good faith.

Held:
All the foregoing circumstances, in our opinion, did not necessarily make appellee a possessor in
bad faith. The first circumstance cited is of no material importance because as ground by the lower court
and later on by this Court itself on appeal in G.R. No. L-12039, the land sold by virtue of Exhibit 4 is the
same one covered by TCT 2497. And the non-registration of the sale did not make the vendee one in bad
faith. With particular reference to the last circumstance stated, it has not been shown that Maximo
Francisco was notified or had actual knowledge of the said proceeding for consolidation of ownership in
appellant. Francisco was then and for a long time had been in possession of the land, and there can be no
question that for purposes of such possession the deed of sale marked Exhibit 4 was a good and sufficient
title. It was acquired without any flaw which would invalidate it. The possession having begun in good
faith the presumption is that it continued to be enjoyed in the same character until it could be proven
that the possessor was not unaware that his possession was wrongful (Articles 528 and 529, Civil Code).
It appears that in spite of the consolidation of ownership in appellant and the issuance of a transfer
certificate of title in his name in 1937, he never attempted to exercise possessory rights over the property
or paid taxes thereon, nor did he demand its possession from appellee until the complaint in this case
was filed on January 20. 1949.
98. MANOTOK REALTY, INC. v. THE HONORABLE COURT OF APPEALS
GR No. L-35367 April 9, 1987

Facts:
Herein appellee MANOTOK REALTY, INC. is the registered owner of the lot in dispute. It acquired
the aforementioned property from the Testate Estate of Clara Tambunting de Legarda, being the highest
bidder in a sale conducted by the Probate Court. After having acquired said property, the appellee
subdivided it, but could not take possession thereof because the whole area is occupied by several houses
among which is the one belonging to the herein appellant Felipe Carillo. Demands to vacate and to
surrender possession of the property were made and served to the appellant. In spite of such demands,
the appellant continued to occupy the disputed lot and refused to surrender possession thereof. He
argues that he acquired the lot in dispute from a certain Delfin Dayrit on September 25, 1962, pursuant
to a deed of assignment; that Dayrit in turn had acquired the property from the late Carla Tambunting
by virtue of a Contract of Sale on Installment Basis; that Dayrit had religiously paid the monthly
installments as they fell due, his last payment being on May 25, 1954, then leaving an unpaid balance
when the said parcel was conveyed to defendant Carillo, for which receipts were duly issued; that Dayrit
could not continue paying the succeeding installments as they fen due because Vicente Legarda, the
surviving spouse of Clara Tambunting, refused to receive any payment for the same and that it was only
on September 25, 1962, when Dayrit conveyed the lot to appellant Carillo.
After the petitioner failed in its attempts to take possession of the lot, it filed the reivindicatory action
against the respondent. The trial court decided the case in favor of the petitioner.

Issue:
Whether or not appellant may be considered as a possessor in good faith of the property in
question.

Held:
In this case, it was shown that under the contract of sale on installment basis, Delfin Dayrit had
only paid a total of P4,917.30, leaving an unpaid balance of P3,860.20 as of August 9, 1954. The said
contract specifically provides that ". . . if for some reason or other the purchaser cannot pay a certain
installment on the date agreed upon, it is hereby agreed that said purchaser will be given a maximum
limit of two months' grace in which to pay his arrears, after which the property will revert to the original
owner hereof: the Clara Tambunting Subdivision,." The subsequent installment after August 9, 1954, not
having been paid, the property, therefore, reverted to Clara Tambunting and therefore formed part of
her estate, which was subsequently acquired by appellee. Thus, when appellant purchased the parcel of
land in question from Dayrit on August 25, 1962—or eight (8) years after the default—the latter had no
more right over the same. A purchaser cannot close his eyes to facts which should put a reasonable man
upon his guard and then claim that he acted in good faith under the behalf that there was no defect in
the title of the vendor (Leung Yee v. Strong Machinery Co., 37 Phil. 644). Consequently, appellant cannot
be deemed a possessor in good faith and is not, therefore, entitled to reimbursement for the
improvements he had introduced in the property in question.
99. BRAULIO CASTILLO, ET AL. vs. SIMPLICIA NAGTALON
GR No. L-17079 January 29, 1962

Facts:
On November 11, 1952, Court of First Instance of Ilocos Norte rendered judgment declaring the
plaintiffs Braulio Castillo, et al., owners pro-indiviso of the land described in the complaint with the right
to possess it and that the defendants are ordered to restore the possession of the eastern portion thereof
to the plaintiffs, to pay damages in the amount of P210.00 every year since 1943 until they deliver the
possession of said portion to the plaintiffs, and to pay the costs.
On appeal by the defendants, the Court of Appeals affirmed said decision in all respects, with
costs against the defendants-appellants therein. The decision having become final, a writ of execution
was issued against all the defendants, to satisfy the damages and costs awarded therein which, together
with the expenses incidental to such execution, amounted to P3,401.00. Consequently, ten parcels of
land, three of which belonged exclusively to herein appellee Simplicia Nagtalon, one of the defendants,
were levied upon and sold for P3,401.00 at the execution sale conducted on July 8, 1957. On July 8, 1958,
the last day of the one-year period for redemption, appellee Simplicia Nagtalon deposited with the
Deputy Provincial Sheriff the sum of P317.44 representing 1/12 of the consideration of the sale plus 1%
interest thereon, and prayed for the issuance of the corresponding deed of redemption as to the three
parcels of land belonging to her.
The purchaser opposed the same on the ground that the amount thus tendered did not cover the
full redemption price of the said three parcels of land which were auctioned separately. In view of said
opposition, Nagtalon filed a motion with the court to compel the Sheriff to issue the deed of redemption
prayed for. On August 26, 1958, the court, acting on said motion, issued an order holding that the liability
of the defendants, as appearing in the dispositive part of the executed decision, was only joint and that
the tender by movant Nagtalon of the sum corresponding to 1/12 of the purchase price was sufficient to
redeem her properties sold at public auction. Thus, the Deputy Provincial Sheriff was directed to execute
and deliver to movant Nagtalon the certificate of redemption covering the three parcels of land owned
by her. The purchaser's and the Sheriff's motion for reconsideration having been denied, they instituted
the instant appeal.

Issue:
Whether or not the lower court committed an error in holding movant's tender of the sum of
P317.44 as valid redemption of the three parcels of land owned by her, and in ordering the issuance of
the corresponding certificate of redemption therefor.

Held:
The procedure for the redemption of the properties sold at execution sale is prescribed in Section
26, Rule 39, of the Rules of Court. Thereunder, the judgment debtor or redemptioner may redeem the
property from the purchaser, within 12 months after the sale, by paying the purchaser the amount of his
purchase, with 1% per month interest thereon up to the time of redemption, together with the taxes paid
by the purchaser after the purchase, if any. In other words, in the redemption of properties sold at an
execution sale, the amount payable is no longer the judgment debt but the purchase price. Considering
that appellee tendered payment only of the sum of P317.44, whereas the three parcels of land she was
seeking to redeem were sold for the sums of P1,240.00, P21.00, and P30.00, respectively, the
aforementioned amount of P317.44 is insufficient to effectively release the properties. However, as the
tender of payment was timely made and in good faith in the interest of justice we incline to give the
appellee opportunity to complete the redemption purchase of the three parcels, as provided in Section
26, Rule 39 of the Rules of Court, with and executory.
100. MARIA MAHILUM v. THE HONORABLE COURT OF APPEALS
GR No. L-17970 June 30, 1966

Facts:
Pedro Mahilum was the registered owner of a parcel of land. Upon the death of Pedro Mahilum
in 1934, he was succeeded by his six children, namely, Tomas, Juan, Clemente, Antonia, Juliana and
Tomasa who on May 13, 1935, executed a "deed of definite sale" in favor of Gorgonia Flora, married to
Basilio Sotes. The vendors had acknowledged the deed of sale before Notary Public Nicolas D. Destua. It
further appears that Gorgonia Flora, the herein plaintiff, had declared the contested portion for taxation
purposes and began paying the taxes therefor in 1936. The Mahilums, however, claimed that they never
sold any portion of the aforesaid Lot. As a matter of fact, according to them, Original Certificate of Title
No. RO-6024 (22893) is free from any encumbrance whatsoever.
They further claimed that if plaintiff had been in possession of a portion of said lot, it was a mere
toleration on their part, but not an acknowledgment of her right of ownership over the property. In the
six children of the late Tomas Mahilum, only two were living at the trial of this case, namely, Tomasa and
Juan. According to Tomasa, neither she nor her brothers and sisters appeared before notary public
Nicolas Destua, much less thumb marked and/or signed the deed of sale. According to the plaintiff, only
Clemente Mahilum affixed his signature on the document, and they simply thumb marked the same.
Juan Mahilum alleged in their complaint for "Annulment of Contract of Definite Sale," that Gorgonia
Flora Vda. de Sotes fraudulently took advantage of the illiteracy or incapacity of the plaintiff and their
brothers and sisters, Tomas, Clemente and Antonia who were then living, induced them to sign a certain
writing, which writing the defendant, in conspiracy with Notary Public, Nicolas D. Destua ..., falsely and
fraudulently represented to be an acknowledgment of debt of plaintiffs father, Pedro Mahilum, but which
is in fact a Definite Contract of Sale disposing of Lot No. 2195 as aforesaid.

Issue:
Whether or not the Court of Appeals erred in not holding that the deed of sale is inadmissible in
evidence because it lacks the necessary documentary stamps.

Held:
No. The stamps referred to by petitioners (and required by Section 238 of the Internal Revenue
Code so that a public document may be admitted as evidence) are supposed to be, and as a matter of
practice actually are, affixed to the original or first copy of the document and not to any of the duplicates
or carbon copies thereof. There is no evidence whatsoever that such practice was not observed in regard
to the deed of sale involved in this case, and consequently the presumptions that official duty has been
regularly performed, that private transactions have been fair and regular, and that the regular course of
business has been followed, must be applied (Sec. 69[q], Rule 123; now Sec. 5, Rule 131). The burden is
upon those who seek to destroy this presumption to do so by convincing proof. The decision of the Court
of Appeals is affirmed, with costs against petitioners-appellants.
101. MACONDRAY & CO., INC. vs. PRAXEDES R. DE SANTOS
G.R. No. L-42416, April 9, 1935, 61 PHIL. 730

Facts:
The complaint alleges, for a first cause of action, that on January 11, 1934, Praxedes R. De Santos
executed and delivered to the plaintiff Macondray & Co., INC. a promissory note for the sum of P1,000,
with interest rate of 12 per cent per annum, payable in installments and in case of default in the payment
of the principal or interest an additional sum equal to 20 per cent of the total amount due was to be paid
as attorney's fees; that to guarantee the payment of this note the defendant executed a chattel mortgage
on a automobile; if the mortgaged property be lost, destroyed or damages, the mortgage would
immediately have the right to foreclose and declare the whole amount of the principal and interest,
secured by said mortgage, due and payable;
On January 21, 1934, the mortgaged automobile, while in possession of the defendant, met with
an accident resulting in its total wreck and loss; by reason of the failure of the defendant to replace or to
restore the automobile or to pay the value thereof plaintiff foreclosed its mortgage and what remained
of the wrecked automobile was sold at public auction for the sum of P50; that after applying this amount
to the account of defendant there was an unpaid balance of P980.39 plus interest at 12 per cent per
annum from March 24, 1934, and 20 per cent of the amount due as attorney's fees, which defendant
refused to pay. As an alternative cause of action, the plaintiff reproduces the allegations contained in the
first cause of action and prays that defendant be sentenced to pay the plaintiff the above-mentioned
amount with interest. The defendant, as the only ground of her demurrer, alleges that under the
provisions of Act No. 4122, article 1454-A of the Civil Code, there is no cause of action against her.
The defendant demurred to the complaint, the trial court sustained it and gave the plaintiff five days
within which to amend. Plaintiff accepted to the order sustaining the demurrer and gave notice that it
elected to stand upon its complaint and thereupon the lower court, upon motion of the defendant,
dismissed the complaint with costs against the plaintiff. Plaintiff accepted to the order dismissing the
complaint and moved for a new trial. Upon the denial of this motion and upon appeal to this court,
plaintiff alleges that the trial court erred: I. In sustaining the demurrer of the defendant to the plaintiff's
complaint; II. In dismissing the case; III. In not rendering judgment in accordance with the prayer of the
plaintiff's complaint; IV. Conceding, but not admitting, that the case falls under the provisions of Act No.
4122, the lower court erred in not finding that the said law is unconstitutional in that it confiscates
property without due process of law and denies the equal protection of the laws of the plaintiff. V. In not
granting the plaintiff's motion for new trial.

Issue:
Whether or not the contention of the defendant that under the provisions of Act No. 4122, article
1454-A of the Civil Code, there is no cause of action against her is valid.

HELD:
 No. In order to apply the provisions of article 1454-A of the 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. In view of the above, the trial court erred in sustaining the demurrer.
The appellant's first, second, third and fifth assignments of error are sustained. Wherefore it is not
necessary to pass upon the fourth assignment of error. The order of the trial court dismissing the
complaint is hereby set aside and this case will be remanded to the trial court for further proceedings in
accordance with law, with the costs of this appeal against the defendant-appellee.

102. LEVY HERMANOS, INC. vs. GERVACIO, G.R. No. L-46306

October 27, 1939, 69 Phil. 52

Facts:
On March 10, 1937, plaintiff Levy Hermanos, Inc., sold to defendant Lazaro Blas Gervacio, a
Packard car. Defendant, 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 cent per annum, to secure the payment
of the note, he mortgaged the car to the plaintiff. Defendant failed to pay the note in its maturity.
Wherefore, plaintiff foreclosed the mortgage and the car was sold at public auction, at which plaintiff
was the highest bidder for P1,800. The present action is for the collection of the balance of P1,600 and
interest.

Issue:
Whether or not the cash payment made by Gervacio should be considered as an instalment.

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.
103. INDUSTRIAL FINANCE CORP vs. TOBIAS
78 SCRA 28
Facts:
Tobias bought on installment one a Dodge truck from Leelin Motors, Inc. To answer for his
obligation he executed a promissory note in favor of the latter, for the sum of P29.070.28 payable in
thirty-six (36) equal installments with interest at the rate of 12% per annum payable in the amounts and
dates indicated in said promissory note. To secure payment of the promissory note, respondent Tobias
executed in favor of Leelin Motors, Inc. a chattel mortgage on the Dodge truck. Leelin Motors, Inc.
indorsed the promissory note and assigned the chattel mortgage to petitioner Industrial Finance
Corporation.
Tobias paid six (6) installments on the promissory note directly to the petitioner Industrial
Finance Corporation but defaulted on more than two installments, IFC through a letter gave Tobias a
choice of either paying the balance of the purchase price or surrender the truck. Tobias responded to the
letter voluntarily and willingly surrendering the truck which was still in the custody of Leelin Motors ever
since the truck met an accident. Upon learning that the truck met an accident, IFC decided not to get the
truck anymore from Leelin Motors. Instead, IFC filed an action against Tobias to recover the unpaid
balance of the promissory note.

Issue:
Whether possession by the mortgagee of the disputed vehicle bars its foreclosure

Held:
Possession by the mortgagee of the disputed vehicle bars the chattel mortgage foreclosure. The
contract being a sale of machinery payable in installments, the applicable provision of law is Article 1484
of the Civil Code, which gives the vendor the option to exercise any one of the alternative remedies
therein mentioned: exact fulfillment of the obligation, cancel the sale, or foreclose the chattel mortgage.
But the vendor- mortgagor in the present case desisted, on its own initiative, from consummating the
auction sale, without gaining any advantage or benefit, and without causing any disadvantage, or harm
to the vendees-mortgagees. The least that could be said is that such desistance of the plaintiff from
proceeding with auction sale was a timely disavowal that cancelled and rendered useless its previous
choice to foreclose; its acts, being extra-judicial, brought no trouble upon any court, and were harmless
to the defendants. For this reason, the plaintiff can not be considered as having “exercised” (the Code
uses the word “exercise”) the remedy of foreclosure because of its incomplete implementation, and,
therefore, the plaintiff is not barred from suing on the unpaid account.
The remedies provided for in Art. 1484 are considered alternative, not cumulative such that the
exercise of one would bar the exercise by the others. Here, petitioner has not cancelled the sale, nor has
it exercised the remedy of foreclosure. Foreclosure, judicial or extra-judicial, presupposes something
more than a mere demand to surrender possession of the object of the mortgage. Since the petitioner
has not availed itself of the remedy of cancelling the sale of the truck in question or of foreclosing the
chattel mortgage on said truck, petitioner is still free to avail of the remedy of exacting fulfillment of the
obligation of respondent Tobias, the vendee of the truck in question. In Radiowealth Inc. vs. Lavin, the
facts of which are similar to the ‘present case, the issue was “whether the plaintiff is precluded to press
for collection of an account secured by a chattel mortgagee after it shall have informed the defendants
of its intention to foreclose said mortgage, and the voluntary acceptance of such step (foreclosure) by
defendant mortgagor,” the Supreme Court ruled in favor of the plaintiff mortgagee.

104. RIDAD vs. FILIPINAS INVESTMENT

120 SCRA 246
Facts:
The spouses Ridad purchased from the Supreme Sales Development Corporation two (2) brand
new Ford Consul Sedans complete with accessories. To secure payment thereof, plaintiffs executed on
the same date a promissory note covering the purchase price and a deed of chattel mortgage not only on
the two vehicles purchased but also on another car (Chevrolet) and their franchise or certificate of public
convenience granted by the defunct Public Service Commission for the operation of a taxi fleet with
Filipinas Investment.
Due to the failure of the plaintiffs to pay their monthly installments as per promissory note, Filipinas
Investment foreclosed on the chattel mortgage on the Ford Consul Sedans. The foreclosure sale had a
deficiency. Consequently, the corporation foreclosed the mortgage constituted on the (Chevrolet) and
their franchise or certificate of public convenience.

Issue:
Whether Filipinas Investment is precluded from foreclosing the second mortgage to recover the
deficiency on the first mortgage

Held:
No. The vendor of personal property sold on the installment basis is precluded, after foreclosing
the chattel mortgage on the thing sold from having a recourse against the additional security put up by
a third party to guarantee the purchaser’s performance of his obligation on the theory that to sustain the
same would overlook the fact that if the guarantor should be compelled to pay the balance of the
purchase price, said guarantor will in turn be entitled to recover what he has paid from the debtor-
vendee, and ultimately it will be the latter who will be made to bear the payment of the of the balance of
the price, despite the earlier foreclosure of the chattel mortgage given by him, thereby indirectly
subverting the protection given the latter.
If the vendor under such circumstance is prohibited from having a recourse against the additional security
for reasons therein stated, there is no ground why such vendor should not likewise be precluded from
further extrajudicially foreclosing the additional security put up by the vendees themselves, as in the
instant case, it being tantamount to a further action 5 that would violate Article 1484 of the Civil Code,
for then is actually no between an additional security put up by the vendee himself and such security put
up by a third party insofar as how the burden would ultimately fall on the vendee himself is concerned.
172
105. ESGUERRA vs. COURT OF APPEALSE
173 SCRA 1
Facts:
Esguerra bought a truck from GAMI on installments. To secure the payment, a chattel mortgage
was executed by Esguerra. Later, Esguerra failed to pay 2 installements. Consequently GAMI filed an
action for foreclosure of the chattel mortgage. Agents of GAMI, impersonated sheriffs and took the said
truck while it was in the possession of Esguerra’s driver, Carlito Padua; and the same had remained in the
possession of GAMI, notwithstanding demands for its return by Esguerra.
Esguerra filed a complaint with the then Court of First Instance of Cavite, Branch IV, TagaytayCity
to recover said truck and for damages. Esguerra alleged, among others, that due to his failure to pay the
installments due, the agents of GAMI, Jose Tino and Samuel Dore, representing themselves as deputy
sheriffs and with use of force, threats and intimidation, seized the cargo truck in question from his driver,
Carlito Padua, while unloading gravel and sand in Pasay City; and that despite repeated demands, GAMI
refused and failed to return the same. GAMI, et al. filed their answer with a counterclaim, alleging as
affirmative defense that the plaintiff gave his consent to the taking of the truck by the agents of the
corporation on condition that he be allowed to recover its possession upon payment of his back accounts.

Issue:
Whether or not GAMI is liable for damages in taking the truck

Held:
The taking of Esguerra’s truck without proceeding to sell the same at public auction
appropriating the same in payment of Esguerra’s indebtedness is not lawful. However, the respondent
appellate court did not err in holding that while the mortgagee can take possession of the chattel, such
taking did not amount to the foreclosure of the mortgage. Otherwise stated, the taking of Esguerra’s
truck without proceeding to the sale of the same at public auction, but instead, appropriating the same
in payment of Esguerra’s indebtedness, is not lawful. As clearly stated in the chattel mortgage contract,
the express purpose of the taking of the mortgaged property is to sell the same and/ or foreclose the
mortgage constituted thereon either judicially or extrajudicially and thereby, liquidate the indebtedness
in accordance with law.
A stipulation in a contract of sale regarding automatic appropriation amounts to pactum commissorium,
and is therefore null and void. More than that, even if such automatic appropriation of the cargo truck in
question can be inferred from or be contemplated under the aforesaid mortgage contract, such
stipulation would be pactum commissorium which is expressly prohibited by Article 2088 of the Civil
Code and therefore, null and void. The three remedies of the vendor in case the vendee defaults under
Art. 1484 are alternative and cannot be exercised simultaneously or cumulatively by the vendor creditor.
Having opted to foreclose the chattel mortgage, respondent GAMI can no longer cancel the sale. The
three remedies of the vendor in case the vendee defaults, in a contract of sale of personal property the
price of which is payable in installment under Article 1484 of the Civil Code, are alternative and cannot
be exercised simultaneously or cumulatively by the vendor-creditor. In Cruz vs. Filipinas Investment and
Finance Corporation (23 SCRA 791, [1968]), the Supreme Court construing Article 1484 of the Civil Code,
HELD: “Should the vendee or purchaser of a personal property default in the payment of two or more of
the agreed installments, the vendor or seller has the option to avail of any one of these three.

106. FILINVEST CREDIT CORPORATION vs. THE COURT OF APPEALS, JOSE SY BANG and
ILUMINADA TAN SY BANG
G.R. No. 82508 September 29, 1989
Facts:
Herein private respondents spouses Jose Sy Bang and Iluminada Tan were engaged in the sale of
gravel produced from crushed rocks and used for construction purposes. They intended to buy rock
crusher from Rizal Consolidated Corporation which carried a cash price tag of P550,000.00. They applied
for financial assistance from herein petitioner Filinvest Credit Corporation, who agreed to extend
financial aid on the certain conditions.
A contract of lease of machinery (with option to purchase) was entered into by the parties
whereby the private respondents agreed to lease from the petitioner the rock crusher for two years
starting from July 5, 1981, payable as follows: P10,000.00 – first 3 months, P23,000.00 – next 6 months,
P24,800.00 – next 15 months. It was likewise stipulated that at the end of the two-year period, the
machine would be owned by the private respondents. Thus the private respondent issued in favor of the
petitioner a check for P150,550.00, as initial rental (or guaranty deposit), and 24 postdated checks
corresponding to the 24 monthly rentals. In addition, to guarantee their compliance with the lease
contract, the private respondent executed a real estate mortgage over two parcels of land in favor of the
petitioner. The rock crusher was delivered to the spouses.
However, 3 months later, the souses stopped payment when petitioner had not acted on the complaints
of the spouses about the machine. As a consequence, petitioner extra-judicially foreclosed the real estate
mortgage. The spouses filed a complaint before the RTC. The RTC rendered a decision in favor of private
respondent. The petitioner elevated the case to CA which affirmed the decision in toto. Hence, this
petition.

Issues:
Whether or not the nature of the contract is one of a contract of sale.
Whether or not the remedies of the seller provided for in Article 1484 are cumulative.

Held:
Yes. The intent of the parties to the subject contract is for the so-called rentals to be the installment
payments. Upon the completion of the payments, then the rock crusher, subject matter of the contract,
would become the property of the private respondents. This form of agreement has been criticized as a
lease only in name.
Sellers desirous of making conditional sales of their goods, but who do not wish openly to make a bargain
in that form, for one reason or another, have frequently restored to the device of making contracts in the
form of leases either with options to the buyer to purchase for a small consideration at the end of term,
provided the so-called rent has been duly paid, or with stipulations that if the rent throughout the term
is paid, title shall thereupon vest in the lessee. It is obvious that such transactions are leases only in name.
The so-called rent must necessarily be regarded as payment of the price in installments since the due
payment of the agreed amount results, by the terms of bargain, in the transfer of title to the lessee.
No, it is alternative. The seller of movable in installments, in case the buyer fails to pay 2 or more
installments, may elect to pursue either of the following remedies: (1) exact fulfillment by the purchaser
of the obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased property if one was
constituted thereon. It is now settled that the said remedies are alternative and not cumulative, and
therefore, the exercise of one bars the exercise of the others. Indubitably, the device – contract of lease
with option to buy – is at times resorted to as a means to circumvent Article 1484, particularly paragraph
(3) thereof. Through the set-up, the vendor, by retaining ownership over the property in the guise of
being the lessor, retains, likewise the right to repossess the same, without going through the process of
foreclosure, in the event the vendee-lessee defaults in the payment of the installments. There arises
therefore no need to constitute a chattel mortgage over the movable sold. More important, the vendor,
after repossessing the property and, in effect, canceling the contract of sale, gets to keep all the
installments-cum-rentals already paid.
107. INDUSTRIAL FINANCE CORPORATION vs. HON. PEDRO A. RAMIREZ, Judge of the Court of
First instance of Manila, and CONSUELO ALCOB
GR. No. L-43821 May 26 1977

Facts:
On December 4, 1970 Arnaldo Dizon sold to Consuelo Alcoba his 1966 model Chevrolet car
forP13,157.89, payable in eighteen monthly installments, which were secured by a chattel mortgage on
the car.On that same date, Dizon assigned for ten thousand pesos to Industrial Finance Corporation all
his rights and interest in the chattel mortgage. Consuelo Alcoba defaulted in the payment of the first
fouri nstallments. Because of that default and by virtue of the acceleration clause in the promissory note
forming part of the mortgage, the whole obligation became due and demandable.On November 20,
1971, or less than a year after Industrial Finance Corporation had discounted Consuelo Alcoba's
promissory, note to Dizon, the corporation sued her in the Court of First Instance of Manila (Civil Case
No. 85583). The complaint, a printed form used by thecorporation in collection cases, is denominated
"replevin with damages".

Issue:
Whether or not Industrial Finance Corporation sought to foreclose the chattel mortgage by means of a
writ of replevin.

Held:
According to article 1484, 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 isentitled 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 mortgagedproperty is subsequently attached and sold, the sale thereof does not
amount to a foreclosure of themortgage. Hence, the seller-creditor is entitled to a deficiency judgment.
Decision: The court reversed its order of denying the third writ of execution. Consuelo Alcoba,
respondent, is held guilty. Costs against the respondent.
108. SOUTHERN MOTORS, INC. vs. MOSCOSO
G.R. No. L-14475 May 30, 1961

Facts:
Plaintiff Southern Motors, Inc. sold to defendant Angel Moscoso one Chevrolet truck on
installment basis, for P6,445.00. Upon making a down payment, the defendant executed a promissory
note for the sum of P4,915.00, representing the unpaid balance of the purchase price to secure the
payment of which, a chattel mortgage was constituted on the truck in favor of the plaintiff. Of said
account, the defendant had paid a total of P550.00, of which P110.00 was applied to the interest and
P400.00 to the principal, thus leaving an unpaid balance of P4,475.00. The defendant failed to pay 3
installments on the balance of the purchase price. Plaintiff filed a complaint against the defendant, to
recover the unpaid balance of the promissory note. Upon plaintiff's petition, 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 belonging to defendant, were attached by the Sheriff and said truck was brought to
the plaintiff's compound for safe keeping. After attachment and before the trial of the case on the merits,
acting upon the plaintiff's motion for the immediate sale of the mortgaged truck, the Provincial Sheriff
of Iloilo sold the truck at public auction in which plaintiff itself was the only bidder for P1,OOO.OO. The
trial court condemned the defendant to paythe plaintiff the amount of P4,475.00 with interest at the rate
of 12% per annum from August 16, 1957,until fully paid, plus 10% thereof as attorneys fees and costs.
Hence, this appeal by the defendant.

Issue:
Whether or not the attachment caused to be levied on the truck and its immediate sale at public
auction, was tantamount to the foreclosure of the chattel mortgage on said truck.

Held:
No. Article 1484 of the Civil Code provides that 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: (I) 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; and (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. The plaintiff had chosen the first remedy. The complaint is an
ordinary civil action for recovery of there maining unpaid balance due on the promissory note. The
plaintiff had not adopted the procedure or methods outlined by Sec. 14 of the Chattel Mortgage Law but
those prescribed for ordinary civil actions, under the Rules of Court. Had the plaintiff 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. That the
plaintiff did not intend to foreclose the mortgage truck, is further evinced by the fact that it had also
attached the house and lot of the appellant at SanJose, Antique.We perceive nothing unlawful or
irregular in plaintiff's act of attaching the mortgaged truck itself. Since the plaintiff 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.

109. SERVICE WIDE SPECIALISTS, INC. V. INTERMEDIATE APPELLATE COURT

G.R. NO. 174

Facts:
Galicano Siton purchased from Car Traders Philippines, Inc. a vehicle and paid a down payment
of the price. The remaining balance includes not only the remaining principal obligation but also advance
interests and premiums for motor vehicle insurance policies.
Siton executed a promissory note in favor of Car Traders Philippines, Inc. expressly stipulating that the
face value of the note shall "be payable, without need of notice of demand, in installments. There are
additional stipulations in the Promissory Note consisting of, among others, that if default is made in the
payment of any of the installments or interest thereon, the total principal sum then remaining unpaid,
together with accrued interest thereon shall at once become due and demandable.-As further security,
Siton executed a Chattel Mortgage over the subject motor vehicle in favor of Car Traders Philippines, Inc.
The credit covered by the promissory note and chattel mortgage executed by respondent Galicano Siton
was first assigned by Car Traders Philippines, Inc. in favor of Filinvest Credit Corporation. Subsequently,
Filinvest Credit Corporation likewise reassigned said credit in favor of petitioner Servicewide Specialists,
Inc. and respondent Siton was advised of this second assignment. Siton failed to pay, Servicewide
Specialist filed this action against Galicano Siton and "John Doe."
After the service of summons, Justiniano de Dumo, identifying himself as the "John Doe" in the
Complaint, inasmuch as he is in possession of the subject vehicle, filed his Answer with Counterclaim and
with Opposition to the prayer for a Writ of Replevin. Said defendant, alleged the fact that he has bought
the motor vehicle from Galicano Siton; that de Dumo and Siton testified that, before the projected sale,
they went to a certain. Atty. Villa of Filinvest Credit Corporation advising the latter of the intended sale
and transfer. Siton and de Dumo were accordingly advised that the verbal information given to the
corporation would suffice, and that it would be tedious and impractical to effect a change of transfer of
ownership as that would require a new credit investigation as to the capacity and worthiness of Atty. De
Dumo, being the new debtor. The further suggestion given by Atty. Villa is that the account should be
maintained in the name of Galicano Siton.; that as such successor, he stepped into the rights and
obligations of the seller; that he has religiously paid the installments as stipulated upon in the promissory
note. He also manifested that the Answer he has filed in his behalf should likewise serve as a responsive
pleading for his co-defendant Galicano Siton.
The CA denied the issuance of Writ of Replevin and ordering Siton and De Dumo to pay jointly
and severally, the plaintiff, the remaining balance on the motor vehicle.

Issue:
 Whether or not the mortgagee is bound by the deed of sale by the mortgagor in favor of a third
person, as neither the mortgagee nor its predecessors has given written or verbal consent thereto
pursuant to the deed of Chattel Mortgage.

Held:
The rule is settled that the chattel mortgagor continues to be the owner of the property, and
therefore, has the power to alienate the same; however, he is obliged under pain of penal liability, to
secure the written consent of the mortgagee. Thus, the instruments of mortgage are binding, while they
subsist, not only upon the parties executing them but also upon those who later, by purchase or
otherwise, acquire the properties referred to therein.-The absence of the written consent of the
mortgagee to the sale of the mortgaged property in favor of a third person, therefore, affects not the
validity of the sale but only the penal liability of the mortgagor under the Revised Penal Code and the
binding effect of such sale on the mortgagee under the Deed of Chattel Mortgage.-There is no dispute
that the Deed of Chattel Mortgage executed between Siton and the petitioner requires the written
consent of the latter as mortgagee in the sale or transfer of the mortgaged vehicle. We cannot ignore the
findings, however, that before the sale, prompt inquiries were made by private respondents with Filinvest
Credit Corporation regarding any possible future sale of the mortgaged property; and that it was upon
the advice of the company’s credit lawyer that such a verbal notice is sufficient and that it would be
convenient if the account would remain in the name of the mortgagor Siton.-Even the personal checks
of de Dumo were accepted by petitioner as payment of some of the installments under the promissory
note. If it is true that petitioner has not acquiesced in the sale, then, it should have inquired as to why de
Dumo's checks were being used to pay Siton's obligations.
110. BACHRACH MOTOR CO., INC. vs. PABLO A. MILLAN
G.R. No. 42256 April 25, 1935

Facts:
On December 12, 1933, the defendant, Pablo A. Millan, for value received, executed and
delivered to the Bachrach Motor Co., Inc. (plaintiff) his promissory note for the sum of P939 payable in
the City of Manila, Philippine Islands, in monthly installments. Said amount of P939 was the balance of
the purchase price of one second hand Renault touring car purchased by the said defendant from the
plaintiff, as may be seen from the chattel mortgage executed by the defendant in favor of the plaintiff on
December 12, 1933, and registered in the office of the Register of Deeds of the City of Manila. Defendant
failed to pay three monthly installments (December 22, 1933, and January 22 and February 22, 1934)
which violated the terms of the said promissory note and chattel mortgage. After crediting all the
payments made by defendant on account of said promissory note, he still owes the plaintiff the sum of
P928.50, together with interest thereon.
Defendant offered to return the second hand Renault touring car to the plaintiff in payment of
the full amount under the promissory note and the chattel mortgage but plaintiff refused to receive the
same, and has filed this complaint for the full amount of the purchase price without foreclosing the
chattel mortgage. The trial court dismissed the case.

Issue:
Whether or not the adoption of article 1454-A (Act No. 4122), amending article 1454 of the Civil
Code also repealed that part of article 1124 of the Civil Code, which gives the prejudiced person the right
to exact the fulfillment of an obligation.

Held:
No. Before Act No. 4122 was adopted the legal right to exact the fulfillment of an obligation was
also available to the person prejudiced by the failure of one of the obligors to comply with the terms of
an obligation. Act No. 4122 does not expressly or impliedly prohibit the party injured by the failure of one
of the obligors, in a sale of personal property on installments, from exacting the fulfillment of that
obligation. Neither do the terms of that Act expressly provide nor do they imply that, upon failure to pay
two or more installments on the purchase price of personal property sold on the installment plan, the
vendor must "cancel the sale or foreclose the mortgage if one has been given on the property." In view
of the foregoing, it is evident that the Legislature in adopting Act No. 4122 did not intend to limit the
remedies available to a vendor of personal property on the installment plan to the right to cancel the sale
or foreclose the mortgage if one had been given on the property. The real object of that law is to prevent
the exercise of either of these rights by such a vendor until after the vendee has failed to pay two or more
installments and furthermore to prescribe and limit the rights of the vendor after he has availed himself
of either of the remedies mentioned therein. In a sale of personal property on the installment plan the
vendor may elect to exact the fulfillment of the obligation, as the plaintiff has done in this case, cancel
the sale or foreclose his mortgage if one has been given on the property so sold. If he elects to cancel or
foreclose he is bound by the provisions of article 1454-A of the Civil Code.

111. MACONDRAY & CO., INC. vs. BENITO and OCAMPO

G.R. No. 43014 September 24, 1935

Facts:
The defendants admit each and every allegation in each and every paragraph of the plaintiff’s
amended complaint subject to the stipulations herein contained. The promissory notes mentioned were
executed by the defendants to cover the unpaid balance of the price of certain personal properties
purchased by them from the plaintiff payable in installments, the said properties being covered by the
two chattel mortgages specified therein.
Upon the failure of the defendants to pay the two (2) and more installments on the purchase price ofsaid
personal properties, plaintiff foreclosed the mortgages executed on said properties. The properties
mortgaged were sold at public auction to the plaintiff which was the only bidder therefor. The parties, in
view of this stipulation, submit for determination by the court the sole question of law whether by virtue
of sec. 1454-A of the Civil Code (Act No. 4122 of the Philippine Legislature) plaintiff is entitled to recover
from the defendants the unpaid balance of the purchase price of said personal properties.

Issue:
Whether or not the provisions of Law No.4122 of the Philippine Legislature benefits in this case
the defendants.

Held:
Yes. Not challenged the effectiveness and the validity of the Act. The notes in question are hand
granted after the rule of law. It is obvious, therefore, that the transaction at issue here falls within its laws,
among which are available expressly that the seller will have no action against the purchaser, to recover
the unpaid balance after the property executed, and that any agreement contrary to this legal provision
is null and void.
112. PASCUAL vs. UNIVERSAL MOTORS CORP.
61 SCRA 121 November 1974
Facts:
Plaintiff-appellee spouses Lorenzo Pascual and Leonila Torres (spouses Pasqual) executed the
real estate mortgage subject matter of this complaint on December 14, 1960 to secure the payment of
the indebtedness of PDP Transit, Inc. (PDP Trans.) for the purchase of 5 units of Mercedes Benz trucks,
with a total purchase price or principal obligation of P152,506.50 which was to bear interest at 1% per
month starting that day, but the plaintiffs' guarantee is not to exceed P50,000.00 which is the value of
the mortgage. The PDP Trans., as the spouses Pasqual's principal, paid to defendant-appellant Universal
Motors Corporation (Universal Motors) the sum of P92,964.91.
On April 5, 1961 for two of the five Mercedes Benz trucks and on May 22, 1961 for the remaining
three, thus leaving a balance of P68,641.69 including interest due on February 8,1965. On March 19, 1965,
Universal Motors filed this complaint with the CFI of Manila against the PDP Trans. to collect the balance
due under the Chattel Mortgages and to repossess all the units sold to PDP Trans. as the spouse Pascual’s
principal, including the 5 units guaranteed under the subject Real (Estate) Mortgage. During the
hearinbg, Universal Motors admitted that it was able to repossess all the units sold to the latter, including
the 5 units guaranteed by the subject real estate mortgage, and to foreclose all the chattel mortgages
constituted thereon, resulting in the sale of the trucks at public auction. As the real estate mortgagors,
the spouses Pascual filed an action with the CFI of Quezon City for the cancellation of the mortgage they
constituted on 2 parcels of land in favor of the Universal Motors to guarantee the obligation of PDP Trans.
to the amount of P50,000. The said CFI rendered judgment in favor of the spouses Pascual and ordered
the cancellation of the mortgage.

Issue:
Was Article 1484 of the New Civil Code applicable in the case at bar.

Held:
The Supreme Court affirmed the lower court’s decision. Appellant Universal Motors argues that
Article 1484 is not applicable to the case at bar because there is no evidence on record that the purchase
by PDP Trans. of the 5 trucks was payable in installments and that the PDP Trans. had failed to pay two
or more installments. Universal Motors also contends that what Article 1484 prohibits is for the vendor
to recover from the purchaser the unpaid balance of the price after he has foreclosed the chattel
mortgage on the thing sold, but not a recourse against the security put up by a third party. The Supreme
Court concluded to the contrary, saying that the first issue was whether or not the sale was one on
installments. The lower court found that it was, and that there was failure to pay two or more
installments, a finding which is not subject to review by the Supreme Court. The next contention is that
what article 1484 withholds from the vendor is “the right to recover any deficiency from the purchaser
after the foreclosure of the chattel mortgage,” and not a “recourse to the additional security put up by a
third party to guarantee the purchaser's performance of his obligation.” But the Supreme Court to sustain
this argument of the appellant would be to indirectly subvert and public policy overturn the protection
given by Article 1484.

113. ZAYAS JR. vs. LUNETA MOTOR COMPANY, et al.

G.R. No. L-30583 October 23, 1982
Facts:
Eutropio Zayas, Jr, purchased on installment basis a motor vehicle from Mr. RoqueEscaño of the
Escaño Enterprises in Cagayan de Oro City, dealer of respondent Luneta MotorCompany , under the
following terms and conditions:
Selling price P7,500.0.
Financing charge P1,426.82
Total Selling Price P8,926.82
Payable on Delivery P1,006.82
Payable in 24 months at 12% interest per annum P7,920.00
The motor vehicle was delivered to the petitioner who paid the initial payment in the amount of
P1,006.82, and executed a promissory note in the amount of P7,920.00, the balance of the total selling
price, in favor of respondent Luneta Motor Company. The promissory note stated the amounts and dates
of payment of 26 installments covering theP7,920.00 debt.
Simultaneously with the execution of the promissory note and to secure its payment, the petitioner
executed a chattel mortgage on the subject motor vehicle in favor of the respondent. After paying a total
amount of P3,148.00, the petitioner was unable to pay further monthly installments prompting the
respondent Luneta Motor Company to extra- judicially foreclose the chattel mortgage. The motor
vehicle was sold at public auction with the respondent Luneta Motor Company as the highest bidder in
the amount of P5,000.00.Since the payments made by petitioner Zayas, Jr. plus the P5,000.00 realized
from the foreclosure of the chattel mortgage could not cover the total amount (P7,920.00) of the
promissory note executed by the petitioner in favor of the respondent Luneta Motor Company, the latter
filed an action for the recovery of the balance of P1,551.74 plus interests.

Issue:
Whether or not a deficiency amount after the motor vehicle, subject of the chattel mortgage, has
been sold at public auction could still be recovered by respondent company

Held:
No. The main defense of respondent Luneta Motor Company is that EscañoEnterprises, Cagayan
de Oro City from which petitioner Zayas, Jr. purchased the subject motor vehicle was a distinct and
different entity; that the role of Luneta Motor Company in the said transaction was only to finance the
purchase price of the motor vehicle; and that in order to protect its interest as regards the promissory
note executed in its favor, a chattel mortgage covering the same motor vehicle was also executed by
petitioner Zayas, Jr. In short, respondent Luneta Motor Company maintains that the contract between
the company and the petitioner was only an ordinary loan removed from the coverage of Article 1484 of
the New Civil Code. This is untenable. The Escaño Enterprises of Cagayan de Oro City was an agent of
Luneta Motor Company. Avery significant evidence which proves the nature of the relationship between
Luneta Motor Company and Escaño Enterprises is Annex “A” of the petitioner’s Opposition to Urgent
Motion for Reconsideration. Annex “A” is a Certification from the cashier of Escaño Enterprises on the
monthly installments paid by Zayas, Jr. In the certification, the promissory note in favor of Luneta Motor
Company was specifically mentioned. There was Escaño Enterprises, a dealer of respondent Luneta
Motor Company.

114. MANILA TRADING AND SUPPLY CO vs. REYES

GR No. L-43263 October 31, 1935

Facts:
On December 13, 1933, following the enactment of Act No. 4122 or the Installment Sales Law,
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. To plaintiff's complaint defendant filed an answer in
which he pleaded as a 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. After trial the lower court sustained defendant's defense and rendered a
judgment absolving him from the complaint, with costs.
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.

Issues:
Whether or not Act No. 4122 violates the constitutional provision "that no bill which may be
enacted into law shall embraced more than one subject and that subject shall be expressed in the title of
the bill.
Whether or not the said law violates the non-impairment clause.

Held:
Act No. 4122 known as the enforcement sales law is valid and enforceable.
The Philippine Legislature having had the purpose in mind in enacting Act No. 4122 to provide
legislation concerning sales on the installment plan, this subject was sufficiently expressed by indicating
in the title that the law had to do with an amendment of the Civil Code in the portion thereof given to
purchase and sale. Legislation should not be embarrassed by overly strict construction. The
constitutional provision " that no bill which may be enacted into law shall be expressed in the title of the
bill" while designed to remedy an evil was not designed to require great particularity in stating the object
of the law in its title. Parties have no vested rights in particular remedies or modes of procedure, and the
Legislature may change existing remedies and modes of procedure without impairing the obligations of
contracts, provided an efficacious remedy remains for the enforcement of a mortgage may not,even
when public policy is invoked as an excuse, be pressed so far as to cut down the security of a mortgage
without moderation or reason or in a spirit of oppression. In the Philippines three remedies are available
to the vendor who has sold personal property on the installment plan. (1) He may elect to exact fulfillment
of the obligation (Bachrach Motor Co. vs. Millan [1935], 61 Phil 409). (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.
Act 4122 does no more than qualify the remedy.
The question of the validity of an act is solely one of constitutional power. Questions of
expediency of motive or of results are irrelevant. Nevertheless it is not improper to inquire as to the
occasion for the enactment of a law.
Most constitutional issues are determined by the Court's approach to them. The proper approach
should be to resolve all presumptions in favor of the validity of an act in the absence of a clear conflict
between it and the constitution. All doubts should be resolved in its favor.
Public policy, obvious from a statute, when defined and established by legislative authority and when
violative of no constitutional principle, should be perpetuated by the Courts.
115. INDUSTRIAL FINANCE CORPORATION VS. CASTOR TOBIAS
G.R. No. L-41555 July 27 1977

Facts:
Tobias bought on installment one a dodge truck from Leelin Motors, Inc. To answer for his
obligation he executed a promissory note in favor of the latter, for the sum of P29 070.28 payable in thirty
– six (36) equal installments with interest at the rate of 12% per annum payable in the amounts and dates
indicated in said promissory note. To secure payment of the promissory note, respondent Tobias
executed in favor of Leelin Motors, Inc. a chattel mortgage on the dodge truck. Leelin Motors, Inc.
indorsed the promissory note and assigned the chattel mortgage to petitioner Finance Corporation.
Tobias paid six (6) installments on the promissory note directly to the petitioner Industrial
Finance Corporation but defaulted on more than two installments, IFC through a letter gave Tobias a
choice of either paying the balance of the purchase price or surrender the truck. Tobias responded to the
letter voluntarily and willingly surrendering the truck which was still in the custody of Leelin Motors ever
since the truck met an accident. Upon learning that the truck met an accident, IFC decided not to get the
truck anymore from Leelin Motors. Instead, IFC filed an action against Tobias to recover the unpaid
balance of the promissory note.

Issue:
Whether possession by the mortgagee of the disputed vehicle bars its foreclosure.

Held:
Possession by the mortgagee of the disputed vehicle bars the chattel mortgage foreclosure. The
contract being a sale of machinery payable in installments, the applicable provision of law is Article 1484
of the Civil Code, which gives the vendor the option to exercise any one of the alternative remedies
therein mentioned: exact fulfillment of the obligation, cancel the sale, or foreclose the chattel mortgage.
But he vendor – mortgagor in the present case desisted, on its own initiative, from consummating the
auction sale, without gaining any advantage or benefit, and without causing any disadvantage,, or harm
to the vendees – mortgagees. The least that could be said is that such desistance of the plaintiff from
proceeding with auction sale was a timely disavowal that cancelled or rendered useless its previous
choice to foreclose; its acts, being extra-judicial, brought no trouble upon any court, and were harmless
to the defendants. For this reason, the plaintiff cannot be considered as having ―exercised‖ (the Code
uses the word ―exercise‖) the remedy of foreclosure because of its incomplete implementation, and,
therefore, the plaintiff is not barred from suing on the unpaid account.
The remedies provided for in Art. 1484 are considered alternative, not cumulative such that the exercise
by the others. Here, petitioner has not cancelled the sale, nor has it exercised the remedy of foreclosure.
Foreclosure, judicial or extrajudicial, presupposes something more than a mere demand to surrender
possession of the object of the mortgage. Since the petitioner has not availed itself of the remedy of
cancelling the sale of truck in question or of foreclosing the chattel mortgage on said truck, petitioner is
still free to avail of the remedy of exacting fulfillment of the obligation of respondent Tobias, the vendee
of the truck in question. In Radio wealth Inc. vs. Lavin, the facts of which are similar to the present case,
the issue was ―whether the plaintiff is precluded to press for collection of an account secured by a chattel
mortgage after it shall have informed the defendants of its intention to foreclose said mortgage, and the
voluntary acceptance of such step (foreclosure) by defendant mortgagor,‖ the Supreme Court ruled in
favor of the plaintiff mortgagee.

116. SPOUSES NONATO VS. IAC AND INVESTOR‘S FINANCE CORP.

G.R. No. L-67181 November 22 1985

Facts:
In 1976, Spouses Restituto Nonato and Ester Nonato purchased a Volkswagen from the People‘s
Car Inc. on installment basis. To secure their complete payment, Nonato executed a promissory note and
a chattel mortgage in favor of People‘s Car Inc. Subsequently, People‘s Car Inc. assigned its rights and
interest over the note and mortgage in favor of Investor‘s Finance Corp (IFC). For failure of the spouses
to pay two or more installments, despite demands, the car was repossessed by IFC. Despite repossession,
IFC still demanded from Nonato that they pay the balance of the price of the car. IFC, then, filed a
complaint for the payment of the price of the car with damages. Nonato, in their defense, argued that
when the company repossessed the car, IFC had, by that act, effectively cancelled the sale of the vehicle.
As such, it was barred from exacting the recovery of the unpaid balance of the purchase price as
mandated by Article 1484. The trial court rendered in favor of IFC and ordered the spouses Nonato pay
the balance of the purchase price of the car with interest. CA affirmed the same.

Issue:
Whether or not a vendor or his assignee, who had cancelled the sale of a motor vehicle for failure
of the buyer to pay two or more of the stipulated installments, may also demand payment of the balance
of the purchase price.

Held:
No.The applicable law in this case at bar is Article 1484 which provides that 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 fulfilment 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 contrary shall be void.
This provision means that should the vendee or the purchaser of a personal property default in the
payment of two or more of the agreed installments, the vendor or the seller has the option to avail any
of these 3 remedies – either to exact fulfillment by the purchaser of the obligation, or to cancel the sale,
or to foreclose the mortgage on the purchased personal property, if one was constituted. These remedies
have been recognized as an alternative, not cumulative, that the exercise of one should bar the exercise
of the others.
In the present case, it is not disputed that IFC had taken possession of the car purchased by the
Nonatos after the spouses defaulted in their payments. The defense of IFC that it the repossession of the
vehicle was only for the purpose of appraising its value and for storage and safekeeping pending full
payment of the spouses is untenable. The receipt issued by IFC to the spouses when it took possession
of the vehicle that the vehicle could be redeemed within 15 days. This could only mean that should the
spouses fail to redeem the car within the period provided, IFC would retain permanent possession of the
vehicle. IFC even notified the spouses Nonato that the value of the car was not sufficient to cover the
balance of the purchase price and there was no attempt at all on the part of the company to return the
car.
The acts performed by IFC are consistent with the conclusion that it had opted to cancel the sale
of the vehicle. Therefore, it is barred from exacting payment from the petitioners of the balance of the
price of the vehicle which it had already repossessed (it cannot have its cake and eat it too).
117. VDA. DE QUIAMBAO VS. MANILA MOTORS CO.
G.R. No. L-17384 October 31 1961

Facts:
On 7 March 1940, Gaudencio R. Quiambao, deceased husband of Nestora Rigor Vda. De
Quiambao and father of the other petitioners bought from Manila Motor Company, Inc. one (1)
Studebaker car on installment plan. Upon default in the payment of a number of installments, the
company sued Gaudencion Quiambao in Civil Case 53043 of the CFI Manila. On 4 December 1940,
judgment was entered in said case, awarding in favor of the company the sum of P3, 054.32, with interest
thereon at 12% per annum, and P300.00 attorney‘s fees. On 14 July 1941, the court issued a writ of
execution directed to the Provincial sheriff of Tarlac, who thereupon levied on and attached two parcels
of land covered by TCT 18390 of the Office of the Register of Deeds for Tarlac.
On 27 August 1941, Atty. Felix P. David, then counsel for the Manila Motor Company,
accompanied by the sheriff, personally apprised Gaudencio Quiambao of the levy. The latter pleaded to
have the execution sale suspended and begged for time within which to satisfy the judgment debt,
proposing that in the meanwhile, he would surrender to the company the Studebaker car. This
proposition was accepted; accordingly, Gaudencio Quiambao delivered the car to the company, and
Atty. David issued a receipt therefore. On 16 October 1941, Gaudencio Quiambao remitted to the
company, on account of the judgment, the sum of P500.00; he , however, failed to make further
payments, thus leaving a balance still unsettled of P1,952.47, with interest thereon at 12% per annum
from 6 March 1940.
In the meantime, the Pacific war broke out, and when the Japanese forces occupied the country
shortly thereafter, the invader seized all the assets of the Manila Motor Company, Inc. as enemy
property. After the war, the company filed with the Philippine War Damage Commission, among other
things, a claim for its mortgage lien on the car of Gaudencio Quiambao and was awarded the sum of
P780.47, P409.75 of which amount had already been paid. On 12 October 1949, the company addressed
a letter to Gaudencio Quiambao asking him to fill a blank form relative to the lost car. Quiambao having
since died, his widow, Nestora Rigor Vda. De Quiambao, returned the form with the statement that the
questioned car was surrendered to the company for storage. On 18 May 1953, a demand was made on
the widow to settle the deceased‘s unpaid accounts, but in view of her refusal, the company urged the
Sheriff of Tarlac to carry out the pre-war writ of execution issued in Civil Case 58043. Although the records
of the case had been lost during the war, and have not been reconstructed, a copy of said writ of
execution kept on file by the provincial sheriff was saved. Accordingly, the latter advertised for sale at
public auction the properties levied upon.
Issue:
Whether or not the heirs of the deceased Quiambao may file the suit to annul and set aside the
writ of execution and to recover damages.

Held:
Judgment was rendered by the CFI in favor of the Quiambaos, but on appeal to the Court of
Appeals (CA –GR 17031 – R), the decision was reversed and another entered dismissing the complaint.
Hence, the appeal by writ of certiorari.. Heacock case does not apply; delivery of car to company did not
produce the effect of rescinding or annulling the contract of sale; buyer surrendered car to postpone
satisfaction of the judgment amount. Receipt of car not for appropriation but as security to satisfaction
of judgment credit; does not amount to foreclosure of chattel mortgage. Since the company did not
receive the car for the purpose of appropriating the same, but merely as security for the ultimate
satisfaction of its judgment credit, the situation under consideration could not have amounted to a
foreclosure of the chattel mortgage.
Payment of war damage compensation does not produce same and equal legal effect as formal
foreclosure. Having been the party who was last in possession of the lost car, the company was well
within its rights, or better still, under obligation, to protect the interest of the car owner, as well as its
own, by claiming, as it did, the corresponding war damage compensation for the car. Such action of the
company cannot reasonably be construed as a constriction of its rights under the pre-war judgment. Suit
filed was for specific performance and not for rescission or cancellation of contract of sale. The best
reason why respondent company may not be construed as having rescinded or cancelled the contract of
sale or foreclosed the mortgage on the automobile is precisely because it brought suit for specific
performance, and won, in the pre-war Civil Case 58043.
Pre-war judgment has not prescribed; period covered by moratorium law and closure of regular
courts at the outbreak of war deducted. The pre-war judgment was entered on 4 December 1940, and on
14 July 1941, a writ of execution was issued. The company took no further step to enforce the judgment
until 19 may 1954, on which date, Manila Motors scheduled 2 parcels of land owned by the Quiambaos
for sale at public auction pursuant to the writ of 14 July 1941.
Pre-war writ of execution and levy may still be enforced by sale of the levied property after the
lapse of the 5-year period within which a judgment may be executed by motion. A valid execution issued
and levy made within the period provided by law may be enforced by a sale thereafter. The sale of the
property by the sheriff and the application of the proceeds are simply the carrying out of the writ of
execution and levy which when issued were valid. This rests upon the principle that the levy is the
essential act by which the property is set apart for the satisfaction of the judgment and taken into custody
of the law, and that after it has been taken from the defendant, his interest is limited to its application to
the judgment, irrespective of the time when it may be sold.
Amount received from the Philippine War Damage Commission must be credited to the
Quiambao‘s account. The Quiambaos should be credited the amount of P409.75 which the Manila
Motors Actually received from the Philippine War Damage Commission on account of the car of
Gaudencio Quiambao that had been seized from it by the enemy occupant during the war. This should
reduce the principal amount still due Manila Motors from the Quiambao to the sum of P1,542.72
118. ABELLA vs. GONZAGA
G.R. No. 345743 September 19, 1931

Facts:
Cirilo Abella demanded specific performance of the contract entered into with Mariano Gonzaga
on April 15, 1921, which parts of it read as follows:
SPECIAL CONTRACT OF LEASE
Mariano Gonzaga, landowner, and Cirilo Abella, tenant, do hereby enter into a contract of lease
under the following conditions:
First. Mariano Gonzaga, as land owner, does hereby lease the following described parcel of land
situate within the jurisdiction of San Felipe Neri to Cirilo Abella to use with all the active and passive
easements thereof, to wit: etc. The surveyed parcel contains an area of one hectare, seventy-eight ares,
and fifty-eight centares.
Second. The lease shall run for five years: from March 5, 1921 to March 5, 1926.
Third. The rent shall be one thousand one hundred fourteen pesos and 34/100 (P1,114.34) per
annum payable in advance at the house of the undersigned on the 5th of March every year.
Fourth. In consideration of the sum of one thousand three hundred ninety –two pesos and
(P1,392.92) which the tenant has now paid, and his promise to pay rent of the remaining nineteen
quarters at the periods fixed in the preceding clause, the owner undertakes at the termination of this
contract to transfer free of charge to the tenant the full ownership of the leased property, provided the
tenant has made the aforesaid payments.
Gonzaga contended in his answer that Abella’s right to compel him to make the transfer of the
land in question is not absolute, but conditional; that the conditions have not been complied with, but
violated by the latter, who made the last payment over a year after the obligation had become due.

Issue:
Whether or not the special contract of lease entered into by the parties a contract of sale on
installments.

Held:
Yes. The contract is clearly a sale on installments. The document entitled “Special Contract of
Lease” and the special quality consists in the stipulation found in clause IV, to wit: that in consideration
of the sum of one thousand three hundred ninety –two pesos and 92/100 (P1,392.92) which the tenant
has now paid, and his promise to pay rent of the remaining nineteen quarters at the periods fixed in the
preceding clause, the owner undertakes at the termination of this contract to transfer free of charge to
the tenant the full ownership of the leased property, provided the tenant has made the aforesaid
payments. When Abella paid the last installments, the SC arrived at the inevitable conclusion that
although in the contract the usual words “lease,” “lessee,” and “lessor” were employed, that is no
obstacle to the holding that said contract was a sale on installments, for such was the evident intention
of the parties in entering into said contract. (Art 1281, par. 2, of the Civil Code, as interpreted in the cases
of Reyes vs. Limjap, 15 Phil 420; and De la Vega vs. Ballilos, 34 Phil 683)

119. HEACOCK CO. vs. BUNTAL MANUFACTURINMG CO.

G.R. No. 44471 ` September 26 1938

Facts:
Buntal, et al rented a machine from Heacock Company for a term of 20 calendar months.
Buntal, et al unable to return the machine and failed to pay the lease.
The lower court held that the contract is a contract of lease. It also decided that Heacock should pay P555,
the total amount they bound themselves to pay (rate of rent is P35 a month starting august 1931).

Issue:
Whether or not is the contract a contract of purchase and sale on installments?

Held:
Yes. It was stipulated in the contract that:
“In consideration of the sum of P160 to it in hand paid by the hirer, the owner hereby grants to
hirer the option to purchase while the present lease is in force and effect, the property made the subject
of this agreement, at the purchase price of P860….”
The court finds that the amount P160 paid by Buntal Manufacturing Company was an initial
payment for the P860 purchase price.
The court also stated that the intention of the parties should be taken into consideration when
the contract in question is not clear. The intention was seen in the contract they stipulated. 204
120. MACONDRAY & CO., INC. vs. BENITO and OCAMPO
G.R. No. 43014 September 24, 1935
Facts:
The defendants admit each and every allegation in each and every paragraph of the plaintiff’s
amended complaint subject to the stipulations herein contained. The promissory notes mentioned were
executed by the defendants to cover the unpaid balance of the price of certain personal properties
purchased by them from the plaintiff payable in installments, the said properties being covered by the
two chattel mortgages specified therein. Upon the failure of the defendants to pay the two (2) and more
installments on the purchase price of said personal properties, plaintiff foreclosed the mortgages
executed on said properties. The properties mortgaged were sold at public auction to the plaintiff which
was the only bidder therefor. The parties, in view of this stipulation, submit for determination by the
court the sole question of law whether by virtue of sec. 1454-A of the Civil Code (Act No. 4122 of the
Philippine Legislature) plaintiff is entitled to recover from the defendants the unpaid balance of the
purchase price of said personal properties.

Issue:
Whether or not the provisions of Law No.4122 of the Philippine Legislature benefits in this case
the defendants.

Held:
Yes. Not challenged the effectiveness and the validity of the Act. The notes in question are hand
granted after the rule of law. It is obvious, therefore, that the transaction at issue here falls within its laws,
among which are available expressly that the seller will have no action against the purchaser, to recover
the unpaid balance after the property executed, and that any agreement contrary to this legal provision
is null and void
121. FELIX GOCHAN AND SONS REALTY CORPORATIONS, ET AL. vs. HEIRS OF RAYMUNDO BABA
GR. 138945 August 19, 2003

Facts:
The lot in dispute is part of the conjugal property of spouses Raymundo Baba and Dorotea Inot
and was originally titled in the name of Inot. After Raymundo’s demise in 1947, an extrajudicial
settlement of his estate, including the lot was executed.
One-half undivided portion of the lot was adjudicated in favor of Dorotea, and the other half
divided between his 2 children - Victoriano and Gregorio.
Dorotea, Victoriano and Gregorio sold the lot to petitioner Felix Gochan and Sons Realty Corporation. -
Consequently, title was issued in favor of Gochan Realty. Sometime in 199(, the latter entered into a joint
venture agreement with Sta. Lucia Realty and Development Corporation Inc. for the development of the
lot into a subdivision.
Meanwhile respondents, Baba, filed a complaint for quieting of title and re-conveyance with
damages against petitioners. They alleged that they are among the 7 children of Dorotea Inot and
Raymundo Baba. That petitioners connived with Dorotea Inot, Victoriano and Gregorio Baba in executing
the extrajudicial settlement and deed of sale which fraudulently deprived them of their hereditary share
and that said transactions are void insofar as their respective shares are concerned because they never
consented to the said sale and extrajudicial settlement, which came to their knowledge barely a year
prior to the filing of the complaint. Their action in reality seeks to declare said deeds as inexistent for lack
of consent, an essential element for the existence of a contract.

Issue:
Whether or not there exists a cause of action to declare the inexistence of the contract of sale
with respect to the shares of respondents in the lot on the ground of absence of any of the essential
requisites of a valid contract.

Held:
Under Article 1819 of the Civil Code, there is no contract unless the following requisites concur:(1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract; and
(3)cause of the obligation.
 The absence of any of these essential requisites renders the contract inexistent and an action or
defense to declare said contract void ab initio and the action does not prescribe, pursuant to Article 1410
of the same Code.
In Delos Reyes v. Court of Appeals , it was held that one of the requisites of a valid contract under
Article 1819 of the Civil Code, namely, the consent and the capacity to give consent of the parties to the
contract, is an indispensable condition for the existence of consent. There is no effective consent in law
without the capacity to give such consent. In other words, legal consent presupposes capacity. Thus,
there is said to be no consent, and consequently, no contract when the agreement is entered into by one
in behalf of another who has never given him authorization unless he has by law a right to represent the
latter.
The Court, applying Article 1410 of the Civil Code declared that a claim of prescription is
unavailing where the assailed conveyance is void ab initio with respect to those who had no knowledge
of the transaction.
In the case at bar, it involved a fraudulent sale and extrajudicial settlement of a lot executed without the
knowledge and consent of some of the co-owners. It was held that the sale of the realty is void in so far
as it prejudiced the shares of said co-owners and that the issuance of a certificate of title over the whole
property in favor of the vendee does not divest the other co-owners of the shares that rightfully belonged
to them. The nullity of the said sale proceeds from the absence of legal capacity and consent to dispose
of the property.
Likewise, in the cases decided by the Court, it ruled that conveyances by virtue of a forged
signature or a fictitious deed of sale are void ab initio. The absence of the essential requites of consent
and cause or consideration in these cases rendered the contract inexistent and the action to declare their
nullity is imprescriptible.
On the other hand, laches is defined as failure or neglect for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence, could or should have been done earlier. It is
negligence or omission to assert a right within a reasonable time, warranting presumption that the party
entitled to assert it has abandoned it or has declined to assert it. Its elements are: (1) conduct on the part
of the defendant, or of one under whom he claims, giving rise to the situation which the complaint seeks
a remedy; (2) delay in asserting the complainant’s rights, the complainant having had knowledge or
notice of the defendant’s conduct as having been afforded an opportunity to institute a suit; (3) lack of
knowledge or notice on the part of the defendant that the complainant would assert the right in which
the bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held barred. Though laches applies even to imprescriptible actions, its
elements must be proved positively. Laches is evidentiary in nature which could not be established by
mere allegations in the pleadings and cannot be resolved in a motion to dismiss. At this stage therefore,
the dismissal of the complaint on the ground of laches is premature.
122. PHILIPPINE LAWIN BUS CO. (LAWIN) vs. CA
GR 130972 January 23, 2002

Facts:
Lawin initially loaned from Advance Capital Corp. (ACC) Php 8M payable within 1 yr and
guaranteed by a chattel mortgage of Lawin’s 9 buses. Lawin was in default in its payments and was able
to pay only Php 1.8M.
Lawin obtained its second loan of 2M payable in one month under a promissory note. Lawin was
in default again hence it asked ACC for a restructuring of the loan despite this Lawin was still not able to
pay. The buses for foreclosed and it was sold for 2M.
ACC sent Lawin demand letters to settle its indebtedness amounting to hp16,484,992.42 then
subsequently filed a suit for sum of money against Lawin. Lawin in its defense said that there was already
an arrangement to settle the obligation
A. Sale of 9 buses and its proceeds will cover for the full payment; OR
B. ACC will shoulder the rehabilitation of the buses and the earnings of the operation will be then
applied to the loan
RTC dismissed the suit to claim for a sum of money against Lawin. CA reversed RTC’s decision
and ruled that Lawin has to pay.

Issue:
Whether or not there was dacion en pago between the parties upon the surrender or transfer of
the mortgaged buses to the respondent.

Held:
No. In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. It is
“the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation.” It “extinguishes the obligation to the extent of the value
of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by
agreement, express or implied, or by their silence, consider the thing as equivalent to the obligation, in
which case the obligation is totally extinguished."
 Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion
en pago. A contract of sale is perfected at the moment there is a meeting of the minds of the parties
thereto upon the thing which is the object of the contract and upon the price. In Filinvest Credit
Corporation v. Philippine Acetylene Co., Inc., we said:
“x x x. In dacion en pago, as a special mode of payment, the debtor offers another thing to the creditor
who accepts it as equivalent of payment of an outstanding obligation. The undertaking really partakes in
one sense of the nature of sale, that is, the creditor is really buying the thing or property of the debtor,
payment for which is to be charged against the debtor’s debt. As such, the essential elements of a
contract of sale, namely, consent, object certain, and cause or consideration must be present. In its
modern concept, what actually takes place in dacion en pago is an objective novation of the obligation
where the thing offered as an accepted equivalent of the performance of an obligation is considered as
the object of the contract of sale, while the debt is considered as the purchase price. In any case, common
consent is an essential prerequisite, be it sale or novation, to have the effect of totally extinguishing the
debt or obligation.”
In this case, there was no meeting of the minds between the parties on whether the loan of the
petitioners would be extinguished by dacion en pago. The petitioners anchor their claim solely on the
testimony of Marciano Tan that he proposed to extinguish petitioners’ obligation by the surrender of the
nine buses to the respondent acceded to as shown by receipts its representative made. However, the
receipts executed by respondent’s representative as proof of an agreement of the parties that delivery
of the buses to private respondent would result in extinguishing petitioner’s obligation do not in any way
reflect the intention of the parties that ownership thereof by respondent would be complete and
absolute. The receipts show that the two buses were delivered to respondent in order that it would take
custody for the purpose of selling the same. The receipts themselves in fact show that petitioners
deemed respondent as their agent in the sale of the two vehicles whereby the proceeds thereof would be
applied in payment of petitioners’ indebtedness to respondent. Such an agreement negates transfer of
absolute ownership over the property to respondent, as in a sale. Thus, in Philippine National Bank v.
Pineda we held that where machinery and equipment were repossessed to secure the payment of a loan
obligation and not for the purpose of transferring ownership thereof to the creditor in satisfaction of said
loan, no dacion en pago was ever accomplished.
123. INSULAR LIFE ASSURANCE COMPANY, ET AL. vs. ROBERT YOUNG, ET AL
GR. 140964 January 16, 2002

Facts:
In December, 1987, respondent Robert Young, together with hisassociates and co-respondents,
acquired by purchase Home Bankers Savings and Trust Co., now petitioner Insular Savings Bank ("the
Bank," for brevity), from the Licaros family for P65,000,000.00. Young and his group obtained 55% equity
in the Bank, while Jorge Go and his group owned the remaining 45%.
However, Araneta backed out from the intended sale and demanded the return of his downpayment.
On October 1, 1991, Insular Life and Insular Life Pension Fund formally informed Young of their intention
to acquire 30% and 12%, respectively, of theBank's outstanding shares, subject to due diligence audit and
properdocumentation. On October 9, 1991, Insular Life and Young, authorized to represent the other
stockholders, entered into a Memorandum of Agreement(MOA), wherein Insular Life and its Pension
Fund agreed to purchase 30,860common shares and 311,572 common shares, respectively, for a
totalconsideration of P198,000,000.00. Under its terms, the MOA is subject to Young's representations
and warranties that, as of September 30, 1991, the Bank has (a) a total outstanding paid-in capital of
P157,714,900.00, (b) a total net worth of P114,801,539.00, and (c) total loans with doubtful recovery of
P60,000,000.00.
The MOA is also subject to these "condition precedents": (1) Young shall infuse additional capital
of P50,000,000.00 into the Bank, and (2) Insular Life and its Pension Fund shall undertake a due diligence
audit on the Bank to determine whether the provision for P60,000,000.00 doubtful account made by
Young is sufficient.
On October 21, 1991, Young signed a letter prepared by Atty. Jacinto Jimenez, counsel of Insular
Life, addressed to Mr. Vicente R. Ayllon, Chairman of the Bank's Board of Directors, stating that due to
business reverses, he shall not be able to pay his obligations under the Credit Agreement between him
and Insular Life. Consequently, Young "unconditionally and irrevocably waive(s) the benefit of the
period" of the loan (up to December 26, 1991) and Insular "may consider (his) obligations there under as
defaulted." He likewise interposes no objection to Insular Life's exercise of its rights under the said
agreement.Forthwith, Insular Life instructed its counsel to foreclose the pledgeconstituted upon the
shares. The latter then sent Young a notice informing him of the sale of the shares in a public auction
scheduled on October 28, 1991, and in the event that the shares are not sold, a second auction sale shall
be held the next day, October 29. From October 31, 1991 to December 27, 1991, Insular Life invested a
total of P325,000,000.00 in the Bank. Meanwhile, on November 27, 1991, its Board of Directors, during
its meeting, accepted the resignation of Young as President. On January 7, 1992, Young and his
associates filed with the Regional Trial Court(RTC), Branch 142, Makati City, a complaint against the
Bank, Insular Life and its counsel, Atty. Jacinto Jimenez, petitioners, for annulment of notarial sale,
specific performance and damages, docketed as Civil Case No. 92-049. The complaint alleges, inter alia,
that the notarial sale conducted by petitioner Atty. Jacinto Jimenez is void as it does not comply with the
requirement of notice of the second auction sale; that Young was forced by the officers of Insular Life to
sign letters to enable them to have control of the Bank; that under the MOA, InsularLife should apply the
purchase price of P198,000,000.00 (corresponding to the55% of the outstanding capital stock of the
Bank) to Young's loan of P200,000,000.00 and pay the latter P162,000,000.00, representing
theremaining 45% of its outstanding capital stock, which must be set-off against the loans of the other
respondents.

Issue:
Whether or not the respondent court erred in declaring the MOA dated October 9, 1991 valid and
enforceable between the parties despite respondent Young's failure to comply with the terms and
conditions thereof.
Held:
Contrary to the findings of the Court of Appeals, the foregoing provisions of the MOA negate the
existence of a perfected contract of sale. The MOA is merely a contract to sell since the parties therein
specifically undertook to enter into a contract of sale if the stipulated conditions are met and the
representation and warranties given by Young prove to be true.
The obligation of Petitioner Insular Life to purchase, as well as the concomitant obligation of Young
toconvey to it the shares, are subject to the fulfillment of the conditions contained in the MOA. Once the
conditions, representation and warranties are satisfied, then it is incumbent upon the parties to perform
their respective obligations under the contract. Conversely, in the event that these conditions are not
met or complied with, no obligation on the part of either party arises. This is in accord with Article 1181
of the Civil Code which provides that "(i)n conditional obligations, the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the happening of the event which
constitutes the condition." And when the obligation assumed by a party to a contract is expressly
subjected to a condition, the obligation cannot be enforced against him unless the condition is complied
with. Here, the MOA provides that Young shall infuse additional capital of P50,000,000.00 into the Bank.
It likewise specifies the warranty given by Young that the doubtful accounts of petitioner Bank amounted
to P60,000,000.00 only.
However, records show that Young failed to infuse the required additionalcapital. Moreover, the
due diligence audit shows that Young was involved infraudulent schemes like check-kiting which
amounted to a staggeringP344,000,000.00. This belies his representation that the doubtful accounts of
petitioner Bank amounted only to P60,000,000.00. As a result of these anomalous transactions, the
reserves of the Bank were depleted and it had to undergo a ten-year rehabilitation plan under the
supervision of the Central Bank. Significantly, respondents do not dispute petitioners’ assertion that
Young committed fraud, misrepresented the warranties and failed to comply with his obligations under
the MOA. Accordingly, no right in favor of Young's arose and no obligation on the part of Insular Life was
created. Since no sale transpired between the parties, the Court of Appeals erred in concluding that
Insular Life purchased 55% of the total shares of the Bank under the MOA. Consequently, its findings that
the debt of Young has been fully paid and that Insular Life is liable to pay for the remaining 45% equity
have no basis. It must be emphasized that the MOA did not convey title of the shares to InsularLife. If
ever there was delivery of the said shares to Insular Life, it was because they were pledged by Young to
Insular Life under the Credit Agreement. It would be unfair on the part of Young to demand compliance
by InsularLife of its obligations when he himself was remiss in his own. Neither can hefeign ignorance of
the stipulation in the MOA since it is presumed that he read the same and was satisfied with its provisions
before he affixed his signature therein. The fact that no deed of sale was subsequently executed by the
parties confirms the conclusion that no sale transpired between them.