1. FERNANDO A. GAITE vs. ISABELO FONACIER, et.

al
G.R. No. L-11827 July 31, 1961

FACTS:

Isabelo Fonacier (Fonacier) owned 11 iron lode mineral claims, known as the Dawahan Group, located
in Camarines Norte. He appointed Fernando Gaite (Gaite) as his attorney-in-fact to enter into contracts
with individual or juridical persons for the exploration and development of the mining claims. Gaite in
turn executed a general assignment conveying the development of the mining claims into the Larap
Iron Mines, a single proprietorship owned by him. Then he started the development of those mining
claims.

Fonacier decided to revoke the authority granted by him to Gaite, and Gaite assented, subject to
certain conditions. They entered into a contract, where Gaite transferred to Fonacier, for P20,000, all
his rights and interests on the roads and facilities in the claims, plus the right to use the business name
“Larap Iron Mines.” Gaite also transferred to Fonacier, for P75,000, all this rights and interests over the
tons of iron ore that he already extracted from the mineral claims.P10,000 of this was paid upon signing
and the contract stated that “the balance of P65,000 will be paid from and out of the first letter of credit
covering the first shipment of iron ores and of the first account derived from the local sale of iron ore
made by Larap.”

To secure the payment, Fonacier delivered to Gaite a surety bond. Gaite wanted another bond written
by a bonding company, so Fonacier executed a second one, but it provided that the liability of the
surety company would attach only when there had been an actual sale of iron ore for an amount of no
less than P65,000, and that the liability of said surety company would automatically expire on
December 8,1955.

Up to December 8, 1955, when the bond expired with respect to the surety company, no sale of the
tons of iron ore had been made by Larap, nor had the P65,000 balance of the price of said ore been
paid to Gaite by Fonacier and his sureties, the second bond automatically expired. And when Fonacier
and his sureties failed to pay, Gaite filed the present complaint against them for the payment of the
P65,000 balance.

The defendants set up the defense that the obligation sued upon by Gaite was subject to a condition
that the amount of P65,000 would be payable out of the first letter of credit covering the first shipment
of iron ore and/or the first amount derived from the local sale of the iron ore by Larap, and that up to the
time of the filing of the complaint no sale of the iron ore had been made. Therefore, the obligation was
not due and demandable yet.

The lower court held in favor of Gaite, and the defendants were ordered to pay the P65,000. The lower
court held that the oblig of the defendants to pay Gaite was one with a term: that it would be paid upon
the sale of sufficient iron ore, such sale to be effected on or before Dec 1955, and that as the latter
failed to put up a good and sufficient security after the bond expired, the oblig became due and
demandable.

ISSUE:

Is the obligation of Fonacier to pay Gaite the P65,000 an obligation with a period or term and not one
with a suspensive condition?

HELD:
Obligation was subject to a suspensive period or term. Lower court decision affirmed.

A contract of sale is normally commutative and onerous. Not only does each of the parties assume a
correlative obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay
the price), but each party anticipates performance by the other from the very start. While in a sale the
obligation of one party can be lawfully subordinated to an uncertain event, so that the other
understands that he assumes the risk of receiving nothing for what he gives, it isn’t in the usual course
of business to do so. Hence, the contingent character of the obligation must clearly appear. Nothing is
found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the
ore without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is
proven by the fact that Gaite insisted on a bond to guarantee payment of the P65,000.

Plus, to subordinate the obligation to pay the remaining P65,000 as condition precedent would be
tantamount to leaving the payment at the discretion of the debtor, for the sale or shipment could not be
made unless steps were taken to sell the ore.

Fonacier has forefeited the right to compel Gaite to wait for the sale of the ore before receiving payment
of the balance of P65,000 because of their failure to renew the bond or else replace it with an
equivalent guarantee.
2. KER & CO., LTD., vs. JOSE B. LINGAD
G.R. No. L-20871 April 30, 1971

FACTS:

The then Commissioner of Internal Revenue Domingo assessed the petitioner to pay Php20,272 as
commercial broker’s percentage tax. The petitioner requested for its cancellation but was denied and
deemed liable as an agent of United States Rubber International, referred here as the Company.

The petitioner was the Company’s distributor. Their contract provides that the petitioner, as distributor,
cannot dispose of the products for shipment elsewhere than the designated places. But the crucial
stipulations state that 1) the consignment remains property of the Company until sold by the distributor
and 2) “the distributor is not constituted as an agent of the Company by this contract for any purpose
whatsoever.”

ISSUE:

Wether or nit the petitioner should be liable for the commercial broker’s percentage tax as the agent of
the company given the stipulation in their contract

HELD:

Yes. The Court of Tax Appeals was correct in deciding “that the petitioner Ker & Co., Ltd is, by
contractual stipulation, an agent of the Company as all the circumstances are antagonistic to the idea of
an independent merchant.”

According to the National Internal Revenue Code, a commercial broker “includes all persons… who, for
compensation or profit, sell or bring about the sales or purchase of merchandise for other persons, or
bring proposed buyers together…” The test to see who falls under this definition was penned by Justice
JBL Reyes in CIR vs Constantino stating “since the company retained ownership of the goods, the
price and the terms subject to it, the relationship of the company and the dealer is one of agency.”

The case of Salisbury vs Brooks support this view stating that if the transfer of title puts the transferee
in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed
price, and not merely as an agent who must account for the proceeds of a resale, it is a sale; while the
essence of an agency to sell is the delivery to an agent, not as his property, but as the property of the
principal, who remains the owner and has the right to control sales, fix the price and terms, demand
and receive the proceeds less the agent’s commission upon sales made.”
3. SCHMID & OBERLY, INC., vs. RJL MARTINEZ FISHING CORPORATION
G.R. No. 75198 October 18, 1988

FACTS:

Respondent Martinez Fishing needed electrical generators for the operation of its business. Petitioner
Schmid advertise and sells electrical generators branded “Nagata”. The same is supplied by the
manufacturer, the D. Nagata Co. Ltd., of Japan. Respondent purchased 12 brand new generators and
D. Nagata Co., Ltd. shipped them to respondent through an irrevocable line of credit. However, the 12
generators were found to be defective. Consequently, respondent informed petitioner of its intention to
return all the generators, which in fact, 3 of which were actually returned. Respondent sued petitioner
on the warranty, asked for rescission of the contract; that the petitioner be ordered to accept the
generators and be ordered to pay back the purchase money; and damages.

Note that D. Nagata Co., Ltd directly shipped from their offices in Japan to respondent with the latter
executing a letter of credit in favour of Nagata Co. Petitioner served as an intermediary between the
two and received a commission for its services.

ISSUE:

Whether or not the transaction between Schmid and Martinez Fishing was a sale transaction or an
indent transaction?

HELD:

The transaction is an indent transaction.

A sale is a transfer that puts the transferee in the attitude or position of an owner and makes him liable
to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the
proceeds of a resale (Based on Art. 458 of the NCC). However, an indentor of an indent transaction is a
middleman in the same class as commercial brokers and commission merchants. The chief feature of a
commercial broker and a commercial merchant is that in effecting a sale, they are merely
intermediaries or middle-men, and act in a certain sense as the agent of both parties to the transaction.

Based on the facts presented, it was deemed that Schmid only rendered its services as a middleman
between Nagata Co. and respondent, from the time of purchase until the same was repaired by Nagata
Co.’s technicians. Not being a vendor of the 12 generators, petitioner cannot be held liable for the
implied warranty for hidden defects under the Civil Code
4. FILINVEST CREDIT CORPORATION vs. THE COURT OF APPEALS
G.R. No. 82508 September 29, 1989

FACTS:

Spouses Sy Bang were engaged in the sale of gravel produced from crushed rocks and used for
construction purposes. In order to increase their production, they looked for a rock crusher which Rizal
Consolidated Corporation then had for sale. A brother of Sy Bang, went to inspect the machine at the
Rizal Consolidated’s plant site. Apparently satisfied with the machine, the private respondents signified
their intent to purchase the same.

Since he does not have the financing capability, Sy Bang applied for financial assistance from Filinvest
Credit Corporation. Filinvest agreed to extend financial aid on the following conditions: (1) that the
machinery be purchased in the petitioner’s name; (2) that it be leased with option to purchase upon the
termination of the lease period; and (3) that Sy Bang execute a real estate mortgage as security for the
amount advanced by Filinvest. A contract of lease of machinery (with option to purchase) was entered
into by the parties whereby they to lease from the petitioner the rock crusher for two years. The contract
likewise stipulated that at the end of the two-year period, the machine would be owned by Sy Bang.

3 months from the date of delivery, Sy Bang claiming that they had only tested the machine that month,
sent a letter-complaint to the petitioner, alleging that contrary to the 20 to 40 tons per hour capacity of
the machine as stated in the lease contract, the machine could only process 5 tons of rocks and stones
per hour. They then demanded that the petitioner make good the stipulation in the lease contract. Sy
Bang stopped payment on the remaining checks they had issued to the petitioner.

As a consequence of the non-payment, Filinvest extrajudicially foreclosed the real estate mortgage.

ISSUE:

Whether or not the real transaction was lease or sale?

HELD:

The Transaction is a sale on installments.

The real intention of the parties should prevail. The nomenclature of the agreement cannot change its
true essence, i.e., a sale on installments. It is basic that a contract is what the law defines it and the
parties intend it to be, not what it is called by the parties. It is apparent here that 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 resorted 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.
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.

Even if there was a contract of sale, Filinvest is still not liable because Sy Bang is presumed to be more
knowledgeable, if not experts, on the machinery subject of the contract, they should not therefore be
heard now to complain of any alleged deficiency of the said machinery. It was Sy Bang who was
negligent, not Filinvest. Further, Sy Bang is precluded to complain because he signed a Waiver of
Warranty.
5. LUZON BROKERAGE CO., INC., vs. MARITIME BUILDING CO., INC
G.R. No. L-25885 January 31, 1972

FACTS:

On April 1949, Myers Building Co. (Myers) entered into a Deed of Conditional Sale (DOCS) in favor of
Maritime Building Co. (Maritime) over 3 parcels of land with improvements in Manila City for
P1,000,000. Maritime paid P50,000 upon execution. The balance was to be paid in monthly
installments of P10,000 at 5% interest per annum and later lowered to P5,000 at 5.5% per annum. The
parties agreed that:

 If Maritime defaults, the contract would be annulled at Myers' option.

 All payments already made shall be forfeited.

 Myers shall have the right to re-enter the property and take possession. And if Maritime
refuses to peacefully deliver the possession of the properties subject of this contract to
the Myers in case of recission, a suit should be brought in court by the Myers to seek
judicial declaration of rescission.

Maritime failed to pay the installment for March 1961. Maritime Vice President George Schedler
(Schedler) requested Myers President Mr. C. Parsons (Parsons) for a moratorium on the payments.

Maritime's suspension of payment arose from an award of backwages in a Labor Case favor of
members of the Luzon Labor Union. Schedler claims he is being sued for the backwages for which F.H.
Myers, former majority stockholder of Luzon Brokerage, allegedly promised to indemnify him when
Schedler bought F.H. Myers' stock.

Parsons replied that the payments are addressed to Myers Bldg Co., not the estate of F.H. Myers, and
Board of Directors refused to grant the moratorium.

On May 16, 1961, Myers made a demand upon Maritime for the unpaid installments. On June 5, 1961,
Myers advised Maritime of the cancellation of the DOCS and demanded the return of the property,
holding Maritime liable for rentals at P10,000 monthly.

Myers demanded from its lessee, Luzon Brokerage, the payment of monthly rentals of P10,000 and the
return of the property. Luzon Brokerage, to avoid paying to the wrong party, filed an action for
interpleader. Myers filed a cross-claim, praying for judicial confirmation of its right to rescind.

The decision of the Court of First Instance is, Maritime committed breach by nonpayment. Myers is
entitled to cancel the DOCS, forfeit the payments made, repossess the property, and collect the rentals
thereof.

ISSUE:

1. Whether or not Maritime was guilty of breach of contract

2. Whether or not Myers is entitled to extrajudicially rescind the DOCS

HELD:
1. Yes. The non-payment of the installments designed to coerce Myers Bldg Co. into
answering for an alleged promise of the late F. H. Myers. Maritime cannot ignore the fact
that whatever obligation F. H. Myers/ his estate had assumed was not, and could not have
been, an obligation of the corporation, Myers Bldg Co. Hence, the breach was tainted with
dolo or a "conscious and intentional design to evade the normal fulfillment of existing
obligations" (Capistrano Vol. 3). Having acted in bad faith, Maritime is not entitled to ask the
court to grant further time to make payment.

From another point of view, it is irrelevant whether Maritime's breach was casual or serious,
for as pointed out in Manuel v. Rodriguez, in contracts to sell, the failure to pay in full is not a
breach but simply an event that prevented the obligation of the vendor to convey title from
acquiring binding force.

2. YES. Supreme Court held in Lopez v. Commissioner of Customs that a judicial action for the
rescission of a contract is not necessary where the contract provides that it may be revoked
and cancelled for violation of any of its terms. As further explained in UP v. de Los Angeles,
the party who deems the contract violated may consider it resolved or rescinded without
previous court action, but it proceeds at its own risk. For it is only the final judgment of the
corresponding court that will conclusively and finally settle whether the action taken was or
was not correct in law. But the law definitely does not require that the contracting party who
believes itself injured must first file suit and wait for a judgment before taking extrajudicial
steps to protect its interest.

Neither can Maritime invoke Civil Code Art. 1592 (where vendee in default can continue to
make payments as long as no judicial/notarial demand for rescission has been made)
because the cross-claim filed by Myers constitutes a judicial demand for rescission that
satisfies the said article. Moreover, this is not an ordinary sale envisaged by Article 1592,
transferring ownership simultaneously with the delivery of the real property sold, but one in
which the vendor retained ownership of the immovable object of the sale, merely
undertaking to convey it provided the buyer strictly complied with the terms of the contract.
What Myers seeks is not really rescission and restoration of the parties to the status quo
ante but enforcement of the provisions.
 6. SILVESTRE DIGNOS and ISABEL LUMUNGSOD vs. COURT OF APPEALS
G.R. No. L-59266 February 29, 1988

FACTS:

The spouses Silvestre and Isabel Dignos were. owners of a parcel of land in Opon, Lapu-Lapu City. On
June 7, 1965, appellants, herein petitioners Dignos spouses sold the said parcel of land to respondent
Atilano J. Jabil for the sum of P28,000.00, payable in two installments, with an assumption of
indebtedness with the First Insular Bank of Cebu in the sum of PI 2,000.00, which was paid and
acknowledged by the vendors in the deed of sale executed in favor of plaintiff-appellimt, and the next
installment in the sum of P4,000.00 to be paid on or before September 15, 1965.

On November 25, 1965, the Dignos spouses sold the same land in favor of defendants spouses,
Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A
deed of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses, and which
was registered in the Office of the Register of Deeds pursuant to the provisions of Act No. 3344.

As the Dignos spouses refused to accept from plaintiff-appellant the balance of the purchase price of
the land, and as plaintiff- appellant discovered the second sale made by defendants-appellants to the
Cabigas spouses, plaintiff-appellant brought the present suit.

ISSUE:

1. Whether or not there was an absolute contract of sale.

2. Whether or not the contract of sale was already rescinded when the Dignos spouses sold the
land to Cabigas

HELD:

1. Yes. That a deed of sale is absolute in nature although denominated as a "Deed of Conditional
Sale" where nowhere in the contract in question is a proviso or stipulation to the effect that title
to the property sold is reserved in the vendor until full payment of the purchase price, nor is
there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the
vendee fails to pay within a fixed period.

A careful examination of the contract shows that there is no such stipulation reserving the title of
the property on the vendors nor does it give them the right to unilaterally rescind the contract
upon non-payment of the balance thereof within a fixed period.

On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code,
are present, such as: (1) consent or meeting of the minds; (2) determinate subject matter; and
(3) price certain in money or its equivalent. In addition, Article 1477 of the same Code provides
that "The ownership of the thing sold shall be transferred to the vendee upon actual or
constructive delivery thereof." While it may be conceded that there was no constructive delivery
of the land sold in the case at bar, as subject Deed of Sale is a private instrument, it is beyond
question that there was actual delivery thereof. As found by the trial court, the Dignos spouses
delivered the possession of the land in question to Jabil as early as March 27,1965 so that the
 latter constructed thereon Sally's Beach Resort also known as Jabil's Beach Resort in March,
1965; Mactan White Beach Resort on January 15, J 966 and Bevirlyn's Beach Resort on
September 1, 1965. Such facts were admitted by petitioner spouses.

2. No. The contract of sale being absolute in nature is governed by Article 1592 of the Civil
Code. It is undisputed that petitioners never notified private respondents Jabil by notarial act
that they were rescinding the contract, and neither did they file a suit in court to rescind the sale.
There is no showing that Amistad was properly authorized by Jabil to make such extra-judicial
rescission for the latter who, on the contrary, vigorously denied having sent Amistad to tell
petitioners that he was already waiving his rights to the land in question. Under Article 1358 of
the Civil Code, it is required that acts and contracts which have for their object extinguishment
of real rights over immovable property must appear in a public document.

Petitioners laid considerable emphasis on the fact that private respondent Jabil had no money
on the stipulated date of payment on September 15,1965 and was able to raise the necessary
amount only by mid-October 1965. It has been ruled, however, that where time is not of the
essence of the agreement, a slight delay on the part of one party in the performance of his
obligation is not a sufficient ground for the rescission of the agreement. Considering that private
respondent has only a balance of P4,000 and was delayed in payment only for one month,
equity and justice mandate as in the aforecited case that Jabil be given an additional period
within which to complete payment of the purchase price.
7. CANUTO MARTIN vs. MARIA REYES and PEDRO REVILLA
G.R. No. L-4402 July 28, 1952

FACTS:

The respondents Pedro Revilla and Maria Reyes obtained from the La Previsora Filipina
sometime before November 18, 1939 a loan of P6,500; and with the money, they the price of a
lot, with improvements, which they paid had previously purchased from the Archibishop of
Manila. And they mortgaged the property to La Previsora for the purpose of guaranteeing
repayment of the debt in installments with interest at 12 per cent per annum.

It turned out later that Monte de Piedad y Caja de Ahorros had obtained a judgment against
Pedro Revilla for the sum of P45,000 and had levied execution therefor upon the property and
its rentals. Apprised of this development, the La Previsora started foreclosure proceedings,
alleging non-payment of its credit by the mortgagors. The conflicting interests were later the
object of amicable settlement among the parties, as a result of which the herein respondents
notarized the deed Exhibit E whereby in satisfaction of their obligations to La Previsora (then
amounting to P8,204.60) they ceded the property to the said institutions, reserving the right to
repurchase for P8,204.60 within sixty days. The deed was acknowledged on November 3,
1941.

It seems that La Previsora at the same time, or immediately thereafter conveyed the property
to petitioner Canuto Martin, who then executed the document undertaking to allow
respondents to repurchase the property within sixty days from October 31, 1941, but at the
price of P14,000. This document was signed by Maria Reyes signifying her assent. At the trial
she pleaded that the document, without embodying their true agreement, had been obtained
thru deceit and abuse of confidence. However, her assertions were not credited by the Court of
Appeals. Nevertheless, that court declared the document void for the only reasons that it had
been signed by Canuto Martin before acquiring ownership of the property by the cession of
Maria Reyes and Pedro Revilla to the La Previsora, and from the latter to them. The Court
noted that whereas Exhibit E was acknowledged before the notary on November 3, 1941, bore
the date October 30, 1941, a few days before.

ISSUE:

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

HELD:

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

It is not unusual for persons to agree to convey by a certain time, notwithstanding they have no
title to the land at the time of the contract, and the validity of such agreement is upheld. In such
cases, the vendor assume the risk of acquiring the title and making the conveyance, or
responding in damages for the vendee's loss of his bargain, One having an option to purchase
real estate has a legal right to enter into an executory contract to sell the property. A fortiori, it
is not necessary that the vendor be the absolute owner of the property at the time he enters
into agreement of sale because the owner of the land, is as much the subject of sale as is the
land itself, and whenever one is so suited with reference to a tract of land that he can acquire
the title thereto, either by the voluntary act of the parties holding the title, or by proceeding at
law or in equity, he is in a position to make a valid agreement for the sale thereof, without
disclosing the nature of his title.
8. MINDANAO ACADEMY, INC vs. ILDEFONSO D. YAP
G.R. No. L-17681 February 26, 1965

FACTS:

By deed entitled "Mutual Agreement", executed on May 10, 1964, Rosenda A. de Nuqui and her son
Sotero Dionisio, Jr. sold three parcels of residential land in Oroquieta, Misamis Occidental, and another
parcel in Ozamis City in favor of Ildefonso D. Yap. Included in the sale were certain buildings situated
on said lands as well as laboratory equipment, books, furniture and fixtures used by two schools
established in the respective properties, the Mindanao Academy in Oroquieta and the Misamis
Academy in Ozamis City. The aggregate price stated in the deed was P100,700.00, to be paid
according to the terms and conditions specified in the contract. Besides Rosenda and her son Sotero,
Jr., both of whom signed the instrument, Adelaida Dionisio-Nuesa is also named therein as co-vendor,
but actually did not take part either personally or through her uncle and supposed attorney-in-fact,
Restituto Abuton. These three — Rosenda and her two children above named — are referred to in the
deed as the owners pro-indiviso of the properties sold. The truth, however, was that there were other
co-owners of the lands. The buyer, Ildefonso D. Yap, obtained possession of the properties by virtue of
the sale, took over the operation of the two schools and even changed their names to Harvardian
Colleges.

ISSUE:

Whether or not the Mindanao Academy can reimburse even in bad faith?

HELD:

Yes. The appellant claims reimbursement for the value of the improvements he allegedly introduced
in the schools, consisting of a new building worth P8,000.00 and a toilet costing P800.00, besides
laboratory equipment, furniture, fixtures and books for the libraries. It should be noted that the judgment
of the trial court specifies, for delivery to the plaintiffs, only "the buildings and grounds described in the
mutual agreement together with all the permanent improvements thereon." If the defendant constructed
a new building, as he alleges, he cannot recover its value because the construction was done after the
filing of the action for annulment, thus rendering him a builder in bad faith who is denied by law any
right of reimbursement. In connection with the equipment, books, furniture and fixtures brought in by
him, he is not entitled to reimbursement either, because the judgment does not award them to any of
the plaintiffs in these two actions. What is adjudged is for the defendant to restore to the Mindanao
Academy, Inc. all the books, laboratory apparatus, furniture and other equipment "described in the
Mutual Agreement and specified in the Inventory attached to the records of this case; or in default
thereof, their value in the amount of P23,500.00." In other words, whatever has been brought in by the
defendant is outside the scope of the judgment and may be retained by him.
 9. LEONORA ESTOQUE vs. ELENA M. PAJIMULA
G.R. No. L-24419 July 15, 1968
FACTS:

Lot No. 802 of the Cadastral survey of Rosario, was originally owned by the late spouses, Rosendo
Perez and Fortunata Bernal, who were survived by her children, namely, Crispina Perez, Lorenzo
Perez and Ricardo Perez. Ricardo Perez is also now dead. On October 28, 1951, Crispina P. Vda. de
Aquitania sold her right and participation in Lot No. 802 consisting of 1/3 portion with an area of 640
square meters to Leonora Estoque. On October 29, 1951, a deed of extrajudicial settlement was
entered into wherein Lorenzo Perez, Emilia P. Posadas and her minor children assigned all their right,
interest and participation in Lot No. 802 to Crispina Perez. On December 30, 1959, Crispina Perez and
her children Rosita Aquitania Belmonte, Remedios Aquitania Misa, Manuel Aquitania, Sergio Aquitania
and Aurora Aquitania sold to Elena Pajimula, the remaining 2/3 western portion of Lot No. 802 with an
area of 958 square meters.

Plaintiff based her complaint for legal redemption on a claim that she is a co-owner of Lot No. 802, for
having purchased 1/3 portion thereof, containing an area of 640 square meters as evidenced by a deed
of sale,which was executed on October 28, 1951 by Crispina Perez de Aquitania, one of the co-owners,
in her favor.

On the other hand, the defendant, who on December 30, 1959 acquired the other 2/3 portion of Lot No.
802 from Crispina Aquitania and her children, claimed that the plaintiff bought the 1/3 southeastern
portion, which is definitely identified and segregated, hence there existed no co-ownership at the time
and after said plaintiff bought the aforesaid portion, upon which right of legal redemption can be
exercised or taken advantage of.

Estoque’s stand is that the deed in her favor was inoperative to convey the southeastern third of Lot
802 of the Rosario Cadastre notwithstanding the description in the deed itself, for the reason that the
vendor, being a mere co-owner, had no right to sell any definite portion of the land held in common but
could only transmit her undivided share, since the specific portion corresponding to the selling co-owner
is not known until partition takes place (Lopez vs. Ilustre, 5 Phil. 567; Ramirez vs. Bautista, 14 Phil.
528). From this premise, the appellant argues that the sale in her favor, although describing a definite
area, should be construed as having conveyed only the undivided 1/3 interest in Lot 802 owned at the
time by the vendor, Crispina Perez Vda. de Aquitania. Wherefore, when the next day said vendor
acquired the 2/3 interest of her two other co-owners, Lot 802 became the common property of appellant
and Crispina Perez. Therefore, appellant argues, when Crispina sold the rest of the property to
appellee Pajimula spouses, the former was selling an undivided 2/3 that appellant, as co-owner, was
entitled to redeem, pursuant to Article 1620 of the New Civil Code.
ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the
other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly
excessive the redemptioner shall pay only a reasonable one.

Should two or more co-owners desire to exercise the right of redemption, they may only do so in
proportion to the share they may respectively have in the thing owned in common.

The lower court, upon motion of defendant, dismissed the complaint, holding that the deeds of sale
show that the lot acquired by plaintiff Estoque was different from that of the defendants Pajimula; hence
they never became co-owners, and the alleged right of legal redemption was not proper. Estoque
appealed.

ISSUE:

Whether or not right of redemption can be exercised by Estoque

HELD:

NO. Appellant Estoque became the actual owner of the southeastern third of lot 802 on October
29, 1951. Wherefore, she never acquired an undivided interest in lot 802. And when eight years later
Crispina Perez sold to the appellees Pajimula the western two-thirds of the same lot, appellant did not
acquire a right to redeem the property thus sold, since their respective portions were distinct and
separate.

(1) The deed of sale to Estoque (Annex A of the complaint) clearly specifies the object sold as the
southeastern third portion of Lot 802 of the Rosario Cadastre, with an area of 840 square meters, more
or less. Granting that the seller, Crispina Perez Vda. de Aquitania could not have sold this particular
portion of the lot owned in common by her and her two brothers, Lorenzo and Ricardo Perez, by no
means does it follow that she intended to sell to appellant Estoque her 1/3 undivided interest in the lot
forementioned. There is nothing in the deed of sale to justify such inference. That the seller could have
validly sold her one-third undivided interest to appellant is no proof that she did choose to sell the
same. .

(2) While on the date of the sale to Estoque (Annex A) said contract may have been ineffective, for lack
of power in the vendor to sell the specific portion described in the deed, the transaction was validated
and became fully effective when the next day (October 29, 1951) the vendor, Crispina Perez, acquired
the entire interest of her remaining co-owners (Annex B) and thereby became the sole owner of Lot No.
802 of the Rosario Cadastral survey (Llacer vs. Muñoz, 12 Phil. 328). Article 1434 of the Civil Code of
the Philippines clearly prescribes that — .

When a person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer or
grantee."
10. FELIPE, ANTONIA SEGURA v. NICOLAS SEGURA
G.R. No. L-29320 September 19, 1988
FACTS:

This involves a parcel of land owned by Gertrudes Zamora. She died intestate and without debt and
was suvived by her 4 children who never decided to divide the property among themselves. The conflict
arises when Gertrudes' grandchildren filed a complaint for recovery of ownership and possession of the
disputed inheritance.

On April 6, 1961, three of the nine grandchildren - Nicolas, Santiago and Gaudencio Segura, executed
a deed of extrajudicial partition arrogating the entire property to themselves alone as equal pro indiviso
owners. The partition was not registered immediately, but only 5 years later, in 1946.

Before such registration, the following developments transpired:

The land was sold to Amojido with right to repurchase. Such right was not exercised. In November 28,
1946, Amojido executed an affidavit of consolidation of ownership and obtained a TCT with a
reservation of the rights of the other heirs annotated therein. Amojito sold the land to Mirope
Mascarenas vda. de Eliso who obtained the TCT in her name, which did not retain the annotation. In
turn, Elison sold the land to Mildred Elison vda. de Javelosa. Mildred sold the land to Ernesto and
Igmedio Amojido.

On January 16, 1958, the Civil Case was dismissed on motion of the plaintiff's counsel.

The complaint in the case at bar involves the six excluded children. They alleged that the partition and
all subsequent transfers of the subject land were null and voidinsofar as these transactions deprived
them of their shares as co-owners of the said property.

The defendants moved to dismiss, contending that the action was barred by prior judgment and that in
any even whatever rights might have pertained to the plaintiffs had already been prescribed under the
Rules of Court and the Civil Code.

ISSUE:

Whether or not the plaintiffs are barred by prescription from questioning the alleged extrajudicial
partition

HELD:

The claim of prescription is based first on the contention that under the Rules of Court the deed of
extrajudicial partition should have been impugned within two years from the date of its execution in
1941. As the challenge in the instant case was made only in 1956, when Civil Case No. 3941 was filed,
that first case, and more so the case at bar which was commenced in 1968, should be and were
properly dismissed for tardiness under Rule 74, Section 4, of the Rules of Court.

It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and void
as far as the plaintiffs were concerned. The rule covers only valid partitions.

The partition in the present case was invalid because it excluded six of the nine heirs who were entitled
to equal shares in the partitioned property. Under the rule, "no extrajudicial settlement shall be binding
upon any person who has not participated therein or had no notice thereof." As the partition was a total
nullity and did not affect the excluded heirs, it was not correct for the trial court to hold that their right to
challenge the partition had prescribed after two years from its execution in 1941.

11. REPUBLIC OF THE PHILIPPINES VS. COURT OF APPEALS

G.R. No. 128531. October 26, 1999

FACTS:

Private respondent Vicente Yupangco is the owner of a unit in a condominium building in Legaspi
Street, Makati City, as evidenced by Certificate of Title No. 7648. Because his aforesaid certificate
could not be located, he filed, on January 28, 1994, in the Regional Trial Court, Branch 136, Makati, a
petition for the issuance of a new duplicate certificate of title in lieu of his lost copy, pursuant to 109 of
P.D. No. 1529 (Property Registration Decree). The trial court ordered the Register of Deeds of Makati to
comment on the petition and thereafter set the case for initial hearing.

ISSUE:

Whether or not in a proceeding for the issuance of an owners duplicate certificate of title, the Solicitor
General is required to be notified, such that failure to give such notice would render the proceedings
void.

HELD:

The decision of the Court of Appeals is AFFIRMED. This is not correct. Considering that the law does
not impose such notice requirement in proceedings for the issuance of a new owners duplicate
certificate of title, the lack of notice to the Solicitor General, as counsel for the Registrar of Deeds, was
at most only a formal and not a jurisdictional defect.

This case should be distinguished from our rulings in cadastral registration cases and original land
registration proceedings which require that the Solicitor General be notified of decisions and hold as
decisive, for the purpose of determining the timeliness of the appeal filed by the government, the date
of his receipt of the decisions therein and not that of the Director of Lands or of his other
representatives. The issue and the applicable laws in those cases are different.
12. ROMANA TEODORO and ELINO CLARETE vs. THE HONORABLE COURT OF APPEALS
G.R. No. L-31471 November 12, 1987
FACTS:

In 1948, Isabel Ariola leased from the Manila Railroad Company a parcel of land. Sometime in
1953, the Manila Railroad Company sold four parcels of its property including that leased to Isabel
Ariola, to one Alfonso San Lorenzo, who in turn assigned his rights in favor of E.C. Herrera &
Company, subject to the condition that the purchaser would recognize the rights of the present
occupants of the said properties to purchase the respective parcels that they are now occupying at
a reasonable price to be agreed upon by the parties, and/or continue occupying said parcels of land
on rental basis the rates of which should be the same rental rates the Manila Railroad Company is
charging them until such time as final adjustment is worked out between the occupants and the
purchasers, which occupants are indicated in the attached list duly signed by both parties. On
November 20, 1957 the E.C. Herrera & Company, pursuant to the above condition, sold to Isabel
Ariola, who is listed as one of the occupants, a portion of about 176 square meters of the land
originally leased to her by the Manila Railroad Company. Thereafter, Isabel Ariola was issued
Transfer Certificate of Title No. 54930 covering the lot sold to her.

On November 29, 1957, Romana Teodoro and her husband, Elino Clarete, filed a complaint against
Isabel Ariola and the E.C. Herrera & Company for the cancellation of Transfer Certificate of Title No.
54930 and the issuance of another title in their favor, with damages, alleging that sometime in
December, 1948, by virtue of a verbal agreement between them and defendant Ariola, they
constructed a three-storey residential building on a portion of about 71 square meters of the lot
leased by Ariola from the Manila Railroad Company, that on January 9, 1954, in confirmation of the
verbal agreement, they and defendant Ariola entered into a written contract whereby said defendant
assigned her rights and interests on all the portion of land on which their house had been erected
and an additional portion adjacent thereto, or a total of 80 square meters; that the Manila Railroad
Company gave its conformity to and duly recognized said written agreement; that in the year 1956,
through fraud and intimidation, defendant Ariola was able to purchase from defendant E.C. Herrera
& Company the lot leased to her, including that portion on which their house stands, resulting in the
issuance of TCT No. 54930 in her favor; that to protect their interest, they filed an affidavit of
adverse claim, which was duly recorded in the Office of the Register of Deeds; and that, by reason
of said fraud and misrepresentations and in order to protect their rights and interests, they suffered
damages.

ISSUE:

Whether or not there was indeed a verbal agreement between the plaintiffs and the defendant
whereby the latter undertook to buy the lot in question from the Manila Railroad Company and
 thereafter to resell the same to the former.

HELD:

Yes. The Court rejects, finally, the respondent Court of Appeals insofar as it holds that Isabel
Ariola’s promise to sell does not bind Romana Teodoro because it is not supported by a
consideration distinct from the price pursuant to the provisions of Article 1479 of the new Civil Code.
That consideration is expressed in the written contract, under which the petitioners shouldered all
rental expenses payable by Ariola for her occupation of the property. This should be distinguished
from a sublease arrangement in which the sublessee’s responsibility as and for rents due the lessor
is subsidiary. But here, the petitioners bound themselves primarily to answer for those rents. That is
enough consideration to support Ariola’s promise.

13. YU TEK and CO., vs. BASILIO GONZALES

G.R. No. L-9935 February 1, 1915

FACTS:

Gonzalez received P3,000 from Yu Tek and Co. and in exchange, the former obligated himself to
deliver 600 piculs of sugar of the first and second grade, according to the result of the polarization,
within the period of three months. It was also stipulated that in case Gonzales fails to deliver, the
contract will be rescinded he will be obligated to return the P3,000 received and also the sum of
P1,200 by way of indemnity for loss and damages.

Plaintiff proved that no sugar had been delivered to him under the contract nor had he been able to
recover the P3,000.

Gonzales assumed that the contract was limited to the sugar he might raise upon his own plantation;
that the contract represented a perfected sale; and that by failure of his crop he was relieved from
complying with his undertaking by loss of the thing due.

ISSUE:

Whether or not there was a perfected contract of sale

HELD:

No. This court has consistently held that there is a perfected sale with regard to the “thing” whenever
the article of sale has been physically segregated from all other articles.

In the case at bar, the undertaking of the defendant was to sell to the plaintiff 600 piculs of sugar of the
first and second classes. Was this an agreement upon the “thing” which was the object of the contract?
For the purpose of sale its bulk is weighed, the customary unit of weight being denominated a “picul.”
Now, if called upon to designate the article sold, it is clear that the defendant could only say that it was
“sugar.” He could only use this generic name for the thing sold. There was no “appropriation” of any
particular lot of sugar. Neither party could point to any specific quantity of sugar and say: “This is the
article which was the subject of our contract.”

We conclude that the contract in the case at bar was merely an executory agreement; a promise of sale
and not a sale. There was no perfected sale.
 14. ONG JANG CHUAN v. WISE & CO.
G.R. No. 10907. January 29, 1916.

FACTS:

Defendant bound itself to deliver one thousand (1,000) sacks of flour, ’Mano’ brand, at the net price
of P11.05 (eleven pesos and five centavos) per barrel, the expenses of transportation from the
Binondo Canal to be borne by the purchaser, 500 sacks to be delivered in September and 500 in
October.

It has been established by a preponderance of evidence that the reason for the nonfulfilment, on
the part of Wise & Co., of the contract made with the plaintiff, was that the ’Mano’ brand of flour
which the defendant bound itself to deliver during the months of September and October had to
come from Australia, and at the time the contract was executed Wise & Co. did not have a sufficient
stock of the said brand of flour; and that, as the government of Australia prohibited the exportation
of flour, because of the scarcity of grain in that country, due to the war that had been declared
between Great Britain, of which Australia is an integral part, and the German Empire, it was
impossible for the importers to supply Wise & Co. with a sufficient quantity of flour to enable the
latter, in turn, to serve its customers.

ISSUE:

Whether or not the contract was an agreement to sell and not a perfected sale.

HELD:

Not a perfected sale. In the case under consideration, the undertaking of the defendant was to sell
to the plaintiff 1,000 sacks of "Mano" flour at P11.05 per barrel, 500 sacks to be delivered in
September and 500 in October. There was no delivery at all under the contract. If called upon to
designate the article sold, the defendant could only say that it was "Mano" flour. There was no
appropriation of any particular lot of flour. The flour mentioned in the contract was not physically
segregated from all other articles. In fact, the defendant did not have in its possession in Manila, at
the time the contract was entered into, the 1,000 sacks of flour which it agreed to deliver in
September and October. It is therefore clear that under the rule laid down in the case of Yu Tek &
Co., supra, and the cases cited in that opinion, the sale here in question was not a perfected one.

A contract of sale is not perfected where the parties have agreed upon the price and the thing sold,
unless the latter has been selected and is capable of being physically designated and distinguished
from all others of the same class.
 15. BUNGE CORPORATION vs. ELENA CAMENFORTE and COMPANY
48 OFF.GAZ. 3377

FACTS:
Plaintiff Bunge Corporation (represented by Universal Commercial Agencies) entered into a contract of sale
with Visayan Products Company whereby the latter sold to the former 500 long tons of merchantable
Philippine copra on October 22, 1947. Visayan Products Co. f a i l e d t o d e l i v e r t h e c o p r a a s a c c o r d i n g
t o t h e t e r m s a n d c o n d i t i o n s o f t h e c o n t r a c t whereby the vendor should ship the stipulated
copra during the month of November or December 1947, to San Francisco, California, U.S.A. for delivery to
the vendee.

Bunge Corp, however sold to El Dorado Oil Works the quantity of copra it had purchased at the same price
agreed upon; and that because of the failure of the Visayan Product to fulfill its contract to ship and
deliver the quantity of copra agreed upon within the period stipulated, the Bungee Corp has suffered
damages. Visayan Product contended that no contract of sale was perfected. If any, it was that signed by
Vicente Kho, the manager and controlling stockholder in Visayan Product Tacloban, but he was not authorized to
sign a contract for Visayan Product Cebu. Kho admitted that he signed the contract and tried his best to deliver
the copra but due to force majeure he failed to do so. Lower Court orderedfor payment of damages by Visayan
Product to Bunge Corp.

Upon appeal the question raised is not a matter of fact, but of law. Visayan Product now admitted that a contract
of sale of copra was entered into, alleging as a defense that the copra they had gathered and stored for delivery
to the appellees in Samar was destroyed by force majeure which under the law has the effect of exempting them
from liability for damages. Consequently, appellants now contend that the lower court erred in condemning them
for damages despite the fact that their failure to fulfill the contract is due to force majeure

ISSUE:

1. Whether or not there was a perfected contract of sale between El Dorado and Bunge Corp
of the copra to be acquired from sale by Visayan Products
2. Whether or not Visayan Product is liable for failure to deliver copra even if lost by force majeure

HELD:
1. Yes. The lower court erred in disregarding the transaction with the El Dorado Oil Works
simply because it found an apparent discrepancy in the dates appearing in the contracts. Contract
between Bunge Corp and Visayan appears dated on October 22, 1947, and was executed in Cebu,
Philippines, whereas contract between Bunge Corp and El Dorado dated on October 21, 1947, and was
executed in New York City. The difference of one day in the execution of these documents is merely
nominal because New York time is several hours behind Cebu time. In fact both transactions have been
practically executed on the same day. Even supposing that the contract with the El Dorado Oil Works
calls for future and not present deliveries. There is nothing improbable for the appellees to sell copra
which they expect to acquire sometime in the future for purposes of speculation.

2. Yes. A perusal of this contract shows that the subject matter is Philippine copra. The sale is to be made
by weight, — 500 long tons. It does not refer to any particular or specific lot of copra, nor does it
 mention the place where the copra is to be acquired. No portion of the copra has been
earmarked or segregated. The vendor was at liberty to acquire the copra from any part of
the Philippines. The sale simply refers to 500 long tons of the P h i l i p p i n e c o p r a . T h e
s u b j e c t - m a t t e r i s , t h e r e f o r e , g e n e r i c , n o t s p e c i f i c . H e n c e , t h e obligation cannot
be deemed extinguished by the destruction or disappearance of the copra stored in San
Ramon, Samar. Their obligation subsists as long as that commodity is available. A generic obligation
is not extinguished by the loss of a thing belonging to a particular genus. Genus nun quan perit .

16. ANTONIO M. PATERNO, ET AL. v. JOSE V. SALUD

G.R. No. L-15620, September 30, 1963

FACTS:

Defendant claims to be the owner of the land which plaintiffs seek to recover having been in adverse
possession thereof since 1890 and having registered it in his name Registration Case No. 23 of the
same court on April 16, 1940 for which he obtained a Torrens title.

On March 1912, Jose T. Paterno, as administrator of the estate Maximino Molo Agustin Paterno,
acquired at an auction sale certain parcels of land that were levied in execution belonging to Esteban
de Villa. These includes the land in question which contained 5 hectares. In 1927, all these lands were
adjudicated to Concepcion Paterno Vda. de Padilla, daughter of the late Maximino Molo Agustin
Paterno as her share in the estate. In that year, the lease of the lands to the De Villas was not renewed
and so their possession was returned to the Paternos. In 1943, Concepcion Paterno died leaving all the
lands she owned in Batangas, including the one in question, to plaintiffs as her heirs. Hence, from
1927, when the lease to the De Villas was terminated, to 1949, plaintiffs had been in possession of the
lot with an area of 5 hectares.

The Court of Appeals ruled in favor of the defendant that land in question and the bigger Parcel of
30.5285 hectares of which it was originally a part, were not included in the auction in 1912 of the
properties of Esteban de Villa.

ISSUE:

Whether or not the 5 hectares of land is owned by the defendant

HELD:

The Supreme Court ruled that the Court of Appeals erred in declaring defendant owner of the parcel of
land claimed in his counterclaim. The evidence shows that plaintiff predecessor-in-interest Concepcion
Paterno Vda. de Villa secured in 1928 Original Certificate of Title No. 49 over a parcel of land of which
the land involved here was a part. This parcel of land was originally acquired by the Paternos in 1912.
This was leased to Esteban Villa and Pia de Villa from 1917 to 1925; surveyed Jose T. Paterno on
September 25, 1924; was the subject of petition for registration by the Paternos in 1926, due notice of
which was given to the De Villas, and upon the death of Concepcion Paterno Vda. de Padilla, it was
transmitted to plaintiffs by succession. Since the land in question was registered in the name of the
Paternos in 1928 and it was only on November 19, 1952, date of defendant' answer, that he sought its
reconveyance to him, that title became indefeasible under Section 38, Act No. 496, as amended by Act
No. 3630.

17. JOSE STA. ANA, JR. and LOURDES STO. DOMINGO v. ROSA HERNANDEZ

G.R. No. L-16394. December 17, 1966

FACTS:

Spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo sold a land in Bulacan to respondent Rosa
Hernandez for P11,000 lump sum. (there were two other previous sales to different vendees of other
portions of the land)

The boundaries of the land were stated in the deed of sale and its approximate land area.

Petitioners-spouses caused the preparation of the subdivision plan but Hernandez didn’t agree to the
partition. As such, petitioners-spouses filed a case alleging that Hernandez is occupying in excess of
17000 square meter of the land sold. Hernandez claims that the excess area is part of the land she
bought.

ISSUE:

Whether or not the excess area occupied by Hernandez is part of the land sold.

HELD:

The sale involves a definite and identified tract, a corpus certum, that obligated the vendors to deliver to
the buyer all the land within the boundaries, irrespective of whether its real area should be greater or
smaller than what is recited in the deed.

To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the
sale was made by unit of measure at a definite price for each unit. The sale in this case only involves
the definite boundaries but only approximate land areas. As such, Art 1542 concerning the sale for
lump sum must be considered.
 18. LEON SIBAL vs. EMILIANO J. VALDEZ ET AL.
G.R. No. L-26278 August 4, 1927

FACTS:

Plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac, by
virtue of a writ of execution issued by the Court of First Instance of Pampanga, attached and sold to
the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his tenants on seven
parcels of land. Plaintiff offered to redeem said sugar cane and tendered to the defendant Valdez
the amount sufficient to cover the price paid by the latter, the interest thereon and any assessments
or taxes which he may have paid thereon after the purchase, and the interest corresponding
thereto. However, Valdez refused to accept the money and to return the sugar cane to the plaintiff.

ISSUE:

Whether or not pending crops which have potential existence may be the valid subject matter of a sale.

HELD:

Yes, it can be a valid subject matter of a sale.

From an examination of the reports and codes of the State of California and other states we find that
the settle doctrine followed in said states in connection with the attachment of property and execution of
judgment is, that growing crops raised by yearly labor and cultivation are considered personal property.

Mr. Floyd R. Mechem (He is the author of A Treatise on the Law of Sale of Personal Property) says that
a valid sale may be made of a thing, which though not yet actually in existence, is reasonably certain to
come into existence as the natural increment or usual incident of something already in existence, and
then belonging to the vendor, and then title will vest in the buyer the moment the thing comes into
existence. Things of this nature are said to have a potential existence.

A man may sell property of which he is potentially and not actually possessed. He may make a valid
sale of the wine that a vineyard is expected to produce; or the gain a field may grow in a given time; or
the milk a cow may yield during the coming year; or the wool that shall thereafter grow upon sheep; or
what may be taken at the next cast of a fisherman’s net; or fruits to grow; or young animals not yet in
existence; or the good will of a trade and the like. The thing sold, however, must be specific and
identified. They must be also owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am.
Rep., 165].)

The Supreme Court held that pending crops which have potential existence may be the valid subject
matter of sale and may be dealt with separately from the land on which they grow. Judgment appealed
from AFFIRMED.

19. LUIS PICHEL vs. PRUDENCIO ALONZO

G.R. No. L-36902 January 30, 1982

FACTS:

That Prudencio Alonzo (VENDOR) executed a deed of sale for the coconut fruits of his land in
Balactasan Plantation in Lamitan, Basilan, in favor of Luis Pichel (VENDEE). The land from which the
subject coconut fruits are derived from was subjected to a cancellation of the award in 1965, due to the
reason of violation of the law that disallows alienation of land (the vendor’s rights to the land were
reinstated in 1972)
The vendor and his wife sold to the vendee the fruits of the coconut trees from 1968 to 1976 for
consideration of 4,200. Even during the date of sale, the land was still leased to one Ramon Sua, and it
was part of the agreement of the sale that the sum of 3,650.00 was to be paid by the vendor to Ramon
Sua as to release the land.
The RTC decided in favor of the vendor, due to the fact that the deed of sale that was executed was
invalid, due to its supposed violation of RA No. 477, in which they equated the deed of sale executed by
the parties as a contract of lease.

ISSUE:

Whether or not the contract of sale is valid.

HELD:

Yes. A contract of sale may be absolute or conditional. The subject matter of the contract of sale in
question are the fruits of the coconut trees on the land during the years from September 15, 1968
up to January 1, 1976, which subject matter is a determinate thing. Under Article 1461 of the New
Civil Code, things having a potential existence may be the object of the contract of sale. And in
Sibal vs. Valdez, 50 Phil. 512, pending crops which have potential existence may be the subject
matter of the sale.
 20. FELIX BUCTON vs. ZOSIMO GABAR,
G.R. No. L-36359, January 31, 1974

FACTS:

Plaintiff Bucton is the sister of respondent Gabar, who is plaintiff's brother. Both siblings are married.
Plaintiff entered into a verbal contract of sale with the respondent for the half portion of a lot having an
area of 728 sq. m. in Misamis Oriental. Petitioner paid P1,000.00 as part payment of the purchase price
on January 19, 1946. Private respondents were not yet the owners of the lot, they became such owners
on January 24, 1947, when a deed of sale was executed in their favor by the Villarin spouses. On May
2, 1948, petitioner made her second and final payment of P400. Plaintiffs then sought to obtain a
separate title for their portion of the land in question. Defendants repeatedly declined to accommodate
plaintiffs. Respondent's alleged right of action was based on the receipt which was executed way back
on January 19, 1946. They allege that From January 19, 1946 to February 15, 1968, when the
complaint was filed in this case, twenty-two (22) years and twenty-six (26) days had elapsed.
Therefore, the plaintiffs' action to enforce the alleged written contract (Exh. A) was not brought within
the prescriptive period of ten (10) years from the time the cause of action accrued.

ISSUE:

1. Does the petitioner have ownership over the land?

2. Was there a need to enforce the contract?

3. Did the action to quiet title property already prescribe?

HELD:

1. Yes. In the premises, Article 1434 of the Civil Code, which provides that "[w]hen a person who
is not the owner of a thing sells or alienates and delivers it, and later the seller or grantor
acquires title thereto, such title passes by operation of law to the buyer or grantee," is
applicable. Thus, the payment by petitioner by Bucton of P1,000.00 on January 19, 1946, her
second payment of P400.00 on May 2, 1948,) resulted in the full payment of the purchase price
and the consequential acquisition by petitioner of ownership over one-half of the lot. Petitioner
 therefore became owner of the one-half portion of the lot in question by virtue of a sale which,
though not evidenced by a formal deed, was nevertheless proved by both documentary and
parole evidence.

2. No. Under the circumstances no enforcement of the contract is needed, since the delivery of
possession of the land sold had consummated the sale and transferred title to the purchaser,
and that, actually, the action for conveyance is one to quiet title, i.e., to remove the cloud upon
the appellee's ownership by the refusal of the appellants to recognize the sale made by their
predecessors.

3. No. It is an established rule of American jurisprudence that actions to quiet title to property in the
possession of the plaintiff are imprescriptible.

21. REPUBLIC OF THE PHILIPPINES vs. MARIANO F. LICHAUCO, ET AL.

G.R. No. L-21436 August 18, 1972

FACTS:

December 2, 1957, Republic of the Philippines filed in the Court of First Instance a complaint against the
defendants for the expropriation of the lands of the “Hacienda El Porvenir”, area of 1,352.84245 hectares. It was
said the value of the property was P434,440.00, requested to purchase of said property by the government.
Defendants sought the dismissal of the complaint, alleging that the hacienda was no longer a co-ownership but
had been partitioned among the several heirs of Crisanto Lichauco. On March 23, 1961, the plaintiff and the
defendants filed in court an Agreement and Joint Motion 2. The land known as “Hacienda El Porvenir” area of
approximately 990.1725 was divided into 9 parts.

Parties have agreed to survey and segregate the retained areas by the surveyors of the Land Tenure
Administration, with the assistance of the defendant-co-owners or their authorized representative in order to
outline approximately the boundaries on the ground of the retained areas, at the expense of the Land Tenure
Administration.

The plaintiff agrees to dismiss the expropriation proceedings because the co-owners approved the expropriation
by the Republic of the Philippines of the property mentioned in Pars. Il and III of the complaint but excluding the
portions to be retained by defendents. Based on Original Certificate of Title No. 7, half of which is approximately
1,352.8425 hectares, the survey shows an increase in area of about 144.0681 hectares which is still subject to
judicial determination.The plaintiff shall have the option buy the said portions in question as adjudicated and to
pay the corresponding price as in this expropriation case.

The co-owners agreed that payments shall be made to them separately. Payment shall be made to the creditor
banks to be paid to each co-owners by the Land Tenure Administration with the Court which shall be deducted
from the corresponding amounts due each of the co-owners who are the debtors. Subsequently, the some portion
of the lands were sold to Trinidad Castillo. Later, some portions of the land was then sold to Amanda de la Cruz
who shall deposit same in a bank so as to earn interest. All payments by the Land Tenure Administration for the
expropriated portion of the “Hacienda El Porvenir” shall be strictly on cash basis.
Upon motion of the plaintiff, after it had deposited with the clerk of court the provisional value of the property, the
court issued, on July 3, 1961, the writ of possession in favor of the plaintiff, and an alias writ on August 30, 1961.
This writ was served on September 10, 1961, and on said date plaintiff was placed in possession of the property.

ISSUE:

Whether or not the Republic of the Philippines previously has legal rights to the land also known as “Hacienda El
Porvenir”

HELD:

No, because it was proven to the court that the hacienda was no longer a co-ownership but had been partitioned
among the several heirs of Crisanto Lichauco, and that Republic Act No. 1400 was unconstitutional.

The record clearly shows that the hacienda had already been partitioned among the several heirs such that each
one of the defendants-appellees owned his/her portion separate and distinct from that of the others. In this
connection, the following ruling is pertinent: "It has been held to be wrong to value three separately owned parcels
as one and allocate the amount among the owners, even though the parcels had originally been in single
ownership and were thereafter divided among the owners, who were all members of one family.

22. HEIRS OF AMPARO DEL ROSARIO vs. AURORA O. SANTOS, et. al

G.R. No. L-46892 September 30, 1981

FACTS:

Amparo Del Rosario entered into a contract with Atty. Andres Santos and his wife Aurora Santos
whereby the latter sold to the former a 20,000 sq. m. of land which is to be segregated from Lot 1. Said
lot forms part of the several lots belonging to a certain Teofilo Custodio, of which lots, Attorney Santos,
by agreement with the latter, as his attorney’s fees, owns ½ interests thereof. Parties agreed that
spouses Andres shall thereafter execute a Deed of Confirmation of Sale in favor of Del Rosario as soon
as the title has been released and the subdivision plan of said Lot 1 has been approved by the Land
Registration Commissioner. Due to the failure of the spouses Andres to execute the deed after the
fulfilment of the condition, Del Rosario claims malicious breach of a Deed of Sale. Defendant thereafter
filed a motion to dismiss setting up the defenses of lack of jurisdiction of the court over the subject of
the action lack of cause of action as well as the defense of prescription. They further alleged that the
deed of sale was only an accommodation graciously extended, out of close friendship between the
defendants and the plaintiff, hence, tantamount to waiver, abandonment or otherwise extinguishment of
the demand set forth in the complaint. Finally, defendants alleged that the claim on which the action or
suit is founded is unenforceable under the statute of frauds and that the cause or object of the contract
did not exist at the time of the transaction. The lower court resolved to deny the motion to dismiss. After
actions by respective parties, the lower court ordered the defendants to execute and convey to plaintiff
the 200,000 sq. m. of land to be taken either from Lot 4 or from Lot 5-A of Custodio’s lots, which
defendants own ½ interest thereof. Aggrieved by the aforesaid decision, the defendants filed an appeal
with the Court of Appeals which certified the records of the case to the Supreme Court for final
determination.

ISSUE:

Whether or not the sale is valid as to the cause or object of the contract
HELD:

Yes. The Supreme Court held that the execution of the Deed of Sale is valid notwithstanding the lack of
any title to the lot by appellants at the time of execution of the Deed of Sale in favor of appellee as there
can be a sale of an expected thing in accordance with Article 1461 of the NCC: “Article 1461: Things
having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere
hope of expectancy is deemed subject to the condition that the thing will come into existence. The sale
of a vain hope or expectancy is void.” The case at bar is not a case of a vain hope or expectancy which
is void under the law. The expectant right came into existence or materialized for the appellants actually
derived titles from Lot 1which subsequently became the object of subdivision.

23. TIBURCIO LUTERO vs. SIULIONG and CO.,

G.R. No. L-31125 January 21, 1930

Doctrine:
Contracts of sale of agricultural products to be delivered in future, fixing a selling price, are not usurious
or illegal, even when the market price of the products sold should turn out to be higher at the time of
delivery.

FACTS:

Plaintiff entered into a contract with defendant to sell the former’s future sugar crop harvest to
the latter at a price depending on the class of the sugar. The defendant bound itself to pay an advance
amount of Php. 3,000 and the remainder shall be paid from time to time. The contract also stated that
should the plaintiff fail to deliver, he shall pay the amount of the undelivered portion to the defendant.
The plaintiff also entered into a mortgage agreement to secure his performance in the contract.

ISSUE:
Whether or not future products are invalid subjects in a contract of sale

HELD:
No.
 The contracts of sale of agricultural products to be delivered in future, fixing a selling price, are
not usurious or illegal, even when the market price of the products sold should turn out to be higher at
the time of delivery.

Contracts of sale of agricultural products to be delivered in future, fixing a selling price, are not
usurious or illegal, even when the market price of the products sold should turn out to be higher at the
time of delivery.

24. KER & CO., LTD., vs. JOSE B. LINGAD

G.R. No. L-20871 April 30, 1971

FACTS:

The then Commissioner of Internal Revenue Domingo assessed the petitioner to pay Php20,272 as
commercial broker’s percentage tax. The petitioner requested for its cancellation but was denied and
deemed liable as an agent of United States Rubber International, referred here as the Company.

The petitioner was the Company’s distributor. Their contract provides that the petitioner, as distributor,
cannot dispose of the products for shipment elsewhere than the designated places. But the crucial
stipulations state that 1) the consignment remains property of the Company until sold by the distributor
and 2) “the distributor is not constituted as an agent of the Company by this contract for any purpose
whatsoever.”

ISSUE:

Wether or nit the petitioner should be liable for the commercial broker’s percentage tax as the agent of
the company given the stipulation in their contract

HELD:

Yes. The Court of Tax Appeals was correct in deciding “that the petitioner Ker & Co., Ltd is, by
contractual stipulation, an agent of the Company as all the circumstances are antagonistic to the idea of
an independent merchant.”

According to the National Internal Revenue Code, a commercial broker “includes all persons… who, for
compensation or profit, sell or bring about the sales or purchase of merchandise for other persons, or
bring proposed buyers together…” The test to see who falls under this definition was penned by Justice
JBL Reyes in CIR vs Constantino stating “since the company retained ownership of the goods, the
price and the terms subject to it, the relationship of the company and the dealer is one of agency.”

The case of Salisbury vs Brooks support this view stating that if the transfer of title puts the transferee
in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed
price, and not merely as an agent who must account for the proceeds of a resale, it is a sale; while the
essence of an agency to sell is the delivery to an agent, not as his property, but as the property of the
principal, who remains the owner and has the right to control sales, fix the price and terms, demand
and receive the proceeds less the agent’s commission upon sales made.”

25. INCHAUSTI & CO., v. ELLIS CROMWELL

GR No. L-6584, October 16, 1911

FACTS:

Inchausti is engaged in the business of buying and selling wholesale hemp both for its own account and
on commission. It is customary to sell hemp in bales which are made by compressing the loose fiber by
means of presses, covering two sides of the bale with matting, and fastening it by means of strips of
rattan; that the operation of bailing hemp is designated among merchants by the word “prensaje.” In all
sales of hemp by Inchausti, the price is quoted to the buyer at so much per picul, no mention being
made of bailing. It is with the tacit understanding that the hemp will be delivered in bales. The amount
depends under the denomination of “prensaje” or the baled hemp.

Collector of Internal Revenue (CIR) made demand in writing upon Inchausti for the payment of the sum
of P1, 370.68 as a tax of one third of one per cent on the sums of money mentioned as aggregate sum
collected as prensaje or the baled hemp. Inchausti paid upon protest, contending that the collected
amount is illegal upon the ground that the said charge does not constitute a part of the selling price of
the hemp, but is a charge made for the service of baling the hemp.

ISSUE:

Whether or not the baled hemp constitutes a contract of sale.

HELD:
Yes, the baled hemp constitutes a contract of sale. In the case at bar, the baled form before the
agreement of sale were made and would have been in existence even if none of the individual sales in
question had been consummated. The hemp, even if sold to someone else, will be sold in bales. When
a person stipulates for the future sale of articles which he is habitually making, and which at the time
are not made or finished, it is essentially a contract of sale and not a contract for piece of work. It is
otherwise when the article is made pursuant to agreement. If the article ordered by the purchaser is
exactly such as the plaintiff makes and keeps on hand for sale to anyone, and no change or
modification of it is made at the defendant’s request, it is a contract of sale, even though it may be
entirely made after, and in consequence of, the defendant’s order for it.
 26. Mauricia Majarabas, et. al. vs Inocencio Leonardo
GR No. 4348, September 12, 1908

FACTS:

Plaintiff had rendered services as wet nurse and governess to an infant daughter of the defendant by
virtue of a verbal agreement entered into with the now deceased parents of the defendant promising to
liberally compensate the services of the plaintiff, providing the maintenance of herself, her husband and
their child, during all the time that the services of the plaintiff were required.

It is maintained in the defendant's demurrer that the obligation contracted by the parents of the
defendant was to support the plaintiff and her family, and that by reason of the death of the former, as
stated in the complaint, under the provision of article 150 of the Civil Code, the said obligation has been
extinguished in fact and in law. The demurrer was overruled by the court below on the ground that
aforesaid agreement constituted a contract for services, although the price was to be measured by the
cost of the maintenance of the plaintiff.

ISSUE:

Whether or not without specified price no lease of services can exist.

HELD:

It is not necessary that the certainty of the price be actual or determined at the time of executing the
contract, but that it is sufficient compliance with the law if the same can be determined by the
speculations of the contract made by the party thereto. In the present case the contracting parties fixed
the maintenance of the plaintiff and her family as the price for the services required of her. Said
maintenance is the specific and determinate thing that in its turn fixes the price, inasmuch as its cost
determines the price according to the agreement of the parties to the contract. There might be a
question as to the actual cost of the plaintiffs’ maintenance, but this is a matter of fact which in such a
case would have to be proven. Be it as it may, whatever might be the cost of said subsistence, it would
constitute the price for the services rendered by the plaintiff; said price is unquestionably the specified
one since it refers to a specified thing designated by the parties as the rate regulating the amount
thereof. Therefore, the appellant's allegation is unfounded, and the order of the court below overruling
the demurrer must be affirmed.

Even if there is no specific price stated in a contract, it is sufficient if it is determinable by making a

reference to another thing which is itself certain.
 27. Mitsui Bussan Kaisha vs The Manina Electric Railroad and Light Company
GR No. L-13753, February 15, 1919

FACTS:

“Coal tax case” On December 23, 1914, the Legislature passed Act No. 2432 imposing a specific tax
of P1.00 per metric ton on coal. The Act was later amended by Act. 2445, and the provision was
inserted, “Whenever any person has prior to the enactment of this law entered into a contract… the
burden of said tax or increased rate of tax shall be borne by the person to whom said article is
furnished pursuant to such contract, unless the parties have agreed or shall agree otherwise.”

Prior to the enactment of Act No. 2432 and Act 2445, Mitsui Bussan Kaisha had contracted to sell
large quantities of coal to the Manila Electric Railroad and Light Company. The basic price fixed in the
contract was P9.45 per long ton but it was stipulated that the price was subject to modification “in
proportion to variations in calories and ash content, and not otherwise.” This means that the price
could be made certain by the application of known factors.

From March to October 1915, Mitsui brought to Manila from Japan 11,874.75 metric tons for delivery
and paid the new internal revenue tax imposed by Acts No. 2432 and 2445. When Mitsui demanded
reimbursement of the P11,874.75 taxes it paid, Manila E.R.R. & L. refused saying that Mitsui was
obligated to deliver at that price and incidentally was bound to bear any expense necessary to enable
it so to deliver coal to the defendant, and that the parties had agreed that the internal-revenue tax
should be paid that the seller.

ISSUE:

1. Whether or not is the contract to sell at a fixed price within the contemplation of the law
stating “unless the parties have agreed or shall agree otherwise.

2. Whether or not the stipulation of the contract stating “in proportion to variations in calories
and ash content and not otherwise” can considered that the parties have already agreed as
to the fixed price and therefore the seller shall bear the additional tax burden.

HELD:

1. YES. The words “unless the parties have agreed or shall agree otherwise” contemplates the
case where express provision has been made with direct reference to the burden of such
internal revenue taxes as the Legislature might impose. The very purpose of the phrase was
to evade the effect of the implication that the seller should bear all the expenses necessary
to enable It to fulfill the principal obligation, and to put the burden of the new tax on the
purchaser in the absence of express stipulation to the contrary. Evidently the intent of the
Legislature was to relieve the person who had bound himself to make deliveries at a fixed
price.

2. NO. The stipulation between Mitsui and Manila E.R.R.&L has exclusive reference to the
quality of the coal delivered, and has no other purpose than to supply a means of
ascertaining the value of the coal by determining its utility in combustion. It has no bearing
upon liability for the internal-revenue tax.
 28. E.C McCullough vs R. Aenlle & Co.
GR No. 1300, February 3, 1904

FACTS:

On August 27, 1901, the parties made a written contract for the purpose of carrying into effect the said
contract of sale. Don Matias Saenz de Vizmanos y Lecaros, the manager of R. Aenlle & Co., declares
that they sell, absolutely and in fee simple to E.C. McCullough, the tobacco and cigarette factory known
as “La Maria Cristina” and everything else belonging to the said factory.

The inventory mentioned in the contract was made by the defendant and delivered to the plaintiff. The
parties have completed the mentioned inventory of machinery, furniture and other tools of the said
tobacco factory representing a total amount of P131, 000.00 after deducting the 20% discount that has
been agreed including the value of the trade-mark at P20, 000.00 and that the E.C McCullough, the
purchaser, remained in the possession of the tobacco factory.

The plaintiff, with others, organized a company, to which the plaintiff sold all the tobacco bought by him
from the defendant. The purchaser examine the two lots and rejected them because of that the tobacco
was not of the quality indicated in the inventory. The plaintiff claims that the tobacco in these lots was
worthless, and brought this action against the defendant to recover what he paid.

ISSUE:

Whether or not the plaintiff can revover what he paid.

HELD:

No. The plaintiff cannot recover the cost. It was a sufficient compliance with the contract. The fact that
the tobacco was described as one class instead of another would be unimportant. The appellee did not
purchase by class or quality but by quantity.

The words "unless the parties have agreed or shall agree otherwise" contemplate the case where
express provision has been made with direct reference to the burden of such internal-revenue taxes as
the Legislature might impose. The original contract contained no express provision on this point, and
the parties made no contract with reference thereto after Act No. 2445 was posted. The case is,
therefore, directly within the operative words or the provisions quoted; and the seller is, in the Court's
opinion, relieved of the burden of the tax. It is true that, from the agreement of the plaintiff to deliver
coal at a fixed price, there was to be deduced an implication to the effect that the plaintiff should bear
all expense necessary to enable it to fulfill the principal obligation; and without the aid of the
amendatory statute the plaintiff would have been compelled to satisfy the tax in this case. But the very
purpose of the words quoted was to evade the effect of this implication and to put the burden of the
new tax on the purchaser in the absence of express stipulation to the contrary.
 29. Zacarias Robles vs Lizarraga Hermanos
GR No. L-26173, July 13, 1927

FACTS:

Hacienda “Nahalinan” in Occidental Negros belonged originally to the Sps. Zacarias Robles and Anastacia de la
Rama, parents of present plaintiff Zacharias Robles.

Upon death of Zacharias Sr., Anastacia was appointed administratrix of his estate; as administratrix she leased
the hacienda to Zacharias for period of 6 years (May 1915- May 1920). It was stipulated in the lease agreement
that any permanent improvement necessary to the cultivation and exploitation of the hacienda should be made at
the expense of the lessee and without right to indemnity at the end of the term. Annual rent fixed at P2,000 per
annum.

During the term of the lease, Zacharias made various improvements and additions to the plant such as
substitution of a new hydraulic press; reconstruction of dwelling house; construction of new houses for workmen;
building of camarins; construction of chimney; reconstruction of ovens; installment of new coolers; purchase of
farming tools and many head of carabao, with other repairs and improvements. All this expense was borne
exclusively by the lessee, with the exception that his mother and coheirs contributed P1,500 towards the expense
of the reconstruction of the dwelling house, which was one-half the outlay for that item.

The firm of Lizarraga Hermanos was well aware of the nature and extent of these improvements, for the reason
that the lessee was a customer of the firm and had purchased from it many of the things that went into the
improvements.

On 1916, Anastacia de la Rama died leaving 5 children and grandchildren of a deceased daughter as heirs.
Zacharias Robles, Jose Robles, and Evarista Robles acquired by purchase the shares of their coheirs in the
entire inheritance.

Lizarraga Hermanos proposed to buy from these three all of the other properties belonging to the Robles estate
(which included other properties in addition to the hacienda "Nahalinan").

Zacharias alleged that since the lease still had over 2 years to run, for him to surrender the last two years of his
lease the defendant agreed to pay him the value of all betterments that he had made on the hacienda. The
instrument of conveyance was executed on Nov 16, 1917. The 3 grantors in the deed conveyed only their several
rights, interests and share in the estate of their mother. What Zacharias conveyed is not defined as being the
hacienda Nahalinan nor including any of his rights in or to the property conveyed other than those which he
possessed as a character of an heir. No reference is made to the surrender of Zacharias’ rights as lessee except
in fixing the date when the lease would end. Nothing is said concerning the improvements or the property of a
personal nature w/c Zacharias had placed on the Hacienda.

Zacharias says that their agreement with respect to compensation was not incorporated in the document because
the representative of Lizarraga explained that it was unnecessary in view of the confidence existing between the
parties which he believed would be carried out in good faith. The agreement was not reduced to writing.

Lizarraga says that no agreement with respect to compensation for the improvements was made. He claims that
after the sale of the hacienda, Zacharias offered to sell the crop of the cane then exisiting and the carabao then in
use on the place.

ISSUE:

Whether of not the trial court erred in admitting oral evidence of a contract different from that expressed in the
contract of sale.
HELD:

No. Zacharias introduced in evidence a letter (Exhibit D), written on March 1, 1917, by Severiano Lizarraga to the
plaintiff, in which reference is made to an appraisal and liquidation. This letter is relied upon by the plaintiff as
constituting written evidence of the agreement; but it seems to us so vague that, if it stood alone, and a written
contract were really necessary, it could not be taken as sufficient proof of the agreement in question. But we
believe that the contract is otherwise proved by oral testimony.

1. Carmelo Lizarraga’s testimony – He admitted that a few days before the conveyance was
executed the plaintiff proposed that the defendant should buy all the things that the plaintiff
then had on the hacienda, whereupon the Lizarragas informed him that they would buy those
things if an agreement should be arrived at as to the price.

2. Direct testimony of the Zacharias and his brother Jose - agreement was as claimed by the
plaintiff; and this is supported by the natural probabilities of the case in connection with a
subsequent appraisal of the property.

Lizarraga imputes error in the action of trial court in admitting oral evidence of contract different from that
expressed in the contract of sale and insisted that the written contract must be taken as expressing all of the
pacts, agreements and stipulations entered into between the parties with respect to the acquisition of
the hacienda. In this connection stress is placed upon the fact that there is no allegation in the complaint that the
written contract fails to express the agreement of the parties.

Court: The case is not one for the reformation of a document on the ground of mistake or fraud in its execution.
The purpose is to enforce an independent or collateral agreement which constituted an inducement to the making
of the sale, or part of the consideration therefor.

General Rule: Extrinsic evidence is inadmissible to contradict or vary the terms of a written contract.

Exceptions: Proof is admissible of any collateral, parol agreement that is not inconsistent with the terms of the
written contract, though it may relate to the same subject-matter

Doctrine as expressed in a legal encyclopedia:

"The rule excluding parol evidence to vary or contradict a writing does not extend so far as to
preclude the admission of extrinsic evidence to show prior or contemporaneous collateral
parol agreements between the parties, but such evidence may be received, regardless of
whether or not the written agreement contains any reference to such collateral agreement, and
whether the action is at law or in equity."

In the case before us the deed of conveyance purports to transfer to the defendant only such interests in certain
properties as had come to the conveyors by inheritance. Nothing is said concerning the rights in
the hacienda which the plaintiff had acquired by lease or concerning the things that he had placed thereon by way
of improvement or had acquired by purchase.

The verbal contract which the plaintiff has established in this case is therefore clearly independent of the
main contract of conveyance, and evidence of such verbal contract is admissible under the doctrine above stated.

The rule that a preliminary or contemporaneous oral agreement is not admissible to vary a written
contract appears to have more particular reference to the obligation expressed in the written agreement, and the
rule had never been interpreted as being applicable to matters of consideration or inducement. In the case before
us the written contract is complete in itself; the oral agreement is also complete in itself, and it is a collateral to the
written contract, notwithstanding the fact that it deals with related matters.
 30. Askay vs Fernando A. Cosalan
GR No. L-21943, September 15, 1924

Facts:

The plaintiff Askay is an illiterate Igorrote between 70 and 80 years of age, residing in the municipal district of
Tublay, Province of Benguet, who at various time has been the owner of mining property. The defendant is
Fernando A. Cosalan, the nephew by marriage of Askay, and municipal president of Tublay, who likewise has
been interested along with his uncle in mining enterprises.

About 1907, Askay obtained title to the Pet Kel Mineral Claim located in Tublay, Benguet. On November 23, 1914,
if we are to accept defendant's Exhibit 1, Askay sold this claim to Cosalan. Nine years later, in 1923, Askay
instituted action in the Court of First Instance of Benguet to have the sale of the Pet Kel Mineral Claim adhered
null, to secure possession of the mineral claim, and to obtain damages from the defendant in the amount of
P10,500. Following the presentation of various pleadings including the answer of the defendant, and following trial
before Judge of First Instance Harvey, judgment was rendered dismissing the complaint and absolving the
defendant from the same, with costs against the plaintiff. On being informed of the judgment of the trial court,
plaintiff attacked it on two grounds: The first, jurisdiction, and the second, formal. Both motions were denied and
an appeal was perfected. Acting under the authority granted by the order of the Secretary of Justice, Judge
Harvey proceeded to hear the case of Askay vs. Cosalan, without protest from anyone until after an adverse
decision for the plaintiff and until after Judge Harvey had left the district.

The point which plaintiff now presses is that Act No. 3107, amendatory of section 155 of the Administrative Code,
which authorizes a Judge of First Instance to be detailed by the Secretary of Justice to temporary duty, for a
period which shall in no case exceed six months, in a district or province other than his own, for the purpose of
trying all kinds of cases, excepting criminal and election cases, was not in force until fifteen days after the
completion of the publication of the statute in the Official Gazette, or not until August 3, 1923.

Also, plaintiff contends that the sale of the Pet Kel Mineral Claim was accomplished through fraud and deceit on
the part of the defendant. Plaintiff may be right but in our judgment he has failed to establish his claim. Fraud must
be both alleged and proved.

Issue:

Whether or not, Judge George R. Harvey had jurisdiction to try the case.

Whether or not, the plaintiff has established his cause of action by a preponderance of the evidence.

Held:

1.Yes. Judge Harvey had jurisdiction to try this case,that his findings of fact are in accordance with the evidence,
that no prejudicial error was committed in the trial, and that the complaint was properly dismissed. Because that
Act No. 3107 went into effect on March, 17, 1923, and that it was subsequent thereto, on April 16, 1923, that
Judge Harvey was authorized to hold court at Baguio, beginning with May 2, 1923, appellant's argument along
this line is found to be without persuasive merit. 49

2. But the fact that the bargain was a hard one, coupled with mere inadequacy of price when both parties are in a
position to form an independent judgment concerning the transaction, is not a sufficient ground for the
cancellation of a contract. The document itself executed in the presence of witnesses and before a notary public
and filed with the mining recorder. The notary public, Nicanor Sison, and one of the attesting witnesses, Apolonio
Ramos, testified to the effect that in the presence of the plaintiff and the defendant and of the notary public and
the subscribing witnesses, the deed of sale was interpreted to the plaintiff and that thereupon he placed his thumb
mark on the document. Two finger print experts, Dr. Charles S. Banks and A. Simkus, have declared in
depositions that the thumb mark on Exhibit 1 is that of Askay. No less than four other witnesses testified that at
various times Askay had admitted to them that he had sold the Pet Kel Mine to Fernando A. Cosalan.
 31. Warner, Barnes & Co., Limited vs Ramon F. Santos
GR No. L-4932, November 16, 1909

FACTS:

Plaintiff brought an action for the purpose of foreclosing a mortgage. Later the cause was brought on
for trial, and after hearing the evidence adduced during the trial, the lower court rendered a judgment in
favor of the plaintiff. The judgment of the lower court further provided that if the defendant failed to pay
the amount of aid judgment that an execution might issue against the property.

On the 6th day of March, 1908, upon the petition of the plaintiff, the amount of said judgment not having
been paid, judge of said court, issued an order of execution, directing the sheriff to sell the property
covered by the said mortgage. The mortgaged property, under said execution, was duly sold on the
10th day of April, 1908. On the 21st day of April, 1908, the defendant appeared in the court and
objected to the confirmation of the sale upon the ground that there was another person who would pay
the sum of P5,500 for the property sold. The return of the sheriff shows that he sold the property for the
sum of P4,715.

The defendant in said motion requested that the property be put up and sold again. It will be noticed
that the defendant appeared and objected to the confirmation of the sale eleven days after the sale had
been consummated, and so far as the record discloses this was his first appearance during the
pendency of the cause in the lower court. On the 21st day of April, 1908, after duly considering the
objection made by the defendant, the lower court overruled the said objection and confirmed the sale of
said property.

ISSUE:

Whether or not the objection of the defendant to the confirmation of the sale constituted a sufficient
cause for refusing to confirm such sale.

HELD:

The basis of the objection of the defendant in the lower court was that he was able to obtain from
another person about P800 more than the sheriff received from the person to whom he sold said
property. This person was not discovered by the defendant until ten or twelve days after the sale took
place. No objection is made by the defendant that the sale was not duly advertised or that there was
any collusion on the part of the sheriff or the other parties interested in the sale. It is the duty of the
court, of course, in the sale of the property under the conditions of the present case, to obtain as much
money for the judgment debtor out of his property as it is possible. This duty on the part of the court,
however, does not justify negligent delay in an attempt to protect his rights on the part of the said
judgment debtor. In the present case the defendant made no attempt to defend his rights until some
days after judgment, execution, and sale. The Supreme Court of the United States has held in
numerous decisions, that a sale under foreclosure proceedings would not be set aside upon the ground
that the sheriff did not receive as much money as he might have received, providing all of the
proceedings were valid and regular, unless the sale was made for a sum grossly inadequate in
comparison with the real value of the property.
 32. Philippine National Bank vs Manuel Ernesto Gonzalez
GR No. 21026, February 13, 1924

FACTS:

On 23 November 1921, the Philippine National Bank has commenced a suit against Manuel Ernesto
Gonzales to foreclose a mortgage property securing a promissory note for 15,000. On 17 March 1922
an amended complaint against the same defendant was filed, a reproduction of the original for the
second mortgage on the said property for P15,000.00. The judgement for the first cause amounted to
17,313.59 and for the second 17,755. The property was advertised for sale covered by Transfer
Certificates of Title described in Exhibit A (3,657,703 sq.m), Exhibit B (1,335,505 sq.m.) and Exhibit C
(263,765 sq.m). Exhibit C was sold at the auction sale to Mr. Saturnino Lopez for 15,000 (3,000 less
than the claim). The court has confirmed the sale declaring that the sale complied with the
requirements of the law. On 05 April 1923, defendant Gonzales filed a complaint that the said order was
“not in accordance with law” presenting only an assessed valuation of the land for 45,490 from the
municipal treasurer, without proof that the said land was in fact can be sold for more than 15,000 nor
calling any witness for that matter.

ISSUE:

Whether or not the sale should be invalidated for gross inadequacy of price.

HELD:

The rule is well stated in Graffam and Doble vs. Burgess (117 U.S., 180), in which the syllabus says: A
judicial sale of real estate will not be set aside for inadequacy of price, unless the inadequacy be so
great as to shock the conscience, or unless there be additional circumstances against its fairness. If the
inadequacy of price paid for the purchase of real estate at a sale on an execution be so gross as to
shock the conscience, or if in addition to gross inadequacy the purchaser has been guilty of unfairness
or has taken any undue advantage, or if the owner of the property or the party interested in it has been
for any other reason misled or surprised, then the sale will be regarded as fraudulent and void, and the
party injured will be permitted to redeem the property sold. In the instant case, there is no claim or
pretense that there was any fraud or collusion, or that in any way Gonzales was misled or deceived.
The bank was personally represented at the sale, and there is no showing whatever that, if the property
was resold, it would sell for a centavo more than the P15, 000.00. For such reasons, the judgment of
the trial court, setting aside the confirmation of the sale, is reversed, and the sale will stand affirmed as
of the date of the original confirmation by the trial court, with costs in favor of the appellant. Such
judgment to be without prejudice to the right of Gonzales, if any, to redeem.
33. THE DIRECTOR OF LANDS VS. ABARCA
G.R. No. L-38581 December 18, 1934

FACTS:

The lot now in question was the subject of litigation between Datu Bualan and his coclaimants, on the
one hand, and Ciriaco Lizada, on the other. Juan A. Sarenas and Domingo Braganza were the
attorneys for Datu Bualan and his co-claimants in that suit, wherein a judgment was rendered declaring
Datu Bualan and his co-claimants the owners of the land involved in the litigation. Subsequently, a
controversy arose between the Bagobos and their attorneys as to the amount of fees due the latter,
whereupon the attorneys took possession of the property now in question. Action was brought by the
Bagobos against their former attorneys for the recovery of the land. In this action (civil case No. 607)
judgment was rendered ordering the attorneys to return the property seized by them, and requiring the
Bagobos to pay their former attorneys the sum of P6,000 as fees.

As a result of this judgment Datu Bualan and his coclaimants paid Sarenas and Braganza the sum of
P5,126.13. They also paid to the municipal treasurer of Davao in the name of Sarenas and Braganza,
for taxes and penalties due on the property in the year 1926, while the same was in the possession of
the latter, the sum of P1,035.87. The Bagobos assumed that, by these payments which amounted in all
to P6,162, the judgment rendered against them for P6,000 together with interests due thereon, was
fully satisfied. Claiming that the sum paid to the municipal treasurer of Davao should not be credited on
the amount of the judgment obtained by them, Sarenas and Braganza caused the clerk of the court to
issue a writ of execution on the said judgment. By reason of the writ of execution so issued, the sheriff
levied on the property here in question and sold it to Sarenas and Braganza for the sum of P877.25.
Upon the failure of the Bagobos to redeem the property, they filed their claim in the present cadastral
case, alleging that they were the absolute owners of lot No. 700.

ISSUE:

Whether or not the sum paid by the Bagobos to the municipal treasurer should be credited.

HELD:

Yes, it should be credited. In fairness and equity, which after all are the true aims of the law, the amount
paid by Datu Bualan and his co-claimants for taxes and penalties due on the contested property should
be credited on the judgment obtained by Sarenas and Braganza in civil case No. 607. Such taxes and
penalties accrued while the property was in that possession under a claim of ownership. It follows that
the error assigned by Datu Bualan and his coclaimants against the judgment below, to the effect that
the lower court erred in subjecting the property sought to be registered to a lien in favor of Sarenas and
Braganza for P877.25 with interests, must be sustained.
34. AURORA DE LEON vs. HON. SERAFIN SALVADOR and EUSOBIO BERNABE
G.R. No. L-30871, December 28, 1970

FACTS:

On November 8, 1966 two parcels of land of 682.5 square meters each registered in the names of
Bernabe of Caloocan City was levied on execution for damages incurred to Enrique de Leon by herein
respondent-debtor, the said properties were sold to Aurora (sister of the judgment creditor) as the
highest bidder. Thereafter, the sheriff executed the corresponding certificate of sale of the latter’s favor,
which was duly registered on February 21, 1967 with the Caloocan City register of deeds.

On February 7, 1968, just about two weeks before the expiration of the one-year period to redeem the
properties sold in execution, the judgment debtor Bernabe filed a separate civil action against Enrique
and Aurora de Leon for the setting aside or annulment of the execution sale for being anomalous and
irregular, and for ordering of a new auction sale. Instead of filing this case to Judge Cruz which had
issued the writ of execution, the other branch of the Rizal Court of First Instance presided by Judge
Serafin Salvador, who later issued a writ of preliminary injunction enjoining therein defendants from
taking further proceedings against the properties of Bernabe. Pending his decision, Judge Salvador
issued an order ordering the sheriff to allow respondent-debtor to redeem the two properties sold at
public auction.

ISSUE:

Which of the courts has the exclusive jurisdiction to set aside for alleged irregularities of the execution
sale.

HELD:

It is patent that such exclusive jurisdiction was vested in Judge Cruz’ court. Having acquired jurisdiction
over and rendered judgment that had become final and executor, it retained jurisdiction over its
judgment, to the exclusion of all other coordinate courts for its execution and all incidents thereof, and
to control, in furtherance of justice, the conduct of its ministerial officers in connection therewith.
Execution of its judgment debtor’s properties, Eusebio Bernabe as judgment debtor coyld not in the
guise of a new and separate second action ask another court of coordinate jurisdiction, to interfere by
injunction with the execution proceedings, to set them aside and to order the holding of a new
execution sale – instead of seeking such relief by proper motion and application from Judge Cruz’ court
which had exclusive jurisdiction over the execution proceedings and the properties sold at the
execution sale.

Aside from the basic lack of jurisdiction of Judge Salvador’s court to issue the redemption order, the
order per se suffered from other grave flaw for a reason that Bernabe’s motions were presented on May
12 and May 15, 1969 and it was self-evident from the record that the one-year period for redemption
had long expired more than a year ago. Furthermore, nothing in the record indicates that the latter had
ever timely made a valid offer of redemption so as to safeguard his right thereto.
35. JOHANNA HOFER BORROMEO vs. DR. VENUSTANO H. J. BORROMEO, et.al
G.R. No. L-7548, February 27, 1956

FACTS:

Johanna Hofer Borromeo, widow of the late Dr. Maximo Borromeo who died on July 31, 1948, alleged
that during her marriage with the deceased, the latter bought a certain real property situated in Cebu,
this property becoming one of the conjugal properties of her husband and herself, that in June 1948,
before his death and at the time when he was seriously ill and bedridden, her husband signed, or was
made to sign, a fictitious deed of sale of said property in favor of Dr. Venustiano H.J. Borromeo and Dr.
Jose Borromeo purporting to convey said property to them for P3,000 and that the property was
assessed at P42,480 and had a market value of P80,000 and there was a mortgage thereon of
P125,000 in favor of the Rehabilitation Finance Corporation.

ISSUE:

Whether or not the complaint made by the wife under a conjugal partnership is a mere expectancy and
does ripen into legal title until a liquidation has been made.

HELD:

According to Article 1413 of the Old Civil Code that the husband, as the administrator is given the
power to dispose of conjugal property under onerous title without the consent of the wife, however the
second paragraph thereof states that this power has limited by the reservation that the wife’s rights will
not be prejudicated by the assignment or sale made by the husband, when such violates the provisions
of the Code or is in fraud of the rights of the wife. The instances, therefore, to which said refer those
eases of sales, conveyances or assignment which have been made under onerous title, violating such
provision. Said contract have the three essential requisites: a.) Consent of the parties b.) Subject matter
and c.) Consideration. In the latter case, said contract or agreements lack one of the essential elements
for their vailidity, namely, cause or consideration, and therefore, they are considered as non-existent. It
is under this category that the fictitious sale, alleged in the case at bar to have been executed by the
husband without consideration or with false consideration, falls.

Considering that one committed by the husband was of non-existent contract, it is not correct therefore,
to hold that the right of the wife to assail its effectiveness is made to depend upon the outcome of the
liquidation of the conjugal partnership.
36. SANTIAGO CRUZADO vs. ESTAFANIA BUSTOS and MANUEL ESCALER
34 Phil 17, No. 10244, February 29, 1916

FACTS:

On September 25, 1913 Cruzado alleged that he was the owner of a certain rural property situated in
the Barrio of Dolores formerly San Isidro, Municipality of Bacolor, Pampanga containing an area of sixty
five balitas which the defendant Bustos together with the other defendant had, since the year 1906
been detaining the land and refused to deliver possession thereof to the petitioner. Estafania Bustos,
herein respondent, in defense, said that the title of the land produced by the petitioner was not a lawful
one, for the reason that only a simulated sale of the land was made by and between herself and the
father of the petitioner. During the cross-examination set forth, it showed that during the time of the
purchased of Escaler to Bustos there was no record in the property registry to show that the land in
question belonged to a third person or any other than the vendor.

ISSUE:

Whether or not the deed of sale was simulated not to defraud third party but to show that the father of
herein petitioner owns a real property in order to faithfully discharged his duties as procurador.

HELD:

It is unquestionable that the contract of sale of the sixty five balitas of land was perfect and binding
upon both contracting parties, since they both appear in that instrument to have agreed upon the thing
sold, but it is also undeniable that the said contract was not consummated, inasmuch as,
notwithstanding that the deed of sale was accomplished and this document was kept by the pretended
purchaser, it is positively certain that the latter did not pay the purchase price and never took
possession of land apparently sold in the said deed.

The simulation of that sale was effected by making a pretended contract which bore the appearance of
truth, when really and truly there was no contract, because the contracting parties did not in fact intend
to execute one, but only to formulate a sale in such a manner that, for that particular purpose sought by
Cruzado and Bustos, it would appear to have been celebrated that the former might hold his office of
procurador on the strength of the security afforded by

the value of the land feignedly sold.

 37. RUBY H. GARDNER and FRANK GARDNER JR. v. COURT OF APPEALS
G.R. No. L-59952. August 31, 1984.

FACTS:

The case involve several transfers of the subject real property. It appears that petitioners the Gardner
spouse enter into an agreement with Respondent spouses, the Santoses to subdivide 2 parcels of land
and executed an absolute deed of sale in favor of the latter. The real truth is that what occurred was a
sale ‘in trust’ since the petitioner obtained an amount of money from the respondents, who in turn
promised to improve the land.

Apparently, the Santoses transferred the properties to the Cuencas who in turn transferred it to the
Verroyas who executive a mortgage over the lot. Then Verroya executed a deed of transfers to the
Natividads. Note that from the titles of the Cuencas (the Second Transferees) to the titles of the
Natividads (the Fourth Transferee), the Adverse Claim of the Gardners continued to be carried, and that
throughout the successive transfers, the petitioners continued to remain in possession, cultivation and
occupation of the disputed properties.

In their Answer, the Santoses claimed that the sale to them was conditional in the sense that the
properties were to be considered as the investment of the petitioners in the subdivision venture and that
in the event that this did not materialize they were to reconvey the lots to petitioners upon
reimbursement by the latter of all sums advanced to them; and that the deed of sale was to be
registered for the protection of the Santoses considering the moneys that the latter would be advancing.

Hence, the Gardners filed an action for declaration of Nullity, Rescission and damages against the 5
transferres and mortgagees. The RTC ruled in favor of petitioners declaring the transfers null and void.
The CA affirmed in toto the RTC but reconsidered it decision and ruled that the sale of land to
Natividad’s are valid.

ISSUE:

Whether or not the admissions made by Santos in the pleadings are admissible

HELD:

NO. The testimony of Ariosto Santos is at variance with the allegations in his Answer. As a general rule,
facts alleged in a party's pleading are deemed admissions of that party and binding upon it, but this is
not an absolute and inflexible rule. An Answer is a mere statement of fact which the party filing it
expects to prove, but it is not evidence.

Santos himself, in open Court, had repudiated the defenses raised in his answer and against his own
interest, his testimony is deserving of weight and credence. Both the Trial Court and the Appellate Court
believed in his credibility and we find no reason to overturn their findings thereon. Santos likewise
admitted against his own interest that the petitioners did not receive from him any consideration, which
corroborated the declarations of the petitioners. The Subdivision Joint Venture Agreement and the
Supplemental Agreement express that the true and real nature of the agreement between the parties,
which was for a subdivision and not a sale transaction.

All Five Transfers were absolutely simulated and fictitious and were, therefore, void ab initio and
inexistent. Contracts of sale are void and produce no effect whatsoever where the price, which appears
therein as paid, has, in fact, never been paid by the purchaser to the vendor.
38. IRENEO ODEJAR v. ISIDRO P. GUICO
G.R. No. 67548. December 20, 1989.

FACTS:

Fermina Maluto and her husband, Isidro P. Guico, to whom one of the five (5) lots in controversy was
sold by Rufino Tamisin on April 10, 1953, supra, took no part. It was not until March 12, 1975-almost
twenty-two (22) years after they had purchased the lot from Rufino Tamisin, and after Fermina Maluto
had died-that Isidro P. Guico, Fermina's husband, and their two (2) children, Emmanuel Guico and
Lourdes G. Amoranto, finally went to Court to vindicate their rights over the land sold to Fermina
Maluto. They filed suit, described by them as one "for annulment of documents and tax declaration and
to quiet title to property with damages," in the Court of First Instance of Laguna. Their complaint named
Ambrocio Odejar and Gliceria Gibas as defendants, but when it was discovered soon thereafter that
these two had already died, the pleading was amended so as to include said spouses' heirs as
defendants, namely: Ireneo Odejar, Librada Odejar and Juanito Odejar. Also named as defendants
were Attorney Juan Baes, the Odejars' counsel, to whom they had conveyed one-half (1/2) interest pro
indiviso in the five (5) lots; the provincial sheriff, Cecilio Bituin; and the Provincial Assessor of Laguna.
The complaint prayed that the sheriffs certificate of sale dated June 16, 1960, and the conveyance to
Atty. Juan Baes of an undivided interest over the land sold to Fermina Maluto, be declared null and
void.

ISSUE:

Whether or not the sale can still be cancelled and be declared null and void even after the lapse of 22
years.

HELD:

The facts above detailed, considered conjointly, irresistibly conduce to the conclusion that Rufino
Tamisin and Fermina Maluto never intended to effect a genuine, bona fide transfer of property when
they entered into the sale of April 10, 1953, a reality made manifest and according to which the parties,
vendors and vendees as well as their privies guided their actions, during the period of twenty (20) years
or so following the transaction. The Tamisins' acts clearly show that they considered themselves still the
owners of the property and as never having parted therewith even after the sale, publicly and openly
proclaiming their title and demanding recognition thereof on several occasions. The Guicos, for their
part, tacitly acquiesced, at least never presented any opposition, to such assertions of title by the
Tamisins until March 12, 1975, when it had already become apparent that the latter had exhausted
every possible recourse for the recovery of the property from the Odejars. All indications, therefore, are
that the ostensible conveyance was executed solely to prevent the property of the Tamisins from being
levied upon in execution of the judgment in Civil Case No. 9401, or ever applied in satisfaction of the
Tamisins' adjudicated liability to the Odejars. Such a stratagem cannot be allowed to succeed.

The defect of the sale of April 10, 1953 thus produced effects transcending mere rescissibility. The sale
could not be treated merely as a simple conveyance of "things under litigation ... entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial authority,"
rescindable by action within four (4) years. It was in reality "absolutely simulated or fictitious" and hence
" inexistent and void" in contemplation of Article 1409 of the Civil Code. Since, as Article 1411 of the
Civil Code provides, the "action or defense for the declaration of the inexistence of a contract does not
prescribe," the Odejars were not precluded from invoking such nullity, as they did, even after the lapse
of twenty-two years.
39. MARIA ENCARNACION CASTILLO v. JOSEFA GALVAN
G.R. No. L-27841. October 20, 1978

FACTS:

Paulino Galvan was the registered owner of an undivided one- half (1/2) interest over two parcels of
land, the other undivided half is owned by his two daughters by a first marriage herein defendants
Josefa and Natividad Galvan. On 1961, Paulino Galvan died, Maria Castillo (the second wife and their
2 children), out of "delicadeza" waited for the defendants to initiate the move for the settlement of his
estate. But, after finding that none was forthcoming, the plaintiffs became apprehensive, so that they
began to go over the papers concerning the properties of the decedent. In the office of the Register of
Deeds of Dagupan City, they were surprised to find a deed of sale, signed by the late Paulino Galvan
and the plaintiff, Castillo, whereby they had purportedly sold for P500 the ½ undivided portion of
Paulino Galvan over said lots in favor of defendants, so Maria Castillo remembered that way back in
1953, she and her husband Paulino Galvan were made to sign a certain document by Josefa Galvan
through fraud. Wherefore, they prayed that the deed of sale be declared null and void; that the plaintiffs
be declared the owners of four-sixths (4/6) of the undivided half share pertaining to Paulino Galvan.

The defendants filed a motion to dismiss the complaint upon the ground that the action is barred by the
statute of stations for the reason that the present action for the annulment of the instrument of sale
based upon fraud which should be brought within four (4) years from the time of the discovery of the
same in accordance with Article 1391 of the Civil Code is already prescribe. The lower court, thereafter,
dismiss the case.

ISSUE:

Whether or not the trial court improperly dismissed the complaint on the ground of prescription

HELD:

Yes. The court sustains defendants' contention. The basis of the annulment is alleged fraud, and the
action for the. annulment of the document should be brought within 4 years from the discovery of fraud
however, the plaintiffs' action is to declare void and inexistent the deed of sale executed by Paulino
Galvan and Encarnacion Castillo on August 3. 1955 in favor of Josefa and Natividad Galvan, upon 'the
grounds that (a) there is fraud in securing the signatures of the vendors in said deed of sale: and (b)
there was no consideration given at the time of the transaction. In other words, the plaintiffs are seeking
a judicial declaration that the deed of sale in question is void ab initio, which action is imprescriptible.
40. LEOPOLDO DE BELEN vs. THE INSULAR COLLECTOR OF CUSTOMS
G.R. No. L-22082. September 26, 1924

FACTS:

Timoteo Tienzo was a duly accredited customs broker in the City of Manila, and in connection with his business
as such broker, operated a number of trucks for the purpose of conveying merchandise arriving at the port of
Manila to various consignees, his customers, throughout the city. On or about April 7, 1921, Tienzo procured a
permit from the Insular Collector for the withdrawal of 12,500 sacks of flour from one of the piers for delivery to
one Chua Soco, then a merchant in the City of Manila. The bill of lading for said flour was not produced by Tienzo
at the time he procured the delivery permit, and in order to get possession of the flour he obligated himself, upon
his bond as a customs broker, to have the bill of lading forthcoming in due time. Said bill of lading, however, was
never produced by Tienzo or his principal, Chua Soco, with the result that the collector of customs caused an
action of replevin to be begun in the name of the Government on June 10, 1921, to recover the flour which had
been delivered as aforesaid, or in case the flour itself could not be secured, to recover judgment for the value
thereof in the amount of P47,816.32. an attachment was sued out by the plaintiff against the property of the
defendant Tienzo, on the ground that he was about fraudulently to dispose thereof; and on June 13, 1921, the
sheriff levied said attachment on seven trucks that had been operated by Tienzo in connection with his business
as customs broker and truckman. After the sheriff had taken the trucks into custody the plaintiff in this case,
Leopoldo de Belen, a brother-in-law of Tienzo, made claim to the trucks, relying on a document of transfer (Exhibit
A), dated June 1, 1921, and executed by Tienzo and himself, in which Tienzo purports to convey to Belen all of
the trucks involved in this controversy. The consideration stated in this instrument is the sum of P25,000, said to
have been advanced upon previous occasions to Tienzo by Belen. The sheriff having ignored the claim of Belen
to the ownership of the trucks, the present action of replevin was instituted by Belen against the Collector of
Customs and the sheriff for the recovery of the trucks and compensation for the unlawful detention of the same.
Upon hearing the cause the trial judge found that the document referred to (Exhibit A) was evidently a fictitious
transfer, conceived and executed for the purpose of placing the trucks in question beyond the reach of the
creditors of Tienzo, and he held said instrument to be completely without effect. He therefore absolved the
defendants from the complaint, and the plaintiff appealed.

ISSUE:

Whether or not that the document referred to (Exhibit A) was evidently a fictitious transfer, conceived and
executed for the purpose of placing the trucks in question beyond the reach of the creditors of Tienzo.

HELD:

Yes. It is sufficient to refer to the testimony of one Gerardo Garcia, specially deputized by the sheriff to serve the
summons and other papers relating to the case No. 20110, instituted by the Government and the Collector of
Customs against Chua Soco and Timoteo Tienzo. This witness states that in a conversation between himself and
the present plaintiff soon after the service of the complaint, the latter said that Tienzo was owner of the trucks and
that he (Belen) was merely an instrument of Tienzo. This admission of the plaintiff, in connection with the relation
of the parties and the financial difficulties then impending over Tienzo, establish in our opinion a strong
presumption that the transfer referred to was made for the purpose of placing the trucks beyond the reach of legal
process directed against Tienzo. Nor is this presumption overcome by the documents C to C-6, purporting to be
receipts for money advanced by Belen to Tienzo during the years, 1918, 1919, and 1920. The Court thinks the
trial judge was right in entertaining the suspicion that these receipts might have been manufactured to meet the
situation, without representing bona fide debts of Tienzo to Belen. At any rate it is quite clear that Belen was
aware of the financial embarrassment in which Tienzo was involved, and the evidence in our opinion establishes
the conclusion drawn by the trial court, namely, that the transfer of the trucks was a simulated transaction
41. FRANCISCO IRURETA GOYENA vs. ILDEFONSO TAMBUNTING
G.R. No. L-956 November 18, 1902

FACTS:

The plaintiff's principal owned a tract of land and the building thereon known as No. 20 Calle San Jose,
Ermita, Manila. This tract contained 152.46 square meters of land. A broker, representing the plaintiff,
stated to the defendant that this lot was for sale and, on information received from the plaintiff, that it
measured 23 meters in front and 8 meters in depth. The plaintiff and defendant had certain negotiations
between themselves concerning the sale. On March 12, 1901, the defendant signed the following
document: On this date I have bought from Don Francisco Yrureta Goyena a lot at No. 20 Calle San
Jose, Ermita, for the sum of thirty-two hundred pesos, this money to be paid as soon as the bill of sale
is signed. Manila, March 12, 1901. (Signed) Tambunting. The plaintiff signed a similar document. What
the negotiations between the parties were prior to the signing of the these documents does not appear.
There is no evidence whatever in the record that they came to any agreement in regard to the sale
other than the one contained in the papers of March 12. On the day assigned for the execution of the
instrument, all the parties being in the office of the notary, the defendant told the latter to insert in the
writing the price, $3,200, and then refused to sign it because the lot did not contain the area which the
plaintiff, through the broker, had represented that it contained. He expressed his willingness to sign it if
a proportional reduction was made in the price. The plaintiff refused to make, and this action was
brought under article 1451 of the Civil Code. The private contract expresses a specific thing as the
object of the contract. Upon this point there is no controversy. There is no doubt as to which lot is No.
20 on Calle San Jose, of the District of Ermita of the city of Manila. The private contract specifies a
certain price, 3,200 pesos. There is no controversy whatsoever upon this point. There is no question
that this sum is there specified plainly and specifically, and without being made subject to any condition
whatever.

ISSUE:

Whether or not there was a perfect contract

HELD:

Evidently nothing is lacking for the existence of a perfect contract of purchase and sale. Article 1445 of
the Civil Code is as follows: "By the contract of purchase and sale one of the contracting parties
undertakes to deliver a specific thing, and the other to pay therefore a price certain, in money or in
something representing it. Article 1450 of the same Code is a follows: "The sale shall be perfected
between vendor and vendee and shall be binding on both of them, if they have agreed upon the thing
which is the object of the contract and upon the price, even when neither has been delivered." This
private document was not a more draft or project. It cannot be said that the purchase is not to be
understood as perfected until the execution of the public instrument. That private document is not
subject to any term or condition whatever. The least that can be said about the private document is that
it contains a promise to buy, not a mere project of sale, and a promise to buy, according to article 1451,
confers upon the contracting parties the right to reciprocally demand the performance of the contract. If
the contract were not perfected no right would accrue in favor of the contracting parties to reciprocally
demand its performance. A thing which has no existence can produce no effect. Because it is merely a
private document which contemplates the subsequent execution of a public instrument, it does not
follow that it is not enforceable as it now stands. "Contracts," says article 1278, "shall be obligatory
whatever may be the form in which they have been entered into, provided that the essential elements
for their validity are present," to wit, a determinate thing, a price certain, and a meeting of the minds
with respect to the object of the contract. Hence the contract in question is obligatory.
42. FILIPINAS COLLEGES, INC. vs. MARIA GARCIA TIMBANG, et. al.
G.R. No. L-12812 September 29, 1959

FACTS:

This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a) declaring the
Sheriff's certificate of sale covering a school building sold at public auction null and void unless within 15 days
from notice of said order the successful bidders, defendants-appellants spouses Maria Garcia Timbang and
Marcelino Timbang, shall pay to, appellee Maria Gervacio Blas directly or through the Sheriff of Manila the sum of
P5,750.00 that the spouses Timbang had bid for the building at the Sheriff's sale; (b) declaring the other appellee
Filipinas Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of tile
No 45970, on which the building sold in the auction sale is situated; and (c) ordering the sale in public auction of
the said undivided interest of the Filipinas Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaid
portion of the judgment in favor of appellee Blas and against Filipinas Colleges, Inc. in the amount of P8,200.00
minus the sum of P5,750.00 mentioned in (a) above. The order appealed from is the result of three motions filed
in the court a quo in the course of the execution of a final judgment of the Court of Appeals rendered in 2 cases
appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the
parties. Filipinas Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within the time prescribed,
the spouses Timbang, in compliance with the judgment of the Court of Appeals, on September 28, 1956, made
known to the court their decision that they had chosen not of appropriate the building but to compel Filipinas
Colleges, Inc., for the payment of the sum of P32,859,34. The motion having been granted, a writ of execution
was issued on January 8, 1957. On January 16, 1957, appellee Blas in turn filed a motion for execution of her
judgment of P8,200.00 representing the unpaid portion of the price of the house sold to Filipinas Colleges, Inc.
Over the object of the Timbangs, the court grated the motion and the corresponding writ of execution was issued
on January 30, 1957, date of the granting of the motion for execution, Blas through counsel, sent a letter to the
Sheriff of Manila advising him of her preferential claim or lien on the house to satisfy the unpaid balance of the
purchase price thereof under Article 2242 of the Civil Code, and to withhold from the proceed of the auction sale
the sum of P8,200.00. Levy having been made on the house in virtue of the writs of execution, the Sheriff of
Manila on March 5, 1957, sold the building in public auction in favor of the spouses Timbang, as the highest
bidders, in the amount of P5,750.00. Personal properties of Filipinas Colleges, Inc. were also auctioned for
P245.00 in favor of the spouses Timbang. As a result of these actuation, three motion were subsequently filed
before the lower court. The Timbang spouses presented their opposition to each and all of these motions.

ISSUE:

Whether or not the appellants as owner of the land may seek recovery of the value of the land by writ of
execution, levy the house of the builder and sell it in public auction.

HELD:

No. The Court has already held in Matias vs. The Provincial Sheriff of Nueva Ecija that while it is the inveriable
practice, dictated by common sense, that where the successful bidder is the execution creditor himself, he need
not pay down the amount of the bid if it does not exceed the amount of his judgement, nevertheless, when there is
a claim by a third-party, to the proceeds of the sale superior to his judgment credit, the execution creditor, as
successful bidder, must pay in cash the amount of his bid as a condition precedent to the issuance to him of the
certificate of sale. In the instant case, the Court of Appeals has already adjudged that appellee Blas is entitled to
the payment of the unpaid balance of the purchase price of the school building. Blas is actually a lien on the
school building are concerned.

The order of the lower court directing the Timbang spouses, as successful bidders, to pay in cash the amount of
their bid in the sum of P5,750.00 is therefore correct. With respect to the order of the court declaring appellee
Filipinas Colleges, Inc. part owner of the land to the extent of the value of its personal properties sold at public
auction in favor of the Timbang, this Court Likewise finds the same as justified, for such amount represents, in
effect, a partial payment of the value of the land. failure of the Timbang spouses to pay to the Sheriff or to Manila
Gervacio Blas said sum of P5,750.00 within fifteen (15) days from notice of the final judgment, an order of
execution shall issue in favor of Maria Gervasio Blas to be levied upon all properties of the Timbang spouses not
exempt from execution for the satisfaction of the said amount.
43. ANTONIO M. BARRETTO vs. JOSE SANTA MARINA
26 PHIL 200, December 2, 1913

FACTS:

The La Insular cigar and cigarette factory is a joint account association with a nominal capital of
P865,000, the plaintiff's share is P20,000, or 4/173 of the whole. The plaintiff's attorneys wrote the
defendant's local representative a letter offering to sell plaintiff's share in the factory. The result of the
correspondence between the parties and their representatives was that Exhibit G was duly executed on
May 3, 1910. In accordance with the terms of this exhibit a committee of appraisers was appointed to
ascertain and fix the actual value of La Insular. The committee rendered its report on November 14,
1910, fixing the net value at P4,428,194.44. Subsequently to the execution of Exhibit J, demand was
made by the plaintiff upon the defendant for his share of the profits from June 30, 1909, to November
22, 1910. This demand was refused and thereupon this action was instituted to recover said profits.
The plaintiff argued that if the agreement of May 3, 1910, was a perfected sale he cannot recover any
profits after that date; while on the other hand the defendant concedes that if said agreement was only
a promise to sell in the future it, standing alone, would not prevent recovery in this action.

ISSUE:

Whether the agreement made by the parties on May 3, 1910 was a perfected contract of sale.

HELD:

YES, it was a perfected contract of sale.

Article 1450 of the Civil Code reads: "The sale shall be perfected between vendor and vendee and shall
be binding on both of them, if they have agreed upon the thing which is the object of the contract and
upon the price, even when neither has been delivered."

This is supplemented by Article 1447 of the Code which reads as follows: "In order that the price may
be considered fixed, it shall be sufficient that it be fixed with regard to another determine thing also
specific, or that the determination of the same be left to the judgment of a specified person.”

The contract of May 3, 1910, provides that: “Whereas the respective contracting parties have agreed,
the one to sell and the other to buy the whole of the right, title and interest of the said Antonio Maria
Barretto in and to the said joint account association, including not only the individual participation of the
said party of the second part standing on the books of the association in the name of Antonio M.
Barretto, but also one-half of the share in the business which stands on the books in the name of
Barretto & Company constituting a total nominal share of P54,700 Philippine currency in the total
nominal capital of P865,000 Philippine currency.

Under article 1450, supra there are two indispensable requisites in a perfected sale: (1) There must be
an agreement upon the things which is the object of the contract; and (2) the contracting parties must
agree upon the object of the contract in the case at bar was the whole of the plaintiff’s right, title, and
interest La Insular. This whole was 4/173 of the entire net value of the business. The parties agreed
that the price should be 4/173 of the total net value. The fixing of such net value was unreservedly left
to the judgment of the appraisers. As to the thing and the price the minds of the contracting parties met,
and all questions relating thereto were settled. Nothing was left unfinished in so far as the contracting
parties were concerned. Neither party could withdraw from the contract without the consent of the other.
The result is that the two essential requisites necessary to constitute a perfected sale were present.
We find that the parties did not only agree “the one to sell and the other to buy” and that “one will
immediately sell and theother will immediately buy” the whole of the plaintiff’s interest but that they were
unable to agree “as to the true present value of the said interest;” they did agree, however, upon the
method of fixing and determining such value by appointing appraisers for this purpose. It was the duty
of the appraisers to hear the respective claims of the one and the other party relative to the value and
assets of the business, “and in accordance with the proof adduced relative to said values to fix and
determine the same for the purposes of the purchase and sale above mentioned. “they did not say for
the purpose of a sale to be made in the future. Is the language, “for the purposes of the purchase and
sale above mentioned” any the less significant controlling than that relied upon by the plaintiff found in
the first and fifth paragraph? When the parties used this language they had in mind the purchase and
sale which they had just made. According to the ordinary and well-understood use of the words
“purchase” and “sale” they mean, in the absence of any expression to limit their significance, a
transmutation of property from one party to another in consideration; divesting the title out of the vendor
and vesting it in the vendee. Again, not only was the title of the plaintiff’s interest vested in the
defendant on the execution of the contract of May 3 but the possession of that interest was also then
transferred to the defendant. (Art. 1462, Civil Code; Uy Piaoco vs McMicking, 10 Phil. Rep., 286.)
44. EL BANCO NACIONAL FILIPINO vs. AH SING
G.R. No. L-46419 February 20, 1940

IMPERIAL, J.:

El demandante entablo la accion para obtener la nulidad del contrato celebrado entre el y el demandado el 4 de
abril de 1934. El demandante pretende que el contrato es de promesa de venta de bienes inmuebles y que
hallandose prohibido por la Constitucion el traspaso de terrenos agricolasa un extranjero, la venta prometida no
es ya realizable y procede anularse, reintegrandose ambas partes los terrenos y el precio, con sus intereses
legales. El demandado sostiene que el contrato es de venta absoluta; que el cumplio todas las condiciones
estipuladas, pagando los plazos convenidos, y que la prohibicion de la Constitucion no es aplicable porque no
tiene efecto retroactivo y porque, ademas, ya habia adquirido un derecho que la misma Constitucion ampara. El
demandante apelo de la parte de la decision dictada por el Juzgado de Primera Instancia de Davao que le
condeno a pagar al demandado la suma de P2,877.50 como valor de los gastos utiles y necsarios hechos por el
ultimo en los terrenos, y, ademas, porque el demandado no fue condenado a pagarle el valor de los frutos de los
terrenos que percibio. El demandado apelo de la parte de la misma sentencia que declaro que el contrato es de
promesa de venta; que las mejoras que el introdujo en los terrenos pueden adquirirse por el demandante
mediante el pago por este de su valor; que el contrato es nulo y de ningun valor; y que las partes deben
restituirse reciprocamente los terrenos y las amortizaciones pagadas, con intereses legales sobre las ultimas
desde el 4 de abril de 1934.

Las cuestiones que se plantean en esta apelacion giran al rededor de la interpretacion del contrato celebrado,
por lo que conviene transcribirlo a continuacion:

PROMESA DE VENTA

Notorio sea a todos:

Que el Banco Nacional Filipino, una corporacion bancaria creada, organizada y existente por y en virtud de la Ley
No. 2612, tal como fue reformada, cuya oficina central se halla en la Ciudad de Manila y con una sucursal
establecida en el municipio de Davao, Provincia de Davao, I.F., que mas adelante se designara como Primera
Parte; y A. Sing, mayor de edad, comerciante y domeciliado en el referido municipio de Davao, Provincia de
Davao, I.F., que mas adelante se designara como Segunda Parte, por la presente convienen, estipulan y hacen
constar:

Primero. Que en consideracion de la suma de veinticinco mil pesos (P25,000), que la Segunda Parte se obliga a
satisfacer en la forma que mas abajo se expresa, la Primera Parte por la presente se compromete a vender,
ceder, y transpasar en absoluto a la Segunda Parte todo su derecho, titulo, interes y participacion en dos
parcelas de terreno situadas en el distrito municipal de Samal, Provincia de Davao, que se describen como sigue:

1. A parcel of land (lot No. 3, plan II-10758) with all buildings and improvements, except those herein expressly
noted as belonging to other persons, situated in the barrio of Quinawitnon, barrio of Babac, municipal district of
Samal; bounded on the N. by property of Placida Quiñones; on the NE. by public lands; on the SE. by public
lands; on the SW. by property of Basilides Bustamante; and on the NW. by the Gulf of Davao, property of Bocboc,
a road and properties of Mayond-gon, the Municipal Government of Samal, Lelango, Bancao, Angel Mamay-ya
and Libudan et al.; containing an area of 33,223,867 square meters, more or less;

2. A parcel of land (lot No. 4, plan-10758) with all buildings and improvements, except those herein expressly
noted and belonging to other persons, situated in the sitio of Quinawitnon, barrio of Babac, municipal district of
Samal; bounded on the SE. by a road; on the S. by properties of Logan and Gutom; on the SW, by the Gulf of
Davao, and on the NW. by property of Libudon et al.; containing an area of 16,481 square meters, more or less;
cuyas propiedades se hallan mas particularmente descritas en el certificado de transferencia de titulo No. 1099
expedido por el registrador de titulos de Davao a nombre del Banco Nacional Filipino.

Segundo. Que la Segunda Parte pagara el precio arriba estipulado en la forma siguiente:
Dos mil pesos (P2,000) al contado, en el acto del otorgamiento de este contrato; y

El saldo de veintitres mil pesos (P23,000), con sus intereses al 8 por ciento al ano, en veinte amortizaciones
anuales iguales de P2,342.55 cada una, debiendo pagarse la primera amortizacion el dia 3 de abril de 1936.

Tercero. Que la Segunda Parte pagara igualmente las contribuciones e impuestos, tanto vencidos como por
vencer, que afectan a las referidas propiedades, asi como cualquier otro gravamen que pese sobre los mismos, y
los gastos de otorgamiento de este contrato y de la escritura de venta definitiva en su caso, los sellos
documentarios y los derechos de registro en relacion con esta transaccion.

Cuarto. Que la posesion de las susodichas propiedades queda cedida a la Segunda Parte en la fecha del
otorgamiento de este contrato.

Quinto. Que la Primera Parte no respondera a la Segunda Parte del saneamiento en caso de eviccion ni por los
defectos o gravamenes ocultos de las citadas propiedades.

Sexto. Que una vez pagada por completo por la Segunda Parte el precio arriba estipulado, la Primera Parte
otorgara la correspondiente escritura de venta definitiva de todo su derecho, titulo, interes y participacion sobre
las repetidas propiedades a favor de la Segunda Parte.

Septimo. Que si la Segunda Parte faltare al pago, a su vencimiento, de cualquiera amortizacion, o dejare cumplir
cualquiera de las condiciones arriba especificadas, este contrato quedara automaticamente rescindido y
cancelado, y, en tal caso, todas las cantidades pagadas por la Segunda Parte seran consideradas como
alquieres pagados por el uso y ocupacion de las mencionadas propiedades durante el tiempo transcurrido desde
el otorgamiento de este contrato hasta dicha rescision y cancelacion, pudiendo entonces la Primera Parte
posesionarse inmediatamente de las mismas y venderlas a otra persona.

En fe de lo cual, firman las partes la presente en Davao, Davao, I.F., hoy 4 de abril de 1934.

En el convenio de hechos que las partes han sometido se hacen las admisiones siguientes:

1. Que las partes admiten el debido otorgamiento y autenticidad del documento Exhibito A, unido a este convenio
de hechos.

2. Que se admite tambien el hecho de que el demandado ha estado cumpliendo religiosamente sus obligaciones
de acuerdo con los terminos del contrato Exhibito A, y que la amortizacion correspondiente al ano de 1937 fue
depositada por el demandado en la escribania de este Juzgado por haber el demandante rehusado y negado a
aceptarlo.

3. Que se admite tambien el hecho de que el demandado desde el otorgamiento del Exhibito A, unido a este
convenio, hasta esta fecha, ha estado y continuado en la posesion de los terrenos, objecto del referido contrato
Exhibito A, y continua dicho demandado ocupandolos.

4. Que se admite igualmente el hecho de que el demandante ha requerido al demandado a devolver y entregar
los terrenos, objecto del contrato Exhibito A, y el demandado se ha negado a hacerlo.

5. Que copia de la carta de requerimiento dirigida al demandado por el abogado del demandante se une a este
convenio y se marca como Exhibito B, y la contestacion del demandado al Hon. Ramon Diokno referente a la
carta del manager de su sucursal en Davao, se une asimismo a este convenio y se marca como Exhibito C.

6. Que los terrenos, objeto del contrato Exhibito A, son para fines agricolas o terrenos agricolas.

7. Que se admite el hecho de que el demandado es subdito chino.

Las pretensiones y apelaciones de ambas partes pueden resolverse a la vez determinado (1) si el contrato es de
promesa de venta o de venta absoluta con estipulacion de que el resto del precio se pagaria en los plazos
fijados, y (2) si la prohibicion contenida en el articulo 5, Titulo XII, de la Constitucion, es aplicable al contrato.
El demandante arguye que los terminos del contrato demuestran claramente que el mismo es de promesa de
venta porque se estipulo expresamente que despues del pago del ultimo plazo es cuando se otorgaria la
escritura de venta definitiva, y cita en su apoyo el articulo 1451 del Codigo Civil que dispone, en parte, que la
promesa de vender o comprar, habiendo conformidad en la cosa y en el precio, dara derecho a los contratantes
para reclamar reciprocamente el cumplimiento del contrato. En nuestra opinion del contrato celebrado por las
partes es el de venta real de los inmuebles que fueron objeto de la contratacion. Segun sus terminos las partes
convinieron tanto en los terrenos que eran el objecto del contrato como en el precio y en la forma en que este
ultimo se debia pagar. No solo esto, sino que las partes convinieron en que los terrenos se entregarian al
demandado y este, en realidad, tomo posesion de los terrenos, introdujo mejoras en los mismos y se beneficio de
sus frutos, pagando, ademas, los plazos convenidos a medida que vencian. Es de estricta aplicacion al caso el
articulo 1450 del Codigo Civil que provee que la venta se perfeciona entre comprador y vendedor y es obligatoria
para ambos, desde que hayan convenido en la cosa objeto del contrato y en el precio, aunque ni la una ni el otro
se hayan entregado. Mas aun, la venta quedo tambien consumada desde el momento en que los terrenos fueron
entregados al demandado y este entro en posesion y disfrute de los mismos (articulo 1462 del Codigo Civil).

Se insinua que el contrato no paso de ser mera promesa unilateral aceptada que en derecho no confiere accion
alguna al que trata de comprar. Opinamos que el contrato era una promesa bilateral aceptada que en derecho
viene a ser el mismo contrato de compra y venta que define el articulo 1445 del Codigo Civil. Sobre este punto es
digno de mencion el comentario del tratadista Manresa que dice:

(b) Promesa bilateral. — Esta promesa es la reciproca, es de compra y venta. Cuando por ambas partes es
aceptada, tiene el mismo valor que lo que hemos venido llamando contrato de compra y venta. Para
convencernos de ello basta con tener presente que todos los requisitos esenciales de dicho contrato se dan en
esta situacion juridica.

El Codigo asi lo reconoce en el articulo que comentamos, al afirmar que, habiendo conformidad en la cosa y en el
precio, dara derecho a los contratantes para reclamar reciprocamente el cumplimiento del contrato. (10 Manresa,
2. edicion, pag. 70.)

En relacion con el segundo punto, el articulo 5, Titulo XII, de la Constitucion provee:

ART. 5. Salvo en casos de sucesion hereditaria, ningun terreno agricola privado sera traspasado o cedido
excepto a favor de individuos, corporaciones o asociaciones capacitados para adquirir o poseer terrenos del
dominio publico en Filipinas.

Se sostiene que de conformidad con esste precepto constitucional el demandado no puede adquirir en compra
definitiva los terrenos que fueron objeto del contrato porque es en extranjero o ciudadano de la Republica de
China, y que no pudiendose cumplir por el demandante la promesa procede la anulacion del contrato y la
restitucion de los terrenos y el precio. Declaramos que la prohibicion no alcanza al demandado porque el articulo
5, Titulo XII, de la Constitucion no tiene efecto retroactivo. Habiendose hecho dueño el demandado de los
terrenos con anterioridad al 15 de noviembre de 1935, fecha en que entro en vigor la Constitucion, los derechos
que adquirio en tal concepto no pueden ser despojados porque pugnaria con el precepto del articulo 1 (1), Titulo
III, de la Constitucion, que dispone que nadie debera ser privado de su propiedad sin el debido proceso de ley.

Teniendo en cuenta las conclusiones antes sentadas, la apelacion interpuesta por el demandante carece de
merito y sus senalamientos de error no requieren ulterior consideracion.

Se revoca la sentencia recurrida; se declara valido el contrato enjuiciado; y el Escribano del Juzgado de Primera
Instancia de Davao entregara al demandante el Manager's Check No. 11153 por la suma de P2,342.55 que el
demandado deposito en pago del plazo vencido, con las costas de ambas instancias al demandante. Asi se
ordena.

Avanceña, Pres., Villa-Real, Diaz, Laurel and Concepcion, MM., estan conformes.
45. ANIANO OBAÑA v. THE COURT OF APPEALS
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.
46. SOSTENES CAMPILLO v. HON. COURT OF APPEALS
G.R. No. 56483. May 29, 1984

FACTS:

Tomas de Vera was the owner of two parcels of land in Tondo, Manila. In 1961, de Vera sold the
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. \ acquired the land and he was able to have the
lands be registered under his name.

ISSUE:

Who has better right over the property: Santos who first bought it w/o registering it or Campillo who
subsequently purchased it at a public auction and have it registered under his name?

HELD:

Campillo has the right over the said properties. 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 persons only from the date of its registration. Santos purchase of
the two parcels of land may be valid but it is not enforceable against third persons for he failed to have
it registered. Campillo is a purchaser in good faith as he was not aware of any previous sale for Santos
never caused the annotation of the sale. Section 51, PD No. 1529, otherwise known as the Property
Registration Decree, provides as follows:

"Section 51. Conveyance and other dealings by registered owner. -An owner of registered land
may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws.
He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in
law. But no deed, mortgage, lease or other voluntary instrument except a will purporting to convey or
affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the Register of Deeds to make registration.

"The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in the office
of the Register of Deeds for the province or city where the land lies."

The purchaser (Campillo) in the execution sale of the registered land in suit acquires such right and
interest as appears in the certificate of title unaffected by prior lien or encumbrances not noted therein.
This must be so in order to preserve the efficacy and conclusiveness of the certificate of title which is
sanctified under our Torrens system of land registration.
47. KERR & CO. LTD vs COLLECTOR OF INTERNAL REVENUE
G.R No. 46667. June 20, 1940

Facts:

In effecting the sales under consideration the plaintiff sent a cable to Shaw, Wallace & Co. of Calcutta,
India, offering a price for certain merchandise or asking for quotation. The Calcutta firm either accepted
the offer or gave its quotation of the price. After the price was thus agreed upon, plaintiff entered into a
contract of sale with local buyers quoting a price higher than that agreed upon or fixed by the Calcutta
firm; and the price of the merchandise for local buyers was fixed by the plaintiff. After the contract of
sale was thus entered into, plaintiff instructed the Calcutta firm to send the goods to, and draw a draft
on, the local buyers. This draft bore price agreed upon between the plaintiff and local buyers, and was
drawn against a local bank in accordance with the letter of guarantee executed in the form of the local
bank by the buyer and by the plaintiff. After receiving the draft and shipping documents, the local bank
released the merchandise to the buyer against a trust receipt. In due course, the draft was paid by the
buyers to the local bank and after the proceeds of the draft were received by the Calcutta firm, the latter
paid the plaintiff the difference between the price agreed upon between plaintiff and the Calcutta firm,
and the price for which the merchandise was actually sold to the local buyers.

SEC. 1459. Percentage tax on merchants sales. — All merchants not herein specially exempted shall
pay tax of one per centum on the gross value in money of the commodities, goods, wares and
merchandise sold, bartered, exchanged, or consigned abroad by them, such tax to be based on the
actual selling price or value of the things in question at the time are disposed of or consigned, whether
consisting of raw material or of manufactured or partially manufactured, and whether of domestic or
foreign origin. The tax upon things consigned abroad shall be refund upon satisfactory proof of the
return thereof to the Philippine. Islands unsold.

The following shall be exempt from this tax:

(a) Persons engaged in public market in the sale of food products at retail, and other small merchants
whose gross quarterly sales do not exceed two hundred pesos.

(b) Peddlers and sellers at fixed stands of fruit, produce, and food, raw or otherwise, the total selling
value whereof does not exceed three pesos per day and who do not renew their stock oftener than
once every twenty-four hours.

(c) Producers or commodities of all classes working in their own homes, consisting of parents and
children living as one family, when the value of each day's production by each person capable of
working is not in excess of one peso.

Merchants, as here used, means a person engaged in the sale, barter, or exchange of personal
property of whatever character. Except as specially provided, the term includes manufactures who sell
articles of their own production, and commission merchants having establishment of their own for the
keeping and disposal goods of which sales or exchanges are effected, but not include merchandise
brokers.

ISSUE:

Whether or not there was a perfection of sale.

Held:
It is argued by the appellant, that she was not the buyer of the goods, because if it were, the letter
would have turned against her and not against local buyers, and it would not guarantee the payment of
the amount of the bill. This argument, however, has no weight, because once purchased goods by Kerr
& Company, she could order that the goods were sent to anyone else because the most important thing
for Shaw Wallace & Company is to be paid the amount of goods, and this obligation has assumed Kerr
& Company in the event that local buyers not paying the letter at maturity.

The fact that the contract concluded by Kerr and Company with the local buyer Lim Ki Choa &
Company, Kerr & Company, according to Exhibit D, it has noted that this transaction with Lim Ki Choa &
Company she acted in the capacity of corridor only and that it assumes no responsibility.

In addition, in the case of breach of Kerr & Company the contract awarded to local buyers, they would
have no action whatsoever to be directed against Shaw Wallace & Company to demand from this
company contract performance, since none have been held with Shaw, Wallace & Co., as the facts
show that Kerr & Company first contract in its own name with Shaw Wallace & Company, and then also
contract in its own name with local buyers.

All of the above considerations show a single and a single proposition: that Kerr & Company contract in
its own name and on their own with Shaw Wallace & Comprany as a trader, and sold in its own name
as a trader; and therefore is subject to tax trader.
49. People’s Homesite & Housing Corporation v CA
G.R. No. 61623, December 26, 1984

FACTS:

The People’s Homesite & Housing Corporation (PHHC) passed a resolution awarding to spouses
Rizalino and Adelaida Mendoza Lot 4 of its Consolidated Subdivision Plan subject to the approval of the
Quezon City Council of the said plan and the approval of the OEC (PHHC) Valuation Committee and
higher authorities. The spouses were informed of the city council’s disapproval of the plan.

Following the city council’s approval of a revised subdivision plan, PHHC recalled all awards of lots to
persons who failed to pay the deposit or down payment, including the Mendozas.

The corporation eventually withdraw the tentative award of Lot 4 to the Mendoza spouses and
reawarded the said lot five individuals subject to existing PHHC rules and regulations. The new
awardees paid the initial deposit and corresponding deeds of sale were executed in their favor. The
subdivision of Lot 4 into five lots was approved by the city council and the Bureau of Lands.

ISSUE:

Whether or not there was a perfected sale of Lot 4 to the Mendozas.

HELD:

NO. Lot 4 was conditionally or contingently awarded to the Mendozas subject to the approval by the city
council of the proposed consolidation subdivision plan and the approval of the award by the valuation
committee and higher authorities. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From that moment, the
parties may reciprocally demand performance, subject to the law governing the form of contracts. In
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. Under the
facts of the case, there was no meeting of the minds.
50. ERNESTO R. ANG and ROSALINDA ANG vs. THE COURT OF APPEALS
G.R. No. 80058, February 13, 1989

FACTS:

Petitioner siblings negotiated for the sale of three (3) parcels of land with private respondent
Lee Chuy Realty Corporation. The latter issued a check of P50,000 constituting his down
payment in favor of petitioners with a receipt indicating the agreed total price and embodying
the conditions of their agreement: (1) that petitioners shall undertake to remove and clear the
subject property of all occupants and obstruction at their expense, and (2) that when the
subject property is cleared of all occupants and obstructions, the petitioners shall deliver a
deed of absolute sale in favor of private respondent with all pertinent papers necessary for the
registration and issuance of a certificate of title in the latter’s name. The check was received
and thereafter encashed by petitioners. However, the accompanying receipt was not returned;
instead another receipt prepared and signed by petitioners were forwarded to private
respondent. The new receipt did not indicate the agreed total price for the subject property.

A month later, petitioner Rosalinda Ang demanded that private respondent pay the balance
despite failure of the petitioners to comply with their undertaking to clear the subject property of
the obstructions thereon. Private respondent in turn demanded that petitioners return his down
payment.

ISSUE:

Whether or not petitioners committed a breach of contract and acted in bad faith in dealing with
private respondent.

HELD:

YES. Petitioners breached the agreement when they failed to undertake fulfillment of the two
conditions embodied in their agreement: the removal and clearance of the subject property and
the delivery of a deed of absolute sale and other pertinent papers.