1)DEL PRADO vs COURT OF APPEALS

GR 148225

Facts:

A lot No. 1109 was adjudicated in favor of spouses Caballero thru a Deed of Sale.
They sold to petitioner said lot on the basis of Tax Declaration covering the said
property. In the Deed of Sale, it is stated that the parcel of land sold to Carmen Del
Prado only covers 4,000 square meters while the total area of the said lot is 14,000
square meters.

Issue:

Whether or Not the sale of the land was for lump sum or not .

Held:

The court reiterated the rulings in Esguerra v. Trinidad; In sales involving real
estate, the parties may choose between two types of pricing agreement:

Unit price contract, where in the purchase price is determined by way of reference to
stated rate per area.

Lump sum, contract which states a full purchase price for an immovable, the area of
which may be declared based on the estimate or where both the area and boundaries are
stated.

In the instant case the sale of the land was for lump sum because the parties
agreed to purchase the land at P 40,000 for pre-determined area of 4,000 square
meters, more or less, with boundaries stated therein. In a contract of sale of land in a
mass, the specific boundaries stated in the contract prevails over any other statement
with respect to the area contained within its boundaries.
2)LEABRES V. COURT OF APPEALS

Facts:

After the death of Clara Tambunting, Leabres bought on partial payment of P

1,000.00 a portion of the Legarda-Tambunting subdivision owned by the former from
the surviving husband Vicente Legarda, acted as special administrator. Upon petition of
Vicente Legarda, later appointed as regular administrator, together with Pacific Price
and Augusto Tambunting, the Probate Court of Manila in special proceedings over the
testate and estate of said Clara Tambunting, authorized the sale of the property.
However, when Vicente was relieved as regular administrator, the Philippine Trust
Company took over as such administrator, advertised the sale of the subdivision. No
adverse claim or interest over such division or any portion thereof was ever presented by
any person. By the order of the probate court, the PTC executed a Deed of an Absolute
Sale infavor of Manotok Realty.

Plaintiff seeks for the quieting of the title over the lot for continuing possession of
the land and for damages.

Issue:

Whether or Not there is a valid sale of the subdivision between Leabres and
Vicente.

Held

The sale is not valid and unenforceable. The estate of Clara Tambunting was
under custodial egis of the Probate Court. Don Vicente entered into said sale in his own
personal capacity.

The Legarda-Tambunting subdivision is covered by the Torens Certificate of

Title. Leabres claims the sale of said lot in his favor, evidence by a Deed of Sale dated
May 2, 1950. However he did not registered his suppose interest over the lot in the
records of the Register of Deeds, nor did he present his claim for probate in the testate
proceedings over the estate of the owner of said subdivision in spite of the notices
advertised in its purpose. On the other hand, the Absolute Deed of Sale over the whole
subdivision in favor of Manotok Realty was immediately registered under the Torrens
Law. Thus, the latter has right over the lot in question. An example of the receipt reveals
that the same can never be reagarded as a contract of sale or promise to sell. There was
merely of an acknowledgement of the sum of P1,000. There was no agreement to the
total price of the land nor to the monthly installment to be paid by the petitioner.
3) SPOUSES TONGSON vs EMERGENCY PAWNSHOP BULA, INC.

GR 167874

Facts:

Napala purchased from spouses Tongson their 364 square meter parcel of land
situated in Davao. The respondent prepared an Absolute Deed of Sale indicating the
consideration as P 400,000 and executed another Memorandum of Agreement in
conformity with the Deed of Sale. Upon signing, Napala paid two hundred thousand
pesos in cash to spouses and issued postdated PNB check to represent the balance.
However the check was dishonored for insufficient funds. Despite demand, Napala
failed to pay or return the purchase land. The petitioners filed for the annulment of the
contract.

The trial court ordered the annulment of the contract. Furthermore, Napala’s
action in giving the check constituted fraud that induced the spouses to enter in the sale.

Issue:

Whether or Not Napala employed fraud which induces the spouses to enter in the
sale.

Held:

The issuance of PNB check and fraudulently representation made by Napala

could not be considered as determining cause for the sale of the subject parcel of land.

A valid contract requires occurrence of three elements. In the present, there is no

dispute as regards the presence of two requisites; namely, (a) determinate subject
matter, and (b) price certain in money. As regards the requisite which is the consent of
the parties, it is clearly shown for the record that the spouses agreed to sell the land to
Napala who offered to pay the price. The fraud was not employed during the negotiation
and perfection stages of the sale, but existed in the consummation when the parties are
in the process of their respective obligations.
4)SPOUSES ISABELO and ERLINDA PAYONGAYONG,
vs.
HON. COURT OF APPEALS, SPOUSES CLEMENTE and ROSALIA SALVADOR

FACTS:

Eduardo Mendoza was the registered owner of a two hundred square meter
parcel of land situated in Barrio San Bartolome, Caloocan.On April 18, 1985, Mendoza
mortgaged the parcel of land to the Meralco Employees Savings and Loan Association
(MESALA) to secure a loan in the amount of P81,700.00. On July 11, 1987, Mendoza
executed a Deed of Sale with Assumption of Mortgage over the parcel of land together
with all the improvements in the property in favor of petitioners in consideration
of P50,000.00. It is stated in the deed that petitioners bound themselves to assume
payment of the balance of the mortgage indebtedness of Mendoza to MESALA.

On December 7, 1987, Mendoza, without the knowledge of petitioners, mortgaged

the same property to MESALA to secure a loan in the amount of P758, 000.00. After
that, on November 28, 1991, Mendoza executed a Deed of Absolute Sale over still the
same property in favor of respondents in consideration of P50,000.00. On even date,
MESALA issued a Cancellation of Mortgage acknowledging that for sufficient and
valuable consideration which it received from Mendoza, it was cancelling and releasing
the real estate mortgage over the property.

Respondents caused the cancellation of Mendoza’s title and the issuance of Transfer
Certificate Title No. 67432 in their name.

Petitioners filed on July 16, 1993 a complaint for annulment of deed of absolute
sale and transfer certificate of title with recovery of possession and damages against
Mendoza, his wife Sally Mendoza, and respondents before the Quezon City RTC because
they alleged that the spouses Mendoza maliciously sold to respondents the property
which was priorly sold to them and that respondents acted in bad faith in acquiring it,
the latter having had knowledge of the existence of the Deed of Absolute Sale with
Assumption of Mortgage between them (petitioners) and Mendoza.

ISSUE/S:

1)Whether or Not respondents are entitled to the protection accorded to

purchasers in good faith.

2)Whether or Not the sale between Mendoza and respondents was simulated.

HELD:

Yes they are considered to be purchasers in good faith.It is a well-established principle

that a person dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him to go behind the
certificate to determine the condition of the property.He is charged with notice only of
such burdens and claims as are annotated on the title.He is considered in law as an
innocent purchaser for value or one who buys the property of another without notice
that some other person has a right to or interest in such property and pays a full and fair
price for the same at the time of such purchase or before he has notice of the claim of
another person.

In the instant case, at the time of the sale of the property by Mendoza to the
respondents only the mortgages in favour of MESALA appeared on the annotations of
encumbrances on Mendoza’s title. The respondents also inspected the property before
buying it.

2) No, the contract was not simulated. Simulation occurs when an apparent
contract is a declaration of a fictitious will, deliberately made by agreement of the
parties, in order to produce, for the purpose of deception, the appearance of a juridical
act which does not exist or is different from that which was really executed. Its requisites
are: a) an outward declaration of will different from the will of the parties; b) the false
appearance must have been intended by mutual agreement; and c) the purpose is to
deceive third persons.

The basic characteristic then of a simulated contract is that it is not really desired or
intended to produce legal effects or does not in any way alter the juridical situation of
the parties.

The cancellation of Mendoza’s certificate of title over the property and the procurement
of one in its stead in the name of respondents, which acts were directed towards the
fulfillment of the purpose of the contract, unmistakably show the parties’ intention to
give effect to their agreement. The claim of simulation does not thus lie.
5) SPOUSES MAPALO vs. MAXIMO MAPALO

FACTS:

Spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were
registered owners of residential land in Manaoag, Pangasinan. They donated the eastern
part of their land to Miguel Mapalo however they were deceived into signing a deed of
absolute sale over the entire land. Following the execution of the afore-stated document,
the spouses Miguel Mapalo and Candida Quiba immediately built a fence of permanent
structure in the middle of their land segregating the eastern portion from its western
portion. Said fence still exists. The spouses have always been in continued possession
over the western half of the land up to the present. Maximo Mapala registered the land
to his name and sold it to the Narcisos. They subsequently registered it to their name.

The Narcisos took possession only of the eastern portion of the land in 1951, after
the sale in their favor was made. On February 7, 1952 they filed suit in the Court of First
Instance of Pangasinan (Civil Case No. 1191) to be declared owners of the entire land, for
possession of its western portion; for damages; and for rentals. It was brought against
the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb who had a
house on the western part of the land with the consent of the spouses Mapalo and
Quiba.

The Narcisos appealed to the Court of Appeals. In its decision on May 28, 1963, the
Court of Appeals reversed the judgment of the Court of First Instance, solely on the
ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been
obtained by fraud, the same was voidable, not void ab initio, and, therefore, the action
to annul the same, within four years from notice of the fraud, had long prescribed. It
reckoned said notice of the fraud from the date of registration of the sale on March 15,
1938. The Court of First Instance and the Court of Appeals are therefore unanimous that
the spouses Mapalo and Quiba were definitely the victims of fraud. It was only on
prescription that they lost in the Court of Appeals.

The plaintiffs only assailed the validity of the sale with respect to the western
portion of the land.

ISSUE:

Whether there was an onerous conveyance of ownership, that is, a sale, by virtue
of said deed of October 15, 1936, with respect to said western portion. Specifically, was
there a cause or consideration to support the existence of a contrary of sale?

HELD:
 As a general rule, contracts without a cause or consideration produce no effect
whatsoever. Nonetheless, under the Old Civil Code, the statement of a false
consideration renders the contract voidable, unless it is proven that it is supported
another real and licit consideration. And it is further provided by the Old Civil Code that
the action for annulment of a contract on the ground of falsity of consideration shall last
four years, the term to run from the date of the consummation of the contract.

In the instant case, the plaintiffs never received a consideration as purchase price
for the western portion of the land. In that case the contract of purchase and sale is null
and void and produces no effect whatsoever where the same is without cause or
consideration in that the purchase price which appears thereon as paid has in fact never
been paid by the purchaser to the vendor.
6)G.R. No. 138018 July 26, 2002
RIDO MONTECILLO, petitioner,
vs.
IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA ABUCAY

FACTS:

Respondents Ignacia Reynes and Spouses Abucay filed on June 20, 1984 a
complaint for Declaration of Nullity and Quieting of Title against petitioner Rido
Montecillo. Reynes asserted that she is the owner of a lot situated in Mabolo, Cebu CitY.
In 1981, Reynes sold 185 square meters of the Mabolo Lot to the Abucay Spouses who
built a residential house on the lot they bought. A Deed of Sale was then issued by
Ignacia in favour of Montecillo. The latter promised to pay the agreed price after one
month but he failed to fulfil his obligation. Ignacia made a demand to Montecillo that he
should return the Deed but Montecillo refused to return the Deed of Sale that’s why
Reynes executed a document unilaterally revoking the sale and gave a copy of the
document to Montecillo.

Ignacia Reynes,subsequently sold the land to spouses Abucay but they received
an information that the lot was already registered in the name of the Montecillos.

Reynes and the Abucay Spouses argued that "for lack of consideration there (was)
no meeting of the minds" between Reynes and Montecillo. Thus, the trial court should
declare null and void ab initio Montecillo’s Deed of Sale, and order the cancellation of
Certificate of Title in the name of Montecillo.

In his Answer, Montecillo claimed he was a buyer in good faith and had actually
paid the P47,000.00 consideration stated in his Deed of Sale. Montecillo, however,
admitted he still owed Reynes a balance of P10,000.00. He also alleged that he
paid P50,000.00 for the release of the chattel mortgage between Cebu Ice Storage and
Bienvenido Jayag which he argued constituted a lien on the Mabolo Lot. He further
alleged that he paid for the real property tax as well as the capital gains tax on the sale of
the Mabolo Lot.

The Issues

1. "Was there an agreement between Reynes and Montecillo that the stated
consideration of P47,000.00 in the Deed of Sale be paid to Cebu Ice and Cold Storage to
secure the release of the Transfer Certificate of Title?"
2. "If there was none, is the Deed of Sale void from the beginning or simply
rescissible?"15

Held:

First issue: manner of payment of the P47,000.00 purchase price.

Montecillo’s Deed of Sale does not state that the P47,000.00 purchase price
should be paid by Montecillo to Cebu Ice Storage. Montecillo failed to adduce any
evidence before the trial court showing that Reynes had agreed, verbally or in writing,
that the P47,000.00 purchase price should be paid to Cebu Ice Storage. Absent any
evidence showing that Reynes had agreed to the payment of the purchase price to any
other party, the payment to be effective must be made to Reynes, the vendor in the sale.
Article 1240 of the Civil Code provides as follows:

"Payment shall be made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to receive it."

Thus, Montecillo’s payment to Cebu Ice Storage is not the payment that would
extinguish16 Montecillo’s obligation to Reynes under the Deed of Sale.

Second issue: whether the Deed of Sale is void ab initio or only rescissible.

One of the three essential requisites of a valid contract is consent of the parties on
the object and cause of the contract. In a contract of sale, the parties must agree not only
on the price, but also on the manner of payment of the price. An agreement on the price
but a disagreement on the manner of its payment will not result in consent, thus
preventing the existence of a valid contract for lack of consent. This lack of consent is
separate and distinct from lack of consideration where the contract states that the price
has been paid when in fact it has never been paid.

Reynes expected Montecillo to pay him directly the P47,000.00 purchase price within
one month after the signing of the Deed of Sale. On the other hand, Montecillo thought
that his agreement with Reynes required him to pay the P47,000.00 purchase price to
Cebu Ice Storage to settle Jayag’s mortgage debt. Montecillo also acknowledged a
balance of P10,000.00 in favor of Reynes although this amount is not stated in
Montecillo’s Deed of Sale. Thus, there was no consent, or meeting of the minds, between
Reynes and Montecillo on the manner of payment. This prevented the existence of a
valid contract because of lack of consent.
In summary, Montecillo’s Deed of Sale is null and void ab initio not only for lack of
consideration, but also for lack of consent. The cancellation of TCT No. 90805 in the
name of Montecillo is in order as there was no valid contract transferring ownership of
the Mabolo Lot from Reynes to Montecillo.
7) SPOUSES PARAGAS vs. HEIRS. OF DOMINADOR BALACANO

Facts:

Gregorio Balacano was a registered owner of a parcel of land in the province of

Isabela and he has three children (Domingo, Catalino and Alfredo) with Lorenza
Balacano. His spouse died in 1991 while his death was on July 28, 1996. Gregorio and
Lorenza had three children, namely: Domingo, Catalino and Alfredo, all surnamed
Balacano. Lorenza died on December 11, 1991. Gregorio, on the other hand, died on July
28, 1996.Prior to his death, Gregorio was admitted at the Veterans General Hospital in
Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until July 19, 1996. He
was transferred in the afternoon of July 19, 1996 to the Veterans Memorial Hospital in
Quezon City where he was confined until his death. On July 22, 1996, or barely a week
prior to his death, he sold a portion of land to spouses Rudy and Corazon Paragas for the
total consideration of P500,000.00. The spouses Paragas also sold some portion of the
land to Catalino Balacano.

The children of Domingo Balacano assailed the validity of the contract of sale
because they alleged that their grandfather could not have appeared before the notary
public because he was confined in a hospital at that moment and he was seriously ill at
that time which vitiated his consent to the disposal of the property. They also alleged
that their uncle , Catalino manipulated the execution of the deed .

ISSUE:

Whether or Not the contract of sale between Gregorio Balacano and Spouses
Rudy and Corazon Paragas.

HELD:

In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death
bed in the hospital. Gregorio was an octogenarian at the time of the alleged execution of
the contract and suffering from liver cirrhosis at that – circumstances which raise grave
doubts on his physical and mental capacity to freely consent to the contract. Adding to
the dubiety of the purported sale and further bolstering respondents’ claim that their
uncle Catalino, one of the children of the decedent, had a hand in the execution of the
deed is the fact that on 17 October 1996, petitioners sold a portion of Lot 1175-E
consisting of 6,416 square meters to Catalino for P60,000.00.22 One need not stretch his
imagination to surmise that Catalino was in cahoots with petitioners in maneuvering the
alleged sale.
8)G.R. No. 111238 January 25, 1995

ADELFA PROPERTIES, INC., petitioner,

vs.
COURT OF APPEALS, ROSARIO JIMENEZ-CASTAÑEDA and SALUD
JIMENEZ, respondents.

FACTS:

Jose and Dominador were brothers of the private respondent and they co-owned
a registered property. Jose and Dominador sold their share which is the eastern portion
of the land to Adelfa. Thereafter, Adelfa expressed interest in buying the western
portion of the property from private respondents. Accordingly, an exclusive Option to
Purchase was executed between Adelfa and private respondents and an option money of
fifty-thousand pesos was given to the latter. Before Adelfa could make payments, it
received summons as a civil case was filed against Jose, Dominador and Adelfa by the
nephews and nieces of private respondents. As a consequence, Adelfa informed the
private respondents that it would hold payment of the full purchase price and suggested
that they settle the case with their said nephews and nieces. Salud did not heed the
suggestion; respondent informed Atty. Bernardo that they are cancelling the
transaction. He further made some offers but they were all rejected.

When the case was dismissed, private respondents executed a Deed of

Conditional Sale in favor of Chua, over the same property so they rejected the offer of
Adelfa to purchase the same. The private respondents sent a letter informing Adelfa
about the sale and they also enclosed a check which represent the option money paid by
Adelfa.

ISSUE:

WON the agreement between ADELFA and Private Respondents was strictly an
option contract.

HELD:

The agreement between the parties is a contract to sell and not just a mere option
contract or a contract of sale.

In the case at bar, the obligation of petitioner to pay the purchase price is specific,
definite and certain, and consequently binding and enforceable. Had private
respondents chosen to enforce the contract, they could have specifically compelled
petitioner to pay the balance. This is distinctly made manifest in the contract itself as an
integral stipulation, compliance with which could legally and definitely be demanded
from petitioner as a consequence. The term “balance” connotes a remainder or
something remaining from the original total sum already agreed upon. The alleged
option money in the case at bar was actually an earnest money which was intended to
form part of the purchase price. The amount was not distinct from the cause or
consideration for the sale of the property, but was itself a part of the purchase price. It is
a statutory rule that whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and as a proof of the perfection of the contract.
9) G.R. No. L-11872 December 1, 1917

DOMINGO MERCADO and JOSEFA MERCADO

vs.
JOSE ESPIRITU, administrator of the estate of the deceased Luis Espiritu

Domingo and Josefa Mercado brought suit in the Court of First Instance of
Bulacan, against Luis Espiritu, but, as the latter died soon thereafter, the complaint was
amended by being directed against Jose Espiritu in his capacity of his administrator of
the estate of the deceased Luis Espiritu. The plaintiffs alleged that they and their sisters
Concepcion and Paz, all surnamed Mercado, were the children and sole heirs of
Margarita Espiritu, a sister of the deceased Luis Espiritu; that Margarita Espiritu died in
1897, leaving as her paraphernal property a tract of land of 48 hectares in area situated
in the barrio of Panducot, municipality of Calumpit, Bulacan, which hereditary portion
had since then been held by the plaintiffs and their sisters, through their father
Wenceslao Mercado, husband of Margarita Espiritu; that, about the year 1910, said Luis
Espiritu, by means of cajolery, induced, and fraudulently succeeded in getting the
plaintiffs Domingo and Josefa Mercado to sign a deed of sale of the land left by their
mother, for the sum of P400, which amount was divided among the two plaintiffs and
their sisters Concepcion and Paz.

Two among of the four parties were minors during the signing of the Deed of Sale
but on the date of sale, these minors presented themselves that they were of legal age at
the time they signed it and they made the same manifestation before the notary public.

Issue:

WON the Deed of Sale is valid when the minors presented themselves that they
were of legal age.

Held:

The courts lay down that such sale of real estate was still valid since it was
executed by minors who have passed the age of puberty adolescence and are near the
adult age and that the minors pretended that they already reached their majority. Under
Art 38, Minority, insanity or imbecility, the state of being deaf mute, prodigality and
civil interdiction are mere restrictions on the capacity to act and do not exempt the
incapacitated person from certain obligations as when the latter arise from his acts of
from property relations such as easements. Also these minors cannot be permitted
afterwards to excuse themselves from compliance with the obligation assumed by them
or seek their annulment. This is in accordance with the provisions of the law on
estoppel.
10)G.R. No. L-1720 March 4, 1950

SIA SUAN and GAW CHIAO

vs.
RAMON ALCANTARA

Facts:

Rufino Alcantara and his sons Damaso Alcantara and Ramon Alcantara
conveyed to Sia Suan five parcels of land. Ramon Alcantara was then 17 years, 10
months and 22 days old. On August 27, 1931, Gaw Chiao (husband of Sia Suan) received
a letter from Francisco Alfonso, attorney of Ramon Alcantara, informing Gaw Chiao that
Ramon Alcantara was a minor and accordingly disavowing the contract. After being
contacted by Gaw Chiao, however, Ramon Alcantara executed an affidavit in the office of
Jose Gomez, attorney of Gaw Chiao, wherein Ramon Alcantara ratified the deed of sale.
On said occasion Ramon Alcantara received from Gaw Chiao the sum of P500. In the
meantime, Sia Suan sold one of the lots to Nicolas Azores from whom Antonio Azores
inherited the same.

On August 8, 1940, an action was instituted by Ramon Alcantara in the Court of

First Instance of Laguna for the annulment of the deed of sale as regards his undivided
share in the two parcels of land covered by certificates of title Nos. 751 and 752 of
Laguna. Said action was against Sia Suan and her husband Gaw Chiao, Antonio, Azores,
Damaso Alcantara and Rufino Alcantara (the latter two being, respectively, the brother
and father of Ramon Alcantara appealed to the Court of Appealed which reversed the
decision of the trial court, on the ground that the deed of sale is not binding against
Ramon Alcantara in view of his minority on the date of its execution,

Issue:

WON the deed of sale should be annulled because one of the parties in the
contract is minor.

Held:

The court ruled that Ramon Alcantara is not allowed to annul such deed, because
he already ratified it. The letter written by Alcantara informing the buyers about his
minority constituted an effective disaffirmance of the sale and that the choice to
disaffirm will not by itself avoid the contract until the courts adjudge the agreement to
be invalid, said notice shielded Ramon from laches and consequent estoppel. Ramon
may have executed his acts in bad faith because he earned money from Gaw Chiao as a
result of the sale and its ratification, yet the summons the courts to annul the sale
because he executed it while he is a minor.

11)REYNALDO VILLANUEVA, G.R. NO. 154493

- versus -

PHILIPPINE NATIONAL BANK

(PNB),

Facts:

Philippine National Bank issued an advertisement for the sale thru bidding of
certain lots. The bidding was subject to the following conditions: 1) that cash bids be
submitted not later than April 27, 1989; 2) that said bids be accompanied by a 10%
deposit in manager’s or cashier’s check; and 3) that all acceptable bids be subject to
approval by PNB authorities. In a June 28, 1990 Reynaldo Villanueva offered to
purchase Lot Nos. 17 and 19 for P3,677,000.00. He also manifested that he was
depositing P400,000.00 to show his good faith but with the understanding that said
amount may be treated as part of the payment of the purchase price only when his offer
is accepted by PNB.

On July 6, 1990, Guevara informed Villanueva that only Lot No. 19 is available
and that the asking price therefor is P2,883,300.00. He also informed Villanueva that if
he is interested with the terms and conditions imposed by the Bank he should submit a
revised offer to purchase. But instead of submitting a revised offer, Villanueva merely
inserted at the bottom of Guevara’s letter a July 11, 1990 marginal note, which indicate
that he will deposit P 600,000.00 and the balance will be payable in two years at
quarterly amortizations.Also, on July 24, 1990, P380,000.00 was debited from
Villanueva’s Savings Account No. 43612 and credited to SAMD.

After that, Guevara wrote Villanueva that, upon orders of the PNB Board of
Directors to conduct another appraisal and public bidding of Lot No. 19, SAMD is
deferring negotiations with him over said property and returning his deposit
of P580,000.00. Undaunted, Villanueva attempted to deliver postdated checks covering
the balance of the purchase price but PNB refused the same.

Hence, Villanueva filed with the RTC a Complaint for specific performance and
damages against PNB.
Issue:

Whether or Not there was no perfected contract of sale because the July 6,
1990 letter of Guevara constituted a qualified acceptance of the June 28, 1990 offer of
Villanueva, and to which Villanueva replied on July 11, 1990 with a modified offer.

Held:

The sale is not perfected because in the case at bench, consent, in respect to the
price and manner of its payment, is lacking. The record shows that appellant, thru
Guevara’s July 6, 1990 letter, made a qualified acceptance of appellee’s letter-offer
dated June 28, 1990 by imposing an asking price of P2,883,300.00 in cash for Lot 19.
The letter dated July 6, 1990 constituted a counter-offer (Art. 1319, Civil Code), to which
appellee made a new proposal, i.e., to pay the amount of P2,883,300.00 in staggered
amounts, that is, P600,000.00 as down payment and the balance within two years in
quarterly amortizations.

A qualified acceptance, or one that involves a new proposal, constitutes a counter-

offer and a rejection of the original offer (Art. 1319, id.). Consequently, when something
is desired which is not exactly what is proposed in the offer, such acceptance is not
sufficient to generate consent because any modification or variation from the terms of
the offer annuls the offer (Tolentino, Commentaries and Jurisprudence on the Civil
Code of the Philippines, 6th ed., 1996, p. 450, cited in ABS-CBN Broadcasting
Corporation v. Court of Appeals, et al., 301 SCRA 572).
12) G.R. No. 106063 November 21, 1996

EQUATORIAL REALTY DEVELOPMENT, INC. & CARMELO &

BAUERMANN, INC.
vs.
MAYFAIR THEATER, INC.

Facts:

Petitioners Carmelo Baurmann Inc. leased it’s parcel of land with two-story
building to respondent Mayfair theater Incorporated. They entered a contract which
provides that if the lessor should desire to sell the property, the lessee shall be given 30-
days exclusive option to purchase the same. Carmelo informed Mayfair that they have
an intention to sell the property to EQUITORIAL. Mayfair made known its interest to
buy the property but only to the extent of the leased premises. Notwithstanding
Mayfair’s intention, Carmelo sold the property to the petitioner company.

Issue:

WON the sale of the property to Equatorial is valid.

Held:

The sale of the property should be rescinded because Mayfair has the right of first
refusal. Both Equatorial and Carmelo are in bad faith because they knew of the
stipulation in the contract regarding the right of first refusal.

The stipulation is a not an option contract but a right of first refusal and as such
the requirement of a separate consideration for the option, has no applicability in the
instant case. The consideration is built in the reciprocal obligation of the parties.

In reciprocal contract, the obligation or promise of each party is the

consideration for that of the other. (Promise to lease in return of the right to first
refusal)
 With regard to the impossibility of performance, only Carmelo can be blamed for
not including the entire property in the right of first refusal. Court held
that Mayfair may not have the option to buy the property. Not only the leased area but
the entire property.

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

JOSE SANTA ANA, JR. and LOURDES STO. DOMINGO

vs.
ROSA HERNANDEZ

Facts:

Spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo, owned a 115,850-square
meter parcel of land situated in barrio Balasing, Sta. Maria, Bulacan. On 28 May 1954,
they sold two (2) separate portions of the land for P11,000.00 to Rosa Hernandez.

After the sale (there were two other previous sales to different vendees of other
portions of the land), the petitioners-spouses caused the preparation of a subdivision
plan, Psd-43187, was approved on 13 January 1955 by the Director of Lands. Rosa
Hernandez, however, unlike the previous vendees, did not conform to the plan and
refused to execute an agreement of subdivision and partition for registration with the
Register of Deeds of Bulacan; and she, likewise, refused to vacate the areas that she had
occupied. Instead, she caused the preparation of a different subdivision plan, which was
approved by the Director of Lands on 24 February 1955. This plan, Psd-42844, tallied
with the areas that the defendant, Rosa Hernandez, had actually occupied.

On 28 February 1955, herein petitioners-spouses filed suit against respondent Rosa

Hernandez in the Court of First Instance of Bulacan, claiming that said defendant was
occupying an excess of 17,000 square meters in area of what she had bought from them.
Defendant Rosa Hernandez, on the other hand, claimed that the alleged excess, was part
of the areas that she bought.

Issue:
 Whether or Not the excess area occupied by Hernandez is part of the land sold.

Held:

In the instant case, 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.

14)G.R. No. 76031 March 2, 1994

MIGUEL SEMIRA
vs.
COURT OF APPEALS and BUENAVENTURA

.Facts:

Juana Gutierrez owned a parcel of land situated in Sto. Niño, Taysan, Batangas
which she sold to private respondent Buenaventura for P850.00 by means of a
"Kasulatan ng Bilihan ng Lupa" executed on 4 January 1961. Aside from the estimated
area of 822.5 square meters appearing in the deed of sale, the following boundaries of
the lot are also indicated. Thereafter, private respondent entered the premises observing
thereby the boundaries of the property and not the area given.

Buenaventura also acquired two (2) other parcels of land, Lot 4215 with an area
of 8,606-square meters located on the east of Lot 4221 from the spouses Pascual
Hornilla and Gliceria Ilao on 30 June 1964, and another lot with an area of 11,000-
square meters from Santiago Asi. Pascual Hornilla is the son of Juana Gutierrez.

On 18 October 1972, private respondent sold Lot 4221 to his nephew, Cipriano
Ramirez, and spouse by means of another "Kasulatan ng Bilihan ng Lupa" for
P2,500.00, where the lot was described with the same area and boundaries mentioned
in the 4 January 1961 "Kasulatan ng Bilihan ng Lupa" with the exception of the
boundary on the east; which was changed from "Juana Gutierrez" to "Buenaventura An"
to reflect the acquisition by private respondent of the adjoining Lot 4215.

On 12 March 1979, Cipriano Ramirez sold the lot to petitioner Miguel Semira for
P20,000.00. However, the area stated in the "Kasulatan ng Bilihan ng Lupa" was 2,200
square meters and not 822.5 appearing in the previous document. As delimited by its
boundaries, the lot is actually much bigger than 822.5 square meters. This was
confirmed by the Taysan Cadastral Mapping Survey conducted in 1974 where it is
definitely stated that the area of Lot 4221 is 2,200 square meters; hence, the reason for
the change.

On 17 March 1979, Miguel Semira entered the very same premises previously occupied
by Ramirez and began the construction of a new rice-mill. However, on 18 April 1979, a
complaint for forcible entry was filed against him by private respondent in the
Municipal Circuit Trial Court of Taysan-Lobo. The latter claimed that the area of Lot
4221 was 822.5 square meters only and that the excess of 1,377 square meters forcibly
occupied by petitioner formed part of Lot 4215 which he acquired from the Hornillas in
1964.

Petitioner admits having entered the disputed portion on 17 March 1979, but denies
having illegally done so. In his answer, petitioner claims ownership over the property by
invoking the 1979 deed of sale in his favor by Cipriano Ramirez.

Issue:

Whether or Not Miguel Semira is liable for forcible entry because lot 4221 has an
area of 822.5 square meters only therefore the excess 1,377 is not covered by the sale.

Held:

The sale is for lump sum. Thus, he is not liable for forcible entry.

The court repeatedly ruled that where land is sold for a lump sum and not so
much per unit of measure or number, the boundaries of the land stated in the contract
determine the effects and scope of the sale, not the area thereof. Hence, the vendors are
obligated to deliver all the land included within the boundaries, regardless of whether
the real area should be greater or smaller than that recited in the deed. This is
particularly true where the area is described as "humigit kumulang," that is, more or
less. These conclusions are drawn from Art. 1542 of the Civil code which states —In the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of
measure or number, there shall be no increase or decrease of the price, although there
be a greater or less are or number than that stated in the contract.

The same rule shall be applied when two or more immovables are sold for a
single price; but if, besides mentioning the boundaries, which is indispensable in every
conveyance of real estate, its area or number should be designated in the contract, the
vendor shall be bound to deliver all that is included within said boundaries, even when it
exceeds the area or number specified in the contract; and, should he not be able to do
so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or
number, unless the contract is rescinded because the vendee does not accede to the
failure to deliver what has been stipulated.

Hence, when private respondent Buenaventura An sold Lot 4221 to his nephew
Cipriano Ramirez by means of a "Kasulatan ng Bilihan ng Lupa" which incorporated
both the area and the definite boundaries of the lot, the former transferred not merely
the 822.5 square meters stated in their document of sale but the entire area
circumscribed within its boundaries.

15) GR 169890

ESGUERRA

vs.

TRINIDAD

Facts:

Esguerra spouses were the owners of several parcels of land in Camalig,

Meycauayan, Bulacan – among them is a 35,284-square meter parcel of land, half of
which (17,642 square meters) they sold to their grandchildren, herein petitioners
Feliciano, Canuto, Justa, Angel, Fidela, Clara and Pedro, all surnamed Esguerra; and a
23,989-square meter parcel of land covered by Tax Declaration No. 12080, 23,489
square meters of which they also sold to petitioners, and the remaining 500 square
meters they sold to their other grandchildren, the brothers Eulalio and Julian Trinidad
(Trinidad brothers). Also sold to the Trinidad brothers were a 7,048-square meter
parcel of land, a 4,618-square meter parcel of land, and a 768-square meter parcel of
land. Eulalio Trinidad later sold his share of the land to his daughters-respondents
herein, via a notarized Kasulatan ng Bilihang Tuluyan ng Lupa
On respondents’ application for registration of title, the CFI awarded Lot No. 3593 in
their favor in Land Registration Case No. N-323-V.

Meanwhile, under a notarized deed dated November 10, 1958, petitioners sold to
respondents’ parents Eulalio Trinidad and Damiana Rodeadilla (Trinidad spouses) a
portion of about 5,000 square meters of the 23,489-square meter of land which they
previously acquired from the Esguerra spouses and during the same cadastral survey
conducted in the late 1960s, it was discovered that the about 5,000-square meter
portion of petitioners’ parcel of land sold to the Trinidad spouses which was
assigned actually measured 6,268 square meters.

In a subsequent application for registration of title over Lot No. 3591, docketed as Land
Registration Case No. N-335-V, the CFI, by Decision of August 21, 1972, awarded Lot
No. 3591 in favor of Eulalio Trinidad. Pursuant to the Decision, the LRC issued Decree
No. N-149491 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-
6498 in the name of Trinidad.

Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was
transmitted to respondents by succession.

Petitioners, alleging that upon verification with the LRA they discovered the issuance of
the above-stated two OCTs, filed on August 29, 1994 before the Regional Trial Court
(RTC) of Malolos, Bulacan two separate complaints for their nullification on the ground
that they were procured through fraud or misrepresentation.

ISSUE

Whether or not the acquisition and registration by the respondents were

fraudulent.

HELD

No, the respondents did not fraudulently acquired and registered the property.
 It is settled that fraud is a question of fact and the circumstances constituting the
same must be alleged and proved in the court below. In the present cases, as did the trial
court, the appellate court found no fraud in respondents’ acquisition and registration of
the land. Appellant Pedro Esguerra even testified that he does not know how appellees
were able to secure a title over the lot in question and that they never sold Lot No.
3593 to Virginia Trinidad since it is part of the whole lot of 23,489
square meters. The said testimony is a mere conclusion on the part of appellants. On the
other hand, the evidence shows that appellees acquired title over the subject
property by virtue of a deed of sale executed by their father Eulalio Trinidad in their
favor. Under the Torrens System, an OCT enjoys a presumption of validity, which
correlatively carries a strong presumption that the provisions of the law
governing the registration of land which led to its issuance have been duly
followed. Fraud being a serious charge, it must be supported by clear and convincing
proof. Petitioners failed to discharge the burden of proof, however in a unit price
contract, the statement of area of immovable is not conclusive and the price may be
reduced or increased depending on the area actually delivered. If the vendor delivers
less than the area the vendee is entitled to proportional reduction of the price of the real
property.

16) G.R. No. L-20435 October 23, 1923

LUIS ASIAIN,
vs.
BENJAMIN JALANDONI

Facts:

Luis Asiain owns a hacienda known as "Maria" situated in the municipality of La

Carlota, Province of Occidental Negros, containing about 106 hectares while Benjamin
Jalandoni is the owner of another hacienda adjoining of Asiain. Sometime in May 1920,
Asain conveyed his interest to sell some portion of his hacienda to Jalandoni. With a
wave of his hand, he indicated the tract of land in question, affirming that it contained
between 25 and 30 hectares. Jalandoni remain doubtful as to the extent of the land and
the amount of the crop that can be harvested on it.

When Jalandoni possess the property he did two things. He had the sugar cane
ground in La Carlota Sugar Central with the result that it gave and output of P800 piculs
and 23 cates of centrifugal sugar instead of 2,000 piculs that Asiain positively claimed in
the memorandum. When opportunity offered, he secured the certificate of title of Asiain
and produced a surveyor to survey the land. According to his survey, the parcel in
question contained an area of 118 hectares, 54 ares, and 22 centiares instead of 25- 30
hectares which Asiain also claimed.

Issue:

Whether or Not the contract of sale between Jalandoni and Asiain should be
rescinded because there is amistake of fact as to the area of the property and as to the
amount of the standing crop.

Held :

The Supreme Court affirmed the previous ruling of the trial court which is to
annul the contract and both parties should return everything they received from each
other.

The court further ruled that the contract was not a contract of hazard. It was a
sale in gross in which there was a mutual mistake as to the quantity of land sold and as
to the amount of the standing crop. The mistake of fact as disclosed not alone by the
terms of the contract but by the attendant circumstances, which it is proper to consider
in order to throw light upon the intention of the parties, is, as it is sometimes expressed,
the efficient cause of the concoction. The mistake with reference to the subject-matter of
the contract is such that, at the option of the purchaser, it is rescindable. Without such
mistake the agreement would not have been made and since this is true, the agreement
is inoperative and void. It is not exactly a case of overreaching on the plaintiff's part, or
of misrepresentation and deception, or of fraud, but is more nearly akin to a bilateral
mistake for which relief should be granted. Specific performance of the contract can
therefore not be allowed at the instance of the vendor.

The ultimate result is to put the parties back in exactly their respective positions
before they became involved in the negotiations and before accomplishment of the
agreement. This was the decision of the trial judge and we think that decision conforms
to the facts, the law, and the principles of equity.
17) SPOUSES AVELINO and EXALTACION SALERA

Vs.

SPOUSES CELEDONIO and POLICRONIA RODAJE,

Facts:

On May 7, 1993, spouses Avelino and Exaltacion Salera, filed with the Regional
Trial Court (RTC), Branch 11, Calubian, Leyte, a complaint for quieting of title against
spouses Celedonio and Policronia Rodaje. Petitioners alleged that they are the absolute
owners of a parcel of land situated at Basud, San Isidro,Leyte with an area of 448.98
square meters, more or less. They acquired the property from the heirs of Brigido
Tonacao as shown by a Deed of Absolute Sale executed on June 23, 1986. They had the
document registered in the Registry of Deeds of Iloilo on July 1, 1986. When they asked
the Provincial Assessor to declare the property under their names for taxation purposes,
they found that Tax Declaration No. 2994 (R-5) in the name of Brigido was already
cancelled and another one, Tax Declaration No. 2408, was issued in the names of
respondents. Petitioners further alleged that they have been in possession of the
property and the house they built thereon because they had paid the purchase price even
before the execution of the deed of sale.

In their answer to the complaint, respondents claimed that they are the absolute
owners of the same property. They acquired it from Catalino Tonacao, the father of
Brigido, in a Deed of Absolute Sale dated June 6, 1986. The sale was registered in the
Registry of Deeds of Leyte on June 10, 1986 and Tax Declaration No. 2408 was issued in
their names. Prior thereto, or on January 11, 1984, they had a verbal contract of sale
with Catalino. They paid him P1,000.00 as downpayment. They agreed that the
balance of P4,000.00 shall be paid upon execution of the deed of sale. Since then, they
have been exercising their right of ownership over the property and the building
constructed thereon peacefully, publicly, adversely and continuously. Apart from being
the first registrants, they are buyers in good faith.

The trial court ruled in favor of the petitioners so the respondents elevated the
case to Court of Appeals which later reversed the decision of the lower court. The Court
of Appeals, in upholding the validity of the sale in favor of respondents, relied on Article
1544 of the Civil Code on double sale. Wherein , as between two purchasers, the one
who registered the sale in his favor has a preferred right over the other who has not
registered his title, even if the latter is in actual possession of the immovable property.
Hence, the defendants-appellants have a superior right over the contested property
inasmuch as they have both actual possession and prior registration of the conveyance.
Issue:

Whether or Not the Court has correct interpretation of Article 1544 of the Civil
Code.

Held

The Court of Appeals is wrong. Article 1544 of the Civil Code contemplates a case
of double sale or multiple sales by a single vendor. More specifically, it covers a
situation where a single vendor sold one and the same immovable property to two or
more buyers. It cannot be invoked where the two different contracts of sale are made by
two different persons, one of them not being the owner of the property sold. In the
instant case, the property was sold by two different vendors to different
purchasers. The first sale was between Catalino and herein respondents, while the
second was between Brigido’s heirs and the petitioners.

The court further ruled that the Deed of Sale contracted by the respondents with
Catalino is null and void because he has no power to convey the property because
Brigido was already the rightfull owner of the subject land.
18) GR 1085515

LUIS BALANTAKBO, et.al

Vs.

COURT OF APPEALS and LAGUNA AGRO-INDUSTRIAL, COCONUT COOPERATIVE,

INC.

Facts:

Private respondent Laguna Agro-Industrial Coconut Cooperative, Inc. (hereafter

simply LAGUNA), a family corporation organized by the heirs of the deceased spouses
Honorio Sumaya and Crispina Orlanda, was the plaintiff in an action to quiet title over a
parcel of unregistered coconut land in Bo. Dita. Liliw, Laguna, filed in the Regional Trial
Court, Br. XXVII, Laguna against herein private respondents and docketed as Civil Case
No. SC-1367.

The complaint in said action alleged basically that the land in question had been
purchased by the Sumaya spouses (LAGUNA's predecessors) for P800.00 from
Consuelo Vda. de Balantakbo (mother of petitioner Luis Balantakbo and Sancho
Balantakbo), the sale being evidenced by a deed executed by Consuelo on December 13,
1955; and that some twenty (20) years later, or on March 8, 1975, the seller's heirs,
intruded into the land and harvested the coconuts found therein.

In their answer the Balantakbos denied knowledge of the sale and alleged that the
land claimed sued for was different from that owned and held by them.

The Regional Trial Court rendered judgment (per Judge Francisco C. Manabat,
Branch 27, Sta. Cruz, Laguna) in favor of the Balantakbos, dismissing LAGUNA's
complaint, upholding the former's theory of the case and ruling that what was
contemplated in the descriptive words "more or less" immediately following the stated
area of 2,000 square meters in the description of the land was construable as referring
only to a "slight difference" in said area, not to a difference as large as 4,870 square
meters, or more than double the 2,000 square meters actually stated and intended to be
sold.

The judgment was appealed to the Court of Appeals which after due proceedings
reversed it by decision promulgated on July 9, 1992, declaring LAGUNA the owner of
the entire land, not only of a 2,000-square meter portion thereof, ruling that the area
embraced within the stated boundaries prevails over the area set forth in the
descriptions which must have been based on mere estimates, and that the buyer was
entitled to receive all that was included within the boundaries thus stated in the deed of
sale.

Issue:

In case of conflict between the area described and the actual boundaries of the
land, which should prevail?

Held:

The court ruled that where land is sold for a lump sum and not so much per unit
of measure or number, the boundaries of the land stated in the contract determine the
effects and scope of the sale, not the area thereof. Hence, the vendors are obligated to
deliver all the land included within the boundaries, regardless of whether the real area
should be greater or smaller than that recited in the deed. This is particularly true where
the area is described as "humigit kumulang," that is, more or less.

In the present case, it is clear that the disputed parcel of unregistered land was
sufficiently identified and described. The Second Partial Stipulation of Facts submitted
by the Parties sufficiently demonstrates that the parties lay claim to one and the same
parcel of land, that descended to Raul Balantakbo from his father Jose Balantakbo,
Sr. later inherited by Consuelo Joaquin Vda. de Balantakbo from the same Raul, her
son and then sold by Consuelo to the Spouses Honorio Sumaya and Crispina Orlanda.
Uniform descriptions of the subject lot were made in the Deed of Sale executed by
Consuelo Joaquin Vda. de Balantakbo in favor of herein private respondent in 1955, in
the Affidavit of Self-Adjudication executed by Consuelo on November 3, 1952, and in the
Extrajudicial Partition of December 10, 1945.
19) GR 132281

ROLENDO T. DELFIN

VS

JOSEFINA L. VALDEZ and JOSE V. LAGON

Facts:

Spouses Carlos Valdez, Sr. and Josefina de Leon-Valdez were the owners of a
parcel of land with an area of 24,725 square meters located in the commercial district of
Isulan, Sultan Kudarat. Carlos Valdez, Sr. died intestate on March 26, 1966, survived by
his widow, Josefina, and their children, among whom is Carlos Valdez, Jr., a practicing
lawyer.

On December 28, 1978, Josefina caused the subdivision of Lot No. 3 into eight
(8) lots, namely, Lots Nos. 3-A to 3-H, all fronting the national road. To enhance the
value of the property, she decided to sell a 4,094-square meter portion thereof, more
particularly Lot No. 3-C and a portion of Lot No. 3-D to her co-respondent herein, Jose
V. Lagon , a successful businessman in Sultan Kudarat who owned a construction firm
and other business enterprises: the Lagon Enterprises and the Rural Bank of
Isulan. He was also one of the clients of Josefina’s son, Carlos Valdez, Jr.

Hence, on May 9, 1979, Josefina, through her attorney-in-fact, Carlos Valdez, Jr.,
and Lagon entered into a contract of sale involving the aforementioned 4,094-square
meter portion of what used to be Lot No. 3. No transfer certificate of title could as yet be
issued to Lagon because at the time of the sale, the intestate estate of the late Carlos
Valdez, Sr. had still to be settled and partitioned. The subjet property was subsequently
sold by Josefina to Rolendo T Delfin.

Upon learning that a portion of the property already sold to him was
subsequently sold by Josefina to Delfin, Lagon filed in the RTC of Sultan Kudarat a
complaint for specific performance with damages against Josefina and her attorney-in-
fact, Atty. Carlos Valdez, Jr. On the other hand upon knowing of Civil Case instituted by
Lagon, Delfin filed in the same court an action to quiet title against Josefina and Lagon,
docketed as Civil Case No. 779, now the subject of the present petition.

The trial court denied his application he has an actual knowledge of prior sale of
lot to Delfin, making him buyer in bad faith.

Issue:

Since there is an alleged double sale in the instant case, who has the better right?

Held:

Rolando Delfin has a better right over the property because the prior contract of
sale between Valdez and Lagon is not valid due to the latter’s refusal to perform all the
conditions indicated in the contract. It is clear that on account of Lagon’s failure to
comply with the terms and conditions of the so-called first sale, the Court deemed that
the sale is “null and void” without need of any demand from Josefina and her
son Carlos Valdez, Jr. for Lagon to comply with the agreed terms and conditions
attendant to that so-called first sale.
20) G.R. No. 170405 February 2, 2010

RAYMUNDO S. DE LEON
vs.
BENITA T. ONG

Facts:

On March 10, 1993, petitioner Raymundo S. de Leon sold three parcels of

land with improvements situated in Antipolo, Rizal to respondent Benita T. Ong. As
these properties were mortgaged to Real Savings and Loan Association, Incorporated
(RSLAI), petitioner and respondent executed a notarized deed of absolute sale with
assumption of mortgage. Benita Ong assumed the responsibility to pay the amount of
the loan and the balance will be paid to de Leon.

Pursuant to this deed, respondent gave petitioner P415,500 as partial payment.

Petitioner, on the other hand, handed the keys to the properties and wrote a letter
informing RSLAI of the sale and authorizing it to accept payment from respondent and
release the certificates of title. Respondent undertook repairs and made improvements
on the properties. He likewise informed RSLAI of her agreement with petitioner for her
to assume petitioner’s outstanding loan. RSLAI required her to undergo credit
investigation.

Subsequently, respondent learned that petitioner again sold the same properties
to one Leona Viloria after March 10, 1993 and changed the locks, rendering the keys he
gave her useless. Respondent thus proceeded to RSLAI to inquire about the credit
investigation. However, she was informed that petitioner had already paid the amount
due and had taken back the certificates of title.

Issue:

Whether or Not the parties entered into a contract of sale or a contract to sell.

Held:

The contract between the respondent and petitioner is a contract of sale.

In a contract of sale, the seller conveys ownership of the property to the buyer
upon the perfection of the contract. Should the buyer default in the payment of the
purchase price, the seller may either sue for the collection thereof or have the contract
judicially resolved and set aside. The non-payment of the price is therefore a negative
resolutory condition.

On the other hand, a contract to sell is subject to a positive suspensive condition.

The buyer does not acquire ownership of the property until he fully pays the purchase
price. For this reason, if the buyer defaults in the payment thereof, the seller can only
sue for damages.

In the instant case the deed executed by the parties stated that petitioner sold the
properties to respondent "in a manner absolute and irrevocable" for a sum of P1.1
million. With regard to the manner of payment, it required respondent to pay P415,500
in cash to petitioner upon the execution of the deed, with the balance payable directly to
RSLAI (on behalf of petitioner) within a reasonable time. Nothing in said instrument
implied that petitioner reserved ownership of the properties until the full payment of the
purchase price. On the contrary, the terms and conditions of the deed only affected the
manner of payment, not the immediate transfer of ownership (upon the execution of the
notarized contract) from petitioner as seller to respondent as buyer. Otherwise stated,
the said terms and conditions pertained to the performance of the contract, not the
perfection thereof nor the transfer of ownership.
21) G.R. No. L-29972 January 26, 1976

ROSARIO CARBONELL
vs.
HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA INFANTE and RAMON
INFANTE

Facts:

Jose Poncio was the owner of the parcel of land herein involve with
improvements situated in San Juan, Rizal, which is subject to mortgage in favor of the
Republic Savings Bank for the sum of P1,500.00. Petitioner Rosario Carbonell, a cousin
and adjacent neighbor of respondent Poncio lived in the adjoining lot at 177 V. Agan
Street. When Poncio is no longer able to keep up with the installments due on the
mortgage ,he approached petitioner and offered to sell to the latter the said lot,
excluding the house wherein respondent lived. Petitioner accepted the offer and
proposed the price of P9.50 per square meter. Respondent Poncio, after having secured
the consent of his wife and parents, accepted the price proposed by petitioner, on the
condition that from the purchase price would come the money to be paid to the bank.

Petitioner and respondent Jose Poncio then went to the Republic Savings Bank
and secured the consent of the President thereof for her to pay the arrears on the
mortgage and to continue the payment of the installments as they fall due. The amount
in arrears reached a total sum of P247.26. But because respondent Poncio had
previously told her that the money, needed was only P200.00, only the latter amount
was brought by petitioner constraining respondent Jose Poncio to withdraw the sum of
P47.00 from his bank deposit with Republic Savings Bank. But the next day, petitioner
refunded to Poncio the sum of P47.00.

On January 27, 1955, petitioner and respondent Poncio, in the presence of a

witness, made and executed a document in the Batanes dialect, which indicates that
beginning January 27, 1955, Jose Poncio can start living on the lot sold by him to
Rosario Carbonell, until after one year during which time he will not pay anything. Then
if after said one can he could not find a place where to move his house, he could still
continue occupying the site but he should pay a rent

Thereafter, petitioner asked Atty. Salvador Reyes, also from the Batanes Islands,
to prepare the formal deed of sale, which she brought to respondent Poncio together
with the amount of some P400.00, the balance she still had to pay in addition to her
assuming the mortgaged obligation to Republic Savings Bank. However, Poncio
informed Carbonell that he could not proceed any more with the sale, because he had
already given the lot to respondent Emma Infante; and that he could not withdraw from
his deal with respondent Mrs. Infante, even if he were to go to jail. Petitioner then
sought to contact respondent Mrs. Infante but the latter refused to see her. Then her
lawyer advised her to file an adverse claim over the lot.

issue:

Who has a better right over the subject property?

Held:

In the instant case, Carbonnell has superior right over Infante because
22)G.R. No. 66140 January 21, 1993-10

INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES, INC.

vs.
LPJ ENTERPRISES, INC.

Facts:

LPJ Enterprises, Inc. had a contract to supply 300,000 bags of cement per year to Atlas
Consolidated Mining and Development Corporation (Atlas for short), a member of the
Soriano Group of Companies. The cement was delivered packed in kraft paper bags,
then as now, in common use.

Sometime in October, 1970, Cesar Campos, a Vice-President of petitioner Industrial

Textile Manufacturing Company of the Philippines, asked Lauro Panganiban, Jr.,
President of Respondent Corporation, if he would like to cooperate in an experiment to
develop plastic cement bags. Panganiban acquiesced, principally because Itemcop is a
sister corporation of Atlas, respondent's major client. A few weeks later, Panganiban
accompanied Paulino Ugarte, another Vice-President of Itemcop, to the factory of
respondent's supplier, Luzon Cement Corporation in Norzagaray, Bulacan, to test fifty
(50) pieces of plastic cement bags. The experiment, however, was unsuccessful. Cement
dust oozed out under pressure through the small holes of the woven plastic bags and the
loading platform was filled with dust. The second batch of plastic bags subjected to trial
was likewise a failure. Although the weaving of the plastic bags was already tightened,
cement dust still spilled through the gaps. Finally, with three hundred (300) "improved
bags", the seepage was substantially reduced. Ugarte then asked Panganiban to send
180 bags of cement to Atlas via commercial shipping. Campos, Ugarte, and two other
officials of petitioner company followed the 180 bags to the plant of Atlas in Sangi,
Toledo, Cebu where they professed satisfaction at the performance of their own plastic
bags. On December 29, 1970, Campos sent Panganiban a letter proclaiming dramatic
results in the experiment. Consequently, Panganiban agreed to use the plastic cement
bags. Four purchase orders (P.O.s) were thereafter issued.

Petitioner delivered the orders consecutively on January 12, February 17, March 19, and
April 17, 1971.Respondent, on the other hand, remitted the amounts of P1,640.00,
P2,480.00. and P13,230.00 on March 31, April 31, and May 3, 1971 respectively, thereby
leaving a balance of P84,123.80. No other payments were made, thus prompting A.
Soriano y Cia of petitioner's Legal Department to send demand letters to respondent
corporation. Reiterations thereof were later sent by petitioner's counsel. A collection suit
was filed on April 11, 1973 when the demands remained unheeded. At the trial on the
merits, respondent admitted its liability for the 53,800 polypropylene lime bags covered
by the first purchase order. With respect to the second, third, and fourth purchase
orders, respondent, however, denied full responsibility therefor. Respondent said that it
will pay, as it did pay for, only the 15,000 plastic bags it actually used in packing cement.
As for the remaining 47,000 bags, the workers of Luzon Cement strongly objected to the
use thereof due to the serious health hazards posed by the continued seepage of cement
dust. Notwithstanding the measures adopted by respondent such as the use of masks,
glove and conveyor system, the workers still refused to utilize the plastic bags.
Respondent was, therefore, constrained to revert to the use of kraft paper bags in
packing cement. Thereafter, petitioner was asked to take back the unused plastic bags.
Considering however, that the bags were in the cement factory of respondent's supplier,
petitioner maintained that it was respondent's obligation to return the bags to them.
Apparently, this was not done and so petitioner demanded payment for the said bags.

The trial court ruled in favor of the petitioner.

Issue:

Whether or not respondent maybe held liable for the 47,000 plastic bags which
were not actually used for packing cement as originally intended.

Held:

Yes, the court held that the transaction between respondent and petitioner
constituted an absolute sale and respondent is liable for the plastic bags delivered to it
by petitioner.

It is beyond dispute that prior to respondent's transaction with petitioner, the

bags were already tested and the results thereof, albeit initially unsuccessful, were
nevertheless favorably considered after due alterations were made. Verily, it is on the
basis of such experimental findings that respondent agreed to use the plastic cement
bags and thereafter issued the purchase orders heretofore mentioned. Significantly, the
quantity of bags ordered by respondent also negates its position that the bags were still
under experimentation. Indeed, if it were so, the bags ordered should have been
considerably lesser in number and would normally increase as the suitability of the
plastic bags became more definite. Likewise, it is worthy to note that as of the date of
petitioner's third delivery on March 19, 1971, respondent has received a total of 52,000
bags. By then, it was very probable that the problems alluded to by respondent could no
longer be resolved, thus, only 15,000 bags were actually used and 37,000 bags were
already considered unfit for packing cement. Under such predicament, it was but logical
for respondent to cancel then the fourth purchase order for another 10,000 bags.
Surprisingly, respondent still accepted the same upon delivery on April 17, 1971 and
remitted its payments until May 3, 1971. When petitioner sent letters demanding the full
payment of the bags, respondent simply declared that it did not receive any because it
transferred its offices to another place. In the meantime, the bags remained in the
custody of Luzon Cement, respondent's supplier and virtually a stranger as far as
petitioner is concerned. It is for this reason that petitioner may not be expected to just
pull out its bags from Luzon Cement. We should also consider the fact that Panganiban,
respondent corporation's president, also collected due commissions for the four
purchase orders issued in favor of petitioner.

Finally, the conditions which allegedly govern the transaction according to

respondent may not be considered. The trial court correctly observed that such
conditions should have been distinctly specified in the purchase orders and respondent's
failure to do so is fatal to its cause. We find that Article 1502 of the Civil Code, invoked
by both parties herein, has no application at all to this case. The provision in the
Uniform Sales Act and the Uniform Commercial Code from which Article 1502 was
taken, clearly requires an express written agreement to make a sales contract either a
"sale or return" or a "sale on approval". Parol or extrinsic testimony could not be
admitted for the purpose of showing that an invoice or bill of sale that was complete in
every aspect and purporting to embody a sale without condition or restriction
constituted a contract of sale or return. If the purchaser desired to incorporate a
stipulation securing to him the right of return, he should have done so at the time the
contract was made. On the other hand, the buyer cannot accept part and reject the rest
of the goods since this falls outside the normal intent of the parties in the "on approval"
situation.
23)G.R. No. L-21263 April 30, 1965

LAWYERS COOPERATIVE PUBLISHING COMPANY, plaintiff-appellee,

vs.
PERFECTO A. TABORA, defendant-appellant.

Facts:

Perfecto A. Tabora bought from the Lawyers Cooperative Publishing Company

one complete set of American Jurisprudence consisting of 48 volumes with 1954 pocket
parts, plus one set of American Jurisprudence, General Index, consisting of 4 volumes,
for a total price of P1,675.50 which, in addition to the cost of freight of P6.90, makes a
total of P1,682.40. Tabora made a partial payment of P300.00, leaving a balance of
P1,382.40. the ownership was also reserved to the company until the whole price is
tendered by him. The books were duly delivered and receipted for by Tabora on May 15,
1955 in his law office Ignacio Building, Naga City. However after the delivery of the said
books it was burned because a big fire broke out in their locality which destroyed and
burned all buildings. Tabora immediately reported the incident to the company
regarding the incident. On May 23, the company replied and as a token of goodwill it
sent to Tabora free of charge volumes 75, 76, 77 and 78 of the Philippine Reports. As
Tabora failed to pay the monthly installments agreed upon on the balance of the
purchase price notwithstanding the long time that had elapsed, the company demanded
payment of the installments due, and having failed, to pay the same, it commenced the
present action before the Court of First Instance of Manila for the recovery of the
balance of the obligation. Plaintiff also prayed that defendant be ordered to pay 25% of
the amount due as liquidated damages, and the cost of action.

Tabora alleged that the books bought from the plaintiff were burned during the
fire that broke out in Naga City on May 15, 1955, and since the loss was due to force
majeure he cannot be held responsible for the loss. He prayed that the complaint be
dismissed and that he be awarded moral damages in the amount of P15,000.00. He also
alleged that since ownership was still retained by the company they should bear the loss.

Issue:

Who should bear the loss if there is stipulation that the seller retains ownership until the
payment of the whole price of the goods?
Held:

Tabora will bear the loss. While as a rule the loss of the object of the contract of
sale is borne by the owner or in case of force majeure the one under obligation to deliver
the object is exempt from liability, the application of that rule does not here obtain
because the law on the contract entered into on the matter argues against it. It is true
that in the contract entered into between the parties the seller agreed that the ownership
of the books shall remain with it until the purchase price shall have been fully paid, but
such stipulation cannot make the seller liable in case of loss not only because such was
agreed merely to secure the performance by the buyer of his obligation but in the very
contract it was expressly agreed that the "loss or damage to the books after delivery to
the buyer shall be borne by the buyer." Any such stipulation is sanctioned by Article
1504 of our Civil Code, which in part provides:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer,
in pursuance of the contract and the ownership in the goods has been retained by the
seller merely to secure performance by the buyer of his obligations under the contract,
the goods are at the buyer's risk from the time of such delivery.

Neither can appellant find comfort in the claim that since the books were
destroyed by fire without any fault on his part he should be relieved from the resultant
obligation under the rule that an obligor should be held exempt from liability when the
loss occurs thru a fortuitous event. This is because this rule only holds true when the
obligation consists in the delivery of a determinate thing and there is no stipulation
holding him liable even in case of fortuitous event. Here these qualifications are not
present. The obligation does not refer to a determinate thing, but is pecuniary in nature,
and the obligor bound himself to assume the loss after the delivery of the goods to him.
In other words, the obligor agreed to assume any risk concerning the goods from the
time of their delivery, which is an exception to the rule provided for in Article 1262 of
our Civil Code.
24)G.R. No. L-64159 September 10, 1985-12

CIRCE S. DURAN and ANTERO S. GASPAR, petitioners,

vs.
INTERMEDIATE APPELLATE COURT, ERLINDA B. MARCELO TIANGCO and
RESTITUTO TIANGCO,respondents.

Petitioner Circe S. Duran owned two (2) parcels of land (Lots 5 and 6, Block A,
Psd 32780) covered by Transfer Certificate of Title No. 1647 of the Register of Deeds of
Caloocan City which she had purchased from the Moja Estate. She left the Philippines in
June 1954 and returned in May 1966.

On May 13, 1963, a Deed of Sale of the two lots mentioned above was made in
favor of Circe's mother, Fe S. Duran who, on December 3, 1965, mortgaged the same
property to private respondent Erlinda B. Marcelo-Tiangco. When petitioner Circe S.
Duran came to know about the mortgage made by her mother, she wrote the Register of
Deeds of Caloocan City informing the latter that she had not given her mother any
authority to sell or mortgage any of her properties in the Philippines. Failing to get an
answer from the registrar, she returned to the Philippines. Meanwhile, when her
mother, Fe S. Duran, failed to redeem the mortgage properties, foreclosure proceedings
were initiated by private respondent Erlinda B. Marcelo Tiangco and, ultimately, the
sale by the sheriff and the issuance of Certificate of Sale in favor of the latter.

Petitioner Circe S. Duran claims that the Deed of Sale in favor of her mother Fe S.
Duran is a forgery, saying that at the time of its execution in 1963 she was in the United
States. On the other hand, the adverse party alleges that the signatures of Circe S. Duran
in the said Deed are genuine and, consequently, the mortgage made by Fe S. Duran in
favor of private respondent is valid.

Issue/s:

a)Whether or not the signature of the petitioner was forged.

b)Whether private respondent Erlinda B. Marcelo-Tiangco was a buyer in good

faith and for value.
 As to the first issue raised the court held that even if the signatures were a
forgery, and the sale would be regarded as void, still the Deed of Mortgage is VALID,
with respect to the mortgagees, the defendants-appellants. While it is true that under
Art. 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of
the property mortgaged, and while as between the daughter and the mother, it was the
daughter who still owned the lots, STILL insofar as innocent third persons are
concerned the owner was already the mother (Fe S. Duran) inasmuch as she had already
become the registered owner (Transfer Certificates of Title Nos. 2418 and 2419). The
mortgagee had the right to rely upon what appeared in the certificate of title, and did not
have to inquire further. If the rule were otherwise, the efficacy and conclusiveness of
Torrens Certificate of Titles would be futile and nugatory. Thus the rule is simple: the
fraudulent and forged document of sale may become the root of a valid title if the
certificate has already been transferred from the name of the true owner to the name
indicated by the forger (See De la Cruz v. Fable, 35 Phil. 144; Blondeau et al. v. Nano et
al., 61 Phil. 625; Fule et al. v. Legare et al., 7 SCRA 351; see also Sec. 55 of Act No. 496,
the Land Registration Act). The fact that at the time of the foreclosure sale proceedings
(1970-72) the mortgagees may have already known of the plaintiffs' claim is immaterial.
What is important is that at the time the mortgage was executed, the mortgagees in good
faith actually believed Fe S. Duran to be the owner, as evidenced by the registration of
the property in the name of said Fe S. Duran.

As regards to the second issue, good faith consists in the possessor's belief that
the person from whom he received the thing was the owner of the same and could
convey his title (Arriola vs. Gomez dela Serna, 14 Phil. 627). Good faith, while it is
always to be presumed in the absence of proof to the contrary, requires a well-founded
belief that the person from whom title was received was himself the owner of the land,
with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith where
there is an honest intention to abstain from taking any unconscientious advantage from
another (Fule vs. Legare, 7 SCRA 351). Otherwise stated, good faith is the opposite of
fraud and it refers to the state of mind which is manifested by the acts of the individual
concerned. In the case at bar, private respondents, in good faith relied on the certificate
of title in the name of Fe S. Duran and as aptly stated by respondent appellate court
even on the supposition that the sale was void, the general rule that the direct result of a
previous illegal contract cannot be valid (on the theory that the spring cannot rise higher
than its source) cannot apply here for We are confronted with the functionings of the
Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or
forged document of sale may become the ROOT of a valid title if the certificate of title
has already been transferred from the name of the true owner to the name of the forger
or the name indicated by the forger.

Thus, where innocent third persons relying on the correctness of the certificate of
title issued, acquire rights over the property, the court cannot disregard such rights and
order the total cancellation of the certificate for that would impair public confidence in
the certificate of title; otherwise everyone dealing with property registered under the
Torrens system would have to inquire in every instance as to whether the title had been
regularly or irregularly issued by the court. Indeed, this is contrary to the evident
purpose of the law. Every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him
to go behind the certificate to determine the condition of the property. Stated
differently, an innocent purchaser for value relying on a Torrens title issued is protected.
A mortgagee has the right to rely on what appears in the certificate of title and, in the
absence of anything to excite suspicion, he is under no obligation to look beyond the
certificate and investigate the title of the mortgagor appearing on the face of said
certificate.
25)G.R. No. 80298 April 26, 1990

EDCA PUBLISHING & DISTRIBUTING CORP., petitioner,

vs.
THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and
style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents.

On October 5, 1981, a person identifying himself as Professor Jose Cruz placed an

order by telephone with the petitioner company for 406 books, payable on
delivery. EDCA prepared the corresponding invoice and delivered the books as ordered,
for which Cruz issued a personal check covering the purchase price of P8,995.65. On
October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos who,
after verifying the seller's ownership from the invoice he showed her, paid him
P1,700.00.

Meanwhile, EDCA having become suspicious over a second order placed by Cruz
even before clearing of his first check, made inquiries with the De la Salle College where
he had claimed to be a dean and was informed that there was no such person in its
employ. Further verification revealed that Cruz had no more account or deposit with the
Philippine Amanah Bank, against which he had drawn the payment check. EDCA then
went to the police, which set a trap and arrested Cruz on October 7, 1981. Investigation
disclosed his real name as Tomas de la Peña and his sale of 120 of the books he had
ordered from EDCA to the private respondent. On the night of the same date, EDCA
sought the assistance of the police in Precinct 5 at the UN Avenue, which forced their
way into the store of the private respondents and threatened Leonor Santos with
prosecution for buying stolen property. They seized the 120 books without warrant,
loading them in a van belonging to EDCA, and thereafter turned them over to the
petitioner.

The private respondents sued for recovery of the books after demand for their
return was rejected by EDCA. A writ of preliminary attachment was issued and the
petitioner, after initial refusal, finally surrendered the books to the private
respondents. As previously stated, the petitioner was successively rebuffed in the three
courts below and now hopes to secure relief from us.

Issue/s:

(1)The petitioner contends that the private respondents have not established
their ownership of the disputed books because they have not even produced a receipt to
prove they had bought the stock.

(2)Whether the petitioner has been unlawfully deprived of the books because the
check issued by the impostor in payment therefor was dishonored. Hence, the petitioner
has the right to seize the books from respondent?

Held:

(1)The court held that the petitioner’s contention is unacceptable because the first
sentence of Article 559 provides that "the possession of movable property acquired in
good faith is equivalent to a title," thus dispensing with further proof.

In the instant case, Leonor Santos first ascertained the ownership of the books
from the EDCA invoice showing that they had been sold to Cruz, who said he was selling
them for a discount because he was in financial need. Private respondents are in the
business of buying and selling books and often deal with hard-up sellers who urgently
have to part with their books at reduced prices. To Leonor Santos, Cruz must have been
only one of the many such sellers she was accustomed to dealing with. It is hardly bad
faith for anyone in the business of buying and selling books to buy them at a discount
and resell them for a profit.

(2) No, the books were not unlawfully deprived from the petitioner because the
contract of sale is consensual and is perfected once agreement is reached between the
parties on the subject matter and the consideration. Actual delivery of the books having
been made, Cruz acquired ownership over the books which he could then validly
transfer to the private respondents. The fact that he had not yet paid for them to EDCA
was a matter between him and EDCA and did not impair the title acquired by the private
respondents to the books.

One may well imagine the adverse consequences if the phrase "unlawfully deprived"
were to be interpreted in the manner suggested by the petitioner. A person relying on
the seller's title who buys a movable property from him would have to surrender it to
another person claiming to be the original owner who had not yet been paid the
purchase price therefor. The buyer in the second sale would be left holding the bag, so to
speak, and would be compelled to return the thing bought by him in good faith without
even the right to reimbursement of the amount he had paid for it.

It bears repeating that in the case before us, Leonor Santos took care to ascertain first
that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice
Cruz showed her assured her that the books had been paid for on delivery. By contrast,
EDCA was less than cautious — in fact, too trusting in dealing with the impostor.
Although it had never transacted with him before, it readily delivered the books he had
ordered (by telephone) and as readily accepted his personal check in payment. It did not
verify his identity although it was easy enough to do this. It did not wait to clear the
check of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by
the printed terms thereon, that the books had been paid for on delivery, thereby vesting
ownership in the buyer.

Surely, the private respondent did not have to go beyond that invoice to satisfy herself
that the books being offered for sale by Cruz belonged to him; yet she did. Although the
title of Cruz was presumed under Article 559 by his mere possession of the books, these
being movable property, Leonor Santos nevertheless demanded more proof before
deciding to buy them.

It would certainly be unfair now to make the private respondents bear the prejudice
sustained by EDCA as a result of its own negligence. We cannot see the justice in
transferring EDCA's loss to the Santoses who had acted in good faith, and with proper
care, when they bought the books from Cruz.

26)

27) ACABAL AND NICOLAS vs VILLANER

FACTS:

Alejandro Acabal and Felicidad Balasbas executed a Deed of Absolute Sale over a
parcel of land in favor of their son, respondent Villaner Acabal. Villaner was then
married to Justiniana Lipajan. When he become a widower, he executed a deed
conveying the same parcel of land in favor of petitioner Leandro Acabal. However,
Villaner later claims that the document he signed was a Lease Contract, wherein he
leased for the property for three years to Leonardo. Villaner filed a complaint with the
RTC against Leonardo and Ramon Nicolas to whom Leonardo in turn conveyed the
property for annulment of the Deed of Sale.
 The RTC ruled infavor of Acabal and dismissed the complaint. The CA reversed
the decision of RTC and held that the Deed of Sale executed by the respondent Villaner
in favor of the petitioner Leonardo is a Deed of Absolute Sale.

ISSUE:

Whether or Not the Deed of Sale executed by respondent Villaner in favor of

petitioner Leonardo is Absolute.

HELD:

It bears noting, that Villaner failed to present evidence on the fair market value of
the property as of April 19, 1990, the date of execution of the disputed deed. Absent any
evidence on the fair market value of land as of the time of its sale, it cannot be concluded
that the price at which it was sold was inadequate. Inadequacy of price must be proven
because mere speculation or conjecture has no place in our judicial system.

28) GR 161223

CADUNGDONG vs. YAP

Facts:

On August 17, 1979, Virgilio Cadungdong sold six lots with right to repurchase
within 10 years to his cousin Franklin Ong. The lots were designated as follows;

 Lot 000821- 1170 sqm

 Lot 4978-1444 sqm
 Lot 29586-4257 sqm
 Lot 1140-980 sqm
 Lot-1020 sqm
 The petitioner failed to redeem the property. Nevertheless , upon the prodding of
Franklin, Virgilio who was merely a letter-carrier, executed a deed of sale in favor of
Jocelyn in which it appears that he sold parcel 1,2, and 3, for the price of P 5,000.00.

On December 23, 1996 Cresenciano Ong executed Deed of Absolute Sale of parcel
no. 2 in favor of APC Group. Inc. When Franklin learned of the said sales, he objected,
thus he delivered to Franklin a check drawn an issued by Cresenciano Ong in the
amount of P 25,000. Virgilio also delivered to Franklin a check drawn and issued by the
same person and the same amount. Franklin acknowledged to have receive the said
amount which represents the full payment for the refund of the lot sold in Ginatilan.

When Jocelyn learned about the sale of lot to APC she filed a criminal complaint
for estafa against him. On the other hand the petitioner filed an action for nullity of the
Deed of Absolute Sale in favor of the respondent. He alleged that Franklin had requested
him to make the deed to lessen the tax liability of his sister Jocelyn in Canada. He
further claimed that there was no consideration in the contract.

Issue:

Whether the contract of sale between the petitioner and respondent is null and
void.

Held:

In the case at bar, the contract of sale is null and void because the petitioner was
no longer the rightful owner of the subject lot at the time of the execution of the
instrument in favor of the respondent. The failure of the petitioner to repurchase the lot
within the stipulated period automatically transferred the right of ownership to
Franklin. The essence of a pacto de retro sale is that the title and ownership of the
property sold are immediately vested in the vendee a retro, subject to the resolutory
condition of repurchase by a vendor a retro within a stipulated period.
30) Gallar vs. Husain

Facts:

Teodoro Husain sold his land to Serapio Chichirita reserving for himself the
right to repurchase within six years.

Teodoro was not able to redeem the said property although shortly after the
execution of the Deed of Sale, Chichirita transferred his right to Graciana Husain, sister
of the vendor. It was indicated in their agreement that Graciana redeemed the lot. She
also subsequently transferred the property to Elias Gallar in exchange for one cow.

In 1960 asked the Cadastral Court to grant him transfer of certificate of title but it
was dismissed due to lack of jurisdiction. He therefore, filed a suit to compel the heirs of
Teodoro Huasin to execute proper Deed of Sale so he can transfer the title to his name.

The heirs denied the sale and contended that the agreement was just a mortgage
to secure a loan of P 30. They claimed that the mortgage had been discharged when
Graciana paid Teodoro’s debt to Chichirita.

Issue:

Who has better right over the property?

Held:

The court held that , while it is true that the first note written on the reverse side
of the deed of sale speaks of redemption of the land, there is no evidence to show that
the vendee, Graciana Husain was acting in behalf of his brother. Unlike a debt which a
third party may satisfy even against the will of the debtor the right to repurchase may be
exercise only by the vendor in whom the right is recognized by contract or by any person
to whom the right may have been transferred. Graciana therefore must be deemed to
have acquire the land in her own right and as such, he may dispose of the land.

Since the Teodoro failed to redeem the lot, its ownership is consolidated to the
appellee.
31) GR NO. L-19196

VILLARICA vs. CONSUJI

Facts:

The petitioners, spouses Villarica sold to spouses Consuji a lot situated in the
poblacion of the City of Davao for the price of P35,000.00. The public instrument of
absolute sale and the certificate of title were delivered to the vendees. On the same day
the Consuji’s executed another public instrument whereby they granted the spouses
Villarica an option to buy the property within the period of one year for the price of P
37,750.00. but they secured another title in their names and sold the lot to Francisco for
the price of P 47,000.00 by means of a public instrument. Then now, the recent buyer
filed an application for an issuance of a new title.

On April 14, 1953, the spouses Villarica bought an action in the court against the
Consuji’s and Jovito Francisco for reformation of absolute sale into equitable mortgage
as a security for usurious loan.

Issue:

Whether or Not the Contract executed by the Villaricas in favor of the Consujis is
a contarct of Equitable Mortgage.

Held:

The contract is a contract of sale. The contention and allegation of the petitioners
is not true because the consideration or the price of the lot was not inadequate, the
vendors did not remain in possession of the land sold as lessees or otherwise, and lastly,
they granted them an option to buy only which is different and distinct from right to
repurchase which must be reserved by the vendor.
32) GR NO. 156522

SAN PEDRO vs. SISON

Facts:

The petitioner, Erlinda San Pedro secured a loan in the amount of P 105,000.00
with interest of P 45,000.00 or total of P 150,000.00. As security for the loan, she
agreed to mortgage a 17,235 square meter of parcel of agricultural land. The transaction
took place in the office of Atty. Venustiano Roxas.

The petitioner alleged that Atty. Roxas and Lee coerced her to sign the deed and
the instrument was executed merely as written evidence of the loan and mortgage. They
also assured her that it is just for formality and the respondents will not enforce the
contract against her.

The respondents presented an entirely different version of evenst and claimed

that the contract was a Deed of Sale.

Issue:

Whether the contract in question is an equitable mortgage or a deed of absolute

sale.

Held:

It is well-settled that the presence of even one of the circumstances provided

under Art. 1602 is sufficient to declare a contract as an equitable mortgage, ion
consonance with the rule that the law favors the least transmission of property rights.
For the presumption of an equitable mortgage to arise under Art. 1602, two requisites
must concur: 1) that the parties entered into a contract denominated as a sale; and 2)
that their intention was to secure an existing debt by way of mortgage.

In the case at bar, there is no cogent reason to disturb the ruling of Court of
Appeals in dismissing the case due to lack of merit. Upon the plaintiff in a civil case, the
burden of proof never parts. Its upon Erlinda San Pedro as a petitioner to establish her
case by a preponderance of evidence. She has the burden of presenting evidence
required to obtain a favorable judgment, and she having the burden of proof, will be
defeated if no evidence were given on either side.
33) GR NO L- 46307

SERRANO vs. FERNANDEZ

Facts:

The petitioner filed a complaint against respondents Leocadio Macaraya and

Maximo Fernandez for declaration of nullity of contract, cancellation of titles,
conveyance and damages. She alleged that the contract of sale between her and
Macaraya was fictitious and simulated. She claimed that the contents of the contract did
not reflect their true agreement, which was a mere transaction of loan of P12,ooo. On
the other hand, respondents denied the allegations of the petitioner and insisted that
there was no imputation of fraud and insisted upon the regularity of the assailed
transactions. Fernandez on the other hand claimed that he is a buyer in good faith.

Issue:

Whether or Not the contract should be treated as an equitable mortgage.

Held:

In the case at bar, the consideration is inadequate for 384 square meter lot which
is a commercial land. The petitioner continued receiving rentals from Angelo Leonar
Enterprises Inc., the lessee of the subject property for atleast six months after the
execution of the contract of sale.the collection of rentals ceased only when respondent
Fernandez sued the lessee for ejectment and the rentals were subsequently ordered to be
deposited in the Municipal Court Mati while the case is pending. This act of Macaraya is
contrary to the principle of ownership .

Thus, the contract is considered as an equitable mortgage.

34) MONTEVIRGEN vs SENIR

Facts:

The petitioners filed an action against respondent-spouses Serafin Abutin and

Carmen Senir for the annulment of a deed of sale with pacto de retro, over a parcel of
land which was transferred to respondents upon the registration of the deed of pacto de
retro sale. On July 1, 1971, the trial court, by virtue of the agreement reached by the
parties, rendered a decision declaring the transaction an equitable mortgage and fixing
the period of ten months within which the petitioners must pay their obligation with
legal interest.

The petitioners failed to pay their obligation so the respondent moved for the
execution of the court decision but the petitioners opposed the motion for execution
alleging that there must be foreclosure of mortgage upon failure to redeem and not
outright execution sale. Said opposition was denied by the trial court and an Order of
Execution was issued on May 10, 1972. Upon implementation of said order the Clerk of
Court issued two writs of execution, directing the Provincial Sheriff of Cavite to levy on
the properties of petitioners to satisfy their loan to the respondents. The second is to sell
the property in public auction.

The petitioners move to quash the writ of execution and it was granted. The
respondents appealed the decision and the respondents filed another motion for
execution sale. This was opposed by petitioners with a prayer for cancellation of
Certificate of Title issued in the name of the respondents.

Issue:

Whether or Not the execution of sale must be annulled.

Held:

The court do not agree with the interpretation of the Court of Appeals that upon
failure of the petitioners to pay their obligation within the period as fixed in the
judgment, petitioners also lost the right to redeem the property and as such, the
absolute ownership over the subject premises has become consolidated in the
respondents. The said ruling of the CA contradicts the agreement between the parties
and the declaration in the decision that the contract between the parties was an
equitable mortgage, not pacto de retro sale. It would produce the same effect as a
pactum commissurium, a forfeiture clause that has traditionally been held as contrary to
good morals and public policy, therefore, void.
 The declaration therefore, in the decision of July 1, 1971 to the effect that
absolute ownership over the subject premises has become consolidated in the
respondents upon failure of the petitioners to pay their obligation within the specified
period, is a nullity, for consolidation of ownership in an improper and inappropriate
remedy to enforce a transaction declared to be one of mortgage. It is the duty of
respondents, as mortgagees, to forclose the mortgage and if he wishes to secure a perfect
title to the mortgaged property if he buys it in the foreclosure sale.
35)
44)JERRY T. MOLES vs. IAC and MARIANO M. DIOLOSA

G.R.No. 73913 January 31, 1989

FACTS:

In 1977, petitioner needed a linotype printing machine for his printing business,
The LM Press at Bacolod City, and applied for an industrial loan with the Development
Bank of the Philippines for the purchase thereof. An agent of Smith, Bell and Co. who is
a friend of petitioner introduced the latter to private respondent, owner of the Diolosa
Publishing House in Iloilo City, who had two available machines. Thereafter, petitioner
went to Iloilo City to inspect the two machines offered for sale and was informed that
the same were secondhand but functional.

Sometime between April and May, 1977, the machine was delivered to petitioner's
publishing house at Tangub, Bacolod City where it was installed by an employee of
respondent Diolosa. Another employee of the Diolosa Publishing House stayed at
petitioners house for almost a month to train the latter's cousin in operating the
machine. 6

Under date of August 29, 1977, private respondent issued a certification wherein he
warranted that the machine sold was in A-1 condition, together with other express
warranties.

On November 29 1977, the petitioner sent a letter to private respondent informing him
that the machine was not functioning properly as it needed a new distributor bar.
Private respondent made no reply to said letter so petitioner engaged the services of
other technicians. Later after several telephone calls regarding the defects in the
machine, private respondent sent two technicians to make the necessary repairs but
they failed to put the machine in running condition. After receiving a warning that the
petitioner would be forced to seek legal remedies to protect his interest, the respondent
decided to purchase a new distributor bar but he wanted to share the cost with the
petitioner.

The Regional Trial Court decided in favor of the petitioner then it was reversed by the
appellate court, hence this petition.
ISSUE:

Whether or not there is an implied warranty in the quality and fitness of

secondhand items?

HELD

It is generally held that in the sale of a designated and specific article sold as
secondhand, there is no implied warranty as to its quality or fitness for the purpose
intended, at least where it is subject to inspection at the time of the sale. On the other
hand, there is also authority to the effect that in a sale of a secondhand article there may
be, under some circumstances, an implied warranty of fitness for the ordinary purpose
of the article sold or for the particular purpose of the buyer.

In the instant case, it must be observed that the petitioner made known to the
respondent, the purpose of the machine. The court upheld the ruling in the case of
Drumar Mining Co. vs. Morris Ravine Mining Co.

“There is nothing in the Uniform Sales Act declaring there is no implied warranty in the
sale of secondhand goods. Section 1735 of the Civil Code declares there is no implied
warranty or condition as to the quality or fitness for any particular purpose, of goods
supplied under a contract to sell or a sale, except (this general statement is followed by
an enumeration of several exceptions). It would seem that the legislature intended this
section to apply to all sales of goods, whether new or secondhand. In subdivision 1 of
this section, this language is used: where the buyer ... makes known to the seller the
particular purpose for which the goods are required, and it appears that the buyer relies
on the seller's skill or judgment ... there is an implied warranty that the goods shall be
reasonably fit for such purpose.”