CASE# 24: EQUATORIAL REALTY DEVT, INC. VS. MAYFAIR THEATER, INC. 264 SCRA 483 (GR NO.

106063 NOVEMBER 21, 1996) FACTS: Carmelo & Bauermann owned a piece of land and 2 two-storey buildings Claro M Recto Avenue, Manila. It is covered by TCT No. 18529 issued in its name by the Register of Deeds of Manila. Carmelo entered into a lease contract with Mayfair, with the latter leasing a portion of Carmelo's property, for use by Mayfair as a motion picture theater house and for a term of twenty years on June 1, 1967. Mayfair thereafter constructed on the leased property a movie house known as "Maxim Theatre." Two years later, on March 31, 1969, Mayfair entered into a second lease contract with Carmelo for the lease of another portion of Carmelo's property, for similar use as a movie theater house and for a similar term of twenty (20) years. Mayfair put up another movie house known as "Miramar Theatre" on this leased property. Both lease contracts provides identically worded paragraph 8, which reads: That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30-days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale hereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. Around August 1974, Mr. Henry Pascal of Carmelo told Mr. Henry Yang, President of Mayfair, through a telephone conversation that Carmelo desires to sell the entire Claro M. Recto property. Mr. Pascal told Mr. Yang that a certain Jose Araneta was offering to buy the whole property for US$1.2 million and Mr. Pascal asked Mr. Yang if the latter was willing to buy the property for P6 million to P7 million. Mr. Yang replied that he would let Mr. Pascal know of his decision. On August 23, 1974, Mayfair replied through a letter stating: It appears that on August 19, 1974 your Mr. Henry Pascal informed our client's Mr. Henry Yang through the telephone that your company desires to sell your above-mentioned C.M. Recto Avenue property. Under your company's two lease contracts with our client, it is uniformly provided:

8. That if the LESSOR should desire to sell the leased premises the LESSEE shall be given 30-days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it is (sic) herebinds (sic) and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions hereof (sic). Carmelo did not reply to this letter. On September 18, 1974, Mayfair sent another letter to Carmelo claiming to express interest in acquiring not only the leased premises but "the entire building and other improvements if the price is reasonable. However, both Carmelo and Equatorial questioned the legitimacy of the second letter. Four years later, on July 30, 1978, Carmelo sold its entire C.M. Recto Avenue land and building, which included the leased premises housing the "Maxim" and "Miramar" theatres, to Equatorial by virtue of a Deed of Absolute Sale, for the total sum of P11.3 million. In September 1978, Mayfair instituted the action a quo for specific performance and annulment of the sale of the leased premises to Equatorial. In its answer, Carmelo alleged as special and affirmative defense (a) that it had informed Mayfair of its desire to sell the entire C.M. Recto Avenue property and offered the same to Mayfair, but the latter answered that it was interested only in buying the areas under lease, which was impossible since the property was not a condominium; and (b) that the option to purchase invoked by Mayfair is null and void for lack of consideration. Equatorial, in its Answer, pleaded as special and affirmative defense that the option is void for lack of consideration (sic) and is unenforceable by reason of its impossibility of performance because the leased premises could not be sold separately from the other portions of the land and building. It counterclaimed for cancellation of the lease contracts, and for increase of rentals in view of alleged supervening extraordinary devaluation of the currency. Equatorial likewise cross-claimed against co-defendant Carmelo for indemnification in respect of Mayfair's claims.

ISSUE: Whether or not the contract of sale between Carmelo and Equatorial is rescissible.

Whether or not the right of first refusal granted to Mayfair be enforced by an action for specific performance. DECISION: The Deed of Absolute Sale between petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby deemed rescinded; petitioner Carmelo & Bauermann is ordered to return to petitioner Equatorial Realty Development the purchase price. The latter is directed to execute the deeds and documents necessary to return ownership to Carmelo and Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11.3 million. LAW: The respondent court correctly held that the Contract of Sale was not voidable but rescissible. Under Article(s) 1380 to 1381 of the Civil Code, a contract otherwise valid may nonetheless be subsequently rescinded by reason of injury to third persons, like creditors.

#26 Development Bank of the Philippines vs. Medrano February 7, 2011 No. 167004 Facts: Medrano and Development Bank of the Philippines set up 3 conditions that must be met so that a contract of sale can be perfected. The 1st condition is that prior to the implementation of approval, 57,596 shares of Paragons stock issued to the stockholders concerned shall first be surrendered to the DBP. The 2nd condition is that all the parties concerned shall give their written conformity to the arrangement. The 3rd condition is that the transaction shall be implemented within 45 days within date of approval, otherwise, the same shall be deemed canceled. DBP offered Medrano a commission of P185,010 if he could convince the minority stock holders to sell their stock at 65% of par value. Medrano then delivered to DBP all his 37,681 shares which had a value of P2,449,265. Medrano also took action upon the minority stockholders to convince them to sell the stock they are holding at 65% of the par value to DBP. All minority stockholders had been contacted except one who was in Singapore. Only 2 of the minority decided to sell the stock thus his commission was reduced to P155,455.

Issue: Medrano demanded DBP to pay the value of his shares, which he had already turned over, and his P155,455 commission. DBP did not heed his demand. Decision: There was no meeting of the minds because the conditions for the perfection of the contract were not met. DBP is to pay Medrano the value of his shares and damages for the unjust retention of it for 30 years and attorneys fees. Law: Article 1545 of the Civil Code and Article 2208 of the Civil Code CASE# 27: PEALOSA VS. SANTOS GR NO. 133749 AUGUST 23, 2001 FACTS: Respondents Severino C. Santos (deceased) and Adela Mendez Santos are registered owners of a residential house and lot located at No. 113 Scout Rallos St., Quezon City. In 1988, Severino and Adela decided to sell the said house and lot and for that, they negotiated with petitioner Hernando (or Henry) Pealosa. It was then occupied by a lessee (Eleuterio Perez), who was given preference to buy it under the same terms offered by the buyer. Since he proposed less favorable terms, Severino rejected his offer. On August 1, 1988, petitioner Henry Pealosa and respondent Severino Santos tried to enter into an agreement whereby the latter, for a consideration of P1.8 million, would sell to the former the residential house and lot. The deed of absolute sale (first deed) evidencing this transaction was signed by Henry but not by Severino, because according to the latter, Henry took time to decide on the matter. On August 15, 1988, Henry signed a document which states that the first deed was executed between him and Severino, to help the latter eject Perez, the occupant of the property. In the document, Henry acknowledged that although Severino had agreed to sell the property to him, he had not paid the consideration stated in the first deed. Thereafter, Henry and Severino executed another deed of absolute sale (second deed) for a higher consideration of P2 million. Although the second deed was originally dated August 1988, superimposed upon the same was the date September 12, 1988. This second deed was signed by both parties and duly notarized. It states that Severino sells and transfers the property to Henry, who had paid the full price of P2 million therefor. Severino explained that his initial asking price for the property was only P1.8 million as shown in the first deed. But later on, he asked for a higher price since Henry could not give the money as soon as expected. However, Severino claimed that he made it clear to Henry that he agreed to sell the property under the second deed for P2 million, provided that the payment will be given immediately. Severino said that he wanted to use the money to invest in another property located in Alabang and told Henry that if

payment was made at a later date, the price would be the current market value at the time of payment. Henry then gave Severino P300,000 as earnest money, supposedly with the understanding that the former was to pay the balance within 60 days. Otherwise, said amount would be given up in favor of Severino. The latter also maintained that he signed the second deed only for the purpose of facilitating Henrys acquisition of a bank loan to finance payment of the balance of the purchase price and added that execution of the second deed was necessary to enable Henry to file a court action for get rid of the tenant. After execution of the second deed, Henry filed a loan application with the Philam Life for the amount of P2.5 million. According to Henry, he had agreed with Severino during the signing of the second deed, that the balance (P1.7 million) would be paid by means of a loan, with the property itself given as collateral. Meanwhile, on the strength of the first deed and as new owner of the property, Henry wrote a letter dated August 8, 1988 to the lessee, demanding that the latter leave the property within 10 days. Failing in this effort, Henry brought a complaint for ejectment against Perez before the Office of the Barangay Captain. On September 1, 1988, a Certification to File Action was issued by the barangay lupon. This led to the subsequent filing of Civil Case No. 88-0439 for unlawful detainer, before the Metropolitan Trial Court of Quezon City, Branch 43, entitled Henry Pealosa, Plaintiff vs. Eleuterio Perez, Defendant. Claiming that he still had a subsisting contract of lease over the property, Perez countersued and brought Civil Case No. Q-88-1062 before the Regional Trial Court of Quezon City, Branch 96, entitled Eleuterio Perez, Plaintiff vs. Severino Santos, et. al, Defendants. In this latter case, Perez attacked the validity of the sale transaction between Severino and Henry, which he impleaded as a co-defendant of Severino. While the abovementioned court cases were pending resolution, Philam Life informed Severino through a letter, that Henrys loan application had been approved by the company on January 18, 1989. Philam Life stated in the letter that of the total purchase price of P2.5 million. The amount of P1.7 million would be paid directly to Severino by Philam Life, while P800,000 would be paid by Henry. The loan proceeds could only be released if certain documents in Severinos possession, one of them being the owners duplicate of the Transfer Certificate of Title (TCT) pertaining to the property. However, when Henry and Severino met with officials of Philam Life to finalize the loan/mortgage contract, Severino refused to surrender the owners duplicate title and insisted on being paid immediately in cash. As a consequence, the loan/mortgage contract with Philam Life did not materialize.

On April 28, 1989, judgment was rendered by the MTC-QC, Branch 43, in Civil Case No. 0439, ordering the tenant Perez to vacate and surrender possession of the property to Henry. In said judgment, Henry was explicitly recognized as the new owner of the property by virtue of the contract of sale dated September 12, 1988, after full payment of the purchase price of P2 million, receipt of which was duly acknowledged by Severino. Upon finality of said judgment, Henry and his family moved into the disputed house and lot on August 1989, after making repairs and improvements. Henry spent a total of P700,000 for the renovation, as evidenced by receipts. On July 27, 1992, Severino sent a letter to Henry, demanding that Henry vacate the house and lot, on the ground that Henry did not conclusively offer nor tender a price certain for the purchase of the property. The letter also stated that Henrys so-called offer and promise to buy the property has since been rejected by Severino. When Henry refused to leave the property, Severino brought this action for quieting of title, recovery of possession and damages before the Regional Trial Court of Quezon City, Branch 78, on September 28, 1992. Severino alleged in his complaint that there was a cloud over the title to the property, brought about by the existence of the second deed of sale. Essentially, Severino declared that the second deed was void and inexistent because: a) There was no cause or consideration therefor, since he did not receive the P2 million stated in the deed; b) His wife, Adela, in whose name the property was titled, did not consent to the sale nor sign the deed; c) The deed was not registered with the Register of Deeds; d) He did not acknowledge the deed personally before the notary public; e) His residence certificate, as appearing in the deed, was falsified; and f) The deed is fictitious and simulated because it was executed only for the purpose of placing Henry in possession of the property because he tendered earnest money. Severino also claimed that there was no meeting of minds with respect to the cause or consideration, since Henrys varied offers of P1.8 million, P2 million, and P2.5 million, were all rejected by him. For his part, Henry asserted that he was already the owner of the property being claimed by Severino, by virtue of a final agreement reached with the latter. Opposing Severinos claim, the price of the property was pegged at P2 million, as agreed upon by

the parties under the second deed. Prior to the filing of the action, his possession of the property remained undisturbed for three (3) years. Nevertheless, he admitted that since the signing of the second deed, he has not paid Severino the balance of the purchase price. He, however, faulted the latter for the non-payment, since according to him, Severino refused to deliver the owners duplicate title to the financing company. On Aug. 20, 1993, the trial court rendered judgment in favor of Severino and disposed: Wherefore, judgment is rendered as follows: 1) Declaring the Deed of Absolute Sale which was signed by the plaintiff Severino C. Santos as vendor and the defendant as vendee and which was entered in the notarial register of notary public Dionilo Marfil of Quezon City as Doc. No. 474, Page No. 95, Book No. 173, Series of 1988, as inexistent and void from the beginning; and consequently, plaintiffs title to the property under T.C.T. No. PT-23458 (54434) issued by the Register of Deeds of Quezon City is quieted, sustained and maintained; 2) Ordering the defendant to pay plaintiffs the amount of P 15, 000.00 a month as reasonable compensation for the use of the House and Lot located at No. 113 Scout Rallos St., Quezon City, beginning on the month of August, 1993, until the premises is fully vacated, (the compensation for the use thereof from the time the defendant had occupied the premises up to July, 1993, is recompensed for the repairs made by him); and 3) Ordering the plaintiffs to reimburse the defendant the amount of P300,000.00 after defendant had vacated the premises in question, and the reasonable compensation for the use thereof had been paid. All other claims and counterclaims are denied for lack of legal and factual bases. No pronouncement as to costs. SO ORDERED. Both Henry and Severino appealed the above decision to the Court of Appeals. Before the appellate court could decide the same, Severino passed away and was substituted by his wife and children as respondents. Henry filed a motion for leave to be allowed to deposit P1.7 million in escrow with the Landbank of the Philippines to answer for the money portion of the decision, which was granted. On December 29, 1997, the appellate court affirmed the judgment of the trial court and thereafter, denied Henrys motion for reconsideration. Thus, Henry brought this petition, that says that:

(1) The Honorable Court of Appeals grievously erred in Concluding that there was no perfected contract of sale between Severino Santos and Henry Pealosa, (2) The Honorable Court of Appeals grievously erred in considering non-payment of the full purchase price as cause for declaring a perfected contract of sale as null and void, and (3) The Honorable Court of Appeals grievously erred in refusing to recognize that ownership of the subject property had been effectively vested upon petitioner when actual possession thereof had lawfully transferred to petitioner by virtue of the court judgment in the ejectment suit against the former lessee. ISSUE: Whether or not second deed is valid and constitutes evidence of the final agreement between the parties regarding the sale transaction entered into by them. DECISION: A new judgment is hereby rendered upholding the validity of the Deed of Absolute Sale dated September 12, 1988, entered into between the parties. The Landbank of the Philippines is further ordered to release to respondents the amount of P1.7 million held in escrow, which is the balance of the purchase price agreed upon by the parties under the deed of absolute sale. Finally, the respondents are ordered to deliver to petitioner the owners duplicate copy of TCT Num. PT-23458 after said release, with the corresponding payment of taxes due. Costs against respondents. LAW: The elements of a valid contract of sale under Article 1458 of the Civil Code are: (1) Consent or meeting of the minds; (2) Determinate subject matter; and (3) Price certain in money or its equivalent. In the instant case, the second deed reflects the presence of all these elements and as such, there is already a perfected contract of sale.

#28 Nonato vs. Intermediate Appellate Court November 22, 1985 No. L-67181 Facts: On June 28, 1976, defendant spouses Restituto Nonato and Ester Nonato purchased one unit of Volkswagen Sakbayan from the Peoples Car, Inc., on installment basis. To secure complete payment, the defendants executed a promissory note and a chattel mortgage in favor of Peoples Car, Inc.. Peoples Car, Inc., assigned its rights and interests over the note and mortgage in favor of plaintiff Investors Finance Corporation. For failure of defendants to pay two or more installments, despite demands, the car was repossessed by plaintiff on March 20, 1978. Despite repossession, plaintiff demanded from defendants that they pay the balance of the price of the car. Finally on June 9 1978, plaintiff filed before the Court of First Instance of Negros Occidental the present complaint against defendants for the latter to pay the balance of the price of the car, with damages and attorneys fees. Issue: Whether a vendor, or his assignee, who had cancelled the sale of a motor vehicle for failure of the buyer to pay two or more of the stipulated installments, may also demand payment of the balance of the purchase price. Decision: The Nonatos do not have to pay the remaining balance because the creditor repossessed the car. Thus, the act of the creditors repossession was a cancellation of sale. Law: Article 1484 of the Civil Code In a contract of sale of personal property the price of which is payable in installments, the vendor may exercise any of the following remedies: 1. Exact fulfillment of the obligation, should the vendee fail to pay; 2. Cancel the sale, should the vendees failure to pay cover two or more installments; 3. Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendees failure to pay cover two or more installments. In this case, he shall have no further action against the purchaser to recover any unpaid balance of the price. Any agreement to the contrary shall be void

#30 Oesmer vs. Paraiso Development Corporation February 5, 2007 No. 157493 Facts: The buyer (Paraiso Development Corporation) and the sellers (Oesmer) put up a contract to sell. 6/8 share was subject to sale because only 6 out of 8 owners signed the contract The buyer gave the sellers a check of P100,000 as it was written as Option Money while the words of the contract suggest it is an Earnest Money. The contract to sell was then notarized a few days after they signed it. A few months later, the owners of the land wrote a letter to the corporation to inform them of the rescission of the contract to sell and to return the amount of the option money. The corporation did not respond. Years later the owners put up a case against the corporation to which they lost. Another hearing was put up and then it was judged as Ernestos share is the only one valid because the signature of the other owners did not confer Ernestos authority to sell their share since it lacked any written authority. Thus their share of the sale is void. The contract to sell is still valid because they have signed their names on it. Some claim that they did not know that it was a contract to sell that would bind them. They claimed that they only signed it to be a witness to the contract to sell of their brother. The court ruled that their lack of effort of wanting to know the contents of the contract have made them negligent thus the signatories are bound to the contract. Issue: Whether a sale of one co-owner will affect the share of the other owners, whether a specific word of a contract is greater than the contracts intent as a whole, and whether the amount of effort/knowledge of the signatory of the seller to know the contents on a contract to sell will bind him to the contract. Decision: A sale of one co-owner shall only be applied to his share and shall not affect the other owners share. The contracts intent as a whole overrules a specific word mentioned in the contract. May it be known by the seller or not, the seller will be bound by the contract once the signature of the seller has been written. Law: Article 493 Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign, or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved.

But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. The contracts intent as a whole overrules a specific word mentioned in the contract. The law clearly defines that earnest money and option money are not the same. Due to the lack of knowledge of seller, the seller must have put a substantial amount of effort to understand what the seller is putting his signature on, either way may it be known by the seller or not, the seller will be bound by the contract once the signature of the seller has been written. CASE# 34: SPOUSES SABIO VS. INTERNATIONAL CORPORATE BANK, INC. GR NO. 132709 SEPTEMBER 4, 2001 FACTS: On May 25, 1973, the spouses Gerardo and Emma Ledonio assigned to the spouses Camilo and Ma. Marlene Sabio (herein petitioners) all their rights, interests, title and participation over an nearby portion of the subject property measuring 119,429 sq. m. (particularly the one that was covered by TCT No. 65162). For this purpose, a deed of assignment with assumption of mortgage was later executed by the Ledonio spouses in favor of the Sabio couple on November 23, 1981. Similarly, while the subject property was still the object of several pending cases, the International Corporate Bank, Inc. (or Interbank) acquired from the Trans-Resource Management and Development Corporation all of the latters rights to the subject property by virtue of a deed of assignment executed between them on July 12, 1984. Sometime thereafter, or on March 6, 1985, the Sabios and Interbank settled their opposing claims by entering into a Memorandum of Agreement (or MOA) whereby the Sabios assigned, conveyed and transferred all their rights over the parcel covered by TCT No. 65162 to Interbank, with the express exception of a 58,000 square meter nearby portion of said lot. The MOA also provided: 2. That for and in consideration of the aforementioned assignment, conveyance and transfer by the FIRST PARTY (i.e., the Sabios), the latter (SECOND PARTY, i.e., Interbank) shall: a. PAY to the FIRST PARTY the sum of SEVEN HUNDRED FIFTY THOUSAND PESOS (P750,000), Philippine Currency, receipt of which in full is hereby acknowledged by the FIRST PARTY from the SECOND PARTY;

b. Subject to the rights of the SECOND PARTY under the provisions of No. 4 hereunder, COMPLETE and PERFECT its ownership and title to the afore-described three (3) parcels of land with all the improvements thereon, situated at Tindig Na Manga (Almanza), Las Pias, Rizal (now Metro Manila), covered by Transfer Certificate of Title No. S-65161-Metro Manila, Book T-328, Page 161 (formerly No. 190713-Rizal, Book T-1227, Page 113) and Transfer Certificate of Title No. S-65162-Metro Manila, Book T-328, Page 162 (formerly No. 190714-Rizal, Book T-1227, Page 114), AND, ASSIGN, CONVEY and TRANSFER unto and in favor of the FIRST PARTY a CONTIGUOUS PORTION of the afore-described parcel of land, with all the improvements thereon, covered by the aforementioned Transfer Certificate of Title No. S-65162-Metro Manila, Book T-328, Page 162 (formerly No. 190714-Rizal, Book T-1227, Page 114). The aforementioned CONTIGUOUS PORTION referred to in paragraph 1 hereof with an area of FIFTY EIGHT THOUSAND (58,000) SQUARE METERS, the exact location of which is, as far as practicable, as indicated in the sketch plan, which is hereto attached as Annex D and made an integral part hereof, LOT 6-B; c. Bear and defray all costs, fees and expenses incidental to and/or connected with the segregation, survey, registration and delivery to the FIRST PARTY of a new transfer certificate of title in the name of the FIRST PARTY, free from all liens and encumbrances, over the aforedescribed parcel of land herein assigned, conveyed and transferred by the SECOND PARTY; d. Constitute and grant and by these presents has CONSTITUTED and GRANTED without indemnity whatsoever in favor of the FIRST PARTY and of said parcel of land to be covered by a new transfer certificate of title in the name of the FIRST PARTY with an area of FIFTY EIGHT THOUSAND (58,000) SQUARE METERS, a permanent and perpetual RIGHT OF WAY sufficient for all the needs of said parcel of land through out the properties already owned and/or to be acquired by the SECOND PARTY, particularly the parcels of land covered by Transfer Certificate of Title No. 85717, Transfer Certificate of Title No. S-65161-Metro Manila, Book T-328, Page 161 (formerly No. 190703-Rizal, Book T-127, Page 113) and Transfer Certificate of Title No. S-65162-Metro Manila, Book T-328, Page 162 (formerly No. 190714-Rizal, Book T-1227, Page 114), it being understood that the right of way herein contemplated shall not be less than TEN (10) meters in WIDTH. Paragraph 4 of the MOA granted Interbank the right to assign all its rights and interests outlined in the MOA, provided that all the obligations of Interbank specified in the aforequoted paragraphs 2.b, 2.c and 2.d shall also bind all of its assigns, heirs and

successors. Afterwards, Interbank transferred all its rights and interests to the Las Pias Ventures, Inc. (LPVI). In turn, the portion covered by TCT No. 65161 designated as Lot Nos. 2 and 3 were obtained from LPVI by the Ayala Group of Companies (herein respondents) through a merger between LPVI and Ayala Land, Inc. (ALI). Lot No. 6 (then covered by TCT No. S-65162) was also subsequently transferred first to LPVI, then to ALI, and a new title (TCT No. T-41261) was issued also on April 25, 1994. Another contiguous parcel, then covered by TCT No. 85717, was acquired by the Ayala Group sometime in 1993, which was eventually subdivided and retitled in favor of ALI. Thereafter, a dispute arose regarding the 58,000 sq. m. contiguous portion subject of the MOA that was to be conveyed and transferred back to the Sabios by Interbank. Another concern was the permanent and perpetual right of way that Interbank was obligated to constitute in favor of the Sabios 58,000 sq. m. portion. The Sabios got constrained to set up an action for Specific Performance and Damages against Interbank, Goldenrod Incorporated, PAL Employees Savings and Loan Association, Incorporated (PESALA) and the Ayala Group of Companies comprised of the Ayala Corporation, LPVI, Insular Life Assurance Company, Ltd., Filipinas Life Assurance Company, ALI, Ayala Property Ventures, Incorporated (APVI), and the Bank of the Philippine Islands (BPI). BPI was later dropped as a party-defendant. The Regional Trial Court of Makati, Branch 64, in Civil Case No. 1854, summarized the Sabios claims in their complaint, thus: Plaintiffs claimed that defendant Interbank was obligated to complete and perfect its ownership and title to the parcels of land so that Interbank could transfer to plaintiffs the absolute ownership and title over the contiguous portion. They also claimed that one of the commitments of defendant Interbank which induced plaintiffs to execute the agreement without which plaintiffs would not have executed was that defendant Interbank would clear the contiguous portion of all occupants and wall-in the same, together with the parcels of land belonging to defendants. Allegedly, the property had already been cleared, by defendant Ayala Group, of occupants except for the contiguous portion thereof. Plaintiffs alleged that defendants, particularly Ayala Group, failed to comply with their commitments and obligations in the MOA specifically those arising from the abovementioned provisions thereof. Hence, plaintiffs have been prevented from utilizing for productive purposes the land. They further assumed that they were constrained to obtain a loan from Interbank where the contiguous portion of the property was used as collateral and this loan is now deemed paid and plaintiffs are now considered released. Plaintiffs claimed actual

and compensatory damages in the amount of P500,000 and exemplary damages in the amount of P250,000. The defendants answer was summed up by the trial court as follows: Defendants denied liability. Defendants Ayala Corp., Ayala Life, ALI, APVI (collectively referred to as Ayala Group), PESALA, and LPVI, claimed that they were not privy to the MOA, the contract from which the suspected obligations arose. In the transactions they were each involved in, subsequent to the MOA, pursuant to which they each acquired the property which was originally transferred by the plaintiffs to defendant Interbank, the contiguous portion which plaintiffs claimed was the subject of non-compliance of the obligations agreed upon was not included in the property acquired. On the contrary, in each transaction, the contiguous portion was expressly excluded in the corresponding contracts, hence, plaintiffs have no cause of action against them and even assuming that defendants were privy to the MOA, they would still have no obligation to clear the contiguous portion of the property as there was no express or implied provision in the MOA that the party to whom the property was transferred would clear the same. After some time, the defendants submitted a Notice of Confession of Judgment and Motion for Partial Decision Against Answering Defendant to secure an entry of judgment against them while avoiding the formality, time and expense of ordinary proceedings. In particular, the defendants confessed judgment with regard to the plaintiff spouses prayer stemming from the MOA, and asked that judgment be rendered directing the defendants to comply with their obligations as defined in the pertinent provisions of the MOA. Moreover, the defendants signified willingness to abide by the MOA, and complete and perfect title to the parcel of land, including that portion which was to be assigned to the plaintiff spouses. With regard to that 58,000 sq. m. parcel, the defendants also acknowledged the obligation to segregate that contiguous portion and deliver title thereto to the plaintiff spouses free from liens and encumbrances. However, the defendants also stated that fulfillment of its obligation under the MOA became impossible due to the plaintiff spouses own acts. First, defendants posited that they were ready to deliver the title to the 58,000 sq. m. parcel and had, in fact, prepared the Deed of Conveyance required by the Register of Deeds, but the plaintiffs themselves refused to sign the deed unless the subject property was cleared of all illegal occupants. The defendants nevertheless disclaimed the plaintiffs claim that they (defendants) were obligated to clear the said property of all squatters and occupants, much less to fence the property, arguing that no such obligation was imposed in the MOA. Secondly, the defendants noted that the property in question became the subject of an action for recovery of ownership filed by the Ledonio spouses against the Sabios. Consequently, the annotation of the notice of lis pendens caused to be registered by the Ledonios on the titles hampered the delivery of the title covering the 58,000 square meter portion to the Sabios.

The defendants further admitted the obligation to grant an easement of right of way under the MOA, manifesting that not only did the defendants constitute and grant such right of way, but that they were also willing and prepared to provide an alternative choice at the pleasure of the plaintiff spouses. Moreover, the mortgage obligations of the plaintiff spouses annotated on the titles covering the 58,000 square meter portion had already been paid off by the defendants, prompting the latter to seek a court order cancelling the Notice of Lis Pendens and annotation of the MOA on the titles covering the subject parcel of land. ISSUE: Whether or not the defendants had the obligation to clear the subject 58,000 sq. m. portion of all occupants and to fence the said premises, before conveyance of the property can be considered as full compliance with the obligation imposed upon the defendants under the MOA. DECISION: Defendant Ayala Group is ordered to pay plaintiffs Camilo and Marlene Sabio P500,000 in actual damages and P250,000 in exemplary damages (this was later set aside by the Decision of the Court of Appeals dated April 30, 1997). Plaintiffs, however, are directed to specifically comply with the obligations under the MOA by executing a Deed of Conveyance upon payment by the defendant of the foregoing amount. The Register of Deeds is directed to cancel the notice of lis pendens as regards this case, and the annotation of the subject Memorandum of Agreement, both of which are annotated on TCTs Nos. T-5331 to T-5334, the TCTs covering the contiguous portion of the property. The Decision of the Court of Appeals dated April 30, 1997 in CA-G.R. CV No. 48870 (stated above) is AFFIRMED in toto (in total or completely). No pronouncement as to costs. LAW: Under Article 1498 of the Civil Code, when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the object of the contract, if from the deed the contrary does not appear or cannot be inferred. Possession is also transferred, along with ownership thereof, to the petitioners by virtue of the deed of conveyance. Under the aforementioned Article 1498, the mere execution of the deed of conveyance in a public document is equivalent to the delivery of the property. Since the execution of the deed of conveyance is deemed equivalent to delivery, prior physical delivery or possession is not legally required.

Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery under Article 1498 can still be effected through the execution of the deed of conveyance. CASE# 39: COCA-COLA BOTTLERS PHIL, INC. VS COURT OF APPEALS GR NO. 110295 OCTOBER 18, 1993 FACTS: On May 7, 1990, Lydia L. Geronimo (private respondent), filed a complaint for damages against Coca-Cola Bottlers Phil, Inc. (petitioner) with the Regional Trial Court (RTC) of Dagupan City. She claims in her complaint that she was the proprietress of Kindergarten Wonderland Canteen located in Dagupan City, an enterprise engaged in the sale of soft drinks (including Coke and Sprite) and other goods to the students of Kindergarten Wonderland and to the public. On August 12, 1989, some students parents complained to her that the Coke and Sprite soft drinks that she sold contained fiber-like matter and other foreign substances or particles. She then went over her supply of soft drinks and discovered the presence of some fiber-like substances in the contents of some unopened Coke bottles and a plastic matter in the contents of an unopened Sprite bottle. She then brought the said bottles to the Regional Health Office of the Department of Health at San Fernando, La Union, for examination. Consequently, she received a letter from the Department of Health informing her that the samples she submitted "are adulterated." As an outcome of the discovery of the foreign substances in the beverages, her sales of soft drinks harshly plummeted from the usual 10 cases per day to as low as 2 to 3 cases per day resulting in losses of P200 to P300 per day, and not long after that she had to close shop on December 12, 1989. Lydia then became jobless and destitute. She demanded from the petitioner the payment of damages but was turned down by it. She prayed for judgment ordering the petitioner to pay her P5,000 as actual damages, P72,000 as compensatory damages, P500,000 as moral damages, P10,000 as exemplary damages, the amount equal to 30% of the damages awarded as attorney's fees, and the costs. The petitioner moved to dismiss the complaint on the grounds of failure to exhaust administrative remedies and prescription. Anent the latter ground, the petitioner argued that since the complaint is for breach of warranty under Article 1561 of the said Code. In her Comment thereto, the private respondent alleged that the complaint is one for damages which does not involve an administrative action and that her cause of action is based on an injury to plaintiff's right which can be brought within four years pursuant to Article 1146 of the Civil Code; hence, the complaint was seasonably filed. Subsequent related pleadings were thereafter filed by the parties.

In its Order on January 23, 1991, the trial court granted the motion to dismiss. It ruled that the doctrine of exhaustion of administrative remedies is not applicable as the existing administrative remedy is inadequate. It also stated that the complaint is based on a contract, and not on quasi-delict, as there exists pre-existing contractual relation between the parties. Thus, on the basis of Article 1571, in relation to Article 1562, the complaint should have been filed within six months from the delivery of the thing sold. Her motion for the reconsideration of the order having been denied by the trial court in its Order on April 17, 1991, the private respondent came to this Court via a petition for review which was referred to the public respondent "for proper determination and disposition. In a decision promulgated on 28 January 1992, the public respondent annulled the questioned orders of the RTC and directed it to conduct further proceedings. In holding for the private respondent, it ruled that: Petitioner's complaint being one for quasi-delict, and not for breach of warranty as respondent contends, the applicable prescriptive period is four years. It should be stressed that the allegations in the complaint plainly show that it is an action or damages arising from respondent's act of "recklessly and negligently manufacturing adulterated food items intended to be sold or public consumption" (p. 25, rollo). It is truism in legal procedure that what determines the nature of an action are the facts alleged in the complaint and those averred as a defense in the defendant's answer (I Moran 126; Calo v. Roldan, 76 Phil. 445; Alger Electric, Inc. v. CA, 135 SCRA 340). Secondly, despite the literal wording of Article 2176 of the Civil code, the existence of contractual relations between the parties does not absolutely preclude an action by one against the other for quasi-delict arising from negligence in the performance of a contract. ISSUE: Whether or not the complaint of the private respondent is based on a contract or on a quasi-delict. DECISION: The public respondent's conclusion that the cause of action in Civil Case No. D-9629 is found on quasi-delict and that, therefore, pursuant to Article 1146 of the Civil Code, it prescribes in four (4) years is supported by the allegations in the complaint, more

particularly paragraph 12 thereof, which makes reference to the reckless and negligent manufacture of "adulterated food items intended to be sold for public consumption." The affirmance of the decision of the public respondent should by no means be understood as suggesting that the private respondent's claims for moral damages have sufficient factual and legal basis. LAW: The vendee's remedies against a vendor with respect to the warranties against hidden defects of or encumbrances upon the thing sold are not limited to those prescribed in Article 1567 of the Civil Code which provides: Art. 1567. In the case of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between withdrawing from the contract and demanding a proportionate reduction of the price, with damages either case. The vendee may also ask for the annulment of the contract upon proof of error or fraud, in which case the ordinary rule on obligations shall be applicable. Under the law on obligations, responsibility arising from fraud is demandable in all obligations and any waiver of an action for future fraud is void. Responsibility arising from negligence is also demandable in any obligation, but such liability may be regulated by the courts, according to the circumstances. Those guilty of fraud, negligence, or delay in the performance of their obligations and those who in any manner contravene the tenor thereof are liable for damages.

CASE# 40: GOODYEAR PHIL, INC. VS. SY AND LEE GR NO. 154554 NOVEMBER 9, 2005 FACTS: The subject of this case involves a motor vehicle, particularly a 1984 model Isuzu JCR 6-wheeler truck, with plate number PEL 685, motor number 6BD1-371305 and serial number JCR500BOF-21184. The said vehicle was originally in possession of Goodyear Philippines, Inc. (Goodyear) which it purchased from Industrial and Transport Equipment, Inc. in 1983. It had since been in the service of Goodyear until April 30, 1986 when it was hijacked. This hijacking was reported to the Philippine National Police (PNP) which issued out an alert alarm on the said vehicle as a stolen one. Later on, it was recovered in 1986.

The vehicle was used by Goodyear until September 12, 1996, when the company sold it to Anthony Sy on that day. Sy then sold it to Jose L. Lee on January 29, 1997. Lee filed an action for rescission of contract with damages against Sy on December 4, 1997, because he could not register the vehicle in his name due to the certification from the PNP Regional Traffic Management Office in Legazpi City that it was a stolen vehicle and the alarm covering the same was not lifted. Instead, the PNP in Legazpi City impounded the vehicle and charged Lee criminally. Goodyear requested the PNP on July 10, 1997 to lift the stolen vehicle alarm status upon being informed of the denial of the registration of the vehicle in Lees name by Sy. This notwithstanding, Goodyear was impleaded as the thirdparty defendant in the third-party complaint filed by Sy on January 9, 1998. A motion to dismiss was filed by Goodyear on March 24, 1998 on the twin grounds that the third-party complaint failed to state a cause of action and even if it did, the said cause of action was already extinguished. An opposition thereto was interposed by Sy on April 17, 1998. The Regional Trial Court (RTC) resolved to dismiss the third-party complaint on the basis of the first proffered ground in its challenged Order dated May 27, 1998. It ratiocinated: A perusal of the third party complaint does not expressly show any act or omission committed by the third party defendant which violates a right of the third party complainant. The third party complaint failed to show that the vehicle in question belongs to a person other than the third party defendant at the time the said motor vehicle was sold by the third party defendant to the third party plaintiff. On the contrary[,] the third party defendant has not denied having sold to the third party plaintiff the said motor vehicle which had been in its possession as owner from 1986 to 1996. The fact that the said motor vehicle was included by the PNP in its alert status as stolen vehicle[,] resulted only following the report by the third party defendant that it was hijacked in 1986. But when the said motor vehicle was recovered, the third party defendant informed the PNP about the said recovery and requested the lifting of the alert status on it as stolen vehicle. If the PNP has not removed the said vehicle from its alert status as a stolen vehicle, [then] that does not make [Goodyear] not the owner thereof. Hence, [Goodyear], the third party defendant, is not guilty of any breach resulting from any flaw in the title over the

said vehicle. This is confirmed by the allegation of the third party plaintiff as answering defendant in paragraph 6 of its Answer with Counterclaim and Affirmative Defenses dated January 9, 1998, hereunder quoted as follows: 6. Defendant specifically denies the allegations contained in paragraph 9 of [p]laintiffs complaint, the truth of the matter is that [d]efendant help[ed] plaintiff in removing the impediments in the registration and transfer of ownership and that defendant ha[d] no knowledge of any flaw [in] the title of Goodyear Philippines, Inc. Under Rules 16, a motion to dismiss may be made on any of the following grounds: g) That the pleading asserting the claim states no cause of action. ISSUE: Whether or not the Third-Party Complaint stated a cause of action against petitioner. DECISION: The May 27, 1998 Order of the Regional Trial Court, which states that: WHEREFORE, for failure of the third party complaint to state a cause of action, the same is hereby ordered DISMISSED. is reinstated. No costs. LAW:

Gratia argumenti that there was a breach of the implied warranty against hidden

encumbrances, notice of the breach was not given to petitioner within a reasonable time. Article 1586 of the Civil Code requires that notice be given after the breach. CASE# 41: RAMOS VS. SARAO GR NO. 149756 FEBRUARY 11, 2005 FACTS: On February 21, 1991, Spouses Jonas Ramos and Myrna Ramos executed a contract over their conjugal house and lot in favor of Susana S. Sarao for and in consideration of P1,310,430. Entitled DEED OF SALE UNDER PACTO DE RETRO, the contract granted the Ramos spouses the option to repurchase the property within six months from February 21, 1991, for P1,310,430 plus an interest of 4.5% a month. It was further agreed that if the spouses fail to pay the monthly interest or to exercise the right to

repurchase within the stipulated period, the conveyance would be deemed an absolute sale. On July 30, 1991, Myrna Ramos tendered to Sarao the amount of P1,633,034.20 in the form of two managers checks, which the latter refused to accept for being allegedly insufficient. On August 8, 1991, Myrna filed a Complaint for the redemption of the property and moral damages plus attorneys fees. The suit was docketed as Civil Case No. 91-2188 and raffled to Branch 145 of the Regional Trial Court (RTC) of Makati City. On August 13, 1991, she deposited with the RTC two checks that Sarao refused to accept. On December 21, 1991, Sarao filed against the Ramos spouses a Petition for consolidation of ownership in pacto de retro sale docketed as Civil Case No. 91-3434 and raffled to Branch 61 of the RTC of Makati City. Civil Case Nos. 91-2188 and 913434 were later consolidated and jointly tried before Branch 145 of the said Makati RTC. After trial, the RTC dismissed the Complaint and granted the prayer of Sarao to consolidate the title of the property in her favor. Aggrieved, Myrna elevated the case to the CA. ISSUE: The petitioner raises the following issues for our consideration: 1. Whether or not the honorable appellate court erred in ruling the subject Deed of Sale under Pacto de Retro was, and is in reality and under the law an equitable mortgage; 2. Whether or not the honorable appellate court erred in affirming the ruling of the court a quo that there was no valid tender of payment of the redemption price neither [sic] a valid consignation in the instant case; and 3. Whether or not [the] honorable appellate court erred in affirming the ruling of the court a quo denying the claim of petitioner for damages and attorneys fees. DECISION: Judgment is hereby rendered: (1) DECLARING (a) the disputed contract as an equitable mortgage,

(b) petitioners loan to Respondent Sarao to be in the amount of P1,633,034.19 as of July 30, 1991; and (c) the mortgage on the property -- covered by TCT No. 151784 in the name of the Ramos spouses and issued by the Register of Deeds of Makati City --as discharged (2) ORDERING the RTC to release to Sarao the consigned amount of P1,633,034.19 (3) COMMANDING Respondent Sarao to return to petitioner the owners copy of TCT No. 151784 in the name of the Ramos spouses and issued by the Register of Deeds of Makati City (4) DIRECTING the Register of Deeds of Makati City to cancel Entry No. 24057, the annotation appearing on TCT No. 151784 (5) ORDERING petitioner to pay Sarao in the amount of P67,567.10 as reimbursement for real property taxes No pronouncement as to costs. LAW: In a pacto de retro, ownership of the property sold is immediately transferred to the vendee a retro, subject only to the repurchase by the vendor a retro within the stipulated period. The vendor a retros failure to exercise the right of repurchase within the agreed time vests upon the vendee a retro, by operation of law, absolute title to the property. Such title is not impaired even if the vendee a retro fails to consolidate title under Article 1607 of the Civil Code. Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. Article 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. Even if a contract is denominated as a pacto de retro, the owner of the property may still disprove it by means of parol evidence, provided that the nature of the agreement is placed in issue by the pleadings filed with the trial court.

CASE#42: SPOUSES CRISTOBAL ET AL VS. DIZON GR NO. 172771 JANUARY 31, 2008 FACTS: Aida G. Dizon (respondent) mortgaged to Monte de Piedad Mortgage and Savings Bank (Monte de Piedad) a 168.6-sq. meter parcel of land, which was registered in her name under Transfer Certificate of Title No. 132499, including the two-storey apartment (the property) built thereon, to secure a P265,000 loan. Respondent failed to settle the loan, drawing Monte de Piedad to foreclose the mortgage, consolidate its ownership of the property, and register it in its name. Monte de Piedad nevertheless gave respondent until May 28, 1987 to purchase back the property for P550,000. On May 28, 1987, petitioner Elizabeth Santiago (Elizabeth), on behalf of respondent, paid P550,000 for the property. Monte de Piedad then executed a deed of sale in favor of respondent who, on May 29, 1987, in turn executed a deed of sale in favor of Elizabeth and her herein co-petitioners. Also on May 29, 1987, respondent and petitioners executed an agreement giving respondent the option to buy back the property within three (3) months from the date of this agreement at the price of P900,000, failing which respondent should vacate the premises occupied by her, and turn over possession thereof to [petitioners] including the lessees of the building.

The respondent continued to stay in the property. Three months having elapsed without respondent repurchasing the property, petitioners registered with the Registry of Deeds of Manila the Deed of Sale executed by Monte de Piedad in favor of respondent, as well as the Deed of Sale of the property executed by respondent in favor of petitioners who were issued a title thereover. Respondent failed to vacate the property. Petitioner Elizabeth thus filed an ejectment case against her before the Manila Metropolitan Trial Court (MeTC), Branch 21 of which decided in petitioner Elizabeths favor. On appeal, Branch 27 of the Regional Trial Court (RTC) of Manila reversed the MeTC decision. The Court of Appeals affirmed the RTC decision. On petitioners Motion for Reconsideration, the appellate court reversed the RTC decision and re-established the MeTC decision (in favor of petitioner Elizabeth). Thus, the respondent filed a Petition for Review before this Court which affirmed the appellate courts reinstatement of the MeTC decision. This Court held, however, that the ejectment case did not bar a subsequent action to settle the issue of ownership. Respondent subsequently filed before the RTC of Manila a verified Complaint (docketed as Civil Case No. 96-81354) against petitioners and Hon. Godofredo CA. Fandialan in his capacity as Presiding Judge of Branch 21 of MeTC of Manila, for reformation of the deed of sale in favor of petitioners, alleging, inter alia, that: [the] actual agreement between the parties is that of a loan and mortgage x x x and x x x [the] subject document denominated as a deed of sale was actually an equitable mortgage considering the inadequacy of the price at P550,000.00 in the deed of sale dated May 29, 1987 for such prime property within the university and commercial belt in Manila; the fact that the sale was with a right of repurchase at P900,000.00; that plaintiff continued to exercise rights of ownership after the sale such as the payment of realty taxes and collection of rentals from tenants; and the fact that the P550,000.00 was in fact a loan by private defendants to plaintiff which was paid to Monte de Piedad to buy back the property for plaintiff. In their Answer, petitioners maintained that their transaction with respondent was a bona fide sale. Branch 6 of the Manila RTC, applying Articles 1602 and 1603 of the Civil Code, decided in favor of respondent by Decision of March 22, 2002, it holding that the transaction

between respondent and petitioners was an equitable mortgage in light of the following considerations: 1. Exhibits A and B were signed and executed by the parties on the same day, May 29, 1987. The purchase price of the subject property was P550,000.00 in the Deed of Absolute Sale (Exhibit A) while in the Agreement (Exhibit B) defendants agreed to give to give plaintiff the option to buy back the subject property within the period of three (3) months from the date of the Agreement at P900,000. There was a tremendous increase of P350,000 in the repurchase price of the subject property within a period of three (3) months. It has been held that a stipulation in the contract sharply escalating the repurchase price enhances the presumption that the transaction is an equitable mortgage. Its purpose is to secure the return of the money invested with substantial profit or interest, a common characteristic of loans. 2. The fact that the repurchase price of the subject property as stated in the Agreement dated May 29, 1987, was P900,000, clearly indicates that the purchase price of the subject property at P550,000 was inadequate as stated in the Contract of Absolute Sale. 3. Plaintiff remained in possession of the subject property in question after the execution of the Absolute Deed of Sale. Plaintiff continued to exercise the rights and obligations of owner-lessor after the execution of the Absolute Deed of Sale when she paid the realty taxes and collected rentals from the other tenants of the apartment building which were turned over to the defendants. 4. Where vendor (herein plaintiff) was given the right to possess the subject property pending the redemption period of three (3) months, equitable mortgage exists. 5. Having just repurchased the subject property from the Bank at the price of P550,000.00, it would have been utterly senseless for the plaintiff to sell the same property to the defendants at the same price of P550,000.00, without profit (Exhibit A). However, by the terms of the Agreement Exhibit B, plaintiff would have to repurchase the same property from the defendants at an increased price of P900,000.00. Thus, from the afore-said documents, there is no other possible and logical conclusion that Exhibits A and B, taken together, [are] an equitable mortgage because they were executed as security for the loan of P550,000.00 extended by defendants to plaintiff, for the latter to buy back the subject property from the Bank.

xxxx By Decision of February 8, 2006, the Court of Appeals affirmed the RTC decision. Hence, the present Petition for Review on Certiorari faulting the Court of Appeals in affirming: I. . . . the findings and conclusions of the Regional Trial Court of Manila (Branch 06) despite the fact [that] there was no equitable mortgage. . . . the findings and conclusions of the Regional Trial Court of Manila (Branch 06) even when these conclusions run contrary to the prevailing law and jurisprudence.

II.

ISSUE: Whether or not the subject document denominated as a deed of sale was actually an equitable mortgage. DECISION: The respondent failed to prove that the transaction was one of equitable mortgage. Reformation of the deed of sale of the property to petitioners does not thus lie. Civil Case No. 96-81354 of the Manila Regional Trial Court, the complaint against the petitioners and Hon. Godofredo CA. Fandialan in his capacity as Presiding Judge of Branch 21 of MeTC of Manila, is dismissed. LAW: The presumption of equitable mortgage created in Article 1602 of the Civil Code is not conclusive. It may be rebutted by competent and satisfactory proof of the contrary. In the case at bar, ample evidence supports petitioners claim that the transaction between them and respondent was one of sale with option to repurchase. CASE# 46: PAN-AM VS. RAPADAS GR NO. 60673 MAY 19, 1992 FACTS: On January 16, 1975, Jose K. Rapadas (private respondent) held Passenger Ticket and Baggage Claim Check No. 026-394830084-5 for Pan-Ams (petitioner) Flight No. 841 with the route from Guam to Manila. While standing in line to board the flight at the Guam airport, Rapadas was ordered by Pan-Am's handcarry control agent to check-in

his Samsonite attach case. Rapadas protested since the other co-passengers were permitted to handcarry bulkier baggage. He stepped out of the line only to go back again at the end of it to try if he can get through without having to register his attache case. However, the same man in charge of handcarry control still noticed him and ordered him again to register his baggage. For fear that he would miss the plane if he insisted and argued on personally taking the attach case with him, he agreed to have it checked. He then gave his attache case to his brother who happened to be around and who checked it in for him, but without declaring its contents or the value of its contents. He was given a Baggage Claim Tag Num. P-749-713. Upon arriving in Manila on the same date, January 16, 1975, Rapadas claimed and was given all his checked-in baggage except the attach case. Since Rapadas felt ill on his arrival, he sent his son (Jorge Rapadas) to request for the search of the missing attach case. The petitioner exerted efforts to locate the luggage through the Pan American World Airways-Manila International Airport (PAN AM-MIA) Baggage Service. On January 30, 1975, the petitioner required the private respondent to have the request in writing. The respondent filled in a Baggage Claim Blank Form. Thereafter, Rapadas personally followed up his claim. For several times, he called up Mr. Panuelos, the head of the Baggage Section of Pan-Am. He also sent letters demanding and reminding Pan-Am of his claim. Rapadas received a letter from the petitioner's counsel dated August 2, 1975 offering to settle the claim for the sum of $160.00, which represents the petitioner's alleged limit of liability for loss or damage to a passenger's personal property under the contract of carriage between Rapadas and Pan-Am. Refusing to accept this kind of settlement, on October 1, 1975, Rapadas filed the instant action for damages. Rapadas alleged that Pan-Am singled him out in ordering that his luggage be checked in. He also alleged that Pan-Am neglected its duty in handling and safekeeping his attach case from Guam to Manila. He said that the value of his attach case and its contents amounting to $42,403.90. According to him, the loss resulted in his failure to pay certain monetary obligations, failure to send money sent through him to relatives, inability to enjoy the fruits of his retirement and vacation pay earned from working in Tonga Construction Company (he retired in August 1974) and inability to return to Tonga to fulfill his then existing contracts. In its answer, petitioner-defendant Pan-Am acknowledged responsibility for the loss of the attach case but asserted that the claim was subject to the "Notice of Baggage Liability Limitations" said to be attached to and forming part of the passenger ticket. The petitioner disputed that that notice was also noticeably posted in its offices to guide the passengers.

At the trial, private respondent showed proof of his retirement award and vacation pay amounting to $4,750. He claimed that the attach case also contained other money consisting of: (1) $1,400 supposedly given to him by his son (Jaime) as a round trip fare of his (plaintiff-respondent) wife, but which amount was later found to be actually intended by Jaime as payment for arrears of a lot purchased from Tropical Homes, Inc.; (2) $3,000 allegedly given by his brothers for payment of taxes and for constructing improvements on the Rapadas estates; and (3) $300.00 birthday present of the spouses Mr. and Mrs. Ruben Canonizado to plaintiff-respondent's wife. He also claimed that several items kept are inside in the attach case, namely: (1) contracts and records of employment, letters of commendation, testimonials and newspaper clippings on his achievement for 13 years in Tonga, New Zealand and Australia, drafts of manuscripts, photographs and drivers license alleged to be worth $20,000; (2) a Polaroid camera, films, calculator, and other personal items worth $403.90; (3) memorabilia, autographs personally acquired from Charles Lindberg, Lawrence Rockefeller and Ryoichi Sasakawa, a commemorative palladium coin worth Tongan 100 paengs and unused Tongan stamps, all totaling $7,500; and (4) a plan worth $5,000.00 drawn by his son Jaime, who is an architect, for the construction of a residential house and a 6-story commercial building. Rapadas claimed the amount of the attach case itself to be $25.50. The petitioner still says that its liability for the lost baggage of the respondent Rapadas was limited to $160 since the latter did not declare a higher value for his baggage and did not pay the corresponding additional charges. The private respondent, on the other hand, insists that he is entitled to as much damages as those awarded by the court and affirmed by the respondent appellate court. ISSUE: Whether or not a passenger is bound by the terms of a passenger ticket declaring that the limitations of liability set forth in the Warsaw Convention (as amended by the Hague Protocol)), shall apply in case of loss, damage or destruction to a registered luggage of a passenger. The real amount of the attach case and the items inside combined.

DECISION: The petitioner is ordered to pay the private respondent damages in the amount of US$400.00 or its equivalent in Philippine Currency at the time of actual payment, P10,000.00 in attorney's fees, and costs of the suit. LAW: The Warsaw Convention, as amended, specifically provides that it is applicable to international carriage which it defines in Article 1, par. 2 as follows: (2) For the purposes of this Convention, the expression "international carriage" means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a breach in the carriage or a transshipment, are situated either within the territories of two High Contracting Parties or within the territory of a single High Contracting Party if there is an agreed stopping place within the territory of another State, even if that State is not a High Contracting Party. Carriage between two points within the territory of a single High Contracting Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention. ("High Contracting Party" refers to a state which has ratified or adhered to the Convention, or which has not effectively denounced the Convention). Nowhere in the Warsaw Convention, as amended, is such a detailed notice of baggage liability limitations required. Nevertheless, it should become a common, safe and practical custom among air carriers to indicate beforehand the precise sums equivalent to those fixed by Article 22 (2) of the Convention. CASE# 48: CEBALLOS VS. INTESTATE ESTATE OF THE LATE EMIGDIO MERCADO GR NO. 155856 MAY 28, 2004 FACTS: Leonora Emparado Ceballos (petitioner) is the registered owner of a certain parcel of land situated in Bato, Badian, Cebu, consisting of 53,301 sq. m. and covered by Transfer Certificate of Title Num. T-948 of the Register of Deeds for the Province of Cebu. Sometime in October 1980, Leonora was introduced to Emigdio Mercado to obtain a loan as the latter was also known to be in money-lending business. She was able to borrow P12,000 payable in two (2) months and to secure the loan, she executed a Deed of Real Estate Mortgage in favor of Emigdio Mercado over the subject property. The mortgage deed was not registered by the mortgagee. She was not able to pay her mortgage indebtedness to Emigdio Mercado within two months. On February 13, 1982, a Deed of Absolute Sale was executed wherein the

subject property was sold to Emigdio Mercado for the price of P16,500. The deed contained the signatures of Leonora and her husband Narciso Ceballos and notarized by Atty. Elias V. Ortiz. It seems that around 1990, the petitioner offered to buy the property back from Emigdio Mercado for P30,000 but the latters wife refused since the same was already transferred in their names (under TCT No. TF-3252 issued on June 1, 1987). Emigdio Mercado died on January 12, 1991 and a petition for the issuance of letters of administration over his intestate estate was filed by her daughter Thelma M. Aranas before the RTC-Cebu City, Branch 11. On August 18, 1990, the petitioner set up the present suit against the Intestate Estate of the late Emigdio Mercado, Teresita Mercado as the Administrator, and/or the heirs of the late Emigdio Mercado. The Complaint assumed the following: "[Petitioner] is the owner as her paraphernal property of a parcel of land located at Barangay Bato, Municipality of Badian, Province of Cebu and covered by TCT No. T-948, the same being her hereditary share from the property of her late father Rufo Emparado. Sometime in the early part of December 1980, to accommodate a friend who was hospitalized, [petitioner] went to the late Emigdio Mercado, who was known, besides his other businesses, to be also in the business of lending money, although at exorbitant rate of interest. A Real Estate Mortgage was drawn on December 31, 1980 for P12,000.00 although only P8,000.00 was actually delivered, the difference represents the interest for the use of money, for a period of two (2) months. Since the accommodated party could not yet produce the redemption money, [petitioner] periodically went to the mortgagee to beg him not to foreclose the mortgage. On February 13, 1982, [petitioner] was made to execute a Deed of Sale with Pacto de Retro for an increased consideration, from P12,000.00 to P16,500.00 for a period of one (1) year from date of execution thereof, which contract was in fact an equitable mortgage. [Petitioner] religiously paid interest on the loan even beyond the term of the mortgage, on the repeated request by [petitioner] to the deceased mortgagee not to foreclose the mortgage. [Petitioner] learned to engage in the buy and sell of just any commodity, more especially real estate, and her income improved. In November 1990, she went to the deceased mortgagee to redeem the property to which the latter agreed but the wife, Teresita Virtucio-Mercado vehemently objected saying that it could no longer be done because the title had been transferred in their names. [Petitioner] waited for a propitious time to again propose to redeem the property since it was a matter of convincing by the deceased mortgagee for his wife to agree to the redemption, when she learned of his death on January 12, 1991. [Petitioner] then started her epic to recover the property; she engaged in gathering documentation when to her great worry and apprehension she discovered that the title to the property had indeed been transferred in the name of the deceased Emigdio S. Mercado under TCT No. TF-3252. Such transfer of title was based on a document, Deed of Absolute Sale, purportedly executed by

[petitioner] and her husband on February 13, 1982, the same date when deceased Emigdio Mercado and [petitioner] executed the Deed of Sale With Pacto de Retro and for the same consideration of P16,500.00, the latter document turned out not to have been submitted by the deceased for notarization. Said Deed of Absolute Sale is an absolute fabrication with the signatures therein appearing to have been of the [petitioners] and husbands, were absolute forgeries. [Petitioner] submitted said deed of sale to disinterested third parties to confirm its being spurious; she sought the assistance of the Philippine National Police (PNP) which found (PNP Report No. 097-91) that said document of sale is a forgery; and hence, it is patent that the transfer of title on the property was done through fraud. [Petitioner] is willing and ready to redeem the property and there is no other way for her to recover her property but through the courts. [Petitioner] thus prayed for a judgment (1) declaring the Deed of Absolute Sale void from the beginning; (2) to allow [petitioner] to redeem her property; (3) ordering defendant, after redemption, to reconvey the property to [petitioner]; (4) ordering defendant to reimburse [petitioner] attorneys fees of P50,000.00 and litigation expenses of P10,000.00, and to pay moral damages in the sum of P100,000.00. (emphasis mine) "In their Answer with Counterclaim, [respondents] Heirs of the Late Emigdio Mercado asserted that what was written on the deed of real estate mortgage was the truth and that the deed of sale with pacto de retro was not pushed through because [petitioner] decided to sell the property to the late Emigdio Mercado absolutely for the price of P16,500.00. [Petitioner] already knew that she had sold the property to Mr. Mercado and she was even the one who delivered to him the Deed of Absolute Sale already signed by her and her husband, and already notarized by the notary public; and since that time [respondents] have been in possession of said property and were the ones paying the realty taxes thereon. The signatures appearing on the deed of sale are genuine, and the property can no longer be redeemed as it had already been sold in an absolute manner to Mr. Mercado. [Respondents] thus prayed that the complaint be dismissed and on the counterclaim, that [petitioner] be ordered to pay [respondents] the amounts of P30,000.00 as attorneys fees, P20,000.00 as litigation expenses, P1,000,000.00 as moral damages and P200,000.00 as exemplary damages. xxx xxx xxx

"To prove her allegations in the complaint, [petitioner] presented documentary evidence and her own testimony and those of her witnesses Romeo Varona (document examiner of the PNP Crime Laboratory, Camp Sotero Cabahug) and Jovencio Virtucio. [Respondents], on the other hand, presented the testimonies of Atty. Elias Ortiz (who notarized the Deed of Absolute Sale), Teresita Virtucio Mercado and SPO2 Wilfredo Espina (member of the PNP assigned at the Crimes

Record Section). In rebuttal, [petitioner] returned to the witness stand and also presented the testimony of Pio Delicano (alleged overseer of the subject land since 1990). [Respondents] sur-rebuttal evidence consisted of a copy of tax declaration in the names of [petitioner] and Francisca Emparado and copy of the complaint in Civil Case No. CEB-13680 pending before RTC-Cebu City, Branch 22 between [petitioner] and her own brothers and sisters over the same property subject of the present litigation. On October 19, 1995, the trial court rendered judgment in favor of the [respondents] and against the [petitioner] as earlier cited." ISSUE: Whether or not said document of sale is a forgery, and therefore void Whether or not the contract was one of equitable mortgage, not of sale. DECISION: Contract was one of sale as petitioner failed to present clear and convincing evidence to overcome the presumption of validity of the notarized Deed conveying the land to private respondents. Awards for moral damages, attorneys fees and expenses of litigation are deleted. No pronouncement as to costs. LAW: "Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate: (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

"In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws." "Art. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale."

CASE# 49: SPOUSES RAYMUNDO ET AL VS. SPOUSES BANDONG GR NO. 171250 JULY 4, 2007 FACTS: Eulalia (wife of Carlos Raymundo) was engaged in the business of buying and selling large cattle from different provinces within the Philippines. For this purpose, she employed biyaheros, whose primary task involved acquiring large cattle with the financial capital provided by Eulalia and delivering the acquired cattle to her for further disposal. In order to secure the financial capital she advanced for the biyaheros, Eulalia required them to surrender the Transfer Certificates of Title (TCTs) of their properties and to execute the corresponding Deeds of Sale in her favor. Dominador Bandong had been working for Eulalia as one of her biyaheros for three decades. Since he served Eulalia for so long without any bad record at all, he was no longer required by Eulalia to post any security in the performance of his duties. In 1989, however, Eulalia found that Dominador incurred shortage in acquiring cattle in the amount of P70,000. The Spouses Bandong then executed a Deed of Sale in favor of Eulalia on February 3, 1989, covering a parcel of land with an area of approximately 96 sq. m., located at Caloocan City and registered under TCT No. 1421 (subject property), in the name of the Spouses Bandong. On the strength of the abovementioned deed, the subject property was registered in the names of the Spouses Raymundo. Afterwards, the subject property was sold by the Spouses Raymundo to Eulalias grandniece and herein co-petitioner, Jocelyn Buenaobra. Thus, the subject property came to be registered in the name of Jocelyn and her husband Angelito. After the TCT of the subject property was transferred to their names, the Spouses Buenaobra instituted before the Metropolitan Trial Court (MeTC) of Caloocan City, an action for ejectment against the Spouses Bandong (docketed as Civil Case No. 20053) to evict the latter from the subject property, which the Spouses Bandong opposed on the ground that they are the rightful owners and possessors thereof. The MeTC ruled in favor of the Spouses Buenaobra which, on appeal, was totally affirmed by the RTC and subsequently, by the Court of Appeals. Finally, when the case was raised on appeal in G.R. No. 109422, a Resolution dated July 12, 1993 was issued, finding that there was no substantial argument raised for the appealed decision to be reversed.

To assert their right to the subject property, the Spouses Bandong instituted an action for annulment of sale before the RTC against Eulalia and Jocelyn on the ground that their consent to the sale of the subject property was vitiated by Eulalia after they were served by Jocelyns counsel with the demand to vacate (docketed as Civil Case No. C14980). The Spouses Bandong said that there was no sale intended but only equitable mortgage for the purpose of securing the shortage incurred by Dominador in the amount of P70,000 while employed as biyahero by Eulalia. Eulalia countered that Dominador received a significant sum of money from her, either as cash advances for the purpose of acquiring large cattle or as personal loan, and when he could no longer pay his obligations, the Spouses Bandong voluntarily ceded the subject property to her by executing the corresponding deed of sale in her favor. The Spouses Bandong personally appeared before the Notary Public and manifested that the deed was their voluntary act and deed. For her part, Jocelyn said that she was a buyer in good. While she admitted that she had previous notice that Dominador and a certain Lourdes Santos were in possession of the subject property, Jocelyn claimed that the possessors already acknowledged her ownership and even asked for time to vacate. In the end, though, they refused to leave the premises. ISSUE: Whether or not the Deed of Sale between Dominador and Eulalia is valid and binding. Whether or not Jocelyn is a buyer in good faith. DECISION: 1. Annulling the Deed of Absolute Sale dated February 3, 1989 as a deed of sale, and considering it instead as a real estate mortgage of the disputed property to secure the payment of the P70,000 the plaintiffs-appellants spouses Bandong owe the defendants-appellees spouses Raymundo. The spouses Bandong are given one (1) year from the finality of this Decision to pay the P70,000 that they owe to the spouses Raymundo, at 12% interest per annum computed from July 17, 1991 until its full payment. 2. Annulling the Deed of Absolute Sale dated September 25, 1990, between the spouses Raymundo (vendors) and the spouses Buenaobra (vendees). 3. Ordering the Register of Deeds of Caloocan City to issue a new Transfer Certificate of Title (covering Lot 18, Block 2 of the subdivision plan PSD 16599, a portion of Lot 1073 of the Cadastral Survey of Caloocan) in the names of the spouses Bandong, after the cancellation pursuant to this Decision of TCT No. 222871 currently in the names of the spouses Buenaobra; and further ordering the said Register of Deeds to explain in the new Transfer Certificate of Title in the names of the spouses Bandong a real estate mortgage in favor of the spouses Raymundo reflecting the terms of this Decision.

4. Awarding: (a) moral damages of P50,000.00; (b) exemplary damages of P20,000.00; and (c) attorneys fees and expenses of litigation of P20,000.00, plus P500.00 per proven appearance of the plaintiffs-appellants counsel in court all solidarily payable by the spouses Raymundo and the spouses Buenaobra, to the spouses Bandong. 5. Ordering the payment of the costs of the suit, payable by the spouses Raymundo and the spouses Buenaobra. LAW: Article 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold. (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. Article 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. For Articles 1602 and 1604 to apply, two requisites must concur: (1) The parties entered into a contract denominated as a contract of sale; and (2) Their intention was to secure an existing debt by way of an equitable mortgage. CASE# 50: YU BUN GUAN VS. ONG GR NO. 144735 OCTOBER 18, 2001 FACTS:

Elvira Ong (respondent) said that she and Yu Bun Guan (petitioner) are husband and wife that were married according to Chinese rites on April 30, 1961. They lived together until she and her children were abandoned by her husband on August 26, 1992, because of the latter's incurable promiscuity, volcanic temper and other vicious vices; out of the reunion were born three (3) children, now living with her. She purchased, out of her personal funds, a parcel of land on March 20, 1968, then referred to as the Rizal property, from Aurora Seneris, and supported by Title No. 26795, then subsequently registered on April 17, 1968, in her name. Also during their marriage, they purchased, out of their conjugal funds, a house and lot, in 1983, thereafter, registered in their names, under Title No. 118884. Before their separation in 1992, she reluctantly agreed to Yu Bun Guans importunings that she execute a Deed of Sale of the J.P. Rizal property in his favor, but on the promise that he would construct a commercial building for the benefit of the children. He suggested that the J.P. Rizal property should be in his name alone so that she would not be involved in any obligation. The consideration for the simulated sale was that, after its execution in which he would represent himself as single, a Deed of Absolute Sale would be executed in favor of the three (3) children and that he would pay the Allied Bank, Inc. the loan he obtained. Because of the glib assurances of her husband, Elvira executed a Deed of Absolute Sale in 1992, but then he did not pay the consideration of P200,000, supposedly the ostensible valuable consideration. On the contrary, she paid for the capital gains tax and all the other assessments even amounting to not less than P60,000, out of her personal funds. Because of the sale, a new title (TCT No. 181033) was issued in his name, but to insure that he would comply with his commitment, she did not deliver the owner's copy of the title to him. Because of the refusal of Yu Bun Guan to perform his promise, and also because he insisted on delivering to him the owner's copy of the title to the JP Rizal property, in addition to threats and physical violence, she decided executing an Affidavit of Adverse Claim. Also to avoid burdening the JP Rizal property with an additional loan amount, she wrote the Allied Bank, Inc. on August 25, 1992, withdrawing her authority for her husband to apply for additional loans. To save their marriage, she even sought the help of relatives in an earnest effort at reconciliation, not to mention a letter to her husband on November 3, 1992. The petitioner, on the other hand, filed with the RTC, Makati, in 1993 (Case No. M2905), a 'Petition for Replacement' of an owner's duplicate title.

Attached to the Petition was the Affidavit of Loss dated March 26, 1993, in which he falsely made it appear that the owner's copy of the title was lost or misplaced, and that was granted by the court in an Order dated September 17, 1993, following which a new owner's copy of the title was issued to petitioner. Upon discovery of the fraudulent steps taken by the petitioner, Elvira immediately executed an Affidavit of Adverse Claim on November 29, 1993. She precisely asked the court that the sale of the JP Rizal property be declared as null and void; for the title to be cancelled; payment of actual, moral and exemplary damages; and attorney's fees. It was, on the other hand, the version of Yu Bun Guan that sometime in 1968 or before he became a Filipino, through naturalization the JP Rizal property was being offered to him for sale. Because he was not a Filipino, he utilized Elvira as his dummy and agreed to have the sale executed in her name, although the consideration was his own and from his personal funds. When he finally acquired a Filipino citizenship in 1972, he purchased another property being referred to as the 'Juno lot' out of his own funds. If only to reflect the true ownership of the JP Rizal property, a Deed of Sale was then executed in 1972. Believing in good faith that his owner's copy of the title was lost and not knowing that the same was surreptitiously concealed by respondent, he filed in 1993 a petition for replacement of the owner's copy of the title, in court. He added that the respondent could not have purchased the property because she had no financial capacity to do so; on the other hand, he was financially capable although he was disqualified to acquire the property by reason of his nationality. Respondent was in pari delicto being privy to the simulated sale. ISSUE: Whether or not Deed of Sale was void. The identity of the person who purchased the JP Rizal property. DECISION: The Deed of Sale dated July 24, 1992 is declared VOID. The plaintiff Elvira Ong is declared the owner of the property covered by Transfer Certificate of Title No. 217614, Registry of Deeds, Makati. The Register of Deeds, City of Makati is ordered to: Cancel Transfer Certificate of Title No. 181033; and Issue in lieu thereof, a transfer certificate of title in the name of Elvira A. Ong, of legal age, single, Filipino';

The defendant Yu Bun Guan is ordered to pay to the said plaintiff, the following: P48,631 As reimbursement of the capital gains tax; Six (6) percent of P48,631 per annum from November 23, 1993, until the said P48,631 is paid as damages; P100,000 as moral damages; P50,000 as exemplary damages; The counterclaim made by Yu Bun Guan is dismissed. Cost is taxed against the defendant. LAW: The trial court further held that the in pari delicto rule found in Articles 1411 and 1412 of the Civil Code was not applicable to the present case, because it would apply only to existing contracts with an illegal cause or object, not to simulated or fictitious contracts or to those that were inexistent due to lack of an essential requisite such as cause or consideration. It likewise voided the Deed of Absolute Sale of the JP Rizal property for having been simulated and executed during the marriage of the parties. Whether or not the Court of Appeals gravely erred in not applying the rules on coownership under Article 144 of the New Civil Code in determining the proprietary rights of the parties herein even as respondent herself expressly declared that the money with which she allegedly bought the property in question in 1968 came from her funds, salaries and savings at the time she and petitioner already lived as husband and wife.