DOCTRINES IN SALES & LEASE

I. EXTINGUISHMENT OF SALES
1) Ramos vs. CA
The true intention of the parties being that the transaction shall secure the payment of the debt,
it shall be presumed to be an equitable mortgage. The existence of one circumstance under Art.
1602 is enough to create the presumption. Parol eidence shall be considered in determining
the true intention of the parties.
2) De leon vs. Salvao!
!hile in ordinary sales for reasons of equity a transaction may be inalidated on the ground of
inadequacy of price, or "hen such inadequacy shoc#s one$s conscience as to %ustify the courts
to interfere, such does not follo" "hen the la" gies to the o"ner the right to redeem, as "hen
a sale is made at public auction, upon the theory that the lesser the price, the easier it is for the
o"ner to effect the redemption. And so it "as aptly said that "hen there is the right to redeem,
inadequacy of price should not be material, because the %udgment debtor may reacquire the
property or also sell his right to redeem and thus recoer the loss he claims to hae suffered by
reason of the price obtained at the auction sale.
") Flo!es vs. So
&nder the 'ld (iil (ode, o"nership is consolidated by operation of la". A right of o"nership
ested "ay bac# from the time the 'ld (iil (ode "as still in effect cannot be defeated by the
application of Articles 1606 and 160) of the *e" (iil (ode.
+n a pacto de retro sale, o"nership oer a thing sold is transferred to the endee upon
execution of the contract sub%ect only to the resolutory condition that the endee exercise his
right of repurchase "ithin the period agree upon.
#) Alon$o vs. IAC
!here co,heirs filed action for redemption of co,heir$s sold share only after 1- years had
elapsed from the sale, they are deemed to hae been actually informed thereof sometime
during those years although no "ritten notice of sale "as gien to them. .rom the day the first
complaint for redemption "as filed, it shall be deemed that the co,heirs "ere actually informed
of the sale and that thereafter the -0,day period started running.
%) Lao vs. CA
A person "ho is in dire need of money may be compelled to sign a document purporting to be a
sale but in fact a mortgage. /uch presumption arises from a statement in a deed of sale "ith
the right to repurchase that the endor borro"ed from the endee the money used in buying the
property from the original o"ner. (de Leon book)
+n determining the nature of the contract "hether it is a pacto de retro sale or an equitable
mortgage, the (ourt loo#s at the intent of the parties and not at the nomenclature used to
describe it. 0ence, parol eidence becomes admissible to proe the intent and agreement of
the parties.
&) Lan'$a vs. e leon
The stipulation in pacto de retro sale that the o"nership oer the property sold "ould
automatically pass to the endee in case no redemption "as effected "ithin the stipulated
period, is contrary to the nature of a true pacto de retro sale under "hich the endee acquires
o"nership of the thing sold immediately upon the execution of the sale, sub%ect only the
endor$s right of redemption. The said stipulation is pactum commissorium "hich enables the
mortgagee to acquire o"nership of the mortgaged property "ithout foreclosure. +t is oid. (de
Leon book)
() Ca)'lon* vs. CA
The deed of sale and deed of option to purchase the property are in reality an equitable
mortgage, as they "ere signed on the same day. A subsequent sale of the property to a
endee,a,retro and its registration on the same day indicate said sale is not a pacto de retro
sale.
The existence of equitable mortgage can be sho"n by the fact that a series of loan "ere
obtained by a 1endor2 from a 1endee2.
+) Sol, Homes In- vs. CA
+n a contract of sale "ith pacto de retro, the endee has a right to the immediate possession of
the property sold, unless other"ise agreed upon. +t is basic that in a pacto de retro sale, the title
and o"nership of the property sold are immediately ested in the endee a retro,, sub%ect only
to the resolutory condition of repurchase by the endor a retro "ithin the stipulated period.
The (ourt ruled that Article 1616 of the (iil (ode is not restrictie or exclusie, barring
additional amounts that the parties may agree upon. /aid proision should be construed
together "ith Article 1601 of the same code requiring the endor to comply "ith the proisions
of Article 1616 and other stipulations agreed upon by the parties.
.) Lee C/'0 Real10 Co!) vs. CA
Bona fide tender of the redemption price, "ithin the prescribed period is only essential to
presere the right of redemption for future enforcement beyond such period of redemption and
"ithin the period prescribed for the action by the statute of limitations. !here the right to
redeem is exercised through %udicial action "ithin the reglementary period, the offer to redeem,
accompanied by a bona fide tender of the redemption price, "hile proper, may be unessential.
II. LEASE
12) G'$man 3o-al,n* vs. 3onnev,e
A lease "ith a proiso granting the lessee the right of first priority 1all things and conditions
being equal2 meant that there should be identity of the terms and conditions to be offered to the
lessee and all other prospectie buyers, "ith the lessee to en%oy the right of first priority.3 A
deed of sale executed in faor of a third party "ho cannot be deemed a purchaser in good faith,
and "hich is in iolation of a right of first refusal granted to the lessee is not oidable under the
/tatute of .rauds but rescissible under Articles 1-40 to 1-41 5-6 of the *e" (iil (ode.
(ontract of /ale "as not oidable but rescissible. &nder Article 1-40 to 1-41 5-6 of the (iil
(ode, a contract other"ise alid may nonetheless be subsequently rescinded by reason of
in%ury to third persons, li#e creditors. The status of creditors could be alidly accorded the
7onneies for they had substantial interest that "ere pre%udiced by the sale of the property to
the petitioner "ithout recogni8ing their right of first priority under the (ontract of 9ease.
According to Tolentino, rescission is a remedy granted by la" to the contracting parties and
een to third persons, to secure reparations for damages caused to them by a contract, een if
this should be alid, by means of the restoration of things to their condition at the moment prior
to the celebration of said contract.
11) 4e5 Sen* Co vs. CA
The circumstance that the lessee has paid its rentals religiously during the past t"enty 5206
years is also not sufficient to %ustify the extension that it demands. *either are the substantial
improements it allegedly made on the leased premises nor the difficulty of finding another
place of business, on "hich it has not submitted any eidence at all.
+f the rental "as paid monthly and term had not been expressly agreed upon, the lease "as
understood under Art.164) to be terminable from month to month.

12) S)s. Cl'1a!,o vs. CA
Acceptance in rentals in arrears does not constitute "aier of default in payment of rentals.
*on,payment of rentals is a ground for %udicial e%ectment under (( and 7P22.
1") 4a) vs. C!'$
+n the absence of notice or demand to acate, the lease of a lessee continues to be in force and
cannot be deemed to hae expired as of the end of the month automatically.
1#) Un,1e Real10 Co!). vs. CA
The lease agreement in question being for a definite period, the lessor$s right to %udicially e%ect
the lessee is an exception to the general proided for in /ec. : of P; *o. 20 5<xcept "hen the
lease is for a definite period, the proisions of par.1 of Art.16)- of (( insofar as they refer to
d"elling unit or land on "hich another$s d"elling is located shall be suspended until other"ise
proided= but other proisions of the (( and >ules of (ourt on lease contracts insofar as they
are not in conflict "ith the proisions of this Act, shall apply6
'ne of the grounds for e%ectment under /ec.? of 7P2? is the expiration of the period of a "ritten
lease contract.
The lease agreement does not fall "ithin the protectie mantle of the proisions of P;20 and
7P2? "hich coers only d"elling units.
9ease on a month to month basis expires after the last day of the -0
th
day period.
1%) Le*a! M*1 & Real10 Co!). vs. CA
The lessee of a residential property coered by the >ent (ontrol 9a" can be e%ected on the
basis alone of the expiration of the erbal lease contract.