SALES CASE DOCTRINES

1
ST
HW (ART 1458-1478)
***1. DIgnos vs CA
i. A deed of sale is absolute in nature although denominated as a "Deed of Conditional
Sale WHERE THERE IS NO PROVISION THAT TITLE IS RESERVED TO THE VENDOR OR
UNILATERALLY GIVING THE VENDOR THE RIGHT TO RESCIND CONTRACT.
ii. all the elements of a valid contract of sale under Article 1458 of the Civil Code, are
present, such as: (1) consent or meeting of the minds; (2) determinate subject matter;
and (3) price certain in money or its equivalent.
iii. Art 1477- ownership is transferred by delivery of the thing sold.
iv. There was ACTUAL DELIVERY in the case at bar.
v. a slight delay on the part of one party in the performance of his obligation is not a
sufficient ground for the rescission of the agreement.

*** 2. Artates vs Urbi
i. The execution sale was null and void pursuant to Section 118 of the Public Land Law
(CA 141).
ii. As thus prescribed by law, for a period of five years from the date of the government
grant, lands acquired by free or homestead patent shall not only be incapable of being
encumbered or alienated except in favor of the government itself or any of its
institutions, but also, they shall not be liable to the satisfaction of any debt contracted
within the said period.
iii. Purchaser will not acquire absolute ownership through a sheriffs provisional
certificate.

*** 3. Heirs of Zambales vs CA
i. The sale of a homestead lot within the five-year prohibitory period provided in Section
118 of the Public Land Law(CA 141) is illegal and void.
ii. As the contract is sold from the beginning, for being expressly prohibited by law (Article
1409, ibid.) the action for the declaration of its inexistence does not prescribe.
iii. ACTION FOR REVERSION NOT DISCOUNTED. The homestead in question should be
returned to the Zambaleses, petitioners herein, who are, in turn, bound to restore to
the Corporation the sum of P8,923.70 as the price thereof. This is without prejudice to
the corresponding action on the part of the State for reversion of the property and its
improvements, if any, under Section 124 of the Public Land Act.

***4. Quiroga vs Parsons Hardware

i. SALES; INTERPRETATION OF CONTRACT. For the classification of contracts, due regard
must be paid to their essential clauses. In the contract in the instant case, what was
essential, constituting its cause and subject matter, was that the plaintiff was to furnish the
defendant with the beds which the latter might order, at the stipulated price, and that the
defendant was to pay this price in the manner agreed upon. These are precisely the
essential features of a contract of purchase and sale. There was the obligation on the part
of the plaintiff to supply the beds, and, on that of the defendant, to pay their price. These
features exclude the legal conception of an agency or order(?) to sell whereby the
mandatary or agent receives the thing to sell it, and does not pay its price, but delivers to
the principal the price he obtains from the sale of the thing to a third person, and if he does
not succeed in selling it, he returns it, Held: That this contract is one of purchase and sale,
and not of commercial agency.

***5. Concrete Aggregates vs. CTA and CIR
i. Case is related to Art. 1467. A contract for the delivery at a certain price of an
article which the vendor in the ordinary course of his business manufactures or
procures for the general market, whether the same is on hand at the time or
not, is a contract of sale, but if the goods are to be manufactured specially for
the customer and upon his special order, and not for the general market, it is a
contract for a piece of work.
ii. Issue: whether petitioner is a contractor subject to the 3% contractor's tax
under Section 191 of the 1968 National Internal Revenue Code or a
manufacturer subject to the 7% sales tax under Section 186 of the same Code
iii. Held: Section 194(x), now Section 187(x), of the Tax Code provides that a
'Manufacturer' includes every person who by physical or chemical process alters
the exterior texture or form or inner substance of any raw material or
manufactured or partially manufactured product in such manner as to prepare
it for a special use or uses to which it could not have been put in its original
condition xxx

Petitioner is a manufacturer as defined by Section 194(x), now Section 187(x), of
the Tax Code; it has an aggregate plant at Montalban, Rizal, which processes
rock aggregates mined by it from private lands; it operates a concrete batching
plant at Longos, Quezon City.

***6. Peoples homesite vs CA and Mendoza
. CIVIL LAW; OBLIGATIONS AND CONTRACTS, NON-PERFECTION OF CONTRACT OF SALE;
CONDITIONAL OR CONTINGENT AWARD PROPERLY WITHDRAWN; CASE AT BAR. There
was no perfected sale of Lot 4. It was conditionally or contingently awarded to the
Mendozas subject to the approval by the city council of the proposed consolidation
subdivision plan and the approval of the award by the valuation committee and higher
authorities. The city council did not approve the subdivision plan. The Mendozas were
advised in 1961 of the disapproval. In 1964, when the plan with the area of Lot 4 reduced to
2,608.7 square meters was approved, the Mendozas should have manifested in writing their
acceptance of the award for the purchase of Lot 4 just to show that they were still
interested in its purchase although the area was reduced and to obviate any doubt on the
matter. They did not do so. The People's Homesite and Housing corporation (PHHC) board
of directors acted within its rights in withdrawing the tentative award. The contract of sale is
perfected at the moment there is a meeting of minds upon the thing which is the object of
the contract and upon the price. From that moment, the parties may reciprocally demand
performance, subject to the law governing the form of contracts." (Art. 1475, Civil Code). "In
conditional obligations. the acquisition of rights, as well as the extinguishment or loss of
those already acquired, shall depend upon the happening of the event which constitutes the
condition." (Art. 1181, Civil Code). Under the facts of the case, there was no meeting of
minds on the purchase of Lot 4 with an area of 2,608.7 square meters at P21 a square
meter.

***7. Toyota Shaw vs CA
i.
1. CIVIL LAW; SPECIAL CONTRACTS; SALES; CONTRACT OF SALE; ELEMENT OF
DEFINITENESS OF PRICE FOR PERFECTION THEREOF; NOT PRESENT IN CASE AT BAR.
Article 1458 of the Civil Code defines a contract of sale and Article 1475 specifically
provides when it is deemed perfected. It is not a contract of sale. No obligation on the
part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative
obligation on the part of the latter to pay therefor a price certain appears therein. The
provision on the downpayment of P100,000.00 made no specific reference to a sale of a
vehicle. If it was intended for a contract of sale, it could only refer to a sale on
installment basis, as the VSP executed the following day confirmed. But nothing was
mentioned about the full purchase price and the manner the installments were to be
paid. This Court had already ruled that a definite agreement on the manner of payment
of the price is an essential element in the formation of a binding and enforceable
contract of sale. This is so because the agreement as to the manner of payment goes
into the price such that a disagreement on the manner of payment is tantamount to a
failure to agree on the price. Definiteness as to the price is an essential element of a
binding agreement to sell personal property.

2. ID.; ID.; ID.; ID.; ELEMENT OF MEETING OF MINDS; NOT ESTABLISHED IN CASE AT
BAR.

***8. Addison vs. Felix
1. VENDOR AND PURCHASER; DELIVERY; EXECUTION OF PUBLIC INSTRUMENT. It is the
duty of the vendor to deliver the thing sold. Symbolic delivery by the execution of a public
Instrument is equivalent to actual delivery only when the thing sold is subject to the control
of the vendor.
2. ID.; ID.; RESCISSION. If the vendor fails to deliver the thing sold the vendee may elect to
rescind the contract.

***9. Sampaguita pictures vs Jalwindor Manufacturers Inc.
i. Ownership is not transferred by perfection of the contract but by delivery,
either actual or constructive. This is true even if the purchase has been made on
credit, as in the case at bar. Payment of the purchase price is not essential to
the transfer of ownership as long as the property sold has been delivered.
ii. Ownership is acquired from the moment the thing sold was delivered to
vendee, as when it is placed in his control and possession (Art 1477)

***10. Ten Forty Realty and Devt Corp vs Cruz
i. CIVIL LAW; SPECIAL CONTRACTUAL; SALES, BUYER ACQUIRES THE THING UPON ITS
DELIVERY; PETITIONER DID NOT GAIN CONTROL AND POSSESSION OF PROPERTY IN
CASE AT BAR. In a contract of sale, the buyer acquires the thing sold only upon its
delivery "in any of the ways specified in Articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor
to the vendee." With respect to incorporeal property, Article 1498 lays down the
general rule: the execution of a public instrument shall be equivalent to the delivery
of the thing that is the object of the contract if, from the deed, the contrary does
not appear or cannot be clearly inferred. However, ownership is transferred not by
contract but by tradition or delivery. Nowhere in the Civil Code is it provided that
the execution of a Deed of Sale is a conclusive presumption of delivery of possession
of a piece of real estate. This Court has held that the execution of a public
instrument gives rise only to a prima facie presumption of delivery. Such
presumption is destroyed when the delivery is not effected because of a legal
impediment. . . In the case at bar it is undisputed that petitioner did not occupy the
property from the time it was allegedly sold to it on December 5, 1996 or at any
time thereafter.

2
ND
HW (ART 1479-1483 AND 1504)

***1. Southwestern Sugar and Molasses Co. v. Atlantic Gulf & Pacific Co.
CONTRACTS; OFFER AND ACCEPTANCE; RULE ON WITHDRAWAL OF OFFER. While it is
true that under article 1324 of the new Civil Code, the general rule regarding offer and
acceptance is that, when the offer or gives to the offeree a certain period to accept, "the
offer may be withdrawn at any time before acceptance" except when the option is founded
upon consideration this general rule must be interpreted as modified by the provision of
article 1479 which applies to "a promise to buy and sell" specifically. This rule requires that a
promise to sell to be valid must be supported by a consideration distinct from the price,
which means that the option can still be withdrawn, even if accepted, if the same is not
supported by any consideration.

***2. Atkins, Kroll & Co., Inc. v. Cua Hian Tek
1. OBLIGATION AND CONTRACTS; SALES; OFFER TO SELL A DETERMINATE THING FOR A
PRICE CERTAIN; ACCEPTANCE OF OFFER; EFFECT OF; LIABILITY OF THE OFFEROR AND
OFFEREE. The acceptance of an offer to sell a determinate thing for a price certain
creates a bilateral contract to sell and to buy(?). The offeree, upon acceptance, ipso facto
assumes the obligations of a purchaser. On the other hand, the offeror would be liable for
damages if he fails to deliver the thing he had offered for sale.
2. ID.; ID.; ID.; ID.; OPTION WITHOUT CONSIDERATION. If an option is given without
(consideration?), it is mere offer of contract of sale, which is not binding until accepted. If,
however, acceptance is made before a withdrawal, it constitute a binding contract of sale,
even though the option was not supported by a sufficient consideration.
***3. Sanchez vs Rigos
1. CIVIL LAW; CONTRACTS; CONTRACT TO BUY AND SELL; OPTION WITHOUT
CONSIDERATION; CASE AT BAR. Where both parties indicated in the instrument in the
caption, as an "Option to Purchase," and under the provisions thereof, the defendant
"agreed, promised and committed" herself to sell the land therein described to the plaintiff
for P1,510.00, but there is nothing in the contract to indicate that her aforementioned
agreement, promise and undertaking is supported by a consideration "distinct from the
price" stipulated for the sale of the land, it is not a "contract to buy and sell." It merely
granted plaintiff an "option" to buy.

2. ID.; ID.; ID.; ID.; ARTICLES 1354 AND 1479, NEW CIVIL CODE; APPLICABILITY. It should
be noted that: Article 1354 applies to contracts in general, whereas the second paragraph of
Article 1479 refers to "sales" in particular, and, more specifically, to "an accepted unilateral
promise to buy or to sell."

3. ID.; ID.; REQUISITE OF A UNILATERAL PROMISE IN ORDER TO BIND PROMISOR; BURDEN
OF PROOF REST UPON PROMISEE. In order that a unilateral promise may be "binding"
upon the promisor, Article 1479 requires the concurrence of a condition namely, that the
promise be "supported by a consideration distinct from the price." Accordingly, the
promisee can not compel the promisor to comply with the promise, unless the former
establishes the existence of said distinct consideration. In other words, the promisee has the
burden of proving such consideration.

4. ID.; ID.; WHERE A UNILATERAL PROMISE TO SELL GENERATED TO A BILATERAL CONTRACT
OF PURCHASE AND SALE; ARTICLES 1324 AND 1479, NCC., NO DISTINCTION. This Court
itself, in the case of Atkins, Kroll & Co., Inc. vs. Cua Hian Tek (102 Phil., 948), decided later
than Southwestern Sugar & Molasses Co. vs. Atlantic & Pacific Co., 97 Phil., 249, saw no
distinction between Articles 1324 and 1479 of the Civil Code and applied the former where a
unilateral promise to sell similar to the one sued upon was involved, treating such promise
as an option which, although not binding as a contract in itself for lack of a separate
consideration, nevertheless generated a bilateral contract of purchase and sale upon
acceptance. In other words, since there may be no valid contract without a cause or
consideration promisor is not bound by his promise and may, accordingly withdraw it.
Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of
an offer to sell which, if accepted, results in a perfected contract of sale.

***4. Natino vs IAC

2. CIVIL LAW; CONTRACTS; SALE; OPTION OR PROMISE, UNSUPPORTED BY CONSIDERATION
DISTINCT FROM PURCHASE PRICE NOT BINDING UPON PROMISOR. The Bank was not
bound by the promise made by Mrs. Brodeth not only because it was not approved or
ratified by the Board of Directors but also because, and more decisively, it was a promise
unsupported by a consideration distinct from the re-purchase price. The second paragraph
of Article 1479 of the Civil Code expressly provides: . . ."An accepted unilateral promise to
buy or to sell a determinate thing for a price certain is binding upon the PROMISSOR if the
promise is supported by a consideration distinct from the price." Thus in Rural Bank of
Paraaque Inc. vs. Remolado, et al., a commitment by the bank to resell a property, within a
specified period, although accepted by the party in whose favor it was made, was
considered an option not supported by a consideration distinct from the price and,
therefore, not binding upon the PROMISSOR. Pursuant to Southwestern Sugar and Molasses
Co. vs. Atlantic Gulf and Pacific Company, it was void.



***5. Serra vs. Court of Appeals, and RCBC

2. ID.; ID.; PROMISE TO BUY AND SELL A DETERMINATE THING FOR A PRICE; DISTINGUISHED
FROM ACCEPTED UNILATERAL PROMISE TO BUY OR SELL A DETERMINATE THING FOR A
PRICE. A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price
certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price. (Article 1479, New Civil Code) The first is a mutual promise and each has the
right to demand from the other the fulfillment of the obligation. While the second is merely
an offer of one to another, which if accepted, would create an obligation to the offeror to
make good his promise, provided the acceptance is supported by a consideration distinct
from the price. Article 1324 of the Civil Code provides that when an offeror has allowed the
offeree a certain period to accept, the offer may be withdrawn at anytime before
acceptance by communicating such withdrawal, except when the option is founded upon
consideration, as something paid or promised. On the other hand, Article 1479 of the Code
provides that an accepted unilateral promise to buy and sell a determinate thing for a price
certain is binding upon the promisor if the promise is supported by a consideration distinct
from the price. In a unilateral promise to sell, where the debtor fails to withdraw the
promise before the acceptance by the creditor, the transaction becomes a bilateral contract
to sell and to buy, because upon acceptance by the creditor of the offer to sell by the
debtor, there is already a meeting of the minds of the parties as to the thing which is
determinate and the price which is certain. In which case, the parties may then reciprocally
demand performance. Jurisprudence has taught us that an optional contract is a privilege
existing only in one party the buyer. For a separate consideration paid, he is given the
right to decide to purchase or not, a certain merchandise or property, at any time within the
agreed period, at a fixed price. This being his prerogative, he may not be compelled to
exercise the option to buy before the time expires.

***6. Roman vs Grimalt

3. ID.; PARTIES; PROPOSAL, CONSENT; CONSIDERATION. When there is no proof that
parties have agreed as to the thing should be the subject of the contract and that one has
accepted the terms propose by the other, it can not be said that the contracting parties
have given their mutual consent as to the consideration of the contract.

4. ID.; SALE. Where no valid contract of sale exists it create no mutual rights or
obligations by between the alleged purchaser and seller, nor any label relation legal relation
binding upon them.

***7. Equatorial Realty vs Mayfair
1996

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; OPTION CONTRACT; PARAGRAPH 8 OF THE
LEASE CONTRACT GRANTS TO MAYFAIR THE RIGHT OF FIRST REFUSAL, NOT AN OPTION. -
We agree with the respondent Court of Appeals that the aforecited contractual stipulation
provides for a right of first refusal in favor of Mayfair. It is not an option clause or an option
contract. It is a contract of a right of first refusal.

2. ID.; ID.; SINCE PETITIONER IS A BUYER IN BAD FAITH, THE SALE TO IT OF THE PROPERTY IN
QUESTION IS RESCISSIBLE.

3. ID.; ID.; THE RIGHT OF FIRST REFUSAL SHOULD BE ENFORCED ACCORDING TO THE LAW
ON CONTRACTS INSTEAD OF THE CODAL PROVISIONS ON HUMAN RELATIONS.

***8. Norkis Distributors Inc. vs. Court of Appeals, and Nepales
ISSUE: Whether or not, there was delivery of the motorcycle.

HELD: The purpose of the execution of the sales invoice and the registration of the vehicle
was not to transfer to Nepales the ownership over the motorcycle, but only to comply with
the requirements of the DBP for processing Nepale's motorcycle loan.

Article 1496 of the Civil Code which provides that "in the absence of an express assumption
of risk by the buyer, the things sold remain at seller's risk until the ownership thereof is
transferred to the buyer," is applicable to this case, for there was neither an actual nor
constructive delivery of the thing sold, hence, the risk of loss should be borne by the seller,
Norkis, which was still the owner and possessor of the motorcycle when it was wrecked.
This is in accordance with the well-known doctrine of res perit domino.

3
RD
HW (ART 1484-1491)

***1. Southern Motors Inc. vs. Moscoso
1. SALE ON INSTALLMENTS; ACTION FILED IS FOR SPECIFIC PERFORMANCE;
MORTGAGED PROPERTY ATTACHED; SALE OF MORTGAGED PROPERTY NOT
TANTAMOUNT TO FORECLOSURE OF MORTGAGED; DEFICIENCY JUDGMENT. In
sales on installments, where the action instituted is for specific performance and the
mortgaged property is subsequently attached and sold, the sale thereof does not
amount to a foreclosure of the mortgaged; hence, the seller-creditor is entitled to
deficiency judgment.

***2. Pascual vs. Universal Motors Corp

ISSUE: Whether or not, the vendor has the right to recover any deficiency from the
purchaser after the foreclosure of the chattel mortgage and not a recourse to the additional
security put up by a third party to guarantee the purchaser's performance of his obligation.

HELD: If the guarantor should be compelled to pay the balance of the purchase price, the
guarantor will in turn be entitled to recover what she has paid from the debtor vendee.
Ultimately, it will be the vendee who will be made to bear the payment of the balance of the
price, despite the earlier foreclosure of the chattel mortgage given by him. Thus, the
protection given by Article 1484 would be indirectly subverted, and public policy
overturned.

***3. Filinvest Credit Corp vs. CA

3. ID.; SPECIAL CONTRACTS; SALES; REMEDIES OF SELLER OF MOVABLES PAYABLE IN
INSTALLMENTS WHERE BUYER FAILS TO PAY TWO OR MORE INSTALLMENTS; REMEDIES ARE
ALTERNATIVE NOT CUMULATIVE. Under Article 1484 of the New Civil Code, the seller of
movables in installments, in case the buyer fails to pay two or more installments, may elect
to pursue either of the following remedies: (1) exact fulfillment by the purchaser of the
obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased property if
one was constituted thereon. It is now settled that the said remedies are alternative and not
cumulative and therefore, the exercise of one bars the exercise of the others.

4. ID.; ID.; ID.; CONTRACT OF LEASE WITH OPTION TO BUY, RESORTED TO AS A MEANS OF
CIRCUMVENT ARTICLE 1484 OF NEW CIVIL CODE. Indubitably, the device contract of
lease with option to buy is at times resorted to as a means to circumvent Article 1484,
particularly paragraph (3) thereof. Through the set-up, the vendor, by retaining ownership
over the property in the guise of being the lessor, retains, likewise, the right to repossess
the same, without going through the process of foreclosure, in the event the vendee-lessee
defaults in the payment of the installments. There arises therefore no need to constitute a
chattel mortgage over the movable sold. More important, the vendor, after repossessing
the property and, in effect, canceling the contract of sale, gets to keep all the installments-
cum-rentals already paid.

6. ID.; SPECIAL CONTRACTS; SALES; WARRANTY; EXPRESS WAIVER OF WARRANTIES
ABSOLVED SELLER FROM ANY LIABILITY ARISING FROM ANY DEFECT OR DEFICIENCY OF
MACHINERY; CASE AT BAR.

***4. Layug vs IAC

4. ID.; ID.; ID.; SALES OF REAL ESTATE ON INSTALLMENT. REPUBLIC ACT 6552 governs
sales of real estate on installments. It recognizes the vendor's right to cancel such contracts
upon failure of the vendee to comply with the terms of the sale, but at the same time gives
the buyer, subject to conditions provided by law, a one month grace period for every year of
installment payment made and if the contract is cancelled, a refund of cash surrender value.

***5. Ridad vs. Filipinas Investments

1. CIVIL LAW; CONTRACTS; SALE OF PERSONAL PROPERTY ON INSTALLMENT BASIS;
REMEDIES OF THE VENDOR SHOULD THE VENDEE DEFAULT; ALTERNATIVE NOT
CUMULATIVE. Under Article 1484 of the Civil Code, the vendor of personal property, the
purchase of which is payable in installments, has the right, should the vendee default in the
payment of two or more of the agreed installments, to exact fulfillment by the purchaser of
the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal
property, if one was constituted. (Luneta Motor Co. vs. Dimagiba, 3 SCRA 884; Radiowealth,
Inc. vs. Lavin, 7 SCRA 804; Industrial Finance Corporation vs. Tobias, 78 SCRA 28). Whichever
right the vendor elects he cannot avail of the other, these remedies being alternative, not
cumulative. (Industrial Finance Corp. vs. Tobias, Ibid; Cruz vs. Filipinas Investment and
Finance Corp., 23 SCRA 791).

2. ID.; ID.; ID.; ID.; ID.; ELECTION TO FORECLOSE THE MORTGAGE ON DEFAULT PRECLUDES
ACTION FOR RECOVERY OF UNPAID BALANCE; PURPOSE OF THE LAW. If the vendor avails
himself of the right to foreclose his mortgage, the law prohibits him from further bringing an
action against the vendee for the purpose of recovering whatever balance of the debt
secured not satisfied by the foreclosure sale. (Luneta Motor Co. vs. Dimagiba, Supra;
Northern Motors, Inc. vs. Sapinoso, 33 SCRA 356). The precise purpose of the law is to
prevent mortgagees from seizing the mortgaged property, buying it at foreclosure sale for a
low price and then bringing suit against the mortgagor for a deficiency judgment, otherwise,
the mortgagor-buyer would find himself without the property and still owing practically the
full amount of his original indebtedness. (Bachrach Motor Co. vs. Millan, 61 Phil. 409;
Macondray & Co. vs. Benito, 62 Phil. 137; Zayas vs. Luneta Motor Co., L-30583, October 23,
1982).

3. ID.; ID.; ID.; ID.; ID.; ID.; RULING IN LEVY HERMANOS, INC. vs. PACIFIC COMMERCIAL CO.,
ET AL. APPLICABLE TO CASE AT BAR. Where the appellant corporation elected to
foreclose its mortgage upon default by the appellee in the payment of the agreed
installments and having chosen to foreclose the chattel mortgage, bought the purchased
vehicles at public auction as the highest bidder, it submitted itself to the consequences of
Article 1484 of the Civil Code and the lower court rightly declared the nullity of the chattel
mortgage in question in so far as the taxicab franchise and the used Chevrolet car of
plaintiffs are concerned, under the authority of the ruling in the case of Levy Hermanos, Inc.
vs. Pacific Commercial Co., et al., 71 Phil. 587, the facts of which are similar to those in the
case at bar.

4. ID.; ID.; ID.; ID.; ID.; ID.; PROHIBITION OF RECOURSE AGAINST ADDITIONAL SECURITY;
WHETHER PUT UP BY A THIRD PARTY OR BY THE VENDEES THEMSELVES. The vendor of
personal property sold on the installment basis is precluded, after foreclosing the chattel
mortgage on the thing sold, from having a recourse against the additional security put up by
a third party to guarantee the purchaser's performance of his obligation. (Cruz vs. Filipinas
Investment & Finance Corporation, 23 SCRA 791; Pascual vs. Universal Motors Corporation,
61 SCRA 121) If the vendor under such circumstance is prohibited from having a recourse
against the additional security for reasons therein stated, there is no ground why such
vendor should not likewise be precluded from further extrajudicially foreclosing the
additional security put up by the vendees themselves, as in the instant case, it being
tantamount to a further action (cf. Cruz vs. Filipinas Investment & Finance Corporation,
supra) that would violate Article 1484 of the Civil Code, for there is actually no difference
between an additional security put up by the vendee himself and such security put up by a
third party insofar as how the burden would ultimately fall on the vendee himself is
concerned.

5. ID.; ID.; ID.; ID.; SALE OF MORTGAGED PROPERTY IN AN ACTION FOR SPECIFIC
PERFORMANCE; DIFFERENTIATED FROM FORECLOSURE OF CHATTEL MORTGAGE IN CASE AT
BAR. In sales on installments, where the action instituted is for specific performance and
the mortgaged property is subsequently attached and sold, the sale thereof does not
amount to a foreclosure of the mortgage, hence, the seller-creditor is entitled to a
deficiency judgment. (Southern Motors, Inc. vs. Moscoso, 2 SCRA 168). In that case, the
vendor has availed of the first remedy provided by Article 1484 of the Civil Code, i.e., to
exact fulfillment of the obligation; whereas in the present case, the remedy availed of was
foreclosure of the chattel mortgage.

***6. SPS Dela Cruz vs. Asian Consumer and Industrial Finance Corp

1. CIVIL LAW; SPECIAL CONTRACTS; SALE; REMEDIES OF UNPAID SELLER OF PERSONAL
PROPERTY PAYABLE IN INSTALLMENT; RULE. The instant case is covered by the so-called
"Recto Law", now Art. 1484 of the New Civil Code, which provides: "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 vendee's failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the
vendee's failure to pay cover two or more installments. In this case, he shall have no further
action against the purchaser to recover any unpaid balance of the price. Any agreement to
the contrary shall be void." In this jurisdiction, the three (3) remedies provided for in the
"Recto Law" are alternative and not cumulative; the exercise of one would preclude the
other remedies. Consequently, should the vendee-mortgagor default in the payment of two
or more of the agreed installments, the vendor-mortgagee has the option to avail of any of
these three (3) remedies: either to exact fulfillment of the obligation, to cancel the sale, or
to foreclose the mortgage on the purchased chattel, if one was constituted. (Pacific
Commercial Co. vs. De la Rama, 72 Phil. 380 (1941); Manila Motor, Inc. vs. Fernandez, 99
Phil. 782 (1956); Radiowealth vs. Lavin, L-18563, April 27, 1963, 7 SCRA 804).

2. ID.; ID.; ID.; ID.; EFFECT OF FAILURE OF VENDOR TO FORECLOSE THE MORTGAGED
PROPERTY. It is thus clear that while ASIAN eventually succeeded in taking possession of
the mortgaged vehicle, it did not pursue the foreclosure of the mortgage as shown by the
fact that no auction sale of the vehicle was ever conducted. As we ruled in Filinvest Credit
Corp. v. Phil. Acetylene Co., Inc. (G.R. No. 50449, January 1982, 111 SCRA 421) "Under the
law, the delivery of possession of the mortgaged property to the mortgagee, the herein
appellee, can only operate to extinguish appellant's liability if the appellee had actually
caused the foreclosure sale of the mortgaged property when it recovered possession
thereof (Northern Motors, Inc. v. Sapinoso, 33 SCRA 356 [1970]; Universal Motors Corp. v.
Dy Hian Tat, 28 SCRA 161 [1969]; Manila Motors Co., Inc. v. Fernandez, 99 Phil. 782 [1956]).
It is worth noting that it is the fact of foreclosure and actual sale of the mortgaged chattel
that bar recovery by the vendor of any balance of the purchaser's outstanding obligation not
satisfied by the sale (New Civil Code, par. 3, Article 1484). As held by this Court, if the vendor
desisted, on his own initiative, from consummating the auction sale, such desistance was a
timely disavowal of the remedy of foreclosure, and the vendor can still sue for specific
performance" (Industrial Finance Corp. v. Tobias, 78 SCRA 28 [1977]; Radiowealth, Inc. v.
Lavin, L-18563, April 27, 1963, 7 SCRA 804; Pacific Commercial Co. v. dela Rama, 72 Phil. 380
[1941]). Consequently, in the case before Us, there being no actual foreclosure of the
mortgaged property, ASIAN is correct in resorting to an ordinary action for collection of the
unpaid balance of the purchase price.

3. ID.; ID.; ID.; ID.; ID.; POSSESSION OF MORTGAGED PROPERTY SHOULD BE RETURNED TO
MORTGAGEE-VENDEE UPON PAYMENT OF UNPAID BALANCE; CASE AT BAR.

***7. Agustin vs CA

2. CIVIL LAW; CIVIL CODE; ARTICLE 1484(3) THEREOF; RECOVERABLE EXPENSES ABOVE
VALUE RECEIVED FROM FORECLOSURE SALE; CASE AT BENCH. At any rate, even if we
were to brush aside the "law of the case" doctrine we find the award for repossession
expenses still proper. In Filipinas Investment & Finance Corporation v. Ridad, the Court
recognized an exception to the rule stated under Article 1484(3) upon which petitioner
relies. "Recoverable expenses would, in our view, include expenses properly incurred in
effecting seizure of the chattel and reasonable attorney's fees in prosecuting the action for
replevin."

***8. Fiestan vs CA

par. (2) of Article 1491 and par. (7) of Article 1409 of the Civil Code which prohibits agents
from acquiring by purchase, the property whose administration or sale may have been
entrusted to them unless the consent of the principal has been given DOES NOT apply in a
case where the sale of the property in dispute was made under a special power attached to
the real estate mortgage pursuant to Act No. 3135

Between a specific statute and general statute, the former must prevail since it evinces the
legislative intent more clearly than a general statute does. The Civil Code is of general
character while Act No. 3135 is a special enactment and therefore the latter must prevail.
Under Act No. 3135, as amended, a mortgagee- creditor is allowed to participate in the
bidding and purchase under the same conditions as any other bidder.

4
th
HW (ART 1493-1506)

***1. Dizon vs Suntay 47 scra 160

1. CIVIL LAW; PROPERTY; OWNERSHIP AND POSSESSION; RIGHT OF OWNER OF IMMOVABLE
PROPERTY UN-LAWFULLY DEPRIVED THEREOF; CASE AT BAR. A diamond ring valued at
P5,500.00 was delivered by respondent Lourdes C. Suntay to a certain Clarita R. Sison for
sale on commission. After the lapse of a considerable time without the latter having
returned the ring nor its purchase price, demands were made upon her by the owner upon
which a pawnshop ticket, the receipt of the pledge with petitioner Dominador Dizon's
pawnshop, ,was delivered. Since what was done was violative of the terms of the agency,
there was an attempt to recover possession by an action for recovery and by the provisional
remedy of replevin. The dispossessed owner having prevailed, both in the lower and in the
Court of Appeals, the matter was then elevated to this Court by petitioner grounded on
estoppel. HELD: The invocation of estoppel is unavailing. Respondent-owner Lourdes G.
Suntay has in her favor the protection accorded by Art. 559 of the Civil Code which provides
that: "The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may
recover it from the person in possession of the same. If the possessor of a movable lost or of
which the owner has been unlawfully deprived, has acquired it in good faith at a public sale,
the owner cannot obtain its return without reimbursing the price therefore.

***2. EDCA Publishing and Distributing Corp vs Santos

ISSUE:
Whether or not the petitioner may seize the books from private respondent because it has
been unlawfully deprived of the books due to the dishonored check issued by the impostor.

HELD:
NO. In its extended memorandum, EDCA cites numerous cases holding that the owner who
has been unlawfully deprived of personal property is entitled to its recovery except only
where the property was purchased at a public sale, in which event its return is subject to
reimbursement of the purchase price. The petitioner is begging the question. It is putting
the cart before the horse. Unlike in the cases invoked, it has yet to be established in the case
at bar that EDCA has been unlawfully deprived of the books.

Actual delivery of the books having been made, Cruz acquired ownership over the books
which he could then validly transfer to the private respondents. The fact that he had not yet
paid for them to EDCA was a matter between him and EDCA and did not impair the title
acquired by the private respondents to the books.

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


***3. Layug vs IAC 167 scra 627

4. ID.; ID.; ID.; SALES OF REAL ESTATE ON INSTALLMENT. REPUBLIC ACT 6552 governs
sales of real estate on installments. It recognizes the vendor's right to cancel such contracts
upon failure of the vendee to comply with the terms of the sale, but at the same time gives
the buyer, subject to conditions provided by law, a one month grace period for every year of
installment payment made and if the contract is cancelled, a refund of cash surrender value.

***4. Power Commercial and Industrial Corp vs CA

1. CIVIL LAW; CONTRACT; SALE; TYPES OF DELIVERY, CONSTRUED. The Civil Code provides
that delivery can either be (1) actual (Article 1497) or (2) constructive (Articles 1498-1501).
Symbolic delivery (Article 1498), as a species of constructive delivery, effects the transfer of
ownership through the execution of a public document. Its efficacy can, however, be
prevented if the vendor does not possess control over the thing sold, in which case this legal
fiction must yield to reality. The Court has consistently held that: [Addison vs. Felix, 38 Phil.
404,408 (1918); Vda de Sarmiento vs Lesaca, 108 Phil. 900, 902-903 (1960); and Danguilan
vs Intermediate Appellate Court, 168 SCRA 22, 32, November 28, 1988.) ". . . (I)n order that
this symbolic delivery may produce the effect of tradition, it is necessary that the vendor
shall have had such control over the thing sold that . . . its material delivery could have been
made. It is not enough to confer upon the purchaser the ownership and the right of
possession. The thing sold must be placed in his control When there is no impediment
whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will
of the vendor, symbolic delivery through the execution of a public instrument is sufficient.
But if, notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or through another
in his name, because such tenancy and enjoyment are opposed by the interposition of
another will, then fiction yields to reality the delivery has not been effected." ETaSDc

2. ID.; ID.; ID.; BREACH OF WARRANTY AGAINST EVICTION; WHEN PRESENT. A breach of
warranty against eviction requires the concurrence of the following circumstances: (1) The
purchaser has been deprived of the whole or part of the thing sold; (2) This eviction is by a
final judgment; (3) The basis thereof is by virtue of a right prior to the sale made by the
vendor; and (4) The vendor has been summoned and made co-defendant in the suit for
eviction at the instance of the vendee. In the absence of these requisites, a breach of the
warranty against eviction under Article 1547 cannot be declared.

3. ID.; ID.; ID.; SOLUTIO INDEBITI; CONSTRUED; NOT APPLICABLE IN CASE AT BAR.



Differentiate:

Contract of sale vs contract to sell

Earnest money vs option money

Policitacion vs option contract

Tapos problem about 1480 at 1504 yung tungkol sa who should bear the loss

10 case doctrines Fiestan, Toyota, Edca, Concrete aggregates ,Norkis ,Southern moscoso,

Natino,

Sampaguita

3 problems

From Maceda law

Recto law

Option contract