Villamar vs Mangaoil

FACTS: Villamar is the registered owner of a 3.6080 hectares parcel of land in Manuel, Isabela. In
1998, she entered into an Agreement with Mangaoil for the purchase and sale of said parcel of land. The
parties then executed a Deed of Absolute Sale whereby Villamar transferred the subject parcel of land to
Mangaoil for and in consideration of P185,000. After several months, Mangaoil wrote a letter informing
Villamar that he was backing out from the sale agreed upon giving as one of the reasons that the area is
not yet fully cleared by encumbrances as there are tenants who are not willing to vacate the land without
giving them back the amount that they mortgaged the land. Mangaoil demanded refund of
his [P]185,000.00 down payment. Reiterating said demand in another letter dated April 29, 1999, the
same, however, was unheeded. On January 28, 2002, the respondent filed before the RTC a complaint for
rescission of contract against the petitioner. In the said complaint, the respondent sought the return
of P185,000.00 which he paid to the petitioner, payment of interests thereon. In the petitioners answer to
the complaint, she averred that she had complied with her obligations to the respondent. Specifically, she
claimed having caused the release of TCT by the Rural Bank of Cauayan and its delivery to a certain
Atty. Antonio, whom she commissioned to facilitate the transfer of the said title in the respondent's name.
The RTC ordered the rescission of the agreement and the deed of absolute sale executed between the
respondent and the petitioner. CA rendered the now assailed decision dismissing the petitioners appeal.

ISSUE: Whether or not the failure of the seller to deliver the physical possession of the property and the
TCT to the buyer is a breach of contract which would warrant rescission.

HELD: YES. As a general rule, the execution of a public instrument amounts to a constructive delivery
of the thing subject of a contract of sale. However, exceptions exist, among which is when mere
presumptive and not conclusive delivery is created in cases where the buyer fails to take material
possession of the subject of sale.

Under Article 1306 of the NCC, the contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. While Articles 1458 and 1495 of the NCC do not impose upon the
petitioner the obligation to physically deliver to the respondent the certificate of title covering the subject
property or cause the transfer in the latter's name of the said title, a stipulation requiring otherwise is not
prohibited by law and cannot be regarded as violative of morals, good customs, public order or public
policy. Item no. 3 of the agreement executed by the parties expressly states that transfer shall be
immediately effected so that the latter can apply for a loan from any lending institution using the
corresponding certificate of title as collateral therefore. Item no. 3 is literal enough to mean that there
should be physical delivery of the TCT for how else can the respondent use it as a collateral to obtain a
loan if the title remains in the petitioners possession.

The Court agrees with the RTC and the CA that the petitioner failed to prove that she delivered
the TCT covering the subject property to the respondent. What the petitioner attempted to establish was
that she gave the TCT to Atty. Antonio whom she alleged was commissioned to effect the transfer of the
title in the respondent's name. Although Atty. Antonio's existence is certain as he was the petitioners
counsel in the proceedings before the RTC, there was no proof that the former indeed received the TCT or
that he was commissioned to process the transfer of the title in the respondent's name. Moreover, in item
no. 2 of the agreement, it is stated that part of the P185,000.00 initially paid to the petitioner shall be used
to pay the mortgagors in the subject land. While the provision does not expressly impose upon the
petitioner the obligation to eject the said mortgagors, the undertaking is necessarily implied. Cessation of
occupancy of the subject property is logically expected from the mortgagors upon payment by the
petitioner of the amounts due to them. Hence petition is denied.

PHILIPPINE CHARITY SWEEPSTAKES OFFICE (PCSO) v. NEW DAGUPAN METRO GAS

CORPORATION

FACTS: Respondent Purita E. Peralta is the registered owner of a parcel of land located at Bonuan Blue
Beach Subdivision, Dagupan City. On March 8, 1989, a real estate mortgage was constituted over such
property in favor of PCSO to secure the payment of the sweepstakes tickets purchased by one of its
provincial distributors, Patricia P. Galang. Galang, PCSO and Peralta were respectively designated as
"principal", "mortgagee" and "mortgagor". On July 31, 1990, Peralta sold, under a conditional sale, the
subject property to New Dagupan, the conveyance to be absolute upon the latters full payment of the
price of P800,000.00. New Dagupan obliged to pay Peralta P200,000.00 upon the execution of the
corresponding deed and the balance of P600,000.00 by monthly instalments. Peralta showed to New
Dagupan a photocopy of the TCT, which bore no liens and encumbrances, and undertook to deliver the
owner s duplicate within three months from the execution of the contract. New Dagupan withheld
payment of the last installment, which was intended to cover the payment of the capital gains tax, in view
of Peraltas failure to deliver the owners duplicate of the TCT and to execute a deed of absolute sale in
its favor. In view of Peralta s continued failure to deliver a deed of absolute sale and the owner s duplicate
of the title, New Dagupan filed a complaint for specific performance against her with the RTC. During
the pendency of New Dagupans complaint against Peralta, PCSO caused the registration of the mortgage.
They filed an application for the extrajudicial foreclosure sale of the subject property in view of Galangs
failure to fully pay the sweepstakes she purchased in 1992. A public auction took place where PCSO was
the highest bidder and subsequently a certificate of sale was correspondingly issued.

In 1994, the RTC rendered a Decision approving the compromise agreement between Peralta and
New Dagupan granting ownership and possession to the latter. After that, New Dagupan filed with the
RTC a petition against PCSO for the annulment of TCT No. 52135 or surrender of the owners duplicate
thereof. The RTC rendered a Decision in New Dagupans favor.

ISSUE: Whether or not New Dagupan should be granted of the ownership of the property in
question.

HELD: YES. At the time of PCSOs registration of its mortgage lien on May 20, 1992, the subject
mortgage had already been discharged by Galangs full payment of P450,000.00, the amount specified in
the Deed of Undertaking with First Real Estate Mortgage. There is nothing in the aforementioned deed
that would indicate that it is a continuing security or that there is an intent to secure Galangs future debts.
The Court did not agree with PCSO that the mortgage is a continuing guarantee (one that covers all
transactions, including those arising in the future, which are within the description or contemplation of the
contract of guaranty, until the expiration or termination thereof). A reading of the other pertinent clauses
of the subject mortgage shows that the mortgage shall only secure Galangs liability in the amount of
P450,000 and does not cover any liability of any future debts of Galang. Therefore, since the subject
mortgage is not in the nature of a continuing guaranty and given the automatic termination thereof, PCSO
cannot claim that Galangs ticket purchases in 1992 are also secured. From the time the amount of
P450,000.00 was fully settled, the subject mortgage had already been cancelled such that Galangs
subsequent ticket purchases are unsecured. Simply put, PCSO had nothing to register, much less,
foreclose.

Futhermore, assuming the contrary, New Dagupan is not bound by PCSOs mortgage lien and was a
purchaser in good faith and for value. A purchaser in good faith and for value is one who buys property of
another, without notice that some other person has a right to, or interest in, such property, and pays a full
and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of
some other person in the property. The Court did not give credence to PCSO s claim to the contrary.
PCSO did not present evidence, showing that New Dagupan had knowledge of the mortgage despite its
being unregistered at the time the subject sale was entered into. Peralta, in the compromise agreement,
even admitted that she did not inform New Dagupan of the subject mortgage. Since PCSO had notice of
New Dagupans adverse claim prior to the registration of its mortgage lien, it is bound thereby and thus
legally compelled to respect the proceedings on the validity of such adverse claim. It is therefore of no
moment if PCSO s foreclosure of the subject mortgage and purchase of the subject property at the auction
sale took place prior to New Dagupan s acquisition of title. The effects of a foreclosure sale retroact to the
date the mortgage was registered.

UNION BANK v. MAUNLAD HOMES

G.R. No. 190071 August 15, 2012

FACTS:

Union Bank is the owner of a commercial complex known as Maunlad Shopping Mall. Union Bank
(seller) and Maunlad Homes (buyer) entered into a contract to sell involving the Maunlad Shopping Mall.
The purchase price was set at 151 million pesos, 2.4 million of which was to be paid as downpayment,
and the balance will be paid over the succeeding 180-month period. Under the contract, Maunlad was
authorized to take possession of the property and to build improvements thereon. It was also stipulated
that if Maunlad violates any of the provisions of the contract, all payments made will be applied as rentals
for the use and possession, and all improvements on the land will accrue in favor of Union Bank. In the
event of rescission due to failure to pay or to comply with the provisions of the contract, Maunlad will be
required to immediately vacate the property and must voluntarily turn possession over to Union Bank.

When Maunlad failed to pay the monthly amortization, Union Bank sent a Notice of Rescission of
Contract demanding payment of the installments due within 30 days from receipt, otherwise, it shall
consider the contract automatically rescinded. Maunlad did not comply. Union Bank sent another letter
demanding payment of the rentals due and requiring Maunlad to vacate the property and turn over its
possession to the bank. Maunlad continued to refuse contending that it is the owner of the property as
Union Bank did not reserve ownership of the property under the terms of the contract. Union Bank filed
an ejectment suit but it was dismissed by MeTC on the ground that the action filed should be accion
reivindicatoria and not an unlawful detainer. It found that the action was based on a breach of contract
and that both parties are claiming a better right to possess the property based on their respective claims of
ownership, therefore they, MeTC, has no jurisdiction. RTC and CA affirmed.

From the CAs judgment, Union Bank appealed to the Court by filing the present petition for review
on certiorari under Rule 45 of the Rules of Court.
ISSUE:

Whether or not the ownership was already transferred to Maunlad Homes by virtue of the contract

HELD:

NO. Case is remenaded to MeTC. Union Bank never lost ownership over the property despite the
execution of the contract, only the right to possess was conceded to Maunlad Homes.

On the issue of jurisdiction:

MeTC has jurisdiction and authority to interpret contracts in an unlawful detainer. Thus, to fall within the
jurisdiction of the MeTC, the complaint must allege that

1. the defendant originally had lawful possession of the property, either by virtue of a contract or by
tolerance of the plaintiff;
2. eventually, the defendants possession of the property became illegal or unlawful upon notice by the
plaintiff to defendant of the expiration or the termination of the defendants right of possession;
3. thereafter, the defendant remained in possession of the property and deprived the plaintiff the
enjoyment thereof; and
4. within one year from the unlawful deprivation or withholding of possession, the plaintiff instituted the
complaint for ejectment.

Contrary to the findings of the lower courts, all four requirements were alleged in Union Banks
Complaint.

Under Section 16, Rule 70 of the Rules of Court, "when the defendant raises the defense of ownership in
his pleadings and the question of possession cannot be resolved without deciding the issue of ownership,
the issue of ownership shall be resolved only to determine the issue of possession." Section 18, Rule 70 of
the Rules of Court, however, states that "the judgment x x x shall be conclusive with respect to the
possession only and shall in no wise bind the title or affect the ownership of the land or building."

Interpretation of the contract between the plaintiff and the defendant is inevitable because it is the contract
that initially granted the defendant the right to possess the property; it is this same contract that the
plaintiff subsequently claims was violated or extinguished, terminating the defendants right to possess

The MeTCs ruling on the rights of the parties based on its interpretation of their contract is, of course,
not conclusive, but is merely provisional and is binding only with respect to the issue of possession.

Section 11 of the contract between Union Bank and Maunlad Homes provides that "upon payment in full
of the Purchase Price of the Property x x x, the SELLER shall execute and deliver a Deed of Absolute
Sale conveying the Property to the BUYER." Jurisprudence has established that where the seller promises
to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the
contract is only a contract to sell." The presence of this provision generally identifies the contract as being
a mere contract to sell. After reviewing the terms of the contract between Union Bank and Maunlad
Homes, we find no reasonable ground to exempt the present case from the general rule; the contract
between Union Bank and Maunlad Homes is a contract to sell.

In a contract to sell, the full payment of the purchase price is a positive suspensive condition whose non-
fulfillment is not a breach of contract, but merely an event that prevents the seller from conveying title to
the purchaser. "The non-payment of the purchase price renders the contract to sell ineffective and without
force and effect." Maunlad Homes act of withholding the installment payments rendered the contract
ineffective and without force and effect, and ultimately deprived itself of the right to continue possessing
Maunlad Shopping Mall.

NERI VS. HEIRS OF HADJI YUSOP UY AND JULPHA IBRAHIM UY

FACTS: Anunciacion Neri, married to Enrique Neri (second marriegae), had seven children, 2 from her
first marriage and 5 from the second.. During their (second) marriage, Spouses Neri acquired several
homestead properties. On September 21, 1977, Anunciacion died intestate. Her husband, Enrique, in his
personal capacity and as natural guardian of his minor children Rosa and Douglas, together with
Napoleon, Alicia, and Visminda executed an Extra-Judicial Settlement of the Estate with Absolute Deed
of Sale on July 7, 1979, conveying them to the late spouses Hadji Yusop Uy and Julpha Ibrahim Uy.

Thereafter, the children of Enrique filed a complaint for annulment of sale assailing the validity of the
sale for having been sold within the prohibited period. The complaint was later amended to include
Eutropia and Victoria as additional plaintiffs for having been excluded and deprived of their legitimes as
children of Anunciacion from her first marriage. On their defense, the heirs of Uys stated that the sale
took place beyond the 5-year prohibitory period from the issuance of the homestead patents. They also
denied knowledge of Eutropia and Victorias exclusion from the extrajudicial settlement and sale of the
subject properties, and interposed further the defenses of prescription and laches.

The RTC rendered a decision in favor of Neri, hence, annulling the Deed of Absolute of Sale. However,
the CA reversed said decision and dismissed the complaint of herein petitioners ruling that the sale was
valid and binding with respect to Enrique and his children, holding that as co-owners, they have the right
to dispose of their respective shares as they consider necessary or fit. While recognizing Rosa and
Douglas to be minors at that time, they were deemed to have ratified the sale when they failed to question
it upon reaching the age of majority. Hence, this petition.

ISSUE: WHETHER OR NOT THE DEED OF ABSOLUTE SALE IS VALID

HELD: The Absolute Deed of Sale in favor of the late spouses Hadji Yusop Uy and Julpha Ibrahim Uy
as regards the 13/16 total shares of the late Enrique Neri, Napoleon Neri, Alicia D. Neri-Mondejar,
Visminda D. Neri-Chambers and Rosa D. Neri-Millan VALID.

It was stated in the facts that Rosa and Douglas were still minors at the time of the execution of the
settlement and sale, , their natural guardian and father, Enrique, represented them in the transaction.
However, on the basis of the laws prevailing at that time, Enrique was merely clothed with powers of
administration and bereft of any authority to dispose of their 2/16 shares in the estate. Under Articles 320
and 326 of the Civil Code, the laws in force at the time of the execution of the settlement and sale,
provide:

ART. 320. The father, or in his absence the mother, is the legal administrator of the property
pertaining to the child under parental authority. If the property is worth more than two
thousand pesos, the father or mother shall give a bond subject to the approval of the Court of
First Instance.

ART. 326. When the property of the child is worth more than two thousand pesos, the father
 or mother shall be considered a guardian of the childs property, subject to the duties and
obligations of guardians under the Rules of Court.
Thus, Enrique does not have the power to dispose or encumber the property of Douglas and Rosa.
However, the sale may be valid on their parts provided that upon reaching the age of majority, they
ratified said sale. In the case at bar, it was proven that only Rosa ratified the contract. Considering, thus,
that the extrajudicial settlement with sale is invalid and therefore, not binding on Eutropia, Victoria and
Douglas, only the shares of Enrique, Napoleon, Alicia, Visminda and Rosa in the homestead properties
have effectively been disposed in favor of spouses Uy. A person can only sell what he owns, or is
authorized to sell and the buyer can as a consequence acquire no more than what the seller can legally
transfer.