Ang Yu Asuncion vs CA
on human conduct.
G.R. No. 109125, December 2, 1994
FACTS:
Petitioners allege that they are tenants or lessees of residential and
commercial spaces owned by defendants in Ongpin Street, Binondo,
Manila since 1935 and that on several occasions before October 9,
1986, defendants informed plaintiffs that they are offering to sell the
premises and are giving them priority to acquire the same. During the
negotiations, Bobby Cu Unjieng offered a price of P6-million while
petitioners made a counter offer of P5-million. On October 24, 1986,
petitioners asked the respondents to specify the terms and conditions of
the offer to sell. Petitioners now raise that since respondents failed to
specify the terms and conditions of the offer to sell and because of
information received that the latter were about to sell the property,
plaintiffs were compelled to file the complaint to compel defendants to
sell the property to them.
The trial court found that the respondents offer to sell was never
accepted by the petitioners for the reason that they did not agree upon
the terms and conditions of the proposed sale, hence, there was no
contract of sale at all. The Court of Appeals affirmed the decision of the
lower court. This decision was brought to the Supreme Court by petition
for review on certiorari which subsequently denied the appeal on May 6,
1991 for insufficiency in form and substance.
On November 15, 1990, while CA-G.R. CV No. 21123 was pending
consideration by this Court, the Cu Unjieng spouses executed a Deed
of Sale transferring the property in question to herein respondent Buen
Realty and Development Corporation, for P15,000,000.00. On July 1,
1991, respondent as the new owner of the subject property wrote a letter
to the petitioners demanding that the latter vacate the premises. On July
16, 1991, the petitioners wrote a reply to respondent corporation stating
that the latter brought the property subject to the notice of lis pendens
regarding Civil Case No. 87-41058 annotated on TCT No. 105254/T-881
in the name of the Cu Unjiengs.
The lessees filed a Motion for Execution dated August 27, 1991 of the
Decision in Civil Case No. 87-41058 as modified by the Court of Appeals
in CA-G.R. CV No. 21123.
On August 30, 1991, the RTC ordered the Cu Unjiengs to execute the
necessary Deed of Sale of the property in litigation in favor of plaintiffs
Ang Yu Asuncion, Keh Tiong and Arthur Go for the consideration of P15
Million pesos in recognition of petitioners right of first refusal and that a
new Transfer Certificate of Title be issued in favor of the buyer. The court
also set aside the title issued to Buen Realty Corporation for having been
executed in bad faith. On September 22, 1991, the Judge issued a writ
of execution.
On 04 December 1991, the appellate court, on appeal to it by private
respondent, set aside and declared without force and effect the above
questioned orders of the court a quo.
ISSUE
Whether or not Buen Realty can be bound by the writ of execution by
virtue of the notice of lis pendens, carried over on TCT No. 195816
issued in the name of Buen Realty, at the time of the latters purchase
of the property on 15 November 1991 from the Cu Unjiengs.
HELD
We affirm the decision of the appellate court.
In the law on sales, the so-called right of first refusal is an innovative
juridical relation. Needless to point out, it cannot be deemed a perfected
contract of sale under Article 1458 of the Civil Code.
In a right of first refusal, while the object might be made determinate, the
exercise of the right, however, would be dependent not only on the
grantors eventual intention to enter into a binding juridical relation with
another but also on terms, including the price, that obviously are yet to
be later firmed up. Prior thereto, it can at best be so described as merely
belonging to a class of preparatory juridical relations governed not by
contracts (since the essential elements to establish the vinculum juris
would still be indefinite and inconclusive) but by, among other laws of
general application, the pertinent scattered provisions of the Civil Code
The final judgment in Civil Case No. 87-41058, it must be stressed, has
merely accorded a right of first refusal in favor of petitioners. The
consequence of such a declaration entails no more than what has
heretofore been said. In fine, if, as it is here so conveyed to us,
petitioners are aggrieved by the failure of private respondents to honor
the right of first refusal, the remedy is not a writ of execution on the
judgment, since there is none to execute, but an action for damages in
a proper forum for the purpose.
Furthermore, Buen Realty, not having been impleaded in Civil Case No.
87-41058, cannot be held subject to the writ of execution issued by
respondent Judge, let alone ousted from the ownership and possession
of the property, without first being duly afforded its day in court.
ANG YU V. CA (December 02, 1994)
FACTS:
Petitioner Ang Yu Asuncion and Keh Tiong leased a property of
respondents Bobby Cu Unjieng, Rose Cu Unjieng and Jose Tan in
Binondo Manila.
Respondents informed plaintiffs that they are offering to sell the
premises and are giving them priority to acquire the same.
Respondents 6M for the property but petitioners offered 5M.
Respondents acceted and asked petitioners to put in writing the terms
and conditions but the latter never provided such.
When defendants were about to sell the property, plaintiffs were
compelled to file the complaint to compel defendants to sell the property
to them. Court recognizes the right of first refusal of the petitioner.
Notwithstanding the courts decision, respondent sold the property to
Buen Realty and Development Corporation.
ISSUE:
WON petitioners can demand specific performance to the respondents
to sell to them the property.
HELD:
The petitioners never accepted the offer when they refused to make the
terms and condition of the sale. As such, respondents has the right to
sell the property to other parties.
Even if petitioners are aggrieved by the failure of private respondents to
honor the right of first refusal, the remedy is not a writ of execution on
the judgment, since there is none to execute, but an action for damages
in a proper forum for the purpose
Ang Yu Asuncion et al. vs. Court of Appeals and Buen Realty Corp.
(G.R. No. 109125, December 2, 1994)
Ponente: Vitug
Topic: Sales; Contract of sale v. Contract to sell; remedies for violation
of right of first refusal
Facts:
Petitioners Ang Yu Asuncion et. al. are lessees of residential and
commercial spaces owned by the Unjiengs. They have been leasing the
property and possessing it since 1935 and have been paying rentals.
In 1986, the Unjiengs informed Petitioners Ang Yu Asuncion that the
property was being sold and that Petitioners were being given priority to
acquire them (Right of First Refusal). They agreed on a price of P5M but
they had not yet agreed on the terms and conditions. Petitioners wrote
to the Unjiengs twice, asking them to specify the terms and conditions
for the sale but received no reply. Later, the petitioners found out that
the property was already about to be sold, thus they instituted this case
for Specific Performance [of the right of first refusal].
The Trial Court dismissed the case. The trial court also held that the
Unjiengs offer to sell was never accepted by the Petitioners for the
reason that they did not agree upon the terms and conditions of the
proposed sale, hence, there was no contract of sale at all. Nonetheless,
the lower court ruled that should the defendants subsequently offer their
property for sale at a price of P11-million or below, plaintiffs will have the
right of first refusal.
The Court of Appeals affirmed the decision of the Trial Court.
In the meantime, in 1990, the property was sold to De Buen Realty,
Private Respondent in this case. The title to the property was transferred
into the name of De Buen and demanded that the Petitioners vacate the
premises.
Because of this, Petitioners filed a motion for execution of the CA
judgement. At first, CA directed the Sheriff to execute an order directing
the Unjiengs to issue a Deed of Sale in the Petitioners favour and
nullified the sale to De Buen Realty. But then, the CA reversed itself
when the Private Respondents Appealed.
Issues:
1. Whether or not the Contract of Sale is perfected by the grant
of a Right of First Refusal.
2. Whether or not a Right of First Refusal may be enforced in an
action for Specific Performance.
Held:
1. No. A Right of First Refusal is not a Perfected Contract of Sale
under Art. 1458 or an option under Par. 2 Art 1479 or an offer
under Art. 1319. In a Right of First Refusal, only the object of
the contract is determinate. This means that no vinculum
juris is created between the seller-offeror and the buyer-
offeree.
2. No. Since a contractual relationship does not exist between
the parties, a Right of First Refusal may not be enforced
through an action for specific performance. Its conduct is
governed by the law on human relations under Art. 19-21 of
the Civil Code and not by contract law.
Therefore, the Supreme Court held that the CA could not have decreed
at the time the execution of any deed of sale between the Unjiengs and
Petitioners.
Other Rules, Comments and Discussion:
This case is notable because it lays down the rules on options contracts
and right of first refusal as well as promises to buy and sell. First, the
Supreme Court discussed the stages of the formation of a sales
contract, these are:
1. Negotiation covers the period from the time the
prospective contracting parties indicate interest in the contract
to the time the contract is concluded (perfected).
2. Perfection takes place upon the concurrence of
the essential elements thereof. In a sales contract this is
governed by Art. 1458
3. Consummation begins when the parties perform
their respective undertakings under the contract culminating
in the extinguishment thereof
Until the contract is perfected (No. 2), it cannot, as an independent
source of obligation, serve as a binding juridical relation. A sales contract
is perfected when a person, called the seller, obligates himself, for a
price certain, to deliver and to transfer ownership of a thing or right to
another, called the buyer, over which the latter agrees (Art 1458).
Under Art. 1458, there is no perfection of a sale under a Contract to
Sell. A Contract to Sell is characterized as a conditional sale and the
breach of the suspensive condition will prevent the obligation to transfer
title from acquiring obligatory force.
Promises to Buy and Sell
Unconditional mutual promise to buy and sell As long as the object is
made determinate and the price is fixed, can be obligatory on the parties,
and compliance therewith may accordingly be exacted. The Right of
First Refusal falls under this classification.
Accepted unilateral promise If it specifies the thing to be sold and the
price to be paid and when coupled with a valuable consideration distinct
and separate from the price, is what may properly be termed a perfected
contract of option. This contract is legally binding. (Par. 2 Art. 1458) Note
however, that the option is a contract separate and distinct from the
contract of sale. Once the option is exercised before it is withdrawn, a
bilateral promise to sell and to buy ensues and both parties are then
reciprocally bound to comply with their respective undertakings.
Offers with a Period
Where a period is given to the offeree within which to accept the offer,
the following rules generally govern:
1. If the period is not itself founded upon or supported by a
consideration Offeror may withdraw offer at any time before
its acceptance (or knowledge of its acceptance). However, the
right to withdraw must not be exercised whimsically or
arbitrarily otherwise it can give rise to damages under Art. 19
of the New Civil Code
2. If period is founded on a separate consideration This is
a perfectedcontract of option. Withdrawal of the offer within
the period of the option is deemed a breach of the contract of
option (not the sale). If, in fact, the optioner-offeror withdraws
the offer before its acceptance (exercise of the option) by the
optionee-offeree, the latter may not sue for specific
performance on the proposed contract (object of the option)
since it has failed to reach its own stage of perfection. The
optioner-offeror, however, renders himself liable for damages
for breach of the option.
3. Earnest money This is not an offer with a period. Earnest
money is distinguished from the option contract if the
consideration given will be considered as a part of the
purchase price of the object of the sale. Earnest money is
evidence of a perfected contract of sale. (Art. 1482)
Right of First Refusal
This is an innovative juridical relation because it is neither a perfected
contract of sale under Art. 1458 nor an option contract under par. 2 Art
1479. The object might be made determinate, the exercise of the right,
however, is dependent on the offerors eventual intention to enter into a
binding juridical relation with another but also on terms and conditions
such as price. There is no juridical tie or vinculum juris.
Breach of the right cannot justify correspondingly an issuance of a writ
of execution under a court judgement that recognizes its existence, such
as inAng Yu Asuncion. An action for Specific Performance is not allowed
under a Right of First Refusal because doing so would negate the
indispensable element of consensuality in the perfection of contracts.
This right is not inconsequential because it gives right to an action for
damages under Art. 19.
Other Acts that Wont Bind
Public advertisements or solicitations Construed as mere invitations to
make offers and/or proposals.
Related Cases
The cases of Equatorial v. Mayfair and Paraaque Kings v. Court of
Appealsheld that if a sale happens in violation of a Right of First Refusal
where the buyer is aware of the existence of that right in favor of another
(such as when it is written in a lease contract), the sale may be rescinded
and the seller may be forced to offer the property to the party with the
Right of First Refusal.
However, the case of Ang Yu Asuncion may still be good law for cases
not involving a third party buyer in bad faith.
Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.
G.R. No. 133879, November 21, 2001
Panganiban, J.
Doctrine: Rent is a civil fruit that belongs to the owner of the property
producing it by right of accession.
Facts: Carmelo & Bauermann, Inc. (Camelo ) used to own a parcel of
land with two 2-storey buildings constructed thereon, located at Claro M.
Recto Avenue, Manila, which it leased to Mayfair Theater Inc. (Mayfair)
for a period of 20 years. The Contract of Lease contained a provision
granting Mayfair a right of first refusal to purchase the subject properties.
However, on July 30, 1978 within the 20-year-lease term the
subject properties were sold by Carmelo to Equatorial Realty
Development, Inc. (Equatorial) for the total sum of P11,300,000,
without first offering to Mayfair. Mayfair filed a Complaint before the RTC
of Manila for (a) the annulment of the Deed of Absolute Sale between
Carmelo and Equatorial, (b) specific performance, and (c) damages.
The lower court rendered a Decision in favor of Carmelo and Equatorial
but the CA reversed such decision rescinding the sale and ordered to
allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00.
Mayfair bought the property. However, Equatorial filed an action for the
collection of a sum of money against Mayfair, claiming payment of
rentals or reasonable compensation for Mayfairs use of the subject
premises after its lease contracts had expired. Equatorial alleged that
representing itself as the owner of the subject premises by reason of the
Contract of Sale; it claimed rentals arising from Mayfairs occupation
thereof. The trial court dismissed the Complaint holding that the
rescission of the Deed of Absolute Sale did not confer on Equatorial any
vested or residual proprietary rights.
Issue: Whether Equatorial is entitled to back rentals.
Held: No. In the case, there was no right of ownership transferred from
Carmelo to Equatorial in view of a patent failure to deliver the property
to the buyer. By a contract of sale, one of the contracting parties
obligates himself to transfer ownership of and to deliver a determinate
thing and the other to pay therefor a price certain in money or its
equivalent. Ownership of the thing sold is a real right,[ which the buyer
acquires only upon delivery of the thing to him 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. This right is transferred, not by contract alone, but by tradition
or delivery. And there is said to be delivery if and when the thing sold is
placed in the control and possession of the vendee. From the peculiar
facts of this case, it is clear that petitioner never took actual control and
possession of the property sold, in view of respondents timely objection
to the sale and the continued actual possession of the property. While
the execution of a public instrument of sale is recognized by law as
equivalent to the delivery of the thing sold, such constructive or symbolic
delivery, being merely presumptive, is deemed negated by the failure of
the vendee to take actual possession of the land sold. In the case,
Mayfairs opposition to the transfer of the property by way of sale to
Equatorial was a legally sufficient impediment that effectively prevented
the passing of the property into the latters hands. Rent is a civil fruit that
belongs to the owner of the property producing it by right of accession.
Consequently and ordinarily, the rentals that fell due from the time of the
perfection of the sale to petitioner until its rescission by final judgment
should belong to the owner of the property during that period. Not having
been the owner, Equatorial cannot be entitled to the civil fruits of
ownership like rentals of the thing sold.
EQUATORIAL REALTY V. MAYFAIR (November 21, 1996)
FACTS:
Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-
storey building to respondent Mayfair Theater Inc.
They entered a contract which provides that if the LESSOR should
desire to sell the leased premises, the LESSEE shall be given 30-days
exclusive option to purchase the same.
Carmelo informed Mayfair that it will sell the property to
Equatorial. Mayfair made known its interest to buy the property but only
to the extent of the leased premises.
Notwithstanding Mayfairs intention, Carmelo sold the property to
Equatorial.
ISSUE:
WON the sale of the property to Equatorial is valid.
HELD:
The sale of the property should be rescinded because Mayfair has the
right of first refusal. Both Equatorial and Carmelo are in bad faith
because they knew of the stipulation in the contract regarding the right
of first refusal.
The stipulation is a not an option contract but a right of first refusal and
as such the requirement of a separate consideration for the option, has
no applicability in the instant case. The consideration is built in the
reciprocal obligation of the parties.
In reciprocal contract, the obligation or promise of each party is the
consideration for that of the other. (Promise to lease in return of the right
to first refusal)
With regard to the impossibility of performance, only Carmelo can be
blamed for not including the entire property in the right of first refusal.
Court held that Mayfair may not have the option to buy the property. Not
only the leased area but the entire property.
VILLONCO REALTY V. BORMAHECO (July 25, 1975)
FACTS:
Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty
a parcel of land and its improvements located in Buendia, Makati.
Bormaheco made the terms and condition for the sale and Villonco
returned it with some modifications.
The sale is for P400 per square meter but it is only to be consummated
after respondent shall have also consummated purchase of a property
in Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land
and subsequently bought the property.
Villonco issued a check to Bormaheco amounting to P100,000 as
earnest money. 26 days after signing the contract of sale, Bormaheco
returned the P100,000 to Villonco with 10% interest for the reason that
they are not sure yet if they will acquire the Sta.Ana property.
Villonco rejected the return of the check and demanded for specific
performance.
ISSUE: WON Bormaheco is bound to perform the contract with Villonco.
HELD:
The contract is already consummated when Bormaheco accepted the
offer by Villonco. The acceptance can be proven when Bormaheco
accepted the check from Villonco and then returned it with 10% interest
as stipulated in the terms made by Villonco.
On the other hand, the fact that Villonco did not object when Bormaheco
encashed the check is a proof that it accepted the offer of Bormaheco.
Whenever earnest money is given in a contract of sale, it shall be
considered as part of the price and as proof of the perfection of the
contract" (Art. 1482, Civil Code).
DOROMAL V. CA (September 5, 1975)
FACTS:
A parcel of land in Iloilo were co-owned by 7 siblings all surnamed
Horilleno. 5 of the siblings gave a SPA to their niece Mary Jimenez, who
succeeded her father as a co-owner, for the sale of the land to father
and son Doromal. One of the co-owner, herein petitioner, Filomena
Javellana however did not gave her consent to the sale even though her
siblings executed a SPA for her signature. The co-owners went on with
the sale of 6/7 part of the land and a new title for the Doromals were
issued.
Respondent offered to repurchase the land for 30K as stated in the deed
of sale but petitioners declined invoking lapse in time for the right of
repurchase. Petitioner also contend that the 30K price was only placed
in the deed of sale to minimize payment of fees and taxes and as such,
respondent should pay the real price paid which was P115, 250.
ISSUE: WON the period to repurchase of petitioner has already lapsed.
HELD:
Period of repurchase has not yet lapsed because the respondent was
not notified of the sale. The 30-day period for the right of repurchase
starts only after actual notice not only of a perfected sale but of actual
execution and delivery of the deed of sale.
The letter sent to the respondent by the other co-owners cannot be
considered as actual notice because the letter was only to inform her of
the intention to sell the property but not its actual sale. As such, the 30-
day period has not yet commenced and the respondent can still exercise
his right to repurchase.
The respondent should also pay only the 30K stipulated in the deed of
sale because a redemptioners right is to be subrogated by the same
terms and conditions stipulated in the contract.
GOLDENROD INC. V. CA (November 04, 1998)
FACTS:
Respondents Barreto realty owns 43 parcels of land in Quiapo Manila
which they mortgaged in UCPB. Respondent sold the property to
petitioner Goldenrod who In turn pays 1M earnest money and promise
to pay respondents debt to UCPB. Respondent caused 2 land titles to
the property.
Petitioner was not able to pay UCPB and the latter did not agree for and
extension. Hence, petitioner rescinded the contact and demands the
return of the earnest money.
Respondent did not oppose the recession but did not gave the earnest
money. They even sold the first lot to Asiaworld Trade Center and the
other lot to UCPB for payment of their mortgage.
ISSUE: WON respondent should return the earnest money of the
petitioner.
HELD:
Earnest money is a part of payment of a sale. Art. 1385 of the Civil Code
provides that rescission creates the obligation to return the things which
were the object of the contract together with their fruits and interest.
Since the respondent did not oppose the extra-judicial recission, they
should return the earnest money of the petitioner. It would be most
inequitable if resondent BARRETTO REALTY would be allowed to retain
petitioner's payment of P1,000,000.00 and at the same time appropriate
the proceeds of the second sale made to another.
DALLION V. CA
FACTS:
Petitioner Segundo Dalion allegedly sold his property in Southern
Leyte to respondent Ruperto Sabesaje through a private deed of sale.
Dalion denies the sale and claims that his signature in the document
was forged.
ISSUE: WON there has been a contract of sale between the parties.
HELD:
The authenticity of the signature of Dallion was proven by the testimony
of several witness including the person who made the deed of sale.
Dalion never presented any evidence or witness to prove his claim of
forgery.
Dallions claim that the sale is invalid because it was not made in a public
document is of no merit. This argument is misplaced. The provision of
Art. 1358 on the necessity of a public document is only for convenience,
not for validity or enforceability. It is not a requirement for the validity of
a contract of sale of a parcel of land that this be embodied in a public
instrument. Sale is perfected upon meeting of the minds of both parties.
YUVIENCO V. DACUYCUY (May 27, 1981)
FACTS:
Petitioners own a property in Tacloban City which they intend to sell for
6.5M. They gave the respondents the right to purchase the property nut
only until July 31, 1978. Respondents replied that they agree to buy the
property and they will negotiate for details. Petitioner sent another
telegram informing respondents that their proposal is accepted and a
contract will be prepared.
Lawyer of defendant, Mr.Gamboa, arrived bringing a contact with an
altered mode of payment which says that the balance payment should
be paid withing 30 days instead of the former 90 days. (Otiginal terms:
2M payment upon execution. 4.5M after 90 days)
ISSUE: WON there was already a perfected contract of sale between
the parties.
HELD:
There was no perfected contract of sale yet because both parties are
still under negotiation and hence, no meeting of the minds. Mr.Gamboa
even went to the respondents to negotiate for the sale. Even though
there was an agreement on the terms of payment, there was no absolute
acceptance because respondents still insisted on further details.
With regard to the alleged violation of terms of payment, there was no
written document to prove that the respondents agreed to pay not in
cash but in installment. In sale of real property, payment of installment
must be in requisite of a note under the statute of frauds.
First Philippine International Bank vs Court of Appeals
252 SCRA 259 Legal Ethics Forum Shopping
Civil Law Contract of Sale Parties to a Sales Contract
Producers Bank (now called First Philippine International Bank), which
has been under conservatorship since 1984, is the owner of 6 parcels
of land. The Bank had an agreement with Demetrio Demetria and Jose
Janolo for the two to purchase the parcels of land for a purchase price of
P5.5 million pesos. The said agreement was made by Demetria and
Janolo with the Banks manager, Mercurio Rivera. Later however, the
Bank, through its conservator, Leonida Encarnacion, sought the
 repudiation of the agreement as it alleged that Rivera was not authorized
to enter into such an agreement, hence there was no valid contract of
sale. Subsequently, Demetria and Janolo sued Producers Bank. The
regional trial court ruled in favor of Demetria et al. The Bank filed an
appeal with the Court of Appeals.
Meanwhile, Henry Co, who holds 80% shares of stocks with the said
Bank, filed a motion for intervention with the trial court. The trial court
denied the motion since the trial has been concluded already and the
case is now pending appeal. Subsequently, Co, assisted by ACCRA law
office, filed a separate civil case against Demetria and Janolo seeking
to have the purported contract of sale be declared unenforceable against
the Bank. Demetria et al argued that the second case constitutes forum
shopping.
ISSUES:
1. Whether or not there is forum shopping.
2. Whether or not there is a perfected contract of sale.
HELD:
1. Yes. There is forum shopping because there is identity of interest and
parties between the first case and the second case. There is identity of
interest because both cases sought to have the agreement, which
involves the same property, be declared unenforceable as against the
Bank. There is identity of parties even though the first case is in the
name of the bank as defendant, and the second case is in the name of
Henry Co as plaintiff. There is still forum shopping here because Henry
Co essentially represents the bank. Both cases aim to have the bank
escape liability from the agreement it entered into with Demetria et al.
The Supreme Court did not lay down any disciplinary action against the
ACCRA lawyers but they were warned that a repetition will be dealt with
more severely.
2. Yes. There is a perfected contract of sale because the bank manager,
Rivera, entered into the agreement with apparent authority. This
apparent authority has been duly proved by the evidence presented
which showed that in all the dealings and transactions, Rivera
participated actively without the opposition of the conservator. In fact, in
the advertisements and announcements of the bank, Rivera was
designated as the go-to guy in relation to the disposition of the Banks
assets.
VDA. DE JOMOC V. CA (August 02, 1991)
FACTS:
A parcel of land in CDO owned by late Pantaleon Jomoc was fictitiously
sold to third persons in which the last transferee are the spouses
Mariano and Maria So. Maria Vda de Jomoc filed suit to recover the
property and won.
While pending appeal, Vda de Jomoc executed executed a Deed of
Extrajudicial Settlement and Sale of Land with private respondent for
P300,000.00. The document was not yet signed by all the parties nor
notarized but in the meantime, Maura So had made partial payments
amounting to P49,000.00.
So demanded from the heirs of Jomoc for the execution of final deed of
conveyance but the latter did no comply. As such, So filed a civil case
and a notice of lis pendens were placed in the title of the land.
On the same date, the heirs of Jomoc executed another extra-judicial
settlement with absolute sale in favor of intervenors Lim Leong Kang
and Lim Pue claiming that they believe that So already backed-out from
the agreement.
ISSUE: WON the sale is enforceable.
HELD:
Since petitioners admit the existence of the extra-judicial settlement, the
court finds that there was meeting of the minds between the parties and
hence, there is a valid contract that has been partly executed.
The contract of sale of real property even if not complete in form, so long
as the essential requisites of consent of the contracting parties, object,
and cause of the obligation concur and they were clearly established to
be present, is valid and effective as between the parties. Public
document is only needed to bind third persons.
The payment made by So is a clear proof of her intention to acquire the
property and the petitioners cannot claim about the respondent backing
out. The sale to the intervenors Lim cannot be recognized because when
they bought the property, there was already a notice of lis pendens and
the sale cannot be said to be in good faith.
ADDISON V. FELIX (August 03, 1918)
FACTS:
Petitioner Addison sold four parcels of land to Defendant spouses Felix
and Tioco located in LucenaCity. Respondents paid 3K for the purchase
price and promised to pay the remaining by installment. The contract
provides that the purchasers may rescind the contract within one year
after the issuance of title on their name.
The petitioner went to Lucena for the survey designaton and delivery of
the land but only 2 parcels were designated and 2/3 of it was in
possession of a Juan Villafuerte.
The other parcels were not surveyed and designated by Addison.
Addison demanded from petitioner the payment of the first installment
but the latter contends that there was no delivery and as such, they are
entitled to get back the 3K purchase price they gave upon the execution
of the contract.
ISSUE: WON there was a valid delivery.
HELD:
The record shows that the plaintiff did not deliver the thing sold. With
respect to two of the parcels of land, he was not even able to show them
to the purchaser; and as regards the other two, more than two-thirds of
their area was in the hostile and adverse possession of a third person.
It is true that the same article declares that the execution of a public
instruments is equivalent to the delivery of the thing which is the object
of the contract, but, in 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, at the moment of the sale, 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 there is an impediment, delivery
cannot be deemed effected.
Addison vs Felix
38 SCRA 404, No. 12342
August 3, 1918
FACTS:
By a public instrument, plaintiff Addison sold to the defendant Marciana
Felix and husband Balbino Tioco, 4 parcels of land. Defendants paid, at
the time of the execution of the deed, the sum of P3,000.00 on account
of the purchase price, and bound herself to pay the remainder in
installments. It was further stipulated that the purchaser was to deliver
to the vendor 25 per centum of the value of the products that she might
obtain from the 4 parcels from the moment she takes possession of
them until the Torrens certificate of title be issued in her favor. It was
likewise covenanted that within I year from the date of the certificate of
title in favor of Felix, she may rescind the contract of sale in which she
shall be obliged to return to Addison the net value of all the products of
the 4 parcels sold, and Addison shall be obliged to return to her all the
sums that she may have paid, together with interest at the rate of I 0
percent per annum.
However, Addison was able to designate only 2 of the 4 parcels and
more than two-thirds of these two were found to be in the possession of
one Juan Villafuerte, who claimed to be the owner of the parts so
occupied by him.
Addison filed suit in CFI to compel Felix to make payment of the first
installment, in accordance with the terms of the contract and of the
interest at the stipulated rate. Defendant answered and alleged that the
plaintiff had failed to deliver the lands that were the subject matter of the
sale.
ISSUES:
1. Whether or not the delivery had been effected by reason of the
issuance of the Torrens Certificate of title, notwithstanding the fact that
the thing sold was not subject to the control of the vendor.
2. Whether or not the purchaser can rescind the contract.
HELD:
1. No. The record shows that the plaintiff did not deliver the thing sold.
With respect to two of the parcels of land, he was not even able to show
them to the purchaser; and as regards the other two, more than two-
thirds of their area was in the hostile and adverse possession of a third
person.
The Code imposes upon the vendor the obligation to deliver the thing
sold. The thing is considered to be delivered when it is placed in the
hands and possession of the vendee. It is true that the same article
declares that the execution of a public instrument is equivalent to the
delivery of the thing which is the object of the contract, but, in order that
this symbolic delivery may produce the effect of tradition, I t is necessary
that the vendor shall have control over the thing sold that, at the moment
of sale, it 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 the 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.
2. Yes. It is evident in the case at bar, that the mere execution of the
instrument was not a fulfillment of the vendors obligation to deliver the
thing sold, and that from such non-fulfillment arises the purchasers right
to demand, as she has demanded, the rescission of the sale and the
return of the price.
DANGUILAN V. IAC (November 28, 1988)
FACTS:
A residential and farm lot in Cagayan owned by Dominggo Melad were
being claimed by petitioner Felix Danguilan and respondent Apolonia
Melad.
Apolonia contends that she acquired the property when Dominggo
Melad sold it to her when she was just three years old in which her
mother paid the consideration. She contends that she just moved out of
the farm only when in 1946 Felix Danguilan approached her and asked
permission to cultivate the land and to stay therein.
Dangguilan presented for his part 2 documents to prove his claim that
the properties were given to him by Dominggo Melad through an
onerous donation. The onerous part of the donation includes the taking
care of the farm and the arrangement of the burial of Dominggo.
HELD:
The ruling should be in favor of Danguilan. The contention of Apolonia
that the deed of donation is void because it was not made through a
public document is of no merit. The deed was an onerous one and
hence, it was not covered by the rule in Article 749 requiring donations
of real properties to be effected through a public instrument. An onerous
donation is effective and valid if it embraces the conditions that the law
requires. Since it has been proven that Danguilan did the conditions in
the onerous donation particularly the arrangement of Dominggos burial,
the deed is deemed valid.
On the other hand, the deed of sale made in favor of Apolonia is
suspicious. One may well wonder why the transfer was not made to the
mother herself, who was after all the one paying for the lands. The
averment was also made that the contract was simulated and prepared
after Domingo Melad's death in 1945.
Even assuming the validity of the deed of sale, the record shows that
the private respondent did not take possession of the disputed
properties and indeed waited until 1962 to file this action for recovery of
the lands from the petitioner. If she did have possession, she transferred
the same to the petitioner in 1946, by her own sworn admission, and
moved out to another lot belonging to her step-brother. In short, she
failed to show that she consummated the contract of sale by actual
delivery of the properties to her and her actual possession thereof in
concept of purchaser-owner. Ownership does not pass by mere
stipulation but only by delivery.
Danguilan vs. IAC
Facts:
o A parcel of lot owned by Domingo Melad was being claimed
by petitioner Felix Danguilan and respondent Apolonia
Melad.
o Apolonia Melad contends that she acquired the property when
Dominggo Melad sold it to her when she was just 3 years old
in which her mother paid the consideration. (Evidence: Deed
of sale dated December 4, 1943 with a sum consideration of
P80.00.)
o Apolonia contended that she just moved out of the farm only
in 1946 when Felix Danguilan approached her and asked
permission to cultivate the land and to stay therein.
o Dangguilan, on the other hand, presented for his part 2
documents executed in September 14, 1941 and December
18, 1943, to prove his claim that the properties were given to
him by Dominggo Melad through an onerous donation. The
onerous part of the donation includes the taking care of the
farm and the arrangement of the burial of Dominggo.
o RTC ruled in favor of Danguilan. CA reversed RTCs ruling. It
ruled that there was a donation, which was void for failing to
comply with the formalities.
Issues:
1. Who has the better right between parties? Petitioner Danguilan.
2. WON there was delivery in favor of respondent for the alleged sale?
NO.
Held:
Domingo Melad intended to donate the property to petitioner
Danguilan
It is our view, considering the language of the two instruments, that
Domingo Melad did intend to donate the properties to the petitioner
Danguilan. We do not think, however, that the donee was moved by pure
liberality. While truly donations, the conveyances were onerous
donations as the properties were given to petitioner Danguilan in
exchange for his obligation to take care of the donee for the rest of his
life and provide for his burial.
Hence, it was not covered by the rule in Article 749 of the Civil Code
requiring donations of real properties to be effected through a public
instrument, and the 2 private documents remain valid.
Assuming there was a valid deed of sale, PR Melad failed to show
that it was consummated (no actual delivery + no possession)
At any rate, even assuming the validity of the deed of sale, the record
shows that Apolonia Melad did not take possession of the disputed
properties and indeed waited until 1962 to file this action for recovery of
the lands from petitioner Danguilan. If she did have possession, she
transferred the same to Danguilan in 1946, by her own sworn admission,
and moved out to another lot belonging to her step-brother.
Her claim that the petitioner was her tenant (later changed to
administrator) was disbelieved by the trial court, and properly so, for its
inconsistency. In short, she failed to show that she consummated the
contract of sale by actual delivery of the properties to her and her actual
possession thereof in concept of purchaser-owner.
No constructive delivery allowed if property is in actual and
adverse possession of a third person
In our jurisdiction, it is a fundamental and elementary principle that
ownership does not pass be mere stipulation but only by delivery and
the execution of a public document does not constitute sufficient delivery
where the property involved is in the actual and adverse possession of
third persons.
Therefore, in our Civil Code it is a fundamental principle in all matters of
contracts and a well- known doctrine of law that "non mudis pactis sed
traditione dominia rerum transferuntur".
In conformity with said doctrine as established in paragraph 2 of article
609 of said code, that "the ownership and other property rights are
acquired and transmitted by law, by gift, by testate or intestate
succession, and, in consequence of certain contracts, by tradition".
In accordance with such disposition and provisions the delivery of a thing
constitutes a necessary and indispensable requisite for the purpose of
acquiring the ownership of the same by virtue of a contract.
One who is in possession is presumed to be the owner
In this case, there no dispute that it is Danguilan and not Melad who is
in actual possession of the litigated properties. And even if the claim of
petitioner and respondent are weak, judgment must be in favor of the
Danguilan for one who is in possession is presumed to be the owner,
and cannot be obliged to show or prove a better right.
PASAGUI V. VILLABLANCA (November 10, 1975)
FACTS:
Plaintiffs Calixto Pasagui and Fausta Mosar bought a property
in Leyte from Estaquia and Catalina Bocar for P2,800. Before they could
take possession of the property, defendant spouses Ester T. Villablanca
and Zosimo Villablanca took possession of it and harvested from the
coconut plantation thereon. Plaintiffs demanded the return of the
property but the defendants refused.
Plaintiffs filed a case in the CFI but respondents contend that the case
is a forcible entry and as such, CFI has no jurisdiction.
ISSUE: WON the case is of forcible entry.
HELD:
In order that an action may be considered as one for forcible entry, it is
not only necessary that the plaintiff should allege his prior physical
possession of the property but also that he was deprived of his
possession by any of the means provided in section 1, Rule 70 of the
Revised Rules of Court.
It is true that the execution of the deed of absolute sale in a public
instrument is equivalent to delivery of the land subject of the sale. This
presumptive delivery only holds true when there is no impediment that
may prevent the passing of the property from the hands of the vendor
into those of the vendee. It can be negated by the reality that the
vendees actually failed to obtain material possession of the land subject
of the sale.
DY V. CA (July 08, 1991)
FACTS:
Wilfredo Dy bought a truck and tractor from Libra Finance Corporation.
Both truck and tractor was also mortgage to Libra as security for a loan
and as such, they took possession of it. Brother of Wilfredo, Perfecto Dy
and sister Carol Dy-Seno requested Libra that they be allowed to buy
the property and assume the mortgage debt. Libra agreed to the
request.
Meanwhile, a collection suit was filed against Wilfredo Dy by Gelac
Trading Inc. On the strength of a writ of execution, the sheriff was able
to obtain the tractor on the premises of Libra. It was sold in a public
auction in which Gelac Trading was the lone bidder. Gelac subsequently
sold it to one of their stockholders.
The respondents claim that at the time of the execution of the deed of
sale, no constructive delivery was effected since the consummation of
the sale depended upon the clearance and encashment of the check
which was issued in payment of the subject tractor
ISSUE:
WON the William Dy is still the owner of the tractor when it was obtained
through the writ of execution.
HELD:
The tractor was not anymore in possession of William Dy when it was
obtained by the sheriff because he already sold it to his brother.
William Dy has the right to sell his property even though it was mortgage
because in a mortgage, the mortgagor doesnt part with the ownership
over the property. He is allowed to sell the property as long as there is
consent from the mortgagee such as in this case. But even if there is no
consent given, the sale would still be valid without prejudice to the
criminal action against the mortgagor.
When William Dy sold the tractor, he already transferred the ownership
of it because NCC states that the ownership of the thing sold is acquired
by the vendee from the moment it is delivered to him or in any other
manner signing an agreement that the possession is transferred from
the vendor to the vendee. In the instant case, actual delivery of the
subject tractor could not be made but there was constructive delivery
already upon the execution of a public instrument which in this case is a
deed of sale.
The payment of the check was actually intended to extinguish the
mortgage obligation
PERFECTO DY, JR. vs. COURT OF APPEALS, GELAC TRADING
INC., and ANTONIO V. GONZALES
G.R. No. 92989. July 8, 1991.
FACTS:
The petitioner, Perfecto Dy and Wilfredo Dy are brothers.
Sometime in 1979, Wilfredo Dy purchased a truck and a farm tractor
through financing extended by Libra Finance and Investment
Corporation (Libra). Both truck and tractor were mortgaged to Libra as
security for the loan.
The petitioner wanted to buy the tractor from his brother so, he wrote
a letter to Libra requesting that he be allowed to purchase from Wilfredo
Dy the said tractor and assume the mortgage debt of the latter.
 Libra thru its manager, Cipriano Ares approved the petitioners request.
Wilfredo Dy executed a deed of absolute sale in favor of the petitioner
over the tractor in question. At this time, the subject tractor was in the
possession of Libra Finance due to Wilfredo Dys failure to pay the
amortizations.
Despite the offer of full payment by the petitioner to Libra for the tractor,
the immediate release could not be effected because Wilfredo Dy had
obtained financing not only for said tractor but also for a truck and Libra
insisted on full payment for both.
Petitioner was able to convince his sister to purchase the truck so that
full payment can be made for both
A PNB check was issued in the amount of P22,000.00 in favor of Libra,
thus settling in full the indebtedness of Wilfredo Dy with the financing
firm. Libra insisted that it be cleared first before releasing the chattels
Meanwhile, Civil Case entitled Gelac Trading, Inc. v. Wilfredo Dy, a
collection case to recover the sum of P12,269.80 was pending in another
court
On the strength of an alias writ of execution issued, the provincial
sheriff was able to seize and levy on the tractor which was in the
premises of Libra in Carmen, Cebu. The tractor was subsequently sold
at public auction where Gelac Trading was the alone bidder. Later,
Gelac sold the tractor to one of its stockholders, Antonio Gonzales.
It was only when the check was that the petitioner learned about
GELAC having already taken custody of the subject tractor
petitioner filed an action to recover the subject tractor against GELAC
Trading
the RTC rendered judgment in favor of the petitioner
Court of Appeals reversed the decision of the RTC (held that the tractor
in question still belonged to Wilfredo Dy when it was seized and levied
by the sheriff)
ISSUE: WHETHER OR NOT OWNERSHIP OF THE FARM TRACTOR
HAD ALREADY PASSED TO HEREIN PETITIONER WHEN SAID
TRACTOR WAS LEVIED ON BY THE SHERIFF PURSUANT TO AN
ALIAS WRIT OF EXECUTION ISSUED IN ANOTHER CASE IN FAVOR
OF RESPONDENT GELAC TRADING INC.
HELD: YES
SPECIAL CONTRACTS; CHATTEL MORTGAGE; RIGHT OF
MORTGAGOR TO SELL THE PROPERTY MORTGAGED; RULE.
The mortgagor who gave the property as security under a chattel
mortgage did not part with the ownership over the same. He had the
right to sell it although he was under the obligation to secure the written
consent of the mortgagee or he lays himself open to criminal prosecution
under the provision of Article 319 par. 2 of the Revised Penal Code. And
even if no consent was obtained from the mortgagee, the validity of the
sale would still not be affected.
APPLICABLE IN CASE AT BAR. We see no reason why Wifredo Dy,
as the chattel mortgagor can not sell the subject tractor. There is no
dispute that the consent of Libra Finance was obtained in the instant
case. Libra allowed the petitioner to purchase the tractor and assume
the mortgage debt of his brother. The sale between the brothers was
therefore valid and binding as between them and to the mortgagee, as
well.
REMEDY OF MORTGAGEE IN CASE MORTGAGOR FAILED TO PAY
THE DEBT. It was Libra Finance which was in possession of the
subject tractor due to Wilfredos failure to pay the amortization as a
preliminary step to foreclosure. As mortgagee, he has the right of
foreclosure upon default by the mortgagor in the performance of the
conditions mentioned in the contract of mortgage. The law implies that
the mortgagee is entitled to possess the mortgaged property because
possession is necessary in order to enable him to have the property
sold. While it is true that Wilfredo Dy was not in actual possession and
control of the subject tractor, his right of ownership was not divested
from him upon his default. Neither could it be said that Libra was the
owner of the subject tractor because the mortgagee can not become the
owner of or convert and appropriate to himself the property mortgaged
(Article 2088, Civil Code). Said property continues to belong to the
mortgagor. The only remedy given to the mortgagee is to have said
property sold at public auction and the proceeds of the sale applied to
the payment of the obligation secured by the mortgagee (See Martinez
vs. PNB, 93 Phil. 765, 767 [1953]). There is no showing that Libra
Finance has already foreclosed the mortgage and that it was the new
owner of the subject tractor. Undeniably, Libra gave its consent to the
sale of the subject tractor to the petitioner. It was aware of the transfer
of rights to the petitioner.
PURCHASER OF MORTGAGED PROPERTY STEPS INTO THE
SHOES OF THE MORTGAGOR. Where a third person purchases
the mortgaged property, he automatically steps into the shoes of the
original mortgagor. His right of ownership shall be subject to the
mortgage of the thing sold to him. In the case at bar, the petitioner was
fully aware of the existing mortgage of the subject tractor to Libra. In fact,
when he was obtaining Libras consent to the sale, he volunteered to
assume the remaining balance of the mortgage debt of Wilfredo Dy
which Libra undeniably agreed to.
SALE; DELIVERY OF PROPERTY VESTS OWNERSHIP TO THE
VENDEE. Article 1496 of the Civil Code states that the ownership of
the thing sold is acquired by the vendee from the moment it is delivered
to him 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. We agree with the petitioner that Articles
1498 and 1499 are applicable in the case at bar.
RULE ON CONSTRUCTIVE DELIVERY. In the instant case, actual
delivery of the subject tractor could not be made. However, there was
constructive delivery already upon the execution of the public instrument
pursuant to Article 1498 and upon the consent or agreement of the
parties when the thing sold cannot be immediately transferred to the
possession of the vendee (Article 1499).
CONSUMMATION OF SALE; NOT DEPENDENT ON THE
ENCASHMENT OF CHECK. The payment of the check was actually
intended to extinguish the mortgage obligation so that the tractor could
be released to the petitioner. It was never intended nor could it be
considered as payment of the purchase price because the relationship
between Libra and the petitioner is not one of sale but still a mortgage.
The clearing or encashment of the check which produced the effect of
payment determined the full payment of the money obligation and the
release of the chattel mortgage. It was not determinative of the
consummation of the sale. The transaction between the brothers is
distinct and apart from the transaction between Libra and the petitioner.
The contention, therefore, that the consummation of the sale depended
upon the encashment of the check is untenable.
EVIDENCE; FRAUD; MUST BE ESTABLISHED BY CLEAR
CONVINCING EVIDENCE. There is no sufficient evidence to show
that the sale of the tractor was in fraud of Wilfredo and creditors. While
it is true that Wilfredo and Perfecto are brothers, this fact alone does not
give rise to the presumption that the sale was fraudulent. Relationship is
not a badge of fraud (Goquiolay vs. Sycip, 9 SCRA 663 [1963]).
Moreover, fraud can not be presumed; it must be established by clear
convincing evidence.
Power Commercial and Industrial Corp. vs CA
G.R. No. 119745, June 20, 1997
FACTS:
Petitioner Power Commercial & Industrial Development Corporation
entered into a contract of sale involving a 612-sq. m. parcel of land with
the spouses Reynaldo and Angelita R. Quiambao, herein private
respondents. The parties agreed that petitioner would pay private
respondents P108,000.00 as down payment, and the balance of
P295,000.00 upon the execution of the deed of transfer of the title over
the property. Further, petitioner assumed, as part of the purchase price,
the existing mortgage on the land. In full satisfaction thereof, he paid
P79,145.77 to respondent Philippine National Bank (PNB for brevity).
On June 1, 1979, respondent spouses mortgaged again said land to
PNB to guarantee a loan of P145,000.00, P80,000.00 of which was paid
to respondent spouses. Petitioner agreed to assume payment of the
loan. On February 15, 1980, PNB informed respondent spouses that, for
petitioners failure to submit the papers necessary for approval pursuant
to the formers letter dated January 15, 1980, the application for
assumption of mortgage was considered withdrawn.
On February 19, 1982, PNB sent petitioner informing him that the loan
has been past due from last maturity with interest arrearages amounting
to P25,826.08 as of February 19, 1982. PNB further requested petitioner
to remit payments to cover interest, charges, and at least part of the
principal.
On March 17, 1982, petitioner filed Civil Case No. 45217 against
respondent spouses for rescission and damages before the Regional
Trial Court of Pasig, Branch 159. Then, in its reply to PNBs letter of
February 19, 1982, petitioner demanded the return of the payments it
made on the ground that its assumption of mortgage was never
approved. On May 31, 1983, while this case was pending, the mortgage
was foreclosed. The property was subsequently bought by PNB during
the public auction.
On July 12, 1990, the trial court ruled that the failure of respondent
spouses to deliver actual possession to petitioner entitled the latter to
rescind the sale, and in view of such failure and of the denial of the
latters assumption of mortgage, PNB was obliged to return the
payments made by the latter. On appeal by respondent-spouses and
PNB, Respondent Court of Appeals reversed the trial court.
ISSUES
1. Whether or not there was a substantial breach of the contract between
the parties warranting rescission
2. Whether or not there was a mistake in payment made by petitioner,
obligating PNB to return such payments.
HELD
1. The alleged failure of respondent spouses to eject the lessees from
the lot in question and to deliver actual and physical possession thereof
cannot be considered a substantial breach of a condition for two
reasons: first, such failure was not stipulated as a condition whether
resolutory or suspensive in the contract; and second, its effects and
consequences were not specified either.
If the parties intended to impose on respondent spouses the obligation
to eject the tenants from the lot sold, it should have included in the
contract a provision similar to that referred to in Romero vs. Court of
Appeals, where the ejectment of the occupants of the lot sold by private
respondent was the operative act which set into motion the period of
petitioners compliance with his own obligation.
As stated, the provision adverted to in the contract pertains to the usual
warranty against eviction, and not to a condition that was not met. The
terms of the contract are so clear as to leave no room for any other
interpretation.
2. Contrary to the contention of petitioner that a return of the payments
it made to PNB is warranted under Article 2154 of the Code, solutio
indebiti does not apply in this case. This doctrine applies where: (1) a
payment is made when there exists no binding relation between the
payor, who has no duty to pay, and the person who received the
payment, and (2) the payment is made through mistake, and not through
liberality or some other cause.
In this case, petitioner was under obligation to pay the amortizations on
the mortgage under the contract of sale and the deed of real estate
mortgage. Under the deed of sale, both parties agreed to abide by any
and all the requirements of PNB in connection with the real estate
mortgage. Petitioner was aware that the deed of mortgage made it
solidarily and, therefore, primarily liable for the mortgage obligation.
Therefore, it cannot be said that it did not have a duty to pay to PNB the
amortization on the mortgage.
Also, petitioner insists that its payment of the amortization was a mistake
because PNB disapproved its assumption of mortgage after it failed to
submit the necessary papers for the approval of such assumption. But
even if petitioner was a third party in regard to the mortgage of the land
purchased, the payment of the loan by petitioner was a condition clearly
imposed by the contract of sale. This fact alone disproves petitioners
insistence that there was a mistake in payment. On the contrary, such
payments were necessary to protect its interest as a the buyer(s) and
new owner(s) of the lot.
POWER COMMERCIAL V. CA (June 20, 1997)
FACTS:
Petitioner asbestos manufacturer Power Commercial and industrial
corporation bought the property of spouses Reynaldo and Angelita
Quiambao located in Makati City.
Since there are lessees occupying the subject land, part of the deed of
sale is a warranty of respondents that will defend its title and peaceful
possession in favor of the petitioners.
The property is mortgage to PNP and as such, petitioners filed a request
to assume responsibility of the mortgage. Because of petitioners failure
to produce the required papers, their petition was denied.
Petitioners allege that the contract should be rescinded because of
failure of delivery.
ISSUE:
WON the contract is recissible due to breach of contract.
HELD:
There is no breach of contact in this case since there is no provision in
the contract that imposes the obligation to the respondents to eject the
people occupying the property.
There was also a constructive delivery because the deed of sale was
made in a public document. The contention of the petitioners that there
could be no constructive delivery because the respondents is not in
possession of the property is of no merit. What matters in a constructive
delivery is control and not possession. Control was placed in the hands
of the petitioners that is why they were able to file an ejectment case.
Prior physical delivery or possession is not legally required and the
execution of the deed of sale is deemed equivalent to delivery.
VILLARTA V. CA (May 29, 1987)
FACTS:
Respondent Rosalinda Cruz entrusted to petitioner Victoria Villarta
seven pieces of jewelry on November 1968. On December of the same
year, Villarta exchanges one jewelry to another and issued a post-dated
check in favor of Cruz. Cruz deposited the check but it was dishonored
for lack of funds.
An estafa case was filed against Villarta but she argued that she can
only be civilly liable because even though the check bounced, she only
gave it for a pre-existing obligation. She contends a person cannot be
imprisoned for non-payment of debt.
ISSUE:
WON the transaction is a sale or return
HELD:
The transaction is not a sale or return but a sale on approval or sale on
acceptance.
When Cruz gave the jewelry to Villarta on November, the clear intention
is to make the latter choose which item she wanted to buy. There was
no meeting of the minds yet at this point and hence, it cannot be
considered as delivery.
If ownership over the jewelry was not transmitted on that date, then it
could have been transmitted only in December 1968, the date when the
check was issued. In which case, it was a "sale on approval" since
ownership passed to the buyer. Vallarta, only when she signified her
approval or acceptance to the seller, Cruz, and the price was agreed
upon.

It is still criminal fraud or deceit in the issuance of a check which is made
punishable under the Revised Penal Code, and not the non-payment of
the debt.
STA.ANA V. HERNANDEZ (January 17, 1966)
FACTS:
Spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo sold a land in
Bulacan to respondent Rosa Hernandez for P11,000 lump sum. (there
were two other previous sales to different vendees of other portions of
the land)
The boundaries of the land were stated in the deed of sale and its
approximate land area.
Petitioners-spouses caused the preparation of the subdivision plan but
Hernandez didnt agree to the partition. As such, petitioners-spouses
filed a case alleging that Hernandez is occupying in excess of 17000
square meter of the land sold. Hernandez claims that the excess area is
part of the land she bought.
ISSUE:
WON the excess area occupied by Hernandez is part of the land sold.
HELD:
The sale involves a definite and identified tract, a corpus certum, that
obligated the vendors to deliver to the buyer all the land within the
boundaries, irrespective of whether its real area should be greater or
smaller than what is recited in the deed.
To hold the buyer to no more than the area recited on the deed, it must
be made clear therein that the sale was made by unit of measure at a
definite price for each unit. The sale in this case only involves the definite
boundaries but only approximate land areas. As such, Art 1542
concerning the sale for lump sum must be considered.
Carbonell vs. CA
Facts:
o Respondent Jose Poncio was the owner of the parcel of land
located in Rizal. (Area more or less 195 sq. m.)
o The said lot was subject to mortgage in favor of the Republic
Savings Bank for the sum of P1,500.00.
o Carbonell and respondent Emma Infante offered to buy the
said lot from Poncio.
o Poncio offered to sell his lot to Carbonell excluding the house
on which he and his family stayed. Carbonell accepted the
offer and proposed the price of P9.50/sq. m..
o Poncio accepted the price on the condition that from the
purchase price would come the money to be paid to the bank.
o January 27, 1995: The parties executed a document in the
Batanes dialect which is translated as: CONTRACT FOR
ONE HALF LOT WHICH I (Poncio) BOUGHT FROM.
o Carbonell asked a lawyer to prepare the deed of sale and
delivered the document, together with the balance of P400, to
Jose Poncio. (Note: Carbonell already paid P200 for the
mortgage debt of Poncio + obligated herself to pay the
remaining installments.)
o However, when she went to Poncio, the latter informed her
that he could no longer proceed with the sale as the lot was
already sold to Emma Infante and that he could not withdraw
with the sale.
o Poncio admitted that on January 30, 1995, Mrs. Infante
improved her offer and he agreed to sell the land and its
improvements to her for P3,535.00.
o In a private memorandum agreement, Poncio bound to sell to
Infante the lot for the sum of P2,357.52, with Infante still
assuming the mortgage debt of P1,177.48. (Note: The full
amount of mortgage debt was already paid by the Infantes)
o February 2, 1995: A deed of sale was executed between
Poncio and Infante.
o February 8, 1995: Knowing that the sale to Infante has not
been registered, Carbonell filed an adverse claim.
o February 12, 1995: The deed of sale was registered but it has
an annotation of the adverse claim of Carbonell.
o Thereafter, Emma Infante took possession of the lot, built a
house and introduced some improvements.
o In June 1995, Carbonell filed a complaint praying that she be
declared the lawful owner of the land, that the subsequent
sale to spouses Infante be declared null and void, and that
Jose Poncio be ordered to execute the corresponding deed of
conveyance of said land in her favor
o RTC ruled that the sale to spouses Infante was null and void.
After re-trial, it reversed its ruling. CA ruled in favor of
Carbonell but after a MfR, it reversed its ruling and ruled in
favor of the Infantes.
Issue: WON Carbonell has a superior right over Emma Infante. YES
Held:
Article 1544 provides that for double sale of an immovable
property, the ownership shall belong to the person who first
acquired it in good faith and recorded it in the Registry of Property
Article 1544, New Civil Code, which is decisive of this case, recites:
If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should movable property.
Should it be immovable property, the ownership shall belong to the
person acquiring it who in good faith first recorded it in the Registry of
Property.
Should there be no inscription, the ownership shall pertain to the person
who in good faith was first in the possession; and, in the absence
thereof, to the person who presents the oldest title, provided there is
good faith.
The buyer must act in good faith in registering the deed of sale
It is essential that the buyer of realty must act in good faith in registering
his deed of sale to merit the protection of the second paragraph of said
Article 1544.
Unlike the first and third paragraphs of said Article 1544, which accord
preference to the one who first takes possession in good faith of
personal or real property, the second paragraph directs that ownership
of immovable property should be recognized in favor of one "who in good
faith first recorded" his right. Under the first and third paragraph, good
faith must characterize the act of anterior registration.
Rule when there is inscription or not
If there is no inscription, what is decisive is prior possession in good
faith. If there is inscription, as in the case at bar, prior registration in good
faith is a pre-condition to superior title.
Carbonell was in good faith when she bought the lot
When Carbonell bought the lot from Poncio on January 27, 1955, she
was the only buyer thereof and the title of Poncio was still in his name
solely encumbered by bank mortgage duly annotated thereon. Carbonell
was not aware and she could not have been aware of any sale of
Infante as there was no such sale to Infante then.
Hence, Carbonell's prior purchase of the land was made in good faith.
Her good faith subsisted and continued to exist when she recorded her
adverse claim four (4) days prior to the registration of Infantes's deed of
sale.
Carbonells good faith did not cease when she was informed by
Poncio about the sale to Emma Infante
After learning about the second sale, Carbonell tried to talk to the
Infantes but the latter refused.
(Exact words of the SC: With an aristocratic disdain unworthy of the
good breeding of a good Christian and good neighbor, Infante snubbed
Carbonell like a leper and refused to see her.)
So Carbonell did the next best thing to protect her right she registered
her adversed claim on February 8, 1955. Under the circumstances, this
recording of her adverse claim should be deemed to have been done in
good faith and should emphasize Infante's bad faith when she registered
her deed of sale four (4) days later on February 12, 1955.
The Infantes were in bad faith (5 indications of bad faith listed
below)
Bad faith arising from previous knowledge by Infante of the prior sale to
Carbonell is shown by the following facts:
1. Mrs. Infante refused to see Carbonell.
Her refusal to talk to Carbonell could only mean that she did not want to
listen to Carbonell's story that she (Carbonell) had previously bought the
lot from Poncio.
2. Carbonell was already in possession of mortgage passbook and copy
of the mortgage contract. (Not Poncios saving deposit passbook.)
Infante naturally must have demanded from Poncio the delivery to her
of his mortgage passbook and mortgage contract so that the fact of full
payment of his bank mortgage will be entered therein; and Poncio, as
well as the bank, must have inevitably informed her that said mortgage
passbook could not be given to her because it was already delivered to
Carbonell.
3. Emma Infante did not inquire why Poncio was no longer in possession
of the mortgage passbook and why it was in Carbonells possession.
The fact that Poncio was no longer in possession of his mortgage
passbook and that the said mortgage passbook was already in
possession of Carbonell, should have compelled Infante to inquire from
Poncio why he was no longer in possession of the mortgage passbook
and from Carbonell why she was in possession of the same.
4. Emma Infante registered the sale under her name after Carbonell filed
an adverse claim 4 days earlier.
Here she was again on notice of the prior sale to Carbonell. Such
registration of adverse claim is valid and effective.
5. Infante failed to inquire to Poncio WON he had already sold the
property to Carbonell especially that it can be shown that he was aware
of the offer made by Carbonell.
Poncio alleged in his answer that Mrs. Infante and Mrs. Carbonell
offered to buy the lot at P15/sq. m. which offers he rejected as he
believed that his lot is worth at least P20.00/sq. m. It is therefore logical
to presume that Infante was told by Poncio and consequently knew of
the offer of Carbonell which fact likewise should have put her on her
guard and should have compelled her to inquire from Poncio whether or
not he had already sold the property to Carbonell
The existence of prior sale to Carbonell was duly established
From the terms of the memorandum, it tends to show that the sale of the
property in favor of Carbonell is already an accomplished act. As found
by the trial court, to repeat the said memorandum states "that Poncio is
allowed to stay in the property which he had sold to the plaintiff ..., it
tends to show that the sale of the property in favor of the plaintiff is
already an accomplished act..."
There was an adequate consideration or price for the sale in favor
of Carbonell
Poncio agreed to sell the same to Carbonell at P9.50 per square meter,
on condition that Carbonell:
1. should pay (a) the amount of P400.00 to Poncio and the arrears in the
amount of P247.26 to the bank
2. should assume his mortgage indebtedness.
The bank president agreed to the said sale with assumption of mortgage
in favor of Carbonell an Carbonell accordingly paid the arrears of
P247.26.
It is evident therefore that there was ample consideration, and not
merely the sum of P200.00, for the sale of Poncio to Carbonell of the lot
in question.
The subject property was identified and described
The court has arrived at the conclusion that there is sufficient description
of the lot referred to in Exh. As none other than the parcel of lot occupied
by the defendant Poncio and where he has his improvements erected.
The Identity of the parcel of land involved herein is sufficiently
established by the contents of the note Exh. 'A'.
Quimson v. Rosete [G.R. No. L-2397. August 9, 1950.]
TOPIC: Double Sales
DOCTRINE: Upon sale of real estate the execution of a notarial sale is
a sufficient delivery of the property sold. When the sale is made by
means of public instrument, the execution thereof is tantamount to
conveyance of the subject matter.
FACTS: (written in spnaish)
The subject property land, originally belonged to the late Dionisio
Quimson. He executed a deed transferring the same in favor of his
daughter Tomasa Quimson. However, he still remained to be in
possession and enjoyment of the property.
Later, the property was sold to the spouses Magno Agustin and Paulina
Manzano on 3
May 1935, with right to repurchase within the term of six years.
Then, two years after, the same property was again sold to Francisco
Rosete, also with pacto de retro within five years.
Thereafter, he repurchased the property from Agustin and Manzano with
money furnished to him by Rosete. Since then, Rosete possessed the
property in a peaceful manner even after the death of Dionisio Quimson.
Tomasa Quimson filed with the Justice of Peace of San Marcelino,
Zambales. In the registration of the property and inscription of the deeds
of sale, Tomasa Quimson arrived one hour earlier (9:30am) than
Francisco Rosete (10:30am) of the same day.
The Court of First instance of Zambales ruled in favor of Tomasa
Quimson and Marcos Santos.
The Court of Appeals the reversed the decision and ruled in favor of
Rosete.
ISSUE: Who owns the land now, Quimson or Rosete?
HELD: Quimson is the owner.
The findings of the RTC that there was indeed a sale by the father in
favor of his daughter was not reversed by the CA and stands as the fact
of the case. Further, it was shown that consideration was given in that
sale, acknowledged before the notary public.
ART. 1462. The thing sold shall be deemed delivered, when it
is placed in the control and possession of the vendee.
When the sale is made by means of a public instrument, the
execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the said
instrument the contrary does not appear or may not be clearly
inferred.
ART. 1473. If the same thing should have been sold to
different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong
to the person acquiring it who first recorded it in the registry.
Should there be no inscription, the ownership shall belong to
the person who in good faith was first in the possession; and,
in the absence of this, to the person who represents the oldest
title, provided there is good faith.
CHENG V. GENATO (December 29, 1998)
FACTS:
Respondent Genato entered a contract to sell to spouses Da Jose
pertaining to his property in Bulacan. The contract made in public
document states that the spouses shall pay the down payment and 30
days after verifying the authenticity of the documents, they shall pay the
remaining purchase price.
Da Jose spouses was not able to finish verifying the documents and as
such asked for a 30 day extension. Pending the extension and without
notice to the spouses, Genato made a document for the annulment of
the contract.
Petitioner Cheng expressed interest over the property and paid 50K
check with the assurance that the contract between Genato and the
spouses Da Jose will be annulled. Da Jose spouses protested with the
annulment and persuaded Genato to continue the contract. Genato
returned the check to Cheng and hence, this petition.
HELD:
The contract between Genato and spouses Da Jose was a contract to
sell which is subject to a suspensive condition. Thus, there will be no
contract to speak of, if the obligor failed to perform the suspensive
condition which enforces a juridical relation. Obviously, the foregoing
jurisprudence cannot be made to apply to the situation in the instant
case because no default can be ascribed to the Da Jose spouses since
the 30-day extension period has not yet expired.
Even assuming that the spouses defaulted, the contract also cannot be
validly rescinded because no notice was given to them. Thus, Cheng's
contention that the Contract to Sell between Genato and the Da Jose
spouses was rescinded or resolved due to Genato's unilateral rescission
finds no support in this case.
The contract between Genato and Cheng is a contract to sell not a
contract of sale. But But even assuming that it should be treated as a
conditional contract of sale, it did not acquire any obligatory force since
it was subject to a suspensive condition that the earlier contract to sell
between Genato and the Da Jose spouses should first be cancelled or
rescinded.
Art.1544 should apply because for not only was the contract between
herein respondents first in time; it was also registered long before
petitioner's intrusion as a second buyer (PRIMUS TEMPORE,
PORTIOR JURE). (Spouses made annotation on the title of Genato).
Since Cheng was fully aware, or could have been if he had chosen to
inquire, of the rights of the Da Jose spouses under the Contract to Sell
duly annotated on the transfer certificates of titles of Genato, it now
becomes unnecessary to further elaborate in detail the fact that he is
indeed in bad faith in entering into such agreement.
CORONEL vs CA and ALCARAZ (263 SCRA 15)
The case arose from a complaint for specific performance filed by private
respondent Alcaraz against petitioners to consummate the sale of a
parcel of land in Quezon City.
Facts: On 19 January 1985, Romulo Coronel, et al. executed a
document entitled Receipt of Down Payment in favor of Ramona
Patricia Alcaraz for P50,000 downpayment of the total amount of
P1.24M as purchase price for an inherited house and lot (TCT119627,
Registry of Deeds of Quezon City), promising to execute a deed of
absolute sale of said property as soon as such has been transferred in
their name. The balance of P1.19M is due upon the execution of said
deed. On the same date, Concepcion D. Alcaraz, mother of Ramona,
paid the down payment of P50,000.00. On 6 February 1985,the property
originally registered in the name of the Coronels father was transferred
in their names (TCT 327043). However, on 18 February 1985, the
Coronels sold the property to Catalina B. Mabanag for P1,580,000.00
after the latter has paid P300,000.00. For this reason, Coronels
canceled and rescinded the contract with Alcaraz by depositing the
down payment in the bank in trust for Alcaraz.
On 22 February 1985, Alcaraz filed a complaint for specific performance
against the Coronels and caused the annotation of a notice of lis
pendens at the back of TCT 327403. On 2 April 1985, Mabanag caused
the annotation of a notice of adverse claim covering the same property
with the Registry of Deeds of Quezon City. On 25 April 1985, the
Coronels executed a Deed of Absolute Sale over the subject property in
favor of Mabanag. On 5 June 1985, a new title over the subject property
was issued in the name of Mabanag under TCT 351582.
In the course of the proceedings, the parties agreed to submit the case
for decision solely on the basis of documentary exhibits. Upon
submission of their respective memoranda and the corresponding
comment or reply thereto, and on 1 March 1989, judgment was handed
down in favor of the plaintiffs, ordering the defendant to execute a deed
of absolute sale of the land covered by TCT 327403 and canceling TCT
331582 and declaring the latter without force and effect. Claims for
damages by plaintiffs and counterclaims by the defendants and
intervenors were dismissed. A motion for reconsideration was thereafter
filed, which was denied. CA affirmed decision of TC.
Issue: Whether the contract between petitioners and private respondent
was that of a conditional sale or a mere contract to sell
Held: Sale, by its very nature, is a consensual contract because it is
perfected by mere consent. The essential elements of a contract of sale
are the following: a) Consent or meeting of the minds, that is, consent to
transfer ownership in exchange for the price; b) Determinate subject
matter; and c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a
Contract of Sale because the first essential element is lacking. In a
contract to sell, the prospective seller explicity reserves the transfer of
title to the prospective buyer, meaning, the prospective seller does not
as yet agree or consent to transfer ownership of the property subject of
the contract to sell until the happening of an event, which for present
purposes we shall take as the full payment of the purchase price. What
the seller agrees or obliges himself to do is to fulfill his promise to sell
the subject property when the entire amount of the purchase price is
delivered to him. In other words the full payment of the purchase price
partakes of a suspensive condition, the non-fulfillment of which prevents
the obligation to sell from arising and thus, ownership is retained by the
prospective seller without further remedies by the prospective buyer. A
contract to sell may thus be defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the
subject property despite delivery thereof to the prospective buyer, binds
himself to sell the said property exclusively to the prospective buyer
upon fulfillment of the condition agreed upon, that is, full payment of the
purchase price.
A contract to sell may not even be considered as a conditional contract
of sale where the seller may likewise reserve title to the property subject
of the sale until the fulfillment of a suspensive condition, because in a
conditional contract of sale, the first element of consent is present,
although it is conditioned upon the happening of a contingent event
which may or may not occur. If the suspensive condition is not fulfilled,
the perfection of the contract of sale is completely abated. However, if
the suspensive condition is fulfilled, the contract of sale is thereby
perfected, such that if there had already been previous delivery of the
property subject of the sale to the buyer, ownership thereto automatically
transfers to the buyer by operation of law without any further act having
to be performed by the seller. In a contract to sell, upon the fulfillment of
the suspensive condition which is the full payment of the purchase price,
ownership will not automatically transfer to the buyer although the
property may have been previously delivered to him. The prospective
seller still has to convey title to the prospective buyer by entering into a
contract of absolute sale.
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by
the owner not to the party the seller contracted with, but to a third person,
as in the case at bench. In a contract to sell, there being no previous
sale of the property, a third person buying such property despite the
fulfillment of the suspensive condition such as the full payment of the
purchase price, for instance, cannot be deemed a buyer in bad faith and
the prospective buyer cannot seek the relief of reconveyance of the
property. There is no double sale in such case. Title to the property will
transfer to the buyer after registration because there is no defect in the
owner seller's title per se, but the latter, of course, may be used for
damages by the intending buyer.
In a conditional contract of sale, however, upon the fulfillment of the
suspensive condition, the sale becomes absolute and this will definitely
affect the seller's title thereto. In fact, if there had been previous delivery
of the subject property, the seller's ownership or title to the property is
automatically transferred to the buyer such that, the seller will no longer
have any title to transfer to any third person. Such second buyer of the
property who may have had actual or constructive knowledge of such
defect in the seller's title, or at least was charged with the obligation to
discover such defect, cannot be a registrant in good faith. Such second
buyer cannot defeat the first buyer's title. In case a title is issued to the
second buyer, the first buyer may seek reconveyance of the property
subject of the sale.
The agreement could not have been a contract to sell because the
sellers herein made no express reservation of ownership or title to the
subject parcel of land. Furthermore, the circumstance which prevented
the parties from entering into an absolute contract of sale pertained to
the sellers themselves (the certificate of title was not in their names) and
not the full payment of the purchase price. Under the established facts
and circumstances of the case, the Court may safely presume that, had
the certificate of title been in the names of petitioners-sellers at that time,
there would have been no reason why an absolute contract of sale could
not have been executed and consummated right there and then.
What is clearly established by the plain language of the subject
document is that when the said "Receipt of Down Payment" was
prepared and signed by petitioners Romeo A. Coronel, et al., the parties
had agreed to a conditional contract of sale, consummation of which is
subject only to the successful transfer of the certificate of title from the
name of petitioners' father, Constancio P. Coronel, to their names.
The provision on double sale presumes title or ownership to pass to the
first buyer, the exceptions being: (a) when the second buyer, in good
faith, registers the sale ahead of the first buyer, and (b) should there be
no inscription by either of the two buyers, when the second buyer, in
good faith, acquires possession of the property ahead of the first buyer.
Unless, the second buyer satisfies these requirements, title or
ownership will not transfer to him to the prejudice of the first buyer. In a
case of double sale, what finds relevance and materiality is not whether
or not the second buyer was a buyer in good faith but whether or not
said second buyer registers such second sale in good faith, that is,
without knowledge of any defect in the title of the property sold. If a
vendee in a double sale registers that sale after he has acquired
knowledge that there was a previous sale of the same property to a third
party or that another person claims said property in a pervious sale, the
registration will constitute a registration in bad faith and will not confer
upon him any right.
As clearly borne out by the evidence in this case, petitioner Mabanag
could not have in good faith, registered the sale entered into on February
18, 1985 because as early as February 22, 1985, a notice of lis pendens
had been annotated on the transfer certificate of title in the names of
petitioners, whereas petitioner Mabanag registered the said sale
sometime in April, 1985. At the time of registration, therefore, petitioner
Mabanag knew that the same property had already been previously sold
to private respondents, or, at least, she was charged with knowledge
that a previous buyer is claiming title to the same property
MENDOZA V. KALAW (October 12, 1921)
FACTS:
Federico Caet sold his land under a conditional sale to Primitivo Kalaw.
Less than two months after, he sold it again to Agapito Mendoza under
an absolute sale.
Mendoza took possession of the land and enclosed it with fence. Kalaw
attempted to claim possession but Mendoza refused. Kalaw attempted
to have his title registered in the registry of deeds but was denied by for
the reason that there existed some defect in the description of the
property, and that the title of the vendor had not therefore been
registered. The register of deeds, however, did make a preventive
annotation.
HELD:
The ruling should be in favor of Mendoza because even if he acquired
the property subsequent to the conditional sale in favor of Kalaw, a
conditional sale, before the performance of the condition, can hardly be
said to be a sale of property, especially where the condition has not been
performed or complied with.
MENDOZA v KALAW
FACTS: In 1919, Federico Canet sold to Kalaw a parcel of land under a
Conditional Sale. 2 months after, Canet sold to Mendoza the same
parcel of land under an Absolute Sale. Mendoza took possession
thereof, cleaned and fenced it, and sought to have the same registered
but Kalaw opposed. When Kalaw first tried to register the same, he was
denied but ananotacion preventive was annotated in the title.
ISSUE: Who has a better title, Canet or Kalaw?
HELD: CANET. While a conditional sale came before the absolute sale,
still the latter must prevail. A conditional sale, before the happening of
the condition, is hardly a sale especially if the condition has yet to be
complied with. The anotacion preventiva obtained by Kalaw cannot
create an advantage in his favor as the same was good for only 30 days.
The court ruled in favor of Mendoza.
ADALIN V. CA (October 10, 1997)
FACTS:
Appellee-Vendors sold their 5-door commercial building to Appellants
Yu and Lim located in front of Imperial Hotel in Cotabato City.
Since there are lessees in the property, the vendors offered it first to
them twice but they refused both offers. As such, appellee-vendors and
appellants executed a deed of conditional sale. The contract states that
they appellants will pay the down payment of 300K first and the
remaining balance after the appellee-vendors completely evicted the
lessees occupying the property.
After the vendors and the tenants made known their intention to buy the
property for a higher price. As such, the vendors executed three deeds
of sale of registered land in favor of the lessees.
The vendors offered to return the downpayment paid by the appellants
but the latter refused. The vendors contend that they can rescind the
contract because the condition to evict the tenants was not completed.
HELD:
Although the contract was a conditional sale, what was subject to the
condition is the payment of the balance. Both parties have their
respective obligations yet to be fulfilled, the seller the eviction of the
tenants and the buyer, the payment of the balance of the purchase price.
The choice of who to sell the property to, however, had already been
made by the sellers and is thus no longer subject to any condition nor
open to any change. In that sense, the sale to the appellants was
definitive and absolute. A clear breach of contract was made by the
vendors.
A case double sale occurred when the vendors sold the property to the
tenants. When the tenants bought the property, they are fully aware of
its prior sale to the appellants. Though the second sale to the said
tenants was registered, such prior registration cannot erase the gross
bad faith that characterized such second sale, and as such, there is no
legal basis to rule that such second sale prevails over the first sale of
the said property.
ADALIN v CA
FACTS: Elena Kado and her siblings owned a lot with a 5-door
commercial building fronting Imperial Hotel. The units were leased.
Elena contracted the services of Bautista, who brought Yu and Lim to
her for the purpose of buying the premises. During the meeting, it was
agreed that the Yu and Lim would buy the said units except for the 5
which is to be bought by Adalin. They entered into a Conditional Sale
where Elena was obligated to evict the tenants before the full payment
of the purchase price. Elena offered the same for sale to the lessees but
they refused claiming that they could not afford; thus, she filed a case
for ejectment against them. Thereafter, the lessees decided to exercise
their right to buy the unitsKalaw ruled that since the sale to Yu and
Lim was conditional, the subsequent sale to the lessees must be
preferred.
ISSUE: Who has a better title, Yu and Lim or the lessees?
HELD: YU AND LIM. While it is true that the Deed was for Conditional
Sale, examination of the contents thereof would show that it was one for
the actual sale. During the meeting, the property was already sold; the
only conditions were that Elena would evict the lessees before the full
payment of the price. The choice of to whom to sell the property had
already been decided. That being the case, since the sale in favor of Yu
and Lim was the prior sale, it must be preferred. Besides, Elena was
guilty of double-dealing, which cannot be sanctioned in law. It was, after
all, her obligation to evict the lessees. The lessees were in bad faith as
well for having knowledge of the supposed salei n favor of Yu and Lim.
Their subsequent registration of the sale cannot shield them in their
fraud.
ESPIRITU V. VALERIO (December 23, 1976)
FACTS:
Valerio filed a case to quiet title against mother and daughter Espiritu
who were asserting their adversary rights over said land and disturbing
his possession thereof.
Valerio presented a deed of sale from which he acquired the property
while the Espiritus allege that they acquire the same from their deceased
father.
The Espiritus also presented two deeds of sale to prove that their
deceased father have a legal right over the property which they
inherited.
ISSUE: WON mother and daughter Espiritu have a better right over the
property.
HELD:
Apparently, this case concerns the sales of one parcel of land by the
same vendor but in favor of two different vendees.
If both allegations of the parties are valid, Espiritu's contention that they
have a better right than that the claimed by Valerio would seem to be
meritorious in the light of the facts of the case and the provisions of
Article 1544 of the New Civil Code, it not being disputed that the Deed
of Sale in favor of them was registered first.
But since the deeds of sale presented by Esiritu are found to be falsified,
they have no legal right to claim the disputed property.
TAEDO V. CA (January 22, 1996)
FACTS:
Lazaro Taedo executed a deed of absolute sale in favor of Ricardo
Taedo and Teresita Barrera in which he conveyed a parcel of land
which he will inherit. Upon the death of his father he executed an affidavit
of conformity to reaffirm the said sale. He also executed another deed
of sale in favor of the spouses covering the parcel of land he already
inherited. Ricardo registered the last deed of sale in the registry of deeds
in their favor.
Ricardo later learned that Lazaro sold the same property to his children
through a deed of sale.
ISSUE: WON the Taedo spouses have a better right over the property
against the children of Lazaro Taedo.
HELD:
Since a future inheritance generally cannot be a subject of a contract,
the deed of sale and the affidavit of conformity made by Lazaro has no
effect. The subject of dispute therefore is the deed of sale made by him
in favor of spouses Taedo and another to his children after he already
legally acquired the property.
Thus, although the deed of sale in favor of private respondents was later
than the one in favor of petitioners, ownership would vest in the former
because of the undisputed fact of registration. On the other hand,
petitioners have not registered the sale to them at all.
Petitioners contend that they were in possession of the property and that
private respondents never took possession thereof. As between two
purchasers, the one who registered the sale in his favor has a preferred
right over the other who has not registered his title, even if the latter is
in actual possession of the immovable property.
CRUZ V. CABANA (June 22, 1984)
FACTS:
Leodegaria Cabana sold his real propery first to Teofilo Legaspi and
Illuminada Cabana and then later to Abelardo Cruz.
Legaspi and Cabana were able to take possession of the property but
they were not able to register the deed of absolute sale because the
property was still mortgaged to PNB. They however were able to register
with the RD the sale with the right to repurchase.
On the other hand, Cruz succeeded to register the deed of absolute sale
in his favor.
HELD:
Even though Cruz was the first to register the deed of absolute sale, he
cannot be given a better right over the property because he was a buyer
in bad faith.
Cruz knew the prior sale of the property because he was informed by
the RD that Legazpi and Cabana already registered the sale of the said
property.
Knowledge of a prior transfer of a registered property by a subsequent
purchaser makes him a purchaser in bad faith and his knowledge of
such transfer vitiates his title acquired by virtue of the latter instrument
of conveyance which creates no right as against the first purchaser.
Cruz vs Cabana
129 SCRA 656, No. L-56232, June 22, 1984
FACTS:
On June 1, 1965, defendant Leodegaria Cabana sold a parcel of land
with right of repurchase to defendants-spouses Teofilo Legaspi and
Iluminada Cabana. A document Bilihang Muling Mabibili stipulated that
the land can be repurchased by the vendor within one year from
December 31, 1966. Said land was not repurchased and in the
meantime, however, said defendants-spouses took possession of the
land.
Upon request of Leodegaria Cabana, the title of the land was lent to her
in order to mortgage the property to the Philippine National Bank. Said
title was forthwith, deposited with the PN8. On October 21, 1968,
defendant Leodegaria Cabana sold the land by way of absolute sale to
the defendants-spouses. However, on November 29, 1968, defendant
sold the same property to plaintiff Abelardo Cruz and the latter was able
to register it in his name. While the title was registered in plaintiff-
appellant Cruzs name on February 9, 1971, he knew of the sale of the
land to defendants spouses Legaspi, as he was inforned in the Office of
the Register of Deed of Quezon.
ISSUE:
Whether or not, the second buyer Cruz, being the first to register the
land creates right as against the first buyer, notwithstanding his
knowledge of the previous sale.
HELD:
No. Said respondent spouses were like wise the first to register the sale
with the right of repurchase in their favor on May 13, 1965 under Primary
Entry No. 210113 of the Register of Deeds. They could not register the
absolute deed of sale in their favor and obtain the corresponding transfer
certificate of title because at that time the sellers duplicate certificate
was still with the bank. But there is no question and the lower courts so
found conclusively as a matter of fact, that when petitioner Cruz
succeeded in registering the later sale in his favor, he knew and he was
informed of the prior sale in favor of respondents spouses., Respondent
appellate court correctly held that such knowledge of a prior transfer of
a registered property by a subsequent purchaser makes him a
purchaser in bad faith and his knowledge of such transfer vitiates his title
acquired, by virtue of the latter instrument of conveyance which creates
no right as against the first purchaser.
NAVERA V. CA (April 26, 1990)
FACTS:
Leocadio Navera owns a parcel of land in Albay which was inherited by
his 5 children. His 3 children already have their share of the inheritance
from the other properties of Leocadio. The subject land was now owned
by his 2 daughters. An OCT was issued in the name of Elena Navera
et.al (et.al refers to his sister Eduarda Navera)
When Elena died, his share of the land was inherited by her heirs
Arsenio and Felix Narez. The other portion was owned by Eduarda.
Eduarda sold her portion to her nephew Arsenio and then one year after
to Mariano Navera. Both sales were made in a public instrument but
both sales were also not registered in the Registry of Property.
ISSUE: WON the second sale of the property is valid.
HELD:
Since the records show that both sales were not recorded in the Registry
of Property, the law clearly vests the ownership upon the person who in
good faith was first in possession of the disputed lot.
The possession viewed in the law includes not only the material but also
the symbolic possession, which is acquired by the execution of a public
instrument. This means that after the sale of a realty by means of a
public instrument, the vendor, who resells it to another, does not transmit
anything to the second vendee, and if the latter, by virtue of this second
sale, takes material possession of the thing, he does it as mere detainer,
and it would be unjust to protect this detention against the rights of the
thing lawfully acquired by the first vendee.
In the case at bar, the prior sale of the land to respondent Arsenio Nares
by means of a public instrument is clearly tantamount to a delivery of the
land resulting in the material and symbolic possession thereof by the
latter.
Balatbat v. CA
Facts:
A parcel of land was acquired by plaintiff Aurelio Roque and Maria
Mesina during their conjugal union. Maria died on August 28, 1966. On
June 15, 1977, Aurelio filed a case for partition. The trial court held that
Aurelio is entitled to the portion at his share in the conjugal property,
and 1/5 of the other half which formed part of Marias estate, divided
equally among him at his 4 children. The decision having become final
and executory, the Register of Deeds of Manila issued a transfer
certificate of title on October 5, 1979 according to the ruling of the court.
On April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-
Repuyan and Jose Repuyan, as evidenced by a deed of absolute sale.
On June 21, 1980, Aurora caused the annotation of her affidavit of
adverse claim. On August 20, 1980, Aurelio filed a complaint for
rescission of contract grounded on the buyers failure to pay the balance
of the purchase price. On February 4, 1982, another deed of absolute
sale was executed between Aurelio and his children, and herein
petitioner Clara Balatbat, involving the entire lot. Balatbat filed a motion
for the issuance of writ of possession, which was granted by the court
on September 20, 1982, subject to valid rights and interests of third
persons. Balatbat filed a motion to intervene in the rescission case, but
did not file her complaint in intervention. The court ruled that the sale
between Aurelio and Aurora is valid.
Issues:
(1) Whether the alleged sale to private respondents was merely
executory
(2) Whether there was double sale
(3) Whether petitioner is a buyer in good faith and for value
Held:
(1) Contrary to petitioner's contention that the sale dated April 1, 1980
in favor of private respondents Repuyan was merely executory for the
reason that there was no delivery of the subject property and that
consideration/price was not fully paid, we find the sale as consummated,
hence, valid and enforceable. The Court dismissed vendor's Aurelio
Roque complaint for rescission of the deed of sale and declared that the
Sale dated April 1, 1980, as valid and enforceable. No appeal having
been made, the decision became final and executory.
The execution of the public instrument, without actual delivery of the
thing, transfers the ownership from the vendor to the vendee, who may
thereafter exercise the rights of an owner over the same. In the instant
case, vendor Roque delivered the owner's certificate of title to herein
private respondent. The provision of Article 1358 on the necessity of a
public document is only for convenience, not for validity or enforceability.
It is not a requirement for the validity of a contract of sale of a parcel of
land that this be embodied in a public instrument. A contract of sale
being consensual, it is perfected by the mere consent of the parties.
Delivery of the thing bought or payment of the price is not necessary for
the perfection of the contract; and failure of the vendee to pay the price
after the execution of the contract does not make the sale null and void
for lack of consideration but results at most in default on the part of the
vendee, for which the vendor may exercise his legal remedies.
(2) Article 1544 of the Civil Code provides that in case of double sale of
an immovable property, ownership shall be transferred: (1) to the person
acquiring it who in good faith first recorded it in the Registry of Property;
(2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the
oldest title, provided there is good faith. In the case at bar, vendor
Aurelio Roque sold 6/10 portion of his share to private respondents
Repuyan on April 1, 1980. Subsequently, the same lot was sold again
by vendor Aurelio Roque (6/10) and his children (4/10), represented by
the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of Court,
on February 4, 1982. Undoubtedly, this is a case of double sale
contemplated under Article 1544 of the New Civil Code.
Evidently, private respondents Repuyan's caused the annotation of an
adverse claim on the title of the subject property on July 21, 1980. The
annotation of the adverse claim in the Registry of Property is sufficient
compliance as mandated by law and serves notice to the whole world.
On the other hand, petitioner filed a notice of lis pendens only on
February 2, 1982. Accordingly, private respondents who first caused the
annotation of the adverse claim in good faith shall have a better right
over herein petitioner. As between two purchasers, the one who has
registered the sale in his favor, has a preferred right over the other who
has not registered his title even if the latter is in actual possession of the
immovable property. Further, even in default of the first registrant or first
in possession, private respondents have presented the oldest title. Thus,
private respondents who acquired the subject property in good faith and
for valuable consideration established a superior right as against the
petitioner.
(3) Petitioner cannot be considered as a buyer in good faith. If petitioner
did investigate before buying the land on February 4, 1982, she should
have known that there was a pending case and an annotation of adverse
claim was made in the title of the property before the Register of Deeds
and she could have discovered that the subject property was already
sold to the private respondents. It is incumbent upon the vendee of the
property to ask for the delivery of the owner's duplicate copy of the title
from the vendor. One who purchases real estate with knowledge of a
defect or lack of title in his vendor cannot claim that he has acquired title
thereto in good faith as against the true owner of the land or of an interest
therein; and the same rule must be applied to one who has knowledge
of facts which should have put him upon such inquiry and investigation
as might be necessary to acquaint him with the defects in the title of his
vendor. Good faith, or the want of it is not a visible, tangible fact that can
be seen or touched, but rather a state or condition of mind which can
only be judged of by actual or fancied tokens or signs.
RADIOWEALTH V. PALILEO (May 20, 1991)
FACTS:
Spouses Castro sold a parcel of unregistered coconut land in Surigao
del Norte to Manuelito Palileo. The sale is evidenced by a notarized
deed of sale and Palileo exercised acts of ownership through his mother
and also paid real estate taxes.
Meanwhile, a judgment over a civil case was rendered agains Enriqur
Castro ordering him to pay 22K to Radiowealth Finance Co.
Pursuant to this, the provincial sheriff levied upon and sold in public
auction the subject land that was previously sold to Palileo. A certificate
of sale was issued in favor of Radiowealth being the lone bidder and
after the expiration of the period of redemption, a deed of final sale was
also executed in their favor and both deeds was registered to the
Registry of Deeds.
ISSUE: WON the sale in public auction is valid.
HELD:
Had Art.1544 been applied, the judgment should be rendered in favor of
Radiowealth being the one who registered the land first. But since the
subject land is an unregistered land, a different rule should apply.
Under Act.3344 mere registration of a sale in one's favor does not give
him any right over the land if the vendor was not anymore the owner of
the land having previously sold the same to somebody else even if the
earlier sale was unrecorded.
Article 1544 of the Civil Code has no application to land not registered
under the torrens system. It was explained that this is because the
purchaser of unregistered land at a sheriffs execution sale only steps
into the shoes of the judgment debtor, and merely acquires the latter's
interest in the property sold as of the time the property was levied upon.
As such, the execution sale of the unregistered land in favor of petitioner
is of no effect because the land no longer belonged to the judgment
debtor as of the time of the said execution sale.
Dagupan Trading Co. vs Macam
14 SCRA 179, G.R. No. L-18497
May 31, 1965
FACTS:
In the year 1955, Sammy Maron and his seven brothers and sisters were
pro-indiviso owners of a parcel of unregistered land located in Barrio
Parayao, Municipality of Binmaley, Pangasinan. While their application
for registration of said land under Act No. 496 was pending, they
executed on June 19 and September 21, 1955, two deeds of sale
conveying the property to appellee who thereafter took possession
thereof and proceeded to introduce substantial improvements therein.
One month later, that is, on October 14, 1955, Original Certificate of Title
No. 6942 covering the land was issued in the name of the Marons, free
from all liens and encumbrances. On August 4, 1956, by virtue of a final
judgment rendered by the Municipal Court of Manila against Sammy
Maron in favor of the Manila Trading and Supply Company, levy was
made upon whatever interest he had in the aforementioned property,
and thereafter said interest was sold at public auction to the judgment
creditor. The corresponding notice of levy, certificate of sale and the
Sheriffs certificate of final sale in favor of the Manila Trading and Supply
Co. because nobody exercised the right of redemption were duly
registered. On March 1, 1958, latter sold all its rights and title to the
property to appellant.
Appellant, filed an action against appellee Rustico Macam, praying that
he be declared owner of the one-eighth portion of the land. Answering
the complaint, appellee alleged, in the main, that Sammy Marons share
in the property described in the complaint, as well as that of all his
coheirs, had been acquired by purchase by appellee since June 19 and
September 21, 1955, before the issuance of the original certificate of title
in their name; that at the time the levy in execution was made on Sammy
Marons share therein, the latter had no longer any right or interest in
said property; that appellant and its predecessor in interest were
cognizant of the facts already mentioned; that since the sales made in
his favor, he had enjoyed uninterrupted possession of the property and
introduced considerable improvements thereon. Appellee likewise
sought to recover damages by way of counterclaim. After trial upon the
issue thus joined, the court rendered judgment dismissing the complaint,
which, on appeal, was affirmed by the Court of Appeals.
ISSUE:
Whether or not appellant Dagupan Trading Company is the owner of the
one-eight portion of the land.
HELD:
No. The sale in favor of appellee was executed before the land subject
matter thereof was registered, while the conflicting of appellant was
executed after the same property had been registered. What should
determine the issue are the provisions of the last paragraph of Section
35, Rule 39 of the Rules of Court, to the effect that upon execution and
delivery of the final certificate of sale in favor of the purchaser of land
sold in an execution sale, such purchase shall be substituted to and
acquire all the right, title, interest and claim of the judgment debtor to the
property as of the time of the levy.
We ask: What was the interest and claim of Sammy Maron on the one-
eighth portion of the property inherited by him and his co-heirs, at the
time of the levy? The answer must necessarily be that he had none
because for a considerable time prior to levy, his interest had already
been conveyed to the appellee fully and retrievably.
Dagupan Trading vs. Macam 14 SCRA 99 May 1965
FACTS:
Sammy Maron and his seven brothers and sisters were pro-indiviso
owners of a parcel of unregistered land located in barrio Parayao,
Binmaley, Pangasinan. In 1955, while their application for registration of
said land under Act No. 496 was pending, they executed, on June 19
and on September 21, two deeds of sale conveying the property to
herein respondent Rustico Macam who thereafter took possession of
the property and made substantial improvements upon it. On October
14, 1955, OCT No. 6942 covering the land was issued in the name of
the Marons, free from all liens and encumbrances.
On August 4, 1956, however, by virtue of a final judgment of the
Municipal Court of Manila in a civil case in favor of Manila Trading and
Supply Co. (Manila Trading) against Sammy Maron, levy was made
upon whatever interest he had in the subject property. Thereafter, said
interest was sold at public auction to the judgment creditor Manila
Trading. The corresponding notice of levy, certificate of sale and the
sheriff's certificate of final sale in favor of Manila Trading - because
nobody exercised the right of redemption - were duly registered, and on
March 1, 1958, the latter sold all its rights and title in the property to
herein petitioner Dagupan Trading Company (Dagupan Trading).
On September 4, 1958, Dagupan Trading filed an action against Macam,
praying that it be declared owner of one-eighth portion of the subject
property. The CFI of Pangasinan dismissed the said complaint, and the
Court of Appeals affirmed its decision.
ISSUE: Who has the superior right over the one-eight portion of the
subject property?
COURT RULING:
The Supreme Court likewise affirmed both decisions of the lower courts.
At the time of the levy, Sammy Maron already had no interest on the
one-eight portion of the property he and his siblings have inherited
because for a considerable time prior to the levy, said interest had
already been conveyed upon Macam "fully and irretrievably" - as the
Court of Appeals held. Consequently, the subsequent levy made on the
property for the purpose of satisfying the judgment rendered against
Sammy Maron in favor of the Manila Trading Company was void and of
no effect.
The unregistered sale and the consequent conveyance of title and
ownership in favor Macam could not have been cancelled and rendered
of no effect upon the subsequent issuance of the Torrens title over the
entire parcel of land. Moreover, upon the execution of the deed of sale
in his favor by Sammy Maron, Macam had immediately taken
possession of the land conveyed as its new owner and introduced
considerable improvements upon it himself. To deprive him, therefore,
of the same by sheer force of technicality would be against both justice
and equity.
CARUMBA v CA
FACTS: Canuto sold a parcel of land to Carumba by virtue of a Deed of
Sale of Unregistered Land. The sale was never registered. Thereafter,
Canuto was sued for collection of money, and the said land was levied
upon and sold to Balbuena, who registered it.
ISSUE: Who has a better right, Carumba or Balbuena?
HELD: CARUMBA. Art. 1544 does not apply in this case. Instead, the
Rules of Court are applicable. Balbuena, the later vendee, merely steps
into the shoes of the judgment debtor and acquires all the rights and
interests of the latter. By the time the lot was sold through the foreclosure
proceedings, it was no longer owned by Canuto by virtue of a prior sale
to Carumbawho has a better right
PAULMITAN V. CA- Co-ownership of Property
When a co-owner sells the entire property without consent from the other
co-owners, only his pro indiviso share on the property is transferred to
the buyer.
FACTS:
The dispute covers 2 lots, Lot 757 and Lot 1091, which were owned by
Agatona Paulmitan. She had 2 children, Pascual and Donato. Pascuals
(7) children (Alicio, Elena, Abelino, Adelina, Anita, Baking, Anito) are the
respondents and Donato and his daughter and son-in-law are
petitioners.
Donato executed an Affidavit of Declaration of Heirship, adjudicating to
himself Lot 757 claiming that he is the sole surviving heir thus the OCT
of Agatona was cancelled and a TCT was issued in his name. He
executed a deed of sale of Lot 1091 in favor of his daughter, Juliana.
For non-payment of taxes, the lot was forfeited and sole at a public to
the Provincial Govt of Negros Occidental, however, Juliana was able to
redeem the property. Upon learning these, the children of Pascual filed
w/ the CFI a complaint against petitioners to partition the land plus
damages. Petitioners defense was that the action has already
prescribed for it was filed more than 11 years after the issuance of the
TCT and that Juliana has acquired exclusive ownership thru the Deed
of Sale and by redeeming the said property.
The CFI dismissed the complaint and became final and executory. With
respect to Lot 1091, the court decided in favor of respondents. They are
entitled to of Lot 1091, pro indiviso. The redemption did not in anyway
prejudice their rights. The land was ordered to be partitioned and the
petitioners were ordered to pay the respondents their share of the fruits
and the respondents to pay their share in the redemption of the land.
The CA affirmed the decision thus the case at bar.
ISSUE:
(1) Whether or not Pascuals children and Donato and Juliana were co-
owners of their mothers lot
(2) Whether or not Juliana acquired full ownership by redeeming the
property
HELD:
(1) YES: When Agatona died, her estate was still unpartitioned. Art.
1078 states that Where there are 2 or more heirs, the whole estate of
the decedent is, before its partition, owned in common by such heirs,
subject to the payment of debts of the deceased. Since Pascual and
Donato were still alive when she died, they are co-owners of the estate.
When Pascual died, his children succeeded him in the co-ownership of
the property.
When Donato sold to his daughter the lot, he was only a co-owner of the
same thus he can only sell his undivided portion of the property. Art. 493
states that 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 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.
Only the rights of the co-owner-seller are transferred making the buyer
(Juliana) a co-owner.

(2) NO: When she redeemed the property, it did not end the co-
ownership. The right of repurchase may be exercised by a co-owner w/
respect to his/her share alone as stated in Art. 1612. But she may
compel them to reimburse her for half of the repurchase price for a co-
owner has the right to compel other co-owners to contribute to the
expenses for the preservation of the thing and to taxes.

PAULMITAN v CA
FACTS: When Agatona died, she was succeeded by 2sons: Pascual
and Donato. She left 2 parcels of land. Pascual died leaving 7 heirs. The
titles remained in the name of Agatona and the lots were never
partitioned. Donato, thereafter, executed an affidavit of Declaration of
Heirshipunilaterally adjudicating one of the lots to himself. He
thereafter sold the entire lot to his daughter Juliana. For the failure to
pay taxes, the lot was forfeited and sold at a public auction, but Juliana
later redeemed the property. The Heirs of Pascual then surfaced and
sought to partition the property.

ISSUE: W/N Juliana became the owner of the entire lot upon her
redemption of the property

HELD: NO. From the moment of Agatonas death, her heirs, Pascual
and Donato, became co-owners of the undivided lot. When Donato died,
his pro-indiviso share transferred to his heirs. That being the case, when
Donato sold the entire property to his daughter, he was merely co-owner
thereof and transferred only his undivided share. If a co-owner alienates
the entire property without the consent of the other co-owners, the sale
will affect only his share. Thus, only undivided share passed onto
Juliana. The fact that Juliana redeemed the property does not operate
to terminate the co-ownership. It merely entitles her to reimbursement
from the other co-ownersredemption being a necessary expense.
Until reimbursement, Juliana holds a lien upon the lot for the amount due
to her. However, a partition is in order.

MINDANAO v YAP
FACTS: Rosenda and Sotero were among co-owners of 3parcels of
land, which they sold to Ildefonso Yap for some P100K without the
consent of the other co-owners. They included in the sale certain
buildings and laboratory and other educational equipment within the said
properties, which were actually owned by Mindanao Academy.
Mindanao Academy and the other co-owners assailed the validity of the
sale. The trial court declared the sale null and void. Yap contends that
Erlinda, one of the co-owners owning 5/12 share of the co-ownership,
does not have the standing to challenge the sale for being in bad faith.

ISSUE: W/N the sale is null and void as to its entirety

HELD: YES. Although the general rule is that if a co-owner alienates the
entire property without the consent of the other co-owners, the sale will
affect only his share, such rule does not apply if the property cannot be
partitioned/subdivided. In this case, aside from the fact that Rosenda
and Sotero cannot sell the entire property including the school
equipment, they cannot also sell their undivided share in the co-
ownership. Otherwise, the properties sold would be subject to a partition,
which cannot happen to the properties in this case. School equipment,
as well as the buildings, are indivisible. Thus, they cannot be subject to
partition