Sales CLV Case Digests

SALES | DEAN CLV | 2D 2012
1. GAITE v FONACIER
THE NATURE OF SALE
Gross inadequacy of price does NOT affect the validity of sale, unless it indica
tes either (1) a vice of consent or (2) that the parties intended a donation or
some other contract. No evidence suggests such circumstances. The price need not
be the exact value of the property. In fact, all the parties to the sale believ
ed that they received the commutative value of what they paid for.
FACTS: Fonacier was the holder of 11 iron lode mineral claims. By a Deed of Assi
gnment, he appointed Gaite as his attorney-in-fact for the purpose of operating
the same. Gaite then executed a general assignment conveying the right to develo
p and exploit the mining claim to Larap Iron Mines, owned by him, and then start
ed to develop the same. Fonacier then decided to revoke the authority granted to
Gaite; the latter acceded and transferred the claims back to Fonacier but for c
onsideration—royalties and a sum of P75,000, P10,000 of which was already paid. A
balance of P65,000 remained for which Fonacier issued 2 sureties, good for a yea
r. There was a stipulation that the P65,000 balance will be paid from the 1st sh
ipment of ores and its local sale. Eventually, the sureties expired and Fonacier
defaulted in settling his debt. He now alleges that the payment of the balance
was subject to a suspensive condition—being the 1st shipment and sale of iron ores
. ISSUE: W/N the 1 shipment and sale of iron ores are considered suspensive cond
ition HELD: NO. It was only a SUSPENSIVE TERM. What took place between Gaite and
Fonacier, regarding the transfer of the mining rights, was a sale. A contract o
f sale is normally ONEROUS and COMMUTATIVE. Each party anticipates performance f
orm the very start. Since a sale is essentially onerous, any doubts must be sett
led in favor of the greatest reciprocity of rights—in this case, that a period, an
d not a condition, was contemplated. Had it been a suspensive condition, Fonacie
r would have been able to postpone payment indefinitely.
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3.
CELESTINO & CO. v COLLECTOR
FACTS: Celestino & Co. (Oriental Sash Factory) was paying 7% taxes based on gros
s receipts for the manufacture and sale of sash products. It now seeks to pay on
ly the 3% tax imposable upon contracts for piece of work—as opposed to the 7% tax
on sales—claiming that they do not manufacture ready-made doors for the public but
only upon special order of the customers. ISSUE: W/N Celestino & Co. is a contr
actor (piece of work) HELD: NO. The fact that the sash products are made only up
on the order of the customers does NOT change the nature of the establishment. T
iming is not the controlling factor but the nature of the work done. They habitu
ally make sash products and can easily duplicate and mass-produce the same. The
bulk of their sales come from standard ready-made products—special orders are the
exception and come only occasionally. If the goods are manufactured specifically
upon special order of the customer and requires extraordinary service, then tha
t would be the time when it can be classified as piece of work. But such is not
the case here. Oriental Sash is clearly a manufacturer and massproducer of doors
.
2.
BUENAVENTURA v CA 4. COMMISSIONER OF INTERNAL REVENUE ENGINEERING EQUIPMENT & SU
PPLY CO. v
FACTS: Joaquin spouses sold 6 subdivision lots to some of their 9 children evide
nced by corresponding Deeds of Sale. The other children, interested in protectin
g their inheritance, sought to have the deeds of sale declared null and void for
prejudicing their legitimes, lack of consideration, and gross inadequacy of pri
ce. ISSUE: W/N the contract of sale is valid HELD: YES. At the onset, their righ
ts to the legitimes are merely inchoate and vest only upon the death of their pa
rents; thus they have no legal interest thereof. Payment of the price has nothin
g to do with the perfection of the contract of sale; it was perfected by mere co
nsent. Failure to pay consideration cannot be equated with lack of consideration
, which prevents the existence of a valid contract. The former only results in t
he right to demand payment or rescission. There was already a meeting of the min
ds as to the price which was reflected in the Deed of Sale—and that was sufficient
. In fact, evidence suggests that the purchase process have indeed been paid. Th
e sales are thus valid.
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
FACTS: Engineering Equipment & Supply (EES) was engaged in the business of desig
ning and installing central air-conditioning systems. It was assessed by the CIR
for 30% advanced sales tax, among other penalties pursuant to an anonymous comp
laint filed before the BIR. EES vehemently objected and argued that they are con
tractors and not manufacturers, and thus, should only be liable for the 3% tax o
n sales of services or pieces of work. ISSUE: W/N EES is a contractor (piece of
work) HELD: YES. EES was NOT a manufacturer of airconditioning units. While it i
mported such items, they were NOT for sale to the general public and were used a
s mere components for the design of the centralized air-conditioning system, whe
rein its designs and specifications are different for every client. Various tech
nical factors must be considered and it can be argued that no 2 plants are the s
ame; all are engineered
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separately and distinctly. Each project requires careful planning and meticulous
layout. Such central airconditioning systems and their designs would not have e
xisted were it not for the special order of the party desiring to acquire it. Th
us, EES is not liable for the sales tax of 30%. Three years later, Arco discover
ed that the prices quoted to them by GPS with regard to their first 2 orders men
tioned were not the net prices, but rather the list price, and that it had obtai
ned a discount from Starr Piano. Moreover, Arco alleged that the equipment were
overpriced. Thus, being its agent, GPS had to reimburse the excess amount it rec
eived from Arco. ISSUE: W/N there was a contract of agency, not of sale HELD: NO
. The letters containing Arco's acceptance of the prices for the equipment are c
lear in their terms and admit no other interpretation that the prices are fixed
and determinate. While the letters state that GPS was to receive a 10% commissio
n, this does not necessarily mean that it is an agent of Arco, as this provision
is only an additional price which it bound itself to pay, and which stipulation
is not incompatible with the contract of sale. It is GPS that is the exclusive
agent of Starr Piano in the Philippines, not the agent of Arco. it is out of the
ordinary for one to be the agent of both the seller and the buyer. The facts an
d circumstances show that Arco entered into a contract of sale with GPS, the exc
lusive agent of Starr Piano. As such, it is not duty bound to reveal the private
arrangement it had with Starr Piano relative to the 25% discount. Thus, GPS is
not bound to reimburse Arco for any difference between the cost price and the sa
les price, which represents the profit realized by GPS out of the transaction.
5.
QUIROGA v PARSONS
FACTS: Quiroga and Parsons Hardware entered into a contract where the former gra
nted the latter the exclusive right to sell Quiroga Beds in the Visayas. It prov
ided for a discount of 25% as commission for the sales, among other conditions.
Quiroga alleged that Parsons breached its contractual obligations by selling the
beds at a higher price, not having an open establishment in Iloilo, not maintai
ning a public exhibition, and for not ordering beds by the dozen. Only the last
imputation was provided for by the contract, the others were never stipulated. Q
uiroga argued that since there was a contract of agency between them, such oblig
ations were necessarily implied. ISSUE: W/N the contract between them was one of
agency, not sale HELD: NO. The agreement between Quiroga and Parsons was that o
f a simple purchase and sale—not an agency. Quiroga supplied beds, while Parsons h
ad the obligation to pay their purchase price. These are characteristics of a pu
rchase and sale. In a contract of agency (or order to sell), the agent does not
pay its price yet, and sells the products, remitting to the principal its procee
ds. Unsold products must also be returned to the principal. The provisions on co
mmission and the use of the word “agency” in the contract as well as the testimonies
in court do not affect its nature. Contracts are what the law defines it to be,
not what the parties call it.
7.
LO v KJS ECO-FORMWORK SYSTEM PHIL., INC.
6.
PUYAT v ARCO AMUSEMENT CO.
FACTS: Arco Amusement was engaged in the business of operating cinematopgraphs.
Gonzalo Puyat & Sons Inc (GPS) was the exclusive agent in the Philippines for th
e Starr Piano Company. Desiring to equip its cinematograph with sound reproducin
g devices, Arco approached GPS, through its president, GIl Puyat, and an employe
e named Santos. After some negotiations, it was agreed between the parties that
GPS would order sound reproducing equipment from Starr Piano Company and that Ar
co would pay GPS, in addition to the price of the equipment, a 10% commission, p
lus all expenses such as freight, insurance, etc. When GPS inquired Starr Piano
the price (without discount) of the equipment, the latter quoted such at $1,700
FOB Indiana. Being agreeable to the price (plus 10% commission plus all other ex
penses), Arco formally authorized the order. The following year, both parties ag
reed for another order of sound reproducing equipment on the same terms as the f
irst at $1,600 plus 10% plus all other expenses.
FACTS: KJS Inc was engaged in the sale of steel scaffolding. Sonny Lo, a contrac
tor, purchased scaffolding equipment worth P540,000. He made a deposit of P150,0
00, the balance payable within 10 months. Due to financial difficulties, Lo defa
ulted after paying only 2 installments. A debt of some P335,000 remained. Thus,
Lo assigned in favor of KJS all his receivables from Jomero Realty Corp. which r
efused to pay and raised the defense of compensation—claiming that Lo also had deb
ts in its favor. KJS thus again sought to collect from Lo who them averred that
his debts have already been extinguished by the said assignment. ISSUE: W/N the
assignment of credit extinguished the debts HELD: NO. The assignment of credit m
ade by Lo in favor of KJS was in the nature of dacion en pago, which is governed
by the law on sales. It is as if KJS bought the credit from Lo, the payment of
which is to be charged upon the latter’s debt. Lo, as vendor not good faith, shall
be liable for the existence and legality of the credit at the time of the sale
(but not for the solvency of the debtor). He is bound by certain warranties. In
this case, since the assignment he made in favor of KJS has already been compens
ated, he should still be liable to pay KJS for his indebtedness. He should make
good the warranty and pay the obligation.
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SALES | DEAN CLV | 2D 2012 PARTIES TO A CONTRACT OF SALE
1. PARAGAS v HEIRS OF DOMINADOR BALACANO properties to each other; the same proh
ibitions apply to a couple living in as husband and wife without the benefit of
marriage. As public interests dictate, to rule otherwise would put the persons i
n guilt at better position than those legally married.
FACTS: Balancano, married to Lorenza, owned 2 parcels of land. He was already 81
years old, very weak, could barely talk, and had been battling with liver disea
se for over a month. On his deathbed, barely a week before he died, he allegedly
signed a Deed of Absolute Sale over the lots in favor of Paragas Spouses, accom
panied by Atty. De Guzman who proceeded to notarize the same, alleging that it w
as a mere confirmation of a previous sale and that Gregorio had already paid P50
,000 as deposit. The Paragas’ driver was also there to take a picture of Gregorio
signing said deed with a ballpen in his hand. There was nothing to show that the
contents of the deed were explained to Balacano. Paragas then sold a portion of
the disputed lot to Catalino. The grandson of Gregorio, Domingo, sought to annu
l the sale and the partition. There was no sufficient evidence to support any pr
ior agreement or its partial execution. ISSUE: W/N Balacano is incapacitated to
enter into a contract of sale HELD: YES. A person is not rendered incompetent me
rely because of old age; however, when such age has impaired the mental facultie
s as to prevent a person from protecting his rights, then he is undeniably incap
acitated. He is clearly at a disadvantage, and the courts must be vigilant for h
is protection. In this case, Balacano’s consent was clearly absent—hence the sale wa
s null and void. The circumstances raise serious doubts on his capacity to rende
r consent. Considering that the Paragas spouses are not owners of the said prope
rties, it only follows that the subsequent sale to Catalino—who was not in good fa
ith—is likewise void. Furthermore, the lots pertained to the conjugal partnership—ha
ving been inherited by Balacano during his marriage to Lorenza. Thus, it cannot
be sold without the latter’s consent.
3.
RUBIAS v BATILLER
FACTS: Militante claimed ownership over a parcel of land and applied for the reg
istration of the same with the CFI; his counsel was his son-in-law, Atty. Rubias
. His claim was dismissed by the trial court, thus he appealed. Pending appeal,
he sold the lot to Atty. Rubias for P2,000. Batiller, on the other hand, claimed
to have inherited the same lot from his ancestors who have been in open, public
, peaceful, and actual possession thereof under a claim of title. Atty. Rubias f
iled an ejectment suit against Batiller who assailed the validity of the sale to
Rubias. Given the dismissal of Militante’s application, he had thus no right over
the said land that he may have validly transferred to Atty. Rubias. ISSUE: W/N
the sale to Atty. Rubias is valid HELD: NO. Even assuming he had title thereto,
the sale of the lot to Atty. Rubias would be null and void for being expressly p
rohibited by the Civil Code. Lawyers cannot acquire by purchase the property or
rights under litigation over which they take part by virtue of their profession.
The same rule applies to judges, clerks of court, and other judicial officers w
ith respect to the same. The purchase in violation of the above provision is not
merely voidable as Atty. Rubias contends; it is VOID and INEXISTENT from the ve
ry beginning. The right to set up the defense of its illegality cannot be waived—
and, unlike cases involving agents, guardians, or administrators with respect to
the properties under their charge, it is not susceptible to compromise or ratif
ication. It is likewise contrary to public policy
2.
CALIMLIM-CANULLAS v FORTUN 4. PHIL. TRUST CO. v ROLDAN
FACTS: Mercedes and Fernando were married and had 5 children. Fernando inherited
the land upon which their house was built. Fernando left his family to live wit
h his concubine Corazon. He then sold the said lot with the house in favor of Co
razon for P2,000. Corazon, unable to take possession of the house and lot, filed
a complaint for quieting of title. Mercedes objected alleging that the properti
es pertained to their conjugal partnership. ISSUE: W/N the sale to Corazon was v
alid HELD: NO. The properties pertained to the conjugal partnership of Mercedes
and Fernando, thus the sale is null and void for lack of Mercedes’ consent and for
being contrary to morals and public policy. The law generally prohibits spouses
from selling or donating
FACTS: Mariano Bernardo, a minor, inherited among others 17 parcels of land from
his deceased father. Soccoro Roldan was appointed as his guardian. Soccoro soug
ht and was granted authority to sell the lots to her brother-in-law Ramos for P1
4,700. Very shortly after, Ramos sold back to Soccoro the same properties for P1
5,000. She then sold 4 parcels to Emilio Cruz. Phil. Trust Co. replaced Soccoro
as guardian and sought to annul all the aforesaid sales. ISSUE: W/N the sale to
Ramos was valid HELD: NO. Guardianship is the trust of the highest order. In thi
s case, for all intents and purposes, it was as if
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Soccoro herself purchased the properties of her ward. Civil Code. She indirectly
sold the properties to herself. The same applies even though there was no actua
l malice or collusion proven. Since the sale to Soccoro was null and void, it on
ly follows that the sales made by Soccoro to Cruz were likewise void. One cannot
sell what is not his property. Soccoro tried to correct the problem by allowing
Mariano to re-purchase the said properties for P15,000. However, the child woul
d still be at a losing end because it would not entitle him to the fruits of the
property during the time when he was not in possession thereof. The SC annulled
the sale. CLV: Bad ruling because W/N ward is benefited is IMMATERIAL. Advantag
e to ward can easily be forged. This falls within the prohibition under Art. 145
9 of the the house—allowing Atty. Murillo the option to occupy or lease 40% of the
said house and lot. A compromise agreement was entered into where Florencio acq
uired both properties. Atty. Murillo installed a tenant in the Pugahanay Propert
y; later on, Florencio claimed exclusive rights over the properties invoking Art
. 1491 of the CC. Florencio and Atty. Murillo both died and were succeeded by th
eir respective heirs. ISSUE: W/N contingent fees agreed upon are valid HELD: YES
. Contingent fees are not contemplated by the prohibition in Art. 1491 disallowi
ng lawyers to purchase properties of their clients under litigation. The said pr
ohibition applies only during the pendency of the litigation. Payment of the con
tingent fee is made after the litigation, and is thus not covered by the prohibi
tion. For as long as there is no fraud or undue influence, or as long as the fee
s are not exorbitant, the same as valid and enforceable. It is even recognized b
y the Canons of Professional Ethics. However, considering that the contract is v
ague on the matter of division of the shares if Florencio occupies the property;
the ambiguity is to be construed against Atty. Murillo being the one who drafte
d the contract and being a lawyer more knowledgeable about the law. The Court th
us invoking the time-honored principle that a lawyer shall uphold the dignity of
the legal profession, ordered only a contingent fee of P3,000 as reasonable att
orney’s fees.
5.
FABILLO v IAC
FACTS: Florencio Fabillo contracted the services of Atty. Murillo to revive a lo
st case over his inheritance from his deceased sister Justinia. He sought to acq
uire the San Salvador and Pugahanay Properties that his sister left behind again
st the latter’s husband. They entered into a contract where a contingent fee in fa
vor of Atty. Murillo in case the case won was agreed upon. The fee was 40% of th
e value of whatever benefit Florencio may derive from the suit—such as if the prop
erties were sold, rented, or mortgaged. It was vague, however, regarding the fee
in case Florencio or his heirs decide to occupy
SUBJECT MATTER OF SALE
1. POLYTECHNIC UNIVERSITY v CA grasp the whole gamut of transfers where ownershi
p of a thing is ceded for consideration. Further, judging from the conduct of th
e parties in this case, all the elements of a valid sale attend. Consent is mani
fested by the Memo Order No. 214, the cancellation of liabilities constituted co
nsideration; the subject matter was of course the property subject of the disput
e. Since a sale was involved, the right of first refusal in favor of Firestone m
ust be respected. It forms an integral part of the lease and is supported by con
sideration—Firestone having made substantial investments therein. Only when Firest
one fails to exercise such right may the sale to PUP proceed.
FACTS: The National Development Corp. (NDC) owned the NDC Compound, a portion of
which was leased to Firestone Ceramics, which built several warehouses and faci
lities therein. Since business between NDC and Firestone went smooth, the lease
was twice renewed this time conferring upon Firestone a right of first refusal s
hould NDC decide to dispose of the property. Also, under the contract, Firestone
was obliged to introduce considerable improvements thereon. Eventually though,
Memo Order No. 214 was issued ordering the transfer of NDC Compound to the gover
nment in consideration of the cancellation of NDC’s P57M debt. Pursuant thereto, N
DC transferred the property to Polytechnic University (PUP). Firestone sued for
specific performance invoking its right of first refusal, and sought to enjoin N
DC and PUP from proceeding with the sale. Both PUP and NDC aver that there was n
o sale involved since ownership of the property remained with the government—both
companies being GOCCs. ISSUE: W/N there was a sale HELD: YES. The argument of PU
P and NDC was untenable. GOCCs have personalities separate and distinct from the
government. “Sale” brings within its
2.
ATILANO v ATILANO
FACTS: Eulogio Atilano I purchased Lot 535 and had it subdivided into 5 parts (A
to E). He occupied Lot A; his brother, Eulogio II, occupied Lot E. He then sold
lots B, C, and D to other persons. He then sold Lot E to his brother Eulogio II
. Both brothers died and their heirs found out after a survey that Eulogio I act
ually occupied Lot E and Eulogio II occupied Lot A. Thus, the heirs of Eulogio I
I offered to exchange the properties. However, the heirs of Eulogio I refused be
cause Lot E was bigger than Lot A.
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ISSUE: W/N an exchange of the properties was proper HELD: NO. What took place wa
s a simple mistake in drafting the instrument evidencing the agreement between t
he brothers. One sells or buys property as he sees it in actual setting and not
by the mere lot number in the certificate of title. The brothers remained in pos
session of their respective portions throughout their lives unaware of the mista
ke in the designation of the lots. In this case, the instrument simply failed to
reflect the true intention of the parties; thus, an exchange of the properties
is unnecessary. All the heirs should do is to execute mutual deeds of conveyance
. HELD: NO. The subject matter was not yet determinate. The sugar agreed upon ha
s yet to be segregated from all other articles. That being the case, there was m
erely an executory agreement—a promise of sale, and not a contract of sale itself.
Moreover, there was no stipulation that the sugar was to be derived from his cr
op; he was at liberty to get it from whatever source he could find. The obligati
on he incurred was for the delivery of the generic thing. Thus, he cannot invoke
force majeure under the maxim genus never perishes. His obligation to deliver t
he sugar is not extinguished. Yu Tek is thus entitled to rescind the contract an
d recover the money in addition to the stipulated P1,200 as indemnity for losses
. DD: This rule no longer holds true. Generic things may now be the subject matt
er of a contract of sale provided that they have the quality of being DETERMINAB
LE at the perfection of the contract.
3.
MELLIZA v CITY OF ILOILO
FACTS: Meliza owned Lot 1214, 9,000 sqm of which she donated to the Mun. of Iloi
lo for the use of the site of the Mun. Hall. However, the donation was revoked b
ecause it was inadequate to meet the requirements of the “Arellano Plan.” Lot 1214 w
as later divided into 4 lots. Meliza then sold Lots C and D to the Municipality;
Lot B was not mentioned in the sale. However, the contract stipulated that the
area to be sold to the Municipality would include such areas needed for the cons
truction of the City Hall according the Arellano Plan. She then sold the remaini
ng portions of the lots to Villanueva, who then sold the same to Pio. The sale w
as for such lots not included in the sale to the Mun. of Iloilo. The City of Ilo
ilo, assuming that Lot B has been sold in its favor pursuant to the Arellano Pla
n, then donated Lot B to UP. Pio objected and sought to recover the lots stating
that Lot B was not included in the initial sale made by Meliza to the Municipal
ity—and that the subject matter of sale should be a determinate thing. ISSUE: W/N
there was a determinate/determinable subject matter HELD: YES. The requirement f
or the subject matter to be determinate is satisfied in this case. Simple refere
nce to the “Arellano Plan” would indicate that it could determine what portions of t
he contiguous land (lot B) were needed for the construction of the City Hall. Th
ere was no need for a further agreement to establish the lots covered by the sal
e; thus, the sale is valid. Besides, the portions of Lot B covered by the sale w
ere practically at the heart of the City Hall site.
5.
NGA v IAC
4.
YU TEK & CO. v GONZALES
FACTS: Gonzales received P3,000 from Yu Tek and obligated himself in favor of th
e latter to deliver 600 piculs of sugar of the 1st and 2nd grade within 3 months
. He failed to deliver the sugar and refused to return the money—thus Yu Tek sued
him. Gonzales, in seeking to evade liability, invokes fortuitous event, alleging
the total failure of his crop. ISSUE: W/N there was perfected contract of sale
FACTS: National Grains Authority (now National Food Authority, NFA) is a governm
ent agency created under PD 4. One of its incidental functions is the buying of
palay grains from qualified farmers. In 1979, Leon Soriano offered to sell palay
grains to the NFA, through its Provincial Manager, William Cabal. He submitted
the documents required by the NFA for pre-qualifying as a seller, which were pro
cessed and accordingly, he was given a quota of 2,640 cavans of palay. The quota
noted in the Farmer’s Information Sheet represented the maximum number of cavans
of palay that Soriano may sell to the NFA. On 23 and 24 August 1979, Soriano del
ivered 630 cavans of palay. The palay delivered were not rebagged, classified an
d weighed. When Soriano demanded payment of the 630 cavans of palay, he was info
rmed that its payment will be held in abeyance since Mr. Cabal was still investi
gating on an information he received that Soriano was not a bona fide farmer and
the palay delivered by him was not produced from his farmland but was taken fro
m the warehouse of a rice trader, Ben de Guzman. On 28 August 1979, Cabal wrote
Soriano advising him to withdraw from the NFA warehouse the 630 cavans stating t
hat NFA cannot legally accept the said delivery on the basis of the subsequent c
ertification of the BAEX technician (Napoleon Callangan) that Soriano is not a b
ona fide farmer. Instead of withdrawing the 630 cavans of palay, Soriano insiste
d that the palay grains delivered be paid. He then filed a complaint for specifi
c performance and/or collection of money with damages against the NFA and Willia
m Cabal. Meanwhile, by agreement of the parties and upon order of the trial cour
t, the 630 cavans of palay in question were withdrawn from the warehouse of NFA.
In 1982, RTC ruled in favor of Soriano and in 1986, CA affirmed decision of RTC
. ISSUE: W/N there was a perfected contract of sale HELD: YES. In the present ca
se, Soriano initially offered
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to sell palay grains produced in his farmland to NFA. When the latter accepted t
he offer by noting in Soriano’s Farmer’s Information Sheet a quota of 2,640 cavans,
there was already a meeting of the minds between the parties. The object of the
contract, being the palay grains produced in Soriano’s farmland and the NFA was to
pay the same depending upon its quality. The contention that – since the delivery
were not rebagged, classified and weighed in accordance with the palay procurem
ent program of NFA, there was no acceptance of the offer thus – this is a clear ca
se of policitation or an unaccepted offer to sell, is untenable. The fact that t
he exact number of cavans of palay to be delivered has not been determined does
not affect the perfection of the contract. Article 1349 of the New Civil Code pr
ovides that “the fact that the quantity is not determinate shall not be an obstacl
e to the existence of the contract, provided it is possible to determine the sam
e, without the need of a new contract between the parties.” In the present case, t
here was no need for NFA and Soriano to enter into a new contract to determine t
he exact number of cavans of palay to be sold. Soriano can deliver so much of hi
s produce as long as it does not exceed 2,640 cavans. 7. NOOL v CA FACTS: One lo
t formerly owned by Victorio Nool has an area of 1 hectare. Another lot previous
ly owned by Francisco Nool has an area of 3.0880 hectares. Both parcels are situ
ated in San Manuel, Isabela. Spouses Conchita Nool and Gaudencio Almojera (plain
tiffs) alleged that they are the owners of the subject land as they bought the s
ame from Victorio and Francisco Nool, and that as they are in dire need of money
, they obtained a loan from DBP, secured by a real estate mortgage on said parce
ls of land, which were still registered in the names of Victorino and Francisco
Nool, at the time, and for the failure of the plaintiffs to pay the said loan, i
ncluding interest and surcharges, totaling P56,000.00, the mortgage was foreclos
ed; that within the period of redemption, the plaintiffs contacted Anacleto Nool
for the latter to redeem the foreclosed properties from DBP, which the latter d
id; and as a result, the titles of the 2 parcels of land in question were transf
erred to Anacleto; that as part of their arrangement or understanding, Anacleto
agreed to buy from Conchita the 2 parcels of land under controversy, for a total
price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon
payment of the balance of P14,000.00, the plaintiffs were to regain possession o
f the 2 hectares of land, which amounts spouses Anacleto Nool and Emilia Nebre (
defendants) failed to pay, and the same day the said arrangement was made; anoth
er covenant was entered into by the parties, whereby the defendants agreed to re
turn to plaintiffs the lands in question, at anytime the latter have the necessa
ry amount; that latter asked the defendants to return the same but despite the i
ntervention of the Barangay Captain of their place, defendants refused to return
the said parcels of land to plaintiffs; thereby impelling the plaintiffs to com
e to court for relief. On the other hand, defendants theorized that they acquire
d the lands in question from the DBP, through negotiated sale, and were misled b
y plaintiffs when defendant Anacleto Nool signed the private writing, agreeing t
o return subject lands when plaintiffs have the money to redeem the same; defend
ant Anacleto having been made to believe, then, that his sister, Conchita, still
had the right to redeem the said properties. It should be stressed that Manuel
S. Mallorca, authorized officer of DBP, certified that the 1-year redemption per
iod and that the mortgagors’ right of redemption was not exercised within this per
iod. Hence, DBP became the absolute owner of said parcels of land for which it w
as issued new certificates of title. About 2 years thereafter, DBP entered into
a Deed of Conditional Sale involving the same parcels of land with Anacleto Nool
as vendee. Subsequently, the latter was issued new certificates of title in 198
8. RTC ruled in favor of Anacleto Nool. CA affirmed. ISSUE: W/N there was a vali
d contract of sale between Anacleto and Conchita HELD: NO. Article 1459 of the C
ivil Code provides that “the vendor must have a right to transfer the ownership
6.
JOHANNES SCHUBACK & SONS PHIL. TRADING CORP. v CA
FACTS: SJ Industrial, through Ramon San Jose, approached Schuback & Sons Phil. T
rading (SSPT) to purchase bus spare parts. He submitted the list of parts he wan
ted and SSPT coordinated with its Germany Office to quote the prices, and forwar
ded its formal offer to SJ Industrial, containing the prices, item numbers, desc
riptions, etc. SJ informed SSPT of his desire to purchase such items and promise
d to submit the quantity per unit. SJ then submitted such quantities needed to S
SPT’s GM, Mr. Reichert. San Jose indicated the same in the Purchase Order with the
inscription “this will serve as our initial purchase order. PO will include 3% di
scount.” SSPT immediately ordered the products from Germany to avail of the old pr
ices— partial deliveries of which were made. Then, for his failure to secure lette
rs of credit, SJ failed to purchase the same and alleged that there was no perfe
cted contract of sale. Thus, SSPT sought damages. ISSUE: W/N there was a perfect
ed contract of sale HELD: YES. Quantity is immaterial in the perfection of a con
tract of sale. What is important is the meeting of the minds as to the object an
d cause of the sale. There was already a meeting of the minds in this case from
the moment SJ manifested that he will order the parts, although he will communic
ate quantities later on. In fact, he indeed communicated such needed quantities— t
his goes to the execution of the contract of sale already. By ordering the parts
, SJ acceded to the prices offered by SSPT. On the other hand, SSPT acceded to S
J’s request for discount by immediately ordering the parts. SJ Industrial is thus
liable for damages
6
thereof [object of the sale] at the time it is delivered.” Here, delivery of owner
ship is no longer possible. The sellers can no longer deliver the object of the
sale to the buyers, as the buyers themselves have already acquired title and del
ivery thereof from the rightful owner, the DBP. Thus, such contract may be deeme
d to be inoperative and may thus fall, by analogy, under item 5 of Article 1409
of the Civil Code: “Those which contemplate an impossible service.” Article 1505 of
the Civil Code provides that “where goods are sold by a person who is not the owne
r thereof, and who does not sell them under authority or with consent of the own
er, the buyer acquires no better title to the goods than the seller had, unless
the owner of the goods is by his conduct precluded from denying the seller’s autho
rity to sell.” In the present case, there is no allegation at all that petitioners
were authorized by DBP to sell the property to the private respondents. Further
, the contract of repurchase that the parties entered into presupposes that peti
tioners could repurchase the property that they “sold” to private respondents. As pe
titioners “sold” nothing, it follows that they can also “repurchase” nothing. In this li
ght, the contract of repurchase is also inoperative and by the same analogy, voi
d.
PRICE AND OTHER CONSIDERATION
1. MAPALO v MAPALO debt. Apparently, it was a Deed of Sale. In 1980, Rongavilla
went to Dela Cruz place and asked them to vacate the lot. Suprised by this, Del
a Cruz discovered the misrepresentation her niece made when she signed the docum
ent. She the filed an action with the RTC to have the purported Deed of Sale dec
lared null and inexistent for lack of consent and consideration. ISSUE: W/N ther
e was a valid sale HELD: NO. Rongavilla and Jimenez were able to secure the sign
ature of Dela Cruz in the Deed of Absolute Sale through fraud and there was no c
onsideration whatsoever for the alleged sale. The consent was not only vitiated,
but it was not given at all. Since there was no consent, the deed of absolute s
ale is null and void ab initio.
FACTS: Miguel and Candida Mapalo were illiterate farmers and owned a parcel of l
and. Since Maximo Mapalo was to be married, they donated to him the eastern half
of the land. Maximo, however, deceived them by making them sign an instrument d
onating the entire lot. There was a consideration for P5,000 stated in the deed,
but the spouses never received anything. Miguel built a fence to divide the lot
and continued to occupy the western part. Maximo then registered the entire lot
and 13 year after, sold the same to the Narcisos who took possession only of th
e eastern half. Later on, the Narcisos sought to be declared owners of the entir
e land; the spouses claimed that the sale to the Narcisos was void for lack of c
onsideration. The CA declared that the sale was merely voidable and the action b
y the spouses was barred by prescription, being filed after 4 years from the dis
covery of the fraud. ISSUE: W/N there was a valid contract of sale HELD: Conside
ration was totally absent; the P5,000 price stipulated was never received/delive
red to the spouses. Thus, the sale to the Narcisos was VOID ab initio for want o
f consideration. The inexistence of the contract is permanent and cannot be the
subject of prescription. The Narcisos are also in bad faith—they had knowledge of
the true nature and extent of Maximo’s right over the land.
3.
MATE v CA
2.
RONGAVILLA v CA
FACTS: Both spinsters and unschooled in English, Mercedes and Florencia dela Cru
z are the aunts of Rongavilla. Dela Cruz co-owned a parcel of land (1/2 pro-indi
viso) in Las Pinas with another niece named Juanita Jimenez (elder sister of Ron
gavilla), who kept the OCT, as well as the TCT after it was subdivided. In 1976,
Dela Cruz borrowed P2,000 from Rongavilla for the repair of their dilapidated r
ooftop. A month later, Rongavilla and Jimenez visited their aunts home and brou
ght with them a document for the signature of their aunts. While the document wa
s in English and upon inquiry by Dela Cruz what it was about, Rongavilla answere
d that it was merely evidencing the P2,000
FACTS: Josefina approached Fernando asking for help. Her family was to be sued b
y Tan for issuing rubber checks; thus she asked him to cede his 3 lots to Tan an
d it will be Josefina who will repurchase them for him. He initially rejected he
r offer. Then, Josefina issued him 2 checks, one for P1.4M, pertaining to the va
lue of the lot, and another for P420,000 corresponding to 6 months’ interests. He
agreed, drafted the instrument himself, and ceded his properties to Tan. Later,
both checks bounced; he sued Tan for annulment of the sale for lack of considera
tion since he never received anything. He also sued Josefina criminally, but abs
conded. ISSUE: W/N there was a valid contract of sale HELD: YES. There was consi
deration in the form of the check for P420,000. It was his fee for executing the
sale. It was not only kindness that impelled him to cede his property, it was a
lso his interest for profit. That he never received money is of no moment; a sal
e is a consensual contract. He also tacitly admitted to the sale when he filed c
riminal charges against Josefina. Fernando, being a lawyer, has no one else to b
lame but
7
himself for the loss. He acted negligently our of desire for profit. HELD: YES.
There was consideration. Its apparent inadequacy is of no moment since the usual
practice in deeds of conveyance is to place a nominal amount although there is
more valuable consideration given. Consideration is presumed to exist. He who al
leges otherwise assumes the burden of proof. The one peso was not the considerat
ion, but rather the other valuable considerations.
4.
YU BUN GUAN v CA
FACTS: Yu Bun Guan and Ong are married since 1961 and lived together until she a
nd her children were abandoned by him in 1992, because of his incurable promiscu
ity, volcanic temper, and other vicious vices. In 1968, out of her personal fund
s, Ong purchased a parcel of land (Rizal Property) from Aurora Seneris. Also, du
ring their marriage, they purchased a house and lot out of their conjugal funds.
Before their separation in 1992, she reluctantly agreed to execute a Deed of Sa
le of the Rizal Property on the promise that Yu Bun Guan would construct a comme
rical building for the benefit of the children. He suggested that the property s
hould be in his name alone so that she would not be involved in any obligation.
The consideration for the sale was the execution of a Deed of Absolute Sale in f
avor their children and the payment of the loan he obtained from Allied Bank. Ho
wever, when the Deed of Sale was executed in favor of Yu Bun Guan, he did not pa
y the consideration of P200K, supposedly the "ostensible" valuable consideration
. Because of this, the new TCT issued in his name was not delivered to him by On
g. Yu Bun Guan then filed for a Petition for Replacement of the TCT, with an Aff
idavit of Loss attached. Ong, on the other hand, executed an Affidavit of Advers
e Claim and asked that the sale be declared null and void . RTC ruled in favor o
f Ong. CA affirmed. ISSUE: W/N there was a valid contract of sale HELD: NO. It i
s clear from the findings of the lower courts that the Deed of Sale was complete
ly simulated and thus, VOID without effect. No portion of the P200,000 considera
tion stated in the Deed was ever paid. And, from the facts of the case, it is cl
ear that neither party had any intention whatsoever to pay that amount. Instead,
the Deed of Sale was executed merely to facilitate the transfer of the property
to petitioner pursuant to an agreement between them to enable him to construct
a commercial building and to sell the Juno property to their children. Being mer
ely a subterfuge, that agreement cannot be taken as a consideration for the sale
.
6.
BAGNAS v CA
FACTS: Hilario died with no will and was survived only by collateral relatives.
Bagnas (et al) were the nearest kin. Retonil (et al) were also relatives but to
a farther extent. They claimed ownership over 10 lots from the estate of Hilario
presenting notarized and registered Deeds of Sale (in Tagalog) where the consid
eration for the lands was P1 and services rendered, being rendered, and to be re
ndered. Bagnas argued that the sales were fictitious, while Retonil claimed to h
ave done many things for Hilario—such as nursing him on his deathbed. ISSUE: W/N t
here was a valid contract of sale HELD: NO. At the onset, if a contract has no c
onsideration, it is not merely voidable, but VOID—and even collateral heirs may as
sail the contract. In this case, there was no consideration. Price must be in mo
ney or its equivalent; services are not the equivalent of money insofar as the r
equirement of price is concerned. A contract is not one for sale if the consider
ation consists of services. Not only are they vague, they are unknown and not su
sceptible of determination without a new agreement between the parties.
7.
REPUBLIC v PHIL. RESOURCES DEV. CORP.
5.
ONG v ONG
FACTS: The Republic brought an action against Apostol for the collection of sums
owing to it for his purchase of Palawan Almaciga and other logs. His total debt
amounted to some P34,000. PRDC intervened claiming that Apostol, as President o
f the company, without prior authority, took goods (steel sheets, pipes, bars, e
tc) from PRDC warehouse and appropriated them to settle his personal debts in fa
vor of the government. The Republic opposed the intervention of PRDC, arguing th
at price is always paid in money and that payment in kind is no payment at all;
hence, money and not the goods of PRDC are under dispute. ISSUE: W/N payment in
kind is equivalent to price paid in money HELD: YES. Price may be paid in money
or ITS EQUIVALENT—in this case, the goods. Payment need not be in the form of mone
y. The prices for the goods have, in fact, been assessed and determined. PRDC th
us has a substantial interest in the case and must be permitted
FACTS: For an in consideration of P1 and other valuable considerations, Imelda O
ng transferred through a Deed of Quitclaim her rights over a ½ portion of a parcel
of land to Sandra. Later on, she revoked the Deed and donated the whole propert
y to her son, Rex. Sanda, through her guardian, sought to recover ownership and
possession thereof. Imelda alleged that the sale was void for lack of considerat
ion. ISSUE: W/N there was a valid contract of sale
8
to intervene—its goods paid out without authority being under dispute in this case
. mortgage over another set of properties of RRRC. Likewise, it defaulted and th
e properties were foreclosed. However, RRRC was able to negotiate with the Bank
for the redemption of the properties by was of a concession whereby the Bank all
owed RRRC to refer to it would-be buyers of the properties who would remit their
payments directly to the Bank, which would then be considered as redemption pri
ce for RRRC. Eventually, these were sold and payments made directly to the Bank
were in excess by P300K for the redemption price. In the meantime, Jorge Navarra
requested that they repurchase their house and lot for P300K, which the Bank ag
reed. Accordingly, Jorge Navarra requested further that the excess payment of RR
RC be applied as down payment for their repurchase. For his failure to this fact
cannot lead to the conclusion that a contract of sale had been perfected. Befor
e a valid and binding contract of sale can exist, the manner of payment of the p
urchase price must first be established since the agreement on the manner of the
payment goes into the price such that a disagreement on the manner of payment i
s tantamount to a failure to agree on the price. Moreover, the letter/offer fail
ed to specify a definite amount of the purchase price for the sale/repurchase of
the properties. It merely stated that it will be based on the redemption value
plus accrued interest at the prevailing rate up to the date of the sales contrac
t. Clearly, the lack of a definite offer on the part of the Navarra spouses coul
d not possibly serve as the basis of their claim that the sale was perfected.
8.
NAVARRA v PLANTERS DEV. BANK
FACTS: Navarra spouses are the owners of 5 parcels of land in BF Homes, Paranque
. In 1982, they obtained a loan of P1.2M from Planters Bank, secured by a mortga
ge over these parcels of land. Unfortunately, they defaulted to pay their obliga
tion and thus, Planters Bank foreclosed the property. They were not able to rede
em the property as well. On the other hand, RRRC Dev. Corp. is a real estate com
pany owned by the parents of Carmelita Navarra. It obtained a loan from Planters
Bank secured by a submit a board resolution from RRRC authorizing such, the Ban
k refused to apply the excess to his repurchase. In 1988, a portion of the lots
was sold to Gatchalian Realty. Navarra spouses filed for specific performance ag
ainst Planters Bank, alleging that there was a perfected contract of sale (P1.8M
, with P300K downpayment). RTC ruled in favor of Navarra spouses. CA reversed. I
SSUE: W/N there was a valid contract of sale (consider the repurchase as a sale)
HELD: NO. While the letters indicate the amount of P300K as downpayment, they a
re completely silent as to how the succeeding installment payment shall be made.
At most, the letters merely acknowledge that the downpayment was agreed upon by
the parties. However,
FORMATION OF CONTRACT OF SALE
1. MANILA METAL CONTAINER CORP. v PNB less the P725K deposit. Manila Metal, agai
n, rejected this offer and filed a complaint against PNB for the annulment of fo
reclosure or specific performance, contending that there was a valid contract of
sale between Manila Metal and SAMD. In 1993, while the case was pending, Manila
Metal offered to repurchase at P3.5M, but PNB rejected because the market value
of the property was at P30M. Manila Metal offered again at P4.25M but was rejec
ted again. ISSUE: W/N there was a valid contract of sale HELD: NO. There was no
perfected contract of sale between PNB and Manila Metal because there was no agr
eement as to the price certain. The Statement of Account prepared by SAMD cannot
be classified as a counter-offer. It is simply a recital of its total monetary
claims against Manila Metal. The amount stated therein could not be considered a
s a counter-offer since it was only a recommendation subject to PNB s Board of D
irectors approval. Neither can the receipt of P725K by SAMD be regarded as evid
ence of a perfected contract of sale. The amount is merely an acknowledgment of
the receipt of P725K as deposit to repurchase the property. It was accepted by r
espondent on the condition that the purchase price will still be approved by the
Board of
9
FACTS: Manila Metal was the owner of a parcel of land in Mnadaluyong. To secure
a P900K loan it obtained from PNB, Manila Metal executed a real estate mortgage
over the lot. PNB later granted Manila Metal a new credit accommodation of P1M.
Manila Metal secured another loan of P653K from PNB. In 1982, PNB sought to have
the property foreclosed and sold at a public auction. PNB was the highest bidde
r. Manila Metal requested an extension of time to redeem the property and to rep
urchase such on installment. The Special Assets Management Department (SAMD) pre
pared a statement of account and as of 1984, Manila Metal s obligation amounted
to P1.6M, which includes the bid price, interests, advances of insurance premium
s, advances on realty taxes, etc. When apprised of the statement of account, Man
ila Metal remitted P725K to PNB as deposit to repurchase. In the meantime, SAMD
recommended that Manila Metal be allowed to repurchase for P1.6M. PNB, however,
rejected the recommendation and offered the property at P2.66M, its minimum mark
et value. Manila Metal refused and reiterated that it already acceded to SAMD s
offer, to which it remitted P725K. In 1985, PNB accepted the offer but for P1.9M
cash
Directors. Pending such approval, Manila Metal cannot legally claim that PNB is
already bound by any contract of sale with it. HELD: NO. The Deeds of Assignment
were not option contracts, which may be enforced by Tayag. Not being the legal
owners of the property, the tenants had no right to confer upon Tayag the option
, more so, the exclusive right to buy the property.
2.
CARCELLER v CA
FACTS: Carceller leased 2 parcels of land owned by State Investment Houses (SIHI
), the period being 18 months at P10,000/month rent. Under the lease, SIHI guara
nteed Carceller the exclusive right and option to purchase the said lots within
the lease period for the aggregate amount of P1.8M. Around 3 weeks before the en
d of the lease period, SIHI informed Carceller of the impending termination of t
he lease and the short period left for him to purchase. He begged for an extensi
on, but SIHI refused. Nevertheless, SIHI offered the property to him for lease f
or another year, but this time, it also offered it for sale to the public. Carce
ller thus sued SIHI for specific performance to compel SIHI to execute a Deed of
Sale in his favor. ISSUE: W/N Carceller may still exercise the option to purcha
se the property HELD: YES. Even if Carceller failed to purchase the property wit
hin the said period, still equity must intervene. He had introduced substantial
improvements thereon; to rule against him would cause damage to him—and SIHI does
not stand to gain much therefrom. SIHI clearly intended to sell the lot to him c
onsidering that it was under financial distress, that is constantly reminded him
of the option and the impending deadline. The delay of 18 days is not substanti
al. Carceller’s letter to SIHI expressing his intent to purchase the lot is fair n
otice of intent to exercise the option despite the request for extension. Carcel
ler should thus be allowed to buy the lots.
4.
VILLAMOR v CA
FACTS: The Villamors purchased from Macaria ½ of the latter’s land for a price consi
derably higher than the prevailing market price. They then executed a Deed of Op
tion stating that the only reason why the Villamors agreed to purchase the said
lot is because Macaria agreed to confer upon them the exclusive right to purchas
e the other half of the land. Such sale under the deed may be imposed whenever t
he need for the sale arises on the part of either party. Macaria sought to repur
chase the land, but the Villamors refused. Instead, the Villamors exercised thei
r option to purchase the other half of the property. Macaria refused, thus the V
illamors filed a case for specific performance. Macaria averred that the option
is void for lack of consideration. ISSUE: W/N the option contract is void for la
ck of consideration HELD: NO. The Option Contract is supported by a consideratio
n—that being the difference of the agreed price and the market price of the other
half of the land, which was sold to the Villamors. Thus, it is valid and may be
enforced by the Villamors. The consideration may consist of anything of value. T
he option was, in fact, the only reason why they purchased the other half for an
expensive price. Since the Villamors exercised their option, this is tantamount
to an acceptance of the offer—a valid and obligatory contract of sale was thus pe
rfected.
3.
TAYAG v LACSON 5. SANCHEZ v RIGOS FACTS: Sanchez and Rigos executed an Option to
Purchase where Rigos agreed, promised, and committed to sell to Sanchez a parce
l of land in Nueva Ecija for P1,510. In spite of the repeated tenders made by Sa
nchez, Rigos refused to sell the same. Thus, Sanchez consigned the amounts and f
iled a case for specific performance. Rigos alleged that the contract between th
em was a unilateral promise to sell, which is not supported by any consideration
, hence, it is not binding. ISSUE: W/N there was a valid option contract HELD: N
O. The promisee (Sanchez) cannot compel the promissor (Rigos) to comply with the
promise unless the former can establish that the promise was for a consideratio
n. The burden of proof to establish the existence of the consideration lies with
Sanchez. Therefore, there was no valid option contract in this case. However, a
n option without consideration is a mere offer, which is not binding until accep
ted. But from the moment it is accepted before it is withdrawn,
10
FACTS: Angelica Lacson and her children were registered owners of agricultural l
ands. Tiamzon and others were their farmer-tenants. The tenants executed a Deed
of Assignment in favor of Tayag—assigning to the latter their rights to purchase t
he lands as tenant-tillers of the landholdings possessed by them at P50.00 per s
qm. This was subject to the conditions that (1) Lacson, the landowner, would agr
ee to sell the same parels and (2) that there are no more legal impediments to t
he assignment. Tayag invited the tenants to a meeting to discuss the agreement,
but the latter did not attend and wrote Tayag that they have decided to sell the
ir rights to the Lacsons instead because he allegedly betrayed their trust by fi
ling a certain lawsuit. Tayag thus filed a Complaint before the RTC asking that
the court fix the period for the payment; he also asked for a Writ of Preliminar
y Injunction against Lacson and the tenants to enjoin them from accepting any of
fers for sale made by the tenants. ISSUE: W/N the assignment was in the form of
an option contract
a valid contract of sale arises. In this case, even though there was no option c
ontract, there was nevertheless an offer and acceptance enough to constitute a v
alid contract of sale. exercise of the option need not be coupled with actual pa
yment so long as such payment is made upon the fulfillment of the owner’s undertak
ing to deliver the property. This is based on the principle that such option con
tracts involve reciprocal obligations—and one does not incur delay if the other pa
rty fails or refuses to comply with his respective obligation. That being the ca
se, there was no need for Nietes to deposit the said amounts—and his withdrawal th
ereof does not affect his right.
6.
VASQUEZ v CA
FACTS: The Vallejera spouses sought to recover from Vasquez an agricultural lot,
which they previously sold to him. Along with the previous execution of a Deed
of Sale, the parties also executed a Right of Repurchase allowing Vallejera to r
epurchase the said estate. Vasquez resisted the redemption arguing that the opti
on to buy was not supported by any consideration—and thus not binding upon him. IS
SUE: W/N there was a valid option contract HELD: NO. It is apparent that the Rig
ht to Repurchase was not supported by any consideration. Thus, in order for the
doctrine under Sanchez v Rigos to apply, giving rise to a valid contract of sale
, it must be shown that the promissee (Vallejera) accepted the right of repurcha
se before it was withdrawn by Vasquez. In this case, no such acceptance was made
. The vendor a retro (Vallejera) must make actual and simultaneous tender of pay
ment and consignation. Mere expressions of readiness and willingness to repurcha
se are insufficient. Their ineffectual acceptance allowed Vasquez to withdraw th
e offer through his refusal to sell the lot. Vasquez thus cannot be compelled to
sell the lot.
8.
ANG YU ASUNCION v CA
FACTS: The Unijeng spouses owned certain residential and commercial spaces lease
d by Ang Yu. They offered to sell the said units to Ang Yu on several occasions
and for P6M. Ang Yu made a counter offer for P5M. The Unijeng spouses asked Ang
Yu to specify his terms in writing but the latter failed to do so. They failed t
o arrive at any definite agreement. When Ang Yu discovered that the spouses were
planning to sell the property to others, he sued them for specific performance.
While the case was pending, the spouses sold the units to Buen Realty for P15M.
ISSUE: W/N there was a perfected contract of sale between Unijeng and Ang Yu HE
LD: NO. There was no perfected contract of sale yet since there was yet any meet
ing of the minds. Thus, there is no ground for specific performance. During the
negotiation stage, any party may withdraw the offer made—especially if it was not
supported by any consideration. An Option Contract of a Right of First Refusal i
s separate and distinct from the actual contract of sale— which is the basis for s
pecific performance. The remedy available to Any Yu, in case the withdrawal was
made capriciously and arbitrarily, would be to sue on the basis of abuse of righ
t. In case there was an option contract, timely acceptance would create an oblig
ation to sell on the part of the vendor; but no such circumstance attends in thi
s case.
7.
NIETES v CA
FACTS: Nietes leased from Dr. Garcia the Angeles Educational Institute; the cont
ract contained an Option to Buy the land and school buildings within the period
of the lease. It also stipulated that the unused payment will be applied to the
purchase price of the school. Nietes paid Garcia certain sums in excess of the r
ent, which Garcia acknowledged as forming partial payment of the purchase price
of the property. Later on, Garcia, through counsel, wrote Nietes informing him o
f his decision to rescind the contract due to certain violations of the contract—s
uch as poor maintenance, lack of inventory of school equipment, and the use of a
nother name for the said school. Nietes replied by informing Garcia that he deci
ded to exercise his Option to Buy, but Garcia refused to sell. Nietes thereafter
deposited the balance of the price to Agro-Industrial Bank, but he later withdr
ew the said amounts. CA ruled in favor of Garcia stating that the full purchase
price must be paid before the Option to Buy may be exercised. Thus, Nietes broug
ht the matter to the SC. ISSUE: W/N actual payment is needed before one may exer
cise the option to buy HELD: NO. There is nothing in the contract that required
Nietes to pay the full price before he could exercise the option. It was suffici
ent that he informed Garcia of his choice and that he was at that time ready to
pay. The
9.
EQUATORIAL REALTY THEATER INC.
DEV.
INC.
v
MAYFAIR
FACTS: For its theaters, Mayfair was leasing a portion of the property in CM Rec
to, which Carmelo owns. Under the lease agreement, “if Carmelo should decide to se
ll the leased premises, Mayfair shall be given 30 days exclusive option to purch
ase the same.” Carmelo, through Henry Yang, informed the president of Mayfair that
the former is interested in selling the whole CM Recto property—and that Araneta
offered to purchase the same for $1.2M. Mayfair twice replied through a letter o
f its intention to exercise its right to repurchase—but Carmelo never replied. The
reafter, Carmelo sold the entire property to Equatorial Realty for some P11M. Th
us, Mayfair instituted an action for specific performance and annulment of the s
ale.
11
Carmelo alleges that the right, being an option contract, is void for lack of co
nsideration. ISSUE: W/N the right to repurchase is an option contract and void f
or lack of consideration HELD: NO. The clause in the lease agreement was NOT an
option contract, but a RIGHT OF FIRST REFUSAL. It was premised on Carmelo’s decisi
on to sell the said property. It also did not contain a stipulation as to the pr
ice of said property. The requirement of separate consideration does not apply t
o a right of 1st refusal because consideration is already an integral part of th
e lease. Carmelo violated such right by not affording Mayfair a fair chance to n
egotiate. It abandoned the negotiations arbitrarily. Equatorial was likewise in
bad faith; it was well aware of the right conferred upon Mayfair because its law
yers had ample time to review the contract. That being the case, the contract be
tween Carmelo and Equatorial is rescissible. Mayfair should be allowed to purcha
se the entire property for the price offered by Equatorial. Rights of First Refu
sal are also governed by the law on contracts, not the amorphous principles on h
uman relations. the MOA, Ayala was to undertake the development of the lands exc
ept the “retained area.” Under Par. 5.15 of the MOA, “Ayala agreed to give Vasquez a f
irst option to purchase the 4 adjacent lots to the retained area at the prevaili
ng market price at the time of the purchase.” A case was filed by one of the forme
r sub-contractors of Conduit against Ayala causing a 6-year delay in the develop
ment of the project. Now, Vasquez comes forward invoking Par. 5.15 claiming that
it was a valid option contract, and that Ayala should sell to him the said prop
erty at the 1984 prevailing price. Ayala offered to sell the said properties to
Vasquez at the prevailing prices (1990); but the latter refused to accept. Ayala
discounted the price from P6,500/sqm to P5,000/sqm, but still, Vasquez refused.
ISSUE: W/N there was a valid option contract given to Vasquez HELD: NO. Par. 5.
15 was NOT an option contract, but a RIGHT OF FIRST REFUSAL. It was predicated u
pon Ayala’s decision to sell the said properties. The price was also not specified
. It was also not supported by any independent consideration. By twice refusing
to accept Ayala’s offers, Vasquez lost his right to repurchase. Ayala did not brea
ch its obligation.
10. PARANAQUE KINGS ENTERPRISES INC v CA 12. RIVERA FILIPINA INC v CA FACTS: Cat
alina owned 8 parcels of land leased to Chua, who assigned its rights thereto to
Lee Ching Bing, who, in turn, assigned said rights to Paranaque King Enterprise
s, which introduced significant improvements on the premises. Under the lease ag
reement, “in case of sale, the lessee shall have the option or priority to buy the
said properties.” Catalina, in violation of the said stipulation, sold the lot to
Raymundo for P5M. Paranaque King notified her of the said breach, and she immed
iately had the lots reconveyed. She then offered the lot to Paranaque King for P
15M; but the latter refused claiming that the offer was “ridiculous.” Catalina there
after sold it again to Raymundo for P9M. ISSUE: W/N there was compliance with th
e Right of First Refusal assigned to Paranaque King HELD: NO. In a Right of Firs
t Refusal, the seller cannot offer the property to another for a lower price or
under terms more favorable. It must be offered under the same terms & conditions
to Paranaque King; otherwise, the right of first refusal becomes illusory. Only
if Paranaque King fails to meet the offer may the property be offered for sale
to another buyer—and under the same terms and conditions as well. The Right of Fir
st Refusal may also be validly transferred or assigned—as in this case. FACTS: In
1982, Reyes executed a 10-year (renewable) Contract of Lease with Riivera Filipi
na over a parcel of land in EDSA. Under such contract, the lessee is given a rig
ht of first refusal should the lessor decide to sell the property during the ter
ms of the lease. Such property was subject of a mortgage executed by Reyes in fa
vor of Prudential Bank. Since Reyes failed to pay the loan with the bank, it for
eclosed the mortgage and it emerged as the highest bidder in the auction sale. R
ealizing that he could not redeem the property, Reyes decided to sell it and off
ered it to Riviera Filipina for P5,000/sqm. However, it bargained for P3,500/sqm
. Reyes rejected such offer. After 7 months, it again bargained for P4,000/sqm,
which again was rejected by Reyes who asked for P6,000/sqm price. After 2 months
, it again bargained for P5,000/sqm, but since Reyes insisted on P6,000/sqm pric
e, he rejected Riviera s offer. Nearing the expiry of the redemption period, Rey
es and Traballo (his friend) agreed that the latter would buy the same for P5,30
0. But such deal was not yet formally concluded and negotiations with Riviera Fi
lipina once again transpired but to no avail. In 1989, Cypress and Cornhill Trad
ing were able to come up with the amount sufficient to cover the redemption mone
y, with which Reyes paid to Prudential Bank to redeem the property. Subsequently
, a Deed of Absolute Sale was executed in favor of Cypress and Cornhill for P5.4
M. Cypress and Cornhill mortgaged the property in favor of Urban Dev. Bank for P
3M. Riviera Filipina filed a suit against Reyes, Cypress and Cornhill on the gro
und that they violated its right of first refusal under the lease contract. RTC
ruled in favor of
12
11. VASQUEZ v AYALA CORP. FACTS: In 1984, Ayala Corp. entered into a Memorandum
of Agreement with Dr. Vasquez buying the latter’s shares with Conduit Development—wh
ich constitute some 50 hectares of the land in Ayala Alabang. Under
Reyes, Cypress, and Cornhill. On appeal, CA affirmed the decision of the RTC. IS
SUE: W/N Riviera Filipina lost its right of first refusal HELD: YES. As clearly
shown by the records and transcripts of the case, the actions of the parties to
the contract of lease, Reyes and Riviera, shaped their understanding and interpr
etation of the lease provision "right of first refusal" to mean simply that shou
ld the lessor Reyes decide to sell the leased property during the term of the le
ase, such sale should first be offered to the lessee Riviera. And that is what e
xactly ensued between Reyes and Riviera, a series of negotiations on the price p
er square meter of the subject property with neither party, especially Riviera,
unwilling to budge from his offer, as evidenced by the exchange of letters betwe
en the two contenders. It can clearly be discerned from Riviera’s letters that Riv
iera was so intractable in its position and took obvious advantage of the knowle
dge of the time element in its negotiations with Reyes as the redemption period
of the subject foreclosed property drew near. Riviera strongly exhibited a "take
-it or leaveit" attitude in its negotiations with Reyes. It quoted its "fixed an
d final" price as Five Thousand Pesos (P5,000.00) and not any peso more. It voic
ed out that it had other properties to consider so Reyes should decide and make
known its decision "within fifteen days." Riviera even downgraded its offer when
Reyes offered anew the property to it, such that whatever amount Reyes initiall
y receives from Riviera would absolutely be insufficient to pay off the redempti
on price of the subject property. Naturally, Reyes had to disagree with Riviera’s
highly disadvantageous offer. Nary a howl of protest or shout of defiance spewed
forth from Riviera’s lips, as it were, but a seemingly whimper of acceptance when
the counsel of Reyes strongly expressed in a letter dated December 5, 1989 that
Riviera had lost its right of first refusal. Riviera cannot now be heard that h
ad it been informed of the offer of Five Thousand Three Hundred Pesos (P5,300.00
) of Cypress and Cornhill it would have matched said price. Its stubborn approac
h in its negotiations with Reyes showed crystal-clear that there was never any n
eed to disclose such information and doing so would be just a futile effort on t
he part of Reyes. Reyes was under no obligation to disclose the same. Pursuant t
o Article 1339 of the New Civil Code, silence or concealment, by itself, does no
t constitute fraud, unless there is a special duty to disclose certain facts, or
unless according to good faith and the usages of commerce the communication sho
uld be made. The general rule is applicable in the case at bar since Riviera fai
led to convincingly show that either of the exceptions are relevant to the case
at bar. Dela Vida took possession of it and promptly built an edifice worth P800
,000. However, on the said date, the sale did not materialize. Consequently, Mac
ion filed a complaint for unlawful detainer against Dela Vida, while Dela Vida c
ountered with a complaint for reformation of the contract to sell. These differe
nces were eventually settled. In 1992, both parties entered into a compromise ag
reement where Macion will give Dela Vida 5 months to raise P2.06M and in case of
failure to do so, Dela Vida would vacate the premises. After 2 months, Dela Vid
a alleged that they had negotiated a loan from BPI and requested Macion to execu
te the contract to sell in its favor. However, Macion refused, which prompted De
la Vida to file an urgent motion for an order to direct Macion to execute the co
ntract to sell. In return, Macion filed a motion for execution of judgment alleg
ing that after 5 months, Dela Vida was not able to settle their obligations with
Macion. RTC ruled in favor of Dela Vida. ISSUE: W/N it was proper to execute a
contract to sell in favor of Dela Vida HELD: YES. Although the compromise agreem
ent (par. 7) does NOT give Dela Vida the right to demand from Macion the executi
on of the contract to sell in its favor. From this paragraph, it is clear that M
acion is obliged to execute a Deed of Sale and not a Contract to Sell upon payme
nt of the full price of P2.06M. Thereafter, Macion will turn over to Dela Vida t
he TCT. HOWEVER, a review of the facts reveals that even prior to the signing of
the compromise agreement, both parties had entered into a contract to sell, whi
ch was superseded by a compromise agreement. This compromise agreement must be i
nterpreted as bestowing upon Dela Vida the power to demand a contract to sell fr
om Macion. Where Macion promised to execute a deed of absolute sale upon complet
ing payment of the price, it is a contract to sell. In the case at bar, the sale
is still in the executory stage since the passing of title is subject to a susp
ensive condition--that if Dela Vida is able to secure the needed funds to purcha
se the properties from Macion. A mere executory sale, one where the sellers mere
ly promise to transfer the property at some future date, or where some condition
s have to be fulfilled before the contract is converted from an executory to an
executed one, does not pass ownership over the real estate being sold. It cannot
be denied that the compromise agreement, having been signed by both parties, is
tantamount to a bilateral promise to buy and sell a certain thing for a price c
ertain. Hence, this gives the contracting parties rights in personam, such that
each has the right to demand from the other the fulfillment of their respective
undertakings. Demandability may be exercised at any time after the execution of
the Deed.
13. MACION v GUIANI FACTS: Macion and Dela Vida Institute entered into a contrac
t to sell, where the latter assured the former that it will buy the 2 parcels of
land in Cotabato City on or before July 31, 1991 at P1.75M. In the meantime,
14. VILLONCO v BORMAHECO FACTS: Cervantes and his wife owned 3 parcels of land a
long Buendia where he buildings of Bormaheco Inc were situated. Beside their pro
perty were lots owned by Villonco Realty. Cervantes entered into several
13
negotiations with Villonco for sale of the Buendia property. Cervantes made a wr
itten offer of P400/sqm with a downpayment of P100,000 to serve as earnest money
. The offer also made the consummation of the sale dependent upon the acquisitio
n by Bormaheco of a Sta. Ana property. Villonco made a counter-offer stating tha
t the earnest money was to earn 10% interest p.a. The check was enclosed with th
e reply letter. Cervantes accepted and cashed the check. The Sta. Ana Property w
as awarded to Bormaheco; the transfer was also duly approved. However, Cervantes
sent the check back to Villonco with the interest thereon—stating that he was no
longer interested in selling the property. He also claims that no contract was p
erfected; Villonco sues for specific performance. ISSUE: W/N there was a perfect
ed contract of sale HELD: YES. There was a perfected contract of sale. The alleg
ed changes made in the counter-offer are immaterial and are mere clarifications.
The changes of the words “Sta. Ana property” to another property as well as the ins
ertion of the number “12” in the date, and the words “per annum” in the interest are tri
vial. There is no incompatibility in the offer and counteroffer. Cervantes assen
ted to the interest and he, in fact, paid the same. Also, earnest money constitu
tes prood of the perfection of the contract of sale and forms part of the consid
eration. The condition regarding the acquisition of the Sta. Ana property was li
kewise fulfilled; there is thus no ground for the refusal of Cervantes to consum
mate the sale. signatories HELD: NO. It is true that the signatures of the 5 sib
lings did not confer authority on Ernesto as agent to sell their respective shar
es in the properties, because such authority to sell an immovable is required to
be in writing. However, those signatures signify their act of directly (not thr
ough an agent) selling their personal shares to Paraiso Dev. Corp. In the case a
t bar, the Contract to Sell was perfected when the petitioners consented to the
sale to the respondent of their shares in the subject parcels of land by affixin
g their signatures on the said contract. Such signatures show their acceptance o
f what has been stipulated in the Contract to Sell and such acceptance was made
known to respondent corporation when the duplicate copy of the Contract to Sell
was returned to the latter bearing petitioners’ signatures. As to petitioner Enriq
ueta’s claim that she merely signed as a witness to the said contract, the contrac
t itself does not say so. There was no single indication in the said contract th
at she signed the same merely as a witness. The fact that her signature appears
on the right-hand margin of the Contract to Sell is insignificant. The contract
indisputably referred to the “Heirs of Bibiano and Encarnacion Oesmer,” and since th
ere is no showing that Enriqueta signed the document in some other capacity, it
can be safely assumed that she did so as one of the parties to the sale. In the
instant case, the consideration of P100,000.00 paid by respondent to petitioners
was referred to as “option money.” However, a careful examination of the words used
in the contract indicates that the money is not option money but earnest money.
“Earnest money” and “option money” are not the same but distinguished thus: (a) earnest
money is part of the purchase price, while option money is the money given as a
distinct consideration for an option contract; (b) earnest money is given only
where there is already a sale, while option money applies to a sale not yet perf
ected; and, (c) when earnest money is given, the buyer is bound to pay the balan
ce, while when the would-be buyer gives option money, he is not required to buy,
but may even forfeit it depending on the terms of the option.
15. OESMER v PARAISO DEV CORP. FACTS: Oesmers are co-owners of undivided shares
of 2 parcels of agricultural and tenanted land in Cavite, which are unregistered
and originally owned by their parents. When their parents died, they acquired t
he lots as heirs by right of succession. In 1989, Paular, a resident and former
Mun. Sec. of Carmona Cavite, brought Ernesto Oesmer (one of the heirs) to meet w
ith Lee, President of Paraiso Development Corp, in Manila for the purpose of bro
kering the sale of Ernesto s properties to Paraiso Dev. Corp. A contract to sell
was entered into between Paraiso Dev. Corp and Ernesto as well as Enriqueta. A
check in the amount of P100,000 payable to Ernesto was given as option money. Ev
entually, Rizalino, Leonora, Bibiano Jr, and Librado also signed the Contract to
Sell. However, 2 of their brothers, Adolfo and Jesus, refused to sign the docum
ent. A couple of months after, the Oesmers informed Paraiso (through a letter) t
hat it is rescinding the Contract to Sell and returning the option money. Howeve
r, Paraiso did not respond and thus, Oesmers filed a complaint for declaration o
f nullity of the Contract to Sell with the RTC, which ruled in favor of Paraiso
Dev. Corp. On appeal, CA modified by declaring that the Contract to Sell is vali
d and binding as to the undivided shares of the six signatories of the document.
ISSUE: W/N the Contract to Sell is valid as to all
16. FULE v CA FACTS: Fule, a banker and a jeweler, acquired a 10hectare property
in Rizal (Tanay Property), which used to be under the name of Fr. Antonio Jacob
e, who mortgaged it to Rural Bank of Alaminos to secure a loan of P10,000. Howev
er, the mortgage was foreclosed. In 1984, Fule asked Dichoso and Mendoza to look
for a buyer of the Tanay property. They found one in the person of Cruz, who ow
ns a pair of diamond earrings. Fule was interested to buy these earrings, but Cr
uz refused to sell them to him for the price he offered. Subsequently, negotiati
ons for the barter between the earrings and the property ensued. But it turned o
ut that the redemption period for the property has not yet expired. Thus, Fule e
xecuted a deed of redemption on behalf of Fr. Jacobe in the amount of P16,000, a
nd on even date, Fr. Jacobe sold the property to Fule for
14
P75,000. The Deed of Sale was notarized ahead of the Deed of Redemption. Subsequ
ently, a Deed of Sale over the earrings was executed and when it was delivered,
Fule contends that the earrings were fake, even using a tester to prove such all
egation. Thereafter, they decided to Dimayuga, a jeweler, to have the earrings t
ested. After a glance, Dimayuga declared them fake. Fule filed a complaint with
the RTC against Cruz and her lawyer, Belarmino, praying that the contract of sal
e over the Tanay property be declared null and void on the ground of fraud and d
eceit. RTC ruled in favor of Cruz and Belarmino. ISSUE: W/N the Deed of Sale ove
r the Tanay Property is valid HELD: YES. It is evident from the facts of the cas
e that there was a meeting of the minds between petitioner and Dr. Cruz. As such
, they are bound by the contract unless there are reasons or circumstances that
warrant its nullification. The records, however, are bare of any evidence manife
sting that private respondents employed such insidious words or machinations to
entice petitioner into entering the contract of barter. Neither is there any evi
dence showing that Dr. Cruz induced petitioner to sell his Tanay property or tha
t she cajoled him to take the earrings in exchange for said property. On the con
trary, Dr. Cruz did not initially accede to petitioner s proposal to buy the sai
d jewelry. Rather, it appears that it was petitioner, through his agents, who le
d Dr. Cruz to believe that the Tanay property was worth exchanging for her jewel
ry as he represented that its value was P400,000.00 or more than double that of
the jewelry which was valued only at P160,000.00. If indeed petitioner s propert
y was truly worth that much, it was certainly contrary to the nature of a busine
ssmanbanker like him to have parted with his real estate for half its price. In
short, it was in fact petitioner who resorted to machinations to convince Dr. Cr
uz to exchange her jewelry for the Tanay property. Furthermore, petitioner was a
fforded the reasonable opportunity required in Article 1584 of the Civil Code wi
thin which to examine the jewelry as he in fact accepted them when asked by Dr.
Cruz if he was satisfied with the same. By taking the jewelry outside the bank,
petitioner executed an act which was more consistent with his exercise of owners
hip over it. This gains credence when it is borne in mind that he himself had ea
rlier delivered the Tanay property to Dr. Cruz by affixing his signature to the
contract of sale. That after two hours he later claimed that the jewelry was not
the one he intended in exchange for his Tanay property, could not sever the jur
idical tie that now bound him and Dr. Cruz. The nature and value of the thing he
had taken preclude its return after that supervening period within which anythi
ng could have happened, not excluding the alteration of the jewelry or its being
switched with an inferior kind. 17. DAILON v CA FACTS: Sabesaje sues to recover
ownership of a parcel of land based on a private document of absolute sale exec
uted by Dailon. Dailon denies the fact of the sale alleging that the same being
embodied in a private instrument, the same cannot convey title under Art. 1358 o
f the Civil Code which requires that contracts which have for their object the c
reation, transmission, modification, or extinction of real rights over immovable
property must appear in a public instrument. ISSUE: W/N there was a valid/perfe
cted contract of sale HELD: YES. The necessity of a public instrument is only fo
r convenience—not for validity and enforceability. Such is not a requirement for t
he validity of a contract of sale, which is perfected by mere consent. Dailon sh
ould thus be compelled to execute the corresponding deed of conveyance in a publ
ic instrument in favor of Sabesaje. If the sale is made through a public instrum
ent, it amounts to constructive delivery.
18. SECUYA v VDA DE SELMA FACTS: Caballero owned certain friar lands. She entere
d into an Agreement of Partition where she parted with 1/3 of the said property
in favor of Sabellona. Sabellona took possession thereof and sold a portion to D
almacio Secuya through a private instrument that is already lost. Secuya, along
with his many relatives took possession of the said land. Later on, Selma bought
a portion of the said land, including that occupied by Secuya; she bought it fr
om Caesaria Caballero. She presented a Deed of Absolute Sale and a TCT. Secuya f
iled a case for quieting of title. CA upheld Selma’s title considering that she ha
d a TCT and a Deed of Sale. ISSUE: Who has a better right, Secuya or Selma? HELD
: The Secuyas have nothing to support their supposed ownership over the parcel o
f land. The best evidence they could have had was the private instrument indicat
ing the sale to their predecessor-ininterest. But the instrument is lost. Even s
o, it is only binding as between the parties and cannot prejudice 3rd persons si
nce it is not embodied in the public document. Selma, on the other hand, has all
the supporting documents necessary; she also acted in good faith and thought th
at the Secuyas were merely tenants. They did not even pay realty taxes and did n
ot have their claim annotated to the certificate of sale.
19. YUVIENGCO v DACUYCUY FACTS: Yuvienco entered into a contract with Yao King O
ng and the other occupants, wherein the former will sell to the latter the Sotto
property in Tacloban City for P6.5M provided that the latter made known their d
ecision to buy it or not later than July 31, 1978. When Yuvienco s representativ
e went to Cebu with a prepared and duly signed contract for the purpose of perfe
cting
15
and consummating the transaction, Yao King Ong and other occupants found varianc
e between the terms of payment stipulated in the document and what they had in m
ind. Thus, it was returned unsigned. Thus, the action for specific performance.
ISSUE: W/N the claim for specific performance of Yao King Ong is enforceable und
er the Statute of Frauds HELD: YES. It is nowhere alleged in the complaint that
there is any writing or memorandum, much less a duly signed agreement to the eff
ect, that the price of P6,500,000 fixed by petitioners for the real property her
ein involved was agreed to be paid not in cash but in installments as alleged by
Yao King Ong. The only documented indication of the non-wholly-cash payment ext
ant in the record is the deeds already signed by Yuvienco and taken to Tacloban
by Atty. Gamboa for the signatures of the respondents. In other words, the 90day
term for the balance of P4.5 M insisted upon by respondents choices not appear
in any note, writing or memorandum signed by either the petitioners or any of th
em, not even by Atty. Gamboa. Hence, looking at the pose of respondents that the
re was a perfected agreement of purchase and sale between them and petitioners u
nder which they would pay in installments of P2 M down and P4.5 M within ninety
90) days afterwards it is evident that such oral contract involving the "sale of
real property" comes squarely under the Statute of Frauds (Article 1403, No. 2(
e), Civil Code.) In any sale of real property on installments, the Statute of Fr
auds read together with the perfection requirements of Article 1475 of the Civil
Code must be understood and applied in the sense that the idea of payment on in
stallments must be in the requisite of a note or memorandum therein contemplated
. While such note or memorandum need not be in one single document or writing an
d it can be in just sufficiently implicit tenor, imperatively the separate notes
must, when put together , contain all the requisites of a perfected contract of
sale. To put it the other way, under the Statute of Frauds, the contents of the
note or memorandum, whether in one writing or in separate ones merely indicativ
e for an adequate understanding of all the essential elements of the entire agre
ement, may be said to be the contract itself, except as to the form. asked if it
was possible to pay on terms. The bank officials stated that there was no harm
in trying to ask for payment on terms because in previous transactions, the same
had been allowed. It was the understanding, however, that should the term payme
nt be disapproved, then the price shall be paid in cash. It was Albano who dicta
ted the terms under which the installment payment may be approved, and acting th
ereon, Alfonso Lim wrote BPI through Merlin Albano embodying the payment initial
ly of 10% and the remaining 90% within a period of 90 days. 2 or 3 days later, L
SM learned that its offer to pay on terms had been frozen. Alfonso Lim went to B
PI and tendered the full payment of P33,056,000.00 to Albano. The payment was re
fused because Albano stated that the authority to sell that particular piece of
property in Pasig had been withdrawn from his unit. The same check was tendered
to BPI Vice-President Nelson Bona who also refused to receive payment. LSM filed
an action for specific performance with damages against BPI. In the course of t
he trial, BPI informed the trial court that it had sold the property under litig
ation to National Book Store (NBS) in 1989. The complaint was thus amended to in
clude NBS. RTC ruled in favor of LSM, holding that there was a perfected contrac
t of sale between LSM and BPI. CA reversed, holding that no contract of sale was
perfected because there was no concurrence of the three requisites enumerated i
n Article 1318 of the Civil Code. ISSUE: W/N there was a valid contract of sale
HELD: YES. There was a meeting of the minds between the buyer and the bank in re
spect to the price of P1,000/sqm. The requirements in the payment of the purchas
e price on terms instead of cash were suggested by BPI Vice-President Albano. Si
nce the authority given to broker Revilla specified cash payment, the possibilit
y of paying on terms was referred to the Trust Committee but with the mutual agr
eement that “if the proposed payment on terms will not be approved by our Trust Co
mmittee, Limketkai should pay in cash, the amount was no longer subject to the a
pproval or disapproval of the Committee, it is only on the terms.” The record show
s that if payment was in cash, either broker Revilla or Aromin had full authorit
y. But because LSM took advantage of the suggestion of Vice-President Albano, th
e matter was sent to higher officials. Immediately upon learning that payment on
terms was frozen and/or denied, Limketkai exercised his right within the period
given to him and tendered payment in full, thus complying with their agreement.
The negotiation or preparation stage started with the authority given by Philip
pine Remnants to BPI to sell the lot, followed by the authority given by BPI and
confirmed by Philippine Remnants to broker Revilla to sell the property, the of
fer to sell to Limketkai, the inspection of the property and the negotiations wi
th Aromin and Albano at the BPI offices. The perfection of the contract took pla
ce when Aromin and Albano, acting for BPI, agreed to sell and Alfonso Lim with A
lbino Limketkai, acting for LSM, agreed to buy the disputed lot at P1,000/sqm. A
side from this there was the earlier agreement between LSM and the authorized br
oker.
20. LIMKETKAI SONS MILLING INC v CA FACTS: In 1976, Philippine Remnants Co., Inc
. constituted the Bank of the Philippine Islands (BPI) as its trustee to manage,
administer, and sell its real estate property, one of which was the disputed lo
t in Pasig. In 1988, Pedro Revilla, Jr., a licensed real estate broker, was give
n formal authority by BPI to sell the lot for P1,000/sqm. Broker Revilla contact
ed Alfonso Lim of Limketkai Sons Milling (LSM) who agreed to buy the land. LSM a
sked that the price of P1,000/sqm. be reduced to P900.00 while Albano stated the
price is to be P1,100.00. The parties finally agreed that the lot would be sold
at P1,000/sqm. to be paid in cash. Notwithstanding the final agreement to pay P
1,000/sqm. on a cash basis, Alfonso Lim (LSM official)
16
There was a concurrence of offer and acceptance, on the object, and on the cause
thereof. partial performance, which takes the verbal agreement out of the opera
tion of the Statute of Frauds.
21. ORTEGA v LEONARDO FACTS: Ortega occupied a parcel of land. After the liberat
ion, the government assigned the lot to the Rural Progress Admin. She asserted h
er right thereto; but was disputed by Leonardo. Ortega and Leonardo agreed to a
compromise. The agreement was for Ortega to desist from pressing her claim, and
Leonardo, upon getting the lot, would sell to her a portion thereof provided she
paid for the surveying of the lot. If he acquired title, she could stay as tena
nt. Ortega thus desisted from her claim, paid for the surveying of the lot and t
he preparation of the plan, and regularly paid him a monthly rental. When she re
modeled her son’s house beside the lot, it extended over the subject lot. When Leo
nardo acquired title, he refused to sell the portion agreed upon. He claims that
the contract is unenforceable based on the Statute of Frauds. ISSUE: W/N the co
ntract is unenforceable HELD: NO. The contract is enforceable because there was
partial performance. Ortega made substantial improvements on the lot, desisted f
rom her claim, continued possession, and paid for the surveying, and also paid t
he rentals. All these put together amount to
22. CLAUDEL v CA FACTS: Cecilio Claudel acquired a lot from the Bureau of Lands.
He occupied the same, declared it in his name and dutifully paid his taxes. Aft
er his death, his heirs and siblings contested each other claiming ownership the
reof. It was his heirs who were in possession of the property. They partitioned
it amongst themselves, registered each portion under the Torrens System, and eac
h paid their respective taxes. The siblings filed a case for cancellation of tit
les and reconveyance arguing that there was a verbal sale between Cecilio and th
eir parents over the lot. As evidence, they presented a subdivision plan. CA ord
ered the cancellation of the TCTs in favor of the heirs. ISSUE: W/N there was a
valid sale between Cecilio and his siblings HELD: NO. As a rule, a sale of land
is valid regardless of the form it may have been entered into. However, in the e
vent that a 3rd party disputes the ownership, there is no such proof in support
of the ownership. As such, it cannot prejudice 3rd persons—such as the heirs in th
is case. Also, the heirs had a right to rely upon their Torrens titles, which, a
s opposed to the subdivision plans, are definitely more credible. Further, the s
ubsequent buyers were in bad faith because Armando & Adelia registered their adv
erse claim—this amounts to constructive notice, which negates good faith. The Stat
ute of Frauds likewise does not apply considering that Godofredo & Carmen had al
ready derived the benefits from the sale—such as the money to pay for the loan. Th
e receipt also suffices to constitute the memorandum required by the Statute of
Frauds. Assuming that the sale was voidable because it was conjugal property, th
e same was ratified by Godofredo by introducing Armando & Adelia to the Natanawa
ns as the new lessors. Also, even though titled as Specific Performance, the com
plaint was one for reconveyance— and prescription does not lie of one who is in ac
tual possession of the property.
23. ALFREDO v BORRAS FACTS: Godofredo & Carmen mortgaged their land to DBP for P
7,000. To pay their debt, they sold the land to Armando & Adelia for P15,000. Th
e latter also assumed to pay the loan. Carmen issued Armando & Adelia a receipt
for the sale. They also delivered to Armando & Adelia the Original Certificate o
f Title, tax declarations, and tax receipts. They also introduced Armando & Adel
ia to the Natanawans, the tenants of the said property as the new lessors. They
thereafter took possession of the said land. Later, they found out that Godofred
o & Carmen sold the land again to other buyers by securing duplicate copies of t
he OCTs upon petition with the court. Thus, they filed for specific performance.
Godofredo & Carmen claimed that the sale, not being in writing, is unenforceabl
e under the Statute of Frauds. ISSUE: W/N the contract of sale is unenforceable
under the Statute of Frauds. HELD: NO. The Statute of Frauds is applicable only
to executory contracts, not those that have already been partially or completely
consummated. In this case, the sale of the land to Armando & Adelia had already
been consummated. The ownership of the land was also transferred to Armando & A
delia when they were introduced to the Natanawans and took possession thereof. T
herefore, when Godofredo & Carmen sold the land to other buyers, it was no longe
r theirs to sell.
23. TOYOTA SHAW INC v CA FACTS: Luna Sosa wanted to buy a Toyota Lite Ace. He we
nt to Toyota Shaw where he met Popong Bernardo, a sales rep. Sosa explained that
he needed the Lite Ace by June 17, otherwise, he would become a laughing stock.
Bernardo guaranteed that the vehicle would be delivered. They executed a docume
nt entitled Agreements between Sosa & Popong Bernardo of Toyota Shaw” where a P100
K downpayment was stipulated and that the Lite Ace would be available at a given
date. When the day of reckoning arrived, the Lite Ace was unavailable—the explana
tion of Bernardo being “nasulot ng ibang malakas.” However, according to Toyota, the
true reason was that BA Finance, which was supposed to
17
answer for the balance of the purchase price, did not approve Sosa’s application.
Toyota also returned the downpayment. Thus, Sosa sued for damages amounting to P
1.2M due to his humiliation, hurt feelings, sleepless nights, and so on. ISSUE:
W/N there was a perfected contract of sale HELD: NO. Toyota Shaw should NOT be h
eld liable for damages because there was no perfected contract of sale in the fi
rst place. There was no agreement as to the price and the manner of payment—which
are both essential to the perfection of the sale. It was also clear that Bernard
o signed the document in his personal capacity and it was up to Sosa to inquire
as to the extent of the former’s capacity. Sosa did not even sign it. It was nothi
ng but a mere proposal, which did not mature into a perfected contract of sale i
n lieu of the subsequent events. In fact, it made no specific reference to the s
ale of a vehicle. No obligations could thus arise therefrom. Sosa has no one els
e to blame but himself for his humiliation for bragging about something he does
not own yet.
CONSUMMATION/PERFECTION OF CONTRACT
1. SANTOS v SANTOS ISSUE: W/N Wilfredo, as mortgagor, can sell the tractor subje
ct of a mortgage HELD: YES. The mortgagor (Wilfredo) had every right to sell the
property subject to mortgage—even without the consent of the mortgagee as long as
the purchaser assumes the liability of the mortgagor. In this case, there was c
onstructive delivery already upon the execution of the public instrument—even if t
he tractor could not yet be delivered. Execution of the public instrument and mu
tual consent of the parties was equivalent to constructive delivery. Therefore,
at the time when the sheriff levied upon the tractor, it was no longer the prope
rty of Wilfredo. Also the clearing of the check was not a condition for the cons
ummation of the sale but only upon the extinguishment of the mortgage.
FACTS: Jesus and Rosalia owned a lot with a 4-door apartment. They sold through
a public instrument the said property to their children, Salvador and Rosa—who sol
d her share to Salvador as well. Nonetheless, in spite of the sale, Rosalia rema
ined in possession and control over the property. Jesus, Rosalia and Salvador di
ed. Zenaida, claiming to be Salvador’s heir, demanded rent from the tenants. The o
ther children of Jesus and Rosalia filed a case for reconveyance averring that t
he sale to Salvador was fictitious and done merely to accommodate him. ISSUE: W/
N the sale to Salvador was fictitious HELD: YES. While it is true that sale thro
ugh a public instrument is equivalent to delivery of the things sold which has t
he effect of transferring ownership, the delivery can be rebutted by clear and c
onvincing evidence. The vendor’s continuous possession makes the sale dubious. Sal
vador never took possession of the property. He surrendered the titles to his mo
ther after having registered the lots in his name, he never collected rentals, n
either has he paid the taxes thereon. Thus, there was no real transfer of owners
hip. That being the case, the action for reconveyance was imprescriptible.
3.
ADDISON v FELIX
FACTS: Addison owned 4 parcels of land, which he sold to Felix, through public i
nstrument. The down payment was made; the final installment to be paid after the
issuance of the certificate of title. Addison sued Felix to compel the latter t
o pay the last installment—but Felix refused and sought to rescind the contract du
e to the absolute failure of Addison to deliver the thing sold. ISSUE: W/N there
was delivery
2.
DY JR v CA
FACTS: Perfecto and Wilfredo Dy are brothers. Wilfredo purchased a truck and a t
ractor, both of which were mortgaged to Libra Financing as security for a loan.
Perfecto wanted to purchase the tractor, he convinced his sister to purchase the
truck. Perfecto executed a public document to evidence the sale. Libra acceded
to the sale and agreed that upon the issuance and encashment of the check that t
hey issued for the purpose, the chattels can be released. However, in a case aga
inst Wilfredo filed by Gelac Trading, the sheriff seized the tractor on levy and
sold the same on public auction, with Gelac as the highest bidder. Perfecto thu
s sought to recover the truck from Gelac.
HELD: NO. While it is true that execution of a public instrument is tantamount t
o delivery of the thing sold, in order for such symbolic delivery to have the ef
fect of tradition, the vendor should have had control over the thing and at the
moment of the sale, its delivery could have been made. In this case, the ownersh
ip was disputed by the Villafuertes, who were in possession of the land. Addison
even failed to show the land to Felix due to the hostile opposition; he also fa
iled to have it surveyed. The legal fiction of delivery thus yields to reality—no
delivery was ever made. Felix had every right therefore to rescind the contract.
Had there been an agreement that Felix would have to undertake to evict the Vil
lafuertes, the result may have been different, but there is no such agreement.
18
4. DANGUILAN v IAC 6. POWER COMMERCIAL AND INDUSTRIAL CORP. v CA FACTS: Domingo
owned 2 lots, which he donated through a private instrument to Danguilan for the
consideration that the latter must take care of him for the remainder of his li
fe and manage his burial. Domingo’s daughter, Apolonia, laid claim to the land, pr
esenting a public document allegedly executed in her favor, the purchase price b
eing paid for by her mother. She however failed to take possession of the said p
roperty after the execution of the deed. In fact, she moved out of the farm when
Danguilan started to cultivate the same for as long as she was given a share fr
om the harvests. She decided to file a case only after the deliveries of farm pr
oduce have ceased. ISSUE: Who has a better title over the land, Danguilan or Apo
lonia? HELD: DANGUILAN. At the onset, the donation in favor of Danguilan was val
id even though embodied in a private instrument, because it was an onerous donat
ion. The deed of sale presented by Apolonia was also suspicious. It was only 3 y
ears old and the consideration was paid for by her mother. Assuming that it was
valid, still the presumptive delivery is overcome by the fact that she failed to
take possession of the property. Ownership, after all, is not transferred by me
re stipulation butby actual and adverse possession. She even transferred the sam
e to Danguilan possession of the same. She cannot have a better right in this ca
se than Danguilan. FACTS: Power Commercial Corp. entered into a contract of sale
with the Quiambao spouses. It agreed to assume the mortgages thereon. A Deed of
Absolute Sale with Assumption of Mortgage was executed. Power Commercial failed
to settle the mortgage debt contracted by the spouses, thus it could not undert
ake the proper action to evict the lessees on the lot. Power Commercial thereaft
er sought to rescind the contract of the sale alleging that it failed to take ac
tual and physical possession of the lot—which allegedly negated constructive deliv
ery. ISSUE: W/N there was delivery HELD: YES. First, such a condition that the Q
uiambao spouses would evict the lessees therein was not stipulated in the contra
ct. In fact, Power Commercial was well aware of the presence of the tenants ther
ein. Also in this case, Power Commercial was given control over the said lot and
it endeavored to terminate the occupation of the actual tenants. Control cannot
be equated with actual possession. Power Commercial, as purchaser, agreed volun
tarily to assume the risks involved. The public instrument executed amounted to
symbolic delivery of the property sold and authorized the buyer to use the docum
ent as proof of ownership. Power Commercial was deprived of ownership only after
it failed to remit the amortizations, but not due to failure of delivery.
7. 5. PASAGUI v VILLABLANCA FACTS: Pasagui purchased a parcel of land form the B
ocar Spouses for P2,800, which was embodied in a public instrument. They failed
to take possession of the property because the Villablancas illegally took posse
ssion of the property and harvested the coconuts therein. Thus, Pasagui filed a
case for ejectment before the CFI. The Bocar spouses were likewise impleaded. Th
e latter contested that the case should be dismissed because the CFI did not hav
e jurisdiction over forcible entry cases. ISSUE: W/N this is a case of forcible
entry HELD: NO. The case was not for forcible entry because there was no allegat
ion that Pasagui was in prior physical possession of the land and that the Villa
blancas, through force, stealth, or threat, deprived them thereof. While the sal
e was made through a public document is equivalent to delivery, this presumption
only holds true if there is no impediment to the possession of the purchaser. S
uch is not the case here. Since Pasagui had not yet acquired physical possession
of the land, the case was not one for forcible entry and the CFI (not municipal
courts) has jurisdiction.
CHUA v CA
FACTS: Valdes-Choy is the owner of the subject matter, when she advertised the p
roperty for sale. Chua responded to the advertisement, and met up with Valdes-Ch
oy. They agreed for the purchase price of P10,800,000, to be paid on July 15, 19
89. This was evidenced by an earnest money for P100,000, which was put on a rece
ipt, stating that the money will be forfeited upon failure to pay on the dat sti
pulated. On July 13, Valdes-Choy executed two deeds of absolute sale, first, per
taining to the house and lot, valued at P8,000,000, and second, pertaining to th
e movable properties therein. The next day, Chua issued a check worth P485,000 f
or the purpose paying the capital gains tax. The value was deducted from the bal
ance, with an outstanding value of P10,295,000 (additional P80,000 for the docum
entary stamp tax). Chua also showed a check worth P10,215,00 to Valdes-Choy, how
ever, he demanded that the TCT should first be transferred to his name before pa
ying the check. Out of anger, ValdesChoy tore the deed of absolute sale. On the
reckoning date, Valdes-Choy tried to make a compromise with Chua, but she did no
t get any response. Two days later, Chua filed an action for specific performanc
e, which the trial court dismissed. A week later, he filed another action for sp
ecific performance, where the court ruled in favor of him. On appeal, CA reverse
d.
19
ISSUE: 1. 2. Whether the agreement was a contract of sale or contract to sell Wh
ether registration is needed to transfer ownership ISSUE: W/N VELI is obliged to
pay for the expenses to transfer the title of the property to Genuino Ice HELD:
YES. Under Art. 1487 of the CC, the expenses for the registration of the sale s
hould be shouldered by the vendor (VELI) unless there is a stipulation to the co
ntrary. In the absence of the stipulation of the parties relating to the expense
s for the registration of the sale and the transfer of the title to the vendee (
Genuino Ice), Art. 1487 shall be applied in a supplementary manner. Under Art. 1
495 of the CC, VELI, as vendor, is obliged to transfer title over the property a
nd deliver the same to the vendee (Genuino Ice). While Art. 1498 of the CC provi
des that the execution of a notarized deed of absolute sale shall be equivalent
to the delivery of the property, the same shall not apply if from the deed the c
ontrary does not appear or cannot clearly be inferred. In this case, Genuino Ice
and VELI agreed that the latter would cause the eviction of the tenants and del
iver possession of the property. It is clear that at the time the petitioner exe
cuted the deed of sale in favor of Genuino Ice, there were tenants in the proper
ty. It cannot be concluded that the property was thereby delivered to Genuino Ic
e.
RULING: It is a contract to sell. First, when the agreement was made, the earnes
t money is forfeited in favor of Valdes-Choy who may then sell the land to other
interested parties. This is the nature of reserving the ownership of the proper
ty, subject to the full payment of the purchase price. Second, absent of a forma
l deed of conveyance of the property in favor of the buyer shows that there was
no intention to transfer ownership immediately. The non-fulfillment of the suspe
nsive condition, which is payment of the full purchase price prevents the obliga
tion to sell from arising, where the owner retains the ownership over the proper
ty. Art 1482 speaks of earnest money as an evidence of a perfected contract of s
ale. However, in this case, the earnest money was paid in part consideration of
a contract to sell, and therefore, art 1482 does not apply. Delivery is effected
upon execution of the sale in a public instrument. However, registration is not
needed in order to complete the deed of sale. Delivery is what transfers owners
hip, and not registration in the Registry of Property. Registration is only nece
ssary to bind third persons; it is not a mode of acquiring ownership.
9.
BHEN MEYER & CO. v YANGCO
8.
VIVE EAGLE LAND INC v CA
FACTS: In 1987, Spouses Flores, as owners, sold 2 parcels of land in Cubao to Ta
tic Square International Corp for P5.7M. Tatic applied for a loan with Capital R
ual Bank of Makati to finance its purchase of the said lots, which the bank gran
ted provided that the torrens title over the lots would be registered under its
name as collateral for the payment of the loan. In 1988, Tatic sold these parcel
s of land to Vive Eagle Land Inc (VELI) for P6.3M, although the torrens titles o
ver the lots were still in the custody of the bank. During the same year, VELI s
old one of these parcels of land to Genuino Ice Co. Inc. for P4M. Also, a deed o
f assignment of rights in which VELI assigned in favor of Genuino Ice all rights
and interests under the Deed of Sale executed by spouses Flores and the other D
eed of Sale executed by Tatic in VELI s favor, in so far as that lot is concerne
d. Flores Tatic (2 lots) VELI (2 lots) Genuino Ice (1 lot) Genuino Ice demanded that V
ELI pay its capital gains tax amounting to P285,000. However, VELI refused sayin
g that the Spouses Flores and Tobias (broker of the sale) are responsible to pay
the tax. Genuino Ice filed an action for specific performance against VELI, con
tending that VELI failed to transfer title to and in the name of Genuino Ice, to
cause the eviction of the occupants, and to pay the tax and other dues to effec
tuate the transfer of the title of the property. RTC ruled in favor of Genuino I
ce, CA affirmed.
FACTS: Yangco ordered 80 drums of caustic soda “Carabao Brand” from Bhen & Meyer. Th
e instrument evidencing the agreement made use of the terms “FOB” and “CIF.” The goods w
ere detained by the British authorities in Penang. Bhen & Meyer alleges that Yan
gco had already acquired ownership of the said goods and should thus pay for the
purchase price. However, Yangco refused to accept the same alleging that the go
ods were not “Carabao Brand” and that the same were adulterated. ISSUE: W/N ownershi
p is transferred/delivery is effected with FOB and CIF from seller to buyer HELD
: NO. The terms FOB and CIF mean that the costs of delivery are for the seller.
This means that it is the seller’s duty to make sure that the goods are duly deliv
ered. Until then, ownership of the goods had not yet passed. Had the expenses be
en for the buyer, the goods are deemed delivered upon delivery to the common car
rier. In this case, the delivery has not been effected to the buyer, thus, the l
atter had every right to rescind the contract of sale.
10. GENERAL FOODS v NACOCO FACTS: • General Foods is a foreign corporation license
d to do business in the Philippines. • National Coconut Corporation (NACOCO) sold
to General Foods 1500 tons of long copra under the terms: a. Quantity: Seller co
uld deliver 5% more or less than the contracted quantity, and the
20
surplus/deficiency shall be paid on the basis of the delivered weight. b. Price:
CIF New York. c. Payment: Buyers to open an Irrevocable Letter of Credit for 95
% of invoice value based on shipping weight. d. Balance of the price was to be a
scertained on the basis of outturn weights and quality of the cargo at the port
of discharge. e. Weights: Net landed weights. • In the Philippines, the net cargo
was weighed at 1054 tons, the alleged weight delivered by NACOCO. NACOCO then wi
thdrew 95% (or $136,000) of the amount in the Letter of Credit in favor of NACOC
O. • In New York, the net cargo was reweighed and found to weigh only 898 short to
ns. General Foods demanded the refund of the amount of $24000. • NACOCO’s officer’s-in
-charge acknowledged in a letter liability the deficiency and promised payment a
s soon as funds were available. • However, NACOCO was abolished and went into liqu
idation. The Board of Liquidators refused to pay the claim of General Foods. • Gen
eral Foods then filed to recover $24,000 and 17% exchange tax plus attorney’s fees
and costs. • General Foods alleges that although the sale quoted CIF New York, th
e agreement contemplated the payment of the price according to the weight and qu
ality of the cargo upon arrival in New York (port of destination). Therefore, th
e risk of shipment was upon the seller. • NACOCO alleges that the contract is an o
rdinary CIF, which means that delivery to the carrier is delivery to the buyer.
Therefore, the shipment having been delivered to the buyer and the buyer having
paid the price, the sale was consummated. ISSUES: 1. Whether the weight in New Y
ork should be the basis upon payment of the price of copra should be made. – Yes.
The weight in New York should be the basis. 2. Whether what is to be ascertained
based upon the outturn weights and quality at port of discharge was only the ba
lance due to be paid. – No. The balance due to be paid is not the only basis. HELD
: • Under an ordinary CIF agreement, delivery to the buyer is complete upon delive
ry of the goods to the carrier and tender of the shipping and other documents re
quired by the contract and the insurance policy are taken in the buyer’s behalf. H
owever, the parties may, by express stipulation, modify a CIF contract and throw
the risk upon the seller until the arrival in the port of destinations. • In this
case, the terms of the contract indicate and intention that the precise amount
to be paid by the buyer depended upon the ascertainment of the exact net weight
of the cargo at the point of destination: a. Net landed weights were to govern.
b. The balance of the price was to be ascertained on the basis of outturn weight
s and quality of the cargo at the port of discharge. c. The seller could deliver
5% more or less than the
contracted quantity, and the surplus/deficiency shall be paid on the basis of th
e delivered weight. • While the risk of loss was apparently placed on General Food
s after the delivery of the cargo to the carrier, it was agreed that the payment
of the price was to be according to the “net landed weight” which is 898 (weighed i
n New York) and not 1054 (weighed in the Philippines). • NACOCO had the burden to
prove that the shortage was due to risks of voyage and not the natural drying up
of copra. In other words, if the weight deficiency was due to the risks of the
voyage, General Food would not have been entitled to any claim in the deficiency
. • The provision on the “balance of the price was to be ascertained on the basis of
outturn weights and quality of the cargo at the port of discharge” should not be
construed separately from the provision that the “net landed weight” was to control.
• The manifest intention of the parties was for the total price to be finally asc
ertained only upon determining the net weight and quality of the goods upon arri
val in New York, most likely because the nature of copra is that it dries up and
diminishes weight during the voyage. • In fact, this intention was shown by the l
etter of the officer-in-charge of NACOCO acknowledging NACOCO’s liability to Gener
al Foods. Though this letter of acknowledgement should not be construed as an ad
mission of liability of NACOCO, it is nevertheless competent evidence of NACOCO’s
intention to be bound by the net landed weight or outturn weight of the copra at
the port of discharge.
11. PACIFIC VEGETABLE OIL CORP v SINGZON FACTS: • Petitioner and respondent entere
d into a contract in the US whereby Singzon agreed to ship 500 tons of copra, wi
th the agreement CIF, Pacific Coast • Singzon failed to deliver, but the parties e
ntered into a settlement, whereby Singzon would deliver 300 tons at the same ter
ms the contract provided that should Singzon again default, he would pay $10,000
for damages and the original contract would be revived • Singzon again failed to
ship the copra, and he did not pay the fine or ship the 500 tons as originally a
greed • Pacific filed an action to recover damages • Singzon claims that Pacific had
no legal personality to sue because it is a foreign corporation HELD: • The contr
act was perfected in the US by a broker and representatives of the parties payme
nt was made to a bank in California and delivery undertaken through CIF, Pacific
Coast • Under that arrangement, the vendor is to pay not only the cost of goods,
but also the freight and insurance expenses, and this is taken to indicate that
the delivery is to be made at the port of destination • Since CIF includes both in
surance and freight expenses to be paid by the seller, ordinarily, before the ve
ssel arrives at the point of destination the risk of loss be for
21
the account of the seller. and creates lien upon the land. The spouses acquired
their titles under the Torrens System and they acted in good faith by exercising
due diligence; thus, they have a better right to the said property.
12. RUDOLF LIETZ INC v CA FACTS: Buriol previously owned a parcel of unregistere
d land in Palawan. In 1986, he entered into a lease agreement with Flaviano and
Tiziana Turatello and Sani (Italians) involving a hectare of his property. This
agreement was for a period of 25 years, renewable for another 25 years. After th
e paying P10,000 downpayment, Turatello and Sani took possession of the land. Ho
wever, this agreement was only reduced into writing in 1987. After 11 months, Bu
riol sold the same parcel of land (5 hec) to Rudolf Lietz Inc for P30,000. Later
on, Rudolf Lietz Inc discovered that Buriol owned only 4 hectares with one hect
are covered by the lease; thus, only 3 hectares were delivered to it. Rudolf Lie
tz Inc instituted a complaint for the annulment of the lease against Buriol, San
i and the Turatellos before the RTC. RTC and CA ruled in favor of Buriol, Sani a
nd Turatellos. ISSUE: Whether the sale between Buriol and Rudolf Lietz Inc is a
lump sum or unit price sale HELD: LUMP SUM SALE. The Deed of Absolute Sale shows
that the parties agreed on the purchase price on a predetermined area of 5 hect
ares within the specified boundaries and not based on a particular rate per area
. In accordance with Art. 1542, there shall be no reduction in the purchase pric
e even if the area delivered to Rudolf Lietz Inc is less than that states in the
contract. In the instant case, the area within the boundaries as stated in the
contract shall control over the area agreed upon in the contract.
14. NAVAL v CA FACTS: In 1969, Ildefonso Naval sold a parcel of land to Gregorio
; the sale was recorded under Act 3344. Also in 1969, Gregorio sold portions the
reof to Balilla, Camalla and the Moya Spouses, who thereafter took possession of
their respective portions. Juanita, a great granddaughter of Ildefonso, surface
d and claimed that the land was sold to her by the latter in the year 1972; she
also presented an OCT as evidence. It must be noted that the property was not ye
t registered under the Torrens System when it was sold to Juanita and Gregorio.
ISSUE: W/N Juanita has a better title (since it is registered) than Balilla, Cam
alla and Moya spouses HELD: NO. Art. 1544 is not applicable because the land was
unregistered under the Torrens System at the time of the 1st sale. The applicab
le law is Act 3344. Under said law, registration by the 1st buyer is constructiv
e notice to the 2nd buyer—and as such, the latter cannot be deemed to be in good f
aith. Applying the principle of priority in time, priority in rights, Juanita ca
nnot claim to have a better right. The fact that Juanita was able to secure a ti
tle in her name does not operate to vest ownership. The Torrens System cannot be
used as a means to protect usurpers.
15. CARILLO v CA 13. NAAWAN COMMUNITY RURAL BANK INC v CA FACTS: Comayas offered
to sell to the Lumo Spouses a house and lot. The property was already registere
d under the Torrens System that time and they made appropriate inquiries with th
e RD; they found out that it was mortgaged for P8,000, paid Comayas to settle th
e mortgage, and the release of the adverse claim was annotated in the title. The
reafter, they executed an Absolute Deed of Sale over the subject property and re
gistered the same. However, it turns out that it was already previously sold to
Naawan Community Rural Bank; it was then unregistered. The Bank foreclosed on th
e property, purchased the same, and registered it under Act 3344. Thus, the Bank
sought to eject the spouses. However, the latter countered with an action for q
uieting of title. ISSUE: Who has a better title, Naawan or Lumo spouses? HELD: L
UMO SPOUSES. Where a person claims to have superior property rights by virtue of
a sheriff’s sale, the benefit of Art. 1544 applies favorably only if the property
is registered under the Torrens System—not under Act 3344. Registration under the
Torrens System is the operative act that gives validity to the transfer
FACTS: Gonzales purchased from Priscilla, acting as agent of Aristotle, the latt
er’s land. For failure to execute the Deed of Sale, she filed a case for specific
performance and impleaded Priscilla (not Aristotle). The latter defaulted and ju
dgment was rendered against her ordering the nullification of the OCT of Aristot
le and the issuance of a new certificate of title in favor of Gonzales. The Dabo
ns thereafter surfaced and sought to annul the judgment of the trial court averr
ing that they purchased the property from Aristotle himself and they were not im
pleaded as the real parties in interest. ISSUE: Who has better title, Gonzales o
r Dabon? HELD: DABON. The decision of the lower court in favor of Gonzales was v
oid due to extrinsic fraud. The Dabons were deprived of their day in court and t
hrough questionable means at that—such as the failure to give them appropriate not
ice of the proceedings, and not having them impleaded even though they are the p
arties to be adversely affected. Instead, it was the agent who was impleaded—not t
he principal or the subsequent purchasers. The court never acquired jurisdiction
. It must be noted that the property was sold to Gonzales in 1988, while the sam
e was sold to the Dabons in 1989; nonetheless, the requirements of double-sale
22
are two-fold: acquisition in good faith and registration in good faith. Based on
the foregoing, the case is remanded to the lower court for further proceeding.
18. MENDOZA v KALAW FACTS: In 1919, Federico Canet sold to Kalaw a parcel of lan
d under a Conditional Sale. 2 months after, Canet sold to Mendoza the same parce
l of land under an Absolute Sale. Mendoza took possession thereof, cleaned and f
enced it, and sought to have the same registered but Kalaw opposed. When Kalaw f
irst tried to register the same, he was denied but an anotacion preventiva was a
nnotated in the title. ISSUE: Who has a better title, Canet or Kalaw? HELD: CANE
T. 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 pre
ventiva obtained by Kalaw cannot create an advantage in his favor as the same wa
s good for only 30 days. The court ruled in favor of Mendoza.
16. CARBONELL v CA FACTS: Poncio, a Batanes native, owned a parcel of land, whic
h he offered to sell to Carbonell and Infante. The land was mortgaged to Republi
c Bank. Poncio and Carbonell agreed to the sale of the land, and the latter assu
med to pay the mortgage in favor of the bank. Poncio and Carbonell executed an i
nstrument where the latter allowed the former to remain in the premises in spite
of the sale for a period of 1 year. Later on, when the Formal Deed of Sale was
to be executed, Poncio told Carbonell that he could no longer proceed with the s
ale as he had already sold the same to Infante for a better price. Carbonell imm
ediately sought to register adverse claim; 4 days later, Infante registered the
sale with the adverse claim annotated thereto. Infante thereafter introduced sig
nificant improvements on the property. They now dispute ownership over the said
land. ISSUE: Who has a better title, Carbonell or Infante? HELD: CARBONELL. In o
rder to claim the benefit of Art. 1544, the buyer of realty must register the pr
operty in good faith. It is a pre-condition to a superior title. In this case, I
nfante was not in good faith, thus the prior sale to Carbonell must prevail. Inf
ante registered her claim 4 days after the adverse claim was registered, she had
notice that Carbonell paid off the mortgage debt as the mortgage passbook was a
lready in his possession. She likewise ignored Carbonell and refused to talk to
here. These are badges of bad faith that taint her registration.
19. ADALIN v CA FACTS: Elena Kado and her siblings owned a lot with a 5door comm
ercial 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 buyi
ng the premises. During the meeting, it was agreed that the Yu and Lim would buy
the said units except for the 5th which is to be bought by Adalin. They entered
into a Conditional Sale where Elena was obligated to evict the tenants before t
he full payment of the purchase price. Elena offered the same for sale to the le
ssees but they refused claiming that they could not afford; thus, she filed a ca
se for ejectment against them. Thereafter, the lessees decided to exercise their
right to buy the units—Kalaw ruled that since the sale to Yu and Lim was conditio
nal, the subsequent sale to the lessees must be preferred. ISSUE: Who has a bett
er 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 t
hat 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 fu
ll 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 th
e lessees. The lessees were in bad faith as well for having knowledge of the sup
posed sale in favor of Yu and Lim. Their subsequent registration of the sale can
not shield them in their fraud.
17. SAN LORENZO DEV CORP v CA FACTS: Spouses Lu owned 2 parcels of land, which t
hey purportedly sold to Babasanta. He demanded the execution of a Final Deed of
Sale in his favor so he may effect full payment of the purchase price; however,
the spouses declined to push through with the sale. They claimed that when he re
quested for a discount and they refused, he rescinded the agreement. Thus, Babas
anta filed a case for Specific Performance. San Lorenzo Development Corp. (SLDC)
intervened claiming that the lots have been sold to it by virtue of a Deed of A
bsolute Sale with Mortgage and that it was a purchaser in good faith. Both sales
were not registered. ISSUE: Who has a better title, Babasanta or SLDC? HELD: SL
DC. There was no double sale in this case because the contract in favor of Babas
anta was a mere contract to sell; hence, Art. 1544 is not applicable. The owners
hip of the property was not to be transmitted in his favor until the full paymen
t of the purchase price. There was neither actual nor constructive delivery as h
is title is based on a mere receipt. Based on this alone, the right of SLDC must
be preferred.
23
20. CHENG v GENATO FACTS: Genato owned 2 parcels of land in Paradise Farms. He a
greed with the Da Jose spouses to enter into a contract to sell over the said pa
rcels; it was embodied in a public instrument annotated to the certificates of t
itle. They asked for and were granted an extension for the payment of the purcha
se price. Unknown to them, Genato dealt with Cheng regarding the lot, executed a
n Affidavit to annul the Contract to Sell, appraised the latter of his decision
to rescind the sale, and received a down payment from Cheng upon the guarantee t
hat the said contract to sell will be annulled. By chance, Genato and the spouse
s met at the RD, where he again agreed to continue the contract with them. He ad
vised Cheng of his decision; the latter countered that the sale had already been
perfected. Cheng executed an Affidavit of Adverse Claim and had it annotated to
the TCTs and sued for specific performance. ISSUE: Who has a better title, Chen
g or the Da Jose spouses? HELD: DA JOSE SPOUSES. Both agreements involve a contr
act to sell, which makes Art. 1544 inapplicable since neither a transfer of owne
rship nor a sales transaction took place. A contract to sell is premised upon a
suspensive condition—the full payment of the purchase price. That being the case,
the elementary principle of first in time, priority in right should apply. As su
ch, the contract in favor of the Da Jose spouses must prevail considering that t
he same had not been validly rescinded. Besides, Cheng cannot be considered to h
ave acted in good faith as he had knowledge of the prior transaction in favor of
the spouses. the simple rule on priority in time, priority in right would apply
. As such, the successors-in-interest of Gamiao and Dayag would have a better ri
ght as the sale in their favor came ahead of time. Further, Marquez was not in g
ood faith. He knew that the property was being claimed by other parties who were
in possession thereof instead, he willfully closed his eyes to the possibility
of the flaws.
22. ESTATE OF LINO OLAGUER v ONGJOCO FACTS: (Super detailed, with lots of unimpo
rtant facts, so I ll only state whatever is related to the case at hand) Petitio
ners are the children of Lino Olaguer and Olivia Olaguer. When Lino died, Olivia
became the administrator and Eduardo Olaguer as co-administrator of his estate.
Olivia then got married to Jose Olaguer. As administrators, Olivia and Eduardo
sold 12 parcels of land owned by Lino to Pastor Bacani, including Lot 76 which i
s the lot in question. A day later, it was sold back to them, splitting to them
the portion of which 6/13 went to Olivia, while 7/13 went to Eduardo. She then m
ade a special power of attorney in favor of Jose, giving him the power to sell,
mortgage, transfer, assign endorse and deliver with respect to her share over Lo
t 76. The lot was sudivided, having Lots 76-B to 76-G in the name of Olivia. As
attorney-in-fact, Jose sold the six parcels of land in favor of his son, Virgili
o Olaguer. Lots 76-B and 76-C was consolidated and further subdivided into a pro
portional share, making them Lots 1 and 2. Jose, claiming to be the attorney-in-
fact of his son, sold Lots 1 and 2 to Emiliano Ongjoco. He further sold Lots 76-
D to 76-G to Ongjoco twice on different dates, this time evidenced by a notarize
d general power of attorney. Petitioners moved for the sale made by Spouses Oliv
ia and Jose Olaguer to be null and void. RTC ruled in favor of petitioners (on t
he subject lots), but CA reversed. ISSUE: Whether Ongjoco was a buyer in good fa
ith RULING: With respect to Lots 1 and 2, he cannot be considered a buyer in goo
d faith since there was no proof that the sale on both lots was evidenced by a w
ritten power of attorney. According to Agency Law, a sale of a piece of land mus
t be coupled with a written authority of such agent, else the sale is void. Sinc
e the respondent was not able to show proof that there really was an existing wr
itten authority, the sale over such lots cannot be considered valid, and must be
returned to the Estate of Lino Olaguer. With respect to Lots 76-D to 76-G, ther
e was a notarized general power of attorney to show evidence that authority had
been given by Virgilio to his father to dispose the subject lots. Since petition
ers was not able to show any proof that the lots being sold twice to respondent
show bad faith, good faith must be presumed. Being notarized, the regularity of
such general power of attorney must also be presumed.
21. CONSOLIDATED RURAL BANK INC v CA FACTS: The Madrid Brothers owned a parcel o
f land, which was later subdivided. Rizal Madrid sold his share to Gamaio and Da
yag; the other brothers offered no objection. The sale was not registered under
the Torrens System. Gamaio and Dayag sold the southern half to Teodoro, and the
northern half to Hernandez, who thereafter donated the same to his daughter. The
y all maintained possession of the properties. Later on, the brothers all sold t
heir shared to Marquez who further subdivided the same, registered the lands, an
d mortgaged portions thereof to Consolidated Bank and Bank of Cauayan. For failu
re to settle his debt, CB foreclosed the property. The successors-in-interest of
Gamiao and Dayag sought reconveyance. CB interposed that the mortgage must be r
espected. ISSUE: Who has a better title, Marquez or the successors-in-interest o
f Gamiao and Dayag HELD: The successors-in-interest of Gamiao and Dayag. While M
arquez was the 1st to register the lands under the Torrens System, Art. 1544 doe
s not apply as the double-multiple sales were not done by the single vendor—in thi
s case by the brothers on the one side and Gamiao and Dayag on the other. That b
eing the case,
24
23. ABRIGO v DE VERA FACTS: By virtue of a compromise agreement judicially appro
ved, Villafania sold to Rosenda and Rosita a house and lot. Unknown to them, Vil
lafania obtained a free patent over the said land and sold it to De Vera. On the
other hand, Rosenda and Rosita sold the property to the spouses Abrigo. Now De
Vera and Abrigo dispute ownership over the property—the former filing an ejectment
suit against the latter. ISSUE: Who has a better title, Abrigo or De Vera? HELD
: DE VERA. Abrigo registered the property under Act 3344, while De Vera register
ed the same under the Torrens System. Naturally, De Vera’s right prevails. Registr
ation must be done in the proper registry to bind the land. It was also proven t
hat De Vera acted in good faith considering that there was nothing in the certif
icate of title or the circumstances, which would have aroused suspicion and mand
ated her to make an inquiry. Registration under Act 3344 does not suffice to con
stitute constructive notice in order to negate the good faith of the registrant
under the Torrens System. De Vera’s right must be upheld. 25. CARUMBA v CA FACTS:
Canuto sold a parcel of land to Carumba by virtue of a Deed of Sale of Unregiste
red Land. The sale was never registered. Thereafter, Canuto was sued for collect
ion of money, and the said land was levied upon and sold to Balbuena, who regist
ered 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. B
albuena, the later vendee, merely steps into the shoes of the judgment debtor an
d acquires all the rights and interests of the latter. By the time the lot was s
old through the foreclosure proceedings, it was no longer owned by Canuto by vir
tue of a prior sale to Carumba— who has a better right.
26. ACABAL v ACABAL FACTS: Sps. Acabal sold their lot to their son Villaner Acab
al who in turn transferred it to his godson-nephew Leonardo Acabal. This was lat
er on sold to Leonardo and Ramon Nicolas hence a complaint was filed by Villaner
against them and his nephew arguing that what he signed was a Lease contract an
d not a sales contract. The RTC ruled in favor of Nicolas which was reversed by
the CA thus the case at bar. ISSUE: W/N there was a valid sale HELD: YES It is v
alid only insofar as 5/9 of the land is concerned. This is so because the proper
ty in question was bought during the pendency of the marriage of Villaner theref
ore it is presumed to belong to the conjugal partnership. Leonarda failed to pro
ve otherwise. Nevertheless, when Justiniana (wife) died, her share vested on her
8 children, and her husband vesting him with 5/9 share on the property. Since i
t is not yet partitioned, he cannot yet claim title to any definite portion of t
he property but only to his ideal, abstract or spiritual share. He may still dis
pose of the same for every co-owner has absolute ownership over his undivided in
terest in the co-owned property. However, he cannot dispose of the shares of his
co-owners based on nemo dat qui non habet. Since he sold it without the consent
of the other co-owners, the sale is still valid only insofar as his shares are
concerned. And the finding that both Leonardo and Villaner were in pari delicto,
the same is irrelevant because the property concerned is unregistered.
24. DAGUPAN TRADING CO v MACAM FACTS: Sammy Maron and his 7 brothers were co-own
ers of a parcel of land for which they applied for registration. Pending the pro
ceedings, they sold the same to Macam, who thereafter introduced substantial imp
rovements thereon. Later on, the property was levied upon and sold in favor of D
agupan Trading, which thereafter registered the Sheriff’s Final Certificate of Sal
e ISSUE: Who has a better right, Macam or Dagupan? HELD: MACAM. In this case, th
e sale in favor of Macam was executed before the land was registered, while the
sale in favor of Dagupan was made after the registration. In such a case, the Ru
les of Court will apply such that the delivery of the Sheriff’s Final Certificate
of Sale in favor of Dagupan merely substitutes the latter into the shoes of the
seller Maron and acquires all rights, interests, and claims of the latter. Consi
dering that at the time of the levy, Maron was no longer the owner of the land,
then no title can thereafter pass in favor of Dagupan. Macam’s title is thus susta
ined.
25
SALE BY NON-OWNER/BY ONE HAVING VOIDABLE TITLE: LIFE OF A CONTRACT OF SALE
1. PAULMITAN v CA also sell their undivided share in the co-ownership. Otherwise
, the properties sold would be subject to a partition, which cannot happen to th
e properties in this case. School equipment, as well as the buildings, are indiv
isible. Thus, they cannot be subject to partition.
FACTS: When Agatona died, she was succeeded by 2 sons: Pascual and Donato. She l
eft 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, execute
d an affidavit of Declaration of Heirship—unilaterally adjudicating one of the lot
s 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 J
uliana later redeemed the property. The Heirs of Pascual then surfaced and sough
t to partition the property. ISSUE: W/N Juliana became the owner of the entire l
ot upon her redemption of the property HELD: NO.From the moment of Agatona’s death
, her heirs, Pascual and Donato, became co-owners of the undivided lot. When Don
ato 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 the
reof and transferred only his undivided share. If a co-owner alienates the entir
e property without the consent of the other co-owners, the sale will affect only
his share. Thus, only ½ undivided share passed on to Juliana. The fact that Julia
na redeemed the property does not operate to terminate the co-ownership. It mere
ly entitles her to reimbursement from the other coowners—redemption being a necess
ary expense. Until reimbursement, Juliana holds a lien upon the lot for the amou
nt due to her. However, a partition is in order.
3.
BUCTON v GABAR
FACTS: Josefina bought a parcel of land from Villarin. By verbal agreement, Jose
fina sold a ½ portion thereof to Nicanora for P3,000. Nicanora paid P1,000 then P4
00—all evidence by receipts—then she loaned Josefina P1,000 and thereafter along wit
h her spouse, took possession of the lot and built their house as well as apartm
ents thereon. Villarin then issued a Deed of Sale to Josefina, but the latter re
fused to execute the corresponding Deed of Sale to Nicanora. Josefina claimed th
at the amounts paid by Nicanora were in the concept of loans. Thus, Nicanora fil
ed a case for specific performance. ISSUE: W/N there was a sale between Josefina
and Nicanora HELD: YES. Assuming that at the time when Josefina sold the lot to
Nicanora, she was not yet the owner thereof. When Villarin executed the Deed of
Sale in her favor, title passed to Nicanora by operation of law. Although the s
ale between Josefina and Nicanora was verbal, it was as between them. Considerin
g that Nicanora has paid the purchase price, she became owner of ½ of the lot. Lik
ewise, although the complaint was titled “specific performance” it was actually one
for quieting of title, which is imprescriptible so long as the plaintiff is in p
ossession of the lot.
2.
MINDANAO v YAP 4. CITY OF MANILA v BUGSUK LUMBER
FACTS: Rosenda and Sotero were among co-owners of 3 parcels 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 educationa
l equipment within the said properties, which were actually owned by Mindanao Ac
ademy. Mindanao Academy and the other co-owners assailed the validity of the sal
e. The trial court declared the sale null and void. Yap contends that Erlinda, o
ne of the co-owners owning 5/12 share of the co-ownership, does not have the sta
nding 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 ca
nnot be partitioned/subdivided. In this case, aside from the fact that Rosenda a
nd Sotero cannot sell the entire property including the school equipment, they c
annot
FACTS: Bugsuk Lumber had an office in Manila. The City Treasurer assessed it for
license fees and mayor’s permit—alleging that Bugsuk sold at wholesale and retail t
o different lumber dealers in Manila. Bugsuk refused to pay alleging that the lu
mber it produced were delivered directly from the shipper to the buyer, that the
y paid the appropriate Timber License Fees and that their Manila Office only rec
eived orders and accepted payments. Bugsuk alleges that it is not a dealer and i
ts office is not a store to warrant the imposition of the additional taxes. ISSU
E: W/N Bugsuk is liable for the additional taxes HELD: NO. A dealer buys to sell
again; Bugsuk produced its own lumber from Palawan. Thus, it is not a dealer. I
ts Manila office is not a store as well. A store is a place where goods are kept
for sale—whether for retail or wholesale. The Manila office only processed the or
ders and payments; it did not keep goods therein or act as a
26
dealer or intermediary between the field office and the customers. Thus, it is n
ot liable for the said taxes. Tagatac was NOT unlawfully deprived within the con
text of the Civil Code. The sale between Feist and Tagatac was merely voidable—val
id until annulled. There was a valid transmission of ownership. The fact that Fe
ist did not pay only gives rise to an action to resolve the contract or demand p
ayment. When Feist sold the car to Sanchez, the sale between him and Tagatac was
still valid; therefore, good title passed to Sanchez. As between 2 innocent par
ties, the one who made possible the injury must bear the loss.
5.
SUN BROS. & CO. v VELASCO
FACTS: Sun Brothers sold an Admiral Refrigerator to Lopez upon the agreement tha
t ownership will only pass to the latter upon payment of the full purchase price
. Lopez paid only the downpayment and sold the same to JV Trading (owned by Vela
sco) and was displayed in the latter’s store. It was thereafter bought by CO Kang
Chiu from JV Trading. Sun Brothers sought to recover the refrigerator. ISSUE: W/
N Sun Brothers may recover the thing HELD: NO. It is true that where a person wh
o is not the owner of a thing sells the same, the buyer acquires no better title
than the seller has. In this case. Lopez obviously had no title to the goods fo
r having failed to pay the full price. It only follows that JV Trading had no ti
tle thereto as Velasco was not in good faith. He should have inquired if Lopez h
ad good title to it—the same not being engaged in the business of selling applianc
es. HOWEVER, when the refrigerator passed to Co Kang Chiu, the latter acquired v
alid title thereto. The exception to the foregoing rule is the purchase in good
faith in a merchant store or a fair or a market. This rule fosters stability to
commerce and business transactions. Co Kang Chiu purchased the refrigerator in a
merchant store—and for value and in good faith. Thus, he is protected by the law.
Sun Brothers would not be entitled to recover the refrigerator—not even if they p
ay its value—since they were not deprived of the same unlawfully. Lopez is the one
who should be liable to Sun Brothers for the full purchase price of the ref.
7.
EDCA PUBLISHING v SANTOS
FACTS: EDCA sold books to Tomas dela Pena who fraudulently represented himself t
o be Prof. Jose Cruz, a Dean of DLSU. EDCA delivered him the books, the check To
mas issued was dishonored because he did not have an account at all. Tomas there
after sold the books at a discount to Leonor Santos. EDCA, with the aid of the p
olice, stormed the Santos Bookstore to retrieve the books. ISSUE: W/N EDCA may r
etrieve the books from Santos HELD: NO. Ownership of the books passed to Tomas u
pon the delivery thereof. He had the right to transfer the same to Santos. The f
act that he did not pay for the books only warrants rescission or an action for
payment. EDCA cannot be considered to have been unlawfully deprived under the CC
as to warrant recovery of the books from Santos. Possession of movable property
acquired in good faith is equivalent to title. Santos was a buyer in good faith
, thus he is protected by the law.
8. 6. TAGATAC v JIMENEZ
AZNAR v YAPDIANGCO
FACTS: Tagatac bought a car abroad and brought it to the Philippines. Warner Fei
st deceived her into believing that he was very rich and purchased her car. She
delivered possession thereof. Levy (another name of Feist) issued her a postdate
d check, which was dishonored. Feist then disappeared with the car. Feist was ab
le to register the car in his name and eventually sold the car to Sanchez, who t
hen sold the same to Jimenez. Jimenez even labored to verify the car’s records wit
h Motor Vehicle Office. Jimenez then delivered the car to California Car Exchang
e for display. Tagatac, upon finding out, sought to recover the car, but Jimenez
refused. ISSUE: W/N Jimenez may refuse to give the car back HELD: YES. Jimenez
was a buyer in good faith of the car—he had no knowledge of any defect in the titl
e of the seller. It is true that one who has lost any movable or has been unlawf
ully deprived thereof may recover the same from the possessor. However, in this
case,
FACTS: Teodoro advertised for sale his Ford Fairlane car. De Dios approached the
m purporting to be a nephew of Marella. Teodoro transacted with Marella who agre
ed to buy the car, agreeing to pay the same only after the car has been register
ed in his name. The Deed was registered in his name, but Marella has yet to pay
so the documents were not delivered to him, he pleaded with Ireneo, Teodoro’s son,
that they proceed to Marella’s sister to secure the shortage of cash. Ireneo agre
ed. They proceeded thereto, Ireneo was accompanied by De Dios and an anonymous p
erson. De Dios was able to induce Ireneo to hand over the documents under the pr
etext that he will show them to his lawyer, Ireneo agreed. De Dios made Ireneo w
ait and thereafter escaped with the car and the deed. Marella was then able to s
ell the car to Aznar. The police thereafter seized the car in Aznar’s possession.
Aznar countered with a complaint for Replevin. ISSUE: W/N Teodoro may recover th
e car from Aznar HELD: YES. Teodoro was clearly unlawfully deprived of the car.
There was no valid delivery to Marella, hence the latter acquired no title to th
e car. Delivery must be
27
coupled with intent. That being the case, Teodoro has the right to claim the car
not only from the thief, but also from 3rd persons who may have acquired it in
good faith. The buyer would only be entitled to reimbursement if he purchased th
e same in good faith from a public sale. Dominador Dizon for the return of the r
ing pledged but refused to return the ring thus the case filed by Lourdes. The C
FI issued a writ of replevin so Lourdes was able to have possession of the ring
during the pendency of the case. The CFI also ruled in her favor which was affir
med by the CA on appeal. Thus the case at bar. ISSUE: W/N the CA erred in ruling
that Lourdes has a right to possession of the ring HELD: NO It reiterated the r
uling in de Garcia v. CA, that the controlling provision is Art. 559 of the CC w
hich states that the possession ofmovable property acquired in good faith is equ
ivalent to a title. Nevertheless, one who has lost any movable or has been unlaw
fully deprived thereof may recover it from the person in possession of the same.
If the possessor of a movable lost of which the owner has been unlawfully depri
ved, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor. Lourdes, being unlawfully d
eprived of her ring thus she has a right to recover it from the current possesso
r. Dizon is engaged in a business where presumably ordinary prudence would requi
re him to inquire whether or not an individual who is offering the jewelry by pl
edge is entitled to do so. The principle of estoppel cannot help him at all. Sin
ce there was no precaution availed of, perhaps because of the difficulty of resi
sting opportunity for profit, he only has himself to blame and should be the las
t to complain if the right of the true owner of the jewelry should be recognized
. Other issues raised: 1. Principle of estoppel = has its roots in equity, moral
right and natural justice. For estoppel to exist, there must be a declaration,
act or omission by the party who is sought to be bound. A party should not be pe
rmitted to go against his own acts to the prejudice of another. Concurring opini
on by J. Teehankee: Interpretation of the “unlawfully deprived” in Art. 559 of the C
C. It is understood to include all cases where there has been no valid transmiss
ion of ownership. If our legislature intended interpretation to be that of the F
rench Code, it certainly would have adopted and used a narrower term than the br
oad language of Art. 559 (formerly 464) and the accepted meaning in accordance w
ith our jurisprudence.
9.
CRUZ v PAHATI
FACTS: Jose Cruz delivered his car to Belizo for the latter to sell the same. Be
lizo forged the letter of Cruz to the Motor Section of the Bureau of Public Work
s and converted the same into a Deed of Sale. Using the forged deed, he had the
car registered in his name. Thereafter, Belizo sold the car to Bulahan, who in t
urn sold the same to Pahati. However, the car was impounded by the police, and t
he sale to Pahati was cancelled. Bulahan now contends that between 2 innocent pa
rties (Bulahan and Cruz), the person who made possible the injury must bear the
loss—in this case, supposedly Cruz. ISSUE: W/N Cruz may recover the car from Bulah
an HELD: YES. It is true that both Bulahan and Cruz acted in good faith. One who
has lost a movable or had been deprived of the same may recover it from the pos
sessor. This rule applies squarely to this case. Thus, since Cruz was unlawfully
deprived by Belizo through the latter’s artifice, he is entitled to recover the s
ame even against a subsequent purchaser in good faith. The only exception to thi
s rule is if the purchaser acquired the same from a public sale—in which case, rei
mbursement is in order. It was, in fact, Bulahan who acted negligently in failin
g to detect the forged Deed of Sale.
10. DIZON v SUNTAY FACTS: Lourdes Suntay is the owner of a 3-carat diamond ring
valued at P5,500. She and Clarita Sison entered into a transaction wherein the r
ing would be sold on commission. Clarita received the ring and issued a receipt.
After some time, Lourdes made demands for the return of the ring but the latter
refused to comply. When Lourdes insisted on the return, Clarita gave her the pa
wnshop ticket which is the receipt of the pledge and she found out that 3 days a
fter the ring was received by Clarita, it was pledged by Melia Sison, the niece
of Clarita’s husband in connivance with Clarita with the pawnshop of Dominador Diz
on for P2,600. Lourdes then filed an estafa case. She then asked
28
LOSS, DETERIORATION, FRUITS AND OTHER BENEFITS
1. ROMAN v GRIMALT 2. LAWYERS COOPERATIVE PUBLISHING v TABORA
FACTS: Grimalt transacted with Roman for the purchase of a “schooner” called the San
ta Marina. The sale was predicted upon the condition that it was seaworthy and t
hat Roman would perfect his title thereto—the same being registered to Paulina Gir
on. Only of the said conditions were complied with will Grimalt purchase the sam
e. The terms of payment were likewise agreed upon. Roman did nothing to perfect
his title; then due to a severe storm, the vessel sank. Roman now sues Grimalt f
or the purchase price of the vessel. ISSUE: W/N Grimalt is liable for the loss H
ELD: NO. There was yet to be a perfected contract between them for the failure o
f Roman to perfect his title. That being the case, the loss is for the account o
f Roman as the owner thereof.
FACTS: Tabora purchased volumes of AmJur from Lawyers Coop. The agreement was fo
r ownership to remain with Lawyers Coop until payment of the full price. “Loss or
damage to the goods after delivery to the buyer is for the account of the latter
.” The books were delivered to his office; that same night, his office was razed b
y fire. Tabora failed to pay the full purchase price. Now Lawyers Coop sues him
for the balance. Tabora invokes force majeure. ISSUE: Who bears the loss? HELD:
TABORA. While it is true that generally, loss is for the account of the owner, t
he same does not apply here because the parties themselves have expressly stipul
ated that loss, after delivery to the buyer, are for the account of the latter.
Besides, the stipulation retaining ownership to the seller is intended merely to
secure payment by the buyer. Likewise, the obligation of Tabora consists of the
delivery not a determinate thing, but a generic thing—money. Thus, he is not abso
lved from liability.
REMEDIES FOR BREACH OF CONTRACT OF SALE
1. LEVY v GERVACIO balance payable in 24 installments. Title to the property rem
ained with Delta until the payment of the full purchase price. Under the agreeme
nt, failure to pay 2 monthly installments makes the obligation entirely due and
demandable. The units were delivered, Niu failed to pay. Thus, Delta filed a com
plaint for Replevin and applied the installments paid by Niu as rentals; Niu con
tends that the contractual stipulations are unconscionable. ISSUE: W/N the uncon
scionable remedy Delta availed of was
FACTS: Levy Hermanos sold a Packard car to Lazaro Gervacio. Gervacio made an ini
tial payment and executed a promissory note for the balance of P2,400. He failed
to pay the note at maturity date so Levy Hermanos foreclosed the mortgage and b
ought it at the public auction for P800. Levy Hermanos then filed a complaint fo
r the collection of the remaining balance and interest. CFI ruled in favor of Ge
rvacio finding that Levy can no longer recover the unpaid balance once he has ch
osen foreclosure. Thus the case at bar. ISSUE: W/N Levy Hermanos can still colle
ct the balance HELD: YES In order to apply Art. 1454-A of the CC, there must be
(1) a contract of sale of personal property payable in installments and (2) ther
e has been a failure to pay 2 or more installments. In the case at bar, although
it is a sale of personal property, it is not payable in installments. It is pay
able in a straight term in which the balance should be paid in its totality at m
aturity date of the PN, therefore the prohibition does not apply.
HELD: NO. A stipulation in the contract treating installments as rentals in case
of failure to pay is VALID—so long as they are not unconscionable. The provision
in this case is reasonable. An unpaid seller has 3 alternative (not cumulative)
remedies: (1) exact fulfillment of the obligation, (2) cancel the sale for defau
lt in 2 installments, and (3) foreclose the chattel mortgage (if any) but the se
ller cannot anymore claim the unpaid balance of the price. Delta chose the 2nd r
emedy. Having done so, it is now barred from claiming the balance of the purchas
e price.
3. 2. DELTA MOTOR SALES CORP. v NIU KIM DUAN
TAJANLANGIT v SOUTHERN MOTORS
FACTS: Niu Kim Duan purchased from Delta Motors 3 air conditioning units. Niu pa
id the downpayment, the
FACTS: Tajanlangit bought 2 tractors and a thresher from Southern Motors. They e
xecuted a promissory note in payment thereof; it contained an acceleration claus
e. Tajanlangit failed to pay any of the stipulated
29
installments. Thus, Southern Motors sued him on the PN. The sheriff levied upon
the properties of Tajanlangit (same machineries) and sold them at a public aucti
on to satisfy the debt. Southern Motors now prayed for execution. Tajanlangit so
ught to annul the writ of execution—claiming that since Southern Motors repossesse
d the machineries (mortgaged), he was therefore relieved from liability on the b
alance of the purchase price. ISSUE: W/N Tajanlangit is relieved from his obliga
tion to pay HELD: NO. While it is true that the foreclosure on the chattel mortg
age on the thing sold bars further action for the recovery of the balance of the
purchase price, this does not apply in this case since Southern did not foreclo
se on the mortgage but insteas sued based on the PNs exclusively. That being the
case, it is not limited to the proceeds of the sale on execution of the mortgag
ed goods and may claim the balance from Tajanlangit. HELD: NO. When the unpaid s
eller forecloses on the mortgage, the law precludes him from bringing further ac
tions against the vendee for whatever balance, which was not satisfied by the fi
rst foreclosure. By choosing to foreclose on the Ford sedans, Filinvest renounce
d all other rights which it might have had under the PN; it must content itself
with the proceeds of the sale of the sedans at the public auction.
6.
ZAYAS v LUNETA MOTORS
FACTS: Zayas purchased a Ford Thames Freighter from Escano Enterprises, the deal
er of Luneta Motor Co. The unit was delivered and Zayas issued a PN payable in 2
6 installments secured by a chattel mortgage over the subject motor vehicle. Zay
as failed to pay, thus Luneta extra-judicially foreclosed on the mortgage and wa
s the highest bidder. However, considering that the proceeds of the sale was ins
ufficient to cover the debt, Luneta filed a case for the recovery of the balance
of the purchase price. Zayas refused to pay. ISSUE: W/N Luneta may still recove
r the balance HELD: NO. When the unpaid seller forecloses on the mortgage, the l
aw precludes him from bringing further actions against the vendee for whatever b
alance, which was not satisfied from the foreclosure. Luneta contends that Escan
o Enterprises is a different and distinct entity and maintains that its contract
with Zayas was a loan. This is unsubstantiated as the agency relationship betwe
en Luneta and Escano is clear. Nevertheless, assuming that they were distinct en
tities, the nature of the transaction remains the same. If Escano assigned its r
ight to Luneta, the latter merely acquires the rights of the formers—hence, Art. 1
484 of the CC would likewise be inapplicable.
4.
NONATO v IAC
FACTS: Nonato spouses purchased from People’s Car a Volkwagen car. They issued a P
N with chattel mortgage. People’s Car thereafter assigned its rights to the note t
o Investors Finance. The Nonatos defaulted, thus Investors Finance repossessed t
he car and demanded the payment of the balance of the purchase price. ISSUE: W/N
Investors Finance may still demand for the payment of the balance when it repos
sessed the car HELD: NO. The remedies contemplated under Art. 1484 are ALTERNATI
VE—not cumulative. Investors Finance in effect cancelled the sale and it cannot no
w claim the balance of the purchase price. When it took possession of the car, i
t gave the spouses 15 days to redeem the car. This could mean that their failure
to do so would constrain the company to retain the permanent possession of the
car. There was no attempt at all the return the car—thus, it is untrue that the sa
me was retained merely for appraisal.
7.
NORTHERN MOTORS v SAPINOSO
5.
RIDAD v FILIPINAS INVESTMENT (Filinvest)
FACTS: Ridad purchased from Supreme Sales 2 Ford Consul Sedans, payable in 24 in
stallments, for which he executed a PN with chattel mortgage over the said prope
rty. Another chattel mortgage was executed this time upon a separate Chevy car,
and another one upon the franchise to operate taxi cabs. Supreme Sales thereafte
r assigned its rights under the PN to Filinvest. Ridad defaulted and Filinvest f
oreclosed on the mortgage. It was the highest bidder for the foreclosure sale of
the sedans. But unable to fully satisfy the debt, it also foreclosed the Chevy
and the franchise. ISSUE: W/N Filinvest may still foreclose the Chevy and the fr
anchise to fully satisfy the debt
FACTS: • Respondent Casiano Sapinoso purchased from petitioner Northern Motors an
Opel Kadett car for P12,171 making a downpayment and executing a promissory note
for the balance of P10,540 payable in installments • To secure the payment of the
note, Sapinoso executed in favor of Northern Motors a chattel mortgage on the c
ar; the mortgage provided among others that upon Sapinoso’s default in payment of
any part of the principal or interest, Northern Motors may elect any of the ff.
remedies (a) sale of the car by Northern (b) cancellation of the sale to Sapinos
o (c) extrajudicial foreclosure (d) ordinary civil action for fulfillment of the
mortgage contract; additionally, whichever remedy is chosen, Sapinoso waives hi
s right to reimbursement of any and all amounts on the principal and interest al
ready paid • Sapinoso failed to pay the first 5 installments due from August-Novem
ber 1965; he made payments though on November and December and on April the next
year but failed to make subsequent payments
30
• Northern Motors filed a complaint stating that it was availing of the option of
extrajudically foreclosing the mortgage and prayed that (a) a writ of replevin b
e issued upon its filing of a bond (b) it be declared to have the rightful posse
ssion of the car (c) in default of delivery, Sapinoso be ordered to pay the bala
nce with interest • Subsequent to the commencement of the action but before filing
of his answer, Sapinoso made 2 payments amounting to P1,250 on the promissory n
ote; in the meantime, a writ of replevin was issued and the car was turned over
to Northern Motors • Sapinoso claimed that he withheld payments because the car wa
s defective and Northern Motors failed to fix it despite his repeated demands TR
IAL COURT RULING • Northern Motors had the right to foreclose the chattel mortgage
with Sapinoso failing to pay more than 2 installments • However, the foreclosure
and the recovery of unpaid balance are alternative remedies which may not be pur
sued conjunctively; Northern Motors thereby renounced whatever claim it had on t
he promissory note • Ordered Northern Motors to return of the P1,250 which it had
received from Sapinoso after filing the case and electing to foreclose ISSUE: W/
N as under Article 1484 of the Civil Code,21 plaintiff Northern Motors is barred
from recovering unpaid balance of the debt having elected to foreclose on the c
hattel mortgage. – NO. HELD: • In issuing the writ of replevin and upholding after t
rial the right to possession of the car by Northern Motors, the court below corr
ectly considered the action as one of replevin to secure possession of the car a
s preliminary step to a foreclosure sale • The court below however erred in conclu
ding that the legal effect of the action was to bar Northern Motors from accepti
ng further payments on the promissory note • It is the fact of foreclosure and act
ual sale of the mortgaged chattel that bars further recovery by the vendor of an
y balance on the vendee’s outstanding obligation not satisfied by the sale • In the
present case, there is no occasion to apply the restrictive provision of Article
1484 as there has not yet been a foreclosure sale resulting in a deficiency • A m
ortgage creditor before the actual foreclosure sale is not precluded from recove
ring the unpaid balance although he has filed for replevin for the purpose of ex
trajudicial foreclosure • Also, a mortgage creditor who has elected to foreclose b
ut subsequently desists from proceeding with the auction sale without gaining an
y advantage and without causing any disadvantage to the mortgagor is not barred
from suing on the unpaid account • And as applicable here, a mortgage creditor is
not barred from accepting before a foreclosure sale payments voluntarily tendere
d by the debtor-mortgagor who admits indebtedness. 8. CRUZ v FILIPINAS INVESTMEN
T & FINANCE CORP. FACTS: Ruperto Cruz bought a bus from Far East Motor Corp whic
h was payable on installments of P1,487.20/month for 30 months with 12% interest
. Cruz executed a PN in the sum of the purchase price. To secure the paypent of
the PN, Cruz executed a chattel mortgage on the bus. Since no downpayment was ma
de, Far East required Cruz to execute another security and for the a REM was exe
cuted on the land and building of Mrs. Reyes which at that time was mortgaged to
DBP. Far East then assigned all its rights and indorsed the PN to Filipinas Inv
estment and Financing Corp. Cruz defaulted in payment of the PN with only P500 b
eing ever paid. Filipinas had the chattel mortgage foreclosed and it was the hig
hest bidder at the foreclosure sale. However, the proceeds were not sufficient t
o cover the balance so it paid the indebtedness of Mrs. Reyes and requested that
it be sold at foreclosure sale as well. Thus Cruz and Mrs. Reyes filed an actio
n with the CFI to have the REM constituted on her land cancelled. The CFI ruled
in favor of Cruz and Reyes finding that the extrajudicial foreclosure barred fur
ther action for recovery thus the case at bar. ISSUE: W/N recovery from an addit
ional security is included in the prohibition thus allowing Filipinas to recover
the balance HELD: NO Art. 1484 provides that when in a (1) a sale of personal p
roperty and (2) payable on installments there was default in payment of 2 or mor
e installments, the remedies of the seller are: 1. To exact fulfillment of the o
bligation, should the vendor fail to pay 2. Cancel the sale, 3. Foreclose the ch
attel mortgage on the thing sold, if one has been constituted, should the vendee’s
failure to pay cover 2 or more installments. In this case, he shall have no fur
ther action against the purchaser to recover any unpaid balance of the price. x
x x It has been held that these remedies are alternative thus the exercise of on
e bars the exercise of the others. This is so to prevent he abuses committed in
connection with foreclosure mortgages wherein the mortgagees would seize the mor
tgaged property and buying them at a very low price at the sale and then bringin
g suit for collection of the unpaid balance resulting in the mortgagor still lia
ble to pay his original debt plus losing the property. To allow Filipinas to rec
over thru the additional security would result in a circumvention of the law. Sh
ould the guarantor be compelled to pay the balance then the guarantor would be e
ntitled to recover from the debtor-vendee. In the end, it would still be the deb
tor-vendee who would bear the payment of the purchase price. Also, the word “actio
n” in Art. 1484 covers all types of legal demand of one’s right whether judicial or
extrajudicial thus the barring effect applies to an extrajudicial foreclosure.
31
• The car was worth 13,371 of which 1,160 was paid upon delivery, and the remainin
g balance to be paid in 24 monthly installments. A promissory note and chattel m
ortgage were executed by the Ridad’s to ensure fulfillment of their obligation. • Th
e Ridad Spouses failed to pay the last 5 installments, which prompted Filipinas
to file a replevin suit in the city court of Manila, or in the alternative, to r
ecover the unpaid balance if delivery could not be effected. • The complaint of Fi
lipinas stated that there was an unjustifiable failure and refusal of the Ridad
Spouses to surrender the car for foreclosure. The sheriff was able to seize the
car and sell it in a public auction. • The Ridad Spouses were declared in default
during these proceedings due to their alleged non-receipt of summons; and the or
der of default included an order to pay Filipinas 500 for attorney’s fees and 163
for expenses incurred in seizing the car. (this is what the case is about) • Their
motion to set aside the order of default was denied by the city court of Manila
, thus the Ridad’s appealed to the CFI Manila. The CFI said that the only issue to
be resolved was with regard to the atty’s fees and the expenses incurred due to t
he seizure of the car. It ruled that Filipinas was entitled to recover both amou
nts; for the seizure of the car, and the lowered the attys fees of 300. • This dec
ision was appealed to the SC RIDAD SPOUSES’ CONTENTIONS • Pursuant to Art 148422 (sp
ecifically #3) Filipinas, by opting to foreclose the chattel mortgage renounced
all rights it had under the promissory note, as well as payment for the unpaid b
alance, including any amount it would be entitled to under this action, such as
atty’s fees and costs of suit. FILIPINAS’ CONTENTIONS: • They are entitled to an award
for atty’s fees and costs of suit by virtue of the unjustifiable failure and refu
sal of the Ridad Spouses to comply with their obligations. • What 1484 prohibit is
the recovery of the unpaid balance by means of another replevin suit. ISSUE: Wh
ether under Art 1484 (the Recto Law) Fiipinas is entitled to the award for attor
neys fees and expenses incurred due to the seizure of the car. – Yes, but with cer
tain qualifications. HELD: Art 1484 is called the Recto Law, and was created to
protect mortgagors from mortgagees who wanted to unjustly enrich themselves. No.
3 of Art 1484, discussing the right to foreclose, means that if the vendor opts
for this remedy he shall have no further action to recover any unpaid balance o
f the same. The decided case of Macondray & Co. v Estaquio has almost the exact
facts and deals with the same issue of this case. In Macondray, it was ruled tha
t “the words ‘unpaid balance’ in no. 3 of art 1848 refer to the deficiency judgement w
hich the mortgagee may be entitled to, when after the public auction of the mort
gaged chattel, the proceeds are insufficient to cover the full amount of the sec
ured obligation, which
32
9.
BORBON II v SERVICEWIDE SPECIALISTS INC.
FACTS: Daniel and Francisco Borbon issued a PN in favor of Pangasinan Auto Mart
for the purchase of certain chattels. It was secured by a chattel mortgage. The
rights under the note were assigned to Filinvest, which later assigned said righ
ts to Servicewide. The Borbons failed to pay, thus the mortgages were foreclosed
. The Borbons aver that the seller delivered chattels not strictly in accord wit
h their instructions; nonetheless, they cannot evade liability because the notes
have passed to holders for value and in good faith. The trial court sustained t
he foreclosure but awarded liquidated damages and attorney’s fees in addition to t
he proceeds of the auction sale. ISSUE: W/N it was proper for the trial court to
award liquidated damages and attorney’s fees in addition to the proceeds of the a
uction sale HELD: NO. First, when a person assigns credits to another, the latte
r is bound under the same law; thus, Art. 1484 is equally applicable. In case of
foreclosure, the legislative intent is not merely to limit the proscription to
collecting the unpaid balance of the debt but also to other claims including cos
ts of litigation and attorney’s fees. That being the case, the SC struck down the
award of liquidated damages, but considering the facts of the case, the award of
attorney’s fees is reasonable and sustained.
10. MACONDRAY & CO v EUSTAQUIO FACTS: Eustaquio bought a De Soto car from Macond
ray for which he executed a PN, payable in installments, with a stipulation of a
ttorney’s fees, expenses for collection, and other costs. It was secured by a chat
tel mortgage over the said car. As usual Eustaquio failed to pay, and Macondray
foreclosed on the mortgage. However, there remained a balance of some P340 for w
hich Macondray sues Eustaquio. Macondray also contends that at least the stipula
ted interests and attorney’s fees must be claimable. ISSUE: W/N Macondray may stil
l claim the interests and attorney’s fees stipulated HELD: NO. If the seller avail
s of his right to foreclose on the mortgage, he can no longer bring an action ag
ainst the buyer for the unpaid balance—this includes all the obligations such as a
ttorney’s fees, stipulated interests, expenses of collection and other costs.
11. FILIPINAS INVESTMENT & FINANCE CORP v RIDAD FACTS: • The RIDAD SPOUSES purchas
ed a Ford Consul Sedan from Supreme Sales and Dev’t. Corp. Supreme Sales was the a
ssignor-in-interest of FILIPINAS Investment and Finance, appellees herein.
include… attorneys fees and costs of suit. Were it the intention of legislature to
limit its meaning to the unpaid balance of the principal, it would have so stat
ed.” In other words, the mortgagee is limited to the property mortgaged and is not
entitled to attys fees and costs of suit. Such doctrine prevents the circumvent
ion of the Recto Law. Prior to its enactment, sellers unjustly enriched themselv
es at the expense of their buyers; by recovering the goods sold upon default of
installment payers, by retaining the amounts already paid, and by claiming for d
amages. Looking at the doctrine of Macondray, it appears that in no instance may
the mortgagee recover any sum from the mortgagor after the foreclosure of the m
ortgage. But although the court agrees with the above stated doctrine, it seems
that the mortgagees are not protected against perverse mortgagors. Examples of p
erverse mortgagors are those who deceitfully hide their mortgaged movables, or u
pon default of payment, refuse to give up its possession for foreclosure. When t
he mortgagor does these acts, the mortgagee has no choice but to institute a sui
t for replevin to recover possession of the chattel and enforce his rights over
such. It logically follows that the necessary expenses incurred by the mortgagee
to regain possession of what he had a right to possess should be borne by the m
ortgagor. Such recoverable expenses include attys fees, and expenses incurred in
seizing the chattel. In this case, the court found that the amounts awarded by
the lower court were reasonable. The ruling in this case, in so far as it confli
cts with previously established doctrines, is pro tanto qualified. and turn arou
nd to lease it to a client who gets, in addition, an option to purchase the prop
erty at the expiry of the lease period. In the case at bar, PCI acquired the off
ice equipments for their subsequent lease to Giraffe, with the latter undertakin
g to pay a monthly fixed rental for the whole 36 months. Giraffe made a guaranty
deposit. Their agreement was that in case Giraffe fails to pay any rental due,
PCI will have cumulative remedies, such as, to recover all rentals for the remai
ning term of the lease and recover all amounts advanced for Giraffe’s account. Whe
n PCI demanded for payment of the balance, it made a demand for either of the ch
oices. Either to pay the balance hence Giraffe can keep the equipment or surrend
er them if he cannot. The so-called monthly rentals were in fact monthly amortiz
ations of the price of the leased office equipment. The imperatives of equity, t
he contractual stipulations and the actuations of the parties, the SC has treate
d a purported financial lease as actually a sale of movable property on installm
ents and prevented recovery. The Lease Agreement is in reality a lease with an o
ption to purchase the equipment. This has been made manifest by the actions of P
CI itself. In choosing replevin, PCI waived its right to bring an action to reco
ver unpaid rentals.
13. LEGARDA v SALDANA FACTS: Saldana entered into a contract with Legarda Herman
os. Legarda agreed to sell 2 equal lots for P1,500 each, payable in 120 equal in
stallments over a period of 10 years at 10% per annum. Saldana paid 95 of the 12
0 installments over 8 years, which was recorded in his account with Legarda, but
without stating as to which lots the payments were made. The said account state
d that Saldana still owed 1,311.72 for the 2 lots, although he had already pain
more the P1,500, the value of one lot. After 5 years, Saldana contacted Legardo
Hermanos stating that he was interested in building a house on the lots, however
, he was prevented from doing such because Hermanos failed to introduce the stip
ulated improvements on the subdivision (roads to his lots). He further indicated
his intentions to continue his payments. In his reply, Legarda Hermanos said th
at since Saldana failed to complete the 120 payments in time, as they have previ
ously stipulated, all the amounts paid, together with the improvements on the pr
emises have been considered as rents paid and as payment for damages. Furthermor
e, the sale was cancelled. Saldana then filed an action demanding the delivery o
f the 2 lots and for the execution of the corresponding deed of conveyance after
payment of the outstanding balance. Subsequently, Legarda Hermanos partitioned
the subdivision among the brothers and sisters, and the two lots were among thos
e allotted to Jose Legarda (corespondent). The lower court sustained Legarda Her
manos’ cancellation of the contracts and dismissed Saldana’s
33
12. PCI LEASING AND FINANCE INC v GIRAFFE-X CREATIVE IMAGING INC FACTS: PCI Leas
ing and Giraffe entered into a Lease Agreement whereby PCI Leasing leased severa
l machineries for a rent of P116, 878. 21/month for 36 months and P181, 362/mont
h for 36 months for a total of P10, 736, 647.56. Giraffe paid the amount of P3,
120, 000 as guaranty deposit. However, after 1 year, Giraffe defaulted in its mo
nthly-rental payment obligations. After a 3-month default, PCI demanded a formal
pay-orsurrender-equipment type but the demand went unheeded thus PCI instituted
the instant case and prayed for the issuance for the writ of replevin. The tria
l court issued a writ of replevin. Giraffe filed a motion to dismiss arguing tha
t PCI was barred from pursuing any other claim since the seizure of the 2 leased
equipments because the contract was in reality a lease with option to buy. The
RTC granted the motion to dismiss ruling that it was akin to a contract covered
by art. 1485 hence can no longer pursue its claim. Hence the case at bar. ISSUE:
W/N the contract was covered by Art. 1485 and 1484 hence barred PCI from recove
ring HELD: YES A financial lease is one where a financing company would, in effe
ct, initially purchase a mobile equipment
complaint. The CA eventually reversed this. The CA ordered Legarda Hermanos to d
eliver to Saldana one of the two lots, at his option. Furthermore, Hermanos was
told to execute the deed of conveyance. ISSUE: Should the claim of Hermanos Lega
rda be upheld? He claims that the payment should be considered as rent and that
the sale should be cancelled? – No. HELD: The SC applied the principles of equity
and justice, as correctly held by the CA. considering that Saldana had already p
aid the total sum of P3,582.06 including interests, which is even more than the
value of the two lots. And even if the sum applied to the principal alone were t
o be considered, which was of the total of P1,682.28, the same was already more
than the value of one lot, which is P1,500.00. The only balance due on both lots
was P1,317.72, which was even less than the value of one lot. By this, the cour
t ruled that Saldana had already paid for at least one lot. And he is given the
choice as to which one. Even considering that Saldana as having defaulted after
February 1956, when he suspended payments after the 95th installment, he had as
of the already paid by way of principal (P1,682.28) more than the full value of
one lot (P1,500.00). Furthermore, regardless of the propriety of applying Articl
e 1592 thereto, Legarda Hermanos was not denied substantial justice. According t
o ART. 1234, “If the obligation has been substantially performed in good faith, th
e obligor may recover as though there had been a strict and complete fulfillment
, less damages suffered by the obligee,” and “that in the interest of justice and eq
uity, the decision appealed from may be upheld upon the authority of ART. 1234.” T
he Board of Commissioners of the HLURB only modified the award. The Office of th
e President adopted the findings of facts and conclusions of law by the Board th
us was elevated to the CA which likewise affirmed the decision of the OP. Hence,
the case at bar. ISSUE: W/N Pacifico has paid at least 2 years of installments
HELD: NO The total payments made by Pacifico amounted to P846, 600. What should
be used as divisor is the amount of the installment in the downpayment. The P750
, 000 downpayment was to be paid in 6 monthly installments therefore deducting i
t from what he paid, the remaining balance is P96,600. Pacifico was able to pay
the downpayment in 11 months after the last monthly installment was due. But he
failed to pay at least 2 years of installments therefore he is not entitled to a
refund of the cash surrender value of his payments under Sec. 3 of RA 6552. Wha
t is applicable is Sec 4 which provides that the buyer should be given a grace p
eriod of not less than 60 days and if he should still fail to do so, the seller
may cancel the contract after 30 days from receipt of the buyer of the notice of
cancellation. Pacifico admitted that the under the restructured scheme, the 1st
installment on the 70% balance of the purchase was due on Jan 5, 1998. Although
he issued checks to cover for them, the 1st 2 were dishonored. When he was noti
fied of the dishonor, he took no action hence the 60 day grace period lapsed. He
nce the cancellation was justified.
15. MCLAUGHLIN v CA 14. JESTRA DEV AND MANAGEMENT CORP v PACIFICO FACTS: Daniel
Pacifico signed a Reservation application with Fil-Estate Marketing Assn for the
purchase of a house nad lot and paid the reservation fee. The Reservation appli
cation contained the amounts to be paid in installments with interests. Unable t
o comply with the schedule of payments, Pacifico requested Jestra to allow him t
o make periodic payments which the latter granted. They later on executed a cont
ract to sell when the remaining balance was only P260K. Pacifico requested twice
for a restructuring of his unsettled obligation which Jestra granted subject to
certain conditions of additional penalties et al. As compliance to the conditio
n, Pacifico issued 12 postdated checks however he is unable to pay so he request
ed that he be allowed to dispose the property to recover his interest and he cou
ld recover the 12 post dated checks, which was this time was denied by Jestra. J
estra then sent a notarial notice of cancellation that they are giving him until
a certain date to pay or else the contract will be automatically cancelled. Pac
ifico then filed a complaint before the HLURB claiming that despite his full pay
ment of the downpayment, Jestra failed to deliver to him the property and instea
d sold it to another buyer. HRLURB Arbiter decided in Pacifico’s favor finding Jes
tra liable.
FACTS: Petitioner Luisa McLaughlin (seller) and private respondent Ramon Flores
(buyer) entered into a contract of conditional sale of real property. The total
purchase price is P140,000. P26,550 should be paid upon execution of the deed an
d the balance not later than May 31, 1977 with an interest of 1% per month until
fully paid. Flores failed to pay and hence petitioner filed a complaint for the
rescission of the deed of conditional sale. Eventually, the parties entered int
o a compromise agreement, which was accepted by the court. The parties agreed th
at Flores shall pay P50,000 upon signing of the agreement and the balance in 2 e
qual installments payable on June 30, 1980 and December 31, 1980. Flores also ag
reed to pay P1,000 monthly rental until the obligation is fully paid for the use
of the subject matter of the deed of conditional sale. They also agreed that in
the event Flores fails to comply with his obligations, the petitioner will be e
ntitled to the issuance of a writ of execution rescinding the deed of conditiona
l sale and all the payments made will be forfeited in favor of the plaintiff. On
October 15, 1980, petitioner wrote to Flores demanding payment of the balance o
n or before October 31. This demand included the installment due on June 30 and
December 31, 1980. On October 30, Flores sent a letter signifying his willingnes
s and intention to pay the
34
full balance. On November 7, petitioner filed a motion for writ of execution all
eging that Flores failed to pay the installment due on June 1980 and also failed
to pay the monthly rentals from that date. She prayed that the deed of conditio
nal sale be rescinded with forfeiture of all payments and payment of the monthly
rentals and eviction of Flores. The trial court granted the motion. On November
17, Flores filed a motion for reconsideration tendering at the same time a cert
ified manager’s check payable to petitioner and covering the entire obligation inc
luding the December 1980 installment. The trial court denied the motion. On appe
al, the CA ruled in favor of Flores holding that the delay in payment was not a
violation of an essential condition which would warrant a rescission since On No
vember 17 or just 17 days from the October 31 deadline set by petitioner, Flores
tendered the certified manager’s check and that it was inequitable for Flores to
forfeit all the payments made (P101,550). ISSUE: WHETHER it is inequitable to ca
ncel the contract and to have the amount paid by Flores be forfeited to petition
er particularly after Flores had tendered the certified manager’s check in full pa
yment of the obligation. – YES. HELD: There is already substantial compliance by F
lores with the compromise agreement. More importantly, the Maceda law recognizes
the vendor’s right to cancel the contract to sell upon the breach and nonpayment
of the stipulated installments but requires a grace period after at least 2 year
s of regular installment payments. But in cases where less than 2 years of insta
llments were paid, the seller shall give the buyer a grace period of not less th
an 60 days from the date the installment became due. If the buyer fails to pay t
he installments due at the expiration of the grace period, the seller may cancel
the contract after thirty days from the receipt by the buyer of the notice of t
he cancellation or the demand for rescission of the contract by a notarial act.
Assuming that under the terms of agreement the December 31 installment was due w
hen on October 15 petitioner demanded payment of the balance on or before Octobe
r 31, petitioner could cancel the contract after 30 days from the receipt by Flo
res of the notice of cancellation. Considering petitioner’s motion for execution f
iled on November 7 as a notice of cancellation, petitioner could cancel the cont
ract after 30 days from the receipt by Flores of said motion. Flores’ tender of pa
yment together with his motion for reconsideration on November 17 was well withi
n the 30 day period granted by law. The tender made by Flores of a certified ban
k manager’s check was a valid tender of payment. It covered the full amount of the
obligation. However, although he had made a valid tender of payment which prese
rved his rights as a vendee, he did not follow it with consignation or deposit o
f the sum due with the court. Hence he remains liable for the payment of his obl
igation because of his failure to deposit the amount due with the court.
REMEDY OF RESCISSION IN SALES CONTRACT COVERING IMMOVABLES: CONTRACT OF SALE VS.
CONTRACT TO SELL
1. ADELFA PROPERTIES INC v CA for annulment of the deed of sale in favor of Hous
ehold Corporation and recovery of ownership of the property. As a consequence, A
delfa Properties held payment of the full purchase price and suggested that they
settle the case with their nephews and nieces. In 1990, Adelfa Properties cause
d to be annotated on the TCT the exclusive option to purchase. On the same day,
Rosario and Salud executed a Deed of Conditional Sale in favor of Emylene Chua o
ver the same parcel of land for P3M, of which P1.5M was paid to the former on sa
id date, with the balance to be paid upon the transfer of title to the specified
1/2 portion. Atty. Bernardo wrote Rosario and Salud informing the latter that i
n view of the dismissal of the case against them, Adelfa Properties was willing
to pay the purchase price, and he requested that the corresponding deed of absol
ute sale be executed. This was ignored by Rosario and Salud. Jimenez’ counsel sent
a letter to Adelfa Properties enclosing therein a check for P25,000.00 represen
ting the refund of 50% of the option money paid under the exclusive option to pu
rchase. Rosario and Salud then requested Adelfa Properties to return the owner’s d
uplicate copy of the certificate of title of Salud Jimenez. Adelfa Properties fa
iled to surrender the certificate of title. Rosario and Salud Jimenez filed a pe
tition for the annulment of contract, while Emylene Chua, the subsequent purchas
er of the lot, filed a complaint in
35
FACTS: Rosario Jimenez-Castaneda, Salud Jimenez and their brothers, Jose and Dom
inador Jimenez, were the registered co-owners of a parcel of land in Las Piñas. In
1988, Jose and Dominador sold their share consisting of 1/2 of said parcel of l
and, specifically the eastern portion thereof, to Adelfa Properties. Subsequentl
y, a “Confirmatory Extrajudicial Partition Agreement” was executed by the Jimenezes,
wherein the eastern portion of the subject lot, was adjudicated to Jose and Dom
inador Jimenez, while the western portion was allocated to Rosario and Salud Jim
enez. Thereafter, Adelfa Properties expressed interest in buying the western por
tion of the property from Rosario and Salud. Accordingly, in 1989, an “Exclusive O
ption to Purchase” was executed between the parties, with the condition that the s
elling price shall be P2.86M, that the option money of P50,000 shall be credited
as partial payment upon the consummation of sale, that the balance is to be pai
d on or before 30 November 1989, and that in case of default by Adelfa Propertie
s to pay the balance, the option is cancelled and 50% of the option money shall
be forfeited and the other 50% refunded upon the sale of the property to a third
party. Meanwhile, a complaint was filed by the nephews and nieces of Rosario an
d Salud against Jose and Dominador
intervention. RTC ruled in favor of the Jimenezes and CA affirmed. ISSUE: W/N th
e contract between the Jimenezes and Adelfa Properties is an option contract HEL
D: NO. The alleged option contract is a contract to sell, rather than a contract
of sale. The distinction between the two is important for in contract of sale,
the title passes to the vendee upon the delivery of the thing sold; whereas in a
contract to sell, by agreement the ownership is reserved in the vendor and is n
ot to pass until the full payment of the price. In a contract of sale, the vendo
r has lost and cannot recover ownership until and unless the contract is resolve
d or rescinded; whereas in a contract to sell, title is retained by the vendor u
ntil the full payment of the price, such payment being a positive suspensive con
dition and failure of which is not a breach but an event that prevents the oblig
ation of the vendor to convey title from becoming effective. Thus, a deed of sal
e is considered absolute in nature where there is neither a stipulation in the d
eed that title to the property sold is reserved in the seller until the full pay
ment of the price, nor one giving the vendor the right to unilaterally resolve t
he contract the moment the buyer fails to pay within a fixed period. The parties
never intended to transfer ownership to Adelfa Properties to completion of paym
ent of the purchase price, this is inferred by the fact that the exclusive optio
n to purchase, although it provided for automatic rescission of the contract and
partial forfeiture of the amount already paid in case of default, does not ment
ion that Adelfa Properties is obliged to return possession or ownership of the p
roperty as a consequence of non-payment. There is no stipulation anent reversion
or reconveyance of the property in the event that petitioner does not comply wi
th its obligation. With the absence of such a stipulation, it may legally be inf
erred that there was an implied agreement that ownership shall not pass to the p
urchaser until he had fully paid the price. Article 1478 of the Civil Code does
not require that such a stipulation be expressly made. Consequently, an implied
stipulation to that effect is considered valid and binding and enforceable betwe
en the parties. A contract which contains this kind of stipulation is considered
a contract to sell. Moreover, that the parties really intended to execute a con
tract to sell is bolstered by the fact that the deed of absolute sale would have
been issued only upon the payment of the balance of the purchase price, as may
be gleaned from Adelfa Properties’ letter dated 16 April 1990 wherein it informed
the vendors that it “is now ready and willing to pay you simultaneously with the e
xecution of the corresponding deed of absolute sale.” sale as soon as it has been
transferred in their name. The balance of P1.19M is due upon the execution of th
e deed. When title to the property was finally transferred to their names, the C
oronels sold the property to Mabanag for P1.58M after she paid P300K dp. Because
of this, they cancelled and rescinded the contract with Alcaraz by returning th
e P50,00 dp. Alcaraz filed a complaint for specific performance against the Coro
nels and cause the annotation of a notice of lis pendens on the TCT. Mabanag, on
the other hand, caused the annotation of a notice of adverse claim with the RD.
However, the Coronels executed a Deed of Absolute Sale in favor Mabanag. RTC ru
led in favor of Alcaraz. CA affirmed. ISSUE: Whether the “receipt of downpayment” se
rves a contract to sell or a conditional contract of sale HELD: NO. The agreemen
t could not have been a contract to sell because the sellers made no express res
ervation of ownership or title to the subject parcel of land. Furthermore, the c
ircumstance, 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 establ
ished facts and circumstances of the case, had the certificate of title been in
the names of petitioners-sellers at that time, there would have been no reason w
hy an absolute contract of sale could not have been executed and consummated rig
ht there and then. Moreover, unlike in a contract to sell, petitioners did not m
erely promise to sell the property to private respondent upon the fulfillment of
the suspensive condition. On the contrary, having already agreed to sell the su
bject property, they undertook to have the certificate of title changed to their
names and immediately thereafter, to execute the written deed of absolute sale.
What is clearly established by the plain language of the subject document is th
at when the said “Receipt of Down Payment” was prepared and signed by petitioners, t
he parties had agreed to a conditional contract of sale, consummation of which i
s subject only to the successful transfer of the certificate of title from the n
ame of petitioners’ father to their names. The suspensive condition was fulfilled
on 6 February 1985 and thus, the conditional contract of sale between the partie
s became obligatory, the only act required for the consummation thereof being th
e delivery of the property by means of the execution of the deed of absolute sal
e in a public instrument, which petitioners unequivocally committed themselves t
o do as evidenced by the “Receipt of Down Payment.”
3.
PNB v CA
2.
CORONEL v CA
FACTS: In 1985, Coronel executed a document entitled "Receipt of Down Payment" i
n favor of Alcaraz for P50,000 dp of P1.24M as purchase price for an inherited h
ouse and lot promising to execute a deed of absolute
FACTS: • PNB owned a parcel of land which Lapaz Kaw Ngo offered to buy. Events und
er the first letter-agreement • PNB accepted Lapaz’s offer subject to certain stipul
ations. The important ones are the following: 1. The selling price shall be P5.4
million. Lapaz had already paid P100,000 as deposit.
36
2. Upon failure to pay the additional deposit worth P970,000, the P100,000 shall
be forfeited and PNB shall be authorized to sell the property to another. 3. Th
e property shall be cleared of its present tenants at the expense of Lapaz. 4. S
ale was subject to other terms and conditions to be imposed. • Lapaz agreed, so sh
e proceeded to clear the lot of its tenants at her own expense. • However, due to
difficulties in money, she requested for adjustment of payment proposals, which
the bank denied. PNB also reminded her that she had not yet sent her letter of c
onformity to the agreement reached and told her to pay the full price of P5.4mil
lion. If not, the lot will be sold to other parties. • Lapaz requested for a reduc
tion of the price as the size of the land was substantially reduced. PNB agreed.
• PNB still did not receive payment from Lapaz, and gave the latter the last chan
ce to pay the balance of the down payment. If she failed to pay, the sale shall
be cancelled and the P100,000 payment shall be forfeited. • Lapaz failed to pay, s
o P100,000 was forfeited and the sale never materialized. PNB leased the premise
s to a certain Rivera. • Lapaz requested for a refund of her deposit in the total
amount of P660,000 and asked that the forfeited P100,000 be reduced to P30,000.
PNB agreed. Events under the second letter-agreement • Lapaz requested for a reviv
al of the previously approved offer to PNB. PNB approved. • All conditions as in t
he first agreement were the same, except for the purchase price and deposit. The
price was P5.1million, the deposit was P200,000. • Lapaz refused, however, to con
form to the condition of vacating the premises at her expense as she had already
done so under the first agreement. (She apparently considered this second lette
r-agreement as a continuation of the first so she said that she was no longer re
quired to evict the tenants as she had already done so.) Besides, according to h
er, the occupants of the property were tenants of PNB. PNB refused this offer. •To
prevent the forfeiture of her P200,000 deposit, she signed the letter-agreement
. She told PNB that she was willing to pay the remaining deposit of P800K as lon
g as it was PNB who would clear the property. PNB refused, and forfeited the P20
0,000 of Lapaz. • PNB informed Lapaz that they had already decided to sell the pro
perty for not less than P7M. ISSUES: 1. Whether or not there was a perfected con
tract of sale. – No. There was no perfected contract of sale. 2. Whether or not th
e P100,000 or the P200,000 was earnest money. – No. They were not earnest money. H
ELD: • It is important to note that the first letter-agreement was cancelled and t
hereafter no longer existed. The second letter-agreement is not a contract of sa
le but a contract to sell whose conditions were not fulfilled, which prevented t
he obligations therein from obtaining obligatory force. • A contract to sell is on
e where the obligatory force of
the vendor’s obligation to transfer title is subordinated to a happening of a futu
re and uncertain event. So that if the suspensive condition does not take place,
the parties would stand as if the conditional obligation never existed. • In the
instant case, the second letter-agreement was replete with conditions that Lapaz
had to fulfill before the sale could be executed. The sale was dependent upon L
apaz’s compliance with certain conditions (i.e., payment, eviction of occupants).
It was stipulated in the contract that her failure to pay the additional deposit
would allow PNB to forfeit the price and allow them to sell the property to oth
er parties. • This stipulation took the nature of a reservation of title in the ve
ndor until full payment of the purchase price, or giving the vendor the right to
unilaterally rescind the contract the moment the buyer fails to pay within the
fixed period. • In addition, Lapaz’s refusal to evict the occupants on the ground th
at she had already done so under the first agreement was not justified as the tw
o letteragreements were different transactions all together. Her fulfillment of
the conditions in the first one did not carry over to the second one despite the
identity of the stipulation. •The P100,000 and the P200,000 were not also earnest
money. Article 1482, which defines earnest money, gives only a disputable presu
mption that prevails in the absence of rebuttal evidence. In the instant case, t
he letter-agreements themselves were the evidence that proved the intention of t
he parties to enter into negotiations leading to a contract of sale mutually acc
eptable to both as to absolutely bind them. The P100,000 and the P200,000 could
not have been proof of the perfection of the sale as the letter-agreements were
full of condition precedents before the sale could be executed. The money thus g
iven could be considered as part of the consideration of PNB’s promise to reserve
the property for Lapaz.
4.
BABASA v CA
FACTS: In 1981, a contract of “Conditional Sale of Registered Lands” was executed be
tween the spouses Vivencio and Elena Babasa as vendors and Tabangao Realty Inc.
(Tabangao) as vendee over 3 parcels of land in Batangas. Since the certificates
of title over the lots were in the name of third persons who had already execute
d deeds of reconveyance and disclaimer in favor of the Babasas, it was agreed th
at the total purchase price of P2,121,920.00 would be paid in the following mann
er: P300,000.00 upon signing of the contract, and P1,821,920.00 upon presentatio
n by the Babasas of transfer certificates of titles in their name, free from all
liens and encumbrances, and delivery of registerable documents of sale in favor
of Tabangao within 20 months from the signing of the contract. In the meantime,
the retained balance of the purchase price would earn interest at 17% per annum
or P20,648.43 monthly payable to the Babasas until 31 December 1982. It was exp
ressly stipulated that Tabangao would have the absolute and unconditional right
to take immediate possession of the lots as well as introduce any
37
improvements thereon. On 18 May 1981 Tabangao leased the lots to Shell Gas Phili
ppines, Inc. (SHELL), which immediately started the construction thereon of a Li
quefied Petroleum Gas Terminal Project, an approved zone export enterprise of th
e Export Processing Zone. Tabangao is the real estate arm of SHELL. The parties
substantially complied with the terms of the contract. Tabangao paid the first i
nstallment of P300,000.00 to the Babasas while the latter delivered actual posse
ssion of the lots to the former. In addition, Tabangao paid P379,625.00 to the t
enants of the lots as disturbance compensation and as payment for existing crops
as well as P334,700.00 to the owners of the houses standing thereon in addition
to granting them residential lots with the total area of 2,800 square meters. T
abangao likewise paid the stipulated monthly interest for the 20month period amo
unting to P408,580.80. Meanwhile, the Babasas filed Civil Case 519 and Petition
373 for the transfer of titles of the lots in their name. However, 2 days prior
to the expiration of the 20-month period, specifically on 31 December 1982, the
Babasas asked Tabangao for an indefinite extension within which to deliver clean
titles over the lots. They asked that Tabangao continue paying the monthly inte
rest of P20,648.43 starting January 1983 on the ground that Civil Case 519 and P
etition 373 had not yet been resolved with finality in their favor. Tabangao ref
used the request. In retaliation the Babasas executed a notarized unilateral res
cission dated 28 February 1983 to which Tabangao responded by reminding the Baba
sas that they were the ones who did not comply with their contractual obligation
to deliver clean titles within the stipulated 20-month period, hence, had no ri
ght to rescind their contract. The Babasas insisted on the unilateral rescission
and demanded that SHELL vacate the lots. On 19 July 1983 Tabangao instituted an
action for specific performance with damages in the RTC Batangas City to compel
the spouses to comply with their obligation to deliver clean titles over the pr
operties. The Babasas moved to dismiss the complaint on the ground that their co
ntract with Tabangao became null and void with the expiration of the 20-month pe
riod given them within which to deliver clean certificates of title. SHELL enter
ed the dispute as intervenor praying that its lease over the premises be respect
ed by the Babasas. RTC ruled in favor of Tabangao and Shell. CA affirmed. ISSUE:
W/N there was a contract of absolute sale between the Babasa and Tabagao HELD:
YES. Although denominated “Conditional Sale of Registered Lands,” the contract betwe
en the spouses and Tabangao is one of absolute sale. Aside from the terms and st
ipulations used therein indicating such kind of sale, there is absolutely no pro
viso reserving title in the Babasas until full payment of the purchase price, no
r any stipulation giving them the right to unilaterally rescind the contract in
case of non-payment. A deed of sale is absolute in nature although denominated a
conditional sale” absent such stipulations. In such cases, ownership of the thing
sold passes to the vendee upon the constructive or actual delivery thereof. In
the
instant case, ownership over Lots 17827-A, 17827-B and 17827-C passed to Tabanga
o both by constructive and actual delivery. Constructive delivery was accomplish
ed upon the execution of the contract of 11 April 1981 without any reservation o
f title on the part of the Babasas while actual delivery was made when Tabangao
took unconditional possession of the lots and leased them to its associate compa
ny SHELL which constructed its multi-million peso LPG Project thereon. In Romero
v. Court of Appeals and Lim v. Court of Appeals, the Court distinguished betwee
n a condition imposed on the perfection of a contract and a condition imposed me
rely on the performance of an obligation. While failure to comply with the first
condition results in the failure of a contract, failure to comply with the seco
nd merely gives the other party the option to either refuse to proceed with the
sale or to waive the condition. In the present case, the spouses’ contract with Ta
bangao did not lose its efficacy when the 20month period stipulated therein expi
red without the spouses being able to deliver clean certificates of title such t
hat Tabangao may no longer demand performance of their obligation.
5.
VALDEZ v CA
FACTS: Carlos Valdez Sr. and Josefina Valdez were owners of a parcel of land. Wh
en Carlos Sr. died, Josefina subdivided the property into eight lots. On May 1,
1979, she executed a special power attorney, authorizing her son Carlos Jr, who
was a practicing lawyer, to sell a portion thereof (lots 3-C and 3-D) to Jose La
gon for P80,000. Part of consideration was also for Lagon to transfer the Rural
Bank of Isulan to the subject property, and to construct a commercial building b
eside the bank. Without knowledge of Josefina, Carlos Jr. entered into a differe
nt agreement, selling the property for P40/square meter, and it was indicated in
the deed that the P80,000 had already been paid in cash. A downpayment of P20,0
00 was paid by the wife of Lagon, to which Josefina issued a receipt. Carlos Jr.
prepared an affidavit, signed by Lagon, the transfer of the bank and the constr
uction of commercial building as part of the condition, else the deed of absolut
e sale shall be null and void without need of demand. Lagon failed to comply wit
h the considerations stated in the deed, to which the Valdez refused to deliver
the torrens title. Lagon had Lot 3-C to be subdivided into three separate lots,
to which he paid the professional services. Josefina used the subdivision survey
, and sold Lot 3-C-2 to PCIB, evidenced by a deed of absolute sale, exectued a r
eal mortgage over Lot 3-C-3 to DBP, and executed a deed of absolute sale in favo
r of Carlos Jr. over Lot 3-C-1. She also sold lot 3-D to Engr. Rodolfo Delfin. L
agon filed a complaint against Josefina and Carlos Jr for specific performance a
nd damages. Trial Court ruled in favor of Lagon. CA reversed, but reversed itsel
f, ruling in favor or Lagon. ISSUE: Whether the agreement was a contract of sale
or contract to sell / Whether the contract was ratified RULING: It is a contrac
t of sale. The nature of the
38
contract must be inferred from the express terms and agreement and from the cont
emporaneous and subsequent acts of the parties thereto. When Josefina, through h
er son acting a an attorney-in-fact, executed a deed of absolute sale in favor o
f Lagon, she did not reserve the ownership of the property, subject to the compl
etion of payment of the consideration. However, Carlos Jr. exceeded his authorit
y when he entered into a different agreement with Lagon, making the contract une
nforceable, unless ratified. In this case, it was ratified when Josefina accepte
d the downpayment of P20,000 and issued a receipt as a consequence of ratifying
the contract. It must be noted, however, that an affidavit was signed by Lagon a
s part of the consideration, to transfer the Rural Bank of Isulan as well as con
structing a commercial bank beside the bank, both failed to perform by Lagon, ma
king the deed of absolute sale null and void. It cannot be considered as an afte
rthought contrived by Carlos Jr. since Lagon admitted in court the authenticity
of the affidavit, and its binding effect against him. There was no need to resci
nd the contract because it was clearly stipulated that failure to comply with su
ch obligation makes the deed null and void, though petitioners are obliged to re
fund the respondent s partial payment of the subject property. question to Jabil
as early as 27 March 1965 so that the latter constructed thereon Sally’s Beach Re
sort also known as Jabil’s Beach Resort in March, 1965; Mactan White Beach Resort
on 15 January 1966 and Bevirlyn’s Beach Resort on 1 September 1965. Such facts wer
e admitted by the Dignos spouses.
7.
UNIVERSITY OF THE PHILIPPINES v DELOS ANGELES
6.
DIGNOS v CA
FACTS: Dignos is the owner of a parcel of land in LapuLapu City, which they sold
to Jabil for P28,000, payable in 2 installments and with an assumption of indeb
tedness with First Insular Bank of Cebu for P12,000. However, Dignos also sold t
he same land in favor of Cabigas, who were US citizens, for P35,000. A Deed of A
bsolute Sale was executed in favor of the Cabigas spouses. Jabil filed a suit ag
ainst Dignos with CFI of Cebu. RTC ruled in favor of Jabil and declared the sale
to Cabigas null and void. On appeal, CA affirmed RTC decision with modification
. ISSUE: W/N the contract between Dignos and Jabil is a contract of sale (as opp
osed to a contract to sale) HELD: YES. A deed of sale is absolute in nature alth
ough denominated as a “Deed of Conditional Sale” where nowhere in the contract in qu
estion is a proviso or stipulation to the effect that title to the property sold
is reserved in the vendor until full payment of the purchase price, nor is ther
e a stipulation giving the vendor the right to unilaterally rescind the contract
the moment the vendee fails to pay within a fixed period. In the present case,
there is no stipulation reserving the title of the property on the vendors nor d
oes it give them the right to unilaterally rescind the contract upon non-payment
of the balance thereof within a fixed period. While there was no constructive d
elivery of the land sold in the present case, as subject Deed of Sale is a priva
te instrument, it is beyond question that there was actual delivery thereof. As
found by the trial court, the Dignos spouses delivered the possession of the lan
d in
FACTS: • UP was given a land grant which shall be developed to obtain additional i
ncome for its support. • UP and ALUMCO entered into a logging agreement where ALUM
CO was granted the exclusive authority for an extendible period of 5 years (by m
utual agreement), to cut and remove timber from the land grant inconsideration o
f royalties and fees to be paid to UP. • ALUMCO incurred an unpaid amount of P219,
363. UP demanded payment but it failed to pay. ALUMCO received a letter that UP
would rescind or terminate their logging agreement. They executed an instrument “A
cknowledgement of Debt & Proposed Manner of Payment” which the UP President approv
ed. ALUMCO agreed to give their creditor (UP) the right to consider the logging
agreement as rescinded without necessity of any judicial suit and creditor will
be entitled to P50,000 for liquidated damages. • ALUMCO continued logging but stil
l incurred unpaid accounts. UP then informed them that as of that date, they con
sidered rescinded the agreement and of no further legal effect. UP then filed fo
r collection of the unpaid accounts and the trial court gave them preliminary in
junction to prevent ALUMCO from continuing their logging. • Through a public biddi
ng, the concession was awarded to Sta. Clara Lumber Company and a new agreement
was entered into between them and UP. • ALUMCO tried to enjoin the bidding but the
contract was already concluded and Sta. Clara started its operation. • Upon motio
n by ALUMCO, UP was declared in contempt of court for violating the writ of inju
nction against them. • ALUMCO’s contentions are the following: a. It blamed its form
er general manager for their failure to pay their account. b. Logs cut were rott
en; thus, they were unable to sell them. c. UP’s unilateral rescission was invalid
without a court order. ISSUE: W/N UP can validly rescind its agreement with ALU
MCO even without court order. –Yes. UP can unilaterally rescind the agreement. HEL
D: • UP and ALUMCO expressly stipulated in their “Acknowledgement of Debt” that upon d
efault of payment, creditor UP has the right and power to rescind their Logging
Agreement without the necessity of a judicial suit. • There is nothing in the law
that prohibits the parties from entering into agreements that violation of terms
of
39
the contract would cause its cancellation even without court intervention. • Act o
f a party in treating a contract as cancelled on account of any infraction by th
e other party must be made known to the other and is always provisional, being s
ubject to scrutiny and review by the proper court. If the other party deems the
rescission unjustified, he free to resort to judicial action. The court shall, a
fter due hearing, decide if the rescission was proper, in which case it will be
affirmed and if not proper, the responsible party will be liable for damages. • A
party who deems the contract violated may consider it rescinded and act accordin
gly, even without court action but it proceeds at its own risk. Only the final j
udgment of the court will conclusively settle whether the action taken was prope
r or not. But the law does not prohibit the parties from exercising due diligenc
e to minimize their own damages. • UP was able to show a prima facie case of breac
h of contract and default in payment by ALUMCO. Excuses by ALUMCO are not proper
for them to suspend their payments. • Thus, the Supreme Court lifted the injuncti
on. P246.42 until fully paid. Par. 6 of the contract provided for automatic extr
ajudicial rescission upon default in payment of any monthly installment after th
e lapse of 90 days from the expiration of the grace period of a month, without n
eed of notice and forfeiture of all installments paid. Dumpit was able to pay th
e dp and several installments amounting to P13,722.50, with the last payment mad
e on Dec. 5, 1967 for installments up to Sept. 1967. In 1973, Dumpit requested P
alay Inc to update his overdue accounts and sought its permission to assign his
rights to Dizon. However, Palay informed him that his Contract to Sell had long
been rescinded pursuant to Par. 6 and that the lot had already been resold. Dump
it filed a complaint with the NHA for reconveyance with an alternative prayer fo
r refund. NHA ruled in favor of Dumpit, stating that the rescission is void for
lack of either judicial or notarial demand. Office of the President affirmed. IS
SUE: 1. W/N notice or demand may be dispensed with by stipulation in a contract
to sell 2. W/N Palay should be liable for the refund of the installment payments
made by Dumpit HELD: 1. NO. Although a judicial action for rescission of a cont
ract is not necessary where the contract provides for its revocation and cancell
ation for violation of any of its terms and condition, jurisprudence has shown t
hat at including the said land, to Pacifico Banking Corp. (PBC). In 1975, the Or
linos, who remained in possession of the land, made a written offer to PBC to re
deem the property. In response, the bank agreed provided that P160K should be pa
id in full upon signing of the Deed of Absolute Sale and that as additional cons
ideration, Orlinos share on a property in Caloocan City should be conveyed to t
he bank. After a year, PBC advised the Orlinos that if the transaction will not
be finalized in 30 days, it would be offered to other buyers. However, negotiati
ons ensued between them until 2 years after, PBC sold the land to spouses Lim fo
r P300K. The Orlinos filed a complaint against PBC and Lim for the annulment of
the deed of sale on the ground that the subject land had bee earlier sold to the
m. RTC held that PBC and Lim acted in bad faith knowing that there was a cloud i
n the status of the property. CA affirmed. ISSUE: Whether the transaction betwee
n PBC and the Orlinos is a contract to sell or a contract of sale HELD: CONTRACT
TO SELL. There was no immediate transfer of title to the Orlinos as what would
have happened if there had been a sale. The supposed sale was never registered a
nd there was no new TCT in favor of the Orlinos. They also acknowledged that the
title to the property would remain with the bank until their transaction shall
be finalized. Moreover, the consideration agreed upon was never paid to convert
the agreement into a contract of sale. As payment of
40
8.
PALAY INC v CLAVE
FACTS: In 1965, Palay Inc., through its President Onstott, executed in favor of
Dumpit (respondent) a Contract to Sell a parcel of land in Antipolo, RIzal. The
sale was for P23,300 with 9% interest p.a., payable with a downpayment of P4,660
and monthly installments of least, there was a written notice sent to the defau
lter informing him of the rescission. Par. 6 cannot be considered a waiver of Du
mpit s right to be notified because it was a contract of adhesion. A waiver must
be certain and unequivocal and intelligently made; such waiver follows only whe
re the liberty of choice has been fully accorded. Moreover, the indispensability
of notice of cancellation to the buyer is protected under RA 6551. It is a matt
er of public policy to protect the buyers of real estate on installment payments
against onerous and oppressive conditions. Waiver of notice is one such onerous
and oppressive condition to buyers of real estate on installment payments. 2. Y
ES. As a consequence of the rescission of the contract, right to the lot should
be restored to Dumpit or the same should be replaced by another acceptable lot.
However, considering that the lot had been resold to a third person, Dumpit is e
ntitled to refund of the installments paid plus legal interest of 12%.
9.
LIM v CA
FACTS: In 1965, Orlinos (3 co-owners) mortgaged a parcel of land in Diliman, QC
to Progressive Commercial Bank as security for a P100K loan. They failed to pay
the loan and the mortgage was foreclosed, where the bank acquired the property a
s the highest bidder at the auction sale. The bank transferred all its assets,
the consideration was a positive suspensive condition, title to the property nev
er passed to the private respondents. Thus, the property was legally unencumbere
d and still belonged to PBC when it was sold to Lim. On RESCISSION: Although a c
ontract to sell imposes reciprocal obligations and cannot be terminated unilater
ally by either party, judicial rescission is required under Art. 1911 of the CC.
However, this rule is not absolute. Jurisprudence has shown that a party may ta
ke it upon itself to consider the contract rescinded and act accordingly albeit
subject to judicial confirmation, which may or may not be given. It is true that
the rescinding party takes a risk that its action may not be approved by the co
urt. The Orlinos obligated themselves to deliver to PBC P160K and their share on
the property in Caloocan City. However, the Orlinos did not act on their obliga
tions. PBC could not be required to wait for them forever. Thus, PBC had the rig
ht to consider the contract to sell between them terminated for non-payment of t
he stipulated consideration. SC s decision reversing the CA s decision and order
ing the RD to cancel the notice of lis pendens on the titles issued to AFPMBAI,
declaring it as buyer in good faith and for value. Investco Inc and Solid Homes
Inc entered into a contract to sell. During this time, the titles to the Quezon
City and Marikina properties had not been transferred in the name of Investco In
c as asignee of the owners, Angela Perez Staley and Antonio Perez. Thus, Investc
o Inc merely agreed to sell and Solid Homes to buy the former s rights and inter
est in the properties. However, Solid Homes Inc. reneged or defaulted on its obl
igation. Thus, Investco Inc rescinded extra-judicially such contract to sell. Af
ter such event, AFPMBAI and Investco Inc entered into a contract of absolute sal
e, wherein the former paid in full, causing the transfer of titles in its name.
ISSUE: W/N Investco Inc properly rescinded its contract to sell and buy with Sol
id Homes Inc HELD: YES. Upon Solid Homes Inc s failure to comply with its obliga
tion under the contract, there was no need to judicially rescind the contract. F
ailure by one of the parties to abide by the conditions in a contract to sell re
sulted in the rescission of the contract.
10. AFP MUTUAL BENEFIT ASSN INC v CA FACTS: This case involved Solid Homes Inc s
MR of the
CONDITIONS AND WARRANTIES
1. LA FORTEZA v MACHUCA -30,000 –earnest money, to be forfeited in favor of Lafort
ezas if the sale is not effected due to the fault of Machuca -600,000 – upon issua
nce of the new certificate of title in the name of late Francisco Laforteza and
upon execution of an extra judicial settlement of the decedent’s estate with sale
in favor of Machuca * Paragraph 4 of the Memorandum contained a provision that:
upon issuance of the new title, the Machuca shall be notified in writing and he
shall have 30 days to produce the balance of 600k which shall be paid to Laforte
za upon execution of the extrajudicial settlement * Machuca paid earnest money o
f 30k plus rentals for subject property *Upon failure of Machuca to comply with
the payment of the balance, Lafortezas informed the formed that they were cancel
ing the contract * Machuca requested that he intends to tender payment of the ba
lance which was refused by the Lafortezas who insisted for the rescission of the
memorandum. * Machuca filed an action for specific performance * TC: ruled in f
avor of Machuca which the CA affirmed ISSUES: W/N THE CONTRACT EXECUTED BY THE P
ARTIES IS A CONTRACT OF SALE OR A CONTRACT TO SELL RULING: CONTRACT OF SALE AND
LEASE The Memorandum of Agreement shows that the transaction between the petitio
ners and respondent was one of sale and lease A contract of sale is a consensual
contract and is perfected at the moment there is a meeting of the
41
FACTS: * The disputed property in this case consists of a house and lot located
at Marcelo Green Village, Paranaque, which is registered in the name of the late
Francisco Laforteza, although it is conjugal in nature * Lea Zulueta-Laforteza
executed a Special Power of Attorney in favor of Robert and Gonzalo Laforteza, a
ppointing both as her attorney-in-fact authorizing them jointly to sell the subj
ect property and sign any document for the settlement of the estate of the late
Francisco Laforteza * Michael Laforteza also executed a Special Power of Attorne
y in favor of Robert and Gonzalo Laforteza granting them the same authority. Bot
h agency instruments contained a provision that in any document or paper to exer
cise authority granted, the signature of both attorneys-in-fact must be affixed
* Dennis Laforteza executed an SPA in favor of Robert L. for the purpose of sell
ing the subject property. A year later, he executed another SPA in favor of Robe
rt and Gonzalo L. naming both attorneys-in-fact for the purpose of selling the s
ubject property and signing any document for the settlement of the estate of the
late Francisco LAforteza. Both agency instruments contained same provisions as
that mentioned above. * In the exercise of the above authority, the heirs of the
late Franciso L. represented by Robert and Gonzalo L entered into a Memorandum
of Agreement (Contract to Sell) with Machuca over the subject property for the s
um of 630,000 payable as follows:
minds upon the thing which is the object of the contract and upon the price. Fro
m that moment the parties may reciprocally demand performance subject to the pro
visions of the law governing the form of contracts. In this case, there was a pe
rfected agreement between the petitioners and respondent whereby Lafortezas obli
gated themselves to transfer the ownership of and deliver the house and lot and
Machuca to pay the price amounting to 630k. All the elements of a contract of sa
le were thus present. However, the balance of the purchase price was to be paid
only upon the issuance of the new certificate of title in lieu of the one in the
name of the late Francisco Laforteza and upon the execution of an extrajudicial
settlement of his estate. Prior to the issuance of the “reconstituted” title, Machu
ca was already placed in possession of the house and lot as lessee thereof for 6
months at a monthly rate of 3,500k. It was stipulated that should the issuance
of the new title and execution of the extrajudicial settlement be completed prio
r to expiration of 6month period, Machuca would be liable only for the rentals p
ertaining to the period commencing from the date of the execution of the agreeme
nt up to the executon of the extrajudicial settlement. It was also expressly sti
pulated that if after the expiration of the 6 month period, the lost title was n
ot yet replaced and the extrajudicial partition was not yet executed, Machuca wo
uld no longer be required to pay rentals and would continue to occupy and use th
e premises until the subject condition was complied with by Lafortezas. The 6-mo
nth period during which Machuca would be in possession of the property as lessee
, was clearly not a period within which to exercise such option. An option is a
contract granting a privilege to buy or sell within an agreed time and at a dete
rmined price. In this case, the 6-month period merely delayed the demandability
of the contract of sale and did not determine perfection for after the expiratio
n of the 6 month period, there was a absolute obligation on the part of Lafortez
as and Machuca to comply with the terms of the sale. The fact that after the exp
iration of the 6-month period, Machuca would retain possession of the house and
lot without need of paying rentals for the use therefore, clearly indicated that
the parties contemplated that ownership over the property would already be tran
sferred by that time. What further indicated that this was a contract of sale wa
s the payment of earnest money. Earnest money is something of value to show that
buyer was really in earnest, and given to the seller to bind the bargain. Whene
ver earnest money is given in a contract of sale, it is considered as part of th
e purchase price and proof of the perfection of the contract. 2. HEIRS OF PEDRO
ESCANLAR v CA The Heirs of Escanlar failed to pay the balance of the purchase pr
ice, but the Heirs of Cari-an never demanded payment and continued to accept bel
ated payments. They later on sold their interests over the same land to the Chua
s and assailed the validity of the Deed of Sale they executed with the Heirs of
Escanlar. The lower courts annulled the contract for not having the approval of
the court as stipulated. ISSUE: W/N the Deed of Sale to the Heirs of Escanlar is
valid HELD: YES. There is a distinction between the validity and effectivity. O
nly the effectivity was made subject to the condition. So long as all the requis
ites (consent, subject matter, and price) are present, as in this case, the cont
ract is already perfected. Nonetheless, the intent of the parties clearly manife
sts their intention to give efficacy to the contract. In fact, the vendors conti
nued to accept payments. That being the case, the sale in favor of the Heirs of
Escanlar must be preferred as it is a valid and subsisting one.
3.
POWER COMMERCIAL AND INDUSTRIAL CORP. v CA
FACTS: Power Commercial Corp entered into a contract of sale with the Quiambao s
pouses. It agreed to assume the mortgages thereon. A Deed of Absolute Sale with
Assumption of Mortgage was executed. Power Commercial Corp failed to settle the
mortgage debt contracted by the spouses, thus it could not undertake the proper
action to evict the lessees on the lot. Power Commercial Corp thereafter sought
to rescind the contract of sale alleging that it failed to take actual and physi
cal possession of the lot. ISSUE: W/N there was a breach of warranty on the part
of the spouses that it would evict the lessees HELD: NO. First, such condition
that the Quiambao spouses would have to evict the lessees was not stipulated in
the contract. Thus, it cannot be considered a condition imposed upon its perfect
ion. In fact, Power Commercial Corp. was well aware of the presence of the tenan
ts therein. It was also given control over the said lot and it endeavored to ter
minate the occupation of its actual tenants. Also, since it was Power Commercial
that knowingly undertook the risk of evicting the lessees, it cannot now claim
that there was a breach of warranty on the part of the vendor.
4.
GUINHAWA v PEOPLE
FACTS: The Heirs of Cari-an executed a Deed of Sale of Rights, Interests, and Pa
rticipation over a parcel of undivided land in favor of the Heirs of Escanlar. I
t was stipulated that “the contract shall become effective only upon approval of t
he CFI of Negros Occidental.”
FACTS: * Jaime Guinhawa was engaged in the business of selling brand new motor v
ehicles, including Mitsubishi vans, under the business name of Guinrox Motor Sal
es. His office and display room for cars were located along Panganiban Avenue, N
aga City. He employed Gil Azotea as his sales manager.
42
* Guinhawa purchased a brand new Mitsubishi L-300 Versa Van from the Union Motor
s Corporation (UMC) in Paco, Manila. * The van bore Plate no. DLK 406. Guinhawa’s
driver, Olayan, drove the van from Manila to Naga City. * However, while the van
was traveling along the highway in Daet, Camarines Norte, Olayan suffered a hea
rt attack. The van went out of control, traversed the highway onto the opposite
lane, and was ditched into the canal parallel to the highway. The van was damage
d, and the left front tire had to be replaced. * The van was repaired and later
offered for sale in Guinhawa’s showroom. * Spouses Ralph and Josephine Silo wanted
to buy a new van for their garment business; they purchased items in Manila and
sold them in Naga City. * Unaware that the van had been damaged and repaired on
account of the accident in Daet, the couple decided to purchase the van for 591
k. Azotea, sales manager, suggested that the couple make a downpayment of 118,20
0, and pay the balance of the purchase price by installments via a loan from the
United Coconut Planters Bank (UCPB), with the van as collateral. * Azotea offer
ed to make the necessary arrangements with UCPB for the consummation of the loan
transaction wherein the couple agreed. * The spouses executed a Promissory Note
for the amount of 692,676 as payment of the balance on the purchase price, and
as evidence of the chattel mortgage over the van in favor of UCPB. * The couple
arrived in Guinhawa’s office to take delivery of the van. The latter executed the
deed of sale, and the couple paid the 161,470 downpayment, for they were issued
a receipt. They were furnished a Service Manual which contained the warranty ter
ms and conditions. * Azotea instructed the couple on how to start the van and to
operate its radio. Ralph Silo no longer conducted a test drive; he and his wife
assumed that there were no defects in the van as it was brand new. * Josephine
Silo, accompanied by Glenda Pingol, went to Manila on board the van, with Glenda’s
husband as the driver. On their return trip to Naga from Manila, the driver hea
rd a squeaking sound, which seemed to be coming from underneath the van. The squ
eaking sound persisted and upon examination at the Shell gasoline station, it wa
s found out that some parts underneath the van had been welded. * Guinhawa insis
ted that the defects were mere factory defects. As the defects persisted, the sp
ouses requested that Guinhawa replace the van with 2 Charade-Daihatsu vehicles w
ithin a week or two, with the additional costs to be taken from their downpaymen
t. * The spouses brought the car to Rx Auto Clinic for examination wherein the m
echanic discovered that it was the left front stabilizer that was producing the
annoying sound, and that it had been repaired. * Josephine Silo filed for rescis
sion of the sale and refund of their money. * They instituted also a criminal co
mplaint for other deceits made by Guinhawa by making fraudulent representations
about the car being brand new and that it never encountered an accident.
ISSUE: W/N THERE WERE FRAUDULENT REPRESENTATIONS MADE BY THE SELLER, GUINHAWA BY
VIRTUE OF THE CONTRACT OF SALE EXECUTED BETWEEN HIM AND THE COUPLE RULING: YES
Article 1389 of NCC provides that failure to disclose facts when there is a duty
to reveal them constitutes fraud. In a contract of sale, a buyer and seller do
not deal from equal bargaining positions when the latter has knowledge, a materi
al fact which, if communicated to the buyer, would render the grouns unacceptabl
e or, at least, substantially less desirable. If, in a contract of sale, the ven
dor knowingly allowed the vendee to be deceived as to the thing sold in a materi
al matter by failing to disclose an intrinsic circumstance that it vital to the
contract, knowing that the vendee is acting upon the presumption that no such fa
ct exists, deceit is accomplished by the suppression of the truth. In this case,
Guinhawa and Azotea knew that the van had figured in an accident, was damaged a
nd had to be repaired. Nevertheless, the van was placed in the showroom, thus ma
king it appear to the public that it was a brand new unit. Guinhawa was mandated
to reveal the foregoing facts to Silos but they even obdurately declared when t
hey testified that the court did not figure in an accident, nor had it been repa
ired. Even when Guinhawa was apprised that Silos had discovered the van’s defects,
the former agreed to replace the van, but changed his mind and insisted that it
must be first sold. Guinhawa is not relieved of his criminal liability for dece
itful concealment of material facts, even if Silos made a visual inspection of t
he van’s interior and exterior before she agreed to buy and failed to inspects its
under chassis.
5.
ANG v CA
FACTS: * Under a car-swapping scheme, Bruno Soledad sold his Mitsubishi GSR seda
n 1982 model to Jaime Ang by a Deed of Absolute Sale * For his part, Ang conveye
d to Soledad his Mitsubishi Lancer model 1988 also by a Deed of Absolute Sale *
As Ang’s car was of a later model, Soledad paid him an additional 55,000 * Ang, a
buyer and seller of used vehicles, later offered the Mitsubishi GSR for sale thr
ough Far Eastern Motors, a second hand auto display center. The car was even sol
d to a certain Paul Bugash for 225k. * Before the Deed could be registered in Bu
gash’s name, however, the vehicle was seized by virtue of a writ of replevin on ac
count of the alleged failure of Ronaldo Panes, the owner of the car prior to Sol
edad, to pay the mortgage debt constituted thereon. * To secure the release of t
he vehicle, Ang paid BA Finance the amount of 62,038.47. Soledad refused to reim
burse the said amount, despite repeated demands, drawing Ang to charge him for e
stafa with abuse of confidence.
43
ISSUE: W/N THE COMPLAINT HAD PRESCRIBED HINGES ON A DETERMINATION OF WHAT KIND O
F WARRANTY IS PROVIDED IN THE DEED OF ABSOLUTE SALE RULING: YES A warranty is a
statement or representation made by the seller of goods, contemporaneously and a
s part of the contract of sale, having reference to the character, quality or ti
tle of the goods, and by which he promises or undertakes to insure that certain
facts are or shall be as he then represents them. Warranties by the seller may b
e express or implied. In declaring that Soledad owned and had clean title to the
vehicle at the time of the deed of absolute sale was forged, he gave an implied
warranty of title. In pledging that he “will defend the same from all claims or a
ny claim whatsoever and will save the vendee from any suit by the government of
the Republic of the Phils, Soledad gave a warranty against eviction. Given Ang’s b
usiness of buying and selling used vehicles, he could not have merely relied on
Soledad’s affirmation that the car was free from liens and encumbrances. He was ex
pected to have thoroughly verified the car’s registration and related documents. S
ince what Soledad, as seller, gave was an implied warranty, the prescriptive per
iod to file a breach thereof is 6 months after the delivery of the vehicle, foll
owing Art. 1571. But even if the date of filing of the damages. Various expert w
itnesses were presented during the trial. ISSUE: W/N Nutrimix should be held lia
ble for the death of the livestock HELD: NO. In alleging that there was a violat
ion of warranty against hidden defects, the spouses assumed the burden of proof.
However, this they failed to overcome. Under the law, the defect must exist at
the time the sale was made and at the time the product left the hands of the sel
ler, which the spouses failed to prove. The feeds were belatedly tested—3 months a
fter the death of the broilers and hogs. This means that at action is reckoned f
rom the date, Ang instituted his first complaint for damages and not when filed
the complaint subject of this case, the action just the same had prescribed, it
having been filed 16 months after the date of delivery of the vehicle. On the ba
sis of breach of warranty against eviction, essential requisites thereof were no
t met. For one, there is no judgment, which deprived Ang of the vehicle. For ano
ther, there was no suit for eviction which Soledad as seller was impleaded as co
-defendant at the instance of the vendee. Even under the principle of solutio in
debiti, Ang cannot recover from Soledad the amount he paid BA Finance. For, Ang
settled the mortgage debt on his own volition under the supposition that he woul
d resell the car. It turned out that he did pay BA Finance in order to avoid ret
urning the payment made by the ultimate buyer Bugash.
6.
NUTRIMIX FEEDS CORP v CA
FACTS: Evangelista spouses purchased feeds from Nutrimix. They refused to pay th
eir unsettled debt claiming that thousands of their livestock were poisoned by t
he Nutrimix feeds. Nutrimix sued them for collection of money. The spouses count
ered with a suit for that time, they may have already been contaminated. They fa
iled to prove that the feeds delivered to be tested were the same feeds that all
egedly poisoned the animals. It is also common practice for them to mix differen
t kinds of feeds. The mere death of the animals does not raise a prima facie cas
e of breach of warranty. In this case, the evidence presented by the spouses are
only circumstantial. The remedies of breach of warranty against hidden defects
are either withdrawal from the contract or to demand a proportionate reduction o
f the price plus damages in either case. In this case, though the spouses failed
to make out their case, hence they should be liable for their debt.
EXTINGUISHMENT OF SALE
1. ROBERTS v PAPIO obligation, the corporation returned the owner’s duplicate TCT
which was then delivered to Amelia Roberts. * The parties (A. Roberts as lessor
and Martin Papio as lessee) executed a 2-year contract of lease. The contract wa
s subject to renewal or extension for a like period at the option of the lessor,
the lessee waiving thereby the benefits of an implied new lease. The lessee was
obliged to pay monthly rentals of 800 to be deposited in the lessor’s account. *
A new TCT was issued in the name of Amelia Roberts as owner. Martin Papio paid t
he rentals and thereafter for another year. He then failed to pay rentals, but h
e and his family nevertheless remained in possession of the property for almost
13 years. * A. Roberts reminded Papio that he failed to pay monthly rentals amou
nting to a total liability of 410k. She demanded that Papio vacate the property
within 15
44
FACTS: * The Spouses Papio were the owners of a 274 sqm residential lot located
in Makati. In order to secure a 59k loan from the Amparo Investments Corp, they
executed a real estate mortgage on the property. Upon Papio’s failure to pay the l
oan, the corporation filed a petition for the extrajudicial foreclosure of the m
ortgage. * Since the couple needed money to redeem the property and to prevent t
he foreclosure of the real estate mortgage, they executed a Deed of Absolute Sal
e over the property in favor of Martin Papio’s cousin, Amelia Roberts. * Of the 95
k purchase price, 59k was paid to the Amparo Investments Corp, while the 26k dif
ference was retained by the spouses. As soon as the spouses had settled their
days from receipt of the letter in case he failed to settle the amount. * A. Rob
erts filed a complaint for unlawful detainer and damages against Martin Papio IS
SUE: W/N THE DEED OF ABSOLUTE SALE AND CONTRACT OF LEASE EXECUTED BY THE PARTIES
IS AN EQUITABLE MORTGAGE OVER THE PROPERTY RULING: NO An equitable mortgage is
one that, although lacking in some formality, form or words, or other requisites
demanded by a statute, nevertheless reveals the intention of the parties to cha
rge a real property as security for a debt and contain nothing impossible or con
trary to law. A contract between the parties is an equitable mortgage if the fol
lowing requisites are present: a. the parties entered into a contract denominate
d as a contract of sale and b. the intention was to secure an existing debt by w
ay of mortgage. The decisive factor is the intention of the parties. In an equit
able mortgage, the mortgagor retains ownership over the property but subject to
foreclosure and sale at public auction upon failure of the mortgagor to pay his
obligation. In contrast, in a pacto de retro sale, ownership of the property sol
d is immediately transferred to the vendee a retro subject only to the right of
the vendor a retro to repurchase the property upon compliance with legal require
ments for the repurchase. The failure of the vendor a retro to exercise the righ
t to repurchase within the agreed time vests upon the vendee a retro, by operati
on of law, absolute title over the property. One repurchases only what one has p
reviously sold. The right to repurchase presupposes a valid contract of sale bet
ween same parties. By insisting that he had repurchased the property, Papio ther
eby admitted that the deed of absolute sale executed by him and Roberts was in f
act and in law a deed of absolute sale and not an equitable mortgage; he had acq
uired ownership over the property based on said deed. Respondent, is thus estopp
ed from asserting that the contract under the deed of absolute sale is an equita
ble mortgage unless there is an allegation and evidence of palpable mistake on t
he part of respondent, or a fraud on the part of Roberts. HELD: NO. Their right
has already prescribed. Considering that no period for redemption was agreed upo
n, the law imposes a 4-year limitation. This means that from the time the school
was merged to Cebu State College, they had 4 years, or until June 1987 to redee
m the property. However, they failed to do so within the period. Failure to rede
em automatically consolidates ownership in favor of the vendee. The fact that th
e right to redeem was annotated does not make it imprescriptible, it only serves
to notify third persons.
3.
SOLID HOMES INC v CA
2.
MISTERIO v CEBU STATE COLLEGE OF SCIENCE AND TECHNOLOGY
FACTS: Asuncion sold to Sudlon Agricultural High School (SAHS) a parcel of land,
reserving the right to repurchase the same in case (1) the school ceases to exi
st, or (2) the school transfers location. She had her right annotated. She died.
By virtue of BP 412, SAHS was merged with the Cebu State College, effective Jun
e 1983. In 1990, the heirs of Asuncion sought to exercise their right to redeem,
claiming that school has ceased to exist. ISSUE: W/N the heirs of Asuncion may
still exercise their right to redeem the property
FACTS: * Solid Homes executed in favor of State Financing Center a Real Estate M
ortgage on its properties embraced in the TCT, in order to secure the payment of
a loan of 10M which the former obtained from the latter. * A year later, Solid
Homes applied for and was granted an additional loan of 1, 511,270.03 by State F
inancing, and to secure its payment, Solid executed an amendment to real estate
mortgage whereby the credits secured by the first mortgage on the abovementioned
properties were increased from 10M to 11,511,270.03. * Solid homes obtained add
itional credits and financing facilities from State Financing in the sum of 1,49
9,811.97 and to secure its payment, the former executed the amendment to real es
tate mortgage whereby the mortgage executed on its properties was again amended
so that the loans or credits secured thereby were further increased from 11,511,
270.03 to 13,011,082.00 * When the obligations became due and payable, State Fi
nancing made repeated demands upon Solid homes for the payment thereof, but the
latter failed to do so. * State Financing filed a petition for extrajudicial for
eclosure of the mortgages who in pursuance of the petition, issued a notice of s
heriff’s sale whereby the mortgaged properties of Solid homes and the improvements
existing thereon, including the V.V. Soliven Towers II Building were set for pu
blic auction sale in order to satisfy the full amount of Solid homes’ mortgage ind
ebtedness, the interest thereon, and the fees and expenses incidental to the for
eclosure proceedings. * Before the scheduled public auction sale, the mortgagor
Solid homes made representations and induced State Financing to forego with the
foreclosure of the real estate mortgage. By reason thereof, State Financing agre
ed to suspend the foreclosure of mortgaged properties, subject to the terms and
conditions they agreed upon, and in pursuance of the said agreement, they execut
ed a document entitled MEMORANDUM OF AGREEMENT/DACION EN PAGO. ISSUE: 1. 2. W/N
THE MEMORANDUM OF AGREEMENT/ DACION EN PAGO EXECUTED BY THE PARTIES IS VALID AND
BINDING W/N SOLID HOMES CAN CLAIM DAMAGES ARISING FROM THE NON-ANNOTATION OF IT
S
45
RIGHT OF REPURCHASE IN THE CONSOLIDATED TITLES RULING: 1. YES | 2. NO The Memora
ndum of Agreement/Dacion En Pago was valid and binding, and that the registratio
n of said instrument in the Register of Deeds was in accordance with law and the
agreement of the parties. Solid homes utterly failed to prove that respondent c
orporation had maliciously and in bad faith caused the non-annotation of petitio
ner’s right of repurchase so as to prevent the latter from exercising such right.
On the contrary, it is admitted by both parties that State Financing informed So
lid homes of the registration with the register of deeds of their memorandum of
agreement/dacion en pago and the issuance of the new certificates of title in th
e name of State Financing. Clearly, petitioner was not prejudiced by the nonanno
tation of such right in the certificates of title issued in the name of State Fi
nancing. Also, it was not the function of the corporation to cause said annotati
on. It was equally the responsibility of petitioner to protect its own rights by
making sure that its right of repurchase was indeed annotated in the consolidat
ed titles of State Financing. The only legal transgression of State was its fail
ure to observe the proper procedure in effecting the consolidation of the titles
in its name. But this does not automatically entitle the petitioner to damages
absent convincing proof of malice and bad faith on the part of private responden
t-corporation ownership, b) the alleged new liability of the spouses c) the alle
ged continuing liability of the spouses. It is clear that the petitioners had ot
her issues which involve more than just a simple claim of of immediate possessio
n, and thus the RTC had jurisdiction over the case. However, the transfer was in
the nature of pactum commissorium, since the sale was really considered as an e
quitable mortgage. It was really intended by the spouses to make such undated de
ed of sale a security. Also, when petitioners transferred the title in its name,
the spouses was never informed of such action. Such transfer was therefore void
, making the TCT held by petitioners null and void as well.
5.
ABILLA v GOBONSENG
4.
A. FRANCISCO REALTY v CA
FACTS: A. Francisco Realty and Development Corp. granted a loan worth P7.5M in f
avor of spouses Javillonar, to which the latter executed three documents: a) a p
romissory note containing the interest charge of 4% monthly, b) a deed of mortga
ge over the subject property, c) an undated deed of sale of the mortgaged proper
ty. Since the spouses allegedly failed to comply with the payments, petitioner r
egistered the sale in its favor, getting a TCT issued in its name without knowle
dge by the spouses. Subsequently, the spouses obtained another loan worth P2.5M,
signing another promissory note in favor of petitioner. Petitioner demanded the
possession of the property, as well as the interest payments, to which the spou
ses refused to comply. Petitioner filed an action for possession in the RTC. RTC
ruled in favor of petitioner, but CA reversed. ISSUE: 1. 2. Whether the RTC had
jurisdiction over the case (property issue) Whether the sale was considered as
an equitable mortgage
FACTS: Spouses Abilla instituted against Spouses Gobonseng an action for specifi
c performance, recovery of sum of money and damages, seeking the reimbursement o
f the expenses they incurred in the preparation and registration of 2 public ins
truments-Deed of Sale and Option to Buy. As a defense, Spouses Gobonseng contend
ed that the transaction covered by these instruments was a mortgage. RTC ruled i
n favor of Spouses Abilla, stating that it was a sale giving Spouses Gobonseng u
ntil Aug. 31, 1983 within which to buy back the 17 lots subject of the sale. CA
affirmed and held that the transaction was a pacto de retro sale, and not an equ
itable mortgage. In 1999, Spouses Gobonseng filed with the RTC an urgent motion
to repuchase the lots with tender of payment, which was denied. However, after t
he judge inhibited himself from the case, it was reraffled to a different branch
, which granted the motion to repurchase. ISSUE: W/N Spouses Gobonseng may exerc
ise the right to repurchase, as stipulated in Art. 1606 (3) HELD: NO. Sellers in
a sale judicially-declared as pacto de retro may NOT exercise the right to repu
rchase within the 30-day period provided under Art. 1606, although they have tak
en the position that the same was an equitable mortgage, if it shown that there
was no honest belief thereof since: (a) none of the circumstances under Art. 160
2 were shown to exist to warrant a conclusion that the transaction was an equita
ble mortgage; and (b) that if they truly believed the sale to be an equitable mo
rtgage, as a sign of good faith, they should have consigned with the trial court
the amount representing their alleged loan, on or before the expiration of the
right to repurchase.
6.
FRANCISCO v BOISER
RULING: Even though the case was filed less than one year after the demand to va
cate, making it an action of unlawful detainer, there were other issues to be co
nsidered such as: a) the validity of the transfer of
FACTS: • Petitioner Adalia Francisco and three of her sisters, Ester, Elizabeth, a
nd Adeluisa, were co-owners of four parcels of registered land in Caloocan City •
On August 1979, they sold 1/5 of their undivided share to their mother, Adela Bl
as, for PhP10,000, making her a co-owner of the real property to that extent
46
• 7 years later, in 1986, however, Adela sold her 1/5 share for PhP10,000 to respo
ndent Zenaida Boiser, another sister of petitioner • In 1992 or 6 years after the
sale, Adalia received summons with a copy of a complaint by Zenaida demanding he
r share in the rentals being collected from the tenants of the Ten Commandments
Building, which stands on the co-owned property • Adalia then informs Zenaida that
she was exercising her right of redemption as co-owner of the subject property,
depositing for that purpose PhP10,000 with the Clerk of Court • The case was howe
ver dismissed after Zenaida was declared non-suited, and Adalia’s counterclaim was
thus dismissed as well • 3 years after, Adalia institutes a complaint demanding t
he redemption of the property, contending that the 30day period for redemption u
nder Art. 1623 had not begun to run against her or any of the other co-owners, s
ince the vendor Adela did not inform them about the sale, which fact they only c
ame to know of when Adalia received the summons in 1992 • Zenaida on the other han
d contends that Adalia already knew of the sale even before she received the sum
mons since Zenaida had informed Adalia by letter of the sale with a demand for h
er share of the rentals three months before filing suit, attaching to it a copy
of the deed of sale • Adalia’s receipt of the said letter is proven by the fact that
within a week, she advised the tenants of the building to disregard Zenaida’s let
ter-demand • The trial court dismissed the complaint for legal redemption, holding
that Art. 1623 does not prescribe any particular form of notifying co-owners on
appeal, the CA affirmed ISSUE: Whether the letter-demand by Zenaida to Adalia,
to which the deed of sale was attached, can be considered as sufficient complian
ce with the notice requirement of Art. 1623 for the purpose of legal redemption
HELD: • The petitioner points out that the case does not concern the particular fo
rm in which such notice must be given, but rather the sufficiency of notice give
n by a vendee in lieu of the required notice to be given by the vendor or prospe
ctive vendor • The text of Art. 1623 clearly and expressly prescribes that the 30
days for making the redemption shall be counted from notice in writing by the ve
ndor it makes sense to require that notice be given by the vendor and nobody els
e, since the vendor of an undivided interest is in the best position to know who
are his co-owners, who under the law must be notified of the sale • Notice by the
co-owner likewise removes all doubt as to the fact of the sale, its perfection,
and its validity by not immediately notifying, or not notifying at all, a coown
er, the vendor can delay or even effectively prevent the meaningful exercise of
the right of redemption • However, it would be unjust in the case at bar to requir
e the vendor Adela to serve notice of the sale, when the fact has already been e
stablished in both lower courts Adalia has effectively exercised her right when
she deposited the PhP10,000 redemption price 7 days after receiving the summons
Fallo • Petition granted, decision of the CA reversed • The decision in Etcuban v. C
A is abandoned, and the one in Butte v. Manuel Uy and Sons, Inc., as affirmed in
Salatandol v. Retes, upheld NOTE • The Court failed to negate or possibly appreci
ate the fact of Adalia’s knowledge of the sale prior to the summons, as proven her
letter-advise to the tenants of the building • The period given by the Court to A
dalia was 30 days after the receipt of the summons on 5 August 1992, which is 4
September 1992
7.
SORIANO v BAUTISTA
FACTS: Bautista spouses mortgaged their lot to Soriano, who took possession ther
eof and cultivated the same. Pursuant to Par. 5 of their agreement, Soriano deci
ded to buy the lot. Bautista refused to sell claiming that being mortgagors, the
y cannot be deprived of their right to redeem the property. ISSUE: W/N Soriano m
ay buy the mortgaged property of Bautista HELD: YES. True that the transaction i
s a mortgage, which carried with it a customary right of redemption. However, th
e mortgagor’s right to redeem was rendered defeasible at the election of the mortg
agees by virtue of Par. 5, allowing them the option to purchase the said lot. Th
ere is nothing immoral or illegal about such stipulation. It was supported by th
e same consideration as the mortgage contract and constituted an irrevocable con
tinuing offer within the time stipulated. That being the case, Bautista spouses
must be compelled to honor the sale.
47
ASSIGNMENT
1. NYCO SALES CORP v BA FINANCE made by Licaros with the Anglo-Asean Bank at the
former s expense. When Gatmaitan contacted the foreign bank, it said they will
look into it, but it didn t prospered. Because of the inability to collect, Gatm
aitan did not bother to pay Licaros the value of the promissory note. Licaros, h
owever, believing that he had a right to collect from Gatmaitan regardless of th
e outcome, demanded payment, but was ignore. Licaros filed a complaint against G
atmaitan for the collection of the note. The trial court ruled in favor of Licar
os, but CA reversed. ISSUE: Whether the memorandum of agreement between petition
er and respondent is one of assignment of credit or one of conventional subrogat
ion RULING: It is a conventional subrogation. An assignment of credit has been d
efined as the process of transferring the right of the assignor to the assignee
who would then have a right to proceed against the debtor. Consent of the debtor
is not required is not necessary to product its legal effects, since notice of
the assignment would be enough. On the other hand, subrogation of credit has bee
n defined as the transfer of all the rights of the creditor to a third person, w
ho substitutes him in all his rights. It requires that all the related parties t
hereto, the original creditor, the new creditor and the debtor, enter into a new
agreement, requiring the consent of the debtor of such transfer of rights. In t
he case at hand, it was clearly stipulated by the parties in the memorandum of a
greement that the express conformity of the third party (debtor) is needed. The
memorandum contains a space for the signature of the Anglo-Asean Bank written th
erein "with our conforme". Without such signature, there was no transfer of righ
ts. The usage of the word "Assignment" was used as a general term, since Gatmait
an was not a lawyer, and therefore was not well-versed with the language of the
law.
FACTS: NYCO Sales Corp extended a credit accommodation to the Fernandez Brothers
. The brothers, acting in behalf of Sanshell Corp, discounted a BPI check for P6
0,000 with NYCO, which then indorsed the said check to BA Finance accompanied by
a Deed of Assignment. BA Finance, in turn, released the funds, which were used
by the brothers. The BPI check was dishonored. The brothers issued a substitute
check, which was also dishonored. Now BA Finance goes after NYCO, which disclaim
s liability. ISSUE: W/N NYCO, as the assignor, is liable for breach of warrantie
s HELD: YES. The assignor (NYCO) warrants both the existence and legality of the
credit, as well as the solvency of the debtor. If there is a breach of any of t
he 2 warranties, the assignor is liable to the assignee. That being the case, NY
CO cannot evade liability. So long as the credit remains unpaid, the assignor re
mains liable notwithstanding failure to give notice of dishonor that is because
the liability of NYCO stems form the assignment, not on the checks alone.
2.
LICAROS v GATMAITAN
FACTS: Abelardo Licaros invested his money worth $150,000 with Anglo-Asean Bank,
a money market placement by way of deposit, based in the Republic of Venatu. Un
expectedly, he had a hard time getting back his investments as well as the inter
est earned. He then sought the counsel of Antonio Gatmaitan, a reputable banker
and investor. They entered into an agreement, where a non-negotiable promissory
note was to be executed in favor of Licaros worth $150,000, and that Gatmaitan w
ould take over the value of the investment
BULK SALES LAW
1. CHIN v UY: CA case contained in O.G. DBP in a "deed of cession of property in
payment of obligation" or dacion en pago. In turn, DBP sold these assets to Uni
on Glass that same year. In 1983, Yu instituted an action against Pioneer Glass,
DBP, and Union Glass, asserting that the transfer of the assets to DBP was void
by reason of fraud. • Pioneer Glass: denied liability to Yu on the ground that by
virtue of the dacion en pago in favor of DBP, the bank assumed liability to its
creditors including Yu under a payment scheme, which is under pending implement
ation DBP: denied liability to Yu on the ground that there being no proof that t
he unpaid merchandise purchased by Pioneer Glass were among those transferred to
it Union Glass: denied liability to Yu on the
48
DOCTRINE: A sale made of all the effects in the vendor s store without the buyer
being furnished a sworn list of creditors as required by Sec 3, is null and voi
d irrespective of the good or bad faith of the buyer, and judgment creditors may
treat such sale as never having been made and proceed to have execution levied
on the properties thus sold.
2.
DBP v HON JUDGE OF RTC OF MANILA •
FACTS: In 1978, Pioneer Glass Manufacturing Corp.purchased from Yu (under Ancar
Equipment Parts and Tonicar) equipment parts worth P7,000. However, Pioneer fail
ed or refused to pay upon demand. Without informing Yu, Pioneer Glass transferre
d all its assets to
•
ground that there was no privity of contract between them, or assuming applicabi
lity of the Bulk Sales Law, no liability attached to Union Glass. MTC denied the
motions to dismiss filed by Union Glass and DBP and ruled in favor of Yu. RTC a
ffirmed MTC s decision. ISSUE: W/N the Bulk Sales Law covers the conveyance in q
uestion (its violation would make DBP, Union Glass, and Pioneer Glass liable to
Yu) HELD: NO. Under the Bulk Sales Law, the terms "goods" and "merchandise," hav
ing acquired a fixed meaning, refer to things and articles, which are kept for s
ale by a merchant. Likewise, the term "fixtures" has been interpreted to mean th
e chattels, which the merchants usually possess and annex to the premises occupi
ed by them in order to store, handle and display their goods and wares. The tech
nicality of these terms conveys the intention of the law to apply it to merchant
s who are in the business of selling goods and wares and similar merchandise. In
this case, Pioneer Glass manufactured glass only on specific orders and it did
not sell directly to consumers but manufactured its products only for particular
clients. Thus, Pioneer Glass was NOT a merchandiser. Moreover, the dacion en pa
go between Pioneer and DBP transferred and conveyed the bulk of its corporate as
sets to extinguish its outstanding debts to DBP. Thus, the subject matter of the
deed of cession was the assets, not stock-in-trade. Such conveyance was clearly
outside the ambit of the Bulk Sales Law. SC ordered Pioneer Glass, not DBP and
Union Glass, to pay Yu the price of the equipment purchased plus interest.
RETAIL TRADE LIBERALIZATION ACT OF 2000 AND RELATED PROVISIONS OF THE ANTI-DUMMY
LAW
1. KING v HERNAEZ “consumption goods.” They are sold to manufacturers and industries
as raw materials. They are intermediate goods, not consumption goods.
FACTS: Macario King, a naturalized Filipino, owned the grocery store Import Meat
& Produce. He employed 3 Chinamen, one as purchaser and 2 others as salesmen. H
e sought the permission of the President to retain the services of the 3, but wa
s denied based on the Retail Trade Law and the Anti-Dummy Law, which prohibit al
iens from interfering in the management and operation of retail establishments.
King contends that the 3 aliens are employed in non-control positions and do not
participate in the management, thus, they are not covered by the Anti-Dummy Law
. ISSUE: W/N the employment of the 3 Chinamen is covered under the Anti-Dummy La
w HELD: YES. The prohibition covers the entire range of employment, regardless o
f whether they are control or non-control positions. Thus, employment of aliens
for evening clerical positions is prohibited. The reason is obvious: to plug any
loopholes that unscrupulous aliens may exploit for the purpose of circumventing
the law.
3.
GOODYEAR TIRE v REYES SR
FACTS: Goodyear, a corporation not wholly owned by Filipinos, was engaged in the
manufacturing and sale of rubber products such as tires, batteries, conveyor be
lts, soles of shoes, etc. ISSUE: W/N Goodyear is covered by the Retail Trade Law
insofar as the prohibition against aliens from engaging in retail trade is conc
erned. HELD: NO. “Retail” pertains to the direct selling to the general public of me
rchandise of goods for consumption. They pertain to goods for personal, family a
nd household consumption. A manufacturer who sells his products to industrial an
d commercial users so that the latter may use the same to render some general se
rvice to the public is clearly not covered by the prohibition. The enterprise of
Goodyear clearly falls within this category. The sale to proprietary planters a
nd persons engaged in the exploration of natural resources is also included in t
he said classification and cannot be considered “retail” as to come within the ambit
of the prohibition. But insofar as sale to employees and officers is concerned,
this may be considered “retail” and comes under the prohibition.
2.
BALMACEDA v UNION CARBIDE PHILIPPINES INC
FACTS: Union Carbide was a manufacturer having 2 divisions: the Consumer Product
s Division and the Industrial Products Division. ISSUE: W/N the Industrial Produ
cts Division is engaged in the retail business HELD: NO. “Retail” pertains to the di
rect selling to the general public of merchandise of goods for consumption. They
pertain to goods for personal, family and household consumption. The products s
old under this division are clearly not covered by the term
4.
DBP v HON JUDGE OF RTC OF MANILA
FACTS: In 1978, Pioneer Glass Manufacturing Corp.purchased from Yu (under Ancar
Equipment Parts and Tonicar) equipment parts worth P7,000. However, Pioneer fail
ed or refused to pay upon demand. Without
49
informing Yu, Pioneer Glass transferred all its assets to DBP in a "deed of cess
ion of property in payment of obligation" or dacion en pago. In turn, DBP sold t
hese assets to Union Glass that same year. In 1983, Yu instituted an action agai
nst Pioneer Glass, DBP, and Union Glass, asserting that the transfer of the asse
ts to DBP was void by reason of fraud. Pioneer Glass: denied liability to Yu on
the ground that by virtue of the dacion en pago in favor of DBP, the bank assume
d liability to its creditors including Yu under a payment scheme, which is under
pending implementation DBP: denied liability to Yu on the ground that there bei
ng no proof that the unpaid merchandise purchased by Pioneer Glass were among th
ose transferred to it Union Glass: denied liability to Yu on the ground that the
re was no privity of contract between them, or assuming applicability of the Bul
k Sales Law, no liability attached to Union Glass. MTC denied the motions to dis
miss filed by Union Glass and DBP and ruled in favor of Yu. RTC affirmed MTC s d
ecision. ISSUE: W/N the Pioneer Glass is a merchandiser, covered under the Retai
l Trade Act HELD: NO. There was an undisputed evidence that Pioneer Glass manufa
ctures glass only on specific orders and does not sell directly to consumers but
manufactures its products only for particular clients. As such, it cannot be sa
id the Pioneer Glass is a merchandiser within the meaning of the Retail Trade Ac
t.
50

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